Latest news with #LTIB
NZ Herald
3 days ago
- Business
- NZ Herald
Covid-19 pandemic handling returns to headlines, with Labour under scrutiny
What truly put the wind at the Government's back this week was the unexpected exhumation of half-buried relics from the Covid era – a period Labour may prefer was left entombed in the sediment of public amnesia. The first, was last Thursday's Treasury Long Term Insights Briefing (LTIB). The report was actually into how best to manage economic shocks: should the Government spend up, or leave it to the Reserve Bank? Treasury reckoned managing shocks was mostly best left to the Reserve Bank – a conclusion it published in a draft report some months ago. What was new were details of Treasury's advice to the former Government of its advice during the pandemic. Two short sections in particular noted that Treasury advised the last Government to ease up on the stimulus in 2022, and another section detailed the consequences of this: a large structural deficit and risks of inflation. With Finance Minister Nicola Willis off in London, exchanging knowing grimaces with Chancellor Rachel Reeves over their mutually dreadful fiscal headaches – left-right ideological niceties be damned – it was Bishop's opportunity to don the acting finance minister cap and have lobbed at him volley after volley of low patsy questions on the report, giving him ample opportunity to sermonise on Labour's alleged fiscal sins. Bishop first cleared his blocked throat during the very first question of the week on Tuesday, Labour leader Chris Hipkins, pointedly interjecting that this was clearly 'audition number one' for Luxon's job. Hipkins wasn't wrong about it being 'number one'. Come Wednesday, it was Nancy Lu's turn to take to her feet and ask Bishop what economic reports he'd been reading, to which he replied he was not yet done with Treasury's gripping LTIB. On Thursday, the lucky backbencher was Catherine Wedd, who asked the same question: what reports had the minister (officially Willis, but in practice, Bishop) been reading on the state of the economy. Bishop replied, 'Oh, I haven't been able to stop reading Treasury's long-term insights briefing.' Another MP, Tom Rutherford piped up, 'What did it say?' Bishop replied, testing the limits of MPs' obligation to be truthful in the House, 'it's a great read'. It's not a bad parliamentary tactic: Grant Robertson often used it to highlight his successes and the Opposition's shortcomings. Bishop's effort this week worked wonders in cheering an otherwise gloomy backbench. In Question Time this week Chris Bishop revealed a passion for reading Treasury documents. Photo / Mark Mitchell Willis and Bishop have done a clever job in giving the impression Treasury's LTIB was mostly about slamming Labour for the Covid response – it's true, that's what's new in the final version vis-a-vis the earlier draft, but overall, the backward-looking part of the report is a small part of the whole. Labour's responses are as interesting as the report itself. Leader Chris Hipkins dismissed it as 'spin', former Robertson staffers Craig Renney and Toby Moore had more detailed critiques. Renney, posting to his Substack, quoted Michael Cullen to describe report as an 'ideological burp' and decided to skewer the conclusion that managing economic cycles was primarily the job of the Reserve Bank. In Renney's view, the whole government is responsible for managing the economic cycle. If this is left to just the Reserve Bank, its focus on inflation would mean that other, distributional impacts become neglected. Hammering inflation somewhere means hammering the economy everywhere. To be fair to Treasury, its report does briefly touch on fiscal policy's ability and obligation to smooth the bluntness of monetary policy. That's worth pursuing in more detail, particularly given the experience New Zealand had during the pandemic, in which the Reserve Bank's money-printing played arsonist to the housing market, before the bank guiltily and belatedly doused the inferno in a series of rate rises so blunt in their asphyxiating cruelty they cast thousands on to the dole queue, and shunted thousands more into the airport departure lounge. Moore's piece, published in the Herald, was more of a right of reply to Treasury. He resurfaced papers he first received as a staffer in Robertson's office and which were subsequently published in the Herald to note that as late as Budget 2023, Treasury was still advising Robertson to spend yet more money – not on Covid stimulus, but via his operating allowance, the pot of money to fund ongoing cost increases in departments and to pay for new things, like removing the $5 prescription charge in that Budget. In that Budget, Robertson actually spent slightly less than Treasury told him, not more. In that Budget, as for all of Robertson's Covid Budgets, the advice to spend more was consistent with the economic forecasts continually being revised in the right direction. This meant more money flowing in, allowing the Government to spend more money while returning to surplus in a creditable timeframe. The trouble with these forecasts is that they were wrong – and badly wrong. The economy did not grow nearly as much as hoped, tax revenue fell – and the effect was compounded, tax revenue as a share of the smaller economy was smaller than forecast too. The spending still happened, but we're still waiting on the money to pay for it. There were, then, two obvious flaws, given just passing detail in Treasury's report: the first is that Treasury's forecasts were badly wrong, the second was that Robertson did not show enough caution when he relied upon Treasury to put his Budgets together. That telling of the story is no less interesting to either side, but it has a different moral lesson: the solution to the fiscal problem really is, as Willis says, growth. If the economy had grown to where Treasury earlier forecast it would grow to, we'd be in surplus and reducing the debt ratio by now. A Treasury graph plotting which fiscal years have run counter- and pro-cyclically. Graph / Treasury Treasury quietly dropped another paper this week – this time by one of its economists, with the usual disclaimer that it does not necessarily represent