NZ one of better for inequality

June 25, 2014

The left have done their best to make inequality the problem of the moment.

Fortunately for New Zealand, though not the left’s campaign, the OECD facts contradict their story:

New Zealand was one of only six developed economies in which both income inequality and disposable income inequality was flat or slightly better between 2007 and 2011, according to the Organisation for Economic Cooperation and Development.

In its latest report, which looks at the impact of the global financial crisis on inequality across 33 developed economies, the OECD confirms New Zealand performed relatively well through the GFC and its aftermath, Finance Minister Bill English says.

“The domestic recession in New Zealand under the previous government in early 2008 and the global financial crisis that followed were tough on many New Zealanders and their families,” he says.

“However, this Government ran large deficits and borrowed through that period to continue its significant support programmes. At the same time, we also set a track back to surplus and supported an economic recovery that is now delivering more jobs and higher incomes.

The opposition criticise the increase in debt but give the government no credit at all for using it to protect the most vulnerable from the worst impact of the GFC.

“This latest OECD research confirms that while inequality increased in many OECD countries during the global financial crisis, this was not the case in New Zealand.”

Using data compiled for the Ministry of Social Development’s household incomes report, the OECD’s latest Income Inequality Update confirms that both income inequality and disposable income inequality were flat or slightly better in New Zealand between 2007 and 2011.

It also finds that the disposable incomes of the top 10 per cent of New Zealand’s income earners were hit harder than the bottom 10 per cent of income earners through this period.

“Across the OECD as a whole, the opposite was true,” Mr English says. “The bottom 10 per cent of disposable incomes fell by twice as much through the GFC and the top 10 per cent.

Mr English says that the Government remains focused on supporting the most vulnerable New Zealanders by improving public services, lifting education standards and supporting more New Zealanders off welfare and into work.

“It’s in these areas that we can make a real difference to the lives of New Zealanders most in need.”

The easiest way to solve inequality is to make the rich poorer – as the left want to do by taxing them more.

That might close the gap between the top and bottom but will do nothing to improve the lot of those in most need.

Addressing their problems, as the government is doing through better public services, higher achievement in education and helping those who can work to do so is the only way to get sustainable improvement in living standards for the vulnerable.

The OECD report is here.


Lies or politics

April 28, 2014

Labour has been tricky about another of its policy releases.

Last week it announced its veteran’s policy which would extend the Veteran’s pension to all veterans, whether or not they were impaired.

That sounds very generous but Matthew Beveridge covers an exchange on Twitter between Labour MP Clare Curran and Graeme Edgeler which shows that yet again Labour hasn’t given the full story.

The veteran’s pension is the same as national superannuation so week to week war veterans will be no better off with Labour’s policy.

Some would call that tricky, some would call it lying by omission.

Either way it’s just like the bumbled announcement of the baby bribe which omitted to let people know that it would kick in only after paid parental leave finished.

Then there’s getting facts wrong which is at best a very poor reflection on politics:

The Labour Party’s attempts to talk down New Zealand’s economic performance have hit a new low this weekend with David Parker making at least nine factually incorrect statements in one short interview, Associate Finance Minister Steven Joyce says.

In the interview, with TV3’s The Nation programme, Parker made assertions about low export prices, a poor balance of trade, job losses in the export sector, New Zealand’s current account deficit,  high interest rates, a lack of business investment, 40 per cent house price increases, no tax on housing speculators, and low levels of house building.

Mr Joyce says all of Mr Parker’s assertions in relation to these nine things are incorrect.

“This is an appalling number of errors for someone who would seek to run New Zealand’s economy. This number of errors surely can’t have been made by accident,” Mr Joyce says.

“Mr Parker’s attempts to describe the New Zealand economy sound much more like the situation this government inherited from Labour in 2008 than anything we are seeing in 2014.

“He must have been thinking of 2008 when he talked of ridiculously high interest rates, a poor balance of trade, and the poor performance of the export sector. All were pretty sick back then and all are in much better shape today as a result of this government’s careful stewardship of the economy.”

Mr Joyce says there are two possible conclusions. “Either Labour is deliberately fudging the facts to fabricate the need for their radical economic policy prescription, or they have truly woken up in 2014 for the election without observing anything that has happened in the last five years. The latter would at least fit their regular denials of the impacts of the GFC and the Canterbury earthquakes.

“New Zealanders know that this country today is doing better than most other developed countries, and in 2008 we were doing worse than most, in fact entering our own recession before the Global Financial Crisis,” Mr Joyce says.

“It might be an idea for Labour to look at the steady improvements that are occurring in the New Zealand economy before they start trying to write up their policy ideas.”

