Economy

If you were Key and had $10b sloshing about next term – what would you do?

Frankly speaking, if you have a surplus of $10bn sloshing around it means you taxed the people too hard.

Prime Minister John Key is hinting at bigger than expected budget surpluses in the next few years which would allow the government to cut taxes despite the cost of the earthquake.

He says the quake is likely to cost between $2 billion and $3b and the government also expects to increase spending on health and education.

“Over the eight years we’ve been in government, while there was the big tax switch in 2010 there hasn’t been a significant reduction in people’s taxes,” Mr Key said at his post-cabinet press conference on Monday.

“I’m not arguing this is going to be significant as in a massive tax cut, but I am saying that I think there is an argument around a tax and family package that sits alongside a lot of other expenditure.”

Mr Key said Finance Minister Bill English had briefed cabinet on next week’s half-year economic and fiscal update.

“When you see the numbers, what you will see is the budget surplus getting quite big,” he said.

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More good news: New car registrations break record

One major indicator of positive economic performance is the purchase of new cars. People who feel comfortable economically buy new cars, businesses who think that the economy is going well will buy new assets like cars.

New car registrations are the highest they have ever been, a clear vote of confidence in the economy.

A total of 14,709 new vehicles were registered during the month of October, which has smashed all previous monthly records, the Motor Industry Association (MIA) has reported. Registration data goes back to 1975.

MIA president John Manley says that not only is it the highest October figure on record but the highest month of any, shattering the previous record of 13,983 vehicles registered during July 1984.

“It is also the first time that more than 14,000 new vehicles were registered in a month,” he said.   Read more »

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How is Robbo going to spin this good news?

Labour likes to talk down New Zealand and its economy. They are trying, and failing, to convince voters that they have better solutions.

I doubt even Robbo could spin this news negatively.

This Thursday GDP figures are expected to show the New Zealand economy grew by at least 3.5 per cent in the year to June 30.

ASB’s economists are picking it to be as high as 3.7 per cent.

“We expect GDP lifted a whopping 1.2 per cent over the June quarter, led by construction, manufacturing and retail activity,” ASB senior economist Jane Turner writes in her preview.

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More goods news: jobs galore

The economy is just refusing to fail at a rate that will see Labour with even a sniff of a chance in 2017

New data from Trade Me jobs looks at applications from 65,000 roles advertised on the website in April, May and June.

Gisborne is booming, up 39 percent on the same quarter in 2015 while the number of listings in the Hawkes Bay has jumped 27.2 percent.

Listings were up across the entire North Island while in the South Island as a mixed bag. Otago was the clear winner but there was a drop in listings across several regions:

North Island
Northland                   21.4 percent
Auckland                    14.4 percent
Waikato                     10.1 percent
Bay of Plenty              27.2 percent
Gisbourne                  39.0 percent
Hawkes Bay               2.7 percent
Taranaki                    2.5 percent
Manawatu/Wanganui  7.2 percent
Wellington                 4.1 percent

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Oh look, how inconvenient for Labour

Last year Andrew Little was stating that Labour’s focus was going to be on “jobs, jobs, jobs”. Grant Robertson is talking about the “Future of Work” and Andrew Little echoed that by talking about the rise of the robots…and nasty car washes.

Carmel Sepuloni thinks the statistics are wrong and calls for the government to be more transparent on job figures.

Grant Robertson even predicted that unemployment was going to balloon:

At the Select Committee Bill English appeared bewildered as to why unemployment is at 6%, higher than Australia, the US or the UK. He had no explanation as to why he has been unable to get unemployment any lower than the 5.6% recorded last year. With unemployment set to head towards 7% in the coming year, it is reckless that the government still has no plan to address this.

Apparently the government isn’t doing enough on jobs…and employment.

But wait…   Read more »

Bill and John’s 4th term is looking dicey, and so are the tax cuts

Economy, economy, economy.

National have had the benefit of a well performing one for the last 2 election results, but unless that milk market perks up, they’re staring down a very tricky campaign in 2017.

New Zealand’s central bank has warned that a prolonged slump in dairy prices could get worse, forcing interest rates down to maintain growth in the farm-reliant economy.

Reserve Bank of New Zealand governor Graeme Wheeler said today the price of whole milk powder had plummeted 63 percent since February 2014 and was still under pressure.

“High stockpiles of whole milk powder in China, the increase in global milk supply, and the trade diversion issues involving Russia make for a very uncertain future, with the potential for further downward pressure on global dairy prices,” he said.

