Labour: the Economic Record 2000 – 2008
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There has been considerable commentary made by Labour’s critics and political opponents that Labour was an incompetant economic manager, during their nine year term in office. The reality, though, is somewhat different. There are many things that Labour did well and some not-so-well.
But the records speaks for itself.
The following is data, in the form of easily understandable graphs, from Trading Economics, an American website. They collect data from the IMF, World Bank, Statistics NZ, the Reserve Bank of NZ, etc, (the usual motley crew of subversive, left wing organisations) to compile their finished presentations.
Each category will be presented via two graphs. Eg,
“New Zealand GDP Growth Rate”
Graph 1: 2000 – 2011
Graph 2: 1990 – 2011
National was in power from 1990 to the end of 1999.
Labour governed from the beginning of 2000 to the end of 2008.
National took office After November 2008.
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New Zealand Population 1960 - 2011
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New Zealand Unemployment Rate
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New Zealand Unemployment Rate 2000 - 2011
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New Zealand Unemployment Rate 1990 - 2011
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Long-term unemployment (% of total unemployment) in New Zealand
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Some politicians use long-term unemployed as an election weapon, to win electoral support. However, despite their mis-use of the facts and figures, long-term unemployment was dropping in the last ten years. Not that certain politicians would admit it, though.
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Long Term Unemployment (% of Total Unemployment) in NZ 2000 - 2008
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Note how long-term unemployment rose in the late 1980s and spiked in the early to mid 1990s. Can we remember what happened to New Zealand in that time? The terms “Rogernomics” and “Ruthanasia” might jog our memories.
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Long Term Unemployment (% of Total Unemployment) in NZ 1990 - 2008
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New Zealand Employment
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New Zealand Employment 2000 - 2010
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New Zealand Employment 1990 - 2010
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New Zealand Government Debt To GDP
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Despite claims that Labour “spent up large” during their nine year term, the truth is completely different. As the IMF data shows with crystal clarity, Labour paid down debt. It was not until National came to office that debt levels took of again.
It could be said, with considerable truth, that Finance Minister Michael Cullen ran the government accounts with a fiscal discipline that would make Scrooge sit up and take notice.
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New Zealand Government Debt To GDP 2000 - 2011
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The IMF data shows fairly well why Labour had such massive debt kevels to pay down. It was an inheritance from the previous Bolger-led National Government of the 1990s. (Though National were addressing that debt, the reduction slowed from 1997 onward.)
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New Zealand Government Debt To GDP 1990 - 2011
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New Zealand GDP
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One of the many “charges” made by neo-liberals against the Labour Party is that centre-left governments are poor stewards of the economy and are anti-business. Yet, the World Bank data below shows quite dramatically how well New Zealand’s economy fared in the 2000s. Our growth was such that a common complaint from business was a lack of skilled, experienced staff.
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New Zealand GDP 2000 - 2010
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The early 1990s were marked by “Ruthanasia” – a continuance of Roger Douglas’s extremist neo-liberal, free market policies. All socio-economic indicators worsened during Ruth Richardson’s tenure as Minister of Finance. The World Bank data below shows how New Zealand’s economy was practically crippled under the tender mercies of the New Right.
It was not till 2003, under Labour’s governance, that the economy began to grow.
As an aside, there were took tax cuts during the 1990s. Result: minimal benefit for the economy.
Labour increased taxes for top income earners in the early 2000s. Except for a short-term ‘dip’, the tax rise doesn’t seem to have impacted on the economy.
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New Zealand GDP 1990 - 2010
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New Zealand GDP per capita
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New Zealand GDP per capita 2000 - 2009
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New Zealand GDP per capita 1990 - 2009
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New Zealand Interest Rates
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New Zealand Interest Rates 2000 - 2011
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New Zealand Interest Rates 1990 - 2011
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New Zealand Inflation Rates
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New Zealand Inflation Rate 2000 - 2011
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New Zealand Inflation Rate 1990 - 2011
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New Zealand Current Account
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This is the bit which shows how much we sell overseas (export), compared to what we buy (import). Exports can be wool, timber, fish, dairy products, company profits, etc. Imports can be fuel, consumer products, vehicles, raw materials, heavy machinary, etc. The shaded gray should be above the ‘O’ line, instead of below it.
