Government operating deficit already 6.3% worse than expected in first 4 mths of year due to lower tax take, interest rates

By Alex Tarrant

Most major forms of government revenue in the first four months of the financial year have been lower than expected due to subdued private consumption and weak wage growth affecting the tax take, and lower-than-expected interest rates affecting other revenue, the government's latest financial statements show.

Lower-than-expected government expenditure partly offset the revenue shortfall, but that didn't stop the government's underlying deficit being 6.3% worse than expected in the May Budget.

The statements for the four months to October 31 come ahead of the Treasury's Half Year Fiscal Update, to be released on December 18. All eyes will be on the 2014/15 projections, the year in which the government is attempting to post a fiscal surplus.

May Budget numbers showed a projected wafer-thin surplus of NZ$197 million in 2014/15, which has effectively been almost wiped out over the past few months, if the government's financial track does not change.

Prime Minister John Key and Finance Minister Bill English both said this week the government was on track to hit the surplus target. Key said he was "not uncomfortable" with recent projections he had seen from Treasury on the surplus track, while English said hitting the target would be "a bit of a challenge."

Revenue down

Core Crown tax revenue of NZ$17.9 billion in the four months to October 31 was NZ$292 million, or 1.6%, lower than Treasury had expected.

The GST take was NZ$253 million, or 5.0%, lower than forecast, driven by private consumption levels that were lower than expected, Treasury said. Source deductions were NZ$191 million, or 2.6%, below forecast, due to weaker wage growth than anticipated.

"This trend is also expected to persist to the end of the year," Treasury said about the source deductions revenue.

A brighter note was other individuals’ tax revenue, which was NZ$351 million, or 46.6%, higher than expected, reflecting an increase in the effective tax rate paid by non-incorporated businesses.

"Tighter collection and enforcement policies by IRD are considered to be a factor, resulting in a higher effective tax rate being paid by non‐incorporated business. The variance is expected to continue widening during the year, albeit at a slower pace," Treasury said.

Finance Minister Bill English said it was good to see Inland Revenue's tighter collection and enrforcement policies were reulting in higher effective tax rates for non-incorporated businesses.

Other core Crown revenue was NZ$244 million lower than forecast, primarily due to lower-than-expected interest rates, resulting in lower interest revenue.

That left overall revenue projections NZ$536 million, or 2.6%, below forecast.

Lower expenses too

Core Crown expenditure of NZ$22.9 billion was NZ$343 million, or 1.5%, lower than forecast, the financial statements showed.

Most areas recorded under-spends, with delays in some health spending (NZ$117 million), and lower than expected welfare costs (NZ$108 million) reflecting lower beneficiary numbers than anticipated. Education expenses and finance costs were also below forecast, NZ$72 million and NZ$69 million respectively, Treasury said.

Largely offsetting these under-spends were earthquake expenses, which were NZ$114 million higher than forecast due to land zoning decisions that were announced after the BEFU forecast was finalised, it said.

Deficit bigger

The Crown's operating balance excluding investment gains and losses (that is, not including changes in the Superannuation and ACC funds) was a deficit of NZ$2.865 billion in the four months to October, NZ$169 million, or 6.3% worse than expected.

While the OBEGAL deficit was higher than forecast, year-to-date gains made on the New Zealand Superannuation Fund and ACC’s investment portfolios were around NZ$1.4 billion greater than expected, and an unforecast actuarial gain of NZ$228 million was also recorded on ACC’s claims liability, Treasury said.

These gains held the operating balance deficit to NZ$34 million, which was NZ$1.9 billion less than expected.

Gross debt and Net debt were close to forecast at NZ$81.5 billion (39.8% of GDP) and NZ$55.5 billion (27.1% of GDP) respectively, Treasury said.

Uncertain world

Finance Minister English said the latest figures confirmed the government was continuing to control its new spending and was getting better results from existing programmes, as it moved towards its 2014/15 surplus target.

"With the world economic position remaining uncertain, it is important that the Government remains focussed on responsible and prudent fiscal policy well beyond its 2014/15 surplus target," English said.

