Food Prices

March 6th, 2011 at 10:32 am by David Farrar

The Herald on Sunday reports:

Prices of day-to-day food, groceries and accommodation are rising at almost their fastest rate in the past 20 years, according to an in-depth investigation.

did increase a lot in January 2011. But that does not mean the HoS claims are accurate, and secondly you need to be very careful to jump to conclusions when prices have been fairly stable for 11 months and have only increased since Christmas.

But wage levels aren’t keeping pace – meaning daily life is as expensive as it’s ever been.

A slogan direct from the Labour Party – but wrong. After tax wages have increased for someone on the average wage either 12% or 16% (off memory. You buy food from your after tax income not your before tax gross wage.

Prices for apples, carrots, mushrooms and potatoes have gone through the roof in the past 12 months, rising 50 per cent or more.

Really. Well the official Food Price Index records prices for all of those items. This is done by the neutral Stats NZ, and isn’t influenced by cheery picking stores.

From January 2010 to January 2011 (Feb food prices are due out Friday), the price for 1 kg of apples has gone up 3% only. For carrots it is 26%, mushrooms 4% and potatoes 35%.

So none of thse have gone up 50%, and for two of the four items, the increase is a magnitude less than claimed by the HoS.

Now let’s not minimise that carrots and potatoes have still increased a lot, and this will be a stretch for some budgets. But this is the nature of having a global market for food.

Lamb and fish have also gone up more than 10 per cent, as have cheese, milk and fruit juice.

According to the food price index, the increases are lamb 6%, fish 0%, cheese 17%, milk 9% and fruit juice -1%.

Now maybe the February Food Price Index will come up with results that back the HoS story, but I’m going to wait to rely on the official figures. I also wonder why the HoS did its own survey when they get a free survey done for them every month by Stats NZ – that is robust and reliable.

Yet statistics reveal wages and salaries increased only 1.7 per cent last year.

Again, you pay for your food out of your after tax income, not the nominal gross wage you get.

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61 Responses to “Food Prices”

  1. malcolm (1,952 comments) says:

    On the subject of gross/net incomes, National can’t have it both ways either. They can’t claim that their tax cuts very revenue neutral and yet somehow say we’re all better off. It’s bull. *On average* we’re no better off. They’re just plucking the goose in a different way.

    A decent government would have reduced their spending so we could have ‘real’ tax cuts and so they wouldn’t need to get into silly little arguments about the price of carrots and spuds.

    [DPF: The vast majority were better off from the last set of tax changes. Those who are not better off were professional residential property investors.]

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  2. side show bob (3,660 comments) says:

    Apparently the world population grows by 80 million a year. Quite frankly in years to come it will be in material if you pay for your food with your after tax income or your nominal gross wage, it will require all the resources you can muster.

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  3. YesWeDid (1,048 comments) says:

    So DPF, are we better off, the same or worst off in terms of standard of living in the term of this government?

    [DPF: Real after tax incomes increased only 4% from Sep 99 to Sep 08. Since Sep 08, real after tax incomes have increased 10% so that is definitely better off]

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  4. bearhunter (853 comments) says:

    Splitting hairs over gross and net income and the size of the percentage increase in food doesn’t mean squat to most people, David. You may be technically correct, but people tend to measure their affluence by what they have left after paying their bills. Regardless of tax cuts and three years of assurances that things are getting better, I would suggest that most people are worse off after three years of National. Sure, it’s not necessarily their fault; they can’t control commodity prices, or change the global economic situation, but they can put some effort into creating an environment where business can flourish, leading to more jobs and better wages. They haven’t even scratched the surface, despite the assurances that National knew how to get the country working.

    [DPF: You can suggest that, but the reality is that most people (not all) should have more money left over after paying their bills, than they did in 2008]

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  5. kiwigunner (230 comments) says:

    This is the big question “Are you better off now than you were three years ago?”. I am certainly worse off and food prices are key to this but only part of an equation that includes power and petrol. Increased unemployment always leads to static pay rises and of course jobs is not a National government priority (most would suggest quite the opposite) but also large tranches
    of people have had very low wage rounds – think the 20,000 teachers getting less than 2% in the current climate, most civil servants under the threat of redundancy achieving a wage round of less than inflation and the many in the private sector who are increasingly talking, including on this blog, about no pay increase for three years. New Zealander’s are in the main worse off now and many rely on assistance from Working for Families etc – the complete opposite of what this govt stands for.

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  6. malcolm (1,952 comments) says:

    Well said, Bearhunter. Keywiblog doth protest too much.

    (Keywiblog – got that from Redbaiter)

    [DPF: And you can leave it there.]