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NZ Current Account 2000 - 2011
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NZ Current Account 1990 - 2011
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New Zealand Government Budget
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This graph is an interesting bit. When John Key and Bill English refer to the previous Labour government expanding State expenditure, this is what they are referring to. And they are correct – but only half correct. As per usual, they are telling you only half the truth – and leaving out the next, important bit.
Look at the next graph below, 1990 – 2000.
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New Zealand Government Budget 2000 - 2011
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In the graph below, it is clear that the National government from the early to mid 1990s (commonly referred to as “Ruthanasia”) and in the late 1990s, consistantly cut back on expenditure. Some of you may recall horror stories of those times; ex psych patients living rough, in toilets, with no State-community support; market housing rentals; and hospital waiting lists far longer than anything we have today.
On 3 April 1998, Southland dairy farmer Colin Morrison (42) died on a waiting list, awaiting a triple heart bypass surgery. In death, Mr Morrison symbolised everything that was terribly wrong with the health system in the late 1990s. Public anger mounted as an unpopular government seemed unable to respond to concerns that our public services were being run down in the name of “efficiency”.
Little wonder that there was a 11.55% swing toward Labour in the 1999 General election – the electorate had had a gutsful of neoliberal policies resulting in growing inequality and social problems that seemingly went unheeded. Contrasts
That is the reason why Labour spent so much during it’s term: to make up for the lack of social spending in the 1990s, and to meet growing public clamour for social services to be better resourced.
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New Zealand Government Budget 1990 - 2011
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Cash surplus/deficit (% of GDP) in New Zealand
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Contrary to the fantasies of some history-revisionists, trying to paint the previous Labour Government as “bankrupting the country”, Cullen actually posted some fairly respectable surpluses.
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Cash surplus-deficit (percent of GDP) in New Zealand
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New Zealand Sovereign Credit Ratings
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The following data-sheet shows New Zealand’s credit downgrades from 1977, when Rob Muldoon was Prime Minister, to the present.
Note that three credit downgrades happened duting three National governments; 1991, 1998, and this year. And if you include the Rogernomics period – that makes FOUR neo-liberal governments that were downgraded.
Do credit ratings agencies seem “risk averse” to new right governments? Do they prefer centre-left governments?
First, look at 10 September 1998 (National government) – AA+ (negative outlook)
But when Labour came to power – 7 March 2001 – AA+ (stable outlook)
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New Zealand Prison Population trend since 1980
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The prison sentenced population demonstrates continuous and steady growth since 1986. The seasonal pattern of reduced numbers toward the end of each year is well established, and reflects the influence of the prisoner Christmas release policy 1 , as well as cycles of activity involving Police and the Courts. Notable is the sharp upturn in numbers which commenced in mid-2003, continuing through to June 2007.
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A closer look at the period 1962 to 1996. Note the huge ‘spike’ in the prison population from 1986 onwards. Except for occassional dips, the prison population has continued to rise steadily since the mid-1980s.
It cannot be a coincidence that New Zealand’s entire socio-economic fabric was unravelled and “reformed” in a process commonly referred to as “Rogernomics”. The process of “economic reform” continued into the 1990s, referred to as “Ruthanasia”, up until 1996.
The prison population, though, continued to rise.
The ongoing effects of “Rogernomics/Ruthansia” are ongoing to the present day.
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Total prison population 1962 to 1996
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[This page still under construction – more data to follow. Keep checking back for more info.]
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Indeed, Joe90 – fascinating isn’t it? It kinda blows National’s mythmaking out-of-the-water, that Labour is somehow fiscally incompetent. In fact, the data doesn’t portray National in a particularly good light!
National is morally bankrupt!
Not just morally, Peter. According to the data, they’ve done a fair job on doing likewise to the country as well…
Spelling corrections:
opponents
motley
Ruthanasia (from Euthanasia)
Typo in “Long Term Unemployment” section: “fascts” and another in the quote regarding Ruthanasia-period health cuts, should be “respond” not “responds”.
Otherwise well-written, thanks. Happy to help.
Uh-oh another one, this time in your comment on 4 Nov – correct spelling: incompetent.
