Rural round-up


Excited about goat sector – Sally Rae:

Jackie Freeman reckons there is ”more to goats than meets the eye”.

Mrs Freeman and her husband Grant recently bought Mohair Pacific, a Canterbury-based business that is a buyer and broker of New Zealand mohair.

The couple, who were attending the recent inaugural NZGoats conference in Queenstown, were excited about the industry’s potential. . . .

When fashion ploughs into farming – Sonita Chandar:

Designers and artists across New Zealand and Australia have spent the past year unleashing the creative beast within to come up with a stunning array of garments for this year’s New Zealand Agricultural Fieldays Ag Art Wear Awards.

Fieldays Ag Art Wear is a prestigious nationwide competition which challenges designers and artists to create wearable art garments made from materials sourced from the farm, rural industries or the natural environment. . .

Young inventor opening gates to success – Anne Boswell:

A year of hard work hangs in the balance for 13-year-old Patrick Roskam who is launching his invention, the Gudgeon Pro 5 in 1, at the Fieldays Innovation Centre this month.

Patrick won the Best Pitch Award at the SODA Inc Innovation Den last year, wowing the judges with his unique fencing tool which is used to quickly and accurately hang gates.

Following feedback at Fieldays, Patrick improved the product, which was originally conceived as a science fair project, to make it adjustable with a spirit level on top and tape measure down the side. . .

Dairying family on fourth shift – Collette Devlin:

Jimmy and Keri Tatham sit in their kitchen among half-packed boxes, with newborn twins Aiden and Xavier snuggled in their arms.

As they box up the remainder of their belongings, their 23-month-old daughter Caitlyn points to a frame on the lounge wall. It is a memorial to their 20-month-old son Jack, who was killed in 2011 after getting into a holding pen of cows.

This prized possession will perhaps be one of the last packed away for the Gypsy Day move. . . .

 Elections, run-off and winter mud – Sally Brooker:

Richard Strowger is continuing to lead North Otago Federated Farmers.

He was re-elected for another year as president at the annual general meeting on May 15.

Dairy section chairman Lyndon Strang was also re-elected and has become the provincial vice-president.

Greg Ruddenklau is the meat and fibre chairman, with Hayden Williamson and Christopher O’Malley helming the sharemilkers’ section. . . .

Ngāti Kahungunu and Sealord announce fishing deal:

A deal allowing New Zealand’s third largest iwi to be more directly involved in the use of its fishing quota has been signed in Nelson.

The arrangement between Ngāti Kahungunu and Sealord will see the two organisations work together in the sustainable utilisation of fishing quota, employ and develop iwi members whilst at the same time maximising profitable returns to iwi. . . .


Cheaper loans, better budgeting


The government announced two initiatives which will help people manage their money better.

Social Development Minister Paula Bennett announced today a new community finance partnership that will see interest free and low interest loans made available to New Zealanders who need them.

The Government is partnering with Bank of New Zealand, Good Shepherd NZ and The Salvation Army to develop a finance initiative that will offer people on low incomes affordable and sustainable credit. Good Shepherd will bring many years of delivering community finance programmes in Australia to the table.

“People on low incomes are vulnerable in their credit options with many tempted by easy finance. The initiative will see sustainable loans available for some people that might not otherwise be able to service a loan with high interest rates and hidden fees,” says Mrs Bennett. 

Beginning with a one-year pilot, BNZ is committing $10 million to the initiative for up to five years that provides a real alternative to loan sharks and pay day lenders.

Today’s announcement honours commitments made in last year’s Budget to boost practical support for people on low incomes.

Mrs Bennett says this is the latest in a string of initiatives by the Government to help people access everyday necessities.

“We’re already helping beneficiaries and people on low incomes buy whiteware and more children are being fed in schools. Now we’re focused on increasing the wellbeing of families by assisting them to avoid unscrupulous lenders and their crippling interest rates,” said Mrs Bennett.

Loan sharks and pay-day lenders pray on the poor.

This initiative will give people a safer and much more affordable alternative to the usurious loans they resort to now.

The government also announced new operating funding of $22 million over four years for non-government organisations delivering community budgeting services to families.

“Budgeting services are providing critical help to thousands of Kiwis who are able to make a real difference in their lives with new money management skills,” Mrs Bennett says.

“This new investment sees baseline funding rise by 61 per cent from $9 million a year to $15 million a year by 2015/16 and will ensure the services are able to keep up with demand.

“Being able to manage your money is vital to be able to improve your living standards. 

“This Government is committed to helping people to help themselves. It’s far better for people to learn and develop budgeting skills and avoid being caught in a constant cycle of bills and debts.

