OPINION:
Last week, I visited Hawke’s Bay after the cyclone hit to see the extent of the damage and hear locals’ experiences. A thick, rancid smell of mud, silage, and damp hit as soon as I landed, and it lingered. Thousands of onions and squashes sat on knee-deep silt. I heard of farmers clearing up thousands of dead livestock, families climbing high into ceilings to escape rising waters, even punching holes in their roofs, or being rescued by strangers.
Local volunteers set up stations to provide water and cooked warm meals for the hundreds of people who turned up to help neighbours shovel silt and clear away sodden furniture. I heard of a generator being destroyed after someone came through overnight and put mud through it, there was concern that when people who’d lost nearly everything moved out of their uninhabitable homes, looters would come and take the little they had left.
I got a sense of the size and scale of the clean-up and recovery. Everyone who’s mucked in to help should be applauded. Thank you for lending a hand when it was needed, it’s been a mammoth effort. The question now turns to what to do from here?
The recovery is going to be costly for both the rebuilding of Auckland after the January storm and the regions ravaged by Cyclone Gabrielle. So, where should the money come from?
Rather than floating a new tax, which would make life harder for current taxpayers, or taking on more debt, which would spark even more inflation and make life harder for future taxpayers, the Government should reprioritise what it’s already spending. It should put that money into rebuilding roads and bridges to reconnect the regions.
There’s plenty of money that can be reprioritised. When Labour inherited the books, spending was about 27 per cent of GDP, or $87 billion a year. Now, it’s 35 per cent of GDP, up $40b a year to around $127b. Even without a natural disaster this was reckless, now it is totally unfeasible. As households tighten their belts in the face of mortgage and rent increases, it’s time for the Government to do the same.
This extra spending has not resulted in greater infrastructure, a lot of it has gone to swathes of new Wellington bureaucrats or lined the pockets of consultants. New Zealand can’t afford that sort of spending, especially not now.
Auckland light rail should be the first to go. It’s always been wasteful, but in the current context cutting it could free up over $14b for truly needed infrastructure. Besides money it also consumes real resources similar to road building. Engineers, project managers, and materials. Labour can hardly say it’s urgent when they’ve taken five years not to start a project they promised would be finished by 2021.
What we can’t allow is a repeat of the debt-fuelled wasteful spending that occurred under the cover of Covid which increased the cost of living for Kiwis. We’re all living through that pain right now.
The extent of the damage to homes isn’t yet known. Thousands of homes will need repairs from foundations to roofs. We’re talking new plumbing, wiring, insulation, plasterboard, flooring and more. Just this week I received a list of building material prices for the months ahead. They range from 2 to 30 per cent increases, including a 15 per cent increase in plasterboard in February, 10 per cent increase in ceiling insulation in March and a whopping 16.5 per cent increase for cement board in April. All increasing before the rebuild starts. Plasterboard shortages are certain to reappear. Ditto worker shortages. Anyone trying to run a business can tell you there is already a chronic worker shortage. Rebuilding thousands of homes and two geographically large provinces will only add to it.
Besides these constraints on real resources, billions of dollars of much-needed funds will flow into the country from the global reinsurance industry. More money chasing after scarcer goods will foment inflation on steroids. More inflation may force the Reserve Bank to raise mortgage rates higher than the track people have begrudgingly accepted.
Acknowledging these inflationary realities, the Government should treat the economy like a good doctor treats a patient. Besides reprioritising its own budget to avoid deficit spending, it should look to ease resource constraints.
A Building Materials Equivalence Register would pierce the byzantine bureaucracy where councils only consent certain brands of materials when there are perfectly good substitutes. Plasterboard being the obvious example, the Ministry of Business Innovation and Employment should state that councils can’t reject consent applications based on material brands if those brands are on its list of equivalents.
When it comes to people, the Recovery Visa is a good start, but it should go further to give speed and certainty. Any person from a visa-waiver country can already show up at the border and holiday for three months any time. People from those countries should be allowed to work for up to three years in any job in the recovery area. The Government should process the visa and an IRD number within 48 hours. That’s almost unimaginable with the current Government, but it’s also the kind of thinking that gets people in the construction industry nodding along.
If the Government recognises the scale of the challenge and responds with decisiveness, it can get the recovery done quickly and minimise the pain for already stressed households inside and outside the recovery region. The ideas are here, a little decisiveness, practicality and courage from the Government is the missing ingredient.
·Brooke van Velden, MP, is the deputy leader of the Act Party.
Inflation is the top issue for Kiwis and they think Labour is best to keep prices down.