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  • Robert MacCulloch

Leaders Debate: A DownToEarth Verdict

It was always going to be difficult for both the Prime Minister and leader of the Opposition to debate their respective reform plans in the face of the virus crisis when they both don't have ones. The PM wants to evaluated on how she has done over the past few months in terms of "eliminating" the virus and the Opposition leader wants to argue that her party is the better economic manager. Most remarkably, in the midst of the greatest health crisis to hit the world in a century, neither of the two leaders had a single bone of a plan to reform our health-care system, which is afflicted by waiting lists, delays and demands for access to better drugs. Since when did all of our health-care concerns come down to catching a single bug, called Coronavirus?


In the last few minutes of the debate, the leaders summed up. Their two speeches were practically indistinguishable. The left is offering a small tax increase and the right a small temporary tax cut. Both sides don't want to talk about how to prioritize public spending in a time of crisis. The PM mentioned the benefits of the winter energy payment. However that subsidy is paid to everyone, including the wealthiest people in the country. Is that a priority when resources are scarce, quarantine places are limited and hospitals are struggling? Whacking higher taxes on those earning over $180,000 as the PM has proposed, only to recycle the funds back to those on over $180,000 makes little sense.


Both leaders argued they had a plan, yet the thrust of both plans was infrastructure. Most of the projects wont start until many years in the future and it's not clear from where the workers can be found. The unemployment rate remains quite low, at around 4%, and borders will be tightly controlled for the foreseeable future.


The debate possibly revealed a certain misunderstanding about the nature of the Covid-19 recession in NZ. It is not similar to a 1929 Great Depression-style downturn which was precipitated by a share crash, leading to a collapse of confidence and unemployment rates of over 20% in the US. The Covid-19 recession is a recession by design. People stayed at home knowing that it would lead to less production, but that was their preferred option to spreading the virus. The wage subsidy was a hastily put together insurance scheme akin to disaster insurance. People now want to go back to their jobs, which are largely intact. There has been no generalized collapse of demand like there was in 1929. The issue is that some sectors, like tourism, may see a medium to longer term downturn in favor of other sectors. Dealing with those kinds of structural shifts should be a focus of public policy.