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An army of part ime workers have little disposable income to create GST receipts and certainly not enough taxable income to fund the needs of the entitled. Which brings me to the veracity of this statement :
Gross debt and Net debt were close to forecast at NZ$81.5 billion (39.8% of GDP) and NZ$55.5 billion (27.1% of GDP) respectively, Treasury said.
Are the assets (NZ$26 billion) supposedly offsetting gross debt to arrive at net debt  viable or just another form of unpayable citizen liability masquerading as an asset, such as student loans?
Cogent explanations welcome.

Once upon a time there was a country, run by people who never noticed that the light at the end of the tunnel was a train.
They kept promising all could be rich and all were entitled, those in the service of the government felt most entitled,most privilaged. It ended with default, bankruptcy, broken homes,destroyed lives and poverty.
The business owners fled unable to fund the monster that the government had become, its appetite just grew and grew until all able had fled to a big red country. The ones left saddled with student debt, massive unfunded liabilities slowly got crushed. The banks cleaned up the scaps in a giant garage sale to the highest bidder, and thats how NZers became slaves in their own land, second class citizens, landless tennants. The lucky got sold into Penury the rest just survived any way they could.

Andrewj - and to add a touch of sparkle........

Personally if it got as bad as the gold bugs and zombie merchants think, this metal will be better to trade with IMHO.

Welcome to post peak oil.
Of course all it takes really is the voters to vote in a party that defaults.
At some point many nations will simply do this, there can be no other outcome.

"liability masquerading as an asset"
Love it!
As far as I have been able to find out the outstanding student debt is about $13billion or about half the government "assets". Don't know what the rest is; unpaid fines, advances to beneficiaries, liable parent contributions - that sort of thing I guess. All triple A rated stuff of course.
I know! Instead of flogging off our power stations why not sell all these other assets. That $25B could sure come in handy, Bill.
I take it these "assets" have been marked to market. Right Bill?

And, how apropos, this leetle gem from the ever-vigilant ZH....offered as an Edumicational Service to the Interested Readers.

I'd suggest calculated risk is far more rational.

It does seem we are on a self reinforcing vicious cycle of policy settings. Reserve Bank policy/inaction = Too high exchange rate = lower domestic activity and profits= higher debts and lower employment and lower taxes=in time higher welfare= increasing government deficit=more offshore borrowing=too high exchange rate.
The government do not seem to want to even countenance that maybe alternative settings in the current global circumstances might be worth considering. Even though the IMF among many other commentators is now suggesting inflation only OCR only mechanisms may well not work.

Meh it's all fine. Bill and some of his mates had a wee tax-payer funded holiday to WA and while they were there they saw some really big trucks moving stuff from out of the ground and concluded that Australia and China are still all gung-ho on mining, so he's feeling much better about the whole economy thing.


Who cares, what’s an account deficit anyway and what relevance does that have to us, our houses are worth more and more so we don’t need to worry about such trivial stuff. Can you stop putting these negative stories on the site and focus on what we kiwis do well, that being growing debt and paying more for each other’s houses?  That’s the real good news story, just ask JK.  We are lucky we have such smart people in charge that can ensure we create a mega bubble which will put all other bubbles to shame.

What a surprise on the deficit. Lets get people paying the most interest they can stand, add to that fees to a non productive parasitic banking sector that cuts costs at every turn.
Sell most we have of value to "investors" adding to the interest overhead for NZ dollars that we can essentially create locally at no cost.
We have an economy set up to enrichen interest collectors at a compounding rate.
All states have debts that will not be paid back, debt money can't be. Without an extinguisher of debt that gold served historically it is all a game of musical debt.

"The GST take was NZ$253 million, or 5.0%, lower than forecast, driven by private consumption levels that were lower than expected"
Hence inflation at 0.9%.
So the Q is how long does our beloved RB continue to pee into the wind and not cut the OCR.

Or, echoing other common taters but with a twist, this is 'xactly what you would expect as people simply Go Galt:  wind down production, run the bizzo such that income = expenses (and where expenses are hard to distinguish from regular household spend...), not Go Buy Stuff, and generally take the foot off of the Consumption Gas Pedal.
Starving the Gubmint Beast, in fact...
Where's PETA when ya need 'em?

