Coalition's talk of fiscal mess, its funding freezes & state sector job cuts have reversed an initial revival in business and consumer confidence, extending & deepening 2023's recession into 2024
It's a very grim picture for everyone except the rich. All the cutting, pushing ever greater costs onto renters and mortgage-payers, with the miniscule carrot of a tax cut which will in no way compensate for the increased cost of living. Total madness.
Maybe this was their devious plan after all..... Keep squeezing councils funding till they are forced to sell off their various assets such as Ports, Airports , Lines companies etc that the vulture capitalists can feast on. Drive public funding down for healthcare until the system breaks so they can sell us the idea of a private health system (shudder) like in the USA.
Corrin asked a very clear question that Brad danced around blaming anything & only hinting at the real answers but ultimately saying they don’t know. A cleaner answer would have been to examine the non tradeables basket & search for answers that way. This would be a great place to start to catalog in definitive terms the effect this govt is having. Just a suggestion for a deep dive Bernard.
Yes, was going to highlight this as well. Obviously not everyone in our economy is suffering through this in the same way... Inflation might still be a problem for the working class, but it's well past being sustained by working class spending.
Let's not forget that the main reason for the current grim situation is the deliberate attempt by the reserve bank to slow down the economy. The reserve bank is literally and deliberately and openly engineering a recession. For a good reason of course - inflation sucks. But the impact is severe and hits poorer people harder.
That's why the Reserve bank should not be independent from government. It means that the government has no control over NZ's monetary policy, (how much money is in circulation, interest rates, the behavior of the banks, etc.). Making the RBNZ independent from government was one of Roger Douglas's more moronic policies from 1989. Is anyone advocating making Treasury, (who control the government's fiscal policy) independent of government? Of course not, so why the RBNZ which was under government control from 1934 - 1989?
My understanding was that it was done to stop the government secretly pumping the economy before the election to ensure that the economy seemed good at election time only for any economic pain to hit afterwards.
You just have to look around the world to see what happens when governments have control over monetary policy and screw it up to save their bacon. Although there clearly does need improvement in this area.
Isn't the system of fiscal updates from Treasury intended to make it harder for governments to secretly 'pump' the economy before an election.
The argument I have seen from an 'independent' reserve bank is to limit democracy via taking away from politicians decision making power over monetary policy. At the same time a 'monetary policy good, fiscal policy bad' mantra is pushed by economists (neoliberal ones at least).
What a dire set of statistics. Luxon spent 2 years talking down the economy (and NZ as a whole) - & somehow the electorate believed he would be the silver bullet. Post election it’s clear he’s lost and leading us to a desert. Given he strongly believes his “feels” over evidence I can’t see any path forward.
Why, oh why, don’t journalists tell the voters that austerity isn’t working, and has repeatedly failed to deliver in places like the UK. Zombie policy that gets rolled out while Ms Willis and co pretend there is no alternative
Right wing governments always profess to be ‘better for the economy’ but this has never been borne out in real life. They always push ‘austerity’, but what the country needs is investment.
Guess the view was the government couldn’t be trusted to manage the money supply.
But now you have the problem that the Reserve Bank only seems to use one lever to control inflation - to engineer a recession and increase unemployment.
The government still has control over taxes but neither main party seems able to bring themselves to increase these, indeed by proposing cuts for higher earners who have disposable income for discretionary spending they are actually boosting inflation.
Don’t forget that one of the first items to be passed before christmas with great fanfare was to restore RB to have only one edict. Even if it was mainly performative any option to ameliorate this has been taken away
This table from the March 2024 NZCTU Economic Bulletin shows the marked difference in ambition Labour to National. A pity Labour then followed the constraining 'fiscal responsibility thresholds' rubbish.
1. Just Transition: supporting New Zealanders to transition to a climate-resilient, sustainable, and low-emissions economy.
2. Physical and Mental Wellbeing: supporting improved health outcomes for all New Zealanders, particularly the mental wellbeing of our young people.
3. Future of Work: equipping New Zealanders and enabling New Zealand businesses to benefit from new technologies, and lift productivity and wages through innovation.
4. Māori and Pacific Peoples: lifting Māori and Pacific peoples’ incomes, skills, and opportunities, including through access to affordable, safe, and stable housing.
5. Child Wellbeing: reducing child poverty and improving child wellbeing, including through access to affordable, safe, and stable housing.
1. Delivering meaningful tax reductions to provide cost of living relief to New Zealanders, who have seen no change in personal income tax rates and thresholds since 2010. Tax reductions will be funded by reprioritisation, savings and new revenue measures, and this package will not add to debt.
2. Identifying enduring savings across government departments and agencies.
3. Improving public services by shifting spending to higher-value areas and focusing on results.
4. Keeping tight control of government spending while funding a limited number of high priority Government policy commitments and urgent cost pressures that cannot be funded through reprioritisation.
