Windfall tax on bank super-profits needed to help fund repair

Written By: - Date published: 3:57 pm, February 20th, 2023 - 69 comments
Categories: budget 2023, climate change, debt / deficit, Economy, Environment, tax - Tags: , ,

According to Finance Minister Grant Robertson the repair bill for the recent cyclones will be similar to the direct cost to government of the Canterbury earthquakes, in the $13 billion region.

Even if a chunk of that is, as he says, absorbed by insurance and the existing budgets of government agencies, there will still be a gaping budget hole. As well, the need to fund climate adaption measures and costly managed retreats is even more urgent.

That hole should be partially filled by a windfall profit on our banking sector, which has been making super profits recently. Former Massey University Banking Professor David Tripe once declared that any return above 1 percent on total assets was excessive and all four of main Australian-owned banks, which make up 85 percent of this country’s banking sector, are currently in that position.

The combined net profit of the big four, ANZ, ANZ, BNZ and Westpac, was around $10 billion last year according to Reserve Bank data.

The RBNZ data shows the average turn on equity for the four behemoths was 13.7 percent. ASB, last week posted a 10 percent lift in half year profit to $840 m despite what Chief executive Vittoria Shortt described as “challenging times”. It is on track for a full year profit of close to $2 billion and its return on equity is a whopping 17 percent. It paid out a $400 million dividend to shareholders which was actually down on last year’s massive $650 million.

ANZ Bank made a net profit of $2.3 billion last year, while BNZ made $1.4 billion and Westpac $1 billion.

These excessive profits have been aided by the cost-of-living crisis, where the RBNZ has been hiking interest rates to tame inflation and the banks’ margins have been rising even faster than interest rates. So, people have been hit by a double whammy – dealing with the steeply rising cost of living and having to pay higher interest rate bills as the banks rack up super profits.

The time is right to impose a one-off windfall tax. Financial commentator Janine Starks even last May in a commentary on the cost of living crisis said that despite high inflation fuelling a cost of living crisis, many companies are making record profits. “So why are we not discussing a windfall tax? In other countries the debate runs hot.”

With damage from the cyclone so catastrophic, we have a doubled-down rationale for acting.

Windfall taxes are a method of rebalancing the fairness of extraordinary circumstances. They can also be used to reduce inequality and fund social policies that help those now experiencing hardship. They were used in Aotearoa during both world wars.

There are plenty of other precedents. EU countries such as Italy and Spain are currently imposing such taxes on energy companies which have been making super profits as a result of the Ukraine war. Italy last year introduced a windfall tax of 10 percent on energy profits.

The most interesting former example comes from former Conservative UK prime minister, Margaret Thatcher, who in 1981, introduced a windfall tax on banks.

The opposite of a socialist, the hard-line monetarist raised the equivalent of about $NZ6 billion in today’s money that represented about a fifth of the profits banks were pocketing at the time.

In her memoir The Downing Street Years, Thatcher responded to critics of the move, saying “the fact remained that they had made their large profits as a result of our policy of high interest rates rather than because of increased efficiency or better service to the customer.”

If Margaret Thatcher can do it, it is pretty hard to argue why a Labour government can’t.

Some experts believe the infrastructure deficit as result of the cyclones will cost hundreds of billions to fix. The government has just $40 billion of wriggle-room before its debt ceiling is hit.

The forestry industry should be the other industry that should be shoulder-tapped to help foot the repair bill. However, a windfall tax is not appropriate for this industry as their profits are made over a very long time-frame. It is more a matter of getting these companies, almost all owned by large overseas-based pension funds, to pay for some of the damage for their irresponsible practices.

There is also needs to be a large government push to more tightly regulate these companies so the same kind of damage from the slash does not reoccur.

The government has already received significant political momentum from how it has responded to the disaster, so much so that it must be the frontrunner to win October’s election, and a bold and popular move to impose a one-off windfall tax on banks, will help lock-in its advantage.

(Simon Louisson is a former reporter and briefly a media adviser for the Green Party)

69 comments on “Windfall tax on bank super-profits needed to help fund repair ”

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  1. tsmithfield 1
    20 February 2023 at 4:57 pm

    Former Massey University Banking Professor David Tripe once declared that any return above 1 percent on total assets was excessive

    I would be interested in seeing a link to justify that statement. I don't know any business that would be happy with a 1% return on assets. If profit is that low, companies would be better to cash them up, and, well, put the money in the bank.

    As per the link below, as a general rule of thumb for businesses, 5% ROA is considered good, and 20% is considered excellent.

    https://www.investopedia.com/terms/r/returnonassets.asp

    • JeremyB 1.1
      20 February 2023 at 5:13 pm

      If you assume a Bank is a normal business, you might be correct.

    • Simon 1.2
      20 February 2023 at 7:02 pm

      Banks are different beasts to other companies- assets include customers’ deposits so as you can imagine that hugely alters things and thus a 1 % return on total is massive.

      • Liberty Belle 1.2.1
        20 February 2023 at 8:43 pm

        Customer deposits are a liability in a bank's balance sheet, not an asset.

      • mikesh 1.2.2
        20 February 2023 at 10:01 pm

        Customer deposits are not assets, they are liabilities.

      • Incognito 1.2.3
        21 February 2023 at 8:08 am

        This might help – the smart alecs that parroted each other didn’t provide any useful info for edification.

        https://bankdashboard.rbnz.govt.nz/balance-sheet [read the notes under the graphs]

        For many banks, deposits are the largest liability. Equity is the amount that assets exceed liabilities and represents the economic value of the bank to its owners. Note that owners’ equity is similar but different to the concept of regulatory capital.

        • Nic the NZer 1.2.3.1
          21 February 2023 at 8:28 am

          Lol. Do you think Simon actually needed correcting about this topic?

          I figured he just threw in the wrong word because the implication is still that banks protect customer deposits.

          • Incognito 1.2.3.1.1
            21 February 2023 at 8:40 am

            I, for one, needed the edification, and I assume I wasn’t the only reader of this Post & Comments to do so. Plus it was a clear hint to those smart alecs who’d already shown off their ‘superior’ knowledge and couldn’t wait (gotcha!) to laud it over the Author (Simon).

