No room for complacency in volatile 2016

The Government must not become complacent about a fall in the unemployment rate given the Reserve Bank Governor’s warning of increasing global uncertainty in 2016 and a plunge in dairy prices yet again, says Labour’s Finance spokesperson Grant Robertson.


“This year has started off in a volatile fashion with stock markets diving, the global dairy price continuing to slide and Fonterra’s forecast milk payout again dropping to well below break-even point for farmers.

“That’s why Graeme Wheeler has warned of greater uncertainties around the global economy and the impact that could have on New Zealand. National must listen to his words – despite ignoring his warnings for months.


“His speech challenges the ongoing validity of the policy targets agreement. This shows Mr English needs to look at alternative approaches to monetary policy. Graeme Wheeler can’t fix the economy on his own.


“Today’s drop in the global dairy trade means there has been a 60 per cent plunge in the price of whole milk powder in the last two years, raising the real prospect of three years of no profits for dairy farmers and flow-on effects for their communities.


“The unemployment figures also need careful reading, given that any drop is offset by the number of people actively looking for work falling by 14,300. This is the third quarter the participation rate has gone down, meaning people are walking away from the labour market. This contributes to a lower unemployment rate.


“Many New Zealanders are still feeling the cost of living squeeze, as evidenced by today’s figures showing the lowest quarterly wage growth in 25 years. While inflation might be low, wages are just not keeping up with skyrocketing housing costs – putting the Kiwi dream of home ownership further out of reach.


“National needs to bring forward more infrastructure projects. It needs to take urgent action to diversify the economy away from dairy and the Auckland housing market to help prepare New Zealand for a challenging year. Just yesterday the ANZ commodity index had a 15 per cent fall, showing the need to move up the value chain of exports.


“New Zealanders need a government that is an active partner in growing the economy and preparing for the future, not the bunch of distracted bystanders we currently have,” says Grant Robertson.