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The minister who cried ‘recovery’

Written By: - Date published: 11:33 pm, March 7th, 2010 - 43 comments
Categories: unemployment - Tags:

Can someone at MSD please sit Paula Bennett down and explain to her what a season is? Our hapless Minister for Social Services is once again claiming victory over rising unemployment because of the seasonal drop in unemployment numbers.

Bennett says that the number on the dole fell by 4,224 (6.2%) last month and that that’s a great achievement. Sorry, I wish it was but it isn’t.

It’s seasonal variation and it’s actually a small reduction. The average decrease from January to February under Labour was 7,300 (8.0%).

Couple this smaller than usual fall with the larger than usual rise in dole numbers in December (a mammoth 13% jump compared to an average of 9%) and you can see that the underlying trend isn’t in the right direction. We’re certainly past the worst of it, where the increase totally drowned seasonal changes, but we’re far from being out of the woods.

Bennett says that the seasonal fall is due to her silly little ‘jobs schemes’ that are really just rorts for employers but the reality is that unemployment isn’t falling. For Bennett to be showering herself in praise over this is kind of like if the Minister for Climate Change were to claim the warming problem is alleviating because daily temperatures are falling, when actually it’s just autumn.

Bennett is also excited that the total number of people on benefits has fallen. Well guess what, that happened every year for the last ten too, except 2009 when she was minister. It is the normal state of affairs for benefit numbers to fall between January and February, remove the seasonal effect and the trend is still upwards.

Bennett’s staffers need to give her seasonally-adjusted numbers, see if that stops her making an arse of herself. She’s been claiming victory for half a year now. It’s gone from laughable to embarrassing to cringe-worthy.

This disgrace of a minister needs to get some semblance of understanding of the reality of the problem, and then do something about it.

But that’s not going to happen. Watch for Bennett to claim victory again with smaller than usual decreases in dole numbers.

[Update: oh dear. Colin Espiner, have you heard of critical analysis?]

43 comments on “The minister who cried ‘recovery’ ”

  1. Why not ask the question, how many people have moved off the unemployment benefit and onto a student allowance (roughly equivalent payment)? A release of those numbers would be useful.

  2. Pete DGeorge 2

    Bennett says that the number on the dole fell by 4,224 (6.2%) last month

    The average decrease from January to February under Labour was 7,300 (8.0%).

    These figures suggest the number of unemployed at the moment is about 68,000, and the average under Labour was about 91,000. That seems odd, or maybe it’s my maths.

    • lprent 2.1

      Look at the graph and remember that National are pretty damn useless at handling employment matters.

      It is the average from 1999-2008. At the start of that period there was enormous unemployment because the Nats had been screwing with employment by having an artificial recession in the early 90’s due to the budget cuts in the early 90’s. They cut too much and confidence fell. It was followed after a minor recovery in the mid-90s after Bolger sacked the architect of that. Then there was the external late 90’s recession, the asian flu.

      It took time with increases in structural support for employees and genuine incentives to work (like security in employment) in the early 00’s to reduce the unemployment. The Nats are currently disassembling those supports. So the risk to employees goes up and their confidence in spending goes down. It is a good route to prolonging a recession.

      Of course it is going to be interesting to see what comes through in the May budget. See if Bill English will repeat Ruth Richardsons over-cutting that destroys spending and business confidence. If there is one thing you can be sure of with National – they always take the seemingly easy route – because they’re too damn lazy to work effectively.

      • Clarke 2.1.1

        If there is one thing you can be sure of with National they always take the seemingly easy route because they’re too damn lazy to work effectively.

        It’s not laziness, lprent – it’s incompetence. They are simply not smart enough to do any better, as demonstrated by the lack of numeracy skills throughout Cabinet.

    • Marty G 2.2

      That’s because Labour inherited a situation where there were 160,000 people on the dole.

      By 2008, that was down to 17,700.

      • lprent 2.2.1

        It always amazes me how some people have no real awareness of history – even when it happened within their own lifetime.

