In response to parliamentary oral question 7 today, economic development Minister Steven Joyce tried to deflect today’s announced cut to New Zealand Institute of Economic Research (NZIER) 2012 growth forecast to a “stagnant” 1.5%, by saying this was all due to the supposed increase in the domestic savings rate.
Perhaps he was hoping that, as the NZIER publication is subscription-only, it was not going to be available to the Opposition, or to the public, and we would be unaware of his spin.
The problem for him, though, is I had the report in my hand and then I sought to table it.
National withheld leave for me to do so, to prevent you from judging for yourself.
In the report, under the heading “Half way through seven years of famine”, the overview states:
“The economy is stagnant. There is little economic growth and the outlook is challenging…”
NZIER ascribes this to six main drivers:
- No interest rate increases – due to growing global risks – resulting in possible Reserve Bank of New Zealand rate cuts if Europe’s crisis worsens. (NB: lower interest rates are not normally seen as an impediment to growth);
- Fiscal headwinds – the Government is “withdrawing stimulus” and this will “slow the pace of economic growth”;
- Slowing global growth – arguing the Government is over-banking on optimistic growth scenarios in Australia and China;
- Migration drain – noting the “net (e)migration is a persistent drain. This is hollowing out ..young people.. and will get worse as baby boomers age”;
- Household saving – “For households the economic picture will remain drearily similar. There will be few new jobs and wages will eke out small gains compared to living costs”;
- Businesses need to tread cautiously – “Because the economy will be flat, growth in sales must be from increased market share. (NB: by definition, this is a zero-sum game).
The NZIER report is cogent and sobering. It shows that the long-promised recovery is still just as far away as ever.
What it does not say is that the stagnant economy results from increased saving, or even substantially so.
To say New Zealanders are saving their way to recession is also sickeningly out of touch with the vast bulk of New Zealanders who are doing it too tough at the moment to be able to put much away.
All in all a case of spin, damned spin – and what Mr Joyce thinks he can get away with in Question Time if no one is checking.
Predictably no mention of impact of climate change, increased energy costs and environmental damage to soils; uncertainly of Fukushima holding mankind in a precarious situation beyond human control.
We have overshot on many fronts and still ignore future changes ahead.
Business allied bodies cannot guide us through planning for the future let alone short term political policies which are utterly irresponsible.
In its short, spineless history the Labour party rapidly circumcised any polemical attacks on capitalist expropriation and now minces along with the rhetoric of job creation and threatens the existence of the welfare state, refusing–out of cowardice, collusion and opportunism–to even wade deeply into union disputes. Try and out woffle the party of Bankers, Investment Capitalists and Farmers all you want on growth, the only thing growing is the Green vote.
@bth – a bit odd that a posting on savings became and environmental dicussion… but for the record I fully agree that the absence of sustainability issues from the Govt’s narrative is galling. Expect to see much more from Labour on this.
David, Labour needs a greater point of difference; difference which ought to substantively coincide with more genuinely radical politics for the sake of the nihilistic generations coming through.
Should come round for a roast some time–getting a bit cold for barbeques.
“To say New Zealanders are saving their way to recession is also sickeningly out of touch with the vast bulk of New Zealanders who are doing it too tough at the moment to be able to put much away.”
Are you talking about the New Zealanders that over extended themselves on interest free retail deals or the ones that used LAQC’s introduced by Labour to buy investment properties by negative gearing to off set losses against their incomes to pay lower taxes? Does Labour really represent this subset of the voting population?
We are not “saving” at present , our Fire & General insurance costs have gone up big time, along with our Gas and Electricty costs..And I am soooo looking forward to my revised rates from our wonderful Super City.. Pity that our wages/salaries have gone backwards in real terms..
These guys are the masters of spin, they have a strong entourage of spin doctors weaving the web and we have a Press and Media who are financially illiterate and suck up to these guys.
We need equitable distribution of resources throughout the economy and growth of our export sector to take this country forward.
We need a plan these guys are just playing with the buttons.
@Peter 7.52: a good point thanks re many Kiwis being unable to afford “saving”. There are macroeconomic implications to your point that are worth teasing out: ‘saving’ by a wealthy few may reduce their private debt to some extent, but disposable income is also spent on luxury items rather than busines investment; lack of disposable income by the many flows through to an economy-wide output gap (lack of aggregate demand) which 2012 Budget documents confirm currently exist in NZ.
Labour’s approach has been to radically increase saving across the board through a universal Kiwisaver – our plan did this 4x as fast as National’s auto-enrolment plan, which they effectively scrapped in Budget 2012 anyway.
So beware Nats bearing rhetoric on the virtues of saving – most often it is a convenient excuse for a lack of effective demand and for top-end tax cuts.
A few other quick comments:
@FLS: agree on the need for Labour to provide a cogent and differntiated alternative. We are working on that.
@Indiana: agree on the need to nail the abuse of LAQCs – unfinished business! You may recall that we announced a major work programme on tax reform before the 2011 election to look at this and trust issues, inter alia.
David, how do you define sustainability? I am not being obtuse here. Proponents of sustainability will readily admit it is an ill-defined concept and proffered definitions are easily teased apart. I find it hard to see what policies flow from such an ill-defined concept. I am sure you are well versed on the topic so perhaps you could put forth a clear definition of “sustainability” and how the particular policies Labour supports logically follow from that.
If one cares to look through our history, one would see that we had a labour government in the thirties that instituted policies that enabled many generations of new zealanders to rise out of servitude, and take their place in the world as the equal of anyone….
Humans are still basically the same animal they have been for tens of thousands of years… How hard should it be to know what generations to come need to sustain the basics of life?
pretending that it is far too complicated to be able to assess what policies, and resource use can be, and is, “sustainable” is a cop out at best….It’s not rocket science… it’s humans, and their needs… we’ve been doing this for long enough to know the answers to these questions…
the real question is, do we have the will to break the cycle of abuse/ greed/ selfishness, that has become the norm when political decisions are made regarding how resources are used…
using history as a guide, i can say that our “traditional” leadership has failed repeatedly in that regard… yet we still keep putting them into position that allow them to exploit even more resources in ways that will only leave gaping holes in the ground, and growing enclaves of desperate poverty littered across the country….
Quothing one mans personal opinions seems more like excusing the exploiters than any kind of useful contribution…
I think it would be clear to most that “sustainability” is supposed to refer to something less vague and encompassing then just “humans and their needs”.
Ignoring that the concept is not well-defined and the controversies surrounding it is a cop out. Those like David who wish to use the term as something more than a hollow rhetorical club should give serious consideration to what the definition of sustainability actually is and the critiques of many of the varied and often mutually exclusive definitions that have been put forth. This conceptual incoherence and the debate surrounding it have obvious implications for what policies actually follow from the concept. How do we exit this morass of arguments if not by first clearly defining our terms?
National are determined to break the back of this country and transfer the remaining wealth to their cronies and their masters in the USA and China.
Housing is a major issue in this country which is not being addressed the building of State Houses provided work and built functional homes for New Zealanders.
Now in Auckland we have a city full of rotting cardboard homes unfit for human habitation.
The KISS Principle would be a good example for Government to follow, Keep It Simple Stupid, everyone is trying to get too clever and wrecking what we already had.
Meanwhile the Press, Media and Politicans keep feeding us irrational dribble.