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NZ Growing Faster Than Aussie, US, Japan, and UK

Written By: - Date published: 11:16 am, April 10th, 2008 - 42 comments
Categories: economy, election 2008, labour, national - Tags: , , ,

The Reserve Bank produces a series of helpful tables of economic data. One table compares our growth to that of Australia, the US, Japan, and the UK. Here’s a graph comparing growth across the countries between National and Labour’s periods in government.

nzvsworld.JPG

National has a pathetic track record on growth. Under them, our economy grew 1% a year slower than Australia’s, slower than the US’s, and barely faster than the UK’s.

Since we tossed them out, New Zealand has grown faster than Australia, the US, Japan, and the UK. The gap in GDP per capita that opened under National has been partially closed and wages have grown after stagnating under National.

But it is still not good enough. To make up the ground we lost under National we need growth to continue and stronger workers’ rights to ensure the benefits of growth go to those who make it happen. That requires a Government that is committed to high employment and high wages, and has the competency to deliver.

Labour needs to do more; National has proven they simply are not up to the task.

42 comments on “NZ Growing Faster Than Aussie, US, Japan, and UK ”

  1. johnn 1

    Have you got a link into the dataset at all ?

    [sorry, meant to include it. linked now. SP]

  2. Sam Dixon 2

    but, but, Labour is wrecking the economy!?

    no come back from the righties I see. Numbers speak for themselves

  3. Perhaps this might have been a better link rather than the poppycock graphs above.

    http://www.rbnz.govt.nz/keygraphs/Fig2.html

  4. Peter Nelson 4

    Why then are wages not rising as much as Australia?
    How much of the growth is due to bigger government in NZ wrt Aust?
    Spam Dixon – statistics can say anything you like them too.

  5. SweeetD 5

    stats are wonderful things eh Pierson, can show you anything you want to see, or want to show people what to think. Typical labour, all smoke, mirrors and bullshit.

  6. Lampie 6

    Perhaps this might have been a better link rather than the poppycock graphs above.

    think both show merits towards how well we have done as that link of yours said, we have done better than our two largest trading partners 🙂

  7. I’m glad you are following the Troy line there SD – I agree with you completely. I mean who would base their case on stats?

    I think we should immediately abolish the census, the department of stats and most of treasury and instead rely on the vast array of anecdotes talkback radio provides for us. Think of the savings we’d make!

    Y’know I think I’m starting to understand how National party “policy” is written…

  8. r0b 8

    Sweetie, is that really the best you can do? Cover your ears and shout “I can’t heeeear you!”. Why not take a look at the numbers yourself, and show us where you think Steve has it wrong?

    You too HS, what makes Steve’s graphs “poppycock” (lovely word, underused) exactly?

  9. Tane 9

    SD: to be fair economic growth rates provided by the RBNZ are relatively uncontroversial.

    Peter Nelson: Australia has had stronger unions and wider provision of collective bargaining, meaning the benefits of growth have been shared more widely than in New Zealand.

    It’s also untrue that Australian wages have been growing faster since 1999 – the last major increase in the wage gap came under National.

    The trans-Tasman wage gap

  10. Higherstandard 10

    rOB

    Haven’t got time for in depth discussion – suffice to say that one has to investiagte the trends and circumstances for our performance vs competitors over time as in the graph on the RBNZ website rather than grabbing the figures reformatting and trying to make a point as per Steve’s post.

    If thread is still running tonight I’ll expand on the stream of conciousness above – you may be surprised that I agree with Tane’s comments regarding Australia sharing benefits of growth more widely than in NZ.

    Have a good afternoon.

    PS we should endeavour to bring back some more underused words far more fun than expletives all the time !

  11. r0b 11

    Haven’t got time for in depth discussion – suffice to say that one has to investiagte the trends and circumstances

    Rightly or wrongly, simple effective headlines and messages are the ones that have an effect. Consider “Iwi / Kiwi” – how many issues and complexities were swamped in that little gem? So, I don’t disagree with you that a more detailed analysis is more revealing, but it is also true that far fewer people are likely to read it.

    Have a good afternoon.

    Likewise I’m sure.

    PS we should endeavour to bring back some more underused words far more fun than expletives all the time !

    I quite agree. I’m going to look out for an opportunity to call someone a “dingbat”.

  12. Steve Pierson 12

    I’m sorry. HS, SweetD etc – on what grounds do you contest the validity of the graphs, other than that they don’t show want you want to believe?

    The figures are straight from the reserve bank table i linked to in the article – they are the average of the annual growth rates in each quarter during which Naitonal was in power during the 1990s and each quarter during which Labour has been in power in the 2000s.

    You’re implying I’ve manipulated them somehow, well make your argument.

    You know what makes an even more interesting graph? when you show the cumulative growth under National and Labour – since National had us in recession for the first 2 years we didn’t actually grow under them until 1994 – Labour had stronger growth up front, and growth is compunding so the result is even worse for National – if I remember rightly National’s total growth after nine years was matched by Labour in 7

  13. Billy 13

    Hey Steve,

    In your view, what policies of the Labour Party have caused this growth?

