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Archive for March, 2014

Thank you, Geoff, and best wishes for your future…

31 March 2014 2 comments

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geoff robinson radio nz

Morning Report co-host, Geoff Robinson

Photo Acknowledgement: Sunday Star Times

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Tomorrow (1 April) see the last day for one of New Zealand’s best media presenters; Radio New Zealand’s Geoff Robinson. It will be a sad day, and somewhere in the back of my mind, I am hoping that this is some kind of quirky “April Fool’s” joke from the good people of Radio NZ.

In all seriousness, I will miss Geoff’s steady voice and hand. As I wrote 23 November, last year,

Geoff Robinson had been a part of my mornings since I “discovered” Radio NZ in the early 199os. He had been part of my mornings since then, outlasting several partners/lovers, and being there as I had my brekky and first of umpteen coffees.

His style was professional and reassuring. He asked the questions and voiced pertinent points from his guests that screamed from my own thoughts.  He always sounded chatty and “laid back” – but his subtle questioning could be deceptively edgy and insightful.

It’s a cliche, I know, but he will be a tough act to follow.

 

All things must end. But with the certainty of change also come human feelings of loss and sadness.

As I also wrote last year; I will miss him terribly. Like a family member who hangs around, never really imposing himself, but always with something interesting to say.

All the best, Geoff!

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Previous related blogpost

Geoff Robinson – an era ends

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Categories: Various Tags: ,

Winston Peters recycles pledge to “buy back state assets” – where have we heard that before?

31 March 2014 5 comments

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Over the last two years (give or take), NZ First leader, Winston Peters, has stated on numerous occassions that buying back shares in the three energy SOEs (Meridian, Genesis, and Mighty River Power) will be a “bottom line” in any post-election coalition deal.

On 20 June 2012, NZ First posted this statement on their website,

New Zealand First will use its influence on the next coalition Government to buy back our state-owned power companies which are being flogged off by National.

Rt Hon Winston Peters says New Zealand First is committed to buying back the shares at no greater price than paid by the first purchaser.

“State-owned assets rightfully belong to all New Zealanders but National is intent on handing them over to rich foreign investors.

“It is simply lining the pockets of the wealthy by selling off well-performing assets that already provide the Government with extremely healthy dividends.”

Mr Peters says it is only fair to alert potential investors that New Zealand First’s intention to buy back the shares will be part of any coalition negotiations.

“As things stand now, the assets will end up in foreign ownership which is an outright attack on our sovereignty. We are committed to repelling that attack.”

The pledge was repeated on 29 November 2013;

New Zealand First is the only political party that has said since the beginning that if the Government did go ahead with this idiotic decision, then when we are in a position to influence the next Government, we would buy back the shares at a price no more than that initially paid for them.

On ‘The Nation‘, on 15/16 March, interviewed by Patrick Gower, Peters repeated NZ First policy that a share buy-back, at a cost no greater than the original purchase-price, was a bottom line policy for his Party;

Gower: So that means buying Genesis back?

Peters: That’s right. At no greater price than they paid for it.

Gower: And does that mean buying back the other power companies as well?

Peters: It means exactly that. That’s what our position has been for some time.

Gower: So that’s a priority for you in any negotiations?

Peters: It is a priority, and it also has the blessings in terms of economic calculations from Treasury.

Taken at face value, Peters’ committment to buy back shares in the powercos seems more comprehensive and radical than either the Greens or Labour. Neither have committed to buying back shares in Meridian, Genesis, and Mighty River Power until the government books allow it.

But, can Peters’ pledge be taken at face value?

Can he be trusted to make good on his word to (a) make a share buy-back a bottom-line in any coalition deal and (b) actually follow through?

His track record on such matters is not good.

On 27 September 1996,  the then-Bolger-led National government sold the Forestry Corporation of New Zealand Ltd cutting rights to a private  consortium (Fletcher Challenge Forests, 37.5%, Brierley Investments Ltd, 25%, and Chinese state-owned company,  Citifor Inc, 37.5%)

This became a major election issue in  the lead-up to the first MMP election in  1996, with the Alliance organising a CIR petition to halt the sale.

