The Finance Minister says it will take time for NZ to transition into a more sustainable economy, but National's Amy Adams says Grant Robertson is dismissing some concerning data

The Finance Minister says it will take time for NZ to transition into a more sustainable economy, but National's Amy Adams says Grant Robertson is dismissing some concerning data

Finance Minister Grant Robertson has responded to a string of recent negative economic news by saying the economy is in a period of “transition.”

But National says the Government needs to take the data more seriously, not bat the issues away by using words like “transition.”

On Wednesday, the unemployment rate lifted slightly to 4.5% – the first increase in the jobless numbers since late 2016.

Hours later, a Federated Farmers confidence survey revealed almost half of the 1100 farmers surveyed expect economic conditions to worsen over the next 12 months. This is the lowest level since July 2012 - a five-fold increase in pessimism in the last 12 months.

On Tuesday, ANZ business confidence data show firms’ optimism has fallen to the lowest level since 2008 and just a week prior, Infometrics downgraded its economic growth expectations to 2%.  

When facing questions from National’s Finance Spokeswoman Amy Adams on this in the House on Wednesday, Robertson said New Zealand is in a “transition period.”

“What I meant was we are going to transition away from an economy that even the member's former leader is now acknowledging was built on population growth and housing speculation.”

He talked up the Government’s investment into regions through the Provincial Growth Fund and its research and development support plans, as ways of creating “sustainable growth.”

But Adams tells Interest.co.nz he is simply batting these issues aside and not paying them the attention they deserve.

“Robertson is very keen on using phrases like transition to ignore the fact that a lot of indicators are showing we’re moving in the wrong direction.”

She says rather than dismissing these indicators with his “nothing to see rhetoric,” he should be acknowledging the concerns and reflecting on what the Government can be doing to support businesses.

“This Government needs to recognise there are concerns and think actively about how it might be contributing to that, but also how it can be supporting it.”

Robertson, however, argues the Government is doing its fair share in this area.

For example, he says Wednesday’s unemployment numbers show the highest employment rates on record for Maori and Woman.

“The unemployment rate has gone up from 4.4% to 4.5% - that puts it lower than what we inherited at 4.8% from the previous Government.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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The unemployment rate was 4.8% though when Labour took over. Yeah it's an "increase", but the real story is it's been steadily going down. Good news.

It was good news, until it started to rise. Trends matter.

It also went up in twice in 2012, 2013 - 2014, twice in 2015 and twice in 2016.

Also, the graph i looked at showed a spike in March 2018 and it dropped back down by June 2018. It's currently the lowest unemployment rate we have had since before National came into power.

https://www.interest.co.nz/news/95092/figures-stats-nz-show-unemployment...

I have missed your obsequious posts dear friend.

Things are on the up.... not term deposits...

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I would have thought acknowledging that "growth" has been built on unsustainable levels of immigration and cheap credit is exactly confronting the underlying issue...rather than pretending all is well, a "good problem to have" or a "sign of our success".

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“What I meant was we are going to transition away from an economy that even the member's former leader is now acknowledging was built on population growth and housing speculation.” Amen to that, can’t happen soon enough. It’s the kind of good sense you would ordinarily expect to hear from a national govt, but apparently not the last one. Good riddance to the last national govt.

GR says ' getting along side the business community to get long term sustainable jobs'

Wow ... well surveys are showing that the same business community are not taking that BS seriously !! and the proof is in the Business & Farmers Confidence results

He thinks that by splashing a billion here and a billion there is sustainable pumping of Growth to brag about !! .. many will call that share stupidity in times like this.

This CoL is insisting on taking business head on and repeating the same empty slogans ... the whole thing will turn to custard, make no mistake about it !!

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I will say, Peters and Robertson have Bridges seriously on the back foot when it comes to having the chops on the floor in Parliament. He's making no progress there.

The problem with National policy is it's all about selling public assets and commercialisation of government departments. Hard to pitch to the public in opposition. So they don't have a real platform, since they can't afford to be honest about their real agenda for the country. Hence Simon's class sizes bs.

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The real story is the unpacking of the myth of the Key government as the "grownups" in handling the economy. Immigration and selling houses..... ?

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True.
The thousands of eateries and tour operators that have sprouted around the country are the “low confidence” moaners most affected by minimum wage hikes and tighter migration rules.
I really don’t think the likes of F&P healthcare, Xero, rocket lab etc. are in the business of hiring unskilled migrants in bulk with business diplomas from PTEs at $18/hr.

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Ag work needs attractive wage and salary levels, it shouldn't be an industry reliant on overseas labour.

