Polity by Rob Salmond


Budget 2016: Growth for the country, but not for your family

Of the 14% of real GDP growth over the next few years, guess how much your family will see? Less than a fifth of it.

The forecasts in the Budget show the economy will continue to grow. That’s good, even if it is dependent largely on events offshore.

But those same forecasts also show that almost none of that growth will go to families who earn their income through wages and salaries. That’s not good at all.

Over the five year forecast period, that goes from 2015/6 to 2019/20, the government is forecasting the real economy will grow by around 14%.

The government also forecasts that real wages (that is, nominal wage changes minus inflation) of only 2.6% over the same period.

That means only around 17 cents of every new dollar in the economy will go to everyday people who go to work and earn wages and salaries. The other 83 cents go to someone else. To be fair, a little of that will go to people not in work today who get jobs under the forecasts*. But the lion's share will go to speculators, company owners, and other folk from the big end of town.

Only one sixth of the growth in the economy is going to wages and salaries. Are our wage and salary owners really only a sixth of the good stuff that’s going on in New Zealand. I don’t think so.

What people need is a set of leaders who set the economic incentives so that the people who work hard get a fair reward, whether they earn their living through dividends, salary, or wages.

They’re not getting that from this crowd.

* The forecasts of rapidly declining unemployment are repeated by Treasury, even though they've been wrong in years past.

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