So how does the housing boom end?

It’s an old adage that a speculative market collapses not when prices get crazy but when the last person who insists prices are crazy gives up in despair.  

Worth bearing in mind when London’s Financial Times tells us that the pandemic has fuelled “the broadest global house price boom in two decades”, even bigger than the one which preceded and helped trigger the 2008 global financial crisis, and which is understandably reviving concerns about financial stability.

Continue reading “So how does the housing boom end?”

Climate change just got cheaper – or maybe not …

Britain’s fiscal watchdog – the Office of Budget Responsibility (OBR) – has some good news.  It thinks the cost for the UK of getting to zero carbon could be much less than anticipated:  

While unmitigated climate change would spell disaster, the net fiscal costs of moving to net zero emissions by 2050 could be comparatively modest.”

Under its ‘early action scenario’ government net debt would rise by a mere 20% of GDP in the years to 2050 from the current 105%.  That almost seems encouraging when compared with the near-30% of GDP increase responding to the Covid pandemic , and the roughly 50% surge which followed the global financial crisis.

Continue reading “Climate change just got cheaper – or maybe not …”

Here’s hoping Transport Minister applies Transmission Gully lessons (and delays) to Light Rail project in Auckland

The Transmission Gully interim review has found serious flaws at the planning stage of the 27km highway, “undermining” the successful completion of the four-lane motorway north of Wellington, according to Infrastructure Minister Grant Robertson and Transport Minister Michael Wood.

Grant Robertson said the review found the public-private partnership (PPP) established under the last National government lacked the proper rigour and consideration.

The review was focused on how the project was awarded for the agreed price, whether the price was realistic, and whether the risks then identified were appropriately considered.

When  announcing  the  review  in  August last  year,  the  government said Transmission Gully would open by September 2021 but will cost another $208m to build, taking  the  cost  to $1.25bn.  Originally the  project’s  cost  was put  at $850m,   but Covid lockdowns  set it spiralling upwards.

At  that point in 2020 the government was  said  to have   “slammed” the delays and increased costs.

But hey – remember  that  Phil  Twyford  had   already  had  three  years as  Transport  Minister  to  expedite  the  project .  Yet all he  did was  order  a  review. Continue reading “Here’s hoping Transport Minister applies Transmission Gully lessons (and delays) to Light Rail project in Auckland”

Covid: everybody loses – at first

As we emerge from the Covid panic phase, you might think that the situation bears an increasing resemblance to the slow motion crises of the 1970s and 80s.

Recall the political economy big picture. The old system had had a good run.  Patterns were familiar and tools had developed to manage political pressures – a nudge here, a subsidy there, a few more jobs in state forests or on the railways, an occasional long-term policy artfully planted and left to mature.

But as growth slowed, economic pressures built and became unmanageable in the old framework.  Political confusion ensued: the slogans stopped working because the voters’ demands couldn’t be reconciled.

This suggests we need to figure out what people expect of government as a result of the Covid crisis – and how that might be orchestrated and channelled through the voting system.

Continue reading Covid: everybody loses – at first

Creativity blossoms in the shadow of the virus (with seed money from taxpayers who may not be aware of their generosity)

We have acknowledged on previous occasions that the Point of Order Trough Monitor was not calibrated to pick up every example of dubiously spent public money.

But when our monitor misses examples of eyebrow-raising grants, investments, loans and what-have-you, other monitors and watchdogs are on the job.  The Taxpayers’ Union for example.

The other day it drew attention to Creative NZ’s track record for funding some pretty odd art projects.

The Taxpayers’ Union has focused on the value of the Arts Continuity Grant, which it describes as a COVID-19 response fund which has so far paid out $16 million in grants to a variety of questionable short-term arts projects.

Many of the descriptions of the projects funded under this programme are described as “frankly, incomprehensible” and:

“It’s hard to see how bureaucrats in Creative NZ can make an objective judgment on which projects are worthy of funding, and which aren’t.

“The resulting handouts speak for themselves. Creative NZ is fighting COVID-19 by spending taxpayer money on plays about menstrual cycles, Māori ‘healing theatre’, and ‘Indigenised Hypno-soundscapes’. That’s madness and it reflects terribly on the Minister of Arts Culture and Heritage – who happens to be Jacinda Ardern.

“These grants are massively unfair to taxpayers, with the benefits skewed toward politically-connected Wellington weirdos. Handouts for fringe interest groups mean less money is available for tax relief that would reward productive work.”

Point of Order visited the Creative NZ website and learned that this continuity fund

“ … is offered to support a short-term arts project, or the stage of a project, that can be delivered within a changed and evolving environment as a result of COVID-19. Projects can include the creation and/or presentation of new work. Existing projects submitted to our suspended funds can be reframed and resubmitted. Applications will be accepted on a rolling basis with weekly decision-making.”

