Reserve Bank governor Alan Bollard reckons New Zealand may not be doing so badly after all – he blames inconsistent measurements for the persistent income gap between New Zealand and Australia.
Dr Bollard told a meeting of the Trans Tasman Business Circle in Auckland last week that different countries use different methodologies and data sources, and said the Reserve Bank believed if consistent conventions were used, the gap between New Zealand and Australia and other OECD countries would narrow.
“Our view is that in New Zealand, some conservative statistical interpretations and particular characteristics of our economy have resulted in the understatement of New Zealand’s economic performance. In international league tables New Zealand is in some ways better off than is often thought.”
GDP could be up to 10 percent higher than official data, he said.
“These are not definitive numbers, and we accept there are counter-arguments to them.”
He acknowledged revising New Zealand’s GDP does not lift actual incomes or purchasing power – “We cannot make ourselves better off directly just by measuring things differently.”
And he said the Reserve Bank’s analysis did not answer the question of whether New Zealand was closing the trans-Tasman gap.
“However, it does argue that the gap is not as wide as most people think.”
He noted that the prime ministers of Australia and New Zealand recently agreed that the respective Productivity Commissions would look at reforms aimed at increasing economic integration.
“Given this aim, a useful contribution could be to improve harmonisation of statistical measurement in Australia and New Zealand, where appropriate, to improve data comparability.”
He said problems with the comparability of statistics were an international issue, and his comments were not a criticism of Statistics New Zealand.
Dr Bollard said he was aware that, in the area of GDP, Statistics NZ has plans in place to increase the ease of comparability of data with Australia.
Organisations like the United Nations and International Monetary Fund were working to make economic statistics more comparable. But for the time being there were pitfalls in making international comparisons, he said.