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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.
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 hour to
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.
It's running hotter than ever.*
*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? 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).
And while the [taxpayer funded] spin
doctors in Nicola Willis' Beehive office are keen to promote the 13
percent ($274 million) reduction in spending
on contractors and consultants, 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).
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" 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" 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...
Speaking
to the Platform James said:
"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]
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.
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.
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.
You can get this episode over
on YouTube, or listen to the audio version over on
our website, Apple
Podcasts, Spotify,
or iHeart
Radio.
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.
Thanks for making the work possible.
Have a great weekend! 😊
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Jordan
Williams
Executive Director
New Zealand Taxpayers’
Union
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