Richard Prebble
The Honourable Richard Prebble CBE is a former member of the New Zealand Parliament. Initially a member of the Labour Party, he joined the newly formed ACT New Zealand party under Roger Douglas in 1996, becoming its leader from 1996 to 2004.
A “pakeha budget” would not cut the NZ Symphony Orchestra funding and maintain funding to Te Mangai Paho. The agency’s CEO in a press release said the budget “signaled good news for the te reo sector…continuity of funding” for Maori media.
A “pakeha budget” would not fail to fund the election promised new cancer treatments while lowering the bowel screening age for Maori and Pasifika from 60 to 50 years old.
In a multi-racial country it is dangerous for politicians to claim, as Labour’s Willie Jackson did in his Herald article, that this was “the most anti-Maori Budget in a generation”.
Few Maori will be affected by the spending cuts. Virtually all Maori households will receive tax cuts. Maori, like the rest of us, will have to repay the borrowing that funded the tax cuts.
The key budget statistic is that the government is projected to take 33.5 per cent of the economy, down marginally from Labour’s 34.5 per cent.
The question is, will the coalition keep to its spending limit?
Nicola Willis took just three days to announce unfunded spending, promising a decision this year to fund new cancer treatments.
Nicola Willis, like Grant Robertson, will find it impossible to keep within the budget’s spending limits.
“Project optimism” is why projects cost more and take longer than estimated. Nobel prizewinning economist Daniel Kahneman said it is because the unexpected happens.
The treasury, in the budget documents, lists 20 pages of fiscal risks that could derail the budget’s projections.
It is likely that the risk that up ends the budget is not listed, Treasury did not predict Covid-19 or the Ukraine War or most of the economic shocks that have blown budgets. The event that sinks this budget is probably something we have not thought of.
History is repeating. Labour governments massively increase spending. National, in opposition, oppose the increased spending. National in government adopts Labour’s spending while promising to manage better.
There is only one proven way to reduce government spending and that is to stop doing things.
7.5 per cent spending cuts like “sinking lids” can slow but cannot stop the rise in government spending.
Labour’s finance spokesperson Barbara Edmonds says that Labour would have reduced government spending but without any job losses. It is a claim that has no economic credibility.
Last week it was left to an 86-year-old, Sir Roger Douglas, to produce alternative policies. See https://www.nzcpr.com/budget-2024-policy-solutions-to-new-zealands-funding-problems/
Roger says:
“The New Zealand Government’s problems fall into two main parts:
• ONE – New Zealand’s poor financial position, highlighted by Treasury in its Long-Term Fiscal Projections (2021-2061)
• TWO – The New Zealand Government owned institutions in the social services area, have all been performing poorly for the last 60 years.”
“Unfunded liabilities which stand today at more than one trillion dollars, are set to become New Zealand’s most serious financial problem.”
“Fifty-Two years ago,” Roger writes, “I introduced a private members bill into the New Zealand Parliament with the support of the entire Labour party caucus, that would have made a lump sum superannuation policy available to every New Zealand worker.”
Labour MPs, that once sought to solve issues, now make fantasy claims.
Roger writes:
“Superannuation and health spending alone are expected to go up by 6.4% of GDP. Add education, and the expected increase in government expenditure becomes 8.1% of GDP. With total government expenditure increasing by 12% of GDP, by 2061 we are expected to be running a negative operating balance of 13.3% of GDP. That would make us technically bankrupt.”
” We cannot increase taxes to the level needed to meet our obligations without destroying economic growth further.”
Roger outlined three principles for the budget:
“Principle One – Each generation must pay for themselves.”
Roger’s solution, compulsory superannuation.
“Principle Two – Every New Zealander should provide for themselves as far as possible.”
Lower taxes so people can purchase their own superannuation, health, and education with the poor assisted to make their purchases.
“Principle Three – Choice and competition.”
“Competition is the force that encourages providers to operate efficiently and cater for their customers’ needs – as well as to improve products they produce on a continuous basis”.
“Fundamental to the reform of the New Zealand Government’s social service institutions is the introduction of competition to all social service areas including education, healthcare, welfare and housing.”
“Competition is just as important in government as it is in private sector markets. The lack of competition, over the past 80 years in government-owned social service institutions, is why they are doing so badly today, when compared to say Singapore’s institutions.”
Those are an 86-year-old’s solutions. Where are the Oppositions?
The Opposition has two dangerous ideas.
First, that New Zealand can tax its way to prosperity.
Second, an even more dangerous proposition, that New Zealand has two classes of citizenship depending on our race.
