JP Morgan report today that the unemployment differential between NZ and Aussie is the worst since records have been kept.
Remember we had lower unemployment than Aussie when Key became PM. Still not 1k of the cycleway built as part of his recovery package nor 1 metre of fibre in the ground.
| Press Release by JPMorgan Australia Limited at 7:42 am, 12 Mar 2010 |
* The bullish case for AUD/NZD can be summarised in the very simple mantra that ‘NZ is not Australia in terms of the level of economic activity. In short, NZ had a much worse recession than Australia and is recovering much more fitfully. One specific illustration of this is the unprecedented divergence that has opened up between the unemployment rate in the two countries. We first highlighted this a few months ago and since then the divergence has become even more acute (Australia releases February unemployment data tonight, after the RBNZ policy meeting). As of December the NZ unemployment rate was 2% higher than in Australia, which is the widest gap since the NZ series was first reported in 1985 and 2.8% wider than the average differential over the past 25 years.
The Banana Republic of Key.
When measured against Australia I would think most countries unemployment rate differential would be at all time highs.
You’re comparing against the strongest economy in the western world Trev.
It’s because aussi take advantage of their mineral wealth~
The truth of the matter is that high unemployment doesn’t really bother Key. Vast majority of unemployed are not his NACT’s voters.
Right so in the good times before the world wide recession guys when we had lower unemployment than Australia the strongest economy in the world according to Seti the reason was ……………. Oh thats right luck, lucky Labour.
Give me a break !
I’m guessing that if NZ wasn’t in recession all on it’s own stagnation late 2007 before the global crisis was even a sub prime mortgage crisis that this growing disparity wouldn’t have been the case. But I’m sure someone will tell me the failed policies of the 90’s are to blame for the problems of 2007 yet National in 2008/2009 did all this damage themselves.
Ho hum, must be lovely being blameless simply because your party logo is red.
Oh dear burt – read the figures. Minerals were a constant. Government policies differed.
Oh dear Trevor, as a proportion of GDP our dairy exports trump Aussie mineral exports and you know this fact.
Trevor
Why ? Why do you deny that Labour’s policies over 9 years are the most significant factor in our economy today ?
Trevor
Yes govt policies did differ radically during Labour’s 3 terms. During that time when the Aussie Tory govt was being slated for giving tax cuts the Tory aussie govt had lower taxes for low paid workers and higher taxes for high paid workers than the NZ socialist and proud of it govt.
Strange days indeed when all you can do is classify govt’s based on the colour of their logo rather than actually basing denigration on real things like the policies they implement.
burt when we went out of government we had lower unemployment than Aussie nothwithstanding two droughts in two years. The gap is now at a record level. The difference is that Aussie to steps to counteract the recession. National didn’t.
Trevor
So nothing good about a Labour govt endures 18 months of a National govt then ?
Who said ‘nothing’ we are talking the unemployment gap is t.h.e w.o.r.s.t e.v.e.r
Thats over a few governments too.
Who made reducing the difference to Australia as one of his quickly discarded promises and then to let it go backwards ?
Remember too all of Keys companies he worked for went under or were swallowed up!
Remember Burt in 5 years time others ask what were you thinking, you can say you swallowed it all hook line and sinker
ghostwhowalksnz
So are you saying that if I were to provide a link to a graph of unemployment in NZ covering 2007 till today it wouldn’t show a sharp upward trend until after National became govt ?
This is National’s fault isn’t it? The domestic recession NZ quietly slipped into before the rest of the world even considered there was problems brewing on a glab scale had nothing to do with it right?
Like I said earlier, must be lovely being blameless simply because your party logo is red.
ghostwhowalksnz
Here is something that you might want to think about.
http://www.statisphere.govt.nz/sitecore/content/statistics/Home/browse_for_stats/work_income_and_spending/Employment/HouseholdLabourForceSurvey_HOTPJun09qtr/Commentary.aspx
So unemployment in NZ was lower than in aussie – your point?
