On RNZ’s First Up this morning, David Seymour identified government spending as the primary cause of inflation in Aotearoa, despite clear evidence, both domestically and internationally, to the contrary.

A report released in August this year by the NZCTU, FIRST Union and ActionStation, concluded that rising corporate profits contributed more than half of domestic inflationary pressure from mid-2021 to the end of 2022.

The report uses a methodology also deployed by theIMF, the OECD, the European Central Bank. Critics have labelled this phenomenon “profit-led inflation”, “seller’s inflation” and “greedflation”. Director of advocacy organisation ActionStation Kassie Hartendorp has condemned Seymour’s comments, and the narrative of the right bloc through the election campaign as deliberately misleading.

“The right bloc have spent the last two years misleading the public on the causes of inflationary pressure, despite clear evidence identifying profits as being the primary driver of domestic inflationary pressure.”

She continues; “If they want to have a conversation about inflation that’s fine- but let’s talk about the real drivers. New Zealanders have been ripped off at the petrol pump and at the checkout, while corporations amass large and in some cases record profits. We need an intervention, and we need it now. What we don’t need is a group of ideologues pushing misleading and disingenuous narratives about the economic situation to garner votes.”

“Either Seymour, Peters and Luxon have not been adequately briefed on the research, or they are aware, but are intentionally misleading voters in order to garner support for a project of disinvestment in our public services. Either way we should be very concerned when the public discourse is framed by ideology, not facts.”

Earlier this month bank workers launched a campaign against to ‘Bankflation’- highlighting the surge in the big four banks’ profit margins, while wages have stagnated and workers struggle to meet basic costs, including rising mortgage rates.

“People currently can’t afford to save or enjoy the standard of living you would expect from a busy week of full-time work and are doing whatever they can to stay afloat” commented Ace Sieed, FIRST Union delegate and Westpac worker.

FIRST Union Researcher and Policy Analyst Edward Miller notes that the effect is wide-reaching. “Multiple datasets show that economy-wide profits reached record levels in 2022 when inflation was at its highest point, while many businesses banked record profits. Now, as higher interest rates are reducing profits across much of the economy, the banking sector is experiencing record returns. All of this adds costs onto households and businesses.”

“Our research shows that the old explanations - blaming government spending or excessive wage increases - simply doesn’t stack up. By the same token, the one-size-fits-all solution of reducing government spending and cutting public services not only won’t address profit-led inflation, but will exacerbate inequality. Surely that is something we should all be concerned about as we head to the polls.”

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