I’M GOING TO BED KNOWING A LOT OF KIWI’S DON'T HAVE A BED

LAST WEEK I WAS IN MT MAUNGANUI

There was no sign of NZ”s housing crisis.

Or poverty.

Or homelessness.

No matter how often I drove up and down the Mt Maunganui strip of shops or walked the surf beach (between the flags) calm prosperity and money was a member of every family group.

Chic, well groomed, couples oozed satisfaction and no questions asked life styling.

But a quick look at the facts of New Zealand's economic situation makes it clear that we are facing tough mind spinners. Right now. Especially when it comes to our GDP, productivity, and the ongoing housing crisis.

I AM AN OPTIMISTIC PERSON

As an entrepreneur and Theory of Constraints (TOC) practitioner I have good reason to be an optimist.

But is it dumb?

Optimism?

Yes the numbers do paint a concerning picture. Our per capita GDP has dropped by 4.6% in the past seven quarters, and this is sharper than what we experienced during the global financial crisis [Hooton, NZ Herald, September 20, 2024]. When I dig a little deeper, I see that our overall GDP contracted by 0.2% in the year leading up to June 2024, and our per capita GDP is down by 2.7% compared to last year [Dann, NZ Herald, September 22, 2024]. That data tells me that our economy is underperforming, more so than the top-line GDP numbers suggest.

One of the biggest contributing factors ?is our lagging productivity. Chief Economist Mr Paul Conway at the Reserve Bank of New Zealand (RBNZ) [January 29, 2025] says that for a long time, New Zealand's economic growth has relied too heavily on immigration and people working longer hours rather than on genuine increases in how much we produce per person.

PRODUCTIVITY GROWTH WHAT?

We are right to be worried that our productivity growth has slipped below its long-run average.

Additionally our exports, as a share of GDP, have been falling since 1992 [RBNZ, January 29, 2025]. The RBNZ has also expressed concerns that our economy is "capital shallow," meaning we do not have enough investment in things that drive competition and innovation [RBNZ, January 29, 2025].

To me these are critical factors in how we create wealth.

The effects are being felt sharply in our housing market.

True, on paper, we are a wealthy nation with high average household wealth ($408,231 USD) [NZ Initiative, January 16, 2025]. But most of that wealth is tied up in an inflated housing market, not in productive assets. We are only 22nd in the OECD for GDP per capita [NZ Initiative, January 16, 2025]. That is why we need significant investment in infrastructure, around $210 billion, just to reach an adequate level [NZ Initiative, January 16, 2025].

Of course, some projects, like the 48 affordable rental homes being built by Te Rūnanganui o Ngāti Porou [ NZ Herald, January 16, 2025], are good examples of what can be done when communities come together.

So I am saying we need much more, and on a much larger scale. The warnings from the Treasury about the cost of our ageing population [ NZ Herald, January 17, 2025] add to the urgency of finding sustainable, forward-thinking solutions.

DESPITE THE CHALLENGES .. I AM OPTIMISTIC

If we focus on long-term strategies and tackle the root causes of low productivity and housing market imbalances we can move forward. There is much potential to be unlocked by prioritising investment in productive assets, embracing innovation, and building a more competitive and fairer housing market. I am confident we can create a prosperous future for all New Zealanders.

?For more information 10 contact me: [email protected]