It’s been six months since Christopher Luxon became Prime Minister and he’s “loving it. Absolutely loving it. No, really loving it”.
Being leader of the opposition was a tough job, he tells Newsroom. And he’s obviously not the first person to think so. “At the end of the day, you don’t get to control or drive anything.”
Whereas, the prime ministership comes with power; the ability to “put things into gear and get change away”.
But with that power comes privilege and responsibility.
Luxon says he feels that responsibility keenly when he’s talking to people in foodbanks, in schools and in his woolshed (sometimes cowshed) meetings.
“People out there in New Zealand are hurting really bad at the moment; people are under huge pressure. My job is to improve things for them. I’m very conscious of that.”
Luxon says the squeeze comes from the “hangover of economic mismanagement” from the last lot. He doesn’t refer to Covid-19, or the fact that countries around the world used stimulus packages to keep their economies afloat during the pandemic.
“And so life is tough for New Zealanders. You know, they’re struggling to get through pay cheque to pay cheque. They’re working incredibly hard, and they still can’t get ahead.”
Next week, Luxon – alongside his Finance Minister Nicola Willis – will see his Government’s first Budget launched. It’s his first true opportunity to ease some of that pain.
The Prime Minister won’t reveal what he reckons this year’s Budget should be known as. Of course, it’s not up to the Government to brand the Budget, but sometimes they give it a crack.
Last year, then-prime minister Chris Hipkins, suggested his first (and only) Budget would be called the “no frills” Budget. It somewhat stuck.
But whatever it ends up being called, there’s certain to be no lolly scramble. It’s not the year for sugar hits. The Pepsi Max drinker would probably say it’s not even the year for the no-sugar equivalent.
Luxon reckons the previous government deployed band aid solutions to deal with gaping wounds in the economy. His plan: Deal with the root cause of the country’s problem. If he can get inflation down, those cost of living pains will ease, he says.
On the flipside, Luxon rejects the suggestion he may be delivering an austerity Budget.
Willis has bristled at likenings to former finance minister Ruth Richardson. She’s previously hit back at reporters, suggesting the comparison was based on solely on their shared gender.
Luxon says this Budget is not about slashing for the sake of slashing. He’s prioritising outcomes over new spending – something the country has heard aplenty from the man of the quarterly plans and Government Targets.
He gives an example: This month, the Government announced it had found $400 million in savings from 100 Corrections programmes that weren’t being properly utilised. So, it redirected that money into something it believes is more likely to yield results – frontline staff.
But it’s hard to sell reprioritisations and a ruthless focus on outcomes as a panacea for the pain felt by low- and middle-income New Zealanders.
Enter the tax relief. Next week’s Budget will include National’s much-promised (and much-debated) tax cuts. But it’s still unclear exactly how far that money will go and when it will be delivered.
When National announced its tax plan ahead of the election, it quickly became clear the “back pocket boost” wasn’t going to be the rocket Kiwis were looking for.
Analysis from the Council of Trade Unions found only 3000 households would get that much-cited $250 a week. Some people will be getting little more than four bucks a week, according to the Nats’ online calculator.
The Government has previously promised the cuts will kick in from July 1, but that’s not something Luxon was willing to confirm in his interview with Newsroom, just a week out from Budget day.
And while the Government gets on with its broader cost of living plan: scrapping the regional fuel tax, rescoping the Reserve Bank’s mandate to focus solely on inflation, and reforming the Resource Management Act (RMA) in order to open up land to increase housing supply and lower housing costs, real Kiwis are waiting for a lifeline.
Newsroom put the current situations and concerns of three Kiwis to Luxon during our interview:
Debbie Leyland tells Newsroom her Kāinga Ora home has given her security.
After living on the street for two years – a terrifying experience – she was placed in a state house in Wellington’s Lyall Bay.
She’s been in the house for 10 years; it’s now her home. And her estranged family: a daughter and two grandchildren, have come back into her life.