            • Ghostwhowalksnz 1.2.3.1.1.1
              21 February 2023 at 10:20 am

              Assume good faith. They just corrected an simple error , a typo almost.

              Simon should have said the [outstanding] loans are an asset.

              • Incognito …
                21 February 2023 at 11:01 am

                IMO, if one wishes to show good faith in helping others to correct their misunderstandings, then one offers more than just the correction, e.g., one could add some explanation, a link, or something else that could be instructive and/or informative, i.e., something truly helpful.

                If one assumes it is a typo or accidental omission, one could make that clear and respond accordingly and in good faith.

                Smart alecs fail on both conditions.

                QED

    • Simon 1.3
      20 February 2023 at 7:04 pm

      Banks are different beasts to other companies- assets include customers’ deposits so as you can imagine that hugely alters things and thus a 1 % return on total assets is massive.

      • tsmithfield 1.3.1
        20 February 2023 at 7:38 pm

        Yes, that is fair. Though I am not sure that customer deposits would be assets of the bank. Surely, the customer deposits are held in trust on behalf of the customer. But anyway, here is a link that explains bank ROA.

        From the link:

        An important point to note is since banks are highly leveraged, even a relatively low ROA of 1 to 2% may represent substantial revenues and profit for a bank.

        • pat 1.3.1.1
          20 February 2023 at 7:58 pm

          Bank deposits are an unsecured loan to the bank and as such are way down the list of claimants should an institution become inslovent….however that is expected to change (to a degree) once the deposir insurance is implemented in a year or so (assuming it goes ahead)

        • mikesh 1.3.1.2
          21 February 2023 at 10:07 am

          Surely, the customer deposits are held in trust on behalf of the customer.

          That's what I think. However, banks maintain that cash deposited by demand depositors belongs to the banks, and offset by liabilities (to the depositors). The distinction as implications when it comes to using depositors' funds for the purpose of making loans, and also the position of those depositors in the event of the bank becoming insolvent.

      • mikesh 1.3.2
        21 February 2023 at 11:45 pm

        Depositors' deposits have nothing to do with the calculation of "return on assets", and therefore they don't count when estimating whether a bank should be hit with windfall tax.

  2. Mike the Lefty 2
    20 February 2023 at 5:49 pm

    Good idea. A form of poll tax was suggested after the 2011 Christchurch earthquake but John Key's government dismissed it summarily, of course.

    Although a lot of businesses are struggling now there are a few that are doing very nicely thank you very much – banks, supermarkets and fuel companies to name a few.

    These outfits should be putting their hands in their pockets and pulling out big dollars rather than the loose change they have been doing so far. They like to trumpet how they are there for Kiwis – so now is their chance to prove it.

    And what of the Cullen fund? It is supposed to be for a rainy day isn't it? Well I think what we have seen over the last two weeks counts as a rainy day.

    • lprent 2.1
      20 February 2023 at 6:22 pm

      Nope. It isn't there for a "rainy day".

      It is to solve a demographic problem of eventually having too few working age taxpayers to pay for the superannuation of a large number of over 65s hitting over a 20 year period.

      The problem really hits at about 2030 and runs through the 60s and 70s baby boom kids of the postwar parents.

      Because of the mess that Muldoon made of the supernniation system in 1975/6, current working age tax payers paid taxes for the superannuation of their grandparents and parents. It meant that they saved less for their own pensions. Doesn't work well when the proportion of the superanuiants goes from 15% of the population to over 30%

      • lprent 2.1.1
        20 February 2023 at 6:35 pm

        Looks like I can't spell on a cellphone..

        • Mike the Lefty 2.1.1.1
          20 February 2023 at 7:09 pm

          The MSM keep referring to the Cullen Fund as a "rainy day fund". I guess I should have known better than to believe them.

          • Nic the NZer 2.1.1.1.1
            21 February 2023 at 8:39 am

            The Cullen fund is itemized for investment.

            Thing is the govt sits over the RBNZ which ultimately makes the payments to/from the govt anyway. Its one of the RBNZ jobs to clear govt payments coupled with being the only institution to issue the NZ$.

            This makes the Cullen fund irrelevant to payment questions. Also the debt ceiling limit described is merely an aspirational stated target of the finance minister and treasury forecast.

            • Ghostwhowalksnz 2.1.1.1.1.1
              21 February 2023 at 10:30 am

              Westpac is/was the governments banker and clears the payments that you are thinking of.

              This their function

              • managing inflation to keep prices stable while supporting maximum, sustainable employment.
              • regulating banks, insurers and finance companies.
              • producing New Zealand's banknotes and coins.
              • operating effective wholesale payment and settlement systems.

              During the pandemic they 'bought' Bonds issued by Treasury ( both new and existing )for Government borrowing known as Large Scale Asset purchases LSAP They also did it on a smaller scale for the trading banks and Local Authorities borrowing

              • Incognito …
                21 February 2023 at 10:57 am

                I assume good faith …

              • Nic the NZer …
                21 February 2023 at 11:01 am

                Westpac, just like all other NZ trading banks, clears its payments through NZClear which is run by the RBNZ. This includes the separated govt account.

                The rest of your comment seems to 'Depend on what the meaning of the word' their is.

                • Ghostwhowalksnz …
                  21 February 2023 at 2:54 pm

                  'Their' was RBNZ.

                  Thanks for the info on NZ Clear which seems to be for high value transactions only. 'Bills bonds and equities'. There s a xlx file of the entities

                  https://www.rbnz.govt.nz/payments-and-settlement-systems/nzclear

                  I was thinking the run of mill regular transactions done by Westpac

                  • Nic the NZer …
                    21 February 2023 at 3:18 pm

                    Agree. As I guessed you were saying those are all RBNZ functions.

                    Another function is to settle inter-bank transactions, including the govt account settlements. Now, its valid to say either side is 'clearing' the payments, I agree. But each side does a different job in this process. Westpac enters the payments into the clearance system and updates the customer facing side of the govt accounts (and its own accounts). And the RBNZ transfers the funds between the bank settlement accounts. So that's how that works. It also works this way in other countries which have a different name for their settlement processes.