Trevor
My point was quite simple I thought;
I’m guessing that if NZ wasn’t in recession all on it’s own stagnation late 2007 before the global crisis was even a sub prime mortgage crisis that this growing disparity wouldn’t have been the case. This is chickens coming home to roost from the policies of the the Labour govt.
@Burt – excuse my ignorance, which policies exactly, and how?
Honestly, I don’t know the answer and some enlightenment is always helful.
paul
I’m referring to the recession NZ was already in before the global economic crisis when I say chickens coming home to roost in relation to unemployment here and now compared to when Labour left office. The state of the economy heading into 2008 was already problematic for Labour, the policies that led NZ to this situation were, after 9 years of Labour, Labour’s policy mix.
A bit like a sad remake of 1990, National were handed a bare cupboard, a train set that needed massive maintenance, nasty surprises in ACC and a stagnated economy with deficits predicted for a decade. It is no surprise NZ didn’t implement bigger govt assistance packages like Australia.
“The truth of the matter is that high unemployment doesn’t really bother Key.”
Unless bricks start flying through windows and cars burn.
High unemployment means even less demand for unskilled labour = even less reason to raise minimum wage.
@ Trevor:
“Remember we had lower unemployment than Aussie when Key became PM”
And why was that I wonder? Because the full force of the recession and resultant unemployment hadn’t yet hit us. The link from Statistics NZ that Burt provided clearly shows this and to me this is also indicative of the “chickens coming home to roost from the policies of the Labour govt.” (thanks Burt!).
Why have we struggled in the recession more than Australia? Well yes I completely agree – strong policies have been non existent as National has been toothless. The job summit has produced nothing & I completely disagree with the cuts to R& D.
However, you can only take this argument so far as bottom line there are massive mitigating factors to take into account such as the fact that our entire population is smaller than that of just Sydney alone and we don’t have anything close to the mineral wealth that Australia has….and even if we did, well I don’t know about the rest of you, but I’d rather stay a little poorer than destroy our landscape!
@Tracey: “High unemployment means even less demand for unskilled labour = even less reason to raise minimum wage.”
To a degree yes to the first part but no I don’t think that it has all that much baring on raising the minimum wage – employers have fought its increase every step of the way. Why else do you think it took a decade to get it from $7 to $12.50? A decade that had record low unemployment & experienced an economic boom like we have never seen before…Labour appeased the employers in this instance as much as National appears to be doing. Those at the bottom are always the first to take the hit when it comes to political strategy.
Further, highly skilled people also struggle to get back into employment as being highly skilled they are often seen as being over-skilled so they are last of the rank as no one wants to pay them a decent wage & employers will often opt for those who are less skilled & thus, cheaper.
@ Paul – tax tax tax tax oh & acc then tax tax tax!!!!
I’ll rephrase, high unemployment provides employers with the excuse de jour for paying peanuts, because, as you point out, even at times of economic thriving they choose to pay little too.
Tracey – I think that you’ll find that most employers will try to pay as little as they can to attract, motivate and retain whatever skillset they’re looking for.
In much the same way as most consumers (possibly including yourself?) will pay as little as possible to get goods / services of the quality / availability they’re looking for.
It’s called the market, and whilst it may be ugly in some areas it’s the best system we have. Government interference in it generally has undesirable and unattractive consequences. Such as lazy and unreliable workers knowing that they can guarantee a rate in excess of what they’re really worth to the employer.
@Rebecca
You say that R&D shouldn’t be cut
How do you then justify the people that help create the curriculum for science in primary schools being let go to make room for National Standards?
All I can say that I still think that unemployment still hasn’t reached its peak. I think it will get worse.
@ Rebecca and we had had nine years of prudent government which paid down an amazing amount of debt notwithstanding loud demands from John Key and Bill English for massive tax cuts. Imagine where we would have been if we followed their advice. Think Greece, Ireland or Iceland.
Trevor yes good point re paying off the debt and yes that was one of the many thinks I was happy about where Labour is concerned.
However!!! I do still think that Labour could have still achieved a better balance in other areas too; think how much MORE debt we could have paid off and how much MORE money would have been in the kitty had Labour been bold enough to address the anomalies in the tax system that cropped up as soon as the top rate of 39c was introduced….
