Free Press, 24 January 2022

Mon, 24 Jan, 2022

THE HAPS

The whole country sees red while the Government takes Wellington Anniversary off. Only Labour would postpone Cabinet in a crisis to observe a public holiday. The crisis is not Omicron but the Government’s reaction to it. Too strict for life to go on, too loose to stop the virus spreading to everyone anyway. It is the worst of all worlds and should have been reformed weeks ago.

THE YEAR OF THE HANGOVER

Jacinda liked to name the year. In 2019 she named it ‘the year of delivery.’ She skipped naming 2020. Last year was ‘the year of the vaccine.’ You can see why she might have given up naming the years now.

Never fear, ACT is always here to offer the alternative. This year will be the year of the hangover. New Zealand will feel the effects of our lock ‘em down, lock ‘em out, borrow spend and print approach to COVID.

Labour bought into the delusion that sealing ourselves off from the world for two years would cost us nothing. For the United States, it might be believable at a stretch. For a small trading nation of five million, it’s a fantasy. They’ve even tried to say the economy is going well by pointing to a labour shortage (we need a Labour shortage).

If the economy seems buoyant at all, it’s thanks for enormous borrowing propped up by artificially low interest rates. Those rates haven’t just applied to Government borrowing, they’ve pushed house prices through the roof.

Adrian Orr and Grant Robertson thought all this was possible because inflation was dead. In fairness, it seemed that way for most of the ‘teens, when even negative interest rates in some countries did nothing for inflation. It was like the laws of economics had changed and inflation no longer had anything to do with money supply. Free Press never bought it.

The truth is there was massive inflation, but it all went into assets, especially property. Now that’s peaked, and the inflation is showing up in day-to-day prices. Yesterday Free Press saw a piece of broccoli for $4.50. At that price, kids might not be forced to eat it after all.

One way to think about the inflation we see is this: It’s a five per cent COVID tax on everything you buy. If the Government put up GST by five per cent to pay for COVID there would be an uproar. Inflating away the debt is less honest, and it amounts to the same thing.

The cost-of-living pain is part one of the COVID hangover. Part two is the battle to contain inflation. As former Reserve Bank Governor Don Brash has said, you should never let inflation get away from you. Chasing it from behind means raising interest rates just when people are facing high prices at the checkout and the pump.

Rising interest rates, in turn, put extra pressure on the housing market. Collapsing house values bring their own kind of headache, as people struggle for credit to keep their businesses afloat. For the first time, a housing correction has become the consensus instead of a perennial speculation.

Above is the macro story. There’s also the tangible world. That world’s made up of people who spent 20 years building up their business, only to find all their equity gone. It is not only heart-breaking but strikes at the heart of the Kiwi dream. The more who fail in one generation, the fewer will try to succeed in the next.

Not everything is about money though. By October last year it was estimated 81,000 had delayed medical procedures thanks to COVID. ACT Deputy Leader Brooke van Velden revealed thousands of women had missed breast cancer screening. The Government freaked and cancelled screening for one of the biggest annual killers of New Zealanders. It goes on.

Kids in Auckland missed half a year of school. For kids with good digital connectivity, parents at home, and perhaps private schools, it won’t make much difference. For kids with little to no internet, parents out working shifts, and disorganised schools, the impact will be life changing. Free Press hears it’s already showing up as last year’s NCEA results get reported.

Then there’s the division and loss of trust and capital after the Government used fear as a tool of control for two years. New Zealand is now a country you can be locked out from and you have no right of recourse. Anyone can put Government controls in place, the hard part is dismantling them.

The year of the hangover is going to be a tough one, but we know how we want to emerge: We need a firm commitment to restoring our freedoms. With the virus set to peak and die out, the restrictions should die out with them. We need a commitment to trading our way out of the debt. We need to ask, will this rule, regulation, new bureaucrat, or use of taxpayer money make the boat go faster? If not, don’t do it.

There has never been a more important time for real leadership. We don’t just need to get Jacinda out of the Beehive, we need to evict her worldview and way of thinking. I hope you’re with us.