Coming soon: A terror alert near you!

19 March 2016 Frank Macskasy 7 comments

threat-level - nz (1)

Setting the Stage for to Dis-information, Deception, and Distraction

Right about now, National is in very, very, VERY deep trouble.

Dairy-farmers, with associated down-stream support businesses, are facing severe economic hardship as Fonterra reduces the pay-out from $4.15 per kgMS to $3.90 per kgMS.

Dairy farmers’ debt has reached unsustainable levels;

About 10 per cent of the most indebted dairy properties owe a combined $11 to $12 billion, about 30 per cent of total dairy debt.

[…]

About 20 per cent of the most indebted farms hold 45 to 50 percent of the total debt – $15b-$38b.

The value of farms and sale numbers is falling (thereby placing many farmers into a negative gearing situation). As Rural Value’s national manager, David Paterson, said on Radio NZ;

“Unless there’s some bright light on the horizon I think there’ll be a continuation of slow sales and we’ll continue to see a reduction of farm values particularly on the dairy farm sector.”

On 18 March, Bill English admitted that real national disposable income-per-capita fell 0.4% for the year;

“You’ve got a big drop in national income, because dairy prices are down. At the same time you’ve had surprisingly high migration numbers. So it’s not surprising that when you work the figures you get a drop in national disposable income.”

Not for the first time in his political career, English boasted that low wages were keeping a lid on inflation;

“The labour market turned out to be quite a bit more flexible than we were expecting.”

The Reserve Bank – recognising that a major economic “correction*” is looming on the horizon – has lowered the OCR from 2.50% to 2.25%. The RBNZ’s 10 March media release paints a gloomy economic picture for the foreseeable future;

The outlook for global growth has deteriorated since the December Monetary Policy Statement, due to weaker growth in China and other emerging markets, and slower growth in Europe. This is despite extraordinary monetary accommodation, and further declines in interest rates in several countries. Financial market volatility has increased, reflected in higher credit spreads. Commodity prices remain low.

Domestically, the dairy sector faces difficult challenges, but domestic growth is expected to be supported by strong inward migration, tourism, a pipeline of construction activity and accommodative monetary policy.

[…]There are many risks to the outlook. Internationally, these are to the downside and relate to the prospects for global growth, particularly around China, and the outlook for global financial markets. The main domestic risks relate to weakness in the dairy sector, the decline in inflation expectations, the possibility of continued high net immigration, and pressures in the housing market.

Retail banks, however, seem reluctant to participate in any plan to stimulate economic activity. The 25-point fall in the OCR has yet to be passed on to bank customers.

If the economy enters recession, expect inward migration to reduce, adding to a slowdown in domestic growth and rise in unemployment.

Setting the Mood

In November last year, our esteemed Dear Leader announced – almost casually – that New Zealand could be targeted by terrorists;

“I think every country in the world is potentially vulnerable, we’re probably less vulnerable than others. We have in this instance the advantage of distance, we’re a long way away, [but] i just couldn’t say to you we’re completely immune.”

And;

“There’s no question about what their motivations are and that’s the tragedy of the Isis story is that you get some very dysfunctional people, for want of a better term, who want to associate themselves with Isis.”

However, on 8 December last year, an entirely ‘new dimension’ was added to the ISIS bogeyman with this dramatic revelation from SIS director, Rebecca Kitteridge;

“Something that has changed over the last year is the issue of New Zealand women travelling to Iraq and Syria, which is something we haven’t seen previously or been aware of.” – Rebecca Kitteridge, 8 December 2015

The media, rather unsurprisingly, went nuts on the story;

NZ women going to IS areas on rise - SIS

As Tracey Watkins and Tommy Livingstone reported for Fairfax Media;

In evidence to the committee, Kitteridge said the past 12 months had seen a significant increase in the global terrorism threat.

“When I started as director of security in May 2014 the so-called Islamic State was barely talked about in New Zealand. Now a day rarely goes by without news of some act of violent extremism associated with IS.”

The threat to New Zealand’s domestic security posed by foreign terrorist fighters and other extremists was real and continued to develop.

“The number of New Zealanders fighting alongside or supporting IS remains small but has increased.”

That included the rise in the number of New Zealand women travelling to Syria and Iraq.

In the same story, Watkins and Livingstone wrote;

Kitteridge said after the committee hearing the numbers leaving from New Zealand were small but significant – but declined to give further details.