“Budgeting services have helped to reduce repeat hardship assistance requests. The work of providers in this sector deserves our recognition and support,” Mrs Bennett says.

Sustainable loans and budgeting advice are two great initiatives to help people manage their money.

It’s not only poor people who have problems budgeting.

Apropos of that a suggestion from the Young Nats at National’s Northern conference at the weekend for financial literacy education has merit.


Photo: Northern Young Nats have pushed for a policy of financial literacy education in schools. What do you think?

NZ First’s Kiwifund threat to super


Winston Peters has let his distrust of business and ignorance design a flawed superannuation investment policy:

A new superannuation fund to save billions of dollars for KiwiSaver contributors over the next thirty years will be a central plank for New Zealand First at the 2014 General Election. . . .

 Mr Peters told delegates that private funds managers were sucking the lifeblood out of KiwiSaver, and in five short years had already taken $325 million in management and investment fees.
“Independent forecasts show that over the next thirty years these funds managers will take more than $22 billion from KiwiSavers and there is no government guarantee that the remaining funds will be safe.
“There is huge pressure from the finance industry to get their hands on more retirement funds. The figures show these companies will make spectacular profits at the expense of people saving for their retirement. 
“Our plan is to change KiwiSaver so that it is a truly government-backed and managed retirement fund. Because of the economies of scale, and the elimination of hordes of ticket clipping fund managers, costs will be greatly reduced. People who pay into KiwiSaver will get their full return.”

Has he any idea of the cost of this? Can he guarantee the bureaucrats who will be managing the funds will be any less expensive and any better at investing than private fund managers?

Under the New Zealand First plan, KiwiFund will be government-guaranteed and it would invest substantially in New Zealand.
“People saving through KiwiFund will be buying back New Zealand.  KiwiFund will invest in buying back farmland, state assets and critical infrastructure. Funding will also be provided to support smart local companies to develop new products and create jobs.

A government guarantee passes the risk to taxpayers.

Super funds invest overseas for very good reasons. Funds based only, or substantially, in New Zealand would be vulnerable to natural or financial disasters here, some overseas investments insulates funds from that.

Having financial eggs is several baskets is a sound and sensible investment strategy.

Landcorp, the state owned farm company, makes less than 1% return on assets. How will KiwiFund’s farms do better than that?

Who will pick these smart, local companies and what guarantees will there be that they will provide sustained returns necessary to make superannuation sustainable?

“We have to invest in our own future. Overseas pension funds and corporate investors can hardly believe their luck – and are buying up everything they can in New Zealand.

“New Zealand First says its time to stop this sell out. We are already well down the road to serfdom in our own country.” . . .

Other people risking their money in our businesses isn’t a sell-out. It’s welcome inward investment which boosts share prices.

How much does he think these assets would be worth without overseas investment?

Mr Peters warned there would be “howls of outrage” from the private funds managers who would “fight to the death” to retain their $22 billion gravy train.
“In the United States, private funds managers lost billions of dollars of pension funds during the 2008 financial crisis. We simply cannot afford to let that happen to the retirement savings of New Zealanders.

And how would he guarantee that public funds wouldn’t do the same in the next financial crisis?

“KiwiFund will enable us to build a high performance economy from which all New Zealanders will get the benefit,” said Mr Peters.

KiwiFund would nationalise private savings.

It would jeopardise superannuation and threaten its sustainability by increasing the risk and reducing returns.

Investment policy must be based on sound financial sense not xenophobia and populist bias against business.

Peters says KiwFund will be a bottom line in coalition negotiations.

Labour and the Green Party might be stupid enough to agree to it, National wouldn’t.

But history tells us what Winston says is a bottom line now and what actually is if he’s in a position to negotiate after next year’s election won’t be the same thing.

MRP good buy?


A share broker wrote to David Shearer and Russel Norman thanking them for sabotaging the Mighty River Power float because it would enable him to buy more shares.

He said one of the unfortunate consequences of the LabourGreen power play was that it was putting off first time investors.

They’d been prepared to dip their toes in the investment market with MRP but the uncertainty in the wake of the LabourGreen sabotage was putting them off.

So are MRP shares still a good buy?

I’m not qualified to give financial advice and wouldn’t presume to tell anyone else what to do with their money but I’ll be putting some of mine in MRP.

Most believe superannuation insufficient


Only nine percent of people believe that New Zealand superannuation alone will provide them with adequate retirement income.

The survey by Horizon Research survey was released by the Financial Services Council which has a vested interest in people investing more.

But the results aren’t surprising, you’d have a very modest lifestyle if you thought $349 per week for an individual and $537 per week for a couple was anything more than barely adequate.

