The easy part's done - the Government's kept the lights on. Now for actually pulling off the rebuild and making tough calls to reset the economy...

The easy part's done - the Government's kept the lights on. Now for actually pulling off the rebuild and making tough calls to reset the economy...
Winston Peters, Jacinda Ardern, James Shaw, Grant Robertson. Getty Images.

By ​Jenée Tibshraeny

Budget 2020 is more about keeping the lights on than transforming the economy. And you know what? That’s enough right now.  

The Government talked a big game ahead of the Budget, saying it would hit “reset” on the economy.

But as I foreshadowed at the beginning the week, it was always going to avoid denting confidence by making structural changes in a rush, on top of the changes forced upon it by this monster virus.

Contradictory to his "reset" buzz word, Finance Minister Grant Robertson also tempered expectations ahead of the Budget, saying it would mark the Government’s next wave of support. 

With new COVID-19-related spending valued at $15.9 billion, this wave would be considered a tsunami in normal times. 

But given the Government had before the Budget progressively allocated a total of $26 billion to various schemes, $15.9 billion really does just add a few more handfuls of feathers to the cushion softening the blow of the virus.

What’s more, recognising the fact this is a rapidly evolving situation, Robertson has given himself the flexibility to respond accordingly by setting aside an additional $20.2 billion to be spent on yet-to-be-determined schemes.

The Government appears to be applying its “go hard and go early” health response to its economic response. With $41.9 billion effectively allocated towards COVID-19 in a couple of months, it’s really front loading the response.

But what Robertson hasn’t done, which he said he would, is substantively address long-standing issues around inequality and climate change.

The Budget doesn’t bolster the welfare system, which so many more people will become reliant on, in line with the Welfare Expert Advisory Group’s recommendations,

Nor does it include any tax changes on top of the tax tweaks for businesses already announced.

As I wrote earlier in the week, Robertson was never going to tackle the tough issue of distributing the cost of paying for the debt the country’s taking on in an attempt to prevent unemployment reaching double digits.

That’s an issue for another day. Telling companies, asset-rich people, or high-income earners they have to pay more tax will only dent their confidence and thus slow the recovery.

Robertson will hope that between now and the September election, he’ll be able to keep dishing out cash - up to $20.2 billion - without specifying exactly who pays.  

The millennials - riddled with student debt and locked out of the property market, the Gen Xers - working hard to be mortgage-free by 65 when they get New Zealand Superannuation, or the asset-rich, income-poor Boomers - hit hard in the low interest rate environment?

In the same way I believe the lockdown has been the relatively easy part for many (without children), the crisis response has been the bit the Government has done a great job with.

But the real test is yet to come. Treasury expects the number of people on Jobseeker Support and Emergency Benefits to double, or increase by 158,000 people, between 2019 and 2021. While a number of people are already in hardship, there is much more to come.

Even with a $60 billion quantitative easing programme and the Official Cash Rate at 0.25%, the Reserve Bank expects low oil prices to tip the country into a brief period of deflation next year. 

Similarly, the Government is yet to face the music politically.

If it's truly committed to pushing “reset” on the economy, it will have to use both a stick and a carrot. Robertson doesn’t want "austerity", but the cost of the recovery will ultimately need to fall harder on some than it will on others. The question is, who?

The question is also, how long will this burden be upon us for? If re-elected, will this government actually be able to pull off what it has failed to do so far, and significantly upgrade the country's infrastructure?

The rebuild is largely hinging on this. Billions of dollars of are going towards new infrastructure projects, housing and free industry trade training to support the big build. We literally can’t afford to have another KiwiBuild or Auckland Light Rail scenario, where grand dreams aren’t executed.

This brings me to my final thought, which I’ve been pondering for some time; do you hit “reset” during a crisis or during the good times?

Logic says, good times. If I want to start a new fitness regime, I should do it when my life is otherwise kind of in order and I have the capacity to take on a new challenge.

In this vein, I tend to think both this government and the previous one (at least in its third term) missed the boat.

