Taxpayers Will No Longer Be Treated Like ATMs: New Zealand PM

New Zealand Prime Minister Christopher Luxon delivers a speech during the National Party Annual Conference at Michael Fowler Centre in Wellington, New Zealand, on June 25, 2023. Hagen Hopkins/Getty Images

New Zealand Prime Minister Christopher Luxon, just 81 days into his first term, has twice characterised the country’s economy as “fragile” in his State of the Nation speech.

He warned this was going to force his government to make “tough choices,” and highlighted his intention to tighten the rules around social benefits, particularly targeting those who had been on welfare for many years.

Recent actuarial modelling predicted beneficiaries could spend up to 13 years receiving state assistance.

“We do everything we can to help people into work, but if they don’t play ball, the free ride is over,” he said. He described the policy as “tough love.”

“Not everyone will like it, but I think Kiwis need a prime minister that levels with them, and is straight up about the state of the nation and where we’re at.”

Mr. Luxon’s centre-right National Party received the majority of the votes in the nation’s October 2023 election, ending the six-year term of the previous Labour government.

‘Taxpayer ATM’ Culture Over

Mr. Luxon placed the blame for the problem at the feet of the previous Labour government, whom he said “treated us like a country that had lost its mojo. And because of that, we did.”

While pledging to fix education, health, and welfare, he also promised that “the culture of treating taxpayers like an ATM is over.”

The economy, he said, was being held back by “too much wasteful government spending,” noting it had risen by 84 percent since 2017, while debt climbed from $5 billion (US$3 billion) to a projected $100 billion-plus.

“We need to get the public finances back in order. That means a return to the orthodoxy of tight budgets, careful stewardship of public money, and a determined focus to keep or return the books to surplus. Strong public finances aren’t enough of course to deliver a strong economy in their own right—but they are a critical pre-requisite,” he said.

Low Productivity an Issue

However, he admitted that, “The long-term performance of our economy is also a major problem,” noting that New Zealand’s economy was now less productive than “vast swathes of the former Eastern Bloc, including Poland, Slovenia, Slovakia, and Lithuania.”

The median full-time worker in Australia now earns $20,000 more a year than someone in New Zealand. The prime minister said it was “no surprise ... that Kiwis have been voting with their feet. Last year, a record net 44,500 New Zealanders left the country.”

“It is only through a strong economy that we can end the cost of living crisis, lift incomes, and give those Kiwis a reason to stay in New Zealand,” he said.

Notably, Mr. Luxon made no mention throughout the speech of National’s coalition partners ACT and New Zealand First.

Aside from targeting beneficiaries and reducing red tape for new infrastructure projects, it was also light on detail.

Mr. Luxon later admitted to reporters that the government was yet to explain how it would finance New Zealand’s major infrastructure shortfall and admitted that funding “is a major barrier.” He promised a detailed plan would be released later this year.

Opposition Labour leader Chris Hipkins rejected Mr. Luxon’s criticism, telling journalists the National Party may not have read previous Budget documents.

“The reality is, New Zealand’s economy is actually in a recovering stage after the global pandemic, as many economies around the world are,” he said.

He also accused the government of dividing the country and making vulnerable communities “more isolated and more discriminated against than they ever have been before.”