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  7. Manolo (13,590 comments) says:

    Are we better off, the same or worst off in terms of standard of living in the term of this government?

    Worse off.

    So much for a government elected to change course, but which instead has chosen to continue on the path trodden by its socialist predecessor. We just changed the hue of red: the socialist tendency remains constant.

    The National Party should do the decent thing and remove the party’s founding principles from its website. Read and laugh.
    “The National Party seeks a safe, prosperous and successful New Zealand that creates opportunities for all New Zealanders to reach their personal goals and dreams.

    We believe this will be achieved by building a society based on the following values:

    • Loyalty to our country, its democratic principles and our Sovereign as Head of State
    • National and personal security
    Equal citizenship and equal opportunity
    Individual freedom and choice
    Personal responsibility
    Competitive enterprise and rewards for achievement
    Limited government
    • Strong families and caring communities
    • Sustainable development of our environment.

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  8. Caleb (479 comments) says:

    the cost of food is only going to rise.

    rising inputs: labor, land costs, fertilizer, fuel, chemicals, seed, the list goes on.

    add to that, the increase in global demand and we will inevitably face shortages and hefty price increases.

    the growers are facing higher risk as the input costs increase. they are not making any more money but the bills are bigger. growers will sell their valuable land and get out.

    priorities.

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  9. malcolm (1,952 comments) says:

    [DPF: The vast majority were better off from the last set of tax changes. Those who are not better off were professional residential property investors.]

    Only if you ignore ETS, ACC levies, indirect taxation via SOE power companies, council rates, etc etc. The fact is, most people feel worse off. And that’s a real problem.

    Even if everything National has done is for the better, but the improvements have been offset by deteriorations beyond their control, it’s still their fault. They haven’t done enough. They’ve shied away from any substantive changes and splitting hairs about the price of carrots just demonstrates how woeful their performance has been. The last Labour term saw a massive spend-up, and this government has done SFA to reduce that. Borrowing $300m per week to remain popular is near criminal.

    If the government needs to explain why you’re actually better off, when you feel the opposite, then they’ve lost. They don’t control the world economy, which is why they need vision and backbone for the things which they do control. Namely government spending and taxation.

    National’s Scorecard:

    1] Remaining popular by borrowing the country into a massive hole: 9/10
    2] Doing anything to address NZ’s long-term decline: 1/10

    [DPF: Rates, power and ETS all are included in the CPI. Please don't invent things]

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  10. DRHILL (121 comments) says:

    Mushrooms?

    Really?

    I wouldn’t say Mushrooms in the same breath as apples and potatoes.

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  11. starboard (2,523 comments) says:

    What Kiwigunner said..spot on.

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  12. keithng (22 comments) says:

    You forgot to mention that GST is the biggest component in the price rise.

    Also, your wage lines are straight out of a National slogan. This one, in fact: http://www.beehive.govt.nz/release/after-tax-earnings-9-cent-2008 (Well, maybe not a slogan per se.)

    The wage figures are wrong: http://publicaddress.net/onpoint/did-you-know-were-in-a-recession/

    People’s wages didn’t go up – you just stopped counting low-income earners because they lost their jobs. The real income measurements showed real household incomes taking a substantial dip, as you would expect in a global recession.

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  13. Inky_the_Red (756 comments) says:

    The HoS article show a lack of analyst.

    Since 2006 Food prices have inreased around twice the rate of the CPI. However the biggest annual increase was in the year ended September 2008 (Food up 7.9% total CPI up 3.9%). I do not think the Nats can be blamed for that increase.

    The Food price indexes do jump around a lot.

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  14. bearhunter (853 comments) says:

    [DPF: The vast majority were better off from the last set of tax changes. Those who are not better off were professional residential property investors.]

    [DPF: Real after tax incomes increased only 4% from Sep 99 to Sep 08. Since Sep 08, real after tax incomes have increased 10% so that is definitely better off]

    My pay slip tells me that in the last pay period of February 2009 I was $130 better off than I was for the same period in 2011. I am not a property investor in any shape or form. My money has been eaten up by increases in ACC, child support payments and (post payment) by GST increases and price rises.

    In fact the only way I can have an even remotely similar level of after-tax affluence is by giving up the smokes, thereby saving myself $120 a week. So I’ve had to sacrifice my main source of pleasure just to stand still.

    If you carry on spinning like that, David, you’ll make yourself ill.

