Another indicator, ANZ’s Truck-O-Meter, showed weak
May and June numbers but light and heavy traffic both rebounded in July.
As Minister of Railways, I found weekly rail tonnage was a better guide to the economy’s health than the out-of-date Department of Statistics figures.
The gloomy June figures served a useful purpose.
Since October 6, 2021, the Reserve Bank has increased interest rates to crush inflation by slowing economic growth.
The June data persuaded the central bank to stop tightening. It’s hard to exaggerate the impact lower interest rates will have.
What confirmed my optimism was the open letter from 20 self-described economists claiming that “New Zealand does not have an urgent need to reduce public debt and expenditure levels are both an economic and a political decision”.
Many of the signatories were appointed during the last Labour Government. Knowing they oppose this Government’s direction gives me confidence we’re on the right track.
It’s been my experience that no one is always right, but some people are never right. Among the 20 are some of New Zealand’s leading never-rights.
The Reserve Bank has finally got interest rates about right. The numbers support another 25-basis-point cut.
It’s a cliche that the economy is like a super-tanker – it takes an age to turn. But it’s true. And it’s turning.
Some of Labour’s policies will hurt for a lifetime. Those attending school for 90% of the time or more fell to just under 40% in Term 2 of 2022.
Literacy and numeracy declined. The ban on offshore exploration will keep electricity prices high for years. There is no low-energy rich country.
But change is under way. Attendance is improving. The revision of the NCEA, with a new focus on maths and literacy, will be life-changing. The first Fast-Track project has started, Bledisloe North Wharf, and many more will begin in the next 12 months.
Replacing the Resource Management Act (RMA) will take the full term, but when it’s done, it will revolutionise planning and investment.
The Regulatory Standards Bill will transform government itself. The Cabinet rules requiring that regulations deliver greater benefits than costs will be enforced. Cutting pointless, growth-choking, red tape will happen.
The direction is right, even if the pace is slow. That explains the polls. As James Carville said: “It’s the economy, stupid.”
The poll to watch is the right-way/wrong-way poll. Roy Morgan’s latest shows 49.5% of New Zealanders think the country is heading in the wrong direction, down four points, while 39% now think it’s heading the right way, up two.
Those numbers move with people’s own experience of the economy. Whoever’s in Government gets the blame and the credit.
As the economy improves, more voters will feel the country is on the right track. About 1.2 million voters live in households with a mortgage. They’ll benefit directly from lower interest rates. Another million own their homes outright and will feel the wealth effect as their property values rise.
It gets better for the coalition. The marginal seats are in the mortgage belts. These swinging voters will feel the impact of lower interest rates first.
We oldies will grumble about lower term deposit returns, but we won’t change our vote over them.
National, because it holds the finance portfolio, has taken most of the blame and will get most of the credit for the recovery.
Business confidence is rising. ANZ’s business confidence survey in September reported a net 43.4% of businesses expect their own activity to improve, the highest level in five months. Building consents are increasing.
This economic recovery is founded on increasing export earnings, not unsustainable immigration.
Immigration has been reset to bring in skilled workers for construction, health and technology. Skilled vacancies are being filled.
Labour’s strategy of doing nothing and waiting for recession to destroy the Government’s popularity has worked until now. In an improving economy, having no policy is a liability.
My optimism is guarded. The Government is borrowing and spending too much. The recovery could have been faster. A global shock could still derail it. Neither major party has yet faced the demographic time bomb of an ageing population and shrinking workforce.
But elections aren’t won by being perfect. They’re won by being better than the alternative.
Labour has the coalition allies from hell. The Government’s three parties have worked better together than anyone expected. Act and New Zealand First have contributed to policy wins including RMA reform, the Regulatory Standards Bill, Holidays Act amendments, the Fast-Track Approvals regime and a foreign policy reset.
There are genuine grounds for guarded optimism. The super-tanker has started to turn and this time, it’s heading the right way.
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