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NATIONALS
ECONOMICROAD TESTJANUARY 2013
DAVID PARKER, LABOUR FINANCE SPOKESPERSON
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TABLE OFCONTENTSNATIONAL - MANAGING OUR DECLINE...............................................................................................3
AVERAGE ANNUAL ECONOMIC GROWTH: 1935-2012...................................................................3
UNEMPLOYMENT.............................................................................................................................................5
THE DOUBLE DIPTON RECESSION .......................................................................................................7
GDP PER CAPITA - NZ V AUSTRALIA ....................................................................................................9
THE FISCAL HOLE.......................................................................................................................................... 11
SUPER FUND ................................................................................................................................................... 13
NZ SUPER COSTS .......................................................................................................................................... 15
MIGRATION TO AUSTRALIA ..................................................................................................................... 17
INCOME INEQUALITY .................................................................................................................................. 19
OVERSEAS BORROWING .......................................................................................................................... 21
EXPORTS .......................................................................................................................................................... 23
EXCHANGE RATE .........................................................................................................................................25
A BETTER WAY A LABOUR WAY ..................................................................................................... 27
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NATIONAL
MANAGING OURDECLINENational promised a brighter uture. It isnt delivering.
Ater our years o National our economy is not delivering or ar too many ordinary New
Zealanders. Signicant problems need to be addressed but the Government reuses to make the
changes that need to be made.
Unemploymenthassurgedtoa13yearhigh.
Noextrajobsoverthelastyear.
Growthistheworstofanygovernmentin50years. Therealeconomyofmanufacturingandexportsoutsidetheprimarysectorisindecline.
Thecurrentaccountis$10billionintheredandgettingworse.
Revenuehasdropped$13billionbelowprojectionsover5years,forcingtheGovernment
toraisepetroltaxestokeepitssurplusdreamalive.
TheovervalueddollariscripplingourexportersandincreasingNZsoverseasdebt.
National throws the blame wherever it can. At Europe, at Australia, at voodoo economists.
But the blame lies squarely on their shoulders. As this road test shows they have ailed to deliver
ontheirownpromises,letaloneNewZealandersexpectations.
Promiseslikecreating170,000newjobs,whenthesadtruthisthesamenumberofpeopleare
looking or work and even more have let or Australia under their watch.National promised a brighter economic uture and to close the wage gap with Australia. Neither
has been achieved.
The truth is National doesnt have the ideas or the willingness to make the changes needed.
Behindeverynumberisapersonwhofailedtondajob,afamilythatcantkeepaheadoftheir
bills and a company owner who has had to close doors or lay o workers.
Kiwisaresickoflisteningtofouryearsofexcuses.Theydeserveaction.Theywantagovernment
that will be hands on and make a dierence.
AVERAGE ANNUAL ECONOMICGROWTH: 1935-2012
NATIONAL IN GOVERNMENT: LABOUR IN GOVERNMENT:
SOURCE: STATISTICS NEW ZEALAND, BRIAN EASTON - HISTORICAL GDP ESTIMATES
2.9% 3.7%
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170,000 NEW
JOBSSOURCE: NATIONAL PARTY TELEVISION COMMERCIAL, NOVEMBER 2011
ZERO NEW JOBSCREATED IN
THE YEAR TOMARCH 2013.
