David Seymour’s defence of free speech in the Herald, under attack from an angry trans-activist, is simply beautiful. Your property is safe(ish) as Parliament takes a three week recess.

THE HAPS

David Seymour’s defence of free speech in the Herald, under attack from an angry trans-activist, is simply beautiful. Your property is safe(ish) as Parliament takes a three week recess. ACT’s MPs are touring, hearing as many people as possible before returning to Parliament in May. The dates are here and after a record crowd in Whangarei this weekend ACT is building nicely towards real change in October. The great thing about a small democracy is you can make a difference, so please come out and play.

IT'S THE ECONOMY, STUPID

So said James Carville, and he was right about some things. Last week’s surprise rise in interest rates from the Reserve Bank will matter for the economy.

Orr’s rise stumped every major economic commentator. They all thought the Reserve Bank’s interest rate would rise by a quarter, from 4.75 to 5.0. It went up by a half to 5.25.

Everyone talks about mortgage rates, and that’s understandable considering how many people are rolling off mortgage interest rates starting with a 2 onto rates starting with a 6. But home lending is not the only type of lending.

It’s builders and developers looking for working capital and bridging finance. In fact it’s every type of business that borrows. It’s renters who need landlords to cover their costs, including interest that’s less and less deductible. Unless you are a saver (in which case some decent interest is a welcome relief), it’s bad news for the economy.

Orr looks like he may get the recession he promised us, and that means a loss of confidence and jobs. A shortage of jobs will be an issue for the first time after years of worrying about a shortage of workers. It’s one thing to face rising prices when your job is secure, it’s another thing in a recession. This stuff is getting real.

Meanwhile, the rest of the world is easing back on interest rate rises. The Reserve Bank of Australia decided to stay put at 3.6 the day before our central bank went to 5.25. The Fed in America stopped half per cent rises in December, going a quarter at a time to reach 4.75. New Zealand is becoming an outlier again, why? Granted, the storms and cyclones haven’t helped, but Auckland carries on and the areas truly devastated contain barely five per cent of the population.

The same commentators who said the rise would be a quarter may say it doesn’t matter. The banks who actually lend to people had a rate rise ‘priced in.’ Hold on. If Orr’s surprise rise wasn’t going to change behaviour, why did he do it?

Prof Robert MacCulloch has one theory, about Orr’s psychology. This is the guy who told us all the financial system’s a forest and he’s Tane Mahuta. He loves big plays so we saw big rate cuts and money printing in COVID, now he swings shock rises to stop the inflation he helped cause.

If the professor’s right then the right answer is to fire the Governor, which ACT already proposes. New Zealand needs a Governor who does not think he’s a tree. But we think there are better reasons.

Labour Governments have a reputation for spending more. They tend to produce idealistic student politicians whereas National governments produce bean counters with no imagination. Together they’ve given us the New Zealand we have today.

This Labour Government’s spending is something else though. As Paul Glass points out in a very good Herald column, Labour’s turned a billion into pocket change. When they bought off New Zealand First for a $3 billion Provincial Growth Fund in 2017, it was serious money. PHARMAC’s annual budget for all medicine is only $1.2 billion.

Turns out they were just getting started, though. The COVID spend was proportionally the second largest in the world. All told Government debt ballooned by $97 billion, and all fiscal discipline went out the window. There’s bike bridges, crazy mergers, and 14,000 extra bureaucrats.

Education spending is up from $14 billion to $18 billion since pre COVID, but fewer kids attend school and those who do learn less. Health spending is up from $18 billion to $28 billion, but the waiting lists get longer.

It doesn’t help that teachers don’t just teach maths, but “Ākonga are encouraged to interrogate dominant discourses and assumptions including that maths is benign, neutral and culture free.” Imagine learning your times tables while working that one out, or being a teacher obliged to follow it.

Meanwhile health is filled with identity politics and restructuring. Stories of surgeons who show up for a full day but only actually operate for two hours are rampant. They spend the time waiting for everyone else to get organised, if enough support staff are available.

Where does that leave us? Our Reserve Bank Governor is a bit crazy, but he is now doing his job, even if he created some of it. The level of waste in Labour’s expensive ideological experiments is probably greater than we can really know right now.

The next Government will need to start from zero. Stop it all and put back only what practically gets results for actual people. It’s a challenge we relish, and we hope you’re with us. Bring on October 14.


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