Of polls, statistics and a Labour deficit

Bugger the pollsters, Jim Bolger famously said on election night in 1993. The (TVNZ) poll is bogus, Andrew Little grumped last week.

Bolger’s problem was that some opinion polls had given him a bigger margin than voters gave him on election day. Little’s problem is that other numbers feed his poll numbers.

Labour averaged 28.5% in polls in August. Since Little became leader Labour’s average has been stuck in a 28%-31% band, only occasionally straying a little either side of that. Its average this year has been 29.0%.

That is below where Labour was before its descent into historical doldrums in the election 24 months ago. Little has reversed only some of that 2014 descent.

Even added together, the Greens plus Labour have polled consistently below National bar one brief lurch in mid-2015.

A year out from the 2017 election, Labour (and the Greens) face a fourth term in opposition unless they — or a global or local shock — pull out a game-changer.


Strong majorities tell pollsters New Zealand is “heading in the right direction”. In other words, they don’t (yet?) accept Little’s insistence that it is heading in the wrong direction. It doesn’t help that he hasn’t got his communications team sorted.

His preferred Prime Minister ratings are a fraction of John Key’s.

The next bad number for Little is consistently positive consumer sentiment, even if off its highs.

Then on Thursday came another bad number for Little: real output (GDP) growth of 3.6% in the year to June (2.8% on the more meaningful annual average calculation). Construction (notably of houses) and retail were big. And the evidence so far points to another strong GDP figure this quarter.

And all this is without a balance of payments blowout. Booming tourism and strong exports kept the current account deficit in the year to June to a modest 2.9% of GDP, down a bit on the year to March’s 3.1% and looking not too bad for the next while.

Net international indebtedness was down to 53.6% of GDP in June from 57.7% a year earlier, still bad but improving.

Add to that job and wage growth. Again, not good numbers for Little.

Might they get better? Grant Robertson thinks so and he has some skerricks of evidence. All is not as plush as Key and Bill English crow.

First, the GDP number owes a lot to record immigration. Immigrants and returning New Zealanders need houses, pushing up construction, and buy things at retail. But sky-high immigration cannot go on indefinitely without causing political trouble for Key-English.

Second, the June growth figure was probably a peak. Manufacturing and goods exports were pumped up by dairy farmers culling herds and beef farmers cashing in on good prices, which pushed up meat processing and exports. Immigration may have peaked. Capacity constraints loom.

Third, tourism is low-wage. The more tourism booms — and guest nights hit a record in July, far above the 2000s/early 2010s average — the lower it keeps average wages. And many in the sector are foreigners on working holidays.

Fourth, chart 22 in Statistics New Zealand’s GDP spreadsheets tell us per-person growth in national disposable income was tiny: 0.5% on an annual average basis, a fraction of the overall GDP figure.

In other words, businesses selling things to immigrants and tourists did well but overall average material wellbeing did not grow much.

Moreover, household debt is back up to record levels. It can’t go on rising forever.

Still, interest rates are low. If you are not a pensioner living partly off interest, you have more left over from wages to spend — if you are not struggling with a mortgage or rent pumped up high in the house price bubble.

Thank Graeme Wheeler. His brief is to get inflation to around 2%.

He was actually at 1.8% in the year to June in non-tradables inflation, the bit driven domestically by the 4.7 million people he can influence.

But the non-tradables (export/import) bit, driven by 7.2 billion foreigners he can’t influence, is actually deflation — minus-1.5% in the year to June.

Wheeler, who pronounces again next week, has to aim for a 2% for all inflation. Hence his official cash rate cuts.

Moreover, the official line goes, if he hadn’t cut in August the exchange rate would have gone up. But our dollar is the world’s eleventh most traded currency and 93% of that trade is by foreigners, alias the 7.2 billion. The exchange rate average is higher this month than in August.

Add all this up and you get a distorted economy. At some point the distortions will have to be ironed out and big distortions are often ironed by a bust.

A bust could produce the (bad) numbers Little needs — if it is in time and if he looks the rescuer part.

That second “if” will depend in large part on whether the “direction of travel” Robertson is supposed to map at Labour’s conference in November signposts a route voters (a) can see and (b) want to go down.

Meantime, “bogus” numbers will bug Little a while yet. And he is starting to run out of time.