Money Talks: Cameron Bagrie - A new era of 'big government and higher taxes'

Cameron Bagrie, Managing Director at Bagrie Economics. Photo / Alex Burton

Economist Cameron Bagrie describes himself as pragmatic and non-ideological. So he is relatively unfazed by the seismic shift the pandemic has wrought on the world of economics.

But he's under no illusions about what it means.

"Governments are going to get bigger. They're going to be a lot more interventionist, they're going to be a lot more active. And they need to rebalance that economic and social side of the ledger", he says on the Money Talks podcast.

"We're going to face higher taxes. I have no problem paying higher taxes as long as we get quality spend and actual outcomes out the other side".

And Bagrie says he has yet to be convinced about those deliverable outcomes.

"At the moment it's A for aspiration. The execution is a really big issue."

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"I don't think people are realising the significance of this pivot point we're at."

He points to the US and Joe Biden, rising tax rates there and around the world.

Political extremes aren't helpful, he says.

"There are people who will say we just have to let the market prevail. Basic economics... Well, sorry, the market doesn't work."

"There's a reason we have referees in a rugby game, the players will cheat. There's a reason we have umpires and snick-o-meters for cricketers. Because we know the cricketers will not walk".

So you need a referee and a not-so-good referee in regard to how the game is actually played".

But if we're going to see bigger government Bagrie wants to see more checks and balances on politicians, more focus on performance.

"We're just about at full employment and yet we've got 200,000 people on the job seeker benefit and 370,000 on benefits overall," he says.

"That's one in nine people of working age. That tells us we've got very big structural problems. If we want to alleviate poverty then it's got to be about getting people back into paid work.

"But it can't just be about paying people willy-nilly. You've got to make them more productive".

Bagrie has spent most of his life thinking about money.

His parents were horticulturalists and he grew up in central Otago. But they were hit hard by the inflation and double digit interest rates of the 1980s.

"I got a little bit scarred by that," he says.

With a good head for maths he fell into economics at university and never looked back.

The former ANZ chief economist has done his time with Treasury and Stats NZ but now works for himself - with Bagrie Economics and as co-founder of the new venture Chaperon.

Bagrie has also been a director on the board of the Life Education Trust for the past two years and has taken a special interest in driving the financial literacy programme for kids.

He has played a key role in launching the Trust's new high school programme Money Mojo.

"It's only small but we launched last year into year 10 - you can't take Harold the Giraffe into year 10 into the high schools.

"What's the biggest barometer that we can sit and look at today and see where New Zealand is going to be in 30 to 35 years? I'd argue it's the education sector".

Money Talks

The Money Talks podcast series isn't about personal finance and isn't about economics, it's just well-known New Zealanders talking about money and sharing some stories about the impact it's had on their lives and how it has shaped them.

You can find new episodes in the Herald, or subscribe on iHeartRadio, Spotify or wherever you get podcasts.

Previous guests include: Kerre McIvor, Sir Michael Cullen, Shane Te Pou, Sharon Zollner and Theresa Gattung, and Matt Heath.

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