Sums up to $50,000 have been on offer. Continue reading “Creativity blossoms in the shadow of the virus (with seed money from taxpayers who may not be aware of their generosity)”

Covid news not bad; political and economic news not good

This far into the epidemic it’s interesting what we know and extraordinary what we don’t. Which is more significant: the knowledge or the ignorance?

So what is happening:

  • Daily cases in many European countries are rising sharply but recorded death and excess mortality rates are not – so far.
  • In the US, the daily case and death rates have been falling for two months, from a late summer bump.
  • And in Australia and New Zealand, we are seeing just how hard it is to eliminate the disease.

The data has lots of possible interpretations, which certainly helps if you’ve got a particular case to support.  But one piece of good news is that the fear factor is coming in at the lower end of expectations.

Continue reading “Covid news not bad; political and economic news not good”

Once known as “mother’s ruin”, it is made all over NZ – including Reefton (where there’s govt funding in the financial mix)

The West  Coast has been the focus of two lots of good news from the Beehive in the past 24 hours or so.

Prime Minister Jacinda Ardern and Associate Health Minister Peeni Henare officially opened Te Nikau Hospital and Health Centre in Greymouth and then turned the first sod at the Buller Health Centre site in Westport.

Meanwhile we learned the Reefton Distilling Company had been granted a loan of almost $1 million from the Provincial Growth Fund.

The loan was one of three newly announced spending and/or lending decisions:

  • Climate Change Minister James Shaw has allocated $50 million from the Clean Powered Public Service Fund to replace, or convert, coal boilers in schools with clean energy alternatives. He has named 18 schools in the latest batch to benefit from this funding.
  • The Reefton Distilling Co will receive a $928,000 Provincial Growth Fund loan to help move its distillery to bigger premises and buy the equipment it needs to expand operations.
  • Te Komanga Marae Trust has received more than $1.54 million to restore and enhance the native flora on the Kōwhairoa Peninsula Historic Reserve at the entrance of Whangaroa Harbour.

Being fond of a good gin, the team at Point of Order has kept on eye on the West Coast distillery since late in 2017 when we read:

A new business is looking to turn pure West Coast rainwater into gin, liqueurs and eventually whisky.

Reefton Distilling Co. will open its doors next year in the West Coast town that shares its name, co-founders Patsy Bass and Sean Whitaker said.

Six people would be employed, including the co-founders, in the first 12 months of operations.

In February 2018 the news was that Reefton Distilling Co had passed the minimum target for its current capital raising and co-founder Patsy Bass hoped it would  hit $1.5m by the time it closed later that month.

An update earlier this year was headed Reefton Distilling Co reaches $2m investment target

A West Coast distillery has raised more than $2 million to expand its Little Biddy Gin operation. 

Reefton Distilling Co reached its first target of $2m within two weeks of releasing its public investment offer. 

The company opened in October 2018 and scooped six awards in its first six months. 

Founder and managing director Patsy Bass said securing the minimum $2m of equity investment now provided the company with access to several debt financing options to expand the business and build new premises. 

 At that time the company had applied to Development West Coast for $1.85m of commercial finance to fund land, buildings and fit out costs.

The business had quickly outgrown its current space and had new premises under contract, with due diligence nearing completion.

According to the report which advised us of these developments:

Bass said the new site would allow Reefton Distilling Co to employ up to 50 people and expand its range of products, including its much-awaited Moonlight Creek Whisky.

And now the government is in for a dram or two of the action.

Rural Communities Minister Damien O’Connor and Regional Economic Development Minister Shane Jones have announced the company will receive a $928,000 Provincial Growth Fund loan to help move its distillery to larger premises and buy the equipment it needs to expand operations.

Shane Jones said the craft distillery was growing rapidly.

“The distilling company began operating only two years ago but it is already proving hugely successful, so much so that it has outgrown its existing premises.

“Demand for the distillery’s international award-winning products is increasing and the $1.86 million expansion project will allow it to keep up with that demand, grow production and host more tourists,” Shane Jones said.

O’Connor said the relocation and fitout of the distillery would provide local construction jobs and significant spending in the region. Construction work is expected to be completed in the first quarter of 2021.

“The expansion has created another seven to eight fulltime jobs, with more expected to be created in early 2021, in addition to existing fulltime permanent staff and casual workers.”

The new development will also provide education and training opportunities for youth through part-time employment, work experience and internship programmes.

Oh – and let’s not forget the environmental benefits.

Shane Jones said the Reefton Distilling Co was also increasing its environmental sustainability.

“The distillery is already working with the Department of Conservation to grow its sustainable use of native botanicals to flavour spirits, as well as collecting rainwater, considering solar energy and using a bio-mass boiler to power its stills.”

The gin business is booming, of course, and we are sure the 50 or so other distillers will be heartened to know where to go if they need a financial tonic.

