Who needs $4.8 billion anyway

Written By: - Date published: 7:15 am, November 21st, 2014 - 106 comments
Categories: national, superannuation - Tags: , , ,

Recently I wrote a post on the Nats’ economic “genius” in our property market. Yesterday a report from the NZ Super Fund (Cullen fund) provided further evidence of their incompetence. The highlights:

Fund size: NZ$27.11 billion
Fund return: 1.47% during October
Total return of 9.92% p.a. since inception (after costs, before NZ tax) compared to Reference Portfolio return of 8.75% p.a.
Total return of 14.78% over last twelve months, compared to Reference Portfolio return of 12.65%

This provoked some discussion on Twitter. If National hadn’t stopped our contributions to the fund it would now be worth $15.2b more than it is currently. There would have been extra costs for higher levels of borrowing, but even so NZ would be $4.8 billion net better off.

Cutting the contributions was stupid, short term thinking from National, and many people said so at the time. (Interesting to read an old Keith Ng post demolishing Farrar on this.) National’s supposed competence on economic matters is pure fantasy. We could have used the $4.8 billion that they just chucked away.

106 comments on “Who needs $4.8 billion anyway ”

  1. les 1

    Yes they’ve managed to sell themselves as the ‘safe pair of hands’,and sound,prudent managers of the economy.Their central policy ,’borrow and hope’,reminds one of the Muldoon debacle in finance.He had cultivated a public reputation as a financial wizard too.

    • David H 1.1

      That’s not a safe pair of Hands. $4.8 billion is a little more than Ooppss Butter fingers. but then again Blinglish and co make blue and white collar crims seem positively honest.

  2. Lanthanide 3

    “This provoked some discussion on Twitter. If National hadn’t stopped our contributions to the fund it would now be worth $15.2b more than it is currently. There would have been extra costs for higher levels of borrowing, but even so NZ would be $4.8 billion net better off.”

    If you assume that despite the extra borrowing, everything else would have remained exactly the same.

    But actually there’s a reasonable chance that our sovereign credit rating would have been downgraded (even more than it already was under National) if we’d borrowed an extra $10B just to invest it offshore. This in turn would have pushed interest rates up and could easily have swallowed the $4.8B in net value that you’re calculating.

    • r0b 3.1

      But actually there’s a reasonable chance that our sovereign credit rating would have been downgraded

      Chance is a fine thing, but what we know for sure is that we’re billions worse off right now because of decisions that the Nats were warned at the time would be a costly mistake. And the cost of this mistake will compound over time…

      • Rob 3.1.1

        A very naive view, essentially the post is stating that there is no penalty in higher interest charges resulting from downgraded credit ratings.

        • Pascals bookie 3.1.1.1

          But the chance of a down grade based on that extra borrowing is pretty slim. The Ng post’s comments goes over this pretty thoroughly.

          While there’s an arg the rating might have been affected, maybe, if the agencies were scaredy pants, it’s pretty thin gruel.

          Fact is some people were right, and others turned out to be wrong.

          • Rob 3.1.1.1.1

            So at the peak of the GFC, when many 1st world economies were turning toxic, do you really believe there would have been no chance of NZ credit rating being lowered if they had followed this extra debt path?

            • Tracey 3.1.1.1.1.1

              more extra debt than the extra debt it was incurring you mean

            • Colonial Rawshark 3.1.1.1.1.2

              do you really believe there would have been no chance of NZ credit rating being lowered if they had followed this extra debt path?

              You mean the credit rating issued by corporate agencies such as S&P and Moody’s? These very same firms who were totally corrupt, and labelled toxic assets as AAA grade investments, facilitating the GFC?

            • Pascals bookie 3.1.1.1.1.3

              Given the low level of debt the govt was carrying, and the size of this ‘extra debt’, yep.

              Stopping these payments was only a small part of the govt’s debt reduction plan, nowhere near the bulk of it.

              Ng explains it well here:

              http://publicaddress.net/system/cafe/onpoint-the-super-fund-shell-game/?p=113747#post113747

              and it’s worth scrolling through to see the rest of the comments too.

            • locus 3.1.1.1.1.4

              Borrowings to finance sound investment do not equate with borrowings and increased debt to pay off tax gifts to the already wealthy

              Credit rating agencies are not stupid and factor in the debit ledger as well as the credit ledger – NZ’s credit rating would not have been downgraded

              Is this really the best excuse you can come up with to defend the nats truly amazing financial ineptitude and derogation of responsibility in changing the direction that Michael Cullen had mapped for NZ’s superannuation fund?

        • greywarshark 3.1.1.2

          If our credit rating was downgraded, then our popular currency might not be so much in demand for playmoney while the big machines wait for the next investment heist to come along and multiply their millions. If the b…rs weren’t so keen on our candy, its price wouldn’t fluctuate so much, therefore costing us at home, extra insurance in hedge funds that we buy from the people who are playing with our money. I think this is the very rational way it works. It is rational because it works for the makers of money rather than the makers of tradeable goods, the Good NZs.

          Please give me a thumbs up if I’m right.

          And superannuation fund having funds payments put in abeyance. I understand that to return the expected result, the income has to be paid in regularly. Then it will compound on the rising trend line, if the economic predictions are correct.
          Stopping payments for a while is a mistake, even if you have to borrow overseas to maintain them. The fund is to be capital accreted, and must be continuous to ensure the model works well. Extra interest would be a say ‘temporary non-repetitive additional cost’.

          Is this a reasonable explanation of what is meant above?

      • Lanthanide 3.1.2

        You’re making assumptions about *what might have been* and stating them as facts. Pure and simple.

        I could also make assumptions about what might have been and state them as facts, just as you have done: if Labour had won the 2011 election, NZ would now be bankrupt.

        Surely you would reject this statement of mine; you should similarly reject your own on the same basis.

        Now, if your argument had more meat to it than a simple calculation, for example you tried to take into account other possibilities (say, what would the situation look like if the interest we paid went up by 0.2%?), you might have a point. Or, alternatively if you hadn’t stated this as *a fact* that we are $4.8B worse-off, then I wouldn’t mind that either.

        • Pascals bookie 3.1.2.1

          Go read the Keith Ng link, and the comments. Loads of assumptions are factored in.

    • Nic the NZer 3.2

      “But actually there’s a reasonable chance that our sovereign credit rating would have been downgraded (even more than it already was under National) if we’d borrowed an extra $10B just to invest it offshore. This in turn would have pushed interest rates up and could easily have swallowed the $4.8B in net value that you’re calculating.”

      Baa, ha, ha, ha, ha. The central bank is in control of the interest rates, NZ’s credit rating is irrelevant. Evidence? Japan had its sovereign credit ratings down graded due to large government debt, and its interest rates on government debt have been near zero for several decades now! Sovereign credit ratings are pretty much irrelevant.

      • Lanthanide 3.2.1

        Cherry-picking data points that really aren’t comparable isn’t the basis for a strong argument.

        Japan’s economy is the 3rd largest in the world. Surely you have heard the saying “Owe $1M to the bank, the bank owns you. Owe $1B to the bank, you own the bank”.

        NZ’s sovereign crediting rating matters, because we borrow money internationally and promise to pay it back, with a certain interest rate on top. If that interest rate goes up, we have to pay more. The central bank’s interest rate controls how much we pay for domestic borrowing; it doesn’t (directly) affect foreigners choosing to lend us money.

        Certainly the situation of the PIIGs didn’t completely pass you by during the GFC?

        • Nic the NZer 3.2.1.1

          ‘Japan’s economy is the 3rd largest in the world. Surely you have heard the saying “Owe $1M to the bank, the bank owns you. Owe $1B to the bank, you own the bank”.’

          I guess we should be borrowing more so we can own our own bank? Oh hang on, we already do ‘own the bank’ its called the RBNZ, and it does what the government tells it (with some limited independence) as does the BOJ.

          ‘NZ’s sovereign crediting rating matters, because we borrow money internationally’, hang on the NZ governments borrowing is almost exclusively in NZ$, how does that work? Also as I said, the RBNZ is in control of interest rates, including interest rates on NZ government debt (because its denominated in NZ$). Here is an informative discussion of this fact,
          http://fixingtheeconomists.wordpress.com/2014/08/15/does-the-central-banks-control-long-term-interest-rates-a-glance-at-operation-twist/

          ‘The central bank’s interest rate controls how much we pay for domestic borrowing; it doesn’t (directly) affect foreigners choosing to lend us money.’

          Almost correct, its not who is lending the money, its the currency they are lending! As I said almost all NZ government debt is in NZ$.

          ‘Certainly the situation of the PIIGs didn’t completely pass you by during the GFC?’

          Yes, good of you to bring that up. I should have mentioned that countries using the Euro are not the same as NZ. This is because they don’t control their currency issuing central bank (the ECB), this brings us back to the charge of

          ‘Cherry-picking data points that really aren’t comparable’

          which you are guilty of. This is not to say that the ECB can’t do things that the RBNZ can, just the PIIGs don’t easily get such co-operation. Did you hear about the Greek government bond panic BTW, notice the ECB has brought down the price on Greek government bonds, by intervention.

