National Government will have increased gross debt by over $100b – Who benefits ?
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- Date published:
4:02 pm, August 19th, 2025 - 19 comments
Categories: Christopher Luxon, Debt, debt / deficit, Economy, economy, grant robertson, infrastructure, jacinda ardern, labour, national/act government, nicola willis, Propaganda -
Tags: disinformation, Misinformation
First, there is nothing inherently wrong with government debt. It’s what we do with it that matters.
In 2023, government debt across OECD countries averaged 110.5% of GDP. New Zealand remained one of the lowest.
Net debt i.e in a simple sense, debt – assets (e.g your debt minus what you have in the bank), the traditional measure used as an international standard, even lower –
Source: Treasury 2023
It’s very important to note here that there’s nothing inherently wrong with government debt – it’s the quality, nature and direction of it that really matters.
However, our national dialogue has been hijacked to suggest that any and all government debt is “bad”.
Nicola Willis even changed core debt measures to make it appear much, much worse than it really is.
Susan St John CNZM QSO:
“In the 2023 budget, financial assets including assets in the NZ Super fund, were netted off [as is standard in global calculations].
From about $15 billion in 2019 or 5% of GDP net debt was projected to become nearly $100 billion by 2024 or 25% of GDP.
By the 2024 budget however, a different measure of the net debt called net core Crown debt was adopted. This measure excludes the assets of the NZ Super Fund and the debt grows from 20% to 45% of GDP over the same time period.”
Using her new measure, Nicola Willis then claimed:
“The previous Government’s spending decisions during and after Covid have left New Zealand with a sea of debt and red-ink in the government finances.…To give you some further historical context, New Zealand’s net core Crown debt, which once hovered between five and 25 per cent of GDP, rose to around 42 per cent last year.”
It’s very typical of the National Party to play this game, and in my view, very dishonest.
Let’s review another economist’s comments on government debt.
Ganesh R Ahirao explains in this article and/or in his excellent Q&A interview –
“The government’s job is to enable the myriad of factors that are critical to the functioning and advancement of a society, including those of future generations…
While… government debt is passed on to our children, so is …the equivalent asset.”
That is, debt can be used to enrich, enliven and acquire a productive, healthy and burgeoning country – one in which we can enjoy, and representative of generational wealth.
And the importance of doing so is amplified within inflationary environments whereby the cost to acquire today out-performs doing so tomorrow.
A good example of this is the i-Rex ferries that National lost $671 million on. Where we acquired fixed price ferries at 40% of the market price during Covid, to acquire an equivalent future proofed boat will cost 100% if not more today. I acknowledge NZ First and National can play games here and acquire less able boats and infrastructure that will require re-investment sooner and hide upfront costs through higher maintenance/operational/replacement costs.
Other good infrastructure examples:
- Bridges are now ~40% more expensive to build compared to a few years ago – same with water supply and sewerage systems.
- 3 Waters was estimated at around $85b when National Party proposed it in 2017. Now it’s estimated at $186bn – and that debt continues to rise and the infrastructure continues to deteriorate!
So when we hear the National Party and/or its affiliate ideology commentators crowing about debt, it’s critical we look under the covers and listen to people like Ahirao and St John who can point out the nuances and differences to us.
And remember that Nicola Willis’s debt presentation is fundamentally dishonest.
Yes, government debt in itself is not a negative in and of itself and it should not be run like a household as it’s fundamentally different in objective, nature, scope and capacity
Second, on pure numbers alone, National Party led government will increase gross debt by $110b in its first five years
Yes – National will increase gross debt by $110b in 5 years.
That’s 125% of Labour’s debt over 2 full terms of government i.e. 6 years.
With their pay equity “savings” they sneakily stole from claimants, many whom were near completion, National increases gross debt by ~$100b.
These are not my stats – they are confirmed by right wing commentator Matthew Hooton.
And subsequently by Nicola Willis herself.
Both of these numbers surpass Labour’s apparently “scandalous” gross debt increase of $88bn over 6 years – of which ~$70bn was a Covid package to save lives, support education, and prop up the economy during a black swan global pandemic.
Right now, as we speak, National is spending more than Labour ever did, even as it cuts funding in multiple directions (including police), and is actively privatising our healthcare and putting our science, environment, vulnerable community, Māori communities, and educational institutions etc. at risk.
Yes while the last government invested and sought to build, invest, and protect, this one is flittering it away for select donor interests.
Yesterday it was announced central government debt rose by another 11% year on year under National.
Again – there is nothing inherently wrong with debt.
It is how you use it that matters.