SOURCE: TREASURY HYEFU 2012
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UNEMPLOYMENT
SOURCE: STATISTICS NEW ZEALAND, HOUSEHOLD LABOUR FORCE SURVEY
0
1
2
3
4
5
6
7
8
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008
Q1
2008Q2
2008
Q3
2008Q4
2009
Q1
2009Q2
2009
Q3
2009Q4
2010
Q1
2010Q2
2010
Q3
2010Q4
2011Q1
2011Q2
2011Q3
2011Q4
2012
Q1
2012Q2
2012
Q3
Unemployment Rate (Seasonally adjusted)
80
90
100
110
120
130
140
150
160
170
180
2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3
Numberunemploy
ed(000s)
Number of unemployed people (Seasonally adjusted)
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THE ECONOMIC
RECOVERY ISA BIT FLATTERTHAN WASEXPECTED, BUTTHAT IS A GOODTHING.SOURCE: BILL ENGLISH, NOVEMBER 2010
SINCE 2008, NEW
ZEALAND IS THE ONLY
DEVELOPED COUNTRY
OUTSIDE OF EUROPE
AND JAPAN TO
ENDURE A DOUBLE
DIP RECESSION
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THE DOUBLE
DIPTON RECESSION
ADVANCED ECONOMIES WHICH EXPERIENCED
A SECOND RECESSION BETWEEN 2008-2012
EUROPE OTHER
Czech Republic (2012) Japan (2010)
Finland (2012) New Zealand (2010)
Greece (2010)
Hungary (2008)
Iceland (2010)
Ireland (2008)
Italy (2011)
Luxembourg(2009)
Netherlands (2011)
Norway (2010)
Portugal (2010)
Slovenia (2012)
Spain (2011)
United Kingdom (2011)
SOURCE: OECD
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3
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GDP PER CAPITA -
NZ V AUSTRALIA
THE WAGE GAPNEW ZEALAND AUSTRALIA
AVERAGE WEEKLY WAGE
MAY-JUNE 2012
$872.61 $1022.10
SOURCE: Stats NZ Quarterly Earnings Survey. Australian Bureau o Statistics Average Weekly
Earnings.OECDPPPandExchangeRates.
Closing the wage gap with Australia was a cornerstone o Nationals 2008 election promise.
The Government has stopped talking about this now. The Finance Minister recently said, it
is no good crying at the airport or wringing your hands over New Zealanders heading to
Australia.
TheweeklywagegapwithAustraliahasgrownby$27.73aweeksinceNationalhasbeenin
oce,from$121.76aweekinDecember2008,to$149.49today
The Government still wont even provide a milestone date by which the wage gap will be
back to where it was when they took oce.
SOURCE: STATISTICS NEW ZEALAND, AUSTRALIAN BUREAU OF STATISTICS
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SHOW ME THE
MONEYSOURCE: JOHN KEY, PRE-ELECTION DEBATE, 2 NOVEMBER 2011
GROWTH IS SO
POOR THATCROWN REVENUE
PROJECTIONSKEEP GETTING
WORSE.
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THE FISCAL HOLE
Since 2011 the Key
Government has been
quietly reducing revenue
projectionsbecausethe
economy is fat.
Now the shortall totals
13.2 billion dollars
DOUBLE the estimated
value o Nationals sale o
state assets.
May 2012
Dec 2012
Pre-election 2011
2012 2013 2014 2015 2016
MIND THAT GAP:THE $13.2B FISCAL HOLE
REVEALED
FORECAST CORE CROWN REVENUE 2012-16
50000
60000
70000
80000
Millions
SOURCE: TREASURY - PREFU 2011,
BUDGET 2012, HYEFU 2012
Nationals hands-o approach to the economy is
not working. Repeated downgrades to job and
growth orecasts have opened up a $13 billion
hole in the fve-year Government accounts.
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40% OF THE
SUPER FUND TOBE INVESTED INNEW ZEALAND.
SOURCE: NEW ZEALAND NATIONAL PARTY 2008 MANIFESTO
PROPORTION
INVESTED IN NZUNCHANGED.
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SUPER FUND
SOURCE: The Guardians o the New Zealand Superannuation Fund
NATIONALS 2008 POLICY PROMISE:
Nationals policy is or the Super Fund to invest a greater proportion in New Zealand, while also
saeguarding the und as a source o uture New Zealand superannuation payments, and overseen by
independent guardians. National will set the target o at least 40% o the Super Fund to be invested
in New Zealand.
National said that more o the Super Fund was not invested in NZ in 2008, because Labour has done
nothing to generate new investment opportunities. Thereore, National has to accept responsibility
or ailing to create investment opportunities in New Zealand in 2013.
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GOVERNMENT
TO STRENGTHENFISCALRESPONSIBILITY
THE GOVERNMENT
REFUSES TO MAKEPROVISION FORFUTURE FISCAL
PRESSURES.
SOURCE: BILL ENGLISH, BUDGET 2012
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NZ SUPER COSTS
SOURCE: TREASURY, HYEFU 2012
FISCAL RESPONSIBILITY REQUIRES RESPONSIBILITY AROUND NZ SUPER
Ironically, the Finance Minister claimed in the 2012 Budget that, The Government is proposing
introducing some additional principles into Part 2 o the Public Finance Act that ministers would have
to take into account when setting scal policy.