                    In order not to get bogged down in technical jargon you might start with the payment system overview.

                    https://www.rbnz.govt.nz/hub/publications/bulletin/2022/payments-primer

  3. bwaghorn 3
    20 February 2023 at 6:23 pm

    Instead of the ets going into some global slush fund, a carbon tax levied in nz that goes towards fixing the damage caused by cc, start with $100 on all tourists into the country.

    • Shanreagh 3.1
      20 February 2023 at 6:52 pm

      This has merit, Bwaghorn. I am keen on the idea of a tax on tourists whose journeys are not carbon neutral.

      What about a windfall tax on supermarkets & fossil fuel firms?

      • bwaghorn 3.1.1
        20 February 2023 at 7:48 pm

        I think there needs to be a 2 teir system for carbon tax higher for frivolous unnecessary stuff, ie tourism, and at the rusk of starting a shit storm less for food related carbon and other necessary products,

        I've found it ridiculous that labour claimed cc was our nuclear moment then lowered tax on fuel.

  4. Ad 4
    20 February 2023 at 8:11 pm

    So the obvious things happen if something as mad as this is proposed:

    – interest rates go up by whole percentage points, not fractions, because the costs get passed on. Watch your mortgage payments skyrocket

    – one of the Big 3 banks just leave, because they can

    – Kieibank is downgraded and everyone does a run on Kiwivank

    – the stockmarket and NZSuperfund and ACC and Kiwisaver fall massively and don't recover. they all invest in banks. At-risk in that is our ability to retire for multiple more years.

    But what is the one business you could tax and is completely immobile?

  5. Nic the NZer 5
    20 February 2023 at 8:16 pm

    "The government has just $40 billion of wriggle-room before its debt ceiling is hit."

    Is this the govts self imposed budget restraint?

    Say it becomes clear the recovery will cost more than this $40 billion, what should take precedence the recovery or the budget?

    • Tricledrown 5.1
      23 February 2023 at 4:56 pm

      I wouldn't believe a lot in this story the big 4 banks don't pay any tax in NZ they act as cartels. T They are more powerful than our government while the big 4 had to refund hundreds of millions in over charging by forcing mortgages to have double insurance. NZ hasn't stopped these practices.The big4Cartel had to pay $100s of millions in fines as well as the refunds.This newshub article looks more like a PR stunt on behalf of the banking Cartel.NZ is run greedy profiteering cartels Labour and National take huge donations from these cartels so are happy to let the rip offs to continue

  6. Mike the Lefty 6
    21 February 2023 at 7:10 am

    Well one thing is certain.

    ACT's self-described "common sense" policies of reigning in government spending and tax cuts is now shown to be the populist posturing stunt that it always was.

    Those kind of policies are not common sense after a disaster like this, despite the Facebook posts that keep popping up telling us so.

    The people of Auckland, Hawkes Bay and Gisborne may not realize it at the moment, but one fortunate thing for them is that ACT is not in government, otherwise they would largely be fending for themselves in the economic recovery.

    • Liberty Belle 6.1
      21 February 2023 at 10:48 am

      The idea of running an economy with lower government spending and taxes is sound economics.

      This government threw huge sums away from the Covid recovery fund on corporate welfare and ideological posturing, when that could have been directed to infrastructure. So here’s a suggestion; take the $28bn on the low value Auckland light rail project and rebuild infrastructure people will actually use.

      Time to wake up from the multi-billion-dollar fantasy of Auckland's light rail | Stuff.co.nz

      • mikesh 6.1.1
        21 February 2023 at 11:15 am

        The idea of running an economy with lower government spending and taxes is sound economics.

        Lower than what? The above is a pointless statement unless you say what levels you think spending and taxation should be at.

        • Liberty Belle 6.1.1.1
          21 February 2023 at 11:22 am

          Lower relative to current spending levels. I was linking to your comment about ACT policy around 'reigning in government spending'.

          Edit – I replied before you edited your comment. There is no ‘perfect’ level of government spending, because there are events that can be significant contributors to unpredictable movements in expenditure. But there are numerous examples of spending (actual and proposed) by successive governments that do not, IMHO, pass a reasonable sniff test of use of public funds.

          • Liberty Belle 6.1.1.1.1
            21 February 2023 at 12:15 pm

            Contd.

            Between 2017 and 2022, core crown expenditure has risen from $76bn to $126bn, an increase of 66%.

            If we consider the Covid response (which I consider to be especially fiscally irresponsible) as a subset, according to Bernard Hickey, "the government of Aotearoa has delivered one of the biggest fiscal and monetary policy responses in the OECD in terms of taxpayer money spent and central bank money printed, relative to GDP."

            And the result? Well, the rest of that article is depressing reading. Essentially the rich have got a lot richer (primarily through asset price inflation), while homelessness has gone from crisis to catastrophe, state house waiting lists have consistently hit new records, and despite spending almost $2bn on mental health, we're going backwards.

            NZ has been failed by a succession of insipid governments, choosing to hurl money ainlessly at their pet projects rather than address the fundamental issues holding us back.

            • Ghostwhowalksnz 6.1.1.1.1.1
              21 February 2023 at 3:11 pm

              Whats the increase in Government revenues in that 2017-2022 ?

              The 2022 yr is a bit of outlier as it covered the 2021-23 covid expenditure, depending if you have cherry picked the meaning of 'core'

              This says 2022 total revenue was $142 bill while in 2017 it was $105 bill ?

              https://www.newshub.co.nz/home/politics/2022/10/government-s-108b-tax-take-what-s-behind-the-haul-and-are-tax-cuts-on-the-table.html

              NZ Superannuation payments increase by billions each year just from the larger numbers reaching 65

              • Incognito …
                21 February 2023 at 4:02 pm

                NZ Superannuation payments increase by billions each year just from the larger numbers reaching 65

                How many billions each year? For example, are you talking about the Joyce Number or googol?

                • Ghostwhowalksnz …
                  22 February 2023 at 8:10 am

                  Did a google search but couldnt find it- too many ads promotions for kiwisaver and the like.

