Economic policy

Budget 2019: How do we know transformation when we see it?

David Hall

  NZ has dethroned GDP as a measure of success, but will Ardern’s government be transformational? When you’re in politics, words are a high-stakes game. Voters and journalists hold you to them and there is a risk in using words that are hard to live up to. This is particularly

Not the transformation we were promised

Amanda Reid & Ganesh Nana

The Wellbeing Budget opens with, “What is wellbeing?”, a question that has been widely posed and little understood. Treasury says “Wellbeing is when people are able to lead fulfilling lives with purpose, balance and meaning to them.” Long-term challenges facing Aotearoa New Zealand include child poverty, mental health, domestic violence,

The 2018 budget: Politics & economics

Geoff Bertram

The first feature of the 2018 Budget is the allocation of $100 million to the America’s Cup.  The politics of this are not hard to understand, but the myth of prioritising within an economically-binding fiscal constraint is exploded. Explicitly prioritising the America’s Cup above mental health and Maori development leaves

Accounting for the government

Brian Easton

The 1989 Public Finance Act adopted a new approach to the presentation of the government’s accounts. Its purpose was to enhance the government’s management of financial flows by combining them all into a single set of accounts. But as so typically happens, a measurement system for one purpose is used

Is the government Austerian?

Brian Easton

The neologism ‘Austerian’ is a portmanteau of ‘austerity’ and ‘Austrian’ (School of Economics). It became extensively used after the Global Financial Crisis. It describes the policies of those countries which had to restrain public and private spending because lenders were unwilling to provide the funds for their budget deficits. Their

Where modern macroeconomics is going wrong

Brian Easton

There is a slowly but steadily accumulating body of criticism of the dominant economic paradigm which constitutes today’s conventional wisdom. A recent Oxford Review of Economic Policy devoted an entire issue to critiquing ‘Dynamic Stochastic General Equilibrium’ (DSGE) models, a workhorse of econometric forecasting based on much of the current

From Universal Basic Income to Public Equity Dividends

Keith Rankin

In 1991 I wrote advocating ‘a universal tax credit available to every adult – the Universal Basic Income (UBI) – and a moderately high flat tax rate’. In 1996 I started to develop these ideas into a “social accounting framework”. It was only after my 1996 presentation – in Vienna,

Immigration reform spotlight: Fairness, economic development, and the Working Holiday Scheme

Oksana Opara

Historically high net migration to New Zealand — which reached over 70,000 annual arrivals in 2017 — has spurred many social and political concerns, including about how the country’s already-strained public infrastructure will cope in the coming years. In response, the newly-elected Labour-New Zealand First coalition government plans to significantly

Rethinking the teaching of economics

Girol Karacaoglu & Julienne Molineaux

In the wake of the Global Financial Crisis, some students of economics in countries as diverse as Chile, the UK and the US asked why the curriculum they were studying at University did not deal with contemporary issues such as debt and finance, or the shortcomings of markets. Some academic

The Economic Rationale of Free Trade Agreements 

Robert Wade

On the face of it, the lack of enthusiastic consensus for mega-regional free trade agreements, such as the TPP, is surprising. Trade obviously brings benefits, and more trade should bring more benefits. But the underlying argument for free trade rests on a raft of assumptions so unreal as to make

The challenges ahead for the new government

Ian Shirley

As the 2017 general election graphically illustrated New Zealand society has reached a turning point in its economic, social and political development. Throughout the election campaign the voting population seemed uncertain which way to go and this uncertainty was reflected in a series of opinion polls and in a range

The Future of New Zealand Capitalism?

Brian Easton

‘Far too many New Zealanders have come to view today’s capitalism, not as their friend, but as their foe. And they are not all wrong. That is why we believe that capitalism must regain its responsible – its human face.’ Winston Peters.   Announcing that he was going with Labour,

Public Debt: How Low Should It Go?

Brian Easton

I asked him [Keynes] if he would borrow if he were in New Zealand in order to get through the crisis. Keynes replied, ‘Yes, certainly if I were you I would borrow if I could, but if you asked me as a lender I doubt whether I would lend to

Too big, too often? Mergers and competition in New Zealand

Donal Curtin

The proposed merger between NZME (formerly Wilson & Horton) and Fairfax’s New Zealand media operations has brought us squarely into the middle of a growing international issue: are industries getting too concentrated, with too few competitors? Are consumers being offered too little choice?  Have competition authorities been too lax in

Think Big: Auckland, immigration, and the absence of income growth

Michael Reddell

Of the biggest cities in each advanced economy, Auckland has been one of the fastest growing. Just in the last 15 years, Auckland’s population has grown by 30 per cent, while the population in the rest of the country has risen by 13 per cent. Many argue that big cities