One final comment, a lot of these comparisons look worse than they actually are because the vertical scale has been truncated. This is common, accepted practice but misleading to those looking at the graph without noticing the truncation.
Thanks, James – will keep you on. (Pay ain’t that great, but.)
The second “infaltion rate” graph actually seems to be a rerun of the second “interest Rate” graph, or am I missing something?
Dont be retarded, Your basing your judgements on the National government, when they came into power at the time of a Global Economic Crisis! Dont be so naive
That would be “you’re”. There are also several basic punctuation mistakes. So who’s retarded then?
Thanks, Robert. No, you didn’t miss anything – I did. The way that “Trading Economics” website works, when you click on another link on the right hand side, I noticed that whilst the text changes – the graphs, and title above the graph, don’t always change with the page text. I thought I’d caught all of the paging-errors -but evidently not.
Thanks for the “heads-up”. I’ve sorted the error. (My apologies to anyone confused by my mistake.)
Actually, except for reference to the third credit downgrade, this year, most of my references to National have been directed at the Bolger-led government, of the 1990s.
2000-2008 was one of the biggest credit led expansions the world has ever seen. There was unprecedented growth globally (all through easy money). Just look at real estate prices during that period (globally). Labour are incompetent economic managers full stop. Would love to see them cope with the current global crisis… we would be begging the IMF to bail us out of a steaming pile of debt.
And yet, you haven’t addressed any of the facts pointed out above?
For example, credit ratings agencies have downgraded National during three consecutive governments.
In comparison, (non-Rogernomics) Labour has seen either steady or upgraded credit ratings.
So credit agencies seem to approve of Labour’s fiscal management.
Just one example.
These would be the same international credit ratings agencies who gave the US sub-prime mortgage debt packages AAA ratings, right? The same credit reference agencies who gave Lehman Brothers and AIG at least an AA rating right up until only a few minutes before Lehman Brothers declared bankruptcy and AIG requested the US Treasury bail it out (for the second time) to the tune of almost US$40 billion?
Basing one’s opinion of financial management on what the credit ratings agencies say is flawed in the extreme, not just because the credit ratings agencies have proven themselves time and time again to be completely incapable of accurately judging risk, but also because they reflect a US-centric hawkish view of economic policy. They like the selling off of public assets. They like privatisation. They like the cutting of public services. The actions might please the ratings agencies, but they’re not an accurate reflection of what managing an economy is about.
A BS E you mean like labour did after muldoom birch and borrowing bills english disasters. Borrowing Bills English has managed less than .5% growth in five years as finance minister even with record commodity prices because they have given the tax cuts to just 10% of the economy it has failed to grow economy.ie UK is doing exactly the same policy same results.You are telling big huge porkies about borrowing as the amount of borrowing has remained exactly the same since the 1975 Kirk led government it has grown at the same rate right through till now with Bills English borrowing the shortfall that the private sector has not been able to because of the credit squeeze you little sleeze but what was different was that Michael Cullen [PHD in economic history with honours youngest man in NZ ever to get that degree]got the economy to grow 3 times faster than the Bulger Shipley or Muldoom[Birch English finance ministers].Plus Cullen fund savings $20 billion +Kiwisaver. Cullen grew the economy 50 times+ more than borrowing bills english. Bill english claims he has got people saving absolute bullshit its just that the banks are not lending.So people are forced to pay down debt but nowhere fast as English is borrowing!
As for many of the other graphs the author points out as indicative of Labour’s fantastic running of the country:
– Unemployment: it’s easy to get the unemployment figures down when people are moved from unemployment to sickness benefit. It’s also to get unemployment figures down when the world economy is booming and dragging little NZ along in its wake. Any jobs growth during Labour’s tenure was despite their meddling and interference, not due to their economic management.
– Interest rates and inflation: the government doesn’t control interest rates – the Reserve Bank does. But the Reserve Bank uses interest rates as its main method of controlling inflation, which remained reasonably high throughout Labour’s tenure. The by-product of the high interest rate was the increase in the value of NZ’s currency compared to our major trading partners, which hurt our major industries; farming, forestry and tourism. And tLabour did very little to intervene.