When high personal tax rates were created, people restructured their affairs to avoid what they saw as a punitive tax, calling these people rich pricks just made it easier to decide to avoid paying the tax.
Now GST is 15% people are starting to take note, a tipping point, it is at a level where it is worthwhile to avoid where possible, some will go so far as to evade, 15% is a good discount.
All that is happenning is that history is repeating, I bet there are more cash or partial cash jobs being done, more overseas internet shopping etc etc.
Our exchange rate just makes this even easier. This also ignores that people are saving more, well I am! (hopefully).

Today i have noted the ten top reasons why the Australian RBA reduced the Australian OCR.
Cant wait to see how these same ten global economic factors dont apply to NZ and why we cant cut the NZ OCR, what with New Zealand being a world beating economic powerhouse and all. 

Tax the place into the ground.  Add (relative to every other developed economy) super high interest rates.  Funny  -  the economy is dead & the govt income stream is dying. 
Why bother going into business in NZ?.   Get your money the easy way  -  become a beneficiary or govt employee or teacher....   

More reasons to keep cutting interest rates .....

National have done a terrible job, which demonstrates why banding a group of people with limited competancies and overrated expectations of their abilities is a disaster waiting to happen...
...time for them to move on.

and just what else is there?  where do we go as voters?
The dead duck ACT? fantasy la la land economically that lot.
Conservatives? about the fruitist of fruity loops not actually kept inside a funny farm.
NZF? ho hum....uh no.
Labour? different la la land to National? not really.....denial things have and will change...dinosaurs.  Maybe Cunliff would have changed things around, but the present leader and the last one couldnt make a decision about ties let alone making a real one....charisma, both missed the boat...
Green's? well a bit more switched on, but no steel there.
In terms of terrible, our un-employemnt isnt to bad....our economy isnt to bad, Govt debt no biggee, we are more or less on track....

hilarious... not too're joking...
Labour were better stewards than this lot of so called centre right lot.  This lot is fixated on austerity, top down control and selling us to China - all of which get's us nowhere.
Being an Act/National voter, it's sad that I now think Shearer/Norman offer something that probably will be better for the economy.....
maybe I need to start my own party.....

I'll vote for you Chris_J, I'm your No.1 supporter!! xoxo

Its quite worrying how many people think Mr Normans idea of printing money is a good idea.

As it happens I'm one of them, noting that the commercial banks have printed about $30 billion over the last four years. I do believe some anti printers are blissfully unaware that such printing is going on.
That aside; suppose the Government printed say $2-5 billion to pay for government debt that they otherwise would have borrowed offshore. The Greens suggest paying for part of the Christchurch rebuild, but I don't believe they suggest spending more than the government would have spent in any case- just that there would be less borrowed from offshore.
This printing would almost certainly drop the exchange rate back to close to where it was four years ago (if it didn't repeat the dose until it does).
That move in exchange rate would give important price signals to importers and exporters to favour NZ produced goods and services. Such a move would improve employment and profitability here; actually increasing the total tax take, and reducing benefits and other costs, so improving the fiscal position, as well as the current account.
You are anti. Can you articulate in first principles why you are? What will happen if they do print say $5 billion to pay off some government debt? Would be interested in your views.

Once you realize how much the money supply has been inflated by the private banks you start to wonder why the private banks have a monopoly on money creation. And why the monopoly has been granted without any resistance from the governments of the day
Worrying about the government printing 2 to 5 billion when the private banks have introduced 50 billion is just a little silly