      • Lanthanide 2.2.2

        So really, in fact, your graph is useless, because like National’s “average wage” it doesn’t actually portray the real state of affairs over that time period.

        It would’ve be much better to show multiple lines on the graph, averages for the years 99-00, 01-02, 03-04, 05-06 and 07-08. That would clearly show the rate of dole numbers decreasing over time.

        • Bright Red 2.2.2.1

          The purpose of the second graph is clearly to show the normal seasonal variations. The first graph clearly shows the decrease over time.

          Man, I don’t get you nitpickers. You can’t even stick to the subject of the post, it’s just whine whine whine when we haven’t even done the work that Marty has obviously put into this post.

          It’s a bit fucken off, frankly.

          • Lanthanide 2.2.2.1.1

            Right, I can see the point of the two graphs now. Perhaps a better title than “dole numbers” would be in order, like “seasonal effects on dole numbers”, which would make it clearer what it is trying to portray.

            • Bright Red 2.2.2.1.1.1

              Marty, I’m sure what Lanthanide is trying to say is: ‘thanks for giving up your time and doing to work to bring this information to the public. God knows we don’t get this depth of analysis from the msm’

              • mcflock

                Indeed.

                And L also apologises, no doubt, for commenting on an article without reading it (given that “seasonal” was used half a dozen times in 9 paragraphs).

  3. Key and Bennett are two peas in a pod, both think they have style when they don’t and both have no substance.
    Sadly give these two some media exposure and away they go, both unaware when they are making mistakes and the cringe factor, as the people around them tell them how wonderful they are.

  4. “In the last week of February, 38 per cent of those who visited Work and Income did not leave with a benefit. ”

    “Ms Bennett said the fall in beneficiary numbers gave her more confidence to proceed with tougher-work test plans”

    http://www.stuff.co.nz/the-press/news/3416103/Fewer-on-dole-as-reform-looms

    That should make the stats look good next time round, but the worrying thing is, if more than one in three who applied for a benefit didnt get it, then how will they get by ?

    Long gone are the days when you could survive on a benefit as some sort of lifestyle choice. Nowadays, if you go cap in hand to the work and income it’s pretty much a last choice desperate option with the next port of call being the food bank or the local park to score yourself a nice bench to sleep on.

    It must suck being employed at work and income, having to kick the buck up the line and say no to the poor and destitute based on tightening requirements for welfare eligibility, not to mention, on the other side of the desk, the frustration of being turned down with no recourse for complaint. You can’t even nut off at your case manager cos they’re just doing their job.

    Still, not to worry, we have assurances from on high that we shouldn’t be worse off…be happy, rejoice !

  5. Ed 5

    So why not show the lines for each year since say 2006 – that would show a more relevant trend than “National has much lower unemployment than Labour” – which we know is misleading, even if true on average.

  6. tsmithfield 6

    “Colin Espiner, have you heard of critical analysis?”

    Appears you haven’t either. Your graph and commentary completely ignores the fact that Labour left office at the end of one of the best economic times the world has experienced and National took office at the beginning of one of the worst.

    Nothing wrong with analysing Nationals performance re unemployment. But if you’re going to completely ignore the context of the dramatic change in the economic environment over that period then your analysis doesn’t qualify as “critical”.

    • Bright Red 6.1

      I read the post to be about whether or not Bennett is right to claim success in falling dole numbers. The information presented shows that in fact the fall is less than we would expect at this time of year, so there isn’t really the success that Bennett is claiming.

      I don’t see praising of Labour’s record or examination of the causes of that at all. little ts having his morning cry is it?

    • lprent 6.2

      ts: Your analysis ignores the fact that Labour took office in one of the worst economic situations NZ has ever been. The unemployment rates were almost double what they are now. The terms of trade were far worse than they are now. The government debt level was frightening. They took over from a national led government that had screwed up big time by destroying business confidence. For that matter, the nats had done exactly the same in the government prior to 1985.