          • Lanthanide 3.2.1.1.1

            Foreign person A wants to buy something that NZ produces, say milk. NZ farmers (ultimately) only accept $NZ for their milk, because the government forces them to pay tax and requires tax be paid in $NZ. So a foreign person has to obtain $NZ in order to buy milk. They do this by giving us their foreign money in exchange for $NZ. The rate at which this happens is the “exchange rate” between the two currencies.

            Similarly, the NZ government borrows $NZ. It does this by taking $NZ off depositors and promising to return it at a future date with interest on top.

            If a foreigner thinks “5% extra money in 10 years time is good value, and that’s what the NZ government is currently offering to pay”, then they will exchange their foreign money for $NZ and then give it to the government. The government has to set the interest rate on what they’re paying at a level that is attractive to investors.

            If the reserve bank were to start arbitrarily printing money, then foreigners would not want to trade foreign cash for $NZ, or they would demand a lot more $NZ in return for their foreign cash, because each $1 NZ is now worth less than it used to be.

            In turn this means the government may have to start offering much greater interest returns on their bonds, in order to encourage foreigners to take the risk to invest with them. The is measured by the sovereign credit rating.

            Hence how printing money is bad for a country (suddenly foreigners won’t give us any money any more, or they’ll give us much less than they used to, and it makes it hard to buy oil, computers and other nice things we import) and how the sovereign credit rating matters to a country – the government has to pay higher interest to realise the same net borrowing amount, and if they start printing money to try and offset the higher interest, they’ll get into a vicious spiral where no-one wants to trade with us.

            • Colonial Rawshark 3.2.1.1.1.1

              The NZ govt needs to be net printing money, now, billions of dollars of it a year, probably up to 2% to 3% of GDP and then spending it into the bottom half of the local economy.

              Your concept of how the NZ Govt borrows is completely askew. Your concept of what makes the NZD valuable to foreign investors is also completely askew. We already offer higher sovereign interest rates than most other western powers on the planet, for low stable sovereign risk. It’s one reason why the NZD is in such high demand. We could do with dropping the value of the NZD another 10%.

              The commentator above who says that the NZ govt is completely in charge of interest rates through the RB is correct.

              Japan’s size as the 3rd biggest economy has nothing to do with them being able to print trillions of yen and monetizing debt. It has everything to do with their needs, however.

              • Lanthanide

                “Your concept of how the NZ Govt borrows is completely askew. Your concept of what makes the NZD valuable to foreign investors is also completely askew. ”

                Ok, sell me the ‘real version’ then. Then convey this in such a way that it’ll be acceptable to the voting public at large. Otherwise it’ll just be laughed at like the Green’s suggestion for filling up the EQC fund (effectively printing money today, but pretending it’s in the future via accounting tricks).

                • Colonial Rawshark

                  Lanth what are you afraid of? Are you surprised that ordinary voters (and ordinary MPs) have no concept of central banking monetary operations? These operations allow the Reserve Bank to set *whatever* interest rate it wants or needs on a day. 0%. 1%. 2%. 3%. 4%. 5%. 6%.

                  Currently the NZD is excessively valuable because it is a target for hoarding and financial speculation. Ideally the NZD would be valuable because of demand for NZ goods and services, instead of as an asset for financial speculation.

            • Nic the NZer 3.2.1.1.1.2

              Your thinking goes wrong here,

              ‘If a foreigner thinks “5% extra money in 10 years time is good value, and that’s what the NZ government is currently offering to pay”, then they will exchange their foreign money for $NZ and then give it to the government. The government has to set the interest rate on what they’re paying at a level that is attractive to investors.’

              If you are holding NZ$ which you don’t have anything more productive to do with them, you have two choices, lend them to the government at what ever is the going rate in a heavily central bank influenced market, or hold onto them (or trade them with somebody else who faces the same choice). So no the government doesn’t have to offer anything! The government has a captive market. I don’t think non-investment is likely here, but even if it happens so what?

              BTW, you seem to have confused exporters with importers, so I have assumed you are talking about importers to NZ who end up with an actual surplus of NZ$ to invest for the purposes of this discussion.

              To point out something quite similar to what you are describing you probably have a savings account and a current account at the bank. Its your choice to put the money in the savings account (and get higher interest) or leave it in the current account (probably paying nada). So the question is how successful are you at influencing the bank to pay more interest on your savings? Maybe you are using your ‘hard bargaining’ strategy of leaving all your savings in the current account! Hows that working out? Is the bank still telling you what the going rate is for savings!

              “suddenly foreigners won’t give us any money any more”, you realize that NZ$ come from NZ right? The NZ economy is self sufficient in NZ$.

              • Colonial Rawshark

                Lanth is afraid of a situation where the value of the NZ$ falls precipitously and we are unable to get our hands on the hard foreign currency required to import goods like pharmaceuticals, computers and other electronics/advanced materials.

                He hasn’t thought through why and how nations actually suffer currency collapses (almost always severe destruction of an economy’s ability to produce valuable goods and services is required eg from warfare).

                • Nic the NZer

                  Seems to have scared the bejesus out of him, he is no longer thinking straight.

                  As long as NZers still need to pay tax in NZ$ and NZ is still producing exports which people can’t easily get elsewhere there will always be a fairly large demand for NZ currency. Also the entire world is obsessed by export lead recovery ideas, most countries are desperate to sell us anything they can produce. NZ policy is making it as difficult as possible to take advantage of that.

                  Of course the exchange rate naturally tends to sort itself out, because if it falls it becomes cheaper for foreigners to buy from NZ and tends to reduce demand for imports (which become more expensive).

                  • Lanthanide

                    “and tends to reduce demand for imports (which become more expensive).”

                    Oh, is that all? Just reduced demand?

                    So, our quality of life wouldn’t be affected if petrol cost $3/litre? What about $4/litre? How productive would our economy be, and how many goods could we create to export, if farmers couldn’t buy the trucks and cars they needed, the IT sector had to pay 200%+ markups over previous prices for new hardware, pharmac had to make-do with 30% less drugs…?

                    Never mind, that’s just “reduced demand”.

                    • Nic the NZer

                      Remember that last time that the RBNZ intervened in the forex market. How did that work out, its suppose to be screwing up those exporters right? Note it did have a significant effect on petrol prices, it must stand out in your memory as a very significant and problematic event.

                      http://www.interest.co.nz/currencies/72207/finance-minister-welcomes-nz-fall-reducing-headwind-exporters-says-rbnz-will-be-hap

                      BTW, the RBNZ uses different transactions for forex, the deficit has much less of a direct or visible effect on the exchange rate. By and large the exchange rate will not be an issue, though the RBNZ might run higher interest rates to keep the currency value high. They appear to be doing that at present.

                    • Lanthanide

                      Weird. You’re comparing *selling* $521M of NZ$ in the normal forex economy, with *printing* $5B NZ$ outside the normal forex economy, as if the first has some sort of bearing on the latter?

                    • Nic the NZer

                      Where did the RBNZ get the 521M $NZ from, I wonder? As I said there is less impact on the forex markets from ‘printing’ anyway. You were worried about import prices in your comment, so I used an example where we can actually see the effects on import prices.

                    • Lanthanide

                      The Reserve Bank got the $521M from it’s currency reserves.

                      They have a whole section on their website about it: http://www.rbnz.govt.nz/markets_and_payment_operations/foreign_reserves/intervention/

                      4. Between 1988 and 1998, successive Ministers of Finance agreed that the Bank should hold a target intervention capacity of around NZD 4.5 billion. In 1998, it was agreed that the intervention capacity should be stated in foreign currency terms,…

                      5. The rationale for the shift to targeting the intervention capacity range in foreign currency terms was that any intervention in a crisis situation would involve the Bank acting as a supplier of foreign currency; hence it is the foreign currency amount that the Bank holds that is important. A crisis in this situation is one where there are no `market makers’ in the New Zealand dollar, and the Bank stands prepared to purchase New Zealand dollars using foreign currency reserves.

                      Note how it doesn’t say anything about printing money.

                    • Nic the NZer

                      Any intervention where the RBNZ has bought something (in this case foreign currency) its effectively printing. If it makes you feel any better we could ask if they can pull the deficit out of their foreign exchange reserves instead! Would that make any difference?

                      Its meaningless for the RBNZ to ‘hold’ NZ$ reserves as it operates the accounts in NZ$.

    • Saarbo 3.3

      @Lanthanide
      That’s rubbish, why wasn’t our credit rating affected by the $10b spent on unnecessary highways over the same period. $10b or 5% of gdp is relatively small.

      • Lanthanide 3.3.1

        @Saarbo – because the choice that National gave us is not between spend $10B on roads or spend $10B on borrowing for the superannuation fund.

        National was *always* going to spend $10B on roads. So the additional $10B borrowing for the superannuation fund would be on top.

        So we’re not talking $10B of ‘spending’, we’re talking $20B.

