economy
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Energy policy fails to energise
Written By: - Date published: 3:00 pm, August 14th, 2008 - 31 comments
A positive and ambitious energy policy that reflects the personality of National leader John Key, was announced today. Old people wiped tears from their eyes and youths vowed never to tag another fence as they heard the ambitious vision National has developed for New Zealand’s energy future under heroic leader, John Key. Actually, there’s 10 […]
Renewable energy policy
Written By: - Date published: 11:52 am, August 14th, 2008 - 23 comments
A policy paper has been released on how the Government’s goal of 90% renewable electricity generation by 2025 can be achieved. Micro-hydro projects and small-scale wind turbines will deliver power to rural areas. Reversibility of new generation will be built into new schemes as part of a more intense focus on sustainability. Solar power will be […]
Policies for the wrong time (again)
Written By: - Date published: 8:40 pm, August 10th, 2008 - 40 comments
We’ve heard a lot about the ‘private’ opinions of some senior National MP’s this week. What we haven’t heard much about is the policy direction National was putting out in public during the conference. Rod Oram has a very interesting commentary on that topic in Sunday Star Times “National needs a shake-up”. Rod Oram always […]
Key-nesian economics
Written By: - Date published: 10:46 am, August 8th, 2008 - 23 comments
I’m really starting to wonder why it’s the worst academics who seem to get the most media, Maybe it’s because the good ones don’t make extreme statements. Today, we have Keith Rankin from Unitec arguing that, as we are in recession, we should be increasing borrowing to inject cash and growth into the economy, as […]
Employment, wages up
Written By: - Date published: 3:27 pm, August 4th, 2008 - 43 comments
Despite the economic slowdown, the labour market is holding up well and wages are up at the record rate. The average hourly wage is now $24, up from $21.90 an hour 2 years ago. That’s a 9.6% increase. Take away 6.1% inflation and the average Kiwi worker is still 3.5% better off than two years […]
Spin-busting: ‘A growth problem, not a debt problem’
Written By: - Date published: 10:42 am, August 4th, 2008 - 28 comments
To justify borrowing for tax cuts, National’s new line is that New Zealand has ‘a growth problem, not a debt problem’. Untrue. (source) New Zealand’s growth has been faster in recent years than trend, faster than it was under National, and faster than growth in our major trade partners. We are in a shallow recession […]
Key’s vision: tax cuts for rich, more debt for youse
Written By: - Date published: 3:39 pm, August 3rd, 2008 - 71 comments
In a speech described by attendees as ‘more bullet points’, John Key announced to the National Party conference today that National would borrow $5 billion more over 6 years to finance infrastructure – specifically roads and the broadband ‘plan’. The money-man has dressed it up cleverly, of course. A fancy new class of ‘investment vehicle’ will be […]
Finance companies – a graphic explanation
Written By: - Date published: 2:48 pm, July 24th, 2008 - 54 comments
With the collapse of Hanover Finance, the 25th finance company to go under, Hanover co-owner Mark Hotchin has declared ‘the finance companies’ model is broken’. Here’s an illustration of that model: I think they went wrong at step 1. Of course, as always, it’s the schmucks who lent Hotchin and Watson the money who lose out. […]
Bollard cuts the OCR
Written By: - Date published: 10:52 am, July 24th, 2008 - 20 comments
The Reserve Bank has dropped the Official Cash Rate from 8.25% to 8%. Inflation is well outside the Bank’s 1-3% target range but there appears to be a recognition that there’s no point strangling our economy with high interest rates when that can’t bring down international oil and food prices. Don’t expect mortgage rates to […]
False idol
Written By: - Date published: 6:38 am, July 19th, 2008 - 30 comments
We’ve said this before but, seeing as BNZ chief economist Tony Alexander is in the Herald this morning saying ‘the October 1 tax cuts won’t cover inflation’, it’s worth restating: tax cuts are not and can not be the method by which people’s incomes are risen for inflation. Tax cuts cannot be cut year on […]
Inflation up but interest rates must come down
Written By: - Date published: 12:27 pm, July 15th, 2008 - 18 comments
