Latest news with #Budget2022
Scoop
9 hours ago
- Business
- Scoop
Labour Leader Chris Hipkins Dismisses Criticism Of Covid-19 Overspending As 'Treasury Spin'
, Acting Political Editor Labour leader Chris Hipkins is dismissing what he calls "Treasury spin" after its analysts said the last government overspent during the Covid-19 pandemic against official advice. Treasury's 2025 Long Term Insights Briefing, released this week, calculated the total cost of the pandemic at about $66 billion, or roughly 20.4 percent of GDP. The report said Treasury advocated for more targeted support in late 2020 into 2021 and explicitly warned "against any further stimulus" by Budget 2022. But responding to questions from RNZ on Friday, Hipkins was unapologetic about his party's economic response to Covid-19. "We prioritised keeping people alive and keeping people in jobs," he said. "I'm never going to claim that we got everything perfect... but prioritising jobs and prioritising lives was the right thing to do." Hipkins claimed other countries also spent up large with the same objectives, but Treasury said New Zealand was near the top of the chart when considering spending as a percentage of GDP. "If you listen to the Treasury spin, then you're going to get one view," Hipkins told RNZ. "If you speak to other economists, you'll get a different view. "Our job was to support New Zealanders through the global pandemic, making sure that we saved lives and kept people's jobs, and we were very successful in doing that: one of the lowest death rates in the world, one of the lowest rates of unemployment in the world, and one of the fastest rates of economic growth in the world." About half of the total Covid-19 response cost was directly tied to the pandemic, such as the wage subsidy scheme, or health initiatives like vaccination, contact tracing and quarantine. The remainder went to a wide range of initiatives like: "tax changes, training schemes, housing construction, shovel-ready infrastructure projects, increases to welfare benefits, the Small Business Cashflow Scheme, Jobs for Nature, additional public housing places and school lunches". Treasury said that had "a lagged impact on the economy and proved difficult to unwind in later years". But Hipkins said Treasury had mischaracterised some of that spending, such as the provision of distance-learning for school students. "Making sure that kids could keep learning while they were at home during lockdown was an essential Covid-19 expense," Hipkins said. The report comes during a prolonged economic downturn, with both the government and opposition parties trading blame over its cause. Finance Minister Nicola Willis was quick on Thursday to wield Treasury's findings as evidence that Labour had been undisciplined in its spending, driving up inflation, and fuelling a cost-of-living crisis. "Treasury's language is spare and polite, but its conclusions are damning," she said. "New Zealanders are still paying the price of the previous government extending a big-spending approach initially intended for a pandemic response. "The lesson from Labour's mishandling of the Covid response is that while there are times when governments have to increase spending in response to major events the fiscal guardrails should be restored as soon as possible." To that, Hipkins scoffed: "By comparison to this government's track record, I'll take our one any day". Hipkins said Willis should stop blaming others and instead accept the consequences of her government's spending cuts. "The wreckage that she is leaving in her wake at the moment is obvious for all New Zealanders to see. Unemployment is going up," he said. "Economic growth has collapsed. Essential services that the public rely on a daily basis are falling into disarray, and this is all on Nicola Willis' watch."
