Delivering broken promises

December 12, 2019

When the Prime Minister declared this the year of delivery, did she mean delivering broken promises?

Today’s half year economic and fiscal update is a damning indictment on Prime Minister Jacinda Ardern’s economic management as she puts New Zealand back in the red, National’s Finance Spokesperson Paul Goldsmith says.

“This Government inherited massive surpluses as far as the eye could see, and has blown them in two years.

The previous Labour government left a decade of deficits and National managed to get back into surplus in spite of the Canterbury earthquakes and GFC.

It’s taken just two years for Labour to undo that good work.

“Treasury has slashed its economic growth forecasts which means fewer opportunities for Kiwis to get ahead, less money to go around and more debt. The Government has turned the strong growth and huge surpluses it inherited into deficits, weak growth and more debt with nothing to show for it.

“The Government is pulling the economy down with one hand through added costs, uncertainty and incompetence, and trying to pull it up with other through more debt. It’s confused, incoherent and chaotic.

The Government has also broken its promise to New Zealanders to reduce debt below 20 per cent of GDP by 2022. This promise was only made because Labour knew New Zealanders didn’t trust them to spend wisely.

“That lack of trust has been fully justified.

“The Government would not need to break their debt promise by almost $5 billion if they had not wasted billions of taxpayer money on failed experimental policies like KiwiBuild, Fees Free or the Provincial Growth Fund.

Borrowing when interest rates are low to fund infrastructure investment isn’t necessarily feckless, but the government wouldn’t need to borrow if it hadn’t wasted money on fripperies.

“After spending its first two years deliberately stopping planned transport infrastructure, it’s a relief the Government has finally woken up to the need to get on with things. We, however, have little confidence it will deliver anything next year either. . . 

The announcement begs some questions.

It is borrowing $19 billion of which $12 billion is earmarked for infrastructure.

What is the other $7 billion to be spent on?

And why wait?

. . But details of these projects were not announced today.

Rather, Robertson said the Government would be announcing the specific projects in early to mid-2020. . . 

Of the new spending announced today, $8 billion is for specific “shovel ready” projects, with a further $4 billion on hand for future spending. . . 

If the projects are shovel ready why not start shoveling now? Do we have enough shovelers or will the work, as Politik says, need more migrants?

Like so many times before, what the government announced is a plan to plan, not actually a plan of action and the money it’s planning to plan to spend would be borrowed because it’s squandered the surpluses that ought to have been available for this type of investment.


Business blues deepen

August 30, 2019

Business confidence has fallen to the lowest point since the global financial crisis a decade ago:

The further collapse in businesses’ confidence and in expectations of their own activity is an indictment on the Ardern Government’s economic management, National’s Finance spokesperson Paul Goldsmith says.

“The most recent ANZ Business Outlook survey shows a net negative 52 per cent of businesses are pessimistic about the economy under the bad economic management of the current Government.

“To make it worse, businesses’ expectations of their own activity have fallen to a net negative for the first time since 2009 when the New Zealand economy was in the midst of the Global Financial Crisis. . . 

“When businesses lack confidence in the economy, as they do under the current Government, they are less likely to expand, invest in new staff or lift wages.

Reluctance to expand, invest or lift wages is even more likely when businesses’ expectations of their own activity are so gloomy.

“There has been a sharp decline in the New Zealand economy under this Government. Economic growth has decreased from around 4 per cent down to 2.5 per cent, per-person growth is amongst the worst in the OECD and business investment has fallen from 5 per cent a year under National to just 0.6 per cent under Labour.

“New Zealand should be doing well. The prices for goods we export are near historical highs meaning any effects from global uncertainty and trade tensions haven’t affected our exporters as of yet.

In spite of that farmers are in a similar frame of mind to that during the ag-sag of the 1980s. Uncertainty and  lack of trust in the government are compounded by fear of what it is going through inflict on the farming sector.

The ANZ survey shows the business blues have deepened in towns and cities too.

“Sadly the current Government’s bad economic management have hurt our economy.

“The Government have added costs to businesses and families with higher taxes and more regulations, they’ve created massive uncertainty and they’ve demonstrated incompetence, most famously with KiwiBuild and their woeful infrastructure policies.

