Yep, Neoliberalism hasn’t worked and now politicians are pushing further and further towards laissez-faire libertarian ideology, which is exemplified by free market devotees like David Seymour and Brooke Van Velden. Actually, I would call them messianic free market devotees. Luxon as usual won’t take a position and is having a bet both ways while Willis is trying to play all the old neoliberalism hits from the late 1980s, 1990s, and early 2000s. She’s even keen to try the old favourite late night party trick, privatisation, bless. But trying to copy John Key or Bill English won’t save her now, plus remember, they’ve already flogged off the remaining good silver.
Good on the greens for pushing the envelope and brilliant commentary and analysis as always Susan and you’re dead right, but tinkering at the margins won’t be enough now will it?
Why? Because under-investment by successive governments (red and blue) has been allowed to metastasise through every part of the economy. Its debilitating effects can be seen and felt across society. Health, poverty, productivity, inequality, education, infrastructure, ferries, environment, and housing have all been underfunded. Of course, there is much more that could be included here too. Under-investment is endemic, ubiquitous, embedded in strategy. The strength, faith, and belief New Zealanders have in NZ’s version of neoliberalism and the NZ government’s promise (and ability) to get the country ‘back-on-track’ can be seen in the purchase of one flights to Australia. 200 people every day depart permanently. One every seven minutes.
The NZ economy is dead in the water and just staying afloat. Housing is sputtering, manufacturing and construction are soft. Retail spending is anaemic. Only price taking commodities are fuelling the economy and they’re cyclic. And then there’s the geopolitical situation. Tinkering, yeah-nah. New Zealand politicians and its people will need to push the reset button before it gets really ugly.
Does it need to be this way? Of course not, the government is choosing a course of action which ensures things will only deteriorate further. It’s a choice. They CAN make a different one, but WILL they? I guess we will see.
The ruling rich don’t mind a little state debt. After all, they own it. Ever since the Bank of England began selling them in the late seventeenth century, government bonds have been an important part of their collective portfolio. And because they find ways to avoid paying tax, the burden of servicing government debt inevitably falls on working people. Another way of transferring wealth from the working class into their pockets.
You discuss valid points about the figures for Government expenditure as a percentage of GDP and then you quote the wrong figures. The 30% target excludes transfer payments. The ratio of government spending to GDP including transfer payments last year was 43.6% (i.e. $180b). Excluding transfers this is 33.4% (i.e. $138b) and the target is to drop this to 30%. I have no idea where you got the 20% figure from. Have a look at the 2024 Financial statements: https://www.treasury.govt.nz/publications/year-end/financial-statements-2024
Thanks Quintin Are you using total government expenses not core?
"Core Crown expenses are expected to increase in dollar terms across the forecast period. This largely reflects the indexation, and growth in recipients, of benefits and NZ Superannuation, together with higher finance costs and funding set aside for future operating allowances. NZ Superannuation expenses, in particular, are expected to grow by around 25 per cent over the forecast period, from $23.2 billion in the current year, to $29.0 billion in 2028/29. Growth in expenses is much more subdued than in recent years, however. As a percentage of GDP, core Crown expenses fall over the forecast period, reaching 30.9 per cent of GDP by 2028/29. Tight future allowances account for a large part of this decline.: Fiscal Strategy Report 025
The 20% is a ball park estimate of (core govt expenditure less transfers plus capital) as a % GDP ie the real resources used by govt..
Ardern introduced a 'wellbeing budget' to augment the cold calculations of GDP and the like, didn't she? Has NZ continued this practice or thinking in any way?
Yep, Neoliberalism hasn’t worked and now politicians are pushing further and further towards laissez-faire libertarian ideology, which is exemplified by free market devotees like David Seymour and Brooke Van Velden. Actually, I would call them messianic free market devotees. Luxon as usual won’t take a position and is having a bet both ways while Willis is trying to play all the old neoliberalism hits from the late 1980s, 1990s, and early 2000s. She’s even keen to try the old favourite late night party trick, privatisation, bless. But trying to copy John Key or Bill English won’t save her now, plus remember, they’ve already flogged off the remaining good silver.
Good on the greens for pushing the envelope and brilliant commentary and analysis as always Susan and you’re dead right, but tinkering at the margins won’t be enough now will it?
Why? Because under-investment by successive governments (red and blue) has been allowed to metastasise through every part of the economy. Its debilitating effects can be seen and felt across society. Health, poverty, productivity, inequality, education, infrastructure, ferries, environment, and housing have all been underfunded. Of course, there is much more that could be included here too. Under-investment is endemic, ubiquitous, embedded in strategy. The strength, faith, and belief New Zealanders have in NZ’s version of neoliberalism and the NZ government’s promise (and ability) to get the country ‘back-on-track’ can be seen in the purchase of one flights to Australia. 200 people every day depart permanently. One every seven minutes.
The NZ economy is dead in the water and just staying afloat. Housing is sputtering, manufacturing and construction are soft. Retail spending is anaemic. Only price taking commodities are fuelling the economy and they’re cyclic. And then there’s the geopolitical situation. Tinkering, yeah-nah. New Zealand politicians and its people will need to push the reset button before it gets really ugly.
Does it need to be this way? Of course not, the government is choosing a course of action which ensures things will only deteriorate further. It’s a choice. They CAN make a different one, but WILL they? I guess we will see.
Very informative Susan thank you!
Good article Susan
Patrick Medlicott
The ruling rich don’t mind a little state debt. After all, they own it. Ever since the Bank of England began selling them in the late seventeenth century, government bonds have been an important part of their collective portfolio. And because they find ways to avoid paying tax, the burden of servicing government debt inevitably falls on working people. Another way of transferring wealth from the working class into their pockets.
yes we need to remember who holds the debt as an asset
Well explained thank you!
You discuss valid points about the figures for Government expenditure as a percentage of GDP and then you quote the wrong figures. The 30% target excludes transfer payments. The ratio of government spending to GDP including transfer payments last year was 43.6% (i.e. $180b). Excluding transfers this is 33.4% (i.e. $138b) and the target is to drop this to 30%. I have no idea where you got the 20% figure from. Have a look at the 2024 Financial statements: https://www.treasury.govt.nz/publications/year-end/financial-statements-2024
Thanks Quintin Are you using total government expenses not core?
"Core Crown expenses are expected to increase in dollar terms across the forecast period. This largely reflects the indexation, and growth in recipients, of benefits and NZ Superannuation, together with higher finance costs and funding set aside for future operating allowances. NZ Superannuation expenses, in particular, are expected to grow by around 25 per cent over the forecast period, from $23.2 billion in the current year, to $29.0 billion in 2028/29. Growth in expenses is much more subdued than in recent years, however. As a percentage of GDP, core Crown expenses fall over the forecast period, reaching 30.9 per cent of GDP by 2028/29. Tight future allowances account for a large part of this decline.: Fiscal Strategy Report 025
The 20% is a ball park estimate of (core govt expenditure less transfers plus capital) as a % GDP ie the real resources used by govt..
Thanks for the reply. This is very helpful.
Good analysis.
Ardern introduced a 'wellbeing budget' to augment the cold calculations of GDP and the like, didn't she? Has NZ continued this practice or thinking in any way?
it seems out of favour with this government