Stephen L - I have had this discussion with you previously. 
First it is a mistake to think that the Government debt will be paid off with the money printed. The debt still remains on the books it is only the way of funding the debt that changes.
I have explained before what happens if you lower the exchange rate. The debt repayments will increase if they are repaid at a lower exchange rate. There is also inflation to worry about.  As I have told you go back to the 1980's and see what happened to the economy when the dollar was devalued by Labour. There are a few bloggers on this site who were around and fully understand the implications and harships NZ faced.  
While I understand that you can see the benefit of a lower dollar to exporters and the increased competitiveness of NZ product on the world market there are other issues which have a detrimental impact and will affect not only exporters but eveyone else.
We had a discussion here on interest and I think you made a mistake in thinking that it was the same amount of product that needed to be sold to service the debt. If you use agriculture exports as an example all imported components from fertiliser, fuel etc increase in price which affects the cost of product whether it be kilograms of milk solids or kilograms of meat. 
Every NZ Government has to ensure that any NZ business has a good profit level. Every decision that Government makes impacts upon business as ultimately it is the NZ business who is funding the whole system.  NZ business is now having to carry the extra load of taxation burdon incurred by off-shore business owners who operate here and who can avoid many of our local income tax rules. NZ business is actually subsidising these non-tax paying business's. 
I recently heard about a large  international company operating here without being registered for GST and their income is very high. I don't know how big this problem is or whether this is an isolated incident.  

The debt repayments will only increase if we have borrowed in foreign currencies without hedging, or with us having the foreign exchange risk. My understanding is that we do not have that risk in a large way. The commercial banks may have, although I don't believe so. It would be their problem.
I was here in the 80s. The real problem was the mess the economy was in after years of mismanagement by Muldoon. A devaluation was essential then; and in my view is now. The NZD is up 38% against the USD since the Nats came to power. That is a massive cost hit to exporters and import substituters. We have not had deflation of 38% since then, even of imported items, suggesting huge margins for foreign exporters and intermediaries. 
I made the point last discussion that the exchange rate has no effect to exporters in terms of the cost of any imported components; assuming their sales are made in say USD. You still seem unconvinced. John Key agrees with you, which in my opinion is embarrassing for him.
If our debts are in NZD, then a devaluation actually will mean we would need to sell less products overseas to pay it off. If its in say USD, then we will need to sell the same amount of stuff as now.
Note that the foreigners loaning us money have had not only the interest we pay, but a 38% bonus on top of that for the last 4 years. A free gift from the people of NZ. So don't be too sympathetic to them.
Yes there would probably be some inflation of imported goods; although as noted, I'm not convinced we have had the full benefit of the appreciation in the last four years. Regardless, some price signals are important to fix the disastrous current account deficit.
I completely agree with you that a government should be concerned with the profitability of NZ firms. That is indeed the whole point. The current government have loaded any export or import substituting businesses with a 38% unnnecessary cost lift.
It's a separate issue, but I agree with you that the government should address the non tax of Google, Facebook and other foreign firms with significant revenues, but no tax here. I understand Peter Dunne is having a look at it.

Stephen L - Much of the current debt NZ has is in foreign currencies and it is this debt that will bite us on the proverbial if the exchange rate is lowered. While hedging provides protection there is an extra cost to this hedging which is added to the overall cost of that money for the period the debt exists.
If you look at the total amount of NZ debt which is borrowed in foreign currencies at todays exchange rates and then work out if we start printing to lower our dollar the total amount to pay back those foreign debts in NZD increases enormously. The country actually gets stripped out paying back those debts. 
In regards to hedging, the entity (e.g. bank) that borrows offshore might hedge against their position in the market to protect themselves, the benefits of this hedging are not passed onto their customer in NZ. The entity preserves their position in the market, (the mortgage holder) the average NZ customer borrowing from the entity doesn't and bears the costs associated with the exchange rate change. 
I think maybe Muldoon understood this fact very well as he did not want to interfere and lower the NZD as he knew it would be detrimental to all NZ'ers who had debt. 
The only solution to the problem is for all people to have hedging over their positions in the market.  