But given National’s frequent attacks on Labour for their debt levels, and most importantly, the fact that National’s debt is not conducive to the public good nor building up critical services e.g. health, infrastructure, education etc. but rather serving landlords, tobacco companies, and fossil fuel multinationals, it is a heavy mark against this government.
i.e. It is not Kiwis who are benefiting from National’s debt and that’s how we evaluate the quality of government debt.
Mountain Tui
Business leaders concur: Debt is not the problem, it’s what you do with debt that matters
Financial commentator Bernard Hickey once said that Kainga Ora could be viewed as a “stonking financial success”. As usual, Hickey hits the mark.
A 25% debt ratio returned 100% quality, well built, houses for future generations.
And as former Board member Philippa Howden-Chapman clearly articulated:
“Has anyone ever bought a house or built a house without doing any borrowing?
The money doesn’t come off trees.
In fact, [because of Kāinga Ora].. – the state owns – 72,000 houses and they are worth close to $40 billion… We have one of the lowest debt rates against asset capital – much lower than, in fact, that the Reserve Bank recommends.”
Yesterday ANZ Chief Economist Sharon Zollner told NZME:
“It’s worrying if [government debt] is getting frittered away [under National], instead of going into key things like infrastructure.”
Because again – government debt is a healthy function of responsible governments when it comes to building the nation, restoring infrastructure, enabling conditions for employment, supporting health, education, social cohesion, security, saving lives etc.
And, government debt is significantly cheaper to everyone than private debt.
We all know we’d rather go to Provider A if they offered us a 1% lower interest rate on our debt than Provider B.
So why do we ignore private debt and only focus on government debt?
The truth is it’s a manipulation and one frequently practiced by right wing aligned individuals and commentators.
It’s also why Labour will come up against problems as this populist narrative has overtaken NZ in the last few years, and perpetuated by those featured heavily in media.
In Australia, Rupert Murdoch aligned media hasn’t been able to capture the narrative in the same way, and it’s not for trying, in my view.
The National Party and ACT operate along a US GOP aligned libertarian ideology, as I’ve written about many, many times before.
Willis, Bishop, Stanford, Brown and Luxon etc axed major infrastructure programs1 as soon as they got into government – including, but not limited to, 3 Waters, Let’s Get Wellington Moving, Auckland Light Rail, school builds, hospital builds, cycleways etc.
They also cut jobs, cut support, cut wages, cut cohesion, cut science, cut environmental protections.
No wonder people are struggling!
Finally, National has not only created an ideological wrecking ball. It’s so called “great plans” are incomparable to Labour’s historical investment
After crashing the construction sector rapidly, Luxon defended his government’s actions by saying National would soon commence a large pipeline of largely unfunded infrastructure work.
However, he refused to answer if the 2026 spend was larger or smaller than 2023 infrastructure spend three times.
Gerry Brownlee has to save him under questioning from Hipkins –
And as Chris Bishop keeps telling us, they want us to pay for it anyway – just through more expensive private debt and “user pays”!
So when National attacks Labour for borrowing, remember to give them the facts.
And remember what National is really about – privatisation and sell offs while claiming it’s the party of low debt and taxes
That “low debt” they claim is simply a game of transferring that debt onto Kiwis via private debt.
Last year, respected infrastructure leader Sean Sweeney warned Kiwis that so-called PPPs (private public partnerships) are no cheaper than government projects.
In fact, he pointed out that in Australia, those PPPs are all coming back to the government for handouts.
But all that doesn’t matter to this government.
Nicola Willis wants to sell off Kiwibank and privatise en masse if they win a second term.
Luxon already gloated about this “opportunity” last year. And Chris Bishop confirmed it again this year.
This term they want to sell “lots of land” and houses to foreigners and encourage bolthole residence for the uber wealthy.
That’s all the right parties have got really – selling the family goods. Once gone, it’s Kiwis who will pay for perpetuity.
Share the facts to counter the misinformation out there. Help each other stop them.
This article is a reprint from the Mountain Tui substack
Susan St John could also have mentioned the $51.6 billion fund that ACC has under management. And they return about 7.5% off this which isn't exactly aggressive.
ACC8706-Financial-Condition-Report-2024.pdf
We also forget to mention that all of ACC's accumulation of funds, is stolen from levy payers and claimants.
Another indirect addition to private debt.
Another extra expense, and drag, on the economy as a whole. Like power prices.
ACC was never meant to be "like a private insurance company". The whole idea of "funding past claims" is bollocks. ACC claim costs are relatively constant. Unlike EQC which needs to have a fund to cover unexpected storms and Christchurch earthquakes.
Imagine if levies were set to actual claims costs and ACC was covering claims properly. ACC could then be extended to sickness etc, as originally intended, without huge rises in levies.
National fattening ACC up for sale is the real reason it is accumulating capital,
Thank you for the work you do Mountain Tui. It is good to be able to refute the lines of spin with facts.
