David Farrar: Defending Nicola, and critiquing her

Media have reported that there may be a debate between Nicola Willis and Ruth Richardson over fiscal policy. I thought it would be useful to lay out what I see as the key fiscal problem, and put context around it.

Now I’m not unbiased here. Nicola I regard as a long standing friend. We were opposition staffer colleagues together over 20 years ago. She is one of the most awesome and competent people I know. I also admire how she has managed to be an amazing mother to four young kids, while also having a successful career at senior levels in business and politics.

Michael Reddell: Fiscal starting points

Not that long ago, New Zealand’s fiscal balances looked pretty good by advanced country standards. Sure, the fiscal pressures from longer life expectancies were beginning to build – as they were in most of the advanced world – but in absolute and relative terms New Zealand still looked in pretty good shape.

Michael Reddell: Fiscal failure

The IMF’s twice-yearly World Economic Outlook and Fiscal Monitor publications have come out in the last couple of days.

If there is gloom in the GDP numbers (eg this chart for the advanced countries, and we don’t score a lot better on the comparable one for the 2019 to 2025 period which encompasses the whole Covid and inflation/disinflation period), much about that is outside the direct or near-term control of  any particular government.

Michael Reddell: Really?

A few weeks ago an invitation dropped into my email inbox to attend a joint Treasury/Motu seminar on recent, rather major, changes that had apparently been made to the discount rates used by The Treasury to evaluate proposals from government agencies.

Michael Reddell: The Secretary to the Treasury defending govt fiscal policy

I wasn’t envisaging writing anything more for a while, but….Welllington’s weather certainly isn’t conducive to either the beach or the garden, and the Herald managed to get an interview with Iain Rennie, the new Secretary to the Treasury (not usually the sort of stuff for 27 December either).

I’ve always been rather uneasy about heads of government departments doing interviews, on anything other than operational/internal matters for which they have specific personal responsibility. When they get onto policy it is never quite clear whether they are expressing their own views or championing those of the minister, and even if the former they are inevitably somewhat constrained by the views and tolerances of the minister. The primary responsibility, after all, of heads of policy agencies is provision of free and frank policy advice to the minister.

Michael Reddell: Should NZ establish a Fiscal Council?

The Treasury this morning hosted a guest lecture on the merits (or otherwise) of a Fiscal Council, hosted by the acting Secretary to the Treasury, Struan Little.

A Fiscal Council in this context is something quite different from the sort of state-funded policy costings office that many of the New Zealand political parties seem to be gravitating towards thinking would be good idea (more state funding, under the guise of something in the public interest, so why should we be surprised). Over the years I’ve written consistently sceptically about the policy costings unit idea, and was only reinforced in that view by my involvement last year in the contretemps over the costings of National’s proposed foreign buyers tax.

Michael Reddell: Fiscal and monetary policy

Over the last few years, The Treasury seems to have been toying with bidding for a more significant role for fiscal policy as a countercyclical stabilisation tool It seemed to start when Covid hubris still held sway – didn’t we do well? – and the first we saw of it in public was at a Treasury/Reserve Bank conference in mid 2021, at which both the Secretary and some of her staff were advancing thoughts of that sort (I wrote about it here). More recently, this mentality has shown up in the commissioned report from US economist Claudia Sahm (post here) and in the consultation for The Treasury’s forthcoming long-term insights briefing (post here).

Michael Reddell: Treasury wanting to use fiscal policy more

Government departments are now all required by law to write and publish a Long-term Insights Briefing at least every three years.

Michael Reddell: A Sahm-type rule for NZ? I think not.

The Treasury yesterday hosted the first in their new series of guest lectures, under the broad heading “Fiscal Policy for the Future”. In introducing the series Dominick Stephens, Treasury’s chief economist, told us that the focus would be on three sub-headings: policy dimensions around fiscal sustainability, the potential stabilising role of fiscal policy, and ideas around value for money. Which sounds fine I suppose, but it perhaps wasn’t a great example of reading the times that the first lecture was about an idea that would, when it was used, involve the Crown simply giving away a lot more money (automatically).

Michael Ryan: Does fighting inflation always lead to recession?

Does fighting inflation always lead to recession? What 60 years of NZ data can tell us

There is an ongoing global debate over whether the high inflation seen in the aftermath of the COVID-19 pandemic can be lowered without a recession.

Michael Reddell: Tougher than that

Thomas Coughlan has a column in the Herald this morning, under the heading “Nicola Willis is just the right amount of Tory”. To this centre-right voter it isn’t obvious Willis is (or sees herself) as any type of Tory, but what Coughlan seems to be suggesting is she is just right if the aim is to hold office, and never mind the large structural fiscal deficit the government inherited from Labour.

It isn’t an uninteresting column, and this post is just about one snippet where I don’t think the author is quite right. Here it is