Concerning signs for our economy
The latest quarterly outlook by independent economics group Infometrics makes for grim reading. Infometrics is forecasting that worsening economic conditions are likely to lead to a reduction in consumer confidence with the income and wealth of Kiwi households under pressure.
One of the key reasons for this pressure is that we are not seeing the job growth we need to keep our economy moving. The New Zealand job market is stagnating with many firms uncertain about the effect of policy changes being made by the current government and the impact of global economic conditions. This is making businesses wary about hiring new staff.
Employment growth is the weakest it has been in the past three years and, according to Infometrics, it is tracking towards a six-year low of 1.3 per cent before the end of this year.
We are seeing this reduction in new jobs reflected in a considerable rise in the number of people on jobseeker benefits. In fact the number of people on the benefit while looking for work has increased by over 15,500 since this Government took office.
While the Government’s changes to the indexation of welfare benefits will provide some improvement in the spending ability of lower-income households, Infometrics sees little else coming from this Government that will help stimulate economic growth in the medium term. Worryingly, the group’s view is that GDP growth could fall as low as 1.4 per cent by 2022.
Even more concerning is the appraisal by Infometrics that the Government’s agenda is likely to contribute to weaker economic growth. So here we have a Government that has imposed additional costs on New Zealand businesses, introducing new fuel taxes and clumsily reforming industrial relations, contributing to a stagnating economy.
It is no wonder that confidence levels in the manufacturing industry are now firmly in negative territory at -57. Back in 2013, confidence levels ranged between 17 and 44.
Against this backdrop of weak employment growth and business confidence that has plummeted to the lowest levels in a decade, the cost of living has dramatically increased under this Government.
More and more New Zealanders are struggling with rising day-to-day living costs, and this is reflected in almost half a million hardship grants being issued in the past 12 months.
Rising rents and the increasing cost of petrol were key contributors to the 1.7 per cent increase in the cost of living in the past year; with rents increasing by 2.5 per cent and petrol by 3.3 per cent.
The Government must take responsibility for the role it has played in driving up the cost of living by imposing more costly regulations on landlords, extending the bright-line test and introducing the ring-fencing of losses on rental properties. All of these have contributed to a $50 per week increase in New Zealand’s median rent since the Government took office.
Keeping the cost of living low and affordable is just as important as growing incomes. When the cost of living grows faster than incomes, Kiwis are going backwards.