For several weeks now, National has been highlighting the fact that, according to Budget documents, Finance Minister Grant Robertson has already blown $57 billion of a total $62 billion of funds set aside to deal with the Covid pandemic.
We were highlighting this before the current outbreak of the Delta variant, given the likelihood of an incursion here, because the purpose of the Covid Recovery Fund is to manage the economic response prudently.
Initially, that was the case, with wage subsidies helping businesses get through periods of lockdown.
But the fund set aside for vital spending required to support New Zealand in unprecedented times has rapidly become a slush fund for a hodge-podge of Government projects with little or no link to the Covid response.
If the $57 billion additional spend over the past 18 months had gone toward high-quality infrastructure projects, imagine what we might have achieved. Instead, a significant portion has gone into a range of low-value vanity projects.
The refurbishment of the Christchurch YMCA, at a cost of $$43 million, cannot seriously be justified as Covid recovery expenditure. Nor is the annual $10 million Robertson has allocated from the fund to remove pests and weeds from iconic landscapes.
Perhaps most egregious of all is the $11 million given – later ‘loaned’ – to James Shaw’s ‘green school’ from this borrowed Covid fund.
The more recent decision to announce a salary cap on senior teachers and nurses seems absurd, given the hard work they have vital done on behalf of us all over the past 16 months.
With only $5.1 billion now in the account – equivalent to only three-and-a-half weeks’ worth of national lockdown – there’s precious little left in the kitty.
When asked what he will do when the $5.1 billion is spent, Robertson has said he will simply borrow more.
This profligate attitude highlights two worrying issues.
First, over the past 18 months our debt has already doubled from $60 million to just under $120 billion. In essence, we have already significantly mortgaged the country.
More troubling is that the country’s debt is forecast (as per the Budget) to increase by another $60 billion over the next three years to $185 billion. This continued increase in debt is due in part to Robertson thinking it is acceptable to continue to run losses – deficits – in each of the next four years, totalling $36 billion.
When questioned about this previously, the Minister’s response was that New Zealand would still be modestly indebted.
At close to 50% of debt to GDP, this fails to take into account that New Zealand is a small trading nation highly susceptible to international headwinds. We are also very vulnerable to seismic and other climatic risks.
The most important thing right now, however, is keeping New Zealanders safe. From an economic perspective, that requires judicious decision-making.
That means spending wisely and investing for our future, not doing ‘nice to have’ projects that offer little tangible value to New Zealanders and New Zealand.
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