Politicians play GDP whodunit
The Government has been accused of ‘‘vandalism’’ by National Party MP and finance spokesperson Paul Goldsmith, who said its ‘‘highly ideological’’ infrastructure spending decisions were to blame for slowing economic growth.
With news that the economy grew by 2.1 per cent over the past year – the slowest rate since 2013 – Labour and National began a game of political ‘‘whodunit’’ with each trying to pin the blame elsewhere.
The Government is blaming deteriorating international conditions caused by the US-China trade war and Brexit for the soft numbers. National said global uncertainty was only partly to blame.
Statistics NZ announced yesterday that gross domestic product – a measure of economic growth – grew 2.1 per cent over the last year, slowing from 2.5 per cent the previous year.
The slowdown was blamed on goods-producing industries, such as manufacturing and construction, shrinking by 0.2 per cent in the last quarter.
Finance Minister Grant Robertson said the economy was performing well and growing faster than most developed economies. Australia had 1.4 per cent growth over the same period. The growth rate in the OECD, a club of developed countries, was 1.6 per cent. Robertson said slowing growth was ‘‘a reflection of the global environment’’.
‘‘Clearly in our export exposed industries and manufacturing there is a hit,’’ he said.
But the Opposition says New Zealand should be doing better.
Goldsmith conceded tough international conditions were weighing on GDP growth but insisted Government policy was also to blame for not generating faster growth despite increased spending. ‘‘It’s incredible, given the need they have [to spend] and the amounts of money being spent in theory by the Government, that we are still slowing,’’ Goldsmith said. The slowdown was a reflection of low business confidence and a stalling infrastructure programme as large roading projects were cancelled in favour of transit projects such as light rail.
‘‘In construction and infrastructure it is directly responsible for a highly ideological shift in transport spending away from projects that were ready to go,’’ he said.
Treasury warned the Government that its decision to shift funding away from roads would lead to $3.5 billion less being spent on state highways. It said there were currently $4.8b worth of ‘‘major projects’’ due to be completed in the next two years, but only $1b worth of new projects getting ready to start, meaning the economy was getting less economic stimulus.
Robertson defended the Government’s record on infrastructure, saying the GDP data didn’t take into account increased money approved in the most recent budget but not yet spent.
He also pointed to positive data: more construction projects are being consented, suggesting the sector might improve. Nonresidential building consents were worth $7.4b this year, up 7.9 per cent from the year before.