1 00:00:00,040 --> 00:00:02,120 Speaker 1: Back to the Treasury report that lias by just how 2 00:00:02,240 --> 00:00:06,200 Speaker 1: ruinous they Adrean Hipkins Robertson campaign of spending was during 3 00:00:06,200 --> 00:00:08,119 Speaker 1: the last years in office. They ever cooked the books, 4 00:00:08,119 --> 00:00:10,960 Speaker 1: ignored official advice, and here we are still trying to rectify. 5 00:00:11,000 --> 00:00:13,600 Speaker 1: The mast titled Spain was sixty six billion, the second 6 00:00:13,680 --> 00:00:16,840 Speaker 1: largest fiscal intervention in the world of a twenty percent 7 00:00:16,880 --> 00:00:19,560 Speaker 1: of GDP. Doctor Eric Crampton is the chief economist at 8 00:00:19,560 --> 00:00:21,480 Speaker 1: the New Zealand Initiative and as Beck, well, this is 9 00:00:21,560 --> 00:00:24,200 Speaker 1: Eric morning, Good morning. I think most of us have 10 00:00:24,239 --> 00:00:26,400 Speaker 1: probably worked this out, but this is proof positive of 11 00:00:26,480 --> 00:00:27,600 Speaker 1: what a miss it was, isn't it. 12 00:00:28,640 --> 00:00:31,720 Speaker 2: Yeah, About half of the spending during the COVID period 13 00:00:31,920 --> 00:00:34,320 Speaker 2: really was not well targeted towards anything having to do 14 00:00:34,400 --> 00:00:38,000 Speaker 2: with COVID. It was largely wasted. There were warnings at 15 00:00:38,000 --> 00:00:40,199 Speaker 2: the time. Treasury could have been more forthright at the 16 00:00:40,200 --> 00:00:43,880 Speaker 2: time about those warnings. The document now is great. They're 17 00:00:43,880 --> 00:00:46,519 Speaker 2: putting up all of the problems that we had at 18 00:00:46,520 --> 00:00:49,239 Speaker 2: the time. If we go back in time a little bit, 19 00:00:49,880 --> 00:00:53,000 Speaker 2: in twenty twenty one, Treasury was saying pretty publicly that 20 00:00:53,159 --> 00:00:56,800 Speaker 2: fiscal policy was wonderful, that it should be included in responses, 21 00:00:56,960 --> 00:01:00,080 Speaker 2: they seemed to have forgotten the difficulty of scaling the 22 00:01:00,080 --> 00:01:02,960 Speaker 2: things back. It's great that they're remembering it now. I 23 00:01:03,000 --> 00:01:06,800 Speaker 2: hope that we remember it in future. The one really 24 00:01:06,920 --> 00:01:11,440 Speaker 2: useful recommendation in there is for an independent fiscal institution. 25 00:01:11,840 --> 00:01:15,759 Speaker 2: So this is something that the Initiative has been arguing 26 00:01:15,800 --> 00:01:19,000 Speaker 2: for for some time, and Treasury quietly makes the case 27 00:01:19,080 --> 00:01:21,280 Speaker 2: for in this piece as well, where they note that 28 00:01:21,880 --> 00:01:25,760 Speaker 2: Treasury's job isn't just doing forecasts and a little bit 29 00:01:25,800 --> 00:01:28,480 Speaker 2: of public comms around it. It's also to be a 30 00:01:28,520 --> 00:01:31,319 Speaker 2: trusted advisor to the Minister of Finance. So if the 31 00:01:31,360 --> 00:01:34,560 Speaker 2: Minister of Finance is doing something really dumb, it is 32 00:01:34,800 --> 00:01:37,760 Speaker 2: hard for Treasury to tell everybody that the Minister of 33 00:01:37,760 --> 00:01:40,200 Speaker 2: Finance is doing something really dumb because they have to 34 00:01:40,200 --> 00:01:43,280 Speaker 2: maintain trust with the minister. That means that we can't 35 00:01:43,319 --> 00:01:46,679 Speaker 2: look to them for the clear warnings that we need 36 00:01:47,120 --> 00:01:51,080 Speaker 2: for democratic accountability. You need to have a different agency 37 00:01:51,240 --> 00:01:55,560 Speaker 2: in that role, advising Parliament and the public more broadly, 38 00:01:56,080 --> 00:01:57,560 Speaker 2: when things are going wrong. 