Welcome to the recession, with giant debt, spending and unemployment that make previous campaigns look like Lilliput. How are New Zealand First are trying to recover & does Labour really want to govern alone?
By Tim Watkin
Watch the video version of the episode here
After a week of heavy policy releases where the major parties have clung to the political centre like a limpet to a life raft, we've been reminded - as if we needed it - why we have a life raft in the first place. It's official: Welcome to Recession Day. New Zealand's economy shrunk by 12.2 percent in the June quarter, the second quarter of negative growth in a row.
Yesterday, Treasury laid out its pre-election fiscal update (PREFU), offering its non-partisan predictions for the next four years. As Kiwibank Chief Economist Jarrod Kerr says, "We've never seen anything like this. It was traumatic." Or as Guyon Espiner says on today's Caucus podcast, "Pakaru mai te hāunga te āhuatanga o te ōhanga". The economy is stuffed.
An estimated 280,000 New Zealanders will be unemployed in 2022, government debt will reach 55.3 percent of GDP by 2024 (up from 19 percent last year), when we'll owe a whopping $201 billion. As we discuss on this week's Caucus podcast, these are massively, enormously, giant figures. But in the midst of a global pandemic it can be hard to absorb just how big they are. So let's put it this way; this was a PREFU straight out of Gulliver's Travel, where Lemuel Gulliver is shipwrecked on the shores of Lilliput, a land inhabited by people who are 15cm tall. The numbers are on a Gulliver-esque scale; so much bigger than everything you've seen before. Previous election numbers look Lilliputian by comparison.
Most years this result would be the government's death warrant, but in a sign of the bizarre times, Finance Minister Grant Robertson was able to announce the numbers with a tone of optimism. Treasury and the banks had in May been predicting unemployment at least double the 7.8 percent peak now predicted and economic contraction of 17-18 percent. So Robertson is able to say we're better off than many had feared. He took credit for that while blaming the worsening medium-term predictions on global uncertainty.
It's almost like it's an election campaign…
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