Wednesday’s Pro email:Business and consumer confidence surge before Christmas
In the political economy and in business today, there are fresh signs the economy is warming under the Government headed into an election year, thanks largely to the usual suspects of near-record population growth and lower interest rates re-heating an under-supplied Auckland housing market.
That's one way to do it, albeit there's not much the Government can claim credit for in this friendly stew of factors, apart from the still-high migration figures and the still-lagging housing supply.
In economic news, the monthly ANZ Business Outlook survey of business confidence in December showed a significant improvement on the wider economy and firms’ own prospects, thanks to easier monetary policy and signs of a fiscal policy loosening, along with a warming housing market and a rebound in migration.
Firms’ own confidence about their own activity, which is the most reliable leading indicator of economic growth, rose four percentage points to a net 17 percent expecting higher activity over the year ahead. This was the strongest reading since April 2018.
“New Zealand businesses are rolling into the end of the year in much better heart than was looking likely just a few months ago, particularly manufacturers,” ANZ Chief Economist Sharon Zollner wrote in the report.
“Challenges remain, and time will tell how sustainable the lift in sentiment and activity proves to be, with headwinds for the economy still present and global risks not having gone away, for all that some geopolitical risks are now less prominent,” she wrote.
Elsewhere, Westpac’s McDermott Miller quarterly survey of consumer confidence found a sharp improvement in the December quarter to back around long-term average levels.
“The rise in confidence follows a drop in mortgage rates earlier in the year and a related resurgence in the housing market,” Westpac Senior Economist Satish Ranchod wrote.
Meanwhile, ASB upgraded its house price inflation forecasts because of strong migration, lower mortgage rates and a persistent under-supply nationally of 30,000 houses. It increased its forecast for Auckland house price inflation to 5.5 percent in the year to June 2020 and 4.3 percent the following year. National house price inflation would be 6.5 percent next year and 4.0 percent the following year, it forecast.
The only off note in the chorus of good economic news was a 5.1 percent fall in Globaldairytrade prices in the auction last night, although they have risen 25 percent in the last year. Before the auction, Rabobank increased its forecast for Fonterra’s 2019/20 payout range to $7.60/kg from $7.15.
In Government and political news, Climate Change Minister James Shaw appointed the remaining Climate Change Commissioners, including Victoria University of Wellington climate change scientist James Renwick, Motu economist Catherine Leining and Plant and Food Research chair (and former Fonterra director) Nicola Shadbolt.
In business news, John Key resigned from the Air New Zealand board after just two and a half years. Many had expected he would be named chair if National was re-elected. Instead, Therese Walsh was named chair and a new CEO, Greg Foran, has replaced the Key-era CEO Christopher Luxon, who resigned to become National’s candidate for Botany.
Elsewhere, the FMA announced it had filed civil charges in the Auckland High Court against failed insurer CBL, its six directors, John Wells, Peter Harris, Anthony Hannon, Norman Donaldson, Ian Marsh and Alistair Hutchison, and the CFO, Carden Mulholland. The SFO also announced it had filed criminal charges after investigations into CBL by the SFO and the Reserve Bank, but did not say who it had charged or the nature of the charges.
1. 43,000 cars worth of emissions
Meridian and Contact Energy have been accused by independent power companies of intentionally spilling water from their South Island dams to drive up the wholesale price of power, Marc Daalder reports on Newsroom Pro.
In a complaint to the Electricity Authority, Haast Energy Trading, Ecotricity, Electric Kiwi, Flick Energy, Oji Fibre, Pulse Energy Alliance and Vocus have blamed Meridian and Contact for an Undesirable Trading Situation (UTS).
Haast also points out that fossil fuel-powered stations in the North Island have had to make up the shortfall for some companies, leading to the generation of 6,000 additional tonnes of CO2 equivalent.
And Flick says a month of hydro spilling equal to 300MW is 108,000 tonnes of CO2 equivalent, or enough to power 43,000 small cars for a year.
2.Could investing in coal mines be 'responsible investment'?
A survey by Kiwi Wealth survey of its KiwiSaver members published in August found more people want their fund manager to get out of harm-inducing companies, than stay and try to change behaviour from inside. In fact, 57 percent of respondents think it’s more important to exclude companies involved in harmful activities than engage with companies to improve poor practices (15 percent).
But, asks Nikki Mandow, what if investors, particularly large ones, engaged actively and openly with companies whose products, activities or business models they were concerned about?
Nikki takes a deep dive into responsible investing and finds it is way more complicated and nuanced than she imagined.
