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Nats fail to keep biggest promise (and the rest)

Written By: - Date published: 9:20 am, March 29th, 2010 - 51 comments
Categories: Economy, national - Tags: ,

One of National’s election promises was to close ‘the gap’ with Australia – sometimes this is taken to mean the GDP per capita gap, other times the wage gap. By any measure, National is failing miserably.

In the December quarter, the economy finally grew faster than the population but we’ve fallen a long way further behind Australia under National and even the 0.8% growth in December (which is pretty weak compared to growth after other recessions) was below the 0.9% growth enjoyed by Australia.

With weak growth, wages falling in inflation-adjusted terms, and unemployment now 2% higher than in Australia and rising the question has to be asked: when is John Key going to keep his promise to close the gap with Australia?

(PS. letting Aussie mining come and dig up the gold in our most precious places won’t help)

51 comments on “Nats fail to keep biggest promise (and the rest) ”

  1. vto 1

    ha ha, Key promising to “close the gap with Australia” and Clark promising to “reach top half of the OECD”.

    Silly politicians.

  2. cocamc 2

    maybe with Infratil and the super fund buying shell’s assets and business we can start to see this changing – profits will mostly stay inshore.

    • Purchasing the remnants of the petroleum distribution system prior to us running out of the stuff in a couple of decades time is not very bright. They would be better off constructing windmills.

      • Bright Red 2.1.1

        wind turbines 🙂

        I do think it’s an odd decision by the Superfund. Perhaps they think there’s always going to be a need for an energy distribution system for vehicles even if it’s not oil. Or maybe they think there’ll be a period of high profitablity for petrol companies and a chance to get out before it’s too late.

        • mickysavage 2.1.1.1

          Thanks BR.

          Must engage brain before typing …

          • Cat tanner 2.1.1.1.1

            That assumes you’ve got a brain to begin with ?

            I demand proof.

            [lprent: Looks to me like you’ve used ignored warnings and used up your chances across a number of pseudonyms… You’ll be aware of the issue and it doesn’t matter how ‘subtle’ you think you are.
            Clean up your act during this two week ban, otherwise I will leave you on the moderation list until I’m sure you’ve become moderately civilized. At present you look like another dickhead troll with a stalking fetish. ]

      • infused 2.1.2

        It’s not going to run out any time soon.

        • Bright Red 2.1.2.1

          http://www.smithschool.ox.ac.uk/world-oil-reserves-at-tipping-point/

          800 billion barrels of oil left. Just 10,000 day’s worth at current demand. less than 30 years. And that’s with no growth in daily consumption which equals no economic growth in our oil dependent economies.

          In reality, of course, the ability to supply even exisitng demand will fall off long before the last oil is pumped.

          • Lanthanide 2.1.2.1.1

            BR, the problem is not total reserves remaining; there will be oil available for many hundreds of years yet, extracted from things like oil sands and probably coil-to-synthcrude. The problem is that the extraction rate will be very low and fail to meet demand, which means very high prices.

            I’m pretty sure you know that already, but it is the key point that needs to be made when dealing with peak oil – it’s not that oil is going to “run out” completely, it’s that oil is going to become very very expensive because supply will fail to meet demand.

            • lprent 2.1.2.1.1.1

              …it’s that oil is going to become very very expensive because supply will fail to meet demand.

              At a given cost / price point…. If you run on a price point at a couple of hundred US dollars per barrel, I suspect that supply will meet and possibly exceed demand…

              • Rich

                I think it’s fairly axiomatic that supply will match demand and prices will move to maintain this. You can’t exactly “overdraw” oil from anywhere. You can store it, but not cheaply or in any great volume.

            • Bright Red 2.1.2.1.1.2

              yeah. should have been clearer

  3. tc 3

    a 100% relentless focus on….um..err…oh Photo opportunities that’s it….smile and wave for the camera….aww how cute.

  4. tsmithfield 4

    I would be interested to see your link to what actually was promised, and over what time-frame.