Inflation was 1.6% in the last quarter, 4% annually, the highest in 13 years. Petrol is driving inflation. By itself petrol accounted for a 1.2% increase. Food is the other big increase, also accounting for a 1.2% and that is itself being driven by international oil prices. The price of oil is beyond our control […]
Running on empty
Written By: - Date published: 3:42 pm, July 11th, 2008 - 69 comments
A worrying report on the future of petrol prices is out today. It predicts petrol could hit $10 a litre in a decade. Nearly all of that increase will be caused by the supply of oil falling as demand pressure grows. Rationing will probably be introduced before that point, otherwise only the rich will be […]
Beyond the political showboating
Written By: - Date published: 10:10 am, July 7th, 2008 - 36 comments
Ok. Now that the political theatre is done maybe National and its allies would like to engage in proper debate on the freight trucking industry. Here’s some issues for debate: Road user charges are less than 10% of costs and the increase, half what was recommended meaning petrol vehicles are still subsidising truck companies, is […]
All aboard KiwiRail
Written By: - Date published: 12:10 pm, July 1st, 2008 - 40 comments
Today marks the launch of KiwiRail. It’s great to have rail back in Kiwi hands, after a decade of asset-stripping. Now comes the task of building up the network so it can provide cheap and clean transport. Businesses are keen to take more freight off the road in the face of skyrocketing fuel prices and long-distance […]
March GDP figures
Written By: - Date published: 12:23 pm, June 27th, 2008 - 37 comments
As expected, the economy contracted 0.3% in the March quarter. The drought brought activity in the agricultural sector down after a recent strong run, the housing sector continued to slow off the back of the boom, oil prices are dragging on the economy in general, and mining was down after a surge in the December […]
Lost highway
Written By: - Date published: 12:55 pm, June 25th, 2008 - 60 comments
Petrol is over $2.10 a litre. The price will keep rising both with the ever upward march of the price of crude and the falling NZ dollar. Already, motorists are responding. Road usage in Auckland has fallen 3%. It’s fair to believe it is falling elsewhere too. The only reasonable conclusion is that the number […]
The headline you didn’t see
Written By: - Date published: 1:40 pm, June 20th, 2008 - 94 comments
‘Unemployment benefits at record low.’ The number of people receiving the unemployment benefit has fallen to just 17,465. That’s the lowest number since at least 1979. At the same time, Sickness Benefit numbers fell 1,542 (3%) in the last year, DPB numbers are down 12% in the last five years. Overall, benefit numbers have dropped […]
Act now to protect workers’ wages
Written By: - Date published: 11:40 am, June 19th, 2008 - 55 comments
Times are going to get harder for workers in the next few years. Unemployment is set to rise to 4.5-6% (still well under 1990s levels). The wages of those who keep their jobs won’t rise as fast. At the same time, prices are rising faster, particularly petrol. What […]
Petrol price hits parties in the polls
Written By: - Date published: 7:16 am, June 17th, 2008 - 120 comments
A reader sent us this graph. It plots President Bush’s approval rating and the price of petrol. (the price of petrol is upside-down, a fall in the price is a rise on the graph) As you can see, spikes in the price have been followed by a fall in Bush’s support and the reverse is […]
Facing up to peak oil
Written By: - Date published: 1:25 pm, June 16th, 2008 - 38 comments
The Government’s independent report on petrol prices is bit of a sop to be the public, really. The world oil price is driving petrol prices; any efficiencies that could be gained in New Zealand would be small and would not change the upward trend. Nor is a Fuel Watch website like Australia’s going to do […]
Mythbusting: Labour’s just had golden economic weather
Written By: - Date published: 10:16 am, June 11th, 2008 - 29 comments
The amazing economic run we’ve experienced under the Labour-led governments is just down to international forces, so National would have us believe. Of course an economy is influenced by international conditions but it’s not the whole story. Under centre-left governments New Zealand has outperformed other economies, after we fell behind under National in the 1990s. And […]