the views of Treasury as an organisation. It pondered whether governments were running pro-cyclical or counter-cyclical fiscal policies, with the latter generally preferred because it allows the Government to moderate the economic cycle. Cullen gets the biscuit for running the most counter-cyclical budgets, Bill English and Steven Joyce get good marks too. Robertson's first term gets a pass, but not the second. The report only goes up to the fiscal year 2024, which was the year of a Labour Budget and National mini-Budget, but some back-of-the-envelope maths from the Budget Economic and Fiscal Update would suggest the Budgets for the last and the current fiscal years will be counter-cyclical – the first since 2019, a cautious vote of confidence in approval to Willis' economic management. The week ended on another blast from the past. The Covid-19 Royal Commission announced Labour ministers would not be appearing before the inquiry in person. Labour itself only found out the commission was going to announce this change a few minutes before it did so – the coalition seemed to have more warning, with each of the three parties putting out damning press releases shortly afterwards. Polling shows the public is clearly on the coalition's side and wants the ministers to appear, but they won't. The refusal led the news for 24 hours and is a good reminder to Labour the public haven't put the pandemic to bed quite as much as the party would like. Labour is proud of its Covid record but the fact the ministers won't appear in public allows the Opposition to argue, with some conviction, that perhaps Labour actually isn't – and its Covid record, particularly on economic matters, is really as embarrassing as the Opposition would like the public to believe. It's a dilemma for the Labour ministers, some of whom probably wouldn't mind appearing and defending themselves. One of the ex-ministers probably will be appearing in public in the near future – and, unlike Jacinda Ardern, will probably spend a lot of that time talking about Covid and money: Robertson's memoir Anything Could Happen is out later this month. There's a good chance some of these questions will get an airing in any promotional tour, and the book itself.
Scoop
07-08-2025
- Business
- Scoop
Te Ara Mokopuna – Treasury's 2025 Long-Term Insights Briefing Published
Press Release – The Treasury The briefing emphasises that monetary policy remains the primary tool for managing economic upturns and downturns. The Treasury has published its final 2025 Long-term Insights Briefing (LTIB), titled Te Ara Mokopuna, which explores the circumstances under which fiscal policy can be used to buffer the economy from shocks and cycles, and how to do so in a sustainable and effective way. The briefing emphasises that monetary policy remains the primary tool for managing economic upturns and downturns. However, there may be circumstances in which fiscal policy has a role to play in responding to shocks and cycles, such as: – Ensuring critical services and infrastructure are maintained or rebuilt. – Addressing the distributional impacts of shocks on communities. – Providing economic stabilisation when monetary policy has less room to move or is constrained by extremes (e.g., near-zero interest rates). The briefing also underscores that when fiscal interventions are required, they should be timely, temporary and targeted, with clear exit strategies in place. The briefing provides an overview of effective and less effective tools, with lump-sum payments, wage subsidies, and targeted adjustments to benefits or fees seen as more effective; and tax changes, new infrastructure investments, and permanent public consumption increases due to timing and reversibility challenges as less effective. Reflecting feedback from the consultation period, the LTIB notes that the involvement of other stakeholders, including private businesses, communities and local government is critical. Fiscal policy should not undermine the incentives for others to prepare for shocks. 'Feedback highlighted there may be an increasing frequency and complexity of shocks, particularly due to climate change, and the important roles of insurance and local authorities in responding to natural disasters,' Iain Rennie said. 'The Treasury agrees that maintaining the resilience of the private sector is important, and that responses to shocks requires the involvement of other stakeholders, including local government and private businesses, and encourages others to prepare for these events.' Treasury Secretary Iain Rennie noted that the ability to use fiscal policy to respond to shocks highlighted the need for governments to keep debt at prudent levels. 'New Zealand's economy is particularly vulnerable to ups and downs because of our small size, reliance on overseas markets, and high household debt. 'As a country, we need to have the capacity to respond to economic shocks when they occur. This will require successive governments to build a buffer – by setting sustainable medium-term fiscal intentions and running operating surpluses between shocks and downturns. 'Internationally we can see that governments tend to increase spending in a downturn or after a shock but fail to offset this with savings when times are good. This has also been the case in New Zealand, contributing to our rising level of public debt over time. 'The final 2025 Long-term Insights Briefing represents the Treasury's commitment to promoting fiscal sustainability and improving wellbeing for future generations of New Zealanders,' Iain Rennie said. Te Ara Mokopuna reflects feedback received in a two-phase consultation process. The first phase (June-July 2024) sought input into the briefing's scope, and the second phase (April-May 2025) focused on the draft briefing. This involved public submissions and targeted engagement including with macroeconomic and fiscal experts. 'I would like to thank everyone who made submissions and those who contributed during consultation on the briefing. 