After-tax wages continue to rise faster than prices, Finance Minister Bill English says.
The real after-tax average wage increased 2.5 per cent in the year to March 2011, after accounting for all consumer price increases including food prices and the one-off rise in GST last October.
“Everyone’s circumstances are different, and we appreciate things remain challenging for many New Zealanders. But it’s encouraging to see that, on average, take-home wages continue to rise faster than prices,” Mr English told Parliament today.
“In the latest March year, the after-tax average wage grew 7.1 per cent in nominal terms and 2.5 per cent after adjusting for inflation.
“This means that since September 2008, after-tax wages have increased 17 per cent in nominal terms and 10 per cent after adjusting for inflation.
“That compares with real growth of just 4 per cent over the entire nine years to September 2008.”
“To put these figures into perspective, New Zealand’s 2.5 per cent increase in inflation-adjusted after-tax wages in the latest year compares with just 0.6 per cent real growth in Australia.”
The figures use data on average weekly ordinary time earnings from Statistics New Zealand’s Quarterly Employment Survey. This is the official series used to calculate the wage floor for New Zealand Superannuation. Comparable data is drawn from the Australian Bureau of Statistics.
“This Government is committed to helping New Zealanders get ahead, enjoy higher incomes and lower interest rates for longer,” Mr English says. “This will require continuing change, year after year, to put the economy on a more competitive footing.”
The best terms of trade since the early 1970s and growing business confidence are bringing a positive outlook for the New Zealand economy, according to the BusinessNZ Planning Forecast for the June quarter 2011.
The BusinessNZ Planning Forecast incorporates BusinessNZ’s Economic Conditions Index (ECI) which tracks 33 indicators, including GDP, export volumes, commodity prices and inflation, debt and confidence figures.
The ECI for the June quarter is 22. This is up 10 from the previous quarter and up 10 from a year ago.
Key factors include the continuing rise in world commodity prices and continued strong growth in New Zealand’s largest trading partners Australia and China.
Projections of 3-4% growth for 2012 and 2013 appear feasible.
MAF’s Situation and Outlook for New Zealand Agriculture and Forestry says:
New Zealand exporters are receiving high prices for logs, wool, lamb, timber, beef and dairy products as the rebounding global economy drives demand for commodities.
With the exception of horticulture, these rises are more broadly based than the 2008 rise, which mainly affected dairy prices.
Short-term supply disruptions such as droughts and floods in various parts of the world are a significant factor supporting recent agricultural price increases.
At the same time, the strength of demand coming through from emerging markets, the recovery in many developed economies, and continuing demand for agricultural resources for biofuel production has led
the Ministry of Agriculture and Forestry to revise upwards its view of medium-term international agricultural prices.
The relative strength in the New Zealand dollar has seen only a portion of these foreign currency price gains passed through to New Zealand farmers and foresters. The strong New Zealand dollar has, however, also reduced the
impact of price rises in imports, especially fuel and fertiliser.
Beyond 2012, steady production growth in dairy, forestry, wine and kiwifruit, together with an assumed depreciation in the New Zealand dollar, leads to strong forecast growth in export revenues.
There is light at the end of the tunnel.
It isn’t a train coming towards us, it’s daylight and a sunny day at that.