By Grant Robertson, Minister for Finance, Labour MP for Wellington Central.
We had a reminder this week that the New Zealand economy is in good shape and in a position to stand up to the global economic headwinds.
A strong economy allows for more jobs, higher wages for working New Zealanders, and gives us the ability to provide world-class healthcare, education and infrastructure.
This year’s surplus shows that we are making good progress on this. It lets us make important investments in new hospitals, classrooms and roads and rail.
Our Economic Plan is ensuring that we keep up the momentum.
Anyone looking at the headlines can see the uncertainty in the global economy. Brexit, the US-China trade war and events in the Middle East are all leading to businesses being wary about the international situation.
As a small, open economy, we can’t control what happens globally. But we can continue to make our economy stronger so that we’re ready to face any challenges that come our way.
One of the biggest risks facing the economy is that we talk ourselves into a funk, when we’re in good shape. Although it’s not surprising, it is disappointing that there is a group of people who are intent on just being negative about the economy.
What we’re focussed on as a Government is building on the positive aspects of what’s going on in New Zealand. Our GDP growth of 2.4% places us favourably in the uncertain global context; we’re growing faster than the likes of Australia, the UK, the EU, Japan, Canada and the OECD average.
Unemployment, interest rates and Government debt are all low, giving us a solid platform for continued growth.
The underlying strength in the economy is being backed by the investments the Government is making, and the support we’re providing to businesses to innovate and be more productive.
Our Economic Plan includes increased investment in infrastructure, like fixing Middlemore Hospital, building new classrooms for 100,000 students and building and fixing major roads and rail in our regions – a piece of the transport puzzle that was ignored by the previous Government.
We’re backing businesses to boost productivity by giving tax incentives for R&D investment in new ideas, and fixing skill shortages through smarter immigration settings.
We’re backing our regions through dedicated Provincial Growth Fund investments.
We’re investing in smart new industries like hydrogen technology in Taranaki, rebuilding our rail capacity in places like Palmerston North, and investing in tourism infrastructure in regions like Queenstown and Otago to take pressure off local communities.
And we’re making sure we have the workforce for the future by subsidising apprenticeships, focussing on getting long-term unemployed into work, and helping people retrain later in life.
What we know is that:
- Average wages are rising at their fastest rate in 10 years, meaning more working New Zealanders are getting a fairer share of economic growth
- Unemployment is at an eleven-year low of 3.9%, meaning businesses are investing and hiring more young people with the skills they need
- Business profits were higher in each of the last two years under the Coalition Government than in 2017, even when inflation is taken into account.
This shows we are well-positioned for this point in the economic cycle. The surplus and low debt give us further opportunities to invest in our economy so that we remain resilient and are prepared for any global shocks.
Grant Robertson is Minister for Finance and Labour MP for Wellington Central.