                  MSD seems to have benefit numbers more easily found than superannuatants

                  • Incognito …
                    22 February 2023 at 8:06 pm

                    It should have been an easy claim to support with a link to clear and unambiguous information unless you made it up on the hoof, which wouldn’t be commenting in good faith.

              • Liberty Belle …
                21 February 2023 at 6:32 pm

                "Whats the increase in Government revenues in that 2017-2022 ?"

                I'll work with the numbers from your link and comments.

                The increase in tax revenue is simply the other side of the same coin as government spending. The government has massively overheated the economy with borrowed/printed money. That has created inflationary pressures which have impacted most on the less well off. Because a significant amount of that money went to corporates/businesses with virtually no strings attached, company taxation has also risen, so the government is simply recycling at least a portion of the money it has borrowed/printed.

                The RB is now playing catch up, lifting interest rates, which will again hit low-income families disproportionately, and push up unemployment.

                This is being repeated in many countries across the planet, and it's not going to end well.

                "depending if you have cherry picked the meaning of 'core'"

                'Core' crown spending (and revenue and debt) is the terminology used by Treasury, professional organisations, etc.

                • Ghostwhowalksnz …
                  22 February 2023 at 7:53 am

                  So the increase in gross government debt under National from $20 bill to $90 bill in 2017 fueled an increase in government spending over and above income and resulted in inflation.?

                  Every other OECD country has the same inflation, some much higher ( even though places like US, EU, Britain have had the QE funded spending in place since 2011 or so .)

                  Even Trump tax cuts replaced income funded by borrowing was there a big uptick in inflation from 2017?

                  You should really update your 90s economic thinking as the GFC threw out a lot od 'standard theories' in that field

                  • Liberty Belle …
                    22 February 2023 at 9:07 am

                    "So the increase in gross government debt under National from $20 bill to $90 bill in 2017 fueled an increase in government spending over and above income and resulted in inflation.?"

                    No. The inflation rate under the Key government never reached anywhere near the heights it is today, mainly because the borrowing was targeted more towards infrastructure investment (eg rebuilding Christchurch) than the covid fund, which has been poorly targeted.

                    "Every other OECD country has the same inflation, some much higher ( even though places like US, EU, Britain have had the QE funded spending in place since 2011 or so .)"

                    Did you read my comment:

                    "This is being repeated in many countries across the planet, and it's not going to end well."

                    But in fact NZ's latest inflation rate isn't that flash. At 7.2% it is higher than the US, Norway, South Africa, France, Canada, Spain…it's a long list.

                    "You should really update your 90s economic thinking as the GFC threw out a lot od 'standard theories' in that field"

                    Economic orthodoxy is not confined to any particular decade. The GFC emphasised the value of that orthodoxy.

                    • Nic the NZer …
                      22 February 2023 at 1:19 pm

                      Could you explain all the measure the Key government took to funnel spending towards infrastructure?

                      Because in policy terms they said they would rather not and were targeting a govt surplus as soon as possible.

                      Also in policy terms they said they would rather not and were delivering PAYE cuts and GST hikes which is not infrastructure spending enhancing.

                      Also they left office with deficits in actual infrastructure spending in most areas.

                      Also they were clearly busy selling off multiple forms of govt infrastructure, such as public housing.

                      It would be truely startling to find out they were focusing spending on infrastructure the whole time while saying this was not a priority and cutting back so I'm certainly looking forward to the massive enlightenment I'm about to experience.

                    • Liberty Belle …
                      22 February 2023 at 4:04 pm

                      “It would be truely startling to find out they were focusing spending on infrastructure the whole time while saying this was not a priority and cutting back so I'm certainly looking forward to the massive enlightenment I'm about to experience.”

                      You haven’t provided any context or references to support your claim the government was “saying this was not a priority and cutting back ‘claims. In fact, the history of period reflects something quite different, particularly considering that period included a GFC,

                      A good place to start is the 2017 budget document. The graph on page 2 shows that the Key/English government spent more on infrastructure investment in every year than any if the last 5 years of the Clark government.

                      Also from 2017, Infrastructure NZ published this document Infrastructure-New-Zealand-Scotland-Report.pdf.

                      a) As can be seen on the graph on page 6 of this document, after recovery from the GFC, capital spending grew for each of the four years 2013-2016, and was then forecast to continue to grow through to 2019.

                      b) In the 2017 budget, the government set aside "by far the largest nominal investment in New Zealand infrastructure in history."

                      A few examples of infrastructure funding prioritisation during the Key/English years are:

                      1. Fast-tracked public projects give $500m boost | Beehive.govt.nz provides a list of fast-tracked infrastructure projects from February 2009 through February 2017.
                      2. The $1.7bn Crown Fibre Holdings UFB roll out.
                      3. Natural disaster recovery – Christchurch and Kaikoura. (These specifically link back to Ghostwhowalksnz comments about crown debt).

                      Finally, the Infrastructure NZ document states this:

                      "After reducing the state’s role in telecommunications, energy and irrigation from the 1980s and sweating increasingly stressed transport and housing assets for three decades, central government is embarking on a new cycle of investment. Budget 2017 allocates over $7 billion in new capital investment, more than doubling 2013 expenditure."

                      None of these actions or spending assignments are indicative of a government not prioritising infrastructure investment.

                    • Nic the NZer []
                      22 February 2023 at 6:04 pm

                      Is that your best case argument?

                      I mean its the election year budget of a government inside the last 6 months of their 9 years in office. The budget shows large jumps in investment entirely during the forecast period which dwarf the sums during the actual term of the govt. As far as I can see its demonstrating exactly what I said, that National didn't invest in infrastructure during their term.

                    • Liberty Belle …
                      22 February 2023 at 6:22 pm

                      "I mean its the election year budget of a government inside the last 6 months of their 9 years in office. "

                      You didn't read my comment, did you? I used the 2017 budget to counter your claims around intent and action.

                      The 2017 budget document shows both. It shows that "the Key/English government spent more on infrastructure investment in every year than any if the last 5 years of the Clark government." (my words from the previous comment) And it demonstrates a financial commitment to infrastructure spend that then ramps up significantly in the subsequent years.

