New Zealand should be borrowing money from overseas to fix up its infrastructure, says Newsroom Pro managing editor Bernard Hickey.
The Government’s caution to borrow in the 1990s was warranted based on overall debt, explains Mr Hickey, but such a mindset has dominated the Government for far too long.
“We’ve paid that back, largely. Even the household sector doesn’t have much debt now.
- Labour will increase debt 'to meet its promises'
- Auckland fuel tax hikes to give people travel options – PM
“We’re still thinking like we’re in 1994.”
Overseas investors wouldn’t hesitate to lend New Zealand money to help fix its crumbling infrastructure, says Mr Hickey.
“They would lend us $10, 20 billion at the drop of a hat.”
According to Mr Hickey, New Zealand would enjoy a cheaper interest rate to than offered to the US. While the US has long been offered cheap interest rates, he says that’s no longer the case because of Donald Trump’s international reputation and borrowing behaviour.
We’re still thinking like we’re in 1994.
And borrowed money would essentially pay for itself, explains Mr Hickey.
He points out that better infrastructure would allow Kiwis to live more efficiently, reduce traffic, keep children from getting sick, among other benefits.
“We’ll be able to be more productive and we’ll generate more economic growth,” he tells RadioLIVE.
The business journalist suggests the Government use the tax revenue from its economic growth to help pay off the 2.8 percent interest rate on borrowed funds.
With New Zealand’s net debt being significantly lower than both Australia and the US, Mr Hickey argues that now is the time the Government ditches its outdated mindset on debt.
“We have a Government right now that, for some bizarre reason, is locked into the thinking of 1994.”
Listen to the full interview with Bernard Hickey above.
Morning Talk with Mark Sainsbury, 9am - 12pm Weekdays and streaming live on 'rova' channel 9 - available on Android and iPhone.