national's economic road test

7/29/2019 National's Economic Road Test

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NATIONALS

ECONOMICROAD TESTJANUARY 2013

DAVID PARKER, LABOUR FINANCE SPOKESPERSON


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TABLE OFCONTENTSNATIONAL - MANAGING OUR DECLINE...............................................................................................3

AVERAGE ANNUAL ECONOMIC GROWTH: 1935-2012...................................................................3

UNEMPLOYMENT.............................................................................................................................................5

THE DOUBLE DIPTON RECESSION .......................................................................................................7

GDP PER CAPITA - NZ V AUSTRALIA ....................................................................................................9

THE FISCAL HOLE.......................................................................................................................................... 11

SUPER FUND ................................................................................................................................................... 13

NZ SUPER COSTS .......................................................................................................................................... 15

MIGRATION TO AUSTRALIA ..................................................................................................................... 17

INCOME INEQUALITY .................................................................................................................................. 19

OVERSEAS BORROWING .......................................................................................................................... 21

EXPORTS .......................................................................................................................................................... 23

EXCHANGE RATE .........................................................................................................................................25

A BETTER WAY A LABOUR WAY ..................................................................................................... 27


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NATIONAL

MANAGING OURDECLINENational promised a brighter uture. It isnt delivering.

Ater our years o National our economy is not delivering or ar too many ordinary New

Zealanders. Signicant problems need to be addressed but the Government reuses to make the

changes that need to be made.

Unemploymenthassurgedtoa13yearhigh.

Noextrajobsoverthelastyear.

Growthistheworstofanygovernmentin50years. Therealeconomyofmanufacturingandexportsoutsidetheprimarysectorisindecline.

Thecurrentaccountis$10billionintheredandgettingworse.

Revenuehasdropped$13billionbelowprojectionsover5years,forcingtheGovernment

toraisepetroltaxestokeepitssurplusdreamalive.

TheovervalueddollariscripplingourexportersandincreasingNZsoverseasdebt.

National throws the blame wherever it can. At Europe, at Australia, at voodoo economists.

But the blame lies squarely on their shoulders. As this road test shows they have ailed to deliver

ontheirownpromises,letaloneNewZealandersexpectations.

Promiseslikecreating170,000newjobs,whenthesadtruthisthesamenumberofpeopleare

looking or work and even more have let or Australia under their watch.National promised a brighter economic uture and to close the wage gap with Australia. Neither

has been achieved.

The truth is National doesnt have the ideas or the willingness to make the changes needed.

Behindeverynumberisapersonwhofailedtondajob,afamilythatcantkeepaheadoftheir

bills and a company owner who has had to close doors or lay o workers.

Kiwisaresickoflisteningtofouryearsofexcuses.Theydeserveaction.Theywantagovernment

that will be hands on and make a dierence.

AVERAGE ANNUAL ECONOMICGROWTH: 1935-2012

NATIONAL IN GOVERNMENT: LABOUR IN GOVERNMENT:

SOURCE: STATISTICS NEW ZEALAND, BRIAN EASTON - HISTORICAL GDP ESTIMATES

2.9% 3.7%


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170,000 NEW

JOBSSOURCE: NATIONAL PARTY TELEVISION COMMERCIAL, NOVEMBER 2011

ZERO NEW JOBSCREATED IN

THE YEAR TOMARCH 2013.

SOURCE: TREASURY HYEFU 2012


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UNEMPLOYMENT

SOURCE: STATISTICS NEW ZEALAND, HOUSEHOLD LABOUR FORCE SURVEY

0

1

2

3

4

5

6

7

8

2005Q1

2005Q2

2005Q3

2005Q4

2006Q1

2006Q2

2006Q3

2006Q4

2007Q1

2007Q2

2007Q3

2007Q4

2008

Q1

2008Q2

2008

Q3

2008Q4

2009

Q1

2009Q2

2009

Q3

2009Q4

2010

Q1

2010Q2

2010

Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012

Q1

2012Q2

2012

Q3

Unemployment Rate (Seasonally adjusted)

80

90

100

110

120

130

140

150

160

170

180

2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3

Numberunemploy

ed(000s)

Number of unemployed people (Seasonally adjusted)


