Bill English has been “trying it on” in his use of statistics, no doubt to try to get off the defensive around inequitable tax policy, his lack of a plan for growth and an embarrassingly strong performance by NZSF and ACC in the recent Crown Accounts.
Mr English alleged in a release last week that revisions to GDP data issued late last year showed the economy grew by “less than 1% a year”.
The Government Accounts had been released the day before. Labour had attacked the government for having suspended superannuation prefunding and cutting ACC, when the investment performance of both had risen strongly.
Based on the Statistics NZ revised data, the average GDP growth for those three years was actually 1.74%.
The more relevant GDP growth benchmark, averaged over Labour’s last term in office, was 3.2% GDP growth per annum.
That was significantly higher than during National’s previous term in office of around 2.6%.
It was higher, year on year, for the three year period Mr English quoted, than the UK (2.6%), US (2.5%) or OECD average (2.3%)
This strong and sustained economic expansion was achieved alongside:
- a massive reduction in Crown debt (net debt cut from 24.8% of GDP to zero);
- unemployment of 3.4%, the lowest in 21 years (less than half of today’s 7.3%)
This was achieved precisely because Labour did not follow Mr English’s advice in 2005 and 2006 to give early tax cuts. In short, not taking Bill English’s advice in 2005/06 meant NZ could afford a Budget in 2008 designed to support Kiwi jobs through the recession.
So if that was the real big picture, how did Mr English come up with his odd numbers?
- First, using highly variable quarterly GDP statistics, not the more aggregated and reliable annual numbers
- Second, choosing a short period impacted by the global recession to bring the average down.
- Finally, by taking advantage of retrospective statistical revision called chain linking whereby when recent data falls sharply (for example due to the recession) previous years are “smoothed” down to fit the trend.
The bottom line is National would give its right arm to have economic performance numbers today that matched the average under the last Labour government.
We have a Minister of Finance who has shown himself not above skewing data for political ends.
Lesson for Bill English: “when in a hole, stop digging”.