Polls bring Labour back to earth while a warning is sounded about the need to brace for next economic crisis

So how  is  the  political landscape looking as the country  inches  slowly  towards   the goal  of  being 90%  vaccinated against Covid-19?

The  government  which  just 12  months   ago  was  blissfully floating beyond electoral threat somewhere  in the  political stratosphere  has  come  back  to  earth with something  of  a thud.

But National,  still  apparently  without  the  capacity  to  strike  the  wavelength  to  reach the  public  as  it  did in its  heyday, has   yet to find  its  old  mojo.  By  comparison, ACT  has been  flexing   a  new kind of   muscularity, without  suggesting  it has  yet  the  ability to  land  a  killer  punch

Meanwhile  a group  of  top  economists  is  warning   that  the  seeds  of  the  next   economic  crisis  have  been  sown. The steps taken by countries, including New Zealand, to counter the economic impact of Covid-19 have masked and in some cases exacerbated the risks.

“The Covid-19 financial support package has kept Kiwis off of the dole queue and saved many businesses from bankruptcy,” report co-author Bryce Wilkinson​ said.

“However, the government should promptly repay those debts in order to be prepared for the next financial shock. Failing to prepare now for the next financial crisis could destroy New Zealanders’ nest eggs and threaten their livelihoods.”

“Free” counselling for teachers – but maybe Hipkins and Robertson would benefit from counselling on where money comes from

We do admire the wellbeing-focused Ardern  government’s readiness to announce “free” services, even as the public debt comes under pressure from policy responses to the latest Covid-19 lockdown.

Education Minister Chris Hipkins today announced a counselling service that – he hooted – is free for teachers and support staff across all early learning services, kōhanga reo, kura, and state and state-integrated schools.

It was among the latest press releases posted on the Beehive website.

Latest from the Beehive

Speech for the NZ Māori Tourism webinar for Māori businesses

This was a speech by Willie Jackson, who started by acknowledging how difficult it is to be a business right now with the Delta variant of COVID-19 in our communities.

Free counselling service for early learning and schooling workforce during COVID-19

Teachers and support staff across all early learning services, kōhanga reo, kura, and state and state-integrated schools can now access free COVID-19 Employee Assistance Programme support, Education Minister Chris Hipkins announced today.

Keynote address to APEC High-level meeting on Health and the Economy

This one’s a speech by Health Minister Andrew Little.

He begins:  Esteemed fellow ministers, delegates and colleagues – Tēnā koutou katoa – it is my pleasure to welcome you all to APEC’s 11th High-Level Meeting on Health and the Economy.

Poroporoaki: Des Ratima, ONZM, JP

Minister for Māori Development Willie Jackson acknowledges the passing of Ngāti Kahungungu leader and kaumatua Des Ratima ONZM JP.

Public service pay will get scant lift from Robertson – but let’s see if the Budget can keep govt’s poll support in the clouds

The  Ardern   government  is  cruising  along with  poll ratings  still far  above those of  its  opponents  and a  leader   enjoying  almost cult  status.

Her  deputy, Grant   Robertson,  wears  a  matching  suit  of  political  armour,  although one-time Labour  Minister (and then ACT  leader) Richard  Prebble contends  he is   the worst  finance minister  since  Rob Muldoon.

Until  now  the  government  has  been borne   along   on  a  cloud  originating  in  the successful  deflection  of  the  Covid  pandemic.  Its  policies  have  escaped   any   deep  scrutiny from  mainstream media,  partly  because of  preoccupation  with  the  pandemic,  and  partly because of  the  teflon  aura surrounding Ardern.

Even   when  there  is a  stumble,   as  happened this  week with her  speech  on NZ-China  relations  and  the  latest  chapter  in the  Mallard story, she  is  within hours  back  on  her  cloud.

Well done, Minister – almost $1bn of spare Covid cash is found and Robertson lands a new job to keep an eye on his colleagues

Yes, Grant Robertson’s pre-Budget speech has now been posted on the Beehive website and we can officially confirm that not all funding allocated in the COVID Response and Recovery Fund has been spent. Our Finance Minister has almost $1 billion of unspent dosh to play with (and the Taxpayers Union is reminding him he is under not obligation to spend it).

He also confirmed he has a new job (but we imagine he won’t be relinquishing any of the others).  He will be leading the establishment of a team which will ride shotgun on the implementation of “critical” initiatives.

This means he will set up a new team to do the PM’s job of ensuring ministers actually do what she wants them do and what they are paid to do, in other words.

As part of the Budget preparation, Robertson told the Wellington Chamber of Commerce, he asked each Minister to look again at COVID spending for which they were responsible to see if it was  still needed or is still a priority, and whether underspends could be reprioritised.

And hey – this exercise has yielded around $926 million worth of savings.

Robertson is comforted about the state of the economy while his colleagues get on with spending borrowed money

The first highlighted item – in a press statement from Finance Minister Grant Robertson after the release of the Pre-election Economic and Fiscal Update – is that the economy is doing better than forecast.

Similarly, Robertson today was taking comfort from better-than-forecast GDP figures which show GDP fell 12.2% in the June quarter from March and plunged the economy into recession.

