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Bill English: Government Booms, Economy Busts

10 March 2006

Government Booms, Economy Busts

In a slowing economy, government spending will continue to boom. Wellington office blocks currently offer the best returns in commercial property, and the state wage bill is rising by $1 billion per year. So the Reserve Bank has to hold the line on interest rates, and they have, signalling it will be a while before rates come back.

Fortunately, the export sector can give a glimmer of hope with the exchange rate falling 10% in recent weeks, but the Reserve Bank is determined to knock back the rest of New Zealanders' appetite for debt.

Household expenditure has been rising faster than household income for several years and it can't keep going. Over the next 12 months, house prices should ease and business investment will slow. Farmers look for any excuse to pay more for land and the fall in the dollar will likely be enough to keep farm values robust.

Everyone's a Winner

The great thing about success in a small country is that everyone can be part of it. My mum is in the same Invercargill rest home as Sam Morgan's grandma.

Everyone's a Loser Often it's the small issues that tell the story. Timber processors in the south are fighting a battle with bureaucracy on behalf of everyone who will build a house or a shed in the next 10 years. Someone, somewhere has decided that all framing timber now has to be made by a machine rather than the traditional visual grading test, which could cost up to $40,000. It's all extra costs to the consumer on top of the new extravagantly stupid Building Act. However, the costs of the new stress test could force local sawmillers out of the framing timber market. Odd how the proposed regulation is supported by big operators like Carters.

So the local sawmill operators have tried to find out why the traditional visual grading is no longer acceptable. It turns out no one really knows. If houses were crumbling around us because of weak framing, that would be persuasive. A few calls around local government building inspectors reveals that it's never been a problem. So this new requirement is a solution looking for a problem. The Building Authority is digging in. When the requirement is irrational there is no sensible way to defend it. But there seems to be no way of stopping it.

Dawn Raids On Again

Wednesday morning in Te Anau saw the first and maybe only dawn raids ever in Southland - at Takaro Lodge. Guests, including the Vice-President of Disney Corporation, were disturbed by a large presence of police and immigration staff who rounded up 12 alleged overstayers.

The staff concerned had been refused work permits and are now overstayers. But why were they refused work permits? It's almost impossible to get staff for hospitality jobs in Queenstown, and all sorts of non-New Zealanders are getting work permits to fill the gap. Takaro is isolated and its requirements specialised, and they just can't get any suitable staff.

Takaro is setting out to establish itself as part of the "spa industry", where high net wealth individuals pay large amounts of money to spend time on health and wellness. We need this tourism business and more like it. So did these immigrants break all the rules, or is it a case of bureaucratic bumbling? I want some answers.


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