New Zealand Fiscal Budget 2020


New Zealand Treasurer Grant Robertson must have been a tangle of emotions on the night before the 2020 Fiscal Budget which was delivered on 14 May at 1400 hours. So much riding on probably the single most important budget in a generation: the one that gets New Zealand out of the COVID19 mud pit.

New Zealand’s economy has taken a battering. Of that, there is no doubt. Unemployment may reach nearly double digit percentage figures, with Air New Zealand shedding 3750 jobs; 150+ at the Hermitage Hotel in Mount Cook Village; 300 at Ngai Tahu; and another 240 when Bauer collapsed the New Zealand magazine industry. Thousands more are going in the hospitality sector where the forced closure as a result of COVID19 has sent many restaurants, bars and cafes to the wall.

On one hand he had an unprecedented licence to spend on measures to get the economy going again. On the other Mr Robertson would have been nervous about whether he got the balance right between a big spend up and having enough in the bank for 2021, in case COVID19 did not clear out as fast as hoped for and to cover unforeseen emergency expenditure. And then some how dancing between the two hands, the knowledge that no matter which way he sliced and diced the pie, someone would not get enough support and might have valid reasons to be grumpy.

So, what did Mr Robertson’s Fiscal Budget 2020 do:

  • For people like me finding out that the Government has thrown another $3.2 billion in wage subsidies to businesses was very welcome news – most budgets do little for me, but this one honestly has
  • Kainga Ora has been allocated funding to build another 8,000 houses
  • 11,000 additional jobs will be created with a $1.1 billion fund to support environmental projects’
  • $1.6 billion for vocational training for those out of work and school leavers

Notably the Government had $50 billion it could have spent on New Zealand yesterday. It appears to have allocated around $30 billion of that money, leaving $20 billion in reserve. If I had to guess, Mr Robertson is wanting to make sure that there is enough in the Treasury in case COVID19 is not as finished as we think and a second wave – God forbid! – hits, in which case that is very sensible thinking.

Whilst no Fiscal Budget ever pleases EVERYONE, that was more so the case today. So many people and industrial sectors needing significant help and simply not enough money to help them all, whilst still having enough in the Treasury for a rainy day situation in 2021. Also New Zealand is very vulnerable at the moment. We are busy trying to deal with a damaging economic hit caused by a pandemic that has already taken nearly 5% off the economy, so should we have a major disaster like an earthquake or large volcanic eruption, it would be catastrophic.

Whilst not on the Government’s agenda, there are other ways we could help grow the fiscal pie, which the Government needs to consider in the near future:

  • Increase investment in research, science and technology to 2% of G.D.P. – with money being prioritized for medicine, renewable energy, alternatives to finite resources
  • Bringing back a permanent nation wide apprenticeship scheme
  • Legalize cannabis and establish the industry in poorer regions such as Gisborne, Northland and the West Coast
  • Redefine infrastructure as energy, railways, merchant marine, and invest accordingly instead of just building roads

So whilst the Government has played a largely welcome Budget in 2020, as always there are things that it could have improved on or been willing to give a try. Many New Zealanders want to see meaningful socio-economic change and are sick of the neoliberal model that only supports the very wealthy, and those with greater means than others. This cannot happen if the Government is not prepared to make changes.

 

N.Z in lock down: DAY 41


Yesterday was DAY 41 of New Zealand in lock down as we fight the COVID19 pandemic.

For the last nearly 6 weeks New Zealand has been in first, LEVEL 4 lock down and now LEVEL 3 lock down as we approach what I believe will be the most important date in the war against COVID19. 11 May 2020 will be a date where the Government either, out of an abundance of caution chooses to continue at LEVEL 3 for a bit longer, or sets a date for some form of LEVEL 2 to kick in.

This date is critical for a number of reasons:

  • The economy is being absolutely battered and the longer it is on ice, the bigger casualty list of businesses and the higher the probability of lasting damage
  • New Zealanders are wanting their lives back – who can blame them; for a time the Government enjoyed an unprecedented level of compliance, but the social harm and the mental harm being done is increasing rapidly
  • New Zealand is nearing a stage where compliance will decrease in inverse proportion to non-compliance with COVID19 restrictions, a stage that I believe will be reached not later than two weeks from now
  • Given that LEVEL 2 still has restrictions, people will be wanting to reach it sooner rather than later so that they can get it over and done with and go to LEVEL 1 where New Zealand will be essentially operating again
  • The election – no more need to be said

Public compliance vs non-compliance will begin to change rapidly in the next two weeks if LEVEL 3 is maintained. SOURCE: R. GLENNIE

Thousands of jobs have been lost across the country and much needs to start happening soon to contain the economic damage before it becomes lasting. Employers big and small have closed shop, cut jobs or announced other substantial measures to reduce their exposure to COVID19. From Air New Zealand, one of New Zealand’s biggest and most distinct employers where 3750 jobs have gone or are going, to the Heritage Hotel at Mount Cook where 170 out of 178 jobs have just been cut, employers of national and regional significance are trying to minimize their losses on a scale not seen since 1987 and possibly before that.

