Pushing the economy off a cliff

New Zealand has achieved a new and most unwelcome record number of job losses:

Job numbers fell by a record 37,500 in April 2020, as COVID-19 effects and restricted trading began to impact on the economy, Stats NZ said today.

In seasonally adjusted terms, total filled jobs fell 1.7 percent in April 2020 compared with March 2020, when it was flat.

April’s fall is the largest in percentage terms and by number since the filled jobs series began more than 20 years ago, in 1999.

“With the country in lockdown throughout most of April 2020, the impact of COVID-19 is now being seen in falling job numbers,” economic statistics manager Sue Chapman said.

“Non-essential businesses closed during the lockdown, though some people were able to work from home.”

The government decreed what were essential businesses and permitted them to operate rather than allowing any that could operate safely to do so and this sharp number of job losses is the result.

Stats NZ calculates filled jobs by averaging weekly jobs paid during the month, based on tax data. Filled jobs include jobs paid by employers who are being subsidised by the COVID-19 wage subsidy scheme.

“While a fall in filled jobs does not necessarily mean employment has ceased in all cases, we saw a rise of over 30,000 people claiming the government’s Jobseeker Support benefit in April,” Ms Chapman said. . .

This month’s figures could be even worse with more than 6,500 job losses this week.

The record number of job losses adds credence to Adam Creighton, writing in The Australian, who says no national leader has been as feted as Jacinda Ardern during this pandemic. But while she might have popular support, the facts are she is pushing the NZ economy off a cliff.

New Zealand’s economy is in strife. Without major change, our constitutional cousin is in decline. Its public finances are in tatters, its biggest export, tourism, has been obliterated — Air New Zealand announced 4000 job losses this week — and New Zealand police now can enter people’s homes without a warrant.

“New Zealand is going backwards, falling behind the vast ­majority of our OECD partners in virtually every social and economic measure that matters,” said Roger Douglas, a former New Zealand Labour treasurer and the famed architect of Rogernomics.

New Zealand ranks fourth last in the OECD for labour productivity growth, and last for multi-factor productivity growth, according to economist Michael Reddell, based on OECD data. Health and education are gobbling up more of the budget as the population ages, with less and less to show for it.

That was happening anyway and has been exacerbated by the harder by the lockdown that used the arbitrary criteria of necessary rather than safe in deeming what we can and can’t do.

The country’s Massey University reckons economic activity will tank 16 per cent in the second quarter, while government forecasts pencil in a 4.6 per cent decline this year ahead of an 8.2 per cent rebound in 2022.

“I doubt the economy will bounce back as the government hopes; and the Treasury forecasts, as bad as they are, will prove optimistic,” former NZ Treasury secretary Graham Scott said.

In one year, New Zealand has blown 30 years of hard-fought ­fiscal rectitude. Its public debt will explode from the equivalent of 19 per cent of gross domestic product last year to 54 per cent by 2022, on the government’s own figures.

Successive governments have been criticised for the 30 years of hard-fought fiscal rectitude. How much worse the current situation would be had they not followed that path,

Scott said expanding the deficit, expected to blow out to 10 per cent this year, was the right thing to do. “But looking further out, comparisons with other countries, such as the US and UK, are no basis to justify our large debt ratios; we’re a small, open economy with vulnerable export industries,” he said, noting the share of exports in GDP had been falling steadily for nine years.

That makes Labour’s ban on oil and gas exploration all the more bizarre. With 0.3 per cent of global GDP, New Zealand can only shoot itself in the foot by shunning fossil fuels. The Prime Minister and Finance Minister, who have not worked in the private sector, spruik the totems of modern left governments — renewable energy, trees, higher tax, equality — but without much to show for it. Plans for a billion trees and 100,000 houses have come close to almost naught, and a capital-gains tax was dumped. Labour made a song and dance about reducing child poverty too, but on six out of nine measures tracked by Statistics New Zealand it is unchanged or worse since 2017, including the share of children living in “material hardship”, which has risen to 13.4 per cent. . .

This column had attracted 102 comments when I read it, a couple of days ago including this gem from Alfred:

The world doesn’t need more examples of the progressive social direction of NZ so we can learn from their utter failure sad as it is. She’s all hat and no cattle, just a charismatic executioner of her country’s future prospects. 

Jacinda Ardern has unprecedented praise from around the world for her response to crisis but before the Covid-19 response the government she leads had made little or no headway on its key policy planks.

She, and they, have taken the praise for dealing with the health crisis and must take responsibility for the economic one we now face.

But given they didn’t manage to deliver on their promises in normal times they can’t be trusted to come up with, and deliver on, policies to reverse the economic catastrophe for which their insistence on a harder and more prolonger lockdown are partially responsible.

3 Responses to Pushing the economy off a cliff

  1. Teletext says:

    What surprises me about this, is that the pundits seem surprised and shocked that this could have happened. It was obvious from day one that at the end of this 3 year term, the economy would be in a mess and require a few years of good management to get it back on track – possibly even another decade of deficits.

    Then came Covid-19 and now even my worst fears have been realised and the decade of deficits has probably been turned into a century of deficits. This is what you get when you have a group of totally incompetent and business ignorant politicians running the country. They might have a lot of fancy degrees but collectively, they haven’t got any economic sense and they have surrounded themselves with acolytes from the same mold.

    There is no more pushing our economy off the cliff, it has already happened and it started from day one of “house arrest” when the “Fairy Princess” declared that only supermarkets and dairies could open. That sealed the fate of so many small businesses that could have traded safely and given them the opportunity to survive. But no, government knew better and now all those small businesses are paying the price and our welfare resources are being drained and will likely send the country bankrupt.

    Thanks Winnie. You desire for Utu for some perceived slight has cost us our country and I’m sorry but that will be your legacy now, certainly not the one you had planned on having. This is all your doing.

  2. adamsmith1922 says:

    Reblogged this on The Inquiring Mind and commented:
    The reality of this appalling bunch of incompetents actions

  3. Andrei says:

    I have been astonished as this train wreck has been unfolding. its like the whole world has collectively lost its fricken mind.

    Seriously we have shut the whole world down to avoid a new variant of the common cold, which poses no significant threat to the vast majority of the human population but only those in the final stages of terminal illnesses?

    The computer modlers who predicted vast death tolls from this virus might have their numbers vindicated but it wont be the virus that is responsible for it, it will be the idiot “policy makers” and their ridiculous interventions to try and stop the inevitable that will be culpable.

    Time to reread “Popular delusions and the madness of crowds”

    Sadly the National Party succumbed to panic and replaced their leadership team and thus surrendered their chances of trying to pick up the pieces.

    Right now this Nation is rudderless

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: