No Minister

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A distorted economy

Two graphs that summarise where we are economically as a nation, and without even looking at the tourism numbers, which are bad enough on their own.

First up, real estate prices for residential properties.

Those increases, in one year, are staggering. In dollar terms they exceed any “help” that any government, even one as spendthrift as Labour, can give to young, first-time home owners.

The price to income multiplier increased during the “nine long years of neglect” of National from 5.05 to 6.08. Under Labours stewardship it’s now at 8.61.

It’s been common wisdom for twenty years now that Aucklanders were cashing up and heading to the Waikato and Bay of Plenty. But since when are retired Aucklanders or Wellingtonians cashing up their houses and moving to Gisborne (almost 50% increase) or for that matter the West Coast (33.6% increase). There will be specific reasons for this inflation but they all boil down to factors driving the basic economic law of demand exceeding supply.

In Auckland those factors have been population growth increasing faster than homes can be built – which in turn is based on government immigration decisions on the demand side vs. building regulations and costs, and even more so the land-banking of city planning causing huge lifts in the cost of land, far beyond the increase in house value itself.

But can those factors be driving demand exceeding supply across the whole nation this time? Immigration has been basically zero for the last year and while land-banking and city planning are a nation-wide supply restricting problem there have not been dramatic changes in those factors in the last year, and some areas have always been more relaxed than others. So what’s driving this recent nationwide inflation?

  • Government changes on investment deductibility and the increased time over which the bright-line test can be applied (basically a Capital Gains Tax) mean that investors are deciding now it’s not a great time to sell, reducing the number of listings (supply)
  • Sensitive people are feeling the breeze of general inflation and take positions to protect their own capital base by lifting those sales from the market, further tightening supply. Better to sit on the potential capital gains, increase the mortgage and use that money to buy a new boat. Notice the increase in prices for second-hand boats, caravans and motor homes.
  • Interest rates pushed down in 2020 as the classic mode of Keynesian response to a potential recession. That increases demand, at least for a while.

The government must be hoping that this is just a one-off and that once the housing market has adjusted to a post-Covid world, things will settle down. We should all hope for that but I see merely the results of a “critical mass” of factors that have finally come together at one point in time rather than individually affecting the market at different times. Even if this spike cools down, the ongoing house price increases will still be greater than we can cope with.

Then there’s this:

That’s Fonterra’s share price in the last three months. An awful drop from $5 per share to $2.82 that exceeds the percentage drop in 2018. That last was caused by financial problems at the company. Problems that, like the housing situation, had been bubbling away for years, but which hit critical mass that year.

Fonterra has since cleaned up many of those problems and was looking pretty healthy internally, with a good payout. So what’s happened?

Professor Keith Woodford is on the case as usual with two articles in May that discussed what might be coming.

You can read the details in those two articles . The summary comes to five points, the first two being around proposals only.

  1. Reduce farmer requirements to own shares, with them needing to hold one share for every four kg of Milksolids supplied, compared to the current one share for every kg of supply. That last is a hangover from Co-op days when the shares were a nominal $1 that never changed as farmers joined and exited co-ops.
  2. Shut down or cap one arm of its two-armed share investors world, the Shareholders Fund. This Fund and the related Trading Among Farmers (TAF) scheme allowed a two-way flow of “units” and shares between the Fund and the Farmer share trades, which kept the price of shares and units within a cent or two of each other and supplied vital pricing information to both farmer investors and external investors.
  3. The Fund allows non-farmers to buy shares and get a dividend but with no shareholder voting. While there was talk about enabling the company to raise capital this way without trying to get cash from cooperative members, the real reason was to remove the redemption risk as farmers exited the company. Under the old co-op model they would not have had the cash to pay them out. The Fund and TAF would shift the risk.
  4. The flaw was that the only way TAF could remove the redemption risk should Fonterra lose a major number of suppliers was by taking on a new risk of losing control of the company to non-farmer investors.
  5. The risk now is not from exiting farmers but from a substantial and ongoing reduction in production, perhaps in the order of 10% to 20%, primarily driven by future environmental regulations around herd sizes. That’s one rock. The other is that farmers still want to control the company.

While only proposals, they did suspend trading before the announcement and they have cut the link between farmer share trading and the external fund, showing the future to investors.

