NZ loses its way

November 22, 2017

For several years, New Zealand has received international attention and praise for its economic success.

Just a few weeks with a new government this commentary from Jared Dillian at Forbes is less than enthusiastic about its policies:

On September 23, the people of New Zealand elected 37-year-old Jacinda Ardern as prime minister, the youngest prime minister in New Zealand’s history. Ardern has brought youthful energy to New Zealand politics, but her scary rhetoric during the campaign (like calling capitalism a “blatant failure”) has some people wondering if she will take the country back to the bad old days of the 70s and early 80s.

New Zealand is a supply-side economic miracle. Not long ago, it was one of the most unfree economies that was not actually Communist in name. Most industry was nationalized, from telecommunications and transportation, to banks and hotels. There were strict capital controls and prohibitions on owning foreign assets. And of course punitively high tax rates, inflation, and extraordinary levels of government debt. . .

Those policies from the early 80s back are the ones which failed us.

The 1980s saw an enormous rollback in the size and scope of government, and the beginning of a supply-side revolution. Of course, economic liberalization was happening around the world at that time, but it was most dramatic in tiny New Zealand.

New Zealand enjoyed unprecedented economic growth, and leapfrogged to near the top of the economic freedom rankings, where it usually sits only behind Hong Kong and Singapore. It became one of the richest countries in the world. Part of New Zealand’s success was due to good central banking; the Reserve Bank of New Zealand was the first central bank in the world to institute a formal policy of inflation targeting, which other central banks have copied over the years, to everyone’s benefit. . . 

Inflation is theft. It steals the real value of money and it’s the poorest who are hit hardest by it.

It seems likely that New Zealand will experience a recession during Ardern’s term. Nobody is predicting a return to the bad old days of the 70s, but New Zealand will probably lose its status as one of the most open, free economies in the world. It takes decades to weaken an economy, just like it takes decades to strengthen it. But investors will probably want to avoid New Zealand for the time being.

This government has taken down the welcome sign to immigrants and inwards investment.

Richard Harman at Politik reports the Government is to put the approval of overseas purchases of farmland on hold as it gets advice from officials on how to carry out its coalition agreement with NZ First to strengthen the Overseas Investment Act.

The hold is likely to affect tens of millions of dollars of property sales and possibly hundreds of millions of dollars worth of business transactions.

POLITIK understands that the sale of one large South Island property and the potential sale of an iconic Wanaka station along with two large North Island dairy properties are likely to be caught up in the move.

It was not clear from the comments from Prime Minister Jacinda Ardern yesterday whether the hold will also apply to overseas business investments – but if that is the case, there are proposed takeovers in both the oil and gas and private hospital sectors that could be affected. . . 

The sale of Icebreaker  to VF Corporation which needs OIO approval as will the sale of carpet maker Godfrey Hirst to global flooring manufacturer Mohawk Industries.

Uncertainty over the economy, the inflationary affect of a lower dollar and higher borrowing, and whether immigrants will be available to fill staff vacancies is denting business confidence.

Less confidence means businesses are less willing to take risks, including hiring more staff.

It’s very early days but if overseas investors are being warned off and local businesses are losing confidence, it’s a sign that New Zealand is losing its way.

 

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Rural round-up

July 9, 2015

Proof is in the pudding for romney ewe hogget winner – Kate Taylor:

Brendan and Prudence Butler farm 260 hectares of summer dry country at Tikokino on the Ruataniwha Plains – part of a property that has been in the Butler family since 1903.

Early-lambing romney ewes are farmed with steer finishing at a stocking rate of 9.3 stock units per hectare. It is a low-cost farming system and their results are achieved with no irrigation, no off-farm grazing, and no use of urea. They also have no crops, no hay, and no supplements for any stock – and the youngest pasture is more than 40 years old. . .

Grazing of lupins investigated – Sally Rae:

Grazing of Russell lupins in the high country has ”plenty of scope” in the right areas, New Zealand Merino Company production science project leader Mark Ferguson believes.

A management protocol is being prepared with the aim of gathering as much evidence as possible, both economic and environmental, so it was a ”one stop shop” for lupins, Dr Ferguson said. . .

Posthumous award for sheep efforts – Sally Rae:

Errol Holgate’s contribution to the sheep industry was recognised at the Beef and Lamb New Zealand sheep industry awards in Invercargill last week.

The retired Otago farmer and farm adviser, who died in May from motor neurone disease, posthumously received the award for an individual or business making a significant contribution to the New Zealand sheep industry. . .

 Dairy sector faces Australian competition:

Australia has announced a $4 billion investment in its agriculture sector, even though there’s an oversupply in the dairy sector, fuelled by China’s slowing economy.

It’ll see huge irrigation dams and other infrastructure built, as well as tax breaks and drought assistance for farmers. . .

NZ Merino secures $3M contract with Godfrey Hirst for luxury wool carpet – Tina Morrison:

(BusinessDesk) – New Zealand Merino Co, which markets the nation’s wool to customers on behalf of suppliers, has secured a $3 million contract to supply a merino wool blend to manufacturer Godfrey Hirst for a luxury carpet range.

The Australian-based carpet maker’s new range will use fibre from sheep with a Merino genetic base crossed with stronger wool bloodlines. Production runs of the new carpet range will start in the coming shearing season following trials over the past year, NZ Merino said in a statement. . .

Upper North Island Beckons Best Young Butchers:

In the last of the Alto Young Butcher and Competenz Butcher of the Year regional finals, the Upper North Island’s best young butchers have been confirmed.

The winner of the Alto Young Butcher category was Luka Young from PAK’nSAVE Lincoln Road, while the winner of the Competenz Butcher Apprentice category was Hohepa Smith from Countdown Meat and Livestock.

In just two hours, entrants turned a beef rump, pork loin and a size 20 chicken into a display of value-added cuts in the practical cutting test. . .

 

Read more: http://www.3news.co.nz/business/dairy-sector-faces-australian-competition-2015070609#ixzz3f7xNF4ra


Summit Wool Spinners to be sold

February 1, 2013

Summit Wool Spinners in Oamaru is to be sold to Canterbury Spinners Ltd, a subsidiary of the carpet manufacturer Godfrey Hirst.

The sale of the woollen mill, owned by the Japanese company Sumitomo Corporation, is subject to consultation with employees and unions.

“Sumitomo has made a decision to sell Summit. This was driven by a number of factors affecting trading results including an unfavourable exchange rate and less local demand for wool carpets. International demand for woollen carpet yarn has also been affected by the Global Financial Crisis,” said the managing director of Summit, Mr Harry Ogawa.

“From Sumitomo Corporation’s perspective, Summit was becoming isolated from the parent’s overall global textile business.

“Summit employs loyal and skilled people and produces top quality yarn. Unfortunately demand for good wool yarn to be used in carpet and rugs have fallen resulting in a difficult trading time,” he said.

The mill is one of Oamaru’s biggest employers but it’s future has been uncertain for some years.

Wool carpets face strong competition in international markets and demand has been hit by the GFC.

The loss of nearly 200 jobs is tough for the workers, it will also have an impact on the town.


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