Debt bomb for your children

Labour Finance Minister Grant Robertson says that over the coming decades billions of dollars of tax revenue will be used to pay off bank loans taken out by the government to fund its Covid-19 economic rescue packages.

Chris Leitch, leader of the Social Credit Party, estimates that $5 billion of tax revenue will be spent every year on interest payments – money, he says – that could just as easily be borrowed from the country’s Reserve Bank at no cost to the taxpayer.

Robertson said Monday 17 August: “Certainly that idea has gained a bit of currency around the world, but I am still confident that we have a system in New Zealand where we’ve got a functioning bond market where debt is managed well.”

Leitch says: “[Robertson] is clearly happy that funding of the rescue package will continue to be done through an economic merry-go-round that will see a massive transfer of wealth from ordinary Kiwis to the mainly overseas shareholders of the country’s banks and investment funds.

“Kiwis will be saddled with massive additional debt and interest payments when it could have cost nothing – freeing up tax dollars for health, education, housing and infrastructure.

“The Reserve Bank could directly fund the government requirements without incurring any cost to taxpayers – something called for by BERL chief economist Ganesh Nana.”

See our story: How money is made


Steve Hart is a writer and podcaster.