    Probably the quickest way for the gap to close is for the Chinese economy to crash, as that accounts for a lot of the Australian economy at the moment. Chanos (who made a fortune by crashing the British Pound) sees China as a huge bubble. For instance, they have put huge amounts of stimulus into dubious projects such as building whole cities that are unpopulated at the moment. Also, real-estate in China in many places is at ridiculous prices if valued in terms of rental yield.

    http://www.nytimes.com/2010/01/08/business/global/08chanos.html

    Australia has been China’s bitch over recent times, supplying the commodities to inflate the bubble. When that bubble bursts, they will get hit much harder than we will.

    • vto 4.1

      In agreement there fulla.

      Also, no better way to feel better than to have your advanced peer knocked back closer to you, rather than you move closer to them. Kuite the kiwi way too.

    • Bright Red 4.2

      oh dear. TS questioning whether there even was a promise to close the gap with Australia.

      http://www.google.co.nz/search?q=%22john+key%22+%22close+the+gap%22+australia&rls=com.microsoft

      • tsmithfield 4.2.1

        So far as I can see, the promise, goal, aspiration, or whatever you want to call it, was to close the gap by 2025. Still a while to go yet.

        • Bright Red 4.2.1.1

          Yeah, but you don’t get there by heading in the wrong direction, eh ts?

          • Pascal's bookie 4.2.1.1.1

            nah BR. Fundamental misunderstanding of youir RWNJ thought processes.

            The only sorts of consequences a government can have is the unintended sort. Any other sort is a) unpossible to eventuate, and b) commun1sm.

            If you gots your government a plannin for the outcomes
            and a taking of the steps in an orderly fashion,
            this is what amounts to a slippery slope to serfdom.
            This has been proved by a famous book title, and is thus beyond the argumentations.

            This principle goes double if a governments actions are popular, and triple if they involve the raising of teh taxes.

            So as per teh QED. If your’n actions ‘consequent in a disorderly and unintended fashion, then your desired outcome must, of necessicity, be brought forward by doing everything in your power to prevent it.

          • tsmithfield 4.2.1.1.2

            Thats the things with long-term goals though. It takes a long time to reach them and there can be twists and turns along the way. The important thing is to get the fundamentals right and things will eventually turn around. Will we actually reach parity with OZ? I don’t know. However, I am sure that the gap can close considerably over time.

            • Bright Red 4.2.1.1.2.1

              on what evidence, ts?

              this isn’t ‘twists and turns’ we’re seeing from National, it’s quarter after quarter of failure. At what point will you start to demand results?

              • tsmithfield

                When aiming for a longterm goal, results aren’t always immediately forthcoming. Ask any sports person trying to change their technique. They often get worse results before they get better.

                I think we will start to see a closing of the gap when the heat goes out of the Chinese economy (I hope it doesn’t actually crash). At the moment that is giving the OZ economy legs that we can’t hope to keep up with.

                Be patient, grasshopper.

                • lprent

                  Sounds like the litany that was heard all of the way through the late 80’s and 90’s..

                  Problem was that it took putting a sensible government in that stopped doing silly impatient fiddling with the basics, stopped introducing extra shocks, and started making a supportive policy framework before we started to realize the gains (assuming you are correct). National governments are too short-term – they tweak when they don’t need to – impatient grasshoppers…

                  Looks like we’ll have to wait to elect another Labour government…

            • Clarke 4.2.1.1.2.2

              Thats the things with long-term goals though. It takes a long time to reach them and there can be twists and turns along the way. The important thing is to get the fundamentals right and things will eventually turn around.

              That’s practically a statement of faith, ts … I mean, I’ve come over all religious and all – “have faith, brothas and sistas! There is a promised land, after all this unemployment and ruthless looting of the country!”

              Only, when you say “things will eventually turn around” you must have a fair bit of time in mind, because as we know for the entire 1990s saw the country go backwards under your lot. So how long do you think it might take, exactly?

    • Zaphod Beeblebrox 4.3

      That would be true if Qld and WA were the only states with rising GDP. Last time I looked Vic, Tas, SA are all doing fine.

      • tsmithfield 4.3.1

        There will undoubtably be spin-offs to other states as well. I am sure that Qld and WA are purchasing more from other states due to their prosperity.