“National will restore business confidence and revive our economy so that we can lift our aspirations, both in what we can earn and in what social challenges we can overcome.”

A thriving economy isn’t just about businesses doing well, it’s about job security, export income and the ability to invest in solutions for social problems.

The government has gone quiet on wellbeing with good reason. Businesses without the confidence to expand, invest and lift wages are a symptom of economic illness and that makes a very shaky foundation for wellbeing.


Why so glum?

August 8, 2019

The quarterly unemployment rate is down to 3.9%; and the official cash rate is at an historic low of 1%.

Yesterday’s GlobalDairyTrade was down 2.6%, the fifth drop in the last six auctions but no-one’s suggesting the milk payout will be lower than $6.

Horticulture and wine are getting healthy returns, arable incomes are reasonable, wool is dismal but the outlook for sheep meat and beef is positive.

But Business confidence is down to -44.3% :

. . .That was the worst reading since August last year, when the index was at -50.3. Employment intentions slumped (-5.5 vs 0) as firms sought to cut jobs, capacity utilization weakened to its lowest since 2009 (0.4 vs 5.3), and activity outlook (5.0 vs 8.0) and export expectations (1.4 vs 5.3) deteriorated. In addition, profit expectations fell further(-16.3 vs -12.5), while investment intentions turned to negative (-0.3 vs 2.5). . . 

And consumer confidence is also gloomy:

The Westpac-McDermott Miller consumer confidence index in New Zealand fell to 103.5 in the second quarter of 2019 from 103.5 in the previous period. Households became increasingly worried about conditions in the global economy over the next five years (-3.5 points to 11.9); and the number of households who think now is a good time to purchase a major item has fallen to a two-year low (-5.5 points to 17.9).  . . 

Why are we so glum?

Today’s historic cut to the Official Cash Rate down to just one per cent sounds a dramatic warning that the New Zealand economy is slowing and the Government needs to get serious about growth, National’s Finance Spokesperson Paul Goldsmith says.

“The Reserve Bank’s cut came with the message, ‘Indicators of growth remained weak or weakened further over the past few months’.

“The only time in the history of the OCR there has been a cut of this magnitude have been after the 9/11 terrorist attack, during the Global Financial Crisis, and after the Christchurch earthquake.

“Of greatest concern is the absence of any clear growth plan from this Government.

“Budget 2019 was devoted almost exclusively to spreading national wealth, with very few policies to grow the economy. The most expensive Budget commitment to transform the economy was a $1 billion subsidy for rail. There was little else.

“Instead of ramping up infrastructure investment, the Government has stopped or postponed a dozen roading projects which were ready to get underway, and replaced them with projects that aren’t ready to go, and won’t be for a lot time yet’.

“We need to move beyond policies that add costs to the business and drive down business confidence.

“National would revive the economy by having a plan for growth which would see confidence bounce back and the economy gain the strength it’s lost under this Government.”

There is no doubt what the government is doing and not doing are a large part of the problem.

In spite of at least reasonable returns for almost all primary products farmers feel under-siege with very real concerns about the costs and restrictions the government will impose on them.

Other businesses have similar worries, not helped by the latest confidence-sapping message sent by the Prime Minister’s ordering Fletchers to not build anything until the Ihumātao dispute is settled.

Then there’s the on-going argument over the letter Associate Transport Minister Julie Anne Genter is refusing to release and the questions that raises over the part she played in delaying Wellington transport plans.

Concerns over this aren’t helped by claims from Wellington City Councilors that the Green Party confidence and supply agreement would have been put in jeopardy if a watered down Let’s Get Wellington Moving wasn’t accepted.

All of this points to government instability and is compounded by Winston Peters’ latest game playing over requiring a referendum on changes to abortion law.

When interest rates were already so low, it is unlikely the larger than expected drop in the OCR will have much impact on the productive economy when there are so many reasons pointing to the need for caution.

And while low interest rates help borrowers they punish savers.

All in all there is little to give anyone confidence anything is going to get better soon and plenty of reasons to doubt the government has the plans and policies to help.

