The PM will return to a country where the flagging economy is running out of the resources it needs to grow

Prime Minister Jacinda Ardern will almost  certainly  have  earned  a  bounce  upwards  in  her party’s  polling after  her mission  in  Europe, where,  as a  result of  her  “Captain’s  Call”,  New Zealand  has  accepted  the  terms  of  the  EU free  trade  deal.

The  outcome is   positive  for  some  sectors, though  not for  the  dairy  and  meat  producers. NZ’s  negotiating team,  led   by  the  redoubtable  Vangelis Vitalis,  did  a  remarkable  job in securing  as  much  as  they  did,  but  the  disappointment  over  the  lack of  any  significant gains  for the  dairy  and  meat  industries   could have  justified  the  government  flagging  it  away.

If   the  plaudits  for  the  government  are somewhat muted, it’s on the  home  front that black   clouds   have been  gathering.

Those  may dull  the  homecoming  for  Ardern after she engages in more trade-related talks in Australia.  The  reports   on  the  economy awaiting her are  downbeat, if not chilling. Continue reading “The PM will return to a country where the flagging economy is running out of the resources it needs to grow”

The lessons NZ can learn from Australia to guide energy policy and keep prices down

As  consumers  receive their winter  power  bills,  many  are puzzled  and  some are incensed that they are  so  high.

There  is a  simple answer:  wholesale  prices are elevated (they have  been   very  high for  some time and reached $215 a  megawatt/hour last week).

And  there’s a  not-so-simple answer:

The  latter relates  to   New Zealand’s complicated  generating  system which –  to  the  casual  observer  looking at   the  power  stations – inspires admiration at  their  construction, as  for  example  on  the  Waikato river  or  at  Benmore in  the  south.

NZ’s system generates more  than 80 per cent of its power output  from renewable  sources, but under  the  Ardern  government  aims  to  get  to 100 per cent to  minimise  carbon emissions.

As  Australian consumers are  finding out, however, closing down fossil fuel plants,  and relying  on  renewable sources can send prices  soaring and  brings  another  set  of  headaches.

NZ has  relied on  the  Huntly power  station with its  fossil-fuelled  generators  as  a  back-up  to  its  renewable  system, but as long  ago as  2016 its  operator, Genesis,  signalled  the coal-fired generators would  be  phased out  by 2025. Continue reading “The lessons NZ can learn from Australia to guide energy policy and keep prices down”

Transport plan (with an affordability proviso) is announced for the capital – but don’t look too hard for the details

The  Ardern  government  has  done  it  again, announcing a  grandiose plan to reform Wellington’s  transport system. The plan  includes a long-overdue  duplicate Mt Victoria tunnel, a rearrangement  of  the road around the  Basin Reserve and a  light  rail operation from the  city  centre to the  south coast, all in  the  Let’s Get Wellington Moving project  at  an original  cost of $6.4bn, now put  at $7.4bn.

Fanciful?  It  is,  if  you  are looking  for  a  business case on (for example) the  light rail project.

The announcement included  this  proviso:

“If the light rail option was too expensive it would explore using buses instead”

So  why announce  it?

Could  it be  a fanfare in   the  wake of the declaration  earlier in the week that Labour MP Paul Eagle has  thrown his  hat in the  ring   to be  Mayor of  Wellington? Continue reading “Transport plan (with an affordability proviso) is announced for the capital – but don’t look too hard for the details”

Yes, the speed limit (on one stretch of our roads) has been lifted but Wood must do much more to rate with Bob Semple

Buzz from the Beehive

Transport  Minister Michael  Wood   has been  busy  beating   his drum  over  the  move  to lift  the  speed  limit on the Waikato Expressway to  110km/h, between Hampton Downs and Tamahere.

He  points  out that the Waikato Expressway is a key transport route for the Waikato region, connecting Auckland to the agricultural and business centres of the central North Island.  The features making it safer for travelling at higher speeds include having at least two lanes in each direction, a central median barrier, and no significant curves.

His press statement was among those to flow from the Beehive since Point of Order’s previous Buzz, including news of further support for Ukraine:

  • $4.5 million to provide Ukraine with additional non-lethal equipment and supplies such as medical kit for the Ukrainian Army
  • Deployments extended for New Zealand Defence Force (NZDF) intelligence, logistics and liaison officers in the UK, Germany, and Belgium
  • Secondment of a senior New Zealand military officer to support International Criminal Court (ICC) investigations, and additional funding to the ICC, including the Trust Fund for Victims.