  5. tc 5

    Oz’s mineral bubble did burst and has been re-inflated since with revamped demand by China (they only need what the rest of the world demands of them) and large mining outfits like BHP Billiton now do more short term price contracts to align with demand.

    So where the bloody hell are they ? Hardly noticed it thanks to Rudd actually stimualting the economy rather than the slash n burn sideshow john styles……focus on NZ righties not Oz it’s simply not comparable.

  6. Politicians (National and Labour) keep pushing for income measures of how well we are doing in the world (gdp per capita, match Australia’s incomes) when most Kiwis don’t really buy it.

    They’re much more interested in quality of life (includes health, education, environment etc as well as income) measures than pure income ones.

    Of course coming up with a quality of life measure is much harder than plucking a standard of living measure out of the standard economist’s tool box.

    It’d mean we’d have to discuss and front up to various trade offs involved in growing the economic cake.

    Nah, too hard. As Rod Oram says we’ll continue to bash each other’s brains out over issues like mining.

  7. Name 7

    The most obvious, most intelligent, most commonsensical way to close the gap with Australia (and therefor far out of reach of any politician) is to give up this stupid conceit that a geographic entity larger than many countries with a population smaller than many cities can run its own economy, and therefore join with Australia as part of the Commonwealth.

    Oh yes, of course. All the advantages of scale, a stonger currency, bigger markets, etc. are more than outweighed by the All Blacks and pig-headed, medieval parochialism.

    • Lanthanide 7.1

      “give up this stupid conceit that a geographic entity larger than many countries with a population smaller than many cities can run its own economy, and therefore join with Australia as part of the Commonwealth.”

      Have to agree. The bay area of San Francisco has 9 million people living in it. Do they have 22 district health boards, huge stretches of highways to maintain, massive borders that must be protected from insects and diseases?

  8. tsmithfield 8

    Here is another interpretation of the graph above:

    1. The biggest decline showing on the graph was during the few months just after National had taken power. Given that it would have been impossible for them to implement anything that would have had time to have an effect in such a brief time-frame, the large decline can only be attributed to Labour’s efforts.
    2. Since that point, the GDP decline has lessened considerably, and has recently started to tick up showing that the policies that National are implementing are starting to have an effect.

    • Lanthanide 8.1

      Or, alternatively, National has had no positive affect on the stats at all, and it is simply following the path of the worldwide recession and apparent recovery now underway.

    • lprent 8.2

      Given that it would have been impossible for them to implement anything that would have had time to have an effect…

      Bullshit. Hell National still haven’t done anything substantive about the economy… But markets run on expectations as much as reality. Just ask Richardson after she triggered the long 1990s recession.

      There was a distinct lack of confidence in Nationals abilities to buoy the economy over the worst of the recession using stimulus spending. That is quite valid bearing in mind that National

      1. immediately announced further taxcuts (thereby reducing their ability to stimulate).
      2. immediately announced their intention to cut the growth in government spending (thereby reducing any stimulus effect)
      etc… etc…

      Any rational businessperson looked at those policy announcements and immediately took action.

      The reason that the rate of decline in GDP has reduced is simply because we’d already hit bottom in the local economy, and our exports haven’t been affected particularly, and the overseas markets have started rising.

      The problem is that we’re really vulnerable to price drops in exports, and we have a major drag effect with the number of unemployed, which I’d expect will take a long time to peak in the official figures. At present there are more people who are unemployed and not getting the benefit than there are on it.

      But the governments only substantive policy that is having an effect during this recession is to make it it worse with some of the benefit bashing they’re doing. It encourages people not to spend.

      In other words, your analysis is pure wishful thinking…

      • tsmithfield 8.2.1

        So, letting people know they would have more money in their pockets isn’t stimulatory? If people know they will have more money tomorrow, they are more likely to spend today. Also, trimming the public sector is stimulatory if the money saved is invested in more productive areas, or left in peoples pockets so they can spend themselves.

        I know that there are other factors beyond our control at the moment at play. However, the tenor of the post by Marty is to lay it all at the feet of National. Consequently, I am just playing along with this line of thought that the government can override macro factors.

        • lprent 8.2.1.1

          So, letting people know they would have more money in their pockets isn’t stimulatory?

