Our PM Jacinda Ardern (and the government)

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#2871771 21-Feb-2022 07:12

Handle9:

On Q+A this morning Bridges was just as unable to identity the spending that has significantly contributed to inflation. It’s almost like he doesn’t know or it’s not true.

Pretty woeful really. He's strong on the effects of inflation but many pollies seem to really struggle with the macro-finance elements of the NZ economy.

Given how exposed we are to overseas markets and the impact on the dollar on export receipts + imported good costs, that's not really good enough from aspiring financial decision-makers.

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#2871775 21-Feb-2022 07:20

GV27:
Handle9:

On Q+A this morning Bridges was just as unable to identity the spending that has significantly contributed to inflation. It’s almost like he doesn’t know or it’s not true.

Pretty woeful really. He's strong on the effects of inflation but many pollies seem to really struggle with the macro-finance elements of the NZ economy.

Given how exposed we are to overseas markets and the impact on the dollar on export receipts + imported good costs, that's not really good enough from aspiring financial decision-makers.

I think it’s because he doesn’t want to acknowledge that the most inflationary spending was the wage subsidies and business support payments. That’s a huge amount of “good” spending as opposed to the relatively small, although at times large in absolute terms, amount of “wasteful” spending.

It’s a complex topic that can’t be boiled down to “spending bad.”

GV27

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#2871781 21-Feb-2022 07:31

I mean it's not like there isn't plenty to talk about with the shitfing RBNZ mandates, the LSAP, the low OCR taking forever to lift as house prices rose, etc.

As usual, stringing together a cohesive argument about this stuff seems to be frighteningly beyond the supposed party of economic thinkers.

Not that Robertson's dismissal of the issues with inflation or RBNZ governance is any better, but we're not exactly spoiled for choice here, are we.

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#2871813 21-Feb-2022 09:09

Handle9:

Be specific. How much spending are you talking about and what is the nett impact?

How about Kiwirail. I saw a report/article last week slamming the Government for it's massive over investment in rail which is based on ideaology rather than cost benefit. The numbers that showed it didn't stack up, to spend as much as they have (and are intending to spend considerably more), multiple sources demonstrated it wasn't a good use of the money spent and will provide minimal benefit over the next 20+ years (if ever). Totally ignored.

Kiwibuild, whilst not specifically about inflation during the pandemic, was another that huge money was spent on. Unsurprisingly 'the most transparent government ever" hasn't told anyone how much it actually has cost to date.

The RSP's and other financial safety nets put in place, could have cost considerably less if not handed out on the high trust model and in huge chunks and instead fed out fortnightly.

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#2871877 21-Feb-2022 11:20

I just cannot believe that they would like to ditch the $521 kiwisaver govt. contribution :(

https://www.stuff.co.nz/business/127827633/labour-review-to-consider-removing-521-govt-kiwisaver-subsidy-from-employees

After the previously announced extra unemployment tax, sorry levy... this will be one more hidden tax for the average worker who would like to save a bit for retirement.

GV27

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#2871881 21-Feb-2022 11:26

engedib:

I just cannot believe that they would like to ditch the $521 kiwisaver govt. contribution :(

https://www.stuff.co.nz/business/127827633/labour-review-to-consider-removing-521-govt-kiwisaver-subsidy-from-employees

After the previously announced extra unemployment tax, sorry levy... this will be one more hidden tax for the average worker who would like to save a bit for retirement.

This is the worst bit for my mind:

Under the small steps plan, after an employee had been contributing at 3 per cent for at least one year, their contribution rate would automatically increase until after 14 years they were saving 10 per cent of their incomes.

"People who are struggling aren't saving enough for their retirement, so we're going to increase their KS rates and reduce their take home pay.

Just add it to the list I guess. Just continually taking money from people's wages is one way to reduce the spending-driven component of inflation, but if your entire justification is that people are marginal on saving to begin with, it would pay to understand why that is.

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#2872154 21-Feb-2022 15:56

networkn:
Handle9:

Be specific. How much spending are you talking about and what is the nett impact?

How about Kiwirail. I saw a report/article last week slamming the Government for it's massive over investment in rail which is based on ideaology rather than cost benefit. The numbers that showed it didn't stack up, to spend as much as they have (and are intending to spend considerably more), multiple sources demonstrated it wasn't a good use of the money spent and will provide minimal benefit over the next 20+ years (if ever). Totally ignored.

Kiwibuild, whilst not specifically about inflation during the pandemic, was another that huge money was spent on. Unsurprisingly 'the most transparent government ever" hasn't told anyone how much it actually has cost to date.