MT, another informed and informative Post ! Power to your E-Pen : )
With this kind of exposure,and more, surely the Economic bullshittery of the Nat and cronies coalition cant survive ? With a patently inept Finance Minister..(IMO Willis really seems to make it up as she goes), NACT1 are literally selling our country down the river : (
Re your
And having known of similar in the past Queenstown/Wanaka (incl the Suharto family of bloody hand infamy), I am sure Money will be the only criteria.
https://www.scoop.co.nz/stories/PO0005/S00043/foreign-affairs-take-narrow-view-of-suharto-assets.htm
We must vote them out. To save NZ.
Keep up your awesome work !
An excellent/well articulated piece..that totally punctures that b s. debt-balloon flown so successfully by the tories…
And it raises the question…why have labour been seemingly unable to articulate the rebuttals to the b.s. you detail ..?..and have just let it become a given for so many (as you noted)
They seem to treat the issue of debt as a third rail…a subject to duck and run from..
..which just feeds into the Tory story…
(Maybe you could offer to do a workshop for them..?…coach them in the arguments..)
Tory soundbites are short and repetitive.
Unfortunately the level of detail in this piece isn't short. But Labour in particular should have had short rebuttals in place 18 months ago.
Agree totally Philip. The parties of the Left have been pathetic at pointing out the lies Willis is telling about debt, spending and other financial indicators.
They need a specific minister, presumably shadow Finance Minister Barbara Edmonds, to be jumping down the media's throat with a detailed rebuttal every time Willis lies.
Aye ..!
So the situation now is that most punters believe that labour threw around money like they were one armed paper-hangers…
(And while I would agree that labour only took care of the big end of town..and that their largess towards them differed sharply to their help for the poor end of town…clearly showing their neoliberal drivers..but that's my bitch..)
The major worry for labour must be that spendthrift halo they now wear…
…and they have been pretty much pathetic in their efforts to counter this b.s…
..are they hoping to do that in the chaos of the election campaign..?..if so. .they need their heads read…
And then there is the simplistic/unthinking reactions of the media…when the tories have been peddling this spin…
They just seem to nod along… thinking of their next question..and seemingly unable to have the nous/knowledge to be even aware they are being spun ..let alone how to counter it….so the fails of both labour and the media have led us to this situation.
I am unsure what labour are waiting for ..
..the tories have given them so much ammunition…and they have pretty much left that ammunition unused…
Ya hafta say…w.t.f..!
Yes ACC and the NZSF have a huge combined amount of assets– around $130b. The difference is that the outstanding claims liability offsets ACC assets on the Crown's balance sheet.
BUT ACC is social insurance like NZS, not private insurance so it is arguable that this OCL should be there. More work needs to be done to see if how we are treating ACC and its assets and OCL are appropriate.
Thank you.
This post proves we need immediate and independent fact checking of financial statistics put forward by all political parties during next year's election campaign.
I think this is exactly right.
The real challenge is that most people’s understanding of economics stops at a high school or even primary school level, and that makes it easy for bad-faith narratives about “debt” to take hold.
The story we need to tell is much simpler: not all debt is bad, and not all debt is equal.
One analogy I like is this:
If we can frame it like that, in terms people already understand, we can start to cut through the noise and counter the manipulation.
The real reason that National flogged off the car to a mate is because it’s convinced that learner drivers and amateurs shouldn’t own a car, only qualified professional drivers. The former get in the way of the latter and slow them down too much.
When you say something would cost x now and x then, that just means budgets would blow out. That's the reason the ferries were canceled.
Final cost estimate November 2023: $3bn i.e. Government only needed to stump up $1.4bn – https://newsroom.co.nz/2024/02/16/questions-over-costs-to-shore-up-inter-island-service/
In addition Willis ignored all advice which included more cost effective options and choices, but she didn’t even bother looking into it and threw away $1000 million for nought.
The boats would have been here this year and next. Now NZ has no rail enabled ferry capability and threw away about $1b in the process once you factor in maintenance, ferries at 40% of market price, future proofing, fixed cost breakages etc.
And that IMO….seems just fine by the Nat's and NACT1 coalition. National has never been too Rail Friendly.
FYI if interested, I have some Rail Related Links ? You might well have them already….
This last one contains a PDF with comparison Info, which while older, is still IMO, very interesting.
Thank you PsyclingLeft.Always. I appreciate it.
Do you remember there was a report that showed National never planned for any South Island rail budget too?
I think that part-reason was to create a narrative that the previous government were wasteful, ignorant, and poor managers of the economy and taxpayers’ money and that the new lot were so much better in every aspect.
The narrative is very successful – many of their voters believe it and someone just said it yesterday in a public spot: "Well at least National are doing to get us back into surplus and don't throw money away like Labour."