THE GOVERNMENT'S austerity agenda has always been an act of political theatre, but the latest announcement from Finance Minister Nicola Willis pushes that theatre into outright farce. Today’s declaration that thousands of public service jobs will be slashed—an estimated 8,700 roles in total—is being sold as fiscal responsibility. In reality, it is a deliberate political choice that will deepen unemployment, undermine essential public services, and inflict real harm on thousands of families already struggling in a period of rising economic insecurity. Behind every 'efficiency saving' is a person who will lose their livelihood, a household that will lose stability, and a community that will lose capacity.
The Government insists its hands are tied. It claims that the previous Labour Government left the books in such disarray that swinging cuts are the only option. This narrative is repeated endlessly: New Zealand is 'flat broke', the cupboard is bare, and the only responsible path is to shrink the state. But this is a myth—one that collapses under even the most basic scrutiny.
Economist Susan St John has been a clear voice exposing the intellectual dishonesty at the heart of the Government’s argument. The supposed 'fiscal black hole' only appears when the Government conveniently excludes the assets of the New Zealand Super Fund from its preferred measure of net debt. Those assets are projected to reach $104 billion by 2028/29 and grow to around 40 percent of GDP by 2036. Internationally, the IMF does include NZ Super Fund assets when assessing net debt, and under that measure New Zealand is not a high-debt country at all. It is, in fact, one of the lowest public-debt countries in the developed world.
St John asks the obvious question: how can excluding the NZ Super Fund from net debt calculations possibly be justified? For a time, Labour used the correct measure. National abandoned it. Was this simply to manufacture a sense of crisis and justify lower public spending? It is difficult to avoid that conclusion. When you remove tens of billions of dollars from the balance sheet, of course the numbers look worse. But that is not economic reality—it is political manipulation.
Commentator Bernard Hickey has made similar points in conversation with Stuff columnist Verity Johnson, noting that the Government’s narrative of scarcity is a political construction, not an economic inevitability. The insistence that 'there is no alternative' to austerity is not a neutral assessment of fiscal conditions. It is a defence of entrenched interests. It protects wealth at the top while shifting the burden onto those least able to bear it.
Because the truth is simple: austerity is always a choice. It is never an inevitability. A government that wanted to maintain public services, invest in people, and strengthen the social infrastructure of the country could do so. It could raise taxes on the wealthy and on large corporations. It could close loopholes, regulate financial institutions properly, and ensure that those who profit most from the economy contribute proportionately to its upkeep. It could invest in job creation rather than job destruction. It could choose a different path.
But this Government will not. And the uncomfortable reality is that a Labour-led Government would almost certainly not select that path either. The grip of neoliberal orthodoxy on parliamentary politics remains iron-tight. It is not so long ago that the Ardern-led Labour Government pursued its own version of austerity—freezing public sector wages, underfunding essential services, and refusing to consider meaningful tax reform. The Green Party, despite its rhetoric, ultimately acquiesced. There is no reason to believe that a future Labour-Green arrangement would behave differently. The boundaries of 'acceptable' economic policy remain policed by the same assumptions that have dominated since the 1980s: low taxes, small government, and the belief that the market knows best.
This is why the current moment feels so bleak. The Government is inflicting deep cuts on the public service at the very moment when unemployment is rising, when families are struggling with the cost of living, and when public services—from health to education to welfare—are already stretched to breaking point. Yet the official opposition offers little more than a gentler version of the same framework. The political class debates the pace of austerity, not its legitimacy. They argue over the size of the state, not its purpose. They quibble over fiscal rules while ignoring the human consequences of those rules.
Meanwhile, the public is told to accept the unacceptable. We are told that job losses are unfortunate but necessary. We are told that public services must shrink because 'the country can’t afford them'. And we are told that inequality is regrettable but unavoidable. But none of this is true. These are political decisions dressed up as economic inevitabilities.
The tragedy is that New Zealand is not a poor country. It is a country with immense wealth—just not shared wealth. It is a country with the fiscal capacity to invest in its people—just not the political will. It is a country where the economic debate has been narrowed to such an extent that even modest alternatives are treated as radical.
The Government’s austerity programme is not about balancing the books. It is about reshaping the state to serve the interests of the wealthy and powerful. It is about weakening the public sector, undermining collective provision, and entrenching a model that has already failed generations of New Zealanders. And unless there is a political force willing to challenge that model—not just rhetorically, but structurally—the cycle will continue.
Austerity is not a necessity. It is a choice. And it is the wrong one.
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