    [DPF: You're being stupid. Go learn the difference between average and everyone. And your payslip has nothing to do with whether prices has gone up. You say your payslip of after deductions income is $130 lower than 2 years ago. The deductions are tax, ACC and child support. Please details the movement for each of these in the last two years, so we can understand how you take home pay has dropped $130]

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  15. keithng (22 comments) says:

    [DPF: Real after tax incomes increased only 4% from Sep 99 to Sep 08. Since Sep 08, real after tax incomes have increased 10% so that is definitely better off]

    Do you really believe that incomes increased more during 3 years or recession than during 9 years of economic boom times? Does this sound at all credible to you?

    [DPF: Keith I am sure you know about both high inflation and about fiscal drag. These destroyed most of the increase in the 1990s in gross wages, for someone on the average wage]

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  16. Pete George (23,480 comments) says:

    National hasn’t been in for three years yet.

    Another significant factor in usable income is mortgages. Interest rates have dropped significantly over the past three years. I’m about to get a $100 per week drop in mine. That would buy a few mushrooms, except that I don’t eat them, and I grow most of my spuds.

    I don’t know what house rentals have done.

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  17. Sector 7g (240 comments) says:

    There is no point complaining about the cost of living in New Zealand. This is what New Zealanders voted for and this is what they want. They don’t want change in their politics and they don’twant change in their pockets. If anyone dared to change the way NZ is going they would face defeat. New Zealand has no future in my opinion.
    Those that have left, know just how expensive it is when we come back to visit family. I was totally blown away by the cost of products, from electrical equipment to food and I have only been away 3 years.
    Farrar can spin it anyway he wants but the simple fact is, it is one of the most expensive places in the world these days.
    I found it was 3 times the price on each item to where i am now. A 50″ plasma t.v for $4000 when 60″ plasma’s of the same brand go for $1000 here. Laptop computers for $900 when they go for $300 here. One nights roast with all the trimmings nearly $100 when you can have that for $30 here.
    The quality of life in NZ is slipping the fastest it ever has and its just what the voters ordered.

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  18. nasska (11,277 comments) says:

    It is hard to argue that National & it’s coalition partners should be held responsible for the cost of the weekly grocery shopping. Ditto for the cost of imported fuel. The lack of wage rises reflect the global recession.

    What they should be hung out to dry for are the things they are well able to control. Examples that spring to mind are electricity prices, vehicle registration (via ACC levies) & local body rates. The latter was supposed to be reined in by our lacklustre trougher Rodney Hide whose promises to curb the spending of prodigal councils consisted of recycled air.

    National could restore faith in itself by tackling the possible.

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  19. Pete George (23,480 comments) says:

    I found it was 3 times the price on each item to where i am now. A 50″ plasma t.v for $4000

    LG 50″ HD Ready Plasma TV $999.00 (Noel Leeming)

    One nights roast with all the trimmings nearly $100

    Must be an expensive large roast with plenty of expensive trimmings.

    but the simple fact is, it is one of the most expensive places in the world these days.

    Where are the facts to back this up? 3x the prices where?

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  20. NeutralObserver (93 comments) says:

    I thought he problem was more that we have an effective duopoly in NZ. I understand the average net income for a ‘Pac ‘n Sav’ franchise owner is around $1 million and the queue to get a franchise grows by the day. Been good for Omaha beach house prices though ! Let’s hope for the rest of us we get some more chains entering this market….

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  21. malcolm (1,952 comments) says:

    What they should be hung out to dry for are the things they are well able to control. Examples that spring to mind are electricity prices, vehicle registration (via ACC levies) & local body rates.

    It’s more than that. They’ve failed to address the conditions which lead to low growth and hence low wages. E.g high taxation to pay for a large unproductive group in society, the burdensome RMA requirements which mean that a simple extension on your house can cost many thousands just to get approval, or the Kaipara Harbour tide-power scheme which took more than 4 years to get through the RMA, lack of a youth minimum wage, etc, etc.

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  22. Sector 7g (240 comments) says:

    Boring Pete.

    Fuck you are boring.
    You miss the point that i don’t care for, or about proving myself to you. These are things myself and my other family members all noticed when we came home from all over the world just 3 months ago.
    You can continue to live in your little “paradise” and defend it at all costs. I don’t mind if you do, i have nothing to prove to you and would prefer that you continue on your path.
    I will continue to live here with better working conditions, better wages and yes believe it or not “products that are 3 times cheaper”.

    Have fun mate, you are the reason why the country is the way it is. Blind and Broke. Take care now. Keep voting.

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  23. jackp (668 comments) says:

    Pete George “Another significant factor in usable income is mortgages. Interest rates have dropped significantly over the past three years. ”

    Your sounding a lot like Alan Greenspan in the 80 and 90’s That philosophy doesnt work. Just look at the world economic situation sparked by the US because of that philosophy.