NZ First leader, Winston Peters, pledged to buy back the cutting rights, stating on several occasions that any government he was part of would “hand back the cheque“;

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The game plan - what we're all playing for - NZ First buy back forest corp

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During the election campaign, Peters stated unequivocally his intentions that the privatisation of Forestry Corp would not stand under any government he was part of;

“I want to tell the Chinese buyers and I want to tell Brierleys that they had better not make any long-range plans because the day after the election is over we will be sending them an emissary to them them exactly what is going to happen, that is, that we are going to keep out promise, they can give back the asset and we will give the money back.” – Winston Peters,  Otago Daily Times, 1 Feb 1997 (on pre-election statement/promise)

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http://fmacskasy2.files.wordpress.com/2013/07/otago-daily-times-1-february-1997-winston-peters-asset-sales-forestry-corp-buy-back-hand-back-the-cheque.jpg

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On 11 December 1996, Peters announced that he would be entering into a formal coalition arrangement with the National Party, to form the first MMP coalition government.

Subsequently, Peters’ pledge to “hand back the cheque” and buy back the forestry cutting rights, was ‘quietly’ dropped;

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NZ First ignored chance to implement own policy

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“… NZ First did not make any attempt to include  in the [Coalition] agreement its policy of placing a 24.9% limit on foreign ownership of strategic assets.

Neither did they raise the NZ First promise to buy-back Forestry Corp, which was sold earlier this year to a consortium including Fletcher Challenge.” – Otago Daily Times, 16 Dec 1996

As Treasurer and Deputy Prime Minister in the National-NZ First government, Peters had ample opportunity to implement his Party’s buy-back policy. It was a promise he could have kept. And should have kept.

Instead, NZ First opted to implement National’s policy of tax cuts on 1 July 1998. With even more tax cuts promised by then-Finance Minister, Bill Birch.

This was money that Peters could have allocated and spent of re-nationalising our forests – but was instead wasted on cutting taxes, thereby reducing the ability of the coalition government to implement a buy-back, as Winston Peters had promised.

If Peters holds the balance of power after 20 September, and if he forms a coalition with either bloc, he may well carry out his promise to buy back shares in our energy utilities.

Or then again, he might not.

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References

NZ First: NZ First Committed To Buying Back State-Owned Assets

NZ First: Our asset sales buyback promise – Radio Live Column

TV3: Winston Peters: Asset buy-back ‘a priority’

FAO.org:  Devolving Forest Ownership in New Zealand: Processes, Issues and Outcomes

Treasury: Income from State Asset Sales as at 30 September 1999

Wikipedia: CITIC Group [Citifor]

Wikipedia: Referendums in New Zealand

Otago Daily Times: Alliance quits quest for forestry petition

Otago Daily Times: NZ First ignored chance to implement own policy

Otago Daily Times: NZ First opts for National

Otago Daily Times: Further tax cuts unlikely before next century

NZPA: Birch pledges more tax cuts

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Be careful what you wish for - Key and Peters

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 16 March 2014.

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Radio NZ: Nine To Noon – Election year interviews – Jamie Whyte

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– Radio NZ, Nine To Noon –

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– Wednesday 26 March 2014 –

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– Kathryn Ryan –

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On  Nine To Noon, Kathyrn Ryan interviewed ACT leader Jamie Whyte, and asked him about coalition negotiations, policies, polls, and other issues…

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Radio NZ logo -  nine to noon

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Click to Listen: Election year interviews  ( 22′ 24″ )

 

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A Query to the Taxpayers Union – ***UP DATE ***

27 March 2014 6 comments

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Taxpayers Union website banner

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Further to an earlier blogpost where I emailed Jordan Williams, at the Taxpayers Union, regarding Judith Collins’ taxpayer-funded trip to China, where she visited a milk importer (Oravida) of which  her husband is the sole Director…

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FROM:   "f.macskasy"
SUBJECT: Judith Collins
DATE:    Wed, 12 Mar 2014 10:39:48 +1300
TO:     "Taxpayers Union" <tipline@taxpayers.org.nz> 

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Kia ora,

I am aware that your Union recently condemned the cost
incurred by Green MP, Ms Mojo Mathers, in a trip she made to
Masterton to participate in a radio interview on
disabilities.

Accordingly, will you be investigating and commenting on the
trip made by National MP and Minister, Judith Collins, for
her recent taxpayer-funded trip to China? 