As events were to transpire three months later, the suggestion that women were “leaving from New Zealand” was to be proved a false assertion.

Yet, during those three months, SIS director, Rebecca Kitteridge, maintained silence on the issue and she did nothing to correct the (mistaken) belief that New Zealand women were departing from New Zealand.

This prompted the usual feeding-frenzy and rantings from the ill-informed rabid-right who vent their ignorance on right-wing fora such as Kiwiblog;

kiwiblog comments - longknives - Jack5

Kiwiblog editor and National Party apparatchik, David Farrar, did nothing to bring reason to the discussion. Indeed, a few voices of sanity on the blog had their moderate views dismissed and voted down;

kiwiblog comments - andrei

Protestations

Following Kitteridge’s comments, lone voices of calm and sanity were barely reported and given much less prominence;

Hazim Arafeh, a spokesperson for he Islamic community, said he was surprised to hear women from New Zealand may have left the country to join ISIS.

“We are not aware of New Zealand Muslim woman going over to Syria to get married. If it is happening, we still don’t know if it is a genuine case, or are they joining ISIS,” he said.

Islamic Women’s Council issued their own rejection of Kitteridge’s comments;

The national Islamic Women’s Council is not aware of any New Zealand jihadi brides heading to war torn regions to join the fight with Isis.

Council president Anjum Rahman told Paul Henry that although it was happening overseas there was no indication the same thing was happening here.

Ms Rahman said she listened carefully to Security Intelligence Service director Rebecca Kitteridge yesterday and she didn’t mention the women leaving were jihadi brides travelling to Syria to marry and support fighters.

“All she said was the number had been growing and because it was a war torn area that was a concern,” she said.

“We don’t know the ethnicity of these women, we don’t actually know the religious background of these woman, whether they just converted before they went, whether they converted at all, and we definitely don’t know what they’re doing while they’re over there.”

Asked if the council had information on women travelling overseas to marry and support Isis Ms Rahman said: “No. We don’t have any knowledge or indication of that happening.”

Three days later, The Wireless illustrated the predictably dire results of the demonisation of muslim women;

the wireless - I'm not a jihadi bride

Hela Rahman, a 25-year-old who has been a NZ citizen for more than 20 years, says these comments aren’t backed by evidence and are causing more harm than good.

A few weeks ago, she returned from a trip visiting her family in Iraq. When she arrived at Auckland Airport she says she was instantly made to feel like she’d done something wrong.

“I was going through with my E-passport and it was automatically declined. I had to go over to the counter.”

The Border Control officer asked Rahman why she’d been in Iraq.

“I told her I was there to see my family. She just looked at me with an awkward uncomfortable expression. She didn’t say anything and just drew a red line through my arrival card.”

Rahman continued to the customers area where the officer, after taking a look at her card, told her to go down the far side.

“Everyone else was being let through, even my parents. I was the only one in that lane.”

She was told to unlock her bags and was put into a holding room for a “long time” while the staff talked about her behind double-sided glass.

“The thing is, they make you feel so uncomfortable that you start questioning yourself. You start wondering if you have done something wrong,” she said.

She was asked a series of questions about why she’d gone to Iraq, what she had done there, and who had bought the flights for her.

Although Rahman had travelled to the Middle East with her mum and dad, she was the only one who was pulled aside for questioning.

“I thought my parents would be questioned too, but they weren’t. I wanted to ask ‘why me’ but I couldn’t. The opportunity never came up. I was just feeling so uncomfortable.”

Rahman spent the next few weeks confused about what had happened. Her Iraqi friends reassured her that it was just standard airport security Muslims have to face now.

That incident took place here, in good old relaxed, laid-back, give-people-a-fair-go, New Zealand.

All that was missing was requiring muslim’s to wear a red crescent stitched to their clothes to identify them in public – a practice very popular with a certain fascist regime and occupied nations, in the the 1930s and 1940s…

badges of suppression

The Truth Will Out

On 16 March, of this year, the truth of the matter was revealed when Radio NZ – bless them – lodged an Official Information Act request and discovered;

radio nz - kitteridge - SIS - NZ's 'jihadi brides' left from Australia

“Something that has changed over the last year is the issue of New Zealand women travelling to Iraq and Syria, which is something we haven’t seen previously or been aware of,” she told MPs.