      Labour left office with all of those things largely under control (our terms of trade were still of concern) in 2008. NACT has proceeded to increase unemployment, government debt, etc as they usually do. Admitted there was global financial crisis. However all indications are that most major countries are likely to pull out of it long before NZ does.

      This is the trademark incompetence of a national led government displaying again….. Perhaps you’d bother to learn some history so you can actually make a critical analysis. From where I’m sitting you appear to be indulging in wishful thinking.

    • No one is ignoring the crisis ts but Bennett is not telling the truth. This is a common theme with this Government style/spin over substance.

      Also Key use to compare us to Aussie in the good times and what posters on this site have proved over and over again is that we closed the gap on Aussie in many markers such as unemployment and wage rates under Labour.

      The Aussie Labor Government chose a different approach to handling the world recession one similar to what Labour NZ would have used when faced with the financial crisis and their Aussie unemployment has gone down and economy is powering a head, ours on the other hand is spluttering.

      Twist it all you like ts we are not catching up with Aussie. Key use to claim this was his goal you remember “in order to stop or best and brightest from fleeing Helen grads nanny state”. Well its looking more like nanny state now than ever and Kiwis are still leaving.

  7. tsmithfield 8

    Iprent “Labour left office with all of those things largely under control (our terms of trade were still of concern) in 2008.”

    Look at the trend on the graph. The trend change in unemployment actually started when Labour was in office.

    Iprent: “NACT has proceeded to increase unemployment, government debt, etc as they usually do. Admitted there was global financial crisis.”

    Why are you complaining about NACT increasing public debt? There used to be regular articles here complaining that we should have been spending more. If the advice of “the standard” contributors had been followed, we undoubtably would be in a similar position to Greece, Spain etc who have hugely increased their deficits to combat the recession but have little to show for it other than near sovereign bankruptcy.

    Iprent “However all indications are that most major countries are likely to pull out of it long before NZ does.”

    Now you are just being silly. Which major economies would that be other than China that may be inflating a huge bubble themselves, and Australia, who are China’s bitch at the moment?

    • Bright Red 8.1

      we hit ‘full employment’ (ie 3.5%, which is due to churn) in 2007 and stayed there until the recession.

      Which major economies [are growing quicker than NZ] be other than Australia who are China’s bitch at the moment?

      Jesus, TS, keep up with current events:

      The US grew 1.3% in the last quarter
      Canada, 1.2%
      UK, 0.3%
      Poland, 1.2%
      Mexico, 2.0%
      Japan 1.1%
      Australia, 0.9%
      France, 0.6%

      NZ’s growth in the last quarter reported: 0.2% – we were 19th equal out of 30.

    • lprent 8.2

      The trend change in unemployment actually started when Labour was in office.

      Yes, and Labour would have continued to do something about employment levels. NACT has done nothing and in some cases worse than nothing.

      Why are you complaining about NACT increasing public debt? There used to be regular articles here complaining that we should have been spending more.

      …. while not giving away bloody stupid taxcuts that just increase the level of public debt. Somehow you forgot to mention that there hasn’t been a post on this site that I’m aware of that supported any of the tax-cuts that have taken place. The solution to public debt is simple. Raise the tax rates back to previous rates to cover the current expenditure.

      Quite simply the tax cuts (even by Labour) were too damn early. The NACTs got themselves in a position that they were wetting themselves with excitement about taxes. Consequently we have gone from a position that we could have weathered the recession with relatively little public debt, to one where we are back in the usual National position of spending far too much on interest. National prefers to transfer debt loads on to future generations. It appears to be about the only thing that they are good at.

      Which major economies would that..

      Bright Red answered that. Many economies are doing better than NZ…. The list is pretty extensive and covers damn near every part of the political spectrum. National is simply pretty damn incompetent.

  8. Iprent said, “Your analysis ignores the fact that Labour took office in one of the worst economic situations NZ has ever been. The unemployment rates were almost double what they are now.”

    When Labour took office in 1999 the unemployment rate was 7.5 percent. Now it is 7.3 percent.

