Source: ACT Party
The Haps
ACT achieved enormously for New Zealand last week, as outlined in David Seymour’s speech to the House. Karen Chhour was decisive in dealing with Youth Justice inmates climbing on the roof. Brooke van Velden introduced faster information sharing of sex offender histories with schools, and deregulated lotteries that fundraise for charities like Pet Refuge. Nicole McKee unveiled a single-supervisor plan to cut Anti-Money Laundering compliance costs. David Seymour showed how the school lunch program can be done well for half the cost.
God Defend New Zealand
Free Press was the only New Zealand outlet to pick a Trump victory in 2016. We predict that he will win again next Tuesday.
It’s not our job to say whether that’s good or bad for America. Besides, nearly everyone has a view and few are willing to change it anyway. We are interested, though, about what a second Trump Presidency might mean for New Zealand.
Trump 2.0 will be different from 1.0. He is angrier, knows better how the Presidency works, and will surround himself with people loyal to him personally rather than the Republican Party or any other calling.
Expect to see him make good on his agenda of demanding friends and allies contribute more to their defence. A 20 per cent tariff on imports would be too disruptive to carry out (especially if you campaigned on reducing the cost of living).
We could be wrong about Trump, but even under a President Harris, the United States is making an inward turn. They try isolationism every few generations. For a country like New Zealand, whose security has depended on 200 years of British then American naval dominance, American attitudes to the world really matter.
One likely outcome of the U.S. Election is that the New Zealand Government will need to spend more on defence. This change comes on top of already strained defence policy, something the ACT Party has factored in for a while now.
New Zealand defence policy is entirely based on an alliance with Australia. At what point does their goodwill run out? When they are asked to divert defence personnel and assets to the east, increasing their own risk to protect people who chose not to protect themselves?
ACT campaigned on increasing defence spending to 2.0 per cent of GDP, because the world has changed and New Zealand is out of step. Our Government spends 0.9 per cent, the Australians are at 2.0 heading for 2.4 at the end of the decade.
How will Australia respond if the Americans give them a deal with AUKUS Pillar II that New Zealand can’t afford to be part of. What would that mean for joint operations?
To put that in hard numbers, New Zealand GDP is about $400 billion, so 0.9 per cent is 3.6 billion, two per cent is $8 billion. There’s roughly 3.5 million taxpayers, so right now we’re at $1,000 per taxpayer on defence, two per cent would be $2,000 per taxpayer.
That level of spending would make New Zealand an equal player in an ANZAC defence force, with similar levels of resourcing. The thing is, it’s easy to say you want something, the hard part is always giving up something else to get it.
The Government basically has three options if it wants to spend more on something. It can borrow, it can tax, or it can make savings elsewhere.
Extra borrowing is out, with debt at 40 per cent of GDP, and interest alone set to hit $10 billion. Borrowing is not sustainable and the interest is already more than New Zealand’s dream defence budget.
The Government could tax an extra $1000 per taxpayer, the fairest and simplest way to do this would be to raise the bottom rate from 10.5 to 17.5 per cent. That would roughly raise the $1,000 per person.
The Government could raise the pension age to 67, perhaps at three months per year for the next eight years. That scheme would save about $3 billion, so would pay for most of the change.
Free Press doesn’t necessarily favour either of those options. There may be a better one. Nonetheless they convey the scale of what New Zealanders may need to give up, around $1,000 per taxpayer per year in extra cost to keep what we already have.
Either way, the world is changing and it’s likely to mean New Zealand, with its already fragile fiscal and economic situation, is going to need to pay more to enjoy what it already has.
