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Hi Friend,

Huge Taxpayer Update today.

NEW POLL (not good news for Luxon); boat sinking (not good news for taxpayers); Government books even worse than feared (not good news for those who wanted Nicola Willis to tackle the last Government's wasteful spending).

We do have some good news for your Friday though: Jordan's been digging into the Government's proposed replacement for the Resource Management Act, and it's looking promising. He sat down and interviewed one of the two MPs driving the effort (video of the interview below).

State of the Government books is a serious wake-up call ⏰

Yesterday, Treasury released the Financial Statements of the Government for the Year Ended 30 June 2024 <[link removed]>. It had about as much good news as your council rates bill.

As soon as the report landed, our team compared the actual numbers with the projections that were released back in May as part of the Budget. Are we doing better or worse than expected?

Only the fiscal sadists left the Treasury lock-up smiling.

Despite the change of Government, government spending continues to grow faster than revenue.

Our in-house Economist, Ray Deacon, sent a note around the campaign team and interns last night. I couldn't have put it better:

To give some perspective on the situation, take a look at how key elements of the Core Crown account have changed since 2016/17. This is the part of government that covers the core policy ministries and operational departments but excludes crown entities, state-owned enterprises and mixed ownership entities.  Consumer price inflation over the period amounted to 27.2%.



Audited data doesn't lie. The Government does not have a revenue problem – it already extracts too much – it has an expenditure problem! Whilst the current Government cannot be held entirely accountable for the current state of the government accounts, it will be accountable for not quickly improving the situation going forward.  Only a much more rigorous examination of government expenditure and deletion of entire programmes (especially the corporate welfare handouts) can hope to achieve the strong fiscal consolidation that Sir Bill English achieved post the global financial crisis and which got New Zealand back into surplus.  Leaving it to officials to decide where to make cuts won’t work – Ministers must make these decisions and remove any obstacles in their way.

There endeth the sermon.

Ray also highlighted the issue with the deficit spending being "structural", according to Treasury officials. That means that even when the economy bounces back, the books are still not expected to return to surplus.

There needs to be a fundamental shift in fiscal policy if New Zealand is to avoid what happened in the mid-80s and then again in the early 90s: the government running out of money.

He's green, he's hungry, and he's now coming for the kids 👀



Nicola Willis is borrowing a million bucks an hourto keep New Zealand Wellington afloat.

That's even faster than the rate Grant Robertson borrowed.

The times of cheap money are over. This year interest payments will amount to more than $9.2 billion – that's $4,622 for your household (and every other household in New Zealand)!

That’s the same as what the Government will spend on primary schools, secondary schools and the Ministry of Justice combined.

So rather than paying for a scary movie this weekend, just head on over to the Official Debt Clock. <[link removed]> <[link removed]>

It's running hotter than ever.*

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*note Debt Clock figures track government debt in real time rather than as at 30 June.

Job losses in Wellington? What job losses? 🤷

Remember how the Government was going to sack those 18,000 extra bureaucrats Labour hired in the last three years of its reign <[link removed]>? Well, yesterday, there was another set of figures being released by the Public Service Commission (ironically, just across the road from the Treasury lock-up at No.1 The Terrace, in the Reserve Bank Building at No. 2, The Terrace).

Sir Humphrey reported as being 'safe and sound'... 😮‍💨

Despite all the crowing about "brutal" and "unfair" public service cuts in Wellington, we now know that there were still more bureaucrats in July 2024 than there were 12 months earlier!

There's a hell of a long way to go to sling out the extra 18,000 taken on under the last Government (see Connor's excellent visualisation that got us into trouble with Parliament's Speaker here). <[link removed]>

And while the [taxpayer funded] spin doctors in Nicola Willis' Beehive office are keen to promote the 13 percent ($274 million) reduction in  <[link removed]>spending on contractors and consultants <[link removed]>, the fact is the Government has cut less well paid (see below) pen pushers than Chris Hipkins hired in his last few months in office! Even the spin doctors couldn't omit the key figure: the Government has 421 more employees as at 30 June 2024 than 12 months earlier.