        Also, spending $10B on roads looks more fiscally responsible to foreigners than borrowing and investing $10B in offshore companies during the greatest recession since the 1930’s.

        • lprent 3.3.1.1

          But they didn’t borrow $10B did they? They borrowed $55B and still rising.

          So how does that look to overseas investors? Ummm funds flooding into the economy, an excessively high currency, and absolutely no problems turning over the extra borrowing.

          I would say that you were and are mistaken. Economics is a ‘relative’ artform rather than a absolutist one.

          • Lanthanide 3.3.1.1.1

            “I would say that you were and are mistaken. Economics is a ‘relative’ artform rather than a absolutist one.”

            Actually that’s the point I’m trying to make. Borrowing an extra $10B, to turn around an invest it at the height of a global financial retraction (which, at several points, was looking like a collapse) could easily have been the straw that broke the camels back re: our credit rating.

            But you are of course right, I should be comparing $65B of borrowing to $55B, not $10B to $20B.

            • locus 3.3.1.1.1.1

              maybe another point you’ve missed is that the projected borrowings for the Cullen fund were planned and transparent – the market already knew what was intended

              the surprise to the market was the way in which the nats decided to cut back on what was a successful and well accepted strategy to protect NZ from the inevitable future increases in superannuation

              • Lanthanide

                “the surprise to the market was the way in which the nats decided to cut back on what was a successful and well accepted strategy to protect NZ from the inevitable future increases in superannuation”

                The short-term money market couldn’t care less about NZ’s future superannuation situation. Especially during a global financial crisis. Similarly plans made for the future when everything was golden and rosey don’t count for much when everything’s falling down around you.

    • Tracey 3.4

      currency traders and brokers know that you have to consistently enter a market so your risk is spread across good bad and even times. tbe ONE thing our former banker brought to the job he ignored.

  3. les 4

    well $4.8 bil is about what the Natz realised from asset sales anyway.Doesn’t go far these days!

    • locus 4.1

      hmm 4.8 billion dollars doesn’t go far? do you understand compound interest?

      actually… do you understand the long term cost to the NZ taxpayer of selling off profitable national assets that have had far more than 4.8 billion invested in them over the years? Particularly when you consider that the money from NZ’s asset sales will not be invested wisely or used to pay down debt by the neolibs that are selling off our future

  4. Nic the NZer 5

    Sorry Rob, this is a absolute non-issue, the government gains no additional capacity to spend from an extra 4.8 billion in super investment profits. It also follows that it gains no additional capacity to spend from raising tax, it can always spend first and worry about tax later. Because the economy is largely demand constrained usually no higher tax rates are needed to compensate for additional spending. You should drop it, its a non-issue. This kind of thinking will lead you to pushing for the retirement age to be raised, which is both un-popular and a really destructive economic policy for all concerned.

    • r0b 5.1

      Sorry Rob, this is a absolute non-issue, the government gains no additional capacity to spend from an extra 4.8 billion in super investment profits.

      Not today’s government – that’s why the Nats don’t care. But future governments and citizens benefit, that’s the whole point of the fund. As I said – stupid short-term thinking. We need governments that are better than this.

      • Nic the NZer 5.1.1

        I believe I said, the government, its irrelevant who that is for the purpose of discussing this.

      • Lanthanide 5.1.2

        Nic seems to believe that all countries can print unlimited amounts of money at any moment they feel like and that doing this will have absolutely no negative repercussions at all. So his post at #5 is coming from this angle.

        • Nic the NZer 5.1.2.1

          Almost, it is likely to have some negative repercussions once the economy is running at or near full capacity (e.g with a very low unemployment rate, not seen for multiple decades). At that stage if the government wants to increase spending more (so as to create more public goods, rather than private goods) they should look at increasing taxes so as not to cause inflation, but until that point Lanthanide is basically correct in his characterization.

          • Lanthanide 5.1.2.1.1

            And yet funnily enough, printing money has never been nirvana for any country that has tried it (outside of the behemoth economies).

            • Colonial Rawshark 5.1.2.1.1.1

              Lanth, NZ needs to worry about its real physical economy: the real condition and status of its adults and its children, the creativity and innovation within its society, and the productivity and quality of its real productive infrastructure.

              But instead of these things you seem stuck in some BS paper accounting world where you are hoping to cleverly balance this against that, this against that via hopelessly hypothetical macro-economic models.

              Printing money is not supposed to be a “nirvana” but it will allow you to put into action heavily under-utilised resources and capabilities. Like 1/4 million unemployed and under-employed NZers.

              There is minimal difference between the NZ Govt borrowing $100 from China and then spending it into the NZ economy, and the NZ Govt issuing that $100 and then spending it into the NZ economy.

              • Lanthanide

                Wanting to be able to import oil, computers and other items we don’t make ourselves is being “stuck in some BS paper accounting world”? Curious.

                “There is minimal difference between the NZ Govt borrowing $100 from China and then spending it into the NZ economy, and the NZ Govt issuing that $100 and then spending it into the NZ economy.”

                Correct. There’s also minimal value to spending $100 into the economy.

                Now, if you’re talking about borrowing $5B from China, or printing $5B and spending it into the economy, then you’ll be materially affecting the exchange rate.

                • Colonial Rawshark

                  What’s your fear Lanth? Even if issuing $5B in new high quality spending over 1 year (approx 4% of GDP) were to affect our exchange rate, so what? You know the NZ dollar could go 10% lower and it would be a great boon to both our added value manufacturers as well as our commodity ag-hort sector.

                  The one thing that you do point to is that NZ must end its clean float forex regime and go to a managed float.

                  • Lanthanide

                    You’re assuming that if we printed $5B of money our exchange rate would drop by 10%.

                    It could drop by 50%, or more.

                    You’re assuming that the idea to print money is a good one, based on the assumption that only good things will happen if you do it. That’s a circular argument.

                    • Colonial Rawshark

                      You’re assuming that if we printed $5B of money our exchange rate would drop by 10%.

                      It could drop by 50%, or more.

                      Hey mate, I think your fears of a 50% drop are incredibly overblown, but am happy to do the issue of $5,000M in 20 separate lots of $250M in order to manage the risk of unintended forex fluctuations.

                    • Lanthanide

                      Even announcing the plan would cause our dollar to drop – wouldn’t even have to follow through on it.

                      Also I don’t think printing $5B would result in a 50% drop in the currency, but the point is, it could. These financial markets are driven by fear, as well as control. Large economies can get away with doing ‘naughty’ things because no-one can stop them. But that’s not the same for a small trading economy on the arse-end of the world.

                      It may not be the $5B in printing itself that drives the dollar down, but the expectation that if the government is going to throw out the prevailing models of economics and print such a large amount of money, that they can’t be trusted for what they’ll do next – it could be $25B next week, or nationalisation of all foreign land and companies, etc. It’s these fears that could drop the currency by 50%.

                • Draco T Bastard

                  Wanting to be able to import oil, computers and other items we don’t make ourselves is being “stuck in some BS paper accounting world”?

                  Having the government creating money won’t stop us from doing that. It would also mean that we wouldn’t have to import at all as we’d just use our resources here instead of selling them overseas at atrocious exchange rates (lots of our resources for minimal of theirs).

                  Now, if you’re talking about borrowing $5B from China, or printing $5B and spending it into the economy, then you’ll be materially affecting the exchange rate.

                  And?

                  • Lanthanide

                    NZ doesn’t produce enough oil domestically for it’s own use.

                    NZ doesn’t produce any x86 CPUs.

                    There are lots of things NZ doesn’t produce, and it will take years or decades to be able to do so, to the point that it doesn’t make sense when we can focus on the things that we do well and trade for those goods instead.

                    • Draco T Bastard

                      NZ doesn’t produce enough oil domestically for it’s own use.

                      Then I suggest we stop using oil.

                      NZ doesn’t produce any x86 CPUs.

                      Then we need to start producing them.

                      There are lots of things NZ doesn’t produce, and it will take years or decades to be able to do so, to the point that it doesn’t make sense when we can focus on the things that we do well and trade for those goods instead.

                      And that is a load of bollocks. People specialise, societies don’t. There are people in NZ quite capable of producing x86 CPUs. Specialisation of a society actually brings about the poor use of it’s human resources. In fact, those people capable of producing x86 CPUs would leave a society that specialises in producing farms.

                      We have the resources to produce everything we use here in NZ and doing so is cheaper, in real terms, than importing them. It’s cheaper because it uses less resources in the first place and we don’t get that massive loss through the rather nasty exchange rate that I mentioned above where we sell tonnes of our resources to get a few kilos of resources back.

                      Our monetary system produces uneconomic results.

                    • Lanthanide

                      “And that is a load of bollocks. People specialise, societies don’t. There are people in NZ quite capable of producing x86 CPUs.”

                      Name 10. Or, name a company in NZ that owns a $2B fab, employs the 2,000 or so (guessing) employees needed to run it?

                      Oh, and has a license that gives them access to the technical specifications for x86 chips. Note: only 3 of these licenses exist in the world.