It’s much easier to get the asset-rich to pay a bit more tax to help those trying to survive on a $250/week benefit, when their asset values are experiencing double-digit annual growth. It's also easier to get companies to invest in innovation aimed at increasing productivity and doing business in a greener way when they're profitable.

But to kick those who are propping up the flawed system when they're down, is difficult and potentially dangerous.

Even the most vulnerable in society will be worse off if a large number of property owners start defaulting on their mortgages, bringing the banking system to its knees. Or if companies contract rather than stay the same size or expand. 

We should’ve been making the tough calls during the good times. The Coalition Government was working towards this on some fronts, with its New Zealand First handbrake on. But it didn't get there in time. 

All we can do now is keep our head above water and try to progressively - not erratically - rebuild a fairer, resilient and more sustainable economy.

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134 Comments

But what do people mean by "reset" - it means different things to different people.

Its simply political spin, you say a whole heap of fluffy words the mean nothing and you aren't then accountable for actually doing anything.

To me it means deleveraging and debt defaults, potentially devaluation of currencies and international agreements on the meaning of debt and the value of different currencies. May mean changes to the way fractional reserve banking will operate in the future. What is the price of a fiat currency vs gold.

Would be something similar to Bretton Woods. Could be the end of the capitalist system that we've come to know.

Yes, that's the possible (and necessary) global re-set - but where in the world is the leader who has that kind of power for change AND who would target such change to benefit the many, as opposed to the few.

I often think what kind of difference Helen Clark would have made were she UN Sec General at the moment. The current guy has absolutely no mana or nous.

Whatever criticism people may have of Helen Clark, she knew how to collect a caucus and get things done.

Kate I really value your logical comments.
BUT not when it comes to Helen Clark and this Coalition lead govt. Time for a drastic change all around

I am not sure the political conditions exist for anything similar to Bretton Woods.

Ralph it needs to change or we are all going down the Toilet

Reset is such a terrible word , almost as bad as the term re-calibrate used by Tryfail Twyford trying to worm his way out of the Kiwibuild fiasco

Tryfail Twyford needs to be admitted to ward 6 at the Mental Institution. He is delusional

What a reset means, is that the present system is not or will not work. Cash up and start again. Not with the shower of Politicians we have on offer.

A good point of view, but....
"Telling companies, asset-rich people, or high-income earners they have to pay more tax will only dent their confidence and thus slow the recovery."
.....panders to snowflakes.
What should any sensible entity of those mentioned above do when confronted with the economic alteration that is necessary; what would you do?
Change!
Confidence is born of action, and 'change' is action.
Indicating that 'change is coming if you read between the lines' doesn't point people in the direction they will HAVE to go. Who is going to set off on a path that has an unknown destination? Not many.
Yes, taxation changes etc are going to be substantial, but the sooner we know what they are and how great, the faster we can set about changing.
I understand that you think 'now, is not the time', but if it isn't then time will erode the capacity for crucial changes to be made. (That's what politics is all about!)
Lets' get on with it!

""taxation changes etc are going to be substantial, but the sooner we know what they are "" - we have to wait until a day after the next election.
It is time wasting; surely National & Labour can quietly agree on a few obvious revenue hikes now while leaving plenty to argue about pre-election.
Why not a joint announcement by Jacinda & Simon midday today saying age of retirement goes up by six months every year for ten years starting at in December. Spell out how its economic impact and even my partner who will be retiring in 2025 will reluctantly accept it.

"Why not a joint announcement by Jacinda & Simon midday today saying (whatever needs to be done)"
Bravo!
But we know that is as likely a return of the moa.

Actually, reviving the moa is now feasible. Id liKe to have some on my block.

The PM did a John Key on it - it's off the table during her premiership

Do you really believe her? She doesn't exactly have a history of being truthful.

I think the election campaign is the platform for these questions.
I expect / want a robust debate from the parties as to how they will carry out the 'reset'

But when a majority of the Votes in said election have just been purchased with parts of that 'unallocated $20b', then who's gonna listen to 'debates'?