The proposed changes are designed to ensure greater transparency around how government
decisions aect the wider economy and uture generations.
The single largest scal pressure in the government is the looming cost o NZ Superannuation. In
threeyears,theannualcostofNZSuperwillexceedannualspendingonallofthe welfaresystem,
or all o the education system rom pre-school to tertiary. It will be large multiples o spending on
unemployment.Andwiththeretirementofbabyboomers,alongwithrisinglifeexpectancy,thecost
pressures will only rise.
Nationals reusal to deal with the issue makes it more likely it will impose unair and sudden change
later when its too late or individuals to change their plans.
0
2000
4000
6000
8000
10000
12000
14000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Millions(
$NZ)
Cost of NZ Super vs Education, Dole and Welfare expenses
NZ Superannuation
Education expenses
All Welfare (excluding NZS)
Unemployment Benefit
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WAVE GOODBYE
TO HIGHERTAXES, NOT YOURLOVED ONESSOURCE: NATIONAL PARTY CAMPAIGN BILLBOARD, 2008
177,031 PEOPLE
HAVE LEFTPERMANENTLY
FOR AUSTRALIASINCE JOHN KEY
TOOK OFFICE.AS OF NOVEMBER 2012
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MIGRATION TO
AUSTRALIA
53,729 people departed or Australia in the year to September 2012.
177,031 people have let New Zealand or Australia since John Key took oce in November
2008.
40 per cent are between 18 and 30 years old.
2012 is set to be the calendar year during which the highest number o people leave or
Australia in New Zealand history.
2005 2006 2007 2008 2009 2010 2011 2012Sept Year 34304 33866 39773 47166 37362 33814 48829 53729
20000
25000
30000
35000
40000
45000
50000
55000
60000
Departur
estoAustralia
Annual Migration to Australia (Year to September)
2005 2006 2007 2008 2009 2010 2011 2012
Sept Year 12,557 12,338 13,985 17,007 13,881 13,219 19,166 21,589
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
Annual Migration to AustraliaAges 18 to 30 Years Inclusive
(Year to September)
SOURCE: STATISTICS NEW ZEALAND
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WE ARE ALL IN THISTOGETHER. WE ALL
STAND TO LOSE FROMTHE EMERGENCE OF AGROWING UNDERCLASS,AND WE ALL STAND
TO GAIN BY DOINGSOMETHING ABOUT IT.SOURCE: JOHN KEY, 31 JANUARY 2007
INCOME
INEQUALITY INNEW ZEALAND:
THE HIGHESTSINCE RECORDS
BEGANSOURCE: MSD - HOUSEHOLD INCOMES IN NEW ZEALAND: TRENDS
IN INDICATORS OF INEQUALITY AND HARDSHIP 1982 TO 2011
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20% OF NEW ZEALANDCHILDREN LIVE IN
POVERTY.SOURCE: GOVERNMENT GREEN PAPER FOR VULNERABLE CHILDREN, 2011
INCOME INEQUALITY
In response to this chart, John Key said: THAT LOOKS LIKE THE
NATIONAL PARTYS POLL RATINGS WHILE IN GOVERNMENT.
- JOHN KEY, PARLIAMENT, AUG 28 2012.
25
27
29
31
33
35
37
39
41
43
45
1990 1992 1994 1996 1998 2001 2004 2007 2009 2010 2011
Ginicoefficie
nt(x100)
Income inequality in New Zealand:
after housing costs
Source: MSD - Household incomes in New Zealand:
Trends in indicators of inequality and hardship 1982 to 2011
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OUR EXTERNAL DEBTLEVELS REMAIN HIGH
AND THE CURRENTACCOUNT DEFICIT ISMOVING BACK TOWARDSTHE 5 PERCENT PLUS
DANGER ZONESOURCE: CAMERON BAGRIE, ANZ CHIEF ECONOMIST, 2011
IN 2012 NEW ZEALAND
HAD THE SECOND
WORST CURRENTACCOUNT DEFICIT IN
THE DEVELOPED WORLD
AFTER GREECE.
IN 2013 IT WILL BETHE WORST.
