Word of the day

April 30, 2014

Cosmogyral – whirling or travelling around the universe.


Losing and keeping friends

April 30, 2014

Discussion with Jim Mora on Critical Mass yesterday was sparked by:

* Time magazine’s list of 10 ways to lose friends

and

Kevin Roberts’ much more positive 10 ways to keep your friends

 


Rural round-up

April 30, 2014

PM turns first sod on Central Plains Water irrigation scheme:

Prime Minister John Key today turned the first sod of the $375 million Central Plains Irrigation Scheme near Hororata in Canterbury.

First conceived in 2001, Stage 1 of the 60,000 ha scheme is expected to deliver water to 20,000 ha of Central Canterbury in September next year.

Chief executive Derek Crombie said that the first major work on the $140m first stage, comprising the 17km-long headrace canal and bridges, will commence immediately, with construction of the 130km-long pipeline network picking up momentum mid-year.

“We expect to have up to 150 contractors working on a number of sites in the near future and to this end we are heartened by the experience of our two major contractors, Fulton Hogan/John Holland JV on the headrace canal and Downers, supported by subcontractors Aquaduct NZ Ltd, for the pipe network. . .

Construction begins on Central Plains Water irrigation scheme in Canterbury:

Primary Industries Minister Nathan Guy has welcomed the official start of construction on the Central Plains Water irrigation scheme in Canterbury, which has the potential to create up to $1.4 billion in new economic activity.

“This is a proud day for the Canterbury region, with major benefits both economically and environmentally.

“When fully completed the scheme will irrigate about 60,000ha in the central Canterbury area, bounded by the Rakaia and Waimakariri Rivers, and the foothills and State Highway 1.

“It’s estimated there will be additional economic activity of between $1 billion and $1.4 billion created, an export boost of $300 million per year, and around 1,100 new fulltime equivalent jobs. . .

Sheep and beef farm profits forecast to increase 35 per cent:

Beef + Lamb New Zealand’s latest forecast, released today, tells a positive story for farmers and the wider industry.

The organisation’s Mid-Season Update predicts better pricing and strong demand for sheepmeat and beef products from key markets.

The report outlined improved product prices which are expected to drive average sheep and beef farm profit up by 35 per cent on the drought-affected level of last season. The Mid-Season Update estimates that farm profit before tax for the 2013-14 season will rise to an average of $113,700 per farm.

B+LNZ Economic Service Chief Economist Andrew Burtt says total gross farm revenue is expected to increase 9.2 per cent to $460,200, reflecting a 12 per cent increase in sheep revenue. Total farm expenditure is estimated to be up 2.8 per cent, to $346,500, on the back of increases in repairs and maintenance expenditures. Interest expenditure dropped by 2.6 per cent, thanks to a slight decrease in farm debt and lower interest rates. . .

The full report is here.

Agricultural footprint risks getting out of balance – Allan Barber:

While not exactly a new or revolutionary call for action, Fish and Game’s call last week for an independent review of water use and leaching into waterways was another bit of pressure on the future development of New Zealand farming. The organisation has long been agitating for such a review, but the Parliamentary Commissioner for the Environment’s critical report on land use and nutrient pollution in waterways has provided it with further ammunition.

Inevitably dairy is cited as the main culprit for the increase in pollution because stocking rates are higher and there is more runoff into rivers and waterways from dairy than from sheep and beef. Fonterra says it has collected nutrient data from nearly 4000 farms which will provide information on how to mitigate the impact of nutrients; in addition fencing of waterways is now an obligatory condition of milk collection, although Fish and Game questions how rigorously this is being audited.

According to modelling by NIWA and Motu Economic and Public Policy Research, by 2020 a further 400,000 hectares of sheep and beef farm land will have been converted to dairy. There will be a large increase in nitrogen runoff in most regions including Canterbury, Southland, Otago and Wellington. . .

Kiwi and Korean deer farmers to work together:

The deer industry plans to work with Korean deer farmers to further build demand for New Zealand deer antler velvet in South Korea, its largest market.

“The Korean Deer Breeders Association used to be opposed to velvet imports, but they now accept that by working together we can grow the pie for their farmers, as well as ours,” says Deer Industry New Zealand (DINZ) chief executive Dan Coup.

Long part of the allure of deer farming, with an Asian medical pedigree going back thousands of years, velvet has recently stepped into the modern era.

