There always the most read stories on news sites. It's like a national past time.
Oh look! Brad Pitt says New Zealand is beautiful! Oh look... Jason Mamoa did a bungy and Queenstown is beautiful!
Well. Have I got news for you, New Zealand.
S & P, the global ratings agency, has just done a bungee on our out-country's finances.
It's mostly good news. Low net debt. Growth of 2.5% a year. Good government. Safe. Sound. Stable outlook.
The equivalent of a 4-star Tripadvisor review.
BUT... there's one number that should be making headlines.
It's on page 4.
10%.
Our country has been borrowing more money to fund stuff, including everyday spending and election promises.
They issue bonds, or debt, to investors and pay them interest for the pleasure.
Those interest costs are going up because of the bond market sell-off we've been talking about on this show.
S & P says the amount we're paying interest will reach 9% of government revenue (i.e. tax) in 2029.
That means for every million bucks the government earns in tax, it pays almost $100k just on interest on its debt.
Interest is our 4th most expensive item on the government's books.
More than we spend schooling our kids through primary and secondary.
S & P says interest costs of more than 10% of revenue could result in 'weaker debt metrics'.
That's not a good thing. It means we're stretching ourselves. We could get a credit downgrade.
People start looking at us sideways asking.... can those guys pay back what they owe us or they taking the Mickey?
That's not the sort of reputation this country can afford.
Ryan Bridge is a New Zealand broadcaster who has worked on many current affairs television and radio shows. He currently hosts Newstalk ZB's Early Edition - where this article was sourced.
1 comment:
National pivoted almost their entire campaign to be ‘all tax is bad tax no matter what the tax’ and challenged Labour to rule out a bed tax, ute tax, app tax, wealth tax, gift tax, streaming tax, dog tax – oh wait, that was a couple of elections ago – but you get the gist.
Now we’ve entered the topsy turvy in which National is arguing Labour is irresponsible for ruling out a tax and arguing some particular fuel tax is critical for public infrastructure, while simultaneously finding a billion dollars from who knows where to top up the transport fund because they too would like to delay it – just not as long as Labour.
And let us never again speak of the fiscal responsibility of $2 billion of foregone tax revenue to keep the property lobby quiet.
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