Economics: Thanking flyaway Kiwis

The Government’s environmental critics had much to grouch about, early in November. Legislative amendments to the Emissions Trading Scheme would enable polluters to keep buying cheap carbon credits and enjoy 50 percent subsidies, and New Zealand would not be signing up to the next phase of commitments under the Kyoto Protocol.
Critics of this easing of New Zealand’s position on climate change dug up speech delivered by John Key in May 2007, when he was leader of the Opposition. It was the speech in which he said National would do much better at reducing New Zealand’s emissions than Labour had done.
As starting point he set target to meet three key tests: it needed to be internationally credible, suitable to New Zealand’s unique economic profile, and time-bound. He duly committed the country to 50 percent reduction in carbon-equivalent net emissions, as compared to 1990 levels, by 2050.
One quote in the speech was apposite to another bit of economic news early in November. Data from the Household Labour Force Survey (HLFS) showed the number of unemployed people increased by 13,000 to 175,000 in the September quarter. This lifted the unemployment rate to 7.3 percent (the rate among Maori rose to 15.1 percent and among Pacific Islanders to 15.6 percent) and 113,000 workers wanted more hours but couldn’t get them.
The number of people employed (2.18 million) was down 8000 following 3000 decline in the June quarter.
Oh dear. In the “50 by 50” speech, Key had averred: “I want to save the planet as much as the next guy, but at the end of the day I’m more interested in every Kiwi having job than I am in becoming the United Nations Secretary-General.”
It could have been worse. In Greece the unemployment rate had climbed to 25.4 percent and Greek Prime Minister Antonis Samaras was making the lives of his people even more miserable by pressing on with more austerity measures to trim massive budget deficit.
But the labour market in this country was supposed to have improved. Early last year, when HLFS figures showed the unemployment rate had risen from 6.4 percent to 6.8 percent in the final quarter of 2010, Key said New Zealanders shouldn’t lose confidence in the job market. Unemployment was “a lagging indicator, not leading indicator, so typically it tells you what has happened, not what’s happening in the future”.
What he could see in our future was “a lot more energy” from the corporate sector. “We see them looking to employ more people, we’re seeing an increasing number of jobs being advertised, we’re seeing reduction of people on the unemployment benefit from the high over Christmas. I think we shouldn’t lose confidence.”
The advice he had received from Treasury was that the unemployment rate had topped out at seven percent.
Key handled the November 2012 setback by casting doubts over the accuracy of the figures. He said the Government had created 57,000 new jobs over the previous 12-18 months (this broadly defined time period gave him six months of wiggle room). The figures were “just very much at odds with everything else that we see”, he was quoted as saying.
“In the end it’s one survey and like lot of surveys, from time to time, it can produce unusual data.” And it was “a little counter to what we’ve actually anecdotally seen in Auckland”.
Opposition politicians, however, could point out that on Key’s watch, unemployment had increased by 70,000. The picture worsens when “jobless” people are brought into the frame. These are either unemployed, available but not actively seeking work, or actively seeking but not available for work (the unemployed plus those who have given up looking for work, in other words).
On this measurement, we had 294,900 New Zealanders without jobs, number that had increased 15,000 under National. Maybe we should be grateful for the 40,000 or so net emigration to Australia. Whether we should be grateful that Key sees no reason to change tack with his government’s economic policies is moot point. M

Bob Edlin is leading economic commentator and NZ Management’s regular economics columnist.

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