    Some specific age and ethnicity rates may be higher than they were in 1999 but “almost double”?

    • lprent 9.1

      I strongly suspect that you are mismatching two different figures there, but I don’t have time to check it out right now.

  9. tsmithfield 10

    Bright Red “Jesus, TS, keep up with current events:

    The US grew 1.3% in the last quarter
    Canada, 1.2%
    UK, 0.3%
    Poland, 1.2%
    Mexico, 2.0%
    Japan 1.1%
    Australia, 0.9%
    France, 0.6%”

    Na. Sorry, you don’t get the picture. A lot of those countries were in much worse shape than NZ due to the recession. For instance, the US has unemployment much higher than ours and has been having heaps of their regional banks going under. So a larger increase from a lower base is not as impressive as you might think

    To show the fallacy of your argument, which is the greater amount: A 50% increase from a base of 10, or a 10% increase from a base of 100?

    • Bright Red 10.1

      “To show the fallacy of your argument, which is the greater amount: A 50% increase from a base of 10, or a 10% increase from a base of 100?”

      except that the differences aren’t on that kind of scale. It’s true that NZ’s economy shrank relatively little (year to Q3 2009 was 1.39% smaller than year to Q3 2008, that’s in constant USD PPP) but the recession was smaller than others only by a small amount. 5 OECD countries had smaller recessions and another 11 shrank by less than 4% including the US.

      So marginal differences in size of recession. Growth rates many times our own.

  10. tsmithfield 11

    Bright Red “except that the differences aren’t on that kind of scale. It’s true that NZ’s economy shrank relatively little (year to Q3 2009 was 1.39% smaller than year to Q3 2008, that’s in constant USD PPP) but the recession was smaller than others only by a small amount. 5 OECD countries had smaller recessions and another 11 shrank by less than 4% including the US.

    So marginal differences in size of recession. Growth rates many times our own.”

    However, Bright Red, a lot of those economies have been basically printing money to keep their economies going. Interest rates are practically zero in both the U.S. and in Europe. Compare that to NZ at 2.5% and Australia at 4%. The relative differences in interest rates gives a much better indication of the health of the various economies.

    A lot of the growth that is seen in these countries is recognised as being the result of artifical stimulus rather than true healthy growth. In fact, one of the great concerns for the world economy is what is going to happen when all the stimulus is eventually withdrawn. The big question is are a lot of the major economies essentially keep economic corpses alive with life-support.

    In that context, I think our 2% growth is probably reasonably impressive if it reflects true growth rather than just stimulus injections.

    • Bright Red 11.1

      “In that context, I think our 2% growth is probably reasonably impressive if it reflects true growth rather than just stimulus injections.”

      0.2% genius.

      Less than population growth.

    • Pascal's bookie 11.2

      Just so as I know, what’s the difference between ‘true growth’ and ‘stimulus growth’?

      Is property/stock market bubble related growth ‘true growth’?

      How about growth based on exports to economies in a bubble?

      Or is it a religious based thing re ‘govt’s bad, randian superheroes good’?

  11. tsmithfield 12

    Bright Red “0.2% genius.

    Less than population growth.”

    Its more impressive because at least it is probably sustainable. There are big questions being asked about many other world economies about whether their growth rates will be sustainable once stimulus has been removed.

    • Bright Red 12.1

      Yeah, falling per capita economic growth is great news. Wonderful spin ts.

      Hold on tight Kiwis, we’ll be catching Aussie any day now!

      • Bright Red 12.1.1

        why don’t you just admit that you can’t criticise the Key government’s performance because you love him and you have an irrational hatred of Labour?

        There’s no shame in it.

        Ok, there’s a lot of shame in it, but it’s better to get it out in the open.

  12. tsmithfield 13

    Bright Red “why don’t you just admit that you can’t criticise the Key government’s performance because you love him and you have an irrational hatred of Labour?”

