Will NZ now pay for taking Easy Street?
In August 2016 the Governor of the Reserve Bank of NZ made a statement which included the line that "Domestic growth is expected to remain supported by strong inward migration, construction activity [and] tourism". These three factors were the key drivers of GDP growth for many years of the Key government.
Fast forward to June 2020. As of today, immigration and foreign tourism numbers are both close to zero. Meanwhile, our construction industry, which has long been characterized by weak productivity growth, is wobbling.
In the midst of this virus crisis, are the powers-that-be now offering a different vision of NZ in which GDP growth may come from other sources? Or are they planning a return to the old model? There has been little talk of the former so I presume its the latter.
Why? Perhaps because Kiwi politicians found out that as long as more foreign tourists kept coming, house prices kept skyrocketing and inward migration soared, they didn't need to sweat about tackling the hard issues. Consequently, quality reforms that raised the long-run per capita growth rate, reduced poverty and cut inequality weren't a priority. Public demand for such reforms may also have been low since taking Easy Street seemed to be working.