I agree they are terrible....Nats convinced me to vote for them first time around on a platform of addressing housing, turning the exodus to Aus around, and their so called economic credentials. They have failed miserably on all counts
I think Aus are going to make the same mistake as NZ, turf out a reasonably good Labour govt and replace them with a mediocre conservative govt that cause more economic problems than they solve with a neo-liberal philosophy that just doesn't work anymore  

MiA - Most of the problems we have in NZ are a direct result of Labours policies. National have failed to address the legislation that needs changing. Private enterprise is saturated and has limited ability to keep paying the bloated costs of the bureaucratic empire that was created.
NZ currently has no political party that can address the underlying issues. If a business is slow to make economic reform when it has been badly managed they will go belly up. Governments are far too slow in the reform process as they have taxpayers footing the bill so there is no urgency.
The exodus to Australia will continue as it doesn't make financial sense for people to stay in NZ. NZ had the same problems in the 1980's when large numbers of people left and very few ever came back. 
Party politics are the problem. Political parties market themselves like branded products on the shop shelf and the voters fall for it, hook, line and sinker. We have group thinking in both political and voter spectrums which allows for interest groups to dictate the direction. If NZ had Independent Politicians it would remove the group mentality at a Political level and quality decisions would be made instead of appeasing certain sections of voters.
Independent Policitians would have to make decisions that were balanced and more in line with the Bill of Rights Act rather than serving the interest groups. 

Not Labour, you can look at previous and post Labour term Govns (ie National) and see little difference. And "saturated" applies more to the private debt those same companies and consumers willingly took on than tax.
"exodus" it will make no odds either way, in fact its arguable that ppl are leaving principally because of the present in-equality.
I do tend to agree on parties being one of our biggest problems though....however getting rid of them could actually be worse. There is no real (any?) evidence to support getting rid of them. For instance whats stopping an independant simply pandering to his voters? that seems endemic in the US system for instance.
I do wish we had such things as a full and proper bill of rights though.

Notaneconomist - that's blameshifting.
As a nation, we spent that period (Lab Govt) busily selling houses to each other, borrowing more than we earned, and thinking - delusionally - that we were getting 'rich'.
A second wave of that is breaking now - the vast majority have no other way of 'trading up', so will keep pushing the barrow. 'Till it falls off the cliff - which has to end in overseas ownership, via fire-sales or foreclosures.
Nations are like individials - you have to export more than you import, or result misery. We've not done that for a long time, even though the accounting has been favourably skewed (no allowance for real dedradation costs, real depletion costs, real pollution (think ETS) costs.
Even zero government, at all levels, won't save us where we're going, though. Unloaned  finance would have died at peak-minus-efficiencies, loaned finance had to hit it with an unaddressable debt overload. Two choices with that - debt forgiveness, or mass default. The only other 'fit' would be rampant inflation with no actual underwrite - stagflation.
So many folk argue from the presumption that the ship isn't sinking.

PDK your economic ignorance amazes me. Think about your statement "nations are like individials - you have to export more than you import, or result misery".
How can every country export more than they import. It is a logical impossible. That sort of mercantile thinking was disproved centuries ago.

Agreed, it's an impossibility.
But the 'disproving' is in the same basket at the 'disproving' of Malthus, the Club or Rome, etc. 
Only growth (based on extraction, in turn based on increased energy-consumption) kept the problem at bay. Can you 'get rich' without extraction? This Govt's actions on multiple fronts, suggests not. So on a finite planet, the growth process stops, then reverses. No other possibility. Only variable? Time. Only mitigation? Efficiencies.
You have to realise that back in the '80's, I stood up in a Council meeting and stated that Peak Oil would occurr between 2000 and 2010, and that it had to be followed by financial collapse. I've been preparing personally for yonks, and urging all I can persuade, to do so too. Most don't get it.
I think it's because they see 'money' or 'wealth' as always being cash-inable for something tangible. Sure, this has been so for their lifetimes, and perhaps a couple of generations prior, but that didn't guarantee that such would always be the case.
For the record, I've long thought that to hang on to your real resources, has to make you 'richer' in the long run, as others deplete theirs. The Japanese are masters at this. What I don't have an answer for is the increasing public and private debt. Mother Nature (aka the planet) doesn't give a stuff about artificial numbers, of course, but I suspect enough of the homo-sapiens species do, for it to be a social issue.

