“… a country’s opportunity to adopt an exclusion/elimination policy is largely contingent on … being a high-income nation … that is, on New Zealand’s ability to efficiently produce the goods and services demanded in global markets, supported by prudent economic policies.”
We can argue over the decisions made during the Covid era and I will shortly but in an uncertain and complex world wealth gives us options. When John Key was confronted with the GFC and Christchurch Earthquake he had a choice; use the crises as a justification to force through desperately needed economic reforms or borrow forty billion to maintain his popularity.
Equally; when the pandemic hit Ardern and Robertson had a decision to make. Respond in a fiscally prudent manner or borrow seventy billion, at least thirty of this was spent on non-pandemic frippery, and wrap themselves in a cloak of virtue while leaving an economic calamity to a future set of politicians.
Equally; when the pandemic hit Ardern and Robertson had a decision to make. Respond in a fiscally prudent manner or borrow seventy billion, at least thirty of this was spent on non-pandemic frippery, and wrap themselves in a cloak of virtue while leaving an economic calamity to a future set of politicians.
“When the pandemic hit Ardern and Robertson had a decision to make; respond in a fiscally prudent manner or borrow seventy billion,” says Damien Grant. Photo: ROBERT KITCHIN / THE POST
Exactly how many lives were saved by our Covid response is impossible to quantify but if we use Sweden’s laissez-faire mortality rate and control for the difference in population, maybe ten thousand individuals enjoyed a few more summers. At a cost of seven million per life saved.
Some readers will consider this a good deal; others will wonder about what other economic and health benefits were lost as a result of reduced government capacity resulting from the billions that will be spent on repaying the debt and associated interest.
The Royal Commission hints that the cost should have been thirty billion lower but for non-pandemic spending. $670 million on ‘community and social development’. $460 million on ‘environmental projects’, and billions on shovel-ready projects to stimulate the economy that did not manifest until after the crisis had passed.
Ardern and Robertson used the pandemic to advance their own agenda; which is admirable in the sense that they saw an opportunity and took it. Key saw a crisis and, lacking an economic agenda or political philosophy, ran to the international money men to maintain the status quo rather than attempt meaningful reform.
Given the content of the Covid Report the current government is right to highlight Robertson’s fiscal incontinence; pointing to the 70.4 billion total spend as a contrast with their own rectitude.
Exactly how many lives were saved by our Covid response is impossible to quantify but if we use Sweden’s laissez-faire mortality rate and control for the difference in population, maybe ten thousand individuals enjoyed a few more summers. At a cost of seven million per life saved.
Some readers will consider this a good deal; others will wonder about what other economic and health benefits were lost as a result of reduced government capacity resulting from the billions that will be spent on repaying the debt and associated interest.
The Royal Commission hints that the cost should have been thirty billion lower but for non-pandemic spending. $670 million on ‘community and social development’. $460 million on ‘environmental projects’, and billions on shovel-ready projects to stimulate the economy that did not manifest until after the crisis had passed.
Ardern and Robertson used the pandemic to advance their own agenda; which is admirable in the sense that they saw an opportunity and took it. Key saw a crisis and, lacking an economic agenda or political philosophy, ran to the international money men to maintain the status quo rather than attempt meaningful reform.
Given the content of the Covid Report the current government is right to highlight Robertson’s fiscal incontinence; pointing to the 70.4 billion total spend as a contrast with their own rectitude.
Except. Well. Here is a quote from last years Half Year Economic Update, referring to the period from 2025 through to 2030; “The forecast increase in net core Crown debt is around $71.7 billion, with larger increases expected in the near term and more modest increases expected at the back end of the forecast period….”
Willis, who has managed to add over twenty billion new debt in her first two years in office, is projected to increase sovereign debt by more than Robertson achieved over the next five years.
And this is without a pandemic, major earthquake or outbreak of foot and mouth. The Covid Report even had a nice graphic to make the point. You can see it below.
And this is without a pandemic, major earthquake or outbreak of foot and mouth. The Covid Report even had a nice graphic to make the point. You can see it below.
Click graph to view - Photo: Royal Commission Covid-19 Lessons Learned Ph2
“New Zealand’s public debt is not high when compared to other high-income countries. However, the country’s natural hazard risk profile is unusually high.”
Our ability to cope with crises depends on New Zealand remaining a high-income country with fiscal capacity. For nearly two decades successive governments have failed to address our declining relative productivity and poor economic performance. We have maintained our living standards through debt.
Imagine a company director who has seen revenue fall but maintains payroll by borrowing. Eventually the line of credit ends, staff lose their employment and the director is forced to sell the family home.
That is our economic policy in one paragraph.
And in case anyone missed it: there is some imbroglio in the Middle East. Something to do with the Pillars of Hermes being closed. Beyond my level of expertise but I read in The Spinoff this might involve an increase in oil prices and, concerningly, a fall in Auckland property values.
We could soon face an oil shock comparable to OPEC’s 1973 oil embargo; but even if this does pass there will be other external shocks that make Treasury’s projected return to a cash surplus by 2029 risible.
1:37 Oil and gas prices rapidly rise around the world
VIDEO CREDIT: ASSOCIATED PRESS
When do we stop running deficits and build up some fiscal capacity? When we no longer have a choice. When the bond markets rate our credit as junk and the only lender willing to fund the state is the Reserve Bank’s photocopier.
Outside the handful of malcontents in Act and a few marginalised National MPs too timid to denounce the emperor for parading the boulevards of Aotearoa in nothing but his self-confidence there is no appetite in Wellington to do anything but wait for the real crisis to hit........The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
“New Zealand’s public debt is not high when compared to other high-income countries. However, the country’s natural hazard risk profile is unusually high.”
Our ability to cope with crises depends on New Zealand remaining a high-income country with fiscal capacity. For nearly two decades successive governments have failed to address our declining relative productivity and poor economic performance. We have maintained our living standards through debt.
Imagine a company director who has seen revenue fall but maintains payroll by borrowing. Eventually the line of credit ends, staff lose their employment and the director is forced to sell the family home.
That is our economic policy in one paragraph.
And in case anyone missed it: there is some imbroglio in the Middle East. Something to do with the Pillars of Hermes being closed. Beyond my level of expertise but I read in The Spinoff this might involve an increase in oil prices and, concerningly, a fall in Auckland property values.
We could soon face an oil shock comparable to OPEC’s 1973 oil embargo; but even if this does pass there will be other external shocks that make Treasury’s projected return to a cash surplus by 2029 risible.
1:37 Oil and gas prices rapidly rise around the world
VIDEO CREDIT: ASSOCIATED PRESS
When do we stop running deficits and build up some fiscal capacity? When we no longer have a choice. When the bond markets rate our credit as junk and the only lender willing to fund the state is the Reserve Bank’s photocopier.
Outside the handful of malcontents in Act and a few marginalised National MPs too timid to denounce the emperor for parading the boulevards of Aotearoa in nothing but his self-confidence there is no appetite in Wellington to do anything but wait for the real crisis to hit........The full article is published HERE
Damien Grant is an Auckland business owner, a member of the Taxpayers’ Union and a regular opinion contributor for Stuff, writing from a libertarian perspective
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