<\/p>\n
\nPrime Minister Christopher Luxon and Finance Minister Nicola Willis.
\nPhoto: RNZ \/ Samuel Rillstone\n<\/p>\n
“Look, I don’t know where that all came from,” the Prime Minister said on Newstalk ZB last Monday after host Mike Hosking asked if he felt “a bit embattled”.<\/p>\n
“Well, it came from the 0.9 percent,” Hosking replied, referring to the decrease in our GDP in Q2<\/a> revealed last week – much worse than the experts expected.<\/p>\n “I know. The reality is it’s been a very difficult quarter. We could feel it, you could see it,” the PM acknowledged.<\/p>\n Herald columnist Matthew Hooton – no fan of the PM – also described him as “embattled”<\/a> this week.<\/p>\n But the bigger problem, he said, was a fiscal an economic catastrophe Treasury has been warning about since 2006.<\/p>\n In his column just after the horror GDP stat came out last week, Hooton had claimed “the economy has crashed completely off the track”.<\/p>\n And bad press for the government kept on coming this week.<\/p>\n ‘How much worse is the economy than two years ago?’ RNZ asked<\/a>.<\/p>\n ‘Why is the economy so shit?’ The Spinoff asked economists in a similar explainer<\/a>.<\/p>\n The timing of the New Zealand Herald’s annual Mood of the Boardroom<\/a> this week wasn’t great for the government either.<\/p>\n “Like tourists roasting an underwhelming Wellington cafe on TripAdvisor, the boardroom has delivered its verdict on Prime Minister Christopher Luxon’s government,” wrote BusinessDesk’s Dileepa Fonseka.<\/p>\n On Monday, the PM told ZB’s Mike Hosking the drop in GDP reflected reality two quarters ago and things aren’t that bad now.<\/p>\n “That period of time we were growing strongly. We’re growing again now. We’ll grow even stronger as we go into Christmas,” he said.<\/p>\n He will certainly be hoping so. If his year of growth ends without much of it, that will be a political problem next year – which has an election near the end of it.<\/p>\n The Post’s Henry Cooke found<\/a> “Luxon’s claim the economy is growing again has the backing of economists \u2012 just not with the same confidence”.<\/p>\n Two quarters ago, the GDP figures reported then were better than the experts predicted, prompting the PM to talk positively about “green shoots”.<\/p>\n Reporting from that mood of the boardroom breakfast bash on Wednesday, Business Desk’s Garth Bray said: “It’s been a long winter. I wore the brown tie today because there’s no green shoots. It’s more like dead leaves.”<\/p>\n But the same day Business Desk was also reporting that the bosses of Freightways and Mainfreight saying the economy is probably past the worst and on the way back up.<\/p>\n Unfriendly fire<\/p>\n Former Finance Minister Ruth Richardson last week got the media’s attention when she called for an emergency budget by Christmas.<\/p>\n The Taxpayers Union, chaired by Richardson, put out media releases urging Nicola Willis to get cutting – and a stream of social media messages asking TPU followers for opinions on how Nicola Willis should do the job.<\/p>\n Another former finance minister from back in the day, Sir Roger Douglas, told The Platform<\/a> he wanted Willis out of the job.<\/p>\n But when asked who should be in it, he was less strident.<\/p>\n “I don’t know, to be honest. There’s got to be someone in the National Party who could do the job and who wants to do the job. Maybe you’ve got to be that radical that you bring one of the young MPs through,” he offered.<\/p>\n Blame the Bank – and the ABs?<\/p>\n While Sir Roger was prepared to roll the dice on that, Sir John Key blamed the Reserve Bank<\/a> on Newstalk ZB last week.<\/p>\n “If they just walked around Auckland or Wellington for five minutes, they could have felt the fact that the government needed help through monetary policy.”<\/p>\n \nSir John Key blamed the Reserve Bank for New Zealand’s economic woes. It was a theme on ZB.<\/p>\n “This is crazy. What happened is not Nicola Willis’s fault. It is the Reserve Bank’s fault,” Drive host Heather du Plessis-Allan claimed, citing its post-Covid moves to slow down the over-heating economy.<\/p>\n The New Zealand Herald editorial last weekend<\/a> also said “the onus is on the Reserve Bank to cut deep and give New Zealand a jolt start”.