  14. Lampie 14

    Haven’t got time for in depth discussion – suffice to say that one has to investiagte the trends and circumstances for our performance vs competitors over time as in the graph on the RBNZ website rather than grabbing the figures reformatting and trying to make a point as per Steve’s post.

    Save you the bother http://www.rbnz.govt.nz/monpol/review/0096149.html

  15. Lampie 15

    I’m sorry. HS, SweetD etc – on what grounds do you contest the validity of the graphs, other than that they don’t show want you want to believe?

    They can’t, see link above, They worked out an average as you did, 1990’s was actually 2.5% 🙂

  16. Occasional Observer 16

    It’s a facile argument, Steve. Yes, the statistics are accurate. Your conclusion–that Labour is a better economic manager–is banal.

    Here’s a fact: National inherited a stagnant and failing economy in 1990. Throughout the 1990s, National encountered several major economic shocks that were well beyond the government’s control. Despite this, National turned a stagnant economy into a consistently growing one throughout the 1990s, and massively reduced the debt burden. Every economic indicator was substantially better, and following a more positive trend, at the end of 1999, than it had been when National had taken office in 1990.

    Cue to the Labour Government. It inherited a growing economy, falling unemployment, low inflation, declining debt, and rapidly growing budget surpluses. Since 1999, the Government hasn’t had to deal with any severe, external, economic shocks.

    Now, it’s a reasonable argument that the current slow-down in the economy are partly due to external factors. But if you’re going to blame National for the Asian crisis, then you have to accept Labour is to blame for the sub-prime crisis, which given business confidence levels, and every other economic indicator heading south, is not an argument you’d want to sustain for very long, going into an election year.

    But I suspect that wasn’t the point of your facile post, Steve. You just wanted to compare two completely and fundamentally different economic eras, and draw inane conclusions from them.

  17. Peter Nelson 17

    Tane, you must be useless at your job if unions have been more powerful in Aust than NZ with a Union loving government we have had for 9 years in NZ.
    Contrast this with Australia, even allowing for their Work Choices legislation.

    IrishBill says: and you must be stupid if you think you can come on this blog and contribute nothing but dull insults to the blog owners. You have been warned.

  18. Steve Pierson 18

    OO – so Government have nothing to do with economic performance? or, more accurately, you argue that national is not responsible for any negative economic outocmes during its time in power but responsible for all the positive outcoems, and vice versa for Labour.

    I’m holding them to the same standard. Both parties have had a similar time in power, economic performance under National trailed this important set of countries. under Labour economic performance has beaten the same set of countries.

    Lampie: did you include 1990 to get 2.5%? Becuase National came to power in October 1990, so I only count from Q1 1991-Q4 1999.

  19. Lampie 19

    But I suspect that wasn’t the point of your facile post, Steve. You just wanted to compare two completely and fundamentally different economic eras, and draw inane conclusions from them.

    I think Steve’s conclusion is that under a Labour Govt. we have perform better than our trading partners than when a National admin was in power. As those external factors affected them as well.

    “The New Zealand economy will continue to be hit by external shocks, and will remain less diversified than other larger economies. As a result, it is probably unrealistic to expect New Zealand to achieve the same level of stability in the real economy as most other OECD countries.”

  20. Steve Pierson 20

    Billy – off the top of my head

    Labour has:
    -increased the minimum wage and other wages through labour policy, that creates domestic demand (money going to people who will spend, rather than shareholders more likely to save and often offshore)
    -lowered business tax and compliance costs (that $2bln reduction in compliance costs is often forgotten)
    -negotiated a series of FTAs
    -has not cut benefits and spending like National did – cuts pull demand put of the economy
    -boosted superannuation and government spending, adding demand to the economy
    -invested 10 times the amount in roading that National did
    – run record low unemployment for nearly four years, putting more demand into the economy, and boosting wages – Government policies do influence the unemployment rate – KBB did an analysis a while back on how unemployment dropped 1.5% following the jobs jolt.
    – paying down Government debt, increases investor confidence in the continuing stability of the NZ economy, encouraging investment
    – higher wages to police, doctors, nurses, etc – more demand in the economy
    – Working for Families, higher after-tax incomes for 370,000 families
    – lower crime rate due to higher employment, more police = greater social stability = more investment
    – increased health spending = healthier workforce that is more productive than it otherwise would be
    – all increased government spending has a multiplier effect throughout the economy = more nurses with better pay buy more cars, buy more fridges, spend more at the supermarket. the reverse occurred when National cut benefits and the civil service, not only were those people’s demand and production cut but other people went out of work because of lower demand.

  21. Lampie 21

    Lampie: did you include 1990 to get 2.5%? Becuase National came to power in October 1990, so I only count from Q1 1991-Q4 1999.

    yes correct, we also came to power in 1999 🙂 Thought you were just been too kind 🙂 Also was going off the RBNZ as they did the decade. Will be interesting to see what they say when the 2000s are up. As biggest growth period since WW2. 🙂

  22. Billy 22

    Good one, Steve. Applying your standards, it is quite OK to compare the policies of Harding favourably with Franklin Roosevelt.

