Ardern’s GDP blunder hints at wider confusion

Jacinda Ardern’s confusion over two sets of figures is understandable, given the volume of material crossing her desk, as well as never-ending negotiations with her governing partners. But with her control of the Government coming under scrutiny, it was exactly the kind of simple mistake she did not need.

Yesterday, Ardern was asked a clear and straightforward question about her expectations for the country’s economic growth figures – GDP – due out tomorrow. Although her answer hinted that she and host Mike Hosking were not exactly on the same page, listeners would probably believe she was giving the inside word on the figures. She was pleased.

Instead, she was talking about the Crown’s financial statements – the Government’s books – which are not due to be released for about three weeks, and which few people outside Parliament or bond trading circles care about.

It might seem like a meaningless mistake, but the integrity of market-sensitive information is critical to New Zealand’s reputation as a transparent economy. No-one gets the inside word, or at least, no-one should, even though lots of people want it. Ardern’s comments left the impression that she not only knew, but that she had not kept the secret.

Whatever the economic growth figures show this week, they will almost certainly move the currency and other parts of the financial markets, amid speculation that new Reserve Bank governor Adrian Orr is prepared to cut interest rates if the economy slows. The speed with which Ardern’s office acknowledged the mistake underlines how important it was that the comments were not amplified without clarification.

Whether or not she caused the New Zealand dollar to jump – and I’m not convinced she did – if her comments had been reported at face value, it would have. Prime ministers deal with vast amounts of information, so it is impossible to expect this kind of mistake will not happen.

National made mistakes from time to time, including at least one that, while different, was arguably much worse than Ardern’s. In 2011, shortly after the Christchurch earthquake, John Key told financial news agency Bloomberg that he expected, and would welcome, the Reserve Bank cutting interest rates. The dollar plunged in a way which suggested financial markets believed Key was making the decision.

Key, who as a former currency trader must have known exactly what he was doing, did not get the criticism he deserved for undermining the central bank’s independence, probably because the country was in shock when the incident happened.

It seems incredible that Ardern’s office did not brief her that she might face questions about the economic growth figures this week. Not only has the economy become one of the dominant stories of her first year in office, but Thursday’s news could, at least for a time, change the conversation.

With business confidence surveys suggesting New Zealand’s corporate sector is in despair, and the economy stalling, Statistics NZ is tipped to reveal that the economy continued to grow at a respectable clip, at least up until the end of June. Any news that the economy might be doing at least a little better than feared would be welcome for Ardern, considering that it looks from the outside as if the Government is engaged in a high-stakes horse trade.

Although figures in and close to the Beehive deny it is quite that simple, it appears Winston Peters is forcing Ardern to make a tough decision, as he refuses to be pinned down on whether he will support Labour’s policy on refugees or aspects of its employment law changes.

Does the prime minister want to announce a doubling of the refugee quota just days before her trip to the United Nations? If so, it appears the price could be agreeing to let NZ First support changes to the Employment Relations Amendment Act, allowing firms to continue to opt out of so-called multi-employer collective agreements (Mecas).

Somewhere along the line, it appears the heavy lobbying campaign by the business sector has convinced NZ First of the danger of what appears to be a relatively obscure and rarely used provision. Precisely how important the Mecas are to Labour’s plan is difficult to know. The fact that some people are trying to talk down the importance of this type of collective agreement suggests that Labour is clearing the ground for a backdown.

This, no doubt, will be sold as the new pure form of coalition Government, where negotiations are seemingly never-ending.

It is hard not to believe that all the negotiating might start to get in the way of the governing.

Any news that the economy might be doing at least a little better than feared would be welcome for Ardern.