                      The data directly contradicts your claims.

                    • Nic the NZer []
                      22 February 2023 at 6:49 pm

                      Yeah, yeah. Pull the other one.

                      We all know about Bill English fiscal strategy of nominal spending increases just less than inflation.

                      Its one of the reasons that (despite apparent commitment to roading infrastructure) there are masses of potholes forming.

                      Yes, I had of course read every word of your comments.

                    • Liberty Belle …
                      22 February 2023 at 7:55 pm

                      "Its one of the reasons that (despite apparent commitment to roading infrastructure) there are masses of potholes forming."

                      Based on the data, you'd better write to the Clark government and complain.

                    • Incognito …
                      22 February 2023 at 8:38 pm

                      What a lovely link you provided. I was impressed by how closely NZ inflation rate tracked that of Australia during the Key regnum. That sure was a testament of National policies keeping inflation under control at our neighbours too.

                      But in fact NZ's latest inflation rate isn't that flash. At 7.2% it is higher than the US, Norway, South Africa, France, Canada, Spain…it's a long list.

                      Inflation has been highly dynamic over the last little while and it would be very silly if not disingenuous to focus on only the data of the latest Q.

                      Even though it is rather meaningless, the list of countries with inflation rate higher than NZ is twice as long as the countries with lower rate. Go figure.

                    • Liberty Belle …
                      22 February 2023 at 9:45 pm

                      "Inflation has been highly dynamic over the last little while and it would be very silly if not disingenuous to focus on only the data of the latest Q".

                      So click on the 'previous' column, and you'll find NZ's rate of inflation, again at 7.2% was ahead of the US, Norway, South Africa, France, Canada, Spain etc. Or compare NZ with G20, and we sit about mid table for both quarters. Or compare NZ's latest annual rate (7.22%), with the USA (6.4%), Norway (5.9%), South Africa (6.9%), France (6%), Canada (5.9%), Spain (5.9%).

                    • Incognito []
                      23 February 2023 at 9:06 pm

                      You obviously like an exercise in futility. Never mind, keep at it.

  7. Tiger Mountain 7
    21 February 2023 at 9:38 am

    Now lets see…to varying degrees in different locations during Gabrielle…
    –Communications down–(Radio seemed to remain pretty bullet proof though)
    –Extended power outages
    –Drinkable water supply affected
    –ATMs not working/payments not made
    –Supermarkets unable to operate/restock
    –Petrol stations unable to operate/restock
    –Medical emergencies and mental meltdowns galore
    –Crumbling road network crumbled again

    The link is penetration of public infrastructure by private capital, worker/citizen asset sales, and hands off the wheel regulation and fudged accountability. I heard various reports of cross agency squabbles over who should fix what. Meanwhile community groups just got on with it.

    It is pretty clear–Climate Disaster is not going away, so the Parliamentary parties need to move on from their beloved monetarism and managerialism. We need big Govt. and a whole bunch of nationalisations.

  8. tsmithfield 8
    21 February 2023 at 9:54 am

    The good thing about profitable banks is that it means they are willing to invest in NZ, making it easier to get finance for both the public and businesses.

    Some businesses need to make "excessive'' profits to make up for the bad years that often come along. So, I think it is better to look at average profits over time to get a better indication of the profitability of different businesses. I imagine that banks would be subject to these effects to some degree, given the occurence of recessions etc from time to time.

    The problem with a "windfall'' tax, especially unannounced, is that it would cause massive capital flight from banks, and likely other businesses. If such a thing was to be introduced, it would definitely need to be done in consultation with businesses.

    The other problem is that businesses could likely easily avoid it, by, for instance, bringing forward expenditure to a forecasted high profit year.

    If profits are "excessive", however that is quantified, the high profits are a symptom of insufficient competition in the market.

    These things normally correct themselves. Because, if profits are higher than expected, then other businesses will be attracted into the market due to the high profits on offer. Eventually, the increased competition brings prices down.

    So, if governments are really interested in getting the best deals for tax payers they should be reducing the barriers for competitors to enter the market.

    A good example is the regions where Gull was operating. Fuel prices tended to be lower in those areas due to the higher competition.

    We now have a number of independent fuel operators in Christchurch. So it will be interesting to see the affect on prices here.

  9. Tiger Mountain 9
    21 February 2023 at 10:36 am

    “Capital Flight” is way over rated. It has been Capital and Finance Capitals go to stock scary phrase for decades.

    I recall John Key’s Offshore Trust scam, engineered with his personal lawyer at the time, partially exposed in the Pandora & Panama Papers
    https://www.nzherald.co.nz/business/pandora-papers-sir-john-key-defends-his-governments-oversight-of-foreign-trusts/RZUDOHP7C4KPNAWKMRAST3TSEY/

    https://www.nzherald.co.nz/business/the-antipodes-email-john-key-his-lawyer-and-foreign-trusts/IMOIQIND4BUXLAZQLZCHGY7LJM/

    https://www.stuff.co.nz/national/politics/78838228/prime-minister-john-key-deposited-money-with-company-specialising-in-foreign-trusts

    Once IRD required more than an A4 sheet of scant information for registered Offshore Trust holders 10,000 odd of them melted away into the night.

    And so it will be if the banksters got sent packing, their export offshore is capital they have squeezed from holders of thumping great mortgages.

  10. tsmithfield 10
    21 February 2023 at 10:48 am

    When we are talking about multi-national companies, including banks, they will often invest their funds where they will get the best return.

    If they suddenly have increased taxes lumped on them, their tendency will be to invest more of their funds where the tax regime is easier. So, that could end up being really bad for kiwis who want to take out loans for various things.

    The best idea is to encourage more banks to come here. Then the profits will spread out more over time over more players. There will be a lot less tendency towards ''excessive'' profits, whatever that means, and the government will end up taking at least as much, if not more tax.

    • Liberty Belle 10.1
      21 February 2023 at 12:17 pm

      You've hit the nail right on the head.

