NZ’s One Trick Pony Economic Management will not clear the hurdle without huge pain.

My first degree was economics and I maintain a keen interest.

If you look back at the major disruptions to the world economy – The Great Depression, the stagflation of the 1970s, the 1987 share market crash, the GFC – the commentators/politicians/banks of the day got the diagnosis/solutions wrong in the moment. They then learned the lessons in hindsight – figured out what would have worked in a particular situation – and applied that solution, without nuance, to the next crash. The great The Big Short illustrates this superbly.

Milton Friedman's “Inflation is always and everywhere a monetary phenomenon” still has significant validity in that if a nation increases the money supply (which Labour has done willy-nilly) without increasing production the prices can only go one way – and rapidly. NZ's one trick is the Reserve Back increasing the Official Cash Rate.

I believe this inflation is significantly more supply-side weighted and needs appropriate solutions. Just hoping in the RBNZ interest rates hikes is exactly the wrong approach. It is hitting the wrong curve. It may eventually work but, like the last time NZ brought inflation down, the cost to employment and could be massive.

Businesses are facing interest rate increases and business owners who are also home owners get hit hard at each OCR jump. They are also facing wage increases, compliance increases (especially ), energy cost increases (including effectively having a fine for importing suitable work vehicles). Add to that the complexity and time taken for building and change of use consents. The NZ qualifications system (and NZ education is in DEEP trouble) is creating a skills shortage and Minister Hipkins has done nothing to improve it. I am not sure where his head is but it is somewhere worse than in the sand. We also have a record number of NEETs (Not in Employment, Education or Training) with no effort being made to get them off the couch.  The current Auckland NEET rate is the highest since 2010. In the year to December 2021 12.4% of Auckland 15-24yos were Not in Employment, Education or Training (nationally 11.9%). In 2015 this figure was 9.8%. These people don't count in the Household Labour Force unemployment statistics as they are not willing to work.

Hoping in immigration is likely to be forlorn for the skills shortage as every Western nation is seeking solutions through immigration and NZ is unlikely to win that fight without a change in approach. Our 's handling of the economy, health and education as well as Ardern's ridiculous UN speech has significantly damaged NZ's reputation and many kiwis will look abroad for work and lifestyle reasons.

The government needs to look at reigning in their spending. loves to say they are “investing” in education, health, etc. Investment implies an improvement and there is little or no signs of that. Adding approximately 1200 employees to the of Education has certainly not worked and we now have over 8,000 children not enrolled anywhere. The Ministry is also taking an incredible amount of time to release Term 2 school attendance figures.

The tax take is huge. It is time to consider taking GST down to 10%. It is a highly regressive tax and doing so with help both business and very much help lower and/or fixed income people. The income tax brackets have long needed adjusting but greedy Grant will have none of it.

Other policies/changes are needed to improve energy supply to lower costs, get NEETs off the couch, transform immigration quickly and provide incentives for highly skilled individuals in sectors where we are lacking. Our productivity statistics are highly problematic but is barely addressed. Compliance costs need to come down and planning permissions need to be sped up. Farming needs to be far better supported. R&D needs to more highly incentivised. The education system needs massive change and improvement.

I I am wrong – but if the above is mostly true – and the one trick approach remains, the interest rate changes could cause carnage for everyone but the banks.

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