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News Worthy

News Worthy

28 October 2005
No. 51

A giant sucking sound from across the Tasman

It is disconcerting that economic policies in Australia and New Zealand which were very much in line for 15 years from the mid-1980s, have moved in different directions.

In a recent speech (14 October 2005) by Rob McLeod the Chairman of the NZ Business Roundtable, he noted that Australia has carried on with market-oriented, pro-growth economic reforms. Although the Howard Government's reform record is seen by many business organisations in Australia as patchy, it keeps on reminding Australians that reform is a never-ending task in a competitive world. Good times are not self-sustaining.

Currently Australia is pressing on with a substantial reform agenda covering tax, privatisation, employment law, welfare, education, business regulation and infrastructure. Australia is also in a different space from New Zealand on Kyoto and on a free trade agreement with the United States.

By contrast, our government has largely abandoned a reforming agenda and instead focused on redistribution, greater intervention in the private sector and more centralised control of services such as health and education.

A Vote Of No Confidence

The trading banks are normally restrained in the wording of the media releases which they issue. In fact the releases are often anodyne.

So it was a surprise when the National Bank in its release of 26 October 2005 front-footed real concerns about the economy.

A net 55 percent of firms expect general business conditions to deteriorate over the next year, a huge collapse when compared to the net 38 percent of firms expecting a deterioration last month.

Inflation is rising even as the economy slows. Inflation is now at 3.4 percent - significantly above the Reserve Bank's target band of one to three percent. And it's going to get worse before it gets better. Worryingly for the Reserve Bank, this is becoming embodied in inflation expectations which rose to 3.3 percent, its highest level in nearly five years.

It looks like tough times ahead for business. Consider this: an overvalued currency, a slowing economy, rising inflation, higher interest rates, and New Zealand's external debt rising without any apparent bounds.

Although official statistics show the economy had a mid-year burst of activity, it may turn out to be a dead cat bounce. The economy is decelerating and businesses are feeling the pinch.

ACC Targets the Self-Employed

ACC plans to increase levies on the self-employed by 35c per $100 of income to $3.57 in the 2006/07 year. This follows a 12c increase last year.

The difference between levies paid by self-employed people and payroll employers is huge.

In the context of the farming sector where most farmers are self-employed the statistics show the number of farm accidents actually reduced in the past year.

ACC's own statistics show the number of farm accidents dropped from 1,716 in 2003 to 1,623 in 2004. The most reassuring aspect of the statistics is that the number of fatal farm accidents dropped from 46 in 2003 to 33 in 2004.

Those who work hard to create a safe workplace don't get rewarded. They don't get a reduced premium. The incentives are all wrong.

National is committed to offering insurer choice in the market.

Plans To Protect Newmarket Rail Station

Auckland City Council is talking to the Auckland Regional Transport Authority (ARTA) about opportunities for retaining the Newmarket rail station and signal box.

This follows concern that the buildings, both built in 1909, would be demolished once work starts on the reconfiguration of the railway track and station upgrade.

The Newmarket and Remuera rail stations are the only timber and ironwork stations in Auckland city that remain largely intact.

Volte-face on MMP

In an echo from the past the Prime Minister said in 1992
"to change the manner of elections to give us a future of perpetual coalitions is not a cure for our discontents"

New Zealand heroes - Part 3 of a continuing series - Nancy Wake

Nancy Wake was the Allies' most decorated servicewoman of WWII, and the Gestapo's most-wanted person. Code-named 'The White Mouse' she led an army of 7,000 Maquis troops in guerrilla warfare to sabotage the Nazis.

Nancy Wake was born in Wellington in 1912.

Political Quote of the Week
"Don't be afraid to take a big step if one is indicated. You can't cross a chasm in two small jumps." - David Lloyd George, British Prime Minister

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Richard Worth

Visit my website for more information at: www.richardworth.co.nz


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