Why so glum?

August 8, 2019

The quarterly unemployment rate is down to 3.9%; and the official cash rate is at an historic low of 1%.

Yesterday’s GlobalDairyTrade was down 2.6%, the fifth drop in the last six auctions but no-one’s suggesting the milk payout will be lower than $6.

Horticulture and wine are getting healthy returns, arable incomes are reasonable, wool is dismal but the outlook for sheep meat and beef is positive.

But Business confidence is down to -44.3% :

. . .That was the worst reading since August last year, when the index was at -50.3. Employment intentions slumped (-5.5 vs 0) as firms sought to cut jobs, capacity utilization weakened to its lowest since 2009 (0.4 vs 5.3), and activity outlook (5.0 vs 8.0) and export expectations (1.4 vs 5.3) deteriorated. In addition, profit expectations fell further(-16.3 vs -12.5), while investment intentions turned to negative (-0.3 vs 2.5). . . 

And consumer confidence is also gloomy:

The Westpac-McDermott Miller consumer confidence index in New Zealand fell to 103.5 in the second quarter of 2019 from 103.5 in the previous period. Households became increasingly worried about conditions in the global economy over the next five years (-3.5 points to 11.9); and the number of households who think now is a good time to purchase a major item has fallen to a two-year low (-5.5 points to 17.9).  . . 

Why are we so glum?

Today’s historic cut to the Official Cash Rate down to just one per cent sounds a dramatic warning that the New Zealand economy is slowing and the Government needs to get serious about growth, National’s Finance Spokesperson Paul Goldsmith says.

“The Reserve Bank’s cut came with the message, ‘Indicators of growth remained weak or weakened further over the past few months’.

“The only time in the history of the OCR there has been a cut of this magnitude have been after the 9/11 terrorist attack, during the Global Financial Crisis, and after the Christchurch earthquake.

“Of greatest concern is the absence of any clear growth plan from this Government.

“Budget 2019 was devoted almost exclusively to spreading national wealth, with very few policies to grow the economy. The most expensive Budget commitment to transform the economy was a $1 billion subsidy for rail. There was little else.

“Instead of ramping up infrastructure investment, the Government has stopped or postponed a dozen roading projects which were ready to get underway, and replaced them with projects that aren’t ready to go, and won’t be for a lot time yet’.

“We need to move beyond policies that add costs to the business and drive down business confidence.

“National would revive the economy by having a plan for growth which would see confidence bounce back and the economy gain the strength it’s lost under this Government.”

There is no doubt what the government is doing and not doing are a large part of the problem.

In spite of at least reasonable returns for almost all primary products farmers feel under-siege with very real concerns about the costs and restrictions the government will impose on them.

Other businesses have similar worries, not helped by the latest confidence-sapping message sent by the Prime Minister’s ordering Fletchers to not build anything until the Ihumātao dispute is settled.

Then there’s the on-going argument over the letter Associate Transport Minister Julie Anne Genter is refusing to release and the questions that raises over the part she played in delaying Wellington transport plans.

Concerns over this aren’t helped by claims from Wellington City Councilors that the Green Party confidence and supply agreement would have been put in jeopardy if a watered down Let’s Get Wellington Moving wasn’t accepted.

All of this points to government instability and is compounded by Winston Peters’ latest game playing over requiring a referendum on changes to abortion law.

When interest rates were already so low, it is unlikely the larger than expected drop in the OCR will have much impact on the productive economy when there are so many reasons pointing to the need for caution.

And while low interest rates help borrowers they punish savers.

All in all there is little to give anyone confidence anything is going to get better soon and plenty of reasons to doubt the government has the plans and policies to help.

And now the Reserve Bank has dropped the OCR, it raises the question of what happens when, as is likely, economic conditions get worse.


RMA reform welcome and needed but

July 25, 2019

The government plans to reform the Resource Management Act:

The Government is overhauling our resource management system, focusing on the Resource Management Act 1991 (RMA) – the primary legislation governing the use of our land, water and air resources. 

