The current Governor declined the same invitation to talk to the students - and so ended that tradition. What was most insightful of the former Governor was his observation that the NZ economy was being supported during the nine years of National under Sir John Key by 3 factors: construction, tourism and immigration. Wheeler said that the economy would keep growing only to the extent that "construction spending, continued migration and tourist flows" held up. Semi-privately, he argued this was no basis to build a solid foundation for a productive economy. Construction was being artificially inflated by a property bubble, 100 year record high immigration rates would reach saturation point, and who knows what country tourists may next decide is the trendy new destination? He was correct on all three counts.
Our current Finance Minister has the same people advising her as advised Bill English and John Key, yet all three of those drivers of the economy under English and Key have largely disappeared. Property prices are stagnant, and construction is now weak. Immigration has been swinging wildly and is now dropping away after a post-Covid surge. Meanwhile tourism has barely recovered to pre-Covid levels. Maybe tourists don't want to be trapped in this country again like they were during the pandemic. With every one of the Key-era drivers of the economy stripped away, all the PM and his Finance Minister can do is make vague references as to how new infrastructure may improve things - even though there is little money for those investments now - and how cutting red-tape may help - even though barely any has been cut so far. Then there's a vague appeal they're making to how better "back-to-basics" education will crank things up. What's happening behind the scenes is that the Nats are thinking, "Without any of the 3 drivers of the economy under the previous Nat government happening, where are the new drivers going to be coming from?"
Our current Finance Minister has the same people advising her as advised Bill English and John Key, yet all three of those drivers of the economy under English and Key have largely disappeared. Property prices are stagnant, and construction is now weak. Immigration has been swinging wildly and is now dropping away after a post-Covid surge. Meanwhile tourism has barely recovered to pre-Covid levels. Maybe tourists don't want to be trapped in this country again like they were during the pandemic. With every one of the Key-era drivers of the economy stripped away, all the PM and his Finance Minister can do is make vague references as to how new infrastructure may improve things - even though there is little money for those investments now - and how cutting red-tape may help - even though barely any has been cut so far. Then there's a vague appeal they're making to how better "back-to-basics" education will crank things up. What's happening behind the scenes is that the Nats are thinking, "Without any of the 3 drivers of the economy under the previous Nat government happening, where are the new drivers going to be coming from?"
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
8 comments:
That's an excellent summary but only part if the equation. We have agriculture but that is becoming uneconomic with all the climate hurdles. When had mining, oil and gas, but we know what happened to that. The education system has been dumbed down and replaced with useless propaganda, so Jacinda's dreams about a high tech economy aren't going to happen. Young people with skills are leaving the country. We have a growing Maori economy that demands taxpayer funding while not paying tax or contributing itself. So it's not surprising our GDP is zero and we have one of the worst trade deficits in the OECD. The only industry that's booming is the Treaty grievance industry which is a further drain. If people think we have a cost of living crisis now, just wait until the effects of all this hit home.
I am no economist. But just look at the UK and what massive immigration has, and is doing. Not just socially but economically. I believe they calculated recently the cost of each new immigrant into the UK. The vast majority are negative contributors to the tune of £500,000 over their life time.
It is no surprise whatsoever that the "Nats are sweating bricks about the economy". The World, not just NZ, is up against the Limits to Growth as these are well and truly kicking in. When it comes to rocks and hard places it is germane to cite what was said by the Vogons in the Hitchhiker's Guide to the Galaxy and the Borg in Star Trek: "Resistance is futile". Couple the obliviousness to this real world issue, one that is not going away, with PM Luxon playing silly beggars about the Treaty Principles Bill and all things to do with Maorification/co-governance and we are truly in the pooh. Anyone who read and understood the 1970's Limits to Growth should know. A look at the 2023 recalibration shows clearly that World Industrial Output has hit the Seneca cliff along with World Food Production. Dealing with this will require a very hard look at how NZ's revenue is used and pouring it into the black holes such as the Waitangi Tribunal wrangling and the grievance industry must be stopped completely. Our Government needs to consider and act on what is going to keep NZ fed and watered because all the frilly stuff is a pointless waste. To chuck in another saying "When you're up to your neck in alligators, it is hard to remember that your initial objective was to drain the swamp".
And tourism had its shine definitely removed when NZ became the Zurich of the South Pacific. The cost of getting here is bad enough, then exorbitant accommodation, food, and activity fees tarnish what's left of any gloss. Maybe the tech sector will be our saviour but, oh, that's right, we've dumbed down our education levels, so that looks less likely. Still, we have a great primary farming and agricultural sector, that is/was until the mad greenies have/had their way.
I always enjoy your articles, Professor. This is good but it would be nice to hear what you think our leaders could be doing to lead us to prosperity. We need positivity to mellow the doom. Or are we doomed?
MC
When Wheeler arrived to address a meeting of business people he was respected. When the current one arrives the comment in the room is "the idiot has arrived"
Building houses and migration does not make a country prosperous. Selling forests to overseas owners certainly is a lose lose. Converting productive farm land into forestry and then selling to overseas owners is about a dumb as you can get
Mike Moore's comment about exporting lamb-burgers was right
One areas where great economic damage continues is in all educational settings - where emotive responses supersede facts. Why is National taking such a passive stance?
National have to come clean on COP 29 and what part of the horrendous payment to undeveloped countries Hon Simon Watt has agreed to on our behalf . NZ should follow the previous lead of former USA President Trump and withdraw with a polite NO thanks .
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