Rebecca Kitteridge, Director of the New Zealand Security Intelligence Service Photo: RNZ / Diego Opatowski

In response to an Official Information Act request, SIS, the domestic spy agency, said the women concerned “did not leave New Zealand.

“They were New Zealand citizens domiciled in Australia and they left from there.”

In response to charges of misleading the media and public, the Minister in Charge of the Security Intelligence Service, Chris Finlayson, denied that National and the SIS had wilfully deceived the country;

“If you go back to the statements that were made there were no implications or ‘winks and nods’ that they were not resident in New Zealand.”

Consider Kitteridge’s statement on 8 December 2015;

“Something that has changed over the last year is the issue of New Zealand women travelling to Iraq and Syria, which is something we haven’t seen previously or been aware of.”

Where else would “New Zealand women” travel from – except New Zealand – unless specifically stated otherwise?

Remember that Kitteridge owned the problem by stating, “which is something we haven’t seen previously or been aware of”. She made no reference to receiving the information from any Australian intelligence organisation.

A day after Radio NZ breaking the story, Minister in Charge of the Security Intelligence Service, Chris Finlayson still refused to issue an apology for National’s and the SIS’s deception;

Chris Finlayson, the Minister in charge of the SIS, told reporters today where the women left from was irrelevant.

“I would have thought the critical issue is were they New Zealand citizens, whether the left from Kingsford Smith airport or Auckland Airport is by-the-by.”

Mr Finlayson said he was due to meet with about 100 members of the Muslim community tomorrow night, and had regular discussions with that community during the process of the intelligence and security review.

“And I’m very happy to proffer an apology on behalf of Metiria Turei who started all this nonsense. I think her performance is lamentable… You just don’t go round handing out apologies willy-nilly.”

The Radio NZ report stated that “the SIS said it had no comment“.

The SIS’s mission was completed; the public was spooked. National’s planned deception had succeeded – nothing further need be said by the spy agency.

It is also worth noting a noticeable lack of follow-up coverage on Kiwiblog by David Farrar on this issue. Perhaps the discovery that Key and Kitteridge had mis-led the New Zealand public and smeared the Muslim community in the process was not as worthy of a comment as Kitteridge’s innacurate initial comments, three months earlier?

A Happy Confluence of Purpose?

On 8 December, Audrey Young wrote in the NZ Herald;

Meanwhile, Mr Key questioned whether that a proposal he has previously rejected – attaching the Cortex cyber security programme to the Southern Cross internet cable linking New Zealand to Australia and the United States – should be revisited to give wider cyber protection to New Zealand companies.

He made the suggestion while questioning the acting director of the Government Communications Security Bureau, Una Jagose, who gave a detailed speech recently about Cortex as part of a new policy of openness in the bureau.

Mr Key said he had canned the original proposal because of the potential anxiety of it being seen as mass surveillance but he asked if an argument could be made, with enough public debate for it happen to protect smaller companies.

At present, the GCSB uses Cortex to mount cyber defence on Government agencies and strategically important private companies – and only with their permission.

Ms Jagose said the “hard ground work” by the GCSB needed to be done to be more open about the GCSB’s cyber defence work.

She acknowledged the possible anxiety over “mass surveillance.”

It could safely be argued that stories of “jihadi brides” would scare the bejeezus out of the public, in the process softening opinion to welcome extending the powers of the SIS and GCSB.

If so, this would be a cynical ploy by National and our spy agencies to manipulate public opinion to accept the unpalatable; a massive increase in state surveillance and mass-gathering of data on all New Zealanders.

They just never counted on anyone actually asking a fairly simple question; where did those so-called “jihadi brides” migrate from?

Implausible Deniability

During last year’s Parliament’s Intelligence and Security Committee meeting on 8 December, where Rebecca Kitteridge uttered her now (in)famous references to “New Zealand women travelling to Iraq and Syria“, Key made reference to “Jihadi Brides“.

Yet, on TV3’s The Nation, Key tried to evade responsibility for using the term “Jihadi brides” on 8 December;

Lisa Owen: All right. One other issue this week has been the so-called ‘jihadi brides’. Muslim leaders that we spoke to said that they were victimised and confused as a result of your comments around jihadi brides. Do you owe them an apology?

