Govt pushing through legislation ahead of Budget
Just over two weeks out from the Budget, the government's ramming through legislation it says could save billions of dollars. Political Reporter Russell Palmer has more.
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NZ Herald
28 minutes ago
- NZ Herald
NZ debt nears $1 trillion as growth moderates, savings fall
At the current rate of growth, we'll hit that landmark inside the next three years. The rate of growth has moderated in the past two years as the Government has sought to curb borrowing, and the housing market, which accounts for the largest chunk of our debt, has been flat. Businesses have also been hunkering down, afraid to invest and expand, and farmers are getting good returns but using them to address high debt levels. But while the rate at which we're borrowing has eased, so too has the rate at which we are saving and growing wealth. The easiest path out of debt is wealth creation, shrinking our net debt and our debt-to-GDP ratio. So going backwards on that front is a cause for concern. The big, ugly numbers In the year to May 31, we hit a total of $872.6 billion in gross debt. That figure is up from $827.3b last year, a rise of 5.4%. It represents an average of $163,717 in raw debt for every Kiwi in the country. The rate of growth is relatively subdued by the standards of previous years. In the first New Zealand Herald Nation of Debt feature, in 2016, the total gross debt figure was $492.5b. We have seen total debt rise 77% since then. That represents an average annual increase of 6.65%. Given we are still coming down from a period of high interest rates, it was not surprising that borrowing growth was subdued, said Reserve Bank adviser for financial stability assessment and strategy, Charles Lilly. 'We're still in a relatively contractionary phase,' he said. 'We want to see stability. We don't want credit debt off the scale and people taking too much risk.' On the downside, a lack of borrowing growth was more of an issue with the financial system if the banks were not willing to lend, he said. 'I think banks are still willing to lend; it's mainly from the demand side, they just don't have customers coming through the door.' Crown debt also continues to rise, despite the Government's efforts to curb spending. Core Crown borrowing (the baseline we've used since 2016) was $238.8b in the year to May 31, 2025. That's up from $215b in the year to May 30, 2024 – an increase of 11%. It follows an increase of 11% for the previous year. While the coalition Government hasn't been able to stop Crown debt rising in double digits, it has at least reduced the annual rate of increase. It was 27% and 17% respectively in the years to May 2022 and May 2023. Crown debt is always a hot political topic. Wellington business editor Jenée Tibshraeny will take a deep dive into the state of the Government books tomorrow in part two of this series. The other side of the ledger Of course, the nominal figures still look scary. So does your mortgage if you don't weigh it against the value of your house. It is important to compare the gross debt figure to our saving rates and assets to add more context. Unfortunately, the latest Stats NZ figures (for the year to March) showed New Zealanders' household net wealth has fallen. Household net worth, the value of all assets owned by households less the value of their liabilities, fell $25.4b to $2.42 trillion in the March 2025 quarter. That is still almost three times the total gross debt figure. But in the year ended March 2025, household net worth fell $23.1b (0.9%), after a rise of $61.2b (2.5%) in the year ended March 2024. We're currently headed in the wrong direction. Most of that fall will be related to house prices, although some of it can be attributed to lower savings rates. Stats NZ's household saving data shows how much households are saving out of their current income (ie current income less current consumption). The data shows savings fell $392 million to minus $1.6b in the March 2025 quarter. Sector by sector Housing It should come as no surprise that the nation's mortgage debt accounts for the bulk of what we owe. Housing debt shot up during the big housing booms in the middle of the last decade and again during the first blush of Covid as stimulus money and low interest rates bolstered property prices. In the year to May 2016, the annual rate of increase for total housing debt was 9.2%, in 2021 it was 11.5%. If we look back further, it topped 16% in 2004. So this year's increase of 4.7% looks modest in comparison. It represents a slight increase on the even more modest 3.3% rise in the year to May 2024. That lift in mortgage debt may reflect the slight uptick in prices late last year and early this year (albeit something of a false start for those waiting on a full-blown housing market recovery). But the level of borrowing has also been lifted by record numbers of first-home buyers coming into the market, and fewer investors, said the RBNZ's Lilly. The former typically need to borrow more from the bank than the latter. If the housing market picks up later this year, as many pundits expect, then we'll likely see the rate of increase in mortgage borrowing follow, he says. Mortgage debt, most of which we owe to Australian banks, is a feature of the New Zealand economy that tends to worry international credit agencies more than our Crown debt. It has been a concern for the Reserve Bank in the past. 