                      Or, if that’s too far up the food chain for you, please tell me which company it is in NZ that manufactures silicon ingots. They’re worth about $1M each and would surely show up in our countries exports if we made even a handful of them each year (since we have no domestic electronics industry that would consume them).

                    • Draco T Bastard

                      Name 10. Or, name a company in NZ that owns a $2B fab, employs the 2,000 or so (guessing) employees needed to run it?

                      I said capable of doing it, not that they’re doing it. Please learn to fucken read.

                      That said:
                      http://www.rakon.com/corporate/about
                      http://www.elex.co.nz/
                      http://www.kamahi.com/about.php

                      Just because we’re not doing it doesn’t mean that we can’t. In fact, I’d say the fact that we aren’t is a failure of our economic system.

                      They’re worth about $1M each

                      IC Grade Monocrystalline Silicon Ingot:

                      FOB Price:
                      US $1 – 99 / Kilogram

                      They’re quite large but I doubt if they mass a 1000kg each never mind 10000 to a million kilos.

                    • Lanthanide

                      Good references, Draco.

                      Now one of those companies probably could design an x86 processor, but I doubt they’d be able to get the manufacturing volume (again, $2B for a state-of-the-art fab), or access to the patented technologies and personnel to make them anywhere near competitive with the CPUs made by Intel. When it comes to CPUs, there’s really 3 important factors: correctness, power usage and price. If your CPUs are the same price but half the speed of the competition, it means you’ll need twice as many (hence twice the price) to achieve the same performance, and thats before you factor in the rest of the computer system that must also be duplicated to house your additional CPUs.

                      So, maybe we could produce x86 CPUs, but it’s pretty much impossible that they’d ever be better than the competition, which means more expensive and less effective. Better to milk some cows efficiently and trade for some efficient CPUs.

                      As for the ingot price, it does look like you’re correct; the price I had for $1M was me extrapolating a comment on the price of a processed silicon wafer. Once a wafer has been processed it’s obviously worth more than a raw ingot.

                    • Colonial Rawshark

                      Forget about the x86 bullshit, just go straight to ARM.

                    • Draco T Bastard

                      So, maybe we could produce x86 CPUs, but it’s pretty much impossible that they’d ever be better than the competition, which means more expensive and less effective.

                      Good job AMD didn’t have you as an advisor because if they had they would never even have tried making a 486 compatible CPU and wouldn’t now be a multi-billion dollar global company despite their initial CPUs not being quite as good as Intel’s.

                    • Lanthanide

                      Thanks for making my point. AMD have been in this business for decades and they are still losing money hand-over-fist and their products still aren’t as good as intels. We’d be lucky to have anything that could compete with AMD CPUs inside a decade.

                    • Draco T Bastard

                      Looks like a profit to me. And considering the games that companies use so as to avoid paying tax I’d take the reports of a loss with a few grains of salt as well. They certainly wouldn’t still be around if they kept losing money.

                      And AMD’s CPUs are as good as Intel’s. In fact, I’m now regretting getting a Core i7 as AMD’s 8 core was better for what I’m using it for.

                      And, finally, it won’t take decades to start NZ doing it. All it took for the US to start was the US federal government to make the first fabrication plant in Silicon Valley. Same thing happened in Taiwan. Basically, if we want a successful economy then the government has to start leading rather than waiting around for private enterprise who are really only looking to clip the ticket.

                    • Lanthanide

                      You need to be more careful when reading reports like those.

                      So far this calendar year they’ve made a loss of $39M. If you include the 4th quarter profit from 2013 then they’ve made a profit of $50M, however that included $48M in one-off revenue from legal settlements, so really it’s only a $2M operating profit over that time period (on a total revenue of $5.86B, or a 0.3% profit margin.

                      Calendar year 2013 they made a loss of $83M.

                      At $39M in the red already so far this year, it seems unlikely they’ll be making a large profit.

                      “And, finally, it won’t take decades to start NZ doing it. All it took for the US to start was the US federal government to make the first fabrication plant in Silicon Valley. Same thing happened in Taiwan. ”

                      And what year what that fabrication plant set up in Silicon Valley? How much did it cost? What was the state of the art then? We’ve come a long way from there, CPUs are a lot more complicated now, and they have arrived where they are because of decades of research and development, which of course is proprietary and/or patented.

                      Surely if it was so easy to set up a CPU fab that could rival Intel and AMD, the Chinese government would have done it, or would be doing it? They easily have the resources, manpower and cash to do it if they chose, and clearly its in their long-term best interests not to rely on US companies for their processors.

                    • Draco T Bastard

                      Surely if it was so easy to set up a CPU fab that could rival Intel and AMD, the Chinese government would have done it, or would be doing it?

                      What makes you think they haven’t? In fact, I’m pretty sure that a lot of Intel CPUs say Made in Taiwan on them. Same with AMD.

                      We’ve come a long way from there, CPUs are a lot more complicated now, and they have arrived where they are because of decades of research and development, which of course is proprietary and/or patented.

                      And a lot of which is publicly available because it was funded by government. Hell, Photolithography, has been around for almost 200 years. I don’t think any patents apply any more. The basics of semiconductors has been publicly available since the 1960s as part of the conditions for public funding in the US.

                      There is nothing stopping us from producing a fab plant in NZ or doing our own research except some fucking idiots determined to believe that we can’t actually do anything.

                • Nic the NZer

                  “Correct. There’s also minimal value to spending $100 into the economy.

                  Now, if you’re talking about borrowing $5B from China, or printing $5B and spending it into the economy, then you’ll be materially affecting the exchange rate.”

                  Actually, what the Colonel was alluding to was, there is minimal difference between the NZ Govt borrowing $5B from China, or printing $5B and spending it into the economy. If the RBNZ is going to keep the OCR above zero, there is basically no difference in terms of how the accounting ends up. This is because the RBNZ must soak up excess reserves resulting from spending to stop the 90-day bill rate from falling, with deficit spending the treasury (DMO) does this before spending, with printing it would need to happen after by DMO or RBNZ. The accounts end up the same however via different order of steps.

                  So the question to you Mr Lanthanide is, show me the collapsing exchange rate to validate your BS theory that the exchange rate collapses when the government prints money!

  5. felix 6

    So in other words we could have kept control of our energy infrastructure and been no worse off.

    Key chose to lose returns by flogging productive strategic assets for a one-off cash injection rather than invest for ongoing returns.

    How did National get a rep for being good with money?

    • Draco T Bastard 6.1

      As far as I can make out, because they’ve been lying about being better at the economy for decades and people now believe the lie despite all the evidence proving that they are actually the worst economic managers.

      • Tracey 6.1.1

        and they lied and fiddled the books to pretend there will be a surplus. post election english is changing public tune. but no one cares…

        • RedLogix 6.1.1.1

          Oh they care alright Tracey. People quite like being lied to when it confirms their preconceived biases.

  6. Poission 7

    The NZ super fund, has paid 4.36 billion in tax receipts since inception,and in it last financial period paid 10% of the total company tax so it is self funding in some respects due to the positive feedback on its investment strategy.

    This is one of the peculiar outcomes of the SOE regime,where a number of organizations with natural monopolies spend a disproportionate amount of time trying to reduce their tax liability eg Transpower,rather then enhancing efficiencies in their business.

    https://www.nzsuperfund.co.nz/news-media/nz-super-fund-releases-its-201314-annual-report-cautions-stakeholders-expect-more-normal

  7. greywarshark 8

    Well it’s obvious how NACTs got the rep for being good with money. They know how to tap into it and drip it round for the benefit of their friends. That’s what money is for in their world.

  8. Not a PS Shark Sashimi 9

    Michael Cullen would be referred to Rome for Beatification and Canonisation….but for his one big sin:
    —————————————————————————————————————

    he accepted a Knighthood!

  9. paddy 10

    A whole lots of what ifs and maybes does not constitute a waste of money. As several have pointed out the cost of using the money in the Cullen fund could well have cost us billions. Higher interest rates would have hurt not just the government who needed to borrow but also every business and every mortgage owner. The post is too simplistic and reeks of National Always Bad. We can do better.

    • Nic the NZer 10.1

      Paddy, the RBNZ controls interest rates in NZ. They brought down mortgage and other borrowing rates after the GFC, as you may remember. They can also control rates on government debt, when they want to (as long as its denominated in NZ$). Its kind of what they do!

    • Lanthanide 10.2

      “The post is too simplistic and reeks of National Always Bad. We can do better.”

      Agreed.

  10. Ross 11

    These are both “aunty” arguments. As my dear old departed dad used to say, “If my aunty had balls she’d be my uncle”.

  11. paddy 12

    God I wish this post had never been put up. It’s an embarrassment to the Left.

    [lprent: You’d better explain why you think that. Otherwise I’m liable to think that

    1. you are a right wing concern troll (it is one of their favourite lines)
    2. You are attacking a author personally.