It was never designed to provide more than that and it is good that people realise they will have to make some provision for retirement income to top up the universal super.

Higher savings, more jobs, higher wages


A bigger savings pool would lead to more jobs and higher wages, a report by Infometrics, commissioned by the Financial Services Council (FSC) says.

• If KiwiSaver can achieve closer to universal coverage, say 80 percent of the workforce and contributions move up to 10 percent, (5 percent from employees and matched 5 percent by employers) the KiwiSaver fund would grow from its current level of $13 billion today to $731 billion by 2066.

• The impacts on the economy for New Zealand would be substantial and include investment in new jobs, an improvement in worker productivity and wage rates, slightly lower interest rates and a more resilient economy during recessions.

• Those starting work today would also get twice the pensions they would be entitled to currently from just NZ Super when they finish their working careers. They would look forward to a comfortable lifestyle, compared to those retiring today.

• To reach the $731 billion goal new KiwiSaver enrolees would need to increase their contributions by 1 percent a year to reach a total of 10 percent. This is an extra half percent a year each from themselves and their employer, over 10 years from 2015 to 2024.

• Existing KiwiSaver members whose contributions currently average 5 percent of income rising to a minimum of 6 percent this year, would only need to increase contributions by 1 percent a year for four years to achieve a 10 percent contribution rate for the rest of their working years and reach the $731 billion goal.

• The average KiwiSaver contribution at 5 percent is well below other countries and way short of what is needed to provide people starting work today with a comfortable retirement income for their expected longer retirement.

• Australian employers, who currently pay 9 percent, will move up to 12 percent over the balance of this decade.

• Two million New Zealanders and some 50 percent of the workforce are currently signed up to KiwiSaver.

• Existing KiwiSaver funds are already creating a significant boost for younger New Zealanders purchasing their first home. In 2012 KiwiSaver funded deposits on 10,000 first homes, worthy around $3 billion.

• Money is being invested into fast-growing New Zealand businesses and helping those businesses maintain a New Zealand base and ownership.

• KiwiSaver is creating a cushion against future economic downturns by ensuring capital continues to flow into companies because the contributions don’t stop being invested in response to short-term events, such as a share market downturn.

The Financial Services Council (FSC) has funded the research to stimulate further discussion. It will test New Zealanders appetite for a universal KiwiSaver Plus savings scheme with market research.

New Zealanders’ poor savings record makes us dependent on overseas borrowing which in turn makes our economy more vulnerable.

This has been gradually changing over the past four years and we’re now saving more than we’re earning – just.

An increase in saving would be better for individuals and the economy but I’m wary of a move to compulsory saving.

Paying off a mortgage or investing in a business could well be a better financial option for some people than a compulsory savings scheme.

NZers finally saving more


It’s taken a while but we’ve finally got the savings message:

It’s good news for Bill English ahead of the May Budget announcement. As the Government seeks to make savings, RaboDirect’s latest survey shows New Zealanders are doing the same at home – with substantially more Kiwis saving now than 20 months ago. However, people are also missing out on better rates by not shopping around.

The poll shows 73 per cent of Kiwis now have cash savings, up from 47 per cent in a similar poll in August 2010.* Reflecting the change in people’s savings habits, the poll also confirms just 11 per cent of Kiwis are not currently saving – a figure that has more than halved since 2010.**

For far too many years we’ve been spending more than we earn.

That’s why we have to rely on foreign investment, and while I’m not opposed to using other people’s money per se, too heavy a reliance on it is not wise – for individuals, businesses or countries.

Increased savings by individuals might be one factor in National’s continuing popularity in the polls. People who are taking a more Presbyterian approach to their own finances expect the government to do likewise and aren’t impressed by an Opposition which still seems to be more keen on taxing and spending.

Taking it to the limit


A bank glitch left people without pay for the second time in a couple of weeks.

That’s resulted in stories of people left without cash and nothing in their accounts for automatic payments.

It’s understandable that people on low incomes live from pay day to pay day but some of the stories of woe show people earning a lot more take their spending to the limit too.




Directors and investors beware


It will be cold comfort to the people who lost fortunes in Lombard Finance that Sir Douglas Graham also lost a large amount – a couple of million dollars.

The sentence of fines and community service handed down to him and other directors won’t help those who lost money either.

But it is a warning to other directors of their responsibilities and to investors that there’s a correlation between risk and return, no matter who’s running the company.

Bank requiring better savings before lending


ANZ has announced it’s all but stopping funding mortgages of 95% of a property’s value.

ANZ New Zealand chief executive, David Hisco, says households are wanting to put their money in the bank rather than taking on new debt, a trend that’s grown since the global financial crisis.

But customers wanting to borrow, may have to save more.