'In the current environment, subdued is definitely the theme,' Lilly said. Business Business borrowing barely lifted in the past year – and that is not good news for the economy. At $136.5b in the year to May 31, it was up just 0.6%. Businesses typically borrow to invest in new equipment that will improve productivity or to expand, taking on staff, to grab more market share. None of that stuff has been a feature of the past year. In fact, the opposite has been the case. Many businesses are struggling to survive. Those that desperately need cash to stay in business aren't going to get it from a bank. The struggle for many retail businesses is also highlighted in the relatively anaemic growth in personal consumer lending. At $14.5b, it is up 1.1% in the year to May 31. NZ Herald retail reporter Tom Raynel will take a closer look at the consumer borrowing trends later this week as part of the Nation of Debt series. For larger businesses, issues such as global uncertainty and tariffs would be limiting the appetite to borrow and take risks, Lilly said. It was also the case that the commercial property sector remained very weak, he said. Agriculture Unlike the struggling urban business sector, farmers have been benefiting from strong international export prices in the past year. Numerous commentators have suggested increased spending in the agricultural sector should buoy the regional economies and eventually flow through to the cities. The borrowing data for the past year offers some clues as to why that may take longer than many expect. Total agricultural debt is down 1% for the year to May 31, to $62.8b. Farmers appeared to be using their increased earnings to pay down debt in the first instance, Lilly said. This wasn't a bad thing; it is only a few years ago that the Reserve Bank was highlighting dairy debt as a significant risk to New Zealand's financial stability, he said. By the numbers That big, ugly number in our graphic is New Zealand's total gross debt. It combines the latest Reserve Bank figures for private debt with Treasury numbers for Crown debt and Local Government Funding Agency data on council debt, and IRD's data on student loans. The Reserve Bank figures include housing debt, consumer debt, business debt and agricultural debt to June 30. These are updated monthly by the central bank as part of its brief to monitor and maintain financial stability. The Crown debt figure is taken from the Treasury's Interim Financial Statements (11 months to May 31) and is the figure for core Crown borrowings. This is different from the net core Crown debt figure often used by politicians when discussing debt-to-GDP ratios. We use this (on Treasury's advice) as it is a gross debt figure but excludes debt held by state-owned enterprises, which would have been covered in the Reserve Bank statistics. The debt figure supplied by the Local Government Funding Agency is gross debt for the year to June 30, 2024. It captures all core council activities (Watercare, Auckland Transport, etc) but excludes some commercial activities (eg Christchurch City Council's Orion lines company, Port of Lyttelton, Christchurch Airport) as these would also be included in RBNZ data. Student loan debt is from the IRD statistics to March 2025. COMING UP IN THIS SERIES Tomorrow: Gov't debt: Are higher taxes inevitable? Wednesday: Consumer debt: What are Kiwis borrowing for? Thursday: Student debt: How big? How bad? Liam Dann is Business Editor at Large for the New Zealand Herald. He is a senior writer and columnist, as well as presenting and producing videos and podcasts. He joined the Herald in 2003.
Scoop
2 hours ago
- Scoop
Transparency Priority For Councillor Hoping To Be Nelson's Mayor
Nelson mayoral contender Aaron Stallard has formally launched his campaign with a promise to make the council more transparent and democratic, if elected. The first-term councillor wanted to re-establish the council's main standing committees to reverse the 'unhealthy concentration of power' that has developed over the last three years under Mayor Nick Smith. Smith, on his election, led a restructuring of how the elected members provided oversight of council activities. The earlier approach, favoured by Stallard, saw committees focused on broad areas of council work – such as infrastructure, or community and recreation. All elected members sat on those committees, which sat publicly, published meeting agendas and minutes, and had the power to make some decisions. The new approach, initiated by Smith, sees smaller taskforces with membership of only a few elected members that focus on single issues or policies – such as the re-opening of the Elma Turner Library or climate change. The taskforces are intended to provide quick guidance to staff and develop recommendations for the full council of elected members to then consider and decide on. However, they meet behind closed doors, don't publish agendas or minutes, and their notes can only be accessed by lodging Local Government and Official Information and Meetings Act (LGOIMA) requests. Though some committees remain in place – such as the Audit, Risk, and Finance Committee – Stallard said the loss of the council's main committees reduced democracy and transparency. 