Those investors, the market, have reacted badly to all of this and although it would be easy to say that this is just frippery that ignores the now “healthy” internals of Fonterra, the fact is that share prices tell us what the market thinks of any company’s future.

Clearly Fonterra’s and perhaps the rest of the dairy industry’s future in NZ is not good. What that means exactly for the wider NZ economy is another question, but clearly for some environmental and economic extremists like No Right Turn the message is the same as for the Huntly power station and the fishing industry: Let It Die.

Written by Tom Hunter

June 19, 2021 at 12:24 pm

AND FOR THE SECOND TIME THIS MONTH

Many of you will have viewed with some disquiet the lead item on TV1 6.00 news tonight showing hundreds of gang members on motorcycles taking over a public road forcing cars off to the side while they escorted the hearse containing a deceased gang member to his final resting place. This being the second such instance in the past month.

And the police stood back and allowed this to happen. Their hands-off approach is driven by Deputy Commissioner Wally Haumaha who has championed engaging with gangs (on their terms) and by a government who believe the burgeoning gang problems can be solved with hugs and kisses.

So the new norm is grin and bear it because the police won’t intervene. Old time Police Commissioners like Gideon Tait will be spinning in their grave.

New Zealand … the way you’ve got it.

Written by The Veteran

June 18, 2021 at 10:45 pm

PAYBACK … LABOUR PARTY STYLE

Some of you with a passing knowledge of the Cook Islands will remember back when (Sir) Albert Henry redefined pork barrel politics. Drive on the ring road and those areas that returned Cook Island Party MPs were easily recognisable … the road was sealed. In constituencies held by the opposition it was potholes galore.

And the pork barrelling continues here in Northland. As part of our punishment for reelecting a National MP it is now reported that the gummit has reduced the subsidy paid to the Far North District Council’s road maintenance budget by 30% and canned completely any contribution to the district’s capital roading budget. I guess they had to find the $1 billion dollars needed to fund Auckland’s second harbour bridge (limited to bikies and pedestrians) from somewhere. Payback for the Greens.

Whoops … we didn’t reelect Matt King. The seat was won by the Labour candidate. Her score to date … the Wellsford to Whangarei four lane highway canned; Marsden Point to Whangarei highway upgrade canned and now the guts ripped out of the FNDC roading budget.

Payback to Northland … Labour Party style.

Written by The Veteran

June 14, 2021 at 3:03 pm

The Precious Midpoint

It’s a truism of politics that you win the centre to gain and hold political power.

But there’s a difference between acting on that and worshipping it as a religious principle that requires politicians to do nothing but sniff the winds and bend accordingly to what they detect.

Politicians and political parties that do that are doomed to accomplish nothing in power beyond managing the status quo until they tire and are voted out in favour of the next new, shiny thing. And if enough time goes by and the status quo breaks down, such a party will simply be left on the side of the road.

Strangely this seems to be the fate of the old socialist parties of France and Germany, which are facing extinction as major players, and the British Labour Party seems to be intent on joining them, as noted in this article, The Road to Hartlepool Pier:

But worst of all is that this transmogrified middle-class party views its old working-class constituency not simply with incomprehension but with contempt. “Yep”, Liddle quotes a “Starmer superfan” as tweeting about the result, “as expected the working class love a bit of nationalism and racism. Well done Hartlepool, you turkeys. I’ve never been and I never will”.

“The Labour Party we knew is gone,” Liddle concludes, “gone for good. Those votes are not coming back”. Stirring stuff and written from the depths of a Social Democrat’s soul.

But the article points out that this is nothing new for British Labour or British Socialism, as implied with the title of the article, cribbing from one of Orwell’s famous books:

“The truth is,” Orwell concludes, “that to many people calling themselves Socialists, revolution does not mean a movement of the masses with which they hope to associate themselves; it means a set of reforms which ‘we’, the clever ones, are going to impose upon ‘them’, the Lower Orders.”

That was written in 1937.