39 00:01:57,800 --> 00:01:59,520 Speaker 1: Who do you think is ultimately blind? Because one of 40 00:01:59,520 --> 00:02:01,920 Speaker 1: the great crisis at the time was they spent they 41 00:02:01,920 --> 00:02:04,200 Speaker 1: spent nine years in opposition on their hands, didn't have 42 00:02:04,200 --> 00:02:06,640 Speaker 1: a plan for government, then panicked and relied on officials 43 00:02:06,640 --> 00:02:08,440 Speaker 1: too much. So where does the blame lie. 44 00:02:10,280 --> 00:02:16,639 Speaker 2: The sorry the list of things that Treasury puts up 45 00:02:16,800 --> 00:02:20,560 Speaker 2: as the misguided spending, those look like political initiatives rather 46 00:02:20,600 --> 00:02:22,720 Speaker 2: than things that were coming out from the bureaus. There 47 00:02:22,800 --> 00:02:25,920 Speaker 2: was no if we think about the shove already jobs 48 00:02:25,960 --> 00:02:30,840 Speaker 2: program or shovel infrastructure program, if this had been something 49 00:02:30,880 --> 00:02:33,320 Speaker 2: that the bureaucracy had been sort of cooking up forever, 50 00:02:33,680 --> 00:02:36,160 Speaker 2: they would have had a list ready of things to go. 51 00:02:36,720 --> 00:02:39,919 Speaker 2: That clearly wasn't the case. Instead, it was politically driven 52 00:02:39,960 --> 00:02:42,519 Speaker 2: that we needed to get money out the door, and 53 00:02:42,840 --> 00:02:45,160 Speaker 2: there's sort of foot grounds around town trying to figure 54 00:02:45,200 --> 00:02:47,200 Speaker 2: out how to spend it. So that's not the best 55 00:02:47,240 --> 00:02:50,000 Speaker 2: way of approaching things, and Treasury says, well, maybe we 56 00:02:50,000 --> 00:02:53,280 Speaker 2: should be devoting this sort of thing to maintenance if 57 00:02:53,280 --> 00:02:56,560 Speaker 2: we're going to be doing it in the next crisis. 58 00:02:57,160 --> 00:03:01,400 Speaker 2: It looked some bits it did come from officials. The 59 00:03:01,520 --> 00:03:05,480 Speaker 2: wage subsidy scheme the first round through, It's hard to 60 00:03:05,520 --> 00:03:09,600 Speaker 2: fault anybody for the response up through even late twenty twenty, 61 00:03:10,320 --> 00:03:13,760 Speaker 2: they were doing the best that they could in remarkable situation. 62 00:03:14,800 --> 00:03:17,920 Speaker 2: They failed then to progress afterwards, and that'll be a 63 00:03:17,960 --> 00:03:21,839 Speaker 2: mix of blame between the political officials and the bureaucracy 64 00:03:21,880 --> 00:03:24,880 Speaker 2: that they didn't come up with something better than lockdowns 65 00:03:24,880 --> 00:03:27,400 Speaker 2: and wage subsidies. Come the next one, and. 66 00:03:27,360 --> 00:03:30,040 Speaker 1: The great question is going forward, and we'll probably never 67 00:03:30,120 --> 00:03:34,000 Speaker 1: answer it. Would a lesson like this be learned and 68 00:03:34,000 --> 00:03:36,320 Speaker 1: therefore or would depend purely on what sort of government 69 00:03:36,320 --> 00:03:38,160 Speaker 1: you have at the time. Appreciate your time, doctor Eric Crampton, 70 00:03:38,240 --> 00:03:40,400 Speaker 1: chief economist at the New Zealand Initiative. By the way, 71 00:03:40,880 --> 00:03:43,800 Speaker 1: for more from the Mic Asking Breakfast, listen live to 72 00:03:43,920 --> 00:03:47,000 Speaker 1: news talks it'd be from six am weekdays, or follow 73 00:03:47,000 --> 00:03:48,520 Speaker 1: the podcast on iHeartRadio.