See Nikki's full story here
3. Joyce defamed: NBR and publisher must pay
Newsroom's co-editor Tim Murphy is back reporting how a High Court judge took just one week to decide the business website NBR and its publisher Todd Scott had separately defamed former finance minister Steven Joyce - and to order them to pay the ex MP's legal costs.
The case is unusual in two respects, Tim writes. First, NBR held out against Joyce despite the author of the column that defamed him, Matthew Hooton, having apologised, retracted his statements and paid Joyce $5000 in costs 18 months ago.
And second, its publisher was found to have defamed Joyce by tweeting comments related to the column and Hooton - making it one of the first defamations by Twitter by a public figure.
The column, published in March last year, claimed Joyce had won just four votes other than his own in the National Party leadership contest, that he had used his proxy Communications Minister Amy Adams to try to help his "friends at Chorus", and that he could "blackmail" the new leader Simon Bridges.
4. Healthcare debts for families of terror victims
Dileepa Fonseka and David Williams report exclusively this morning that some Christchurch terror victims are using their victim payouts to pay their carers' healthcare costs because of the type of visas their families are on.
Raf Manji, an independent advisor to the Christchurch Foundation said he is hearing of more cases like these where families here to support March 15 victims are facing financial pressures as a result of their visa status.
Carers who have come from overseas to look after the injured or bereaved are being hit with medical costs, even for going to the GP, he said. Some families were meeting these payments through the victim payouts of the people they were there to support.
Christchurch-based immigration lawyer Nicola Tiffen of Anthony Harper said she found it “frustrating” that many of the families of victims were only allowed in on three-month visitor visas, and could not work while here.
See the full story here.
5. Why the 'all-singing, all-dancing' national security strategy doesn't exist
Victoria University of Wellington's Robert Ayson writes about the calls for a national security strategy in a comment piece on Newsroom Pro.
The call from Jim Rolfe includes a vision for a New Zealand National Security Strategy that has two main requirements.
One is that it has a comprehensive perspective, and the other is what Rolfe calls “overall coherence”.
The national security strategy would connect the dots, providing guidance to agencies as they work together.
But, says Rob, comprehensiveness and coherence can be unhappy bedfellows, as any grader of university essays will tell you.
Reining in MPs pay - A bill restoring independence to how MPs’ pay is calculated has passed its final reading, repealing a formula introduced in 2015 that the Government says resulted in higher-than-expected pay increases. Under the Remuneration Authority (Members of Parliament) Remuneration Amendment Bill no2 MPs’ pay will be calculated using the same process for reviewing the remuneration of other key public office holders.”
Tax law needing tightening - A Court of Appeal decision yesterday "opens the way for claims to be made to Inland Revenue for donation tax credits which have never been considered to be eligible" and the Government will now move to introduce legislation to clarify the law regarding donation tax credits, says Revenue Minister Stuart Nash. Nash says that the proposed legislative change would confirm that donation tax credits and gift deductions would not be available for gifts to donee organisations where they are made by way of debt forgiveness. The announcement follows the decision by the Court of Appeal in the case of Commissioner of Inland Revenue v Roberts. The Court found donation tax credits are available for gifts made by way of debt forgiveness.
Cadet no 100 - The 100th cadet is about to be accepted into the He Ara Whai Mahi - Pathways to Employment programme. The scheme is a partnership between Welington City Council and MSD piloted in 2016. The Ministry of Social Development funded programme gives young adults on the Jobseeker Support benefit aged between 18-24 years the chance to work for four weeks in a professional working environment.
The council says it has had a 100% completion rate since then, with 73% post-programme employment success rate.
A change of approach - The Crown has developed a new strategy for resolving historical claims arising from abuse in state care. State Services Minister Chris Hipkins and Attorney-General David Parker said the new approach better reflects its principled response to the Abuse in Care Royal Commission of Inquiry. The Crown aims to be more transparent about what claimants can expect from the Crown, give claimants the right to involve whānau, hapu, iwi and community in the resolution process, br explicit that new or additional material information that a claimant becomes aware of even after settlement can then be considered by the Crown, concede any factual matters that it doesn’t dispute when claimants choose to litigate in court.
Submissions open - Public submissions are now open on the Protection for First Responders and Prison Officers Bill, which seeks to create a new offence in the Crimes Act 1961 for intentionally injuring a first responder or prison officer. It would provide for a minimum six month period of imprisonment for this offence. The bill would also expand the definition of a first responder in the Summary Offences Act 1981 to include emergency service workers.
Get ready to Jump - Uber's Jump e-bikes have been granted a licence to operate in Auckland by Auckland Council.