John Key: I don’t think so, and the reason for that is, I think, if you just look at the sequence of events, the first thing is that- I’m not distancing myself, but I didn’t raise the issue. The SIS directed it, and I wasn’t-

Lisa Owen: No, you used the phrase ‘jihadi brides’, Prime Minister. I’ve looked at the transcript. It was you that used that phrase, not Rebecca Kitteridge.

John Key: I didn’t coin that phrase. That phrase is used all around the world.

Lisa Owen: But you were the first one to use it.

John Key: Not around the world, I’m not. It’s a common term.

Was our esteemed Dear Leader, John Key, aware that none of the so-called “Jihadi Brides” had actually departed from New Zealand, and were actually residing in Australia at the time?

Yes, according to Gerry Brownlee’s own admission in Parliament, on 17 March;

Metiria Turei (Co-Leader—Green) to the Prime Minister: Was he advised, prior to 8 December 2015, that the so called “jihadi brides” he referred to during the Intelligence and Security Committee meeting were all resident in Australia and did not leave from New Zealand?

Hon Gerry Brownlee (Leader of the House) on behalf of the Prime Minister: Yes.

Metiria Turei: So the Prime Minister can confirm that he knew that none of those women had left for Syria or Iraq from New Zealand?

Hon Gerry Brownlee: Yes, and the member needs to be aware that as New Zealand citizens it does not matter where they left from. If they pose a security risk to New Zealand on their return, then that is something we are concerned about.

This time Key cannot feign memory loss; erroneous advice; misinterpretation, or a mistake. According to one of his own senior ministers – Key knew the facts.

For reasons of his own, he chose not to disclose that information.

Key’s Lie By His Own Words

On 17 March, Key refuted any willful attempt to mislead the public by inference that so-called “Jihadi brides” had left New Zealand. As reported on Radio NZ;

Today he denied any attempt to create a misleading impression that the 12 or so women referred to by Ms Kitteridge left from New Zealand, rather than from Australia.

“We didn’t say that, it was the Director [General] that made the statement, and what she said was there were jihadi brides.

“The fact that where they leave from is irrelevant, if they’re New Zealanders, they’re New Zealanders, they may return to New Zealand and so we have to deal with those issues.

And remember the Minister in Charge of the Security Intelligence Service, Chris Finlayson, who categorically denied that National and the SIS had deliberately created a deception;

“If you go back to the statements that were made there were no implications or ‘winks and nods’ that they were not resident in New Zealand.”

Yet, that is precisely what Key said on 10 December last year, as this video clearly shows;

Kiwi jihadi brides a reality - PM - yahoo news

John Key: “And it’s just a reality that there are women that we know that left New Zealand, ah, and we suspect that they have gone and got married and we know that this concept of Jihadi Brides is not, it’s not my term, it’s an international term, and you pick up the World’s Section of the newspapers today, a couple of newspapers, and see them reporting on that, hundreds and hundreds of women from around the world, ah, going off and, and potentially marrying these guys before they undertake Jihadist activity.”

Reporter: “Do you think it’s strange that, that, um, that New Zealand muslims don’t… aren’t aware of any of their women going over and, and, marrying men in places like Syria?”

John Key: “Yeah, well, I mean they don’t know everybody in the community, um, and you know, they obviously have a, you know, be [unintelligible word] as anyone can on these things, but we can just tell you by what we see. Y’know, people travel out of our country, and people who turn up, through other reporting, and otherwise, in Syria or Iraq.”

Key was as crystal-clear as his garbled-style of speech permits him to be. He cannot claim he was mis-represented in the media: he stated categorically that “there are women that we know that left New Zealand… people travel out of our country“.

At the same time, according to Minister Brownlee, Key was perfectly aware that “jihadi brides” he referred to during the Intelligence and Security Committee meeting were all resident in Australia and did not leave from New Zealand”.

This was no “mistake” on the part of the media. Brownlee and Key stand convicted of their duplicity, by their own words.

Coming soon: A terror alert near you!

This is now the second (that we are aware of) mis-use of our spy agencies for National’s own political agenda.

Inspector General of Intelligence and Security, Cheryl Gwyn, found that in 2011, then-Labour leader, Phil Goff, had been mis-led by then-SIS director, Warren Tucker, at a briefing meeting. Inaccurate information had also been provided by the SIS to right-wing blogger, Cameron Slater that was used to damage Phil Goff’s reputation.

