David Seymour, leader of the NZ ACT Party addressed the club via Zoom from Wellington. ACT has made strong gains in the polls in recent times and it was easy to see why. David provided a very clear and insightful analysis of NZ current situation and a very practical vision of how to proceed in the post virus world.
Acknowledging the tremendous result that NZ has achieved with the medical component of the Covid challenge, obtained with the compliance and goodwill of the general population, he focussed on the road ahead and how to mitigate the negative impacts and build upon the gains made. David painted a very clear and inspiring picture of NZ as a frontier society, comprised of families over the centuries and in modern times uprooting and moving here to the edge of the world to offer their children a better future. Kiwis are motivated and entrepreneurial and we can do this!
Although we had very low government debt prior to February 2020 (20% of GDP) which did give the government the headroom to borrow up large to implement their various support and recovery packages, when you add in privately held overseas debt we drop to the 5th worst in the OECD, a vulnerable position. The Reserve Bank and Government will be printing $90 billion to part pay for our ladder out of the Covid hole which has several attendant risks. Our Reserve Bank Act, dating back to Don Brash's time as Governor, was the world leader and the independence the RBNZ enjoys is fundamental to maintaining long term confidence in the economy. Further, international lenders will be watching our progress, nervous that a deteriorating fiscal position, the monetising of our debt, and political expectations of future largesse will increase the risk of inflation and a devaluing currency.
His address also touched on the psychological risks of the current leadership style. Specifically the dangers of the smiling and kind face of demagoguery which encourages compliance and unquestioning obedience but also discourages criticism so risking free speech and reducing robust debate and critical thought.
David's recipe for New Zealand's next steps was very easy to follow. Look to save at least 10% of the $80 billion spent on the "business as usual" daily outgoings to run the country. Stop spending on the free first year at Uni which has brought no benefit, attack wasteful civil service spending (the Ministry of Education has 2,600 employees earning an average of $86k per annum i.e more than 1 for each school in the system and on average being paid more than the highest paid teacher) and apply a 10% salary reduction across the entire sector. Then apply the Productivity Commission's suggested reforms to the Resource Management Act which is a significant barrier to development and growth, provide a twelve month growth stimulus to the economy by temporarily reducing GST to 10% and finally increasing the spend in public health to strengthen testing, tracking and tracing to lock in our gains and hasten the opening of our borders. A thoroughly enjoyable and thought provoking session.