Editorial: Government must listen to Reserve Bank call for higher-quality economic statistics

Reserve Bank governor Adrian Orr (right), with assistant governor Karen Silk (left) and chief economist Paul Conway. Photo / Mark Mitchell

Editorial

THREE KEY FACTS

• GDP data for the fourth quarter is not due to be published until March 20, nearly three months after the quarter ended.
• Reserve Bank economist Paul Conway has said the country needed better economic data.
• Stats NZ was itself the subject of some job-cut proposals last year.

The Government needs to take a hard look at Stats NZ, with a view to improving the timeliness and accuracy of key economic data.

The department has been the focus of scrutiny this week, with the Reserve Bank highlighting dramatic revisions to GDP (gross domestic product) as one of the reasons for a controversial reversal in its rate track between May and August last year.

GDP revisions in November showed the country’s economic performance in the year to March 2024 had been much stronger than previously reported.

While careful not to suggest there was an issue with the performance of the Stats NZ team, Reserve Bank (RBNZ) governor Adrian Orr was explicit (in both his Monetary Policy Statement press conference and subsequent select committee hearing) that the department needs more funding.

Orr says he has made this case to the Prime Minister.

He would like to see monthly GDP updates with a breakdown of spending, production and income.

He also stated that he would like to see monthly reporting of Consumers Price Index inflation (we currently only see it every three months) and more regular “rebasing” of the index to ensure it accurately reflects the spending of New Zealanders.

All of this would be in line with our international peers.

The RBNZ’s many critics will be sceptical about the potential for these calls to double as excuses for monetary policy missteps.

But – regardless of where people sit in the debate about the RBNZ’s performance across the past five years – there is no downside to improving the quality of our economic statistics.

The question has to be asked, why don’t we see key economic data more frequently and – in the case of GDP – recorded more accurately?

Calls for more funding add Stats NZ to a long list of competing spending demands facing the Government.

Up against health and education, they may seem a lower priority.

But if we consider the billions at stake across the whole economy if interest rate settings are misaligned with New Zealand’s economic performance, then it adds some urgency to the need.

When rates are too high, Kiwis pay the price on mortgage bills with slower economic growth.

And even if funding isn’t increased, surely this cash-strapped Government could be asking about the prioritisation of resources.

Under the previous Government, there was a broadening of focus across multiple departments (including Treasury) to look at overall wellbeing rather than classical economic data.

Now the focus is squarely on economic growth. Stats NZ should follow that lead.

More detailed breakdowns of how inflation lands across different sectors of the population are useful for policy planners seeking to understand inequality and disadvantage.

But as Stats NZ’s comprehensive research into child poverty (released this week) shows, little or no progress has been made in alleviating it.

If the Government is serious about putting the economy first, it should attack this issue with some urgency.

We are a small economy. There is no reason why we shouldn’t lead the world in measuring these statistics.

That might not guarantee future prosperity. But it would provide us with a more stable platform on which to build it.