As the Herald reported in November 2014;

Inspector General of Intelligence and Security Cheryl Gwyn said this morning the inquiry found the NZSIS released “incomplete, inaccurate and misleading information in response to Mr Slater’s request, and provided some of the same incorrect information to the Prime Minister and the Prime Minister’s office”.

Ms Gwyn said she found no evidence of political partisanship by the NZSIS but did find that the NZSIS “failed to take adequate steps to maintain political neutrality”.

Ms Gwyn said the having released misleading information both to Prime Minister John Key’s office and then to Mr Slater, Dr Tucker “had a responsibility to take positive steps to correct the interpretation”.

“He failed to do so.”

On that basis, Ms Gwyn said Mr Goff was owed an apology.

Ms Gwyn said information about a briefing Mr Goff received from Dr Tucker about suspected Israeli agents in Christchurch following the quakes was “not an accurate description of what happened at that meeting”.

According to revelations in Nicky Hager’s exposé, “Dirty Politics“, the smearing of Phil Goff was orchestrated from the Beehive’s Ninth Floor, by Jason Ede – a National Party “black ops” apparatchik.

The SIS was party to this covert plan to smear Phil Goff and undermine his election chances in 2011.

Unsurprisingly, Green Party Co-Leader Metiria Turei, condemned both the SIS and our esteemed Dear Leader for willfully deceiving the public;

“They were using information for political purposes, and that political purpose was to encourage New Zealanders to accept greater surviellance by spy agencies.

The SIS has proven time and time again they can’t be trusted with the powers that they have. They don’t follow the law that they’re required to, and John Key is using spy agencies to pursue a political agenda.”

It is now a matter of time before another dramatic “terror alert” is issued by this government, to further frighten and manipulate the country into submitting to National’s agenda to increase powers for our spy agencies.

The “terror alerts” will most likely come to nothing; no arrests will be made; no details of any thwarted “terror plot” will ever be released to the public – but the ultimate goal of fomenting fear will be achieved.

A frightened populace is a compliant populace.

.

Postscript1

“Correction” = polite euphemism for shit-about-to-hit-the-fan.

Postscript2

Did the SIS/GCSB ever keep track of New Zealand women travelling to Northern Ireland, during “The Troubles”, who may have met and married men from that province?

Were they ever referred to as “IRA Brides”?

.

References

Fonterra: Fonterra revises 2015/16 forecast milk price

Fairfax media: Small farmer group holds nearly $12 billion of dairy debt

Radio NZ: Dairy farm values set to keep falling

Radio NZ: Incomes dropping despite GDP growth, English admits

Fairfax media: Low wages ‘advantage’ for NZ – English

Reserve Bank: Official Cash Rate reduced to 2.25 percent

NZ Herald: Banks keep their slice of OCR cut

Fairfax media: Distance, spy network means NZ less vulnerable to attack – John Key

Fairfax media: John Key ‘scaremongering’ with details of security threats: Andrew Little

Radio NZ: NZ women going to IS areas on rise – SIS

Fairfax media: Kiwi Jihadi brides on the rise

TVNZ: ‘The worse the attack the more excited they are’ – Kiwi women leave to be jihadi brides

NZ Herald: Q&A – Why do women want to be jihadi brides?

Otago Daily Times: ‘Jihadi bride’ fears over Kiwi women

NZ Herald: Rise in Kiwi women heading to Iraq, Syria

Kiwiblog: Kiwi jihadi brides

NZ Herald: Islamic Women’s Council – It’s news to us

The Wireless: ‘I’m not a jihadi bride’

Radio NZ: NZ’s ‘jihadi brides’ left from Australia

Radio NZ: No apology from govt over ‘jihadi brides’ claims

NZ Herald: Rise in Kiwi women heading to Iraq, Syria

TV3: The Nation – Interview with John Key

Radio NZ: No apology from govt over ‘jihadi brides’ claims

Parliament Today: Questions & Answers – March 17 – Intelligence and Security Committee – Advice

Yahoo News: Kiwi jihadi brides a reality – PM

NZ Herald: Dirty Politics – John Key won’t apologise to Goff

NewstalkZB: Kiwi women heading off to join ISIS, Key insists

Additional

“I’ve Got Nothing to Hide” and Other Misunderstandings of Privacy (hat-tip: Nitrium)

Other blogs

Kiwipolitico: Threat Distortion as Fear Manipulation

No Right Turn: Caught fearmongering

The Daily Blog: Key wasn’t just scare mongering with Jihadi Brides – he used it to distract from Tim Groser GCSB spying

The Dim Post: The struggle

The Standard: The Jihadi Brides lie

The Standard: Nats refuse to apologise for targeting Muslim community

Previous related blogposts

Audrey Young, Two Bains, old cars, and… cocoa?!?!

