PM Jacinda Ardern insists economy is in 'good shape' despite skill-shortage woes

The Prime Minister is insisting the New Zealand economy is tracking well, despite interest rates being slashed last week and admitting skill shortages remain a challenge. 

Jacinda Ardern said she wanted to "provide some context around the economic environment" at her Monday post-Cabinet press conference in Wellington. 

She said the economy is "in good shape with unemployment near record lows at 3.9 percent", and pointed to "stable GDP growth, low inflation" and wages increasing. 

Her comments follow the Reserve Bank last week slashing interest rates to one percent as it looked to prop-up the economy after warnings of sluggish growth. 

National leader Simon Bridges said it points to "bad economic management" of the Government. He said Kiwis who have managed to build up some savings "might soon have to pay the banks to hold on to their money". 

The Prime Minister had a different take on the economic outlook, telling media lower interest rates "is an increasingly global phenomenon". 

"Ultimately, they are good news for mortgage holders, and ultimately, they also lower the cost of living."

But while lower interest rates is good news for borrowers and homeowners, economists are warning it's bad news for savers and pensioners, in that banks will decrease their rates on savings accounts too. 

Ardern said the Government is acting on stimulating the economy. 

"In the Budget we increased our operating allowance to $3.8 billion per annum and allocated $10 billion worth of capital spending, so we are already doing work to stimulate the economy.

"But for that to succeed, we need to ensure we deal with our skill shortage and industries critical to our economic growth, such as building and construction."

Ardern has often pointed to global pressures, such as Brexit and the US-China trade war, as an explanation for why New Zealand's economy is slowing down. 

"We are doing well in the face of global headwinds with our economy growing faster than Australia, the UK, the EU and Canada - but we shouldn't be, and we aren't, complacent."

Ardern said part of the Government's plan to stimulate the economy is by "tackling long-term challenges of skill shortages". 

The Prime Minister insists the economy is tracking well.
The Prime Minister insists the economy is tracking well. Photo credit: Getty

Standing alongside Employment Minister Willie Jackson, she announced the Government's employment strategy which aims to build a skilled and diversified workforce and support industries and regions. 

The strategy will be delivered through a series of six "action plans", which will focus on boosting employment for youth, elderly, Māori, Pacific peoples, refugees and new migrants, and those with disabilities.  

Last week, Stats NZ announced the number of New Zealanders unemployed is the lowest it's been since before the 2008 global financial crisis which caused it to skyrocket. 

But that came off the back of warnings that business confidence and consumer confidence is actually dropping. ANZ's latest business outlook report was titled "Grim". 

On top of that, Immigration Minister Iain Lees-Galloway has expressed concern over essential skills visa application waiting times increasing, during a time when businesses are eager for more workers. 

The Prime Minister said dealing with New Zealand's skill shortage is important to her. She said it "may, in fact, hold up our ability to stimulate the economy". 

She highlighted how she hopes the employment strategy will "allow us to tackle the long-term challenges we must address to lift the wellbeing of all New Zealanders". 

She said it would complement the Government's planned vocational education reform, and allocating more frontline Ministry of Social Development staff to help people into work. 

But the employment strategy hasn't won over the opposition. ACT leader David Seymour said he doubts it will do anything to halt slowing economic growth. 

He said Labour has "no plan to keep the economy afloat or to address deep structural issues". 

Newshub.

Contact Newshub with your story tips:
news@newshub.co.nz