    The latter is a self-martyrdom offence. So I’m choosing to think that is what you wanted when you wrote the comment. You are auto-spammed until you provide an explanation to me. If you provide a good clear explanation I’ll limit your ban to two weeks. ]

  12. Mike 13

    What a fucking moron.

    I guess that’s why you are broke and crying like a little bitch when you think you can talk about investment funds movements with the benefit of hindsight.

    • Colonial Rawshark 13.1

      LOL. Now if you cast your small brain back in time just a couple of years, people did say very clearly at the time that it was short sighted and bad financial management to starve the Cullen Fund. And they were right.

      So own up and take responsibility dude. I thought your type was keen on being “accountable” for bad decisions.

      Well, here’s your chance.

    • Tracey 13.2

      How could anyone dispute your calm and logical refutation. Impeccable.

    • lprent 13.3

      Damn near everyone here at the time apart from some shortsighted dickheads who resemble you, pointed out that with the interest rates as they were it was cheaper to borrow to maintain the fund than it was to not. You will find posts full of that foresight.

      For that matter there are posts here from 2008 and 2009 pointing out that it was the height of fiscal irresponsibility for the National government to change the planned tax changes to favour the rich. Rather than circulate or invested in the economy it’d be sucked up in paying down debt.

      Of course that stupid fiscal hole that National voting shortsighted fuckwits like you created is just about to cause the 7th fiscal deficit by your startlingly incompetent government. I guess that accurately reflect you…. But that does take a special kind of stupidity.

      I guess you have the usual ‘right’ foresight of about 3.5 inches. And the syphilitic memory that goes with it.

  13. Colonial Rawshark 14

    The NZ Govt borrows billions every quarter and spends it into local circulation. We’d be better off simply to issue the money and spend it into circulation ourselves (particularly to build productive and socially important infrastructure) rather than running up mounds of accounting debt.

    • Draco T Bastard 14.1

      Agreed.

      The reason why that doesn’t happen though is because it would make the large amounts of cash built up by the rich worthless as they’d no longer be able to charge the government interest to loan it to them.

    • Lanthanide 14.2

      “We’d be better off simply to issue the money and spend it into circulation ourselves (particularly to build productive and socially important infrastructure) rather than running up mounds of accounting debt.”

      Sure, if it there were no consequences to do so.

      I would rather think that there would be some consequences of some kind. Do those consequences outweigh the benefits? That is unclear.

      • Draco T Bastard 14.2.1

        Sure, if it there were no consequences to do so.

        Well, there doesn’t appear to be any consequences of the banks creating money – except the over-excessive inflation in house prices.

        I would rather think that there would be some consequences of some kind.

        Not really. The government wouldn’t be buying houses but building them using newly resourced materials. They’d source the new materials buy printing money as well but that would be offset by the fact that the materials would be sold. And then the houses would be sold or, even better, rented out. Both the selling of the materials and the renting/selling of the houses would then decrease the money supply decreasing any possible inflation.

        Do those consequences outweigh the benefits? That is unclear.

        The benefits would far outweigh the consequences. We'd have good housing for everyone, jobs for everyone, infrastructure would be built and well maintained, etc, etc. The consequences would be, compared to now, probably less inflation in house prices and a great, dynamic society.

  14. greywarshark 15

    Bill English always manages to sound so positive. He must have been a trial to his parents, trying to find out what was going on.

    The economy is fine.
    “Businesses and consumers are confident about the future, there’s a lot of activity in the manufacturing and service sectors, and companies are employing more people and paying higher wages,” he said in a speech to an ASB business breakfast in Auckland today.
    http://www.scoop.co.nz/stories/PA1411/S00246/nz-performing-well-return-to-surplus-a-challenge.htm

  15. greywarshark 16

    Lanthanide
    I have been reading your refutation of the arguments put to you down the thread. And I think that you aren’t going to know any more at the end of it than at the beginning.

    Colonial Rawshark or Nic NZ could you comment on a concrete real matter. The Conservation Department can’t get enough staff to do its tasks in NZ. We have a lot of unemployed and hardly-employed here. If we asked the unemployed to apply for training, as a foot soldier for DOC doing un to semi-skilled work, to a good standard and with commitment, and looked at their work background, and then trained them, could we pay for it by just raising a debit on the government budget? Then there would be deployment and accommodation around the country of graduates of that training,

    Would it result in a rise in inflation? Would it affect the NZ$ overseas, or anywhere? And presumably the cost of wages would be partly balanced by the drop in benefits, which would be lower than the net wages paid out.

    • NicTheNZer 16.1

      Could the government do it? Yes. Let’s assume that the government does it the conventional way and increases the budget deficit to pay for it. I pointed out in my reply to 5.1.2.1.1.1 that this is basically the same as printing if the reserve bank wants to maintain the OCR above zero.

      Would a large budget deficit cause inflation to rise? Well has it, the budget deficit has been quite high for several years in many countries with out inflation resulting. What about foreign exchange rates, nope no foreign exchange collapses in those either to observe. Yes the raise in tax receipts and fall in out benefit payments might reduce the deficit a bit but as I highlighted it’s not very important what is happening there anyway.

      So why would people think it does? Well the link is based on something called the quantity theory of money. It’s a long run theory which means it can’t be observed so it’s purely theoretical. And basically it turns out it’s not true, markets don’t automatically adjust so inflation tracks the quantity of money. (If anything the quantity of money probably tracks inflation).

      We might start to see inflationary effects when the government starts competing with the private sector for resources (including workers) but obviously in your scenario this is not happening as the workers are unemployed and the private sector doesn’t want them right now. This is because most inflation is cost push (business passing on their costs) and the economy is usually running below full capacity most sectors most of the time.

    • NicTheNZer 16.2

      Actually your proposal is similar to a policy Labour should adopt. The policy is usually called a job guarantee.

      The outline is,
      jobs in the job guarantee program are at the current minimum wage.
      Non profit and charity sectors may apply to the program for help, this is the main way of creating jobs.
      Government will hire anybody who applies for a job (picking a suitable job from above) and pay their salary.
      The system is administered by work and income but does not replace benefits such as disability at all.

      This would not be inflationary either because the people applying are not currently wanted by the private sector. Though having said this things like zero hour contracts may vanish as a result and some businesses which use these kinds of cost saving arrangements may face cost increases (there might be a one off price adjustment by some businesses here but many will have healthy profit margins which could also be reduced). The importance of the job part of job guarantee is that it solves a problem the unemployed face, employers prefer to hire the currently employed ahead of the unemployed.

      Unfortunately the job guarantee must not pay more than the minimum wage as this is likely to become the basic remuneration level for the economy. This kind of policy has been adopted in Argentina and India with success as well.

      • greywarshark 16.2.1

        NictheNZ
        Mmmm. Could be something in that!! What a genius you are. Why can’t the overpaid gigolos and gussies in Gummint think of that? I’m sick of the plain fashion that Bill English wears when he makes his economic rahrah pronouncements. He’s all noise and no substance. He should be wearing cheerleading gear, a tutu, or would that be tootoo much?

        • NicTheNZer 16.2.1.1

          Thanks but genius I am not. I am basically outlining economic theory according to post Keynesian economics and modern monetary theory. The reason to do that is so more people understand the financial system and then are able to push for it to be used for the advantage of the whole country.

          It’s not so hard to see that our finance minister is pretty clueless however. He frequently likes to explain how the government keeping the deficit down is purportedly keeping pressure off mortgage interest rates (whatever that means, the reserve bank is in control of these). OK that’s the kind of foolish thing Paul Krugman has said before, he could be in worse company. But he also said our banking system is insured by Australia as NZ mostly operates Australian subsidiaries, so his conception is that you will take Australian dollars if there is a problem. He is clearly getting bad advice.

          I think a job guarantee was part of IMP platform actually.

  16. greywarshark 17

    Economic Primer No.1
    See under Who Needs $4.8 billion anyway. Nov. 2014.

  17. We should all remember that if the so called financial genious Muldoon had not destroyed the Kirk Labour Super Fund we now would all be very well off,
    Labour builds Tories destroy the world over.