Continue reading “Yes, the speed limit (on one stretch of our roads) has been lifted but Wood must do much more to rate with Bob Semple”

Oops – our well-being is likely to be bruised as NZ slips down international rankings and we slump on economic performance

For long  enough   New Zealanders  have liked  to  think  they  enjoyed  one of the highest living  standards in the  world. More recently those  familiar  with what  is  happening in those  countries  which are  leading the  world have  understood  NZ has  been  slipping  down  the  ladder.

Under  a  Labour-led  government,  the  slide  has  accelerated. Now   as  inflation  surges,  and  recession is looming on the  horizon, new  questions are   being  asked    about  the  economic  stewardship   of  the Ardern  government.

Has  too much  been  left  to  the  Finance  Minister  Grant  Robertson?  How   has  he  done   in  his   fiscal management?. Why  is  inflation  burning  so  fiercely? What  has  happened  with  his  concept  of  “well-being”?

One  of NZ’s  most experienced  economists, Bryce  Wilkinson, has  drawn attention to  the  latest  rankings of 63 of the world’s leading countries by the Swiss Institute for Management and Development (IMD).

Back in 2017, New Zealand ranked #16 – ahead of Australia at #21.

Five years later, New Zealand has fallen to #31, while Australia is ranked #19. Continue reading “Oops – our well-being is likely to be bruised as NZ slips down international rankings and we slump on economic performance”

Farmers start new dairy season on an encouraging note as Fonterra signals another record milk price

New  Zealand’s  dairy  industry, which is  proving  again it is  the  backbone of  the  country’s  export industries, has  been  given  fresh encouragement with the big  co-op Fonterra signalling  a  record  milk price for  the  season  that  has  just  opened.

It  comes  as the  payout  for  the  just-finished  season  stands  as  the  highest  since  the  co-op  was  formed in 2001.

So although farmers have  made  decisions for  this  season on  the  number  of  cows  they  are  milking,  they  have the  incentive  to go  hard on production  levels,  despite the  pressure  from  higher  costs  and worries  over climate changes measures, including  projected charges on emissions.

Fonterra’s buoyant  forecast contrasts with  a recent  report  by agribusiness banking specialist Rabobank  which  said that despite global milk production looking set to decrease for the fourth consecutive quarter in Q2 2022, weakening global demand is expected to create a scenario that will see moderate price declines in dairy commodities during the second half of the year. Continue reading “Farmers start new dairy season on an encouraging note as Fonterra signals another record milk price”

When all that money is being pumped into health (as the PM insists), we may wonder why the system is so badly strained

Opposition Leader  Christopher Luxon  has  shown  he  is  a  fast  learner.  Where   earlier  he  often ended  on  the  receiving  end  in exchanges  with  the  Prime Minister in Parliament, now  it  is the Prime  Minister who who can be seen back-pedalling,

Take,  for  example, pressures  in the  health  system  which are causing  so  much anguish  to  New Zealanders.

The  National Party  has  turned  the  spotlight on emergency departments which are facing high demand and staff shortages, with at least one district health board delaying planned surgeries for weeks.

Luxon  had  laid  the  groundwork  for his questions with  an earlier  statement that he would commit to delivering and improving health outcomes.

The government

“… confuses and conflates spending announcements with actually securing outcomes”, Luxon said.

“This government cannot get anything done, it doesn’t matter which portfolio you pick up, they’re actually spending more money, hiring more bureaucrats and getting worse outcomes.” Continue reading “When all that money is being pumped into health (as the PM insists), we may wonder why the system is so badly strained”

Poverty and pessimism – slump in consumer confidence brings more unpalatable news to Robertson and the Govt

When the  country’s  newspapers devote  their  cover  pages  to  advertisements  captioned “The  cost  living crisis”, it’s not something  that  makes palatable  reading  for  government ministers.

When the advertisements come from an organisation like Kidscan, appealing for donations “to make sure children in poverty get the food they urgently need this  winter”, those ministers may well choke on  their morning lattes.

Prime Minister Jacinda  Ardern  has  other  weighty  issues  on  her  mind – at least for now – as  she  prepares to fly off  to  Europe to  talk  trade  in  Brussels with the  EU and  security in  Madrid   with  NATO.

But  for deputy Prime  Minister Grant Robertson,  left  to  mind the  shop while she is away, the media’s highlighting of a cost-of-living crisis and the persistent challenge of child poverty could  dampen  his normally  cheery  optimism on  the  state  of  the  economy.

Yet  another  dampener would be the latest Westpac McDermott Miller Consumer Confidence Survey, which has  recorded the lowest reading on NZ consumer confidence since the survey began in 1988. Continue reading “Poverty and pessimism – slump in consumer confidence brings more unpalatable news to Robertson and the Govt”

PM says there’s not much to learn from by-elections – but Tauranga voters weren’t signalling an end to Labour’s slide in popularity

The  Tauranga by-election confirmed  Labour’s slide  in popularity, with  its  candidate,  the  newly promoted Cabinet minister Jan Tinetti, winning only 25%  of  the  vote, 14%  less  than  in 2020.