“In South Korea there is growing demand among affluent consumers for health foods and tonics based on traditional ingredients like velvet and ginseng. Because of New Zealand’s reputation for natural, safe and quality-assured product, respected Korean food companies see us as the ideal source of velvet,” Mr Coup says. . . .

Fonterra takes sustainable dairy farming to YouTube:

Fonterra Co-operative Group Limited is putting dairy farm water and environmental conservation in the spotlight with the launch of a series of YouTube videos focusing on responsible dairying initiatives taking place on New Zealand farms.

Entitled Farm Focus, the series begins today and will feature one farm every Wednesday for four weeks on Fonterra’s YouTube channel. The videos will also be posted on Fonterra’s Facebook and Twitter pages under the hashtag #farmfocus.

The four farms featured are from the central and eastern North Island of New Zealand. Each video accounts for one farm and the activities undertaken to protect waterways and natural resources while enhancing the economic viability of a farm. . . .

Birds are on the menu once more:

The 2014 Gamebird Food Festival is opening this Saturday with restaurants from Kerikeri to Invercargill opening their kitchens to cook either this year’s catch of duck, pheasant and quail, or commercially sourced birds.

So far 13 restaurants have confirmed they are taking part in this year’s Gamebird Food Festival to celebrate the hunting season, which opens on Saturday (3 May).

The aim of Fish & Game New Zealand’s Festival is to promote game birds as a delicious, free-range food source: Hunters can take their own birds into participating restaurants to have them prepared by professional chefs, or non-hunters can choose commercially sourced duck, pheasant or quail from the menu. . .

Yealands Family Wines wins ‘Green Company of the Year’ in leading global sustainability awards:

Yealands Estate has been selected as the “Green Company of the Year” by the UK’s leading drinks publisher, Drinks Business.

The Green Awards are the world’s largest programme in the drinks trade raising awareness of green issues and recognising those leading the way in sustainability and environmental practice.

Founder of Yealands Family Wines, Peter Yealands, says this global recognition is another welcome endorsement of their philosophy, culture and focus on continual environmental improvement. . .


Highest March trade surplus

April 30, 2014

The value of exports increased again in the March quarter:

The seasonally adjusted value of exported goods rose 2.1 percent to $13.6 billion in the March 2014 quarter, Statistics New Zealand said today. This follows rises in the previous two quarters.

“Meat and fruit led the increase in seasonally adjusted exports,” international statistics manager Jason Attewell said. “This is the second consecutive quarter that both values and quantities for these two commodities have risen.”

Seasonally adjusted meat values rose 8.7 percent in the March quarter, and quantities rose 6.8 percent. Fruit values rose 27 percent, and quantities rose 20 percent.

The rise in meat and fruit was offset slightly by a fall in milk powder, butter, and cheese, down 2.4 percent. The fall in dairy follows 26 percent increases in both the September and December 2013 quarters. Despite the small fall this quarter, dairy remains at high levels and is the leading contributor (31 percent) to total exports.

Imports rose 1.5 percent to $12.5 billion in the March 2014 quarter. The increase was led by a rise in capital goods.

The seasonally adjusted trade balance for the March 2014 quarter was a surplus of $1.1 billion. This follows a surplus of $986 million in the December 2013 quarter.

Monthly exports pass $5 billion for the first time

Exports rose $671 million in the March month, to $5.1 billion. Milk powder, butter, and cheese led the rise in exports, up $474 million (45 percent) compared with March 2013.

“This is the first time monthly exports have exceeded $5 billion, and annual exports have exceeded $50 billion,” Mr Attewell said. “Record dairy exports pushed the values past these thresholds.”

Imports rose $483 million (13 percent) to $4.2 billion, which was influenced by a one-off large capital item. The trade surplus was $920 million. This is the highest recorded surplus for a March month. . .

These figures underline once again the importance of primary production, and dairying in particular.

The increase in value has happened in spite of the high value of the New Zealand dollar.


Crime rate lowest since ’78

April 30, 2014

New Zealand’s crime rate is at the lowest level since 1978.

Justice Minister Judith Collins explains some of the initiatives which have helped that:

The Prime Minister mentioned the approach the Government took from 2008 – strengthening penalties for the worst offenders; focusing on the underlying drivers of crime and better rehabilitating offenders; and ensuring the justice system better helped those people who were victims of crime. 