H L Mencken: 'Every election is a sort of advanced auction sale of stolen goods'.......

Yes, nice point and reference.
But isn't that down to the opposition to prosecute a strong case against the government?
Sure, that's a gargantuan task if a lot of the population have been beneficiaries of the lolly scramble....

Short of some sort of major further crisis or major stuff up, Labour have this election home and hosed.

Really, the Gnats need to be aiming for the next election. And they need a serious rebuild.
I expect a bit of a clean out post election.

They are hoping the Blessed Luxon is able to replace Saint John.

It shouldn't be anyone with skeletons...

Um, rephrasing needed - politics already attracts plenty of bodies without apparent Vertebrae.....

I heard a rumour they're going to parachute Luxon into Christchurch where his hairstyle will attract more votes.

"Confidence is born of action, and 'change' is action."

Investment confidence is born from certainty, not action.

Especially the kind of action that looks suspiciously like someone thrashing widely in an ocean drowning.

Hi, Our Politicians have absolutely no idea how to get out of their mess. God help New Zealand over the next 12 months

QE resulted in massive gains to stocks and land after the GFC. It likely will again, time to bring back LVT and fix capital gains taxes.

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It's even easier than that. Just restrict what the banks can lend for. Property speculation? No. productive reinvigoration? Yes.
If the banks don't like that environment, then they can hand in their licenses at the RBNZ front desk.
(NB: Speculate in anything you like, with your own money, not what is in effect nationalised debt. LVR for second+ property etc ? 0%)

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Not a bad idea. If you want to invest in property that you will not be inhabiting do it with your own money.

A lot of people are going to make a lot of money out of this. Now, to figure out how to be one of them. Any suggestions?

How many rentals do you own sit23?

Why are posters on this site so obsessed with how many properties other people own and how much tax they pay?

Do you understand bias and how it corrupts clear, objective thought? In order to explore concepts (which is what we're doing in these comments) you need to look past your own self interest - but I've found most property investor types don't have that capacity - so how could they ever look at economic policies without bias? Then if their thoughts are full of bias to themselves and enriching themselves now, what merit do they even have? Its getting pretty close to zero in my opinion.

Views should and need to be utilitarian - looking at what is best for the most NZ'ers not just now, but 10, 20, 30 years from now. Most of the stale, pale, male property investors I talk to will be dead soon so I'm losing interest in their self interested short term views based around low interest rates and paying minimal taxes, foreign buyers etc, no capital gains tax, while receiving government subsidies via welfare/accommodation supplements.

I'm not pale (or stale hopefully) IO, does that mean I get a hall pass?I'm just playing by your rules after all.

You get a pass Te Kooti as long as you don't whinge about millenials, avocado, Jacinda Adern and complain how tough you've had it while you go out and purchase your 3rd rental property! Are you as adventurous as your user name suggests?

Done. I've never complained about millenials, avo or Jacinda either. One point though, you have no idea whether I had it tough or nor so if you stop jumping to assumptions, I'll start respecting you more. I wouldn't choose the pseudonym lightly if that's your point.

Hahahahahahaha what bullsh*t! You literally made a comment to me on here about "running out of avo" like a week ago.

you're a kook though so you don't count, IO actually expresses an opinion.

Have a good deflation mate :)

Are you suggesting there are people in the world with zero bias?

Is not prejudgement itself a bias?

I suggest all people have some bias. I suggest even the most biased person can still have a useful thought. I suggest prejudgment is, at its best, intellectual lazy and at worst just bigotry.

Pot calling kettle black... FYI, there is no such thing as un-bias. Best one can do is full disclosure to your best extent.

Because they don’t own investment property or earn enough to pay much tax. /sarc

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Wrong forum sit23, this is where comrades discuss how to overthrow capitalism

I’d settle for maintaining my wealth. This site, at least on comments, is overtly leftie. Ironically, that’s why it’s so useful as it gives a sense as to how to position myself if Cindy gets back in. As per Sun Tzu, “If you know the enemy and know yourself, you need not fear the result of a hundred battles”.