    David, your spinning more and more as signs show that National is failing miserably. In the paper about 2 months ago, over 70 pecent of the population said they are worse off since the tax changes. Our family is in that group. If you focus on tax cuts only, you are right. But if you include GST, ETS, ACC, Petrol prices, tax increase on savings (which I don’t understand because Key said he wanted kiiwis to save more, more bait and switch crap) you are very wrong unless you are making over 100 grand a year. Is that how much Key is paying you to spin on your blog?

    [DPF: 20 demerits for the last sentence. Everything I blog is my honest opinion and I effectively lose money blogging. As for your substance inflation or the CPI includes the GST increase, includes the ETS impact on power and petrol and includes power price increases. Would have to check about ACC. And the figures I quoted are adjusted for inflation]

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  24. Sector 7g (240 comments) says:

    Boring Pete, one last thing.
    I know you are old and probably struggle using the microwave, but maybe you should do a little more research on your T.Vs. You do know the difference between a HD ready plasma and a Full HD dont you?

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  25. kiwigunner (230 comments) says:

    Yes, quite frankly if you were being charitable you would say this post by DF is simply a sign of his being stupid, if not then it is provided from the Ministry of Truth.

    [DPF: 20 demerits. Argue on the merits of the facts]

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  26. Caleb (479 comments) says:

    has anyone registered a ute lately? over $600!?

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  27. mavxp (479 comments) says:

    Yes David may be spinning the party line, but the sad truth is that there is currently no viable alternative to National.

    We may be dipping slightly under National’s “Labour-lite” policies, but under full blown Labour/Greens/NZ First coalition we would be taking a nose dive towards bankruptcy and 3rd World status. Imagine the finances of the country and our credit rating if we had those collective morons in charge of the national finances and the power to take more money from hard working kiwis and flush it down the toilet.

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  28. Pete George (23,480 comments) says:

    Sector 7g, I am getting on a bit, I used to demonstrate and sell microwaves when they first came on the market here.

    I know about TVs, you didn’t say what specs. Panasonic 50″ Full HD Plasma TV $1999.00, half what you quoted.

    I don’t defend this country at all costs, I was just pointing out significant errors in your costs.

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  29. ben (2,377 comments) says:

    This entire debate is misplaced. Complaining about prices is shooting the messenger. Prices are up in exact proportion to changes in the relative scarcity of these goods. Prices simply reflect a change in the underlying reality. If there is policy advice to come out of this, it is to get rid of whatever legislative and regulatory constraints, if any, are stopping more apples and carrots being produced.

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  30. Sector 7g (240 comments) says:

    Boring Pete.
    You are right, i didn’t provide specs, which is why I said “for the same brand”.
    You still haven’t found the same brand therefore you haven’t pointed out any errors.
    All you have shown is that you in fact pay $1000 more for a T.V that doesn’t have “time machine function” or a 250GB hard drive and is 10″ smaller.
    Good work mate, i now see how cheap NZ is.

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  31. ben (2,377 comments) says:

    Sector 7g is exactly right. New Zealand is a very, very expensive place to live. Real estate is very costly, and so are consumer goods. On top of that, real wages here are about half what they are in the United States and 2/3rds what they are in the UK. That’s a hell of a double whammy and it translates to a much lower standard of living compared to these other countries.

    Some of it is preventable. New Zealand still has tariffs on many goods, which is simply unbelievable given a) tariff is close to universally understood to be the least efficient way to raise revenue, and b) New Zealand, being small, is more dependent on trade than most countries.

    And then New Zealanders vote for governments that keep using regulation to make land artificially scarce, massively driving up the price of land. Real estate in Wellington is comparable in price to San Francisco. Which is extraordinary given incomes here are about half.

    Bottom line: when I visit friends in America, I am always struck by how much stuff they have: the size and newness of their cars, the size and number of their televisions, the square footage of their homes, the scale and investment in their cities and malls and transport infrastructure. It is utterly depressing watching people like Phil Goff argue for even higher redistribution in New Zealand when most of the talent has already left the country, half the population is already on welfare, the state is running a massive deficit – 10% of GDP – as it is, and living standards are something like 70% lower than the US.

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  32. reid (16,290 comments) says:

    But this is the nature of having a global market for food.

    Apparently there’s a global market for oil as well but strangely enough people who live in oil-producing countries often pay much much less for their petrol than the countries that don’t have a surplus so how come the same thing doesn’t happen here, for food?

    Quite frankly when you pay more than the UK does for a given bit of meat or cheese and you know that’s had to travel to get there, you don’t wonder if the local supply chain is gouging, you wonder which particular bits of it are.

