Interest, inflation, cost of living crushing NZ

OPINION: Reserve Bank governor Adrian Orr has warned if we simply borrow overseas money for cyclone recovery work that will worsen inflation – and the cost of living crisis. Does this mean Government spending cuts to ‘‘reprioritise’’ cash or do we need ne

TIn the red corner

here are people whose homes, whose businesses, and whose lives have been completely devastated by recent extreme weather events. We owe it to them to consider carefully both how much this is going to cost and how we pay for it.

As with the earthquakes in Christchurch and then Kaikō ura, the legacy of these events is going to be with us for many years to come. We know that more financial support will be required, but the Government is in a very strong position to contribute to that.

During the flooding, I stood in my local Civil Defence centre, watching a mum and her teenagers emerging from the dark carpark. I saw they were wet, cold, and had nothing with them. Even before any announcements, I knew we would help them through this tough time.

The Government has moved quickly to put in place a Cabinet committee and regional ministerial leads to help coordinate the central government response and recovery. The new extreme weather recovery committee will be chaired by Grant Robertson as minister for cyclone recovery, with Prime Minister Chris Hipkins, Emergency Management Minister Kieran McAnulty and Barbara Edmonds also members.

An initial $50 million support package will support businesses, farmers and growers, and an extra $250m will help councils fix roads, get transport links back up and access into communities. The support will be ongoing, and the committee will help steer the work needed to get affected regions back up and running again.

We also know that how we recover has to be done a little bit differently this time. New Zealand is now without question experiencing the effects of climate change.

Extreme weather events are becoming more common and they are of greater intensity. In the year 2021-22, there was a ninefold increase in the amount of money required to help farmers and growers affected by floods, storms, and drought. Right now, the task ahead of New Zealand may seem daunting to many people.

There is a big challenge ahead of us all, but the cyclone and its aftermath won’t be with us forever.

We can rebound from this and continue to build a country of opportunity and energy.

We can navigate the global pandemic of inflation. We can invest in the skills, the innovation required to power up for the future.

We can build back better, we can build back safer, and we can build back smarter, and we will do that by working together.

TIn the blue corner

he ongoing cost-of-living crisis has been putting pressure on struggling New Zealanders, but the government has taken little action and to date has made it worse.

Undoubtedly, Cyclone Gabrielle and the flooding in the North Island have caused extensive damage and emotional distress for those impacted. As we face the multibillion-dollar reconstruction, we must have prudent and responsible fiscal management.

Unfortunately, I have little confidence that this government can provide that.

Its track record of wasteful spending and lack of delivery is unacceptable. Government spending is running at 35% of GDP, higher than it’s been in 17 years, and I struggle to see what material outcomes we have received as a result.

The tax burden on New Zealanders has increased significantly due to fiscal drag as tax brackets have not been adjusted while incomes have risen.

Tax revenue has increased an eyewatering $43 billion in just five years, helped along by rampant inflation, and a series of new taxes. That extra tax taken is equivalent to $17,500 per household.

And yet the new prime minister has still not ruled out forcing further taxes on Kiwis during what is a difficult time for many. I have always been an advocate for people keeping more of what they earn because they know how to spend their money better than any government does.

This country is being crushed by high inflation, the cost of living and soaring interest rates. The latest figures from Centrix confirm that thousands more New Zealanders are falling into debt trouble, with 430,000 Kiwis now behind on debt repayments, including mortgages, credit cards and ‘‘buy now, pay later’’ accounts.

The Government must address wasteful spending such as the projected $30b on Auckland light rail, $317 million on the TVNZ/RNZ merger, which has now been cancelled, and $16m for consultants on the deeply unpopular three waters reform. This is just a small snippet of the billions of dollars that have gone to waste.

The best way to achieve outcomes for New Zealanders is not throwing money away at pet projects, but instead supporting New Zealand households and businesses to grow and reach their potential.

The current government would do well to remember the famous words of JeanBaptiste Colbert, finance minister for King Louis XIV, ‘‘the art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.’’