No Minister

A GUEST POST FROM WAYNE MAPP

Four weeks till the election. It is said we have a covid election, and of course that is true. The covid pandemic has led to the most difficult economic conditions since the depression of the 1930’s. In large measure people have been insulated from its worst effects by the state pumping billions of dollars into the economy, mostly through the wage subsidy. Beating covid is not the upcoming challenge. The only plausible governments in New Zealand already have a unified approach on that, which is an elimination strategy. I know regular correspondents here rail about that, but frankly no-one in decision making roles are listening to you. That debate has been settled.

The real issue in the election campaign should be; who has the best economic recovery plan? Inevitably our views are influenced by our political preferences. Nevertheless, there are economic fundamentals that any party in government has to deal with. Economic recovery is not an exercise in wish fulfillment. There are some difficult choices ahead.

Let’s look at the key numbers as revealed by the PREFU. It will be 2024 before the economy recovers to the pre covid size. Debt will have grown from $57.7 billion to $201.1 billion by 2024. Unemployment will peak at 7.7% next year. The economy will shrink by nearly 4% over the next 18 months, it won’t be just a one quarter hit. All of that is bad enough, but the PREFU had much worse news. On the current track the government will be in deficit until at least 2034, and all that deficit will be borrowed money. However, just because Treasury says this will happen does not mean it will. Governments can make real choices, starting from pretty much straight after the election, though realistically the numbers forecast for June 2021 are already pretty much locked in.

My experience in government covered the GFC and the Christchurch earthquakes. I know well the kind of choices that had to be made. The goal back then was to smooth the impact while providing a pathway out. We had inherited a PREFU that forecast a decade of deficits. We knew we could change that. But it took real discipline to bring spending under control. Even so we still had to borrow about $40 billion to pay for everything. Now that National has released its economic plan, we know the options that the two major parties are offering for government. Although the immediate focus has been on National’s tax cut, that is not actually where the biggest numbers lie. The biggest difference between the two parties is their spending plans over the next four years.

By 2024 Labour will have spent $23.5 billion more than National. In 2024 the debt under Labour will be $201.1 billion compared to $187.4 billion under National. The difference is $13.7 billion, but when National’s tax cuts of $9.8 billion (both personal and business) is added to the difference, it shows the real size of the spending difference of the two parties. Of course, Labour will have all sorts of reasons why they need to spend $6 billion per year more than National, but much of the extra can be accounted for in just two things; ​contributions to the Super Fund, and Auckland Light Rail.

Neither are necessary at the moment. Labour will compound the debt problem by unnecessarily restrictive rules on the one industry that we are now all dependent on, and that is farming exports. The winter grazing rules, the fertilizer rules and the irrigation rules all add up to a major handbrake on New Zealand’s most important productive industry. Kneecap farming exports by say 10% and expect unemployment to rise, tax revenues shrink and government debt to increase.

I know that our political choices depend on our view of the world. However, Labour appears to think there is no problem with increasing regulation and cost on business. That business will just truck along fine. The real world is different. Under Labour, by 2024 the minimum wage will be nearly $25 per hour or over $50,000 per year for a full time job. A typical small business with three people, including the owner, would need revenue of $450,000 per annum (three times the wage cost) and that is assuming all three are on minimum wages. It will be a real deterrent for startup businesses. It is not surprising that growth was already shrinking even before covid struck. So for me, tight discipline on government expenditure and a realistic understanding of business conditions will be essential if the economy is to have a decent chance of coming back anytime soon.

Our vote can hasten or delay that recovery.​

Written by The Veteran

September 20, 2020 at 12:27 pm

23 Responses

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  1. I don’t have any quarrel with your commentary on economic recovery but you demonstrate palpable ignorance of either viruses or the English language..

    ‘have a unified approach on that, which is an elimination strategy.’

    Covid – 19 cannot be eliminated. It can be contained, controlled or managed.

