Open mike 20/02/2021

Written By: - Date published: 6:00 am, February 20th, 2021 - 56 comments
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56 comments on “Open mike 20/02/2021 ”

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  1. Pat 1
    20 February 2021 at 8:21 am

    What regional development could look like….I hope the PGF is backing these types of initiatives in spades

    https://www.rnz.co.nz/national/programmes/countrylife/audio/2018784336/miro-bringing-jobs-home

  2. Morrissey 2
    20 February 2021 at 8:53 am

    The man who gave the world the term "feminazi" is dead at 70.

  3. Sacha 3
    20 February 2021 at 9:57 am

    How those supermarket 'collectable' campaigns work. https://www.stuff.co.nz/business/124260714/the-summer-of-smeg–why-new-worlds-knife-promotion-worked-so-well

    Most of us tend to shop regularly at the same supermarket. Promotions are the supermarkets’ attempts to break that behaviour.

    …

    There is data to show it works, [AUT marketing lecturer] Phillips says. In 2016, My Little Garden triggered a lot of what the experts call “switching behaviour”. New World had a 3.6 per cent sales increase (worth $14.4 million) during the promotional period. Pak ’n Save dropped 1.9 per cent and Countdown fell 0.6 per cent, Phillips says.

    The experts say customers don’t instantly and automatically switch back at the end of a promotion but the chains are engaged in a constant “Cold War” to keep them. It is why, when one chain runs a promotion, the other will roll one out shortly afterwards.

  4. Ad 4
    20 February 2021 at 10:22 am

    Quite a chunk of the Australian wine industry has simply collapsed due to Chinese trade retaliation for alleged price dumping.

    https://edition.cnn.com/2021/02/16/business/australia-china-wine-tariffs-dst-intl-hnk/index.html

    And yet the price of Penfolds hasn't dropped here. I think it should.

    • Incognito 4.1
      20 February 2021 at 10:28 am

      And yet the price of Penfolds hasn't dropped here. I think it should.

      You know it is not quite like the international oil market but laughyes

    • weka 4.2
      20 February 2021 at 10:32 am

      Maybe people should consider not using nature to make money from the unreliable global economy.

      Love to see the carbon footprint of shipping wine across the planet too.

      It's almost like people don't understand there's an massive crisis on the horizon.

    • Bearded Git 4.3
      20 February 2021 at 10:44 am

      Ad-so Australia takes a moral stand on human rights issues in China (while NZ keeps sucking up to China) and all you can see is a chance for cheap wine from Oz because China has retaliated.

      Some moral compass you have there Ad.

    • RedLogix 4.4
      20 February 2021 at 11:15 am

      This isn't hard – the world is waking up to the fact that Xi Xinping's regime is acting like an enemy not a trade partner.

      Once this has sunk in – everyone will start to work out ways of decoupling existing trade and supply chains out of the CCP's reach – ASAP.

      Aussie wine producers have been done a favour here with an advanced heads up.

      • aom 4.4.1
        20 February 2021 at 11:51 am

        Wait until China controls the international monetary system and endlessly imposes illegal sanctions like the US, instead of deciding who it will trade with and when.

    • Gabby 4.5
      20 February 2021 at 11:30 am

      More likely to go the other way though isn't it.

    • Nic the NZer 4.6
      20 February 2021 at 11:43 am

      Say you were to discover that a majority of prices in the economy are set via some form of cost + markup pricing, and not supply and demand. Would you still expect Penfolds to give you their wine at a discount?

      http://socialdemocracy21stcentury.blogspot.com/2014/05/mark-up-pricing-in-20-nations-and.html

      • Ad 4.6.1
        20 February 2021 at 3:04 pm

        That would, I hope, depend on a completely unregulated market free from any other constraint other than my perfect knowledge of the market, a Licensing Trust able to attend to me needs without thought for its internal mass buyers, the market's perfect knowledge of Penfold's, and and zero impact from any government or regulation, anywhere.