National Party president complains of covert filming – oh the rich irony!

An Open Message to the GCSB, SIS, NSA, and Uncle Tom Cobbly

Dear Leader, GCSB, and Kiwis in Wonderland

One Dunedinite’s response to the passing of the GCSB Bill

The GCSB Act – Tracy Watkins gets it right

The GCSB Act – some history

The GCSB – when plain english simply won’t do

The GCSB law – vague or crystal clear?

The Mendacities of Mr Key #1: The GCSB Bill

Campbell Live on the GCSB – latest revelations – TV3 – 20 May 2014

The real reason for the GCSB Bill

Letter to the Editor: John Campbell expose on Key and GCSB

A letter to the Dominion Post on the GCSB

Big Bro’ is Watching You!

The GCSB law – Oh FFS!!!

Dear Michael Cullen: the GCSB is not International Rescue!

.

headless-chickens

This blogpost was first published on The Daily Blog on 22 March 2016.

= fs =

Letter to the Editor: Labour’s cunning plan (v.2)

30 April 2014 Frank Macskasy Leave a comment

FROM:   "f.macskasy" 
SUBJECT: Letters to the editor
DATE:    Wed, 30 Apr 2014 21:33:36 +1200
TO:      "The Listener" <>

The Editor
THE LISTENER
.

David Parker's Reserve Bank-Kiwisaver Variable Savings Rate
is a very clever piece of policy which is so elegantly
simple but so wonderfully clever at the same time. The
question I keep asking is why no one has thought of it
before!

It's intriguing that thus far the only criticism seems to be
based on Labour-bashing rather than any serious analysis.

Although it's interesting to note that Federated Farmers 
and the Northern Employers and Manufacturers' Association 
are open minded about it  - which is  all anyone can ask,
really.

For the Nats - they are panicking. The common spin is that
Labour's policy is "confused". Not exactly a resounding
rebuttal of the Variable Savings Rate - but expect their
Party strategists to get into high gear very shortly.

The funniest thing though, is the number of right wingers
who seem to prefer their cash to be siphoned off to overseas
banks - rather than invested and returned to them. I know
right-wingers are blinkered and see the world in Black &
White terms but this is a whole new  level of dogmatic
dumbness even for them.

If Labour can come up with more initiatives like this -
September 20th will see a new government. 



-Frank Macskasy
[address & phone number supplied]

References

Radio NZ: Labour makes monetary policy change

Federated Farmers of NZ: Federated Farmers keen on Labour’s monetary policy detail

Above image acknowledgment: Francis Owen/Lurch Left Memes

= fs =

Categories: The Body Politic Tags: David Cunliffe, David Parker, Federated Farmers, kiwisaver, Labour, Northern Employers and Manufacturers' Association, OCR, RBNZ, Reserve Bank of NZ

Letter to the Editor: Labour’s cunning plan

30 April 2014 Frank Macskasy Leave a comment

FROM:   "f.macskasy" 
SUBJECT: Letters to the editor
DATE:    Wed, 30 Apr 2014 12:13:21 +1200
TO:     "Dominion Post" <letters@dompost.co.nz>

The Editor
Dominion Post

.

Labour's new policy to replace OCR interest rates with a
variable Kiwisaver rate is ingenuous and common sense. It
beggars belief that it hasn't been thought up before.

Instead of higher interest rates which force mortgage rates
rises, New Zealanders will make higher payments to their
Kiwisaver account.

The difference is obvious - paid to Kiwisaver, we get to
keep our money. Paid to banks, that money disappears off to
Australia  as billion-dollar profits.

Bill English's criticism that Labour's plan would impact
unfairly on the poor and low/fixed income families is
laughable. When has National ever been concerned about the
welfare of the poor?

English forgets that when the OCR rises, so do mortgage
rates. And rents follow. So low/fixed income families cannot
escape the current RBNZ policy of restraining inflation
through interest rates. 

