A Tale of Two Track Records: Labour vs National #1: New Zealand GDP

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As the election campaign for 2014 heats up, citizens can expect a deluge of dis-information, distortions, and  lies from the enemies of the progressive Left. Their constant repetition will be that Labour left the economy is a shocking state in 2008, with the most pernicious  outright lie that the Clark-Cullen government left New Zealand with a “decade of deficits”.

None of it is true. It is part of a meme-construction by the Right, with zealous followers who are willing and able to spread their mis-information on the internet.

TDB Recommends NewzEngine.com

Spreading lies is easy.

Discovering the truth is that much harder – you need to know where to look.

This series of reports will hopefully make things easier for those who want a clearer picture of events over the last two or three decades.

Those who cannot remember the past are condemned to repeat it.” – George Santayana

  • Introduction

Most graphed information is taken from Trading Economics, a US-based, on-line, economics-information website.

Trading Economics provides its users with accurate information for 196 countries including historical data for more than 300.000 economic indicators, exchange rates, stock market indexes, government bond yields and commodity prices. Our data is based on official sources, not third party data providers, and our facts are regularly checked for inconsistencies. TradingEconomics.com has received more than 100 million page views from more than 200 countries.

In turn, the site uses information from Statistics New Zealand, the World Bank, NZ Treasury, etc.

The reader can set dates for specific time-parameters  (indicated with red arrows) to search the site’s data-banks by years. It is extremely user-friendly and informative.

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field parameter searches

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Other sources for data will be clearly referenced.

National governance is marked with a blue line.

Labour governance is marked with a red line.

  • New Zealand GDP

“The gross domestic product (GDP) measures of national income and output for a given country’s economy. The gross domestic product (GDP) is equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time.”

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New Zealand GDP

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In the 1990s, under National and Ruth Richardson’s (1990-1993) economic stewardship, GDP dropped from $43.9 to $40.3 billion and unemployment skyrocketed to 11.2%. For much of the 1990s, GDP see-sawed up and down, peaking at $67.9 billion in 1997 before falling away again.

Note: National implemented two tax cuts, in 1 July 1996 and 1 July 1998. Neither seemed to help grow GDP, and many public services were cut back in the late 1990s.

For Labour, except for a dip in 2001, GDP rose every year from 2002 to 2008. The rise in percentage terms is outlined below.

From 2009 to 2013, despite the GFC, GDP increased from $117.8 to $169.6 billion, though the rise in percentage terms, outlined below, was not so encouraging. GDP growth, per capita, was also lack-lustre, as demonstrated below.

  • New Zealand GDP per capita

“The GDP per capita is obtained by dividing the country’s gross domestic product, adjusted by inflation, by the total population.”

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New Zealand GDP per capita

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Except for two recessionary periods (early 1990s and 2007/08 Global Financial Crisis and recession), New Zealand’s GDP, per head of capita, has grown every year, until the GFC/recession, when it dropped from$28,168.1 per capita in 2008 to $27,383.8 in 2009.

Curiously,  the 2009 and 2010 tax cuts did not seem to contribute greatly to per capita GDP.

  • New Zealand Real GDP

Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output. GDP is the sum of consumer Spending, Investment made by industry, Excess of Exports over Imports and Government Spending. Due to inflation GDP increases and does not actually reflects the true growth in economy. That is why inflation rate must be subtracted from the GDP to get the real growth percentage called the real GDP.

The raw data for the Reserve Bank  graph (see below) is available in an XLS spreadsheet containing all key figures.

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reserve bank of nz real gross domestic product 1990_2013

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  • Main Stats
  1. Average GDP, 1990 to 1999:     2.4%
  2. Average GDP, 2000 to 2008:   3.5%
  3. Average GDP, 2009 to 2013*:  1.2%

* 2013 figure averaged over three Quarters only.

