The election is officially over and New Zealand is preparing for a new government after six years of left-wing governments and voters rejecting the Labour-majority Government of 2020.
The National Party and its leader Christopher Luxon based their campaign on “getting New Zealand back on track”, pledging to rebuild the economy, crack down on crime and improve the education system.
In nine charts, the Herald has explored the data behind some of the country’s key economic, socioeconomic, education and justice indicators to show the state of the nation National is inheriting.
Consumer inflation & the cost-of-living
Consumer inflation has grown rapidly since 2020, when Covid-19 took grip.
The Consumers Price Index (CPI) is the official inflation rate and one way Stats NZ measures the cost-of-living. It’s different from the Household Living-Costs Price index (the red line in the chart below), which is a better measure of the cost increases facing New Zealand households because it includes mortgage interest rates, which have also risen steeply over the past two years.
Westpac senior economist Satish Ranchhod says although decreasing, the CPI is still high. The CPI has declined because the prices for many imported goods have softened, global prices have come off their highs and consumers are spending more.
“But what’s really important for the Reserve Bank and the incoming Government is that domestic prices are still running red-hot and they haven’t really shown signs of easing, despite interest rates rising sharply over the the past year,” Ranchhod said.
“[There will be] strong domestic inflation pressures for some time yet.”
Mortgage interest rates
Mortgage interest rates have risen steeply since mid-2021 when the Reserve Bank started increasing the OCR to combat inflation. The two-year rate is double what it was two years ago, however that has not led to a substantial increase in people unable to pay their mortgage and being forced to sell their properties.
“If you borrowed at a two-year rate two years ago, that was down at around 3 per cent. As that rolls over when they [need] to re-fix, they’re looking at something that’s over 6,” Ranchhod said.
“So if I think about what that means for an incoming government, just assuming even if interest rates stay where they are now, because people are rolling off those earlier, low interest rates, they’re going to face a big increase in the debt-servicing costs over the coming year. That’s going to be a major headwind for households over the coming year, it’s going to be the big factor that’s going to weigh on economic activity.”
Economic performance: Gross Domestic Product (GDP)
GDP, New Zealand’s official measure of economic performance, grew on a quarterly and annual basis in the second quarter of 2023.
Ranchhod says GDP growth has slowed and the economy has moved into a tougher phase as financial conditions tighten for businesses and households following large increases in business operating expenses and consumer prices.
“Interest rates have risen really sharply [and] that is putting a brake on GDP growth and spending. I think over the coming year, we’re going to see a period of quite soft economic activity.”
One of the several ways Stats NZ measures the labour market is with the unemployment rate. In the most recent data for the third quarter of 2023, the rate ticked up to 3.9 per cent. Although an increase, it was expected and still very low compared to historical levels.
Ranchhod said Westpac economists are forecasting unemployment to hit about 5.3 per cent by the end of next year.
“That’s not as stark as we’ve seen in previous periods like in the wake of the GFC [Global Financial Crisis]. But obviously, it’s going to be pretty material for a number of families who... will be affected by those losses.”
Wage and salary growth
In response to the increased cost of living, wage growth has increased to levels not seen prior to the GFC. In the latest figures for the third quarter of 2023, growth in wages and salaries remained at 4.3 per cent.
Wage and salary growth in the private sector was still pretty strong, but had come off its highs, Ranchhod said.
“It has been running at a reasonably hot level, but some of that pressure on wages is already starting to come out,” he said.
“Businesses are finding it easier to source staff and they’re also not taking on as many workers and I think there’ll be a dampener on wage growth.”
The latest Stats NZ data shows international net migration continues to increase after a sharp decrease between 2020 and 2021 with Covid-19 border closures. Net migration (arrivals minus departures) is at its highest level in a decade.
“Migration is currently at very high levels. We’re getting a number of returning New Zealanders, but it’s mostly because we’re getting new-to-the-country migrations coming in,” Ranchhod said.
“Those migrants have been attracted by what has been a strong jobs market and that’s having a really big impact on the economy.”
Justice: Wait times for court cases
Victims and offenders waited 50 per cent longer for a High Court trial last year than in 2017, from 317 days and to 517. Previously, Courts Minister under Labour Rino Tirikatene said existing pressures had been exacerbated by Covid restrictions. At the High Court, which has the jurisdiction for the most serious criminal offending, there has been a significant increase in homicide cases. Counsel for the Crown and defence generally required at least 12 months to adequately prepare their cases.
Reported victimisations (which is one measure of crime levels) have increased. The Herald has previously explored these statistics in considerable detail.
Collecting data on child poverty was a key initiative of the Dame Jacinda Ardern-led poverty reduction efforts.
However, collecting the data still takes time. Currently the most recent data is for the year to June 2022 and shows modest improvements in most indicators during the previous Government’s time in charge, however both the Green and National parties criticised the progress.
The most recent data showed nearly 120,000 New Zealand children are struggling to get by as of the reporting period, however the official data release covered the year to June 2022, just as the cost of living crisis began to bite, and with record inflation in that time, the worst could be yet to come.
Education achievement standards
The achievement standards of Year 13 students have remained relatively similar over the past decade. Around half of Year 13 students gain University Entrance by the time they leave school and 68 per cent achieve NCEA level 3.
Further data released in September showed only 56 per cent of all students who completed NCEA literacy and numeracy tests in June passed the writing and numeracy components. Reading results were slightly better with a 64 per cent pass rate.
Julia Gabel is an Auckland-based journalist who largely covers data stories. She joined the Herald in 2020.