Australia has over A$1.6 trillion saved in their compulsory
savings account. Had we kept own own savings scheme,
implemented by the Kirk-led government in 1973, NZ would
have saved NZ$278 billion by now. We would not be so reliant
on overseas capital.

But Muldoon scrapped it shortly after the 1975 election, and
we have been "captive" to foreign banks ever since.

Let us not make the same mistake twice.





-Frank Macskasy
[address & phone number supplied]

References

Radio NZ: Labour makes monetary policy change

Fairfax media: Bob each way on effects of a lower dollar

Above image acknowledgment: Francis Owen/Lurch Left Memes

= fs =

Categories: The Body Politic Tags: David Cunliffe, David Parker, kiwisaver, Labour, OCR, RBNZ, Reserve Bank of NZ

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

23 March 2014 Frank Macskasy 2 comments

The Nationalmobile

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?

[…]

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

[…]

Mortgage rates are rocketing upwards…

[…]

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;

Wages

GDP

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.”

[…]

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.

[…]

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.

*

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

*

Above image acknowledgment: Francis Owen

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

= fs =

Categories: Dollars & Sense, The Body Politic Tags: economic growth, economy, mortgage rates, OCR, Official Cash Rate, Reserve Bank

National, The Economy, and coming Speed Wobbles

1 March 2014 Frank Macskasy 4 comments

For a while, the news seemed dire for the Left, and impressively positive for National;

A recent Fairfax Media-Ipsos poll put National on 49.4% versus 31.8% and 10% respectively for Labour and the Greens.
The latest Roy Morgan Poll had National at 48%, compared to 30% and 12% for Labour and the Greens respectively.
Annual average economic growth was 2.6% to September 2013.
The Household Labour Force Survey for the December 2013 Quarter showed a drop in unemployment, from 6.2% to 6%.
Dairy prices (and thusly export reciepts) continued to rise.
The trade deficit continued to slowly improve.
And there was just enough ambiguity around recent child poverty statistics to allow National, and its drooling sycophants, to claim that it was no longer a growing problem (it was simply a constant problem).

However, is everything as it really seems? Is the news all rosy and are we rushing head-first toward the “promised land“, the much heralded, Neo-liberal Nirvana?

Or, are dark clouds beginning to appear on the horizon?

New Zealand’s economic recovery is predicated mostly on the Christchurch re-build, and piggy-backing on the global economic situation picking up. As Treasury reported in 2012;

The Canterbury rebuild is expected to be a significant driver of economic growth over the next five to ten years. The timing and speed of the rebuild is uncertain, in part due to ongoing aftershocks, but the New Zealand Treasury expects it to commence around mid-to-late 2012.

As predicted, the ASB/Main Report Regional Economic Scoreboard recently revealed that Canterbury had over-taken Auckland as the country’s main center for economic growth.

Meanwhile, the same report outlines that Auckland’s “growth” is predicated on rising house prices. Economic “growth” based on property speculation is not growth – it is a bubble waiting to burst.

The other causal factor for our recovery is international. The IMF reported only last month;

Global activity strengthened during the second half of 2013, as anticipated in the October 2013 World Economic Outlook (WEO). Activity is expected to improve further in 2014–15, largely on account of recovery in the advanced economies. Global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015, a broadly unchanged outlook from the October 2013 WEO. But downward revisions to growth forecasts in some economies highlight continued fragilities, and downside risks remain...

Being mostly an exporter of commodities (meat, dairy products, unprocessed timber, etc), New Zealand cannot but help ride the wave of an upturn in the global economy as increasing economic activity creates a demand for our products.

Any economic recovery, as such, has little to do with the incumbent government – just as the incumbent governments in 2008 and 2009 had little to do with the GFC and resulting recession (though National’s tax cuts in 2009 and 2010 were irresponsible in the extreme, reliant as they were on heavy borrowings from overseas). We are simply “riding the economic wave”.

As the global up-turn generates growth in New Zealand’s economy, paradoxically that leaves us vulnerable to new, negative, economic factors;

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. As Bernard Hickey reported in Interest.co.nz;

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.

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.

Even the fear-threat of higher mortgage interest rates may already be pushing home owners to lock-in fixed mortgages. Kiwibank for example, currently has a Fixed Five year rate at 6.9%. ANZ has a five year rate at 7.2%. Expect these rates to rise after March.

