Over the past few months, ministers have started to deliver for the country. Their response to the fuel crisis has been constructively managed. There’s more visibility around the Reserve Bank, and inflation is being better managed. They have delivered a long-awaited trade agreement with the world’s most populous nation. It’s not perfect, but nothing is.
And then, last week, we heard the Finance Minister deliver her third Budget. Her two years in the role are starting to show, and it struck me as her first Budget that started to acknowledge how tough we have it. There were no flashy announcements, and nor was there an election-year “bribe fest”.
Despite the cash box being empty, there was room for more money for health, including funding for longer postnatal stays and broader bowel cancer screening. Funding for badly needed and long overdue infrastructure, including hospitals and schools, roads and rail, was tabled. It wasn’t enough. It never is. But it feels like we’re starting to put what few dollars we have into the right places.
As we should expect after the largesse of the last decade, there were some tough decisions too. The headline grabber was the public service job cuts, targeted at nearly 9000. It’s roughly half of the numbers added to the public service by the last Government. Despite some rhetoric early in the current Government term, it’s the first time our current leaders have faced up to addressing our central government cost base in a meaningful way.
The Finance Minister called it a responsible Budget. My word would be boring. But boring in a good way. A Budget that shows an eventual surplus, just a little bit earlier than we thought.
But it didn’t take long for the serial complainers to condemn the Budget and for the whingers and grizzlers to come out in force. Some of them were complaining before the Budget was even read.
As you might expect, the Public Service Association, the trade union for government workers, called it a “black Budget for public servants” and charged the Government with “cutting public services to the bone”. Somehow, it even managed to apply the phrase “a wilful act of destruction”. I don’t think it’s anything like that.
Opposition leaders trotted out the tired old line about the Government giving tax breaks to its wealthy mates, a reference to the 2024 Budget decisions to reinstate interest deductibility for people with mortgages on rental properties, which had been taken away by the previous Government, and the movement of tax thresholds, the greatest positive impact of which was for those earning less than $53,000 a year.
Not to be outdone, iwi leaders were next out of the blocks, calling the Budget “economic apartheid”. They went on to say that the lack of policy to help their people into work reflected a Government that had “turned its back on Māori”. Right.
Despite there being more money for trades and apprentices, the news networks managed to find people complaining about the distances people had to travel to get to trade academies! Give me a break. They might not have noticed that not every town has a university either.
Even the country’s pre-eminent music awards delivered a rebuke. Despite the state of the world, and our appalling defence spending record over the past 20 years, for some reason musicians thought fit to suggest that defence spending was less important than music. They talked about help being needed for young artists who are struggling.
Well, hang on a minute. There are young construction workers struggling too. And young baristas. And let’s not forget those working in tourism, who haven’t recovered after six years of economic freeze.
Here’s a thought. If I decided I wanted to play the guitar and sing for a living, perhaps “making a living” should be a part of the brief. In what world do we do whatever we want in the hope that, if it doesn’t work out, the Government will top us up?
Let’s get a bit of perspective here. It hasn’t exactly been a cakewalk for the rest of us over the last five years either. Try telling a small business owner or a hospitality operator how tough your life is. After years of Covid-era disruption, recession and now, through no fault of our own, a fuel crisis, these are the people who, quite understandably, might have been looking for a leg up from the Budget. But for the most part there wasn’t one. Because we can’t afford it. But when we can, I’d prefer to see these people at the front of the queue.
After all, these people, particularly those with small businesses, have their houses, their kids’ futures and in many cases their own mental health on the line, and it’s not getting any easier. But they turn up each day, and do the best that they can, in the hope that, one day, the light will shine brighter.
I spoke to a hospitality owner-operator just before the Budget. He told me that business had fallen off a cliff since fuel prices took off. His is a substantial business, and he told me he was making $20,000 a week before the fuel crisis hit. Since then, he’s been losing $30,000 a week.
The reality is that New Zealand catches a cold when the world gets a sniffle.
Overvalued and stretched asset prices leave markets vulnerable, says Bruce Cotterill. Photo / Michael Nagle / Bloomberg via Getty Images
Early this year, it felt like we were starting to crawl out of the hole. But another war, a fuel crisis and trade blockages are pushing us back.
That world isn’t showing any signs of turning things around. Globally, overvalued financial markets risk collapse with private debt at record levels and loss-making startups valued in the billions, not because of investment value but because of speculation. Another “reset” seems imminent and, again, we will be impacted.
So a cautious Government is a sensible Government in the current environment. A boring Budget is a good Budget. My only wish is that we had gone further.
The cost of running the country is still too high. I bear no ill will towards our public servants, but even after 9000 job losses we’ll still have thousands more than eight years ago. Do we really need all those people?
Incidentally, as we’re considering reducing the number of government bureaucrats, perhaps we could get stuck into the number of MPs as well. Why couldn’t we get by with 50 MPs with responsibility for electorates and 30 so-called list MPs, with targeted skills that might not be attracted to electorate roles.
An electorate MP will give you someone who represents an area. A list MP might give you expertise in engineering infrastructure, environmental matters, or even education or healthcare. Our Parliament has too many people but too few experts, too few highly capable individuals with experience in building and growing cities, organisations, and people.
And while we’re cutting the gravy trains, I’d suggest it’s time to take a closer look at our commitment to some of the climate spending. Last week, a new paper from the CMIP climate‑modelling process suggested the highest‑emissions scenario used in some IPCC assessments may be less plausible, a shift some commentators have interpreted as a scaling back of extreme projections. Even former British Prime Minister Tony Blair, once a prominent advocate for the climate action movement, has called for the UK to abandon Net Zero.
We could do the same. At last count, in 2021, we were responsible for 0.17 of 1% of global greenhouse emissions. We’re not in the world’s top 50 emitters. China, India and the United States contribute more than 50% of emissions. Until they start doing something about that, we’re not going to make one bit of difference to the global position. It’s not even a climate argument any more. It’s a financial affordability and logic argument. So why bother?
I commend the Government for eliminating the election-year lolly scramble from its political agenda and presenting us with a boring Budget that acknowledges our problems and seeks to do something about them.
But I also think we could go further. We will never be without the whingers and whiners. But they are the minority. Let’s do what’s best for everyone else.
Bruce Cotterill is a professional director, speaker and adviser to business leaders. He is the author of the book, The Best Leaders Don’t Shout, and host of the podcast, Leaders Getting Coffee. www.brucecotterill.com
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