Are Grant’s Budget cuts enough? Will conflict with China follow NZ economic shockwave?

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Government announces $4 billion worth of public service savings, cutbacks to consultants and contractors

Prime Minister Chris Hipkins and Finance Minister Grant Robertson have announced a sweeping package of public service savings, cutting the Government’s cloth as clouds gather over the New Zealand economy.

The pair announced almost $4b worth of savings, booked over the four year forecast period. That is on top of $4b worth of savings announced at the Budget.

Specific programmes, like the Covid-19 emergency response, have been cut or have had “underspends” returned to the Crown because they are no longer necessary, but the largest cuts come from a sweeping reduction to agencies’ baseline expenditure.

Half a billion dollars has been saved from the 2025/26 Budget and subsequent Budgets, by trimming agencies’ baselines by between 1 and 2 per cent. The largest cuts came at MBIE, which had its baseline cut by $110.8m, followed by the Ministry of Education, which had its baseline cut by $69.7m.

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No more work for Neil Jones, the chinless wonder from down under Davey Cormack and all the other Professional Managerial Class Wellington Consultants which is wonderful news, but will the cuts be enough to in save NZ from the looming crash next month?

The domestic Chinese property crisis alongside the flawed Covid opening alongside the extreme climate events alongside the rising unemployment alongside a crashing economy are terribly problematic for NZ because we are so exposed to China.

When our books open next month, all eyes will be on NZ to see how steep the shut down in China is while exposing out exposure to them.

It will cause a run on the NZ stock market, those KiwiSaver accounts will get smashed and the sense of economic crisis will be intense.

National under John Key sold NZ a ‘all our cows in one Beijing Paddock’ strategy  and unfortunately we handed our cows over cheaply to China and they have grown their own massive new dairy farms.

This is a fundamental shock to the model big Dairy have sold NZ for 20 years and it’s going to explode next month.

The problem is that as an autocratic leader, Xi sees his interests as China’s interests. An economic recession would be disastrous to those interests making the need for a nationalistic flag waving invasion of Taiwan islands or blockade the type of play left.

Let’s see how bad the trade with China is, let’s see the reaction of that exposure on the NZ Economy and let’s keep up the diplomacy and dialogue because the last thing anyone needs in the Pacific is conflict.

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33 COMMENTS

  1. Trimming the budget won’t be the panacea we are hoping for when New Zealand is so reliant on foreign trade. I’m not trying to make defence into anything more than what is required and 3% of the gap on defence ain’t it.

    In two years we will have to have done enough on fossil fuel substitutes and gain some sort of technological advancement in manufacturing anecdotally computer gaming ain’t it. It’s going to jave to be some type of wonder material used in energy storage our Manhattan project so to speak.

    We’ve gutted the navy which is a grave mistake considering everything gets to NZ via the sea. The big issue is economic security goes hand in hand with National security. Navy and airforce will take years longer than we have got to recapitalise. The maintenance of the Navy is by far and away the most important in protecting trade and protecting power when we need it and far more in the actual defence of New Zealand than some wonderful treasury model saying the future looks really splendid and wonderful growing at the awesome pace of treasury modling and interlect.

    Yknow if China is operating on NZ shores then heads have to roll. No ones bothered to adapt farming and forestry practices again in a two year time frame. They have to have a carbon price with which to borrow against and adapt you gonks. But yeah National ACT and matua NZ1st promised the forestry and farming sector can remain stuck in there retarded world of nineteenth century technology and interlect. It could be highly possible that in 2 years backwards minded yokles could be trading there primary industrial products for digital goods instead of trading for cash, or something. Point is infinite growth does not have to require infinite resource consumption with an adequate and corresponding energy policy.

    Also the Labour Party has a long history of paying down debt while growing the economy following on from Muldons ego trip.

    Borrowing matters a lot because we are not critiquing economic models we are critiquing the human experience, and those are two very different things. Yes, companies try to convince people to buy products. This is obvious to anyone who’s ever turned on a television before. That doesn’t mean that buying said things means you were manipulated into buying them. Believe it or not, some people gain enjoyment from certain material goods or services. This does not mean the consumer is in some sort of existential rat race where the only thing that gives them a transient feeling of satisfaction or meaning is the purchase of material posessions. Some material comforts just enhance the overall experience of life. That’s ok. There are quite a lot of people in system who with the correct policy adjustments can be completely satisfied with the level of wealth that they currently enjoy.

  2. Join the BRIICS+ and they will be kind to us. Join the Fascist US Quad ANUS cabal and get reamed and go broke and starve.

  3. The way this government has wasted money it should be easy to cut spending without cutting front line staff. Working on getting back the money wrongly paid out through covid would be a good start .

