On September 2 1666, the 330th Lord Mayor of London, Sir Thomas Bloodworth, was summoned to a small conflagration. A fire had taken hold and the alderman required his permission to contain it.
The prescribed means of containment was to destroy the adjacent buildings but, well, the owners of these adjacent buildings were unhappy at this violation of their property rights.
Excuse the vulgarity but, according to diarist Samuel Pepys, the mayor’s considered response was to declare “a woman’s piss could put it out” and retire to his bed. Sadly, there were insufficient ladies of the night, or the day, to contribute to this effort and the Great Fire of London raged uncontrolled.
Oddly, this did not derail Sir Thomas’s career. He remained a member of the House of Commons until 1679 and retained his social status.
Perhaps Nicola Willis can take heart from this.
Let’s get to business. Last week Treasury released its pre-election economic forecast. It was, as expected, awful.
When Willis took over from Grant Robertson, spending as a percentage of GDP was 31.7%. It is expected to be 32.1% in the 2026 financial year. In raw numbers spending rose $20 billion. Contrast this with tax revenue; which fell from 28% to 27.6% of GDP. Spending is rising, revenue is falling. Total debt as measured against GDP also rose; from 38.6% to 41%.
After three years of austerity... the books got worse.
Oddly, this did not derail Sir Thomas’s career. He remained a member of the House of Commons until 1679 and retained his social status.
Perhaps Nicola Willis can take heart from this.
Let’s get to business. Last week Treasury released its pre-election economic forecast. It was, as expected, awful.
When Willis took over from Grant Robertson, spending as a percentage of GDP was 31.7%. It is expected to be 32.1% in the 2026 financial year. In raw numbers spending rose $20 billion. Contrast this with tax revenue; which fell from 28% to 27.6% of GDP. Spending is rising, revenue is falling. Total debt as measured against GDP also rose; from 38.6% to 41%.
After three years of austerity... the books got worse.
When Nicola Willis took over from Grant Robertson, spending
as a percentage of GDP was 31.7%. It is expected to be 32.1%
in the 2026 financial year. Photo: Ricky Wilson/Stuff
National will point to Treasury’s forecasts that show a surplus is just three years away.
Treasury made the same prediction three years ago. In its 2023 pre-election release Treasury estimated core crown revenue would marginally exceed core crown spending as a share of GDP by 2026.
It is 2026. I checked. Its predictions were wrong. Again. Every three years ‘Lucy’ from Treasury promises that the surplus will arrive and every time she pulls the surplus away as soon as we vote.
National is not even promising to return to a surplus. Not really. There is some vague undertaking about fiscal responsibility but n oplan shared other than hoping that economic growth will magic the problem away. There are plans to fire civil servants and cut spending, which is like my diet. It is scheduled to start tomorrow and has been for several decades.
While we are debating how to reduce the imaginary super-profits of those who sell us cheese and biscuits, the annual spend on interest is set to jump from $3.3b to $10.3b from 2023 to 2027. Most of this was the result of the surge in debt under Robertson’s regime combined with a rise in interest rates, but this Government has done nothing to confront this crisis.
If we look further there is the helpful extrapolation on the cost of paying a universal basic income to millionaire boomers. Superannuation is set to rise from $24b this year to nearly $33b by 2031. Health costs for our ageing population pose a similar challenge.
And these estimates are optimistic because they are based on Treasury’s assumption that economic growth will spike from the current 1.1% annually to a sparkling 2.9% by 2028, which isn’t impossible but is improbable and assumes a period of economic calm. In reference to negative events, Treasury concedes its analysis “… does not include the materialisation of risks or shocks unless we consider them more likely to occur than not.”
Shocks are never anticipated. It is why they are shocking.
Anyone who has lived more than a decade in Aotearoa understands that pandemics, overseas wars, earthquakes, economic recessions and Labour governments occur with greater regularity than Treasury forecasts.
National will point to Treasury’s forecasts that show a surplus is just three years away.