But Prime Minister Jacinda Ardern didn’t  see  it  that  way.  She  said  Tinetti received one of the better results the party has recorded in Tauranga in a number of decades.

In somewhat convoluted English, she further said:

“I think actually for by-elections, it’s very hard to read into them as someone who’s run in a by-election myself because it’s just simply not the same as in general elections, you don’t often have every party represented, so I’m not quick to read into individual outcomes.”

Tinetti came in with a very similar proportion of the vote to the support Labour received in Tauranga when it became the government in 2017, Ardern said.

But it was difficult to extrapolate too many lessons from by-elections, she said.

“Of course hearing from Jan and what she was hearing and experiencing, we listen to that in the same way as what we hear and experience with all of our MPs and every Tuesday we reflect on that in our caucus meeting.” Continue reading “PM says there’s not much to learn from by-elections – but Tauranga voters weren’t signalling an end to Labour’s slide in popularity”

Climate change, farming and (a timely reminder for decision-makers) the Paris Convention’s nod to the need for food

An earlier post  on Point  of  Order about farming and climate change attracted  some interesting  comments.  The  post  itself  contended  that in view of the world  facing  a  global food  shortage the government  should be  doing everything in its power  to lift  food production — and  not  imposing  taxes  on methane  emissions (in  other words  taxing the   burps on animals}.

In the  wake  of  posting our thoughts, Point of  Order  was reminded  that the  Paris  Convention on Climate  Change  in  2015 finished  with an agreement   where Article 2  read with these  key  lines:

Article 2
1. This Agreement, in enhancing the implementation of the Convention,
including its objective, aims to strengthen the global response to the threat of
climate change, in the context of sustainable development and efforts to eradicate poverty, including by :

(b) Increasing the ability to adapt to the adverse impacts of climate
change and foster climate resilience and low greenhouse gas emissions
development, in a manner that does not threaten food production.

Point  of  Order underlines  that last phrase and questions whether that element has  been  fully  considered  in  the  action   which is  now  being  canvassed  in NZ.

He Waka Eke Noa  has delivered its recommendations for pricing agricultural emissions, which in effect will  add  significantly  to the  costs of  food  production.The Government is expected to formally adopt these recommendations in December.

Because He Waka Eke Noa  has  11 partners from the rural industries,  it likely will  be  a  formality   for  the government  to  proceed  with those  recommendations, although the Climate  Change Commission  will have its  own  input   into  what  happens.

Keith Woodford,  a  former  Lincoln College professor, in an article  on the  issue posted by interest.co.nz, noted  the  debate  within HWEN  “went right down to the wire” before Federated Farmers agreed to add their logo.

 “Some of the other partners to the document were also less than happy, but the alternative of failing to come up with an agreement at all was even less palatable.Now it will be up to the Government, taking account of forthcoming advice from the Climate Change Commission (CCC), to make some calls as to the path forward”. 

As  Professor Woodford  put it:

“The Government does not have to accept the HWEN recommendations. Nor does it have to accept the advice of the CCC. But if it does not accept CCC advice, it is required by legislation to give reasons.

“My bet is that there will be robust discussions within Government. There are some within Government, including senior members, who understand very clearly that they must not destroy agriculture. But there are also elements within the Government who are fundamentally antagonistic to New Zealand agriculture as currently structured”.

He says one of the key reasons for antagonism towards New Zealand’s agricultural sector is a serious misunderstanding about the importance of primary industries in general, and pastoral agriculture in particular.

“This lack of understanding is fed by the crazy way that we measure the importance of the agricultural sector in New Zealand. This starts with the measure of GDP, whereby agriculture supposedly makes up in the order of five percent of the economy. 

This GDP measure is limited not only to what happens on-farm, ignoring everything before and past the farm gate, but it also includes only part of what happens on-farm…..The only way to understand the importance to New Zealand of the land-based primary industries is to look at exports. More than 80% of New Zealand’s merchandise exports come from the primary industries”.

Professor  Woodford says the ‘bottom line arising from this situation is that New Zealand has responsibilities to itself, and also to others – through the Paris Agreement – to protect food production.

‘‘However, that does not let New Zealand ‘off the hook’ from having to minimise greenhouse gas emissions whenever it can do so consistent with its food obligations’’.

As Cabinet Ministers  get  to  grips   with the  issue of methane   emissions, Point of Order wonders whether they  will  grasp  all  the  implications  of  what the outcomes  of  their  decisions  will be.   And  will  they understand and  recognise  the  meaning  of the Paris Agreement’s Article 2.1(b)?