Political volleying on cyclone recovery spending provided a reminder we’re in an election year while the Reserve Bank didn’t mince words on where it stands on how we’ll pay for it, writes Anna Rawhiti-Connell in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.
Tax, cut or borrow
Finance minister Grant Robertson has said it will be a matter of weeks and not months before we know how much cyclone and Auckland flood recovery is going to cost and how we’re going to pay for it. It’s not a concrete timeframe and Robertson has said he isn’t going to play the “rule in, rule out” game in the interim but any indication that it might not drag on will be a relief. At times, yesterday’s Question Time sounded a lot like it did before the events of the last month complete with typical election year exchanges about cost-of-living, taxation and non-delivery. RNZ’s Jane Patterson and Russell Palmer have a good run down of what happened which I recommend because there was a lot of verbal volleying. Summarised, the government is faced with the choice of tax, cut or borrow to fund the recovery and the opposition is pressing Robertson to rule out a new tax.
Reserve Bank delivers wake up call
As Question Time played out, Reserve Bank governor Adrian Orr made the central bank’s position very clear. Its focus is still on getting inflation down. As Stuff’s Luke Malpass writes it was a wake up call for politicians of all stripes. In short, Orr indicated that reprioritisation of spending and a new form of revenue (like a tax or levy) would make the job of getting inflation down easier. Politik’s Richard Harman goes one further on succinctly distilling the bank’s view as expressed by Orr: “Raise taxes or I will raise interest rates”.
We shouldn’t assume “we can build our way out of crises we ourselves built in the first place”
All this spending talk is really about identifying what actually needs to be done and how it will get done. There is no question about the need to spend on recovery. Longer term infrastructure investment is needed but it’s also a politically useful thing to talk about. It alludes to tangible things voters will be able to see and a sense of government doing big things. Te Whatu Ora chair Rob Campbell suggests we should make sure the why, what for and what if questions get asked before we “build, baby, build” and not assume “we can build our way out of crises we ourselves built in the first place.”
Central government will need to trust local communities
BusinessDesk’s Dileepa Fonseka (paywalled) points out that government capacity is already stretched and that funnelling everything through central government leads to bottlenecks. “Central government is going to have to trust local communities with more than just ferrying food and shovelling dirt,” he says. There’s something about that line that really nails the slight whiplash I felt as we got rocketed back to Wellington this week. After a week or so of very intense focus on parts of the country beyond our big cities and the many small but cumulatively impactful efforts of local communities, it felt a bit like “big cogs turning” and “business as usual” again.