ON AIR: The Country

12PM - 1PM

Mike's Minute: Numbers don't lie - Economy has turned mediocre under Government

Mike Hosking,
Publish Date
Thursday, 20 June 2019, 9:31AM

Numbers day today - the big report card on our economy.

And never let anyone try and fool you that this stuff doesn't matter, in many respects there is nothing more important.

This Government will try and convince you GDP is not what it was, doesn't really count, doesn't actually mean a lot. They are wrong.

"Wellbeing" is an idea, it's a thought bubble. And even if you accept it's a 'thing', it's only ever chased, achieved, and paid for by GDP. It's all down to what we do, what we make, and what we sell.

"Wellbeing" is paid for by money, and money is made by business, labour, and deals. That is what GDP measures: real world, real time numbers, facts and stats that don't lie and can't be argued with.

And today they think it'll be 0.5 or 0.6 per cent. Neither is that good and that's why today is important. We are now well down the track of a series of these numbers that aren't good, and that is why when you collect them up, and put them into an annualised number, we are barely growing at 2 per cent.

And the problem with two per cent is several-fold. We have been growing at three per cent plus. Two per cent less tax, less confidence, and less business. Two per cent eventually means fewer people being hired, less expansion, and less expenditure.

We've already seen it this week in the manufacturing index. Our index is at 50. 
Fifty means we are going nowhere, the growth has literally stopped. In some sectors of manufacturing it's now shrinking.

Confidence, of course, is now famously down and continues to slide. There is good news in terms of trade, and the amount of trade. But the services sector - 70 per cent of our economy - is heading the same way as manufacturing.

Since this Government has come to power we have had GDP readings of 0.5, 1.0, 0.3 and 0.6. If you want to add 0.5 today, only one of those figures is remotely acceptable and you can guess which one it is.

All that this Government has promised and spent money on so far has been largely driven out of the success of the previous government.

The surplus, if you follow the Budget, is now basically gone. Since the Budget they've found a quarter of a billion more for teachers and today's gun buyback is going to be more expensive than the $160 million they put aside.

Going forward their bills will be paid from the growth they have created as a Government. And the numbers look pale, if not ill.

Yes, internationally we have issues beyond our control. But they've created a lot of local problems that are reflected in today's numbers - and the numbers to come for the rest of the year.

This country can do better and has done better - and that's the frustration.

If the predictions are right 0.5 per cent is another mediocre number, in what is now a mediocre economy, driven by a very average Government that's more gripped by buzzwords than they are real world economics.


ON AIR: The Country

12PM - 1PM