And now the Reserve Bank has dropped the OCR, it raises the question of what happens when, as is likely, economic conditions get worse.


Labour pains National delivers

July 31, 2019

Is this how the National Party and its supporters are seen from the outside?

This is not the kind of stuff to you would expect to get the National Party faithful standing and applauding. It’s not a law and order policy or tax cut or a primary sector subsidy – it’s new health spending. This is the kind of thing Labour does.

Is it any wonder National is perceived as having a good head but too often not credited for having a heart if this is how a political commentator thinks?

Compassionate and effective social policy is what any good government does and it’s what motivates most members of any political party – making the country better for people.

National usually gets credit for economic management but, as the above comment show the reason that matters and what it is able to do and does do with the money it carefully manages, is lost.

A growing economy, and the policies that contribute to that are important not as an end but as the means to pay for the social policies and infrastructure that makes life better for people.

This government would have us believe it’s the first government to care about wellbeing.

Every New Zealand government in my memory has cared about wellbeing and done its best to improve it, albeit with varying success.

Making life better for people was the aim of Bill English’s social investment initiatives. They aimed to not only make life better for the people who were helped into independence, but better for us all by reducing the long term financial and social costs of benefit dependence.

Under this policy the number of people on benefits, and the long term cost of that, were dropping. Under this government both are increasing.

The big difference between this government and the last one, is that National understands the difference between the quality of spending and quantity and that sustainable wellbeing depends on a foundation of a strong and growing economy.

By contrast, the current government thinks more spending is better spending regardless of the results and the cost to those who pay.

National governs with head and heart, the Labour-led one puts feeling ahead of thinking.

That’s why National is able to deliver but in the long term Labour only pains.

National Finance Spokesman Paul Goldsmith explained the link between the economy and services in his speech to the party’s annual conference.

You will have noticed a strong economic theme to the start of the conference.

It’s true, we in the National Party do bang on a lot about the economy.

It makes me think of my old Nana, who always said, ‘money isn’t everything’.

Of course it isn’t.

As one of the richest men in the world, Warren Buffett, put it, ‘it doesn’t matter how much money you’ve got, if you’re not loved by the people you want to love you, life is a disaster’.

It’s similar with countries. Good government is just as much about preserving and enhancing what is special about this country.

That, to me, is the quality of our environment, our social cohesion, our relatively high trust and low corruption traditions, our commitment to the rule of law, freedom and tolerance of different views, our sense of security.

All these things are incredibly important and should never be taken for granted.

So the economy is not everything, but it is important.

Not because we revere the great machine for itself – it’s simply a means to an end.

The economy is about people. It’s about you, me, our families and our neighbourhoods.

To me, the point of a strong economy is to enable New Zealanders to do the most basic things in life well.

A strong economy improves our chances of finding satisfying and well-paying work so that we can look after ourselves and our families – the most fundamental task each of us have.

A society based on the assumption that its average citizen can’t or shouldn’t be expected to look after themselves and their families is doomed.   

That’s not what we believe.

Work itself, in its countless varieties, brings the opportunity to make a contribution to our world and the people in it, whether we’re providing someone with a new hip, a new app, or a cup of coffee with a smile.

And third, if we do well, we can afford to have some fun in our leisure time, and maybe if we have some energy left do something in the neighbourhood; on the barbecue for the school committee, or whatever.

That, to me, is the good life to which we aspire. 

As well as generating work and opportunities, good economic management and a strong economy enables the country to have better public services that improve our lives – a quality education, access to world-class healthcare when we need it, decent transport infrastructure so we can get home on time, the reassurance of superannuation when we’re old.

There are times in everyone’s life when we need help. At certain times of their lives some people can’t look after themselves and their families; the stronger our economy is, the more we can help.

Now, good economic management is not just about spending money, it’s about generating it. . . 

What’s the goal? To deliver a strong economy and world-class public services that enable Kiwis to look after themselves and their families, to find satisfying work, and to lead full lives.


A tale of two caucuses

June 26, 2019

National leader Simon Bridges announced a minor reshuffle of portfolios yesterday:

“Paul Goldsmith will become the spokesperson for Finance and Infrastructure following today’s announcement from Amy Adams that she will leave at the next election.

