Craig Renney is the chief economist at the New Zealand Council of Trade Unions.

OPINION: I’m on holiday right now, and many people take a book with them when they have a break. I’ve taken a copy of Nobel Laureate Robert Shiller’s book Narrative Economics. The central premise of the book is that economics shouldn’t just be the study of dry statistics, or impossibly complicated algebra.

Economics should also examine the narratives that are occupying society – or as Shiller says “traditional economic approaches fail to examine the role of public beliefs in major economic events”.

Economic narratives are stories or ideas that seem to have persuasive force at a point in time. Narratives don’t need to be rational, or evidenced-based, and they are frequently political. They simply provide an answer to the problems that many people perceive to exist.

Like the idea that extreme deregulation and market liberalisation in the 1980s would make everyone in New Zealand better off, or that excessive government spending caused the Global Financial Crisis (hint – it didn’t). They capture a mood and provide an easy answer to often complex problems.

Right now, a narrative is trying to take hold around the state of the New Zealand economy. That we are in the economic doldrums. The National party talks about the need to “kick-start New Zealand’s economy” and get “New Zealand’s economic engine humming again”. ACT’s economic policy says that we need to “cut taxes to get the economy moving again and Kiwis back into work”.

Economists talk about the need for a “big economic adjustment”. The narrative is that things aren’t all well in the New Zealand economy. A tax cut or cutting government spending is often touted as the panacea for these ills.

But like many economic narratives, this one should be treated with caution. Take unemployment, which has been at or around its lowest level since 1986. It is forecast to peak at 5.3% in 2024, where it will still be lower than during the period between 2009 and 2015. Wages are forecast to grow faster than inflation in each of the next four years according to the Treasury. New Zealand has never had as many people working, nor working as many hours, as there are right now.

It’s not just employees who are benefitting. Profit levels since the start of the pandemic have grown significantly. Profits have grown 64% between 2019 and 2022 – and are forecast to grow another 27% over the next four years. New Zealand’s big four banks made record profits last year of $7.2 billion – or $1384 per person. Air New Zealand profits have surged, as have profits in energy companies and a range of other sectors. The NZX50 index is up 5.5% this year. This is not what an economy just limping through looks like.

Then let’s look at economic growth. Between 2019 and 2022 the New Zealand economy grew faster than the US, the UK, and the EU region, and at the same pace as Australia. There is no recession being forecast by the Treasury – and the IMF and OCED agree. GDP growth is expected to average 2.3% annually across the next four years. Yes economic growth fell last quarter, but there is nothing in this forecast to suggest that the economy is simply coasting along.

Now let’s forget the dry numbers that take up too much airtime and concentrate on one of the issues that really matters, child poverty. Since 2017 the number of children living in poverty has fallen by 77,000. The proportion of children living in what is called “after-housing cost” poverty is on target to have fallen from 30% in 2009 to 10% in 2028. That recent progress is the acceleration of a trend that has been going on since 2010, which is a testament to the actions of both parties. There is much more work to be done, but we aren’t heading backward here.

I’m not saying that everything is perfect. Indeed, too many Kiwis are struggling to pay the bills and deal with the cost of living. Many will face higher mortgage payments as a consequence of a higher interest rate. Low wages and insecure work are a constant reality. But these problems are not short-term in their origin or readily answered with a tax cut. They certainly aren’t answered with a cut to public spending.

They are the problems of an economy in which there has been underinvestment for decades – in housing, health, education, climate change, and delivering more competitive markets. Disasters such as Covid and Cyclone Gabrielle have simply exposed the consequences of that underinvestment.

Governments internationally have fallen on the back of economic narratives such as this, and the government will have a job to do to change the story. That’s perfectly fair, but the ramifications of this “vibe” at this election may be highly significant.

Accepting this narrative may mean becoming a country where people are increasingly left to fend for themselves, and where your ability to pay dictates your access to once-universal public services. We should examine carefully the stories being told to us about the economy, and check whether this holds up to the data.