The Government wants the RMA to support a more productive, sustainable and inclusive economy. It also wants the RMA to be easier for New Zealanders to understand and engage with. The Government is approaching this in two stages. 

It plans to start by amending the RMA.

The Government is proposing several specific changes to the RMA through an amendment bill. The aim of the bill is to make the RMA less complex, give people more certainty on RMA issues, and increase opportunities for public participation.

The bill will address issues with resource consenting, enforcement and Environment Court provisions within the RMA. It may also include some other policy proposals. 

The bill is currently being drafted and we are working to introduce it to Parliament later this year. Public submissions will be called for when the bill is referred to a select committee. . . 

Then there’s the second stage:

The Government is undertaking a comprehensive review of the resource management system. This review will examine the broader and deeper changes needed to support the transition to a more productive, sustainable and inclusive economy. 

The aim of the review is to improve environmental outcomes and enable better and timely urban development within environmental limits. . . 

Few if any will argue with the aims to support a more productive, sustainable and inclusive economy and to make the RMA easier to understand and engage with.

Media releases from right, left and centre support the proposal. Reform is welcome and needed but getting agreement on that is the easy part.

The difficulty will be getting those who support the need for reform to agree on the details of any changes that are proposed.

Federated Farmers says reform will be a huge challenge:

The organisation agrees with Environment Minister David Parker that because of frequent amendments, the RMA is now overly cumbersome, costly and complex.

“The review will be no easy task. It will need to consider wide and diverse opinions and concerns. There are few organisations which have been more intricately and routinely involved in resource management processes across the country since the Act first came into force than Federated Farmers, so we consider our active input on the review panel will be vital,” Federated Farmers resource management spokesperson Chris Allen says.

The Act is a source of much frustration for resource users across the country. It is now twice the size it was on enactment in 1991 and while it has created a booming market for planners, lawyers and other experts, this has been at the expense of resource users, ratepayers and the environment.

Federated Farmers would support amendments that made the Act, in the Minister’s words, “fit for purpose in the 21st century”, and approve of any attempt to remove unnecessary complexity, delays and costs.

“But we have a word of caution – it’s hard to make processes move faster, when regional and district councils are already under-resourced and facing increasing public pressure and inadequate central government support,” Chris says.

There is also insufficient weighting given to the economic impacts of regulation on farms, rural communities and the regions of New Zealand. Economic impacts should be considered in balance with environmental, social and cultural wellbeing, instead of just the quick skim currently given.

“The trend appears to be for central government to push national regulation onto local government, expecting them to both resource and fund processes. This isn’t a case of local government being given too much power, rather it’s a trend of central government putting out cookie-cutter national rules and regulations, and expecting local councils to ‘make them work’.

“We have real concerns over central government interfering with local processes, as many regional councils are well underway in developing plans to address water quality and quantity,” Chris says.

Some of these plans are already in place, and other regions are wrestling with tricky questions around how plans can be tailored so they are both efficient and effective. Anything that interferes with these processes, and the considerable economic and social investment already made by our communities, could be a step-backwards for water quality management in New Zealand.

There has been a massive investment in time and money into changing farm practices and infrastructure, and getting a better understanding of the implications of activities on land to the environment.

This groundswell of change has been happening across the country, from landowner level through to catchment groups and wider district efforts. These efforts do not result in improved outcomes overnight, but trends are indicating we are on the right track.

“Ultimately, we don’t want to see this timely opportunity to reform the RMA, being instead used simply to put up as many affordable houses as possible, with an overly urban focus, to the peril of fixing other key issues with the Act,” Chris says.

The previous government’s attempts at reforms were vehemently opposed by the parties in the current government and it won’t be easy to reconcile those parties’ differing views on what needs to be done and how to do it.

At a press conference on Wednesday, Parker said that no RMA reform legislation would be introduced until after the 2020 election because the working group would take nearly 10 months to make its recommendations.

Collins called this “cynical timing.” Given that the next government to consider legislation could well be a National one, she believes Labour should be consulting the Opposition. But Parker refused to consider including the Opposition in the reform process until legislation is introduced, insisting it was the “parliamentary process”.