Arthur Grimes

This article first appeared in The Spinoff on 4 July 2016.   In March 2016, the REINZ Auckland median house price reached $820,000. Four years previously, it was $495,000 – that’s a 66% increase in 4 years. What’s more alarming is that in 2012, many people considered that house prices

Recent Trends in Public Spending

Brian Easton

Despite the public’s desire for more government spending there has been little increase in the aggregate level of government spending relative to GDP over the last 20 years. There was a slight rise immediately after the GFC, because GDP stagnated. Government spending as a percent of GDP is now lower

Timing is Everything

Cameron Preston

I was asked give a Canterbury perspective on whether I expected government services to be cut to fund tax cuts in 2017. The answer is not as straight forward as the question. In May 2011, only three months after the Christchurch Earthquake – our biggest natural disaster – the government announced

Spend and Tax

Brian Easton

As a general rule, New Zealanders want more public spending. Surveys (such as the 2014 Election Survey) show consistent support for increases in spending, particularly in the areas of health, education, housing, law enforcement, public transport and the environment (in that descending order) as well as favouring reduced income inequality.

‘Critic & Conscience’ of Society

Ian Shirley

In 2010 I participated in an OECD Forum in Paris. The Forum was ostensibly focused on the ‘Road to Recovery’ following the onset of what was called the global financial crisis of 2007-2008. In contrast to previous OECD events the forum was dominated by pessimism. The chief economist of the

Real Estate Debt And The Balance Of Trade

John Walley

Auckland has a housing problem but this is not just a problem for Aucklanders, or new home buyers. Out of control asset inflation – as seen in the Auckland housing market – is toxic to the real economy, destroying our ability to deliver a long-run neutral balance of trade. High

A Short Term Budget?

Brian Easton

Third term governments always look tired. Policies developed in opposition have been implemented (usually with more difficulty and less effect than expected), ambitions – such as exporting 40 percent of GDP – are nowhere near deliverable (and in truth, never were), unexpected issues prove tiresome and intractable and whenever you

Children: The Nation’s Greatest Asset

Ian Shirley

As we approach the annual Budget in May it is an appropriate time to review our public policy priorities and especially investments that need to be made to advance this nation’s greatest asset, its children. Writing at the end of the 1950’s J.B. Condliffe suggested that “a baby born in

The Over-Valued New Zealand Dollar – Part Two

John Walley

In a previous Briefing Paper, I discussed what is meant by an over-valued dollar and argued that the New Zealand dollar has been over-valued for much of the past decade. This has fewer benefits than assumed for consumer prices, and has costs for exporters. The graph below shows us the

The Over-Valued New Zealand Dollar – Part One

John Walley

Since 1985 New Zealand has operated with a floating exchange rate. Our currency is traded on the market, responding to changes in economic conditions here and around the world: subject to global events, interest rates, prices, and a range of other factors that affect the demand for our currency. In

Gambling On The Dollar

Brian Easton

Sharp movements in exchange rates often reflect sophisticated speculation. Is there much we can do about it? While the near parity of the Australian and New Zealand dollars got a lot of breathless attention recently, there was little analysis of why it was happening. Explaining the exchange rate depends upon the

Why A Free Market Wage System Doesn’t Work

Michael Sharp

The general decline in collective bargaining coverage across western economies in the 1980s and 1990s was driven by the belief of governments and employers that freer labour markets would work more efficiently. New Zealand lead the way with collective bargaining coverage rates declining from some 60% to 17% (Creighton and

Electricity Supply and Poverty in New Zealand

Geoff Bertram

The electricity industry in New Zealand provides a good case study of how a neoliberal ideological agenda plays out when harnessed to the attitudes and practice of modern big business. At the beginning of the neoliberal period, the industry was a publicly-owned, democratically accountable provider of an essential public service.

For Richer, For Poorer

Dame Anne Salmond

The three Briefing Papers posted today were written by Professor Anne Salmond of the University of Auckland in response to what she describes as the Slippery Slope of Democracy in New Zealand. The first paper was written in the wake of Dirty Politics, the book released by Nicky Hager that

Policy and Prosperity

John Walley

Over the past 30 years economic strategy has separated into two broad camps, largely driven by the underlying culture which made the choice. The Anglosphere countries such as New Zealand, the US, Australia, Canada and the UK have followed a deep belief in the primacy of markets, an intent if

The Purpose of Social Policy

Ian Shirley

Social policy in New Zealand from European settlement to the present day has fluctuated between two dominant traditions. The first can be traced back to 1547 when the city of London imposed a compulsory tax on the rich in order to alleviate poverty. It was an imported model based on

The Purpose of Economic Policy

Brian Easton

The annual May budget is a public spectacle. The Minister of Finance is photographed holding aloft a copy of his speech while those from political parties and sectors dominate media discussions debating the significance of economic growth targets, the level of inflation, and the fiscal deficit – there will even