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THE ECONOMIC

RECOVERY ISA BIT FLATTERTHAN WASEXPECTED, BUTTHAT IS A GOODTHING.SOURCE: BILL ENGLISH, NOVEMBER 2010

SINCE 2008, NEW

ZEALAND IS THE ONLY

DEVELOPED COUNTRY

OUTSIDE OF EUROPE

AND JAPAN TO

ENDURE A DOUBLE

DIP RECESSION


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THE DOUBLE

DIPTON RECESSION

ADVANCED ECONOMIES WHICH EXPERIENCED

A SECOND RECESSION BETWEEN 2008-2012

EUROPE OTHER

Czech Republic (2012) Japan (2010)

Finland (2012) New Zealand (2010)

Greece (2010)

Hungary (2008)

Iceland (2010)

Ireland (2008)

Italy (2011)

Luxembourg(2009)

Netherlands (2011)

Norway (2010)

Portugal (2010)

Slovenia (2012)

Spain (2011)

United Kingdom (2011)

SOURCE: OECD

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3


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GDP PER CAPITA -

NZ V AUSTRALIA

THE WAGE GAPNEW ZEALAND AUSTRALIA

AVERAGE WEEKLY WAGE

MAY-JUNE 2012

$872.61 $1022.10

SOURCE: Stats NZ Quarterly Earnings Survey. Australian Bureau o Statistics Average Weekly

Earnings.OECDPPPandExchangeRates.

Closing the wage gap with Australia was a cornerstone o Nationals 2008 election promise.

The Government has stopped talking about this now. The Finance Minister recently said, it

is no good crying at the airport or wringing your hands over New Zealanders heading to

Australia.

TheweeklywagegapwithAustraliahasgrownby$27.73aweeksinceNationalhasbeenin

oce,from$121.76aweekinDecember2008,to$149.49today

The Government still wont even provide a milestone date by which the wage gap will be

back to where it was when they took oce.

SOURCE: STATISTICS NEW ZEALAND, AUSTRALIAN BUREAU OF STATISTICS


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SHOW ME THE

MONEYSOURCE: JOHN KEY, PRE-ELECTION DEBATE, 2 NOVEMBER 2011

GROWTH IS SO

POOR THATCROWN REVENUE

PROJECTIONSKEEP GETTING

WORSE.


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THE FISCAL HOLE

Since 2011 the Key

Government has been

quietly reducing revenue

projectionsbecausethe

economy is fat.

Now the shortall totals

13.2 billion dollars

DOUBLE the estimated

value o Nationals sale o

state assets.

May 2012

Dec 2012

Pre-election 2011

2012 2013 2014 2015 2016

MIND THAT GAP:THE $13.2B FISCAL HOLE

REVEALED

FORECAST CORE CROWN REVENUE 2012-16

50000

60000

70000

80000

Millions

SOURCE: TREASURY - PREFU 2011,

BUDGET 2012, HYEFU 2012

Nationals hands-o approach to the economy is

not working. Repeated downgrades to job and

growth orecasts have opened up a $13 billion

hole in the fve-year Government accounts.


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40% OF THE

SUPER FUND TOBE INVESTED INNEW ZEALAND.

SOURCE: NEW ZEALAND NATIONAL PARTY 2008 MANIFESTO

PROPORTION

INVESTED IN NZUNCHANGED.


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SUPER FUND

SOURCE: The Guardians o the New Zealand Superannuation Fund

NATIONALS 2008 POLICY PROMISE:

Nationals policy is or the Super Fund to invest a greater proportion in New Zealand, while also

saeguarding the und as a source o uture New Zealand superannuation payments, and overseen by

independent guardians. National will set the target o at least 40% o the Super Fund to be invested

in New Zealand.

National said that more o the Super Fund was not invested in NZ in 2008, because Labour has done

nothing to generate new investment opportunities. Thereore, National has to accept responsibility

or ailing to create investment opportunities in New Zealand in 2013.


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GOVERNMENT

TO STRENGTHENFISCALRESPONSIBILITY

THE GOVERNMENT

REFUSES TO MAKEPROVISION FORFUTURE FISCAL

PRESSURES.