Here in New Zealand I have to wonder if the same thing is true of the National Party? Certainly Chris Trotter notes the problems that Centre-Left parties are having overseas but is cocksure that the same won’t happen to NZ Labour, with his “Four Houses” analogy:

Far from losing touch with its brown working-class base, New Zealand Labour’s liberal, university-educated middle class: the house members of Working With My Brain and Taking Care of Others; are doing everything they can to empower Maori and Pasefika New Zealanders. They are doing this by strengthening their unions; by increasing their benefits; by more appropriately tailoring health and educational services to their needs; and, most significantly, by reconfiguring New Zealand’s constitutional structures to ensure their voices are heard and their cultural needs recognised.

Ironically, this leaves New Zealand’s National Party where British Labour now appears to be standing: with insufficient allies to win a nationwide election. Of New Zealand’s four houses, only Taking Care of Business (especially rural business) is overwhelmingly loyal to National. Increasingly, the house members of Working With My Brain, once more-or-less evenly split between National and Labour, are clustering around like-minded “progressives”.

And here also:

The only real questions, after Thursday’s Budget, is how long will it take National to realise how profoundly the political game has been – and is being – transformed by Covid and Climate Change? Will it be two, three, or four terms? And, how many leaders will the party have to elect, and discard, before it finally masters the new language of electoral victory?

While that’s amusing and something to think about, it must be said that poor old Chris has a long, repeated habit of swinging from orgasmic joy at Labour electoral victories followed by dark mood swings as they flail around and fail to recreate the wonders of Micky Savage’s First Labour Government. That second article might as well have been titled the same as the famous cover of Newsweek in 2008, heralding the arrival of Saint Obama and following the spending spree of the Bush Administration as they effectively nationalised a stack of financial firms.

Things turned out differently of course.

However, the reason for my post’s title was the thought that National may actually be thinking the same as Chris, and it’s been foremost with ex-Cabinet Minister Wayne Mapp, commenting on a number of blogs, including Trotter’s. Here on No Minister he has of course regularly lambasted me as being to the Right of 90% of New Zealanders and I have acknowledged as much.

But over on Kiwiblog this comment from Wayne in a DPF post on electric cars, made it clear that it’s not just me he’s concerned about:

Fourteen out of twenty four comments criticising DPF, either directly or indirectly, for choosing an EV. It does show how far Kiwiblog commenters are from the midpoint of NZ voters.

Given that the vast majority of those comments were not knee-jerk reactions but accurate observations about the cost, range, life-span and capabilities of EV’s, and given that many of those people are or have been National voters, I thought that was a foolish and reactionary comment itself.

But it does show the thinking that’s evolving here, at least with one ex-National MP, and it’s thinking that fits perfectly with Trotter’s about what’s wrong with National and where they have to go to regain power – which is basically to just cede all these fundamental arguments to the Left, roll over and awaken when the electorate eventually tires of Jacindamania.

Given that Labour and its policies were floating around the low twenty percent mark in mid-2017 before the Hail Mary pass to Jacinda yielded a massive increase in Labour’s vote share, even as the policies remained the same, I think that simply following them in those basic policies, if not in detail, is stupid beyond belief.

Having talked to countless Jacinda worshippers and having always asked them the key question, “Would you vote for Labour policies if Jacinda vanished today?”, I’ve not been surprised to find them answering that they’re not actually aware of Labour policies and a hesitant answer that they might still vote for them. In other words, at rock bottom, the popularity of Labour is still in the pre-Jacinda range of early 2017.

As the threat of Chinese Sinus AIDS retreats and the costs of being a NoRightTurn extremist on AGW mount up, especially for that “brown working-class base”, I don’t think even the magic pixie dust of Jacinda will be enough.

Instead of aping the strategic goals of Labour and sneering at their own voters, what National should be thinking about is what the votes for Brexit and Trump in 2016 and for the British Conservatives in 2020 meant, and what the changing politics of things like the recent Hartlepool election meant – rather than imagining that the forces driving them can be wiped away by defeating Trump-like politicians.

National is not going to be rewarded by simply saying that it will do the same as Labour but with better management. In the face of failing public systems, especially education, that’s no longer good enough. The 2020 election told National that when voters are presented with such a choice they’ll just vote Labour.

And the lesson is not to be like the New Zealand equivalent of Mitt Romney, Theresa May or David Cameron – all squishes who either failed to get elected or if they were, failed to grasp the actual electoral environment they claimed their “moderate” noses could sniff out.

