The fact that the government comes across as suggesting it has little control over external causative factors responsible for the runaway inflation highlights a deeper issue within this government – shying away from owning up to the responsibility of its action (or inaction) and shifting the blame on others.
Responding to the release of the latest Consumer Price Index by Stats NZ, Deputy Prime Minister and Minister of Finance Grant Robertson said, “These are challenging times for the global economy with significant increases in food and fuel prices hitting all nations. Inflation is at a 40-year-high of 8.5 percent in the United States and a 30-year high of 7 percent in the United Kingdom. Chinese ports have been shut for long periods, adding to supply chain disruptions. NZ cannot be immune to these challenges, and the government can't control the price of food or petrol.”
By doing this the government has once again shown a penchant for shifting the responsibility of its perceived actions or inaction, wherever possible.
Earlier last week, when the annual food price rise was announced, Minister of Commerce and Consumer Affairs David Clark called for the need to “rein in the super-profits of the supermarket duopoly.”
Food prices were 7.6 percent higher in March than the year before – the biggest annual increase in more than a decade.
“The March increase is above general inflation figures and highlights the role the grocery sector is playing in driving up prices,” Clark had then said in a statement.
Earlier at the beginning of this year, when there was a growing noise against the bank's extremely restrictive lending to prospective homebuyers following the changes introduced by the government before Christmas in the Credit Contracts and Consumer Finance Act (CCCFA), Minister Clark came out swinging against the banks and financial institutions for not implementing the govt's actual intended measures.
“Whilst we are in the early days of new regulations to protect vulnerable borrowers, I have asked the Council of Financial Regulators (COFR, comprising the Reserve Bank, the Treasury, Financial Markets Authority, MBIE and Commerce Commission) to bring forward their investigation into whether banks and lenders are implementing the CCCFA as intended,” Minister Clark had then said bringing forward an investigation.
Back in 2018, when NZ witnessed a sudden bump in fuel prices, Prime Minister Jacinda Ardern launched a scathing attack on fuel companies for "fleecing the consumers".
It seems that to shift the blame on some real or fictitious other for every complex problem it faces is the first knee-jerk response of this government.
To be fair to this government, though, this is a natural tendency of almost every government in power – shifting the blame on some real or fictitious other, except that this government is showing more penchant to indulge in shifting responsibility.
It needs to be reminded that New Zealanders are experiencing “once-in-a-generation” high inflation after having to reel under a “once-in-hundred years” global pandemic for the last two years.
And despite the assertion of government ministers, its own response or lack of it, including being overly conservative in shifting the traffic light system, opening the borders for tourists, travellers, critical workers and students, and borrowing and spending without the accompanying level of economic activity has significantly contributed to these historical inflation rates.
Deputy Prime Minister Robertson said, “We are well-positioned to respond to this challenge. Unemployment at a record low, exports are up, and the economy is growing and helping keep a lid on debt, which is well below those of the countries we compare ourselves with.”
It seems that this Labour government is also walking on the same track as the previous Key-English National government had begun to do, particularly in the third term – finding solace from some intangible macro-economic indices, which the ordinary Kiwis had a little understanding – while the grim micro-economic realities were not accurately captured by the data.
A case in point, the previous National government, almost sat on top of the developing housing crisis showcasing high economic indices with much fanfare without any idea of the scale of the housing crisis and how a generation of people was being locked out of the housing market.
Similarly, the current government also seems to have developed the knack of finding pleasure from high macroeconomic indices, including high growth rate, export rate and low unemployment rates and is assuming that there is no significant economic pain among middle-income New Zealanders.
The low unemployment rate is a highly deceptive economic denominator as it hardly captures the plight of the significant small business sector, particularly the hospitality sector, which is reeling from the double plight of shortage of skilled workforce and exodus of customers.
The need of the hour for the government is to roll up its sleeves and act expeditiously, and not sluggishly, to keep the economic juggernaut moving and bring more real money into the economy than propping it up with only govt-spending.
Opening of borders expeditiously, without compromising with caution, could be one quick solution to bring down the impact of runaway inflation.
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