Nicola fought the blob, but the blob won?

...and rather well paid 🏝️

And buried in the Public Service Commission data:

Remuneration: The average annual salary for public servants was $101,700, a 4.6 percent increase on the previous year. Increases were higher at the lower and middle salary levels driven by the Public Service Pay Adjustment and incremental change. At the other end of the scale, there were more modest increases, with average salaries for tier 2 managers increasing 2.1 percent. Private sector average earnings increased 4.0 percent over the same period, according to Stats NZ's Quarterly Employment Survey.

For comparison, $83,824 is the average wage for the same year ended 30 June (Stats NZ <[link removed]>).

New Zealand's longest "real" recession 😧

There was some celebration this week with the Reserve Bank cutting the official cash rate (the main driver of interest rates) down to 4.75%.

But if you think it'll be enough to fix the economic woes, I have an Interislander ferry to sell you. As James put it in his comments to the media:

“High interest rates have caused a bigger per-capita recession than the one experienced in the wake of the Global Financial Crisis, and the backsliding of Kiwis’ living standards doesn’t look set to stop any time soon.

“Growth is the only answer, and slashing interest rates could be the first step in the right direction. But the risk of long-term damage hasn’t gone away, and the Government needs to work to make sure this OCR cut pays off.

“Domestic inflation still hangs at 5.4% thanks to the reckless previous Government’s overspending. The current Government must double down on any efforts to cut wasteful expenditure, and any savings should be used to start chipping away at anti-growth tax policies like one of the highest corporate tax rates in the developed world.”

The media like to talk of "technical" recessions (that is, two successive quarters of negative growth). But the real number is always per capita growth. If the population grows faster than the economy, we're still getting poorer.

On that per person measure, New Zealand is in the longest recession since records began.

Ouch.

From one shipwreck to the next... 🚢🤔



The HMNZS Manawanui went down this week, seemingly hitting a reef and sinking off the coast of Samoa. Thankfully, everyone escaped with their lives and only taxpayers were seriously injured ($100 million of Royal Naval taxpayer assets disappeared below the waves).

Quite rightly there will be a Court of Inquiry to work out what went so wrong. But a Court of Inquiry is not enough. Unlike civilian judicial proceedings, the public has no rights whatsoever to observe the Court of Inquiry or even know the findings.

It may not be about blame (the Taxpayers' Union is not interested in a pile-on against the Captain) but we say New Zealanders are entitled to know whether the Navy is incompetent or just cursed.

Courts of Inquiry operate in secret because much of their matters relate to national security and military discipline.

But let's get real, the Manawanui was fighting coral, not commies. It should be an open court process determining what went wrong.

Defence Minister Judith Collins should be ensuring taxpayers are not left in the dark so that we know for sure that this wasn't just an Interislander-style "left the autopilot on <[link removed]>" SNAFU. 

New Taxpayers' Union-Curia Poll: lowest results for Nats in 15 months 📉📊

That's not the only bad news for the Government this week, as our hot-off-the-press poll revealed today.



National is down 4.1 points to 34.9 percent from last month while Labour is up 3.6 points to 30.3 percent.

That's National's lowest number in 15 months, and the highest Labour have been in the polls for 16 months.

The Greens are down 0.6 points to 10.4 percent, while ACT are up to 9.7 percent (+0.9 points). New Zealand First is up 0.8 points to 7.6 percent while Te Pāti Māori is down 2.0 points to 3.0 percent.

For the minor parties, TOP is on 2.5 percent (+1.4 points), and no other parties polled above 1.0 percent.

Translating these numbers into seats in Parliament, National is down four seats on last month to 44 while Labour is up five seats to 38.



The Greens are down one to 13 while ACT is up one on last month to 12 seats. New Zealand First is up one to nine while Te Pāti Māori is unchanged on six.

On these numbers, the current coalition would still be able to form a Government, holding 65 seats to the centre-left bloc's 57.

For the first time, we are also releasing data on "Major Voting Issues – Top 3" usually reserved for our "Very Important Taxpayers <[link removed]>" who support the Taxpayers' Union most generously.