The RSP's and other financial safety nets put in place, could have cost considerably less if not handed out on the high trust model and in huge chunks and instead fed out fortnightly.

What percentage of the operating budget are you talking about? How is that contributing to inflation?

The answer is of course below 0.1% of the governments operating budget and it has a negligible contribution. It’s a nonsense argument.

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#2872168 21-Feb-2022 16:41

Handle9:
What percentage of the operating budget are you talking about? How is that contributing to inflation?

The answer is of course below 0.1% of the governments operating budget and it has a negligible contribution. It’s a nonsense argument.

It's not a nonsense argument at all. That is just one example the many examples of wasteful government spending. There are plenty of others where money has been frittered away with no accountability or outcome to match the expenditure.

The clean energy centre planned for Taranaki is another.

As individual projects they might be small but bit by bit they add up. The saying watch the cents and the dollars take care of themselves is very relevant.

Just because it's just a very small percentage of government spending isn't telling the whole story. Government spending as a total of GDP is a very important measure. It has gone from 35.6% in 2017 to 43.6% last year. That's a 22% increase, pretty significant I'd say and a major contributor to inflation.

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#2872172 21-Feb-2022 16:47

What percentage of government spending is “wasteful” and what is its contribution to inflation?

There has been a lot of government spending to keep businesses going and staff employed. That’s different from wasteful spending as is being alleged.

ezbee

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#2872266 21-Feb-2022 22:02

Government spending ?

If you wanted to be Denmark they spend 50% more per head on healthcare.
They have free higher education so probably have upskilled their population, enjoying economic benefit.
However it comes at price of progressive taxes of a level to pay for it.

Tax-to-GDP ratio about 46.5%.
Our Tax-to-GDP ratio about 32.2%

But they do have control of a key inflationary pressure. Housing and land, we let that horse bolt long ago.
We got what seemed to be a cheap boost to economy, which we now pay for generations.

""
Non-Danish citizens who have not previously been domiciled in Denmark for an aggregate period of at least five years can purchase real property in Denmark only with the permission of the Ministry of Justice. The same goes for companies and associations that are not domiciled in Denmark.

However, EU citizens, citizens of European Economic Area (EEA) countries and EU companies may purchase real property in Denmark without the ministry’s permission where certain requirements are met, but only if the property is intended to serve as a necessary permanent residence for the purchaser, or where the purchase is a prerequisite for operating the purchaser’s own business or supplying services. These more extensive rights follow from Executive Order 764 (18 September 1995).
""
Not much we can do about, oil, shipping, higher source prices for manufactured goods, USA they are squealing about price of cars even 2nd hand.
Farmers get great export prices and we pay, even though there is no large shipping cost, thanks guys.

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#2872273 21-Feb-2022 22:39

ezbee:

Farmers get great export prices and we pay, even though there is no large shipping cost, thanks guys.

This deserves a thread all of its own.

Yes, we do pay but not to the farmer, so don't go blaming the farmers.

Very often our dairy products get sold overseas at a cheaper price than we pay in the supermarket here and that's with all the shipping charges. I was told recently that Fonterra sell their cheese for less than a third of what it is sold for in the supermarkets. Go figure.

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#2872550 22-Feb-2022 10:39

Technofreak
Good point, the supermarket system is broken.
Aside from the big co-op and single desk farm groups, others don't do so well.
Despite Farmer ownership Fonterra management does seem to do its own thing, moves in China that backfired for example.

The whole petrol price review of first term of Government was a complete waste of time,
where supermarkets are more of an issue for suppliers and customers alike.

Farm lobbying groups have not helped though, pressing successive Governments to free up foreign ownership to keep farm prices up.
Then lamenting the the corporatization and lack of locals owning and investing in farms.

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#2880116 7-Mar-2022 10:30

https://thespinoff.co.nz/live-updates/07-03-2022/ardern-denies-cost-of-living-crisis-wont-cut-petrol-taxes

I wonder if those who can't seem to get over the 'there isn't a housing crisis' from National, will be equally damning of Arden for this similar denial about the cost of living.

I doubt it somehow.

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#2880190 7-Mar-2022 13:11

Ardern declined to describe the cost of living increase as a crisis. Looking at the article Ardern did not deny cost of living has increased. There are a number of reasons for that increase.

GV27

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#2880193 7-Mar-2022 13:16

gzt: Ardern declined to describe the cost of living increase as a crisis. Looking at the article Ardern did not deny cost of living has increased. There are a number of reasons for that increase.

It's only called a crisis if you earn under $400K a year.

Otherwise it's just 'sparkling lower/middle class squeeze'.

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