Finance Minister Grant Robertson sounded bullish about the NZ economy this week.
That’s a good sign as New Zealanders await his second budget.
He has already told us he is looking beyond traditional measures—such as GDP—to a wider set of indicators of success. The development of budget priorities, he insists, represents a new way of thinking about how NZ’s success is measured.
Robertson set out his five priorities for Budget 2019 as:
– Creating opportunities for productive businesses, regions, iwi and others to transition to a sustainable and low-emissions economy;
– Supporting a thriving nation in the digital age through innovation, social and economic opportunities;
– Lifting Māori and Pacific incomes, skills and opportunities;
– Reducing child poverty and improving child wellbeing, including addressing family violence;
– Supporting mental wellbeing for all New Zealanders, with a special focus on under 24-year-olds.
There’s no mention of GDP or stimulating NZ’s lack-lustre productivity.
Still, it is reassuring to hear Robertson cheer-leading – for example – over the latest export figures.
He told Parliament overseas merchandise trade data for March showed exports rose by $899m to hit $5.7bn—a record monthly high. The increase was driven by higher values and exports of milk powder, beef, and cheese.
On the other hand, imports fell $174m in March to $4.8bn, resulting in a monthly trade surplus of $922m—the highest since April 2011.
He also welcomed as a positive sign the ANZ-Roy Morgan consumer confidence report last Friday, showing consumers’ confidence in the economy rose in April, with the index up 1.4 points.
The proportion of households who think it’s a good time to buy a major household item rose—up eight points to a net 46%. In addition, more consumers are feeling better off now than a year ago, and more consumers expect to be better off this time next year.
“While it’s pleasing to see consumers noticing the strength of the economy, we recognise that there is uncertainty in the global growth outlook that may be weighing on confidence in New Zealand’s own outlook. That is why we are getting on with implementing our plan for a modern and more resilient economy”.
The Finance Minister did add a cautionary note about the uncertain global economic outlook, after the IMF revised down its expectation for global growth to 3.3% in 2019 from 3.5% forecast six months ago.
The IMF is forecasting advanced economies will grow 1.8% in 2019, and 1.7% in 2020. But the plus for NZ is that the IMF is forecasting our economy will grow 2.5% in 2019, and 2.9% in 2020 – stronger than our trading partners in the US, the eurozone, UK, Japan, Canada, and Australia.
And just to rub in the good news, Robertson says the government has ruled out higher tax rates in this term in office. It won’t consider increasing the top tax rate; nor will it introduce an inheritance tax.
This should make most taxpayers experience a nice shiver of well-being even before Robertson delivers his first “well-being” budget.
But how will those people who believed the Prime Minister when she said the government would deliver a “fairer” tax structure feel about it all?