PAUL MCBETH: The role of government needs serious people to stand up

Paul McBeth is the editor of The Bottom Line and Curious News, and worked at BusinessDesk for 15 years.

Finance minister Nicola Willis was at her theatrical best in the budget lock-up, painting a picture of an executive making the hard calls to balance the government’s books.

It’s a pity that the bulk of her presentation was part of the show for the ever-expanding contingent of assorted media, lobbyists and analysts, because she has an impressive grasp of detail when forced to dive into the weeds that leaves her audience better-informed for her diversion.

Take the unnecessary highlighting of a new levy on the financial sector to cover the cost of the Reserve Bank’s prudential supervision. The $70 million or so a year spread across banks, finance companies, insurers and financial market infrastructures barely raised an eyebrow when it was mooted during the 2019 review of the central bank’s legislation and its amplification last week was nothing more than a flurry of arm-waving to the electorate that its beneficent overlords hear their frustrations.

And while the budget presented eschewed the typical sweeteners that governments of all hues have adopted when coming up to a tight election – interest free student loans anyone? – at best all it’s done is kicked the increasingly obvious strains on the nation’s social contract down the road for future New Zealand to worry about.

Yes, the early return to an operating surplus – which now excludes the political football of Accident Compensation Corp entitlements – is a welcome step, as is the smaller borrowing programme being heaped upon young New Zealanders when they reach working age.

We cannot stop now

But to say everything is hunky-dory would be an embellishment of epic proportions.

The Treasury’s forecasts have a very chipper attitude to a global environment where a US tariff regime and a global energy shock are just two examples of the White House’s flexing being felt far and wide. Good luck predicting which way President Donald Trump will tack next.

Across the road, the Reserve Bank’s predictions were a little more subdued, with governor Anna Breman stressing the need for the alternative scenarios to underline just how interesting these times that we’re living in are.

And to be fair to the minister, Willis made clear that cost of the nation’s universal pension has fast become an intergenerational flashpoint.

The $23.19 billion paid out in superannuation in the June 2025 year amounted to 16% of the $141.88 billion of core Crown spending, and almost five times the $4.64 billion spent on the unemployment benefit we now call jobseeker support and emergency benefits.

We got it locked down

By the June 2030 year, the Treasury predicts the nation will spend $31.21 billion on super, almost 19% of the $167.89 billion of core spending, and roughly 6.4 times the cost of the unemployment benefit.

With the New Zealand Superannuation Fund needing a bigger top-up as it tempers its projected returns, the partial pre-funding will only get tougher – especially when so many people look at the $91.05 billion fund as something of a silver bullet when it was only ever going to cover as many as one-in-five superannuitants.

That’s ultimately an issue of design, both in terms of our approach to retirement and the government’s role more broadly.

Willis hasn’t delivered a zero budget like her mentor Bill English, and the Crown is still borrowing more money than what it’s repaying. Cash surpluses seem to have more in common with the mythological unicorn than current fiscal strategy, with just two being achieved since the global financial crisis.

Just because most of that cash shortfall has come from big capital projects doesn’t magically improve the state of the books, nor mask the fact that New Zealand’s simply making up for years of putting off those major infrastructure investments.

Yeah, it’s the Crusader

And while Willis’s opponents try to paint her as a cold arbiter of austerity, even the cuts the coalition government is willing to make are more performative than meaningful.

It will be no comfort to the 8,700 civil servants set to be shown the door in the coming years that the $600 million of annual savings amount to 0.4% of the $167.89 billion core Crown spending in the 2030 fiscal year.

The idea that the idle 8,700 just populate Wellington’s inner-city eateries and can be replaced by Copilot and little Claude or ChatGPT agents is even more heroic than Treasury’s economic forecasts.

It’s not helped by a lack of real direction coming from the Beehive as to what’s surplus to requirement.

If we dive into a few of the budget documents from those agencies tasked with trimming their baseline spending by 2% in the coming year, we can see that there’s less money for ministers to tap the policy wonks at the Ministry of Business, Innovation and Employment, and smaller budgets for the Retirement Commission, Takeovers Panel and hopelessly overworked Official Assignee.

Likewise, the Inland Revenue Department is cutting its spending on things like debt management and unified returns, processing obligations and services to protect the integrity of the tax system.

Y’all ready to flow? Just let me know

It’s impossible to tell whether that’s unnecessary fat in the system or administrative muscle that keeps things working.

And that’s also by design.

Because both this administration and the opposition have so far failed to articulate just what they think the role of government is in New Zealand and, by extension, what it isn’t.

That’s the curly question that ultimately needs answering if there’s to be a serious rethinking of what the population can expect to collectively pay for, and just how much of their hard-earned cash will go towards footing the bill.

Just because something’s called a saving doesn’t mean there isn’t a cost. It would be nice if New Zealanders were given the opportunity to judge whether it’s worth it.

Image from Curious News.