Mythbusting: Labour’s just had golden economic weather

Written By: - Date published: 10:16 am, June 11th, 2008 - 29 comments
Categories: economy, International - Tags:

The amazing economic run we’ve experienced under the Labour-led governments is just down to international forces, so National would have us believe. Of course an economy is influenced by international conditions but it’s not the whole story. Under centre-left governments New Zealand has outperformed other economies, after we fell behind under National in the 1990s.

And our unemployment rate is just one of three that has averaged under 4% for the last five years.

Business tax cuts, export incentives, Kiwisaver, the full employment policy, the Cullen fund, minimum wage rises, the ERA, the Fast Forward Fund – these and many more are policies that have made improved standards of living in New Zealand. Introduced by the Labour-led Governments, opposed by National.

29 comments on “Mythbusting: Labour’s just had golden economic weather”

  1. vto 1

    Your posts continue to astound me mr pierson. This is just a load of old bollocks.

    Just one of many problems with your opinion – Perhaps you can back yourself up by explaining how the business tax cuts which have come in in 2008 have contributed to growth between 1999 and 2008?

  2. Daveski 2

    This is brilliant news! Once the word spreads, Air New Zealand will be putting on extra flights out of Sydney to welcome back all those who left NZ.

    BTW Your graph left out interest rates too 🙂

    Here’s a corollary … why doesn’t Graham Henry create charts that show he won more tests in % that the previous coaches or compares the worst performance on NZ at RWC compared to the other top rugby countries??

  3. vto 3

    Aren’t we supposed to be back in the top half of the OECD?

  4. Daveski. Why would it include interest rates? Interest rates are simply one factor affecting overall growth and employment levels. It is growth and employment that matter. As for migration, look at the archives – emigration to Australia is within historic norms and lower than preivous peaks.

    vto. I gave examples of economic policies that Labour and its allies have put through that have boosted employment and economic performance – some are new some are older, so what?

  5. mike 5

    Its only “international forces” when things turn sour.
    Labour want it both ways.

    Steve can you show me the graph of our rise up the OECD ladder? cheers

  6. mike. no, an economy is influenced by both domestic and international factors.

    All governments at the moment are losing popularity because of rising fuel prices – that’s an international issue haivng a negative effect. The global boom in prices for commodities and food is creating inflation worldwide too, also a negative.

    This shows how shallow your knowledge of the issues are. Yes, a couple of the countries with similar GDPs per cpaita have pulled ahead of us in rencet years but we are all closing the gap on countries further up the ladder.

  7. Phil 7

    That’s a very pretty collection of graphs Steve, but playing around with the numbers of our ‘old world’ trading partners is betraying your economic ignorance and/or spin.

    Over the past decade, demand for NZ products from emerging markets; China, India, SE Asia, and so on, has gone through the roof.

    The positive economic climate we have enjoyed has much more to do with export growth than Labour’s tinkering

    [phil. just using the comparative figures from the reserve bank website. As you know, it would be silly to compare the growth rate of a developed country with emerging economies like India and China. SP]

  8. Looking at your graph, ALL the countries lead by conservatives (US – Clinton to Bush, Australia – Keating to Howard) went down while the countries lead by the centre-left (UK and NZ) went up.

    We went up more – despite the easing in growth in the large, conservative run, economies of our major trading partners.

    Maybe even MMP gets some of the credit….by allowing more effective and efficient reconciliation of diverse and competing interests. We have had growth under any government since we introduced MMP….with a steady improvement over time.

    It will be interesting to see how we do relative to others in the downturn, given we are strong in commodities that are increasing in value….and have enough rain to actually grow stuff.

    Phil: At least you can’t claim Labour has hindered exporters what with export growth “exploding through the roof” as you say. Looks like the World Bank may be correct in saying NZ is at the top of the list of places where it is easy to do business, second only to Singapore(?).

    As for the OECD, which graph? We are well up on many of the things they measure.

  9. Daveski 9

    SP – A valid question. My point is that for all the positive comparisons with other countries, there are obvious indicators such as interest rates that impact in a very real manner on people, particularly those who are not rich pricks 🙂

    Frankly, Labour deserves credit for running the ship well during smooth waters. My opinion (I strongly suspect different to yours) is that they can’t take the credit for the smooth waters.

