Opinion: Government behind economic erosion

David Bennett , MP for Hamilton East. Photo / Supplied

All governments rely on a strong economic foundation. Without one, they will struggle to raise the funds they need for vital public services and to accurately plan for future investment.

Budgets estimate an economic growth figure for the upcoming year and if the true figure is less that forecast, the government will find itself short on revenue.

Labour's spending ideas during the election were so high that Finance Minister Steven Joyce declared they would create an $11 billion fiscal hole with no explanation of where the money would come from. Last week, former ANZ Chief Economist Cameron Bagrie came out and said that "Steven Joyce is going to be proved right".

The Government seems to have assumed that Labour and New Zealand First could sustain the solid economic base that New Zealand enjoyed over the last decade under National.

This Government has been in long enough to show its policies are actually weakening the economy.

Job growth has fallen by 60 per cent, and in the last three months unemployment increased by 4000 people. Business confidence surveys show New Zealand businesses are steadily and consistently becoming more pessimistic about the future, so much so that even Treasury has started talking down GDP growth.

Not only does Labour need to find the billions of taxpayers' dollars it agreed to let New Zealand First spend on pet projects like overseas diplomats, it also needs to account for the costs of its own assaults on New Zealand's economic performance.

A government cannot just cancel the mining industry, rip the heart out of the road construction sector, propose major attacks on farming, bring back failed anti-competitive employment laws, and oversee impending tax increases and expect the economy to suffer no ill effects.

Immigration is also falling with 7000 fewer permanent residents. As Australia's economy shows signs of strength, we need to be careful of returning to the days when over 30,000 Kiwis each year crossed the Tasman.

The New Zealand economy is small and reacts to shocks like these much faster than larger economies like the United States and Australia.

If we do not care for the structures that enable us to grow and prosper we make it unnecessarily tough on ourselves and future generations.

We can see the influence of the poor economic policies from the Ardern-Peters Government in the Waikato already. From 2020 onwards our region loses $150-200 million of annual Government infrastructure spending we enjoyed from constructing the Waikato Expressway.

The $450m Cambridge to Piarere extension of the Expressway is now funding a tram in Auckland. In return our region only gets a $5-10 million subsidy on a train so 180 people can go to Auckland each day.

A loss this size is hardly conducive to economic growth.

The fiscal problems are not the end of an economic cycle or an international shock, they are self-inflicted damages from a Government that has thrown together some policies with no real understanding of what it takes to manage a strong economy or the consequences of taking it for granted.