The Challenges Facing the New Zealand Economy

The government has done much to tackle the problems facing the economy. During COVID-19 there was a significant programme to support the economy. Wage Subsidy Schemes went hand-in-hand with business support including multi-billion-dollar tax cut packages. This was an essential step in protecting the economy and getting us through the initial waves of COVID-19. Many lives, jobs, and businesses were saved because of that swift action.[1]

However, those packages were designed to tackle the economic problems facing the economy in the short term. The indicators we have now suggest that largely they have worked. Our unemployment levels are at historic lows. Exports increased by 11% last year.[2] We have not seen the negative economic impacts of COVID-19 that other countries have faced.[3]

The long-term economic problems facing New Zealand are the problems that existed before the pandemic. We face a recovery from COVID-19 that is increasingly K-shaped.[4] People with skills, in secure work, and with assets, will continue to do well as the economy comes back from COVID-19. People with insecure work, fewer skills, and low incomes will increasingly feel the impacts of inflation, face housing stress, and a more insecure future.

Many communities were disproportionately impacted by the pandemic, including Māori, Pasifika, and women. In October 2021 only 49% of eligible Māori were fully vaccinated compared to 72% of the overall population. An economic strategy for Aotearoa should ensure that Te Tiriti o Waitangi obligations and equity are forefront and considered at every step of policy decisions.

Some policies have been developed to address these issues. Fair Pay Agreements will create minimum standards for industries such as security, hospitality, and cleaning — ending the race to the bottom for many workers. New Zealand Income Insurance will ensure the costs of economic change and job insecurity doesn’t cause catastrophic loss in communities — as they did in the past.[5] Industry Transformation Plans will help guide the development of key sectors.

But there is still much to be done. Delivering on the missions that we set out above will mean tackling the interrelated problems of productivity, investment, climate change, infrastructure, taxation, jobs, income, equity and wellbeing. It means setting out a long-term plan that will deliver truly meaningful change for all New Zealanders.

 

Read about our missions

  1. Mission: Economic Equity
  2. Mission: Delivering Adequate Housing and Our Infrastructure Needs for the 21st Century
  3. Mission:  A Just Transition Towards Climate Mitigation and Resilience             
  4. Mission: Decent Work and Greater Work/Life Balance
  5. Mission: Enabling the Enduring Wellbeing of New Zealanders

Footnotes

[1] Russell, D and Renney, C. (2022). Monthly Economic Bulletin April 2022 - Budgets, Child Poverty & Cost of Living. New Zealand Council of Trade Unions. P. 16-17. NZCTU-Economic-Bulletin-April-2022.pdf (union.org.nz)

[2] Source: Ministry for Foreign Affairs and Trade

[3] Russell, D and Renney, C. (2022). P. 15-18

[4] Discourse on the k-shape impacts of Covid-19 have been discussed by many including, The World Economic Forum, The Spinoff and Newsroom.

[5] https://www.mbie.govt.nz/have-your-say/income-insurance/