PDK one countries exports is anothers imports. So in sum exports must equal imports when collated for all countries. Try disproving that logic statement.
This is true now and will be true after peak oil.
I do not think peak oil caused the financial crisis. But oil prices have risen and this does cause problems for the recovery. Oil prices may reflect a lack of investment in previous decades to cater for the massive increase in demand from the newly emerging middle classes in China, India etc. Or maybe it reflects an increase in marginal cost of increasing supply. But it does not necessarily mean we face an imminent and catastrophic decline in oil production.
Of course at some point oil production will peak, but the question is whether we can then easily transfer (or maybe there is an energy shift before that) to other energy sources/energy efficiencies. For instance batteries for electric cars are improving at a rate of 5-10% a year. At some point there will be a tipping point where electric cars become more popular than petrol powered ones. Much like digital cameras replaced film based ones.
It is now possible to build houses in New Zealand that can maintain a healthy internal environment of 20 degrees from their own renewable heating/insulation systems. See this website for an example
PDK the world is not about to end. Humans are clever...  

Thanks for the reply.
Firstly, lets look at some facts.
Nobody is saying 'catastrophic'. We are saying a volumetric peak/plateau, followed by a decline. We also note the declining EROEI per reserve volume, and the increasing internal consumption by exporters (giving less to export).
No growth-based system continues on the back of that.
Electric cars - and I've said it here many times - need their electricity to have been generated first. In the State of Victoria, electricity is 90% coal-fired, so in Melbourne, they'd be coal-cars, not electric cars. World-wide, they'd be upward of 40% coal cars.
Efficiencies. You can only ever get to 100% efficient, and you'll never achieve that in practice. You start from where you are - say 35-40% for diesel engines - and head for the 100. The gains take sequentially more effort, and eventually the EROEI of the effort-in vs the effort out, crosses through 1:1 and you stop - regardless of cost.  I don't think economics or economists ever get that. (And you don't get "10% per year", indefinitely, of anything).
Nobody said the world was about to end - indeed it will carry on regardless, just possibly ex-us. The growth-based, and entirely artificial,  fiscal system we invented is in permanent trouble, though. Logic says we couldn't have invented any other kind of proxy system in the growth (beginning from nothing is always growth, until it isn't) phase, logic says it won't survive the plateau-then-decline of the underwrite.
Humans clever? Not so, apparently, or they'd realise that their 'cleverness' can only be applied to 'efficiencies', and that efficiencies - as stated - are limited in absolute scope. That leaves the problem of an increasing population, a push to increased consumption per head, vs a depletion of finite resources, pollution of habitat (CO2 being but one example), depletion of aquifers, degradation of land..............
The overshoot has been fuelled by using squillions of years of stored solar energy, in a blink of an eye. Look around you, what isn't happening courtesy of fossil fuels? Nothing else scales (and I'm a renewable advocate - particularly solar). The discussion nowadays is that human-kind probably can't/won't re-boot. The fossil energy bonanza was a one off.
If we'd been real smart, we'd have limited population voluntarily (Ma Nature will do it anyway, but it'll be ugly) to a sustainable level. 2 billion, maybe 1, depending on required consumption-rates.
To be having this debate, now, suggests we aren't smart enough, and that's at the educated end. Much of the planet is still pre-Renaissance, bible-bashing and suicide-bombing. Even in the educated minority, we have economists.  I'm not optimistic        :)

"How can every country export more than they import. It is a logical impossible."
Absolutely agree with that. And because the above statement is true, then
"nations are like individials - you have to export more than you import, or result misery".
Is also true, which is why so many nations are in misery, and so few are doing well.
Use that logic you were talking about Brendon :)

The point I was trying to make is that nations are not like individuals with regard to importing and exporting.
Countries that persistently have trade surpluses (export more than they import) are just as much trouble to the global economy as those with trade deficits. The solution is not for every country to become like the countries with trade surpluses, because that can never be achieved. All that will happen is trade will decrease.
These are difficult problems and people promoting simplistic solutions does not help. Keynes after the WW2 had some ideas on how to achieve this. But was out voted by the US at Bretton Wood.

