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.
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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