        That would just be so sweet.

  5. Incognito 5
    20 February 2021 at 10:25 am

    @ Sacha @ 3:

    Yes, I read that one too.

    I reckon it is no different with the stories we weave and the necessary narratives to tell and develop these stories. The story must be complete, an integrated self-consistent set of facts and factoids. Some people will go to great lengths to make sure no pieces are missing and sometimes people will force a piece into the whole/hole even though it doesn’t fit neatly.

  6. Incognito 6
    20 February 2021 at 10:56 am

    People worry about schools closed or not closed or not closed long enough due to Covid-19.

    Maybe they should worry more about this instead:

    https://www.stuff.co.nz/environment/climate-news/124183902/rising-tides-put-up-to-94-schools-at-risk-of-flooding-and-closures

    Yes, I know, very mischievous of me to phrase it as a binary but when in Rome …

  8. Muttonbird 8
    20 February 2021 at 11:31 am

    What a lovely bloke landlord Andrew McKenzie is.

    After recently putting up the rent 14%, he then kicks out a mother and her son who has learning disabilities on the eve of a law change to protect tenants because "he deciding what to do".

    He says it is business first, but then other landlords say theirs is an important public service, first.

    Who to believe, or should we believe none of them?

    https://www.stuff.co.nz/life-style/homed/housing-affordability/124297655/rental-law-change-casualties-evicted-tenants-fear-homelessness

    • RedLogix 8.1
      20 February 2021 at 11:58 am

      A quick search on the govt tenancy website shows the range of rents for 3bed homes in Wainuiomata is $500 – 550pw.

      Increasing the rent to $430 pw shows that McKenzie had let the rent fall well behind market. It never does anyone any favours in the long run – and I can well understand the dismay of the mother who not only has to try and find a new home in a very tight market, but faces a rental jump in the order of $100pw at the same time.

      A 3 bed home in Wainui is probably worth north of $700k if he'd been getting a rent of $380pw – gross income about $19.7k pa – that's a yield of under 3%. His net in the pocket after fixed costs, mortgage and tax was almost certainly less than $5kpa.

      No wonder he wants to sell.

      • Incognito 8.1.1
        20 February 2021 at 12:07 pm

        No wonder he wants to sell.

        Apparently, he has not yet decided what to do with the property except to ‘renovate’ it AKA“a paint and a tidy up”.

        • Muttonbird 8.1.1.1
          20 February 2021 at 12:08 pm

          Another ghost house.

          By evicting when he did he avoided having to sell or move in. The new law requires him to do this.

          Looks like he wants to sit on an empty house and enjoy capital gain. Nikki And Cole Prier don’t come into it for landlords.

          • Incognito 8.1.1.1.1
            20 February 2021 at 12:16 pm

            At least it will have a nice fresh lick of paint and be tidied up. That’s all aspiring new tenants wish for nowadays and they won’t mind paying the price because beggars can’t be choosers.

            Yup, the CG is already locked in.

          • RedLogix 8.1.1.1.2
            20 February 2021 at 12:23 pm

            Nikki And Cole Prier don’t come into it for landlords.

            Given how far behind the market their rent had fallen – I'll bet you that their unfortunate personal position actually did 'come into it' for McKenzie.

            We've got one older couple who've been with us for over a decade and they pay way below market – but we deliberately choose to carry them because they both contribute to their community magnificently.

            But as I said above – in the long run it may not be doing either party any favours.

        • RedLogix 8.1.1.2
          20 February 2021 at 12:16 pm

          Make what you will of this:

          “I am now deciding whether to get out of being a landlord, or not,” he said.

          “With the uncertainty of what’s coming up, I’ve had a guts full. I’ll renovate the house, then make a decision about whether to put it on the market.”

          As I indicated the other night – my own average rent at the present is $384 pw – a very similar number to the story above, and the properties are newer and in a more desirable suburb. Any thoughts on whether I should sell up and 'evict' a whole bunch of people from their homes?