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  33. nasska (11,277 comments) says:

    Since most Kiwis are reluctant to take a punt on life without “nanny state” picking up the pieces & overseeing our lives what we may need is a laboratory test to see how we would cope. To this end I would like to nominate the my local district council to be micro sized & reduced to it’s core responsibilities.

    First task would be to reach out to the councilors & staff & acquaint them of what these responsibilities are. The mention of something as dreary as rubbish collection or street maintenance would be initially foreign but eventually those lucky enough to be retained on half of their grossly inflated salaries would accept a district shorn of wankerisms such as the RMA & cultural safety. As a rural resident receiving zilch other than “regulatory services” for my $1300pa my joy would be indescribable.

    Few people on this earth other than our local ratepayers have had the misfortune to be sucked dry by such imbecilic wastrels & the sight of the parasites lined up at WINZ would lift the spirits of all they have fleeced over the years.

    After this had proved to be a resounding success all out war could be declared on papershufflers & pompous little bureaucrats everywhere. Get rid of these precious arseholes & watch NZ bloom.

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  34. kiwigunner (230 comments) says:

    “Yes David may be spinning the party line, but the sad truth is that there is currently no viable alternative to National.”

    This is simply untrue (except of course if you only see the Right as the answer). Which takes me back to the question “Are you better off now than you were three years ago?’ This question does mean “Are you better off under this government? and can also mean “Are New Zealander’s better off under this government?”.

    My take is no I am not better off than three years ago, I am not better off under this government, and no I don’t think Kiwis are better off under this government.

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  35. Dazzaman (1,138 comments) says:

    Worse off….neh’ mind, petrol’s going up like a thermometer in a sauna so I’m getting used to it.

    nasska has it right…..another “wankerism” by the white coat brigade are the concrete bunkers specially designed for skateboarders & bmx riders…..all at the behest of some noddy who got voted in on a platform to help the yoof.

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  36. wreck1080 (3,885 comments) says:

    In the UK , they are talking about gas prices tripling if unrest continues in the middle east.

    That would put a petrol at around $6 litre here.

    Locally power companies are increasing their prices at double the inflation rate. But, that seems to be every year.

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  37. backster (2,152 comments) says:

    BEN “ector 7g is exactly right. New Zealand is a very, very expensive place to live. Real estate is very costly, and so are consumer goods. On top of that, real wages here are about half what they are in the United States .

    I guess you are right about real estate ‘Fox’ showed some very good houses for sale in Detroit priced under $10,000..and they were hard to sell, but isn’t California broke, and those high paying jobs must be good but isn’t the U.S. un-employment rate close to 10%, How many trillions is OBama borrowing to support your life of luxury? He seems to have fooled Bill English into deciding that is the way to go.

    Still I agree there is massive waste at Government and Local Government level, the new Auckland Council is a Tragi/comical farce and the government needs to make us face reality.

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  38. reid (16,290 comments) says:

    Locally power companies are increasing their prices at double the inflation rate. But, that seems to be every year.

    Yes, Bradford’s reforms that introduced stiff competition to the sector “to keep prices down” are really working well. I wonder if the free-market fanatics who think the market is suitable for everything under the sun have noticed this or perhaps they just don’t buy any electricity.

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  39. decanker (184 comments) says:

    Trumpeting people on the “average wage” being better off is a bit disingenuous if most of the working population are below it.

    Being simplistic and generous, say we had a population of 20 and the average salary was 57k and people on the average salary are “better off” because of recent tax changes. Our population’s salaries might typically be: 30k, 30k, 30k, 30k, 40k, 40k, 40k, 40k, 40k, 40k, 40k, 40k, 50k, 50k, 50k, 50k, 60k, 80k, 120k, 240k.

    In our population, only 20% of them are “better off”, the high income earners that would have benefited most from the tax changes. No surprises then that even many of your kiwiblog fans feel poorer.

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  40. jackp (668 comments) says:

    I said “Is that how much Key is paying you to spin on your blog?”

    [DPF: 20 demerits for the last sentence. Everything I blog is my honest opinion and I effectively lose money blogging. As for your substance inflation or the CPI includes the GST increase, includes the ETS impact on power and petrol and includes power price increases. Would have to check about ACC. And the figures I quoted are adjusted for inflation]

    I take that as a no. shesh. This is becoming more like Red Alert. They don’t like me there either.