Otago Daily Times
3 days ago
- Business
- Otago Daily Times
Treasury: Previous govt spent too much during Covid despite warnings
By Giles Dexter of RNZ The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released by the Treasury. The Treasury's 2025 Long Term Insights Briefing said debt had risen in recent decades, partly because responses to adverse shocks were not met by savings between those shocks. The higher debt meant less capacity to respond to future shocks, like natural hazards, weather-related risks and biosecurity risks. Treasury estimated the total cost of the pandemic was $66 billion over the 2020-26 financial years and about 20.4% of GDP. The IMF and OECD estimated it was among the largest Covid-19 responses globally. The agency releases a briefing every three years, with this one looking at the role of fiscal policy through shocks and business cycles. The briefing said the Covid-19 response showed the challenges of using fiscal policy to respond to shocks and cycles. Initially, Treasury recommended "strong fiscal stimulus" at the start of the pandemic, which was cited as "perhaps" causing the economy to be much stronger than expected by the end of 2020. The wage-subsidy scheme in particular was seen as making an important contribution to the strong initial recovery, limiting the increase in the unemployment rate and enabling economic activity to resume when restrictions relaxed. Treasury then moved away from recommending broad-based stimulus, preferring more targeted and moderate support. Its post-election advice to the then-Finance Minister in late 2020 highlighted "the importance of controlling ongoing spending and ensuring it was high value to meet the medium-term fiscal challenge." By August 2021, with the Delta lockdowns coming in, Treasury recommended any decisions to provide support to businesses "should take account of macroeconomic trade-offs". It recommended against any further stimulus from Budget 2022 onwards. Wage subsidies and similar schemes during lockdowns made up about 35% of the costs of the response. A further 18% came from health-system costs, like vaccination, contact tracing, and managed isolation and quarantine. The remaining "nearly half" was made up of a wide range of initiatives that Treasury said had "varied objectives". Some were aimed at directly responding to the impacts of Covid-19, others were aimed at providing fiscal stimulus or "achieving social or environmental objectives". They included "tax changes, training schemes, housing construction, shovel-ready infrastructure projects, increases to welfare benefits, the Small Business Cashflow Scheme, Jobs for Nature, additional public housing places and school lunches". Programmes within the fiscal response that were not tied to the shock were seen as having "a lagged impact on the economy and proved difficult to unwind in later years". The report suggested cyclical management was best left to monetary policy, run by an independent central bank. It also suggested governments set out clearly when fiscal policy will be used ahead of time, including pre-defining responses. Ideally, this would have cross-party agreement. An independent fiscal institution, which could scrutinise and report on the sustainability of fiscal policy, was also suggested. The previous government had considered setting up a watchdog to cost election policies, but it could not get cross-party support. National then changed its tune, with current Finance Minister Nicola Willis supporting such a measure, but New Zealand First and ACT were opposed to the idea. 'Dangers of excessive spending' - Willis Willis jumped on the report's release, saying Treasury's language was "spare and polite", but its conclusions were "damning". She said the briefing showed the challenges of using "big spending measures" to respond to one-off shocks. Willis singled out the briefing's focus on the money spent on initiatives not directly tied to the Covid-19 response. "That is a very diplomatic way of saying New Zealanders are still paying the price of the previous government extending a big-spending approach, initially intended for a pandemic response," she said. Labour has been approached for comment.
Otago Daily Times
3 days ago
- Business
- Otago Daily Times
Previous govt spent too much during Covid: Treasury
By Giles Dexter of RNZ The previous government spent too much during the Covid-19 pandemic, despite warnings from officials, according to a briefing released by the Treasury. The Treasury's 2025 Long Term Insights Briefing said debt had risen in recent decades, partly because responses to adverse shocks were not met by savings between those shocks. The higher debt meant less capacity to respond to future shocks, like natural hazards, weather-related risks and biosecurity risks. Treasury estimated the total cost of the pandemic was $66 billion over the 2020-26 financial years and about 20.4% of GDP. The IMF and OECD estimated it was among the largest Covid-19 responses globally. The agency releases a briefing every three years, with this one looking at the role of fiscal policy through shocks and business cycles. The briefing said the Covid-19 response showed the challenges of using fiscal policy to respond to shocks and cycles. Initially, Treasury recommended "strong fiscal stimulus" at the start of the pandemic, which was cited as "perhaps" causing the economy to be much stronger than expected by the end of 2020. The wage-subsidy scheme in particular was seen as making an important contribution to the strong initial recovery, limiting the increase in the unemployment rate and enabling economic activity to resume when restrictions relaxed. Treasury then moved away from recommending broad-based stimulus, preferring more targeted and moderate support. Its post-election advice to the then-Finance Minister in late 2020 highlighted "the importance of controlling ongoing spending and ensuring it was high value to meet the medium-term fiscal challenge." By August 2021, with the Delta lockdowns coming in, Treasury recommended any decisions to provide support to businesses "should take account of macroeconomic trade-offs". It recommended against any further stimulus