The government simply setting a debt target for its fiscal management makes no sense. Better to set a Crown Net Worth target which reflects the entirety of the Crown balance sheet. The National Party promises to bring net core Crown debt down below 40 percent of annual GDP. Labour promises to reduce net debt to…
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The run up to the election is the silly season; is there any point in taking most of the tax proposals seriously? It’s the silly season when campaigning politicians repeatedly display their ignorance. Perhaps the most famous instance was NZ Party leader, Bob Jones, claiming in 1984 that floating the exchange rate would eliminate the…
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Short notes on economic matters which do not make a full column. Wellbeing It is true that wellbeing is a fuzzier concept than, say, GDP. We can make it less fuzzy by discussing and researching the notion but because it is multidimensional and about actual people, I expect it to always be a bit problematic….
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The American evidence is that they frequently do not. For over a century there was a separate Department of Labour, which was amalgamated into that vast miscellaneous department, the Ministry of Business, Innovation and Employment. Today there is no Minister of Labour, while the portfolios of workplace relations and safety and of immigration are held…
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Are we too focused on material consumption at the expense of wellbeing? GDP is a measure of market activity. It was originally developed to understand what was happening to the market economy, especially about the rise in unemployment during the Great Depression. It was never intended to summarise all human economic activity. For more than…
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At the 2026 election, unemployment is likely to be higher and inflation lower than it was in 2023. It was headline news that the unemployment rate, at 5.6 percent of the labour force, rose in the June Quarter to its highest level since March 2015. In fact it has been creeping up over the last…
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Productivity increases do not always generate increases in profits. We do not know when the economic boom generated by AI will be over, but the overstretched industry is increasingly looking shaky. When I last wrote about financial booms and busts, I equivocated over whether the next financial bust – there will be one, we just…
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Where does the grumpiness threatening the nation’s stability come from? Why is everybody so grumpy? Politically grumpy, I mean. Not just in New Zealand; Australia, the US, Britain, much of the rest of Europe all have a restlessness which is indicated by dissenting populist parties. The political fragmentation is on the left and the right….
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There is insufficient support for neoliberal economic policies so political parties of the hard right are adopting populist causes. To succeed the neoliberal revolution of Roger Douglas and Ruth Richardson had to change the culture of New Zealanders from their belief that the government was usually the solution to a problem to a society which…
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Paul Krugman described behavioural economics as the most important innovation in the economics discipline for half a century.[1] Three decades ago, I reviewed The Winner’s Curse: Paradoxes and Anomalies of Economic Life by Richard Thaler which reported behaviour which appeared anomalous according to the economist’s standard model of ‘rational economic man’. Anomalies are at the…
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There is a case that the government agency which has contributed most to New Zealand’s economic growth is the Ministry of Foreign Affairs and Trade. New Zealand is a tiny economy in international terms. Its economic prosperity is dependent upon specialisation for it cannot make everything. Rather, its exports earn foreign exchange to pay for…
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Understanding its history helps understanding where it is going. The ideas which underpin Kiwisaver entered into the New Zealand political dialogue in the late 1960s when the Labour Party, then in opposition, was looking at how to progress the welfare state. It observed that many European nations had occupationally based, earnings-related retirement pensions funded by…
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The column focuses only on the business activities of Ron Brierley Brierley’s main impact in New Zealand was in the 1970s and early 1980s, which was a strange time for the New Zealand economy. Its business was far from dynamic; it was said that the most successful New Zealand entrepreneurs at that time were those…
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Apply the golden fiscal rule and invest prudently. A lender is greatly disadvantaged compared to a borrower. The borrower gets the cash immediately. In exchange, the lender gets a promise that the borrower will repay the loan (plus interest) at some time in the future. No matter how honourable the borrower is, the lender knows…
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The Minister of Health is one of the toughest jobs in Cabinet. In comparison, being Prime Minister or Minister of Finance is easy. Recovering from an emergency operation, unable to move with all the tubes stuck in me, stomach in turmoil, unable to sleep, I thought the Prime Minister had asked me to be Minster…
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If there is a major shock, New Zealand has not got a lot of fiscal room to move. In late 2008, there was the Global Financial Crisis. New Zealand’s orthodox response was a fiscal expansion with a deficit (OBEGAL) of $3.9b in the June 2009 year compared to a fiscal surplus of $5.6b in June…
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The proposal to reduce the number of public servants is not well worked out. Announcing the reduction of 8700 jobs for public servants during the runup to the 2026 election suggests the economy is in a fragile state. The Iran War is generating global stagnation and inflation; even worse – if oil and related products…
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The outlook is gloomy. The Treasury economic forecasts for May budgets are usually settled in April to feed into the fiscal forecasts and, critically, the borrowing program. They can be changed in the interim six weeks if anything happens. (Not too difficult with a fully balanced forecast; I was once involved in a morning rejig…
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We are facing difficult challenges from the likely rise in import prices. Many readers may find this week’s column difficult compared to the discussions they are familiar with. That is because it tries to get the analysis right rather than skipping over the difficult bits and leaving the reader with misunderstandings. So apologies for the…
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In too many areas we are avoiding thinking about or preparing for oncoming changes. About a decade ago I had a ‘Lambton Quay’ conversation with an environment policy advisor. For those who do not live in Wellington, LQ is the main shopping street which starts at Parliament buildings; it also has cafes and government offices….
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