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  41. immigant (950 comments) says:

    NZ is expensive if I consider what portion of my income I used to spend on food and housing overseas, and how much of it I spend in NZ. NZ is way more expensive and you get less for your buck too. It’s good if you are over a certain threshold, things are bearable, but you still get low quality products, both food and consumer for quite high prices.
    I pray that next term National puts the boot in and tightens and cuts all the fat and BS that grew in the last ten years.
    NZ was never cheap to live in but in view of the recession and global oil price spikes, It has not got any better.
    But then debating quality of life and wages are too totally different things, and this is where this thread starts to break down. One group is arguing stats and the other realities of life.

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  42. Viking2 (11,417 comments) says:

    Well Jackp that last line was uncalled for. You are a guest, even if I agree with the sentiment that DPF is out of touch with reality.

    What his statistics fail upon is that NZ is a nation of SME’s and contract workers who are not the typical wage earner. Many of these have taken an absolute thrashing in terms of earnings this last 3 or more years and so to take a tiny sample of “wage ” earners and to some how extrapolate that to represent the average NZer’s monetary position is false. Indeed most of the wage earners are in fact Public Servants. I forget the number but there’s about as many as there are ordinary wage earners in the private sector. So the information that these premises are based on is skewed and therefore inaccurate.
    There are very few people that I know who would claim to be better off financially at the end of each week.

    For interest sake we did a household budget last week. Now there are just two of us and we live in a modest house in a decent part of town. The reason for doing this exercise was that I am now one of those Superannuates and I wanted to see if we could manage on that. Well that answer is definitely no. (Which of course was what I always thought and why I have been accumulating further income for when I finally retire) and go have some rest.
    Now If I couldn’t survive on the pension now how would I when petrol goes up, power goes up water goes up as it has, etc.

    Our rates bill alone is going up 11% on $1600 plus gst for this year with more to follow next year and so on. Our rates don’t include our rubbish collection (privatized ) nor water which is charged separately. Now that’s $184 on that item alone and we received a 3.7% increase to cover the cost that and everything else.

    Like a poster said a few days ago, I’m sick of having to work harder. I have always worked hard and I am feed up with being abused by every two bit politician that wants to tell me what to do and uses their spare time to find more ways to rob me of my earnings. I am completely happy to pay for my things and stuff but I am feed up with paying for them and their voters.

    Unfortunately going to Aussie doesn’t solve it for they are as bad if not worse and America is no longer a dream of the enterprising.

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  43. Inky_the_Red (756 comments) says:

    Local Power companies are not increasing electricity prices at double the rate of inflation.

    Firstly power prices are increasing at three times the rate of inflation (at least for the last 8 years). This despite the line charges being regulated so this portion of your power bill is increasing below inflation. So the power generators are making a killing.

    Secondly unless you live in Wanganui or the King Country you do not have a locally owned power company. The powers companies are normally owned by SOEs (MRP, Genesis or Meridian) or large overseas companies (Contact Energy owned by Origin and TrustPower owned by Infratil which is largely overseas owned)

    Thirdly electricity generation is an oligopoly with huge barriers to entry. For NZ it was better when it was a monopoly as the NZ wide generation is no longer coordinated. Instead we have 5 fairly inefficient producers. As such the price of electricity in NZ continues to increase which allows the power generators to artificially increase the value of their assets. All this is a lose/lose situation for NZ household and businesses. Shame on National for introducing this mess into NZ. Bigger shame on Labour for keeping it for 9 years.

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  44. wat dabney (3,725 comments) says:

    The real story about food prices over recent years has been the environmentalist biofuel agenda, which even The Guardian was forced to acknowledge:

    “biofuel caused food crisis… have forced global food prices up by 75%”

    http://www.guardian.co.uk/environment/2008/jul/03/biofuels.renewableenergy

    The world’s poor have been pushed to the very brink by these zealots.

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  45. Tauhei Notts (1,693 comments) says:

    This is on Food Prices so I will bring up an unusual piece about predatory pricing.
    Fonterra, in an attempt to suck up to the government, have announced a freeze on their domestic milk prices, rather than relate to them international prices.
    I buy milk processed by Green Valley Dairies Ltd of Mangatawhiri. Their raw product acquisition costs are based upon international market prices, just as Fonterra’s are. But they do not have the monolithic structure of Fonterra, to effectively squeeze the minor player out of the market.
    As a private company i do not know how much income tax Green valley pay, and as it is closely held company it is not my busness to know, but I would wager it is more than Fonterra pay.

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  46. gazzmaniac (2,307 comments) says:

    Is New Zealand better off than three years ago? Probably not. In those three years there has been a major worldwide depression, several of the major economies have failed and even more are on the brink.

    I think the question should be rephrased: Is New Zealand better off now compared to where we would be had Labour won the 2008 election? That answer is probably yes.

