I will not bore you with the entire transcript of the propaganda recited today by the inexperienced PM of NZ - Christopher Luxon - but instead I will select a small segment from it and talk about how our media analysis of what he is doing - is lacking.
Here is that segment from Luxon - reciting from his teleprompters :
"My vision is that by 2040 New Zealand will be characterised by three achievements. A more dynamic and productive economy, with higher living standards and more opportunity. A country where Kiwis return home in search of a better life, instead of leaving in pursuit of higher incomes. Public services defined, delivered and evaluated through the lens of social investment. Funding devolved to communities, so Kiwis achieve their potential, leading healthier, happier lives. A comprehensive response to climate change, both on track to achieve our ambitious emissions targets, and resilient to the challenges of a more volatile world. We have already taken some early steps to achieving those objectives. On the economy, we're working hard to reduce inflation and enact pro-growth policies to end the recession we inherited at the end of last year. " - Christopher Luxon.
Forget the long range vision - that is pie in the sky - and Luxon will be long gone and so will his terrible Neoliberal policies by 2040.
The words that stuck in my craw were "we're working hard to reduce inflation" because Luxon is not working hard to reduce inflation.
He's doing bugger all.
All Luxon has done is shuffle some paper work at the Reserve Bank concerning a single mandate which has no impact at all on the inflation track - and the "progress made" is almost all thanks to monetary policy which is the domain of the Reserve bank NOT the fiscal policies of Willis and Luxon.
The projected decline is a trend that was happening for most of 2023 and we are seeing what was projected before Luxon came to power.
It bothers me that nobody in Jo Moir's team at RNZ and nobody in Claire Trevett's team at the NZ Herald ever challenges the way Luxon insinuates it is - thanks to "his team working incredibly hard" that inflation is coming down - as if he is taking credit for something he had nothing to do with.
Anything his Government has enacted would not even show up in the inflation track for another 18 months anyway - and then it would be very small beer.
When Grant Robertson was MInister of Finance media were all over the way CPI inflation was not the issue - it was non tradable inflation that counted and it was sticky and too high.
Today Luxon only talked about CPI Inflation at 4% not non-tradable inflation still sitting at 5.6%
The drivers behind non tradable inflation are rents, rates and the construction industry - but Christopher Luxon consistently tells a misleading story that it's about "wasteful government spending" using deception as a means to make his case.
I expect that Thomas Coughlan knows full well that Treasury estimated there might be ONLY about 30 basis points per Billion in government spending that relates to inflation - and if the entire savings made from job cuts to the Public Service only adds up to $1.5 Billion - then - that's 45 basis points or 0.45% ( less than half of 1% ) that Luxon could possibly claim was something to do with his government.
The impact of this tiny effect - would not even show up until maybe late 2025 - and by then we would be back to the target range of between 1-3% anyway.
To further complicate matters - spending on public servants does not necessarily drive inflation - it depends on how public servants spend their money...what if some saved most of it?
These nuances and this perspective is missing in Jo Moir's reporting as it is in Claire Trevett's.
I am sorry to suggest that what we are actually witnessing is Luxon building a myth in the mindset of his base - through repeating in a media free zone - that falling inflation is all thanks to the National Party.
Nothing to do with the OCR - just his incredible hard work.
Repeat the lie often enough - you know the rest in the absence of media challenge.
I imagine after sowing the seeds for months in 2024 - Luxon will call upon this myth in 2026 and tell the electorate that he drove down inflation after Labour's spending drove it up...and I can imagine the gullible swallowing that as a fact.
You know how it works.
After Luxon's speech he sat down with Simon Bridges and waxed lyrical about a historical education everyone needed to appreciate that Government Spending drove "domestic" inflation and inflation drove interest rates ( suck on these eggs )
People who pay attention would know the difference between non-tradeable inflation and domestic inflation - but not many listening to Luxon today would have appreciated that distinction despite Grant Robertson pointing this out to Nicola Willis frequently.
The truth was Luxon was no expert and trying to teach like his simplified and wrong version of the mechanics was important for others to understand.
Nobody in New Zealand media commented on these matters and I can only imagine professional economists rolling their eyes at the amount of stupidity and misleading rhetoric coming out of the mouth of Christopher Luxon today.
The press gallery need to put their hand up about their failure here.
It really is a very bad look.
Christopher Luxon's Pre-Budget Speech and Inflation
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