Latest news with #Long-termInsightsBriefing
Scoop
4 days ago
- Business
- Scoop
Dangers Of Excessive Spending Highlighted
Minister of Finance Treasury's latest report highlights the dangers of excessive government spending, Finance Minister Nicola Willis says. The Treasury's Long-term Insights Briefing released today explores the role of fiscal policy in economic shocks and crises including the way government finances were used during and after the Covid-19 pandemic. It says the response, which wound up costing $66 billion, about twice the cost of the Canterbury earthquakes (as a proportion of GDP) also shows the challenges of using big spending measures to respond to one-off shocks. 'Treasury's language is spare and polite, but its conclusions are damning,' Nicola Willis says. 'The report makes clear significant errors were made in the fiscal response to Covid. Treasury is urging policy makers not to repeat those mistakes. Our Government will not. 'The briefing notes that the COVID-19 Response and Recovery Fund was established in May 2020 to 'support a timely economic response and public confidence' but as the economy recovered, the then-government was advised against further stimulating in favour of more targeted support. 'Unfortunately, the Labour government ignored that advice. The consequence was undisciplined spending that pushed up inflation, eroded New Zealand's previously low public debt position, and fuelled a cost-of-living crisis. 'The briefing makes particular mention of programmes 'not tied to the shock (that) had a lagged impact on the economy and proved difficult to unwind in later years'. '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. '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. 'Kiwis can take confidence from the current Government's commitment to strong and responsible fiscal and economic management.'
Scoop
4 days ago
- 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
4 days ago
- 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
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.
NZ Herald
30-04-2025
- Business
- NZ Herald
Political flip-flopping is threatening New Zealand's ability to build long-term infrastructure
It is a striking admission. Even ministers now recognise that policy unpredictability has become a genuine investment risk. This is not the kind of sovereign risk once feared, like Governments repudiating sovereign debt or nationalising industries without compensation. But a more subtle form of sovereign risk has crept in: growing doubts about regulatory and policy predictability, the security of property rights and the stability of long-term investment settings. This erosion of stability did not begin with the current coalition Government. Over the past decade, policy whiplash has become a recurring feature of New Zealand public life. Nor are our macroeconomic foundations as secure as they once seemed. Treasury's draft 2025 Long-term Insights Briefing warns that New Zealand now has 'less capacity to respond' to future shocks. Net Crown debt, once below 20% of GDP, is now about 40%. Without major reform, it could exceed 100% by 2060. Ageing demographics, rising healthcare costs, and climate pressures will constrain future options. Meanwhile, the rule of law – another cornerstone of sovereign stability – is under quiet strain. Recent Supreme Court decisions increasingly depart from settled legal principles. Left unchecked, this judicial activism risks undermining parliamentary sovereignty, legal predictability and public trust in the courts. The symptoms of sovereign risk are now hard to miss. The 2018 offshore oil and gas exploration ban, announced without consultation, upended a sector built on long investment horizons. Three Waters reforms proposed to transfer billions of dollars of council-owned water infrastructure into new centralised entities – a move some described as a confiscation of local assets without genuine ownership rights. Resource management law, the framework for planning and development, has been in a state of almost constant upheaval for decades. The last Labour Government replaced the Resource Management Act (RMA) with labyrinthine new laws. The current coalition Government quickly repealed the replacements to start again. While many – including the New Zealand Initiative – have applauded this step, investors must wonder when stability will ever return. Against this backdrop, the current Government's focus on restoring predictability and improving regulatory quality is welcome. It is developing a property rights-focused planning framework. It has eased labour market regulation, created a new Ministry of Regulation, and proposed a Regulatory Standards Bill to lift the quality of future lawmaking. Yet for all this progress, some signals remain concerning. In March, Finance Minister Nicola Willis mused aloud that breaking up New Zealand's two supermarket chains was 'on the table' as a way to foster greater competition. She made the comment while launching a formal request for information about what it would take to enable a third national grocery chain. The willingness of a senior minister to raise the prospect of structural separation – a form of compelled divestment — risks signalling to all major businesses that their ownership structures could be vulnerable to political whim. The Government's treatment of airports provides another troubling example. Just weeks after Auckland Airport secured Commerce Commission approval for its $6.6 billion capital upgrade under the existing regulatory regime, the Ministry of Business, Innovation and Employment (MBIE) blindsided the sector with a fresh regulatory review. Investors are entitled to wonder: if large, long-term infrastructure investments can suddenly find their regulatory environment reopened, what certainty does any project have? These mixed signals matter. Investors value few things more than stability and predictability. Uncertainty about future policy increases the cost of capital. Higher costs mean fewer investments proceed. A country reliant on foreign capital to fund infrastructure and growth cannot afford to chill investment. The risk is not hypothetical. After the offshore oil and gas ban, exploration companies quietly exited New Zealand, redirecting capital to more predictable jurisdictions. In other sectors, investment plans are delayed or deferred whenever major regulatory reviews or possible interventions are floated without clear direction. Nor is New Zealand alone. Australia's attempt to impose a mining super-profits tax in 2010 — launched without consultation – provoked a fierce backlash from the industry and contributed to the downfall of a Prime Minister. In Canada, unpredictable approvals for energy projects have cost billions in lost investment. Small countries such as New Zealand cannot assume capital will forgive our missteps. Once sovereign risk perceptions shift, they can be hard to reverse. Some volatility is inevitable. Our MMP system and short electoral cycles amplify policy swings, encouraging Governments to replace rather than build on their predecessors' work. Yet stability is a choice. Where possible, parties should work toward cross-party continuity in critical areas such as infrastructure, Treaty settlements and climate policy. What matters most is not stasis, but discipline: recognising that how policies are changed can matter as much as what policies are changed. It is equally important to resist populist temptations. Big businesses – banks, supermarkets, airports – make easy targets. But heavy-handed interventions signal that the ground can shift beneath any investor's feet. This echoes far beyond the targeted sectors. New Zealand's prosperity was built on a reputation for good governance, secure property rights, fiscal prudence, and regulatory stability. That reputation remains an invaluable national asset – but it is not immune to erosion. If the coalition Government wants to foster growth and investment, it must ensure that its actions consistently reinforce New Zealand's standing as a safe, predictable place to do business. The alternative is to court a sovereign risk problem of our own making.
