Government ministers are exulting over how the NZ economy is performing— and their own work in making it stronger.
David Clark, standing in for Grant Robertson in Parliament on Tuesday, rejoiced at how solid the “underlying fundamentals of the NZ economy are”. He said the government accounts for the June year showed how the coalition had achieved “strong financial results, while also making significant investments in well-being and infrastructure”.
Robertson, singing from the same songbook, celebrated NZ’s economic strength and resilience being recognised in a major update on the state of the global economy.
The IMF’s latest World Economic Outlook shows NZ’s growth forecasts have held steady at 2.5% in 2019, rising to 2.7% next year, against the 1.7% for the rest of the so-called “Advanced Economies”.
Robertson says NZ is not immune to the global situation—but NZ’s surplus and low debt present “further opportunities to strengthen the economy”.
Ministerial hubris about the state of the economy doesn’t match up with the latest political polls which put Labour on a downward trend.
So is this a case ( again) of NZ voters being unable to recognise the skill of those steering the economy?
Or is rising disenchantment with the coalition got more to do with its failure to deliver on its “transformation” promises?.
The dissonance may be due to the unpleasant truth that child poverty, instead of falling, is actually rising; the queues of homeless, rather than shrinking, are actually growing, and the goal of 100,000 affordable homes is nothing more than a ministerial mirage.
Economist Susan St John, spokesperson for the Child Poverty Action Group, put it more starkly when she said on TV3:
“We have a crisis in NZ, and we’re not identifying that, it has to be addressed, and that is the crisis of poverty….We’ve got a situation where families that are too poor to feed their children. We’ve got them queueing at food banks. We’ve got Christmas coming up, pressure on the NGO sector telling us that things are overwhelming in the demand that they’re seeing. This is a crisis”.
St John contends by spending the surplus now the government will be addressing real problems.
“If you don’t, you’re going to have future social costs. So it’s false economy not to do it now. There’s no justification for letting people who do not have enough money be in that situation for year after year, until some point in the future we decide to deal with it. It’s a problem now, and it’s a problem now for the children”.
She points out since people do not have enough money, they’re having to go and argue for supplementary assistance. That is stigmatising, difficult, temporary and not the answer.
“So about one third of beneficiaries are needing these top-ups. That shows the system isn’t working. And then there’s the other group that are ending up at food banks or going into debt. So, there’s a $1.7bn debt to WINZ which has arisen from WINZ having to fund these extra supplementary payments”.
Appearing on the same programme alongside St John, former Finance Minister Sir Roger Douglas and ACT founder conceded there is a problem.
“On that I agree with Susan. But the problem is we need to solve it. And just throwing money at it doesn’t necessarily solve the problem.
“The central feature about disadvantage is, in fact, not just about money, it’s almost the total lack of choice. And the disadvantaged, in my view at least, need the kind of help that puts people back on their feet, able to make a contribution and make gains for themselves by what they do. And that is the package.
“We’ve thrown money at it. John Key claimed to have the biggest increase in income for the disadvantaged; the Labour Party came in, they cancelled the tax cuts, gave it to the disadvantaged, and the disadvantaged are not any better off. Until we get to a situation, we move away from political choice, which we had, where the politicians make all the decisions, to personal choice. We’ve got to empower this group. Their desires, what they want, is no different from the rest of us”.
Sir Roger says the problem has to be solved on a permanent basis.
“Look, there is inequality in this country. No one can deny that. More than 80% of households have less than $100,000 in investment capital, and how are they going to survive into the future? We need a policy that solves that.
“The problem is, we haven’t got much time. I’d take the $4bn of cash, there’s about $14 or $15bn which I can identify of wasteful or unnecessary expenditure, add that together, transfer the health float into that, you’ve got about $40bn, and empower people with savings accounts, and let them spend their own money. And I believe also there needs to be a tax cut, a substantial tax cut, which you bias to those on low incomes”.
On taxation, Sir Roger argues middle NZ have been hurt, particularly families.
“I mean, if I’m on $50,000 and I get a pay-rise to $60,000, there are circumstances where of that $10,000 pay-rise, $8500 is going to go to the government. That’s nonsense, 30c in tax, 25c reduction in Working For Families, 5% GST, 5% other taxes, and maybe 20c off your housing if you actually had that. And that’s the next big problem for NZ, and I don’t see either party addressing it.”
Are ministers listening to people like St John, or – for that matter – Sir Roger?
Point of Order thinks not. And, sadly, even if they were, they wouldn’t do anything.