www.berl.co.nz Will wellbeing be gazumped? As sombre economic - - PowerPoint PPT Presentation

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www.berl.co.nz Will wellbeing be gazumped? As sombre economic - - PowerPoint PPT Presentation

Oct 21, 2022 47 likes •360 views

www.berl.co.nz Will wellbeing be gazumped? As sombre economic outlook hovers Haratua 2019 Amanda Reid, Senior Researcher Nick Robertson, Senior Economist Dr Ganesh Nana, Chief Economist @BERLeconomics BERL BERL pre-Budget Briefing

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www.berl.co.nz

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BERL pre-Budget Briefing – Haratua 2019 – slide 2

Will wellbeing be gazumped?

As sombre economic outlook hovers

Haratua 2019

Amanda Reid, Senior Researcher Nick Robertson, Senior Economist Dr Ganesh Nana, Chief Economist @BERLeconomics BERL

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BERL pre-Budget Briefing – Haratua 2019 – slide 3

Amanda Reid Senior Researcher

Wellbeing Living Standards Framework Government priorities

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BERL pre-Budget Briefing – Haratua 2019 – slide 4

The Living Standards Framework

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BERL pre-Budget Briefing – Haratua 2019 – slide 5

Current wellbeing domains

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BERL pre-Budget Briefing – Haratua 2019 – slide 6

“Our people” graphs

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BERL pre-Budget Briefing – Haratua 2019 – slide 7

The four capitals

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BERL pre-Budget Briefing – Haratua 2019 – slide 8

Government priorities

  • mental health
  • reducing child poverty
  • lifting incomes for Māori & Pasifika
  • digital innovation
  • transitioning to a low-emissions

economy

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BERL pre-Budget Briefing – Haratua 2019 – slide 9

Nick Robertson Senior Economist

The economic situation

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BERL pre-Budget Briefing – Haratua 2019 – slide 10

OCR and inflation

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BERL pre-Budget Briefing – Haratua 2019 – slide 11

GDP and growth

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BERL pre-Budget Briefing – Haratua 2019 – slide 12

Employment and investment

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BERL pre-Budget Briefing – Haratua 2019 – slide 13

Risks coming from offshore

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BERL pre-Budget Briefing – Haratua 2019 – slide 14

USA yield curve

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1 2 3 4 Aug 03 Nov 05 Feb 08 May 10 Aug 12 Nov 14 Feb 17 May 19 %

Federal Reserve

Yield curve on US Treasuries yield on 10yr bonds minus that on 1yr bonds

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BERL pre-Budget Briefing – Haratua 2019 – slide 15

USA vs China (and Iran and North Korea)

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BERL pre-Budget Briefing – Haratua 2019 – slide 16

Australia, the UK and EU all face change

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BERL pre-Budget Briefing – Haratua 2019 – slide 17

Dr Ganesh Nana Chief Economist

Budget 2019 The Wellbeing Budget

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BERL pre-Budget Briefing – Haratua 2019 – slide 18

The political imperative

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BERL pre-Budget Briefing – Haratua 2019 – slide 19

Economic noise

The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty

A weakening global expansion.

And, of course, there is BREXIT

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1 2 3 4 Aug 03 Nov 05 Feb 08 May 10 Aug 12 Nov 14 Feb 17 May 19 %

Federal Reserve

Yield curve on US Treasuries yield on 10yr bonds minus that on 1yr bonds

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BERL pre-Budget Briefing – Haratua 2019 – slide 20

Fiscal policy now critical

(and makes sense)

2 4 6 8 Apr 09 Apr 11 Apr 13 Apr 15 Apr 17 Apr 19 %pa

RBNZ

10-year Government bond rate

monthly average

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BERL pre-Budget Briefing – Haratua 2019 – slide 21

Wellbeing Budget: can we afford it?

The rainy day surplus

HYEFU

  • includes new spending of

$2.4bn per year

  • hits debt target a year

earlier

  • if push debt target to

2021/22 as originally promised then another $500m per year available

3,000 6,000 9,000 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

$m

OBEGAL

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BERL pre-Budget Briefing – Haratua 2019 – slide 22

The rainy day surplus

  • this scenario is best

part of $3bn per year new spend

  • still meets debt ‘rule’

and still substantive surplus

  • if want to push

envelope further …

3,000 6,000 9,000 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

$m

OBEGAL with extra $500m pa spend

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BERL pre-Budget Briefing – Haratua 2019 – slide 23

The rainy day surplus

defer debt ‘target’ to 2022/23, then

  • another $1bn

available per year

  • i.e. $3.5bn new spend

per year

  • surplus still visible

3,000 6,000 9,000 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

$m

OBEGAL with extra $1bn pa spend

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BERL pre-Budget Briefing – Haratua 2019 – slide 24

Huge elbow room around debt

  • debt still well under

control

  • not forgetting this

measure excludes assets of NZSF

  • including NZSF then

net debt close to 0

16 17 18 19 20 21 22 23 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23

%

Net core Crown debt % of GDP

2018 HYEFU/FSM Scenario A Scenario B

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BERL pre-Budget Briefing – Haratua 2019 – slide 25

Budgeted Govt capital spend

2 4 6 8 10 2005 2008 2011 2014 2017 2020 2023 $bn

NZ Treasury

Net Government Capital Expenditure (excl NZSF contrib)

actual HYEFU17 HYEFU18

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BERL pre-Budget Briefing – Haratua 2019 – slide 26

The business case for transformation

Economics in state of denial? demographic upheaval climate change technology robotics synthetic foods crypto currency measures of progress (GDP et al) inequality gig economy minimum wage living wage insular world NAIRU and free trade still drive economic models social structures and cohesion

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BERL pre-Budget Briefing – Haratua 2019 – slide 27

The productivity puzzle

productivity profitability pay

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BERL pre-Budget Briefing – Haratua 2019 – slide 28

More sophistication?

productivity profitability pay

skills training knowledge experience succession

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Papatūānuku

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BERL pre-Budget Briefing – Haratua 2019 – slide 30

Elephant in room

20 40 60 80 100

20 40 60 80 100 % of net household income and wealth % of households

Distribution of household income and wealth

wealth (2018) income (2017)

BERL calcs

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