Since my previous article, much unexpected has happened.
Donald Trump has rewritten international trade and upset all the normal rules of Economics 101. This has created immense turmoil around the world with short-term and longer-term outcomes uncertain. One consequence is Moody’s downgrading of the US credit rating to Aa1 from Aaa. It is historic as it has never been below Aaa before. The US debt as at now is $36.4T. Like NZ it will get worse. I think that US is technically bankrupt, but we need it to keep operating as normal for the benefit of the rest of the world. However, no-one is quite sure what this new normal is.
The Russian Ukraine War, the conflict in the Middle East, the piracy risks in the Gulf of Aden and the Red Sea, all add to the uncertainties.
UK inheritance Tax changes from 6/4/2025 are likely to affect some Kiwis who have assets in UK over £325,000 after they leave UK as there is a “long tail” of 10 years before they no longer apply. [UK tax advice will be needed if you are potentially caught].
NZ now has 5.3 million people as at 31/12/2024. It would have more if less of our young Kiwis had not left for overseas. This is a major concern as we are losing some of the brightest who have innovation, energy, and vision.
Left wing governments have been elected in Australia and Canada. Both look as though they will follow NZ’s lead under our previous Government of allowing bureaucracy to increase, allow more immigration and restrict growth in mining projects to save the planet – even though some are needed just for that.
The proposed changes to tax charities thankfully did not proceed. That would have been a disaster as it would have affected the ability of many charities to do the work that the Government is not doing. We all know that if charities didn’t do it, that the Government does not have the money or skills to do it instead. We would all have been much worse off.
The Reserve Bank has introduced its Depositor Compensation Scheme from 1/7/2025. This protects up to $100,000 of your savings in a DCS account. Most transaction accounts, savings accounts, notice accounts and term deposits will be protected. Kiwisaver is not protected, and PIEs may not be. Ultimately the depositor will pay for this as the cost to the banks will reduce the interest rates the banks are willing to pay.
18 Local Councils around NZ have had their credit ratings downgraded by Standard & Poors. This will mean higher interest rates for those Councils and higher rates for the ratepayers. In behind this is probably poor management at Council level.
The Government came in with a “hiss and a roar” in 2023 to do great things, turn around NZ, eliminate the waste, and eliminate the division that has plagued our country for years. This was what they were elected for.
This required bold and courageous moves to stop and undo the wasteful and unproductive Government spending and collaboratively develop a vision with growth goals for NZ.
In the end this has been disappointing. Our PM is more of a manager than a visionary.
We need a visionary that unites our country and takes us forward together to better things.
Making the Finance Minister also the Minister of Growth was a mistake. Someone who closely controls spending is not the person who can proactively spend money to make more.
Changes delivered after last year’s Budget did not go far enough. Cuts of 6.5% in Departmental spending was just not enough. Numbers need to be cut back by at least the numbers added in the previous 6 years, while at the same time becoming more focused on core functions and delivery – such as healing the sick, filling the potholes and protecting people from assaults and thefts.
There seems to be an entrenched bureaucracy in some Departments that is preventing the impartial and appropriate level of public service we deserve and should expect. Some actions seem counter to Government policy which is not what the public service is meant to do.
It was scary to find out that both our Health system and Wellington Water were run on Excel spreadsheets. The Health system had no relevant financial information to assist with management decision-making. That is unbelievable. Wellington Water made a major mistake on its Excel forecast that formed the basis of its funding requests to Councils.
This raises questions of competence.
The Budget 2025 does not cut Government spending enough.
We needed to reduce debt annually, cut further spending and avoid further borrowing.
That might mean much deeper cuts to public service numbers but that should have happened already.
Education initiatives are great and demonstrate what can be done with the right leadership and strategic thinking.
Why is that not happening in Health? Or Police? Or Immigration?
Where is the Planning? For the new doctors we need in 6 years’ time? The new pharmacists in 6 years’ time? The new nurse we need in 3 years’ time? How are we going to keep them when they are trained, or will we just let them go overseas? How are we going to pay the ones we have properly, so they stay and are joined by others?
Where is the vision? I am still waiting to hear it. We need Vision + Integrated Planning.
I heard the PM in his Budget speech thank the business community for what they are doing for NZ. Is that the only hope? That they do better and become more predictive? A 20% Investment Boost allowance is not going to cut it.
See below for the scorecard link of the Government’s performance. See what you think.
Tony Richardson