That approach just won’t cut it anymore with Centre-Right parties. Real, practical solutions based around giving incentives to individuals – in education, healthcare and other areas – are what is required. Certainly not something that “‘we’, the clever ones, are going to impose upon ‘them’, the Lower Orders“, from the hearts of wealthy suburbs sporting myriad electric cars.

The midpoint is there to be moved, not just accommodated with as others move it.

Just as important is that all this needs to be backed by a willingness to fight with the likes of Tova and John Campbell when they use their usual emotional bullshit arguments in opposition. That’s yet another lesson that Trump has taught at least the next generation of GOP politicians. I see Nikki Halley is already being talked up, but the future actually lies with the likes of Ron DeSantis, Tim Scott, Tom Cotton, Mike Pompeo, and Kristi Noem.

Who National’s future lies with I have no idea.

Written by Tom Hunter

June 6, 2021 at 10:23 am

Making progress with Progressivism

It’s a bog-standard feature of every Labour government that the state will expand, not just in terms of money spent, but people employed.

So I’m not surprised to see this information from a recent post by Don Brash, Do We Need So Many Bureaucrats?:

  • Land Information New Zealand, 25.5%
  • Ministry of Foreign Affairs and Trade, 30.7%
  • Ministry of Education, 32.4% (not teachers)
  • Ministry of Defence, 35.3%
  • Ministry of Primary Industries, 36.7%
  • Ministry of Business, Innovation and Employment, 38.9%
  • Oranga Tamariki, 40.7%
  • Ministry of Transport, 40.8% (not including NZTA)
  • Ministry for the Environment, 41.0%
  • Public Service Commission, 42.6%
  • Ministry for Women, 45.8%
  • Ministry for Maori Development, 69.8%
  • Ministry for Pacific Peoples, 81.1%

As Brash points out, this would not be so bad if there was evidence that the government was getting stuff done with all these extra people. But as is increasingly obvious to anybody who ignores the NZ MSM, it’s not.

A person at the polar opposite end of the political spectrum from Brash, Danyl Mclauchlan, has noticed the same thing:

Which raises an awkward question. If policy is developed by ministerial staff and implemented by DPMC, what do all of Robertson’s ministerial colleagues and their thousands of highly paid advisers do all day? Because the description of the Implementation Unit sounds an awful lot like the current role of a ministerial office.

Given Adern’s lightweight nature, it’s not surprising as to where this idea came from:

The Implementation Unit is a Blairite idea, as the Stuff journalists point out. He called it “the Delivery Unit”, inventing it in his final years in Downing Street to try and overcome what he perceived as the failure of both the civil service and his junior ministers in achieving his policy ambitions. Blair’s critics disagreed, arguing that Blair’s tendency to grandstand in the media by announcing visionary, aspirational goals without figuring out how to deliver them was the deeper problem with his administration.

Helpfully the Stuff article reminds us that Jacinda Ardern once worked for Tony Blair.

Chuckle. Danyl also takes a shot at other Lefties who have been banging the drums for a 21st century Ministry of Works, by quoting a senior government advisor that he knows:

“It’s the same mistake National made with MBIE. Let’s build a new entity to do the economic transformation the rest of the government can’t deliver. And how’d that work out? Imagine you’re a Labour minister and you decide to fund a Ministry of Works to deliver all these projects that NZTA and HUD and Kāinga Ora seem unable to do. You’re going to spend two years and, I dunno, a couple hundred million setting it up. You’re going to end up staffing it with people from NZTA and Kāinga Ora, because who else are you going to get? But once it’s built you’ve just replicated these same dysfunctional organisations. So it’s not going to build anything and your political career will be over.”

You could also add the ACT Party’s dopey idea to establish a Productivity Commission. How’d that work out?

That and the MBIE, plus all this other stuff, really go to the heart of the problem, which is not just the mindless acquisition of new bureaucrats by Labour but the fact that National and ACT refuse to shut down a lot of these useless government departments and worse, create new ones themselves. It’s Public Choice theory on steroids.

Speaking of which, let’s recall this blog’s namesake, as well as one of the key writers who seemed to well understand that theory as he wrote delicious lines like this for a show that seems ageless:

Perhaps it’ll all be okay. As I have said before, having a government that’s useless beats one that’s actually doing stupid shit. I just wish they could do all this nothing for much less money.