  23. SweeetD 23

    Pierson, you fully know that comparing two different economic periods and then suggesting that performance or not in one period over another is due directly to a governments economic policy is bullshit. Without understanding the history of the time, a simple snapshot graph is bullshit.

    To hold them both to the same standard as you suggest, you would need 2 NZ’s, and run them both in parallel using both the nats and labours policys. Again, la la land stuff as it is impossible.

    Hence my comment above, stats can tell any story you want.

  24. Lampie 24

    negotiated a series of FTAs

    And plenty more too (what is Key on about??? http://www.scoop.co.nz/stories/PA0804/S00230.htm)we trying with every bugger!!! Including India!!!!

  25. Lampie 25

    Pierson, you fully know that comparing two different economic periods and then suggesting that performance or not in one period over another is due directly to a governments economic policy is bullshit. Without understanding the history of the time, a simple snapshot graph is bullshit.

    It is more they performance against other countries in the same period right Steve? I.e we have performed better against OZ NOW than we did when under National. And this comment As a result, it is probably unrealistic to expect New Zealand to achieve the same level of stability in the real economy as most other OECD countries.’

  26. Steve Pierson 26

    Dead on Lampie – the point of comparing to other countries is that the international impacts can be largely discounted as a cause of the difference in gorwth between National and Labour

  27. r0b 27

    So SD, you dingbat you, is presenting the complex legal, racial and social situation that arose as a result of the foreshore and seabed legislation using “Iwi / Kiwi” billboards also bullshit? If not, why not?

    Simple messages do have their place, and if you want the full story then Lampie posted a very interesting rbnz link above. And unlike “Iwi / Kiwi”, Steve’s graphs do provide some context. The NZ economy is compared to other countries. All were exposed to similar external environments (Asian crash etc), and the relative performance of the economy under National and Labour governments can be compared with the relative performance of other countries over the same time periods. NZ shows the greatest improvement in the second (Labour) period.

  28. Lampie 28

    Right on Steve, thought you did well 🙂

  29. Billy 29

    Nice use of dingbat, R0b.

  30. Lampie 30

    Nice use of dingbat, R0b.

    how about, Billy is a dingbat, dingbat

  31. r0b 31

    Blogging would be much more fun if we all used anachronistic insults (if we had to use insults at all, of course). We could do so much with Shakespeare, for example!

    http://www.pangloss.com/seidel/shake_rule.html
    http://www.renfaire.com/Language/insults.html
    http://petelevin.com/shakespeare.htm

    Yo Billy – thou dissembling onion-eyed canker-blossom!

  32. Billy 32

    I think this is beyond brilliant, and I will certainly be employing it from now on. I look forward to calling Tane a mewling fat-kidneyed hedge pig at just the right moment.

  33. Tane 33

    You’ll be careful there, ye paunchy ill-breeding lout.

  34. Billy 34

    My, isn’t this fun.

  35. IrishBill 35

    You geeks. And I don’t mean in the archaic circus-freak sense.

  36. r0b 36

    Come on IB, give it a try! Haven’t you always wanted to call someone a villainous fool-born foot-licker? I know I have…

  37. Occasional Observer 37

    No, Steve. Again your economic illiteracy is showing.

    Fact: National inherited an economic disaster in 1990. New Zealand suffered several major, external, economic shocks during the 1990s. Despite this, New Zealand’s economy improved radically, to the point that every major economic indicator had improved dramatically over the period. Dramatic rises in unemployment were stalled and turned around; inflation and interest rates were at their lowest levels in a generation; economic growth was the strongest it had been in fifteen years; crown debt was declining dramatically, and government was in surplus for the first time in over a generation, and New Zealanders were staying in New Zealand.

    Fact: Labour inherited a strong economy with sound fundamentals in 1999, and has not suffered any significant external economic shocks since 1999. New Zealand’s economy has grown steadily since that time. It is clear, however, that New Zealand is ill-prepared for the effects of the sub-prime crisis, with all the major forecasters predicting a downturn in the economy over the next few years. Every major economic indicator, from inflation to interest rates, to unemployment to debt reduction, and New Zealanders are heading overseas in record numbers.

    To discount external factors shows a degree of ignorance that I never thought even you were capable of, Steve. Well done. You’ve surprised me.

  38. Paul Williams 38

    Possibly the most important thing to note with these data is that they clearly show the NZ economy is more dynamic and exposed that the US and Australian economies. Most of NZ GDP is domestic consumption and we have low-levels of trade intensity (principally in commodities) therefore the external factors have a more pronounced impact.

    I think Steve’s post proves the lie coming from National that it’s the better economic steward, however no government is able to claim full credit for growth or buffer NZ from international trends. What Labour has done however is implement policies to enhance business performance – they might be policies National may now support, but they are policies National hadn’t e.g. investing in workforce skills, increasing tax incentives for R&D and opening new markets through trade agreements. Though it’ll be unpopular with the less informed and more reactionary readers here, there’s also an argument that that increases in the minimum wage improve productivity by encouraging firms out of low-wage, low-value added business.

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