<\/p>\n But veteran political reporter Richard Harman said they were all ignoring that the Bank’s job is to control inflation.<\/p>\n “Sir John Key knows the Bank’s remit well enough to understand that his calls for it to stimulate the economy are essentially asking it to do something that is not within its job,” he said on his site Politik.<\/p>\n That same Herald editorial last weekend also cited “the All Blacks losing” as a factor in the economic malaise.<\/p>\n The same day the Otago Daily Times blamed<\/a> it on the just-beaten Black Ferns.<\/p>\n “If the government hoped for the feel-good factor distraction from the Black Ferns heading for the Women’s Rugby World cup final, it’ll be disappointed.”<\/p>\n (The feel-good factor of Otago winning the Shield the night before did not seem to make the ODT feel any better).<\/p>\n “Pinning hopes on an OCR cut by Christmas, putting more money into the economy along with some infrastructure spending and inflation coming down, seems to be the ploy. But there’s no Plan B,” the ODT concluded.<\/p>\n And almost on cue, fresh spending on fix ups for hospitals and schools was announced by the government last Tuesday, mostly from Budget 2025 and 2024 funding.<\/p>\n “We don’t want it sitting around in government bank accounts. We want it resulting in signed contracts, spades in the ground, high viz and jobs,” Nicola Wllis told Newstalk ZB that day.<\/p>\n But that same day there was high visibility for yet more bad data in the news about the economy.<\/p>\n The Herald said almost half of Kiwis are going backwards financially according to a Fintech company Revolut – and that among people with money to invest confidence had fallen in the June quarter to its lowest level since the Covid pandemic.<\/p>\n But having heard a million people passed through Auckland airport, ZB’s Hosking was economically upbeat.<\/p>\n “Not everyone’s travelling. But stop being negative. When the numbers are in front of you, you can’t argue with that many people with enough money to fly internationally and around the countryside for what is nothing more than a holiday for funsies.”<\/p>\n His producer Glenn Hart gently pointed out that people flying out were also flying back in, and many would be the same people on short trips for business not funsies.<\/p>\n And the 200-odd people a day currently leaving New Zealand permanently was not a sign of an improving economy.<\/p>\n The economic pain clearly is not even.<\/p>\n When the NBR released its annual rich list in June, RNZ’s money correspondent Susan Edmunds pointed out<\/a> the collective wealth of the country’s wealthiest went up by $4.5b last year – while the net worth of all households declined by $4.2billion.<\/p>\n That looked a bit like wealth trickling up and not down, according to political communication professor Aeron Davis at that time – and the latest GDP stat out last week shows the economy was actually contracting at that time back in June as well.<\/p>\n And on ZB’s midday news show last Tuesday, Herald business editor-at-large Liam Dann said that Q2 0.9 percent GDP slump that created so many headlines may not even have been the real number.<\/p>\n “There were things in it like the impact of the Tiwai Point aluminium smelter having restrictions on how much it could do because of energy curbs – and things might have been called ‘unusual items’ a listed company might not have included in the bottom line.<\/p>\n “There was something called ‘a balancing item’ that was worth 0.6 per cent which is very variable and seasonal. Quite often we see these numbers revised,” Dann said.<\/p>\n “There are some green shoots out there. The risk is that we focus on a number that is very historic and beat ourselves up over it so badly it becomes a bit self-fulfilling on confidence,” he added.<\/p>\n It’s a bold business editor who’ll say “green shoots” out loud in the current climate, but not beating ourselves up about it all is pretty good advice. It seems the media are willing to do that for us.<\/p>\n Bigger picture and longer term<\/p>\n While the GDP figures reflect what’s been and gone in the economy, Treasury’s latest Long-term Fiscal Outlook<\/a> on Wednesday warned that current policies are not suitable or sustainable for the future.<\/p>\n<\/p>\n
\nPhoto: Tim Collins\n<\/p>\n