Most people in NZ are pretty left-leaning in reality.

Giving a damn about future and current generations chances of owning a home in their own country and not having to rent forever from greedy rich boomers is not necessarily being a leftie. Plenty on the right feel this way too.

Sounds more like the politics of envy than left or right. Short of a revolution you will just have to accept that the Boomers have a lot of the wealth. The current situation entrenches that.

Depends where you set the divider. I put it between Labour and National for NZ. An American might say they are both left from their point of view. Based on the last election it more balanced than ‘pretty-left’.

Lol this one thinks he's some sort of military general.

Vote Labour, Help yourself

Agree BW. I've been arguing for years that direction needs to be given, and the banks properly regulated. Your suggestion is excellent and exactly what i am thinking too.

Agree - DTI restrictions would be a good start. Perhaps house prices will reduce to a level that means that they can be brought in at sensible levels. Otherwise banks will keep driving the ponzi (which LVR does little to address) towards the next crisis, continuing the downwards trend in real interest rates until there are no savers left.

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Couldn't agree more bw.

I think using equity in one property as the deposit for another is nothing more than a ponzi scheme.

And an immoral ponzi scheme as well.

Here's hoping karma keeps her track record.

Hi Kate time you got into Politics Save New Zealand

RBNZ could make a simple adjustment to risk settings to tip lending towards productivity. Although I don't see them doing this out of fear of house prices collapsing more than they will.

This is a bit like the mental block you get before pulling a band aid off. You know you have to do it at some point and you know it is going to be painful. Interesting research on that by Kahneman in his book Thinking Fast and Slow. The pain can be spread across a longer period of time or a shorter period of time - it basically comes down to how you want to remember it.

Basically we're going to have to do it but there appear to still be enough people with self interest (house prices) that are willing to screw the productive economy for their own wealth. But eventually each time they screw the productive economy, their argument gets weaker.

Run for public office bw, I'll vote for you.

Rationing credits according to whims of political parties will never achieve much better outcomes than the current model have. Banks will lend to what is best for them. The fact that they predominantly lend against housing is a symptom of NZ economy. Capital formation is so very weak in NZ and you will need capital (equity) if you want a bank to lend money to you. I am sure that many people here are full of potential ideas that are very existing and all, but the current reality is that NZ is running at full capacity on anything that it has any relative advantages (primary industries, construction and civil work, tourism (while it was a thing), etc). What is left? housing.

Bankers are deplorable, yes, but they are deplorable because they are after return for their shareholders (and themselves). If all lending is focused on properties, it is not because bankers have a fantasy to turn a country into a game of monopoly. It is because lack of real, viable, attractive economic opportunities, mean people are not willing to put their own money in the venture, which in turn mean that bankers are not willing to lend money to them. By forcing banks to lend you are not fixing anything, you are creating a massive, corrupting, ugly problem.

The banks operate within the environment set by the RBNZ and in turn by the politicians. Pointless picking out the Banks.

Do you want an LVT in addition to the extremely high council rates? Aren't they already the LVT that everyone wanted?

No, because rates pay for things that have actually get budgeted. LVT will go into a kitty to spend on new shiny things, or offset tax from elsewhere (hopefully PAYE).

Council rates only charge about 0.1% against land values. That's why land values are so damn high. There's insufficient burden involved with exclusive landholdings. I think 1-2% would be more reasonable. It would reduce land values, household debt, and increase our efficiency of landholdings. No more dereliction, and no more productivity per capita recession.

It's crazy that we tax people so much on their labour, and let the capital holders get all sorts of free money that they don't even have to earn and with significant tax advantages. It obviously needs to be considered in a revenue neutral setting. In otherwords, reducing other taxes in its place. A tax free income tax bracket would be a good idea.

Yes, my council values the land at about $350,000. My total RV is $550,000 ( which was about $50,000 too high BEFORE Covid), . So that means I can build my 3 bedroom, two bath, double garage, wrap around deck, split level house for $200,000??? I think not. Rvs are a joke, but they get much more tax (rates) by jacking up the land value %.
However, how much 'free' money do you think property owners will be making in due course?

