In what seems like an endless litany of bad news, it got worse on Thursday. Not only were hundreds of job cuts announced in Wellington, and we are in a recession, but New Zealand has dropped out of the list of top 10 happiest countries in the world.
To make the news sting a little bit more, we have been replaced in the top 10 by no other than Australia. We narrowly missed out, though, coming in at number 11. The World Happiness Report ranks countries using factors such as gross domestic product per capita, social support, health, freedom, income, generosity and absence of corruption. Near neighbours Finland, Denmark and Iceland came in first, second and third, respectively.
Whatever people might think about listicles such as these, few would dispute New Zealand is going through the economic wringer. And it’s hardly a surprise people here are less happy than they were. High interest rates, skyrocketing insurance bills, rising food and fuel prices and the increasing cost of housing are all hitting hard. Rents are rising, not because landlords are intrinsically evil, but because the underlying costs of running a rental property are going up.
The announcement that hundreds of jobs are on the line at the Ministry of Primary Industry [MPI] and the Ministry of Health is almost certainly going to be echoed by other government departments over coming months. MPI plan to cut their workforce by nine per cent, although much of the reduction is expected to be managed by cancelling vacancies. The Post reported sources at the Ministry of Education, ACC, WorkSafe, Crown Law, MBIE and other departments have all confirmed jobs will go.
As the process runs its course, it’s likely the happiness quotient of the wider Wellington region will reduce further, with Wairarapa no exception. In a region heavily populated by public servants and fueled by government spending, cuts in this area are going to hurt. Tourism, hospitality, and the retail sector are likely to feel the pain first as people focus spending on essentials.
At the same time, even though it might not be obvious, the first green shoots of an economic spring could be likely to appear before many expect.
Heavily reduced spending is almost certainly going to hit inflation, bringing the average within the Reserve Bank’s [RBNZ] magic range. The RBNZ is charged with keeping inflation low and stable, between 1 and 3 per cent over the medium term, with a focus on future inflation at about 2 per cent.
As inflation drops, interest rates can be expected to reduce.
At the same time, an increased focus on strengthening ties with existing trading partners and forging new ties can be expected to have significant benefits in coming years.
This week, in an announcement that went largely under the radar, the Minister for Trade and Agriculture, Todd Mclay, said parliament was in the final stages of bringing the New Zealand–European Union Free Trade Agreement into force earlier than expected – in May.
This is good news for primary producers, including in Wairarapa. Hopefully, by the end of the year, much of the worst of the economic downturn will be behind us.
