New Zealanders spent $22 billion on groceries last year. The costs of food and transport have been growing this year. Photo / Mike Scott
New Zealanders spent $22 billion on groceries last year. The costs of food and transport have been growing this year. Photo / Mike Scott
Opinion
OPINION:
One of my favourite American presidents is Ronald Reagan, and he won the 1980 presidential election against incumbent Jimmy Carter asking people a simple question, "Are you better off than you were four years ago?"
I wonder what the answer for New Zealanders is today, economically speaking.
People generallyhave jobs, but that is not everything when we think about our standard of living, or as Grant Robertson would say, our economic wellbeing.
To my way of thinking as we move into a new year, the stark realities of our numbers paint a rather more ominous picture than the Government would portray.
Secondly, wage growth is 2.4 per cent, that is, half the rate of inflation, so that means many New Zealanders are finding it harder as costs for food, transport, accommodation and more, grow, at double the rate wages are increasing.
What is also true is that such stats disproportionately affect those who aren't as well-off.
They have less to play with and more of what they spend each week is non-discretionary and must go on essentials, which have tended to go up by more than the nice-to-have items.
These numbers are backed by all the latest commercial surveys I have seen as we push into 2022.
For example, the Westpac McDermott Miller Consumer Confidence report says there are now more New Zealanders who are pessimistic about the economic environment than are optimistic.
Reasons include Covid, but also inflation and interest rates (going up because of inflation). As a result, New Zealanders' "purchasing power will have been squeezed" so that many have seen a deterioration in their financial position and expect to continue to be under pressure.
A while back many thought it was all okay as this inflationary environment was going to be a fleeting thing. That no longer seems to be the predominant view.
Inflation is going to be around for a while, certainly until interest rates have climbed high enough to hurt many New Zealanders.
And while this inflationary environment is global, different countries are faring, well, differently.
Australia has lower inflation at 3 per cent and my view is that the level of government spending is a decisive factor in this. The more cash from government, the higher inflation will be.
If we want New Zealanders to be better off at the end of 2022 than the start of it, Labour, instead of continuing to raise spending, should rein it in a bit.
The Government is already spending at an elevated 40 per cent higher than it had been under National. But Grant Robertson wants to take that to a whopping 68 per cent higher this coming year.
In an already hot economy that's not right. It's time to alleviate some of the inflationary and interest rates pressure, Grant.
Government at the height of our Covid emergency was right to spend more, but the quality of that cash splash hasn't been there, and you'd be on the very optimistic side of the ledger if you thought somehow it will be from now on.
In an economy where over half of the inflationary pressure is domestically not internationally derived, pull it back a tad so that government isn't competing with borrowed money for land, consultants, and everything else with everyone else.
Will you be better off at the end of 2022 than the start of it? I hope so.
- Simon Bridges is the National Party's spokesman on finance.