          Because honestly that's what's going through my mind. Our equity would do a whole lot better for us in Australia at the moment.

          • Muttonbird 8.1.1.2.1
            20 February 2021 at 12:23 pm

            Will someone not think of the poor landlords!

            • RedLogix 8.1.1.2.1.1
              20 February 2021 at 12:34 pm

              That's pathetic. I'm giving you real life facts and figures from my experience as a real world landlord for almost 20 yrs. If you don't understand how the business works then anything you say is going to amount to little more than pious, futile prattle.

              I'm not asking for anyone's pity – how I choose to run my business is precisely my responsibility and no-one else's. But I am prepared to educate you in some basic numbers and their consequences.

              • Muttonbird …
                20 February 2021 at 12:37 pm

                Stop with the ridiculous claim you are under so much pressure then.

                And your real life facts and figures is simply virtue signalling.

                • RedLogix …
                  20 February 2021 at 12:45 pm

                  Why do you think this is a 'ridiculous claim'?

                  As I mentioned the other night – one of the reasons why we moved to Australia 8yrs ago was because our mortage was indeed putting us under considerable pressure.

                  Essentially over the past 20yrs we've actually had to put money into the business to keep it afloat, and our tenants in their homes. We're now in the position of having shitloads of equity, but crap cash flow, and because I'm close to retiring that isn't something I can sustain anymore.

                  What would you do? Sell and evict – or hold on and hope the business environment doesn't continue to become more hostile?

                  • Stuart Munro …
                    20 February 2021 at 3:54 pm

                    Sell and evict – or hold on and hope

                    When the legal balance between landlords and tenants is about right, selling with a sitting tenant will be a plus, not a minus.

                    • RedLogix …
                      20 February 2021 at 4:31 pm

                      I get where you're coming from, but from the perspective of an investor they will often be looking to add value, usually a significant renovation, and vacant possession will be important to them.

                      And if the new owner wants to live in it ….

                  • aj …
                    20 February 2021 at 10:10 pm

                    Essentially over the past 20yrs we've actually had to put money into the business to keep it afloat, and our tenants in their homes. We're now in the position of having shitloads of equity, but crap cash flow, and because I'm close to retiring that isn't something I can sustain anymore.

                    The trouble with this is that I've heard this description from not only landlords but farmers as well, except farmers don't like to flaunt their equity in public.

                    The total values of assets that can be realised is the figure that most people will focus on. If you have $10M in equity but moan your a**e off about pitiful cashflow, then you generally won't get a lot of sympathy.

                    • RedLogix …
                      20 February 2021 at 10:58 pm

                      I've made it clear I'm not asking for sympathy. I chose to get into this business and have stuck at it for 20 years now. That's my responsibility and no-one else's. All I'm doing here is explaining how the business works in order that people can make informed sense of these stories they read.

                      Rule No. 1 in all businesses is that cash flow is king. No matter how much shareholder funds you have, how much capital, stock, ring-fenced tax loss, forward orders or anything else – if you cannot meet this month's cash burn the business is bankrupt. And what I've explained here – overshared if you will – is that most residential rental businesses, like many NZ businesses (certainly those with substantial debt), are running on pretty thin cash flow margins. Or are being propped up by the owner's PAYE income.

                      Just as an extra data point – fixed costs used to run at about 20% of rental income, and here in Australia we can see this is still the case. By contrast in NZ they've risen to somewhere between 35 – 40% in recent years. And in the past most people could reasonably run the business themselves, but increasingly the environment has forced owners to use professional managers – and there's another 10% of cashflow gobbled up.

                      So even small extra costs imposed by new govt rules, or bad tenants, or even just letting the rent fall too far behind market because you felt sorry for a tenant, can have a big impact on the bottom line cashflow.

                      The total values of assets that can be realised is the figure that most people will focus on.

                      Equity means nothing unless I either sell or borrow more against it – and neither is a non-trivial decision. It's this background that helps decode what was going on with the original Wainui story above.