    • Ghostwhowalksnz 10.2
      21 February 2023 at 3:17 pm

      Muldoon used to force the banks and life insurance companies to invest in government bonds at govt decided interest rates . I think it was a longstanding policy but he increased the government stock ratio even higher.

      Some background here

      They didnt take their money and run.

      • tsmithfield 10.2.1
        21 February 2023 at 4:11 pm

        ”It didn't happen over 40 years ago so it won't happen now” isn't a good argument.

        Things were quite different back then in terms of our banking industry. And now banks have lots of options and can move money around at the push of a button.

        A good illustration of how money flows is that of water. Water tends to find its fastest course to the sea. In a similar way, money tends to flow towards the best profit opportunities.

        Governments are most effective when they harness that flow for the maximum benefit for those in the economy, and set environments that increase the flow to the maximum. But, a lot of left wing ideas I see are more akin to trying to pump water uphill.

        • Nic the NZer 10.2.1.1
          21 February 2023 at 5:57 pm

          Your calling lake Onslow left wing?

          • tsmithfield 10.2.1.1.1
            21 February 2023 at 7:02 pm

            Don't start me off on pumped hydro…

            • Ghostwhowalksnz 10.2.1.1.1.1
              22 February 2023 at 8:04 am

              We have our own massive hydro station that could be on standby. Wave Comalco goodbye . The state buys Manapouri and its generation used exclusively for that dry year- winter peak generation problem we have. ( perhaps a small flow use to keep the station live)

              Best of all we dont have to buy power from the existing generators to pump water uphill. When unwanted the water just flows freely down the Waiau river in Southland and the lake is left full.

              • Nic the NZer …
                22 February 2023 at 8:26 am

                While Comalco leaving would free up significant capacity I don't think its clear this strategy makes a better power grid. It probably makes sense for a battery generator to be designed for that purpose, leaving Manapouri to replace existing fuel based generators, and otherwise facilitating more (relatively cheap, but undependable) wind power.

        • Ghostwhowalksnz 10.2.1.2
          22 February 2023 at 8:00 am

          All our big banks are Australian owned , why havent they just moved back home then.

          The reason is they factor in their costs of business and make their money from there.

          Same goes for the banking segments they are active in. Residential mortgages are different rules than say commercial buildings and different gain say for land development ( a tricky one). Farm lending is different again and then theres the big one under the radar funding mergers and acquisitions.

          The risks in each sector and the rules both from RBNZ and the banks own criteria change to . But its still they are happy to work in ( or not as sometimes happens).

          Your ideas are very Muldoon and I guess come from that era in the 80s and 90s when you might have been in the thick of it.

    • roblogic 10.3
      22 February 2023 at 10:40 pm

      No way, the banks are glorified crime syndicates and need to be nationalised for the future of humanity

  11. georgecom 11
    21 February 2023 at 10:16 pm

    I would favour a CGT with funds tagged at least initially to a rebuild myself

  12. thebiggestfish7 12
    22 February 2023 at 3:18 pm

    This post can't be taken as credible when the author cannot even get the first sentence right. The cost of the cyclones will not come as a direct cost to the government of $13billion. A large portion of this $13billion number that has been cited will be covered by insurance and reinsurance.

    • Incognito 12.1
      22 February 2023 at 4:36 pm

      Way to go, writing off a whole Post because you dislike and/or disagree with the first sentence that actually cited Grant Robertson.

      Robertson said on Sunday that Cyclone Gabrielle would cost the Government “billions” and potentially up to nearly $13 billion.

      https://www.stuff.co.nz/business/opinion-analysis/131288785/tom-pullarstrecker-cyclone-leaves-less-room-to-deal-with-more-shocks

      The second paragraph of the Post actually mentions insurance.

      He qualified that by saying, on the one hand, that some of that cost would be covered by insurance, and, on the other, that “each day, we discover more, each day we understand more”. [from above Stuff link]

      Why don’t you start learning to read before you start shooting the messenger? It makes you look foolish and without credibility.

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    Some of you might know Gerard Otto (G), and his G News platform. This morning he wrote a letter to Christopher Luxon which I particularly enjoyed, and with his agreement I’m sharing it with you in this guest newsletter.If you’d like to make a contribution to support Gerard’s work you ...
    Nick’s KōreroBy Nick Rockel
    5 days ago

  • LINDSAY MITCHELL: Alarming trend in benefit numbers
    Lindsay Mitchell writes –  While there will not be another quarterly release of benefit numbers prior to the election, limited weekly reporting continues and is showing an alarming trend. Because there is a seasonal component to benefit number fluctuations it is crucial to compare like with like. In ...
    Point of OrderBy poonzteam5443
    5 days ago

  • BRIAN EASTON: Has there been external structural change?
    A close analysis of the Treasury assessment of the Medium Term in its PREFU 2023 suggests the economy may be entering a new phase.   Brian Easton writes –  Last week I explained that the forecasts in the just published Treasury Pre-election Economic and Fiscal Update (PREFU 2023) was ...
    Point of OrderBy poonzteam5443
    5 days ago

  • CRL Progress – Sep-23
    It’s been a while since we looked at the latest with the City Rail Link and there’s been some fantastic milestones recently. To start with, and most recently, CRL have released an awesome video showing a full fly-through of one of the tunnels. Come fly with us! You asked for ...
    Greater AucklandBy Matt L
    5 days ago

  • Monday’s Chorus: Not building nearly enough
    We are heading into another period of fast population growth without matching increased home building or infrastructure investment.Photo: Lynn Grieveson / The KākāTL;DR: Labour and National detailed their house building and migration approaches over the weekend, with both pledging fast population growth policies without enough house building or infrastructure investment ...
    The KakaBy Bernard Hickey
    5 days ago

  • Game on; Hipkins comes out punching
    Labour leader Chris Hipkins yesterday took the gloves off and laid into National and its leader Christopher Luxon. For many in Labour – and particularly for some at the top of the caucus and the party — it would not have been a moment too soon. POLITIK is aware ...
    PolitikBy Richard Harman
    5 days ago