Mr Hisco says the bank is not sure that it’s the right thing to do to lend to customers who have only a 5% deposit and stopped doing so in all but special circumstances.

“We tend to think that probably in the current environment people should try and save a little bit more, maybe save 10% as a minimum.”

Even 10% is far lower than prudent banks used to require from would-be property owners.

In those days it was much harder to get loans and banks required you to show a savings record to convince them you’d be able to service and repay a mortgage.

In recent years it’s been easier to borrow more but that comes with higher risk for the lender and the borrower.

If you’ve only managed to save 5% of the property’s value and borrow the rest you could easily lose the tiny equity you have if values fall.

A lot of people got into trouble because of that, ending up owing more than their property was worth.

What would you say?


Inventory 2 at Keeping Stock asks what would you do if you won Lotto’s $34 million prize tonight.

My question: is what would you say when the media asked you what would you do?

My answer to that also answers I2’s question: I’d share some, have fun with some and use most of it to make some more.

That way I could keep on sharing and having fun and making more.

Memories of the 80s


Rural people remember the mid to late 80s for the difficulties of the ag-sag.

The removal of subsidies -which I now agree was a good move – coincided with high interest rates (we were paying around 25% for seasonal finance at one stage), raging inflation and a very high dollar.

In North Otago and much of the rest of the east coast we also had to contend with recurring droughts.

Until the share-crash of 1987 the country endured the pain while the cities partied.

The freer economy which made it so difficult in the country as farming was dragged into the real world, provided plenty of opportunities for money making in cities.

This video clip from a Close-Up programme shows a little of how it was done and features a longer-haired and greatly bespectacled John Key.

Hat Tip: Kiwiblog

Making investment too safe is risky


Her investments were handled by her son but she took an intelligent interest in them.

When the annual report of a company arrived she read it then rang her son and told him to sell all the shares she had in it.

Her reason?

The chair wasn’t wearing a tie in the board photo.

The sartorial standards of a board chair may not be very solid ground on which to base investment decisions but in this case the investor’s action was right. Soon after her shares were sold the company went under taking a lot of other people’s money with it.

There are some very sad stories of people who put their faith, and their money, in companies whose rhetoric outperformed returns and who lost the lot and – in the cases of those who’d borrowed to invest – more.

This has resulted in calls for tighter regulations for financial advisors and directors.

Some of the actions of some of the people involved in companies built on very shaky foundation warrant this but making investment too safe is risky.

As Stephen Franks opines:

The deterrent of the prosecutions could see the birth of  impeccable candour among company directors, ushering in a new age in which fear of prosecution makes it  possible to take at face value nearly all public commercial discourse, assuming statements have been checked to exhaustion for possibly misleading inferences. The resulting public confidence will see a flood of renewed saving and direct  investment by the newly trusting “mums and dads”.

Or we could be watching a dramatic acceleration of the great decline in  opportunities for direct public investment, as promoters directors and major shareholders decide that the compliance costs (and risks) of public offering far outweigh any lowered costs of capital.

And in another post:

Our new law must target crooks, people with criminal mens rea (guilty minds). It must not treat foolishness and over-optimism and carelessness as if they are similar species of wickedness. Because law that conflates them all will scare honest people into doing nothing, or spending time on fruitless compliance back-covering.

If regulations go too far they will place unrealistic responsibilities on directors and make it difficult to find them willing to do much or serve on boards  at all.

Protecting investors from bad directors is a worthy goal, but the law which aims to protect might also stifle innovation and growth which require varying elements of risk.

Investors and the wider economy will gain nothing and lose a lot if that happens.

This is news?


The headline says: Survey: few students understand basic finance

I don’t think that is news and nor does Retirement Commissioner Diana Crossan who said the survery results were shocking but not surprising.

“Why would you expect a high level of financial awareness when they don’t teach it at schools and parents don’t have the skills themselves?”

I wonder what the results would have been had the survey been given to parents and teachers too?

Points for paying back


The ANZ has developed a points scheme for customers who pay back all they owe their credit cards each month.

The Everyday Rewards Visa is aimed at customers who pay their balance in full every month and replaces points for purchases with points when they pay back money spent.

Credit cards generally have the highest interest rate for unsecured credit (with the dishonerable exception of loan sharks). It’s a sad indication of financial illiteracy that a lot of people don’t realise they’d be better taking a bank loan or increasing the mortgage rather than racking up credit debts they can’t pay back in full.

However, this scheme is an interesting concept which gives an incentive to the prudent and it might appeal to people who don’t realise the very high interest rates on credit card debt means paying the balance in full on or before the due date provides a reward in itself.

%d bloggers like this: