Robert MacCulloch
Robert MacCulloch is a native of New Zealand and worked at the Reserve Bank of NZ before he travelled to the UK to complete a PhD in Economics at Oxford University.
Political spin is one thing. Facts another. My reading of NZ Treasury’s Half Year Economics and Fiscal Update 2024 is that little has changed since the government changed.
The latest figures show that the fiscal deficit (excess of government spending over taxes) equals -3.1 per cent this year under National, ACT and NZ First. Given GDP is about $400 billion, that’s $12 billion added to NZ’s national debt. Next year, 2025, its forecast to be -4.1 per cent and the following year, -3.1 per cent. The average of those three numbers, which comprise the coalition’s first term in office, is -3.4 per cent.
How does it compare to when former PM Jacinda Ardern and Finance Minister Grant Robertson governed? Those six years went from 2018 until 2023. They ran a surplus in 2018 of 1.9 per cent, surplus in 2019 of 2.4 per cent, and once the pandemic hit, deficits of -7.3 per cent in 2020, -1.3 per cent in 2021, -2.7 per cent in 2022 and -2.4 per cent in 2023. The average is -1.6 per cent. So National, ACT and NZ First are on course to more than double the size of fiscal deficits that were run during the Ardern-Robertson years.
What’s more, the year when the deficit really blew out, being 2020, was due entirely to the wage subsidy scheme expansion. National lobbied hard, together with Business NZ and NZ Initiative, where Finance Minister Willis was a director, to make it of unlimited size, so the largest firms in NZ would be fully covered. Labour relented, probably concerned in election year 2020 that it would help the Nats take the business vote. Before the wage subsidy cap was lifted, the maximum any one firm could take was $250,000. After the cap came off, firms like Fletcher Building scooped over $50 million each.
What’s the moral of the story? That National and Labour are essentially the same party, just run by different actors, sales folks and marketing directors who are pretending their two products are different, because they use different branding and colors. They’re like Coke and Pepsi Cola.
We have a borrow and spend finance minister pretending she’s ‘prudent’. But she ain’t cutting corporate welfare; she ain’t cutting movie subsidies; she ain’t replacing welfare dependence on the state with helping Kiwis build up their own personal savings to become more independent, like the Aussies and Singaporeans have done; she ain’t cutting the billions spent each year on university grants and subsidies paid to children from the wealthiest families in NZ. No, she’s just trimming some public servants in Wellington and writing A-grade English speeches about how it all proves she is ‘delivering’.
Willis is good at doing that – she did English at university and was in debating clubs. But hers are not profound changes. They’re profoundly boring. Same old. More Bill English. More John Key. Both her former bosses. Am sure she gets on well with former Bell Gully chair and (for the past 10 years and for the next 10 years, probably a lot more) NZ Initiative chair Roger Partridge (Willis’ father having been a partner at Bell Gully as well).
Yes, keep it cosy in NZ, where everyone knows everyone. Same old. Same old.
Source:
https://www.treasury.govt.nz/sites/default/files/2024-12/hyefu24.pdf
This article was originally published by Down to Earth Kiwi.