                      Stepping back, this is as you've pointed out, a wider theme with the whole NZ economy, too much has over the past three decades has tilted toward capital gain for profit, rather than cash flow. It's a structural flaw across many sectors that has distorted our decision-making and tends toward market failure. (I recall writing on this here at TS over a decade ago.)

                      It's especially chronic in agriculture. About that time we had looked at diversifying into a small horticultural business – and I recall one offer that was priced at over $2m for a business that barely turned over $160k. Utterly nuts – literally.

                      Which is why I was a strong supporter and promoter here of TOP's Comprehensive Capital Tax proposal. Not so much because I thought the party was a ripper – but because in my view it was a intelligently designed tax that would actually achieve what it was intended to do.

          • Incognito 8.1.1.2.2
            20 February 2021 at 12:42 pm

            I was going to reply to your comment the other night about landlords creaming it but decided not to – it is sitting there half-finished. I think it is much better this way.

            Why you would want to evict your tenants from your rentals is unclear to me except to free up equity. If you need (to do) that, then you can justify it, at least to yourself. It is your decision.

            Don’t ask for business advice here, unless you really want/need it and intend to follow it. Ask a professional instead.

            Don’t share your business wheeling and dealing here unless you want to cop the flack for it. Over-sharing carries many risks online for little gain/benefit even though your intention might be to provide a different PoV to guide/inform discussion and lift to a ‘higher plane’ than the usual ‘landlord-bashing’, which I respect and understand, but it doesn’t get you far, does it?

            I could do similar things on discussion topics here but I’m not prepared to die in the ditch for those unless it is about a core value of mine – details are less important and there are other ways to get your point across without divulging too much personal information or history; arguments should be able to stand on their own legs of merit and persuasion.

            These are my genuine well-meant thoughts for you.

            Make of it what you will.

            Bye

            • RedLogix 8.1.1.2.2.1
              20 February 2021 at 12:50 pm

              Fair enough.

              Don’t ask for business advice here, unless you really want/need it and intend to follow it. Ask a professional instead.

              In effect I am the professional here and I've been sharing information on how the residential rental business actually works. I've been doing this solely in the hope that some people here might stop treating their landlord as some spawn of the devil – and start focusing on the real reasons why the housing market in NZ has gotten into the mess it has.

              But maybe you're right – the effort was doomed to be futile from the outset.

              • Incognito …
                20 February 2021 at 2:09 pm

                … and personal stories that rehumanize each other to each other.

                …

                There is no We if we see each other through partisan caricatures and don’t engage directly. When we hear each others’ stories, we know that in real life, good versus evil is rarely the truth, …

                HT to Robert Guyton.

              • gsays …
                22 February 2021 at 1:08 pm

                The other important tension that exists in this landlord/tenant discussion is for one party it is a business. The tax benefits, passive income etc, the leverage available…

                The other party it is home, a place for family, a garden, pets, to love, laugh weep. A turangawaewae.

                Failing to acknowledge the other view is where the argy barty begins.

                Like Kiwi attitudes to land. One view is my property, my rights etc. The other is stewardship, a responsibility to pass it forward in better knick, to treat and see it as if it were alive. A strong spiritual bond.

          • Ad 8.1.1.2.3
            20 February 2021 at 2:17 pm

            Well Red, you've made tonnes of equity over the years.

            Rent + tax preferences + equity increases = a reasonable rate of return.

            You sound like you're in a steady place.

            This is a leftie site so few will have patience to give non-Socialist advice.

            But you are still of sufficiently sound mind that you can throw the dice another way than real estate.

            In New Zealand, Victoria, or Queensland we need more people prepared to cash up and invest in fresh local growing business that's better for the whole economy.

            You've done good. Do even better.

      • Jester 8.1.2
        20 February 2021 at 12:27 pm

        Reading the article, he actually comes across as a pretty decent landlord. If Red Logix's numbers correct, then he has been giving her a very good deal for a long time.

