News is good for Kiwis
Sometimes the news is so good that people don’t believe it’s true.
But here is the news. When the government owned 100% of the power companies (Genesis, Mighty River Power and Meridian), they received on average (for the five years prior), $365 million a year in dividends. Since they’ve sold 49% of the power companies, they’ve received on average $442 million a year over the past three years.
See … I knew you wouldn’t believe me! But it’s true, I’ve researched Treasury’s analysis of it. In fact, in the year to March the average cost of electricity paid by consumers fell for the first time in 15 years.
Just like the price of food has fallen. Kiwi shoppers are enjoying lower grocery prices. Three different sets of statistics confirm the downward trend, which started five years ago. According to the latest Statistics New Zealand figures, food prices fell 1.3 per cent in the year to July 2016.
Coming back to electricity, a lot of people say their power bill has gone up. Yes, there have been increases for what is called ‘‘line charges.’’ That’s the cost of getting power from the lake to your plate. This increase is driven by the need for a huge amount of investment in infrastructure such as high voltage transmission lines, but the actual cost of the energy component of your bill has in fact decreased.
Interest rates are lower now than any other time I’ve been alive. And alongside this period of flattened costs, we’ve seen an average wage increase of 2.2% a year, well above the rise of inflation.
We do have a few challenges though. We’re moving into a more technical age where education and marketable skills are essential for higher paid employment. We need to keep driving educational achievement.
Secondly, with low interest rates, we’re also getting lower returns for savings. This is putting pressure on retirees and superannuation schemes all around the world. The low inflation and low interest rate environment is great for consumers, but not good for savers – or those who rely on their savings for a bit extra.
Increasing the age of entitlement for NZ Superannuation only serves to makes the situation easier for the government, but harder for the retiree.
The answer is a higher performing economy built on a highly educated and skilled workforce making and selling products the world wants. Let’s get it right from the classroom up and continue to understand that as a country we have to earn our way in this world.