POLITICAL UPDATE Thur 9 Nov 2000 (No. 38/00)
Strong export outcomes continue
Exports over the September quarter are around 20% higher than last year, with about 17% of this movement due to higher export prices and the remainder reflecting higher volumes. Export growth has been across the board, with strong growth in dairy products and improving growth in mechanical and electrical machinery. The value of exports rose 31% to Asia, but fell 21% to the UK. An improving trade balance means conditions may now be in place for a significant improvement in the current account deficit.
Close US election may be good news for economy
US stocks were unsettled overnight, following the inconclusive result from yesterday's Presidential election. Some investors appeared to believe that Bush will still win - tobacco, pharmaceutical and energy companies, perceived as likely to benefit from a Bush victory, all rose overnight (technology stocks continued their fall, apparently unrelated to the election). Regardless of the eventual outcome, the close election means more gridlock in Washington, with neither big tax cuts nor big new spending programmes on the horizon, and with the US in the midst of the longest economic expansion in its history, investors should be happy with a stalemate. One analyst said: "The background economics remain superb, and if you want to keep those unmolested, this political outcome is the best that you could have."
Fisher & Paykel wants a government inquiry into alleged recent dumping by Korean manufacturers of washing machines and fridges. Gary Paykel says South Korean companies have a long-term strategy to make inroads into foreign markets by selling below cost under their own and other brand names. He said the downturn in the NZ dollar has also hurt F&P's whiteware division, since it has to buy components in US dollars but earns relatively little in US dollars for finished appliances. The comments were made as F&P made plans to lay off 200 staff at its East Tamaki plant.
Hong Kong trade agreement mooted
Trade Negotiations Minister Jim Sutton has called for talks on a closer economic relationship with Hong Kong. Hong Kong favours multi-lateral arrangements, but indicated recently it would consider a bilateral agreement. NZ officials have briefed their Hong Kong counterparts on the recent Singapore-NZ deal, and will now discuss a similar deal, freeing up trade in goods and services and liberalising investment flows between NZ and Hong Kong. Such an arrangement could help NZ businesses leapfrog into the Chinese market in the wake of its entry into the WTO.
China closer to WTO status
And China's 14-year quest to join the WTO has progressed suddenly, with tentative agreement reached on 2 of 11 tabled issues yesterday - tariff rates and anti-red tape measures. Two other areas also look close to resolution - intellectual property and monitoring of China's WTO commitments. But thorny issues remain over quantitative restrictions on imports, industrial subsidies, anti-dumping measures and farm subsidies.
Working holiday schemes approved
An official working holiday scheme with Hong Kong has been agreed, allowing 200 visas for young NZers to work in Hong Kong, with a review of the quota in two years. Hong Kong is particularly interested in young Kiwis able to work as English language teacher assistants. A working holiday scheme was agreed with Germany last week.
Conveyancing monopoly reaffirmed
NZ lawyers' monopoly on conveyancing has been bolstered again, by the High Court's ruling that only enrolled solicitors are entitled to do it. The way was opened for non-lawyers to practise conveyancing in NZ under the 1997 Trans Tasman Mutual Recognition Act (land broking is a recognised non-legal profession in Australia), but the NZ Law Society successfully argued this would allow the development of an unregulated system in NZ, through the back door of trans-Tasman mutual recognition. Despite the High Court ruling, the NZ government is expected to change the law next year to strip lawyers of the conveyancing monopoly anyway.
Export guarantee scheme shifts risk from businesses to taxpayers
The export credit guarantee scheme announced yesterday amounts to gambling taxpayers' money, says National's John Luxton. He says similar exercises in other OECD countries resulted in considerable losses to the taxpayer, and if insurance companies won't carry the risk of underwriting export initiatives, why should the taxpayer?
Mysterious employment increases in education
Employment is up strongly and unemployment has dropped to 5.9% in the latest household labour force survey, with 22,000 new jobs generated in the September quarter. But that figure includes 8,000 in the education sector, and given a total of about 120,000 in this sector, this represents an increase of around 7% within one quarter. As schools don't recruit at this time of year and universities are shedding labour, the question of what these 8,000 new jobs are is a mystery.
Aussie unions want restrictions on work hours
The Australian CTU is applying to have upper limits set on hours employees are expected to work. The ACTU wants a clause in Federal awards saying employees must not be required to work "unreasonable" hours.
Demand for IT workers reflected in US public pay rates
The US government is offering pay increases of up to 33% to IT workers in an attempt to compete with private sector rates of pay and stock options. Mediation freephone The Department of Labour has set up a help line for workplace problems, including a free mediation advice service - the number is 0800 800 863.
Commerce Commission wins in anti-competitive cases
The Commerce Commission's annual report tabled in Parliament yesterday showed it had won all its court cases in the last financial year, including a price-fixing case against petrol companies, a dominance case against Carter Holt Harvey Building Products regarding pricing of insulation products (being appealed), and a case against Aetna Health and Southern Cross Medical care regarding misrepresentation over the level of payment for some hospital operations.