5. Developing a long-term, sustainable pipeline of infrastructure investments.
Dirge is the perfect word, Bernard. I have been bewildered at how suddenly we're meant to be in a funeral march. After the contributions to this Kaka I assume now its because the reserve bank is at the mercy of stuff in the Middle East and in China and because of planes and the world at large and poor little reserve bank no hope. Plus Nat etc vs Labour Wellbeing objectives as reported by Andrew Riddell in Comments.
Am now getting a feeling for who has died - I think it might be us.
What this government is attempting to kill is our empathy for other human beings, and our concern for the future of the planet that sustains us all. I want to believe that they will fail.
However, let's pressure Labour to abandon neo-liberal economics which they have never changed. There is seriously good debate happening around the world about alternatives. We must engage with these and debate the alternatives applicability to NZ
Absolutely. That rut has got deeper and deeper. We have to get out of it and now is the perfect time to connect with with world - wide debates, so that we can hit the next elections ready
Yes, this all stinks. Thank you, Bernard for continuing to shine a light into the dark places. But I refuse to believe we will be broken by this government. Their cuts and callousness are becoming so widespread that eventually everyone will feel a pang of outrage and rebel. Kia Kaha everyone! At least we've got each other.
Many thanks to paying subscribers for permission and support to open this one up for public reading, listening and sharing. We got over 100 likes. Nga mihi Nui. Bernard
Nicola Willis, the Minister of Finance, is constantly talking about reducing inflation being the cause of our economic woes. However, she fails to address such important issues as reducing the breakdown in health services, education, social housing and other issues of concern to everyday Kiwis but as Joseph Gobbles said, as Hitler’s Minister of Propaganda, that “ if you repeat a lie often enough people will come to believe it and you will come to believe it yourself “.
Get real Nicola, address those issues which of real concern to ordinary Kiwis.
It's a very grim picture for everyone except the rich. All the cutting, pushing ever greater costs onto renters and mortgage-payers, with the miniscule carrot of a tax cut which will in no way compensate for the increased cost of living. Total madness.
Maybe this was their devious plan after all..... Keep squeezing councils funding till they are forced to sell off their various assets such as Ports, Airports , Lines companies etc that the vulture capitalists can feast on. Drive public funding down for healthcare until the system breaks so they can sell us the idea of a private health system (shudder) like in the USA.
I’ve been suspecting this too
I don't think it's a maybe and the only ones who didn't see it coming are the wilfully blind.
Corrin Dan interviewed Brad Olsen this morning. The topic moved off petrol and onto why inflation is not coming down.
https://www.rnz.co.nz/national/programmes/morningreport/audio/2018936126/petrol-prices-creep-up-around-the-country
Corrin asked a very clear question that Brad danced around blaming anything & only hinting at the real answers but ultimately saying they don’t know. A cleaner answer would have been to examine the non tradeables basket & search for answers that way. This would be a great place to start to catalog in definitive terms the effect this govt is having. Just a suggestion for a deep dive Bernard.
Yes, was going to highlight this as well. Obviously not everyone in our economy is suffering through this in the same way... Inflation might still be a problem for the working class, but it's well past being sustained by working class spending.
Noting of course that there are stronger flow through links tradable prices to non-tradables than is often assumed.
Let's not forget that the main reason for the current grim situation is the deliberate attempt by the reserve bank to slow down the economy. The reserve bank is literally and deliberately and openly engineering a recession. For a good reason of course - inflation sucks. But the impact is severe and hits poorer people harder.
There’s an argument that the areas now impacting inflation have more to do with fiscal policy than monetary policy
That's why the Reserve bank should not be independent from government. It means that the government has no control over NZ's monetary policy, (how much money is in circulation, interest rates, the behavior of the banks, etc.). Making the RBNZ independent from government was one of Roger Douglas's more moronic policies from 1989. Is anyone advocating making Treasury, (who control the government's fiscal policy) independent of government? Of course not, so why the RBNZ which was under government control from 1934 - 1989?
My understanding was that it was done to stop the government secretly pumping the economy before the election to ensure that the economy seemed good at election time only for any economic pain to hit afterwards.
You just have to look around the world to see what happens when governments have control over monetary policy and screw it up to save their bacon. Although there clearly does need improvement in this area.
Isn't the system of fiscal updates from Treasury intended to make it harder for governments to secretly 'pump' the economy before an election.
The argument I have seen from an 'independent' reserve bank is to limit democracy via taking away from politicians decision making power over monetary policy. At the same time a 'monetary policy good, fiscal policy bad' mantra is pushed by economists (neoliberal ones at least).
Roger Douglas and his mates had mostly moronic policies.
What a dire set of statistics. Luxon spent 2 years talking down the economy (and NZ as a whole) - & somehow the electorate believed he would be the silver bullet. Post election it’s clear he’s lost and leading us to a desert. Given he strongly believes his “feels” over evidence I can’t see any path forward.
So the talk of fiscal mess appears to be self fulfilling, the talk of being prudent managers of the economy does not appear to be fairing so well.
Why, oh why, don’t journalists tell the voters that austerity isn’t working, and has repeatedly failed to deliver in places like the UK. Zombie policy that gets rolled out while Ms Willis and co pretend there is no alternative
No one trusts journalists in NZ apparently...