Ms Collins' portfolios include  Minister for Ethnic Affairs;
  Minister of Justice; and Minister for ACC.

It is unclear what purpose was served by a trip to China as
none of her portfolios relate directly  to foreign affairs
or trade.

Will you also be investigating and commenting on the
conflict of interest posed by her visit to Orivida - a
Chinese company of which her husband is a Director?

This appears to be little more than a tax-payer funded
'junket' and I await your response to this in the light of
your critical stance taken regarding Ms Mathers' trip to
Masterton.

Regards,
-Frank Macskasy

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Mr Williams, from the so-called Taxpayers Union, responded on the same day;

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National puppet organisation

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Several commentators on my previous blogpost suggested that blogs are a part of the media (or “new media”) and that Mr Williams should, accordingly, be responding to my query as if the NZ Herald had contacted him for a comment.

I took note of the suggestions and wrote back to Mr Williams,

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FROM:    "f.macskasy" 
SUBJECT:  Re: Judith Collins
DATE:     Sun, 16 Mar 2014 12:37:51 +1300
TO:      "Jordan Williams" <jordan@taxpayers.org.nz>
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Kia ora Jordan!

Thank you for taking the time to respond to my query, and in
such a timely fashion. That was greatly appreciated.

Regarding your point on the Mojo Mathers issue; I understand
that you stated you did not initiate contact with the
Herald, and that you responded to their query.

As you may be aware, I blog on various issues, including
covering public activities such as Select Committee
hearings; protests; etc. 

I am therefore part of the so-called "new media" of citizen
journalists/bloggers, as your colleague, Cameron Slater also
maintains.

Accordingly, I seek a response from you, on behalf of the
Taxpayers Union, on  National MP and Minister, Judith
Collins'  recent taxpayer-funded trip to China.

It is unclear what purpose was served by a trip to China as
none of her portfolios relate directly  to foreign  affairs
or trade. Ms Collins' portfolios include  Minister for
Ethnic  Affairs; Minister of Justice; and  Minister for ACC.

Considering that none of her portfolios relate to foreign 
affairs or trade, was this trip necessary? What purpose did
it serve, and for who?

What is the Taxpayers Union's response on the
perceived/actual conflict of interest posed by her visit to
Orivida - a  Chinese company of which her husband is a
Director?

Does the Taxpayers Union view Collins' trip as little more
than a tax-payer funded  'junket'?

Does the Taxpayers Union consider the $36,000 spent by
Collins on this trip "value for money"?

I look forward to the Taxpayers Union's statement on this
issue.

Regards,
-Frank Macskasy
Blogger

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As at 11.59PM, on 18 March, I have received no further correspondence from Mr Williams, nor from any other representative of the Taxpayers Union. Not even a simple acknowledgement of having received my 16 March email.

It is interesting to note the circumstances surrounding this issue.

I emailed the Taxpayers Union because it had commented – and roundly condemned – Mojo Mathers’ flight from Christchurch to Masterton, to attend a radio interview on the issue of disabilities.

On 2 March, Jordan Williams made this statement on the resulting furore surrounding his remarks on Ms Mathers’ travel;

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This morning there has been some criticism of my comments in a story on the Herald website about a trip Mojo Mathers took to Masterton from Christchurch apparently just for a short interview on a community radio station.

For clarification:

  • The Taxpayers’ Union did not seek media attention on this story. There is no associated press release. The Herald called yesterday evening asking for comment, as happens often.
  • The Taxpayers’ Union operate 24 hour media line for comment on taxpayer issues. Yesterday’s call came through to me and I was asked whether it was value for money for an MP to fly 800km for a radio interview on a small community station. I said it was not value for money when the interview could have been done on Skype as well as the comments that are quoted in the story.
  • I’ve made no comment about Ms Mathers disability. In fact, if the travel was necessary I would not criticise the spending. But answering questions posed by the Herald, on matter which as far as I know are completely unrelated to her disability, is legitimate.
  • Accusations that I (or the Union) sought to go after Mathers are ridiculous. To repeat, we were asked for comment by the Herald who were running the story. The comments would have been the same whoever the MP.
  • Accusations that the Taxpayers’ Union are partisan are also silly. I am proud that the Union has gone after National MPs and the current government for expenses, wasteful expenditure and corporate welfare. Seehttp://info.scoop.co.nz/New_Zealand_Taxpayers’_Union 

On reflection, I wonder why an MP from a party that prides itself for having a low environmental footprint choose to fly to a radio interview that could have been done on Skype. Perhaps Ms Mathers had other engagements in Masterton. If so, that was not the information provided to me at the time by the Herald reporter.

