Budget 2020 Amounts to Borrow & Hope
Big spending and even bigger borrowing is the Government’s prescription in Budget 2020 to the economic challenges of Covid-19. My concern is the scale of debt proposed, the questionable quality of spending and the lack of a plan to rebuild the economy and jobs.
The Government is budgeting on deficits of nearly $30 billion per year or $16,000 per household for the next three years. The borrowing continues for eight years until 2028 and totals $140 billion. That is $80,000 per household. Little of the spending is capital or building new assets. It has the Government total nett worth decline from $143 billion to just $33 billion. It has Government running up debt to 90% of the value of all our public assets like roads, schools, hospitals etc. I doubt many Nelson families would feel comfortable pushing their mortgage up to 90% of the value of their home but that is what the Government is effectively proposing.
I find this level of debt scary and too large. It leaves no room for managing any other shock for the next decade. Debt is easy to rack up and hard to pay off. I am the only remaining MP from the early 1990s when we climbed out of a similar sized mountain of debt. It was a painful period that no New Zealander should want to repeat.
The Government should run deficits to maintain our core public services and benefits through these difficult times just as National did through the Christchurch earthquakes. My problem is with the huge slush funds that look more like electioneering than wise spending.
The $100 million for racing and gambling is an indulgence for Winston Peters. So too is the extra $500 million funding for the Provincial Growth Fund. There is so much cash pouring out of the Beehive that wasteful spending is inevitable. The thinking is that spending is the answer to every problem and the bigger the problem, the more that should be spent.
My greatest disappointment is the lack of a plan for jobs in the Budget. The announcement of the closure of Nelson’s regional facility for turbo prop aircraft occurred while Parliament debated the budget. Not one Government MP or Minister from Labour, NZ First or the Greens spoke in its support. The Government owns a 52% majority shareholding in Air NZ and is providing $900 million in financial support. Aviation will recover and this Nelson base should have been supported for the long term. The latest economic reports shows 5,000 Nelsonians losing their jobs with closures of this sort. The Budget should have been focused on how to protect as many of these jobs as possible.
Nelson needed more from this Budget that what economic commentators have called borrow and hope. National is best able to rebuild the economy. We have the strong track record of having done so in the 1990s and 2010s. The urgent focus of my work is developing an alternate economic plan focused on jobs and working with the private sector to rebuild Nelson and New Zealand’s economy.