Thursday, 27 February 2020

Economic tide going out, does Robertson have the fiscal togs?


“Labour’s low-quality spending decisions are coming back to haunt them as the serious economic impact of coronavirus becomes apparent”, says ACT Leader David Seymour. 

“Robertson claims the Government has room for a shock, but in the next breath he hopes for a mild coronavirus impact. We hope he’s right, but in reality the situation is not only worsening, but worsening at a faster rate each day.

“The old saying goes that it’s only when the tide goes out that you learn who has been swimming naked. Hold on, we are about to find out.

“According to Treasury’s Economic and Fiscal Update series, Labour will spend about $10 billion more next year than was forecast prior to the 2017 election.

“It has splurged billions on low-quality corporate and middle-class welfare, including Fees-Free and the Provincial Growth Fund, yet child poverty and homelessness are actually rising. It’s hard to overstate what an inefficient Government we have.

“Labour’s $10 billion spending splurge has come at a time of strong economic performance, when New Zealand’s terms of trade are the best in a generation. Any government can loosen the mainsheet and sail downwind, but loose spending makes New Zealand vulnerable in the face of a downturn.

“ACT has warned the Government for more than two years that the good economic weather would eventually come to an end and that it should be tightening its belt. 

“The serious economic impact of coronavirus will now require stimulus in the form of tax cuts or higher spending. 

“The Finance Minister himself has said that coronavirus will have a ‘serious impact on the New Zealand economy in the short term’. But he now has far less fiscal room to support the economy using tax cuts or stimulus spending due to his earlier poor spending decisions. 

“Good governments recognise good times when they see them and prepare for bad times. This Government’s failure to do so by indulging in low-quality spending now looks very silly indeed.”