    Abuse of language by changing the meaning of a word is a common tactic of Leftists when seeking to spread lies

    Did you not hear about all those new cases which broke out after your incredibly incompetent PM claimed to have eliminated the virus ?

    adolffinkensen

    September 20, 2020 at 12:45 pm

    • I nominate Adolf for a Nobel Prize. Or a Darwin Prize. Probably the Darwin Prize.

      Gustavo Frink

      September 20, 2020 at 1:06 pm

    • Yeah, nah.

      Manipulators from all parts of the ideological spectrum use euphemisms and other obfuscations to package their message. “Collateral damage”, “downsizing” and “creative destruction” are three examples formulated by the right.

      Also, in context, “elimination” does not mean “eradication”. Whether it is the best policy is moot, but as per Wayne Mapp it is the current political consensus so there is no other show in town, nor likely to be in 2020.

      And, “…your incredibly incompetent PM”?! In breaching Kimbo’s law (in blogworld the validity of an argument is in inverse proportion to the use of redundant emphatic adverbs), you’ve also flouted Skitt’s law (any post correcting an error in another post will contain at least one error itself).

      Now, i’ve reread this three times before hitting “Post Comment”, but I’ve likely still overlooked a spelling, grammatical, rhetorical or logical error somewhere in it! 😳😂

      Kimbo

      September 20, 2020 at 1:32 pm

    • But speaking of incompetent:

      https://www.stuff.co.nz/national/politics/122827807/election-2020-fair-cop–nationals-paul-goldsmith-admits-to-accounting-mistake-as-labour-points-out-4b-holef incom

      Honestly?! OK, I know that Ardern and the rest of her coalition, with a couple of exceptions, are incompetent. But National?! How hard is it to pass the basic competence test for a government-in-waiting of getting the costings and revenue figures for your policies right?! You’ve had three bloody years?!

      They’ll probably still get my vote on the basis that they are not as useless as the other crowd, but leadership change merry-go-rounds, idiots sand-bagging candidate selections and now this confirms that National is not the party it was under the Key-English-Joyce triumvirate.

      Even if the odd naive Minister of Defence did leak on their watch! 😉

      Kimbo

      September 20, 2020 at 2:05 pm

    • …and Goldsmith’s explanation?

      ““What we didn’t realise was that Labour slipped in a reduction in their own contributions to the NZ Super Fund without announcing it or telling anyone,” Goldsmith said”

      So not only are you careless, but you are also so naive that you fall for what was almost certainly a prearranged trap?! Explaining is losing…

      There is only one thing worse in politics than being corrupt, and that is being…naive. Sure, this gaffe may not amount to much in terms of specifics given the eye-watering levels of debt both main parties are saying they will rack up if the win the Treasury benches. But falling for a trap laid by Robbo after Steven Joyce had done the same to him 3 years ago?! When your core brand and supposed point-of-difference is fiscal competence?!

      Kimbo

      September 20, 2020 at 2:17 pm

    • This is getting extremely tiresome. First, it’s tangential to the OP at best. More importantly, you’ve had explained to you multiple times that the word ‘elimination’ as used by epidemiologists in the context of an epidemic has a context-specific meaning that isn’t the same as your preferred meaning, and yet you continue pushing this pointless barrow.

      To add insult to injury, even if we were to apply your generic meaning of ‘elimination’ in this specialist context, you’re still wrong. NZ had months of 0 Covid-19 cases and looks like it’s just about back there again. That’s ‘elimination’ of the virus within NZ even by your standard definition, until such time as it gets back in again, at which point we eliminate it again. That is what “elimination strategy” means, regardless of how often you stamp your feet about it.

      Psycho Milt

      September 20, 2020 at 3:02 pm

  2. Covid, for all the terrible problems it will bring, will also bring benefits. For example, work from home options that decrease congestion and other travel costs will be hastened.