    The other comment I made is worth a reply – if things have been so good, why have so many people left for Oz? Is this a reality or an urban myth?

  10. Daveski: have a look at this chart of GDP per capita per capita comparing us with Australia and the US. Both countries are steadily pulling away from us. Our GDP may be growing but only by having more people outputting less per person.

    [“Our GDP may be growing but only by having more people outputting less per person” Your graph does not show GDP per capita falling, it shows it rising. It also shows the gap opened under National and has not grown under Labour, despite us having ground to make up becuase of National. You can’t even read a graph, no wonder you reference that joke Hickey all the time. SP]

  11. Daveski: no it is not a myth Migration to Australia is a reality and it’s been getting a lot worse under Labour in the 2000’s than it was under National in the 1990’s: look at all the red ink 🙂

  12. Bloody Norwegians! Show-offs!

    Excellent post, Steve. But how do we get the MSM to quit the “NZ sucks” narrative that they’re now running with all the relish that Faux News would a video of Obama satan-worshipping?

  13. ants 13

    Graphs and stats can paint a picture – however, walk up to 10 random people in the street and ask them “how has this economic boom that Labour has delivered, helped you” – I bet you 9 out of 10 will say that their personal situation has deteriorated.

    Can any of you actually come up with a concrete example of how this economic boom has reaped dividends for you?

    I asked this question on the nz.general usenet group recently and all I got was marginal stuff like the following:

    – trips to the doctor now only cost $35
    – I get $200 a week in WFF
    – student loans are free now
    – 8% ROI for term deposits (before tax)

    How about some concrete examples of what this boom has delivered for you personally? How have these vast riches being delivered to the doorsteps of Kiwis?

    All that I can come up personally with are:

    – tax rate is now higher thanks to PAYE, petrol, alcohol tax increases
    – Interest rate is at an obscene level, putting house payments through the roof
    – Exchange rate is destroying our export and manufacturing sectors, and has decimated my shares in export-based companies
    – The government personally ruined my AIA shares (glad I didn’t have any Telecom ones)

    In fact, the only people enjoying the riches are Farmers, and the government is not responsible in any way whatsoever for that.

  14. Nedyah Hsan 14

    It’s a bit misleading to say that the tampa boats full of people fleeing to the burnt country are loaded with kiwis.

    Notwithstanding the fact I’ve farewelled well over 40 friends to Brisbane and Melbourne.

    But have welcomed back at least 30 from the UK, Canada, America and China.
    So the myth that boatloads escape doesn’t quite match up with the number of kiwis returning “home” after having experienced the world, and generally tend to have a much better outlook on the country.

    Although it’s a shame that there aren’t any stats showing the number of NZ Born Kiwis vs Immigrant Kiwis with their shiny new NZ passports crossing the ditch

    No doubt some bleeding hearts will decry “a kiwi is a kiwi!” though it’s common knowledge the NZ passport is seen as the easiest to get, and the majority of people proclaiming publicy they’re leaving seem to be those of different ethnicities who weren’t born here.

  15. MacDoctor 15

    SP It also shows the gap opened under National and has not grown under Labour
    Actually the graph clearly shows the gap initially widens rapidly from about 1984 to 1990. I believe this was the time of the fourth labour government…

  16. MacDoctor. I’m referring to the current Labour-led govts, not the neo-liberal Labour in the 1980s. In fact, that’s just further proof that neolib economic policy hurt nz.

  17. MacDoctor 17

    Thanks, Steve, that makes it clear. I hadn’t realized that the fourth Labour government was actually a National one in disguise…

    [now you know. remember who the finance minister who made those changes was, often over the heads of most of his collegues, and that he wants to be a finance minister in a national-led govt after the election. SP]

  18. roger nome 18

    Steve:

    “Why would it include interest rates?”

    Because interest rates were higher under National in the 1990s than the have been under Labour.

    And hey, guess who’s got the worse record on mortgage rates?

