Prime Minister Christopher Luxon will no longer claim a $52,000 accommodation allowance for living in the Wellington apartment he owns.
Video / Newstalk ZB
Opinion by Matthew Hooton
Matthew Hooton has more than 30 years’ experience in political and corporate strategy, including the National and Act parties.
What sort of basket-case can’t maintain a residence suitable for their head of Government or an aircraft so they don’t miss appointments with other world leaders?
Christopher Luxon’s attending Melbourne’s special Asean-Australia Summitshould have been a triumph. Luxon correctly judged that aside from our ally Australia, our Five Eyes friends and the Pacific Islands, our most important long-term relationships are with Southeast Asia.
That’s true for economics and trade, especially if global instability compromises other shipping lanes. It’s true to protect New Zealand from security threats emerging further north.
Beehive strategists say Luxon made amends at the conference dinner, having a long chat with Philippines President Ferdinand Marcos jnr and one with Laos Prime Minister Sonexay Siphandone. Still, how embarrassing that Siphandone, leading Asean’s poorest country, made it to Melbourne on time?
This wasn’t Luxon’s fault. But his tone-deaf $1000 a week claim for living in his own flat was. It too symbolised denial of the various crises left unaddressed by the successively more cynical and fiscally irresponsible Key-English and Ardern-Hipkins regimes. Let’s party like it’s still 1995.
For 14 consecutive years, through good times and bad, Ruth Richardson, Bill Birch, Winston Peters and Sir Michael Cullen ran surpluses, paying off all government debt.
Cullen’s last few months began the rot, when Labour’s electoral desperation and the Global Financial Crisis bequeathed National a decade of forecast deficits.
But the point of National Governments is supposedly that they won’t just accept disastrous forecasts but fix them.
Instead, John Key and Bill English didn’t prioritise doing the right thing but “taking voters along with us”.
Their slogan’s unspoken part was “so we keep our jobs”. The spin doctors took charge, so their Government radically failed to meet its potential.
Despite a decade of economic growth from June 2010, English borrowed $50 billion before becoming Prime Minister.
The Global Financial Crisis and Christchurch earthquakes were blamed, but, like Jacinda Ardern and Grant Robertson blaming Covid, that justified some years of borrowing but not English’s eight consecutive cash deficits and six in accrual terms.
To be fair, English hoped economic growth would reduce the real burden of his borrowing and, to an extent, it did. In his sixth year as Finance Minister, net core government debt as a percentage of GDP began falling.
In his year as Finance Minister, Steven Joyce paid off a couple of billion dollars of English’s debt. When National left office, economic growth had also reduced core government spending from 30 per cent of GDP to 27.3 per cent. But that’s not much after nine Budgets.
The Labour-NZ First Government paid back another couple of billion before Robertson’s spending addiction took hold after Covid. In three years, the Labour-only Government borrowed as much as Key-English in nine.
No one really knows where English and Robertson’s $100b went. We got the Waikato expressway, a third of the Auckland-Whangārei expressway, ultrafast broadband and Key’s cycleway. Some went on Auckland’s City Rail Link but the rest of the network falling into disrepair means it won’t deliver faster commutes.
Most of the $100b just propped up welfare. Yet, despite Key talking about the underclass and Ardern child poverty, both worsened.
Obsessed with re-election, neither had the integrity to materially raise taxes or sufficiently cut spending to balance the books.
Alarmingly, Beehive strategists indicate Nicola Willis will carry on the merry way of English and Key, her mentors, and Robertson and Ardern.
Latest forecasts suggest Willis may never reach surplus. She admitted again this week a further deficit for 2026/27.
In cash terms, it’ll be our 18th in the past 20 years. After accruals, it’ll be our 15th.
Worse, achieving balanced books this decade relies on there being no cyclones, droughts, earthquakes or other economic shocks.
Even without any shocks, the Treasury says the deficit is structural, meaning almost no level of economic growth will deliver balanced books.
Beehive strategists blame worsening post-election forecasts, but that’s only marginally true.
Rod Emmerson's view after another New Zealand Airforce plane broke down.
Pre-election, Robertson revealed core government revenue and expenses in 2023/4 would be about $134b and $139b respectively. By Christmas, revenue was reforecast up a couple of billion and expenses by one billion.
Wednesday’s interim financial statements for the seven months to January 31 were worse than expected, so the final numbers will be closer to Robertson’s.
Most worrying was the cash deficit blowing out. It’s now picked to be $26b in 2023/24, or $13,000 per household, but Robertson had confessed $25b of that.
National has few credible excuses for the mess. It can’t claim to be surprised by the outlook since it said it didn’t believe Robertson’s pre-election numbers, saying things were much worse.
It can’t say it wasn’t warned its own pre-election numbers didn’t add up. Its tax policy quickly collapsed under scrutiny and its capital and operational expenditure estimates were heroic.
Like Robertson, National chose to play fairytale politics pre-election, now discovering there’s no happy ending.
Yet a 2008-aura pervades the Beehive. Another four or five years of borrowing are apparently fine, being no worse than English’s effort. That ignores English inherited zero debt.
Ministers deny parts of the bureaucracy refuse to offer even the relatively modest spending cuts Willis seeks.
Those offered usually involve hundreds of tiny cuts that no minister could properly analyse, each designed by bureaucrats to be politically explosive.
Nevertheless, the Beehive insists the $14b of tax cuts promised from July, when inflation will still be undefeated, will happen no matter what.
Parroting Key and English, strategists say keeping faith with voters is most important, leaving unsaid the bit about their own jobs.
Yet, as Key and English proved, it’s a governing philosophy that’s ultimately self-defeating. If true in a first term, the slogan is just as true in the second and third. Governments then leave office with little to show.
No one suggests the political recklessness possible before MMP.
But if National thinks it will get away with a safety-first, borrowing-based political strategy, anyone who can ought to start planning to leave New Zealand now.
If promises must be broken to avoid calamity, then Governments are honour-bound to break them. Luxon and Willis’ only credible strategy is to do the right thing and then tell Topham Guerin and the rest of their spin machine to sell it.
Fifteen years of focus groups setting policy have delivered just one thing: a country symbolised by a leader without a decent house in Wellington nor a functioning plane to do business abroad.
- Matthew Hooton has more than 30 years’ experience in political and corporate communications and strategy for clients in Australasia, Asia, Europe and North America, including the National and Act parties, and the Mayor of Auckland.