Jordan Williams.

Jordan Williams
Jordan Williams
Author

Note Mr Williams’ statement;

Accusations that the Taxpayers’ Union are partisan are also silly. I am proud that the Union has gone after National MPs and the current government for expenses, wasteful expenditure and corporate welfare

Aside from a handful  of press releases aimed at National Minister, Steven Joyce, most of the Taxpayers Unions public comments seemed to target Auckland mayor Len Brown; government departments (whilst not mentioning their Ministers); and strangely, the Labour Party – which is not even in government.

The Taxpayers Union has not commented on Judith Collins’ trip to China, despite there being glaring questions which demand to be asked. Questions such as why a Minister of Justice/Ethnic Affairs/ACC felt the need to spend $36,000 of taxpayers’ money on a junket overseas.

Mr Williams has not deigned to respond to my queries with a comment.

Yet, he was only too happy to launch into a savage excoriation of Green MP, Mojo Mathers, for spending an estimated $500 to speak on an issue that was actually her portfolio – and which, because of her disability, is  a matter she is intimately familiar to speak on.

One can only assume that Mr Williams does not wish to be drawn into this issue.  The reason is quite apparent.

Jordan Williams is closely connected to the likes of David Farrar, Cameron Slater, and Simon Lusk – all of whom are hard-Right National/ACT supporters and apparatchiks.

Right-wing blogger, David Farrar, is one of the  Board members of the Taxpayers Union. His ‘bio‘, however, mentions nothing about his close links to the National Party,

“David is a well known political blogger and commentator. David also owns and manages the specialist polling agency Curia Market Research and has an active involvement in Internet issues. He is an experienced political campaigner and former parliamentary staffer.

“I helped form the New Zealand Taxpayers Union because I believe that New Zealand needs a lobby group to stand up for the rights of taxpayers and ratepayers, and fight against those who treat them as a never ending source of funds”.”

David Farrar’s Disclosure Statement on Kiwiblog;

“Since I joined Young Nationals in 1986, I have been affiliated to, and a member of, the National Party. I do not regard National as always right, but it is the party which I believe gives me the greatest opportunity to achieve the New Zealand I want.

As a volunteer, I established National’s initial Internet presence in 1996 and have held various roles in the party up until 2005. I have three times been a temporary contractor to National HQ, helping out with the campaign in 1999, and also between staff appointments – in 2004 and 2007 for a total of ten months.”

Other Board Members are;

John Bishop; businessman; columnist for the right-leaning NBR; and authored a “puff piece” on National’s Deputy Leader, Bill English; Constituency Services Manager,  ACT Parliamentary Office, April 2000 – August 2002, “developing relationships with key target groups and organising events”.

Gabrielle O’Brien; businesswoman; National Party office holder, 2000-2009.

Jordan McCluskey; University student; member of the Young Nationals.

Jono (Jonathan) Brown; Administrator/Accounts Clerk at the Apostolic Equippers [Church] Wellington, which, amongst other conservative policies,  opposed the marriage equality Bill.

None of this is mentioned even in passing on the Taxpayers Union ‘Who We Are‘ page.

By now, it should be patently obvious that the Taxpayers Union is little more than a thinly-disguised, right-wing, front organisation for the National Party.

In which case, it would be “counter-productive” of the Taxpayers Union to be criticising Judith Collins’ trip to China. It would be a case of  attacking one of their own.

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References

Taxpayers Union:  A question of value for taxpayer money

TV1: Key puts Collins on warning, opposition calls for sacking

Fairfax Media: Anti-MMP plan leaked

Taxpayers Union: Who we are

Kiwiblog: Disclosure Statement

Finda.co.nz: John Bishop Communicator

Johnbishop.co.nz: Bill English – Minister of Infrastructure

Advisoryboards.co.nz:  Curriculum Vitae: John Bishop – Advisory Boards NZ

LinkedIn: Gabrielle O’Brien

LinkedIn: Jordan McCluskey

LinkedIn: Jonathan [“Jono”] Brown

Newswire.co.nz:  ‘Not up to church to dictate on gay marriage’

See Also

NZ Herald:  John Drinnan – High-risk PR strategy flies

Sciblogs: Jesus heals — but not cancer! [Equippers Church]

Previous related blogposts

Doing ‘the business’ with John Key – Here’s How (Part # Rua)

A Query to the Taxpayers Union

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Skipping voting is not rebellion its surrender

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 19 March 2014.