Treasury made the same prediction three years ago. In its 2023 pre-election release Treasury estimated core crown revenue would marginally exceed core crown spending as a share of GDP by 2026.
It is 2026. I checked. Its predictions were wrong. Again. Every three years ‘Lucy’ from Treasury promises that the surplus will arrive and every time she pulls the surplus away as soon as we vote.
National is not even promising to return to a surplus. Not really. There is some vague undertaking about fiscal responsibility but n oplan shared other than hoping that economic growth will magic the problem away. There are plans to fire civil servants and cut spending, which is like my diet. It is scheduled to start tomorrow and has been for several decades.
While we are debating how to reduce the imaginary super-profits of those who sell us cheese and biscuits, the annual spend on interest is set to jump from $3.3b to $10.3b from 2023 to 2027. Most of this was the result of the surge in debt under Robertson’s regime combined with a rise in interest rates, but this Government has done nothing to confront this crisis.
If we look further there is the helpful extrapolation on the cost of paying a universal basic income to millionaire boomers. Superannuation is set to rise from $24b this year to nearly $33b by 2031. Health costs for our ageing population pose a similar challenge.
And these estimates are optimistic because they are based on Treasury’s assumption that economic growth will spike from the current 1.1% annually to a sparkling 2.9% by 2028, which isn’t impossible but is improbable and assumes a period of economic calm. In reference to negative events, Treasury concedes its analysis “… does not include the materialisation of risks or shocks unless we consider them more likely to occur than not.”
Shocks are never anticipated. It is why they are shocking.
Anyone who has lived more than a decade in Aotearoa understands that pandemics, overseas wars, earthquakes, economic recessions and Labour governments occur with greater regularity than Treasury forecasts.
Chris Hipkins and Christopher Luxon are offering sharply
different approaches to tax and government spending
ahead of the November election.
And let’s continue to pretend that ACC is solvent. Because it isn’t, and, I believe that to prove this point Willis changed the metrics of how we measure crown debt to hide this fact. Willis can claim that the numbers are better than initially forecast in her last Budget. Which is true. Things have gone from horrendous to merely awful.
National’s response is “No New Taxes” and a warning that Labour wants to tax Kiwis more. And that that is the choice at this election.”
It’s pitiful but truthful. Hipkins is promising to revive pay-equity, costing the taxpayer many billions; reduce revenue from student loans; spend more billions on Kāinga Ora; increase medical spending; new investments for school buildings. With the only new tax a capital gains on property which is earmarked for that expanded medical care.
The Greens want a tax on wealth, Opportunity a tax on land, and Te Pāti Māori wants to tax everything. Their collective economic approach is to raise income but increase spending and borrow the balance.
Sir Thomas Bloodworth’s failure was his unwillingness to take the hard decision early and the consequences were catastrophic. We are no better. No one is willing to accept that our welfare spending, including that on health, is unsustainable. The question is not if the ship of state will capsize, but when....The full article is published HERE
And let’s continue to pretend that ACC is solvent. Because it isn’t, and, I believe that to prove this point Willis changed the metrics of how we measure crown debt to hide this fact. Willis can claim that the numbers are better than initially forecast in her last Budget. Which is true. Things have gone from horrendous to merely awful.
National’s response is “No New Taxes” and a warning that Labour wants to tax Kiwis more. And that that is the choice at this election.”
It’s pitiful but truthful. Hipkins is promising to revive pay-equity, costing the taxpayer many billions; reduce revenue from student loans; spend more billions on Kāinga Ora; increase medical spending; new investments for school buildings. With the only new tax a capital gains on property which is earmarked for that expanded medical care.
The Greens want a tax on wealth, Opportunity a tax on land, and Te Pāti Māori wants to tax everything. Their collective economic approach is to raise income but increase spending and borrow the balance.
Sir Thomas Bloodworth’s failure was his unwillingness to take the hard decision early and the consequences were catastrophic. We are no better. No one is willing to accept that our welfare spending, including that on health, is unsustainable. The question is not if the ship of state will capsize, but when....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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