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Economic Bulletin December 2023

December 2023 Economic Bulletin

Welcome to the Christmas edition of the Economic Bulletin. In this edition, we unpack the new government’s “Mini Budget”, which was delivered alongside Treasury’s Half-year Economic and Fiscal Update (HYEFU). The Minister of Finance called for “more transparent and responsible fiscal management”, yet the new government’s Mini Budget appears to have provided us with the opposite.

We also discuss the new government’s decision to remove the Reserve Bank’s employment mandate. We show that, contrary to the government’s claims, there is no evidence to indicate the employment mandate has contributed to the higher rates of inflation we have experienced in recent years, nor that getting rid of it will reduce the cost of living. This is an example of bad policy, based not on evidence but on the ideology of the 1990s.

In our regular updates, we examine the latest GDP, retail spending, and balance of payments data, and update our minimum-wage-to-housing index. We also look at food and rental inflation, immigration, and consumer confidence statistics. For the latest employment, wages, and consumer inflation statistics, please see the October/November Bulletin.

The new government’s first actions have been revealing of its priorities. In repealing the Fair Pay Agreements Act, the new government is ensuring the low-wage sectors of the New Zealand economy stay low-wage sectors. By expanding 90-day trials to businesses of all sizes, it is reducing workers’ job security. And by cutting funding for public services, it is eliminating thousands of good jobs delivering essential services. In 2024, we will continue to use the Bulletin to explore the consequences of the new government’s policies, and to map out an alternative path for the New Zealand economy, in which workers are prioritised.

As always, please get in touch if you have any feedback or suggestions for areas of future investigation.

Wishing you all a happy Christmas.