By Dr Muriel Newman

A number of opinion polls published over recent weeks confirm support for Prime Minister Christopher Luxon’s National-led governing Coalition is holding. That’s in spite of the tough economic times, public service resistance, and biased media reporting.

The Roy Morgan poll showed the Coalition edging ahead with 55 percent support – National up 1.5 to 37.5 percent, ACT up 0.5 to 10, and New Zealand First steady on 7.5 – with the opposition on 41 percent: Labour down 3.5 to 23, the Greens up 1 to 14, and the Maori Party up 0.5 to 4.

Their analysis shows men of all ages support the coalition, while older women split support equally between the Coalition and the opposition. Younger women strongly support opposition parties, especially the Greens and the Maori Party.

While the overall mood of the country remains gloomy, with cost-of-living pressures still top of mind, there is a feeling that things are starting to improve.

This was confirmed by the drop in annual inflation from 3.3 percent in June to 2.2 percent in September – a rate now within the Reserve Bank’s target 1-3 percent band for the first time since March 2021.

While the Reserve Bank began lowering interest rates in August with a 0.25 basis point reduction, last week’s 0.5-point cut, which reduced the Official Cash Rate to 4.75 percent, the lowest in more than a year and a half, is clearly not enough. With mortgagee sales on the rise, 40 percent more company liquidations than last year, unemployment increasing and record numbers of Kiwis leaving the country for a better life overseas, there’s growing speculation that deeper cuts will be needed to revive the economy.

At times like this it’s important to remind ourselves why we experienced such a dramatic rise in inflation and why such drastic action was required to bring it under control. And we need look no further than former Prime Minister Jacinda Ardern. Under her watch, Labour embarked on an unprecedented spending and borrowing spree that crippled the economy with record debt and record inflation, exacerbated by record immigration.

But questions are also now being asked about the competency of the Reserve Bank board to deal with Labour’s extraordinary mismanagement.

Under their watch, staff numbers, which traditionally hovered between 200 and 250 from 2000 to 2017, ballooned to 601, with salary expenditure rising dramatically as the number of employees earning over $100,000 increased from 132 in 2017, to 436!

Former Reserve Bank senior advisor, Geof Mortlock, in a submission on banking competition, claimed the Board “lacks directors with the requisite level of knowledge and experience in financial sector regulatory and financial stability issues”.

He called on the government to “abandon the highly questionable approach of seeking gender and ethnic balance as the priority for board appointments. The only balance needed on any board is the required balance of skills, knowledge, experience, and judgement. Gender, ethnicity, and culture should always be subordinate to these fundamental matters.”

University of Auckland’s Professor of Economics Robert MacCulloch is also highly critical of the Bank: “The Reserve Bank of New Zealand’s $100 billion money printing program – one of the world’s largest – was a knee-jerk reaction…

“Then in another panicked knee-jerk reaction, the Reserve Bank Governor announced he was ‘engineering a recession’ with punishingly higher interest rates to get the inflation he created back down again…

“Turns out our incompetent Central Bank never did ‘engineer a recession’ to kill inflation. It engineered three – and killed three birds – jobs, the economy, and cost-of-living – with one stone, the OCR, instead.”

New Zealand is now one of the world’s worst performing economies, and while the new Government has introduced a range of measures to turn the situation around, they have not gone far enough nor quickly enough.

This can be seen in the grim figures in the Government’s  “Financial Statement” for the year ended June 2024. Treasury revealed that while spending exceeded $180 billion, revenue was much less at $167 billion. As a result, net core Crown debt rose from $155.3 billion or 39.3 percent of GDP last year to $175.5 billion or 42.5 percent of GDP.

In comparison, in 2019 before Labour embarked on their reckless borrowing and spending, debt stood at $60 billion or 20 percent of GDP.

This deterioration in the Government’s books, in spite of the tax take being stronger than expected, shows that while the Coalition is talking tough, they need to do more. And since their strategy of growing the country out of its financial problems is not working as quickly as they may have hoped, more spending cuts will be needed.

The public sector should be a primary target.

When National was last in government in 2017, there were around 47,000 full-time equivalent public servants. By the end of 2023, Labour had added 19,000 new employees, expanding the bureaucracy by 40 percent to almost 66,000.

This is partly why it’s almost impossible to get anything done in New Zealand these days. An army of clipboard officials pushing debilitating levels of compliance in such things as health, safety, the environment, culture, are on the loose, crushing the entrepreneurial spirit of risk takers trying to make things happen.

Returning the public sector headcount to 2017 levels would not only save taxpayers around $1.5 billion a year in payroll costs, but a slimmed down bureaucracy would help to revive business confidence.

While the Coalition’s public service cuts have resulted in loud protests from opposition parties and the unions – exacerbated by hysterical reporting by the mainstream media – the actual number of job losses between December and June was only 2000.

It turns out that most of the 7,000 public sector jobs that critics claimed had been lost were vacancies.

