National is a party weak on policy. It has had to drop nearly every one of its principled but unpopular policies to get itself in a position to win an election. This raises the question of why someone would vote for National, rather than keep the current lot. One of National’s answers is to claim that New Zealand needs National’s supposedly superior economy management because the economy is going down the toilet. To further this claim, National and its allies need to talk down the economy.
It’s a strategy that National and business have employed in each of the last three election years. Proclaim a coming recession, blame the government, say that only National can save us. Enough repeating of dire economic warnings and the media will pick it up, the public will start to believe the spin, and you might just get the downturn you’re hoping for. When poor hapless old Bill English tried it in 2002, the economy grew at 5.1%. Don Brash and John Key tried it on again in 2005 but the economy was too resilient and maintained a 2.7% growth rate. Even their gleeful predictions of recession in 2006 only came to two quarters of 0.1% growth in the end.
This year, the economy is facing real difficulties and this has encouraged National to push the â€˜recession’s coming, elect us’ line harder (because we led New Zealand during its last two recessions?). Doom and gloom predictions of doubling unemployment are being bandied about by National’s allies. But don’t be fooled, things are not as bad as they would have you believe. Yes, there has been 6% inflation in food, the housing market is static, and petrol is up. But New Zealand is going into this rough patch with record low unemployment, strong wage growth, a mammoth dairy payout, business tax cuts in place, and income tax cuts coming. In fact, the economy is in such good shape that growth accelerated throughout last year and totalled 3.1%. Unemployment is not going to grow substantially because low unemployment is self-reinforcing employers are afraid to let staff go during soft patches in case they can’t get them back when things pick up and lots of people in work means lots of domestic demand.
And remember who really has the better record on growth.