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Insights 19: 29 May 2026
NZ Herald: Dr Michael Johnston on replacing fees-free funding for something that works
 
New Research Report: Prescription for Prosperity 2026, fourteen years of policy research
 
The Australian: Dr Oliver Hartwich on the modern slavery bill no one dares to oppose
Fingers crossed
Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz
If the country sees a few lucky breaks, Budget 2026 shows a return to surplus in 2029.

The period of structural deficits will have lasted almost a decade.

Without those lucky breaks, including at the Strait of Hormuz, deficits will extend for longer. And it beggars belief that a decade of structural deficits is consistent with the fiscal responsibility provisions of the Public Finance Act.

Nobody should envy the Minister of Finance’s position.

Returning to structural surplus sounds simple enough. Government revenue as a share of the economy is higher than it was before Covid. Holding spending to the share of GDP Finance Minister Grant Robertson had set in 2019 would mean a comfortable return to surplus.

But in the interim, superannuation costs have risen considerably as the population ages. Health and debt financing costs have also risen, and defence spending must increase.

The government’s strategy to return to surplus depends on keeping a very tight rein on “operational allowances”: how government budgets for cost pressures across different spending areas. It also depends on ministries achieving savings targets.

Both will be challenging.

Treasury’s projections past 2030 reveal how maintaining a strict line on operating allowances versus accommodating normal demographic cost pressures affects surpluses.

Accommodating normal cost pressures for only two years reduces the 2032 surplus from 1.6% to 0.5% of GDP. Not keeping up with cost pressures will turn into political pressure well before 2030 and before any potential return to surplus.

Maintaining the government’s projected path through an election, coalition negotiations and three years of cost pressure is difficult. And managing the longer-term forecast requires major change to a large cost driver: superannuation.

During the budget’s question and answer period, Hon Nicola Willis and Hon David Seymour made abundantly clear that National and ACT will be campaigning on dealing with superannuation.

Failing to fix superannuation will mean substantial tax increases, large reductions in other areas of government spending, or both. The burden on younger people will rise substantially. And the only thing that might keep younger Kiwis from fleeing is that the pension situation in most other countries is even worse.

Fixing superannuation could see the opposite effect. Young, productive people abroad could unshackle themselves from soaring tax obligations and come to New Zealand.

In the short term, spending still must come down. But superannuation reform remains the largest and most necessary change – and biggest opportunity.

Listen to Dr Eric Crampton and Dr Oliver Hartwich discuss Budget 2026 on our latest podcast episode here.
A prescription that fits
Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz
This week’s Budget confirmed what most New Zealanders already suspected. The government’s finances are tight, the deficit persists, and there is no pot of money waiting to be spent on the country’s problems.

Just as well, because government spending never delivers growth or prosperity. The question is, what will?

While the reformers of the mid-1980s faced an enormous task, their challenge was concentrated. There were few but large structural changes. Floating the dollar, removing subsidies and opening the economy did most of the heavy lifting.

Today, the reform challenge is different. New Zealand is not crippled only by one or two catastrophic distortions. It is held back by dozens of smaller ones, such as planning rules that restrict housing supply, funding models that punish councils for approving development and regulatory barriers that discourage business investment.

Each would be manageable in isolation, but together, they strangle the economy.

The current government has made genuine advances, among them liberalising overseas investment, reforming school education and beginning the replacement of the Resource Management Act.

But structural problems remain, and the world is less forgiving. The closure of the Strait of Hormuz has delivered a fuel price shock that further compresses an already tight fiscal room, strains household budgets and cuts New Zealand’s growth prospects.

This week, The New Zealand Initiative published Prescription for Prosperity 2026, our fourth briefing to the incoming government. It makes 235 recommendations across 26 chapters, from housing and health to trade, defence and local government reform.

We did not set out to write a long document, but the list kept growing because the problems are spread across almost every portfolio.

No single recommendation would transform the country. But the cumulative effect of implementing even half of them would be substantial. These problems were made in Wellington and can be unmade there.

Selling one big reform is one thing. Selling dozens of small ones across every portfolio at once is another.

Reform demands a state apparatus capable of processing multiple policy changes simultaneously. That is why our Prescription proposes restructuring the public service itself as an enabling reform that would make all the other reforms deliverable.

New Zealand does not need a silver bullet. It needs capable government, willing to do the unglamorous, sustained work of fixing what is broken, one policy at a time.

Explore our research report "Prescription for Prosperity 2026" here.
Let Them Eat Slop!
Henry Olsen | Research Analyst | henry.olsen@nzinitiative.org.nz
In an age of unprecedented technological upheaval — an upheaval more consequential than even the advent of fire or settled agriculture — we find ourselves standing — quite literally — at a crossroads.

The question isn't whether AI will transform writing — it’s what we lose when we let it.

Consider Matthew Goodwin — the British political scientist turned failed Reform UK candidate — who recently ‘wrote’ a book, Suicide of a Nation. It fabricated quotations, made up immigration horror stories, and even cited ChatGPT — ‘MattGPT,’ per the critics. The footnotes silently — almost poetically — evaporated after 12 citations.

Some called it plagiarism. Some called it laziness. Some called it a Tuesday.

But I would argue — and this is crucial — that it's a symptom — a symptom of a culture that has quietly forgotten how to think.

That's not impressing colleagues — it's giving the game away.

The game is a set of rhetorical tics — small, innocuous, almost charming devices — that — in moderation — would be excellent tools for English prose. Used by a LLM, they metastasize and become — quite frankly — slop.

Consider the humble em dash — beloved of writers from Goethe to Gordimer — which has — in the age of generative AI — been drafted into service — conscripted, even. AI glues together thoughts — thoughts that have no business being glued. It once offered a graceful aside — now, it appears seven times per paragraph. This matters.

Or take the rhetorical contrast — the "it's not X — it's Y" construction — which — in the hands of a human — can land with the force of a small revelation. In AI prose, it appears with mechanical regularity — it becomes a tell. It's not rhetoric — it's a fingerprint. This matters.

And then there's the staccato triplet. Three short sentences. Stacked like spoons. Each one supposedly more emphatic than the last. You'll know it when you see it. You'll see it everywhere. You'll never unsee it. This matters.

Defeating AI slop is not an impossible battle — it’s a winnable war.

The war can be won if every AI-assisted article ended with a disclaimer — a quiet acknowledgment, a gentle confession, a tiny act of intellectual honesty. A disclaimer is an unbeatable weapon. It reveals the truth. It is a truth nuke in humanity’s literary struggle. And that struggle isn't a bug — it’s a feature.

Will you settle for slop? Or will you demand something more?

The future of writing — indeed, the future of thought itself — hangs in the balance.

Disclaimer: This slop was written with human assistance. This matters.
 
On The Record

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