Everyone must be arguing about this, right \u2013 picking a lane?<\/p>\n
Actually, no. Chris Hipkins agrees there\u2019s a \u201ctwo-speed economy\u201d, and in a speech to the Queenstown Business Chamber last month said<\/a> the government\u2019s policies around things like rates, insurance levies and electricity prices were contributing to increasing costs. People who were worse off were finding themselves even more so, as other sectors and demographics sped forward, he said.<\/p>\n Media commentators seem to share the opinion that different parts of the country are going at different speeds, with National Business Review<\/a> calling the contrasts \u201cstark\u201d, and the Herald\u2019s Liam Dann explaining the diverging lanes at length<\/a>. \u201cA gap is opening between the pace of recovery in provincial regions, which are feeling the direct flow from high export commodity prices, and the urban areas, which are suffering from low confidence and extended property market contraction,\u201d he wrote<\/a> after the Reserve Bank lowered<\/a> the Official Cash Rate to 3%, a \u201cone-speed\u201d lever to aid the recovery.<\/p>\n So who is hooning along then?<\/p>\n It depends where you look. Primary industries in the regions are doing well, thanks to high commodity prices and strong exports \u2013 total red meat exports have been on the rise, farmgate milk prices have seen a record payout \u2013 which has led to a bump<\/a> in rural incomes.<\/p>\n Urban centres are another story, with consumer spending (a big part of their pie) down and living costs continuing to rise. \u201cIt\u2019s tough in the cities across New Zealand at the moment, particularly Auckland, Wellington,\u201d Luxon said last month.<\/a><\/p>\n The job market is rough this year<\/a>, and both those centres have endured cuts across private and public sectors<\/a>. In Auckland the unemployment rate is 6.1% (compared to a nationwide average of 5.2%) while the property market has crashed<\/a> into a ditch after going way too fast.<\/p>\n When you\u2019ve got less money coming in and things are more expensive<\/a> (food prices are up 5%<\/a>, mince is costing 19% more than a year ago, and butter\u2019s seen Formula 1 levels of price propulsion with a 42% increase), the belt gets tightened. \u201cConsumer spending remains modest, especially for discretionary items,\u201d Westpac chief economist Kelly Eckhold has said<\/a>, and we\u2019re less likely to go out to restaurants and shops.<\/p>\n Retail and hospitality sectors have been vocal about the challenges, and there have been high-profile closures in the big cities<\/a>. \u201cOperators are experiencing falling revenues at the same time as costs for wages, food, rent, utilities and compliance continue to climb,\u201d the Restaurant Association said at the end of August. It\u2019s something felt most strongly in the central business districts, where office occupancy hasn\u2019t returned to pre-pandemic levels.<\/p>\n There have been myriad infrastructure challenges and road cones everywhere<\/a>. Patient Aucklanders are also pinning their hopes on the City Rail Link<\/a>, which has been under way since the project broke ground in 2016<\/a>, and promises to help revitalise<\/a> the city.<\/p>\n Some rural regions have stalled too. Thousands of jobs are disappearing as mills, plants and meatworks are closed around the country<\/a> in towns like Kawerau, Ohakune and Timaru, and as Anna Rankin reported from Tokoroa<\/a> and the Kinleith Mill, the causes and effects are complex, hugely impacting regional economies. In some parts, provincial populations are ageing quickly: \u201c\u200b\u200btimes are really tough\u201d in Buller<\/a>, where 26.6% of people are over 65 (the national average is 16.6%).<\/p>\n And while things are objectively hard in Auckland and Wellington by many metrics, the two regions<\/a> also have the highest median household incomes in the country. (Though 8.8% of Auckland households are deemed \u201ccrowded\u201d, 2.8% severely so.)<\/p>\n All right then, is it the Mainland pulling ahead?<\/p>\n Luxon reckons the South Island is \u201con fire<\/a>\u201d (in a good way), calling Canterbury the \u201csharp end of the spear\u201d during a recent visit to Christchurch, where the region\u2019s GDP growth has overtaken the national average. Queenstown appears to be speeding ahead too; the hospitality sector is up 13.4%<\/a> and the unemployment rate is 1.75%.<\/p>\n \u201cEverything just gets better the further you go south,\u201d Kiwibank said<\/a> in July of the regional divide. The bank\u2019s economic heat map<\/a> had Southland and Otago as the country\u2019s best-performing regions (though both were far from searing, registering 5\/10 compared to the tepid national average of 4).<\/p>\n Up in the North Island, \u201cTaranaki, Northland and Gisborne are going backwards,\u201d Kiwibank\u2019s chief economist Jarrod Kerr told the Herald<\/a>. And with a third of New Zealanders living in Auckland, what happens there has an outsized impact on the country\u2019s populace.<\/p>\n Well, since we\u2019re talking speed, what about the actual roads then?<\/p>\n Good question. According to ANZ\u2019s Truckometer<\/a> \u2013 yes, this is an actual thing \u2013 heavy traffic, a production indicator, is up by 2.8% on last year, while light traffic, a consumer measure, is up too, by 0.9%. Combined, they\u2019re considered a \u201creal-world proxy for economic activity<\/a>\u201d and a barometer of momentum. So\u2026 traffic is good? Or bad? Either way, the government\u2019s Accelerate NZ policy<\/a> suggests that if we could only drive a bit faster<\/a> we\u2019d be more productive<\/a>, therefore economically<\/a> better off.<\/p>\n OK, back to the metaphor. Is this a new thing?<\/p>\n Semantically, no. \u201cTwo-speed\u201d economies were a hot topic back in the early 2010s. There were \u201cfears<\/a>\u201d that Australia had one, due to the mining industry \u201ceclipsing every other productive sector\u201d, and compared to what was happening across the ditch, some felt New Zealand might as well have had the hand brake on given our \u201cno-speed economy<\/a>\u201c.<\/p>\n In 2012, New Zealand\u2019s racing engines had different rankings, with economists concerned<\/a> about an overheated Auckland housing market and struggling regional economies.<\/p>\n In 2013, with our own \u201cterrible two-speed economy\u201d chugging along fitfully, Labour\u2019s David Parker was pointing out<\/a> the inequity of property investment. \u201cWe\u2019ve got this tax bias, which means that someone can own 10 houses and pay no tax on the profits. That tax bias which favours residential rental investment over other forms of investment both harms the economy and drives up house prices.\u201d<\/p>\n With a zooming property market, two years later, we were still grappling with dual speeds of economic success, and analysts flagged<\/a> the imbalance of \u201cstrong domestic demand offsetting a weak external sector\u201d. Locally, retail, labour and home sales were robust, while exports struggled, particularly the dairy industry<\/a>.<\/p>\n Jump to 2025, and Chris Hipkins was telling<\/a> the business luminaries of Queenstown that \u201cwe can\u2019t get rich as a country just by buying and selling houses from one another\u201d, even if some want another hit<\/a>. (The average house price in the Queenstown-Lakes District is now<\/a> $1.6m, compared to around $880k nationwide.)<\/p>\n So when are we shifting gears?<\/p>\n<\/p>\n
Christchurch: officially hooning (Photo: Getty Images)<\/p>\n