The New Zealand Government's gross debt — the amount taxpayers must service — will now increase by another $73b by 2029, reaching a massive $283b. That's $94,000 for every New Zealand family (with nearly $6000 of that just to pay the government's interest!).
Things are desperate. It's the middle year of an election cycle. Time for something bold.
No?
No.
Its not about doing more with less, or vainly trying to to. It's about doing less with less. Less with our money.
Ms Willis has failed us on both counts.
Several years ago when Helen Clark's Labour Party was about to lose an election , then Finance Minister Michael Cullen placed a fair proportion of New Zealanders onto welfare. His Welfare for Working Families programme made sure that, until ended, more than half of the country will now be beneficiaries. On the mooch. More than half of the country pulling down more from other taxpayers than they can ever give back.
This National Party Finance Minister could have done nothing with the programme — allowing inflation to make the maximum threshold for the programme dissolve.
She could have ended it altogether — signalled in good time, of course, to let folk plan ahead — but ending it could have saved $2.5-3billion.
Instead, she raised that threshold below which working families get welfare. Around 142,000 New Zealand families. Which means even more working New Zealanders will continue to be moochers off (further normalising the behaviour perpetuating the Welfare State).
Many years ago a National Party Finance Minister introduced an Accommodation Supplement to, supposedly, help out poorer renters. Of course, it did nothing of the sort: instead if helped out their landlords, who could simply raise their rents to meet this new "supplemental" monetary demand for their supply. The Supplement — a grant to landlords — currently costs around $5 billion.
This National Party Finance Minister could have announced a lowering of the Supplement, saving some of those billions.
She could have announced it would end altogether, saving them all (while lowering rents). Instead, another expensive, destructive market-distorting subsidy continues.
I highlight these two measures because, for all Nicola Willis's hand-wringing about being prudent, about being responsible, about needing to achieve a surplus — and with the economic system flatlining while government debt vaults up decade by decade, bold measures to get there are not just a nice-to-have but a have-to-have — this budget is neither prudent, nor careful nor responsible.
Not being bold is to be irresponsible.
It's to be a coward.
Opposition parties are trying to paint this as an austerity budget. National Party pollster David Farrar
boasts that it isn't.
It bloody should have been.
More here from others:
The Taxpayers’ Union is slamming Budget 2025 as
a waste of time and hype, asking ‘is that it?’
"Nicola Willis has failed,” says Taxpayers’ Union Spokesman Jordan Williams. “This Budget could easily have been delivered by Grant Robertson."
“Willis promised to tackle the last Government’s ‘addiction to spending’. Spending is going up as a proportion of the economy in this year’s Budget compared to the current year. Core Crown Expenses are forecast to be 32.9 percent in 2025/26 compared to 31.8 percent under Robertson in 2022/23.
“She promised to balance the books. The OBEGAL never gets into surplus according to Treasury forecasts. Willis has had to make up a new measure to exclude the ACC deficit to create an illusion of a laughably small surplus in 2029.”
“And she promised growth. But the headline measure – an accelerated depreciation regime – is basically no better than what the last Labour Government tried immediately after COVID.”
“According to the Budget documents, the Government's headline ‘growth’ policy adds just 1 percent to GDP over 20 years. It is laughable in its small size.”
“More spending, more debt, and nothing to materially shift the dial and grow the economy. It’s not a Growth Budget, it’s a fudge-it."
Further:
"Spending as a share of GDP is materially higher than in the last fiscal year Grant Robertson was responsible for."
It's very much a centrist budget to not please those wanted a balanced budget and shrinking of the state, and of course isn't a budget of new grand larceny and profligate handing out to preferred causes, it basically just holds the line of NZ's Jacinda-era bloated state. ... a[nother] kick-the-can-down-the road budget.
Eric Crampton mentions some political sleight-of-hand:
"At some point, we have to wonder about the fiscal responsibility provisions in the Public Finance Act matter, because those effectively say you should not be running structural deficits for a decade, and we will have been running structural deficits for a decade. The ones during Covid were excusable - now, not so much. ....
"If you want to see the state of the government's books on the more traditional OBEGAL measure, rather than the one that excludes substantial ongoing ACC deficits, you have to go to the "Additional materials" in the online appendix.
"Here 'tis. No return to surplus."
"The Growth Budget" has just one growth-oriented policy [i.e., accelerated depreciation for business investment], estimated by Treasury to raise GDP by a mere 1% over 20 years (0.5% in total in the next five).
"We were, of course, promised 'bold steps.'
"Simply unserious."
UPDATE: More from Michael:
"[T]he government chose to title its effort [yesterday] 'The Growth Budget.' The Minister spoke today against a backdrop emblazoned repeatedly with that label.... the Prime Minister made a big thing of the need to accelerate growth ... The Minister of Finance in announcing the Budget date ... [boasted] 'the Budget will contain bold steps to support economic growth' ...
"They did not deliver.
"There was a single growth-oriented initiative in the Budget ... [T]he best Treasury estimate is that it will lift GDP by 1 per cent, but take 20 years to do so
"This year’s Budget represents another lost opportunity, and probably the last one before next year’s election when there might have been a chance for some serious fiscal consolidation. The government should have been focused on securing progress back towards a balanced budget. Instead, the focus seems to have been on doing just as much spending as they could get away with without markedly further worsening our decade of government deficits. ...
"We used to have some of the best fiscal numbers anywhere in the advanced world, but as things have been going – under both governments – in the last few years we are on the sort of path that will, before long, turn us into a fairly highly indebted advanced economy, one unusually vulnerable to things like expensive natural disasters. ...
"The government seems to have become quite adept at rearranging the deckchairs (cutting spending that they consider low priority and increasing other spending) but they are choosing to make no progress at all in reducing the structural deficit. ...
"Which brings us to the most recent IMF Fiscal Monitor released a few weeks ago [showing how our] primary deficit now compares ... Depending on your measure we were (based on HYEFU/BPS numbers) worst or close to worst in the advanced world. Today’s Budget will have done nothing to improve that ranking."