Taxpayer Update: Inflation dips 📉 | Mayor Mauger's Commonwealth Fantasy🏅 | More NZTA’s budget blowouts 🤑

January 27, 2024 Callum Purves

If you're in Auckland for their long weekend – come along and meet the team on Monday at Mission Bay (see details at the end of this email).

Thanks to Connor for holding the fort. Sadly while I have been away, the examples of waste and excess have just kept coming. But let's start with a little bit of good news.

Inflation dips, but it's mostly from overseas 📉

Inflation is finally dropping, and about time too. This week's figures showed inflation has is now down to 4.7% from 5.6% the previous quarter. This will come as welcome news to those struggling with the cost of living.

But that’s where the good news ends, I’m afraid.

For the 31st month in a row, inflation remains well outside of the 3% target range and far from sustainable levels. Our high inflation is being propped up by “non-tradeables”, which surprise, surprise is the area most affected by government spending...

Digging deeper into the figures out this week - while the rest of the world's inflation is easing (i.e. our 'tradable goods'), New Zealand's domestic inflation (termed 'non tradables') remain stubbornly high. That means that, on average, New Zealand is likely to face higher interest rates for longer, compared to our trading partners.

High inflation: All roads lead back to Wellington 👀

As a proportion of the economy, New Zealand's response to COVID was among the highest in the world. And, once the lockdowns were over, New Zealand still lags behind in getting inflationary government spending back under control!

That's why the New Zealand Government Debt Clock is still racing, and the Reserve Bank is still imposing high interest rates. Until the new Government gets serious about tackling the culture of waste and out-of-control deficit spending they have inherited, that’s not going to change anytime soon.

Bad news for those with mortgages...

Sir Humphrey would be proud: Unelected bureaucrats setting up new Ministers again 🧑🏻‍💻

When new governments are elected, ideologically-driven bureaucrats often disagree with the policies that have a democratic mandate to implement. But unlike the US – where a new administration can replace/appoint most of the leaders of government agencies – New Zealand has a politically neutral public service.

Or so they claim...

Before Christmas, we saw the leaks about the so-called ‘fair pay’ agreement changes and, more recently, the Treaty Principles Bill – clearly aimed to undermine policies that were explicitly campaigned on by the parties making up the new Government.

This week it was Casey Costello's turn. Radio NZ was clutching its pearls after it obtained a document that purported to show that the new Associate Minister of Health, Casey Costello (our former chair), had asked officials for advice on freezing tobacco excise.

It looks to be a carefully calculated sting operation by the bureaucrats.

From the reporting of the story, you would think that Casey had instigated research into this policy area, but that is not quite the full story. Unelected officials proactively offered to provide the Minister with advice on the implications of increasing and not increasing tobacco excise along with inflation prior to the annual decision having to be made. When the Minister agreed, it appears Ministry of Health officials created the advice about freezing tobacco taxes 'which she had asked for' and leaked this certain sections to the media, which predictably had a meltdown.

These sorts of policy advice papers and documents would have been made public in time anyway, but jumping the gun through selective leaks creates a strong incentive for Ministers not to seek official's advice or do their job.

In fact, we think the new Government has a real problem on its hands: The professionalism (or lack thereof) by the bureaucrats across dozens of government agencies risks undermining the decision-making process and having a chilling effect on constructive communication and the need for Cabinet government to be based on well-informed decision making.

This behaviour from some officials is nothing more than a political hit-job seeking to make it harder for the Government to unwind the past six years of wasteful, bureaucratic and ineffective policy. We say that unless unelected bureaucrats can act impartially and support the government to implement policies even if they disagree with them, they need to find a new career.

Nicola Willis has a big decision to make when it comes to appointing the new Public Service Commissioner in just a few months. We need someone willing to tackle The Blob head on. And the names reportedly being considered do not inspire confidence. Watch this space...

Mayor Mauger Needs to Learn to Walk Before Joining the 100m Sprint 🏅

Christchurch is a city on the mend, but now in what seems to be a vain attempt to prove something to the world, the Mayor is gunning to throw so much of that progress away.

Across the ditch, the State of Victoria has had to bail on its plans to host the Commonwealth Games thanks to the insurmountable cost. Alberta in Canada had to pass up the opportunity because it was simply unaffordable, even for a province loaded with oil money. Now the Christchurch Mayor – an area with less than 10% of the population of either of these two – is proposing local ratepayers pick up the baton.

Christchurch Council is $25k per residential ratepayer in debt, bridges still haven’t been fixed since the earthquake, and the Council is already planning 15.8% rates hikes this year alone. Even for those who would love to see the Commonwealth Games back in the Garden City, the council simple does not have spare billions to blow on a one-off event.

Mr Mauger, before trying to prove to the world that Christchurch is back on its feet, should perhaps try proving this to Christchurch residents.

NZTA’s incompetence on display yet again with budget blowouts 🤑

This week showed once again that The Agency Formerly Known As Waka Kotahi struggles to be prudent with our money.

It might sound like déjà vu, considering that just last week Connor told you about the near-comical downfall of Auckland Light Rail – a project which after 6 years and $228 million spent didn’t have a single metre of track laid – but unfortunately it turns out that New Zealand Transport Agency (NZTA) has been haemorrhaging funds on its other trademark projects just as badly.

Earlier this week, we heard that the NZTA has already blown through nearly two thirds of its $280 million budget for the Mt Messenger highway without a single kilometre of tarmac built.

The bypass was initially meant to be completed 2 years ago, but now will likely push out to at least 2026 and is set to majorly blow out in costs. Out of the $172 million spent so far, only around $100 million has been used on actual construction.

But it doesn’t stop there…

Months of road closures for clip-on footbridge 💸

In Waikanae, another costly NZTA debacle is unfolding with a $2 million ‘clip-on’ shared pathway to be attached to Waikanae Bridge. As of this week, work on this heavily overdue project is finally underway, but the bridge will now be closed heading southbound for at least the next 5 months, and possibly longer, for work to be undertaken.

Considering the enormous cost of the project, coupled with the major traffic disruptions it will burden the region with, we also question whether more cost-effective alternatives that would have prevented the current bridge from being closed could have been used instead.

Judge for yourself! Official Information from Kapiti District Council revealed that a similar stand-alone bridge a few kilometres downstream was erected in 2009 for just $178,672. See the plans here. This new ‘clip-on’ approach will cost at least 10 times that amount, and that’s assuming everything goes to plan.

It’s been clear for several years that NZTA has lost its way and has wholly failed to demonstrate any value for money. We’re calling on the new Government to ensure our transport agency gets back to focussing on delivery and ensuring our roads are adequately maintained first before embarking on outlandish gold-plated developments. A clear out of what appears to be a lacklustre board would be a good start.

Other News in Brief ⏰

Jordan appeared in a recent edition of the Different Matters podcast hosted by friend of the Taxpayers' Union, Damien Grant. He discusses our recently published book The Mission: 10 Years of the Taxpayers' Union, which is available to purchase here.
James threw our support behind calls on Minister of Local Government, Simeon Brown, to restrict the powers of the unelected, undemocratic, unaccountable Tauranga commissioners ahead of a return to democracy in July. It is unacceptable for long-term decisions to be made now before local residents have been given to have the chance to have their say on the future direction of their city.

One more thing...

Debt Clock

While it may be a long weekend for Aucklanders, sadly one thing that won't be taking a holiday is our national debt, which will rack up more than $75 million on Monday's public holiday alone. We'll be out in Mission Bay with the Debt Clock and holding sausage sizzle to do our bit to help pay down the national debt. Come along and buy a sausage – we need to sell an awful lot of them!

Yours aye,