    Certainly National could have done a whole lot better. Capping rates rises at the rate of inflation would be a good start, as to would be reforming ACC and undoing many of Labour’s reforms of the 2000s. They could have moved to a more market based approach for the electricity sector instead of using state ownership of that sector as a giant cash register. They could have started abolishing many of the commissions that we did fine without before Labour created them – I still don’t know what the tertiary education commission or families commission do (apart from shuffle paper and cause trouble), or the electricity commission, ministry of women’s affairs, race commission, etc.

    What National have to do after the election is be proactive in reforming the economy lest we end up in a situation like Ireland’s, or like NZ’s in 1984. They need to balance the books, and although that might take much longer since the earthquake if the rest of the books were balanced we could consider that spending as one off or capital expenditure. What they shouldn’t be doing is raising ACC any more (it costs the same to register a vehicle in NZ as it does in QLD now, except there is no limit to what you could be paid out in QLD if you are injured in a car accident, and ACC collects an additional levy at the bowser). Nor should they allow rates to rise further and should seriously look at reforming the tax system to be more consumption based and less income based, while reducing the overall tax take.

    WRT food prices, there is a campaign at the moment by Coles to make food more affordable to Australians, the headline being milk for $2/2L (which right now is $NZ2.75/2L). That is great for the consumer (at least in the short term) but there is some debate about whether it’s fair to farmers (personally I don’t feel all that sad for them) and whether it’s temporary to try and kill off some competition (that is of concern – Coles claim it’s permanent). Time will tell. I note that when I was at New World on my last trip home that standard grade Pam’s milk was $2.85/2L so it’s not actually much dearer once the exchange rate is taken into account.

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  47. nasska (11,277 comments) says:

    Gazzmaniac @ 7.00pm

    The lowest price for two litres of standard milk currently, in my area of NZ, is about $3.85. You may know for sure but I thought that there was some government subsidisation of milk prices in OZ.

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  48. pq (728 comments) says:

    food prices in Christchurch have not shifted much,
    after the earthquake,
    but the extra cost is getting to supermarket, and time ,
    and patience,

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  49. orewa1 (410 comments) says:

    Sorry David, you protest too much. You only need to walk into a supermarket to see that prices have exploded dramatically in recent months – more than any time in living memory. Any stats that suggest otherwise are bollocks.

    The question is whether its the government’s fault. The answer is mixed

    To the detriment of successive governments, they carry some responsibility. Government has led prices upwards in many areas – car registration as noted above is but one example where ministers should have held out against greedy officials. The scandals around travel excesses, perceived extravagence on cars etc, all set a climate of profligacy from the top. Theres a sense that government – local as well as central – prices its services on the basis of what it thinks it can screw out of the citizens without excessive fallout.

    Is it any wonder that the private sector observes this kind of thing and says “what the heck, me too.” Sad, but real and understandable human behaviour. Call it a leadership failure.

    Another major contributor in my view was the inexplicable decision by the Commerce Commission a few years ago to sanction the merger of Foodstuffs and Woolworths. This concentrated the supermarket sector from 3 “Mr Bigs” to 2. That’s the crucial point at which most economists recognise price competition goes out the window. I’d love to know the trend in supermarket margins since that happened, but I’m picking there are some very, very wealthy grocers out there at the expense of their suppliers as well as customers. Look too, at book prices in NZ as evidence of what happens when market power gets too concentrated.

    Then there’s the GST increase. This inherently dulls price awareness and creates a wonderful opportunity for traders to increase their margins below the radar.

    The public excesses by certain private sector business people, notably in the finance sector, has played a part too. Other business people look at them getting away with shady deals and reason that its every man for himself.

    So what I am saying is that there are human attitudinal and behavioural factors within this mix. They are not the absolute cause, but I’m very certain they have had a bearing.

    Finally – this is a food-producing country. A boom in world food prices should be really good for us. Why then, is the “trickle down” theory not working for Mother of 10 from Otara, or teacher of 30 from Taupo?

    The government is not the sole cause of the problem, and perhaps not even the primary villian. But there are steps it can usefully take, even now, to alleviate the situation. It needs to move beyond political dogma and explore creative solutions. Creative thinking is needed urgently.

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  50. KH (695 comments) says:

    I think I am of a right wing viewpoint. But there is something wrong with our system. The big corporations (a) and the government (b) and the local authorities (c) are right out of control. The individuals are being seriously screwed by them.
    (1) We need instead quite aggressive anti monopoly law and practice. Like at least 15 supermarket chains.
    (2) Law designed in the locals interests. Not the overseas corporations.
    (3) Law that promotes locals being able to join together to own things. That’s actually a property right. People like Max Bradford are a good example of the way our cheap, locally owned and controlled enterprises were removed from us.
    (4) Law that surpresses the non productive financial services sector. Speedo Weldon and his pals seem to be able to get away with too much. eg their current wishlist of selling off our assets so they can have some more script to churn.