I think unfortunately we're stuck there though. What is the differential point which supports higher prices for our produce? And is that alone enough to support higher wages? The capital gains expected on the land would eat into most of that anyway.

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The current Nat party leadership should be thankful to Ardern who saved them from inheriting a post-cycle mess of an economy. I hate to say this but Sir Chon and his lackeys allowed third world industries to thrive in NZ with an unending stream of cheap workers.
Let’s wait and see how the plans to transition the economy pans out!

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I agree that the last govt has given the current one an economic hospital pass. I would much have referred for key and English to clean up their own mess

I so wish that were the case, Bobster.
But the lot weren’t ready to acknowledge there was a mess that needed cleaning up to begin with.

Advisor, Why should New Zealand have to wait to see how the Transition pans out. It will be a disaster, why because 46 % of the Population do not want the Transition that is taking place. They are the 46% of the Population that earn the Money that this Govt wants to spend on THEIR view of transition. BS

Don't kid yourself, man. How long do you think we can keep up with economic growth based on elevated debt levels, high migration and house flipping?
Our economy grows at roughly the same pace as the OECD average but our population growth at 2.1% YoY is 3 times the OECD average of ~0.7%.

I am relieved to know that 54% of New Zealanders don't wish to live with their head in their sand.

Will house selling somehow miraculously stop or not become a huge driver of any dynamic economy under this CoLs ?

I think it will be the most important part of GDP after they wreck everything else up ....

God save NZ

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The principal driver of the property market was the massive increase in private sector debt. All that mortgage credit was being tipped into the housing market with the inevitable consequence that prices shot up. Wages are going nowhere by comparison but at some point that debt needs to be paid back. These high prices don’t reflect national wealth we have earned, they represent borrowing from the future that at some point needs to be paid back. We have officially run out of road in terms of credit expansion, so that source of “growth” has now disappeared. National were seduced by the political catnip of rising house prices. They were happy for the bubble to grow and grow. “Sign of success”, “nice problem to have”. They were totally shameless and I think history will judge them very harshly

What is a CoL?

Coalition of Losers - whereas the last government was a COMB - Coalition of One Man Bands.

Eco made the nicks up. He misses FPP.

Lets get politics out of it.
We have been and are going through changing economic conditions that have been largely affected by external factors and consequential internal events.
National did have a charmed ride with a "rock star" economy in which we individually were largely sheltered from the effects of the GFC due to a continuing demand for our raw materials and foodstuffs (unlike Australia's mining industry) but more so by historically low interest rates due to QE. House price inflation provided a stimulus to the economy due to a perceived increased personal wealth due to increase house prices (and a strong share market) and propensity to spend. We largely weathered the GFC as a result of this cheap finance, and did the government did not need to enact policies such as providing personal grants as a means of stimulus as happened in Australia. John Key described these events at the National Party Conference. There is need to recognise that these events were not significantly related to the then National Party government policies; both the National Party and Joe Bloggs home owners were fortunate but sadly FHB were disadvantaged. The past "rock star" economy as Key pointed out was fueled by cheap money and for that they can't be criticised; they like us went along for the ride. However, arguably the government - and the RBNZ - could have acted more quickly in implementing policies such as LVRs to ensure that social goal of home affordability for potential FHBs.
Equally, the reality of the current slow down is not the result of Labour Government policies or inaction. Again, any slow down in the economy is largely influenced by external and non-political factors including tightening post QE, potential development of trade wars, flat local house markets (hence less propensity to spend), and with this transition in the global economic factors, growing uncertainty within New Zealand not only in the business sector (in part only by anti-Labour sentiments) but by some commentators talk of train crashes.
So lets look beyond politics as to why the economy has done well over the past decade, and concerns related to the current situation and outlook.
Despite criticism of John Key and his comments on this site; take the comments for what they were - an acknowledgement that the decade of a sound economy was a result of a causation factor that was largely external. He did not lay strong claims to it being result of National Government policies and actions for which he needs to be given credit for doing so.
Where to the future?
Winston was right when announcing the coalition agreement. The past economic conditions were not going to be sustainable.
Personally, I feel that the current Government's Working for Families Package, heating grants, and KiiwBuild are as much about stimulating the economy as they are for social reasons.

