public debt starting to bite?

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Batman

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#284620 5-May-2021 10:27

https://www.stuff.co.nz/national/politics/300292597/government-announces-three-more-years-of-pay-restraint-for-public-servants

"Finance Minister Grant Robertson said the restraint was necessary to keep a lid on public debt, which had skyrocketed during Covid-19 to pay for expensive measures like the wage subsidy."

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#2702193 5-May-2021 13:14

I think public debt is going to be a major problem.

However just like most things this government has done (in most cases not done) this will be just just window dressing and and a PR stunt. The savings will be a drop in the bucket.

It scares me where this government is taking New Zealand.

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wellygary

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#2702303 5-May-2021 13:58

Its window dressing to deflect from stats that show the number of public servants is growing like topsy...

The last official data in June 2020 showed 57,149, up nearly 5,000 from 2019, (yes , yes, COVID will get cited), but since 2017 numbers have risen from 47,252... up 20%...

The 2021 numbers will likely be even higher again....so slapping a cap on salary increases still doesn't stop the cost of the public service rising...

https://www.publicservice.govt.nz/assets/SSC-Site-Assets/SAPG/Strategic-Information/Workforce-Data/2020-Workforce-data-fact-sheets.pdf

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#2702351 5-May-2021 14:48

Technofreak:

I think public debt is going to be a major problem.

the rich get richer, the poor get taxpayer funded lifestyle, essentially the middle class will pay

mind you i don't know what other solution is possible from here though

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#2702362 5-May-2021 14:52

Technofreak:
I think public debt is going to be a major problem.

Why? Government debt is still low by international standards. Reasonable levels of debt isn't a problem. In many ways the stupid arbitrary debt targets governments have set have significantly impeded economic growth by gross underinvestment.

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#2702819 6-May-2021 09:29

A very good article by Bernhard Hickey here

antonknee

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#2705506 10-May-2021 13:49

Moving to freeze the pay of public sector employees is rubbish quite frankly and a slap in the face. No one likes Wellington bureaucrat fat cats who suck on the public teat and contribute little- but this move doesn't really impact them, it does however impact people who do the mahi up and down the country.

I happen to think those on over $100k can probably deal with their pay being held in any case. But $60k is honestly not a lot of money in Auckland or Wellington, so I'm not sure how fair this is on them. In any case it's a literal drop in the bucket.

That said, I understand further detail has come out suggesting those under $60k will be lifted to that level, $60k-$100k will continue to get their stepped increases, and people over $100k will be on ice. So essentially business as usual?

1101

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#2705571 10-May-2021 16:12

Handle9:
Technofreak:

I think public debt is going to be a major problem.

Why? Government debt is still low by international standards. Reasonable levels of debt isn't a problem. In many ways the stupid arbitrary debt targets governments have set have significantly impeded economic growth by gross underinvestment.

why, because it has to be paid back

govt spending usually wastefull & unproductive way to spend BORROWED money
govt money spent on interest over the next 10-20years is money wasted

Its living off the credit card . Its not targeted borrowing .
Look at Ak council. Literally living off borrowed money rather than get spending under control .

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Handle9

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#2705575 10-May-2021 16:16

1101:

Handle9: Why? Government debt is still low by international standards. Reasonable levels of debt isn't a problem. In many ways the stupid arbitrary debt targets governments have set have significantly impeded economic growth by gross underinvestment.

why, because it has to be paid back

govt spending usually wastefull & unproductive way to spend BORROWED money
govt money spent on interest over the next 10-20years is money wasted

Its living off the credit card . Its not targeted borrowing .
Look at Ak council. Literally living off borrowed money rather than get spending under control .

Lol.

Did you buy a house with cash or did you get a mortgage?

If borrowing is so wasteful why does every corporation have it as part as part of it's capital structure?

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#2705715 10-May-2021 18:24

Handle9:

1101:

why, because it has to be paid back

govt spending usually wastefull & unproductive way to spend BORROWED money
govt money spent on interest over the next 10-20years is money wasted

Its living off the credit card . Its not targeted borrowing .
Look at Ak council. Literally living off borrowed money rather than get spending under control .

Lol.

Did you buy a house with cash or did you get a mortgage?

If borrowing is so wasteful why does every corporation have it as part as part of it's capital structure?

I think missed the point. See the bits I have bolded.

Would you not agree that a mortgage is targeted borrowing just like any borrowings for most corporations.

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Handle9

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#2705718 10-May-2021 18:37

Technofreak:

Handle9:

Lol.

Did you buy a house with cash or did you get a mortgage?

If borrowing is so wasteful why does every corporation have it as part as part of it's capital structure?

I think missed the point. See the bits I have bolded.

Would you not agree that a mortgage is targeted borrowing just like any borrowings for most corporations.

