Monday, 23 May 2022

Free Press, 23 May 2022


The Haps 

ACT’s Tauranga Candidate Cameron Luxton is a machine. He is out on the street listening to voters and standing up to the city’s Labour appointed National Party Commissioner in the media. He is holding street corner meetings, embodying ACT’s back-to-basics approach to democracy. If you are in or near Tauranga and would like to support Cam, there is more info here. 

The Brain Drain Budget

The Government had one opportunity to stop Budget 2022 being the Brain Drain Budget. Free Press is in touch with young New Zealand. We receive message after message on social media saying ‘all my friends are off.’

Budget 2022 was Grant Robertson’s opportunity to draw a line in the sand and say ‘from now on we focus on being a competitive country for the next generation to build their lives. In the short term, here’s how we’ll kill inflation. In the long term, here’s how we’ll grow productivity to be first world again.

The Treasury now forecasts inflation will be 5.3 per cent next year. Big spending Government budgets mean there is too much money chasing after too few goods. Too much money because Government spending is inflationary.

Take the Emissions Reduction Plan. It subsidises a whole lot of schemes to reduce carbon emissions that will cost more than the market price. For example, the ‘cash for clunkers’ policy is actually based off California’s ‘Clean Cars 4 All’ policy.

The Californian Government estimates it costs $920USD ($1500NZD) to take a tonne of carbon out of their air by paying people to upgrade their cars. The current market price to emit a tonne under the Emissions Trading Scheme is $76. If you care about reducing emissions, why would you support a scheme that takes 20 times less carbon out of the air per dollar spent?

Incidentally, you may have seen coverage of an economics consultant (someone who lives off Government contracts) called Shamubeel Eaqub saying David Seymour is ‘economically illiterate’ and telling ‘lies’ about the budget. Here is a real economist - a Professor who’s globally recognised in his field- saying that Newshub owe David a retraction and apology. We couldn’t agree more.

Meanwhile, the rest of the world also agrees that Government spending is inflationary. The Government could have cut spending, removed remaining COVID restrictions, told Immigration New Zealand to actually facilitate immigration by skilled workers, and cut taxes so people can deal with the prices we already face. Unfortunately Grant didn’t do that.

Then there’s productivity. Australia’s median wage has grown $6,600 faster than ours since Labour were elected. That’s not the gap. That’s the growth in the gap over five years. Lithuania, Slovenia, and the Czech Republic have overtaken New Zealand for dollars per hour worked.

We need to decide as a country if we’re ok with this decline. If we are, then you don’t have to do anything, just enjoy the slide. If you are worried then we need to start changing policy.

Only one true policy innovation came out of the budget. It was the long overdue move to stop the supermarket duopoly from covenanting out any competition from land they used to own. The Australians got onto this back in 2009 (where the bloody hell were we, etc).

That move will, so fast as it goes, change the dynamics of the New Zealand economy. It will increase the intensity of competition in the grocery sector. That’s a good thing, but we needed so much more policy change.

The Mixed Ownership Model made four SoEs more efficient. Are we so rich that we can afford not to extend successful policies? ACT’s Real Change Budget says we should extend it to all SoEs, listing 49 per cent of them on the NZX, retaining local control and raising $8 billion to repay debt in the process.

We’re now the fourth hardest place for foreigners to send money. According to the OECD only Myanmar, Saudi Arabia, and China are more hostile to foreign investment. Can we really afford to be this way? ACT’s alternative budget says we should lift restrictions on investment from democratic OECD countries. We could go on.

There are lots of similar examples in ACT’s alternative budget. If we want to arrest the slide here in New Zealand, then we’re going to have to wake up quick. If you agree with us, we need to stick together and deliver real change. We hope you’ll support ACT.