'The resulting lack of governance oversight also resulted in problems such as the planting of 20,000 exotic redwoods in the Maitai and a loss of $5m of transport funding,' he added. The council agreed to a taskforce recommendation to transition away from commercial clear-fell pine forestry in November 2023. However, Stallard was later surprised by a decision made by council staff several months later to replant 20.5 hectares of the redwoods in the Maitai Valley rather than native trees which, he said, was against the recommendations outlined in the taskforce's report. He also said councillors were told 'out of the blue' in August 2023 that the council would lose access to funding from the Government's Transport Choices programme to construct a cycleway linking the Brook and Waimea Road due to a lack of project capacity. Both issues wouldn't have occurred with the greater councillor oversight which committees provided, Stallard said. But Smith, who was also running to be re-elected, defended the decision to get rid of the larger committees, which he said re-litigated issues which had already been debated. 'It was inefficient, costly, and frustrating for both councillors as well as staff.' Smith said the changes had successfully improved council culture, highlighting that there had been 10 code of conduct issues over the two terms preceding his mayoralty which had cost 'tens of thousands of dollars', and none during his tenure. The changes also enshrined democracy by ensuring decisions were only made at full council meetings to allow participation of all elected members, and improved transparency by reducing the number of meetings journalists needed to report on, he said. Smith disagreed that committees would have solved the two issues specifically raised by Stallard, attributing them instead to 'tensions' between some councillors and staff decisions about the council's forestry transition, but that a newly-hired forest manager would get the plan 'on track', as well as a 'ridiculous' Government timeframe to complete the cycleway project while the council was grappling with storm recovery. However, he added that he was 'open-minded' about having another look at the council structure next term. The council reviewed the taskforce structure in August 2023 after they had been in place for several months. At the time, Stallard attempted to return to committees, while keeping some taskforces, but his proposal was defeated by five votes to eight. The Chief Ombudsman also called for all council workshops to be open to the public by default in October 2023. Though this is already the case in Nelson, the recommendation calls into question the privacy of the council's taskforces. In addition to returning to committees to increase transparency, Stallard pledged to investigate opportunities to increase community involvement in council decisions, such as through citizens' assemblies and the participatory budget setting, as was recommended by the Review into the Future of Local Government. 'Such improved participation… is especially suited to working through complicated or controversial issues, and for avoiding the sort of messy and divisive process we experienced with Plan Change 29 that dealt with housing intensification.' Stallard's other project priorities included the Rocks Road walking and cycling boulevard, a central city civic hub, addressing climate change, and tackling air pollution. Running against Stallard and Smith were Richard Osmaston and John Wakelin.
RNZ News
20 hours ago
- RNZ News
Mediawatch: Palestinian statehood push vexes media
Pro Palestinian protesters gather in Wellington on 16 August 2025 as part of nationwide demonstrations. Photo: RNZ / Mark Papalii "New Zealand is fast becoming one of the last Western democracies to recognise Palestine as a state," Corin Dann told Morning Report listeners on RNZ National last Tuesday. While there was a bit of cognitive dissonance in fast becoming one of the last, the roll call of those who have been more decisive was comprehensive. "Australia, Canada, the UK, France, and 147 other countries have made similar declarations as the world responds to the ongoing destruction and famine in Gaza," he added. Just a couple of weeks ago, news organisations were prevaricating over whether they could say 'famine' was happening in Gaza or not, but not so much now. The previous evening, the Minister of Foreign Affairs, Winston Peters, put out a statement that said the government would "carefully weigh up its position ... over the next month". Prime Minister Christopher Luxon told reporters recognition was "not a race". But back on Morning Report on Tuesday, former prime minister Helen Clark told Dann she thought it really was urgent. "I've seen victims of the war in the hospital in a nearby town. I've seen the trucks turned around carrying food and medicines which were unable to enter Gaza. This is a catastrophic situation. And here we are in New Zealand somehow arguing some fine point about whether we should be adding our voice," she said, after a trip to the Rafah border crossing. But in the media here, party political tensions were overshadowing debate about New Zealand's official response. When Green Party co-leader Chlöe Swarbrick condemned what she saw as government's spinelessness in the House, it led the ZB news soon after - followed by points of order about MPs accessories from ACT leader David Seymour. And Swarbrick's eventual expulsion led TVNZ's 1News at Six soon after that. But on Newstalk ZB, the hosts overwhelmingly declared that declaring Palestinian statehood was just a gesture. "Two groups determined to wipe each other off the face of the earth will never stop until one wins. Definitively recognising one as a state will not make a jot of difference," Mike Hosking insisted on his breakfast show on Tuesday. Later on her ZB Drive show, Heather du Plessis-Allen reckoned it was just a distraction - one that had already distracted the media. "For every minute and every column inch that we dedicate to talking about whether we should or should not support the state of Palestine in September, we are not spending ... talking about