Rebecca
Labour tried to address the anomalies that the 39% rate created. They broke a 1999 election promise when the lifted the minor beneficiary distribution rate in trusts to a flat 33% to counter people distributing income to their children to avoid the 39% policies of envy rate.
(the promise made by Helen Clark in 1999 was; nobody earning under $60k will pay a cent more income tax)
But they didn’t stop there. They also introduced income attribution rules that said if 80% or more of the income to a trust or a company was from one persons labours then that trust or company was deemed void and the income was to be taxed in the hands of the individual.
These bandaids didn’t achieve much, because you simply can’t shut down companies and trusts as vehicles to retain earnings and shelter income from extremely low personal tax thresholds. Two individuals can easily associate in one company/trust to foil the income attribution rules, distribution to minors at 33% is still better than 39%. Saving profits taxed at 33% is better than saving profits taxed at 39%.
As for paying off debt, if I overcharged my customers I could clear my overdraft really quickly as well – would it be good for my business ? Would I be better to invest in productive assets that keep my staff employed long term?
I guess if I had a monopoly and had an attitude of saying “we won you lost – eat that” then I wouldn’t care about the long term either and my business having lower debt would still stagnate like our economy did late 2007.
I simply can’t agree that using fiscal drag to extract billions from middle earners only to pay off some debt then leave the economy in recession due to stagnation and falling productivity (before the impacts of the global crisis) can be called prudent.
George that is a very one-sided iew and in fact it’s not the best system it is broken. Even the IMF are admitting that now.
“Government interference in it generally has undesirable and unattractive consequences. ” Business is generally happy to let the Government and fellow taxpayers pick up the pieces through wlefare and other functions. Example is the Spotless cleaning profit of 24m while simultaneously arguing they cannot raise wages because of the competitie margins.
We need to stop seeing things in black and white as though we have to accept a system as it is rather than trying to change aspects to achieve the balance we desire as a community.
Capitalism is far from a panacea. Trouble is it serves rather well those with the means to perpetuate it and who are by no means a numerical majority. Infact this minority include many who want Maori representation gone because one person one ote. However ignoring that lobby groups alter the one person one vote model substantially albeit covertly.
Thanks Burt – I thought when Lab came in for their 9 yrs they were in a similar place you describe for National now – huge debt, empty cupboards…I do wonder how much worse off we all would be now if we had not cleared off some of the debt – granted debt repayment is not as sexy as tax cuts…
@Burt: yes I remember the “bandaids” that Labour said would fix the issues as I was part of the team that implemented them! But being bandaids they of course, like you say, achieved very little hence my last statement to Trevor. Token gestures don’t constitute to “addressing the anomalies” in my book
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@Paul: I agree that paying off debt is a good thing provided one is not missing opportunities to generate real growth. There is obviously good debt (house) and bad debt (car). My point is though had Labour been bold enough to introduce policies that actually worked to reduce the number of people playing outside the tax boundaries then we would have been in a much better position to handle the recession by being able to pay off even more debt( if appropriate) AND letting people keep more of their own money….in my humble opinion!
)
No government will ever get it right all the time, but I do think that 9 years in office Labour would struggle to say they didn’t get enough of a chance to at least give it an honest try.
However, what is done is done. I am most interested in seeing where Labour wants to take things now – such as how they would overhaul the tax system & sort the rental issues out & close the gap with Australia; grandiose statements in election year won’t be enough to persuade the switchers back into the red army.
It might, and they have every right to wait til then.
I don’t think they should be criticised for waiting for the right time to release their policies.
Spud unfortunately they can’t help but be criticised for waiting as even though we are nearly half way through National’s first time, it still feels very much like yesterday that Labour was in office.
For those of us still a little grumpy at Labour – that is, those of us who pushed them into oblivion in the last election, the memories of what we feel they didn’t do are all too fresh.
I would dearly love to switch back, but I won’t do so unless Labour outlines something of substance instead of the usual political (& predictable) rhetoric. I would also like to see the young guys coming out a bit more – Darren Hughes & Jacinda Ardern have so much to offer.