'The feedback has been valuable in helping to shape the final briefing. Contributions will also help to inform our future policy advice and development of the Treasury's forthcoming stewardship reports,' Iain Rennie said. Feedback reflected the critical role of our institutional arrangements in delivering sustainable and effective fiscal policy, and also focused on lessons learned from recent fiscal responses to shocks and cycles, the respective roles of monetary and fiscal policy in responding to the business cycle, and the role of the Crown's balance sheet, including public investments, in managing our exposure and preparedness to shocks. A summary of the consultation feedback and changes made to the briefing as a result of this feedback can be found at Te Ara Mokopuna 2025 – Submissions. short version of Te Ara Mokopuna 2025 is also available. The Treasury has two further stewardship reports due for publication which will build on the themes raised in the LTIB. The 2025 Long-term Fiscal Statement will consider long-term pressures on New Zealand's fiscal position and the choices available to successive governments to return to a fiscally sustainable path. The Investment Statement will consider how governments' management of the Crown balance sheet, including debt levels and investments, can support New Zealand's living standards across generations. These are due to be published in the coming months.
Scoop
07-08-2025
- Business
- Scoop
Te Ara Mokopuna - Treasury's 2025 Long-Term Insights Briefing Published
The Treasury has published its final 2025 Long-term Insights Briefing (LTIB), titled Te Ara Mokopuna, which explores the circumstances under which fiscal policy can be used to buffer the economy from shocks and cycles, and how to do so in a sustainable and effective way. The briefing emphasises that monetary policy remains the primary tool for managing economic upturns and downturns. However, there may be circumstances in which fiscal policy has a role to play in responding to shocks and cycles, such as: - Ensuring critical services and infrastructure are maintained or rebuilt. - Addressing the distributional impacts of shocks on communities. - Providing economic stabilisation when monetary policy has less room to move or is constrained by extremes (e.g., near-zero interest rates). The briefing also underscores that when fiscal interventions are required, they should be timely, temporary and targeted, with clear exit strategies in place. The briefing provides an overview of effective and less effective tools, with lump-sum payments, wage subsidies, and targeted adjustments to benefits or fees seen as more effective; and tax changes, new infrastructure investments, and permanent public consumption increases due to timing and reversibility challenges as less effective. Reflecting feedback from the consultation period, the LTIB notes that the involvement of other stakeholders, including private businesses, communities and local government is critical. Fiscal policy should not undermine the incentives for others to prepare for shocks. "Feedback highlighted there may be an increasing frequency and complexity of shocks, particularly due to climate change, and the important roles of insurance and local authorities in responding to natural disasters," Iain Rennie said. "The Treasury agrees that maintaining the resilience of the private sector is important, and that responses to shocks requires the involvement of other stakeholders, including local government and private businesses, and encourages others to prepare for these events." Treasury Secretary Iain Rennie noted that the ability to use fiscal policy to respond to shocks highlighted the need for governments to keep debt at prudent levels. "New Zealand's economy is particularly vulnerable to ups and downs because of our small size, reliance on overseas markets, and high household debt. "As a country, we need to have the capacity to respond to economic shocks when they occur. This will require successive governments to build a buffer - by setting sustainable medium-term fiscal intentions and running operating surpluses between shocks and downturns. "Internationally we can see that governments tend to increase spending in a downturn or after a shock but fail to offset this with savings when times are good. This has also been the case in New Zealand, contributing to our rising level of public debt over time. "The final 2025 Long-term Insights Briefing represents the Treasury's commitment to promoting fiscal sustainability and improving wellbeing for future generations of New Zealanders," Iain Rennie said. Te Ara Mokopuna reflects feedback received in a two-phase consultation process. The first phase (June-July 2024) sought input into the briefing's scope, and the second phase (April-May 2025) focused on the draft briefing. This involved public submissions and targeted engagement including with macroeconomic and fiscal experts. "I would like to thank everyone who made submissions and those who contributed during consultation on the briefing. "The feedback has been valuable in helping to shape the final briefing. Contributions will also help to inform our future policy advice and development of the Treasury's forthcoming stewardship reports," Iain Rennie said. Feedback reflected the critical role of our institutional arrangements in delivering sustainable and effective fiscal policy, and also focused on lessons learned from recent fiscal responses to shocks and cycles, the respective roles of monetary and fiscal policy in responding to the business cycle, and the role of the Crown's balance sheet, including public investments, in managing our exposure and preparedness to shocks. A summary of the consultation feedback and changes made to the briefing as a result of this feedback can be found at Te Ara Mokopuna 2025 - Submissions. A short version of Te Ara Mokopuna 2025 is also available. The Treasury has two further stewardship reports due for publication which will build on the themes raised in the LTIB. The 2025 Long-term Fiscal Statement will consider long-term pressures on New Zealand's fiscal position and the choices available to successive governments to return to a fiscally sustainable path. The Investment Statement will consider how governments' management of the Crown balance sheet, including debt levels and investments, can support New Zealand's living standards across generations. These are due to be published in the coming months.
