By David Chaston
Two years ago we recorded some benchmarks when the new Ardern/Peters/Shaw Government was formed.
These are economic metrics and as such only part of how we should review progress.
But as it is the economic side of life that we cover, we can look at life through that lens. We did this a year ago, and this is the update of that initial review.
The improvers:
The government's net debt is significantly lower, down -13.3% in one year. But in year two it rose slightly.
Exports are up +13.3%, but when measured on a world price basis, the gain is less.
Interest rates are significantly lower. The OCR has fallen, and key mortgage rates are well down.
Inflation is much lower.
Median incomes are up +7% in two years, up +3.6% in the past year.
Median house prices are up +13.7 in two years, up +7.4% in the latest year alone.
Public spending on health services are up +8.1% overall, up faster in the latest year (+11.8%).
Tax rates haven't changed.
Immigration levels are essentially unchanged. They fell a fraction in year one, but picked up again in year two.
The population is up +2.6% of which +1.2% of that is in the past year.
Where things have got weaker:
Consumer confidence has improved in the past year, but still remains lower than at the start.
The Crown surplus has turned into a deficit, although the tighter OBEGAL is still in surplus. But overall, the track is weaker.
Our exchange rate is lower by -6.6% on a TWI-17 basis. That is lower than the -4.9% decline a year ago. That means our incomes need to be this much higher just to ensure their buying power is not slipping on an international basis, and of course we never got anywhere near that.
GDP growth is weaker.
Our current account deficit has risen, both in NZD terms and USD terms. It is even higher as a proportion of GDP. But in the past year there has been a tiny reversal.
There is no improvement in our jobs market. Gains that we have had for years have stopped.
The improvement in our net overseas liabilities ended this year, but the overall impact is still an improvement
Renters are paying +11% more for a median three bedroom house. But these median rents slipped in the latest year, even if only marginally.
Median house prices are up +13.7 in two years, up +7.4% in the latest year alone.
Tax rates haven't changed. (Although taxes have gone up noticeably on fuel, and some other user charges.)
There are more people on a public-funded benefit.
Public spending on health services are up +8.1% overall, up faster in the latest year (+11.8%).
The core public service is the fastest growing component of our jobs market.
Immigration levels are essentially unchanged. They fell a fraction in year one, but picked up again in year two.
The population is up +2.6% of which +1.2% of that is in the past year.
The scorecard
Ok then, how is the balance of these changes? It will depend on your point of view of course and how you weight them in importance. We are not saying that the 'improvers' are all the result of the new Government's policy actions, nor that the weaker items are as well. All we are recording here is what has happened on their watch.
First up, there are marginally more 'weaker' than 'improver' items. The raw score is 10 improvers with 11 weaker in the past year with 3 unchanged. Note that this is the score in the table below - in the lists above some items are in both categories (allowing for differing points of view !)
But rather than set out what we think, we would like to hear how you would analyse and assess the progress. The comment facility below is where you should record your judgment.
Here is the data:
| Benchmark updated: 19-Dec-19 | Source | NZ$ | NZ$ | US$ | NZ$ | US$ | NZ$ | US$ | |||
| 2008 | 2017 | 2018 | 2019 | ||||||||
| Consumer confidence | ANZ-Roy Morgan | 102.3 | 126.3 | 117.6 |
|
121.0 | |||||
| Crown surplus/(deficit) (bln) | Treasury | -$0.5 | +$12.3 | +$8.7 | +$8.4 | +$5.8 |
|
-$2.3 | -$1.6 | ||
| Exchange rate TWI-17 | RBNZ | 63.3 | 75.6 | 71.8 |
|
70.8 | |||||
| Government net debt bln | Treasury | $10.2 | $66.3 | $47.1 | $57.5 | $39.8 |
|
$57.7 | $39.4 | ||
| Country's net overseas liabilities % GDP | RBNZ | -80.4% | -58.5% | -52.1% |
|
-55.3% | |||||
| Exports (Goods + Services) bln pa | Stats NZ | $58.9 | $75.0 | $53.3 | $82.3 | $57.0 |
|
$85.0 | $58.1 | ||
| Current account deficit bln | Stats NZ | -$14.1 | -$7.5 | -$5.3 | -$10.5 | -$7.3 |
|
-$10.3 | -$7.0 | ||
| C/A as % of GDP | Stats NZ | -7.5% | -2.8% | -3.6% |
|
-3.4% | |||||
| Unemployment rate | Stats NZ | 4.1% | 4.6% | 4.4% |
|
4.0% | |||||
| Employment rate | Stats NZ | 65.4% | 67.8% | 67.5% | - | 67.5% | |||||
| Participation rate | Stats NZ | 68.0% | 70.6% | 70.6% |
|
70.0% | |||||
| Inflation / CPI | Stats NZ | +5.1% | +1.9% | +1.9% |
|
+1.5% | |||||
| Official cash rate | RBNZ | 7.50% | 1.75% | 1.75% |
|
1.00% | |||||
| 2 year fixed mortgage rate (avg) | interest.co.nz | 8.56% | 4.78% | 4.48% |
|
3.57% | |||||
| GDP growth | Stats NZ | -1.7% | +2.7% | +2.6% |
|
+2.3% | |||||
| Median income, week | Stats NZ | $919 | $1,175 | $835 | $1,213 | $841 |
|
$1,257 | $859 | ||
| Median house price $(000) | REINZ | $335 | $525 | $373 | $556 | $385 |
|
$597 | $408 | ||
| Median rent $/week 3br house | MBIE | $295 | $400 | $284 | $450 | $312 |
|
$445 | $304 | ||
| Health spending (bln) pa | Treasury | $11.9 | $18.4 | $13.1 | $17.8 | $12.3 |
|
$19.9 | $13.6 | ||
| Income tax rate (max) | IRD | 39% | 33% | 33% | - | 33% | |||||
| GST | IRD | 12.5% | 15% | 15% | - | 15% | |||||
| Annual net permanent migration (000) R | Stats NZ | +4.3 | +55.8 | +49.1 |
|
+54.6 | |||||
| Core public service (000) FTE | SSC | 45.9 | 48.9 | 51.4 |
|
54.3 | |||||
| Number of people on a benefit (000) | MSD | 269.6 | 277.2 | 284.3 |
|
292.0 | |||||
| Population (mln) | Stats NZ | 4.270 | 4.818 | 4.885 |
|
4,943 | |||||
| NZ$1 = US$ | RBNZ | 0.7145 | 0.7110 | 0.6930 |
|
0.6835 | |||||
Deputy Prime Minister Winston Peters last year claimed "one year on, and New Zealand has a brighter future" but the evidence is that their first year was a non-transformational toss-up, one where we simply marked time while other countries got further ahead. On the economic front, 2019 has not been a "year of delivery" either, one that has not transformed anything in the economic landscape. That claim turned out to be shallow wishful thinking, rather than heralding an actual political drive.
My view is that, based on the benchmarks above, we have gone from being a nondescript "quite good" to "decidedly average", and that is being generous. New Zealand should be able to do much better than that. It continues to be disappointing to keep on slipping back internationally.
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