Our nation and our community face some very difficult financial problems over the next few years. I am a fiscal conservative and concur with the Charles Dickens quote from 1850: “Annual income £20, annual expenditure £19 and 6s, result happiness. Annual income £20, annual expenditure £20 and 6s, result misery.”
New Zealand measures its international trade by the Balance of Payments that totals how much we earn from exports and spend on imports as well as services such as tourism. The latest figures showing a deficit of $30 billion are the worst in decades and the equivalent of $15,000 per household. It has deteriorated from $8 billion six years ago. We have a massive job ahead in growing our overseas earnings if we are to own our future.
I am equally worried about the deficits facing the new Government. The Government had a surplus of $5 billion ($2500 per household) in 2017/18 but has been running huge deficits with spending exceeding income by $9.4 billion ($4700 per household) in 2022/23. Net Government debt has increased as a consequence from $5.4 billion ($2700 per household) to $71.4 billion ($35,700 per household). That’s a 13-fold increase in debt over five years.
The Government deficits are a consequence of spending increasing 64%, from $99 billion ($49,500 per household) in 2017 to $162 billion ($81,000 per household) in 2023. Taxation also increased over these six years by 53%, but not enough to offset the increase in spending.
This national financial picture is a backdrop against which our Nelson Council faces its own challenges. They are not as dramatic but we, too, have been running deficits. We are yet to resolve how we meet the costs of the August 2022 storm event that has topped $70 million ($3500 per household). Council’s infrastructure, interest, insurance and audit costs are all up significantly. These costs and high inflation are contributing to Council facing the most difficult decisions on debt and rates in decades.
Council will be consulting in the New Year on our Long Term Plan 2024-34. The choices our country and community face are going to be difficult but change is required. We have to live within our means.