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    For the last few years, the Green Party has been the party that has managed to avoid the plague of multiple scandals that have beleaguered other political parties. It appears that their luck has run out with a second scandal which, unfortunately for them, coincided with Golraz Ghahraman, the focus ...
    Democracy ProjectBy bryce.edwards
    3 days ago
  • Bernard’s Dawn Chorus with six newsey things at 6:46am for Saturday, March 16
    TL;DR: The six newsey things that stood out to me as of 6:46am on Saturday, March 16.Andy Foster has accidentally allowed a Labour/Green amendment to cut road user chargers for plug-in hybrid vehicles, which the Government might accept; NZ Herald Thomas Coughlan Simeon Brown has rejected a plea from Westport ...
    The KakaBy Bernard Hickey
    3 days ago
  • How Did FTX Crash?
    What seemed a booming success a couple of years ago has collapsed into fraud convictions.I looked at the crash of FTX (short for ‘Futures Exchange’) in November 2022 to see whether it would impact on the financial system as a whole. Fortunately there was barely a ripple, probably because it ...
    PunditBy Brian Easton
    4 days ago
  • Elections in Russia and Ukraine
    Anybody following the situation in Ukraine and Russia would probably have been amused by a recent Tweet on X NATO seems to be putting in an awful lot of effort to influence what is, at least according to them, a sham election in an autocracy.When do the Ukrainians go to ...
    4 days ago
  • Bernard’s six stack of substacks at 6pm on March 15
    TL;DR: Shaun Baker on Wynyard Quarter's transformation. Magdalene Taylor on the problem with smart phones. How private equity are now all over reinsurance. Dylan Cleaver on rugby and CTE. Emily Atkin on ‘Big Meat’ looking like ‘Big Oil’.Bernard’s six-stack of substacks at 6pm on March 15Photo by Jeppe Hove Jensen ...
    The KakaBy Bernard Hickey
    4 days ago
  • Buzz from the Beehive Finance Minister Nicola Willis had plenty to say when addressing the Auckland Business Chamber on the economic growth that (she tells us) is flagging more than we thought. But the government intends to put new life into it:  We want our country to be a ...
    Point of OrderBy Bob Edlin
    4 days ago
  • National’s clean car tax advances
    The Transport and Infrastructure Committee has reported back on the Road User Charges (Light Electric RUC Vehicles) Amendment Bill, basicly rubberstamping it. While there was widespread support among submitters for the principle that EV and PHEV drivers should pay their fair share for the roads, they also overwhelmingly disagreed with ...
    No Right TurnBy Idiot/Savant
    4 days ago
  • Government funding bailouts
    Peter Dunne writes – This week’s government bailout – the fifth in the last eighteen months – of the financially troubled Ruapehu Alpine Lifts company would have pleased many in the central North Island ski industry. The government’s stated rationale for the $7 million funding was that it ...
    Point of OrderBy poonzteam5443
    4 days ago
  • Two offenders, different treatments.
    See if you can spot the difference. An Iranian born female MP from a progressive party is accused of serial shoplifting. Her name is leaked to the media, which goes into a pack frenzy even before the Police launch an … Continue reading ...
    KiwipoliticoBy Pablo
    4 days ago
  • Treaty references omitted
    Ele Ludemann writes  – The government is omitting general Treaty references from legislation : The growth of Treaty of Waitangi clauses in legislation caused so much worry that a special oversight group was set up by the last Government in a bid to get greater coherence in the public service on Treaty ...
    Point of OrderBy poonzteam5443
    4 days ago
  • The Ghahraman Conflict
    What was that judge thinking? Peter Williams writes –  That Golriz Ghahraman and District Court Judge Maria Pecotic were once lawyer colleagues is incontrovertible. There is published evidence that they took at least one case to the Court of Appeal together. There was a report on ...
    Point of OrderBy poonzteam5443
    4 days ago
  • Bernard's Top 10 @ 10 'pick 'n' mix' for March 15
    TL;DR: My top 10 news and analysis links this morning include:Today’s must-read: Climate Scorpion – the sting is in the tail. Introducing planetary solvency. A paper via the University of Exeter’s Institute and Faculty of Actuaries.Local scoop: Kāinga Ora starts pulling out of its Auckland projects and selling land RNZ ...
    The KakaBy Bernard Hickey
    4 days ago
  • The day Wellington up-zoned its future
    Wellington’s massively upzoned District Plan adds the opportunity for tens of thousands of new homes not just in the central city (such as these Webb St new builds) but also close to the CBD and public transport links. Photo: Lynn Grieveson / The KākāTL;DR: Wellington gave itself the chance of ...
    The KakaBy Bernard Hickey
    4 days ago
  • Weekly Roundup 15-March-2024
    It’s Friday and we’re halfway through March Madness. Here’s some of the things that caught our attention this week. This Week in Greater Auckland On Monday Matt asked how we can get better event trains and an option for grade separating Morningside Dr. On Tuesday Matt looked into ...
    Greater AucklandBy Greater Auckland
    4 days ago
  • That Word.
    Something you might not know about me is that I’m quite a stubborn person. No, really. I don’t much care for criticism I think’s unfair or that I disagree with. Few of us do I suppose.Back when I was a drinker I’d sometimes respond defensively, even angrily. There are things ...
    Nick’s KōreroBy Nick Rockel
    4 days ago
  • The Hoon around the week to March 15
    Photo: Lynn Grieveson / The KākāTL;DR: The five things that mattered in Aotearoa’s political economy that we wrote and spoke about via The Kākā and elsewhere for paying subscribers in the last week included:PM Christopher Luxon said the reversal of interest deductibility for landlords was done to help renters, who ...
    The KakaBy Bernard Hickey
    4 days ago
  • Labour’s policy gap
    It was not so much the Labour Party but really the Chris Hipkins party yesterday at Labour’s caucus retreat in Martinborough. The former Prime Minister was more or less consistent on wealth tax, which he was at best equivocal about, and social insurance, which he was not willing to revisit. ...
    PolitikBy Richard Harman
    4 days ago
  • Skeptical Science New Research for Week #11 2024
    Open access notables A Glimpse into the Future: The 2023 Ocean Temperature and Sea Ice Extremes in the Context of Longer-Term Climate Change, Kuhlbrodt et al., Bulletin of the American Meteorological Society: In the year 2023, we have seen extraordinary extrema in high sea surface temperature (SST) in the North Atlantic and in ...
    5 days ago
  • Melissa remains mute on media matters but has something to say (at a sporting event) about economic ...
     Buzz from the Beehive   The text reproduced above appears on a page which records all the media statements and speeches posted on the government’s official website by Melissa Lee as Minister of Media and Communications and/or by Jenny Marcroft, her Parliamentary Under-secretary.  It can be quickly analysed ...
    Point of OrderBy Bob Edlin
    5 days ago
  • The return of Muldoon
    For forty years, Robert Muldoon has been a dirty word in our politics. His style of government was so repulsive and authoritarian that the backlash to it helped set and entrench our constitutional norms. His pig-headedness over forcing through Think Big eventually gave us the RMA, with its participation and ...
    No Right TurnBy Idiot/Savant
    5 days ago
  • Will the rental tax cut improve life for renters or landlords?
    Bryce Edwards writes –  Is the new government reducing tax on rental properties to benefit landlords or to cut the cost of rents? That’s the big question this week, after Associate Finance Minister David Seymour announced on Sunday that the Government would be reversing the Labour Government’s removal ...
    Point of OrderBy poonzteam5443
    5 days ago
  • Geoffrey Miller: What Saudi Arabia’s rapid changes mean for New Zealand