If home owners are already fixing their mortgages at these higher rates, this may explain the fall in consumer confidence, as the Herald wrote on 20 February,

New Zealand consumer confidence fell from its highest level in seven years this month, while remaining elevated, amid a pickup in inflation expectations and the prospect of interest rate increases.

It may also explain, in part, this curious anomaly which recently featured in the news cycle,

The Herald report goes on to state,

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.

Treasury officials said some of the lower GST take was due to earthquake related refunds, and that the shortfall in Pay As You Earn might be short-lived. The corporate tax take shortfall was smaller than in the previous month…

A drop in GST would be utterly predictable if consumer spending was falling.

Personal income tax would be falling if employers were cutting back on part-time work available. Which indeed seems to be the case, according to the latest Household Labour Force Survey (HLFS) Poll on unemployment,

Over the year, the total number of under-employed people increased by 27,200 to 122,600. As a result, the under-employment rate increased 1.0 percentage points to 5.3 percent.

Less wages equals less spent in the economy and less PAYE and GST collected by the government.

This would also account for the drop in corporate tax take falling by 4.9%.

The effect of the Reserve Bank’s decision to begin raising interest rates will be to dampen economic activity and consumer demand. This will be bad news for National.

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. If we cannot pay our way in the world through exports, that will worsen our Balance of Trade; in turn risking our international credit rating; which in turn can impact negatively on the cost of borrowing from off-shore (the lower our credit-rating, the higher interest we pay to borrow, as we are considered a higher lending risk).

This, too, will affect what we pay for our mortgages and capital for business investment.

Less people employed or a reduction on work hours for part-time employees will also result in a lower tax take.

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.

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

Interestingly, the “Economy” category also included the social issue of “Poverty / The gap between the rich and the poor”. 16% believed that “Poverty / The gap between the rich and the poor”was a major factor within the economic situation – a significant sub-set of the 42%.

Add that 16% to the 21% considering social issues to be the number one priority, and we see the number of respondents in this category increasing to 37%. That is core Labour/Green/Mana territory.

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.”

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.

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.

Since 2008, New Zealand’s sovereign debt has increased six-fold – made worse in part by two ill-conceived and ultimately unaffordable tax cuts. Those tax cuts were, in essence, electoral bribes made by John Key to win the 2008 general election. (Labour’s paying down of massive debts it had inherited from National in the 1990s, plus posting nine consecutive surpluses, had come around to bite Cullen on his bum. Taxpayers were demanding “a slice the action” by way of tax cuts.)

That debt will eventually have to be repaid. Especially if, as some believe, another global financial shock is possible – even inevitable. With a $60 billion dollar debt hanging over our heads, we are not well-placed to weather another global economic shock. In fact, coupled with private debt, New Zealand is badly exposed in this area (as the OECD stated, in the quote below).

So the “good news” currently hitting the headlines is not so “good” after all, and many of the positive indicators have a nasty ‘sting in the tail’. As the OECD recently reported,

The New Zealand economy is beginning to gain some momentum, with post‑earthquake reconstruction, business investment and household spending gathering pace.Risks to growth remain, however, stemming from high private debt levels, weak foreign demand, large external imbalances, volatile terms of trade, a severe drought and an exchange rate that appears overvalued. The main structural challenge will be to create the conditions that encourage resources to shift towards more sustainable sources of prosperity. Incomes per head are well below the OECD average, and productivity growth has been sluggish for a long time. Lifting living standards sustainably and equitably will require structural reforms to improve productivity performance and the quality of human capital.

As the election campaign heats up, expect the following;

Greater media scrutiny on National’s track record,
The public to become more disenchanted with Key’s governance as economic indicators worsen and impact on their wallets and purses,
National (and its sycophantic supporters) continue to blame welfare beneficiaries; the previous Labour government; the GFC and resulting recession; and other “external factors” for their lack-lustre performance,
Key and various business figures to become more strident in their attacks on Labour and the Greens,
A dirty election campaign , including a well-known extremist right-wing blogger releasing personal information on political opponants, which will backfire badly on National,
National to fall in the polls; NZ First will cross the 5% threshold; and Labour/Greens/Mana to form the next government, with Peters either sitting on the cross benches, or taking on a ministerial portfolio outside Cabinet.

So it’s not the Left that should be worried.

National is on shakier ground than many realise.