Besides, the new National-led coalition government of 2026 will freeze those numbers at that year’s level and hold them there until they lose power 2-3 terms later.

The idea of abolishing a bunch of these ministries, starting with the last three on that list, will be rejected as “too extreme and divisive” – plus Woman, Maori and Pasifika political activists and “journalists” who will never vote National, will tell National that they’d be awful people if they did such things.

Written by Tom Hunter

June 1, 2021 at 12:00 pm

MIND BOGGLING INCOMPETENCE … OR WORSE

The revelation here at https://www.stuff.co.nz/business/125180968 that the Government abandoned moves to protect the Waikato DHB (and others) from cyber attacks citing budget constraints. The result … Waikato Hospital paralysed.

And further that key parts of the Government’s cybersecurity strategy have not been implemented two years after the strategy document was published. Promised actions included an action plan and an annual report. The minister responsible for the cybersecurity strategy, ​Kris Faafoi, left the role in November last year. His successor, ​David Clark, admits no annual cybersecurity report from the 2019 strategy document was ever produced. However, he promises a report will be produced for the 2022 financial year.

Promises by Clark, who resigned his Health portfolio, hardly engender confidence.

What a cock-up. New Zealand, the way you’ve got it.

Written by The Veteran

May 30, 2021 at 4:59 pm

Posted in Healthcare, NZ Labour Party

Tagged with

NEW ZEALAND … THE WAY YOU’VE GOT IT

Can I start this off by making this simple statement … the Mongrel Mob are a criminal gang … no ifs, buts or maybes.

And their response to the widespread outrage spearheaded by National’s Simeon Brown over the mob being allowed to take over a portion of the State Highway in contravention of any number of traffic laws supposedly as part of ‘tangihanga’ was to have their media relations person, a certain Lou Hutchinson, launch a petition calling for Brown to be forced to apologise to the affected whanau for his racist outburst; that he be censured by the National Party and stripped of his portfolio responsibilities (Police, Corrections, Serious Fraud Office and Youth); that he be censured by the Speaker of the House and that his Facebook, Twitter and Social Media Accounts be suspended until he completes cultural sensitivity training and the Speaker deems him fit.

About the only thing they didn’t call for was his hanging, drawing and quartering without trial.

Kudos to Brown for his response … “if the gangs are trying to get me sacked then I must be doing the right thing”. Brown has previously received death threats for speaking out on gangs whose membership has grown by over 50% since Labour took office in 2017.

I finish where I started. The Mongrel Mob et al are major players in a whole range of serious criminal activity. Any hugs and kindness shown to them will be taken as a sign of weakness and the green light to continue on doing what they do best … thumbing their noses at the law. But its all hugs and kindness that gangs can look forward to from this soft cock on crime government and its not going to get any better soon.

Written by The Veteran

May 27, 2021 at 4:16 pm

SIMEON BROWN WUZ RIGHT ON THE MONEY

When he said in the House the other day that gangs were out of control under Labour. He was referring to the fact that gang membership has increased 50% since Ardern took office from 5,343 to 8,006. And now the revelation that in this years budget Vote Police fell by $90m including a reduction of $63m in road policing, $4.5m in investigations and $5.5m in primary response (when you ring up to complain that your home has been burgled). That’s on top of the freeze in police salaries and police morale going south..

Labour’s soft cock approach to gangs was none better illustrated than by this photograph of the Mongrel Mob taking over a State Highway in the Hawkes Bay for the funeral procession following the tangi of a high ranking gang member.

Motor bikes/vehicles covering the whole road and note the vehicle traveling in the opposite direction forced over onto the berm.

And the response from Stuart Nash, local member and one time Police Minister … arresting them ain’t the answer, we need alternative strategies.

Clearly Labour’s alternative strategy is based on one law for gangs and another law for the rest of us. Soft cock indeed.

Written by The Veteran

May 26, 2021 at 12:05 pm

Posted in New Zealand, NZ Labour Party

Tagged with

The Song Remains The Same

This is outstanding news:

Tens of millions of dollars have been spent on Auckland light rail since Labour came to power, despite there being no shovels in the ground to build it. 

