This is a critical year in the history of New Zealand Inc. Will we pull ourselves out of the market-led ills of inflation, inequality and Covid profit-taking that are simultaneously striking Australia, the UK, and other countries around the globe? Can we repurpose Working For Families to work for all children and dig our health service out of applied market ideology where it’s languished for two decades? Will we start on climate preparedness? The mahi has been done to highlight supermarket post-Covid profit taking so what do we do next to address a global cost of living crisis?”
I tried to watch the promised Budget 2022 coverage on television and, like many a journalist of my generation, lost the will to live in milliseconds. This was not informed, wraparound coverage from specialists and professionals assessing announcements with depth and accuracy. At the first sight of a line-up of opposition parties variously simpering or squaring their shoulders to declaim their displeasure into the proffered microphone, I went to bed with a book to await more useful information.
As commentator Gordon Campbell said next day, “the political biffo back and forth on the merits of Budget 2022 comes down to only one thing. Who is the better manager of the economy and better steward of social wellbeing – National or Labour?
“In its own quiet way, Treasury has buried a fascinating answer to this “who’s best at running an economy during a crisis question,” he said. Beginning on page 57 of the Fiscal Strategy section of the Budget, it compares the handling of the economic harms done by the Global Financial Crisis (under a National government) with the handling of the economic harms caused by the Covid pandemic (under a Labour-led government.)
It found that initially, “real GDP fell 10 percent in the second quarter of 2020 as a result of the economic impacts of COVID-19, compared to a peak-to-trough fall of nearly three percent of GDP through to the second quarter of 2009 following the GFC.”
However, although the impact of the pandemic on GDP was three times worse than the damage done by the 2009 financial crisis, the Labour-led government was three times faster at getting the economy back on the rails this time, even though the problem it faced was three times bigger than the one that had faced the Key government.
“Government support of businesses and workers contributed to a much stronger economic bounce-back from Covid-19 and New Zealand’s real GDP was back to pre-levels within three quarters from the start of the crisis. In comparison, following the GFC, New Zealand’s real GDP took 10 quarters to return to pre-recession levels,” said Treasury.
The comparison was even more marked in the handling of the unemployment situation, which can have lasting and complex effects from the atrophy of skills and discouragement alone.
“Following the GFC, the employment rate declined almost three percentage points from its pre-crisis level and stayed below pre-GFC levels for most of the next decade.”
“During the initial impact of Covid-19, the employment rate fell more swiftly than during the GFC. However, the success of investments like the Wage Subsidy, Resurgence Support Payment and Jobs for Nature programme meant that more New Zealanders remained connected to their jobs during the crisis.
“The unemployment rate peaked at 5.3 percent in the third quarter of 2020 and has since fallen considerably below its pre-pandemic level.
Again, the Labour-led government had faced a bigger unemployment problem, yet managed to return the jobs situation to normality far more quickly.
“Opposition claims that Labour has made a mess out of managing the economy; that it hasn’t got a plan, is a mega dose of fake news,” said Campbell. “Unemployment levels have consistently remained lower than Treasury forecasts, which anticipated a peak of close to 10 percent at Budget 2020 and forecast nearly eight percent unemployment at the 2020 Pre-election Update.
“This isn’t spin. All this is the Treasury’s dispassionate analysis, a positive verdict that has been echoed by the IMF and the international credit rating agencies. Keep this example in mind when next you hear Christopher Luxon trying to assert that National is an inherently better economic manager. There is absolutely no evidence to support that claim, and some compelling evidence to the contrary,” he said.
All this is good and encouraging news. Deep diving on our structural issues has its rewards, not least for our mental health. We don’t need the frumious clamour. We need to be picking over the wins and losses and, as a tribe, begin the hard yards to put children at the top of the list, not somewhere behind petty political rules to strongarm mothers into (low paid) work. To shame Countdown into fairer trading in the short term and build food resilience and local manufacturing within our own borders in the long view, and to support the government we chose last year to right the tax imbalance and worst excesses of unregulated lending and megalithic bank and global business profits.• Liz Waters