Economic Bulletin

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  • Economic Bulletin 131 - Inequality, unions and wage-led growth
    1 Feb 2012 - 09:37

    January 2012

    A graph showing the share of income that the richest 1% of people in New Zealand have received over the last 90 years together with union membership over that period gives a clear picture. Income inequality has risen when union membership has been falling, and inequality has fallen when union membership has been strong.

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  • Economic Bulletin 130 - Post election, pre-crisis?
    5 Dec 2011 - 12:31

    November 2011

    Events around the world threaten another round of recession and dangerous financial turmoil. Just as in 2008, there was little debate about what parties would do if the economy plunges. The incoming government could once again plead “crisis” and change may be much deeper than National’s election platform.

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  • Economic Bulletin 129 - New Zealand doesn't have to be a low wage country
    1 Nov 2011 - 09:37

    October 2011

    The political parties now have most of their employment relations policies out. These policies have great importance for New Zealand’s wage levels, and already there are the predictable allegations by business that Labour’s policies will lead to unaffordable wage demands. Yet it is inescapable that National’s policies which weaken collective bargaining will mean lower wages. This commentary shows that higher wages are affordable, even with current economic output and growth rates. And of course wages could be higher yet, if productivity increased faster – and the results of that were fairly shared with wage and salary earners.

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  • Economic Bulletin 128 - Lucky Government, Unlucky Country
    3 Oct 2011 - 12:49

    September 2011

    It has been almost the perfect storm for New Zealand over this government’s term. From the global financial crisis to the Pike River tragedy, all are beyond our control here in New Zealand – or at least appear to be.

    For any government however, a crisis brings opportunity and licence to do what it always wanted to do (but never dared ask). So bad luck for voters may be good luck for a government. By these standards, the Key government has been extraordinarily lucky.

    Undoubtedly, much was beyond this government’s control, for the better and the worse. But they did have choices in how they reacted. Despite low government debt they talked up its danger. They used it to spin a story of “there is no alternative” to holding, then cutting, government spending when a more generous programme was affordable and could have held down unemployment and prevented its stagnation.  An effective economic stimulus could also have reduced the big income gaps in New Zealand.

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  • Economic Bulletin 127 - Youth Unemployment
    1 Sep 2011 - 12:50

    August 2011

    Youth unemployment is finally getting some traction on the political agenda. It is a big reason for unemployment remaining high: 44 percent of unemployed people are under 25. So far National has announced one policy, which it says is the result of Welfare Working Group recommendations, that would put about 2,600 young people who are receiving a benefit onto an electronic card which tries to limit their spending to necessities, and proposes a privatised form of social welfare to get them into work, education or training. Regardless of its merits, the policy caters for a very small portion of the 65,700 unemployed 15-24 year olds. Meanwhile, ACT is continuing to push youth rates as if it was the silver bullet. This ignores the fundamental starting point: youth unemployment is a complex issue which cannot be reduced to simplistic slogans such as youth rates, or short sharp shocks to “get them on the right path”.

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  • Economic Bulletin 126 - Do price rises hit people on low incomes harder?
    1 Aug 2011 - 11:08

     

    July 2011


    We often say that low income families are hit harder by rises in the prices of necessities than high income families. That is very topical with the big rises in food prices in the last year – 7.5 percent from June 2010 to June 2011 – and petrol up 20.1 percent between the two June quarters. Why should they be hit differently? Because for low income people, a bigger proportion of their spending goes on necessities, and they spend a greater proportion of their income. People with higher incomes have more income over which they have greater choice. That could include saving, and spending on luxury items such as travel, dining out, and additional or more expensive cars and houses. How much different are these patterns of expenditure and what difference do they make?

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  • Economic Bulletin 125 - How far are our wages behind Australia’s?
    1 Jul 2011 - 09:58

    June 2011

    Despite rumours the government had quietly dropped its 2008 election promise of closing the income gap with Australia by 2025, it has recently compared wages in New Zealand and Australia again. It is now resorting to an after-tax comparison to try to show some progress. But cutting taxes doesn’t increase the size of the economy. And its comparisons conveniently forget to go beyond income taxes to take into account benefits like Working for Families. Neither does it tell us what might have been lost in government services to pay for the tax cuts. Until we are given that bigger picture it is a hollow and deceptive argument. But what we are paid by our employers does matter. What are the facts?

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  • Economic Bulletin 124 - The Budget: focus on debt, but at what cost?
    1 Jun 2011 - 10:01

    May 2011

    The 2011 Budget was a victory of story-line over needs. The story was that the New Zealand government has a debt problem that according to the Minister of Finance’s Budget speech “leaves the Government vulnerable and less able to meet future shocks. Its double-A plus credit rating is on negative outlook with two rating agencies.” We must therefore “eliminate the deficit faster and target a lower level of public debt... Finance costs would otherwise rise unacceptably...” It was therefore a Budget of a thousand cuts, as we anticipated.

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  • Economic Bulletin 123 - The Budget: What's Likely?
    29 Apr 2011 - 17:37

    April 2011

    The government’s 19 May Budget is a fateful one. It could push New Zealand back into deeper recession and unemployment, or it could give us a chance to pull out of three years of stagnation.

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  • Economic Bulletin 122 - Debt and Why the Government is Different
    1 Apr 2011 - 14:03

    March 2011

    It’s common sense isn’t it? In hard times like these, just as you and I have to cut our spending to balance our budgets, so must the government. The government is just like any household or firm. It must urgently reduce its debt and return to a budget surplus.

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