Speech to the KangaNews New Zealand Debt Capital Markets Summit 2023

Good afternoon and thank you to KangaNews and the sponsors of the NZ Debt Capital Market Summit.

We meet in interesting times.

Yesterday the New Zealand Treasury published their pre-election update on the state of the New Zealand economy and the Government’s books.

It paints a concerning picture.

The forecasts are for flat growth, persistent high inflation that will stay higher for longer than previously hoped and interest rates that will have to remain higher to counter it.

While economists will debate whether we will enter recession again, the reality for most New Zealanders is that, according to these forecasts, the next couple of years will feel like a recession. 

Growth is slow to absent – with the Treasury forecasting per capita GDP growth to remain flat for all of 2024.

The cost-of-living crisis is marching into its third year, and it is hurting New Zealanders and their families, small businesses, and the productive basis of our economy.

Those looking for light at the end of the tunnel will be held back by the massive handbrakes of high inflation and interest rates.

Treasury acknowledges that price pressures are persisting longer than hoped, with domestic ‘non-tradeable’ pressures the culprit now rather than the previous excuse offered by global factors. In Treasurys’ own words, households and businesses will remain under pressure.

The Government books are also in bad shape.

Years of big-spending Budgets, wasteful spending and large increases in backroom bureaucracy have left our books out of balance, with deficits and mounting debt ahead of us.

Put simply, Labour has left the cupboard bare.

The forecasts confirm the third delay in the Government’s commitment to return the books to surplus.  It will now be, even in the most optimistic and best-case scenario presented by the Treasury, not until 2027 that the books return to balance, marking a seven year stretch of deficits, the longest time in the red since 1994.

Debt has completely blown out. From just $5.4 billion in 2019, it is forecast to hit $100 billion in 2025 and by 2027 will be $13 billion higher than forecast at the Budget just four years ago.

This amount of debt is worrying because of the heightened financial vulnerability it creates for New Zealand and because of the increasing burden debt repayments will place on taxpayers.

New Zealand has long maintained the view that as a small, exposed trading nation we should stick to low levels of debt so that we are in a strong position to withstand an inevitable rainy day.

In fact, the current Finance Minister once set a limit of net Crown debt not exceeding 20 per cent of GDP. Using that measure, debt will in fact hit 43.6 per cent in 2025, twice what Mr Robertson once deemed acceptable.  The scale of New Zealand’s debt is significantly more than that experienced after the Global Financial Crisis and the Canterbury Earthquakes.

The blow-out matters because it means we will have less room to move should disaster befall us again. It also means we will be forking out a lot more as a country to pay the interest costs on our debt.

This is illustrated by forecasts of the increasing servicing cost of Government debt – rising to over $11 billion by 2027. In fact, servicing core Crown debt becomes the fourth biggest area of Government spending after social security and welfare, health, and education.

It’s vital that we get debt under control, and the next National Government will ensure we do.

By contrast, Labour would lead our country into a death spiral of mounting debt.

What am I basing that on? Put simply, I don’t believe the promises of future spending restraint that the figures in the pre-election fiscal update depend on.

The pre-election update reads like a list of New Year’s Resolutions.

It asks us to believe that despite never being able to rein in spending before, suddenly Labour are going to learn an entirely new set of habits.

It’s not credible.

Mr Robertson is asking you to believe that after years of spraying the money hose around suddenly he’s going to show levels of restraint he has never achieved. 

That, despite not being able to say no to his colleagues in the past, suddenly he’s going to get tough. 

And that even though he refused to control his spending in the height of an inflation crisis, he will, miraculously, do it after the election.

Taxpayers should not be taken for fools.

Grant Robertson has never stuck to his spending limits in the past, and he’s not about to start.

Indeed, even yesterday’s shows he will spend $6.9 billion more over the next four years than he said he would at the Budget just four months ago.

If, like me, you think past behaviour is the best predictor of future behaviour, then the history of Labour’s past election spending promises is instructive.

In the 2020 pre-election update, Grant Robertson set out a spending limit of around $2.4 billion for the 2021 and 2022 Budgets and a $2.6 billion limit for the 2023 Budget.

He didn’t hit a single one of these targets. Instead in 2021 he spent $3.8 billion, this year he spent $4.8 billion, and in 2022 he spent $5.9 billion –actually, even more if you add in spending that he did outside his budget allowance.

The problem is that spending has not been driving productive growth but has instead gone to go-nowhere projects like the TVNZ-RNZ merger and the Auckland cycle bridge, excessive spending on Government consultants and a huge build up in back office public service roles and hundreds of millions wasted on Light Rail business cases with no rail built.

The cumulative impact of these spending blowouts is that this year the Government is spending $23 billion more than it promised it would at the last election.

Indeed, Treasury forecasts a risk scenario where the Government does not stick to their Budget allowances and debt blows out even further. Politely noting “in recent times, the Government’s final allocations have exceeded the signalled Budget allowance.” And not so subtly highlighting that if that were to occur, the costs could be great.

There is every reason to believe that just as Labour has blown its budgets in the past, so it would again, if voters give it the chance.

The ‘fiscal risks’ section of the pre-election update is full of potential fiscal bombs to be detonated by an incoming Labour Government.

Lake Onslow.

Auckland and Wellington Light Rail.

The proposed Income Insurance Scheme.

And many more besides.