          Not when it is relatively peanuts for almost everyone, and when they can see what is happening overseas in the news. Most people are very aware that exports are 35% or so of our GDP and that we’d highly exposed to overseas economies. They act accordingly and start cutting back on the things that make them vulnerable, like debt.

          The problem with trimming the public service is taht you’re never quite sure if you’re trimming fat or muscle.

          For instance last year Paula Bennett trimmed a number of people out of the WINZ structure, both front-line and back-office. This year WINZ is overwhelmed and unable to hire because of a sinking lid policy. That causes major distortions in how fast people can be turned around out of unemployment. It means that people run out of savings earlier and get to the point that they are unable to get to job interviews…

          Idiotic…

  9. That’s a bit harsh, Marty. Key did keep his promise “to see wages drop”.

    Not sure if the petrol distribution assets themselves are a good buy in terms of their current usage, although some of the property sites certainly will be valuable in the future if converted to another use.

    • lprent 9.1

      I’m not sure that he really ‘promised’ that. It was just something he said when he didn’t realise that the media was listening. It must have been one of the few times during the campaigning that he actually said what he meant to carry out…

      Honesty in public isn’t exactly a key trait…..

  10. tsmithfield 10

    Lanthanide: “Or, alternatively, National has had no positive affect on the stats at all, and it is simply following the path of the worldwide recession and apparent recovery now underway.”

    Can’t agree there. If that was the case, then NZ would have simply tracked OZ. However, the big drop that occurred at the start of Nationals term was obviously much greater than what OZ experienced for the same period. Thus it can only be attributed to the effect of political parties. Since National wasn’t in long enough at the time to have any effect at all, the drop can only be attributed to Labour.

    • felix 10.1

      “If that was the case, then NZ would have simply tracked OZ. However, the big drop that occurred at the start of Nationals term was obviously much greater than what OZ experienced for the same period.”

      And what was the Australian govt doing at this time which ours was not?

      Come on retard, you’re nearly there…

      • tsmithfield 10.1.1

        Nice to see your cheery wee self back again, felix.

        FYI I am not one asking the following ludicrous question: “when is John Key going to keep his promise to close the gap with Australia?” when National set the objective for 2025 (as I pointed out above), not tomorrow, as Marty seems to want. If silly questions are asked, then expect some silly answers.

        However, putting all the stupidity aside, the truth of the matter is that Australia is always going to fare better in a recession than us due to economies of scale and their relative wealth in commodities. They are simply better set-up to weather these sorts of events than us. It wouldn’t have mattered who was in power or what we did, the result would have been pretty much the same.

        • felix 10.1.1.1

          However you are the one who made the statement I quoted above. So my question stands.

          I won’t be holding my breath waiting though, I think most readers have figured out that you don’t come here in good faith.

        • vto 10.1.1.2

          Mr Smithfield you can’t, with regard to Australia and NZ’s relative economic performance, say this “Thus it can only be attributed to the effect of political parties.”

          and follow it up in your very next post with this “It wouldn’t have mattered who was in power or what we did, the result would have been pretty much the same.”. Amongst others …

          You have some lots of serious cross-over and opposite contradictory things going on in them there posts..

          And felix behave. You had too much caffiene today?

          • felix 10.1.1.2.1

            Yes I have. Sorry v.

          • tsmithfield 10.1.1.2.2

            Marty has done these sorts of posts before where he tries to attribute differences in GDP between NZ and OZ due to whether National or Labour is in power. The truth is that there are a multitude of causes to explain the differences including demand for commodities, economies of scale etc.

            In those previous posts I was just matching Marty by trying to find simplistic patterns in what is in reality quite complex. I don’t seriously believe what I had written though. As I said, ask a silly question and get some silly answers.

            What I actually believe, and what I think the evidence would show, is that the fact that Australia has four times our population and much greater wealth in commodities etc, they will be able to endure recessions much better than us no matter what we do.

            To make my point, think about how Telecom has been able to survive for a long time with crap service and products that would have sunk a small company years ago. Big does make a difference.

            • lprent 10.1.1.2.2.1

              Ummm you should try writing a post of 400-800 words and get a complex topic across. You expend far more words than Marty does in comments and don’t seem to get your points across very often either.