Audit out - The Auditor-General’s report summarising the audit of the Financial Statements of the Government for the year ended 30 June 2019 was presented yesterday. The Auditor-General's office would 'like to see more performance-related information reported together with the Government’s financial statements" in order to "tell a richer overall story of what the public are receiving for the taxes they pay". It also reports on whether the money Parliament allocated to particular activities has been spent as intended. For 2018/19, there were few breaches, amounting to 0.2 percent of government expenditure.
Outlook for milking - Rabobank has lifted its milk price forecast for the 2019/20 dairy season, according. In its latest Dairy Quarterly report, Rabobank dairy analyst Emma Higgins said increased global dairy prices were largely a result of reduced global stocks of Skim Milk Powder (SMP) and modest milk production growth. "Across the Big 7 - the EU, the US, New Zealand, Australia, Uruguay, Argentina & Brazil – milk supply growth is expected to remain at, or below, one per cent in 2020,” she said.
Appointed - Business incubator The Icehouse has named Gavin Lennox as group chief executive. Lennox, previously CEO of payments company Invenco, will start in the role on February 3. He is also a 13-year member of The Icehouse’s angel investment network (Ice Angels).
Mark Sowden, currently the Deputy Chief Executive of the Housing and Urban Settings group at the Ministry of Housing and Urban Development, has been appointed Government Statistician and CEO of Statistics NZ.
And the NZX Board has appointed Hayley Buckley as its next Future Director, effective 1 January 2020. Buckley is a partner in the corporate advisory team at legal firm, Wynn Williams.
7. Coming up
Stats NZ releases balance of payments and international investment position for the September 2019 quarter
Education and Workforce Select Committee receives briefings on annual reviews of the Education Review Office and Education Payroll Limited and considers the Education and Training Bill, the Education (Vocational Education and Training Reform) Amendment Bill and the Holidays (Bereavement Leave for Miscarriage) Amendment Bill (No 2)
Finance and Expenditure Select Committee reviews RBNZ’s Financial Stability Report and the Government’s new Budget Policy Statement, considers the Arms Legislation Bill and the Public Finance (Wellbeing) Amendment Bill and receives three petitions
Governance and Expenditure Select Committee receives briefings on annual reviews of Southern Response Earthquake Services Limited, the Office of the Clerk and Parliamentary Services and hears three petitions
Health Select Committee considers the Mental Health and Wellbeing Commission Bill
Social Services and Community Select Committee receives briefings on annual reviews of Te Papa Tongarewa, the Housing New Zealand Corporation and the Social Workers Registration Board and considers the Rates Rebate (Statutory Declarations) Amendment Bill
(Detailed Select Committee schedules can be found here)
The Parliamentary Press Gallery holds its annual Christmas Party in Parliament.
Stats NZ releases GDP figures for the September 2019 quarter
Parliamentary Commissioner for the Environment Simon Upton will release a report on the environmental impacts of tourism
Napier Port Holdings AGM, 10:30 AM, Napier
Enjoy the holidays!
Parliament will be in recess until February 11
February 18 – Stats NZ will release population statistics for the year ending December 31
February 27 – ANZ will release its next Business Outlook Survey
March – Treasury will release its four-yearly Long-term Fiscal Statement
March 30 – Stats NZ will release estimated resident population from the 2018 Census
8. My pick of the news links
RNZ: Heated theatres, cadaver skin - how Whakaari/White Island burns victims are being treated
Jason Walls ( NZ Herald):National Leader Simon Bridges and TV personality Nigel Latta engage in a war of words
1News: Are NZ's adventure tourism rules fit for purpose? Workplace Safety Minister wants answers
Gareth Vaughan (Interest): APRA to probe Westpac for potential breaches of Australia's Banking Act
Phil Pennington (RNZ):230 High Street: Christchurch Council distances its engineer from unstable building
Brent Melville (ODT): Phosphate vital, industry says
Chris Keall( NZ Herald): Lobby group objects to sensors in state houses, Kāinga Ora responds
Tom Pullar-Strecker (Stuff):Public media decision hangs in balance after Cabinet call for more detail
Jane Patterson (RNZ):Government plans for RNZ and TVNZ remain up in the air
Liz McDonald (Stuff): Fuel discounter Waitomo opening first South Island outlet in central Christchurch
The Detail, Newsroom's daily podcast co-production with RNZ asks where in the world are our troops? Read more and listen here. iPhone users can subscribe here and Android users can subscribe here
..and one fun thing:
Technology can be a wonderful thing, as demonstrated by Henpecked Hal on Twitter
Bernard, Lynn and the Newsroom Pro team.
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