The numbers are staggering. Labour is spending a billion dollars more every single week than when they took office. Spending is up almost 70 per cent. Faced with the task of trimming the sails, this week the Minister of Finance confessed he could only bear to decrease annual spending by a hopeless 0.7 per cent.
Taxpayers are funding the Government’s spending addiction. The IRD is raking in $100 million more in tax every day than five years ago. That’s $17,500 more tax for every Kiwi household this year.
What have we got to show for it? Daily ram raids, declining school attendance, patients left on gurneys in cold hospital corridors, day-long waits at emergency departments and potholes puncturing state highways.
Aucklanders were meant to be riding to work on light rail by now. Instead, after allocating more than $8 billion to Kiwirail, commuter services in Wellington and Auckland are - to put it charitably - unpredictable.
Excessive spending and money-printing stoked inflation, and with it, interest rates. Homeowners are having to find hundreds of dollars a week more to service a mortgage as their home’s value plummets.
New Zealanders are straining under rising debt payments and the Government is too. Government debt is up from less than $10b pre-Covid to almost $80b today.
Rating agencies - which effectively decide the price for our debt - watch on, fretting at the fact that our current account deficit is the largest in the developed world.
Finance Minister Grant Robertson’s refrain has been to variously blame Covid or global forces. It doesn’t stack up.
It wasn’t Covid that forced the Government to spend a record $129b this year, a full $20b more than during the peak of lockdowns. (Nor did it require migrant nurses to be refused residency for so long, or for health targets that helped keep emergency department waiting times in check to be dumped.)
If global factors were to blame, then why is Australia faring better, posting a surplus this week when New Zealand is expected to post a deficit and slip into recession? Why do the US, Canada and Singapore all have a lower inflation rate than us?
Good intentions and a big chequebook to fund sugar-hit economics are not enough to solve the long-term challenges New Zealand faces.
A different approach is required. Resolving the cost-of-living crisis, lifting incomes, restoring law and order and delivering far better health and education - it all requires paying our way in the world.
First, focus on driving productive growth. We simply must clear the runway of obstacles between our businesses and their flight to create value. New Zealand has no shortage of innovators and entrepreneurs - what they need is a Government that doesn’t slow them down with clunky RMA changes, prescriptive wrong-headed regulations, so-called Fair Pay Agreements and allergic rejection of global investment.
This nay-saying ideology must be cleared away in favour of a shamelessly pro-growth, pro-innovation, pro-investment agenda. Bring back international education. Revive the tourism industry. Say yes to high-tech manufacturing, renewable energy generation and value-added agriculture.
Second, restore discipline to government spending to take pressure off inflation and track a path back to surplus.
Just as households are tightening their belts, so too must every minister and government department. The Finance Minister’s half-baked savings offering this week are not enough. As we urged a year ago, he should go line by line through each government agency to find the spending that’s not delivering value for money. Cut and cap spending on consultants, advertising, communications and other ballooning backroom functions. Push resources to the front line.
Third, adjust income tax brackets to compensate for the corrosive effects of inflation.
National’s plan to inflation-adjust tax thresholds and offer rebates for childcare costs could be funded in this Budget if ministers got serious.
They should do it, not only because it’s fair but because of the message it sends. Let this be a country that values work and rewards effort, where people can hold onto more of what they earn.
I’d like to think ministers have come to a principled realisation that New Zealand families need their money more than the machine of government does. More likely, Chris Hipkins is just more nakedly political than his predecessor.
Either way, it won’t be enough to put the New Zealand economy back on track. A much bolder change of direction is needed. New Zealand’s current Government has run out of money, it’s run out of ideas and it’s fast running out of time.
- Nicola Willis is the National Party’s deputy leader and finance spokesperson.