“This result was better than the Treasury forecast of 16% released yesterday and at the lower end of other commentators’ expectations,” Grant Robertson said.

Next in descending order on his list of highlights from the PREFU yesterday were the expectation unemployment would peak at 7.8%, down from 9.8% forecast in the Budget; year-to-June accounts showed tax revenue, debt and OBEGAL better than forecast; global forecasts have been downgraded because of COVID-19 uncertainties; and “balanced plan to support critical public services, manage debt and reduce the deficit caused by COVID-19” (his balanced plan, we presume).

 Further down, we learn something about the debt that is being amassed: 

While the pollies are gazing at the stars for guidance, they are letting the economy slip into a huge hole they haven’t filled

Politicians  on  the  campaign  trail  are  offering   plenty  of  big-ticket items in their bid  to be winners  on   October  17.

Among the latest  is  Jacinda  Ardern’s  pledge  to  create a  Matariki   holiday   which  apparently  will not  only  celebrate  the  Maori  New  Year,  but  as  another  MP put it:

“ … gives us time to look up at the night sky and teach our kids about how our tupuna used the stars to give guidance in how we live our lives”.

 So  far,   however,  the  election  policies    of  the   various  parties  appear  to be    no more than a  jumble  sale  of    ideas,  old  and  new.   Critically and dismayingly missing from the policy commitments  –  given  NZ  is confronting a deep  and perhaps protracted recession – is  a constructive,  coherent   plan  to  dig  the  country  out of  the hole  left by the pandemic.

Meanwhile   the issues  of  child  poverty  and  inequality,  far  from  being   resolved  as  Labour promised  in  2017,    are  deepening.

Parties are given more time to persuade us they have the best plan to restore NZ’s post-Covid economy

So  the   election  date  is settled:  PM  Jacinda  Ardern  says  she  won’t  change  her  mind  again.

Implicit  in that is  the  assumption   the  current   Covid-19  outbreak  will  be  brought  under control  well before  then.  Didn’t  we  hear  Winston Peters   say:

“Holding an election during a COVID outbreak has the risk of serious interference in our democracy”?).

At   least, with  the  delay  until  October  17,  there  may  be   a  chance   the more  persuasive influences  on  voters’  minds will be  re-weighted as they enter  the  electoral  booths.

The halo enveloping  the  prime minister  could have ensured  a  50%-plus  party  vote  for  Labour,  had  the  election been  held  on  the original  date.

Now  Opposition   parties,  if  they  have the  political  smarts  to do so   (and  Point of  Order concedes  there  have been  few signs  so far they actually  exist)    can  give  the  electoral  tree  a  good shake.

Robertson is confident about the benefits of spending – but what’s the story about the downside from borrowing?

So is the government succeeding in steering the country through the Covid-19 crisis and what it calls a “one-in-100-year shock”. And just what is it costing?

These are questions which will be uppermost in the minds of voters when they cast their ballots in next month’s general election.

Finance Minister Grant Robertson in Parliament this week assured the nation it is weathering the immediate impacts of Covid-19 “better than expected” — even though the full impact is yet to be felt.

He reckons the employment data this week shows the government’s plan to protect jobs and cushion the blow for businesses and households has protected the labour market from the worst effects of Covid-19.

According to Statistics NZ, the unemployment rate here ranks at seventh in the OECD, better than the OECD average of 8.4% and well ahead of Australia (7%) and the US and Canada (both at 13%).

Furthermore, the employment rate of 76.8% is currently fifth in the OECD, well above the average of 68.6%.

The Govt’s books won’t be affected (at least, not directly) by a new ambassadorial job to promote reading

Latest from the Beehive –

The public debt is among the victims of the Covid-19 epidemic. According to the 2020 Budget Economic and Fiscal Update, in the current year and the next two fiscal years, operating deficits (operating balance before gains and losses) average around $28 billion while net core Crown debt is expected to increase on average by around $35 billion a year. Net core Crown debt is expected to reach 53.6% of GDP by the end of the forecast period, in June 2024.

The government – accordingly – is being very careful about its spending.  Isn’t it?

Sure it is,  and at first blush neither taxpayers nor lenders will have to pay for an initiative announced today by the PM and Tracey Martin, Minister for Internal Affairs and for Children.

At Point of Order, we were more than a tad surprised by this  announcement, although – to be fair – it did involve employment opportunities.

One part-time job opportunity, to be more specific.  A new job, New Zealand Reading Ambassador for children and young people, is being established.

We must confess we had not been among those who had been pressing for this vital post to be established.  Come to think of it, we weren’t aware anyone else had been pressing for it.

How a crash (of sorts) might come

History looks for a trigger for the economy crashing:  the 1929 stock market panic, the 1970s oil shock or the 2008 subprime meltdown.  But while the headline events can be a catalyst, sober analysis usually gives a more complex backstory of growing economic imbalances and disastrous-with-hindsight policy settings.

So casting the Covid shock as the proximate cause, what might be underlying drivers of a sustained deterioration in the economic climate?