But this week’s pre-Budget announcements regarding state housing have triggered Leyland’s anxiety. She’s not sure she will be able to stay in her home.
While Luxon and Housing Minister Chris Bishop have both promised there will be no mass sell-off of state houses, they haven’t been clear about the future shape of “social housing” in New Zealand.
Luxon won’t guarantee that people like Leyland, whose Kāinga Ora homes sit on prime real estate, will be able to stay where they are now.
Sometimes the wrong house is sitting in the wrong location and is the wrong configuration, he says. In that case, the land may need to be sold in order to buy or build elsewhere.
Meanwhile, the Government has announced it will be scrapping the $60 million-a-year first home grant scheme, which gives households up to $20,000 towards their first home.
In opposition, National went after Labour for not lifting the eligibility cap. During the campaign, they point blank promised the scheme would stay.
“That was then, this is now,” was Chris Bishop’s response.
Hopeful first-home buyers have described it as a kick in the guts; one more thing that will make it that little bit harder for Kiwis to haul themselves onto the first rung of the property ladder.
“That’s a tough, difficult choice … and not everyone will be happy about it,” Luxon says.
But he believes the trade-off is worth it: 1500 more social houses. (Labour says that’s fewer than they planned to build.)
The kicker: The review that triggered these changes – and led by former prime minister Bill English – was paid for by money set aside for transitional housing.
Leyland says housing insecurity and transience does not make for a well community.
“If I was to talk to him, I would simply be telling him everybody has a right to a house … not just rich people.”
Luxon says he agrees.
“My grandmother lived in a state house all her life, and I know what a state house means to people … I understand personally, having mowed the lawns of my grandmother’s state house for many, many years, what a state house means to people and the security that delivers.”
But it’s not lost on Leyland that the Prime Minister currently owns seven properties, which were collectively valued at $18m in 2021, according to Stuff.
Meanwhile, Leyland – who also a cancer survivor – is one of many people who has benefitted from the scrapping of the $5 prescription co-payment.
Luxon says he’s sticking to his plan to bring back the fee for some Kiwis. But there will be exemptions for seniors and those who can’t afford it – beneficiaries and seniors. He also reminds Newsroom that the co-payment caps out at $100 per household per year.
“It doesn’t make sense for people like myself, or Chris Hipkins, to get free prescriptions.”
Our second case study, Rhonda, has been living off of a benefit for the past 25 years.
She was born with a chromosomal defect that presents as autism, learning disabilities and developmental dyspraxia. People don’t want to employ her, she says.
Meanwhile, she has been transferred from Wellington Council Housing to community housing, but transferred tenants aren’t eligible for the income-related rent subsidy. She can’t make ends meet.
Rhonda says lifting base benefits, as well as the abatement rate, would make a material difference to her life.
But Luxon believes this has already been addressed by the Government’s decision to index benefits to inflation, which came into effect last month. It doesn’t sound like there’s much more in the Budget for beneficiaries.
Meanwhile, Nick Stoneman has regularly started skipping meals.
Stoneman is on the full-time supported living payment (formerly the invalid’s benefit). He has mental health issues, physical disabilities that impact his mobility, and autism.
Right now, it’s a choice between paying for his treatments, or paying for food.
There are many things this Government could do to make Stoneman’s life better. But lifting the disability allowance from $78.60 a week to $150 would make a material difference.
The disability community was blindsided by Whaikaha’s decision to remove their flexible funding allowances for support services earlier in the year. The saga revealed a department in financial disarray, a minister was sacked, and a review was launched.
Now, the Government is promising more money for frontline disability services. The Prime Minister says this money will help Stoneman.
But more importantly, if his Government follows economics 101, then people like Stoneman will be better off.
“Our desire is to deliver fantastic public services,” he says.
Net Crown debt has exploded. It’s currently more than $71 billion. “We’re now paying $9b in interest, which is more money that doesn’t go to Nick.
“So, if you care about Nick, and you care about people, you actually make sure that you run an economy well.”