Mythbusting: The govt gets rich off high petrol prices
Written By: - Date published: 9:49 am, June 9th, 2008 - 95 comments
We regularly hear calls (not backed by any major party, including National) for the taxes on petrol to be lowered or removed because the prices are so high. After all, every time the price goes up, the government gets more revenue, doesn’t it? No, it doesn’t. Tax on petrol has two parts. There are four levies […]
OCR unchanged
Written By: - Date published: 11:37 am, June 5th, 2008 - 14 comments
The Reserve Bank has left the Official Cash Rate unchanged; no-one expected a rate cut this early. It’s encouraging that Bollard has firmly signalled that interest rates will be coming down this year despite projected inflation reaching 4.7% in the September Quarter. There’s no use in the Reserve Bank strangling our economy with high interest […]
Treasury dreams of cheap oil
Written By: - Date published: 2:59 pm, June 3rd, 2008 - 26 comments
This is the graph of the oil price forecasts Treasury used to underpin its fiscal model for the Budget. It assumes that oil would touch $115 a barrel US in about July this year before easing off to a long-run level of $100 a barrel. That is already up on Treasury’s forecast from November, which […]
Clydesdale report rubbished
Written By: - Date published: 10:56 am, May 28th, 2008 - 29 comments
Greg Clydesdale’s report that labelled Pacific Islanders a ‘drain on the economy’ has been rubbished as a lazy, intellectually dishonest piece of work by fellow academics. The report concludes that Pacific Islanders make no net contribution to the economy but the substance of the report does not justify that conclusion in the slightest. Moreover, it […]
Telling porkies
Written By: - Date published: 9:50 am, May 22nd, 2008 - 44 comments
The Herald and National have started attacking every piece of government spending as pork-barrelling. Here’s some of what they’re calling ‘wasteful, needless spending’: $750 million of new health spending ($160 million for elective services) -Pork $700 million for Fast Forward Fund, food and pastoral sector research -Pork $665 million to buy the national rail operations […]
Water, water everywhere, why not stop to think?
Written By: - Date published: 7:11 am, May 22nd, 2008 - 18 comments
From the MP who tried to ban water comes ‘don’t use crash statistics to work out which roads are dangerous’. Writing in the Oamaru Mail about a dangerous stretch of road, National MP Jacqui Dean says: “Transit New Zealand often places too great an emphasis on the crash statistics it receives from Land Transport New […]
National still won’t say what they’d do
Written By: - Date published: 2:41 pm, May 21st, 2008 - 9 comments
Seemingly content to coast along on the “time for a change” sentiment, the National Party are still refusing to offer any substantive details in major policy areas: government debt, work rights and retirement savings. English ended up sounding like a broken record on Agenda a few days back. His stock answer was ‘I can’t tell […]
Time to let interest rates fall
Written By: - Date published: 1:59 pm, May 16th, 2008 - 23 comments
The economy is clearly slowing. Fundamentally, it remains strong with high employment, good wages rises, and strong prices for our exports but employment and retail spending both declined in the first quarter of this year, the housing market is flat, and there is a danger that if the Reserve Bank keeps its foot on our […]
Rio Tinto threats backfire
Written By: - Date published: 10:50 am, May 14th, 2008 - 72 comments
Rio Tinto’s threat of capital strike appears to have backfired on them, with a political consensus emerging that the multinational has overplayed its hand on this one and some even starting to question whether we might be better to just shut the smelter down and be done with it. CAFCA were particularly blunt: Campaign Against […]
Rio Tinto threatens NZ with capital strike
Written By: - Date published: 10:27 am, May 13th, 2008 - 87 comments
Multi-national minerals company Rio Tinto is threatening to close its Tiwai Point aluminium smelter in Bluff and move its production offshore if the Emissions Trading Scheme is enacted because they say it will increase power prices. This is not the first time Rio Tinto has held New Zealand to ransom using the threat of closing […]
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