        Unfortunately, this is a consequence of the new rental laws. If he was intending to sell or do a major upgrade, I thought under the new rules he could still give the 90 day notice?

        So it seems a bit like he 'panicked' and gave notice now when in fact if he decides to sell in a years time he could still give notice.

        • Muttonbird 8.1.2.1
          20 February 2021 at 12:31 pm

          More reason for rent controls then. More regulation around the cowboy residential industry would give surety and guidance to both tenant and landlord.

          • Jester 8.1.2.1.1
            20 February 2021 at 4:56 pm

            More rent controls will probably make more landlords sell which may be ok as possibly first home buyers would buy. But could be less rentals available. This tenant has been paying $380 per week up until recently which sounds extremely cheap, so he has been subsidizing her for some time now, so he sounds like a very reasonable landlord. He possibly could have given her notice several years ago and rented it out for far more if he had been greedy.

            • Muttonbird 8.1.2.1.1.1
              20 February 2021 at 5:05 pm

              Just a hunch but I don't think he's reasonable at all, I think he's disorganised.

              [RL: Deleted. Damaging speculation that puts the site at risk. Be more careful in future.]

              • Jester …
                20 February 2021 at 7:14 pm

                So you think the landlord is disorganized because for example, he decided to charge her $380 per week instead of the going market rate for the last few years? Well you will be pleased to know that there are many landlords out there that are well organized, and will charge as much as they can, and also raise the rent as often as possible. Many other people would refer to them as greedy rather than organized!

              • Muttonbird …
                21 February 2021 at 9:51 am

                Lol. RedLogix flexing his muscles from Brisbane.

            • Cricklewood 8.1.2.1.1.2
              21 February 2021 at 9:43 am

              I guess the elephant in the room is that no doubt the tax payer will subsidize the next rental through accomodation supplements.

              I can't help but think that a big part of the issue we have is that public funds are paid to enable tennants to meet rents far above their normal income allows.

              The policy came from a good place but the unintended consequence of the scheme sas that it has in effect acted as a wealth transfer and helps fuel the house price increases.

              Imagine if there had been no supplements from govt, the money required to pay the huge rents required to pay the equally huge mortgages/provide a return just wouldnt be there, ergo banks would have been far more reluctant to lend and price increases would have closer matched incomes.

              The govt getting out of social housing and essentially contracting it out to the private sector was a huge mistake and one that is not able to be undone in a hurry. Nonetheless the only solution I can see is that we get stuck in on a massive state backed building program aimed at sucking air out of house price increases. Pouring more money in to help first home buyers or renters for that matter will not help.

      • McFlock 8.1.3
        20 February 2021 at 10:03 pm

        Given that he's also pissy about the healthy homes regulations anf the july deadline for that, and that timeframe means it's likely that most of the bonds issued in the last 6 months will be for healthy homes, it's possible he was keeping up with the market rates.

  9. Incognito 9
    20 February 2021 at 11:57 am

    When myopic birdwatchers can’t tell the difference between a Kea and a Kiwi.

    https://www.engadget.com/twitter-birdwatch-fact-checking-crowdsourcing-partisanship-citation-173611388.html

    Still, it is an experiment in its early days so let’s watch & learn from it.

    Some of the findings are not at all surprising if you have been around the block more than once 😉

  10. Adrian Thornton 10
    20 February 2021 at 12:26 pm

    here is a civil debate that is well worth taking the time to watch…

    Taibbi & Eskow: The Marcuse Match

  11. AB 11
    20 February 2021 at 5:29 pm

    Nice to see MIQ workers getting first doses of Covid vaccine today – gratitude and respect are due for the work they do.

  12. Anker 12
    20 February 2021 at 7:18 pm
    • Complete gratitude and respect for the work the MIQ workers. They should all get some sort of significant award….give them a knighthood, a ceremony like the oscars. True hero’s and heroines