We've made it public because it shows what might be driving the changes in this month's poll: Health has seen a surge in voters' priorities (now second), and with the difficulties the Government has had with this portfolio, could it be this which is hitting the National Party's ratings?



36.5 percent of respondents named the Cost of Living as one of their top three issues, followed by Health at 35.5 percent, the Economy more generally on 33.7 percent, Law and Order on 16.5 percent, Poverty on 16.3 percent, and Housing on 12.1 percent.

MfE & MFAT climate change high flyers: Chucking taxpayer money onto the 'Bonn-fire' 🔥🇩🇪



Regular readers of Taxpayer Update will know that we like to follow those hard working big-spending officials who are selflessly fighting climate change one business class flight at a time. 🍾

One civic-minded public servant's tip-off to the Taxpayers' Union led us to go digging into the Ministry of Foreign Affairs and Trade (MFAT), the Ministry of Primary Industries, and Ministry for the Environment's joint jaunt work trip to Bonn, Germany, for the UN's latest Climate Change conference.

Over the course of just a few days, the New Zealand delegation managed to blow more than $150 grand catching-up with their equivalents from around the the world.

And that's just what MFAT would tell us! Officials refused to say how much was spent on entertainment, food or drink (and if anyone's familiar with diplomats' expenses, you'll know they're not afraid to pop a cork or two). Either there's so much it is in fact 'too hard', or they just don't want you to know. Sounds like quite the party... <[link removed]>

Speaking to the Platform James said: <[link removed]>

"You've got all these bureaucrats at the minute saying they can work from home just fine, and use Zoom to join their meetings."

"But they can't do the same when there's a free trip on offer."

[click to watch] <[link removed]>

<[link removed]>

Bang on, James.

Some good news this Friday: RMA reform imminent 🎉

The Resource Management Act is New Zealand's largest regulatory tax. No other piece of legislation does more to keep New Zealand poor and our living standards down.

When the RMA was introduced in 1990 it was seen as "world leading".  We shouldn't have waited 34 years to get the hint when no one followed!

Last week I sat down with one of the two MPs who are shepherding the next generation of land-use, planning, and environmental management law.

ACT's Simon Court has been head-down with Minister Chris Bishop on what comes next. For those interested in RMA reform, their "joint speech" is well worth the read <[link removed]>.

Credit where credit's due, these reforms are looking to be a huge win for New Zealand.

If what the Government announced earlier in the month holds firm, we are on the cusp of a huge win for New Zealand and our future living standards. Freeing up New Zealanders from the type of 'command and control' central planning model will likely be the biggest thing the Luxon Government is to be remembered for. It is akin to the removal of import licences back in the 1980s.

So after seeing the speech, I asked Simon Court to come into our office and discuss the Government's workstream on replacing the Resource Management Act. 

<[link removed]>

Simon Court is the Parliamentary Under-Secretary to the Minister for Infrastructure and the Minister Responsible for RMA Reform. First elected in 2023, prior to this Simon worked as a civil and environmental engineer with 23 years experience across the public and private sectors.

<[link removed]>

You can get this episode over on YouTube <[link removed]>, or listen to the audio version over on our website <[link removed]>, Apple Podcasts <[link removed]>, Spotify, <[link removed]> or iHeart Radio. <[link removed]>

One more thing, ...

The Taxpayers' Union is made possible by the thousands of supporters who share our vision for a prosperous New Zealand with efficient, effective, and accountable government.

Your support means we can keep the lights on – as well as keep the pressure on Wellington on behalf of you – the taxpayer.

<[link removed]>

Thanks for making the work possible.

Have a great weekend! 😊


Jordan Williams
Executive Director
New Zealand Taxpayers’ Union



In the Media:


RNZ Minister refers question over state of the navy contributing to Manawanui sinking to NZDF <[link removed]>

The Platform James Ross on the Government spending blowout at Bonn Climate Conference <[link removed]>

The HuddleHow much of a difference will the OCR cut make? <[link removed]>

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