NZ 2024
Back in early October 2023 ahead of the election, I said that NZ is in a mess.
Now it is more so.
The latest GDP numbers just out show a 1% drop in September 2024 following a revised drop of 1.1% in June. This is apparently the worst performance since 1991 other than because of Covid. We are in recession as many retailers and builders will tell you.
The GDP per capita which is a more meaningful measure as there are more people in NZ, fell by 1.2%. This is the 8th consecutive quarterly fall.
We do not have a “rock star” economy after all.
The new Government has started quickly to cut spending on bloated public services but not by enough. Instead of removing unnecessary back office and management staff, front-line services have been affected.
There is a reluctance in some Government ministries to get back to doing the basics and doing them well. This is impeding what needs to be done and needs to change.
I agree with Local Government Minister, Simeon Brown’s comments about local Government that we can’t spend money on the “nice to haves” when the pipes are broken, trains and buses are cancelled or never arrive, and the roads have potholes.
We are still picking up the tab for the Reserve Bank’s printing money around Covid and extreme Government spending over the last 6 years, which has caused delayed inflation, much higher interest rates, and resulting hardship on many.
Finance Minister, Nicola Willis, in her press release of 17/12/2024 said that “Lifting productivity is key”. I agree.
However, In my opinion, Barbara Edmonds, the Labour Finance spokesperson, is correct in saying that there is no actual plan to restore productivity. We desperately need dramatically improved productivity to turn the country around.
Spending less is crucial, but the money that is spent needs to be focused into the right areas to act as a catalyst to foster growth.
Collaboration is the missing word in the current “political speak”. We need collaboration among Government, public service, business, farmers, and workers to move our country forward.
Hoping that dairy prices, the exchange rate, Chinese imports and AI are going to do it for us is naïve.
That is rather like backing the NZ cricket team – it could work and sometimes does – but could go and does go horribly wrong too.
The immediate outlook for the country’s finances is troubling with deficits to continue for longer, less money in the piggy bank and increased borrowings just to stand still. The ratio of debt to GDP is forecast to rise to 47% which is disturbing. Interest on Government debt is forecast to rise to $3.2b per year in 2028-29 assuming that NZ can retain its current credit rating [not certain] and there is still money available to borrow [also not certain].
Have a look at the NZ Debt Clock:- https://www.debtclock.nz/?utm_campaign=240517_90k_debt_day_ask&utm_medium=email&utm_source=taxpayers
NZ’s debt is growing by over $1M per hour! Have a look and see what your household’s share is.
World situation
US Debt is more troubling. See https://www.usdebtclock.org/mobile.html.
It is almost $36 Trillion with interest in the last month ticking over $1 Trillion per year. Each taxpayer’s share is over USD 271,000. The deficit is over $2 Trillion per year which is unsustainable.
To turn that around in US, might mean reduction in imports into the US, increased tariffs or other drastic measures. As the world economy depends on the US, this would adversely affect all of us in NZ.
Interest rates have been trending down around the world, but inflation may not play ball. Higher interest on Government debt around the world is going to create more issues for many Finance Ministers trying to set and keep within budgets. Many will fail.
In some countries more money printing is being contemplated, which will bring about increased inflation all over again.
Governments in Germany, France, Georgia and elsewhere are in political trouble so add to that the war in Ukraine, the Middle East situation and there is extreme uncertainty on many fronts.
China and other countries in Asia have been stockpiling precious metals as a currency protection and rare metals which are needed to manufacture chips, electronic processors and batteries. That makes the rest of the world potentially very vulnerable.
Climate Change
A few words on climate change. Have humans messed up the planet? Short answer, yes!
Will all of us driving electric cars and stopping cows farting save the planet? No!
To make NZ’s electricity we burn imported coal and far more than ever before. That is not saving the planet.
Making electric cars, hybrids and the batteries, requires use of rare [and other metals] that all take large amounts of power to manufacture. In several of those countries e.g. DRC and Mozambique workers are paid “peanuts” to extract the metal, while their countryside is destroyed and water is contaminated in the process. That is also not saving the planet. It is just the opposite.
Planting trees that will never be cut down on productive farmland is also not saving the planet. It is destroying the future and prosperity of our country. It is hard to believe that this could ever have been contemplated or permitted.
As an aside, NZ’s emissions are no more than the rounding error on the world climate map. Therefore, whatever we do has an infinitesimal effect on world outcomes.
We need to look at this in a more holistic way to look at all the factors and integrate them to get good outcomes that legitimately help save the planet, which is clearly a good thing.
Responsibility
None of this mess we are in will be fixed anytime soon. We have 5- or 6-years of pain to come even if the Government succeeds in implementing better economic management.
Caution, reduction of debt, and careful financial and business management are recommended for the next 4-5 years both at a business and on a personal level.
I can’t do better than repeat what I said just over a year ago.
Will politicians save us? No, although some policies are better than others.
So, it is up to You!
Vision and Plan
What we need is a VISION for NZ.
A nation where people are productive, properly rewarded for what they do, able to live in their own house, and afford to have a family and all the normal things of life.
A nation of people working together for the common good.
MY PLEA therefore for 2025 is: –
Let’s revert to being ONE PEOPLE.
A nation united for the common good of ALL citizens.
A nation that CARES AND HELPS the disadvantaged, the underprivileged and those in need.
A nation that VALUES FREELY HELD OPINIONS and respects the right to hold and express them.
A nation that WORKS TOGETHER and collaborates for the common good.
A nation that is a POSITIVE EXAMPLE to other nations.
Let our Government be the servant of the people – the citizens – as it is meant to be and do what is in the best interests of everyone.
Let our Government actively collaborate to get NZ moving.
Let our Government encourage initiative.
Let our Government listen and heed what the people say.
Let Employers and Businesses Reward all those involved in making their businesses thrive.
Let’s change to a win-win approach! Where All benefit.
Individually, let us care for our neighbours, making sure that are ok and helping out if they are not.
If we have received a helping hand, pay it forward so someone else can benefit.
Imagine the result of all working together! A country we can be proud of again.
