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| Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz | ||||||||||||
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The report describes an underfunded, fragmented system facing more than twice as many over-85s by 2047. It recommends paying providers enough to build beds, more home care, an independent pricing authority and higher contributions from people with assets. Everyone at the table thought it common sense, and I have yet to hear any politician disagree. But that raised the obvious question. If it is common sense now, it was common sense ten years ago, so what has stopped governments preparing for an ageing society? Without enough rest home beds, frail old people stay with exhausted families or in hospital. A hospital bed costs taxpayers about $1,750 a day, a rest home resident around $80. But the government sets the price of a standard rest home bed and caps what residents pay at that rate. That price has not kept up with costs, so too few get built. The report would let prices reflect costs and help those who cannot pay, rather than hold prices down for everyone. Underpaying providers is a false economy. On the report's figures, even building enough capacity under today's rules to give more than 9,000 people a bed would cost just $190 million a year more by 2037/38 than letting the shortage grow. The report assumes people without a bed spend a tenth of their wait in hospital and need home care and hospital trips for the rest. Each person left waiting costs $59,000 a year more than a rest home bed. By 2047/48, not building costs more than building. Older people waiting in hospital would take up five percent of hospital capacity by 2037/38. Politicians tolerate this because hospital costs are hidden. They turn up as emergency department queues and cancelled operations, which voters blame on Health New Zealand. Paying providers more is a visible decision. So is deciding what those with assets should pay. Here the agreement stops. Associate Health Minister Casey Costello wants a 'really honest conversation' but would not be drawn on who counts as wealthy enough. Her party, New Zealand First, lists 'asset protection' among its priorities. A rest home takes five years to build. The Parliament we elect on 7 November decides what we have in 2031. If that Parliament does not choose rest homes over hospitals, the result will be longer hospital waiting lists. |
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| Nick Clark | Senior Fellow | nick.clark@nzinitiative.org.nz | ||||||||||||
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That was my model for New Zealand two years ago, in a research note for The New Zealand Initiative. I urged the Government to strike City and Regional Deals that live up to the name. New Zealand's centralisation leaves councils with weak incentives for growth. Wellington takes much of the tax revenue, while councils and ratepayers bear infrastructure costs. Devolving powers and sharing revenue would help. The Government, to its credit, has pursued deals. In November 2024, it promised three by October 2026. Last week's signing with the Otago Central Lakes councils delivered the third, after Auckland in April and the Western Bay of Plenty in May. This sounds great, but if you read the agreements, you will see a pattern. Each is a ten-year partnership with a thirty-year vision, an oversight board and an implementation plan yet to be developed. Each lists sensible priorities, but then commits the parties to 'explore', 'investigate', 'examine' and 'support' them. No additional Budget funding is expected in their first three years. In the meantime, councils are encouraged to make greater use of their existing suite of targeted rates, development contributions and infrastructure financing levies. Longer-term, the deals offer hope of possible Crown co-funding, congestion-charging revenue arrangements for Auckland, tourism funding and sharing of royalties from mineral exploration for Otago Central Lakes. These deserve acknowledgement but fall well short of giving councils independent control of substantial new revenue. Auckland's deal promised to explore an accommodation levy. Four months later, Christopher Luxon ruled it out. Otago Central Lakes' deal does not provide for one. Partnership and coordination have value. Regular meetings of ministers and mayors to agree on priorities are better than surprise announcements and reversed decisions. But agreements that leave councils dependent on Wellington's approval for new funding and powers are lopsided partnerships on Wellington's terms. Whoever forms the next government should finish the job. A share of growth-generated revenue must flow back to the councils that enabled that growth, whether through secure shares of GST revenue or mineral royalties. Councils must have greater local discretion over visitor levies and road pricing, with enhanced accountability for how the money is spent. Real decision-making power belongs with the people who live with the results. Greater Manchester secured that commitment in 2014. Surely, we can too. |
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| Roger Partridge | Chair and Senior Fellow | roger.partridge@nzinitiative.org.nz | ||||||||||||
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We hear a great deal about the Bank of Mum and Dad. The Bank of the children gets rather less attention, although we have been drawing on it for years.
The Bank's terms are simple. Voters choose what they want, politicians arrange delivery and Treasury does the paperwork. Anything the adults would rather not pay for goes on the kids' account. The children don't need any money. Their future taxes are security enough. Even the coalition elected in 2023 to repair the books will have added about $34 billion to the tab over its three Budgets. That is a little over $6,000 per New Zealander, toddlers included. None has objected. Election years are the busiest time for the bank. The parties queue at the counter, each promising the family more than the one before: more spending, lower taxes, relief from this charge or that bill. They differ over the shopping list but share a preferred lender. Most banks offer a gift for opening an account. National would give every newborn a $1,500 Baby Boost in KiwiSaver. The babies can pay for their present when they grow up. Labour would wipe 10 percent off student loans for borrowers who stay in New Zealand. Their younger siblings will help pick up the difference. The Bank of the children has other advantages over ordinary lenders. It asks no awkward questions and needs no signature from those whose future earnings secure the loan. Indeed, many cannot yet hold a pen. Their absence from the roll keeps administration simple. Not every charge is frivolous. Borrow for a bridge and the children inherit a bridge as well as the bill. Borrow for the groceries and they inherit the receipt. Nothing is hidden. Treasury publishes the figures, journalists ask whether the promises are affordable and the people who will pay are at kindy. Of course, the children are never consulted. They lack the maturity to understand that you cannot have everything you want. When they're old enough to vote, they can review the terms. By then, though, they may have children of their own. The Bank of the children need never close. In time, the children may come to the Bank of Mum and Dad for help with a house deposit. We should hear them out – family support works both ways. But first they should learn to stand on their own two feet. |
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