Given this, the latest effort at fixing the RMA is unlikely to succeed, Collins believes. “You’ve got New Zealand First going around the provinces saying, ‘We’re going to sort out the RMA and stop all these impediments to development.’ You’ve got the Greens saying, ‘We’re gonna stop all these developments.’ It just must be a nightmare for Labour.”

Winston Peters didn’t disagree with her. When asked if he thought New Zealand First would be on the same page as Labour and the Greens about RMA reform, he answered simply, “No”.

“I cannot agree with their race-based approach,” he said of Green Party support for a Māori role in the resource management system. . . 

That isn’t an encouraging start to the process.

Getting consent through the RMA is process is a long and frustrating process, reforming the act won’t be any easier.


Rural round-up

July 12, 2019

Rotten reality: Apples still on trees in July a visual reminder of Hawke’s Bay picking struggles :

Fruit hanging on trees well into a cold and frosty Hawke’s Bay winter provides a visual reminder of the struggle growers had finding pickers over the last season.

New Zealand Apples and Pears CEO Alan Pollard said it was the third year in a row a labour shortage had been declared in Hawke’s Bay, and it was time to have a conversation about solving the issue.

“We can’t continue to have an annual conversation which is what we’ve been doing in the past, we’ve got to have much more long-term solutions. . .

Winston Peters wonders why he doesn’t get a thank you from farmers – Hamish Rutherford:

No one provides a defence of the New Zealand Government quite like Deputy Prime Minister Winston Peters.

Over the course of nearly two years in Government, senior Labour Party Ministers have adopted an increasingly conciliatory approach to critics, while, if anything, Peters becomes more cantankerous.  . . .

Sheep and beef on farm inflation reaches 3 percent:

Sheep and beef farm input prices rose twice as fast as consumer price inflation in the year to March 2019 with on-farm inflation at 3.0 percent, according to the latest Beef + Lamb New Zealand (B+LNZ) Economic Service Sheep and Beef On-Farm Inflation Report.

The report identifies annual changes in the prices of goods and services purchased by New Zealand sheep and beef farms. The overall on-farm inflation rate is determined by weighting the changes in prices for individual input categories by their proportion of total farm expenditure.

B+LNZ Economic Service’s Chief Economist Andrew Burtt says the biggest three expenditure categories – shearing expenses; fertiliser, lime, and seeds; and council rates – contributed substantially to the 3.0 percent rate of on-farm inflation. . .

ANZCO confident no repeat of horror year – Allan Barber:

ANZCO’s 2018 pre-tax loss of $38 million was the worst result in the company’s history. The exporter has traditionally posted a profit, even in difficult years for the meat industry which has always had a chequered history, so it is critical to assess what went wrong and, more important, how to make sure it doesn’t happen again.

None of the largest meat companies that publish their annual results, Silver Fern Farms, Alliance and ANZCO, enjoyed a great year, but contrary to its previous performances relative to its competitors, ANZCO had the worst of it by a considerable margin. Analysis of the figures shows record income more than offset by expenses and finance costs; the obvious questions for CEO Peter Conley are what is going to change and how is 2019 tracking? . . .

Alternative protein startups: let’s get the facts straight about livestock’s carbon footprint – Lauren Manning:

The impact of the meat industry on the environment, particularly relating to greenhouse gas emissions, has become common knowledge among consumers and is increasingly a feature of mainstream media headlines today.

Arguably starting when the Food and Agriculture Organization released a paper entitled Livestock’s Long Shadow in 2006, the anti-meat movement moved on from focusing on concerns about the humane treatment of animals to its environmental footprint. . . 

Inaugural Ground Spread Awards recognise  innovation, skill and excellence:

The inaugural winners of the New Zealand Groundspread Fertilisers Association (NZGFA) awards were announced this week at the organisation’s 63rd annual conference, ‘Technology the Enabler’, in Taupo.

The NZGFA Innovation Award (sponsored by Trucks & Trailers) was presented to Canterbury’s Ron Smith of R&R Haulage Ltd for his detailed research into testing bout widths against product quality. . .


