Category: Economy

Source: Council of Trade Unions – CTU

Data released by Stats NZ today showed that the size of the economy fell -0.2% in the June Quarter. CTU Economist Craig Renney said “GDP in June was smaller than June 2023 – meaning no real growth in the economy for at least a year. GDP per capita has been falling since September 2022, with a steeper fall than that found during the Great Financial Crisis.”

“The fact that we are back again in economic decline should be of real concern to those in charge of the economy, and should cause a rethink. Unemployment is rising quickly. Activity in retail trade and wholesale trade has been in decline since 2022. Business investment is lower than this time last year. Building construction fell. Government investment is also falling, with spending being lower than this time last year. There is no driver of growth in the current data to lead the recovery.”
 
“With data as bad as this, there should be a plan to deliver growth. Every other country highlighted by Statistics New Zealand in its papers saw growth in June 2024. Australia, Canada, China, the European Union, Japan, UK and the US. None of these countries is proposing the kind of economic and fiscal approach currently being delivered in New Zealand. We are at risk of making the currently bad situation worse.”
 
“With jobs being lost across Aotearoa, and with falling GDP, this is the time to rethink what we are doing. Softer growth and lower interest rates will feed through to lower tax revenues, putting the governments books further at risk. Other countries are seeing growth, and we need to be building a more sustainable economy in the future. When you are in a hole you should generally stop digging. That calls for renewed investment in New Zealand – not less.”
 
“There are things the government could be doing to make sure that the economy returns to growth, and that the recovery benefits all New Zealanders. We have an energy crisis costing jobs rights now. There are building sites lying idle and workers heading overseas for work. There are stalled school rebuilding projects. Rebuilding Aotearoa now will help with the recovery and make our growth less inflationary when it returns. Its time to change economic track.”

Source: Council of Trade Unions – CTU

Calculations undertaken by the NZCTU Te Kauae Kaimahi show that the Government will have wasted millions of dollars to take the already failed Treaty Principles Bill forward.

“This Bill is already dead, yet it keeps taking investment away from bigger priorities for New Zealand. Overall, the Bill and its process is estimated to have cost $4.15m. This would pay for around 40 nurses – the same amount that Wairarapa Hospital is currently short,” said NZCTU Economist Craig Renney.
 
“This calculation is based on extremely conservative assumptions. We have assumed very limited engagement with departments, and only a tiny number of departmental staff (12 in total – not all full time) being involved in the direct production of the bill. We have not added in costs for bodies such as the Waitangi Tribunal, the Human Rights Commission, nor Crown Law. There are a range of other costs – such as parliamentary questions and support for the Governor General which have also been left out of this equation.
 
“That creates a cost of around $2m in departmental costs just to bring the bill to the House. National and NZ First have agreed that it will pass at first reading, meaning that it will have a second reading and a 6 month Select Committee process. That, plus the additional work this will mean for departments will likely require an additional $2.1m of expense. Again, this is a very conservative estimate, based upon just the Select Committee staff, holding meetings around Aotearoa, and the cost of 3 hours of parliamentary time.
 
“There are however significant savings that could be made right now to reduce these costs. Hon. David Seymour is not the controlling Minister for any of these departments. They could instead be directed by their controlling Ministers to not spend any further time or resources on this bill. It could then be voted down at the first reading. That would roughly halve the cost of the bill.
 
“Hon. David Seymour is entitled to put bills before the house. That is a perfectly proper thing for him to do in his role as an MP and as a Minister. But that doesn’t mean that he should have the resources of the state to support a process that is already dead. Nothing is preventing Mr. Seymour from talking about his bill or stopping him from exercising his free speech. But to further waste millions of dollars on this vanity exercise at the same time as 7,000 staff are being cut from public services shows a lack of leadership and the wrong priorities.
 
“These costings are likely to be a significant underestimate of the real costs of this process. External counsel is probably being retained to support departments in this work. External consultants will be engaged, and extensive consultation probably undertaken. During the six-month Select Committee process these costs will continue. Then there are the opportunity costs associated with doing work on a bill that has already been defeated. These resources could be used in areas that would deliver actual results for New Zealanders. In effect, this would likely double the impact of the direct spending cost.
 
“There is still time to save some of the costs associated with this failed bill – but only if actors such as the Prime Minister act now. This would not only save money, it would also signal to the public and to possible submitters that they shouldn’t waste their time on this process. Everyone would be financially better off, and it would reduce tensions on a very divisive subject. Hon. Seymour would still be able to progress his right to free speech and to promote his bill. Otherwise, we are likely going to waste the equivalent of feeding 7,205 children a free school meal for a year on a failed project,” said Renney.

Costings

Total Departmental Costs are based on a 31-week process to deliver a bill to the House. This includes Staff from TPK, Te Arawhiti, Treasury, Justice, and DPMC. Ministerial Services Staff and Parliamentary Counsel Office staff have been added to the timetable as appropriate. 12 staff – not all fully employed on this Bill – have been incorporated from the departments. 5 weeks for Parliamentary Counsel Office drafting have been added to the cost.
 
This work comes in two phases. The first phase is the cost of bringing the Bill to the House. This generates an estimated observable cost of around $2m. Then there are costs for the departments of supporting the Select Committee and the Second Reading of the Bill. That adds a further $875,000 of estimated costs.
 
Each department will have its overhead costs associated with the direct staff involved. We don’t have a direct cost for these, but we have taken the figure from the University of Auckland for NZ government research as a guide. This would cover costs such as office, IT, internal legal, HR, and training costs. These have been added, where appropriate, to direct labour costs in departments.
 
Parliamentary time is calculated per hour from the total remuneration costs of MPs. Figures are taken from the last MP pay update and recent reports of the on-costs for each MP. Three hours of parliamentary time has been allotted to this part of the costs (1 hour first reading, 2 hrs second reading), and overhead recovery is then applied. This meets the cost of the building, additional parliamentary staff including security, and the TV/translation services of the House. This generates an estimated cost of $435,000.
 
Finally, the Select Committee will be staffed (three direct staff, plus one independent advisor) for the 6-month process of engagement. It is assumed that the Committee will travel to 10 sites around Aotearoa, engaging with Iwi and others on the Bill. We have not calculated any MP costs in this part, only Committee Staff and travel costs associated with flights, accommodation, and room hire. Overhead recovery is added to the staffing component but not the other costs. This generates an estimated cost of $825,000.
 
Total estimated costs by component:

• Departmental – $2.89m
• Parliament – $435,000
• Select Committee – $825,000

Estimated Total:

Full calculations are available on request.