Nationals trying to renege on promises with talk of 'weak' economy – Chris Hipkins

The government will have to make some tough choices to revive the economy, says Christopher Lacson.
Photo: RNZ / Marika Kabasi

Finance Minister Nicola Willis is backing Prime Minister Christopher Lacson's stance on the „weak” economy, saying it is in worse shape than many thought.

In his first address to the nation as prime minister, Lacson said rebuilding the economy, restoring law and order and providing better schools and hospitals would be his main focus.

In a speech in Auckland on Sunday, he said his administration faced some tough choices to rein in government spending and repeatedly cited welfare bias.

„The free ride is over,” he said.

He also promised to be „upfront” with Kiwis about the country's „weak” economic situation, saying the Labor government had left a $200 billion hole in its transport spending.

Willis said the country was going through two years of a cost-of-living crisis with high interest rates, unemployment now rising and the outlook for growth low.

This occurred when the government's books were in „extremely bad shape” with large deficits and huge debt – meaning the government was faced with lifting the economy from its „weak state”.

With Standard and Poor's recently giving the New Zealand economy an AA+ rating and net debt below the OECD average, Willis responded that „careful choices” were needed.

He said New Zealand would end up in a „very difficult position” if it continued on the same path as it has for the past six years.

„We have a huge mission to deliver better value for money, get better decisions from public services and give New Zealanders a sense that they can earn more and have more choice in the future. Own household budgets.”

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Asked whether the government would set tougher targets on debt and spending as a percentage of GDP, Willis said he would release a short-term and long-term budget policy statement on March 27. .

Willis said the previous government had changed the way the country's debt was measured, resulting in it being 20 points lower than it should have been.

„It now goes to 44 per cent of our GDP – very high by New Zealand's historical standards.”

At the same time people held large amounts of private debt.

The Labor government kept delaying self-imposed targets, including a return to surplus.

„We can't fix what happened over six in one budget.”

She was again asked about setting hard targets and replied that all will be made clear in the March 27 report.

On welfare, Willis said the best way out of poverty is to help someone get paid work.

„We have employers crying out, whether on farms or in retail stores. Employers say they need skilled workers, but they say they need low-skilled workers, but they can't find them.

„It's not the kind of thing to delay someone on welfare for years.”

He said the lack of barriers has boosted the number of job seekers.

Tax Cuts Center of National Criticism – Hipkins

National is exaggerating the country's economic woes by trying to renege on its unbreakable tax cut promises, says Labor leader Chris Hipkins.

He said the country's economy was not in a weak state, however, it was still recovering from the pressures caused by the pandemic and its aftermath.

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It has emerged from the pandemic with less debt compared to many countries, and while unemployment has „risen”, it was still low compared to other developed countries.

Economists warned during the election campaign that National did not allow enough funding for both spending pressures and tax cuts, Hipkins said.

Chris Hipkins

Chris Hipkins.
Photo: RNZ / Samuel Rilstone

„Now it's clear that the numbers don't add up, so they're trying to create a situation where they can break their promises because they can't make them in the first place,” Hipkins said. Morning report.

„The manifesto, the promises they made in the election were not credible and they were not funded.”

During the global financial crisis, the national government of the day took eight years to return the economy to surplus, he said.

„The global financial crisis and the pandemic have to be seen through a similar lens. They were both huge shocks to the global economy, and New Zealand as a small trading country is really feeling the effects.”

On the new government's welfare reform plans, Hipkins said the population has grown over the past few years. The pandemic also affected many people's jobs.

The last national government also tried to impose economic sanctions on the unemployed, which failed, Hipkins said.

„The national government will tell you that if you are mean to the beneficiaries, they will go to work. The reality is that you have to offer a little more carrot along with any stick to get people into work.” he said.

„Sanctions lead to very transient employment outcomes that are often very short-lived. We really want to see people move off benefits and into sustainable long-term employment.”

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The prime minister alleged that he wanted to punish the beneficiaries

Green Party co-leader Marama Davidson

Mary Davidson
Photo: RNZ / Angus Dreaver

Green Party co-leader Marama Davidson said tougher restrictions on beneficiaries would increase poverty „and cruelly punish people”.

„Economic sanctions will not work to build strong families and support families [making] Healthy results for yourself.

„They will create more hardship for those who are already struggling.”

Davidson said he rejected the narrative that beneficiaries are lazy.

The Greens aimed to end poverty, and to achieve this required a radical reform of the tax system that would tax the „super rich” more and provide a guaranteed minimum income.

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