Information released by Waka Kotahi-NZ Transport Agency (NZTA) shows $34.8 million has been spent since October 2017 on business cases, project management, legal costs, office space and equipment, and Ministry of Transport funding. 

With more projects like this we’re going to able to stand up and proudly proclaim to the world all the wonderful things we’re doing to halt Global Warming… whilst actually doing abso-fucking-lutely nothing about it.

Plus there’s the wonderful Keynesian effect of all that money passing through the hands of lawyers and consultants and into the pockets of Mercedes and Tesla dealerships and Auckland real estate companies.

Now be honest. What more could you want from a government?

The only problem is that they’re showing signs of becoming restrained:

The Government was left with a $47 million contingency in its $6.8 billion NZ Upgrade transport package after $211 million worth of rail projects were put into the package at the last minute.

This was despite repeated warnings from officials the contingency might be too small to pay for any cost blowouts.

Those warnings were prescient, as new cost estimates for the transport projects have led the Government to back away from promises to build everything they proposed a little over a year ago – something that could have been avoided had the projects been given larger contingency funding.

I’m sure they’ll learn from this and put in a bigger contingency for next year’s budget. About a billion dollars should do it.

On the other hand their extreme restraint in achieving anything may actually start being translated into spending as well, with that contingency problem perhaps not being the usual Labour screwup as an indicator of where they’re going, as Chris Trotter points out:

Let’s begin with the Labour Government’s decision to impose a three-year wage freeze on three-quarters of the Public Service. Under the old Political Rule Book, such an action would have been deemed extremely unwise. That rule book would have explained the sheer folly of effectively decreasing the purchasing power of some of the Labour Party’s most loyal supporters. This is hardly surprising: “Look after your electoral base.”; has always been the first and most important rule of electoral politics.

Chris thinks that this is all part of keeping onboard those National voters who crossed the aisle last year, but it’s more likely that Robertson has taken a look at the deficits and debt and finally got the wind up about blowing more money on stuff, especially as he considers how much of the spending to date has produced nothing of consequence or, in the case of poverty and healthcare, seen things go backwards.

To me it therefore seems quite a natural and logical progression for Labour to start down the He Puapua route of separate Maori development. As I have pointed out several times Critical Race Theory, which is currently shredding the USA, was always going to make it down here to New Zealand where it would be gleefully taken up by Maori activists and academics as an even more extremist extension of what used to be called Political Correctness (now “Woke” Politics).

But the reason why the political and activist Left have glommed on to it is that the traditional Left ideas have failed Maori, just as they’ve failed Blacks in the USA.

Public education. Public Healthcare. Social Welfare. And still Maori are suffering worse in education, health and poverty than other ethnic groups in our society.

What else has the Left got to offer Maori? Nothing, which is why this new ideology has taken hold so quickly on the NZ Left. I think it will ultimately prove to be even more useless than traditional Socialism, but for the moment it’s a salve for Maori activists and a possible electoral winner for White Leftists who otherwise have no idea what to do to improve their public institutions beyond simply dumping in more money.

There’s also increasingly a lot of moaning from the Left about why their wonderful Labour government can’t get anything done. Certainly a lot of this is due to their shambling incompetence; they are the most useless shit shower of a government that I’ve known in my lifetime.

But the simple fact is that you can’t build the same thing twice. Is Adern’s Labour government going to build another Social Security system? Another Public Healthcare system? Another building to house the bureaucracy for them? The low-hanging fruit was plucked by the First Labour government. There may be equally revolutionary things like a Universal Basic Income that they could try to implement, but I see no signs of such things from this government.

Which, as a Right-Winger, suits me just fine. I may even vote for them in 2023 on the sound basis that the more useless a government is the better it is for the individual.

But then I recall that even a government that’s too useless to build anything can still stuff things up badly by constantly saying “No” and stopping people doing things, and that’s so easy that even this government can do it. In fact it seems to be their speciality.

Labour 2023: Vote For Nothing.

If I could have just one extra promise from Labour though it would be that their post-2023 government spend less for nothing.

They’re catching up

Romania that is, to our economy.

But they’re not the only ones, as Michael Reddell demonstrates in his blog article, Productivity growth: failures and successes.

