“You are what you do, not what you say you'll do.” Carl Jung
This first term coalition Government is nearing the end of its three-year term.
When it was elected in 2017, they made claims about what they wished to achieve. And at that time we recorded some key economic benchmarks by which we could judge those claims.
And now it is time to assess the full term achievements (or otherwise).
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.
And of course, each reader will have their own view of how progress or otherwise should be adjusted by COVID-19, an event that was unseen at the start of this Government's term, or even this time last year. It is clearly something that will have a major influence on the overall judgement.
To juice up a discussion, here are my assessments.
Exports are up +17% over three years, but when measured on a world price basis, the gain is only +7%.
As a proportion of annual GDP, our overseas liabilities are unchanged.
Our current account deficit has fallen, both in NZD terms and USD terms. It is even lower as a proportion of GDP.
Inflation is lower.
Mortgage interest rates are very much lower.
House prices are up +29% in three years. Affordability for FHBs is marginally better (because of the sharply lower interest rates).
Rents are rising at only half the pace of house prices, (but still much more than incomes).
Tax rates haven't changed (although it is now Labour policy to raise the top rate).
Immigration is higher, even if it is now recently and sharply COVID-affected.
The population is up +5.7%.
Where things have got weaker:
Consumer confidence is markedly weaker.
GDP growth has turned negative.
The Crown surplus has vanished, replaced by sizeable deficits.
The government's net debt is significantly higher, up +25% in three years.
Our exchange rate is lower by -7.1% on a TWI-17 basis. 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.
There is no improvement in our jobs market. Gains that we have had for years have stopped or retrenched.
Average weekly income is up +2.8% per year over the three years but has gone backwards marginally in international terms.
House prices are up +29% in three years.
Renters are paying +15% more for a median three bedroom house.
The health budget is only +5% higher in three years.
Tax rates haven't changed. (Although taxes have gone up noticeably on fuel, and some other user charges.) And there are still no taxes on the gains that fall out of the sky for house owners, further embedding wealth inequality.
There are more people on a public-funded benefit.
The population is up +5.7%.
Ok then, how is the balance of these changes? It will depend on your point of view of course and how you weigh 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. COVID has had a distorting impact. 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 13 weaker, if you will allow for a number of items being in both categories (!) Our new circumstances can see them in varying lights.
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: 27-Sep-20||Source||NZ$||NZ$||US$||change||NZ$||US$|
|Consumer confidence||ANZ-Roy Morgan||102.3||126.3||100.2|
|Crown surplus (bln)||Treasury||-$0.5||+$12.3||+$8.8||-$26.9||-$17.6|
|Exchange rate TWI-17||RBNZ||63.3||75.6||69.3|
|Government net debt bln||Treasury||$10.2||$66.3||$47.5||$83.4||$54.6|
|Country's net overseas liabilities % GDP||RBNZ||-80.4%||-58.5%||-58.4%|
|Exports (Goods + Services) bln pa||Stats NZ||$45.0||$71.8||$51.4||$84.0||$55.0|
|Current account deficit bln||Stats NZ||-$14.1||-$7.5||-$5.4||-$5.8||-$3.8|
|C/A as % of GDP||Stats NZ||-7.5%||-2.8%||-3.0%|
|Unemployment rate||Stats NZ||4.1%||4.6%||4.0%|
|Employment rate||Stats NZ||65.4%||67.8%||66.9%|
|Participation rate||Stats NZ||68.0%||70.6%||69.4%|
|Inflation / CPI||Stats NZ||+5.1%||+1.9%||+1.5%|
|Official cash rate||RBNZ||7.50%||1.75%||0.25%|
|2 year fixed mortgage rate (avg)||interest.co.nz||8.56%||4.78%||2.72%|
|GDP growth (annual)||Stats NZ||-1.7%||+2.7%||-2.0%|
|Average income, week||Stats NZ (QES)||$774||$1,000||$716||$1,087||$712|
|Median house price $(000)||REINZ||$335||$525||$376||$675||$442|
|Median rent $/week 3br house||MBIE||$295||$400||$286||$460||$301|
|Health spending (bln) pa||Treasury||$11.9||$18.4||$13.2||$19.3|
|Income tax rate (max)||IRD||39%||33%||-||33%|
|Annual net permanent migration (000)||Stats NZ||+4.3||+72.1||+76.2|
|Building consents, annual||Stats NZ||+18.5||+31.1||+37.6|
|Core public service (000) FTE||SSC||45.9||48.9||~56|
|Number of adults on a benefit (000)||MSD||269.6||277.2||314.4|
|Population (mln)||Stats NZ||4.270||4.818||5.092|
The US dollar equivalents are recorded so that these benchmarks can be assessed on an exchange-rate adjusted basis. (2017 is NZ$1 = U$0.7163. In 2020 it is NZ$1 = US$0.6548).
Deputy Prime Minister Winston Peters could claim "one year on, and New Zealand has a brighter future" but the evidence is that their whole term has been a non-transformational toss-up, one where we simply marked time while other countries got further ahead.
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 that we keep on sliding back internationally.
I am not sure that is an argument to go back to the previous Administration. But if this one wins a second term, we all deserve much better from them, COVID or not.