    The most significant benefit, in the next 5 years at any rate, is dealing with climate change. Incremental attempts to manage temperature change have been meet with the shrill cry of “don’t you realise it’s a crisis?!!!!” by zealots demanding that only immediate root-and-branch neutering of our productive economic sectors is sufficient.

    Well, now we do have a real crisis, an economic one and unless alleged “Green replacement solutions” provide immediate succour and benefit, then they will get short shrift by those looking for a job. “Green” has become a fashionable virtue-signalling accessory for the liberal wealthy who have, until now, been largely immune to the economic effects of the policies. Hence the ease and popularity of green-washing by donating to a corporate fake Greenpeace, or similar useless gestures.

    That’s going to change very soon…

    Kimbo

    September 20, 2020 at 12:51 pm

  3. Bloody Leftists are all the same. When they get caught out they scream ‘context’ or ‘racist.’

    Then they try to tell you up is down and black is white.

    For the information of readers, elimination is a synonym for eradication. Both words mean exactly the same bloody thing .

    Synonyms of ’eradication’
    eradication
    (noun) in the sense of wiping out
    We are dedicated to the total eradiction of inequality.
    Synonyms
    wiping out
    abolition
    destruction
    elimination
    removal
    extinction
    extermination
    annihilation
    erasure
    obliteration
    effacement
    extirpation (formal)

    adolffinkensen

    September 20, 2020 at 2:06 pm

    • If that was aimed at me, I’m not a leftist. I’m a centrist who leans conservative. I realise to you that likely means I swing to the left of Che Guevara, but so be it.

      I also note you’ve ignored the “right wing” examples of language manipulation I cited in your double down. Typical way to deal with the cognitive dissonance of troublesome facts that don’t fit with your thesis.

      Also, and I can’t believe I’m writing in defence of Ardern because there is a lot about Covid she and her government have done poorly, nor that I even have to put that qualification because adults shgould be able to read without mendaciiously twisting the emaning of others

      ….but a word, any word has a range of meanings and it is only context that narrows down those potential meanings. Ardern has clarified what she meant by “elimination”, and it is not…”eradication”, and it is in accord with what a specific technical specialist term can mean in the context of communicable disease:

      During the 25 years since the certification of smallpox eradication there has been considerable debate among public health practitioners about how existing health technologies can best be used to decrease infectious disease incidence and prevalence. Interruption of transmission has often been envisaged as the ultimate goal, and standard public health concepts of disease reduction have been defined or re-defined. In 1998, Dowdle proposed a definition of control as a reduction in the incidence, prevalence, morbidity or mortality of an infectious disease to a locally acceptable level; elimination as reduction to zero of the incidence of disease or infection in a defined geographical area; and eradication as permanent reduction to zero of the worldwide incidence of infection. (1)

      Whereas the proposed definition of eradication emphasizes that routine intervention measures are no longer needed once interruption of transmission has been certified worldwide, inherent in the definitions of control and elimination is the need for continued intervention measures to prevent re-emergence and re-establishment of transmission. It is this need for continued intervention after reaching control or elimination targets that has been the source of confusion among public health workers, health policy-makers and the politicians who provide resources for infectious disease control. At times, misunderstanding has led to neglect or complete cessation of intervention activities, with concurrent decrease in financial resources, and thus to re-emergence of the target disease.

      https://www.who.int/bulletin/volumes/84/2/editorial10206html/en/https://www.who.int/bulletin/volumes/84/2/editorial10206html/en/

      But yeah, yeah, we know, the WHO?! COMMIES!!

      Now, just out of interest, so the rest of the class can judge your skills of objectivity and consistent application, regarding the spending cuts you insist we should be implementing on both sides of the Tasman in the current fiscal crisis…have you told the Aussie government, “yeah, nah, for the sake of the nation I’m forfeiting my pension”?!

      Kimbo

      September 20, 2020 at 2:41 pm

    • Adolfian wordsmithery.

      No words have context, all words mean what I say they mean.

      Evolution is just a “theory”, so we should “teach the controversy”.

      Coal magically emits no CO2 when we call it “clean coal”.

