Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Richard Prebble's Letter from Wellington – 30 Sept


RICHARD PREBBLE'S

Letter From Wellington

Monday 30th September 2002

4 Percent Plus Growth

The latest GDP figures showing 3.5 percent growth caught Labour ministers by surprise. National's finance spokesman, Dr Brash, put out a gloomy statement headed "4 Percent growth still a long way to go" and saying "GDP result should disappoint Minister of Finance". But Cullen can't believe his luck. He has absolutely no idea why the economy is growing so he was not disappointed. Our readers were not surprised by the growth figures as The Letter has been pointing out that indicators like Tranzrail's freight volumes predict an economy which is growing strongly. The Letter believes the economy is now at 4 percent growth.

The Kiwi Dollar

With the Kiwi dollar at less than 50 cents to the US dollar, NZ exports are very competitive. While the sudden increase in the dollar early this year affected its standing the Kiwi dollar's rise was moderated by the fact that the currencies of all our trading partners have also risen vis-à-vis the dollar.

Agriculture

· Dairy - While Fonterra's performance is reason for serious concern, the lower milk price still gives a positive return to most dairy farmers. · Apple - The deregulated apple industry is predicting an excellent year. It's hard to see how long the kiwi fruit industry can remain regulated.

Tourism

The country's largest employer has bounced back after September 11. Excellent snow has helped. While the America's Cup's international appeal is a myth, it has helped internal tourism.

Immigration

Growth is being underpinned by historically high immigration. Despite raising the points needed for immigration, the department is overwhelmed by applications.

Economically Positive

Research by economists, here and overseas, shows that while immigration in the short and long term is economically positive, the benefits only just outweigh the costs. New immigrants need housing - hence the Auckland housing boom, Each house needs furniture, etc, so new immigrants boost retail. In the longer term they bring new skills and entrepreneurialship. But new immigrants increase the costs of education, health, and infrastructure. Evidence that the government is not meeting those costs can be seen in Auckland's growing health, education and road problems.

Hard to Get Right

Labour is continuing with National's policy to have net positive 10,000 immigrants a year. This is very hard to achieve in practice. There are 800,000 NZ citizens overseas, including 250,000 in Australia. It is impossible to predict how many Kiwis will leave in any year and even harder to say how many will return. Many who say on their immigration forms they are leaving for good, return. Historically, the best indicator of Kiwi migration is the economy and trans-Tasman migration is most affected. 4 percent growth should trigger a Kiwi return. While that would be great news, the Immigration Service is slow to adjust. If a large number of Kiwis return on top of new immigrants it will cause problems. So immigration will remain a hot topic.

It Could Turn to Custard

All the positive economic predictions could turn to custard. As a small trading economy New Zealand is very vulnerable to external international shocks. Here are some possibilities:

· Middle East -If the Middle East goes wrong, oil reaches US $50 a barrel, New Zealand will be affected.

· The US Economy - The Economist believes the US may be in "de-inflation". Falling prices are even worse than rising prices as consumers stop buying, expecting lower prices in the future. A de-inflating US economy would have worldwide ramifications. It's The Letter's experience that external economic shocks usually come from a source not predicted - e.g. September 11, the Asian Crisis, etc.

Wasted Opportunities

When the next shock comes Labour's years will be looked back on as a wasted opportunity. Now is the time for real tax reform, to cut red tape, and to review governments own spending and investment.

A Window of Opportunity

Labour has realized it has a window of opportunity to resolve the GE issues now that it no longer needs the Green vote. It is determined to proceed with GE. Labour strategists thank that GE won't be an election issue. The government appears to be wasting the opportunity to reform the Resource Management Act (RMA) which is imposing huge costs on the country. Indeed Labour's two RMA Bills will make the problems worse.

U is for United or is it U-Turn?

United Future MP Judy Turner on 24 September issued the following press statement: "United Future defends support for Social Security (Development and Employment) Amendment Bill." "Mr Dunne was an opposition MP in the last parliament and it was perfectly reasonable for him to oppose the bill then...I have consulted closely with the government ...as a result...I have concluded that it is not...anti-family...and therefore I have persuaded my colleagues it is legislation worth supporting." The full press statement is on ACT's website at http://www.act.org.nz/u-turn . Far from promoting the family, Treasury has said this Bill will result in an extra 1,000 Domestic Purpose Beneficiaries every year - and at an average 1.8 children each, this means an extra 1,800 children on state dependency per year.


ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Also, Loan Interest: Productivity Commission On Tertiary Education

Key recommendations include better quality control; making it easier for students to transfer between courses; abolishing University Entrance; enabling tertiary institutions to own and control their assets; making it easier for new providers to enter the system; and facilitating more and faster innovation by tertiary education providers... More>>

ALSO:

Higher Payments: Wellington Regional Council Becomes A Living Wage Employer

Councillor Sue Kedgley said she was delighted that the Wellington Regional Council unanimously adopted her motion to become a Living Wage employer, making it the first regional council in New Zealand to do so. More>>

ALSO:

Scoop Images:
Dame Patsy Reddy Sworn In As Governor-General

This morning Dame Patsy Reddy was sworn in as the New Zealand Realm’s 21st Governor-General. The ceremony began with a pōwhiri to welcome Dame Patsy and her husband Sir David Gascoigne to Parliament. More>>

ALSO:

Ruataniwha: DOC, Hawke's Bay Council Developer Take Supreme Court Appeal

The Department of Conservation and Hawke's Bay Regional Investment Company (HBRIC) are appealing to the Supreme Court over a conservation land swap which the Court of Appeal halted. More>>

ALSO:

With NZ's Marama Davidson: Women’s Flotilla Leaves Sicily – Heading For Gaza

Women representing 13 countries spanning five continents began their journey yesterday on Zaytouna-Oliva to the shores of Gaza, which has been under blockade since 2007. On board are a Nobel Peace Laureate, three parliamentarians, a decorated US diplomat, journalists, an Olympic athlete, and a physician. A list of the women with their background can be found here. More>>

Gordon Campbell: On The Key Style Of Crisis Management

At Monday’s post Cabinet press conference Key was in his finest wide- eyed “Problem? What problem?” mode. No, there wasn’t really a problem that top MPI officials had been at odds with each other over the meaning of the fisheries policy and how that policy should be pursued... More>>

ALSO:

Mt Roskill: Greens Will Not Stand In Likely Post-Goff By-Election

“The Green Party’s priority is changing the Government in 2017, and as part of that we’ve decided that we won’t stand a candidate in the probable Mt Roskill by-election... This decision shows the Memorandum of Understanding between Labour and the Green Party is working." More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news