I dont think you understand how rates work.

Councils set budgets and then divide that among the ratepayers. The tool to divide it up is the RV.

And yes RV is not a proper valuation - its desktop and doesnt know that you renovated or changed the carpet. Image the cost of doing a full valuation on every property. Auckland has 470,000 plus residential alone. What $1,500 per proper valuation? You really want them spending over $700 million every 3 year to do full valuation? Well that will push your rates bit to double....

If you want your rates bill to come down ask them to do less. Go through the annual budget at consultation time and find the things you want them to do less of. Either build less stuff or trim certain services.

if properly values all decline as is predicted by many the rates wont drop - unless the budget drops.... the exception would be if one part of town or type of property dropped more relative to other types.

https://m.localmatters.co.nz/blogs/3513-rating-values-explained.html

What weed are you smoking

Part of the process is to see what's functionally left of the economy. There's certainly a lot of activity from yesterday. Power use heading into lockdown was low enough that the spot price of power was close to zero cents. Power use across most of the country greatly increased and the spot price with it.

A few friends working customer service said they were exceptionally busy and worked long hours yesterday. There's some hope that wages and commercial rents will be paid.

All Capitalists need regulating. Otherwise they, without exception, turn into Crony Capitalists. Look at USA.

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The problem is regulation in itself can foster cronyism...

It sure does. Self interests have compromised the viability of regulation. Cartel capitalism.

Self interest is not limited to any particular economic system. As George Orwell noted, all the animals in the farmyard are equal, it's just that some are more equal than others.

Animal Farm applies to all economic systems, not just Soviet Russia

I think that was my point. You quoted only capitalism and I used Orwell's quote in a general sense and stated all economic systems.

I got your point. My original comment was meant to be interpreted as capitalism in the true sense isnt in our current economic system. Our current system is "cartel" capitalism as I would say, where a few big players control and distort markets by market power and political persuasion/donation. But yes it does apply to all systems when regulation isn't applied appropriately (which is nearly always).

Diverting somewhat, there is an argument that the freer the market the more peoples self interest is involved and that the less free the market the fewer peoples self interest is involved (to the detriment of the majority). The idea of benevolent dictatorship might be the exception that proves that rule.

Just an interesting way to think about self interest, if one believes everybody has some.

Speaking of dictatorships..it trump gets voted in again it will be the closest the USA has ever been to a dictatorship..I wonder if the assault rifle carrying far right nationalists there realise that?

What other options have the Yanks got. Really!!!

Juvenal: Quis custodiet ipsos custodes?

Regulation, while a different topic, can cleverly provide benefits for society as well as jobs. The things to be avoided are like the US idiocy around testing self driving cars on the road and killing people. Their approach is reckless.

Crony capitalism is a different area, unlike road safety for example. What has allowed crony capitalism is legalised bribes and other questionable laws. Certainly fraudulent use of political donations is something that voters need to watch carefully. Both NZF and National have shown their colours for cronyism.

I agree. I fail to see the benefit to the populace in allowing "donations" in our political system.

The public sector unions seem to be doing very well in otherwise trying budget conditions, no sign of austerity for them. Maybe this is due to their donations to Labour.

Your point is

Jenee your first paragraph - perfect.

A'reset' would put too much on it's ear. While I am frustrated that the government seems reluctant to move in some areas like housing (building houses won't fix the problem, making them 75% cheaper will), too much change too soon will just cause more harm.

75% cheaper! Ha. I mentioned 60% fall in property a while back and stale, pale, male property bull/investor types lost the plot.

or, you know, anyone with a mortgage who would probably be facing financial ruin? Not everyone who owns a house is a property investor.

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Yes I have some sympathy for owner occupiers, especially FHBs, and in some scenarios I would think they were worthy of support. As for the others - refer to BW's post above. But EVERYONE is better off with houses being dramatically cheaper.

