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Autumn of discontent

#1 User is offline   hukildaspida 

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Posted 13 April 2015 - 01:44 PM

Autumn of discontent
Home » Opinion
Mon, 13 Apr 2015
Editorial

http://www.odt.co.nz...tumn-discontent

Lavish praise is again being heaped upon the New Zealand economy by bank economists and overseas observers. The term ''rock star economy'' has become part of economic folklore.

People have been both celebrating and worrying about the rise and rise of the New Zealand dollar. Bragging rights with Australia seem more important to some than the effect a high currency will have on New Zealand traders in Australia.

Fortunately, as the transtasman cross rate holds high, the kiwi has fallen against the United States currency but Australia remains the second largest export market for this country.

It seems the economy holds no bounds. As Australia's Reserve Bank contemplates cutting its official lending rate to 2% to stimulate growth, people in New Zealand are pondering whether the New Zealand Reserve Bank will hold its cash rate at 3.5%, or even lift it further to try to stop some of the housing inflation being seen in Auckland.

Before getting too excited, there are some aspects of the economy which are not going so well. Therefore, some caution should be exercised by the wider community.

Business and consumer confidence surveys show respondents are reasonably happy with their own circumstances and the circumstances of others.

But spare a thought for the 232 Sanford workers who last week learned their jobs will probably go because the company cannot find enough mussel spat to keep the Christchurch factory going. Arguments the workers will easily find jobs in the city undergoing a major rebuild are specious.

The workers open shellfish for a living, they are shuckers. No construction firm is likely to hire these workers to install windows or build houses. Many of the workers are husband and wife teams with Sanford as their sole source of income. They face an uncertain future.

Likewise, the announcement sections of three prisons are to be closed may see 260 prison officers lose their jobs if they choose not to relocate north.

Much of the argument about the closure of some sections of the prisons is about maintenance costs, but it is the affected families who need to be considered.

The days of large numbers of redundancies being announced on a regular basis are over, but a few hundred here and there still add up to a lot of people looking for jobs in a market seeking mainly skilled workers. Not everyone wants to, or can afford to, move to or live in Christchurch and Auckland.

Finance Minister Bill English seems unlikely to reach his much anticipated financial surplus this year, although the gap between surplus and deficit may be so small as to not be a concern.

The Treasury continues to misread economic signs in its forecasts, something which has happened for many years.

A huge turnaround in the operating balance, which included actuarial losses by ACC and the Government Superannuation Fund were not predicted, despite the size of the figure. It is almost like the Treasury lives in a parallel universe to the so called ordinary New Zealanders.

Whether the country reaches a financial surplus in the year ended June is neither here nor there and too much emphasis has been placed on the goal.

Instead, a closer look needs to be taken at what is driving the economy. Dairy prices play a large part in keeping the economy humming, which is the latest term coined by economists. Lower payout prices will affect economic growth, which will still be high by any global comparisons.

But sight should not be lost of the underlying issues that are being swept aside: for a variety of reasons, some businesses cannot cope with current economic circumstances and their response is to reduce or close their operations.

For decades, consecutive governments have talked about the knowledge economy and how it will drive New Zealand's economic growth. Not everyone can be a scientist. More care needs to be taken of the workers who labour for a living. For them, the rock star economy is slightly out of tune.
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