The cost of the government's good books
The finance minister thanked workers for saving the economy, but businesses and low-income families might be left with little to celebrate
Mōrena and welcome to The Bulletin for Wednesday, October 13, by Justin Giovannetti. Presented in partnership with Z Energy.
In today’s edition: The future of Covid-19 in South Auckland; Amazon kept officials working on its TV series until the last minute; report warns against carbon farming; but first, what to make of the government’s unexpected windfall.
Finance minister and deputy prime minister Grant Robertson (Mark Graham/Bloomberg)
The state of the economy. Grant Robertson was in a sunny mood yesterday after the Treasury unveiled the final figures for the financial year ending in June, confirming that government revenues were billions above expectations while spending had fallen. For the finance minister, it showed an incredible turnaround for the country after the first Covid-19 lockdown. The economy rebounded more rapidly than anyone thought possible. As the NZ Herald reports, the situation is even rosier when you consider the soaring value of the government’s assets. Robertson said that workers had “protected the economy”, with corporate profits up sharply and the deficit down to one-third of the level projected only a few months ago.
Sitting in a mask-wearing, socially-distanced audience, it felt like there was a disconnect between a finance minister claiming a big win and a country where many people are seeing their finances slip away. First, there are the business people sitting around the country worried they’ll close in the coming months. RNZ reports that Auckland businesses found the minister’s optimism bewildering. The full economic impact of Auckland’s lockdown won’t be known for some time, but Robertson said he expects the economy to roar back eventually. “The New Zealand economy is strong, resilient and robust and will bounce back from the position we are in now,” he said.
It’s all about choices. As Robertson spoke I was thinking about a recent conversation I had with my better half about one of her friends. The woman lives in a rented house in the Hutt Valley, works a blue-collar job and is raising seven children with her partner. They both brought kids to the relationship. She stretches a small budget to keep everyone fed. She has a medical condition, as does one of her kids. She only has enough money for one treatment, so she skips her own. Her house is perennially cold in the winter, because of high heating costs. She’s never complained and doesn’t see herself as struggling. She only talks about needing to make choices. It’s hard for me to disentangle some of the choices she needs to make on a daily basis with choices made by Robertson and his predecessors in the finance minister’s office.
With revenues $7 billion higher than expected, and the deficit down to $4.6 billion, Robertson was asked if there’s more he could do to help people facing mounting living costs as rents soar, along with power bills and food costs. People who aren’t on government assistance, but could have their lives made a little easier. While there’s been a boost to people on the benefit this year and those who qualify for the winter energy payment, Robertson said not to expect more, concluding “we’re still in deficit”.
Who wins when the economy is protected? The government’s debt is now $10 billion smaller than expected at the start of the year. New Zealand’s debt had been projected to hit 34% of GDP, up significantly since before Covid-19 but still one of the smallest among countries with advanced economies, who are hovering around 90%. Instead, it was barely above 30% of the economy in June. New Zealand’s focus, according to the finance minister, remains on returning to balance and paying down the debt. The government’s improving balance sheet shouldn’t be compared to people who might be struggling, Robertson said.
“Businesses are doing well, that means people are being paid more, that means more people are working, that means consumers are out spending and supporting retail. These accounts show the strength of that. On the other side they do show a careful balance in the way we’re managing the books…We’re clearly aware that within that economy there are people with different experiences and that’s why we provide the support that we do. I don’t think it’s fair to say these accounts show anything other than New Zealanders working very hard.”
A call for support. While Robertson has said he isn't interested in big new spending, the prime minister confirmed on Monday that some additional support for low-income families is coming. As Newshub reports, there hasn't been any details, but the Child Poverty Action Group says help is needed and fast as food banks can only do so much to plug the holes in the country’s social safety net.
