Tag: New Zealand politics

Debt, money printing, immigration, government spending — the numbers can be real without the story wrapped around them being quite what it seems. Granny did the homework.

A few weeks ago, I came across one of those long Facebook posts explaining what has gone wrong with New Zealand.

You know the sort. Debt. Government spending. Money printing. Immigration. Too many public servants. Too much waste. Too much of everything, apparently — except common sense.

It got my angry up.

My snide-retort finger was hovering dangerously close to the appropriate button when a rather inconvenient thought occurred to me:

Do I actually know whether all of this is true?

Some of it certainly sounded true. Grocery prices hurt. Rates hurt. Power bills hurt. We run a small farm, so I don’t need a politician or a Facebook page to tell me that household costs have risen. I can see that perfectly well from my own bank account, thank you very much.

But there is a rather large gap between “things are difficult” and “New Zealand is an economic basket case and this is who caused it.”

So instead of reposting it, I went looking.

And the more I looked, the more questions I had.

How bad is New Zealand’s debt, really? What actually happened to government borrowing during Covid? Did we simply “print money”? Is immigration wrecking the country, rescuing it, or — annoyingly — a bit more complicated than either?

And when governments promise to save billions by cutting spending, where does that saving actually come from — and who benefits from the saving?

That Facebook post was supposed to give me answers.

Instead, it gave me homework.

And, as it turns out, quite a few questions for Granny.

Meanwhile, back in the real world…

Before we start arguing about who broke what, perhaps we should acknowledge the bit most New Zealanders don’t need a graph to tell them.

Things are tough.

Food costs more. Electricity costs more. Rates have climbed. Housing is painfully expensive. For many households, wages simply haven’t kept pace with the bills arriving on the kitchen bench.

Jobs are harder to come by. Unemployment has risen to its highest level in more than a decade. Businesses are struggling too, with company liquidations remaining at elevated levels.

And at the same time, the welfare system has become more sanctions-focused, with tighter obligations for people who may already be having considerable difficulty finding work.

That combination bothers me.

If jobs are harder to find and businesses are failing, how much pressure can we reasonably put on someone for not finding a job?

None of this is imaginary, and telling people that some economic indicator is improving doesn’t make the supermarket checkout, the power bill or the prospect of losing a job any less frightening.

Government debt has risen substantially. New Zealand borrowed heavily through the Covid years. The Reserve Bank created large amounts of money through its quantitative easing programme. Net migration surged after the borders reopened, putting additional pressure on housing and infrastructure that were already struggling to keep up.

Those are real things. They deserve scrutiny.

But this is where I started getting fidgety.

A list of individually accurate figures can still create a very misleading story if we leave out the context connecting them.

A true number doesn’t automatically make the story wrapped around it true.

How much of that debt was Covid spending? How unusual is New Zealand’s debt compared with countries like ours? Why was money created, who actually created it, and where did it go? Who were those migrants, why did they come, what did they contribute — and why, at the same time, were so many New Zealanders leaving?

And when a government says it has saved billions of dollars, what was actually cut to produce that saving?

Where did the cost go — and who benefited from the saving?

Because perhaps the most important question is this:

If we agree there are problems, does that automatically mean the proposed cure is the right one?

That’s where Granny’s homework really began.

The debt number that stampeded around Facebook

One of the numbers in the post that started all this was $190.3 billion — Treasury’s net core Crown debt figure at 30 April 2026.

Now, a number as large as $190.3 billion can stampede around Facebook quite impressively. Put it beside the word debt, add a suitably alarming sentence or two, and it sounds as though someone has backed the country up to its credit-card limit and gone shopping.

But what does the number actually mean?

This is where things become rather less exciting — and considerably more useful.

Governments have several ways of measuring debt. Gross debt, net debt and different Treasury measures can all produce different numbers. So before deciding whether a debt figure proves the country is broke, we need to know which debt figure we are talking about.

Then there is the rather important question of size.

A $190 billion debt sounds enormous to a household — because it is. But a national economy isn’t a household. Countries are normally compared by looking at debt relative to the size of their economy, usually as a percentage of GDP.

And when we do that, New Zealand doesn’t suddenly become debt-free or give us permission to stop worrying about borrowing. Debt still matters. Interest has to be paid, and money spent servicing debt can’t be spent somewhere else.

But neither does New Zealand emerge as some uniquely indebted economic disaster.

