PREFU: NZ ENTERING A DEEP RECESSION

 

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ROB MacCULLOCH: NZ's Big News Story should be ... (bassettbrashandhide.com)

 

"I can't make sense of the Finance Minister's statements on the "Pre-Election Economic and Fiscal Update" .
Rob MacCulloch for Bassett Brash and Hide says he also is baffled (to put it politely) by yesterday's PREFU. "He claims the country is in better shape than expected and that the "forecasts showed New Zealand would avoid recession, with wages keeping ahead of inflation".

So here's my question - GDP growth up to June 2024 is forecast to be just over 1%. It is also stated immigration is now running at 100,000 a year, corresponding to an increase in 2% of our entire population.

But if total GDP is only growing at a bit over 1% and the population is growing at 2%, then GDP per capita must be declining (since GDP per capita equals total GDP over population size).

In other words, from an individual perspective, we are entering a deep recession.

But the Finance Minister says Kiwis are getting better off since our inflation-adjusted incomes are rising. Can a journalist please ask Robertson how GDP per capita, which measures the average income of a Kiwi, is falling based on his own Pre-Election Economic Update whilst at the same time he tells 5 million Kiwis we're getting better off?

If you don't believe me, take a look at the graph of GDP per capita on page 7 of the Treasury's Pre-election report (see link below). What really blows my mind is the following figure - in particular the black line that shows the amount Kiwis are consuming on a per capita basis, after adjusting for cost-of-living changes:R

 It's set to plummet at a rate not far off from what occurred during the first lock-down in 2020. And consumption is a good measure of living standards. According to former Chair of the Reserve Bank Board, Arthur Grimes, consumption is the best predictor of well-being and we are meant to have a "well-being" government. Kiwis are going backwards.

Sources:

https://www.rnz.co.nz/news/political/497824/election-2023-pre-election-economic-and-fiscal-update-release-government-books-in-better-shape-than-expected https://www.treasury.govt.nz/sites/default/files/2023-09/prefu23.pdf

https://motu-www.motu.org.nz/wpapers/16_12.pdf

First published at Down to Earth Kiwi. Robert MacCulloch worked at the Reserve Bank of NZ, before he travelled to the UK to complete a PhD in Economics at Oxford. ROB MacCULLOCH: NZ's Big News Story should be ... (bassettbrashandhide.com)

To pick up where we were at last night:

Well now. We had PREFU this arvo. The Hon Grant Robertson's take is that " PREFU shows no recession, growing economy, more jobs and wages ahead of inflation ". NZ Herald says "PREFU defied the gloomiest expectations, with no recession forecast and a surplus expected." Stuff: "It wasn't the blood-bath people were anticipating" . 

BUT Jordan Williams of the Taxpayers' Union says yes, they were expecting a blood bath "but what has been delivered is better described as a "shambles" – a butcher's slaughter house."

Consider Labour's propensity for telling porkies; Aunty Herald and Stuff's angst over their likely loss of the Public Interest (hah!) Journalism Fund; and that the Taxpayers' Union is representing you, Joe Public. Whom do you believe? If you can't decide, consider also that New Zealand is now running the second largest fiscal deficit of all the developed economies.

And that Labour is down to 26.8% in the latest Newshub Reid Research poll, and National on 40.9%, with ACT on 10.1% and the Greens on 12.3%." So that the MSM will be frantic at the prospect of losing their teats of the sow of the Public Interest Journalism Fund.

MSM: addicted to Gummint hand-outs

 

Following sob stories from the Main Stream Media (MSM), ministers devised a scheme for handing over $55 million of taxpayers’ funds to them so long as they signed up to the government’s bullswool version of the Treaty and didn’t bite the hand that feeds them. The money is payable until the next election.

Editors, including Murray Kirkness and Shayne Currie of the New Zealand Herald, couldn’t get their noses into the taxpayer trough quickly enough. Same with Radio New Zealand, and the TV stations, all of them crying poverty because Covid had reduced their advertising revenue.

What happened after that was extraordinary. Newspapers promptly shed reporters and there are now only a few of them left. Papers have beenthinned down, there are fewer pages, more prominent advertising and lengthy banal stories. There is no longer much general news of interest to readers in the MSM. But came the Queen’s death and the TV stations and Radio New Zealand suddenly found they had money galore to send journalists to London on what amounted to taxpayer-funded trips of a lifetime. Radio New Zealand and the two main TV channels have been the most profligate.

There was no need for the services of all those TV 1 and TV3 journalists, none of them the equal of the BBC’s more knowledgeable, super competent staff producing all that the world needs to know about the monarchy and the funeral. The journalists’ costs for travel, accommodation and mourning dress will be enormous! And when traced back, it will have come out of our pockets. 

https://thebfd.co.nz/2022/09/22/msm-addicted-to-public-interest-journalism-funds/

 

Our (Taxpayers' Union) economic team are just out of the Treasury lock-up where they've been studying the Pre-Election Fiscal and Economic Update (PREFU).

And things are bad, really bad.

We were expecting a blood bath, but what has been delivered is better described as a "shambles" – a butcher's slaughter house.

The opening of the books reveal that the Government is spending more than ever before. Astonishingly, Grant Robertson is spending even more now than he did during the height of COVID lockdowns.

According to the IMF, New Zealand is now running the second largest fiscal deficit of all the developed economies.

Core Crown Debt has exploded out to more than 160 billion dollars. Per person, that is nearly $123,000 for the typical household of Mum, Dad, and two kids. For the average (smaller) household it is just shy of $82,000.

And the interest costs are enormous. Already we were paying more for debt services than for law and order (Police, Corrections, the Courts etc), but now it's projected to be $9.8 billion by 2027 – which is more than what we are forecast to spend on schooling kids!

Our kids will be paying dearly for Grant Robertson's recklessness 

Julia, Grant Robertson has pulled all the tricks to try and massage today's figures. He told the Treasury to slash projected future spending so that he can provide false assurances about getting back into surplus.

But the numbers do not lie. Treasury has exposed that Grant Robertson's deficit spending now amounts to $72 million per day.