    Saudi Arabia is rarely far from the international spotlight. The war in Gaza has brought new scrutiny to Saudi plans to normalise relations with Israel, while the fifth anniversary of the controversial killing of Jamal Khashoggi was marked shortly before the war began on October 7. And as the home ...
    Democracy ProjectBy Geoffrey Miller
    5 days ago
  • Racism’s double standards
    Questions need to be asked on both sides of the world Peter Williams writes –   The NRL Judiciary hands down an eight week suspension to Sydney Roosters forward Spencer Leniu , an Auckland-born Samoan, after he calls Ezra Mam, Sydney-orn but of Aboriginal and Torres Strait ...
    Point of OrderBy poonzteam5443
    5 days ago
  • It’s not a tax break
    Ele Ludemann writes – Contrary to what many headlines and news stories are saying, residential landlords are not getting a tax break. The government is simply restoring to them the tax deductibility of interest they had until the previous government removed it. There is no logical reason ...
    Point of OrderBy poonzteam5443
    5 days ago
  • The Plastic Pig Collective and Chris' Imaginary Friends.
    I can't remember when it was goodMoments of happiness in bloomMaybe I just misunderstoodAll of the love we left behindWatching our flashbacks intertwineMemories I will never findIn spite of whatever you becomeForget that reckless thing turned onI think our lives have just begunI think our lives have just begunDoes anyone ...
    Nick’s KōreroBy Nick Rockel
    5 days ago
  • Who is responsible for young offenders?
    Michael Bassett writes – At first reading, a front-page story in the New Zealand Herald on 13 March was bizarre. A group of severely intellectually limited teenagers, with little understanding of the law, have been pleading to the Justice Select Committee not to pass a bill dealing with ram ...
    Point of OrderBy poonzteam5443
    5 days ago
  • Gordon Campbell on National’s fantasy trip to La La Landlord Land
    How much political capital is Christopher Luxon willing to burn through in order to deliver his $2.9 billion gift to landlords? Evidently, Luxon is: (a) unable to cost the policy accurately. As Anna Burns-Francis pointed out to him on Breakfast TV, the original ”rock solid” $2.1 billion cost he was ...
    5 days ago
  • Bernard's Top 10 @ 10 'pick 'n' mix' for March 14
    TL;DR: My top 10 news and analysis links this morning include:Today’s must-read: Jonathon Porritt calling bullshit in his own blog post on mainstream climate science as ‘The New Denialism’.Local scoop: The Wellington City Council’s list of proposed changes to the IHP recommendations to be debated later today was leaked this ...
    The KakaBy Bernard Hickey
    5 days ago
  • No, Prime Minister, rents don’t rise or fall with landlords’ costs
    TL;DR: Prime Minister Christopher Luxon said yesterday tenants should be grateful for the reinstatement of interest deductibility because landlords would pass on their lower tax costs in the form of lower rents. That would be true if landlords were regulated monopolies such as Transpower or Auckland Airport1, but they’re not, ...
    The KakaBy Bernard Hickey
    5 days ago
  • Cartoons: ‘At least I didn’t make things awkward’
    This is a re-post from Yale Climate Connections by Tom Toro Tom Toro is a cartoonist and author. He has published over 200 cartoons in The New Yorker since 2010. His cartoons appear in Playboy, the Paris Review, the New York Times, American Bystander, and elsewhere. Related: What 10 EV lovers ...
    5 days ago
  • Solving traffic congestion with Richard Prebble
    The business section of the NZ Herald is full of opinion. Among the more opinionated of all is the ex-Minister of Transport, ex-Minister of Railways, ex MP for Auckland Central (1975-93, Labour), Wellington Central (1996-99, ACT, then list-2005), ex-leader of the ACT Party, uncle to actor Antonia, the veritable granddaddy ...
    Greater AucklandBy Patrick Reynolds
    5 days ago
  • I Think I'm Done Flying Boeing
    Hi,Just quickly — I’m blown away by the stories you’ve shared with me over the last week since I put out the ‘Gary’ podcast, where I told you about the time my friend’s flatmate killed the neighbour.And you keep telling me stories — in the comments section, and in my ...
    David FarrierBy David Farrier
    5 days ago
  • Invoking Aristotle: Of Rings of Power, Stones, and Ships
    The first season of Rings of Power was not awful. It was thoroughly underwhelming, yes, and left a lingering sense of disappointment, but it was more expensive mediocrity than catastrophe. I wrote at length about the series as it came out (see the Review section of the blog, and go ...
    6 days ago
  • Van Velden brings free-market approach to changing labour laws – but her colleagues stick to distr...
    Buzz from the Beehive Workplace Relations and Safety Minister Brooke van Velden told Auckland Business Chamber members they were the first audience to hear her priorities as a minister in a government committed to cutting red tape and regulations. She brandished her liberalising credentials, saying Flexible labour markets are the ...
    Point of OrderBy Bob Edlin
    6 days ago
  • Why Newshub failed
    Chris Trotter writes – TO UNDERSTAND WHY NEWSHUB FAILED, it is necessary to understand how TVNZ changed. Up until 1989, the state broadcaster had been funded by a broadcasting licence fee, collected from every citizen in possession of a television set, supplemented by a relatively modest (compared ...
    Point of OrderBy poonzteam5443
    6 days ago
  • Māori Party on the warpath against landlords and seabed miners – let’s see if mystical creature...
    Bob Edlin writes  –  The Māori Party has been busy issuing a mix of warnings and threats as its expresses its opposition to interest deductibility for landlords and the plans of seabed miners. It remains to be seen whether they  follow the example of indigenous litigants in Australia, ...
    Point of OrderBy Bob Edlin
    6 days ago
  • There’s a name for this
    Every year, in the Budget, Parliament forks out money to government agencies to do certain things. And every year, as part of the annual review cycle, those agencies are meant to report on whether they have done the things Parliament gave them that money for. Agencies which consistently fail to ...
    No Right TurnBy Idiot/Savant
    6 days ago
  • Echoes of 1968 in 2024?  Pocock on the repetitive problems of the New Left
    Mike Grimshaw writes – Recent events in American universities point to an underlying crisis of coherent thinking, an issue that increasingly affects the progressive left across the Western world. This of course is nothing new as anyone who can either remember or has read of the late ...
    Point of OrderBy poonzteam5443
    6 days ago
  • Two bar blues
    The thing about life’s little victories is that they can be followed by a defeat.Reader Darryl told me on Monday night:Test again Dave. My “head cold” last week became COVID within 24 hours, and is still with me. I hear the new variants take a bit longer to show up ...
    More Than A FeildingBy David Slack
    6 days ago
  • Bernard's Top 10 @ 10 'pick 'n' mix' for March 13
    TL;DR: My top 10 news and analysis links this morning include:Today’s must-read: Angus Deaton on rethinking his economics IMFLocal scoop: The people behind Tamarind, the firm that left a $500m cleanup bill for taxpayers at Taranaki’s Tui oil well, are back operating in Taranaki under a different company name. Jonathan ...
    The KakaBy Bernard Hickey
    6 days ago
  • AT Need To Lift Their Game
    Normally when we talk about accessing public transport it’s about improving how easy it is to get to, such as how easy is it to cross roads in a station/stop’s walking catchment, is it possible to cycle to safely, do bus connections work, or even if are there new routes/connections ...
    6 days ago
  • Christopher's Whopper.
    Politicians are not renowned for telling the truth. Some tell us things that are verifiably not true. They offer statements that omit critical pieces of information. Gloss over risks, preferring to offer the best case scenario.Some not truths are quite small, others amusing in their transparency. There are those repeated ...
    Nick’s KōreroBy Nick Rockel
    6 days ago

