Winston Peters: What happened to the $14 billion Covid recovery money?

In June 2020, when still in government, New Zealand First wrote to Minister of Finance Grant Robertson in response to his request for spending proposals, as part of a third tranche of Covid stimulus spending.

There was still unallocated $20 billion in what became a $74.1 billion Covid Response and Recovery Fund.

We urged the Minister of Finance to keep further spending tightly targeted to meet only the stimulatory demands of the economy, which we asked him to explain.

Six billion dollars of further Covid-related spending would be allocated out of the $20 billion. We had no issue with it because that spending focused on income relief payments, extending the wage subsidy, extra PPE, and other Covid-related health needs.

It was necessary spending.

We left office in October with $14 billion left in the Covid fund. We argued in our letter for prudent stewardship of public money in the event of a future shock.

Minister Robertson agreed and, in his public announcement, said the remaining $14 billion in the fund was being set aside for such a purpose. To quote the Minister, “The fund is not there to be used for any old project in the never-never.”

Now, Cyclone Gabrielle wreaked deadly havoc on people, property, and essential infrastructure.

So where is that $14 billion contingency fund set up to meet the fiscal demands of a future disaster? It’s been spent, contrary to what was agreed in Cabinet when it was set up.

If that $14 billion worth of spending had been solely Covid-related then so be it, but the connection between the virus and cameras on fishing boats, prohibitively expensive free school lunches, or a billion-dollar-plus “Jobs for Nature” programme, and ongoing cost of living payments and fuel discounts into the never-never, well, is not obvious.

The Auditor-General shares my concerns.

In May last year, he expressed them in a letter to the Treasury, citing a lack of accountability for spending in response to the pandemic, finding financial reporting requirements not good enough to provide Parliament and the public with sufficient information about the fund’s expenditure, with implications for the Crown’s fiscal position and public debt for years to come.

Then in November, he wrote to Parliament, that “reporting on new initiatives is not currently adequate in providing Parliament with the information needed to hold Government to account for the spending of public money”.

The Auditor-General specifically cited Covid-19 spending when highlighting his concerns.

Now, having frittered away $14 billion, alongside specious spending on consultants for a cycle bridge to nowhere, a failed ideological merger of RNZ and TVNZ, and ever-increasing fiscal madness of Auckland light rail, we are expected to believe the Minister of Finance’s assertion, in the wake of Cyclone Gabrielle, that new monies raised will see his government “clear and transparent about where it’s going”.

Well, if you believe that in an election year, I have a cycle bridge to sell you.

New Zealand is facing an economic inflexion point. We have raised over $70 billion of debt fighting the Covid disruption. Reclassification of debt may make the debt-to-GDP ratio look healthier but the country needs a government that will exert greater transparency and fiscal discipline.

Given our urgent need to better prepare for future weather events, we can no longer afford the slack, untargeted, and politically-driven spending we’ve seen the past two-and-a-half years as Labour became untethered from the fiscal scrutiny previously supplied by its coalition partner.

New Zealand First supported the Zero Carbon Act because it accepts climate change. But from the beginning, we argued that leadership in this space should not be international virtue signalling to tone-deaf China, United States, European Union, India, and Russia, but doing New Zealand’s share commensurate with our 0.17 contribution to global warming.

Events show that we need another hard conversation about where to best direct the country’s scarce resources.

Yes, we need to mitigate against a warming world, but Gabrielle reminds us that we have to urgently fund an infrastructure transformation greater than anything since the Julius Vogel era of large-scale future-proofing.

The cyclone has brought the current fiscal and climate change policy settings into stark relief. We can all agree on the ends we seek, but the means are absolutely in dispute because we are no longer the rich, first world country of years past.

Most New Zealanders feel we’re going backwards, held back by the disastrous effects of inflation, cost of living pressures and in a country increasingly divided about whether it is travelling together as one, or separately.

Imagine if the $14 billion fund was still there to meet its purpose, helping to pay for a future shock, which, along with insurance monies, would have saved taxpayers from what they now face – more debt or higher taxes.

Working people can’t afford any more of Labour’s poor-quality spending and woeful delivery.

If past behaviour is the best predictor of future behaviour, there is little confidence the next huge wave of Government borrowing and spending will be either transparent or effective in meeting the huge infrastructure challenges we face, let alone the expectation that all New Zealanders rightly share, of a better, more prosperous life for their children.