Finance Minister back to his old ebullient self — but what’s happened to NZ’s economy?

Finance Minister Grant Robertson confirmed in Parliament this week he is  back to his old ebullient self and exuded good cheer when questioned on the state of the NZ economy, though he  did note, almost as an afterthought, forecasts for the global economy are being revised downward, and this will affect NZ’s prospects.

 How come? You might ask.

He cites ANZ’s economists as saying that NZ’s “extraordinarily strong labour market means households are, on average, starting from a good place when it comes to income growth and job security”. They are forecasting a steady decline in inflation, from a peak in the June quarter and with positive real wage growth improving from here.

This, he  says, will help New Zealanders with cost of living pressures.

But what about  those workforce  pressures that may be evident?

Well, more good news…The government is continuing to invest heavily in skills and training, with over 215,000 New Zealanders benefiting from the Ardern Government’s move to make apprenticeships and targeted trade training free.

Robertson goes on:  “The immigration reset is attracting overseas workers to get the skills and expertise businesses need. More than 35,000 working holiday visas have been approved to support our tourism and hospitality industries as they approach a bumper summer season, and more than 78,000 job checks are being completed, ready for work visas to be granted”.

A Labour backbencher wants to know what else is going well and Robertson  points to the release of retail card spending data, which remained resilient in October. “Stats NZ reported that seasonally adjusted retail card spending rose 1% in October, compared with the previous month.

“Spending on durables, such as furniture and whiteware, rebounded this month. Stripping out fuel costs, core spending rose 0.9%. ASB’s economists said that this spending remains solid, supported by more people in work and decent income growth.”

The mood  became less cheerful when  Opposition deputy leader Nicola Willis  wanted to know whether he stood by  his statement about the COVID-19 Response and Recovery Fund that “The Fund is not there to be used for any old project in the never-never. It is to provide support and stimulus to recover and rebuild from COVID-19”.

And  if he did stand by it, did he support the draw-down and redirection of $72.3m to help cover unfunded Department of Internal Affairs Three Waters work?

Here is his answer,  delivered in a slightly  tetchy tone, as if  Willis  should  know what had been done…

(From Hansard):

Hon GRANT ROBERTSON (Minister of Finance): In answer to the first question, which is with regards to a statement I made in July 2020, yes. To the second part of the question, the member is incorrect in her description of the funding. In July 2020, a tagged contingency of $710 million was established for three waters infrastructure and investment and a service delivery reform programme within the COVID response and recovery fund—this included provision for policy work on the programme. In April 2022, when that 2020 tagged contingency was coming to an end, $72 million was allocated to programme costs. I would note, at the same time, $12.4 million was returned to the centre.

Nicola Willis: Does the Minister recall a Cabinet paper seeking agreement to reallocate $72 million of the unallocated portion of three waters infrastructure investment programme for policy advice, and can he advise the House how spending $21 million of taxpayers’ money on three waters policy advice and communications activity helps the New Zealand economy recover from COVID-19?

Hon GRANT ROBERTSON: As we’ve discussed several times in this House, the member knows that the COVID response and recovery fund was designed to make sure that New Zealand could respond to COVID and recover from COVID. Part of that is making sure that we stimulate economic development in the regions. That includes, I might say, through the three waters programme: 291 kilometres of drinking-water pipes, 159 kilometres of waste-water pipes, and 128 upgrades to waste-water treatment plants all over New Zealand. The three waters programme, overall, will contribute to a significant number of jobs being created in New Zealand—something I know the National Party has difficulty with.

Nicola Willis: How does spending $14.6 million of taxpayer money on supporting iwi Māori to participate “in the three waters service delivery system” help the New Zealand economy recover from COVID-19?

Hon GRANT ROBERTSON: As I’ve just said in my previous answer, the three waters reform programme is part of economic development right across New Zealand. I appreciate that the National Party doesn’t want iwi and Māori to participate in the New Zealand economy, but on this side of the House we think that’s a good idea.

Nicola Willis: Why did he take $3.6 million from the COVID fund and spend it on the Future of Local Government Review, and is this what he thinks New Zealanders expected would most help the recovery of the economy from COVID-19?

Hon GRANT ROBERTSON: What I think most New Zealanders expected would happen in terms of the recovery from COVID was that the Government would spend around $26 billion supporting employers to be able to keep their staff on, around $13 billion supporting small businesses with low-cost loans, around $10 billion for the health sector to be able to respond to COVID, around $5 billion for business and science and innovation support, around $4.7 billion to support people in housing, around $2.85 billion to support the education sector, around $1.85 billion to support the transport sector to keep going. The vast bulk of the COVID-19 fund was spent directly on things related to recovery; some was spent on response. The member has many colleagues who asked us to spend a lot more money, in COVID, on other things.

Nicola Willis: Does he think it’s prudent for the Government to be spending $2.1 million on a swanky Freemans Bay office for the hundreds of consultants and staff hired to work on three waters reforms; and could he tell the House whether this will also help with recovery from COVID-19?

Hon GRANT ROBERTSON: I know that the National Party think that if a difficult problem comes along, the answer is to kick the can down the road: not deal with the massive rate increases that New Zealanders will have if we don’t solve three waters; not worry whether people have good-quality drinking water; not worry whether our waste systems work. It’s all in the power of the National Party to say, “We’re going to kick that problem down the road.” We’re facing up to it; we’re making sure those reforms happen so New Zealanders don’t have to pay so much for their rates, for their water. National might not care about that; we do.

Nicola Willis: Does he recall stating, in relation to the COVID fund, that, “We are sticking to our word on this. We are investing money where it is needed to respond to COVID-19.”; and does he recall whether, when he said those words, he was anticipating dipping in to the COVID fund so he could avoid public scrutiny for throwing yet more taxpayer money at his unpopular three waters reforms?

Hon GRANT ROBERTSON: I stand by the record of this Government of getting New Zealand through COVID, of saving lives and saving livelihoods. The fact that we spent $26 billion supporting New Zealand businesses has helped New Zealand have an unemployment rate of 3.3 percent. The fact that we spent that money supporting small businesses means that they didn’t go out of business. The member might not like it, but the Government’s record on getting New Zealand through COVID is an excellent one that all New Zealanders might be proud of.

Yes, but  Point of Order  thinks not all New Zealanders will take the same pride in the cost-of-living crisis and the other economic  pressures being experienced by NZ  households now  being  blamed on the Ardern government.

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