They have been swallowed up by the fact that projected tax receipts are down by $13 billion in the current financial year, core Crown expenses are forecast to grow from $139b to $162.9b in the year to June 2029, with $20b additional debt in the four years to 2027/28, and the fact a Budget surplus is looking much further away irrespective of the gaming of the numbers through introducing ObegalX.
The Prime Minister will host an Infrastructure Investment Summit in Auckland on March 13/14, 2025.
This is being led by Treasury and expectations are international funds will be attracted by proposals to invest in (and sometimes form consortia to build) infrastructure assets such as roads and a second harbour bridge crossing in Auckland.
As Transport Minister Simeon Brown has suggested, roads could be funded through tolling entire corridors, automatically increasing toll prices through inflation. “Build and operate” options and value capture will be on the table.
The international funds will be heartened by the Government’s fast-track legislation, which has cleared the way for investment in the private sector such as mines, and green technology like hydrogen and more. But they will also want assurances that the Government is focused on its own fiscal outlook and is prepared to do something about its lazy balance sheet.
The fact that New Zealand is in a deep economic recession does not help.
So what to do?
It is unfathomable that a right of centre Government is not addressing its balance sheet.
Realising commercial assets could be used to create a new fund similar to Wayne Brown’s Future Fund (and the one Tory Whanau’s Wellington Council balked at) to create reliable revenue streams as Auckland Council has through selling its airport shares.
Personally, I favour transferring most – if not all – of the Government’s shareholdings in commercial assets into a Temasek-type holding company where a board, augmented by superbly qualified international directors, would assess the performance of the relevant companies and make the call when to sell down or increase holdings and what new companies to reinvest in.
Again, this is with the aim of removing direct responsibility from shareholding Cabinet ministers who lack the commercial skills to make these calls. In some prior cases, ministers have hindered performance by stacking boards with cronies and endorsing as chairs, directors who have little commercial insight into the sectors they are leading.
The upshot is market disciplines would be applied, giving companies the freedom to seek new capital when required rather than wait for the Government to weigh up whether it is a priority.
A case in point – the lengthy delays Air New Zealand was exposed to during the Covid crisis, whereas Auckland Airport was quick to market.
These are the calls a holding board would make.
There could also be a special dividend to the Government in the transition phase. Better that than standing in the way of company growth, which is essential to New Zealand’s getting out of its current economic hole.
For a coalition which has tackled previous undiscussables (giving David Seymour the opportunity to create a new conversation about racial equality through Act’s Treaty Principles bill; expunging the ability of transgender women to take part in elite sport – a New Zealand First initiative on “fairness”; cracking down on the pervasiveness of “woke” agendas in the education sector – a National Party agenda; and more) it has proved remarkably lily-livered when it comes to having a conversation on how to make the best use of its balance sheet.
When I asked Finance Minister Nicola Willis at Treasury’s soiree on the fiscal outlook this week, “Why is local government treading in asset recycling when the Coalition Government fears to go there?“, she conceded it was a qood question.
But it’s risible that Willis had to trot out that the coalition could not move on this before getting a mandate at the next election.
For a Government that’s changed the rules to force local bodies to focus on core business, maintaining such a wide brief itself instead of simply focusing on its own core business verges on hypocrisy.