  • Tax Cut Austerity Blues.
    The leaders have had their go, they’ve told us the “what?” and the “why?” of their promises. Now it’s the turn of the would be Finance Ministers to tell us the “how?”, the “how much?”, and the “when?”A chance for those competing for the second most powerful job in the ...
    Nick’s KōreroBy Nick Rockel
    6 days ago

  • MIKE GRIMSHAW:  It’s the economy – and the spirit – Stupid…
    Mike Grimshaw writes – Over the past 30-odd years it’s become almost an orthodoxy to blame or invoke neoliberalism for the failures of New Zealand society. On the left the usual response goes something like, neoliberalism is the cause of everything that’s gone wrong and the answer ...
    Point of OrderBy poonzteam5443
    6 days ago

  • 2023 SkS Weekly Climate Change & Global Warming News Roundup #38
    A chronological listing of news and opinion articles posted on the Skeptical Science Facebook Page during the past week: Sun, Sep 17, 2023 thru Sat, Sep 23, 2023. Story of the Week  Opinion: Let’s free ourselves from the story of economic growth A relentless focus on economic growth has ushered in ...
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    6 days ago

  • The End Of The World.
    Have you been looking out of your window for signs of the apocalypse? Don’t worry, you haven’t been door knocked by a representative of the Brian Tamaki party. They’re probably a bit busy this morning spruiking salvation, or getting ready to march on our parliament, which is closed. No, I’ve ...
    Nick’s KōreroBy Nick Rockel
    1 week ago

  • Climate Town: The Brainwashing Of America's Children
    Climate Town is the YouTube channel of Rollie Williams and a ragtag team of climate communicators, creatives and comedians. They examine climate change in a way that doesn’t make you want to eat a cyanide pill. Get informed about the climate crisis before the weather does it for you. The latest ...
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    1 week ago

  • Has There Been External Structural Change?
    A close analysis of the Treasury assessment of the Medium Term in its PREFU 2023 suggests the economy may be entering a new phase. Last week I explained that the forecasts in the just published Treasury Pre-election Economic and Fiscal Update (PREFU 2023) was similar to the May Budget BEFU, ...
    PunditBy Brian Easton
    1 week ago

  • New community-level energy projects to support more than 800 Māori households
    Seven more innovative community-scale energy projects will receive government funding through the Māori and Public Housing Renewable Energy Fund to bring more affordable, locally generated clean energy to more than 800 Māori households, Energy and Resources Minister Dr Megan Woods says. “We’ve already funded 42 small-scale clean energy projects that ...
    BeehiveBy beehive.govt.nz
    2 days ago

  • Huge boost to Te Tai Tokerau flood resilience
    The Government has approved new funding that will boost resilience and greatly reduce the risk of major flood damage across Te Tai Tokerau. Significant weather events this year caused severe flooding and damage across the region. The $8.9m will be used to provide some of the smaller communities and maraes ...
    BeehiveBy beehive.govt.nz
    2 days ago

  • Napier’s largest public housing development comes with solar
    The largest public housing development in Napier for many years has been recently completed and has the added benefit of innovative solar technology, thanks to Government programmes, says Housing Minister Dr Megan Woods. The 24 warm, dry homes are in Seddon Crescent, Marewa and Megan Woods says the whanau living ...
    BeehiveBy beehive.govt.nz
    3 days ago

  • Te Whānau a Apanui and the Crown initial Deed of Settlement I Kua waitohua e Te Whānau a Apanui me...
    Māori: Kua waitohua e Te Whānau a Apanui me te Karauna te Whakaaetanga Whakataunga Kua waitohua e Te Whānau a Apanui me te Karauna i tētahi Whakaaetanga Whakataunga hei whakamihi i ō rātou tāhuhu kerēme Tiriti o Waitangi. E tekau mā rua ngā hapū o roto mai o Te Whānau ...
    BeehiveBy beehive.govt.nz
    4 days ago

  • Plan for 3,000 more public homes by 2025 – regions set to benefit
    Regions around the country will get significant boosts of public housing in the next two years, as outlined in the latest public housing plan update, released by the Housing Minister, Dr Megan Woods. “We’re delivering the most public homes each year since the Nash government of the 1950s with one ...
    BeehiveBy beehive.govt.nz
    6 days ago