getting aid into kids who need food," she said. "I'm sorry, but recognising Palestine right now while this war between Hamas and Israel is ongoing is rewarding Hamas for what they did on October 7th," she added. Half an hour later, du Plessis-Allen's partner Barry Soper backed her up. "Is that going to stop the war? Is Hamas going to finally put down the arms. They can see it as a badge of honour if they did do that." Neither of them were convinced by Child Fund chief executive and politics pundit Josie Pagani. "The only way that we're going to get any movement forward on this is to recognise a two state solution," she said on the same show 24 hours earlier. "The purpose of recognising Palestinian statehood is not to instantly magic up a happy ending to the misery in Gaza. It's to preserve the viability of a two-state solution," The Herald's senior political correspondent Audrey Young wrote in response. Clark had also told Morning Report that she'd just been talking to Egypt's foreign minister about plans. "There's elaborate plans which don't include Hamas. So I think it's all a bit of a red herring now to be talking about Hamas. There are credible plans for moving forward," Clark said The same day University of Auckland international relations professor Maria Amoudian - on Jesse Mulligan's Afternoons show on RNZ National - said Palestinian statehood would not just be symbolic. "It would mean they would get a seat at the United Nations. A better voice in UNESCO, diplomatic relations among countries which could evolve into economic support and trade. Also legal rights over territorial waters, airspace and sovereignty over their own territory," she said. On RNZ's Midday Report the same day, Otago University professor Robert Patman said that our government's current position not only "lacked moral clarity," it was actually inconsistent with our own recent actions and statements. International law was being "trashed on a daily basis by Israel," Patman said. "In Gaza, cameramen and journalists from Al Jazeera were assassinated by the Netanyahu government. It raises issues which go right to the heart of our identity as a country. I think most Kiwis are very clear. They want to see a world based on rules." Meanwhile, political reporters here sensed that we were international laggards on this because partner parties in the Coalition were putting the handbrake on. In his online newsletter Politik, Richard Harman pointed out ACT MP Simon Court had said in Parliament there cannot be progress towards a Palestinian state until all Israeli hostages are returned and Hamas is dismantled. He said it was also the position of the foreign minister, though Peters himself had not actually said that. And Luxon had said on Monday Hamas held hostages that should be released. "We are thinking carefully about all of the different sides ... rather than trying to prove our own moral superiority over each other, which the likes of Chlöe Swarbrick have just been doing," ACT's David Seymour told ZB when asked if ACT was holding up Cabinet support for recognition of Palestine. Seymour gave a similar response to the Parliamentary Press Gallery reporters. It was later posted to ACT's YouTube channel as "David versus the media. David Seymour WARNS against rushing Palestine". He repeated his worry that Hamas might benefit. But when a reporter pointed out a Palestinian state means more than just Gaza, and that Hamas doesn't control the West Bank, that episode of 'David versus the Media' came to an end. "Right now everyone is focused on Gaza. And no one, if you recognise any kind of state - is going to think that this is about the West Bank. That's where the image of every country is going to be judged," he said. "Talk to you about domestic politics tomorrow," Seymour said in closing. On TVNZ's 1News , Simon Mercep highlighted another practical problem. "All five permanent members of the UN Security Council. - America, Russia, China, France and the UK - have to agree on statehood. "Israel's major ally, the US, does not agree. It used its veto as recently as last year." It wasn't much mentioned in the media this past week, but the veto right is something that New Zealand has long opposed. Back in 2012, foreign minister Murray McCully called on the five permanent members to give up their veto rights issues involving atrocities. He said the inability to act in Syria had "cost the UN credibility in the eyes of fair-minded people around the world". Three years later, he said that the Security Council was failing to prevent conflict - and during a stint chairing the Security Council later that year (when New Zealand was a non permanent member for two years) McCully criticised it again. The government paid for New Zealand journalists to travel to the UN at the time to watch sessions chaired by New Zealand. In late 2016, New Zealand co-sponsored a UN resolution that said Israeli settlements in the occupied territories had no legal validity - and were dangerously imperilling the viability of the two-state solution." The resolution passed, Israel withdrew its ambassador here - and the incoming President Trump said "things will be different in the UN" after his first inauguration. "The position we adopted is totally in line with our long established policy on the Palestinian question," McCully said at the time, stuck to his guns. Back then he also said he hoped the attitude of Israel would eventually soften. Eight years later, it's the attitude of New Zealand's government - and its clarity on two-state solution - that seems to have diluted. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