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Radio NZ: Politics with Matthew Hooton and Mike Williams – 24 March 2014

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– Politics on Nine To Noon –

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– Monday 24 March 2014 –

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– Kathryn Ryan, with Matthew Hooton & Mike Williams –

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Today on Politics on Nine To Noon,

Will The Mana party and The Internet party form an alliance?

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radio-nz-logo-politics-on-nine-to-noon

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Click to Listen: Politics with Matthew Hooton and Mike Williams (25′ 54″ )

  • Mana Party
  • Internet Party
  • Hone Harawira
  • Kim Dotcom
  • The Alliance
  • Sue Bradford
  • Roy Morgan Poll
  • Shane Jones, Winston Peters, NZ First, The Green Parrot Restaurant
  • Hekia Parata, Kohanga Reo National Trust, performance pay for teachers
  • Ernst Young, Serious Fraud Office, PISA Education Ratings
  • Judith Collins, Oravida
  • John Key, China, Fran O’Sullivan, Rod Oram
  • Labour Party, Forestry policy, Red Stag Timber, government procurement

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Radio NZ: Focus on Politics for 21 March 2014

23 March 2014 2 comments

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– Focus on Politics –

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– Friday 21 March 2014  –

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– Jane Patterson –

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A weekly analysis of significant political issues.

Friday after 6:30pm and Saturday at 5:10pm

The Education Minister has once again found herself at the centre of a political storm, after allegations relating to the Kohanga Trust Board’s commercial arm, have ended up with the Serious Fraud Office.

The question is; when does public money cease to be public?

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Radio NZ logo - Focus on Politics

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Click to listen: Focus on Politics for 21 March 2014 ( 17′  28″ )

  • Hekia Parata, Pita Sharples
  • Kōhanga Reo National Trust Board, Te Pataka Ohanga
  • Ernst & Young report
  • Serious Fraud Office
  • Derek Fox

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Acknowledgement: Radio NZ

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National, The Economy, and coming Speed Wobbles – March Update

23 March 2014 2 comments

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The Nationalmobile

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On 1 March, in a previous blogpost, I raised the following issues;

1. The Reserve Bank has indicated that  it will begin to increase the OCR (Official Cash Rate) this year. Most economists  are expecting the OCR to rise a quarter of a percentage point on March 13.

Confirmed. True to it’s word and as clearly signalled, on 13 March the Reserve Bank  raised the Official Cash Rate (OCR) from 2.5% to 2.75%.

2. An increase in the OCR will inevitably flow through to mortgage rates, increasing repayments.  As mortgaged home owners pay more in repayments, this will impact on discretionary spending; reducing consumer activity, and flow through to lower business turn-over.

Confirmed. The ANZ Bank  has already  announced it will increase its floating and flexible home loan rates .25 percentage points to 5.99% on 17 March. Expect other banks to follow suit. Other bank rate rises will be signalled here.

This will inevitably dampen consumer spending and reduce economic activity.

3. An increase in the OCR will inevitably also mean a higher dollar, as currency speculators rush to buy the Kiwi. Whilst this may be good for importers – it is not so good for exporters.

Confirmed, as the NZ Herald reported;

The New Zealand dollar jumped to a five-month high after the Reserve Bank raised the benchmark interest rate as expected and signalled further hikes are on the way.

The kiwi rose as high as 85.26 US cents, from 84.73 cents immediately before the Reserve Bank’s 9am statement. The local currency recently traded at 85.20 cents.”

And in another Herald story,

By raising rates, the Reserve Bank aims to tame both inflationary pressures and house price increases but also runs the risk of elevating an exchange rate it already considers too high, making exports less competitive.”

For a nation that bases it’s economy on exporting, a rising Kiwi Dollar will bring inevitable problems of higher debt and greater trade imbalance. It means we are not paying our way in the world and inevitably there will be a “Crunch Day” of tragi-Greek proportions.

