For long enough New Zealanders have liked to think they enjoyed one of the highest living standards in the world. More recently those familiar with what is happening in those countries which are leading the world have understood NZ has been slipping down the ladder.
Under a Labour-led government, the slide has accelerated. Now as inflation surges, and recession is looming on the horizon, new questions are being asked about the economic stewardship of the Ardern government.
Has too much been left to the Finance Minister Grant Robertson? How has he done in his fiscal management?. Why is inflation burning so fiercely? What has happened with his concept of “well-being”?
One of NZ’s most experienced economists, Bryce Wilkinson, has drawn attention to the latest rankings of 63 of the world’s leading countries by the Swiss Institute for Management and Development (IMD).
Back in 2017, New Zealand ranked #16 – ahead of Australia at #21.
Five years later, New Zealand has fallen to #31, while Australia is ranked #19.
In economic performance, NZ has fallen from #22 to #47. Government efficiency is down sharply from #7 to #17.
Altogether, the IMD’s ranking comprises 25 subcategories. In eight of them, NZ finds itself in the bottom half of all countries.
These are the categories that really matter: domestic economy, international trade and investment, inflation, productivity and efficiency, attitudes and values, and technological infrastructure.
NZ, it might be said, became preoccupied with the Covid-19 pandemic, and took pride In achieving at its height one of the lowest death rates in the world. And it did maintain for most an even keel through that period and Robertson liked to trumpet NZ’s low employment rate.
But in that period two of NZ’s significant export earners, tourism and international education, were hard hit. And there wasn’t much else to take up the slack, except massive injections of printed money which, admittedly with the benefit of hindsight, kept being pumped into the economy long after it was needed.
At the time Robertson and the Reserve Bank) were looking at negative interest rates, so unconcerned were they about the inflation that was brewing. Now in the wake of the cost of living crisis that has come to the boil, New Zealanders are feeling the scalding heat.
There’s not much sign of the well-being so beloved by Robertson that he wanted to incorporate it into the work of bodies as esoteric as the Productivity Commission.
The government for long enough thought it was solving the country’s problems with its money-pumping exercise and measures such as its fair-pay legislation. Meanwhile it neglected or ignored what was needed to encourage new enterprises which would broaden the productive economy.
NZ’s hi-tech industries in particular can offer much if they receive full-throated backing in their initial development. But since February this year equity markets have been in free-fall, down by 20% or more. That has cast a pall on investors and most businesses have had to batten down the hatches.
No wonder many New Zealanders are baffled by what is happening to their Kiwisavings funds.
And at this point in the life of this government, it would be hard to award a pass mark for its economic performance.