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“The past "rock star" economy as Key pointed out was fueled by cheap money and for that they can't be criticised; they like us went along for the ride”. I don’t agree with that at all. They gave zero support to the RBs push for enhanced macro pru reg, they totally stonewalled. They refused to even accept rising private sector debt bloating house prices was even a problem, they viewed it as a “good thing” and a political winner. They failed to do anything about the tax settings which encourage piling into property. Key totally failed to spend any of his immense political capital at his PMs bully pulpit on these issues. If we get into trouble with private sector debt and our property bubble blame for that can be laid at his door, he showed zero political leadership.

Bobster
So the increase in private sector debt was all the National Government's fault.
The many, many people who invested in property, traded up, invested in the share market, borrowed cheap finance to buy the new car, electronic goods or overseas holidays are totally blameless and are no part of it.
When do we start to take some individual responsibility for the issue of growth in private debt? Or are we, as you imply, just slavish morons.

The massive increase in private debt is a rational human response to a regulatory environment that encourages investment in property rather than in productive enterprise. Successive governments have overseen that regulatory environment.

John Key campaigned on the need to drive up productivity and address the housing crisis - and I was one of those who voted for him twice - but then perpetuated that encouragement of massive private debt in housing. He knew something needed to be done...but once in, he only about-faced. That was the big frustration.

It's private individuals who made the decision to take on massive private sector debt, but the governments' regulatory environment incentivised them to do so, rather than investing in productive business.

And, as an aside, also seemed like he was going to do something about WFF, or "communism by stealth" as he labelled it...but he only grew it.

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No, you need to read my comments again. Interest rates fell and the banks were falling over themselves to hand money out. But Key did nothing to attempt to manage that growth, he gave no support to additional RB macro pru reg, nor did he exercise his jawbone to make it clear that this kind of fake growth and the risks that go with it was not something he was happy with on his watch. "Yeah yeah house prices are going up vote for me". He did this because he was entirely OK with rising house prices as this translates to votes. But he totally lost control of things. I mean, who would look back in 2013 at the GFC and think that a credit induced real estate bubble would be a good thing to have?! I expected more from Key, he was supposed to be "different", he "wasn't like other politicians", and he ended up being a self serving political coward who I think led the country up an economic dead end.

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Totally agree Bobster. I think it’s far worse that you describe though. The scale of foreign capital influx into Aucklands housing market from 2009-2017 was unprecedented in NZ’s history. As Jim Rickards said in his book the death of money “The greatest episode of capital flight in human history” regarding China. Significant problems such as wealth transfers, and homelessness, are guaranteed in the future. It’s not just poor people that got screwed. High income young people are now faced with the dangerous prospect of hyper-bubble house prices. Eventually, even rich people will get screwed because I think the government will be forced to tackle trusts tax laws, inheritance tax, wealth tax etc. Instead of doing something to mitigate the damage John Key just lied and denied. He personally benefited by at least 10 million dollars on his Parnell house. That’s why I think he’s the worst prime minister in New Zealand’s history.

Interestingly, by lying and denying and deceiving the public one is able to achieve one of the highest honours known to man, a knighthood!

I reckon being respected by all would be a higher honour than some title.

I really think that too much weight is being given to the government - be it National or Labour - to control the wider economy and especially external factors.
Yes, work to minimize the impact of external factors; but the reality is that what actions (or inaction) Labour take, we are headed for economic downturn.

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Between November 2008 and November 2017 the OCR was cut from 6.5 percent to 1.75 percent at which point it stands today. Mortgage debt increased from 160 Billion to 242 Billion and Auckland median house prices doubled as home ownership rates plunged , increasing from 430000 to 888000. The population thru migration surged at historical highs Any incoming government would have difficulty replicating, improving upon, or having such circumstance in its corner. The 1981 Blam Blam Blam hit has a certain resonance.

After a drug/debt fueled bender here comes the hangover. Debt injecting junkies could get really screwed and lets hope theres not mass unemployment and business failures to wreck investor cashflows.

Lots of 8s in that average price, funny.

Cowpat

You forget that government debt is also now much higher as a proportion of GDP so Keynesian stimulus is limited and that with Reserve bank rate at 1.75% that can't get much lower to save us really... Oh yes, and the rest of the world is now in a tightening phase, so we may actually struggle to control our costs of funding anyway... $430,000 to $888,000 to ?$430,000? What shall we call this remarkable adventure? How does an average mortgage feel at 6 or 7% (maybe more)

perhaps - 'There and back again' - a tale by Bilbo Baggins would be a good title. This is Middle Earth after all.

Those cut, cut, cuts were ridiculous. Every man and his dog paid break fees, only to refinance the cost of them (plus I suspect a holiday and a few new appliances for the reno) as part of the new mortgage. It was all so predictable.