On that day, the public will blame politicians.

Politicians will blame each other.

And the Left will shake it’s head in exasperation – it’s admonitions that this was all predictable as a natural consequence of unconstrained consumerism coupled with rampant capitalism –  lost in the shrill clamour of pointless blame-gaming.

As BERL economist, Ganesh Nana, said on The Nation on 15 March, we’ve been down this road before and not learned a single lesson  from these experiences.

4. As economic activity and consumer demand falls, expect businesses not to hire more staff and for fresh  redundancies to add to the unemployment rate. Unemployment will either stay steady later this year, or even increase.

On-going…

5. As interest rates rise, in tandem with the Reserve Bank’s policy on restricting low-home deposits, expect home ownership to fall even further. This will increase demand for rentals, which, in turn will push up rents. Higher rents will also dampen consumer spending.

Confirmed. The Reserve Bank  has reported that there has “been some moderation in the housing market. Restrictions on high loan-to-value ratio mortgage lending are starting to ease pressure, and rising interest rates will have a further moderating influence...”

Expect home ownership levels to fall even further as interest rates rise further; rents increase (thereby making it harder for low income families to save); and mortgagee sales to rise as well.

Interestingly, when in Opposition, National Party leader, John Key lambasted the Labour Government for a high OCR leading to high interest rates. In a desk-thumping speech, on 29 January 2008, he railed,

Why, after eight years of Labour, are we paying the second-highest interest rates in the developed world?

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Why can’t our hardworking kids afford to buy their own house?…

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Mortgage rates are rocketing upwards…

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We know Kiwis are suffocating under the burden of rising mortgage payments and interest rates…”

It seems that Mr Key should now begin to be answering his own questions.

6. As the global economy picks up and demand for oil increases, expect petrol prices to increase. This will have a flow-through effect within our local economy; higher fuel prices will lead to higher prices for consumer goods and services. This, in turn, will force the Reserve Bank to ratchet up interest rates (the OCR) even further.

Whilst fuel prices remained steady during the worst of the GFC, they have begun edging upward again as the global economy improves and demand for energy grows.

Our high Kiwi Dollar will mitigate the worst of rising crude-oil prices – but only temporarily. Once other Central Banks begin to rise their OCRs, expect the value of the Kiwi Dollar to fall as speculators sell the Kiwi in preference to harder currencies.

This will be good for exporters.

But will be a negative impact on imports – such as oil. Prices will rise as the Kiwi Dollar falls. Count on it.

7. As businesses face ongoing pressures (described above), there will be continuing  pressure to dampen down wage increases (except for a minority of job skills, in the Christchurch area). For many businesses, the choice they offer their staff will be stark; pay rise or redundancies?

Data suggests that wages are not keeping pace with GDP Growth;

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Wages

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NZ average hourly wages 2012 - 2014

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GDP

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NZ GDP Growth Rate 2012 - 2014

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8. Expect one or more credit rating agencies (Fitch, Moodies, Standard and Poors) to put New Zealand on a negative credit watch.

On-going…

9. According to a recent (21 February) Roy Morgan poll, 42%  of respondents still considered the economy their main priority of concern. 21% considered social issues as their main concern.This should serve as a stark warning to National that people will “vote with their hip wallets or purses” and if a significant number of voters believe that they are not benefitting from any supposed economic recovery, they will be grumpy voters that walk into the ballot booth.

There is no reason to think otherwise on this issue. Voters who are spending more on mortgage or rent are less inclined to be happy consumers.Especially as mortgage rates are expected to rise even further, according to Bernard Hickey’s assessment of Governor Graeme Wheeler’s statement,

Wheeler said in early December he expected to raise the OCR by 2.25% by early 2016, which would lift variable mortgage rates to around 8% by then. The bank forecast interest rate rises of around 1% this year and a similar amount next year.”

Home owners paying 7% to 8% on their mortgage will not be happy-chappies and chapettes. They will be grumpy. The 2009 and 2010 tax cuts will be a dim memory and any attempt by Key to remind voters of those cuts will not be warmly received. Especially as any minute gain for workers was more than swallowed up by the rise in GST, ACC, government user-pays charges, and now their mortgages and rents.