The social and mental harm being done to New Zealanders will not be minor in the least, and it is showing up now. Mothers on social media are talking about their children having massive and prolonged melt downs for no apparent reason and then when they’ve calmed down enough to talk, they say they are missing the play grounds, their mates, play dates and so forth. For a young child in their formulative years this is not minor. For those who have lost loved ones and are hurting inside without being to grieve properly with their relatives and friends, the longer a funeral or tangi is delayed the greater the internal pain I imagine they must have to deal with.

With the onset of LEVEL 3 there was an immediate increase in non-compliance. Despite the Police saying that they will take a dim view of people breaching their bubbles, hundreds of New Zealanders have already been pinged by the blue arm of the law for having parties, ignoring social distancing requirements when in public. With COVID19 starting to appear to be on its last legs, people are getting impatient and that impatience is only going to increase. And it is not helped by Members of the Opposition parties – notably A.C.T. leader David Seymour, National leader Simon Bridges, M.P.’s Todd McClay and others who think civil liberties are being eroded and that the Government is is now on a piss take.

With COVID19 on the run and hopefully out of new cases to spring upon New Zealand, there is also the knowledge that LEVEL 2 has restrictions attached as well. Events with 500 people or more will not be able to happen. Social distancing will still be maintained, which in bars and restaurants where a degree of intimacy and interaction is a significant part of being there in the first place, is going to cause problems both for bar operators, the authorities and patrons alike.

New Zealand is in unchartered waters and how well we navigate these last few weeks of COVID19 territory could have an impact on how people voted at the election. Whilst I expect the Government of Prime Minister Jacinda Ardern to get a high pass mark on the whole, blowing the public’s goodwill will cause unnecessary harm that National and A.C.T. will not hesitate to pounce on. Just because the Government is almost able to govern alone according to polls does not automatically guarantee it will have those numbers on election day. Ms Ardern and her Government would do well to remember that.

N.Z. in lock down: DAY 36


Yesterday was DAY 36 of New Zealand in lock down as we fight the COVID19 pandemic.

But the economic environment that we need to move into post-COVID19 is not the old unsustainable, throw-away, biota demolishing monster of old. Not if the human world is to avoid early demise caused by inane decisions being made by powerful forces in spite of all the technology, all the knowledge and know how to the contrary. No. If the human world is to continue to grow and enhance itself the human’s that make that world possible much change.

Everything is there, except the political willpower to make that change. But it does not need to be like that.

The change I envisage is something that is not at all new in terms of what I espouse. I have long been a fan of green technology and know how. Whether it is hempcrete to replace concrete because the latter has a massive carbon footprint; the development of hydrogen as a fuel source for vehicles; the extraction of gold, palladium and other valuable metals from e-waste for re-use, the future is green technology.

But it is not just technology, though sustained investment in that will be very useful. The economic recovery will need projects that can be started quickly and get lots of people back to work in a meaningful way. One such thing would be a complete overhaul of the insulation in New Zealand’s social housing stock, which would create a trade boom. The number of houses ready for use in that inventory is nowhere near adequate and so there is a need for new housing projects – Christchurch has an abandoned saleyard at Addington which have not been used for decades; and could accommodate dozens of one/two/three bedroom dwellings quite easily.

There are large scale planting projects that could be getting underway to replant poor quality land that is not practical for farming, building or grazing. To that end I support the Green Party request for $1 billion, which it proposes to use for a range of community funded initiatives. Native forests are very effective carbon sinks and suck up huge quantities, but without intervention to stop possums and other animals from destroying new plantings and stripping foliage, they might become net carbon emitters.

Some projects will be longer term and are quite ambitious. Which is why it is interesting to note the Green Party also has a plan for a $9 billion investment in the New Zealand railway network. In line with New Zealand’s commitment to dealing with climate change, the Greens intend to promote railways as an alternative to the heavy investment in motorways. New Zealand has 1,067mm track gauges, which are similar to some used in Japan for fast trains that can reach speeds of 160km/h. Whilst expensive, the speed of the trains would enable people and goods to reach places nearly twice as fast as a vehicle obeying the 100km/h speed limit.

But as I said at the start, this all comes down to will power. The money is there – the Government has an unprecedented license to spend at the moment. The projects are there and some are shovel ready, whilst others are probably no further than back of the envelope calculations that look promising, and still more are ones that should have been done yonks ago.

So, who is going to give the go-ahead for these projects to get started and get New Zealand back to work?

 

 

N.Z. in lock down: DAY 33


Yesterday was DAY 33 of lock down as New Zealand fights the COVID19 pandemic.

