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| Dr Bryce Wilkinson | Senior Fellow | bryce.wilkinson@nzinitiative.org.nz | ||||||||||||
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"We cannot go on like this," says your partner. "Interest payments are already taking up 7% of our income and are likely to increase by 26% over the next four years if we do not do something." Many households are facing the tough choices that scenarios like this require. Clear heads and decisive action are needed to increase income, cut spending, and/or sell assets. Finance Minister Nicola Willis must bring similar clarity and decisiveness to next month's Budget Policy Statement. Budget 2024's ambitious goals aimed to turn debt-increasing deficits into a surplus by 2027/28. This goal now looks out of reach on current policies, following Treasury lowering its income and revenue growth projections. Budget 2024 proposed a limit of 13% on spending increases to 2027/28 while banking on revenue rising by 22%. The limit on spending looks implausible on current policies, and the projected revenue increase now looks unattainable. Debt will build up more. The Budget Policy Statement to be published next month needs to show more decisive action. Much current spending is unnecessary, and the government owns many assets that it manages badly. While households might have few assets they can sell to reduce debt, the government has $187 billion invested in state-owned enterprises and Crown entities. That is roughly $90,000 per household. It also owns three million hectares of "stewardship" land with no clear purpose. The fact that the returns on risky assets should exceed borrowing costs does not justify continuing Crown ownership. Experts in managing those assets will do better, on average, with their own money. The evidence that governments manage their assets poorly is inescapable. Just look at the infrastructure deficits and maintenance issues in state housing, schools and hospitals. Why does government not sell assets it does not need to own? The proceeds could be used to reduce debt and stem the rising tide of interest payments. Householders know that indecision only compounds problems. The next Budget Policy Statement needs to provide a more convincing fiscal outlook. |
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| Athuryann Santharuban | Student at Rototuna Junior High School | insights@nzinitiative.org.nz | ||||||||||||
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Traffic congestion is one of Hamilton’s most pressing issues. This is due to rapid population growth, which, according to the council, will rise from 152,641 to 237,000 by the year 2048. An initiative that could reduce congestion is a congestion tax. The New Zealand Initiative report Driving Change: How Road Pricing Can Improve Our Roads by Dr Matthew Birchall lays out arguments for how a congestion tax could reduce congestion. International examples have shown that congestion taxes can work. According to Transport for London, traffic congestion decreased by 30% after a congestion tax was implemented. Similarly, Singapore's congestion decreased by 20–25% under a congestion tax. There are challenges to implementing a congestion tax. One is potential backlash from the road users who would be paying for it. Consultation meetings with road users to discuss proposals on the congestion tax could bring people on board. Communities should be consulted on the price of the congestion tax, as well as other aspects of its implementation. Communication with the community is important when proposing a tax like this. Emergency vehicles and public transport should be exempt from any tax. Other initiatives to reduce congestion could be funded with the revenue from a congestion tax. Adding bus lanes would make buses more reliable, with a greater likelihood of running on time and faster journeys, resulting in shorter wait times for passengers. If buses were more reliable and faster to reach their destinations, more people would be more inclined to use them, reducing congestion. Another incentive to reduce congestion might be a public transport loyalty programme. The programme could offer incentives such as free rides and discounts for local businesses. The Los Angeles Metro Authority has implemented a programme like this. It has been successful and brought many new riders to public transport. Such a programme would issue rewards to users who use public transport regularly. A loyalty program would have a dual benefit. It could benefit businesses by bringing more people to them bringing more people to public transport and reducing congestion. More successful businesses may improve Hamilton’s economic growth in the future. Again, the loyalty programme could be funded by the revenue collected from a congestion tax. Together, these proposals could reduce traffic congestion in the growing city of Hamilton and promote eco-friendly transportation. |
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| Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz | ||||||||||||
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Brisbane has spiders the size of dinner plates. One, perched a foot above our heads, woke us by scratching at the wall. It was not pleasant, but at least the large ones are mostly harmless. It’s the small spiders that will kill you. And the snakes. And the rival gangs that firebomb each other’s illicit tobacco and illicit vape retail outlets. Australia forgot that prohibitionist approaches have predictable consequences. But there’s one risk none of us would have thought about. Or at least I’d never considered it. New South Wales police have spent the past few months investigating psychics. One has been charged with fraud. The police believe a syndicate of purported psychics has been operating in Sydney since 2006, bilking people of their savings. Police have seized tarot cards and a crystal ball. One person who was charged was refused bail. Psychics are too dangerous to roam free on the streets awaiting trial, unlike some of those accused of firebombing shops. Australia is a remarkable place. Really, they’re leading the way in extending consumer protection. The BBQ grill scrubber I bought this weekend claimed to be the best in the world. My son, tasked with scrubbing the grill, declared it inferior to our old worn-out brush. But the claim on the packaging is not actionable – nobody reasonably expects that there was any actual contest to decide which scrubber is best. The lawyers call it ‘puffery’. You can’t sue based on it. New Zealand’s Commerce Commission recently brought criminal charges against a telecom company promising 100% coverage. One might have thought that the claim at most warranted civil action by those allegedly harmed. Or that it was mere puffery, like claims from Tourism New Zealand that the country is 100% Pure. Or claims from Labour that they’d build 100,000 houses. Or claims from National that they’d get core crown spending down to 30% of GDP. Or claims from a psychic that they can commune with spirits. I think we should lean into this and start bringing criminal charges against government agencies and politicians who make similarly misleading claims. There’s a lot of work to be done if we really want consumer and voter protection to be more than mere puffery. Perhaps the guilty could be made to double-bunk with Australian spiders. |
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