National says “the economy has grown in ten of the last eleven quarters.” That phrasing is pretty unusual. I wonder why.
For months, John Key and other National Ministers have been reminding the public that “the economy has grown in ten of the last eleven quarters.” Here is Key, Joyce, English, Key again, and English again all with the same magic phrase. For months before that, they said “the economy has grown in nine of the last ten quarters.” Their focus-grouping has clearly revealed that people think ten out of eleven ain’t bad.
The problem with National’s statistic is that it is self-serving bullshit. Here are four specific issues:
1. Start date
National’s growth report does not start in the first full quarter it was in office (Q1/2009, with negative growth). Instead, it starts one quarter later with the +0.10% growth in Q2/2009. How convenient. If you can make a cogent argument why the Q1 negative growth had nothing to do with National but the Q2 positive growth was all about National, then Steven Joyce probably has a job for you.
2. Counting “success”
Anytime the economy grows, no matter how little, National claims victory. Twice the economy grew by only 0.07% in a quarter (Q3/2009, Q2/2011), once more at 0.10% (Q2/2009). National claims these figures as evidence of its stewardship, despite the growth being nowhere near enough to cover population increases. In those quarters, New Zealanders got poorer on average, yet National patted itself on the back.
3. Wrong measure
“Did you grow at all?” is not a typical measure of economic success. By that yardstick, a $1 salary raise and a $1 million salary raise are the same thing. The measure is silly.
A more widespread, sensible measure of economic success is “how much did you grow?” On that measure, National has grown the New Zealand economy at only around 0.8% per year. That is well below New Zealand’s long-term average, and is barely enough to cover population growth. That is hardly a good reason to throw an Economic Stewardship Party.
4. Compared to who?
National says its ten-of-eleven (actually ten-of-twelve since National took office) record is pretty good compared to others. Really? Let’s see.
- Australia grew is eleven of the same twelve quarters, and its economy grew almost three times as fast as New Zealand’s.
- New Zealand did, however, grow better than most countries in the EuroZone. The EuroZone debt crisis may have had something to do with that. The fact that New Zealand is not in such a crisis, as Bill English explained shortly after becoming Finance Minister, is mainly due to good economic stewardship before National took the reins. So outgrowing the EuroZone is also a flimsy reason for National to congratulate itself.
- Among non-EuroZone members of the OECD, a more appropriate comparison set, average growth was around 1.5% per year. New Zealand’s rate was barely half of that. See chart below.
In conclusion, the National government has been busy peddling an entirely misleading, selectively-generated statistic to mask its poor economic management. Faced with the same international conditions, Australia has outperformed National by almost three to one. Even the anemic US outperformed New Zealand by more than half.
It is time the commentators exposed National for trying to pull the wool over New Zealanders’ eyes.
(All figures from stats.oecd.org – accessed 15 May, 2012)