The Government is rationing healthcare, cutting welfare spending, shrinking infrastructure investment, & sacking thousands because it believes a scary ghost story about debt from NZ's ancient past.
"The story goes that (Britain's) Truss proposed a debt-funded tax cut," And she was out. But our own Nicola pushed through a $4.2 billion tax cut for landlords and is now having to borrow money every day to pay nurses, teachers and police.
The only growth this government has achieved is in the size of our debt.
The answer is out there. I’ve read it within the last few months. It was a Brit or? from a winged Think Tank in a paper he authored about appropriate public debt levels and was a figure he randomly selected.
Chances are someone will track down the correct origins, but I seem to recall it from when I was at PA. I moved to the Post mid-'89. It went something like "so, what should the target ratio be?" Not sure it was ever justified.
Nicola Willis and here ridiculous household budget analogy…
She implied that the “household debt” was a consequence of bad lifestyle, like gambling, boozing etc. and ending up on a high-interest credit card… any halfway sensible journalist should have pointed out that the closest a NZ household has to government debt is a mortgage; offset by a tangible, valuable, appreciating asset.
I guess this didn’t fit as well into the government message.
When she started prattling on about household economies, just after she became Monster of Finance, I asked her (OIA) for a copy of the technical advice that she had received that public finances were the same as household finances. Request refused - no such information existed.
My understanding is that using bond markets to help set interest rates is a relatively new phenomenon. It is effectively a savings account at the treasury. If bonds are over subscribed 3-4x then I would say that would indicate that we are offering bond holders too much in interest.
I like thinking about Morgan Edwards PhD investigations. I am looking forward to his presentation along with Ganesh Ahirao at the Reality of Everything Symposium on June 26 in Wellington.
Bernard, this is one of the clearest examples of why the debt debate needs to move from fiscal symbolism to fiscal admissibility. The issue is not simply whether the Crown has debt. The issue is whether the full balance sheet, borrowing conditions, asset base, interest burden, and social cost of non-investment have been brought into the decision.
The household analogy does a lot of hidden damage here. Public housing should be classified as productive infrastructure. Government claims it cannot afford public housing investment because of debt. But failure to invest in public housing may be what makes the country less able to afford the future.
The household analogy is a category error. A government is not a household: it has taxing power, long-lived public assets, intergenerational obligations, and macroeconomic responsibilities. If we use the wrong ontology, we get the wrong governance sequence. Debt becomes danger, surplus becomes virtue, and public housing becomes unaffordable — even while children are being pushed into sickness, school absence, hospital systems, and future justice-system costs.
The deeper question is not “can we afford to borrow?” but “is it admissible not to invest?” If net interest costs are low, bond demand is strong, and the Crown remains in a strong net equity position, then austerity has to justify itself against the real harms it produces. Fiscal discipline cannot be treated as responsible merely because it lowers a ratio. It must prove that the avoided financial risk is greater than the social and institutional damage caused by underinvestment.
In that sense, the debt scare is not just an economic claim. It is a meaning-system. It moralises debt, treats markets as an invisible punishing authority, and turns neglect into prudence. That ghost story needs exactly the kind of challenge you are making here.
Singapore should not be the poster child for affordable and widely available housing. A much much higher percentage of Singapore's residents are neither citizens nor qualify to buy housing. At least in NZ PR means you can vote and buy property. Even if you qualify, a subsidized 2 BB flat in Singapore will be in the $400-500K NZD range. The fact is, right now you can buy a 2 bedroom condo all across NZ for that, including in Auckland. Not that this is affordable.
Kia ora Bernard - please release widely if you can.
Bernard please get in the ring politically - Aotearoa needs you!
(Picturing a Kākā signal rather than a bat signal being turned on)
Ha!
"The story goes that (Britain's) Truss proposed a debt-funded tax cut," And she was out. But our own Nicola pushed through a $4.2 billion tax cut for landlords and is now having to borrow money every day to pay nurses, teachers and police.
The only growth this government has achieved is in the size of our debt.
Kia ora Bernard, I didn't receive this via email today. Are you able to re-send? Ngā mihi
Excellent!! Please open this to the public.