– Prison population: this graph doesn’t really show anything. The growth in prison population tracks the growth in population. Same rates of growth under Labour as under National.
If they like privatisation how come they degraded National but didnt with Labour?
National have had worse employment statistics over the last 30 years by far and sickness beneficiaries ,dpb recipients up 27,000. 100,000 leaving for Aus in three years labour had less in 9 years that has skewed the bad stats and makes nationals employment record a joke.After key promised a brighter future with our children staying here yeah right!
Bazinga! LOL!
Good stuff mate!
Taking that parapgraph point by point,
1. “Unemployment: it’s easy to get the unemployment figures down when people are moved from unemployment to sickness benefit. ”
People were also moved from ACC on to sickness and invalids benefits. One estimate puts the “churn” at 8%;
Also,
2. “It’s also [easy] to get unemployment figures down when the world economy is booming and dragging little NZ along in its wake.”
And yet, NZ had the lowest unemployment at the time. So if the “world economy is booming”, we certainly did better out of it than other countries. Why was that, do you think?
3. “Any jobs growth during Labour’s tenure was despite their meddling and interference, not due to their economic management.”
What “meddling and interfrerence”?
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Well, in that case they should have HATED Labour and downgraded Helen Clark’s government, which did not cut the civil service and did not sell state assets. (In fact, Clark’s government re-nationalised two former SOEs – one wholly, and another majority shareholder.)
Instead, they downgraded precisely those right ring governments that engaged in asset sales and cutting the public service; predominantly National, and Rogernomics Labour.
Again, why was that, do you think?
I showed my dad al this stuff and he was really surprised.
National and roger douglas have only managed 1% growth by volume per year from 1976 till 1998 Michael Cullen broke that trend by exceeding 3% by volume over nine years.Bill dipstick English has been the worst finance minister in over 70years 98 99 09 10 11 less than .1% per annum yes .1% per annum by volume .Economists use the word volume to how actual growth and not % growth from 1/4 to 1/4 which only shows part of the picture.It means the economy is the same size nearly as when English started his tenure in 98 virtually no real growth except in spin and BS.
Mik e; Rod Oram was being interviewed by Kathryn Ryan on Radio NZ, last week . He was suggesting a panel of experts (economists and other professionals) who would “fact check” politicians promises, policies, comments, and track record.
Something like that would quickly tear down the BS that politicians spin around themselves, and which is swallowed whole-heartedly by their supporters. And of course, what’s worse is that a considerable amount of the $380 million a week this government has been borrowing has gone to fill the gap left by irresponsible tax cuts.
Yet, Key assured the voting public in 2008 that National would not have to borrow for tax-cuts.
Just tonight, a couple of posters on the Stuff messageboards were repeating the BS myth that Labour left the economy a “mess” in 2008. I referred them back to this page (Labour: the Economic Record 2000 – 2008) for their entertainment and education. They don’t seem to appreciate when the facts are served up to them, on a dish.
Mik e – yeah, I’ve noticed the same thing… It’s as if they’re “DNA hard-wired” to stuff things up. The same happened in the early ’90s, when the Bolger-led National government took office. They basically took a recessionary period; screwed down spending with massive government cuts; and the recession deepened. I think some of the data above – eg; New Zealand GDP – shows the damaging effects of those cuts.
This current government has learnt nothing from that period, and is pursuing similar policies.
if only people would apply as much passion and belief into their own lives, and in doing everything they can to make NZ a better place to be in for themselves and everyone as they do in commenting on how other people are running the country, we’d all be much better off. I hate the mud slinging and pointing out of other party misdemeanors and faults. Helen Clarke was a great leader. John Key is a great leader – they have both done tremendous jobs in running the biggest business in NZ – our lives, with the knowledge, resources and capabilities they have had on hand. How I wish we had as much opportunity to stand up and praise our leaders and thank them for the VERY hardwork they do, in stead of criticising what they are doing constantly.
My advice to everyone here is put your own house in order. review your own economics over the past 2 decades – and I don’t just mean how much money you’ve made, or where your employment levels are at, I’m talking about how much you have invested in your relationships, in your neighbours and your friends and in those people less fortunate than yourselves.
So stop wasting time on this pointless blog and go and make a difference to someone else’s life yourselves.