    Why can’t you take your focus off headline growth figures and look a bit deeper. Think of it this way. One company makes a small but sustainable profit without taking on huge amounts of extra financing. Another company borrows huge amounts of money, gets a lot greater growth in the short-term due to the extra money, but never makes enough profit to cover the cost of borrowing. Which company do you think will end up best in the end?

    • Bright Red 13.1

      ts. Can you say strawman? Your assumption is that we couldn’t do anything to boost growth because we would end up in unsustainable debt if we did.

      In fact, our debt is tracking well below the track that English put us on, claiming it was sustainable. Our gross debt is 3.5 billion less than English expected just in December.

      then you’ve got to consider the economic cost of unemployment – $11K a year per person on the dole. thousands of lost tax. higher crime bills etc etc etc.

      This all started off with you claiming that NZ had done better than other countries. You were shown to be wrong about that.

      Now you’re trying to say that if you squint really hard you’ll see that other countries’ gowth is just a mirage and under your hero Key things are best in NZ. that’s not true either.

  13. tsmithfield 14

    Bright Red “This all started off with you claiming that NZ had done better than other countries. You were shown to be wrong about that.”

    Exactly where did you show me that? By your logic someone who has living the high-life on the back of their credit card is better off than someone who doesn’t.

    • Bright Red 14.1

      No, by my logic (and te logic of most fo the developed world), someone who turns their starter motor over is more likely to get somewhere than someone who sits waiting for the car to start itself.

  14. Rex Widerstrom 15

    Can someone at MSD please sit Paula Bennett down and explain to her what a season is?

    Yeah, I mean ferchrissakes, how hard is it to prepare a briefing on this in the Minister’s preferred format?

    A picture of the sun, some diagonal lines for rain, some falling leaves, and maybe a happy dancing lamb for “spring”. Get your act together MSD graphics people!!!

  15. tsmithfield 16

    Bright Red: “No, by my logic (and te logic of most fo the developed world), someone who turns their starter motor over is more likely to get somewhere than someone who sits waiting for the car to start itself.”

    The figures you pointed to showed GDP rates for a wide variety of countries. Within that range of countries some are doing very well at the moment (e.g. Australia). Whereas some are in a complete mess (USA and much of Europe). Therefore, I don’t see you have any argument to say that NZ is any worse than any other country on the basis of change in GDP.

    The US, for instance, is getting a gain in GDP through borrowing heavily and printing money. They have changed the accounting standards for their main banks that would otherwise be insolvent. They have huge amounts of commercial real-estate loans that are likely to default this year. Unemployment is running at around 10%, with a real rate probably closer to 20%. GDP gains for the US have largely been at the cost of slashing millions of jobs. The effect has been to make businesses more profitable through lower labour costs. If it weren’t for the Chinese funding their deficits, the US would be stuffed.

    NZ has been also investing in stimulus (Bringing forward roading projects etc). So its not like we’ve been doing nothing. However, because we have not been in as much of a mess we haven’t had to do as much.

    But to say that the US is performing better than NZ on the basis of a higher GDP figure is patently ridiculous given the huge problems in the US economy compared to ours.

  16. Lindsay 17

    Iprent: “I strongly suspect that you are mismatching two different figures there, but I don’t have time to check it out right now.”

    That’s convenient. They are both HLFS figures.

    Actually 7.5 percent was probably the annual average. At September 99, just before the election, it was 6.8 percent. Lower than today.

    http://www.jobsletter.org.nz/stt/stathome112.htm

    • Marty G 17.1

      you, you rely on jobs letter? I thought you were meant to be some serious commentator.

      Heard of infoshare?

      And you’re right about the unemployment rate. But lynn meant to refer to the number on the dole.

  17. Lindsay 18

    Rob Carr: “Less than usual. The number of students is becoming limited at universities.”

    Student allowances are also paid to people attending other institutions.

    Given the student allowance numbers for the past five years…

    2005 56,806
    2006 59,431
    2007 62,479
    2008 65,702
    2009 82,636

    … I prefer to wait on official first quarter statistics to see if the upward trend has reversed.

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