(Calcution based on RBNZ raw data spread sheet)

  • Impactors on GDP growth
  1. Recession, 1987/91
  2. Ruth Richardson’s “Mother of all Budgets” in 1991, which deepened the recession,
  3. Recession, 1997/98
  4. GFC/recession, from 2007/08 onward.
  • Conclusion
  1. Whilst GDP figures “bounce” around, Labour’s stewardship of the economy between 2000 and late 2008 has been more consistant in GDP growth and with less extremes shown in the 1990s and post-2008.
  2. GDP dipped into negative growth in the early 1990s and post-2008
  3. GDP remained in positive growth between 2000 to 2008
  4. Allegations that the economy did not perform well under Labour are clearly wrong, and the evidence does not sustain those claims.

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References

Trading Economics:  About Us

Trading Economics: New Zealand GDP

Trading Economics: New Zealand GDP per capita

Wikipedia: Real Gross Domestic Product (definition)

Reserve Bank of NZ: Real GDP

Reserve Bank of NZ: Real GDP Raw Data spreadsheet

NZ Treasury: New Zealand Economic Growth: An analysis of performance and policy

NZ Treasury: Recent Economic Performance and Outlook

Te Ara: The ‘mother of all budgets’

Ministry of Business, Innovation, & Employment/Dept of Labour:  How bad is the Current Recession? Labour Market Downturns since the 1960s

Colin James: Ruth amid the alien corn

Previous related blogposts

Labour: the Economic Record 2000 – 2008

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The trouble with capitalism is that you run out of money

There, fixed it.

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= fs =

17 COMMENTS

  1. The scene: A phone is ringing in a kitchen decorated national party blue. A blow up Maggie Thatcher doll leans awkwardly against the wall, next to a grimy signed photo of Ruth Richardson. Shuffling sounds approach, becoming louder, then stopping as the ringing ends.

    IV: Hello?
    Gosman: That you IV? Its me. Have you seen what he has posted this morning?
    IV: Just read it. What are we going to do?
    Gosman: Find some different stats, and quickly.
    IV: There are no different stats.
    Gosman: (Mild panic creeping in) Well, just, I don’t know, TWIST something FFS.
    IV: That’s more your forte, I think?
    Gosman: I prefer the “obtuse refusal to see the point” method, thank you very much.
    IV: Silly me, ok, well, I’ll see what bits of the stats I can ignore, and which bits I can repeat ad nauseum to try to prop up our cause.
    Gosman: You know I love you.
    IV: Careful you know THEY are listening.
    (Unknown voice cuts in) Oooh we are not! Anyway it’s in the national interest.
    (Line goes dead)

  2. I’d suggest your date ranges for working out the averages are off by 1 year. There is usually no way a government can take credit or the blame for something that happens in the first year in power. The policy settings are usually inherited from the previous government and the first time they can make any real difference is via the budget for the next year (put out in May). How does that alter your stats?

    • Gosman:

      Why?

      Why pick an arbitrary point of one year?

      Why not two years? Or six months?

      And when did this ever concern you when IV was posting his cherry-picked, mis-leading “facts”?

      I could have picked a year after each government was elected. But then you’d be asking the same questions and demanding justification from me.

      In fact, even if “the averages are off by 1 year “, they balance out over successive administrations.

      The figures stand. Address them as they are presented – not to suit your whimsy.

      • Love the research Frank!I’ll be sharing this with my rellies who didn’t vote last time around. This will convince them!

        And I note that Gosman has to try to redefine the stats because he can’t argue them as they are!

        Well guess what Gosman? The world doesn’t spin according to your view of things.

      • I merely pointed out that it is no use including the year after a party became the government in the figures.

        As for the rest of the article all it shows is the following:

        1) Labour inherited a very well performing economy as opposed to National in both 1990 and 2008.

        2) National had to deal with two significant external shocks to the economy in 1997 and 2008.

        3) Labour pretty much continued on with the major economic policy direction put in place after the structural adjustment of the economy in the late 1980’s and early 1990’s.