If only a small percentage of grumpy voters change their voting away from National (or stay home) – that will mean a critical drop in support for a right-wing bloc. One or two percentage points is all that is required to change the government.

10. National has predicated its reputation as a “prudent fiscal manager”  on returning the government’s books to surplus by 2014/15. As Bill English stated  just late last year,

We remain on track to surplus in 2014/15, although it will still be a challenge to actually reach surplus in that financial year.”

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On top of which is the $61 billion dollar Elephant in the room; the government debt racked up by National since taking office in 2008. As Brian Fallow wrote in the Herald in 2011,

The concern about government debt is not so much about its level, but the pace at which it is increasing. In June 2008 net government debt was $10 billion, or 5.6 per cent of GDP, and gross debt $31 billon, or 17.2 per cent of GDP.”

A lower tax-take, reported by Treasury on 11 March puts serious doubt on National’s ability to return to “remain on track to surplus in 2014/15″;

  • Total unconsolidated tax receipts for the seven months ended January 2014,  $143 million (0.4%) below the 2013 Half Year Economic and Fiscal Update (2013 HYEFU) forecast…
  • Total unconsolidated tax revenue for the seven months ended January 2014,  $459 million (1.1%) below the 2013 Half Year Economic and Fiscal Update (2013 HYEFU) forecast…
  • GST $250 million below forecast,
  • Net individuals’ taxes $191 million below forecast,
  • Customs and excise duties $156 million below forecast

The March Treasury report follows from a February report showing a similar “smaller than forecast tax take across the board“,

The Crown’s operating balance before gains and losses (obegal) was a deficit of $1.79 billion in the six months ended December 31, $380 million wider than forecast in its Dec. 17 half-year economic and fiscal update, and down from a shortfall of $3.19 billion a year earlier. Core tax revenue was $602 million below forecast at $29.18 billion.

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The smaller tax take was across the board, with GST 2.3 per cent below forecast at $7.5 billion, source deductions for personal income tax 1.2 per cent below forecast at $11.71 billion, and total corporate tax 4.9 per cent below expectations at $3.56 billion.

As I wrote on 1 March, should National fail in that single-minded obsession, the public will not take kindly to any excuses from Key, English, et al. Not when tax payer’s money has been sprayed around with largesse by way of corporate welfarism. Throwing millions at Rio Tinto, Warner Bros, China Southern Airlines, Canterbury Finance, etc, will be hard to justify when National has to borrow further to balance the books.

Any economic “recovery” is fragile; dependent on overseas factors; and will bring new problems. Little wonder that Key brought the election date forward by two months. Mortgage rates by the end of the year will be nudging 7%.

Not much of a Christmas present for New Zealanders.

As such, Labour must begin to attack Key’s government in this area. This will be a grand opportunity for the Left to finally drive a stake through the “heart” of National’s undeserved reputation as  being a “responsible economic manager”.

National remains utterly vulnerable during this year’s election.

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References

Interest.co.nz:  Bernard Hickey looks at what the Reserve Bank’s OCR decision means for mortgage rates and house prices

Radio NZ: Reserve Bank warns of more interest rate rises

Interest.co.nz: Mortgages

NZ Herald: Dollar jumps on OCR hike + video

NZ Herald: New Zealand raises interest rate to 2.75 percent

Reserve Bank: Reserve Bank raises OCR to 2.75 percent

John Key: SPEECH: 2008: A Fresh Start for New Zealand

Interest.co.nz: Oil and Petrol

tradingeconomics.com: Wages

tradingeconomics.com: GDP

Roy Morgan: Economic Issues down but still easily the most important problems facing New Zealand (42%) and facing the World (36%) according to New Zealanders

NBR: Govt sees wider deficit in 2014 on ACC levy cut, lower SOE profits

Fairfax media: Public debt climbs by $27m a day

NZ Herald: Govt debt – it’s the trend that’s the worry

NZ Treasury: Tax Outturn Data

NZ Herald: Govt deficit bigger than expected as tax trickles in

Previous related blogposts

TV3 Polling and some crystal-ball gazing

National, The Economy, and coming Speed Wobbles

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https://fmacskasy.files.wordpress.com/2014/02/the-cost-of-living1.jpg

Above image acknowledgment: Francis Owen

This blogpost was first published on The Daily Blog on 16 March 2014.

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