from Budget 2022 onwards. Wage subsidies and similar schemes during lockdowns made up about 35% of the costs of the response. A further 18% came from health-system costs, like vaccination, contact tracing, and managed isolation and quarantine. The remaining "nearly half" was made up of a wide range of initiatives that Treasury said had "varied objectives". Some were aimed at directly responding to the impacts of Covid-19, others were aimed at providing fiscal stimulus or "achieving social or environmental objectives". They included "tax changes, training schemes, housing construction, shovel-ready infrastructure projects, increases to welfare benefits, the Small Business Cashflow Scheme, Jobs for Nature, additional public housing places and school lunches". Programmes within the fiscal response that were not tied to the shock were seen as having "a lagged impact on the economy and proved difficult to unwind in later years". The report suggested cyclical management was best left to monetary policy, run by an independent central bank. It also suggested governments set out clearly when fiscal policy will be used ahead of time, including pre-defining responses. Ideally, this would have cross-party agreement. An independent fiscal institution, which could scrutinise and report on the sustainability of fiscal policy, was also suggested. The previous government had considered setting up a watchdog to cost election policies, but it could not get cross-party support. National then changed its tune, with current Finance Minister Nicola Willis supporting such a measure, but New Zealand First and ACT were opposed to the idea. 'Dangers of excessive spending' - Willis Willis jumped on the report's release, saying Treasury's language was "spare and polite", but its conclusions were "damning". She said the briefing showed the challenges of using "big spending measures" to respond to one-off shocks. Willis singled out the briefing's focus on the money spent on initiatives not directly tied to the Covid-19 response. "That is a very diplomatic way of saying New Zealanders are still paying the price of the previous government extending a big-spending approach, initially intended for a pandemic response," she said. Labour has been approached for comment.
CNA
01-05-2025
- Politics
- CNA
GE2025: Government did not weaken after losing GRCs, says PSP's Leong Mun Wai
SINGAPORE: The government has not shown signs of weakening despite losing Group Representation Constituencies (GRCs) with Cabinet ministers in past elections, said Progress Singapore Party (PSP) secretary-general Leong Mun Wai on Thursday (May 1). "Would a weak government be able to pass through or bulldoze the GST in 2022?' He asked, referring to the increase in the Goods and Services Tax from 7 to 9 per cent announced during Budget 2022. Mr Leong was speaking during a walkabout at Boon Lay Place Market with the PSP team contesting West Coast-Jurong West GRC on the final day of campaigning before Polling Day. His comments were in response to Health Minister Ong Ye Kung, who said at a rally on Wednesday that a further GRC loss for the People's Action Party (PAP) could destabilise Singapore and risk the country "crashing". Calling Mr Ong's remarks "out of this world", Mr Leong said: "PAP has lost ministers and GRCs before. Has that weakened the government in the past few years or past 10 years? "A strong government with all the power to amend the Constitution – only such a government can bulldoze the GST through the parliament," he added. "So, the argument that the minister had about losing some ministers of GRCs to weaken the government is not quite accurate." PAP BROUGHT ONG YE KUNG BACK Fellow PSP candidate and former Non-Constituency MP Hazel Poa also responded to Mr Ong's remarks, pointing out that he lost the 2011 election at Aljunied GRC as part of a PAP team led by then Foreign Minister George Yeo. 'But what happened after that? He was brought back in the next election, at another GRC,' she said. Mr Ong was fielded in Sembawang GRC in 2015, where he was elected and later appointed Health Minister. The PSP team for West Coast-Jurong West GRC is led by party founder Tan Cheng Bock, and includes Mr Leong, Ms Poa and new candidates Sumarleki Amjah and Sani Ismail. They are contesting against a PAP team led by National Development Minister Desmond Lee, alongside incumbent MPs Shawn Huang and Ang Wei Neng, and new candidates Cassandra Lee and Hamid Razak. When asked why Prime Minister Lawrence Wong and Senior Minister Lee Hsien Loong have focused more on rebutting the Workers' Party (WP) rather than addressing PSP directly, Dr Tan said it showed the party's credibility. 'I think they find that the ground we have built for the party is strong enough,' he said. 'You take us, we can reply – our rebuttals are there … they realise that our party is a party that has got a lot of meat, it's got a lot of substance.' Dr Tan added that the limited direct confrontation with top PAP leaders was a 'testimony to the fact that we want to have a fair fight'. He said the PSP does not have to resort to shouting to get its points across, though he acknowledged 'a little bit' of over-enthusiasm after a boisterous chanting match broke out between PSP and PAP supporters at a Jurong West coffee shop on Wednesday. The party, he said, has proven itself to be a 'very responsible' opposition in parliament, and Mr Leong and Ms Poa have shown that in their NCMP roles over the last five years. WARM RECEPTION AT TAMAN JURONG After their stop at Boon Lay Place Market, the PSP team visited Taman Jurong Market and Food Centre, where the reception from the crowd was noticeably warmer. The market is located in Taman Jurong – previously the ward of former Senior Minister Tharman Shanmugaratnam before he resigned to run for the presidency. The PSP team could hardly finish their coffee as residents approached them for chats and photos. Several residents greeted Dr Tan, 85, while others shook hands and took selfies with Mr Leong and Ms Poa. In the 2020 General Election, PSP ran in West Coast GRC and narrowly lost with 48.31 per cent of the vote, earning two NCMP seats as the best-performing losing team.