        If you disagree with this analysis Frank tell me one significant economic policy that the Labour government of 1999 – 2008 enacted that deviated significantly from he neo-liberal consensus that lifted economic growth significantly?

        • Just in their first term there were big increases in spending on the public sector, also the Employment Relations Act and the restoration of ACC.

          But, yeah – what this shows is pretty much that the economy tends to reflect external circumstances, rather than government policy. For example, the current government’s trumpeting of growth happening thanks to their brilliant stewardship, when it’s actually happening thanks to high commodity prices and the Chch rebuild. Likewise, the mid-2000s growth wasn’t because Cullen was a financial genius but because economies were booming everywhere. Likewise again with the recessions.

          One conclusion we can draw from it though, is that all this blather about National being the safer pair of hands for the economy is so much bullshit. Labour are demonstrably just as safe a pair of hands, because the economy does what it does largely independent of government policy (assuming you don’t elect extremist nutcases to be the government, as we did in 1984). Whichever party you vote for, don’t do it because “it’s about the economy, stupid” – it’s really not.

        • The very same neo-liberal consensus that gave us 5% growth when the rest of the world was experiencing 20%?

        • “1) Labour inherited a very well performing economy as opposed to National in both 1990 and 2008. “

          It’s evident, Gosman, from that statement, that you haven’t read and/or taken in the information above.

          Look at “Impactors on GDP Growth. Specifically, #3.

          • Ummmm… Frank Labour was elected in 1999. The impact of the Asian Financial Crisis was over by then. It was National not Labour that were impacted by this.

            • Ummm. Gosman, the GDP figures speak for themselves in the graph above;

              New Zealand GDP

              National

              1997: US$67.963 billion

              1998: US$64.051 billion

              1999: US$54.414 billion

              Labour

              2000: US$56.894 billion

              2001: US$50.896 billion

              2002: US$52.17 billion

              2003: US$64.57 billion

              Let me know if you have trouble understanding these figures.

  3. Frank: it’s great to have the info out there and explained.

    BUT.

    ‘They’ KNOW that the loony left and the commie Greens and the anarcho-rabid baby-eating fruitloops spell Doom and Destruction to Our Way of Life.

    You can’t argue with that.

    And as for Reasoning…! Same as brainwashing, isn’t it? And the links are probably faked up by some pencil-chewing spoiler hiding in an attic and trying to subvert the Rightful Surveillance of Dissident Pinkoes.

    There’s none so blind as those who will not see.

  4. Now, here’s how to see what was really happening at the demise of the Clark Govt.

    1. Determine the tend in GDP.
    Go to this website…http://www.tradingeconomics.com/new-zealand/gdp-growth.
    Change the first year to 2005.
    Watch the trend line from 2005 go DOWN.

    2. Find out when the GFC began.
    Go to …http://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308
    “The active phase of the crisis, which manifested as a liquidity crisis, can be dated from August 9, 2007, when BNP Paribas terminated withdrawals from three hedge funds citing “a complete evaporation of liquidity”.[4]”

    3. Reach a conclusion
    The NZ GDP was collapsing from 2005. The impact of the GFC did not begin until late in 2007, at the earliest. Labour had the economy going into recession BEFORE the GFC. Remarkable, even for Labour.

    • My… the earnest desperation in your writing is so obvious, IV.

      What’s the matter? Have I ‘pricked’ the balloon of your little fantasy world?

      By the way, you and Gosman need to get your stories sorted out. You want to start Labour’s track record at 2005 (it was 2006 in another post you made elsewhere) whilst Gosman says I’m “off by one year”.

      So, which is it? One year? Five? Six?

      That’s the problem with your right-wing-inspired lies, IV. You have to get your ‘stories’ straight. And keep them straight.

      In the meantime, the data I’ve presented above presents a more accurate picture, warts’n’all.

      Have a nice day, my little National/ACT friend. 😉

Comments are closed.