On the Tiles: Economy panel looks at Government's books, inflation, interest rates

By NZ Herald

NZ Herald·

21 Oct, 2021 10:51 PM2 mins to read

The Government is close to surplus - but should it return to pre-pandemic economic norms? Photo / Getty Images

Covid-19 is continuing to dominate local politics - but for this week's episode, On the Tiles takes a break from the pandemic to look at what's happening in the economy.

There's been a surfeit of economic news the past few weeks, from the Reserve Bank's decision to hike interest rates - the first hike in seven years - to the Government revealing Covid-19's minimal impact on its books.

Joining the podcast this week is Interest.co.nz's press gallery journalist Jenée Tibshraeny, and the CTU's policy director and economist Craig Renney, who was formerly an economic adviser to Grant Robertson.

The podcast looked back at the Government's books from the "Goldilocks" period before the latest Delta outbreak.

Tibshraeny said the books were showing the benefits of massive amounts of stimulus money washing through the economy.

Renney said the books showed the Government had lower debt and higher wealth than expected in the immediate aftermath of the pandemic.

Both cautioned against any idea the Government should be trying to return to pre-pandemic normal.

In fact, the accounts showed pre-pandemic social crises worsening.

"The Government was a beneficiary of the increase in land values that a lot of households have felt and that's what's prompted people to feel more comfortable spending money - or people who have houses," Tibshraeny said, noting the value of land owned by the Government was revalued upwards by billions of dollars.

Renney added the accounts showed the other side of the housing crisis, through much higher spending on assisting people who could not afford housing.

"Spending on accommodation assistance… rose 20 per cent, so you can see the housing crisis in the accounts on both sides," he said.