      Donald Trump is not a fascist, he is a “benevolent dictator”, sort of like King Leopold and Lord Mountbatten.

      Elimination is what Adolf does after breakfast and later becomes a post on NM.

      Gustavo Frink

      September 20, 2020 at 3:45 pm

  4. We had inherited a PREFU that forecast a decade of deficits. We knew we could change that. But it took real discipline to bring spending under control. Even so we still had to borrow about $40 billion to pay for everything.

    I guess this is where our political preferences affect our view of things, but I always see this described as though it were a given. Decade of deficits a major problem; spending had to be curtailed and borrowing minimised to solve that problem. What I never see explained is why taking a more Keynesian approach would have been a bad idea. Genuine question: if your government had instead decided to accept up to 50% more borrowing and a slower return to surplus in order to maintain public services and infrastructure through the crisis, would the country have been significantly worse off at the time of the 2017 election? I can think of multiple ways it would have been better off, hence the question.

    Psycho Milt

    September 20, 2020 at 3:16 pm

    • Fair question and one that moves beyond the tribal silliness that when Labour governments tax and spend it is profligacy selling our children into servitude, whereas if National governments do it:

      https://www.kiwiblog.co.nz/2020/09/the_need_for_a_2nd_harbour_crossing.html

      ..it is wise investment in infrastructure.

      That’s the same David Farrar, btw, who is horrified at the thought of councils raising rates in the next few years. OK, David but is it possible that similar calls for austerity in the past have delayed good infrastructure spending that is more expensive in the long term?! Is typical of the NZ approach to infrastructure which has been half-arsed since Julius Vogel in the 1870s. Hence, suddenly now realise we need a new mass-transit Auckland Harbour crossing….

      But to answer your question, getting into surplus a year earlier than originally predicted in 2008 meant lower debt re-servicing, and likely at a lower rate. So more money to spend on social services and/or (if you are that way inclined) tax cuts. And they did it be allegedly getting better quality out of existing spend, with Tony Ryall as the exemplar in Health. Arguably that was at the expense of good social “investment”.

      While you can crunch the numbers both then and now, likely the answer to your question is subjective and depends on ones existing priorities. However, Australia in the late 00s DID do a deliberate Keynesian spend-up and at the time our Labour opposition was criticising Key’s government for not doing the same. I’d suggest the influx of Kiwis back from Australia in the mid 10s is a good measure of which strategy was more effective in the medium term. Like working out in the days of the Cold War which was best, communism or liberal democracy, just apply the simple pragmatic test and go to the Berlin Wall, and see which way the people jump.

      Kimbo

      September 20, 2020 at 3:50 pm

    • The task was two fold. One, get back into surplus within a reasonable period so as to be ready for the next big shock). Two, reduce both the regulatory impact and the total size of government so that business could grow faster.

      For instance ithe 90 day trial period (which was my particular initiative), reform of employment law, reform of the RMA (only partially successful), reform of the Building Regulation (this was post the Leaky Building issue), and a host of other microeconomic reform.

      By 2017 government was at 30% of GDP compared to 34% at the end of the Clark administration.

      All of that explains why the New Zealand economy was among the fastest growing in the OECD from 2012 to 2018. The brain drain out of New Zealand just about ceased.

      A more Keynesian approach would have meant more government spending and lower growth, which is exactly what happened from late 2018 through to the end of 2019.

      The current government in fact had accepted most of the National government’s microeconomic settings (at least prior to covid), though without the same level of enthusiasm.

      Wayne Mapp

      September 20, 2020 at 5:06 pm

    • Looks like it is a matter of political viewpoint. I see public sector at 34% of GDP as a good sign, not a problem, and hope we get back to at least that much or more. I also regard the relatively high growth figures under the Key government not as a result of good governance but a result of mass immigration, a property bubble and intensification of dairying, none of which were good things.