    • Yes Trevor just ask those multi millionaire capitalists businesses. Or are you expecting the man in the street whose job was saved in spite of the above greedies to cough up. So Trevor who should be paying back in your very superior opinion.

      • I am glad you reconize National voters are superior . It is a familiar story from Labour that the spend money with no regard to checks and balances. It was the same with MIQ stays where they allowed million to slip through their hands in unpaid bills for the stay which could have been so easy . They constantly show they are not business savvy

        • So Trevor while these people are leaving without paying ( probably NACT voters)
          How do you suggest they get the money, send in the bailiffs ( not cheap). How Trevor in your superior hindsight would you have collected the money from so called upstanding law abiding citizens who cried foul when they couldn’t get back to NZ. After all most of these people were ex pats who at the time of covid had every complaint under the sun. The powers that be were probably glad to see the back of them.

          • They could have paid like they do at any hotel with a credit card which could then have been forwarded to the government or of set on the cost . Easy

        • @ trevor.
          “I am glad you reconize National voters are superior”
          I agree. They’re succeed in being uglier, dumber, greedier and lazier than anyone else and who’s only talent is to be cunning and devious. Their self entitled expectations of having more than they need at the expense of those who now have ever less, thanks to them, is, again to them, an admirable advantage. Because of the pointlessness of the greed the right wing think of as a talent they expect the rest of us to follow behind in awe as the useless right wing set fire to the planet but only after they exhaust every necessary resource we have. I’m thinking the water, the soils, the oceans and the air.
          After exploiting we trusting and good AO/NZ working people to a point of exhaustion and despair the Right Wing now come at us at election time as though they, themselves have a God given Right to be re elected in triumphant and jubilant superiority. In reality, of course, the cunts should be in prison.

    • Trevor getting the money relies on all a’hole “champions of industry” that took the money having a moral compass. Of course most won’t, yet your mates at National bleat about too many regulations. Why do we need regulations? Because if we don’t these people rip off the taxpayers happily. I believe Mainfreight may have shown leadership in this case and returned the money without needing to be told to.

        • Vintage Bob. My arsehole friends were forced take the money and it’s the governments fault that I can’t give back what was not need.

      • Good story there Wheels even if it is fiction.

        In reality business subsidied the Government by topping up the staffs wages after Jacinda put them all on HomeD and pitted one against another as she started dividing the country like we’ve never seen before.

        Only Jacindas mates businesses got any money given to them and there wasn’t that many, all the rest only got a loan if they needed one.

    • They could start at the extra 3,000 communications staff they’ve employed over the last few years.

      There’s a saving of $1.2 billion over 4 years right there.

    • China is crashing and burning before our very eyes.
      Whilst I still think learning a language that around a billion people speak natively is a great thing, its no more imperative than learning Japanese in the 80s was.

  4. Grants moves to cut spending only prove that they have overspent on consultants and bureaucrats.

    Guilty as charged!

    • No it doesn’t all mean overspend at all. Some of it is related to the covid response which is no longer needed. I am sure they have wasted money but National were not immune to this either

    • More spending = more public services. But you hate public services now apparent labour is evil for some unkown reason. Probably because they aren’t executing brown people.

      • What public service are the 3,000 extra comms staff providing Millsy?

        Apart from feeding the fat Wellington bureaucracy class. I guess it’s also a nice way of buying votes.

  5. Michael Reddell: “We are going into this year’s election with worse immediate fiscals (material op deficits) than ministers faced in either 1972 (Muldoon: “I’ve spent it all”) or 2008 (Clark/Cullen”

    The “sudden” realisation that there’s a gaping hole in the government’s accounts is bad but that current account deficit – the worst in the world – is disastrous given the geo political and trade situation. Adding 8.9% of GDP in the red each year is a direct measure of the loss of our wealth to the rest of the world. “Sustained”, for now, by borrowing or selling assets with consequent outgoing interest and earnings payments adding even more to the C A deficit in the future.

    Were Robertson’s earlier denials ignorance, incompetence or deceit?

  6. “Let’s see how bad the trade with China is, let’s see the reaction of that exposure on the NZ Economy and let’s keep up the diplomacy and dialogue because the last thing anyone needs in the Pacific is conflict”.

