The International Monetary Fund, in its latest Regional Economic Outlook, predicts that next year the New Zealand economy will have the second-lowest growth of the 159 nations it surveys, with the only worse country being Equatorial Guinea.
The projection for New Zealand is 0.8 per cent growth, compared with 1.7 per cent for Australia, 1.1 per cent for the United States, 1.5 per cent for Canada – and yes, minus 8.2 per cent for Equatorial Guinea, a misgoverned African dictatorship.
After six years of Labour, what is our excuse? We cannot say Covid: that was a pandemic, something that is worldwide.
The IMF has warned that the New Zealand Government must get control of expenditure.
Thoughtful voters know that campaign promises depend on the economy.
But there is a lack of reality about the campaign. In the final adjournment debate, no MP mentioned the IMF’s dire prediction.
Chris Hipkins’ campaign pitch is so negative, it lacks reality. Does anyone believe that, under National, our economic performance will be so bad?
Those Green Party members who believe economic growth is bad should be welcoming the IMF report.
The Greens have claimed they can fund their extravagant campaign promises by economic cannibalism – eating the rich. Stats NZ reports that migrant departures in the year to June were 108,400, up 37 per cent. They may have been outweighed by the 161,900 migrant arrivals, but given our willingness to migrate, it is unreal to imagine Kiwis will stay around to be fleeced.
Then there is the lack of reality in Labour’s plan for three tunnels under Auckland Harbour at an estimated cost of $45 billion.
Meanwhile, there is an unreal media obsession with the cost of National’s tax plan. Any fiscal gap is minor compared to the fiscal black hole in the Government’s books.
But there is a better way to look at the campaign.
From an economic perspective, it is expensive to collect taxes and redistribute money. There is IRD research indicating that the dead weight of taxes is very damaging to the economy.
I live in a poor valley where there is no public transport. Should the rural poor be taxed to provide free public transport in Labour’s urban electorates?
Tax cuts do give relief to more households. But at its heart, the issue is whether you are entitled to make your own spending choices.
Should the Government spend our money for us, or should we make our own spending decisions and take responsibility for the consequences?
What is totally unreal is that, despite the IMF forecast, both Labour and National are proposing to continue with an unsustainable level of spending.
Under Labour, government annual spending has increased by $54b. As we have full employment, instead of borrowing, the Government should be running surpluses and paying down debt.
It is easy to promise to stop spending $1.2 million a week on a light rail scheme. But just cutting waste will not balance the books. The only party with a detailed, costed budget to reduce low-quality government spending is Act.
Last week, Leighton Smith did a podcast with businessman Stephen Jennings, the former Treasury official who is now building new cities in Africa. Jennings believes the crisis we face today is worse than 1984. He says the crisis then was economic and now it is cultural.
Jennings says that, in 1970, just 2 per cent of the population was on a general benefit. Now it is 11 per cent. The number of people on health or sickness benefits has increased by six times.
National’s Louise Upston waited until the last day of the 2023 Parliament to ask Social Development Minister Carmel Sepuloni why it is that, “despite two years of businesses crying out for staff all over the country, there are now over 57,000 more people on the Jobseeker benefit ...?”
The minister replied that, “it is hard to reconcile our near-record low unemployment and more Kiwis in employment with the benefit numbers sometimes because it is complex”.
It is simple. We have more people on Jobseeker – 52,404 more than in 2017, according to the minister – because the Government is not enforcing the requirement that able-bodied adults must accept suitable job offers.
What is complex is that it is no longer a shared cultural value that we have a responsibility to support ourselves and our families.
Welfare reform is not on National’s pledge card. Maybe that is right. There are some things politicians should not campaign on, but just do.
If a future National government applies the existing requirement to accept a suitable job, it would result in 50,000 fewer beneficiaries, less expenditure and more tax revenue.
More importantly, it would cause a cultural shift. No one is more opposed to freeloading than a former freeloader.
The IMF projections are a warning. The real issue in this election is, are we to be a nation that rewards hard work and personal responsibility, or a nation that rewards freeloading on the road to Equatorial Guinea?
- Richard Prebble is a former leader of the Act Party and a former member of the Labour Party.