From the moment National came to office in 2008, the Treasurer Bill English had one thing only in mind: get New Zealand back into surplus.
Last week it was announced that Mr English had finally achieved his goal of the last nearly 7 years of returning New Zealand to a surplus. In saying this I do want to acknowledge that Mr English had to overcome several challenges that he could not have necessarily foreseen. He also has also had to deal with international market changes by nations whose economic growth has traditionally fuelled the the demand for export products that New Zealand has excelled in, such as dairy and timber.
One of the nations to have experienced significant corrections to their market is China. Major downturns in the Chinese economy which has been a major export market for New Zealand dairy, coal and other commodities might have been foreseeable in the context of knowing that there was only so long that such staggering rates of growth could go on for. An example of how over supplied the Chinese market became can be seen in brand new cities that have popped up, with high rise apartment blocks that might never be occupied, shopping malls that may never do business. China’s economic growth is also having an appalling environmental cost, which is rapidly being passed on to the ordinary Chinese through high rates of sickness from pollution, degradation of ecosystems removing any economic beneifts they might have had.
Australia is another example. The place where hundreds of thousands of New Zealanders live, which enjoys economic relations with New Zealand that no other country has. It is a country whose people have some of the freest access of any non-Kiwi’s to New Zealand Government services, and which was over the last decade or so, subject to a massive mining boom that pumped hundreds of billions of dollars into the Australian economy. That boom has ended after demand in China for minerals slumped.
Both of these caused fluctuations in the New Zealand dollar, as did uncertainty about Europe Euro crisis and the stability of the U.S. economy.
But none of them caused so much economic grief as earthquakes on 04 September 2010 and on 22 February 2011 managed to. The magnitude 7.1 earthquake that rocked Canterbury in September 2010 cost New Zealand $4 billion and was preceded three days earlier by the collapse of South Canterbury Finance, which resulted in $1.6 billion in lost monies. But worse was to come. At 1251 hours 22 February 2011, in the space of less than 15 seconds high intensity shaking, N.Z.$32 billion in damage was caused. Thousands lost their jobs in those appalling few seconds. Tens of thousands of households suddenly had new insurance claims being born. The tourist, education, and other sectors had hundreds of millions of dollars wiped off their value to the economy in seconds. Nearly five years later, the seismic aftershocks might have gone quiet but the occasional economic one is still hitting. Combined with a damaging aftershock on 13 June 2011 that contributed another few $3 billion to the damage bill.
People accuse Mr English with good reason of cutting services in pursuing his obsession with returning New Zealand to surplus. There is no doubt that some essential services have been stopped or reduced, but if you knew that all of the above was going to occur on your watch, what would you have done differently?