Economics

Promising more, spending less

The health system was the big winner from the recent Budget announcement which saw a much needed increase in capital funding. This was one area that had been starved by the previous government’s insistence to pay down debt and as a result was left drastically underfunded. It’s symptomatic of the infrastructure crisis we face across the country, where public transport, schools, and housing services are teetering on the brink. Even so, Treasury’s 2018 Investment Statement estimated that DHBs required $14 billion of spending over the next 10 years; the $850 million allocated to capital spending in this budget is a start, but it falls well short of requirements.

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Petulance & Policy Paralysis

One can only hope Sir John was out hitting golf balls and Mr. English stomping round in the mud. Such was the embarrassing nature of Simon Bridges’ speech on budget day, the former leaders would have been shocked to see the extent the leadership capabilities of their former party had fallen. Bridges was supported of course by a cast of sneering MP’s just as culpable in behavior that would not be tolerated in a primary school class room.  While the Prime Minister, relentlessly positive as always, managed to retain the moral high ground, in the most part, the scenes of red and blue in their trenches jeering across the room left no surprise as to why the faith and engagement in our democracy is dwindling.

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Spending Our Way Out Of Trouble

The recent funding model proposed for the new Auckland rail developments, along with last week’s budget announcement shows the impacts of the Budget Responsibility Rules committed to by Labour before the election.  

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Making sense of the US stock market. Reason to worry?

Stockmarket palpitations are always great for low level headlines from daily media. The latest has been no exception with headlines screaming really dumb tags such as “Dow drop is a record”. It’s click bait in the extreme and a commentary on just how superficial coverage by popular media is.

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Explaining Modern Monetary Theory in New Zealand - TOP

The concept of Modern Monetary Theory (MMT) is gaining traction around the world, and the visit of Bill Mitchell last week has given a boost to these ideas locally. There are a bunch of things where MMT has a similar view of the world to conventional economists. It also debunks a few of the popular narratives about government surpluses and deficits, particularly challenging the idea that the government’s books are the same as running a household. Whether or not the ideas will work depend a lot on the circumstances, and while MMT has a lot to offer we don’t think New Zealand is ready to apply it – yet.

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New Zealand Transport Funding Issues - TOP

You can tell it is election time, because politicians are promising to complete their pet transport projects. This important issue shouldn’t be used as a political pawn – it is time to depoliticize transport funding. 

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Why we need to invest in rail over roads - TOP

Rail vs Road: Rail Wins, Transparency Loses

The release of KiwiRail’s business case for the “Third Main” freight rail line between Otahuhu and Wiri raises three massive issues. 

First, this is one of the first times that road and rail infrastructure spending have been evaluated on a level playing field, and rail came out the clear winner. Second, it raises questions over transparency; why was the National-lead Government reticent to release this information, while they pursue road projects with fervor?  Third, it calls into question their image as responsible managers of the economy – whether they can make good decisions on the basis of simple business cases.

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From Trickle Down to being Trickled On

One of the often heard regrets from employers is how they can’t get labour from the local market. They resort as much as possible to getting the Immigration Department to approve the importation of labour from abroad. We’re not talking highly skilled labour here; we’re talking about those with middle-of-the-road or lower skill sets primarily.

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