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OVERSEAS
BORROWING
-10
-5
0
5
10
15
20
25
Balance on Current Account, % of GDP: Advanced Economies
2013 IMF Projections
Source: IMF World Economic Outlook,
September 2012
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2013 2014 2015 2016 2017
Current Account Balance (% of GDP): Forecasts
NZIER
IMF
Treasury
RBNZ
Infometrics
Singapore
Norway
Switzerland
Netherlands
Sweden
Taiwan
Luxemburg
Germany
Denmark
HongKong
Ireland
Japan
Korea
Austria
Slovenia
Belgium
Slo
vakRepublic
Israel
Italy
Malta
Finland
France
Portugal
Cyprus
Iceland
CzechRepublic
UnitedKingdom
Greece
UnitedStates
Estonia
Spain
Canada
Australia
NewZealand
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EXPORTS TO BE
40% OF GDP BY2025.SOURCE: TIM GROSER, 20 JUNE 2012
ANOTHER TARGET
NOT BEING MET.
EXPORTS ARE STATIC
AND OUR CURRENT
ACCOUNT DEFICIT
IS UNSOLVED.
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EXPORTS
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024
Exports as proportion of GDP
SOURCE: STATISTICS NEW ZEALAND
2008: 28.3%
2009: 31.2%
2010: 28.3%
2011: 29.7%
2012: 30.2%
ExportsarenotgrowingasaproportionofGDPevenwhenGDPgrowthhas
been fat.
EXPORTS AS PROPORTION OF GDP
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THE ECONOMY
CANNOTOPERATE FORLONG ABOVE AUS70c EXCHANGERATESOURCE: JOHN KEY, 5 APRIL 2007
THE DOLLAR
HAS BEENABOVE US70c
FOR YEARS ANDSHOWS NO SIGNS
OF FALLING.
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EXCHANGE RATE
0.30
0.40
0.50
0.60
0.70
0.80
0.90
Dec 2008 Apr 2009 Aug 2009 Dec 2009 Apr 2010 Aug 2010 Dec 2010 Apr 2011 Aug 2011 Dec 2011 Apr 2012 Aug 2012 Dec 2012
US
Dollar
NZD-USD Exchange Rate
SOURCE: RESERVE BANK OF NEW ZEALAND
120000
140000
160000
180000
200000
220000
240000
2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3
Filled Jobs in Manufacturing (QES)
SOURCE: STATISTICS NEW ZEALAND QUARTERLY EMPLOYMENT SURVEY
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A BETTER WAY
A LABOUR WAYMany o Nationals policies have passed their use-by date. Economists, many governments
andmajorinstitutionssuchastheIMFrealisethattheworldhaschanged.Theyknownew
answers are needed.
New Zealanders understand this too and know that we must change as well.
Kiwis want real and innovative solutions to take this country orward. They want a Government
thatseesproblemsandgetsstuckintoxthemratherthantrytoexplainthemaway.
ThatswhythereissignicantsupportformajorLabourpolicies,includingKiwiBuild,raising
the retirement age, universal KiwiSaver, updating our monetary policy and a capital gainstax.
Its time or a hands-on government, one that is committed to making a real dierence in
peoples lives.
LABOURS SOLUTIONS
Build100,000newhomesin10years,apolicythatwillcreate4,000jobs.
HelpexportersandmanufacturersbychangingtheReserveBankActsoweachievea
fairandcompetitiveexchangerate.
Help the manuacturing industry achieve its vision o being a modern, high-tech driver
of our economy, employing New Zealanders in well-paid jobs and supporting other
parts o the economy.
Changetaxtoencourageinvestmentinproductive,exportingindustries.Acapitalgains
taxandresearchanddevelopmenttaxcreditsareakeypartofthis.
A new vision or skills, education and training so that New Zealanders can take advantage
ofthejobopportunitiesofa21stcenturyeconomy.
InvestingmoreininnovationandsciencebyreinstatingResearchandDevelopmenttax
credits.
Tighter controls on oreign purchases o productive arm land and inrastructure.
Prudent decisions about looming scal pressures, including the age o eligibility or
superannunation.
Introducing Universal KiwiSaver to build our savings so that we can own our own country.
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Authorised by David Parker MP, Parliament
Buildings, Wellington