There has been a vast amount of legislative change. We have, for example, strengthened bail laws; given police greater powers to tackle serious crime; and brought in alcohol reforms that give local communities the option of having tailored alcohol regulations that tackle local alcohol related issues.

But there has been just as much practical, operational, and even attitudinal change. 

The Government introduced Better Public Services, or BPS, targets in 2012 for key public services that would make a real difference for New Zealanders. They were also used to drive a sectoral approach to issues that require broader, long-term and multi-agency responses.

The Justice sector – the main agencies being the Ministry of Justice, NZ Police and the Department of Corrections – set ambitious targets for reducing the rates of total crime, violent crime, youth crime, and reoffending by 2017.

This focus is supported by a justice sector fund – an innovation for this government – that allows justice agencies to collectively share savings and put money where it will have the best effect.

The sector produced a results plan that included 60 new actions as well as building on major initiatives already underway. The plan is being updated this year, and I’m sure there will be some ideas from today that will be incorporated.

The actions range from the big – like ‘Policing Excellence’ with its emphasis on crime prevention, and expanding the range of training and rehabilitation programmes on offer to prisoners – through to smaller initiatives like trialling New Zealand’s first drug and alcohol courts, and providing a range of government, justice and community services starting in the Hutt Valley, from a mobile office in a van.

All of our initiatives however are about reducing crime and improving frontline results and services for people.

A fantastic example of this is the Hutt Valley Innovation Project, which targets local issues by improving the co-ordination of frontline services across the agencies in the area. During 2013, while this project was in its trial period, violent crime in the Hutt Valley dropped by a remarkable 10 per cent. That model is now being rolled out to three other areas. 

As for results, yesterday I announced the latest BPS results – to December 2013. Our target was to see a 15% reduction in the overall crime rate by 2017. As at December, it was down 14% – we’re almost there and with 3 years to go! As well as this, the violent crime rate was down 10 per cent, overall re-offending down by 11.7 per cent and the youth crime rate has reduced by 27 per cent.

To put real numbers around this, remembering New Zealand’s population is about 4.5 million, the results mean New Zealanders are now experiencing around 56,000 fewer crimes annually than in 2011. 

This is a lot less people becoming victims of crime.

This is a huge achievement.

Setting Better Public Service goals provides a real target against which success or failure can be measured.

A 14% reduction in the crime rate by the end of 2013 is well on the way to the target of a 15% reduction by 2017.

 

Photo: National will keep working to reduce crime and stand up for victims. http://bit.ly/1nYt6dG


Own steam

April 30, 2014

National stresses the importance of economic growth not for its own sake but for the opportunities it provides.

Only through economic growth can we have sustainable improvements to employment rates and wages, social services, infrastructure and the environment.

The government has a role to play in that through policies which promote growth and by careful management of its own finances to take pressure off interest rates.

Good governments don’t, as those on the left are wont to, take more from people through tax to give some of it back in ways which encourage dependence.

Good governments foster independence, helping people to get ahead under their own steam.
<Photo


Labour no longer champion of poor

April 30, 2014

Labour once claimed to be the champion of the poor.

The monetary policy announced by its Finance spokesman David Parker yesterday is further proof that it has strayed far from that because it would hit the  poor hardest.

Labour’s plan to use New Zealanders’ retirement savings as a monetary policy tool would hit low and middle-income New Zealanders hardest, and not achieve what Labour thinks it would, Finance Minister Bill English says.

“This idea mixes up people’s own retirement savings – which require certainty over a long period – with the Government’s monetary policy, which the Reserve Bank reviews and can change every six weeks. The two are completely different and should stay that way.

“Labour’s approach will force people to save at least 9 per cent of their wages, plus more when the Government decides to up the contribution rate. This cut in take-home pay would hit hardest those low and middle-income families who are unable to save much, or who are focusing on paying their mortgages.

“Our current monetary policy settings are considered world-best practice. In the last few years we’ve come through a domestic recession and a global financial crisis and now have sustained economic growth, increasing wages and jobs and interest rates are just coming off 50-year lows.

“Labour’s ‘tool’ is a confusing solution looking for a problem. This is wishful thinking and there is no evidence it would actually work. Even if it did it would  require Kiwi families to accept a higher cost of living and higher compulsory savings at the same time, which would be a double squeeze on them.