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  51. Guy Fawkes (702 comments) says:

    The margins of the mainly Franchise organised Supermarket operations in NZ are way tto high compared to the Company Owned store models in the UK. The GP is at least twice that of an outlet in England. Scotland less so.

    The Corporates like Foodstiffs are gobbling up the Treasury Profits from long term credit given by the listed suppliers, and have a similar GP to those of their store in franchise.

    Therefore and small increase in “Raw Food Prices or Processed” is heavily amplified.

    QED

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  52. Robinson 666 (25 comments) says:

    The supermarket chains in NZ are controlled by two main operators, and because of this fact NZers are being ripped off big time. The price of food has risen more than many other countries and New Zealand has the 5th highest GST rate in the OECD for basic food:

    http://www.ey.com/NZ/en/Newsroom/News-releases/Press-Release—GST-at-centre-of-election-year-tax-agenda

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  53. rakuraku (162 comments) says:

    Not suprised when the food chain in Godzown is controlled by two companies one New Zealand owned, one Australian owned, they call it an Oligopoly.

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  54. Brian Marshall (201 comments) says:

    David, I couldn’t help notice that those who have criticised you have not offered alternative statistics. Anyone would think you are saying the climate isn’t getting as warm as what it’s supposed to be, with the way they are attacking your opinion with no actual proof.

    In regards to the Australian milk prices, my understanding is that the supermarkets are artificially dropping the price as a loss leader. Comparing apples and pears.
    For my own opinion, I think that two supermarket chains are too few. Not enough competition leads to higher prices than may otherwise be the case.

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  55. LiberalismIsASin (288 comments) says:

    I have little understanding of economics or other voodoo related subjects, but why pray tell, do NZ food prices have to be linked to this so called “global market”? Why can’t we feed our own people for a fair price, especially dairy products which we have coming out our backsides? I don’t get it. No doubt I am a simpleton, but it seems to me that something is seriously structurally wrong when a food exporter is pricing basic necessities so highly. I don’t like to complain, but frankly things are going from bad to worse at the moment.

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  56. Brian Smaller (4,015 comments) says:

    How about people just start growing some of their vegetable requirements. Even on a 600m section in Lower Hutt with a house, garage, driveways and back shed, we managed to grow about half our summer and a quarter of our winter vege requirements. Give families something to do together as well that does not involve the goggle-box or a playstation.

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  57. Brian Smaller (4,015 comments) says:

    @LiberalismIs A Sin – Farmers sell their milk to their co-ops who sell it overseas. Every drop of milk produced here in NZ, including what we user here in NZ, could be sold overseas. Are you suggesting that some of the farmers get penalised because they supply local demand?

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  58. LiberalismIsASin (288 comments) says:

    Brian, I am not suggesting anything other than something is seriously screwed when we have an abundance of the stuff and we’re gouging our own people.

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  59. Brian Marshall (201 comments) says:

    LiberalismIsASin, if you do not allow the farmers and business to sell their products at an open market price, you are effectively ‘gouging’ the growers and farmers.
    It’s taking money off those that produce the wealth and giving it to others in a way. if you do that enough, the wealth producers will give up working and join the net wealth receivers and the whole economy goes belly up.

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  60. LiberalismIsASin (288 comments) says:

    So essentially Brian, the open market is … a colossal failure.

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  61. excusesofpuppets (132 comments) says:

    I think I’ve said enough times on this website about how I am an average wage worker, married with a young family and how it has becoming so much harder to survive on a single full time income.

    I travel at 150km+ a day for work, things are only going to get tougher. I now drive between 80-90 km/h to conserve fuel, taking more time away from my family.

    For the first time last week, our fortnightly supermarket shop eclipsed the $300 mark.

    And I have done as much as I can for the people down in Canterbury and my heart goes out to them, but if the WFF is cut or removed and interest is applied on the remainder of my loan then my family will be in serious financial trouble. We shouldn’t be, I am in a good job that pays OK and my wife does as much work as she can whilst looking after the young children – but we are. This time last year I was praising every $20 as a gift from god, that has now been cut in half. I am treating $10 as gold.

    Aggressively defending and attacking fellow commentators in the way you have here just disheartens me. Just like the many empty promises personally made by my National MP who convinced me to give our votes to the party. Never again.

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