The use of the word 'sustainable' can never stand alone. It must always be accompanied by the qualifier 'at what level of comfort (or well-being or welfare or health or weal: they all point to the same general way-of-living measure, however imperfectly).

One suspects that this 'transition' is gonna be from a Higher to a Lower level of Comfort (however defined).....

Glass half full, sales of Comforters are gonna soar: go long Kmart!

"Transition"? Sounding like John Mitchell's "Journey" and we all know how that ended.

We're in transition all right, from a well managed, successful economy to........

It will get worse every month with every result and every survey and every quarter result ....before it gets better in 2020.

Spinning and manipulating numbers is an art of deception perfectly mastered by crooks - not by honest and genuine people.

Some here have learned few words in economy ( like public & private debt, and QE, etc) and come out to defend these Losers willy nilly or repeat what similar idiots in Australia and Canada say.

They keep blaming those who filled the Vaults for their Mates to come and spend at large - hardly a hospital pass !! -- but a juicy inheritance to waste... easy Come, easy Go as they say.

The supporters of these Losers will be lost in the dust of their Heros as they are kicked and dragged out of office where they belong .... Then these cheerleaders will sit on the roadside moaning their misfortune and misery!

Teachers have NOT striked for 24 years? Nurses almost the same, have anyone heard of IRD striking before? .. The Unions are stirring the shit ,
and the CoLs are playing their part in the comic play ....

I doubt very much that they have a clue of the consequences, just seizing the opportunity and the hell with the rest - they say the Gov has to dig deeper

lol .... talk about transition .

Once you've finished your tanty, climb out of the cot and pick up your toys like a good boy.

I thought you were better than that, pragmatist

Only so much oh that shrill screeching I can tolerate.

'When the tide goes out, one can see who is skinny-dipping' - Warren Buffett

Can't wait to see the nouveau-rich posing kiwi's prepare for landing.

Why, envious?

I am under 40 with a paid-for home and no debt. So no.

Good on you, well done

Agree, well done. You should mentor Houses Overpriced in the art of the possible.

If HO thought houses were overpriced 7 years ago when he made his interest.co account then he’s got no hope of ever buying a house.

Thanks for the inspiration.. nzdan..

Your comments are worthless , so I give a damn.. its like words coming from a pigs mouth

You're so thoughtful as usual..

Looks like gotten over your gripe over the government

Rejoicing in others misfortune has never made one better off

Learning from their mistakes sure does fam.

but if you're mid to late 30's and still living with your parents it's all you've got

I suggest you read up ^

it wasn't for you

“Rejoicing in others misfortune has never made one better off”

However, taking advantage of others misfortune may well make you better off – if you are that way inclined.

It's sad you think like that

Personally I believe that there is enough in this world not only to do well for oneself but to do well together and lift each other

Totally agree, some basic psychology should be enough to indicate that competition is inefficient in principle, and co-operation is more likely to achieve economic and social goals (ie; the Rochedale principles or the Japanese Keiretsu system).

Here is a summary of what it is about -- a must read piece for the CoLs and to all the idiots who are blindly jumping up and down in their support ... this comes from the Horse's Mouth , not someone sitting back in a shack and chewing the old piece of Labour propaganda fat , or waiting for his share of the baubles ... read and you will be able to immediately tell that Alarm Bells are ringing:

" Low business confidence - Suck it up and do something "
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120...

And for those who cannot tolerate my comments: suck it up or don't read them.

"But, the big drivers of economic growth, housing and immigration, are right off the boil" Thank god for that"

Believe me, if this website had an ignore function you'd have been added to it quite a while back.

The Federated Farmers confidence survey also revealed that Farmers are more upbeat about their personal financial outlook.

The latest Federated Farmers confidence survey shows 30 per cent anticipate an improvement in farm profitability over the next 12 months, while 48 per cent expect profits to remain stable.

Dairy and arable farmers are more optimistic about profitability than they were in the January survey, but meat and wool farmers less so.
https://www.stuff.co.nz/business/farming/105932155/farmers-more-confiden...

The nZ subs/branches have been world record profitable for the Australia banks and insto investors.

The ozzie royal commission shows you the fun thats been had.

Um, nobody has yet pointed out the inability of 'sustainable' and 'growth' to sit alongside each other in the same sentence. Not if you're talking of things physical.

And the big readjustment is happening. As it had to. Neither major Party are capable of holding back the flood and neither - and currently none of the others either - have real solutions yet. And real solutions will so unpalatable that the milling mass (who have replaced belief in the promises of priests for belief in the promises of economists) will reject any Party which attempts to introduce them.