While 22 public service departments and agencies have lowered their staff numbers, 16 have increased them, and a new Ministry – for Regulation – has been added. The largest drop in staff numbers was at Statistics NZ, which lost 23.8 percent of its employees when the Census ended.

Given the appalling anti-government bias in mainstream media reporting – especially from state-owned media companies – the Coalition is attempting to communicate more directly with the public over their actions. Using the Beehive website, their initial 100-day plan with its 49 goals can be seen HERE, their second quarter Q2 action plan with 36 goals is HERE, and their Q3 action plan with 40 goals is HERE.

Their Q4 plan with 43 action points – see HERE – was released last week by Prime Minister Luxon, who explained their strong focus on clearing away the barriers to growth in order to rebuild the economy was continuing. The Fast-track Approvals Bill, which is expected to reduce the approval process for major projects that will deliver significant regional or national benefits from an average of 8 years to one year, is a key part of their strategy.

The six-person Independent Advisory Group, that was set up to assess whether the 384 submitted projects were suitable for inclusion in the Bill, recommended 342 for further consideration.

Of those, Cabinet chose to include 149 in the Bill – 28 in the Auckland region, 22 in Canterbury, 19 in the Waikato, 15 in Otago, 12 in the Bay of Plenty, 11 in Wellington, 11 in Northland, 6 in the Manawatu-Whanganui, 6 in the Hawkes Bay, 4 on the West Coast, 4 in Taranaki, 4 in Southland, 3 in Tasman/Nelson, 1 in Gisborne, 1 in Marlborough, and 2 across multiple regions.

Of those, 58 involve housing, 29 transport, 11 mining, 8 quarrying, 7 farming and aquaculture, and 22 are involved in renewable electricity.

The Coalition says those 22 energy projects will help electrify the economy, boost energy security and assist in achieving New Zealand’s climate change goals. If consented, they are expected to contribute an additional 3 gigawatts of generation capacity to the national grid – one and a half times more than Auckland’s average peak demand.

As a result of the Coalition’s adoption of Labour’s radical decarbonisation agenda, the demand for power is projected to rise more than 50 percent by 2050, driven largely by electrification in the transportation and industrial process heating sectors.

But this week’s NZCPR Guest Commentator, leading power systems engineer Brian Leyland, is highly critical of such goals:

“The pursuit of ‘Net Zero’ partly driven by a mistaken belief that if New Zealand reduced its emissions our climate will be better, has driven the ban on gas exploration and the desire to shut down our coal fired station, even though it is doing a vital job in keeping the lights on. It has also given us expensive and unreliable wind and solar power.”

Sharing his analysis of our present electricity woes, Bryan explains that the power supply problems we experienced this winter with unprecedented price hikes and calls to restrict usage were the result of three underlying factors – the weather, the flawed electricity market and the drive for ‘net zero’.

“Sixty-five percent of our electricity is provided by hydropower, and the remainder by geothermal, gas, coal, wind and some solar. In a dry year, hydro’s ability to deliver falls away, and we lose about 10% of our generation. In the past, we always tried to have the reservoirs and the Huntly coal stockpile full by the end of summer to guard against this possibility. When we switched to an electricity market, this objective fell by the wayside.

“This year, we failed to refill the reservoirs and, until a few weeks ago, they had been declining fast to a record low level. Recent rain, lots of wind plus some expensive gas from Methanex has eliminated the risk of blackouts this year.

“We used to get 20% of our electricity from gas-fired power stations, but because of declining gas supplies from existing wells, and the previous government banning further exploration, we are now desperately short of gas. The Coalition is going to remove the ban but we won’t see the results for several years.”

Bryan makes the point that the increasing reliance on intermittent renewable energy is only sensible if sufficient backup generation, that can be fired up quickly when needed, is available: “In late summer Huntly did not have enough coal in its stockpile because not enough retailers were prepared to pay in advance for a larger stockpile. So coal fired generation was constrained by the market failing to provide an adequate supply of fuel.”

The Government’s newly released Statement of Government Policy to the Electricity Authority is a step in the direction of ensuring the industry operates more efficiently in providing reliable energy at the lowest possible cost. It includes a requirement for adequate backup generation to be available during dry years, when the wind doesn’t blow, and the sun doesn’t shine. Whether such a direction will be sufficient remains to be seen.

Without a doubt, New Zealand is going through a difficult time as the Government attempts to repair the damage caused by six years of reckless financial mismanagement. Voters resoundingly rejected the agenda of the socialist left along with the extreme environmental policies of the Greens and the extreme racist policies of the Maori Party. The Coalition was elected to put things right. To do that it needs to be tougher than it has been to date.

Red tape and bureaucracy are still out of control in this country. The state sector is still bloated and in need of firm direction to make it productive and less obstructive. Entrepreneurial Kiwis need to be encouraged, not penalised, so they can help to turn the country around and take us forward towards a better future.

And diversity hire policies that are a legacy of the failed Labour government – like those in place at the Reserve Bank – must be eliminated.

People working in the state sector must be the best people for the job, hired on merit, not because they fulfil the misguided social justice objectives of failed politicians who have now moved on.