Our actual trade balance is usually (in recent years) a small surplus and is not the real issue for our future.
It's the current account deficit at a forecast double our nominal GDP growth caused by a net international investment position that's the second worst in the developed world. This whole mess is the accumulated, compounding result of forty years of dis saving by NZ households, Governments, farms and businesses. Spending more than you earn IOW.
The story we've been spun (Roger Douglas & neo con economists) was that a floating exchange rate would adjust  via market forces to bring us quickly back to a neutral or surplus position. Well we're still waiting. How can a country with a NIIP like ours have such a strong currency and yet be forced into going deeper into debt and selling assets to fund our apalling current account deficit? How do we get out of this trap?

Kiwidave, you are right. I think there is something wrong with the global trade system, floating exchanges are not responding as 'theory' says it should. Unfortunately little old NZ isn't going to change the global trading system, even if we knew what to replace the system with.
Of course borrowing excessive billions to buy houses of each other probably doesn't help with the current account deficit.

PDK - It's not blameshifting at all. Think you should view all the Legislative and policy change that took place under Labour. Take the Building Act 2004 while it was introduced to deal with leaky homes, it places enormous bureaucratic costs onto new buildings. Other pieces of legislation like the RMA and the LGA have directly impacted on stifling the supply side.
Wouldn't it have been more sensible to deal with the product failure of say the monolithic board, the building inspectors who weren't competent at the job and housing companies/individuals who were directly involved with the leaky buildings? Instead a bureaucratic giant was unleashed and that is why I blame Labour.
National should revert the taxation legislation changes in regards to housing that they made at the start of the GFC and under urgency change legislation that relates to Council activites in regards to land supply and building consents. Council charges for service provisioning in these areas needs to be addressed as well.
In keeping to your nautical theme we can spend time worrying the ship might sink or we turn the bilge pump on and remove bureaucratic and legislative excesses.

Well before laying into National consider the alternative....Phil Gough, couldnt make a "hard decision" if his life depended on it, his replacement seems equally back bone free.  Maybe after 2014's debacle Cunliff might, MIGHT improve things. I dont consider anyone else in Labour even electable....ditto National mind you.
But consider we have seen what is for me in-arguably the greatest economic threat to our economy since the 1930s depression....and we have by and large sailed through with little damage.  Just look at the alternatives, UK? not good...Celtic Tiger? close to a basket case.....PIIGS, basket cases....USA? at best as good as the UK....
Where can you point to thats done better?  Some states in Northern Europe, yes, seem to be more "socialist"
Neo-liberal/neo-cons are a sick joke.  We've watched a 30 year experiment from inside the test tube and its a dismal failure. Inequality is as bad if not worse than the Great Depression...we have probably a generation of debt to pay off if not 2.....thanks to them.
HC etc frankly had to go, spend, spend, spend, uh no thanks....National are marginally better on the spending front but really are as blinkered past 2 or 3 years. 
The ppl to make the hard choices are the voters, until the pollies come clean and are honest it wont happen.

Steven - Labour needs to shoulder most of the responsibilty as they implemented large quantities of Legislative changes that have had significant impact. Labour doubled the public service in their 9 years. Housing values doubled under their reign - the Building Act 2004 was implemented which has created enormous bureaucracy and cost to building homes. Take a look at household debt to income levels as well during their 9 years.
NZ has become inefficient in all operations not just in the public sector but also in the private sector. The small to medium sized business sector is bogged down in compliance and regulatory requirements which impacts significantly on their bottom line. Business debt is one thing to manage, the constant introduction of compliance and regulatory requirements is the elephant in the room. You can't keep introducing costs and compliance to business - you squeeze them too hard and they will abandon ship, or leave the country because believe they me they make changes they have too in order to survive.

Whats the plan Bill?
Well borrow more to fund a lifestyle we can not afford/sustain, inflate prices in the local economy further and leave future generation with an even larger burden of debt (unless they leave for elsewhere i.e Ausie.
Basically NZ well end up debt slaves to foreigners paying of loans plus interest sucking money out of the country like a Vampire - welcome to peasentsville