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Oh absolutely. I would go so far as to say we should be aiming to build enough state houses for everyone to either rent or buy as their first home, with the first right of refusal for future sale to be back to the government at a fixed price. At least that way FHBs get their equity protected and can focus on paying down a mortgage until they're ready for their own family home. We have a state bank, we have a state housing provider. This is not rocket surgery.

In conjunction with a strategy on how NZ would manage immigration going forwards. I'm already dreading this election more than the last.

Murray, you really think a new built house can cost $125k (? please share your assumptions regarding the costing of a new built that will cost this much. Please note that the cost of putting together a prefabricated 60 sqm house is $188k. This is as cheap as cheap goes. A 150 sqm meter of urban residential land would cost $1000 per sqm at least. So a very cheap (i mean the type of cheap that you would get after we have thrown all the greedy landlords to the ocean as shark food following the glorious revolution) land will be about $15k. The costing does not include any finance cost, landscaping, etc. This is based on actual commercial, cheapest of cheap option. https://www.stuff.co.nz/business/112846499/the-real-cost-of-a-flat-pack-...

Time for a dictator. What is the Problem. Social Housing . Build it, put people into houses. Watch the market react. Called a reset. Yeah right lets do it

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This govt is great at talk and throwing money around. Hopeless at actually delivering.
Let's see how they go with their ideas that are great on paper, like building all that extra housing...

When you say 'delivering', what do you actually mean?

Stab in the dark here - Kiwibuild?

I'm waiting to see how the government is going to manipulate statistics to claim they delivered Kiwibuild in part.

Stab in the dark, actually it might be every single thing they have tried to do in the last 3 years.

Plus light rail

I would assume the National Party would be an example of delivering. Asset sales, selling a building on Parliament's grounds so the government could rent it from the owner, failing to rebuild Christchurch, destroying Christchurch's economy by stopping businesses from recovering their records and equipment so looters could steal it, Bill English sending texts to a secretary at 4am in the morning without his wife knowing, a long list of election promises around building regulations that were abandoned as soon as they were elected, and violating the human rights of beneficiaries.

So your counter to this government's awful track record is to point out everyone else's awful track record?

That's not how accountability works, my dude.

It's one possible definition. As per the comment on Kiwibuild delivery above there's something that the Government needs to be held accountable for. Especially being an election promise. Maybe Twyford would like to sing the songs of his glory.

My main issue with the current approach to accountability is it relies entirely on a competent opposition, which NZ has mostly lacked over past two decades. The current government hasn't delivered what it promised but the opposition is so ideologically opposed to things like Light Rail or house building programmes that it can't figure out whether that's a good thing or a bad thing. The losers are the taxpayers who still end up paying all the same, but with nothing to show for it and no one has any incentive to improve the situation.

The media has been AWOL for most of the last term and frankly I am not surprised they find themselves in dire straits.

Journalism is an important part of political accountability but there are next to no journalists in our media. Seeing stuff.co.nz beg for money was an interesting transformation. Setting all of that aside we are now in a very risky position, where much like the US and Australia, we risk the media being bought by companies with a vested interest, and that places our political reporting at risk.

All National (and Mike Hosking) does is argue a contrarian position. There was even a glimmer of Simon Bridges being a leader when he stated the idea of supporting businesses, but the central right is short on ideas and inspiration. I don't have an issue with ideological political leadership, it's just that National and Act are following a dead end ideology that has run its course, has demonstrably failed by only creating asset inflation and a bunch of muppets that think austerity works.

For a viable political right, or whatever people want to call it, they need new economics and functional ideas. That and not filling up the National Party with a bunch of useless MPs in senior positions. Running a political party like local government will never work.

This might sound naff, but I believe people would have been no worse off under Bill English's leadership during the last ten weeks. But I'm also coming around to the idea that a full term of Bill might have been enough for some of the journeyman (and women) in the Nats who seem to fancy themselves as leaders to just get bored of waiting and move on with their lives.

Either way there would be a clearing out. I think after this election the damage that Bridges has done will be evident and the likely loss of seats may send a number of MPs into retirement (some by choice).

