Labour Leader Chris Hipkins gave a stirring speech over the weekend ahead of the election in 137 days time, pledging a warm home, secure jobs and accessible healthcare for all. He even declared ‘Neoliberal, trickle-down economics is a hoax.’ But he remains wedded to neoliberalism’s guide rails in New Zealand - the 30:30 rule limiting the size of Government and public debt to a third of GDP. Without disavowing this bipartisan compact to always put a sinking lid back on the size of Government as soon as a crisis is over, Hipkins’ rhetoric is empty and performative. (See more below and in the video and podcast above.)

Elsewhere in the news this morning:

* Prime Minister Christopher Luxon admitted last night he was unaware Auckland doesn’t have a night shelter open after 5pm, but he said he was comfortable with his Government’s housing, despite record-high homelessness;

* A blood cancer specialist is migrating because he says a lack of specialists is making it too dangerous to work here; and,

* Nurses at the Hutt Hospital are in despair over leaks and building problems after decades of underinvestment in new facilities and maintenance, thanks to the 30:30 rule. (See more below in my Picks n’ Mixes)

Hipkins’ pitch is empty & performative, for now

Labour Leader and former PM Chris Hipkins was successful on Sunday in firing up Labour’s troops before the election on November 7, clearly identifying the frustrations of voters after years of real wage deflation and an exodus to Australia for a better life.

Here’s a sampler from his speech to Labour’s Congress in Wellington, which drew the calculated calls, responses and standing ovations (highlighting mine):

Are we ready? The fight is on! In just 137 days, we go to the polls and we choose our future.

We can choose better jobs, affordable healthcare, and household bills you can finally pay - a government that backs you to build your future here.

Or we can choose more of the same: more broken promises, more cuts, higher costs.

Hipkins went on to articulate the hopelessness many feel was leading to the young leaving:

We’re not going to accept higher costs and lower wages. We’re not going to watch more and more of our friends and neighbours packing up and leave.

Because Kiwis have been doing the right things for years and getting the wrong results. That isn’t a problem with how hard they’re working. It’s a problem with the system.

Neoliberal, trickle down economics is a hoax. Smaller government just for the sake of it doesn’t give people more choices and more freedom, it takes those things away.

He then went on to describe an aspiration for a different economy and results for workers:

Our next Labour Government will lead New Zealand to become a magnet for talent, enterprise and innovation.

A country where the brightest minds want to live, where entrepreneurs want to build, where creators want to create, and where working people share in the rewards of success.

Not because we compete by lowering standards, but because we lead by raising them.

We’ll be a nation that backs its people, investing in skills, research, clean technology and high-value industries, so that ideas born here, grow here, and jobs created here stay here.

And then the wrap-up:

The Kiwi Dream has always been simple and powerful: if you work hard, you can build a decent life. A warm home. A secure job. Good schools for your kids. Healthcare when you need it.

Under Labour, that dream won’t be reserved for a few, it will be delivered for everyone. It comes down to this. Your job. Your health. Your home.

Not promises we can’t keep, but a practical, funded plan, ready to start the day after the election.

I won’t pretend we can fix it all straight away. We’ll focus on what matters most, and we’ll deliver it.

Easing the pressure you’re feeling right now, while we build a stronger economy that lifts everyone over time.

How can you promise those things with the same Budget policy?

Those are all fine things to say, but could only be meaningfully achieved with fundamental changes in the tax incentives for saving and investment, along with a much more muscular approach to using the Crown’s balance sheet to achieve those aims.

In my view, none of those can be achieved with the Budget Policy principles both Labour and National have agreed to in the years since the Public Finance Act was passed in 1989, which include “reducing and maintaining debt to prudent levels, and once those levels have been reached, running operating surpluses on average.”

Treasury has interpreted that to mean the Government must always try to get net debt down to around 20-40% of GDP, with a current cap of 50%, and to use the sinking lid of slower Government spending growth than nominal GDP growth to reduce the size of Government to 30% of GDP. That’s its definition of ‘reducing debt to prudent levels.’

This 30:30 has been the main tool of neoliberalism embedded in legislation, alongside the Reserve Bank Act (1989) and the State Sector Act (1989). For the last 35 years, Labour and National have both agreed to the 30:30 rule or a version of it with functionally similar numbers, after definitional shifts. The Green Party even signed up to it before the 2017 election, although it has since dropped its adherence.

No signs of dropping adherence to those fiscal rules

Hipkins did not specify Labour’s fiscal or Budget strategy in the speech, and Labour has been tightlipped about when it would release it. But one indication was given during the news conference after the speech (video below from 8 mins on), where he was asked where Labour would find the money to pay for pay equity deals. He said Labour would use the same $2.4 billion per year operating allowance used by National, which is itself one of the outputs allowed under the 30:30 rules, given Treasury’s economic forecasts.

Labour’s Finance Spokeswoman Barbara Edmonds also agreed to the same debt targets as National, in an interview with Tom Pullar-Strecker from The Post-$ in May last year.

Labour finance spokesperson Barbara Edmonds has confirmed in the run-up to Thursday’s Budget the party supports the existing cap on government debt recommended by the Treasury.

She also affirmed that achieving an operating (Obegal) surplus by the end of the Treasury’s forecast period, which currently terminates in the year ending June 2029, remained the appropriate goal.

Edmonds said Labour had agreed with the 50% cap when last in power and said it would continue to do so “unless Treasury gives us advice otherwise when we come into government”.

“It’s based on a number of pieces of advice. We clearly need to make sure we have fiscal headroom for ‘shocks’.” Finance Spokeswoman Barbara Edmonds in an interview with Tom Pullar-Strecker from The Post-$

Unless there is a massive about face from Labour in the coming weeks, it is in exactly the same position with exactly the same fiscal strategy as National. That would mean no room for extra state house building, little room for substantial pay equity upgrades, little room for increasing operational and capital spending on health, and little room for electrification.

Hipkins risks falling into the same ‘Third Way’ trap of UK Labour PM Keir Starmer, of promising many good things, but ultimately deciding pleasing the bond markets is more important.

My Picks n’ Mixes

Today’s Top Six Scoops and Breaking News

* Ethan Griffiths for NZ Herald: Three MPs rack up $20k in domestic travel bills in three months

* Giles Dexter for RNZ: National abandons 2023 campaign policy to allow KiwiSaver for rental bonds

* Chelsea Daniels for NZ Herald’s The Front Page: Luxon raises coalition doubts as Labour and Act unveil election priorities

* Stuff: ‘I’d be so embarrassed’: Shane Jones should pay back limo bill, says David Seymour

* 1News: ‘Health system is dangerous for Māori’ says Dr Lance O’Sullivan

* RNZ: Most households see an average 8% increase in power prices this winter

Today’s Top Six Deep-dives

* Ethan Manera for NZ Herald-$: Inside Andrew Little’s inner circle: The former Beeh...