Yesterday, former National media trainer Paul Holmes and former National Party President Michelle Boag attempted an extraordinary hatchet job on Phil Goff on Q+A. No analysis of the real policy divide that Goff and Labour with National carved out at the national conference, just attack – why? The economy, policy, Key’s fading brand, and the polls.
The economy – the economic data goes from bad to worse. We’re almost certainly in recession right now. Despite John Key’s assurances that we would be in the midst of a strong recovery right now, his leadership has seen the weakest period of growth following a recession on record. Each quarter has underperformed expectations and the last half of this year will probably see the economic shrink.
Despite English claiming that unemployment had definitely peaked just a couple of weeks ago, the number of people on the dole continues to climb. The median income shrank in the last year in nominal terms. Add in inflation and the median Kiwi household is over 5% worse off than when National came to power.
Key and Bill English have no clue. English spends all his time making silly statistical games to try to convince us that the opposite of the truth is happening (‘wages are going up!’ If you only count the wages of people in full-time employment, and ignore part-timers, and over-time, and all the people who have lost their jobs or are on reduced hours – and use an average, which is distorted by the fact that most people who have lost their jobs were low income).
National has tried to spin the turnabout in household savings as a good thing, and in normal times it would be. But what it shows now is that people are still extremely concerned about the future – they think their jobs are at risk, so they’re refusing to spend, which actually undermines the economy further. Every piece of bad economic news is actually encouraging households to behave in a way that worsens the situation. (it’s the classic contractionary spiral). The Keynesian response is for the government to increase its spending but that has barely worked this time, and the government is starting to withdraw its economic stimulus, even though its clear the private sector is in no position to stand on its own two feet.
The National leadership won’t publicly admit there’s a problem but anyone with half a brain knows that the economy is going to be the big issue over the next year, and it’s a loser for the government.