I'd agree if it was the first version of Bill English leader of the Nats. After he was dumped the first he came back as someone very much captured by the inner Nat circle.

Seriously. We all need to get over the past. It isn't coming back. It only matters what happens from here.
If we think Labour stalked up Kiwibuild, or whatever, so badly we can't tolerate another 3 years with them in, then we will have a chance to tell them so in a few weeks time.
But whatever we decide - the past isn't coming back.

But thats how we are all judged? In society, our character and abilities are determined by our past successes and failures. Sure, looking forward is crucial to improvement and development but we would be foolish to forget past indiscretions as they are our best indicator of future performance.

Quite right. But that's doesn't mean repeating the past or even expecting it to continue as 'normal'.
None of us expected a pandemic on such a devastating scale. And to keep looking back at 'what was or wasn't' is pointless.
Yes. Learn lessons from the past ( and I'm sure Kiwibuild will be one of them!) and be proud of the positive achievements we have made as a country.
But 'doing what we did' or complaining about didn't work for ideological reasons isn't going to help us with the immediate future.

We need to look further back before the pandemic. There have been signs that the "normal" was starting to falter such as rising debt, DTI, etc but we failed to acknowledge there was trouble brewing until now. If we don't acknowledge that the former "normal" is no longer a sustainable model, I don't see any other option other than boom and bust.

GV...unfortunately worked for trump in the last US election. There was nothing positive he could say about himself that people could believe so he just relied on saying everyone else was as stupid and corrupt as him. Gets pretty old for even semi-intelligent people who can see right through this method. And yet he got elected..what does that say about the US and their IQ? trump is the opitimy of some one who will NEVER take accountability...always someone elses fault.

The best reset would be in the tax base. No tax till you earn $35k, then scale up the progressions to make it as neutral as possible. GST really skews the system towards those who can save and invest, rather than have to spend everything each week. Restricting ‘savings’ and giving low earners an extra $50 or so a week would get money into the economy in a more equitable way than helicopter cash for all.

"Taking away savings" - after-tax deposits returning lower than inflation does exactly that. How are you going to 'take away' savings? Are people on the verge of retirement going to suddenly decide to buy a business?

Respectfully disagree, Pietro. One of the key planks in any ad-valorem tax system is that it simply cannot be avoided. Yes, it's regressive in that low-SES are hit harder in terms of % of discretionary income. But at the other end, the tycoons are still paying 15% tax on their mansions, helicopters, cars and sumptuary goods purchases. Whereas 'income' is a variably interpreted tax base, and the only other thing that can't be avoided is land/property tax - which depends totally on the quality and consistency of valuations (insert hollow laughter soundtrack here).

Designing tax systems is not for amateurs......

The simple truth is this: we already have enough money in the system to provide world-class services; it’s just that the money is being poorly used, captured by the very institutions that are meant to help, rather than being passed through to the pupil, the patient, or the consumer, in a way that makes a material difference to their lives.

Yawn. "Tax the rich" policies just make countries poorer. Venezuala poorer, Argentina poorer, both wealthy countries if they were well run.

There is just no need to increase taxes, bracket creep solves the problem. When, eventually, incomes rise, so does tax revenue.

Reducing taxes, eg refunding last year's GST payments to all businesses with less than $100 million turnover, would put money into those businesses and create jobs. It would do so in proportion to the value added to society by those businesses. That is why it is called "value added tax" overseas. (Presumably, adding value is naughty and must be discouraged. I can't remember why, exactly, but I digress). Obviously that is not politically acceptable to the oligarchic collectivists we have all been trained to be. We are so obsessed with the idea that someone else might benefit undeservedly that we don't look at anything that might actually solve the problem.

Yes of course, but the poor already have nothing and the issue is scale.

When the scale of spending is so vast as to overwhelm bracket creep and other traditional revenue increases assets stripping is the obvious solution to any left leaning government. Creating more or new wealth usually isn't on their radar.

Which governments in NZ typically sell off assets?