Just when you think it can’t get worse

May 30, 2019

Treasury allowing Budget information to be found from a simple search on its own website was bad enough.

Calling it hacking and involving the police without properly investigating first was worse.

And just when the organisation ought to be showing it’s learned a lesson and taking extra care it does the opposite:

. . . 10:30am – In a major blunder, Treasury staff mistakenly handed out copies of the budget to journalists and political commentators.

Newshub’s Political Editor Tova O’Brien tweeted that she was given one of the top secret documents. When the recipients questioned whether they were supposed to see them before going into the lock-up, she says an official asked “Are you not Treasury?” before hurriedly taking the copies back. . . 

It’s a simple human error but given the lead-up it shouldn’t have happened.

So will heads roll?

Treasury bungled badly and Finance Minister Grant Robertson and Winston Peters made baseless accusations against Simon Bridges.

Will there be resignations or even apologies?

Don’t hold your breath.


No CGT but . . .

April 18, 2019

The government is not going to adopt a capital gains tax .

The backdown has cost $2 million and 18 months of uncertainty but Simon Bridges point out there will be more taxes:

“While the Government has backed down on a Capital Gains Tax, there are still a range of taxes on the table. They include a vacant land tax, an agricultural tax and a waste tax.

“Prime Minister Jacinda Ardern says she personally still wants a Capital Gains Tax and that our tax system is unfair. New Zealanders simply can’t trust Labour when it comes to tax. 

“The New Zealand economy has suffered while the Government has had a public discussion about a policy they couldn’t agree on. Put simply, this is political and economic mismanagement. . . 

The government asked a question, the answer to which its three constituent parties couldn’t agree on.

Remember James Shaw saying:

“The last question we should be asking ourselves is, ‘can we be re-elected if we do this?’ The only question we should be asking ourselves is, ‘do we deserve to be re-elected if we don’t?'”

Labour and the Green Party had to swallow a big dead rat, served to them by Winston Peters:

. . .It wasn’t even an hour after the Prime Minister had put the final nail in the coffin that is the capital gains tax (CGT) when RNZ asked Mr Peters whether Labour will be expecting his party’s support on another issue in return for losing this flagship policy. Mr Peters fired back: “May I remind you, the Labour Party is in government because of my party.”

No reading between the lines necessary. . .

New Zealand First is polling under the 5% threshold, it couldn’t afford to alienate the dwindling number of its supporters.

The capital gains tax, if not dead, is buried while Ardern is Prime Minister, but the threat of other niche taxes is still live.

 


No more lives should be risked

November 26, 2018

The Listener editorial says there should be no more lives put at risk in the Pike River mine.

It goes without saying that New Zealanders have enormous sympathy for the families of the 29 men who died in the Pike River Mine disaster. However, it does not automatically follow that all New Zealanders think there should be an attempt to enter what is sadly now more tomb than mine.

That such an attempt seems set to be made is the latest turn in a chain of events whose origins lie in actions and inactions long before the mine exploded eight years ago. It is unarguable that the mine operator, Pike River Coal, bears primary culpability because no agency had more knowledge, more ability to affect the workplace culture and more responsibility for the safety of the men underground than the company. It abjectly failed its workers, contractors and their families.

Statutory health and safety provisions that should have been a back-up had been eroding under the previous Labour Government and continued to do so under National. One of the findings of the royal commission into the tragedy was that mining inspectorate services had been so run down that by the time of the disaster, New Zealand had just two mines inspectors, and their travel budget was so constrained that their invigilation was patchy. 

There were so many failings that “accident” is hardly the right word to describe the disaster that occurred on November 19, 2010. This tragedy could have happened at any time to any shift of miners.

It was a disgrace that when Pike River Coal, then in receivership, was convicted of charges relating to the explosion, the company went under leaving more than $3 million in reparations unpaid. WorkSafe New Zealand then laid 12 health and safety charges against mine boss Peter Whittall. Yet they were dropped in return for his insurance company providing the reparations the mine company failed to make. The Supreme Court last year ruled that the deal was “an unlawful agreement to stifle prosecution”. However, it may still never be possible to hold any person or entity to account. As with the collapse of the Canterbury Television building, the denial of even an attempt at justice rankles with New Zealanders.

