Is Roger being dodgy with his sums?

I am a big fan of Sir Roger’s policies. I regard him as the second best finance minister New Zealand has had.

So it is with trepidation, I scrutinise the figures he uses in his brochure below.

I’ll even leave alone the wisdom of claiming a specific level of economic growth, on the basis of proposed policies. All I’ll say is if you are that good at predicting economic growth, you could make a lot of money on iPredict!

The figure I am interested in is the claim “The Tasman Wage Gap has already grown 29% under Key’s management”.

In September 2008, the gross average weekly earnings in NZ were at 85% of Australia’s. So you see a claim of the gap growing 29% and you think, hell we must now be 56% of Australia.

In fact the latest data has us 82.8% of Australia. Yes a decline of 2.2%, but not quite such a scary one is it.

Before I get to how Sir Roger got his 29% (a classic example of correct yet misleading), I’ll also point out that Sir Roger is only comparing before tax wage rates. As a proponent of lower taxes, I am surprised he does not compare after tax wages – because they would show that in face NZ has closed the gap.

But how did Sir Roger get his 29%? Well, I’m not sure. My best guess is he is referring to the relative change (as opposed to the absolute change). But even then it does not quite add up. The nominal gap in Sep 2008 was $133.70 and in Jun 2010 was $169.34 and the relative change is 26.6%.

But I regard talking about a relative change as a percentage is quite misleading. It may be technically accurate, but it is deceptive. Let me give two examples:

  • Party A goes in the polls from 5% to 6% and they claim they have climbed 20% in the polls.
  • The gap between A and B is 2% in 2008 and 3% in 2010 – you claim the gap has grown 50%. instead of claiming it has grown 1%.

If you look at the position of the arrows it clearly gives an impression of a massive increase in the gap – not a 2.2% change.

The pamphlet would be more defensible if it said that NZ has gone from 85% to 82.8% of Australia.

And the arrows should show both going up – NZ by 7.1% and Australia by 10.0%. Not one going down massively, and one going up massively.

Now I may have interpreted Sir Roger’s calculations incorrectly. I would be happy to have provided how he calculated the 29% – but I am pretty sure is is talking about relative change, rather than absolute change.

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