Then I wondered: where did all that extra debt come from?

Quite a lot of it came from something we seem remarkably good at forgetting when discussing the books — a global pandemic.

The Government borrowed heavily to fund wage subsidies, health measures and support for businesses and households while large parts of normal economic life were effectively switched off.

We can absolutely argue about whether every dollar was well spent. Some clearly wasn’t. We should ask what worked, what was wasteful and what we should do differently next time.

But that’s a different argument from pretending the increase in debt appeared because somebody simply lost control of the chequebook.

There is another little trick worth watching for here.

Debt did not begin with one government, and responsibility for it does not magically stop when the government changes.

Every incoming government inherits an economy, a set of books and decisions made before it. It also starts making decisions of its own.

So fiscal responsibility can’t mean blaming every increase on the people who came before you, while claiming ownership of every improvement that happens on your watch.

That rule should apply whichever party is in government.

The original post also went considerably further than questioning whether public money had been wisely spent, making serious suggestions about where some of that money had gone.

Waste, poor administration and weak accountability absolutely deserve investigation.

But allegations that politicians personally benefited from public money require something rather more substantial than suspicion.

They require evidence.

Economics is not a pantomime, and any post offering us a neat cast of heroes and rogues should make us cautious.

So yes, New Zealand has more debt.

The useful questions are not “Is $190.3 billion a frighteningly large number?”

Of course it is.

The useful questions are:

How much debt do we have relative to our ability to pay it, why did we borrow it, what did we get for it, and what should we do about it now?

Did Labour simply “print money”?

Another claim that crops up regularly is that Labour printed billions of dollars during Covid, flooded the economy with money and caused inflation.

There’s some truth in there. But quite a lot has been squeezed into one sentence.

The money creation was actually part of the Reserve Bank’s Large Scale Asset Purchase programme, New Zealand’s version of quantitative easing. The Reserve Bank created central-bank money and used that money to buy government bonds, helping push interest rates down and support an economy suddenly facing a rather alarming global pandemic.

So, was money created?

Yes.

Was it simply Labour turning on the printing presses to pay its bills?

No.

And was New Zealand alone in doing it?

Not remotely. Central banks around the world took similar extraordinary measures.

That doesn’t mean there were no consequences. Very low interest rates, quantitative easing and enormous government support all played a part in what happened next, alongside global supply shortages, shipping disruption, energy prices and the war in Ukraine.

There are legitimate questions about whether support went too far or lasted too long, and whether some of the money was badly spent.

Those questions deserve proper answers.

But “Labour printed money and caused inflation” takes a complicated series of decisions, made during an extraordinary global event, and turns them into a wonderfully convenient political slogan.

Granny gets suspicious when complicated things become wonderfully convenient.

Did immigration overwhelm New Zealand?

Immigration was another culprit in the original list.

And again, there is a real problem underneath the accusation.

After the borders reopened, net migration rose very rapidly.

But this wasn’t primarily a flood of New Zealanders coming home. In fact, New Zealand citizens were leaving in greater numbers than they were returning.

More people need houses, roads, schools, doctors, electricity and water. If population grows faster than infrastructure can keep up, something has to give.

New Zealand has been particularly good at adding people first and wondering where to put everything else afterwards.

So yes, rapid immigration can put pressure on housing and public services.

But migrants don’t just arrive needing things.

They also work in our hospitals, build houses, teach in our schools, run businesses, pay taxes, harvest crops and fill jobs that employers struggle to fill locally.

That leaves us with a rather more useful question than simply asking whether immigration is good or bad:

Are we planning properly for the number of people we bring in?

If immigration increases the population without matching investment in housing, health, transport and other infrastructure, then the problem isn’t necessarily the people who arrived.

It may be that we invited them in without building enough chairs.

And blaming immigration for every stretched hospital, expensive house or crowded road risks overlooking another awkward possibility:

perhaps some of those systems were already struggling before the new arrivals got here.

Immigration has costs. It also has benefits.

The sensible argument is about how much immigration New Zealand needs, what sort, how quickly our population can grow, and whether governments are prepared to invest in the infrastructure that growth requires.

That’s considerably harder to squeeze onto a Facebook meme.

Does cutting government spending save us money?

This one sounds wonderfully straightforward.

If the Government is spending too much, spend less. Cut waste, reduce bureaucracy, shrink the public service and get the books back under control.

And if something genuinely is wasteful, I’m all for asking why we’re paying for it.

