Cost of living: Business expert says New Zealand's political parties don't have handle on the economy

A business expert believes none of New Zealand's political parties has a handle on New Zealand's economy as the cost of living crisis continues to bite. 

New Zealand is in the midst of a cost-of-living crisis, which has seen prices rising steadily partly because of low unemployment and staffing shortages and partly because of high inflation. 

Aotearoa's unemployment rate was 3.2 percent in the fourth quarter of 2021 and again in the first quarter of this year. It's the lowest it has been since 1986 and as a result employers across the board are crying out for staff.

Annual inflation has skyrocketed over the past year from 4.9 percent in the September 2021 quarter compared to a whopping 7.2 percent in the same quarter this year. It comes after years of low inflation. 

To counter inflation the Reserve Bank (RBNZ) hiked the Official Cash Rate (OCR) by 75 basis points last week - the largest-ever rise - to increase interest rates and hopefully curb inflation.

RBNZ Governor Adrian Orr later admitted the RBNZ was purposely engineering a recession to slow spending and bring inflation under control.  

When asked if he thought any of the political parties had a handle on the economy 

Stuff business reporter Dileepa Fonseka repled "not really."

Fonseka, who appeared on Newshub Nation's final show and Christmas Party, said all of New Zealand's political parties are struggling to handle the economy. 

"I think you've got a lot of different competing political priorities here. You've got National running a bit of a small target kind of strategy, trying to promise as little as they can," Fonseka told Newshub Nation co-host Rebecca Wright. 

"Labour is, I think, trying to come to terms with a vastly different fiscal situation than before and monetary situation and I think there is just a lack of sort of solutions." 

Fonseka added that he feels the current economic situation has parallels to what happened in 2008. 

"You had protests in the Asian community around law and order. You had a financial crisis because financial crisis pre the financial crisis of the property bubble going down," Fonseka told Newshub Nation's Christmas Party.

"I guess this is a chance for parties to rehash that election and will we get a different result?" 

Appearing on Newshub Nation alongside Fonseka, NZME's head of business Fran O'Sullivan said the political parties need to use the summer to iron out their policies for the economy. 

"I think it's going to be difficult, but also and I'm sure the parties will be tempted to do a bit of a lolly scramble in the way they do, but I really think they have to hold the course," O'Sullivan said. 

"They've got to have a sensible fiscal policy, not give in to spraying cash around. I think that's quite important because we've got house prices slipping, we've got cost of living rises and we've also got problems getting workers. 

"It's a very rich cocktail and not easy to deal to, but the sooner everybody admits this problem stays focussed, the sooner we get out of it." 

O'Sullivan said New Zealand is still getting through the COVID-19 pandemic and the effects it has had on the economy and if Kiwis dial back their spending we'll get out of this crisis quicker. 

"It's been very difficult, but I think now people are looking at their own situations. I don't know about other people here, but I'm looking at what can I trim. What's really essential," O'Sullivan told Newshub Nation's Christmas Party. 

"I think if we see that across the economy, people will come out of this quicker because that is actually the action that the Reserve Bank wants from us. It's going to be a crunch, it's going to be difficult and they're going to be winners and losers."

Watch the full interview with John Tamihere, Dileepa Fonseka and Fran O'Sullivan above.

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