Whoa there, Minister – a majority of Kiwis will be disappointed if govt spending is not curbed in this year’s Budget

Uh, oh – it’s probably too late to influence the government on the case for its spending to be curbed  ahead of the Budget Speech to be delivered on Thursday.  The speech and the raft of documents that will accompany it will be ready for the printer – if not already printed – by now.

But the New Zealand Taxpayers’ Union has ascertained that most New Zealanders oppose increasing Government spending.

A new scientific poll of 1,000 respondents was conducted by Curia Market Research and asked,

Given the current levels of inflation, do you think the Government should continue to increase overall spending in this year’s budget, or keep it about the same?

Blair and Boris – who would have thought it?

At last, a glimpse of bipartisan analysis in the chaos engulfing Boris Johnson’s premiership.

Say what you like about Tony Blair, but he is a serious politician.  What he says is worth taking seriously.  

It is also not great for Boris.  And worse for everyone else.

Transitory inflation retires but does not recede

His reappointment as conductor of the world’s monetary orchestra safely in the bag, US Federal Reserve chairman Jay Powell let us know that the current bout of “transitory” inflation was a little more than that.

“It is probably a good time to retire that word”, he told the world.

As euphemisms go, it may not acquire the notoriety of the Nixon White House’s description of a previous statement as “inoperative”.

Boris’s budget tests limits to destruction

Gosh, politics is a rum game.  Britain’s PM, Boris Johnson, took some big risks and triumphantly shattered Britain’s political status quo during the Brexit turmoil.  But last week’s budget statement set the country’s economic parameters in anything but a Thatcherite way.

The difficulty is less in the government’s post-Covid financial tidying up, and more in its approach to long-term problems.  And these look like they might become more urgent – and sooner.

So how does the housing boom end?

It’s an old adage that a speculative market collapses not when prices get crazy but when the last person who insists prices are crazy gives up in despair.  

Worth bearing in mind when London’s Financial Times tells us that the pandemic has fuelled “the broadest global house price boom in two decades”, even bigger than the one which preceded and helped trigger the 2008 global financial crisis, and which is understandably reviving concerns about financial stability.

Climate change just got cheaper – or maybe not …

Britain’s fiscal watchdog – the Office of Budget Responsibility (OBR) – has some good news.  It thinks the cost for the UK of getting to zero carbon could be much less than anticipated:  

“While unmitigated climate change would spell disaster, the net fiscal costs of moving to net zero emissions by 2050 could be comparatively modest.”

Under its ‘early action scenario’ government net debt would rise by a mere 20% of GDP in the years to 2050 from the current 105%.  That almost seems encouraging when compared with the near-30% of GDP increase responding to the Covid pandemic , and the roughly 50% surge which followed the global financial crisis.

Here’s hoping Transport Minister applies Transmission Gully lessons (and delays) to Light Rail project in Auckland

The Transmission Gully interim review has found serious flaws at the planning stage of the 27km highway, “undermining” the successful completion of the four-lane motorway north of Wellington, according to Infrastructure Minister Grant Robertson and Transport Minister Michael Wood.

Grant Robertson said the review found the public-private partnership (PPP) established under the last National government lacked the proper rigour and consideration.

The review was focused on how the project was awarded for the agreed price, whether the price was realistic, and whether the risks then identified were appropriately considered.

When  announcing  the  review  in  August last  year,  the  government said Transmission Gully would open by September 2021 but will cost another $208m to build, taking  the  cost  to $1.25bn.  Originally the  project’s  cost  was put  at $850m,   but Covid lockdowns  set it spiralling upwards.

At  that point in 2020 the government was  said  to have   “slammed” the delays and increased costs.

But hey – remember  that  Phil  Twyford  had   already  had  three  years as  Transport  Minister  to  expedite  the  project .  Yet all he  did was  order  a  review.

Covid: everybody loses – at first

As we emerge from the Covid panic phase, you might think that the situation bears an increasing resemblance to the slow motion crises of the 1970s and 80s.

Recall the political economy big picture. The old system had had a good run.  Patterns were familiar and tools had developed to manage political pressures – a nudge here, a subsidy there, a few more jobs in state forests or on the railways, an occasional long-term policy artfully planted and left to mature.

But as growth slowed, economic pressures built and became unmanageable in the old framework.  Political confusion ensued: the slogans stopped working because the voters’ demands couldn’t be reconciled.

This suggests we need to figure out what people expect of government as a result of the Covid crisis – and how that might be orchestrated and channelled through the voting system.

Creativity blossoms in the shadow of the virus (with seed money from taxpayers who may not be aware of their generosity)

We have acknowledged on previous occasions that the Point of Order Trough Monitor was not calibrated to pick up every example of dubiously spent public money.

But when our monitor misses examples of eyebrow-raising grants, investments, loans and what-have-you, other monitors and watchdogs are on the job.  The Taxpayers’ Union for example.

The other day it drew attention to Creative NZ’s track record for funding some pretty odd art projects.

The Taxpayers’ Union has focused on the value of the Arts Continuity Grant, which it describes as a COVID-19 response fund which has so far paid out $16 million in grants to a variety of questionable short-term arts projects.

Many of the descriptions of the projects funded under this programme are described as “frankly, incomprehensible” and:

“It’s hard to see how bureaucrats in Creative NZ can make an objective judgment on which projects are worthy of funding, and which aren’t.

“The resulting handouts speak for themselves. Creative NZ is fighting COVID-19 by spending taxpayer money on plays about menstrual cycles, Māori ‘healing theatre’, and ‘Indigenised Hypno-soundscapes’. That’s madness and it reflects terribly on the Minister of Arts Culture and Heritage – who happens to be Jacinda Ardern.

“These grants are massively unfair to taxpayers, with the benefits skewed toward politically-connected Wellington weirdos. Handouts for fringe interest groups mean less money is available for tax relief that would reward productive work.”

Point of Order visited the Creative NZ website and learned that this continuity fund

“ … is offered to support a short-term arts project, or the stage of a project, that can be delivered within a changed and evolving environment as a result of COVID-19. Projects can include the creation and/or presentation of new work. Existing projects submitted to our suspended funds can be reframed and resubmitted. Applications will be accepted on a rolling basis with weekly decision-making.”

Sums up to $50,000 have been on offer.

Covid news not bad; political and economic news not good

This far into the epidemic it’s interesting what we know and extraordinary what we don’t. Which is more significant: the knowledge or the ignorance?

So what is happening:

• Daily cases in many European countries are rising sharply but recorded death and excess mortality rates are not – so far.
• In the US, the daily case and death rates have been falling for two months, from a late summer bump.
• And in Australia and New Zealand, we are seeing just how hard it is to eliminate the disease.

The data has lots of possible interpretations, which certainly helps if you’ve got a particular case to support.  But one piece of good news is that the fear factor is coming in at the lower end of expectations.