              What is that saying, something like; those who can’t, criticise.

  11. 350ppm 11

    Sure, JK is failing to keep promises, but’s what’s with the crazy growth paradigm? We all know it’s physically impossible to achieve without externalising the costs (such as continued devastation of the environment), so we need to reframe the argument in terms of sustainability.

  12. Rich 12

    Why on earth do we want to “catch up”? As someone who moved to NZ from a financially wealthier country, I can’t see why people would want to live in a fucked up desert full of racists.

    Australia isn’t even that rich in global terms. If making money is all one cares above, then one could move to California, Switzerland or Japan, languages and immigration permitting. You can even make $74k shifting boxes in Afghanistan. Maybe we should be trying to catch up with the Afghans?

  13. burt 13

    So in this thread Labour supporters bag National for taking longer than Aussie to pull out of recession when NZ was in recession before Aussie because of falling productivity in the domestic economy. Then the economy was further whacked by Cullen spending the last of the gold on a train set, the global crisis hit then the cherry on top was the big ACC bill that had been hidden in the bottom drawer.

    The prudent stewards of the economy in Australia had money to spend on recovery packages, ironically also something National gets criticised for not doing. Go figure.

    • lprent 13.1

      Cullen spending the last of the gold on a train set

      Wrong – it was taxcuts. Bloody stupid idea. The most inefficient way to try and stimulate an economy known. But it wasn’t done for economic reasons. It was done for political reasons because the National and the other economic illiterates had been droning on about it for so long (prior to us killing our debt from Muldoon). Probably because they were stupid enough not to able to read a balance sheet?

      The taxtake had been maintained far higher in Aussie, so they had more room to manoeuvre.

      • burt 13.1.1

        lprent

        You might be right, Cullen’s tax cuts kicked in about the same point the graph actually starts. Cullen’s tax cuts were clearly the cherry on top, does that make the ACC bill hidden in the bottom drawer a smooth latte to finish off Cullen’s banquet of scorched earth policy.

  14. PK 14

    ***As someone who moved to NZ from a financially wealthier country, I can’t see why people would want to live in a f*cked up desert full of racists.***

    Because it has a great climate, magnificent cities, good wages, and friendly people?

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  • Remarks upon 77th anniversary of the bombing of Hiroshima and Nagasaki
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  • Govt signs NZ–USA agreement launching new opportunities for space sector
    An agreement signed today between the New Zealand and United States governments will provide new opportunities for our space sector and closer collaboration with NASA, Economic and Regional Development Minister Stuart Nash said. Stuart Nash signed the Framework Agreement with United States Deputy Secretary of State, Wendy Sherman. The signing ...
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  • Govt strengthens emergency management cooperation between NZ and the US
    An agreement signed today between New Zealand’s National Emergency Management Agency (NEMA) and the United States’ Federal Emergency Management Agency (FEMA) will strengthen global emergency management capability, says Minister for Emergency Management Kieran McAnulty. “The Government is committed to continually strengthening our emergency management system, and this Memorandum of Cooperation ...
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  • New Zealand to stay at Orange as winter continues
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  • Path paved for communities to reshape streets
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  • Boost for agricultural and horticultural science in schools
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  • Bumper breeding season boosts Kākāpō population
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  • Relationship with Malaysia to be elevated to Strategic Partnership
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    7 days ago
  • Call for New Zealanders to get on-board with rail safety
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  • Regional approach the focus at ASEAN and East Asia Summit talks
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  • Speech to the Criminal Bar Association
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  • The beat goes on as Government renews support for musicians
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  • Minister of Defence to attend Guadalcanal Commemorations in the Solomon Islands
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  • New programme to provide insights into regenerative dairy farming 
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  • More women on public boards than ever before
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  • Awards support Pacific women
    I am honoured to support the 2022 Women in Governance Awards, celebrating governance leaders, directors, change-makers, and rising stars in the community, said Minister for Pacific Peoples Aupito William Sio. For the second consecutive year, MPP is proudly sponsoring the Pacific Governance Leader category, recognising Pacific women in governance and presented to ...
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