Hi Ngaro. I've checked. It went out. Can you check your spam?
cheers
Bernard
Well done Bernard, explained in simple terms, embarrassing for any government with any sense of moral decency! Release please.
there are no politicians in the current government who have "any sense of moral decency" or any comprehension of what moral decency is.
Great stuff!!
Thank you for explaining it so well, Bernard.
Agree. Can we get to 100 likes peeps??
Great stuff Bernard. Needs sharing widely - and start to drive pre-election debate.
I seem to recall the 30% taret was picked out of thin air by Roger Douglas back about 1988.
Good question. I've never tracked down the origin story, which makes it even less sensical.
The answer is out there. I’ve read it within the last few months. It was a Brit or? from a winged Think Tank in a paper he authored about appropriate public debt levels and was a figure he randomly selected.
Chances are someone will track down the correct origins, but I seem to recall it from when I was at PA. I moved to the Post mid-'89. It went something like "so, what should the target ratio be?" Not sure it was ever justified.
Try an OIA request???
Nicola Willis and here ridiculous household budget analogy…
She implied that the “household debt” was a consequence of bad lifestyle, like gambling, boozing etc. and ending up on a high-interest credit card… any halfway sensible journalist should have pointed out that the closest a NZ household has to government debt is a mortgage; offset by a tangible, valuable, appreciating asset.
I guess this didn’t fit as well into the government message.
When she started prattling on about household economies, just after she became Monster of Finance, I asked her (OIA) for a copy of the technical advice that she had received that public finances were the same as household finances. Request refused - no such information existed.
OMG!!!!
I don't know if to laugh or cry
🤣🤣🤣🤣🤣🤣🤣😭😭😭😭😭😭
Great exposition. Open it up and send to every MP, every business and political journalist, every editor.
I'd love to see this story get enough likes to be freely available to share!
My understanding is that using bond markets to help set interest rates is a relatively new phenomenon. It is effectively a savings account at the treasury. If bonds are over subscribed 3-4x then I would say that would indicate that we are offering bond holders too much in interest.
Bernard. You need to interview Morgan Edwards again. And get your head around how Nz govt actually finances itself
See Catherine knights post about deconstructing Nicola
I like thinking about Morgan Edwards PhD investigations. I am looking forward to his presentation along with Ganesh Ahirao at the Reality of Everything Symposium on June 26 in Wellington.
Bernard, this is one of the clearest examples of why the debt debate needs to move from fiscal symbolism to fiscal admissibility. The issue is not simply whether the Crown has debt. The issue is whether the full balance sheet, borrowing conditions, asset base, interest burden, and social cost of non-investment have been brought into the decision.
The household analogy does a lot of hidden damage here. Public housing should be classified as productive infrastructure. Government claims it cannot afford public housing investment because of debt. But failure to invest in public housing may be what makes the country less able to afford the future.
The household analogy is a category error. A government is not a household: it has taxing power, long-lived public assets, intergenerational obligations, and macroeconomic responsibilities. If we use the wrong ontology, we get the wrong governance sequence. Debt becomes danger, surplus becomes virtue, and public housing becomes unaffordable — even while children are being pushed into sickness, school absence, hospital systems, and future justice-system costs.
The deeper question is not “can we afford to borrow?” but “is it admissible not to invest?” If net interest costs are low, bond demand is strong, and the Crown remains in a strong net equity position, then austerity has to justify itself against the real harms it produces. Fiscal discipline cannot be treated as responsible merely because it lowers a ratio. It must prove that the avoided financial risk is greater than the social and institutional damage caused by underinvestment.
In that sense, the debt scare is not just an economic claim. It is a meaning-system. It moralises debt, treats markets as an invisible punishing authority, and turns neglect into prudence. That ghost story needs exactly the kind of challenge you are making here.
Singapore should not be the poster child for affordable and widely available housing. A much much higher percentage of Singapore's residents are neither citizens nor qualify to buy housing. At least in NZ PR means you can vote and buy property. Even if you qualify, a subsidized 2 BB flat in Singapore will be in the $400-500K NZD range. The fact is, right now you can buy a 2 bedroom condo all across NZ for that, including in Auckland. Not that this is affordable.
Fair comment but I think his point was, there is not as sever a housing crisis as we have here. IE: People have a roof over their heads.