But there’s a question I don’t think we ask often enough:

What happens to the work when we cut the person doing it?

Sometimes the work really can disappear. A programme may no longer be useful. Two departments may be doing much the same thing. Technology may allow something to be done with fewer people.

Fair enough.

But a nurse removed from the public payroll doesn’t remove the sick person.

A planner no longer employed by a council doesn’t make the consent application disappear.

A government department using fewer staff may simply hire consultants or contractors when the same work still needs doing.

And when services become harder to access, the cost doesn’t necessarily vanish either.

It can turn up somewhere else — in longer waiting lists, delayed maintenance, families paying privately, councils picking up responsibilities, or problems becoming more expensive because we waited too long to deal with them.

The ledger may look tidier, but the bill has not vanished. It may simply have slid into another column.

None of this means governments should spend without restraint.

Of course they shouldn’t.

It means that “we cut $X billion from government spending” doesn’t, by itself, tell us whether New Zealand is $X billion better off.

To know that, Granny wants to know something rather more mundane:

What did we stop buying, what happened as a result, and where did the cost go?

So what are the alternatives?

This is where political arguments can become rather limiting.

We are often presented with two choices: keep spending recklessly, or tighten our belts.

But are those really the only choices?

A country can invest in infrastructure that improves productivity. It can train more of the people it needs rather than continually discovering shortages. It can build housing and plan properly for population growth. It can look at whether its tax system raises enough money, and whether that burden is being shared fairly.

It can also ask a question that seems almost embarrassingly obvious:

What are we trying to achieve?

Because balancing the books is important, but a government isn’t a set of books.

If we save money while hospitals become harder to access, houses remain unaffordable, infrastructure deteriorates and families struggle to pay for the basics, have we actually become better off?

Equally, spending more money doesn’t automatically solve those problems. Governments can waste money just as enthusiastically as anybody else.

So perhaps the choice isn’t really spending versus cuts.

Perhaps it is about deciding what New Zealand needs, working out what genuinely improves people’s lives and the country’s long-term prospects, and then being rather more demanding about whether the money we spend actually achieves it.

That might mean spending less in some places.

It might mean investing more in others.

And yes, it might mean having some uncomfortable conversations about tax.

None of those questions has a tidy one-line answer.

But neither does running a country.

New Zealand is not fine

None of this is an argument that everything is fine.

It isn’t.

People are struggling with the cost of living. Housing remains painfully expensive, and the number of New Zealanders recorded as living without shelter rose sharply between the 2018 and 2023 censuses, and more recent evidence suggests it has risen further.

This winter, there have been several reported deaths among people sleeping rough, including a woman found seriously unwell on a Christchurch beach during freezing conditions.

Our health system is under pressure. Infrastructure has been neglected. Productivity is a problem. Government debt is higher, and there are perfectly reasonable questions to ask about how public money has been spent.

We should ask them.

But there is quite a leap from “New Zealand has serious problems” to “New Zealand is broken.”

And an even bigger leap from there to “therefore this particular political prescription is the only responsible way forward.”

That’s the bit that bothers me.

Because once we convince ourselves that the country is broke, that nothing works and that we simply can’t afford the things we once expected a decent society to provide, all sorts of choices begin to look inevitable.

Perhaps they aren’t.

Perhaps some things genuinely do need cutting.

Perhaps some things desperately need investment.

Perhaps taxes need changing. Perhaps spending priorities do. Perhaps governments of both left and right need to get considerably better at showing us what we receive for the money they spend.

Those are arguments worth having.

But I’d quite like us to have them without first frightening ourselves into believing there is only one possible answer.

The Facebook post that started all this gave me a tidy explanation for what had gone wrong with New Zealand.

After doing the homework, I’m rather less certain.

Some of the figures were real. Some of the problems were real. But a true number does not automatically make the story wrapped around it true.

Almost everything I looked at turned out to be considerably more complicated than the Facebook version suggested.

Which, inconveniently, leaves us with questions rather than slogans.

I think that’s probably a good thing.

New Zealand is not fine.

But neither is it beyond fixing.

So perhaps the question heading into this election isn’t simply who do we blame for getting us here?

Perhaps it is:

What kind of New Zealand do we want to build from here — and who do we want it to work for?

Granny’s going to have a few questions about that.

An earlier version of this article was published by Scoop. This version has been substantially revised, expanded and given the full Granny treatment.

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