  • Immigration settings updates
    Judicial warrant process for out-of-hours compliance visits 2023/24 Recognised Seasonal Employer cap increased by 500 Additional roles for Construction and Infrastructure Sector Agreement More roles added to Green List Three-month extension for onshore Recovery Visa holders The Government has confirmed a number of updates to immigration settings as part of ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Poroporoaki: Tā Patrick (Patu) Wahanga Hohepa
    Tangi ngunguru ana ngā tai ki te wahapū o Hokianga Whakapau Karakia. Tārehu ana ngā pae maunga ki Te Puna o te Ao Marama. Korihi tangi ana ngā manu, kua hinga he kauri nui ki te Wao Nui o Tāne. He Toa. He Pou. He Ahorangi. E papaki tū ana ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Renewable energy fund to support community resilience
    40 solar energy systems on community buildings in regions affected by Cyclone Gabrielle and other severe weather events Virtual capability-building hub to support community organisations get projects off the ground Boost for community-level renewable energy projects across the country At least 40 community buildings used to support the emergency response ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • COVID-19 funding returned to Government
    The lifting of COVID-19 isolation and mask mandates in August has resulted in a return of almost $50m in savings and recovered contingencies, Minister of Health Dr Ayesha Verrall announced today. Following the revocation of mandates and isolation, specialised COVID-19 telehealth and alternative isolation accommodation are among the operational elements ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Appointment of District Court Judge
    Susie Houghton of Auckland has been appointed as a new District Court Judge, to serve on the Family Court, Attorney-General David Parker said today.  Judge Houghton has acted as a lawyer for child for more than 20 years. She has acted on matters relating to the Hague Convention, an international ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Government invests further in Central Hawke’s Bay resilience
    The Government has today confirmed $2.5 million to fund a replace and upgrade a stopbank to protect the Waipawa Drinking Water Treatment Plant. “As a result of Cyclone Gabrielle, the original stopbank protecting the Waipawa Drinking Water Treatment Plant was destroyed. The plant was operational within 6 weeks of the ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Govt boost for Hawke’s Bay cyclone waste clean-up
    Another $2.1 million to boost capacity to deal with waste left in Cyclone Gabrielle’s wake. Funds for Hastings District Council, Phoenix Contracting and Hog Fuel NZ to increase local waste-processing infrastructure. The Government is beefing up Hawke’s Bay’s Cyclone Gabrielle clean-up capacity with more support dealing with the massive amount ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Taupō Supercars revs up with Government support
    The future of Supercars events in New Zealand has been secured with new Government support. The Government is getting engines started through the Major Events Fund, a special fund to support high profile events in New Zealand that provide long-term economic, social and cultural benefits. “The Repco Supercars Championship is ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • There is no recession in NZ, economy grows nearly 1 percent in June quarter
    The economy has turned a corner with confirmation today New Zealand never was in recession and stronger than expected growth in the June quarter, Finance Minister Grant Robertson said. “The New Zealand economy is doing better than expected,” Grant Robertson said. “It’s continuing to grow, with the latest figures showing ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Highest legal protection for New Zealand’s largest freshwater springs
    The Government has accepted the Environment Court’s recommendation to give special legal protection to New Zealand’s largest freshwater springs, Te Waikoropupū Springs (also known as Pupū Springs), Environment Minister David Parker announced today.   “Te Waikoropupū Springs, near Takaka in Golden Bay, have the second clearest water in New Zealand after ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • More support for victims of migrant exploitation
    Temporary package of funding for accommodation and essential living support for victims of migrant exploitation Exploited migrant workers able to apply for a further Migrant Exploitation Protection Visa (MEPV), giving people more time to find a job Free job search assistance to get people back into work Use of 90-day ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Strong export boost as NZ economy turns corner
    An export boost is supporting New Zealand’s economy to grow, adding to signs that the economy has turned a corner and is on a stronger footing as we rebuild from Cyclone Gabrielle and lock in the benefits of multiple new trade deals, Finance Minister Grant Robertson says. “The economy is ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Funding approved for flood resilience work in Te Karaka
    The Government has approved $15 million to raise about 200 homes at risk of future flooding. More than half of this is expected to be spent in the Tairāwhiti settlement of Te Karaka, lifting about 100 homes there. “Te Karaka was badly hit during Cyclone Gabrielle when the Waipāoa River ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Further business support for cyclone-affected regions
    The Government is helping businesses recover from Cyclone Gabrielle and attract more people back into their regions. “Cyclone Gabrielle has caused considerable damage across North Island regions with impacts continuing to be felt by businesses and communities,” Economic Development Minister Barbara Edmonds said. “Building on our earlier business support, this ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • New maintenance facility at Burnham Military Camp underway
    Defence Minister Andrew Little has turned the first sod to start construction of a new Maintenance Support Facility (MSF) at Burnham Military Camp today. “This new state-of-art facility replaces Second World War-era buildings and will enable our Defence Force to better maintain and repair equipment,” Andrew Little said. “This Government ...
    BeehiveBy beehive.govt.nz
    1 week ago

  • Foreign Minister to attend United Nations General Assembly
    Foreign Minister Nanaia Mahuta will represent New Zealand at the 78th Session of the United Nations General Assembly (UNGA) in New York this week, before visiting Washington DC for further Pacific focussed meetings. Nanaia Mahuta will be in New York from Wednesday 20 September, and will participate in UNGA leaders ...
    BeehiveBy beehive.govt.nz
    2 weeks ago

  • Midwives’ pay equity offer reached
    Around 1,700 Te Whatu Ora employed midwives and maternity care assistants will soon vote on a proposed pay equity settlement agreed by Te Whatu Ora, the Midwifery Employee Representation and Advisory Service (MERAS) and New Zealand Nurses Association (NZNO), Minister of Health Dr Ayesha Verrall announced today. “Addressing historical pay ...
    BeehiveBy beehive.govt.nz
    2 weeks ago

  • New Zealand provides support to Morocco
    Aotearoa New Zealand will provide humanitarian support to those affected by last week’s earthquake in Morocco, Foreign Minister Nanaia Mahuta announced today. “We are making a contribution of $1 million to the International Federation of Red Cross and Red Crescent Societies (IFRC) to help meet humanitarian needs,” Nanaia Mahuta said. ...
    BeehiveBy beehive.govt.nz
    2 weeks ago

  • Government invests in West Coast’s roading resilience
    The Government is investing over $22 million across 18 projects to improve the resilience of roads in the West Coast that have been affected by recent extreme weather, Prime Minister Chris Hipkins confirmed today.  A dedicated Transport Resilience Fund has been established for early preventative works to protect the state ...
    BeehiveBy beehive.govt.nz
    2 weeks ago

  • Government invests in Greymouth’s future
    The Government has today confirmed a $2 million grant towards the regeneration of Greymouth’s CBD with construction of a new two-level commercial and public facility. “It will include a visitor facility centred around a new library. Additionally, it will include retail outlets on the ground floor, and both outdoor and ...
    BeehiveBy beehive.govt.nz
    2 weeks ago

  • Nanaia Mahuta to attend PIF Foreign Ministers’ Meeting
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    BeehiveBy beehive.govt.nz
    2 weeks ago

  • PREFU shows no recession, growing economy, more jobs and wages ahead of inflation
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    BeehiveBy beehive.govt.nz
    3 weeks ago

  • New cancer centre opens in Christchurch
    Prime Minister Chris Hipkins and Minister of Health Dr Ayesha Verrall proudly opened the Canterbury Cancer Centre in Christchurch today. The new facility is the first of its kind and was built with $6.5 million of funding from the Government’s Infrastructure Reference Group scheme for shovel-ready projects allocated in 2020. ...
    BeehiveBy beehive.govt.nz
    3 weeks ago

  • Government invests in top of the south’s roading resilience
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    3 weeks ago

  • New Zealanders continue to support the revitalisation of te reo as we celebrate Te Wiki o te Reo Mā...
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    BeehiveBy beehive.govt.nz
    3 weeks ago

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