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| Dr Bryce Wilkinson | Senior Fellow | bryce.wilkinson@nzinitiative.org.nz | ||||||||||||
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The income gap with Australia is large. In 2024, Australians earned about 30 percent more income per person than New Zealanders, according to an OECD measure. That gap comes to $20,000 per person. The cost-of-living problem is more serious than many realise. Its extent has been hidden from households by heavy government borrowing. That borrowing is pain delayed. My new report, NZ Unbound: Freeing up growth and fixing the books, identifies two problems and asks what is holding the country back. The deep problem for New Zealand is low incomes due to low output per hour. On one widely used international database, the average Australian produces in 39 minutes what takes the average New Zealander 60 minutes. (The gap may be smaller, as the database's estimate of hours worked in New Zealand looks too high.) The second problem is the accumulated public debt burden from years of excessive spending. Between 2018 and 2024, central government operating spending rose from 27.3 percent to 33.0 percent of gross domestic product (GDP). Tax revenue rose by only 1.5 percent of GDP. That turned forecast government operating surpluses which would have reduced borrowing to deficits that increased it. Borrowing to pay for day-to-day spending is a tax bill deferred. The more people who emigrate, the heavier the public debt burden for those who stay. The report ends with several suggestions for bringing greater discipline to government spending and regulations. One is a fiscal council reporting directly to Parliament on problems with poor-quality spending and possible remedies. Another is firmer rules determining a prudent level for the public debt. Big spending programmes and rules should face regular fresh reviews, and people should be compensated when a rule takes away their property rights. Ministers should also be able to direct their agencies and get timely information from them. New Zealand has turned around economic problems like its current ones before. The report documents big gains in income per person that followed the decisive reforms of the 1980s and 1990s. Credible action is needed to give young New Zealanders stronger reasons to stay. To learn more about Bryce's research, read the full research report, watch the webinar and read about it in our latest NZ Herald column. |
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| Nick Clark | Senior Fellow | nick.clark@nzinitiative.org.nz | ||||||||||||
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Under the legislation, councils would not be able to increase their rates by more than a set percentage (four percent as drafted in the Bill) without central Government permission. That much is clear from the Bill's name. The name does not make it clear that the legislation would also set a floor. A council holding its average rates increase below two percent would need the Government's permission too. It would have to prove it was funding depreciation and maintaining its assets. If it simply set low rates anyway, central government could direct it to revise the decision. So, Parliament is contemplating creating a statutory power to order an elected council to raise its rates. It would be more honest to call it the 'Rates Range Bill'. The two-to-four percent range seems reverse-engineered. At consultation, officials derived it from inflation and GDP growth. They later abandoned that formula and now explain the range with a retrospective fifteen-year average of council costs. Neither is appropriate for a forward-looking mechanism. Do not get me wrong. The pain that motivated the Bill is real. Rates rose by roughly a third in the three years to September 2025 and were still rising at 6.2 percent in September 2026, against consumer inflation of 3.7 percent. Undoubtedly, some council spending is wasteful, just as it is for central government. But mostly councils are catching up on decades of underinvestment while construction costs surged and central government kept adding unfunded responsibilities. A cap addresses none of those factors. It forces decisions about which spending will give way. The Australian evidence shows that infrastructure is often the first to suffer. A better approach would be to ask communities what they are prepared to pay for. The Initiative's submission proposes binding referendums for major discretionary projects. Ratepayer-approved projects should be funded by targeted rates, with standardised reporting so ratepayers can compare councils. Any mandates the centre imposes on councils should be funded by the centre. Fiscal discipline should come from transparent information on spending and rates. Increases to fund projects should only be imposed with the consent of ratepayers. This Bill offers neither transparency nor choice. When Parliament reassembles after the election, it should be ditched. The Initiative's submission on the Local Government (Rates Capping) Amendment Bill is available here. |
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| Dr Michael Johnston | Senior Fellow | michael.johnston@nzinitiative.org.nz | ||||||||||||
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Alright people, listen up!
The rules have changed since last time around. No, Wilkinson, I'm not talking about same-day enrolment. Section 218A of the Electoral Amendment Act, people. Read it. Learn it. Free food, drink and entertainment are banned within a hundred metres of a polling place. We're here to make sure the rules are followed. The integrity of the election is at stake. One giveaway sausage and we'll have a constitutional crisis on our hands. Don't mess up, people! Olsen, you're patrolling the perimeter for anyone loitering with intent to feed. Colour-code any approaching threats and report them to mission control immediately. Water is code green – it's allowed. But that weird, slightly flavoured water they sell in service stations is code orange. Anything edible is code red. A sausage, any sausage at all, is code black. Don't report it, just take the perps down – with extreme prejudice. Killick, I'm relying on you to intercept any contraband that slips through. And take note of what kind of consumable it is, so the relevant party can be reported to the Electoral Commission. Kale burgers, spirulina smoothies, anything that smells like compost – that's the Greens. What's that, Olsen? Yes, a vegan sausage still counts, even if it tastes like earwax and has the texture of sponge rubber. Extreme prejudice! A stale Koru Lounge scone means National. Intelligence says the PM's been hoarding them since his days at Air New Zealand. What about ACT, Olsen? Don't be daft. ACT's never given anything away for free in its life. It goes without saying that a sausage roll would implicate Labour. It would point right to the top, in fact. No, Olsen, a sausage roll is not a sausage. Gardner, you're on Russian interference. Keep your eyes peeled for borscht and stroganoff. Mind you, the way things are going, we'll have to watch out for the Yanks too. For obvious reasons, hamburgers and Diet Coke are code orange. Enriquez, you're in charge of entertainment prevention. Whistling while waiting to vote is out. Busking is a line call. If they're making money, that's allowed. But move along anyone with an empty tin. That's about it, people. Now get out there and make this a clean election! Oh, and there are doughnuts on the table at the back. Help yourselves. Relax, Olsen. We're 105 metres from the booth. I measured. |
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| Why does it feel like we're working harder and going backwards? | Video | ||||||||||||
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