The PREFU is much better than National wanted
- Date published:
4:33 pm, September 16th, 2020 - 51 comments
Categories: economy, election 2020, grant robertson, helen clark, Judith Collins, labour, uncategorized -
The Prefu is out! And I suspect Judith Collins will be quietly cursing the contents although already National’s line is clear, this is the worst PREFU ever. It is also the only PREFU every formulated at a time the world is experiencing a one in one hundred year pandemic that has caused the deaths of at an absolute minimum nearly a million people but yeah this is all Labour’s fault.
Henry Cooke has prepared this interesting backgrounder. Some highlights:
- It is widely-expected to that unemployment will be much lower than 9.8 per cent, because the country got out of lockdown faster than expected and the wage subsidy kept more people in work.
- Unemployment is expected to stick around for longer, as border restrictions remain in place and the world economy remains in turmoil for longer. It is expected to hit 7.7 per cent in 2021 and then stay above 7 per cent until 2023, when it drops to 6.6 per cent, then to 5.3 per cent the following year.
- Treasury believes that over the three months between March and June, when the lockdowns were at the strongest, New Zealand’s economy shrunk by 16.3 per cent.
- Very modest wage growth over the next four years is forecast. In the year to June 2021 wages will only go up by 0.9 per cent, followed by 2.5 per cent the following year, 2.6 per cent the year after, and 2.9 per cent in the year to June 2024.
- House prices are expected to shrink 4.4 per cent in the year to June 2021 before rapidly rebounding, with 4.7 per cent growth in the year to June 2022, 7.4 per cent the year after, and 8.5 per cent the year following.
- By June 2024 Treasury expects net core crown debt to reach $201.1b, or about 55.3 per cent of the GDP for that year. “This may seem very high, but its actually a lot lower than many comparable countries debt levels going into the crisis, let alone following it.”
No doubt National will be using some variant of the decade of deficits claim that it put out last time it was in opposition. That time it worked, a few people did believe that Helen Clark and Michael Cullen were responsible for the excesses of Wall Street and merchant bankers and the instigators of the global financial crisis. This time I suspect that these tactics will not work. Because the majority now realise that this Government and Grant Robertson in particular are canny managers of the economy.