Scoop
26-06-2025
- Business
- Scoop
Tax Justice Aotearoa Welcomes IRD Discussion Document On Tax Reform
Tax Justice Aotearoa has welcomed the release of Inland Revenue's draft Long Term Insight Briefing, which looks at the possible future directions for New Zealand's tax system. The discussion document suggests a stable core structure of main bases that 'comprehensively taxes the factors that are sought to be taxed', coupled with the ability to 'change rates on main bases to change the level of revenue.' 'We welcome the release of the draft LTIB as a useful contribution to the debate about what kind of tax system we want for the future,' says Glenn Barclay, Chair of Tax Justice Aotearoa. 'Tax has become a hot topic and this document demonstrates some of the challenges we face.' 'We look forward to hearing more from the IR officials and giving the public the opportunity to question their thinking at our upcoming briefing event*,' says Glenn Barclay. 'This is part of the consultation process so everyone who would like to make a submission on the LTIB should come along.' The LTIB notes the fiscal challenge we face as a country as expenditure increases, largely as a result of an ageing population. 'Tax Justice Aotearoa agrees with this observation but an ageing population is just one of the many problems we have stored up for ourselves by failing to invest in both social and physical infrastructure - the challenges of poverty and inequality, as well as climate change adaptation and mitigation also come to mind', says Glenn Barclay. The LTIB also demonstrates that New Zealand is an outlier in the extent to which it relies on tax revenue from labour income and GST and that we under tax capital income. 'These are the taxes that impact most on working people and the poor,' says Glenn Barclay. 'We need to address this imbalance by ensuring those who can afford to pay more are required to do so, and also that the regressive nature of GST can be addressed. The permanent GST-offset credit suggested by the LTIB, is a proposal worth considering.' "There are limitations to the document, for example it does not address the interface between the tax system and the Working For Families tax credit, which is a fraught issue for those who are dependent upon WFF, but we look forward to the debate that the document will provoke,' says Glenn Barclay. Note: * Tax Justice Aotearoa will be hosting speakers from Inland Revenue at one of its 'Tax on Tuesdays' events on Tuesday 1 July at 12.30pm* - members of the public are welcome to attend. It will be a hybrid event with an in person session at Rutherford House in Wellington, which will be live-streamed. Where: Rutherford House Lecture Theatre 2 (RHLT2), 33 Bunny Street, Wellington. When: 12.30-1.30 pm Tuesday, 1 July 2025
Scoop
04-06-2025
- General
- Scoop
Manatū Taonga Releases Draft Report On Culture In A Digital Age
Manatū Taonga Ministry for Culture and Heritage has released a draft Long-term Insights Briefing - a futures-thinking report - on culture in the digital age. A Long-term Insights Briefing (LTIB) provides analysis and information about medium and long-term trends, risks, and opportunities that may affect New Zealand. The topic for this LTIB is: Culture in the Digital Age: How will technology change the way New Zealanders create, share and protect their stories in 2040 and beyond? "Our draft LTIB looks into how AI and other digital technologies will reshape creative expression, content distribution and cultural preservation," says Secretary for Culture and Heritage Leauanae Laulu Mac Leauanae. "By 2040, our cultural sectors will be deeply intertwined with artificial intelligence (AI) and other emerging technologies. These advancements offer unprecedented opportunities for new and exciting ways of creating, sharing, and protecting our stories. On the other hand, they can also introduce significant ethical, legal, cultural and governance challenges that we should address thoughtfully and collaboratively. "We want to open up the discussion and invite the public to give us their thoughts on what this digital future will look like for Aotearoa, and what we need to think about now," says Leauanae. The public can also enter an art competition to design the cover of the final report.