  • Positive progress for social worker workforce
    New Zealand’s social workers are qualified, experienced, and more representative of the communities they serve, Social Development and Employment Minister Louise Upston says. “I want to acknowledge and applaud New Zealand’s social workers for the hard work they do, providing invaluable support for our most vulnerable. “To coincide with World ...
    BeehiveBy beehive.govt.nz
    3 hours ago
  • Minister confirms reduced RUC rate for PHEVs
    Cabinet has agreed to a reduced road user charge (RUC) rate for plug-in hybrid electric vehicles (PHEVs), Transport Minister Simeon Brown says. Owners of PHEVs will be eligible for a reduced rate of $38 per 1,000km once all light electric vehicles (EVs) move into the RUC system from 1 April.  ...
    BeehiveBy beehive.govt.nz
    5 hours ago
  • Trade access to overseas markets creates jobs
    Minister of Agriculture and Trade, Todd McClay, says that today’s opening of Riverland Foods manufacturing plant in Christchurch is a great example of how trade access to overseas markets creates jobs in New Zealand.  Speaking at the official opening of this state-of-the-art pet food factory the Minister noted that exports ...
    BeehiveBy beehive.govt.nz
    6 hours ago
  • NZ and Chinese Foreign Ministers hold official talks
    Minister of Foreign Affairs Winston Peters met with Chinese Foreign Minister Wang Yi in Wellington today. “It was a pleasure to host Foreign Minister Wang Yi during his first official visit to New Zealand since 2017. Our discussions were wide-ranging and enabled engagement on many facets of New Zealand’s relationship with China, including trade, ...
    BeehiveBy beehive.govt.nz
    19 hours ago
  • Kāinga Ora instructed to end Sustaining Tenancies
    Kāinga Ora – Homes & Communities has been instructed to end the Sustaining Tenancies Framework and take stronger measures against persistent antisocial behaviour by tenants, says Housing Minister Chris Bishop. “Earlier today Finance Minister Nicola Willis and I sent an interim Letter of Expectations to the Board of Kāinga Ora. ...
    BeehiveBy beehive.govt.nz
    23 hours ago
  • Speech to Auckland Business Chamber: Growth is the answer
    Tēna koutou katoa. Greetings everyone. Thank you to the Auckland Chamber of Commerce and the Honourable Simon Bridges for hosting this address today. I acknowledge the business leaders in this room, the leaders and governors, the employers, the entrepreneurs, the investors, and the wealth creators. The coalition Government shares your ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Singapore rounds out regional trip
    Minister Winston Peters completed the final leg of his visit to South and South East Asia in Singapore today, where he focused on enhancing one of New Zealand’s indispensable strategic partnerships.      “Singapore is our most important defence partner in South East Asia, our fourth-largest trading partner and a ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Minister van Velden represents New Zealand at International Democracy Summit
    Minister of Internal Affairs and Workplace Relations and Safety, Hon. Brooke van Velden, will travel to the Republic of Korea to represent New Zealand at the Third Summit for Democracy on 18 March. The summit, hosted by the Republic of Korea, was first convened by the United States in 2021, ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Insurance Council of NZ Speech, 7 March 2024, Auckland
    ICNZ Speech 7 March 2024, Auckland  Acknowledgements and opening  Mōrena, ngā mihi nui. Ko Andrew Bayly aho, Nor Whanganui aho.  Good morning, it’s a privilege to be here to open the ICNZ annual conference, thank you to Mark for the Mihi Whakatau  My thanks to Tim Grafton for inviting me ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Five-year anniversary of Christchurch terror attacks
    Prime Minister Christopher Luxon and Lead Coordination Minister Judith Collins have expressed their deepest sympathy on the five-year anniversary of the Christchurch terror attacks. “March 15, 2019, was a day when families, communities and the country came together both in sorrow and solidarity,” Mr Luxon says.  “Today we pay our respects to the 51 shuhada ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Speech for Financial Advice NZ Conference 5 March 2024
    Speech for Financial Advice NZ Conference 5 March 2024  Acknowledgements and opening  Morena, Nga Mihi Nui.  Ko Andrew Bayly aho, Nor Whanganui aho. Thanks Nate for your Mihi Whakatau  Good morning. It’s a pleasure to formally open your conference this morning. What a lovely day in Wellington, What a great ...
    BeehiveBy beehive.govt.nz
    4 days ago
  • Early visit to Indonesia strengthens ties
    Foreign Minister Winston Peters held discussions in Jakarta today about the future of relations between New Zealand and South East Asia’s most populous country.   “We are in Jakarta so early in our new government’s term to reflect the huge importance we place on our relationship with Indonesia and South ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • China Foreign Minister to visit
    Deputy Prime Minister and Minister of Foreign Affairs Winston Peters has announced that the Foreign Minister of China, Wang Yi, will visit New Zealand next week.  “We look forward to re-engaging with Foreign Minister Wang Yi and discussing the full breadth of the bilateral relationship, which is one of New Zealand’s ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Minister opens new Auckland Rail Operations Centre
    Transport Minister Simeon Brown has today opened the new Auckland Rail Operations Centre, which will bring together KiwiRail, Auckland Transport, and Auckland One Rail to improve service reliability for Aucklanders. “The recent train disruptions in Auckland have highlighted how important it is KiwiRail and Auckland’s rail agencies work together to ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Celebrating 10 years of Crankworx Rotorua
    The Government is proud to support the 10th edition of Crankworx Rotorua as the Crankworx World Tour returns to Rotorua from 16-24 March 2024, says Minister for Economic Development Melissa Lee.  “Over the past 10 years as Crankworx Rotorua has grown, so too have the economic and social benefits that ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government delivering on tax commitments
    Legislation implementing coalition Government tax commitments and addressing long-standing tax anomalies will be progressed in Parliament next week, Finance Minister Nicola Willis says. The legislation is contained in an Amendment Paper to the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill issued today.  “The Amendment Paper represents ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Significant Natural Areas requirement to be suspended
    Associate Environment Minister Andrew Hoggard has today announced that the Government has agreed to suspend the requirement for councils to comply with the Significant Natural Areas (SNA) provisions of the National Policy Statement for Indigenous Biodiversity for three years, while it replaces the Resource Management Act (RMA).“As it stands, SNAs ...
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    5 days ago
  • Government classifies drought conditions in Top of the South as medium-scale adverse event
    Agriculture Minister Todd McClay has classified the drought conditions in the Marlborough, Tasman, and Nelson districts as a medium-scale adverse event, acknowledging the challenging conditions facing farmers and growers in the district. “Parts of Marlborough, Tasman, and Nelson districts are in the grip of an intense dry spell. I know ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • Government partnership to tackle $332m facial eczema problem
    The Government is helping farmers eradicate the significant impact of facial eczema (FE) in pastoral animals, Agriculture Minister Todd McClay announced.  “A $20 million partnership jointly funded by Beef + Lamb NZ, the Government, and the primary sector will save farmers an estimated NZD$332 million per year, and aims to ...
    BeehiveBy beehive.govt.nz
    5 days ago
  • NZ, India chart path to enhanced relationship
    Foreign Minister Winston Peters has completed a successful visit to India, saying it was an important step in taking the relationship between the two countries to the next level.   “We have laid a strong foundation for the Coalition Government’s priority of enhancing New Zealand-India relations to generate significant future benefit for both countries,” says Mr Peters, ...
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    5 days ago
  • Ruapehu Alpine Lifts bailout the last, say Ministers
    Cabinet has agreed to provide $7 million to ensure the 2024 ski season can go ahead on the Whakapapa ski field in the central North Island but has told the operator Ruapehu Alpine Lifts it is the last financial support it will receive from taxpayers. Cabinet also agreed to provide ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Govt takes action to drive better cancer services
    Health Minister Dr Shane Reti says the launch of a new mobile breast screening unit in Counties Manukau reinforces the coalition Government’s commitment to drive better cancer services for all New Zealanders. Speaking at the launch of the new mobile clinic, Dr Reti says it’s a great example of taking ...
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    6 days ago
  • Govt takes action to drive better cancer services
    Health Minister Dr Shane Reti says the launch of a new mobile breast screening unit in Counties Manukau reinforces the coalition Government’s commitment to drive better cancer services for all New Zealanders. Speaking at the launch of the new mobile clinic, Dr Reti says it’s a great example of taking ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Work begins on SH29 upgrades near Tauriko
    Unlocking economic growth and land for housing are critical elements of the Government’s plan for our transport network, and planned upgrades to State Highway 29 (SH29) near Tauriko will deliver strongly on those priorities, Transport Minister Simeon Brown says. “The SH29 upgrades near Tauriko will improve safety at the intersections ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Work begins on SH29 upgrades near Tauriko
    Unlocking economic growth and land for housing are critical elements of the Government’s plan for our transport network, and planned upgrades to State Highway 29 (SH29) near Tauriko will deliver strongly on those priorities, Transport Minister Simeon Brown says. “The SH29 upgrades near Tauriko will improve safety at the intersections ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Fresh produce price drop welcome
    Lower fruit and vegetable prices are welcome news for New Zealanders who have been doing it tough at the supermarket, Finance Minister Nicola Willis says. Stats NZ reported today the price of fruit and vegetables has dropped 9.3 percent in the 12 months to February 2024.  “Lower fruit and vege ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Statement to the 68th United Nations Commission on the Status of Women
    Tēnā koutou katoa and greetings to you all.  Chair, I am honoured to address the sixty-eighth session of the Commission on the Status of Women. I acknowledge the many crises impacting the rights of women and girls. Heightened global tensions, war, climate related and humanitarian disasters, and price inflation all ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Speech to the 68th United Nations Commission on the Status of Women (CSW68)
    Tēnā koutou katoa and greetings to you all.  Chair, I am honoured to address the 68th session of the Commission on the Status of Women. I acknowledge the many crises impacting the rights of women and girls. Heightened global tensions, war, climate related and humanitarian disasters, and price inflation all ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Government backs rural led catchment projects
    The coalition Government is supporting farmers to enhance land management practices by investing $3.3 million in locally led catchment groups, Agriculture Minister Todd McClay announced. “Farmers and growers deliver significant prosperity for New Zealand and it’s vital their ongoing efforts to improve land management practices and water quality are supported,” ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Speech to Auckland Business Chamber
    Good evening everyone and thank you for that lovely introduction.   Thank you also to the Honourable Simon Bridges for the invitation to address your members. Since being sworn in, this coalition Government has hit the ground running with our 100-day plan, delivering the changes that New Zealanders expect of us. ...
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    7 days ago
  • Commission’s advice on ETS settings tabled
    Recommendations from the Climate Change Commission for New Zealand on the Emissions Trading Scheme (ETS) auction and unit limit settings for the next five years have been tabled in Parliament, Climate Change Minister Simon Watts says. “The Commission provides advice on the ETS annually. This is the third time the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Government lowering building costs
    The coalition Government is beginning its fight to lower building costs and reduce red tape by exempting minor building work from paying the building levy, says Building and Construction Minister Chris Penk. “Currently, any building project worth $20,444 including GST or more is subject to the building levy which is ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Trustee tax change welcomed
    Proposed changes to tax legislation to prevent the over-taxation of low-earning trusts are welcome, Finance Minister Nicola Willis says. The changes have been recommended by Parliament’s Finance and Expenditure Committee following consideration of submissions on the Taxation (Annual Rates for 2023–24, Multinational Tax, and Remedial Matters) Bill. “One of the ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister’s Ramadan message
    Assalaamu alaikum. السَّلَام عليكم In light of the holy month of Ramadan, I want to extend my warmest wishes to our Muslim community in New Zealand. Ramadan is a time for spiritual reflection, renewed devotion, perseverance, generosity, and forgiveness.  It’s a time to strengthen our bonds and appreciate the diversity ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Minister appoints new NZTA Chair
    Former Transport Minister and CEO of the Auckland Business Chamber Hon Simon Bridges has been appointed as the new Board Chair of the New Zealand Transport Agency (NZTA) for a three-year term, Transport Minister Simeon Brown announced today. “Simon brings extensive experience and knowledge in transport policy and governance to the role. He will ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Speech to Life Sciences Summit
    Good morning all, it is a pleasure to be here as Minister of Science, Innovation and Technology.  It is fantastic to see how connected and collaborative the life science and biotechnology industry is here in New Zealand. I would like to thank BioTechNZ and NZTech for the invitation to address ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Progress continues apace on water storage
    Regional Development Minister Shane Jones says he is looking forward to the day when three key water projects in Northland are up and running, unlocking the full potential of land in the region. Mr Jones attended a community event at the site of the Otawere reservoir near Kerikeri on Friday. ...
    BeehiveBy beehive.govt.nz
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  • Government agrees to restore interest deductions
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