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Even highly vaccinated, South Auckland could see up to 1,400 weekly cases if the international border reopens. Justin Latif reports for The Spinoff about what Covid-19 modelling for Counties Manukau District Health Board shows if the border were to reopen to countries with high virus numbers, even with a 90% vaccination rate locally. The number of jabs delivered in the region so far is much lower. It’s a reminder that in the coming weeks, even as some areas surpass the 90% rate, the government will keep an eye on all parts of the country. We’re all in this together.
The Covid numbers: 40 new community cases were reported yesterday in Auckland and 3 in Waikato. 66% (23) of the previous day’s total were in the community while infectious. There are now 478 active cases. 69,118 people were vaccinated on Monday.
The Spinoff’s Covid data tracker has the latest figures.
Amazon was stringing the government along on Lord of the Rings until the last minute. The NZ Herald (paywalled) reports that Amazon was working on a number of strategies with the government for the series until days before it pulled the plug. Through a series of documents, the newspaper reconstructed the last few weeks of what had been a significant deal for the country’s film industry. Meetings were held and information was going back and forth. A day after it cancelled the project, Amazon contacted its partners in New Zealand to say it wasn’t attending the next virtual meeting, but said it would be fine for officials here to attend. Alone.
An East Coast report has concluded that carbon farming doesn't have a future. Stuff reports that the analysis concludes pine forests planted for carbon will be losing money in a century, leaving behind swathes of old and unsellable pine. In the shorter-term, the replacement of arable land, or forest currently devoted to forestry, with carbon farming will harm employment in the region. The report is so explosive that local business leaders tried to stop it from being released, so you should certainly read it this morning.
The Spinoff is hiring. A Māori politics reporter and a Pacific communities editor will be joining the team, thanks to NZ On Air’s Public Interest Journalism Fund. With my political editor hat on, I’m really looking forward to seeing what both can add to our coverage. The details can be found here. If you’re the right person, give it a go and apply.
The sad saga between Sir Tim Shadbolt and Invercargill city council continues. The deputy mayor is being sent to represent the city at a local government conference today, after councillors said they didn’t trust the mayor to represent the city’s positions or accurately report back what happened. According to the Southland Times, Shadbolt isn’t pleased and calls the decision a circumvention of democracy. So he’s paying his own way to the conference.
Because I can’t top ‘From discus to whisk this’ as a headline. The Wairarapa Times-Age has a story on Masterton’s Courtnay Fafeita who is headed to the Great Kiwi Bake Off. It’s a fun read about a local athlete who has turned into a skilled cake maker, cracking a few eggs along the way.
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(Getty Images)
Right now on The Spinoff: Duncan Greive writes that big, clear calls are now needed to chart the way out of elimination. George Driver explains what the new global tax rate means for tech giants in NZ. Getting everyone vaccinated is a marketing problem, according to Samson Samasoni, along with a health challenge. Stewart Sowman-Lund reports on Molnupiravir, the new antivral drug against Covid. Alex Casey & Tara Ward have written a detailed guide for how to pull off the perfect Vaxathon on Super Saturday using all of NZ’s best TV moments.
For a longer read today, MMP at 25. Part two of Henry Cooke’s door stopper of a MMP series for Stuff looks at the referendum that brought about the new electoral system. A quarter century after it happened, the adoption of MMP remains an incredible story of a revolt by voters, brinksmanship and an unlikely alliance of politicians that let it all happen. Here’s a bit of what Henry wrote:
No one in any kind of power in 1990 wanted MMP.
Jim Bolger, the new prime minister, had promised a referendum on electoral reform but was publicly not a fan of MMP himself, preferring a new upper house instead. Mike Moore, who had just finished as prime minister and was now leading Labour, was dead against it, calling it a “waste of time”. His ambitious deputy Helen Clark was even more opposed—as were 80 per cent of all the MPs in Parliament.
The Breakers plan to play 14 games in New Zealand next year. After a challenging 18 months, Newshub reports that the basketball team is trying to lead a return to some normalcy after a long period spent overseas. The team says it would like to be back in New Zealand from January to finish its season here, but that would depend on the reopening of a bubble with Australia. It’s unclear if that will happen.
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