We have to do it as households, so we should expect our Local and Central Government leaders to do the same.
It is our money they invest on our behalf for the benefit of our community as a whole, so we should insist on prudent and accountable investment - not willy-nilly spending.
Balancing the books and living within your means will be the focus we put on our elected and bureaucratic officials over the next three years.
Ratepayers and taxpayers will have less discretionary income as businesses cope with economic headwinds, made up of interest rate rises, wage and salary increases, supply chain issues which have resulted in holding higher inventory levels and thus stretching working capital, along with a myriad of other cost pressures.
Businesses will be right sizing their companies this year and next, in order to meet the changes in demand required by the Reserve Bank and increased government regulations. Failure to do so will lead to substantial decline in profitability and the ever-possible insolvency. That helps no-one, least of all your staff, your creditors, and your family.
In an environment like this our elected and bureaucratic officials need to ensure they control their operating expenses. Gone are the days of nice-to-have projects and out-of-control operating losses. Leaders need to drive their entities to at least break even or deliver a small operating surplus in these difficult times.
Gaily running an operating loss shows contempt for rate- and taxpayers who are battling to ensure their businesses and indeed their households do not fall into borrowing to fund and operating loss.
Capital expenditure, in complete contrast, needs to continue apace. Capex provides cash to roll through both a local and the national economy. Providing jobs, creating, and maintaining great infrastructure that all can benefit from. As a country we have a substantial infrastructure deficit as funds have been re-prioritised to other parts of the economy. Potholes anyone?
Projects with a productivity payoff that benefits current and future generations must continue, but with a strong financial management hand on the purse strings.
The folly of buying cheap infrastructure and later paying an exorbitant price for repairs and maintenance is well-known. That section of the Waikato Expressway around Lake Rd has the hallmarks of such a poor investment. It has been under repair for years. Our leaders and bureaucrats need to be held to account when they propose to do a cheap project. All it does is stuff us up now and then shift and magnify the charges onto future generations.
It is a balancing act, but one business people have long dealt with. Do our elected and bureaucratic leaders have the business smarts to choose wisely and practise prudent financial management?
Too often it feels as though they are dealing with play money and that nice-to-have projects come before boring underground pipes, roads and balancing the books on an operating basis.
Households and thus voters will reward smart investment but not vanity projects nor imprudent operational expenditure.