      Psycho Milt

      September 21, 2020 at 8:46 am

  5. I guess what you mean Milt is that they wouldn’t have had the surplus they inherited to spend on such doozies as the PGF or free first years tertiary study or, or or Auckland Light Rail that never happened.

    And I still don’t understand why your mob hate farmers. Bit like Cullen and this from his maiden speech … ‘And to my old school, Christ’s College. I am proud of the fact that my secondary education was not paid for by the taxpayers of New Zealand but by the farmers of Canterbury and Hawke’s Bay. I ripped them off for 5 years then, and I shall get stuck into them again in the next few years’.

    The Veteran

    September 20, 2020 at 3:45 pm

    • A government surplus is not a good thing. It means money taken from the economy that cannot be used to create new industries, improve existing enterprises, employ more people, improve health services, etc. It is dead money. I do not understand how avowed capitalists can get this so wrong.

      Gustavo Frink

      September 20, 2020 at 3:49 pm

    • ‘And to my old school, Christ’s College. I am proud of the fact that my secondary education was not paid for by the taxpayers of New Zealand but by the farmers of Canterbury and Hawke’s Bay. I ripped them off for 5 years then, and I shall get stuck into them again in the next few years’.

      …and yet another one fails with a sense of humour/irony by pass.

      A bit like the nongs who can’t see the joke when, in a video entitled “Bad Relationships” Clarke Gayford quipped:

      ….Gayford tells people to start every new relationship badly such as not turning up to a date or kissing an ex so that their partner’s expectations of them can only improve.

      “… Improve the relationship slowly therefore surprising your partner ‘oh you brought me flowers, you never brought me flowers before’ – surprise. You will also never hear those words remember when you used to, you were so much nicer when you used to do that’.

      “Start slowly, improve slowly. Everyone wins. Trust me – I have had literally hundreds and hundreds of really successful relationships.”

      https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12077430

      FFS, he’s joking he’s had hundreds of relationships (he hasn’t, really!!) because they quickly dump him because of the way he treats ’em, so he has to move on to the next relationship…which also ends quickly for the same reason!!

      Kimbo

      September 20, 2020 at 4:00 pm

    • Antagonism between landowners and organised labour isn’t exactly a recent phenomenon, it’s been around as long as labourers have thought to organise, so a couple of hundred years at least. And it’s mutual – suffice to say, no Prime Minister of NZ has ever appointed a crowd of labourers “special constables” so they could go and beat farmers in the street. Should that happen one day, I’ll take farmers’ incessant whinging about how victimised they are a bit more seriously.

      Psycho Milt

      September 20, 2020 at 5:15 pm

  6. Kimbo.

    You should know by now that nothing from WHO is reliable. Smallpox virus was NOT eradicated worldwide in 1980. A quick Wikipedia search will tell you it keeps cropping up every few years, the latest being 2015.

    adolffinkensen

    September 20, 2020 at 7:17 pm

    • Now, you do know I was only quoting the WHO to confirm one of the specific specialist technical meanings of the word “eradication” in the context of communicable diseases…ah, bugger it, yes, Adolf, COMMIES!!!

      It’s like trying to teach algebra to a fox terrier. Yeah, he seems involved, enthusiastic and engaged…but the answers just don’t address the problem! 😳😂

      So, still no answer from you, or the Vet for that matter about giving up those pensions in the interests of the public fiscal rectitude you so enthusiastic to see applied at the expense of others? 😳😂

      Kimbo

      September 20, 2020 at 8:07 pm

    • “elimination”!!

      Sometimes the fox terrier gets the better of the exchange courtesy of the shell-game distraction gambit! 😂🐶

      Kimbo

      September 20, 2020 at 8:12 pm

    • Kimbo, stop questioning Adolt – he is the Suppository of All Wisdom!

      Gustavo Frink

      September 20, 2020 at 8:58 pm

  7. […] Kneecap farming exports by say 10% and expect unemployment to rise, tax revenues shrink and government debt to increase. – Wayne Mapp […]


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