The implication that most government borrowing isn't targeted which is no more true of governments than it is of corporations. The reality is most people aren't at all informed about where the borrowing goes. Corporations will borrow for all sorts of reasons, including dividends.

A mortgage is a way to pay for an asset while still allowing you to have money for other things, like food. For a governments borrowing is much the same. Instead of buying groceries they buy hip replacements, educate children and pay the police. There is a base level of spending that needs to be there.

The easiest way for governments to not have a deficit is to completely stop CAPEX, just as happened in the 80s and 90s. The flow on effect of that is an infrastructure deficit, which is exactly what has happened over multiple generations. It's entirely appropriate to borrow money to pay for multigenerational assets like tunnels, trains, roads and houses.

It's also appropriate to run deficits in times of crisis. If you crashed your car, your house burnt down and your partner had to have a major surgery you had to pay for then you'd borrow money to get yourself back on your feet. Once that cycle ended then you start saving again.

Austerity has consistently been demonstrated to make recessions/depressions much worse than they would otherwise be. That runs directly into the tax take and the overall well being of the nation.

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#2705867 11-May-2021 09:47

Could you elaborate on this so-called wasteful government spending? Not all spending because it's done by the government is a waste. You learn in year 11 economics that the government spends money on public goods that benefit everyone.

Note that just because you don't like an individual item of spend doesn't make it wasteful. The government is here to look after the entire country, not just you.

As has already been pointed out, debt is a valid and useful way to fund anything as proven by your own mortgage and most businesses. The government can also borrow at near zero interest rates. Government debt is not the same as you running up your credit card and then wondering how to pay it back when the statement comes.

Technofreak

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#2706676 12-May-2021 20:44

Austerity has consistently been demonstrated to make recessions/depressions much worse than they would otherwise be. That runs directly into the tax take and the overall well being of the nation.

and

Not all spending because it's done by the government is a waste.

I don't think anyone was talking about austerity just talking about being prudent with the spending.

Sure not all government spending is a waste. Much of what they spend is absolutely necessary

But when you hear how much the public service has grown in the last three years and things like the massive expenditure in IT upgrades, the waste of unused school lunches where the Minister of Education has said he doesn't care about the waste, there's plenty of evidence of wasteful expenditure. No government is immune from excess spending but this one seems to be particularly bad.

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Rikkitic

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#2706701 12-May-2021 21:27

Technofreak:

But when you hear how much the public service has grown in the last three years and things like the massive expenditure in IT upgrades, the waste of unused school lunches where the Minister of Education has said he doesn't care about the waste, there's plenty of evidence of wasteful expenditure. No government is immune from excess spending but this one seems to be particularly bad.

This old saw gets parroted by every conservative who disapproves of every progressive government. Maybe it is true in this case. Maybe it isn't. Historically, Labour governments tend to be much more fiscally prudent than the dire warnings shrieked by National doomsayers. Here is what David Seymour had to say about it in 2018:

“The Central Government award for waste went to the New Zealand Film Commission for paying producers of the TV show “Power Rangers” $1.6 million to reference New Zealand in its script. However, the National Party spent over $500 million of taxpayer money on film and television producers during their time in Government.

“Not to mention the ACT Party found over $1.1 billion of National Party corporate welfare that could be cut to fund company tax cuts, such as R&D Growth Grants and Major Events Funds.

“Make no mistake, the Jonesie Awards may take their name from NZFirst Minister Shane Jones but the National Party are equally guilty of frivolous wasteful spending."

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#2706797 12-May-2021 21:58

Rikkitic:

This old saw gets parroted by every conservative who disapproves of every progressive government. Maybe it is true in this case. Maybe it isn't. Historically, Labour governments tend to be much more fiscally prudent than the dire warnings shrieked by National doomsayers. Here is what David Seymour had to say about it in 2018:

“The Central Government award for waste went to the New Zealand Film Commission for paying producers of the TV show “Power Rangers” $1.6 million to reference New Zealand in its script. However, the National Party spent over $500 million of taxpayer money on film and television producers during their time in Government.

“Not to mention the ACT Party found over $1.1 billion of National Party corporate welfare that could be cut to fund company tax cuts, such as R&D Growth Grants and Major Events Funds.

“Make no mistake, the Jonesie Awards may take their name from NZFirst Minister Shane Jones but the National Party are equally guilty of frivolous wasteful spending."

I was talking about this government in particular. Show me that the examples I quoted aren't correct.

National were in government for 9 years and according to you spent $500 million in film subsidies. This government has given $100 million to Amazon this year alone for just one film deal.

I'm not sure R & D Grants fit into the realm of corporate welfare, but then again we all have different points of view on how money should be spent to help boost innovation, productivity and the economy.

Don't kid yourself, there's nothing what so ever about this government that's progressive.

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Handle9

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#2706810 12-May-2021 22:55

Don't kid yourself that public debt would be different in any meaningful way under a different government.

Both parties fiscal policy is essentially the same.

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