“Paul is the natural choice for the Finance role. He has done an outstanding job holding the Government to account in the Economic and Regional Development portfolio.

Shane Jones will be very happy with this change, though he shouldn’t relax, the two taking over Paul’s portfolios will be just as effective at holding the Minister to account.

“Regional and Economic Development will now be split across two spokespeople. Todd McClay will look after Economic Development, while Chris Bishop will take over the Regional Development and Transport portfolios.

“Chris has done a brilliant job as spokesperson for Police and deserves to take on more responsibility.

“Jo Hayes has been appointed the spokesperson for Māori Development and Treaty of Waitangi Negotiations following the departure of Nuk Korako. Jo is a passionate advocate for Māori.

“Gerry Brownlee will pick up the Foreign Affairs portfolio, Brett Hudson will take on the Police portfolio and Tim Macindoe will become the Shadow Attorney-General.

“Other changes include Michael Woodhouse as the Associate Finance spokesperson, Maggie Barry taking over the Disability Issues portfolio, Stuart Smith will be the spokesperson for Immigration, Todd Muller will be the spokesperson for Forestry, Nicola Willis will take on the Youth portfolio and our newest MP Paulo Garcia will become the Associate Foreign Affairs spokesperson.

“I’d also like to take this opportunity to thank both Amy Adams and Alastair Scott for their valuable contributions to the National Party and Parliament. Amy was a brilliant Minister across a range of portfolios. The changes she made to domestic violence laws as Justice Minister have made families in New Zealand safer. Amy has excelled as our Finance spokesperson and has been an outstanding member for Selwyn.

“Alastair should be proud of the work he has done to prevent drug driving, and for the way he has represented and advocated for the people of Wairarapa. I’m pleased they will be here for the rest of the term to help us form policies for the 2020 election.

“National is the largest and most effective Opposition this country has ever seen. I’m proud to lead such a talented and hardworking team.” 

There are no surprises there and there will probably be none in tomorrow’s reshuffle of Cabinet but there is a major difference between the two caucuses – there’s plenty of talent in National’s with many MPs capable of becoming Ministers.

By contrast Labour’s is a shallow pool and, as Barry Soper noted:

. . .The reshuffle will be minor because most of those who should be in Cabinet are already there. And the amount of time Ardern’s taken getting around to shuffling the chairs just goes to show how hard leadership is for a person who clearly finds it hard to be hard. . . 

Ardern doesn’t have much to choose from and, if past form is a guide, will be reluctant to demote the poorest performers.


Driving on another planet

June 6, 2019

A New Zealand Transport Association tool shows 87% of road speeds are higher than is safe:

. . . The agency’s online risk assessment tool, Mega Maps, uses a range of factors such as road width and stereotype, shoulder width, roadside hazards and alignment to calculate the safe and appropriate travel speed.

Mega Maps suggests only 5 percent of the open road should have the current 100 kilometre an hour speed limit, and in most cases a speed of 60-80 km/h should apply.

For most urban areas, Mega Maps suggests the safe and appropriate speed would be 30-40 km/h . . 

Road design is one factor in making driving less safe. New Zealand roads could be much better but plans by the previous government to improve some by building four-lane highways were canned by this one.

I do most of my driving on the open road and it’s rare to have a longer trip when I’m not caught behind someone dawdling along at 10, 20 or more kilometres an hour below the legal, and safe for most, speed limit.

There are times when the road is hilly and windy, the light is poor and/or the weather inclement when slower speeds are appropriate but driving at 60 – 80 kph on most roads most of the time, providing the driver isn’t distracted,  tired or under the influence of drugs or alcohol, would be a recipe for frustration.

It would also put a handbrake on the economy:

A wholesale reduction in speed limits could do more harm than good by further isolating regional New Zealand and weakening the economy, National’s Transport spokesperson Paul Goldsmith says.

Media reports today reveal the New Zealand Transport Agency (NZTA) estimates 87 per cent of our roads have speed limits that are too high for the conditions. Its mapping tool suggests many roads with a 100kmh speed limit should be reduced to as low as 60kmh.

