Low Boxing Day sales in Wellington linked to public sector cuts

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File photo.
Photo: RNZ / Rebekah Parsons-King

The coalition government’s pledge to shrink the public sector may have spooked many would-be shoppers in Wellington on Boxing Day, commentators say.

South Wairarapa Mayor Martin Connelly said he was not surprised spending was low in the capital while nearby, his region was gaining steam.

Boxing Day sales figures show retail spending in Wellington dropped by nearly 11 percent , while in Wairarapa to the north, spending grew by more than 8 percent on last year.

Connelly believed government signals about possible public sector job cuts had made Wellingtonians cautious.

“Depending on what figure you believe about how many people may or may not lose jobs in the coming few months, I have no doubt that it will certainly take the urge off many people to spend a lot of money.

“They’ll be in saving mode.”

In contrast, Connelly said that Wairarapa was attracting people with its great weather and lower-cost holiday options.

“Everybody can have a good time but [they don’t] have to spend a huge amount of money, whereas if you take the kids to Queenstown … you’re going to be in for big bills every day.”

Infometrics principal economist Brad Olsen also pointed to looming public sector cuts, along with concerns over water restrictions in summer months, as possible reasons why Wellington’s spending plummeted this year.

The presence of two cruise ships in the capital on Boxing Day made the drop more shocking, he said.

“I do wonder as well if some of the worries around water restrictions have also seen a few more people who [have] not stuck around Wellington like they might have before because just across the hill in Wairarapa you saw the second biggest growth in spending in all areas of the country.”

Infometrics principal economist Brad Olsen.
Photo: RNZ / Samuel Rillstone

But Olsen said some tourism hotspots and hospitality businesses seemed to be bucking the trend of weak retail spending across the country.

The national retail spend on Boxing Day was just below the previous year’s levels but food and liquor spending was up nearly 15 percent.

“Kiwis seem to be eating up a storm and I think, particularly when you look at what the Wairarapa offers, it’s got some great food and beverage options.

“Perhaps people were doing a bit more window shopping than actual shopping this year and instead also opting to go over the hill and make sure that they filled their belly.”

‘There’ll be a number of factors at play’ – Minister

But Social Development and Employment Minister Louise Upston rejected the assertion that low spending on Boxing Day in the capital probably stemmed from looming cuts to the public sector.

She said the dip was more likely to stem from the cost-of-living crisis and mortgage pressures.

“I don’t think it is accurate just to draw the dots between what’s happening in the public sector and what we saw on Boxing Day.

“There’ll be a number of factors at play and once the level of detail beneath those figures comes out, that may provide a bit of light.”

Targeting the public sector for savings was what the country expected from the National-led government, Upston said.