It was a further disgrace that New Zealand First and Labour chose to politicise the tragedy at the last election, with Winston Peters promising to be one of the first to re-enter the mine. His swagger implied that cowardice, not caution, was the problem. Never fear, Peters would go where Mines Rescue had not been allowed to tread. This determination to re-enter the mine flies in the face of the only positive development to have come out of the disaster – a new zeal for health and safety.

To unnecessarily risk more lives in the same mine, however much some of the families want it to happen, undermines the very principle this tragedy so firmly established: that safety is paramount.

Through all this, some of the victims’ families have heroically battled on, determined to see responsibility sheeted home somewhere, somehow. Their efforts have been laudable. The idea, however, that a team will be able to find in the devastated, burnt mine evidence that will lead to a prosecution seems illusory and the recovery of human remains sadly unlikely. Regardless, politicians have for years kept the families’ hopes dangling. This seems more cruelty than kindness. The closure the families seek might be further advanced had it been given more of a chance.

The $36 million cost of re-entry would not be worth mentioning, even to those who think the money could be better spent on reducing the rising road toll or child poverty, if the chances were higher that it will serve any purpose except political triumphalism. Little has spoken of “knowing when to call it quits”.

Arguably, and regrettably, that point has probably passed. There must be no more lives put at risk.

John Roughen also argues against any attempt at re-entry and makes the point, the announcement so far isn’t to go very far at all:

Just as in 2013, they don’t propose to go further than the point where the tunnel has collapsed about 2km in. The only difference is that five years ago this plan was reportedly estimated to cost $7.2 million. Last week we were told it will cost $36m. This is madness. . .

But it’s not just the dollar cost, it’s the potential cost in more lives that really matters.

“Safety is paramount,” they all say. If you listened closely last week, they’re not definitely going further than a second chamber, a trifling 170m into the 2km tunnel. Beyond that, they say, it might not be safe. In other words, nothing has changed but the bill.

The company, successive governments, the union and even workers themselves who didn’t act on justifiable fears about safety, are to a greater and lesser extent culpable.

The only good thing to have come out of this disaster is much stricter legislation that makes everyone involved responsible for health and safety.

Even without that, to risk further lives for the very, very slight hope there will be evidence that could be used, or bodies to be returned, can not be justified.


A classical education is never wasted

October 8, 2018

Hon Chris Finlayson at his erudite best in the general debate:

. . . I was trying to work out, the other day, the dynamics of this coalition Government, and then I worked out the answer, because it reminds me very much of that excellent play by Christopher Marlowe, Doctor Faustus. Doctor Faustus is the person who sold his soul to Lucifer in exchange for a few baubles, but at the end of the day Lucifer demands his price. He wants the soul of Doctor Faustus. You, Mr Speaker, from your outstanding academic days at Onslow College, would remember Faustus’ last speech: “Ah, Faustus, now thou hast but one bare hour to live, then thou must be damned perpetually. O lente, lente currite, noctis equi!” because Satan has come to claim his soul.

That is the dynamic in this coalition Government. [Interruption] Well, I don’t what they learnt at Petone Tech, but that’s what Greg O’Connor and I did at St Patricks College. I don’t know that Greg O’Connor actually went to class very much because he was too busy down the front grounds smoking. But I digress.

This is what happened in the negotiation with New Zealand First. They sold their soul to “Old Nick”, to Lucifer, whom we shall describe as the Rt Hon Winston Peters—the vanquished member of Parliament for Tauranga and Hunua and Northland—so that they could have the baubles of office. When they got there, they said to themselves, “Great, we’re here. What are we going to do?” And they had no idea, because they weren’t prepared for Government, but, slowly but surely, “Old Nick” has called in the favours. [Interruption] I’m not talking about Dr Smith; he’s “Young Nick”. . . 

 


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