    National, 1990-1999: average rate = 9.8%

    Labour, 1999-2008: average rate = 8.4%

    http://kiwiblogblog.wordpress.com/2008/03/05/numbers-game/

    It’s also interesting to note that inflation was slightly lower in the 1990s than it has been under Labour.

    So Brash was obviously more focussed on restricting inflation as part of his monetary policy than Bollard has been.

    Although it’s true that the official target band for inflation has been 0-3% in both decades, in reality Bollard has been willing to tolerate inflation in excess of 3%, whereas Brash wasn’t.

    Higher interest rates dampen the economy as they make it more expensive to borrow money, meaning less people are willing to borrow to start new businesses, and the result is and aggregate negative impact on employment.

    Now the Reserve Bank Act stipulates that the Reserve Bank Governor is to set interest rate levels independently of the Government. Having acknowledged this, I don’t believe for a second that the Governor receives no advice or pressure from the Government as to what kind of interest rates they want to see.

    Anyway you look at it, monetary policy during Labour’s tenure has been more conducive to higher economic growth levels than was the case during the 1990s.

  19. randal 19

    some people need to let the elastic out on their underpants… anyone who borrowed to much to finance their vulgar ambitions deserves what they get but for the rest everybody has had a bloody good time or they should have because it does not get any better than this. Be warned it will be much worse if national is inpower and are trying to claw back anything and everything they can get there pudgy grubby little fingers on!

  20. Disengaged 20

    New Zealand’s relative prosperity has had far more to do with the world’s economy than any government policy. Our economy is too small to not be heavily influenced by world events. We are a trading nation after all.

    Could the economy have been managed worse by another government? Sure, just as it could also have been managed better. Look at the growth Singapore has managed to acheive while New Zealand continues to fall further and further behind in the OECD rankings.

    [Singapore is on the Strait of Malacca. Quarter of the world’s shipping passes it on the way to booming economies in India and China. Do you suggest we move NZ? Sounds like Key’s plan to move us beside Ireland. SP]

  21. jbc 21

    Singapore is on the Strait of Malacca. Quarter of the world’s shipping passes it on the way to booming economies in India and China

    Same can be said for Malaysia (Johor, Melaka) and Indonesia (Sumatra, Batam, Bintan).

    So, yes, the Singapore Govt has everything to do with Singapore’s economic success.

  22. Disengaged 22

    Steve while you are crowing about Labour’s record of 3.5% growth, From 2004 to 2007 Singapore’s economy grew by 8.8%, 6.6%, 7.9%, and 7.7%.

    The Singapore Government had the vision to adopt a pro-business, pro-foreign investment, export-oriented economic policy framework, combined with state-directed investments in strategic government-owned corporations as far back as 1961. This vision produced real growth that averaged 8.0% from 1960 to 1999. In fact Singapore still recorded 2.8% in the SARS induced slump of 2003.

    Do you really think that those growth levels are solely down to Singapore’s location? Or are you willing to admit that a government with true vision can truly transform an economy for the betterment of all rather than what we have received from Labour and its economic transformation agenda?

    Capture: Agent Knickerbockers?!?!

  23. roger nome 23

    Disengaged:

    At that rate the size of Singapore’s economy doubles every 10 years. That kind of growth is extreme, and I don’t know of any time any European or Anglo-Saxon county has grown like that in the last 50 years. Hong Kong obviously has an economy that’s vastly different from others that are comparable to ours – i.e. it’s a trade-hub that has specialised in finance/banking for the last 40 years.

    Also, do you know that the state owns 90% of the housing and it’s a virtual dictatorship/”procedural democracy”? Not any right-wing democrat’s dream.

  24. Lew 24

    Yeah, Singapore is great to visit but I wouldn’t like to live there. It’s not quite a police state but it’s as close as it gets to one while not being an international pariah.

    L

  25. Disengaged 25

    I don’t disagree that Singapore is an extreme example, much the same as Dubai, but what I was trying to demonstrate is that a focus on an integrated economy for almost 50 years has yeilded tremendous growth and wealth. It is a shame that a more bi-partisan approach to the economy can’t be achieved in New Zealand rather than having it used as a political football every three years. Some of Labour’s policies have helped New Zealand, but it has also squandered some very real opportunities for significant growth over the last decade and I think Steve’s trying to take credit for the good while ignoring the bad belies his intelligence.

  26. jbc 26

    Also, do you know that the state owns 90% of the housing and it’s a virtual dictatorship/’procedural democracy’? Not any right-wing democrat’s dream.

    Well, the HDB units are technically leasehold (99-year) but are still considered ‘owned’ by the people that live in them. Much higher home ownership rates than NZ. That’s not a bad thing as far as I can tell.

    Yeah, Singapore is great to visit but I wouldn’t like to live there. It’s not quite a police state but it’s as close as it gets to one while not being an international pariah.

    Funny, I’d say it’s not so bad to live (Singapore) with the low tax, low crime, excellent infrastructure, etc, but I don’t see the attraction for a visitor. I think NZ is a much nicer place to visit.

    Police state? I had plenty of police encounters in NZ (as a victim or witness) but never seem to encounter them here. Perhaps if I wanted to stage a protest march…

  27. Matthew Pilott 27

    Disengaged – you’re repeating a line that has become a mantra to many from the right: Labour has squandered opportunities for growth during their last term.

    I don’t believe it. I have yet to see a single proponent provide a rational explanation for this line – especially from National. Here’s your chance to do what John Key can’t and won’t do:

    Can you tell me exactly what these opportunities are, and how they could have been properly utilised? No vague ‘concepts’ either – what’s the plan of action that would have done the trick?

    P.S when you resort to anomalies like Singapore for examples of what NZ has done wrong I wonder about you. Why not argue that a country with predominantly right-wing policies has done better? Trouble finding one perhaps? Funny that.

    I thought the ‘economic golden weather’ hit everyone, not just the odd left-wing government….

  28. Tamaki 28

    “… a focus on an integrated economy for almost 50 years has yielded tremendous growth and wealth”

    But at what cost to personal freedom? – want to buy a car there? Join a very long queue simply to get permission to buy one.

  29. jbc 29

    “But at what cost to personal freedom? – want to buy a car there? Join a very long queue simply to get permission to buy one.”

    Bollocks. You take your chequebook and hop on a bus, train, or taxi to the nearest car dealer (new or secondhand).

    When it comes to cars I guess Singapore is a Greenies wet dream. Cars are heavily taxed (140% sales tax) plus a quota premium for the COE, plus annual registration which favours small cars (no Ford Falcons). The govt has invested heavily in efficient public transport and is trying to discourage people from driving.

    The Singapore govt has focused on economic growth. No question about that. It has been successful too. It closely monitors each sector of the economy and is always looking at ways to attract new business.

    The NZ Govt, on the other hand, sees the economy as a source of revenue to fund its operations and has been fortunate that it has grown in spite of that.

    Granted, it might be just as easy to start a business in NZ as it is in Singapore or Hong Kong – but just how important is that?

Recent Comments

Recent Posts

  • Strong first week of firearms buy-back events
    The first full week of the firearms buy-back and amnesty has produced a strong turnout as events roll out nationwide for the first time. “Momentum is slowly starting to build as community collection events are held across the entire country, ...
    2 days ago
  • New digital service to make business easy
    A new digital platform aims to make it easier for small businesses to access services from multiple government agencies, leaving them more time to focus on their own priorities. Prime Minister Jacinda Ardern and Minister for Small Business Stuart Nash ...
    1 week ago
  • Million-dollar start to gun collection events
    Million-dollar start to gun collection events  Police Minister Stuart Nash says a solid start has been made to the gun buyback and amnesty after the first weekend of community collection events. “Gun owners will walk away with more than ...
    1 week ago
  • Praise after first firearms collection event
    Police Minister Stuart Nash has praised Police and gun owners after the first firearms collection event saw a busy turnout at Riccarton Racecourse in Christchurch. “Police officers and staff have put a tremendous effort into planning and logistics for the ...
    1 week ago
  • New Police constables deployed to regions
    Seventy-eight new Police constables are heading out to the regions following today’s graduation of a new recruit wing from the Royal New Zealand Police College. Police Minister Stuart Nash says the record high number of new Police officers being recruited, ...
    2 weeks ago