{"id":907,"date":"2024-06-01T06:00:00","date_gmt":"2024-05-31T18:00:00","guid":{"rendered":"https:\/\/exposures.co.nz\/?p=907"},"modified":"2025-06-04T05:24:46","modified_gmt":"2025-06-03T17:24:46","slug":"budget-2024-shows-nz-has-some-tough-choices-to-make-scandinavia-or-singapore","status":"publish","type":"post","link":"https:\/\/exposures.co.nz\/?p=907","title":{"rendered":"Budget 2024 shows NZ has some tough choices to make \u2013 Scandinavia or Singapore"},"content":{"rendered":"

Dave Stewart Whakatane Have your say 1st June 2024

https:\/\/democracyproject.nz\/…\/bryce-edwards-budget…\/<\/a><\/span>

Budget 2024 shows NZ has some tough choices to make \u2013 Scandinavia or Singapore

May 31, 2024

To truly understand yesterday\u2019s Budget, it\u2019s worth returning to a statement made in 2020 by the then British High Commissioner Laura Clark that New Zealand has \u201cScandinavian ambitions in terms of quality of life and public services, but a US attitude to tax\u201d. Her point is that New Zealand politicians want an economic setting that doesn\u2019t work \u2013 low taxes mismatched with high spending.

Eventually, the country must choose to either follow Scandinavian high taxes and high spending or US low taxes and low spending\u2014or, indeed, something in the middle. But what is not a serious option is what Labour and National governments continue to promise: relatively low taxes and relatively high government spending.

Yesterday\u2019s Budget continued with that Frankenstein mix, which has produced a relatively incoherent and messy Budget. The centrepiece is an array of complicated tax credits, boosts to Working for Families and tinkering with tax thresholds. Although the result is that the Budget delivers \u201ctax relief\u201d and \u201cfiscal responsibility,\u201d which will have some immediate voter appeal, there will be doubts about whether both of those are illusionary.

Hence, no serious economist or political analyst could endorse Budget 2024 (nor the last Labour Government\u2019s budgets) as a credible blueprint for creating a good society. This Budget, like previous ones, just hasn\u2019t represented the Scandinavian or US path; instead, it is continuing to try and force the best of both models to fit together.

The 2024 Budget embeds the high-spending, low-tax settings
The best big-picture analysis of this year\u2019s Budget comes from Danyl McLauchlan, who was awarded the Voyager Media Award for \u201cBest Columnist in New Zealand\u201d last week. His online Listener column yesterday was short and to the point, arguing that Finance Minister Nicola Willis has attempted to spend more on the welfare state while giving tax cuts and promising an eventual return to surplus. He says that once you ignore the accounting tricks, the Budget fails to deliver any of those things \u2013 see: In praise of deft accounting tricks (paywalled)

The critical point of McLauchlan\u2019s analysis is his explanation that New Zealand\u2019s economy has been hampered by severe structural weaknesses for decades\u2014especially in terms of low growth, low tax, and high expenditure\u2014but then Covid pushed Labour to supercharge the settings in 2020.

Much like how Naomi Klein\u2019s book \u201cShock Doctrine\u201d warned that rightwing governments would opportunistically use natural disasters and emergencies to push through ideological agendas, under Jacinda Ardern and Grant Robertson, Labour suddenly ramped up spending, producing a much bigger state without any real commitment to returning to pre-Covid levels. And now, Willis and her Government have embedded the Covid settings with their first Budget (despite some promises to downsize in the future).

McLauchlan explains: \u201cWhen Covid hit, the government responded to the crisis with a huge one-off emergency spend: vaccines, the wage subsidy, the stimulus funds. But there was also an additional increase in the overall size of the state. This was locked in during Labour\u2019s post-Covid budgets, but the additional spending wasn\u2019t matched by an increase in taxes. This created the structural deficit Treasury has been warning about with increasing urgency. It\u2019s the macroeconomic equivalent of buying the groceries with your credit card.\u201d

After factoring in the Government\u2019s numerous accounting tricks and the political realities, National\u2019s tax cuts won\u2019t be meaningful, government departments will struggle, and future budgets will get bigger. McLauchlan concludes: \u201cit\u2019s hard to see any serious change in direction from the course set by Labour. If we were speeding towards a cliff before, we\u2019ve merely adjusted in a slightly different direction, optimistic that a bridge will suddenly appear before we launch into the air.\u201d<\/p>\n

\"\"<\/p>\n","protected":false},"excerpt":{"rendered":"

Dave Stewart Whakatane Have your say 1st June 2024https:\/\/democracyproject.nz\/…\/bryce-edwards-budget…\/Budget 2024 shows NZ has some tough choices to make \u2013 Scandinavia or SingaporeMay 31, 2024To truly understand yesterday\u2019s Budget, it\u2019s worth returning to a statement made in 2020 by the then British High Commissioner Laura Clark that New Zealand has \u201cScandinavian ambitions in terms of quality . . . → Read More: Budget 2024 shows NZ has some tough choices to make \u2013 Scandinavia or Singapore<\/a><\/span><\/p>\n","protected":false},"author":7408,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"episode_type":"audio","audio_file":"","podmotor_file_id":"","podmotor_episode_id":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","filesize_raw":"","date_recorded":"","explicit":"","block":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[110],"tags":[],"series":[],"class_list":["post-907","post","type-post","status-publish","format-standard","hentry","category-whakatane-uncensored","odd"],"episode_featured_image":false,"episode_player_image":"https:\/\/exposures.co.nz\/wp-content\/plugins\/seriously-simple-podcasting\/assets\/images\/no-album-art.png","download_link":"","player_link":"","audio_player":false,"episode_data":{"playerMode":"dark","subscribeUrls":{"apple_podcasts":{"key":"apple_podcasts","url":"","label":"Apple Podcasts","class":"apple_podcasts","icon":"apple-podcasts.png"},"stitcher":{"key":"stitcher","url":"","label":"Stitcher","class":"stitcher","icon":"stitcher.png"},"google_podcasts":{"key":"google_podcasts","url":"","label":"Google Podcasts","class":"google_podcasts","icon":"google-podcasts.png"},"spotify":{"key":"spotify","url":"","label":"Spotify","class":"spotify","icon":"spotify.png"}},"rssFeedUrl":"https:\/\/exposures.co.nz\/?feed=podcast&podcast_series=exposures-the-blog","embedCode":"

Budget 2024 shows NZ has some tough choices to make \u2013 Scandinavia or Singapore<\/a><\/blockquote>