SOURCE: BILL ENGLISH, BUDGET 2012


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NZ SUPER COSTS

SOURCE: TREASURY, HYEFU 2012

FISCAL RESPONSIBILITY REQUIRES RESPONSIBILITY AROUND NZ SUPER

Ironically, the Finance Minister claimed in the 2012 Budget that, The Government is proposing

introducing some additional principles into Part 2 o the Public Finance Act that ministers would have

to take into account when setting scal policy.

The proposed changes are designed to ensure greater transparency around how government

decisions aect the wider economy and uture generations.

The single largest scal pressure in the government is the looming cost o NZ Superannuation. In

threeyears,theannualcostofNZSuperwillexceedannualspendingonallofthe welfaresystem,

or all o the education system rom pre-school to tertiary. It will be large multiples o spending on

unemployment.Andwiththeretirementofbabyboomers,alongwithrisinglifeexpectancy,thecost

pressures will only rise.

Nationals reusal to deal with the issue makes it more likely it will impose unair and sudden change

later when its too late or individuals to change their plans.

0

2000

4000

6000

8000

10000

12000

14000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Millions(

$NZ)

Cost of NZ Super vs Education, Dole and Welfare expenses

NZ Superannuation

Education expenses

All Welfare (excluding NZS)

Unemployment Benefit


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WAVE GOODBYE

TO HIGHERTAXES, NOT YOURLOVED ONESSOURCE: NATIONAL PARTY CAMPAIGN BILLBOARD, 2008

177,031 PEOPLE

HAVE LEFTPERMANENTLY

FOR AUSTRALIASINCE JOHN KEY

TOOK OFFICE.AS OF NOVEMBER 2012


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MIGRATION TO

AUSTRALIA

53,729 people departed or Australia in the year to September 2012.

177,031 people have let New Zealand or Australia since John Key took oce in November

2008.

40 per cent are between 18 and 30 years old.

2012 is set to be the calendar year during which the highest number o people leave or

Australia in New Zealand history.

2005 2006 2007 2008 2009 2010 2011 2012Sept Year 34304 33866 39773 47166 37362 33814 48829 53729

20000

25000

30000

35000

40000

45000

50000

55000

60000

Departur

estoAustralia

Annual Migration to Australia (Year to September)

2005 2006 2007 2008 2009 2010 2011 2012

Sept Year 12,557 12,338 13,985 17,007 13,881 13,219 19,166 21,589

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

Annual Migration to AustraliaAges 18 to 30 Years Inclusive

(Year to September)

SOURCE: STATISTICS NEW ZEALAND


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WE ARE ALL IN THISTOGETHER. WE ALL

STAND TO LOSE FROMTHE EMERGENCE OF AGROWING UNDERCLASS,AND WE ALL STAND

TO GAIN BY DOINGSOMETHING ABOUT IT.SOURCE: JOHN KEY, 31 JANUARY 2007

INCOME

INEQUALITY INNEW ZEALAND:

THE HIGHESTSINCE RECORDS

BEGANSOURCE: MSD - HOUSEHOLD INCOMES IN NEW ZEALAND: TRENDS

IN INDICATORS OF INEQUALITY AND HARDSHIP 1982 TO 2011


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20% OF NEW ZEALANDCHILDREN LIVE IN

POVERTY.SOURCE: GOVERNMENT GREEN PAPER FOR VULNERABLE CHILDREN, 2011

INCOME INEQUALITY

In response to this chart, John Key said: THAT LOOKS LIKE THE

NATIONAL PARTYS POLL RATINGS WHILE IN GOVERNMENT.

- JOHN KEY, PARLIAMENT, AUG 28 2012.

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31

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35

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39

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1990 1992 1994 1996 1998 2001 2004 2007 2009 2010 2011

Ginicoefficie

nt(x100)

Income inequality in New Zealand:

after housing costs

Source: MSD - Household incomes in New Zealand:

Trends in indicators of inequality and hardship 1982 to 2011


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OUR EXTERNAL DEBTLEVELS REMAIN HIGH

AND THE CURRENTACCOUNT DEFICIT ISMOVING BACK TOWARDSTHE 5 PERCENT PLUS

DANGER ZONESOURCE: CAMERON BAGRIE, ANZ CHIEF ECONOMIST, 2011

IN 2012 NEW ZEALAND

HAD THE SECOND

WORST CURRENTACCOUNT DEFICIT IN

THE DEVELOPED WORLD

AFTER GREECE.

IN 2013 IT WILL BETHE WORST.