If Labour won’t rule these wasteful projects out then it must explain how it intends to pay for them.

So what will National’s approach be?

We will take a disciplined economic management approach because we know it is only with a strong, growing economy that we can reduce the cost of living for New Zealanders, lift incomes for all and fund the future public services New Zealanders deserve.

We will go for growth across all our policies, and back the businesses, innovators and workers New Zealand needs to help us climb out of Labour’s debt hole. It is only by backing enterprise, innovation and investment that our economy will create the value needed to make New Zealanders collectively wealthier.

New Zealand has many of the raw ingredients needed for much faster growth in the years ahead.  We have trade ties to the fastest growing parts of the world, abundant natural resources and the best food producers on earth, the capacity for abundant renewable affordable electricity, oodles of entrepreneurial spirit, innovation in our blood, great employers and small businesses and smart hard-working people. 

National’s economic approach is about better converting these raw ingredients into the richer choices and opportunities New Zealanders deserve.

Our economic plan can be summarised across five key themes: more disciplined spending to reduce the cost of living and get the books in order, lower tax to reward work and effort, less red tape to make growth easier, a smarter approach to education and skills to equip our future workforce and delivering the infrastructure needed for productive growth.

Let me take each of these in turn.


  1. National will get discipline back to government spending and stop the waste.


National will mount the fiscal repair job New Zealand needs and get the Government’s books back in order.

We will release our alternative fiscal plan ahead of the election, once we’ve had a proper opportunity to review the updated books released yesterday.

There are some key things you can expect to see in it:

  • More disciplined budgets in future years- that we will actually deliver on, as our track record as a Party has proven, and that will lead to lower debt over time.
  • Provision for more investment in essential frontline services, including increases to health and education in every Budget.
  • Provision for investment in long term infrastructure assets needed for productive growth, to service a growing population and to adapt to the extreme weather events that climate change is bringing.
  • An ongoing commitment to driving out waste, and prioritising taxpayer dollars to their most effective purpose.


Yes, this means we will trim back wasteful spending in the Government’s own back office and we will stop wasteful projects like Auckland Light Rail.

But it’s also about extracting more out of the money we already spend.

We need to ensure we get value out of every taxpayer dollar – because New Zealanders work incredibly hard to earn a living, and their money deserves respect.

In recent times that respect has been absent. I think of the pledge made to spend $1.9 billion on mental health, without any targets, co-ordination or accountability mechanisms, the Mental Health Commission and others were left asking what real improvements to specialist patient services were delivered as a result.

National will bring back accountability for Government spending by setting transparent targets and measuring the results we achieve with Kiwis money.

The targets we set will be for things that make a difference to you and to our country’s future:  like reducing waiting times for health services, lifting achievement in schools, and making our communities safer.

We will report against these targets every six months.


      2. Our fiscal plan will also include a re-commitment to the tax plan we have announced to provide tax relief for the squeezed middle of working New Zealanders who have struggled to get ahead under Labour.


This is essential, not only to compensate for the ravages of inflation, but also to send a clear signal to New Zealanders that under National hard work will be rewarded.

We have announced our tax plan in full already.  It is responsibly funded through a programme of spending reprioritisations and targeted new revenue measures. It does not require a single dollar of borrowing.

It will deliver a median income worker an additional $50 a fortnight, an average income couple $100 a fortnight and a family with small children up to $250 more a fortnight.

We will also remove the ute tax, the Auckland regional fuel tax, Labour’s punitive landlord taxes and we will stop plans to increase fuel excise.


      3. We will cut red tape and complex regulations that are strangling our economy and making it too hard for New Zealanders to get things done.


Here’s some examples.

We will stop compulsory and costly centralised wage bargaining and the risk it poses to thousands of small and medium sized employers and workers across NZ.  We will repeal the legislation that compels it.

We will fix the spaghetti of regulations created through the Credit Contracts and Consumer Finance Act and that have made it too difficult for people to borrow for their small business or first home.

We will fix farming regulations that defy practicality and that, according to a grower I met recently, are making it impossible for him to expand his operation to grow the affordable vegetables our country so badly needs. We will never turn our back on farmers.

We will fix the rules holding back investment in renewable electricity: it can take up to eight years for a business to get permission to build a wind farm.  That’s just crazy: we’ll set a one year limit.

Our approach will be to minimise red tape so that people can get on and make things happen.


      4. We will grow skills and attract talent. 


That means equipping young New Zealanders better by doing the basics brilliantly in our schools. Filling workforce shortages. Reversing the Te Pukenga disaster. Training more doctors Bonding graduate nurses to NZ by helping pay off their student loans. Ensuring our welfare system supports the vulnerable but also incentives work.


      5. Finally, we will build the infrastructure needed for growth.


We will deliver a complete revamp in the way infrastructure is funded and delivered in New Zealand, working with local councils to drive regional investment, creating fast-track consenting mechanisms, partnering with major investors to finance big projects and creating bigger pipelines of projects.

All of this will make a big difference, and yes there will be more to do – to encourage trade and investment, to back exporters, to encourage better adoption of research, science and technology to boost innovation. 

Taken together, National’s economic policies will be practical and based on our belief that a strong economy is created through the efforts of everyday New Zealanders choosing to work here, to create new jobs here, to start a new business, t take a product global or start something new.

We know that success is good for the country, good for the Government books and good for every New Zealander.

We will back success, growth and get New Zealand back on track.