Online Citizen
29-04-2025
- Business
- Online Citizen
Pritam Singh criticises GST hike, says votes for Workers' Party will force PAP to reconsider future actions
At a rally held on 28 April 2025 at Yusof Ishak Secondary School, Workers' Party (WP) chief Pritam Singh delivered a strong critique of the People's Action Party (PAP) government's decision to raise the Goods and Services Tax (GST) during a period of global inflation. Singh described the GST hikes as having 'turbocharged' inflation, exacerbating the cost-of-living crisis already faced by Singaporeans. He emphasised that the decision was poorly timed and avoidable. The GST increase, announced in Budget 2022, involved a two-stage hike from 7% to 9%, with the first increase to 8% on 1 January 2023 and the second to 9% on 1 January 2024. According to Singh, the Workers' Party had opposed the GST hike during parliamentary debates. He highlighted that, globally, few governments chose to raise consumption taxes while inflation was soaring. Singh argued that the PAP's decision was unique, stating, 'Which government turbocharged inflation with a consumption tax hike? Nobody did except the PAP.' He acknowledged the PAP's rationale that future healthcare and ageing population costs necessitated revenue increases. However, he insisted that the GST hike could have been postponed. Referencing debates in Parliament, Singh recalled questioning the Prime Minister about the impact of the GST hike on inflation. He pointed to a statement by the Monetary Authority of Singapore (MAS), under the Prime Minister's Office, which indicated that the GST hike could raise inflation by up to 40%. 'Isn't that turbocharging?' Singh asked, asserting that the government was aware of the inflationary effects but proceeded nonetheless. Singh further criticised the government for acting despite a reported fiscal surplus of more than S$14 billion during the past parliamentary term. He contended that this surplus demonstrated that the GST hike was unnecessary at that time. He noted that Singaporeans had experienced sharp cost increases across various sectors, including food at hawker centres and election campaign costs, which had risen by 25% since 2020. Singh expressed concern for retirees reliant on CPF payouts, highlighting that such payments do not adjust for inflation, leaving seniors particularly vulnerable. He also referenced a comment by a PAP MP, who suggested that a 'little pain' was necessary to keep Singaporeans 'alert.' Singh called this sentiment insensitive, questioning why additional pain had to be inflicted on citizens already struggling with global inflation. Singh stressed that the PAP's ability to implement unpopular policies without severe political consequences stemmed from a lack of sufficient pressure from opposition parties. He urged voters to support the Workers' Party, arguing that stronger opposition presence would force the PAP to reconsider or better time future policy decisions. 'Votes and seats are the KPIs for PAP politicians,' Singh said. 'When the PAP loses votes and seats to the Workers Party, it has to take corrective action.' The decision to raise the GST despite a robust corporate income tax (CIT) collection had already faced public scrutiny. In 2023, then-Deputy Prime Minister and Finance Minister Lawrence Wong had rejected calls to defer the hike, despite CIT revenue climbing by 26.8% to S$23.1 billion. According to a Straits Times report from 2023, Wong had argued that deferring the GST increase would create greater fiscal risks, citing long-term spending needs. Opposition parties, including the WP and the Progress Singapore Party (PSP), had proposed alternatives such as drawing more from reserve earnings to avoid burdening the populace further. Despite these calls, PAP MPs supported the GST hike during the Budget 2022 debate, maintaining it was necessary to ensure fiscal sustainability. Singh's rally speech highlighted enduring tensions over fiscal policy, cost of living, and the responsiveness of Singapore's government to economic challenges faced by ordinary citizens. Polling day is scheduled for Saturday, with opposition parties hoping to galvanise voter sentiment amid these economic concerns.