Schedule of inaccuracies in David Parker interview on The Nation – April 26 2014

1. “Export prices are going down”

Export prices in fact rose 13.8 per cent in the year to December 2013 (Statistics New Zealand).

The ANZ NZD Commodity Price Index rose 11.6 per cent in the year to March 2014 and is just 6 per cent below its all-time March 2011 peak.

2.  “We are not covering the cost of our imports (and interest)”

Statistics New Zealand reported a merchandise trade surplus for New Zealand in the year to February 2014 of $649 million (1.3 per cent of exports).

January and February’s merchandise trade surpluses were the highest ever for their respective months.

3.  “We are losing jobs in the export sector”

The number of people employed in the agriculture, forestry, fisheries, mining and manufacturing sectors has increased by 16,100 in the last twelve months. 

Total New Zealand employment increased by 66,000 in the last year or 3.0 per cent in one year. This is the fastest employment growth since December 2006. (Statistics New Zealand Household Labour Force Survey December 2013).

4. “This challenge of getting New Zealand’s current account deficit under control”

New Zealand’s balance of payments deficit is currently 3.4 per cent and has averaged only 3.1 per cent over the last four years.

Under Labour the Balance of Payments peaked at 7.9 per cent in December quarter 2008 and averaged 7 per cent over their last four years.

New Zealand’s Net International Investment Position is currently down to 67 per cent of GDP after peaking at 85.9 per cent in March 2009.

5. “Ridiculously high interest rates”

Interest rates have just edged up above 50-year lows.

Floating mortgage interest rates are currently between 6 and 6.25 per cent. They peaked at 10.9 per cent between May and August 2008.

6. “Exporters…. Aren’t willing to invest in plant”

Investment in plant, machinery and equipment by New Zealand companies was up 7.5 per cent in the December quarter and 3 per cent for the year. Investment in plant, machinery and equipment is now at its highest level ever (Statistics New Zealand – December quarter 2013 GDP release).

Just yesterday, long term New Zealand forestry processor Oji Limited announced a $1 billion investment to purchase Carter Holt Harvey Processing assets.

7. “House prices are up 40 per cent under them”

House prices under this government have increased at around 5.7 per cent per annum, compared to 10.7 per cent per annum under Labour, according to REINZ figures. Total house price increases over the period is 30 per cent, not the 40 per cent Mr Parker claims. That compares with a 96 per cent increase in house prices under Labour.

8.  “You need to tax the speculators. They are not taxing speculators”

Taxpayers who buy and sell houses for income are currently taxed at their personal income tax rate on their capital income.

9.  “They are not building any more houses”

The actual trend for the number of new dwellings, including apartments, is up 95 per cent from the series minimum in March 2011.

The trend is at its highest level since October 2007 (Statistics New Zealand February 2014 Building Consents Release).

Getting these facts wrong by accident is incompetence.

Getting them wrong deliberately is worse.

Either way, Labour is trying to talk down the economy which is doing well in spite of the GFC and the earthquakes and because of good management by the National-led government.

That the economy is growing doesn’t mean everyone is doing well.

But the chances of improvement for everyone are far greater under this government than they would have been had Labour been in power and continued with the tax and spend policies which put the country into recession before the GFC hit the rest of the world.

The chances of improvement will be far greater with another National-led government than with the alternative prescription a Labour Green government would impose on us.

 


ASEAN FTA opens market of 500m

February 28, 2009

Trade Minister Tim Groser has signed a Free Trade Agreement with 10 Asian nations.

They are Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia and these 10 members of ASEAN – Association of South East Asian Nations – have a total population of more than 500 million which is a big market for New Zealand produce.

While applauding this I do wonder about the time, effort and expense involved in these sorts of agreements when the greater good would be better served by world-wide free trade.

Given the slow progress of the WTO I realise that it’s important to keep working on these smaller deals which may well be stepping stones to the big goal of full free and fair trade.

That will only come when all the protectionist barriers are dismantled so all countries open their borders to allow trade with all other countries. If there’s a silver lining to the GFC it might just be that more countries find they can no longer afford subsidies and other anti-competitive measures.


It’s now the GFC

February 19, 2009

Do we have to worry or take it more seriously when something becomes an acronym?

Corin Dann said on Breakfast this morning that the global financial crisis is now the GFC.

CORRECTION:

Neil has pointed out in a comment below that I was wrong to use the term acronym. He’s right, an acronym is a word formed from the initial letters of other words and GFC isn’t a word.

SO question for word lovers: is there a word which I could have used for a collection of initial letters used instead of the words without forming a word?


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