Going Backwards

Austerity isn't working; time for more Austerity.

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We're going backwards
Ignoring the realities
Going backwards
Are you counting all the casualties?

We are not there yet
Where we need to be
We are still in debt
To our insanities

Songwriter: Martin Gore

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A grim diagnosis

To the surprise of nobody who had seen her “plans” or knew anything about economics, Nicola Willis’ dismal austerity programme has delivered exactly what everyone except the Finance Minister said it would—except worse.

For goodness sake - it’s not exactly rocket science here.

If you cut jobs and stop infrastructure spending, which means more job losses, then economic activity slows. So the next year, the tax take goes down, and now you have to make more cuts… and rinse and repeat.

Then chuck some tax cuts we can’t afford on top of that, and you’ve got mismanagement of such epic proportions that it’s as if Willis has absolutely tanked the economy on purpose, just so people will stop calling her Nicky No Boats.

What is it to be now, then, Nicola? Nicky No Clues? Nicky No Plans? Or how about Nicky No Job in the Morning?

But this isn’t something important like football, is it?

Economic management

It’s just managing the economy, which determines our spending on everything our society needs. So, it's nothing to get too excited about, and loyal fans will turn a blind eye—although maybe not quite as quickly as they might have before.

Then there are those who’ve already headed for the gate before the final whistle...

A lot of people have lost their jobs, a whole lot. A full Eden Park, or the equivalent of every person in Nelson. Add on the families of those who have lost their jobs, and you’re talking about everyone in Hamilton.

They aren’t all woke public servants out of work; there are plenty of people from across the board, and based on today's news, there will be even more of them.

And so the austerity spiral circles the plug hole like we all knew it would, except for Nicola.

And we all know who is responsible, except for Nicola. She thinks it’s not her, and would prefer to blame anyone else, preferably the opposition. Where is Grant Robertson when you really need him? No, seriously, where is he? We really need him!

1 News announced the forecast, saying the outlook is bleak with more pain ahead. A bit like a walk down the aisle with David Seymour - right Christopher? Or if you’d like to make that joke a little “edgier”, one with Nicola.

A fall in the tax take will result in $13b less in the May budget, which is a lot of money.

Where’s the money gone?

Coincidentally, that’s about the same amount they spent on the tax cuts that most people hardly noticed—well, not the ones who needed them most anyway.

We will run deficits for a couple of years longer than expected, and now Nicola says she has to find the money to pay for essential services.

Look, I don’t want to come over all pantomime here… but, Nicola, “it’s behind you”. Yeah, you blew it all on those tax cuts - if you hadn’t done that, then… well, you get the picture. Right, Nicola?

So this is the bit where they start saying we have to privatise everything because there is no money left because… Oh, look, I’m not going to say it again…

It seems that something is ahead of schedule. I didn’t think we’d get here until the second term, so something’s on a Fast Track, alright. Every single number was worse than expected. In the following analogy, it is a sea of broken crockery.

Image:BeFunky.

On top of that, the government has announced the smallest minimum wage increase in decades. Going back to the days of the person who must be Nicola’s role model by the look of it, Ruth Richardson.

Real wages go backwards, which means more belt-tightening. People spend less, and there is a lower tax take, leading to more austerity. Inevitably, this will lead to the failure of public services and then calls for privatisation as the only answer to the problem they have created.

And all right before our eyes. Just how stupid do they think we are? Hmm, perhaps don’t answer that.

A turd by any other name…

In a futile effort to make things appear better, like hiding a rather obviously body-shaped lump under a rug, Nicola decided to change the rules, to redefine the way things are measured.

The Obegal measure used didn’t look too flash, with deficits as far as the eye could see. So, the coalition created a new measure, Obegalxt, to help make things look better. Funnily enough, the coalition’s metric, which excludes things like ACC and is not supported by the Treasury, makes things look better, although still terrible.

Once you remove that sleight of hand, the real situation is even worse. And these people have the gall to accuse Labour of not being transparent about the numbers. For goodness sake, even the Newstalk ZB account tweeted, “No surplus in sight: Creative accounting used to mask deterioration in Government books.”

At least rents have fallen, right?

Of course, the government spent the money on more than just tax cuts. It also gave billions to landlords, offering the carrot that rents would fall as a result. So did they?

What do you think? Have they turned out as Luxon suggested when he said the following:

“I'd say to you, I don't think it has been a backlash. I think if you're a renter, you're very grateful for the fact that actually costs that have been passed on to landlords are not being passed on to you.

What has been utterly unacceptable was that there's been a $170 per week increase in rents under the previous government and they just kept going up and up and up.”

As you can see from this chart, with the bar on the right representing 2024, it made no difference whatsoever. The landlords just pocketed the tax reduction and raised the rent by the same amount anyway.

Image: https://www.infometrics.co.nz/

This means less money in the pockets of renters and even more money with landlords who can probably think about buying another property with house prices about the only thing expected to grow next year.

Good tidings?

This is not how the government would’ve liked to end the year and the impression they wanted to leave Kiwis with as they take a well-deserved break, take stock and think about whether they’re better off or worse off than a year ago. They consider how positive they’re feeling about the year ahead.

Sadly for the government, it is hard to imagine that many New Zealanders will be feeling anywhere near as optimistic as Willis was when she developed her great economic plan to get the good ship Aotearoa, oops sorry about the nautical reference there, Nicola, back on track.

Suffice to say there wasn’t a lot of good news to deliver to the waiting press pack, toothless though many of them might be.

Let’s be honest; Nicola wasn’t excluding Renney because she was about to deliver good news. She knew it was awful, and he would point out the brutal truth even if others were willing to sing along relatively harmoniously.

The CTU Strikes Back

Renney has not disappointed. Although this is a long quote, I think it’s worth including in full:

“Our fiscal indicators are all heading in the wrong direction – with higher levels of debt, a higher deficit, and deeper cuts programmed in the future. Our economic indicators are all heading in the wrong direction, with lower economic growth and higher unemployment. The Government’s policies are hurting working people, and they’re not working for Aotearoa.

The data showed that the economy is growing more slowly than forecast just six months ago. Next year GDP growth was forecast to 1.7% at Budget, now its 0.5%. GDP is $20bn lower by 2028. Unemployment is higher in every year of the forecast – with 20,000 more people on jobseekers support by 2026. OBEGAL absent the new tricks of accounting – never comes back into surplus across the forecast period. Net Core Crown Debt increases across the forecast period by $58bn.

The Budget Policy Statement signals that we are in for more cuts in the next few budgets. There is only $700m available at the next Budget to pay for everything outside health. That bakes in likely cuts to public investment and to the public sector workforce every year for the next few years. All to pay for the tax cuts that have now passed. The folly of that decision is now being uncovered.

These books paint a picture of a government without a plan. The only solution the Minister of Finance is planning is to double down on an already failing strategy. These are the Government’s books; responsibility shouldn’t be passed on. Working people and communities across Aotearoa will suffer if we don’t change track.”

Austerity isn't working; time for more Austerity

So, the vicious cycle continues. Nicola is already signalling that there will be more public sector job losses, which, along with other spending cuts, will only prolong the recession.

Clearly, the budget's limited resources mean that none of the major issues, such as the state of our health system, will be addressed this term or anytime soon.

We’re not paying off what we owe but will spend longer servicing the debt to pay for tax cuts, which is utter madness.

Nicola Willis has gotten this completely wrong. She has spent all the money on promised tax cuts we couldn’t afford, made the economic situation worse—hardly the remit of the Finance Minister—and is backing us into a corner where we can’t afford the things we need without selling some of them off.

In my view, the country cannot afford Willis’ negligence any longer, and she should be fired.

This is not because of things outside her control in the global economy but because of her choices about what to spend our money on and what to cut. Her stewardship has been disastrous for Aotearoa, and it needs to end.

Willis OUT!

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What did you make of yesterday’s announcement?

Have a good one, all of you lovely people. Not you, Nicola, you’ve got work to do; I suggest starting with some apologies.

You promised to get things Back on Track but you’re only Going Backwards.