As regular readers know I have highlighted from time to time the eastern and central European OECD countries – all Communist-run until about 1989 – that were catching or moving past us. I first noticed this when I helped write the 2025 Taskforce’s report – remember, the idea that we might close the gaps to Australia by 2025, when in fact policy indifference has meant they’ve kept widening – in 2009, so that must have been data for 2007 or 2008.

Back then only Slovenia had matched us, and they were (a) small and (b) just over the border from Italy and Austria. The OECD and Conference Board numbers are slightly different, but by now probably four of the eight have matched or exceeded us (and all eight managed faster productivity growth than us over the last cycle). Turkey – also in the OECD – has also now passed us.

But in this post he decided to focus on an Eastern European nation that’s not in the OECD. Romania.

That trend looks relentless. Reddell also points out that Romania’s population has been shrinking as ours grew, courtesy of what he calls the “big New Zealand” approach. It should be noted that since GDP is calculated based on spending, largely consumer spending, which in turn means its pushed by population growth, the annual average GDP growth rate of 2.78% circa 2010-2017 was largely the product of a population growing at 1.52% per year in that period, which automatically gives you that much annual GDP growth. You’d have needed a Soviet style economy to not have at least 1.5% per annum growth.

If the last National government was bad, the Labour or Labour-led governments since 2017 have been worse. It is hard to think of a single thing they’ve done to improve the climate for market-driven business investment and productivity growth, and easy to identify a growing list of things that worsen the outlook – most individually probably quite small effects, but the cumulative direction is pretty clear.

One of the ways of seeing the utter failure – the indifference, the betrayal of New Zealanders – is to look at the growing list of countries that are either moving past us, or fast approaching us. Recall that for 50 years or more New Zealand was among the handful of very highest income countries on earth.

We still have advantages over such nations of course, largely thanks to our natural environment but also because we inherited an economy that counted as a developed one over a century ago; we had almost everything technological that nations like Britain and the USA had.

Most New Zealanders would rather live as we do than as Romanians do. They’re still recovering from decades of communist rule.

But that’s Riddell’s point: how much longer will that continue to be the case as these nations pass us in terms first of productivity and then economically, powered by that productivity advantage?

In the agricultural work I did this season almost every one of the drivers said they could earn more money doing the same work in Australia, Britain, Ireland and the USA, and many of them were heading to those places as soon as the season here was done and the Covid-border issues eased. In every case their flights and accomodation was being paid for. The foreign drivers mainly came for a working holiday, the locals were held back a little by family, but that was all.

The recent pay freeze on all government workers, which includes frontline staff like nurses and police, is not going to help, as this Kiwiblog commentator noted:

Yup, nurses are furious. They are already paid such a low salary that a nurse cannot dream of owning their own home without help from a male partner.

Two nurses on my partners ward have resigned already and shifting to Australia.

This one notes one method that will be applied:

But many are doing what my wife plans to do. Take unpaid leave while keeping her contract in NZ and go and work in Northern territories where she can earn 3 times her wage in NZ. Ok its hard work but she gets accommodation and food free plus her flights and a bonus. She will do one month every 6.

That is the future for New Zealand. It won’t be a collapse, but we will find it increasingly harder to compete with former “developing” nations for teachers, doctors, and nurses. Those well-trained doctors from Africa and the Indian continent that you so often see in NZ hospitals will not be replaced from the same sources as their nations catch up to us in wealth and can afford to pay as well, or perhaps better. Where we will get the replacements from if we’re increasingly doing little better or worse than the Developing World?

As far as Kiwis themselves are concerned, the older generations will stay here because we’ve done our stints overseas. However…

Before I had kids I used to idly talk about not encouraging any I had to stay in New Zealand, so relatively poor were the prospects becoming. It is harder to take that stance when it is real young people one enjoys being around, but…..at least from an economic perspective New Zealand looks like an ever-worse option, increasingly an inward-looking backwater.

My kids have not yet decided whether they’ll make the jump, but as they engage with the workforce they are under no illusions about the pay gaps with overseas nations as well as the housing costs (and other costs) here in our rather expensive little paradise.

Written by Tom Hunter

May 14, 2021 at 5:37 pm