Our productivity growth has been flagging – so fixing this should be high on Phil’s new agenda

Stripped  of  his  housing  portfolio, Phil Twyford  has  to  rebuild  his  political  reputation.

Given his spectacular  failure with  KiwiBuild, PM  Jacinda  Ardern  might have  been  pardoned  for  leaving Twyford to  work  out  his redemption   in his other  portfolio  of  Transport,   which has  enough  problems  of  its own to demand  the full-time  attention of a   struggling   minister.

But Ardern has  entrusted  the  Economic  Development  portfolio  to Twyford.  This has surprised  some business  leaders,  and dismayed  others.

NZ’s  economic  development  is  suffering  from sustained and  deep-seated  malaise.  Labour  productivity, or output per hours worked, is  around  40%  lower  than  the output per hours worked of international peers.  In a  recent report  the Productivity  Commission  noted the only members of  the  36 countries within the OECD with both a  lower  productivity level and  weaker productivity  growth than NZ  are  Mexico and Greece. Continue reading “Our productivity growth has been flagging – so fixing this should be high on Phil’s new agenda”

Oh goody – our GDP growth rate is solid (but are we envied by countries which enjoy a better standard of living?)

Here  is a  puzzle:   why  are   ordinary   New  Zealanders   not as excited  about the  state  of  their country’s  economy  as  Finance  Minister  Grant Robertson whenever he   talks  about it  in Parliament?.

Surveys have  shown    both  business   and consumer  confidence  sliding  in recent  months.

This  week  Robertson has been citing  reports  from   international  institutions to  contend  everything is  going  swimmingly   for the  NZ  economy despite some  risks, the greatest of  which is a sharp  economic   contraction in China.

But,  hey,  not to  worry, because  “I have huge confidence in the businesses and the workers of NZ that are supported by a government that’s investing in skills, in research and development, in infrastructure”.

Continue reading “Oh goody – our GDP growth rate is solid (but are we envied by countries which enjoy a better standard of living?)”

In the days before wellbeing our focus was on GDP – and hey, Robertson reckons we should be cheered by the latest data

Finance  Minister  Grant Robertson was   pretty  chipper about the state of the  NZ  economy  when  he took questions  in  Parliament  on the latest  GDP  data.  He reckons the  economy continues to  grow “solidly”, in the  face of  global  headwinds.

Noting the  economy had expanded 2.7%  in the March year, with   growth of  0.6% in the last quarter, he  was  particularly  pleased   with the construction sector’s  3.7% growth.

In  summary – plenty to be cheerful  about”.

He  was   especially  chuffed the latest GDP data shows NZ continues to outpace many of its international peers.  It grew faster than Australia, Canada, the UK, the euro area, and the OECD average. Continue reading “In the days before wellbeing our focus was on GDP – and hey, Robertson reckons we should be cheered by the latest data”

Outside of Parliament, the cold water thrown over the Wellbeing Budget should dampen Robertson’s rapture

Finance Minister  Grant  Robertson   could not disguise the rapture that had seized him, when   he was questioned this week in  Parliament  on reactions  to   the budget.

He  was  excited,  apparently,   because  the government  had received  an  “overwhelming”  response from the people of  NZ to the  wellbeing budget.  There had  been a   vast  amount of  correspondence.

He cited   the  Salvation Army as  seeing the budget as   “a step on the path towards lifting New Zealanders out of poverty”  and the Children’s Commissioner  likewise  believing  it “takes seriously the need for a step-change in the way we support the wellbeing of NZ children”.

Good stuff, then, even though it  may  sound a bit  weird  to Kiwis   who  had believed their  country’s living standards  rank  reasonably   well  against  those of  other  developed  nations.  Continue reading “Outside of Parliament, the cold water thrown over the Wellbeing Budget should dampen Robertson’s rapture”

Replacing neoliberal economics – the ideas of Joseph Stiglitz perhaps influenced authors of the Wellbeing Budget

A view of economics that might well be reflected in Grant Robertson’s Wellbeing Budget was expressed by American Nobel laureate Joseph Stiglitz last month in an article headed The Economy We Need.

After 40 years of market fundamentalism, he wrote, America and like-minded European countries are failing the vast majority of their citizens.

“At this point, only a new social contract – guaranteeing citizens health care, education, retirement security, affordable housing, and decent work for decent pay – can save capitalism and liberal democracy.”

Stiglitz, an economics professor at Columbia University and chief economist at the Roosevelt Institute, is the author, most recently, of People, Power, and Profits: Progressive Capitalism for an Age of Discontent.

He has elaborated on his early-May article in After Neoliberalism in which he contends:

“For the past 40 years, the United States and other advanced economies have been pursuing a free-market agenda of low taxes, deregulation, and cuts to social programs. There can no longer be any doubt that this approach has failed spectacularly; the only question is what will – and should – come next.” Continue reading “Replacing neoliberal economics – the ideas of Joseph Stiglitz perhaps influenced authors of the Wellbeing Budget”

Kiwis brace for fallout from Trump’s trade war, but Americans already are paying the price

Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard University, is one of several writers to have examined Donald Trump’s trade war with China in recent days and found American consumers are the major victims of the tariffs that are Trump’s major weapon.

In an article headed The Real Cost of Trump’s Tariffs Frankel writes: 

Whereas winners tend to outnumber losers when trade is liberalized, raising tariffs normally has the opposite result. US President Donald Trump appears to have engineered a spectacular example of this: his trade war with China has hurt almost every segment of the US economy, and created very few winners.

The relevance of Trump’s economic blundering for New Zealand is ominously contained in the OECD warning that a US trade war with China could put an anchor on the global economy (see article here). Continue reading “Kiwis brace for fallout from Trump’s trade war, but Americans already are paying the price”

Robertson changes the debt target and extols the fiscal virtues of flexibility

Finance  Minister Grant Robertson  drew  diverse — and conflicting — responses to his announcement in a pre-budget speech  that he has moved  the Labour-led Coalition’s  debt  target  from 20%  of GDP  to  a  range  of  between 15%  and 25%,  in  the interests  (he  said) of greater   flexibility to  economic conditions.

From  the Left, the CTU  welcomed  the  move  but  said the government should  go  further and  faster in  relaxing  the  Budget  Responsibility Rules  because

“ … it is neither prudent nor responsible to privilege exceptionally low debt levels over major social, human, environmental and economic needs”.

From  the Right,  National’s  Amy  Adams  insisted Robertson had “thrown in the towel” on the rules  and is  loosening the purse strings by tens of billions of dollars. Continue reading “Robertson changes the debt target and extols the fiscal virtues of flexibility”