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OVERSEAS

BORROWING

-10

-5

0

5

10

15

20

25

Balance on Current Account, % of GDP: Advanced Economies

2013 IMF Projections

Source: IMF World Economic Outlook,

September 2012

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2013 2014 2015 2016 2017

Current Account Balance (% of GDP): Forecasts

NZIER

IMF

Treasury

RBNZ

Infometrics

Singapore

Norway

Switzerland

Netherlands

Sweden

Taiwan

Luxemburg

Germany

Denmark

HongKong

Ireland

Japan

Korea

Austria

Slovenia

Belgium

Slo

vakRepublic

Israel

Italy

Malta

Finland

France

Portugal

Cyprus

Iceland

CzechRepublic

UnitedKingdom

Greece

UnitedStates

Estonia

Spain

Canada

Australia

NewZealand


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EXPORTS TO BE

40% OF GDP BY2025.SOURCE: TIM GROSER, 20 JUNE 2012

ANOTHER TARGET

NOT BEING MET.

EXPORTS ARE STATIC

AND OUR CURRENT

ACCOUNT DEFICIT

IS UNSOLVED.


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EXPORTS

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Exports as proportion of GDP

SOURCE: STATISTICS NEW ZEALAND

2008: 28.3%

2009: 31.2%

2010: 28.3%

2011: 29.7%

2012: 30.2%

ExportsarenotgrowingasaproportionofGDPevenwhenGDPgrowthhas

been fat.

EXPORTS AS PROPORTION OF GDP


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THE ECONOMY

CANNOTOPERATE FORLONG ABOVE AUS70c EXCHANGERATESOURCE: JOHN KEY, 5 APRIL 2007

THE DOLLAR

HAS BEENABOVE US70c

FOR YEARS ANDSHOWS NO SIGNS

OF FALLING.


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EXCHANGE RATE

0.30

0.40

0.50

0.60

0.70

0.80

0.90

Dec 2008 Apr 2009 Aug 2009 Dec 2009 Apr 2010 Aug 2010 Dec 2010 Apr 2011 Aug 2011 Dec 2011 Apr 2012 Aug 2012 Dec 2012

US

Dollar

NZD-USD Exchange Rate

SOURCE: RESERVE BANK OF NEW ZEALAND

120000

140000

160000

180000

200000

220000

240000

2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3

Filled Jobs in Manufacturing (QES)

SOURCE: STATISTICS NEW ZEALAND QUARTERLY EMPLOYMENT SURVEY


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A BETTER WAY

A LABOUR WAYMany o Nationals policies have passed their use-by date. Economists, many governments

andmajorinstitutionssuchastheIMFrealisethattheworldhaschanged.Theyknownew

answers are needed.

New Zealanders understand this too and know that we must change as well.

Kiwis want real and innovative solutions to take this country orward. They want a Government

thatseesproblemsandgetsstuckintoxthemratherthantrytoexplainthemaway.

ThatswhythereissignicantsupportformajorLabourpolicies,includingKiwiBuild,raising

the retirement age, universal KiwiSaver, updating our monetary policy and a capital gainstax.

Its time or a hands-on government, one that is committed to making a real dierence in

peoples lives.

LABOURS SOLUTIONS

Build100,000newhomesin10years,apolicythatwillcreate4,000jobs.

HelpexportersandmanufacturersbychangingtheReserveBankActsoweachievea

fairandcompetitiveexchangerate.

Help the manuacturing industry achieve its vision o being a modern, high-tech driver

of our economy, employing New Zealanders in well-paid jobs and supporting other

parts o the economy.

Changetaxtoencourageinvestmentinproductive,exportingindustries.Acapitalgains

taxandresearchanddevelopmenttaxcreditsareakeypartofthis.

A new vision or skills, education and training so that New Zealanders can take advantage

ofthejobopportunitiesofa21stcenturyeconomy.

InvestingmoreininnovationandsciencebyreinstatingResearchandDevelopmenttax

credits.

Tighter controls on oreign purchases o productive arm land and inrastructure.

Prudent decisions about looming scal pressures, including the age o eligibility or

superannunation.

Introducing Universal KiwiSaver to build our savings so that we can own our own country.

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Authorised by David Parker MP, Parliament

Buildings, Wellington

national's economic road test

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