“Labour has a recent history of over-spending in government. It should commit to spending less itself, rather than forcing householders to do the hard work for it.

“Low and middle-income earners would be paying the price for Labour’s lack of discipline,” Mr English says.

Compulsory savings isn’t going to appeal to people who have little or no spare money to save.

Compulsory savings with a variable rate which means you could be forced to save even more of the money you don’t have to spare will have even less appeal.

The idea behind the proposal is to give the Reserve bank and alternative tool to interest rates for fighting inflation.

No-one with borrowed money welcomes interest rate rises but at least most people have some control over how much they borrow and how quickly they repay it.

When interest rates go up they could choose to reduce their debt.

With compulsory savings they would have no choice about how much they pay, and no choice about reducing the amount they had to pay.

Increases in compulsory savings rate will hit everyone but interest rate rises affect  a relatively small number of people directly: *

Only  26% of single families and 55% of couples have mortgages.

Then there’s the impact on wages.

Labour’s compulsory scheme would require greater contributions from employers over time.

When working out what they can afford to pay staff it’s the total cost not where the money goes that matters so a greater contribution to KiwiSaver accounts will leave employers with less for wage increases.

Rob Hosking explains why Labour’s big tool won’t work:

. . . The  entire policy rests on the assumption a lower interest rate will also lead to a lower exchange rate. This is by no means a given. . .

The second issue is more political.

Forcing people to save more is not a costless move for them. Someone on an average income who suddenly has another chunk of their cashflow taken out of their weekly income is going to feel the pinch. . .

Forcing people to give up something is going to be fraught with political difficulty.

When it to implementation you can expect a wave of applications for exemptions, and this can be expected to lead to an administrative catscradle  and a political tangle. . .

BusinessNZ  chief executive Phil Oreilly has concerns about the workability of the policy:

. . . The proposed policy would ‘mix the targets’, he said. Instead of a sole focus on inflation, the Reserve Bank would also have to focus on achieving a positive balance of payments, stable economic growth and stable employment. This raises the risk of not achieving some or all targets.

“New Zealand’s external balance is a result of a number of factors, including over-consumption, over-regulation and inefficient government spending. It’s hard to see how the Reserve Bank can be particularly influential in changing these.”

Mr O’Reilly said there was potential for uncertainty and confusion from having different levers over interest rates and KiwiSaver rates.

“While the Reserve Bank would apparently retain control over its existing interest rate lever, it would probably need to go to the Government for the power to use the KiwiSaver savings lever each time it sought to do so. This would not only slow down the Reserve Bank’s decision-making ability, but would undoubtedly introduce politics into the decision making process. All of this would potentially add a great deal of political uncertainty to New Zealand’s macroeconomic settings.

 “New Zealand’s current Reserve Bank system is scrupulously apolitical. That is why other countries have followed our lead in monetary policy.

“Labour’s policy brings the risk of a future government politicising what has until now been an apolitical process.

“Can you imagine a future Government agreeing to a Reserve Bank recommendation to raise KiwiSaver rates three months before an election? “ Mr O’Reilly asked.

He said restricting immigration numbers as a way to reduce house prices could have negative consequences, potentially leading to wage inflation and constraints on firms unable to gain the skills they need.

“The policy announced today makes little mention of the key role played by other government policies in reducing house prices and making our economy more competitive. We note for example the recent Productivity Commission report on housing affordability which pointed to the key role played by land supply constriction in increasing house prices. ”

There would also be more uncertainty about incomes as a result of the proposed policy, he said.

“Income earners would be uncertain as to whether or not their KiwiSaver or their mortgage rates might rise, or both. This would have impact on private sector wage setting. . . “

So the policy won’t necessarily achieve it’s aim which is to reduce the exchange rate.

It would threaten the political neutrality of the Reserve Bank.

It would also leave people with less money to spend and it would leave them with no certainty over how much they would have.

Even the best budgeters are used to unexpected expenses but in the normal course of events we can all expect certainty over income.

With Labour’s proposed Variable Savings Rates, we won’t have any certainty.

It would be like being subject to possible changes in tax rates every six weeks and it’s the poorer people whom Labour used to champion who will be hurt most by that.

* Hat tip Lindsay Mitchell

 


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