For a good reason. Most journalists seem to be pushing an agenda rather than impartially presenting information. unfortunately.
Do you have a reference for this Alistair? Sounds like a concerning statistic, assuming most is over 50% Is it all the same agenda?
“Pushing an agenda” or just not agreeing with the writer?
More like treating opinion as news & not applying any critical thought on behalf of the reader
Thank you Bernard (depressing though this analysis is!) This does deserve a wider-still audience, so very happy for you to open it up.
Right wing governments always profess to be ‘better for the economy’ but this has never been borne out in real life. They always push ‘austerity’, but what the country needs is investment.
Absolutely, historically in NZ business has always prospered under Labour administrations, as they tend to spend more.
You might find this podcast interesting. https://newbooksnetwork.com/the-power-to-destroy
A more informative read would be this. https://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
thanks for the link
a lot of reading :-)
Depressing, again...... Open this up to the wider audience.
Guess the view was the government couldn’t be trusted to manage the money supply.
But now you have the problem that the Reserve Bank only seems to use one lever to control inflation - to engineer a recession and increase unemployment.
The government still has control over taxes but neither main party seems able to bring themselves to increase these, indeed by proposing cuts for higher earners who have disposable income for discretionary spending they are actually boosting inflation.
Don’t forget that one of the first items to be passed before christmas with great fanfare was to restore RB to have only one edict. Even if it was mainly performative any option to ameliorate this has been taken away
This table from the March 2024 NZCTU Economic Bulletin shows the marked difference in ambition Labour to National. A pity Labour then followed the constraining 'fiscal responsibility thresholds' rubbish.
Budget Policy Statement Wellbeing Objectives 2023 (Labour)
1. Just Transition: supporting New Zealanders to transition to a climate-resilient, sustainable, and low-emissions economy.
2. Physical and Mental Wellbeing: supporting improved health outcomes for all New Zealanders, particularly the mental wellbeing of our young people.
3. Future of Work: equipping New Zealanders and enabling New Zealand businesses to benefit from new technologies, and lift productivity and wages through innovation.
4. Māori and Pacific Peoples: lifting Māori and Pacific peoples’ incomes, skills, and opportunities, including through access to affordable, safe, and stable housing.
5. Child Wellbeing: reducing child poverty and improving child wellbeing, including through access to affordable, safe, and stable housing.
Budget Policy Statement Wellbeing Objectives 2024 (National/ACT/NZ First)
1. Delivering meaningful tax reductions to provide cost of living relief to New Zealanders, who have seen no change in personal income tax rates and thresholds since 2010. Tax reductions will be funded by reprioritisation, savings and new revenue measures, and this package will not add to debt.
2. Identifying enduring savings across government departments and agencies.
3. Improving public services by shifting spending to higher-value areas and focusing on results.
4. Keeping tight control of government spending while funding a limited number of high priority Government policy commitments and urgent cost pressures that cannot be funded through reprioritisation.
5. Developing a long-term, sustainable pipeline of infrastructure investments.
Oh jeepers! No wonder we're all at a funeral. Something really has died.
Dirge is the perfect word, Bernard. I have been bewildered at how suddenly we're meant to be in a funeral march. After the contributions to this Kaka I assume now its because the reserve bank is at the mercy of stuff in the Middle East and in China and because of planes and the world at large and poor little reserve bank no hope. Plus Nat etc vs Labour Wellbeing objectives as reported by Andrew Riddell in Comments.
Am now getting a feeling for who has died - I think it might be us.
What this government is attempting to kill is our empathy for other human beings, and our concern for the future of the planet that sustains us all. I want to believe that they will fail.
They will fail. They have such a dystopian alternative. Of course they will fail.
The TV1 Poll out tonight is encouraging.
However, let's pressure Labour to abandon neo-liberal economics which they have never changed. There is seriously good debate happening around the world about alternatives. We must engage with these and debate the alternatives applicability to NZ
Absolutely. That rut has got deeper and deeper. We have to get out of it and now is the perfect time to connect with with world - wide debates, so that we can hit the next elections ready
Yes, this all stinks. Thank you, Bernard for continuing to shine a light into the dark places. But I refuse to believe we will be broken by this government. Their cuts and callousness are becoming so widespread that eventually everyone will feel a pang of outrage and rebel. Kia Kaha everyone! At least we've got each other.
Many thanks to paying subscribers for permission and support to open this one up for public reading, listening and sharing. We got over 100 likes. Nga mihi Nui. Bernard
Gary Dyall
Kia Ora Bernard
Nicola Willis, the Minister of Finance, is constantly talking about reducing inflation being the cause of our economic woes. However, she fails to address such important issues as reducing the breakdown in health services, education, social housing and other issues of concern to everyday Kiwis but as Joseph Gobbles said, as Hitler’s Minister of Propaganda, that “ if you repeat a lie often enough people will come to believe it and you will come to believe it yourself “.
Get real Nicola, address those issues which of real concern to ordinary Kiwis.