Monday, 31 August 2020

We need an honest conversation about debt


 “As businesses go broke and household budgets tighten, we need an honest conversation about the Government’s spending splurge,” says ACT Leader David Seymour.

“While the Government hands out money to Green Schools and Bungee Jump operators, young New Zealanders are silently being lumped with the debt.

 “The Government has committed to borrow $140 billion on top of the $60 billion debt it had pre-Covid. That’s an extra $140,000, making it $200,000 on behalf of a family of five over the next two years. For many families, their biggest debt will be the one the Government took on for them.

 “We are being lulled into a false sense of security by cheap money and low interest rates. Two years ago the Government was paying four per cent interest, ten years ago it paid over six per cent. Cheap money won’t last, and the impacts of Government borrowing will be felt keenly by generations.

 “Even at current Government borrowing rates under two per cent, a family of five will soon pay over $5000 in interest for public debt every year. The Government has left New Zealanders with a debt equivalent to having every family max out their credit cards.

 “All of this occurs before we consider the possibility of facing another crisis such as an earthquake or trade war that would further imperil the New Zealand Economy. According to Treasury’s Fiscal Strategy Model, the Government will keep borrowing more money each year until 2028.

 “Our current track is unsustainable, we need to have an honest conversation about the Government’s spending habit and the debt it is leaving us with.”