Once upon a time the stuff they are producing was known as Mother’s Ruin,  although we are sure all of the Kiwi products are of a hugely superior quality.  We are willing to put this confidence to a taste test and are contemplating an application to the PGF for the money we would need to conduct the first Point of Order quality trial.

Latest from the Beehive

 25 SEPTEMBER 2020

Tuvalu Language Week theme promotes community resilience in the face of COVID-19

The Minister for Pacific Peoples, Aupito William Sio says the 2020 Tuvalu Language Week theme of “Fakatili Te Kiloga Fou” which means “Navigating

International sport back up and running in New Zealand

The Government is welcoming today’s announcement that the West Indies and Pakistan cricket teams will tour New Zealand

Better health care for West Coasters as Te Nikau Hospital officially opened

The Government has delivered a new hospital for Greymouth and is starting work on a much needed new health centre in Westport, ensuring local communities will benefit from better access to high quality integrated health services.

Government backing local with PGF loan

A West Coast distillery will benefit from a Provincial Growth Fund investment that will enable it to expand its operations and create jobs in the town of Reefton, Rural Communities Minister Damien O’Connor and Regional Economic Development Minister Shane Jones have announced.

 24 SEPTEMBER 2020

Primary sector exports and jobs up again

Primary sector exports and jobs are up again, demonstrating the sector’s underlying strength amid the COVID-19 global pandemic and US-China trade war, and supporting New Zealand’s economic recovery.

 Clean energy future for more schools

Schools across Aotearoa New Zealand will be supported by the Government to upgrade to run on clean energy, the Minister for Climate Change James Shaw announced today.

$4bn hole in National’s fiscal programme raises questions about Treasury’s data-checking role and independent monitoring

Speaking as Labour’s Finance spokesperson, rather than Minister of Finance, Grant Robertson was quick to crow about the discovery of “a basic error” which left a $4 billion gap in National’s economic plan.

“If National can’t even do the basics required on their own policy costings, they cannot be trusted to run the country. Making mistakes like this have real world consequences that New Zealand does not need in this challenging time in our history.”

Robertson was harking back to an announcement a few days earlier, when (he gloated)

“ … National threw out a desperate economic policy that included $4.7 billion of tax cuts that would give Judith Collins $4,000 at a time when New Zealand needs to be investing in services like health and education for our future.” 

This is  a tad puzzling, prompting a question we sent to the people who despatched the press statement:  giving Judith Collins $4000 of what?  We await a response.  Continue reading “$4bn hole in National’s fiscal programme raises questions about Treasury’s data-checking role and independent monitoring”

Fingers crossed about the border being made Covid-tight but let’s salute the further assault on Taumurunui’s housing shortage

Our daily check with the Beehive website revealed nothing new until this afternoon, and then we found just one new announcement.

It came from – guess who?

Yep.  Shane Jones was again demonstrating his munificence, providing $7.78 million for the Ruapehu District Council to “jump-start” its Housing Options programme.

But a statement with much greater national significance had been made by Housing Minister Megan Woods and despatched to the Point of  Order  email intray.

Woods advised us the government is reducing its reliance on private security guards and increasing its use of Defence Force personnel, especially in the highest risk facilities, to fortify the Managed Isolation and Quarantine System and maritime border and further bolster (we hope) protections against community COVID-19 spread.    

The defence personnel will staff higher-risk security areas such as entry and exit points and public areas.

But the private sector isn’t being forsaken. Woods said:

Continue reading “Fingers crossed about the border being made Covid-tight but let’s salute the further assault on Taumurunui’s housing shortage”

Jones mucks in with a $19.5m loan to help with the mushrooming of a Te Mata company

Commercial mushroom growers can be a feisty bunch, a Newsroom report in 2017 suggests. We wonder, therefore, how rival companies will respond to the Government’s favouring one of their number with a $19.5 million loan to increase its production (to their detriment in the marketplace, we imagine).

In a report which dealt with an industry row over the importing of plant manure from Europe that contained traces of horse and chicken poo, Newsroom observed:

The deeper you dig into this murky world of manure, the more you find a tale of intrigue involving anti-competitive behaviour, a government department under threat of a judicial review now dragging its heels on an import licence it’s already granted and revoked,  job losses, and worse – production stalled on tonnes of high-quality super-food vegetables that could drive mushroom prices down and become a thriving export industry. But there is also a deep-seated fear from a wide range of New Zealand farmers and food producers who know that it doesn’t take much of a bio-security slip-up to devastate an industry. 

Mercer Mushrooms was importing substrate – or mushroom compost – from The Netherlands. To get the substrate into New Zealand Mercer had persuaded the Ministry for Primary Industries to re-write the import laws on this product.

Continue reading “Jones mucks in with a $19.5m loan to help with the mushrooming of a Te Mata company”