I might not have been clear. I am suggesting the assets they will come for are assets they don't already own, meaning private assets/wealth.

Very insightful commentary, Jenée.

I concur.

This government could not "execute" its way out of a wet paper bag. Billions of dollars are set to be wasted over the next 3 years and there will be very little to show for it once the bonfire of cash goes out. But those lucky enough to enjoy patronage will have kept themselves very warm and cosy in its warmth.

What is your prescription for post pandemic recovery, then. Any ideas?

Since we apparently have billions of dollars to burn. Create an export development fund/bank. Invite grant proposals from all exporters who achieved export sales of 1 million-plus in the previous financial year.
Basically ask those exporters to set out. How much money they want. What they will spend it on and how many jobs they will create.
All time defined targets. If the targets are not met in the pre-agreed timeline then the grants are converted to loans to be paid off in a time frame and with interest rate agreed before the grant is even made. If the loan is not paid off within the pre-agreed time then the government takes an equity stake in the business equivalent to the loan balance at the time of default.
Who knows. We might have some billion dollar plus exporters to show for our efforts. Instead of a pile of ash.

".. ultimately need to fall harder on some than it will on others. The question is, who?"

When you are spending money you don't have the answer seems self evident; those with any kind of assets.

Those who already have nothing cannot pay.

We would need to bring in some new tax structure if we want to make the asset rich pay - a land tax or similar - and that is not occurring. Under our existing value added and income tax structures the burden falls on the future of those who add value or seek income. Workers and businesses of the future will pay for it all. The idle rich and non-working poor are both currently excluded from the bill.

Now's not the time to 'reset' anything, we don't know what we will be resetting for, the dust needs to settle a bit, shore up the damage and wait to see what happens next. I should add, observations from a NZInc perspective, change off the back of a crisis is quite damaging to economic prospects in this Country , like post currency crisis 1984 or post GFC 2008/09 anythng too drastic will simply shock NZInc into hiding, never to be seen for 2 or 3 years and with it all hiring intentions. Robinson knows this and is playing to that inherent weakness of this country's business community, leading the way for them like children, when they really ought to be leading themselves...

Are you channeling Deborah and Tamati? The arrogance is palpable in the left.

With the children in charge of the cutter, be prepared for a lot more immature leadership. All this lot do are talk & give away money. That is not leadership. It is socialism. The real problem is that the others don't seem to have any better ideas... yet. Perhaps the real issue here is that our mediocre education system is producing mediocre people who have mediocre answers to real world problems. This is not ideal. Throw in the three-quarters of a million people (the brain drain) who have given up on NZ Inc & now ply their trades offshore & we have the makings of a real mess here @ranch.hq. And we are currently living within this mess. In fact, it's a shambles. And just because other countries have similar problems, that doesn't make our mess any better, it goes to show you that after 50 years of socialism principles being active within the education systems of western democracies, it leads to this. A mess. Then add in dysfunctional families & relationships by the tens of thousands & voila! Welcome to the 15th of May 2020.

What would you be doing on 16th May 2020 to sort the mess out?
Because you're right. It needs sorting.
Just you're first action tomorrow at 9.00 am will do.

I think the housing disaster of the past 20 years is a MASSIVE part of our problem.
On multiple fronts.

Why start tomorrow? I have been encouraging my children to follow my example. Get a good education, build up the CV and become an Expat. There is absolutely no downside to making your way in another country. We may value our citizenship but we don’t have to spend our lives here.

Agree with you, but, it's funny how most come home eventually though.

life's about having a purpose...struggle and striving to be better... you can do this anywhere in the world.

Why didn't you have these views the last 10-20 years and do something to fix it or prevent it?

Great article. My only criticism would be the statement that "the Gen Xers - working hard to be mortgage-free by 65 when they get New Zealand Superannuation". I think the first tranche of Gen Xers might get non means tested super, but I suspect anyone under the age of about 50 needs to consider the strong likelihood that they will need to qualify for the dole before they will be getting any help from the government in their old age.

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