“We all want safer roads, and while reducing speed limits across the board might be the easiest thing to do, it is too simplistic and would have huge implications for our way of life,” Mr Goldsmith says.

“Slower roads would impact regional New Zealand severely. Drastic speed limit cuts might mean it would take 45 minutes longer to get to New Plymouth from Hamilton, for example. In terms of isolation, that’s the equivalent of shifting the city another 60 kilometres out to sea.

“There would also be significant economic costs. If it suddenly took 30 per cent longer to move freight the same distance our national productivity would drop substantially, freight costs would rise and our international competitiveness would fall.

“A smaller economy would invest less in healthcare, for example, ultimately costing lives. Houses would be more expensive to build and the price of food would go up. These broader implications need to be considered fully.

“Over the past three years the road toll has risen, and we should absolutely be focused on understanding why. But it’s worth remembering that speed alone is not the cause.

“Other factors include drugged-driving, enforcement of current laws around drink-driving, not wearing seat belts, the quality of our roads, driver distraction and a huge increase in tourism.

“The Government should reverse its policy of not investing in quality new roads, and deal with its blind spot on drugged drivers. It has resolutely ignored the issue for nearly 18 months and it is appalling that the Minister in charge of road safety, Julie Anne Genter, is opposed to roadside drug testing because of her Green Party’s liberal approach to drugs.

“If the Government is truly concerned about saving lives on our roads, then why did the Budget show a cut, in real terms, to road safety policing?”

Most people don’t drive on a whim for the sake of it. We drive to get somewhere we need to go and want to get there in the shortest time we can safely do it.

Then there’s the people who drive for a living, many of whom are those who transport goods.

Slower legal speeds would add to the hours truck drivers would take to get from one place to another and curtail the distance they could travel without going over the time limits imposed on their driving for safety’s sake. It would also raise issues of animal welfare for those transporting stock.

Recommending that only 13% of roads can be safely driven at 100 kph suggests the tool is designed for driving on another planet.


There are three kinds of people in the world . . .

May 24, 2019

There are three kinds of people in the world, those who can count and those who can’t . . .

It’s more than a little concerning that this exchange in parliament on Wednesday shows the Minister of Finance appears to be in the second group.

. . .Hon Paul Goldsmith: To the nearest billion dollars, what is an additional 1 percent GDP growth worth to New Zealand?

Hon GRANT ROBERTSON: I believe it’s about $800 million.

Hon Paul Goldsmith: $800 million?

Hon GRANT ROBERTSON: About that.

Hon Paul Goldsmith: Does he think that the people of New Zealand would expect their Minister of Finance to know that 1 percent of GDP is about $3 billion and that’s the amount of money that we’ve missed out on given the sharp decline in growth in the past year? . . .

Even those who struggle with numbers would recognise that there is a significant difference between $800 million and $3 billion.

We should also be concerned that the Minister has conceded defeat on Budget responsibility rules:

Finance Minister Grant Robertson has today thrown in the towel by scrapping his self-imposed debt target, National’s Finance Spokesperson Amy Adams says.

“Grant Robertson has been backed into a corner by allowing the economy to slow, over promising and making poor spending choices. Now, instead of a fixed target Grant Robertson has lifted the debt limit by 5 per cent. That loosens the purse strings by tens of billions of dollars.

“This is a blunt admission the Government can’t manage the books properly, it is not wriggle-room. This makes the fiscal hole look like a puddle.

“You can almost guarantee that means debt at the upper end of the range of 25 per cent. This is an admission of defeat from a Finance Minister who has repeatedly used these rules to give himself the appearance of being fiscally responsible.

“This decision will mean billions of dollars more debt because the Government can’t manage the books properly and wants to spend up on big wasteful promises in election year.

“This will pay for things like Shane Jones’ slush fund, fees-free tertiary and KiwiBuild – in other words, it’s wasteful spending.

“Debt isn’t free. It will have to be paid for by higher taxes in the future. . . 

The economy is slowing and its poor policies are, at least in part, responsible for that.

Reducing wasteful spending should come before more borrowing.

If the government had concentrated on value for money, measured success by the quality of its spending rather than the quantity and enacted policies which promoted growth it wouldn’t have to even contemplate more debt.


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