The Pretend Austerity That Could Cost Lives

07/04/2025

What Cave Creek Still Has To Teach Us

In 1995, a Department of Conservation platform collapsed in Paparoa National Park. Fourteen people died.

The cause wasn’t just poor workmanship. It was poor public management. DOC, like much of the public service at the time, was under acute fiscal pressure. After years of cuts and restructures, the organisation was stripped of technical expertise, overloaded with risk, and stretched beyond capacity.

The Cave Creek Commission of Inquiry was blunt. Budget cuts, staff shortages, and blurred accountabilities were directly responsible. In short: austerity kills.

So why bring this up in 2025? After all, the government isn’t officially doing austerity. Not if you read the fiscal forecasts. Net government spending is still expansionary. But the rhetoric sounds familiar. Ministers say the government must “tighten its belt”, “reset baselines”, and “refocus on core services”. Agencies are already quietly cutting. Public servants are being told to “do more with less”. It has a 1990s echo, even though it is not the same.

Technically, the government is not doing austerity. Not in the IMF sense. Spending hasn’t collapsed. There are no sweeping fiscal contractions. Yet inside government, at least from what the rest of us can see, it looks like austerity. Managers are cancelling hiring rounds, capital work is being delayed, agencies talking publically about walking away from non-core commitments, and there is talk of more service reductions.

This is the weirdness of 2025: the politics of austerity without the accounting of austerity. The danger isn’t just in formal austerity measures, it’s the potential for the quiet erosion of capacity when the system starts acting like it’s under austerity, whether or not the Budget says so. Public servants are being told to “get back to basics”, but no one can quite say what that means. Everyone is being asked to deliver more, for less, without any serious conversation about what might stop. In reality, some things will stop, but it will be quiet, incremental, and often invisible until something fails.

The Cave Creek tragedy wasn’t really about timber, nails, or engineering diagrams. It was about a weakened system that lost its ability to notice, respond and act. This is a risk today. When the public service contracts, even informally, it loses institutional memory, capability, and capacity.

Experienced regulators, skilled inspectors, policy analysts, engineers, and social workers take redundancy, retire, or burn out. Procurement corners get cut. Quality control weakens. Services thin out in rural towns and low-income suburbs. And eventually, a platform gives way.

A colleague recently pointed out that the real issue isn’t that spending is being cut. It’s that no one believes the books will balance without major new taxes or cuts, but no one wants to admit it. The Treasury and other forecasters keep quietly projecting that things will “return to trend”. I guess, as a non-economist, because the alternative would be admitting the wheels might come off. This is, to borrow another colleague’s metaphor, like cabin crew smiling calmly while the turbulence gets worse. Necessary? Maybe. Honest? Not exactly.

Meanwhile, frontline managers are told there is no austerity: but their budgets, hiring freezes, and recruitment panels say otherwise. This gap between rhetoric and reality is corrosive. It stops honest conversations about what services can and can’t do, where risk is rising, and how to manage it. It also leaves the public confused. They are told services are funded, yet experience the slow degradation of quality and availability.

Cave Creek wasn’t just a freak accident. It was the visible consequence of invisible cuts. Right now, Aotearoa faces a similar dynamic: not because the government is deliberately pursuing “austerity”, but because it is acting like it is, without admitting it.

What happens next depends on whether there is the political courage to have a proper conversation about taxes, spending, and the real role and capacities of government. If not, the risk is that we learn Cave Creek’s lesson again: the hard way.

PS: For those interested in the fiscal forecasting side, watch how Treasury manages its “error bands” over the next year. There’s more happening in the margins than the headlines.