Shamubeel Eaqub slams David Seymour's post-Budget comments calling them 'economically illiterate'

Economist Shamubeel Eaqub has slammed David Seymour's comments on Budget 2022, calling them "economically illiterate" and lies about the economy. 

Both Eaqub and ACT Party leader Seymour were appearing on the Newshub Nation Budget Special shortly after Finance Minister Grant Robertson unveiled his latest spending plan. 

Robertson's Budget was dominated by an $11.1 billion spend over four years to pay for Labour's health system restructure. 

There was speculation pre-Budget around whether Robertson would address the cost of living crisis many Kiwis are experiencing. 

StatsNZ recently revealed annual inflation in the year to March 2021 had risen 6.9 percent, the largest year-on-year increase since 1990. Rises in the cost of petrol, food and rent meant some Kiwis are spending $4-5000 more on those necessities than they were a year ago. 

Interest rates are also rising adding pressure on people's finances. 

Robertson announced an overall cost of living package of about $1 billion to be funded from the closure of the COVID-19 Response and Recovery Fund.  

Included in that package low and middle-income New Zealanders will receive $350 over three months. 

From August 1, roughly $27 per week will be paid out to an estimated 2.1 million Kiwis who earned less than $70,000 in the last tax year and are not eligible for the Winter Energy Payment. 

Seymour accused Robertson of putting half the country on welfare. 

"Unfortunately people who rely on working for a living are no better off and unfortunately somewhere called Australia just got a whole lot more attractive. 

"There is a failure to give hope that we have a real strategy to end the cost of living crisis," Seymour told Newshub Nation. 

The ACT Party leader hit back when asked if Robertson had at least in part addressed that crisis.  

"For everyone earning over $70,000 all you get is additional tax to pay for all additional expenditure that is going on," Seymour said.

But he saved his harshest comments when asked what ACT would do to address the crisis. 

Seymour said his party would curtail Labour's spending and cut back initially by $6 billion. 

"The more Government spend, the higher inflation we have… the higher the Reserve Bank is going to raise interest rates. 

"This insatiable spending appetite Grant Robertson has is a disaster for New Zealand, it makes me so mad actually that he hasn't been able to get over his ideological opposition to just letting hard-working people keep more of their own money."

Eaqub shook his head during most of Seymour's speech saying it made him angry to listen to, calling it "economically illiterate".

"It is not Government spending that is driving inflation. We had the UK hit 9 percent inflation yesterday because there is a global inflation crisis. 

"Yes, we should talk about inflation, yes, we should talk about Government spending but you can't just tell lies about what is going on in the economy.

"This whole thing that it is wasteful Government spending that is causing inflation is simply not true. 

"If you are ACT you can say there are parts of the spending that we don't like and we wouldn't do that because it doesn't add value, it is not efficient. That is fine.

"But don't do it on the basis of what I think we completely wrong things to say," Eaqub told Newshub Nation. 

Seymour has responded to Eaqub's comments, saying government spending in the UK has "just hit a trillion pounds, a year-on-year increase of 35 percent".

"He might want to read the Treasury's economic and fiscal outlook released today which says inflation is being driven by strong domestic demand i.e government spending," he told Newshub.

The Budget Economic and Fiscal Update (BEFU) says that domestic demand has pushed up against supply chain issues, which have "been compounded" by the Russian invasion of Ukraine. 

Seymour also pointed to comments by Reserve Bank Governor Adrian Orr, who earlier this year suggested a need for a change in government spending.

"We are going to have to be very clear with our fiscal authorities around what we are doing and how they could assist with more targeted, effective fiscal policies," Orr said.

He questioned why Eaqub made his comments, when "Treasury and the Reserve Bank agree with me".