This week there were two pieces of economic news showing a dramatic improvement credit for which should be given to the last Labour Government.
The first was a drop in the inflation rate for the December quarter with the annual inflation rate reducing from 5.6% for the previous quarter to 4.7%. The movement in the quarter was 0.5%. If this was continued the Reserve Bank would meet its inflation target this year. New Zealand’s inflation rate was well below the OECD average which stood at 5.4%.
The second piece of good news came from Treasury’s release on the interim financial statements of the Government for the five months ended 30 November 2023.
Core Crown revenue was $54.9 billion up $700 million on forecast. Expenses were $56.8 billion down $300 million on forecast. The OBEGAL deficit was $2.8 billion, down $1.1 billion.
Net debt was $83.2 billion and this was $1.8 billion lower than forecast. The Cullen fund performance was a major driver of this. Gross debt was up slightly but this was due to extra borrowing to cover liquidity deficits.
National did not form a Government until November 27. Since then it has concentrated on cancelling projects and reversing legislation, making worker’s conditions worse and engaging in petty culture wars about Te Reo. And insulting Maori with threats to the treaty. These would have had no effect on these recent statistics.
Nicola Willis’s statement at the mini budget that returning the Government’s books to surplus by 2027 remained a key priority but “had got a whole lot harder than it looked prior to the election” is clearly not correct. And the cuts imposed would have no immediate effect or in some cases take us backward. Stopping the Climate Emergency Response Fund in particular was a very retrograde step.
But hats off to Labour and especially to Grant Robertson. Economic conditions have been tough thanks to a one in 100 year epidemic and the war in the Ukraine. But with debt under control, wages increasing and unemployment low we are currently in a remarkably good position.
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