Newsroom’s political team reports on the day’s biggest election news: GDP figures confirm the largest quarterly drop in NZ history, NZ first releases its rankings, while the Government reaches 50 percent representation for women on state boards
Further evidence of the economic damage caused by the Covid-19 pandemic has been released, with StatsNZ announcing New Zealand’s GDP fell by 12.2 percent in the June quarter – the largest drop on record.
While the news is bleak, it has managed to improve on Treasury’s prediction of a 16 percent contraction in its Pre-Election Economic and Fiscal Update (PREFU) released on Wednesday – an estimate that itself was much better than the almost 24 percent forecast in May’s Budget.
StatsNZ national accounts senior manager Paul Pascoe said measures to contain Covid-19 had led to historically large falls in GDP across much of the world, including Australia (whose GDP fell seven percent in the same quarter), Canada (11.5 percent), Japan (7.9 percent), the United Kingdom (20.4 percent) and the United States (9.1 percent).
Industries like retail, accommodation and restaurants, and transport were among the worst affected due to the international travel ban, Pascoe said, while essential services like food and beverage manufacturing fell much less.
The construction and manufacturing industries, deemed non-essential, fell 25.8 percent and 13 percent respectively during the quarter.
Pascoe said the speed and scale of Covid-19 response measures had made it harder for StatsNZ to measure the GDP data, with a higher level of uncertainty associated with measuring such significant changes in economic activity.
“We have used extra data and careful analysis to minimise this uncertainty and provide a reliable first estimate for the quarter.”
Fiscal fodder for politicians
The data is set to provide further fodder for politicians on the campaign trail. In the wake of the PREFU release, Finance Minister Grant Robertson emphasised the more positive near-term figures while his political opponents instead focused on the grim forecasts for the years ahead.
As Newsroom’s political editor Sam Sachdeva has written, the state of the books leaves parties with little room to manoeuvre in terms of large spending commitments, with debt set to peak at over 55 percent in 2023/24.
National leader Judith Collins has said her party will release its own fiscal plan this week, in a bid to head off accusations from Robertson and Labour that the party cannot stick to its debt target without slashing spending on public services.
Prime Minister Jacinda Ardern is campaigning in Palmerston North today, while Collins is basing herself in Wellington and will respond to the GDP figures after their release.
NZ First list rankings released and tobacco tax pledge released
Jenny Marcroft has suffered a swift demotion in NZ First’s party rankings.
Ranked ninth on the party list at the last election she has been dropped down to number 17.
The party’s list rankings were released on Thursday afternoon.
Fletcher Tabuteau has been promoted up to the number two spot while Shane Jones has gone from eighth on the party list in 2017 to number four.
NZ First President Kristen Campbell-Smith said the party had a seven year history of bringing “balance and common sense” to government.
“New Zealand First has once again sustained its profile by selecting a strong team of highly talented candidates who are committed to promoting the party’s values, policies and principles to put New Zealand and all New Zealanders first!”
In another announcement from the party on Thursday afternoon, NZ First Party leader Winston Peters promised to lower tobacco taxes enough to ensure the average packet of cigarettes costs no more than $20.
He also promised to funnel more money collected through the tax into smoking cessation activities.
“Only a miniscule amount of the tax is reinvested into smoking cessation initiatives. We want to fund more addiction services and make more smoking alternatives available.”
Peters said the tax had led to a large black market trade in tobacco and to criminals targeting dairies and service stations.
“We would prefer people didn’t smoke but for some Kiwis and their families it’s a choice between smoking and buying groceries.”
Labour reminds voters of Lower North Island promises
As Ardern campaigns in Palmerston North Finance Minister Grant Robertson has reminded voters of the $5b worth of infrastructure and shovel-ready commitments the Government has made to the Lower North Island.
They include $1.35b for the Wellington region through the NZ Upgrade programme – which National has also committed to funding.
The lower North Island is set to receive $165m from the Provincial Growth Fund (PGF), $189.5m for classroom upgrades, $55.8m in additional health capital spending, $3.2b from the National Land Transport Programme (NLTP), $100m for water infrastructure, $6.5m for road and rail worker redeployment, $268m for “shovel-ready” projects through the Infrastructure Reference Group process and $9.4m from the Strategic Asset Tourism Protection Programme.
The list of already-announced projects includes $100m to kickstart the Manawatū Gorge replacement – money stripped from the New Zealand Transport Agency’s Auckland light rail budget after the project was delayed then put on ice.
Although there is a cross-party commitment to building many of the large transport projects the Government has decided to fund some do not meet NZTA criteria around value for money.
For example, the four-laning of SH1 Ōtaki to North of Levin at a cost of $817m has a benefit-cost of 0.37 by estimates (each $1 spent on the project generates a 37 cent benefit) in the initial business case for it.
Govt hits 50 percent women on boards
Women’s Minister Julie Anne Genter says the Government has hit its target of women making up 50 percent of the positions on state sector boards and committees, reaching a new record.
The latest Ministry for Women quarterly update found that as of June 2020, there were 1340 women and 1339 appointed to boards, with the 50 percent mark a significant increase from 45.7 percent in 2017.
Genter said the proportion of women in public service senior leadership had also increased, from 49.6 percent in 2019 to 53.2 percent in 2020 – the highest level since measurement began in 2001.
“More diverse leadership results in better decision making, better organisational resilience and better performance. It also opens up more opportunities for women to succeed and contributes to a more inclusive and fairer society,” she said.
The gender pay gap in the public service had dropped to 9.6 percent, also a record low since records began.
“Gender pay gaps are not immovable or inevitable – reducing gender pay gaps takes concerted effort, and it’s very pleasing to see continued and significant progress so soon,” Genter said.