    Yes, let’s get those books open. And as Rodney Jones said in the Q&A interview some ‘deep thinking’ about China, and NZ’s economic and political relationship with China, is well overdue. You’ll have to watch the interview to get the guts of this – it took Jack Tame a few goes to get to the bottom of what Jones meant by deep thinking.
    https://www.tvnz.co.nz/shows/q-and-a/clips/rodney-jones-why-nz-is-so-vulnerable-to-china-s-economic-slowdown

    Its big picture stuff. There is much in the big picture that ordinary folk don’t see. That’s understandable. Most are too busy with everyday stuff to give the bigger picture much thought. Perhaps a feeling they can’t do much about it anyway. And let’s face it the big picture is pretty overwhelming, unfolding as it does within a much wider context than individual lives, their families, whanau, work and political allegiances. Governments too are becoming more and more myopic – it wouldn’t be a stretch to say that collectively, few decision makers – PMs, ministers, backbenchers, consultants and bureaucrats alike -have much overview of how current circumstances are the consequence of historical processes, and how the future might unfold. Sure, they are for the most part business people, graduates of the dreary halls of commerce, lawyers, accountants, real estate agents, and the like. Few ex bus drivers, coal miners, social workers, strippers – although not unprecedented. But you’d think the brighter ones could join some of the dots. But IMV – not uncommon on TDB but by no means universal – an adherence to neoliberal ideology despite its apparent failings, the rising prominence of professional–managerial class in politics, the influence of big money, or collectively a lack of some kind of sociological imagination among decision makers, whatever, limits what any government in NZ can achieve, limits any transformative vision.

    Rodney Jones said any meltdown in the Pacific compared to the CoV19 pandemic will be like a walk in the park. That doesn’t sound too good. Yeah, I know, just one person’s thought. But I would have thought quite an informed view, better informed than most of us. In the coming weeks as the election draws closer and more carrots are offered to the undecided what about public interest journalism holding a few feet to the fire over what could happen in this space– or what is just a matter of time – and what contingency plans there are. What is certain is that if it all turns to custard we’ll all experience it. Then then again, fuck it, chuck the surf board on the ute and put a few cold ones in the chilly bin.

  7. Anker OK true about consultants most begone thank goodness, but what thoughts are to follow? All our concern, ranting at politicians is children crying from their cot and then having a tantrum. What do grown up citizens putting their minds to what politics are at, think we can do, should be

  8. Well I am not an economist.

    But here’s some thoughts: rather than building a new health bureaucracy in a pandemic, that money should have been spent training nurses, Drs etc, paying them well and finding ways of retaining them.

    I probably favour tops land tax idea.

    People say NZ productivity rate is low, so something that addresses that.

    Getting kids back to school pronto and getting critical social justice out of the curriculum

    settling treaty claims, making them full and final.

    Loads more may write more later

    • So you think kids shouldn’t be told that racism is bad. Mind you, typical coming from someone who think Maori should be executed for shoplifting.

      And if you cut admin jobs you will have doctors and nurses filling out forms and cleaning toilets.

      I bet you would privatize and americanise health if you had your way. We need to expand the public health system, and administration, not reduce it. Government run health systems have the best health outcomes. But you hate Labour so much you are willing to have people die because they dont have insurance

  9. ” The Prime Minister and Finance Minister are saying two different things when it comes to an awkward “communication breakdown” with the Green Party ”

    Greens burnt again !

    I would have thought that Chipkins would have wanted to be more inclusive with James and Marama considering should they make it back they will need the Greens for a start.

    LINO just doesn’t ever believe that they will ever need to give any power or authority to the Greens.

    They never have even James is outside cabinet and totally ignored.

    Chipkins and his colleagues reek of arrogance.

    https://www.newsroom.co.nz/labours-mixed-messages-on-communication-breakdown-with-greens

    • Arrogance and ignorance of how to deql in politics for the good of the country and their purposes, but just playing at the task like young adults just out of their learnings times.

  10. ” “Aotearoa’s tax system that has been designed to favour the wealthiest few. The government’s own research shows that just 311 families own more wealth than the bottom two and half million New Zealanders.

    “And yet they pay less than half the effective tax of the average New Zealander ”

    Where have these guys been with their ” baubles and perks of office ”

    Six weeks out from a general election they suddenly remember what they actually stand for and that woke wankery doesn’t pay the bills.

    God help those who are being exploited even more now than six years ago.

    Time for a workers slave party with a backbone.

  11. Big business are making big profits, but the NACT won’t tell you that. They spin and tell lies about the economy on a daily basis and right wing zealots believe its true. All the economic markers are sound, in a very troubled economic world but NACT won’t tell you that. NACT are really telling porkies about the economy to suit and sell their narrative of economic management and to enable their wealthy donors to make even more money on the back of the minimum wage workers and no wage immigration employers . The so called law abiding NACT employers making slaves of their own immigrants. We all know that NACT aren’t it it for the poor and downtrodden aka.” Bottom feeders, children sitting in garages in south Auckland contemplating a life in gangs.” Luxon “Otara “ where’s that again. Today it will be tax cuts for the rich and peanuts ( if they can afford them ) for the poor and it’s shameful.

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