The Reserve Bank keeps a close eye on milk prices because New Zealand is the world’s largest dairy exporter, selling some NZ$15 billion a year, about a third of the country’s entire exports.   Read more »

Bill’s tax cuts are back. Roll on up for an election spending spree

Bill English is back to talking about tax cuts…just in time for a nice long roll up to the 2017 election.

First up he dismisses talk of a recession.

Falling dairy prices are not as disastrous for the economy as they seem and the country is not heading for a recession, Finance Minister Bill English says.

Mr English told TVNZ’s Q+A this morning that the dairy industry was “probably a smaller part of [the economy] than most people think”.

“I think we’ve got to keep the dairy industry in perspective,” he said.

“It’s about 5 to 6 per cent of the whole economy. It’s only 20 per cent of our exports. The other 80 per cent will be starting to enjoy the benefits of the lower exchange rate, and the lower exchange rate will help cushion the impact on dairy of their lower prices.”

When asked by TVNZ’s Simon Dallow whether he agreed with Steven Bayliss of BNZ that New Zealand had a “recipe” for recession on its hands, with low dairy prices coupled with a potential drought and falling Christchurch house prices, Mr English said he thought the prediction was overstated.   Read more »

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Explaining is losing, so Steve Joyce refuses to answer

As we all know explaining is losing, but there is an alternative, which Steve Joyce used on The Nation…refusing to answer.

Of course that just then leads to accusations of hubris and arrogance…something Steve Joyce has in spades.

Economic development minister Steven Joyce is dismissing talk of an economic recession but admits “the job isn’t done in the economy”.

The economy is facing some challenges but they must be kept in perspective, Joyce told TV3’s The Nation on Saturday.

“We shouldn’t talk ourselves into a funk. We should focus on what we now know works for New Zealand, and that is we’ve seen a recipe over the last five or six years which is really working for this country. This is a reminder that we keep pushing in those directions, that we keep opening up to world trade, that we keep encouraging investment in our economy, that we keep building the innovation in our industries. Those are the things that are important,” Joyce said.

His comments came as a bank economists pointed to further cuts to dairy payouts, interest rates and economic growth forecasts.

[…]    Read more »

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John Roughan: Nature, business and the RMA

Let me ask this. Is the protection of New Zealand’s natural environment more important than its economic development? Or are they equally important?

I know, too easy.

So try this. Must they be given equal consideration under the law that governs almost everything New Zealand industry can do?

I had assumed so, too. The vast majority of us, I suspect, have supposed the Resource Management Act, for all its drawn-out procedures, allowed economic benefits to be weighed against environmental costs.

Not so. That became evident last year when the Government tried to write economic considerations into the act. An outcry erupted from non-government organisations. It came not just from the extremes of Greenpeace but from reasonable voices such as Gary Taylor’s Environmental Defence Society and the Fish and Game Council.

The “father” of the RMA, Sir Geoffrey Palmer, weighed in with a warning that to give equal standing to economic development would upset nearly 25 years of case law under the act.

By implication, and sometimes admission, they told us environmental arguments could not compete with economic gains if they were given equal consideration.

I’m not sure that’s true.   There is a balance to everything.   The problem is that the balance is currently way too far towards preservation at all costs.   As with most things in life, positions on the extreme ends carry a high opportunity cost.   Read more »

Does Russel Norman stand by all his statements?

The Green party likes to ask the gotcha question of the Prime minister…Does he stand by all his statements?

Well time for the show to be on the other foot.

Does Russel Norman stand by all his statements?

Russel Norman’s talking down the economy again – lamenting the state of the dairy industry.

Falling dairy prices are highlighting the danger of National’s economic strategy that focuses on the export of a few, simple commodities, the Green Party said today.

Dairy prices are down 8.4 percent this week – a 41 percent fall from their highs in February. Whole milk prices are down 11.5 percent largely due to weaker demand from China.

“National’s economic strategy has simplified our economy and concentrated our exports on a few, low-value-added commodities,” said Green Party Co-leader Dr Russel Norman.

“We want businesses to get on with innovating and exporting high value products that command high prices and support high wages.”

“National has bet the farm on the farm and it isn’t working. A growing reliance on one or two commodity exports has made our economy more vulnerable to commodity price swings.

“Producing increasing amounts of milk powder also has huge, downstream environmental impacts. We need to build a smart green economy with much lower carbon emissions and water pollution.

“A smarter way forward is to invest in innovation and policies that support our manufacturing and ICT export sectors.

“National is not building a strong, resilient export sector.”

Perhaps someone might like to ask him:   “You are proposing a carbon tax of $25, starting at $12.50 on all dairy farmers. You said at the time “they could afford it”. Now that dairy prices have fallen 41% are you going to abandon that policy?”

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