Word of the day

February 24, 2020

Rancorous – characterised by bitterness or resentment; full of rancor; bitter; unforgiving; having or showing a feeling of hate and continuing anger about something in the past.


Thatcher thinks

February 24, 2020


Rural round-up

February 24, 2020

Dairy farmers must increase risk – Hugh Stringleman:

Dairy farmers have to learn to take more risk because staying put is no longer risk-free, independent Cameron Bagrie says.

The pace of change will accelerate not slow and farmers face three to five more years of this grumpy growth, which stems from rising costs and more regulations, he told a DairyNZ farmers forum.

“Stop being so polite and drive the key changes in the things that you can control.” . .

Net zero goal needs new tech – Colin Williscroft:

Agriculture and land use systems will have to be transformed to achieve net zero greenhouse gas emissions, Scottish academic Professor Bob Rees says.

While all sectors of the economy will have to play their part cutting emissions, the likely consequences for agriculture are stark, the keynote speaker at the Farmed Landscapes Research Centre workshop said.

Rees, an agriculture and climate change expert at Scotland Rural College, said emissions from the sector urgently need to be reduced but costs and inertia are significant barriers. . .

Cavalcades bosses keep coming back – Sally Rae:

When Chris Bayne and Sandra Cain drive around the Otago hinterland, they know what lies behind the hills.

For they have been there, among the tussocks, during their combined involvement of more than 50 years with the Otago Goldfields Cavalcade.

The two trail bosses are preparing to head off on this year’s event, which will see hundreds of riders, wagoners, walkers and cyclists arrive in Patearoa next Saturday.

Mrs Bayne’s light wagon and riding trail will meet today at Ardgour, near Tarras, while Mrs Cain’s walking trail will start on Wednesday from Ida Valley Station. . .

Winemaking need not drain reservoirs– Mark Price:

Robin Dicey cannot quite turn water into wine, but he is turning grapes into wine without water. The Bannockburn wine industry pioneer tells reporter Mark Price about his recent vino experiments.

Imagine  growing grape vines in Central Otago without pumping millions of litres of water to them through millions of metres of plastic pipe.

Without an irrigation system, surely they would wither and die in the heat of a Central summer.

Retired Bannockburn wine industry pioneer Robin Dicey is not so sure they would, and has begun an experiment to test that theory. . .

New regional leader award:

A new Regional Leader of the Year Award has been established by Dairy Women’s Network.

Chief executive Jules Benton says more than 70 volunteer regional leaders provide an important point of contact for farmers and play key role in their communities through to organising, hosting and promoting regional events.

They are the face of the network while also in some cases are running million dollar businesses. . .

Farmer confidence plummets amid Brexit and bad weather:

Continued weather conditions and Brexit uncertainty has led to a significant drop in farmer confidence, new figures suggest.

Political unpredictability surrounding the terms of the UK’s post-transition period and the recent flooding is taking its toll on industry confidence.

Results from the latest NFU survey of farmers across the UK shows that short-term (one year) confidence has reduced further from last year, dropping 11 points, to its 3rd lowest level since the survey began in 2010. . .


Why not more of what works?

February 24, 2020

Leilani Farha, UN Special Rapporteur on the right to housing, visited New Zealand and left us with several recommendations including a rent freeze and capital gains tax.

I have yet to see or hear what the visit cost us, but the government that invited her, could have saved all that by asking Steven Joyce who has much better recommendations

. . . Before we embark on another “housing crisis” complete with politically partisan policy ideas that turn out to be mirages (come on down Kiwibuild), let’s have a look at all the housing policy changes that have occurred over the last decade and assess what practical lessons they provide about the New Zealand housing market.

The first is that land supply is hugely important if you want to build more houses.  . .

The price of houses is a reflection of demand outstripping supply and one of the reasons for that is restrictions on where people can build and the cost of developing new areas for housing.

The premier case study on land availability is post-earthquake Christchurch. Pre-earthquake the local councils developed a “smart growth” plan where they agreed what land around the city would be released for housing progressively over the next thirty years. Then, alongside the lives tragically lost in the earthquakes, massive numbers of houses were made uninhabitable virtually overnight.

After the quakes, amid dire predictions of skyrocketing house prices, Gerry Brownlee took the radical decision to release the whole thirty years of land at once. There was much sucking of teeth at local and central government, but it was the right call.

As the result of competition amongst developers tens of thousands of Christchurch families were able to use their insurance payouts and reasonably priced new home and land packages to successfully re-establish themselves. Christchurch house prices have since been some of the most reasonable in New Zealand. 

The second lesson is about the availability of finance. The Global Financial Crisis dried up bank finance and laid waste to non-bank lenders. The lack of finance for new builds crippled the building market and it took years to recover. That’s a cautionary tale for the Reserve Bank, whose heroic new bank capital ratios will reduce available bank finance, albeit more gradually than previously proposed.

The more banks have to hold, the less they will have to lend and the more expensive the lending will be.

The third, and arguably biggest lesson from the last decade is the now obvious role low interest rates play in driving high house prices, and indeed all asset prices. Every time interest rates have got ridiculously low, house prices have shot through the roof as people bid up prices to the limits of the mortgage they can now afford. This price inflation seems fine if you already own a house, but it perpetuates the wealth gap between those that own houses and those that don’t.

Lower interest rates allow people to afford bigger mortgages, that enables them to pay more for houses and that feeds price increases.

Ultra-low interest rates are driven by governments worldwide contracting out wider economic management to central banks, which then have to compensate for poor microeconomic policies flattening growth. You might not think an oil and gas exploration ban, poor quality government spending, and backward-looking employment policies lead to ever higher house prices, but indirectly they do.

There are lessons out of the rental housing and social housing markets. It is crazy to persist with a single monopoly state housing provider when it has never in its history managed to successfully meet the demand for social housing. It’s also not sensible to let one person have the same state house for life irrespective of changes in their family and personal circumstances. The rapidly growing social housing waiting lists compared to two years ago provide the evidence there. . . 

How can a government that cares let a couple or single person occupy a house with multiple bedrooms while families with several children are homeless?

Then there’s the added compliance requirements and accompanying costs that lead to fewer rentals.

That’s not to say never change anything about residential tenancies, but perhaps don’t whack landlords with a dozen negative changes over, say, three years.

To make housing more affordable, the last decade’s experiences tell us to greatly increase land supply, ensure a ready supply of build finance, put less pressure on the Reserve Bank to lower interest rates to keep the economy going, enlist community and NGO help in supplying social housing, and stop treating the vast bulk of residential landlords like they are pariahs. Oh, and forget a more punitive capital gains tax – countries with one of those have the same skyrocketing house prices as we’ve had.

There are valid arguments for a capital gains tax but reining in house prices isn’t one of them.

If CGTs haven’t worked anywhere else, there is no reason to expect they’d work here.

The high cost of housing is a major factor in poverty and all the problems that stem from that.

Why did the government waste money on the UN expert whose recommendations wouldn’t work, when a local one has a much better recipe that would work?


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