Luxon and Willis are right when they say they can’t do it all in one Budget. But the Prime Minister reckons he can get pretty far with three of them.
If the Government holds its nerve, by focusing on cutting spending and pulling down inflation, then opportunities will open up, he says.
“I think New Zealand has a fantastic future ahead of it … There are no excuses for why we shouldn’t be able to do incredibly well in the world.”
In the meantime, people like Nick, Debbie and Rhonda will have to wait.
“The punching down budget” – the breaking of election pledges and a $2.9Billion tax subsidy for landlords negates all the froth and talking tongues
There is no doubt that, regardless of which party got the benches, a day of reckoning had to come for the borrowing that resulted from the covid pandemic. And it was always going to be tough. It’s not just the fiscal decisions that this coalition Government is making that cause deep concern, however, but the ideological ones that have the potential to cause long term harm. The development-freeing legislation, the refocus on roads as opposed to public transport, the diversion of money to the proven failed experiment of charter schools, the determination to throw hundreds more people into jail, and the clawback of the progress that was being made in Maori health initiatives. All these things will create long term problems way beyond the benefits of a balanced budget. History may well leave some criticisms of the previous Labour Government, but that may be trivial compared to the damage this coalition will leave in its wake. For the first time ever I am now questioning whether MMP is indeed better than first-past-the-post. Extremism has gained power beyond its mandate.
You can’t spend what you don’t have.
For us to continue to enjoy all the ‘nice to haves’ of a modern first world country we need to face up to the fact that you cannot just keep borrowing to fund it.
There is some chance this Government might actually start to deliver on that fundamental reality when others in the recent past have not.
Perhaps instead of borrowing to fund essential government services, we could tax unearned income like every other first world country, as the IMF has been urging us to do for years.
One day, maybe, politicians and others will realise that we are a sovereign currency issuing country. Which means financing public works and activities is not the issue, it is whether there are the real resources (materials and people) available.
Landlords right to claim interest expense is the restoration of a right enjoyed by every other business. If this is a tax cut, then every business claiming interest expense has enjoyed a massive tax exemption since the beginning of time.
In respect of everything else, the upcoming budget is of significant interest given that the change of government has delivered reforms at a level never seen before – but signalled in the coalition agreements
Businesses claiming interest expenses are not engaged in feudal behaviors. People are free to pay for business services or not. People without land are not free to pay for rent or not, they cannot simply levitate, they are beholden to landlords. Landlords produce nothing except speculative feudalism, often inherited, yet expect tax cuts to embolden their non-productive malevolence. Labour unions missed the point, true progress requires Land unions.
Of course, landlords don’t pay tax on the profit they make when they on-sell their stock. And it’s a pity that the electorate didn’t have the chance to vote for or against the coalition agreements.
You ignore a simple fact: neither does anyone else. I have no problems with landlords being taxed, as long as everyone else who owns and profits from housing assets is taxed in the same way.
Unbelievable hot air from the National government.
Thats why Luxon always describes his plans as “incredible”
Nothing like balanced journalism….the three people interviewed for this story are very clearly the sorts we all want to help live in circumstances that allow a dignified life. I don’t imagine any government is seeking to make their situation worse.
I am reminded however of a recent article in which a ‘homeless’ person in Rotorua was bemoaning the fact that her begging patch at a set of traffic lights was under siege from others who had moved in from out of town. She was affronted.
She said she earned on average $200 per day. Her partner earned the same. They were ‘homeless’ because there was no more emergency housing for couples or families in Rotorua.
The journalist didn’t ask the next obvious question about why they needed to be homeless in the first place when they are taking home at least $2000 a week. It so begged the question why they need social or subsidised housing in the first place. The question was not asked.
They can’t afford to rent in Rotorua on $2000 a week, net?
And this is what I think is missing in these discussions. There are those who need our help and those who want/demand our help. They are not always the same.
I will support any government that sorts the two out.