Why the lack of confidence in New Zealand economy?


Stuff reporter Tracy Watkins wrote in The Press that Prime Minister Jacinda Ardern has five major problems upon her return to work. One of those problems is dealing with an apparent elephant in the room called business confidence.

Apparently it is at a ten year low. Supposedly the economy is somehow at risk, which I find a bit rich, given that this Government has:

  • Not even been in office a year and has not had time to undo the social consequences of the previous Government
  • Is addressing socio-economic concerns that have seen more and more New Zealanders at risk of falling through the cracks caused by unsustainable increases in the costs of living

Contrary to what National and A.C.T. would have one believe, many of the problems assailing the New Zealand economy at the moment are actually not of the Governments making. As a relatively minor, albeit respected player in the global economy, New Zealand’s ability to influence the likes of larger nations such as the United States, Russia, China and so forth is limited.

New Zealand did not ask for the trade wars that have been starting up, or which threaten to start up. It did not ask to be a victim of large nations slapping tariffs on each others products – the decisions by United States President Donald Trump and his Chinese counterpart Xi Jinping were always going to have a negative flow on effect.

New Zealand did not ask for the high level of political tension in the Middle East that has seen frequent threats of war being bandied about between the United States, Israel and Iran. The very high petrol prices at the moment are a reflection of the fact that fiery rhetoric is starting to be matched, ominously, by military movements in form of U.S. and Iranian military assets being moved into the Gulf region.

Nor have we asked for the winding back of necessary checks put in place after the 2007-09 Global Financial Crisis to make sure that the banking system cannot destroy itself. The Dodd-Frank Act of the United States has been challenged by Republicans trying to assure their place in the 2018 midterm results. The Act was passed by President Barak Obama to end the notion of “too big to fail” which had seen large banks such as Lehman collapse, and ensure fiscal stability and accountability. With concerns mounting that the banking sector may be on the edge of another failure there is little sense in removing these checks and balances.

As for New Zealand economic symptoms, significant reinvestment in health, education, the social welfare system as well as transport and other sectors can only be a good thing. After years of relentlessly chipping away at these sectors, gaps are showing in mental health, housing, affordability of every day necessities. Such investment will help to keep many people who are at the lower end of the wealth spectrum in a position where they do not become destitute, and pay for itself in the longer term by enabling them to find work.

The significant investment in railways and public transport will help to reduce congestion on major routes, but also take more freight off roads and enable it to be moved in bulk. Some roads in New Zealand, such as the State Highway 1 coastal section south of Kaikoura are simply not meant to take the large trucks that are driven along a twisty, narrow route that have tunnels with low ceilings.

Nor should there be concerns about changes to labour legislation to ensure that the exploitation of workers cannot go unchallenged. As a nation that prides itself on giving everyone a fair go, that means giving workers fair working conditions. Common sense, really.

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