This might be 3.5 years on, but John Key is not the great leader you claim him to be. Historically massive record amounts of debt (nigh on 100 billion), a downgrade on the Dollar, and lies, lies, lies about many many things. But he gets voted in because people like you don’t see these things, and keep voting for him because you’re told to. No, I didn’t vote Labour, but I’ll never vote for National ever again, for they have just reverted to type of the 80’s and 90’s and don’t look like they’ve learned their lessons. We call this kind of behaviour, stupid.
This blog is not pointless and how do you know we’re not making a differene in other peroples lives? You sound so conceited. Maybe you should be helping other peoples lives then instead of wasting your time on the internet if it worries you so much!
Hey Frank! I know this is a long time afterward, and you would have had a lot of work on making it by the looks, but do you think there’s any possibility that there could be an update to this posting? I think it would make for some really interesting reading! There seems to have been no headway on a number of fronts, and certainly going backwards on a few too. Given to particular members in the house could make this a rather embarrassing time for the incumbents. Only because they’d be shown to be foolish for a lot of their decisions, or in some cases, lack of. What say you?
Hi MJ… I am working on a project that is similar to the “Labour: the Economic Record 2000 – 2008” story. Call it a “companion piece” of comparisons…
Won’t say anything more, in case I’m ‘pipped at the post’ by someone else… 😉
Unfortunately, we live in a real life “Kings new clothes opera”. Nobody in the media is willing to “expose”, excuse the pun, the reality of the worlds economic highway to hell.
Because, as soon as the reality is widely recognised, collapse is inevitable.
In truth all countries in the world are buried in debt, with little if any way of escape.
Michael Cullen, was the best minister of finance probably that the world has seen.
He took a period of world economic growth, used it to pay down debt, grow the economy and improve social conditions. He didn’t sit on his hands and ride the wave like most other countries around the world. Ireland, Portugal Spain, etc, etc, etc.
Unfortunately, we are now eight years into another cycle of false growth ( Auckland housing market), with the stewardship of our country sitting on their hands. Funding Government through borrowing rather than the recognised norm, taxation.
Could I suggest maybe, a graph of the shift in wealth demographics through the same period, might enlighten your readers as to who the beneficiaries of the last eight years of national policy have been. Then some of the negative commentators, might have a slightly altered view.
After all, aren’t we expecting some trickle down, sometime soon.
I realise that you wrote this 5 years ago.
Though the statistics do point at Labour having a better economic track record than National, I think it is unfair to mention “Roger nomics” and “Ruthnasia” without mention to the global financial crisis or the now two earthquakes that the country has suffered through.
A lot of people these days are referencing these (more up to date) statistics in relation to Nationals “poor” management of the economy. I feel like a lot of people dont realise how significant the impact of the global financial crisis was on the world because of how little the majority of New Zealanders felt it. Compared to the U.S. and a lot of European countries, the majority of New Zealanders were left feeling largely unaffected by the GFC. Spain is still suffering the effects, with 25% unemployment and 75% unemployment in people under 25.
I just realised that some people have commented similar to the above and I have to agree. Up until 2008, Labour had the benefit of riding a huge boom.
Kia ora Troy,
Yes, it was written five years ago – mostly as a response to National’s on-going malicious allegations that Labour had “mis-managed” the economy during the Clark-Cullen Administration. That oft-repeated meme was done usually to justify unpopular policies enacted by National, or to cover up economic mis-management of their own making.
I don’t think anyone is denying that the 2008 Global Financial Crisis and resulting Great Recession could be ignored. The effects on New Zealand were considerable, doubling our unemployment. It could well have been worse, had Cullen not acted prudently in repaying sovereign debt; implementing the Superannuation Fund ; and other measures. National built on those reserves, as Key pointed out first in 2005;
– http://www.scoop.co.nz/stories/PA0503/S00102.htm – Speech: New Zealand National Party, Friday, 4 March 2005, 11:07 am
And in 2013,
– http://tvnz.co.nz/breakfast-news/mind-gap-key-tackles-child-poverty-video-5766147
So my story “Labour, the Economic Record” was designed to set the record straight and counter the ‘spin’ that was emanating from the Ninth Floor of the Beehive.