LEVEL 4 ended at 2359 hours on Monday. LEVEL 3 began at 0000 hours this morning. For the vast majority of New Zealanders, aside from being able to enjoy takeaway meals and coffees from ones favourite outlets, little has changed other than the following:

  • Tradies can return to work, but tools will need to be washed twice daily
  • Activities within your region are permitted, but the closer to home the better
  • Schools can reopen up to Year 10 (children under 14 must be supervised)

This is something from which the recovery will be tedious and unlike anything anything in the memory of the vast majority of New Zealanders. To the chagrin of millions of people. It will test the patience of decision makers, the authorities and the public. It will test them in ways they had not thought possible.

The civil libertarians, whose eternal distrust of Government renders them permanently suspicious of the establishment, will be looking for ways to get around a set of cumbersome, odious and yet essential rules. There may be a few inspired by protests in Germany and the United States who think they are making a stand for their country, but are only making a stand for their misguided beliefs.

The mainstream will be happy to comply with rules if they are sure it will get the virus gone. The authorities will be wanting to be as close to 100% certain as they can, that the virus has been defeated before they openly support seriously relaxed rules; the Police aware that the potential for non-compliance will increase in inverse portion to public patience.

The decision makers, having the decisions will want to be sure that they were a) the right decisions and b) will stand up to the scrutiny of any inquiry or review that happens later. For those like Prime Minister Jacinda Ardern, their legacy and how well their policies survive into the future will depend in large part on how they handle the recovery from COVID19.

I hope we are compliant as a nation – like everyone I want the virus to be decisively defeated. But when the war on COVID19 is inevitably drawn to a close, the Government is going to have a difficult balancing act between systematically denying the virus the prospect of Round 2 and getting as much of the country back to work, back to having a life as quickly as possible. There will also be challenges on the side that need to be dealt with, such as privacy concerns over the new application that the Government is working on – who will store the data; what rules will there be around sharing; what security will there be to stop hacking or data misuse among other concerns.

In some respects it will be like walking along the narrow ridge between potential pits (COVID19 resurgence, all the while wanting to dodge crumbling cliffs (public compliance) and not knowing how long New Zealand can maintain this delicate act without seriously hurting itself.

And all the while remembering there is an election in September.

N.Z. in lock down: DAY 32


Yesterday was DAY 32 of New Zealand in lock down as we try to fight the COVID19 pandemic.

After an initially sluggish response, Australia now joins New Zealand as one of the leading countries in the war on COVID19. Although the “lucky country” has a population 5.1x that of New Zealand, its death rate has per head of population been at a slightly lower rate to that of New Zealand. On 26 April the New Zealand death toll stood at 18; the Australian death toll at just under 90. The number of cases per capita has had a similar trend. Compared to New Zealand’s 1470 as at 26 April, Australia has recorded about 6800.

Initially Australia did not seem to be taking the matter as seriously as New Zealand and it – rightly or wrongly – suffered considerable criticism as a result. Multiple times, despite the risk at that point being well advertized there were reports of large numbers of people at popular leisure spots such as Bondi Beach in Sydney. State Governors and health officials warned the public that if they continued to ignore the warnings much more stringent, large scale stay-at-home orders would be implemented.

For the most part, Australia seems to be complying. Unlike the catastrophic bush fire season of 2019-2020 where the Government of Prime Minister Scott Morrison was blasted both domestically and internationally for its lacklustre response to huge fires ravaging large tracts of the eastern seaboard, the individual State Governments and Federal Government appear to be working together. On 28 March 2020 Australia recorded 454 cases of COVID19; on 26 April 2020 22 cases were recorded.

Like New Zealand and elsewhere there are proponents of Australia going back to work quickly, despite the risk posed by COVID19. Just a few days ago 150 scientists wrote to the Federal Government warning them of the dangers that go with loosening the restrictions too soon.

We need to – and I am pleased to see this happening – start co-ordinating with Australia a phased reopening of our economies and borders. We might have been poles apart on the bush fire response, but Australia is definitely proving to be one of the brighter stars in the COVID19 sky and New Zealand should be grateful for that and encourage them on their way. This is all the more important since it looks like more distant (geographically and COVID19-wise)friends like Britain, the United States and Singapore are not as far out of the proverbial woods as we would like to think. For a while we might have to accept a closed international bubble limited to Australia, New Zealand, maybe Taiwan and also our Pasifika neighbours.

Does that mean thing are going perfectly? No. Australia, like New Zealand and other countries, is facing internal calls to be done with the restrictions, despite the fact that they are still – like New Zealand and other countries – recording dozens of cases a day as well as deaths. But fortunately our trans-Tasman neighbours seem not to be suffering protests by gun toting anti-Government demonstrators like the United States, or demonstrations such as those happening in Berlin and other German cities.