Govt curries favour with farmers with climate change investments – but a collaborative strategy (don’t forget) led to Five Waters

Buzz from the Beehive

Governmental news for the farm and forestry sectors flowed too fast from the Beehive for your Point of Order team to quickly grasp all the implications.

At first blush, we are tempted to wonder if something that looks like good news for farmers has been deftly released to camouflage the not-so-good news buried in these announcements or in some yet to be released.

Many millions of dollars of government funding were among the goodies that might distract farmers from programmes designed to reduce their greenhouse gas emissions by reducing their output – and incomes.

The latest Beehive releases tell us the government is …

Expecting the newly launched  Climate Action Centre to help farmers to maintain their international edge

Prime Minister Jacinda Ardern and Minister for Agriculture, Damien O’Connor, launched the Centre for Climate Action on Agricultural Emissions alongside the primary sector partners today at Mystery Creek Fieldays.

 The bullet points emphasise

• New Climate Action Centre launched to support farmers reduce ag emissions through R&D investment
• 50:50 joint venture between Government and agribusiness to accelerate product development
• First Centre projects launched to get farmers the emissions reducing tools sooner
• Indicative funding commitment rising to $35 million per year by Joint venture partners, seeing at least $170 million invested over the next four years

BRYCE EDWARDS: Will the Govt act on mega bank profits and reform the banking sector?

Dr Bryce Edwards writes – 

The corporate retail banks are making mega profits on the back of Government policies and indirect subsidies of recent years. As a result, there are calls from across almost the whole political spectrum for greater regulation of the banking sector, including windfall taxes. But will outrage turn into action?

Prime Minister Jacinda Ardern led the charge against the banks this week, warning the likes of ANZ – which announced recently that its profits were up 20 per cent to a record $2.3b – that they are at risk of losing their “social license” to operate here.

The Prime Minister sounded tough, but she was also quick to admit that she has no intention of taking any action or changing the rules. The Finance Minister Grant Robertson was also fast to rule out any reforms or further investigations.

Critics have said that Ardern’s plea for the banks to have “self-reflection” is wishful thinking in the extreme. The Green Party’s finance spokesperson, Julie Ann Genter, put forward this analogy: “Expecting banks… to put people ahead of profit would be a bit like putting the fox in charge of the hen house.”

Government wants to make the Fuels Sector more resilient — but will this do it?

Having done nothing as the oil majors closed down the Marsden Point refinery, the Ardern government is now belatedly moving into the  market to ensure what it  calls  “supply  resilience”.

Energy and  Resources Minister Megan Woods says  she  wants “to strengthen NZ’s fuel sector” through a suite of initiatives to encourage more competition.

She doesn’t say why suddenly there should be a  need for more competition, but implicitly there is  criticism of the big petroleum companies for their high prices – as if  government taxation wasn’t taking  more out of motorists’ wallets than the actual cost of the petrol.

It’s  rather like  the Prime Minister saying bank profits are too high, while ignoring the government’s action in printing  money during the Covid pandemic to ensure so much cash sloshing around waiting to be banked.

New Zealand’s management of its strategic assets: just right or in need of recalibration (and in learning from Canberrra)?

This article has been contributed by CHRISTIAN NOVAK, who has undergraduate and postgraduate degrees in history from the University of Sydney.  He currently works for a Wellington based communications company. 

With the global economy already massively disrupted after two years of a global pandemic and now, high inflation, the Russia-Ukraine conflict demonstrates the need for sovereign governments to protect and manage their strategic assets – in this case, energy supply and the risks associated with them.

Amid soaring fuel prices and cost-of living pressures, the closure of our sole oil refinery at Marsden Point calls into question New Zealand’s approach to energy security. Considering the Government struck a deal with Rio Tinto to keep the Tiwai Point Aluminum Smelter open, it puts the spotlight on the government’s decision not to underwrite the refinery. This is because the smelter is not a ‘lifeline utility,’ as defined under New Zealand’s Civil Defence Emergency Management Act 2002.

Compare our policy on Marsden to Australia, which is subsidising its two oil refineries on both strategic and national security grounds. The question posed, therefore, is: how does our government view security of supply of a strategic resource?

Australia, like New Zealand, faced similar problems with its refineries – scale and distance, therefore cost.

Govt which barred small shops from trading early this year now wants shoppers to get a fair deal from supermarkets

The PM two years ago said her government would do it and – hurrah – today it became the stuff of an official announcement.  The competitiveness of supermarkets will be studied to see if Kiwis are getting a fair deal at the checkout counter.

The supermarkets to be studied – let’s note – are the same ones whose small-shop competitors were  nobbled by the Government and barred from trading during the The Great Covid Lockdown earlier this year.

News of the government’s decision to investigate supermarket competition was one of three items posted on The Beehive website since Point or Order last monitored what the PM and her team are doing.

The other items tell us:

• Masks must be worn on all public transport in Auckland and in and out of Auckland and on domestic flights throughout the country from Thursday.
• Tourism Minister Stuart Nash has delivered a speech to the Tourism Industry Aotearoa annual summit.

But let’s focus on the grocery business. 

Ministerial appointments monitor – jobs for the boys (and jobs for the girls, too)

The government makes appointments to 429 state sector boards and committees every year, according to Ethnic Communities Minister Jenny Salesa.

This gives Ministers several opportunities to wield power by making appointments or recommending them, creating a perception that appointments are a form of political patronage.

Ministers proudly announce an array of other appointments, such as judges and overseas envoys.

Point of Order’s weekly monitoring of Beehive press statements to learn who has been favoured by ministerial appointments in the past week shows this …

Economic health of NZ’s port sector is being brought into question

Significant questions are being raised about the economic efficiency and competitiveness of the port sector.

Reports this week of the  Commerce Commission receiving complaints  about  anti-competitive conduct   by  NZ   port companies  follow the  Office of the Auditor-General   writing to port company chairs and  CEOs to raise a raft of issues identified  in its annual audit of the  sector.

The  OAG  had  found  considerable  variation in port companies’ approach to valuations.

Others  involved in the industry are convinced  many ports  are  making  uneconomic  investment  decisions,  some  companies earning  less  than  2%   return on  equity.  They  back  the OAG   who  advised  port companies  to use   fair value, based on expected  cash flows to be  generated.

The  complaints to the Commerce  Commission have spurred  it to start a preliminary assessment of the conduct that is being questioned but it hasn’t embarked on a formal investigation. The  report  said a number of these complaints raised potential issues about various ports taking advantage of their market power in markets for the supply of services.

The national port network is also under review from legislators with the upper North Island supply chain study underpinning the government’s desire to integrate port, rail and road transport infrastructure.

While Ardern waits for a report on the fleecing of fuel consumers, perhaps these figures will help…

Point of Order, true, has already dealt with Prime Minister Jacinda Ardern’s bleating about New Zealanders being “fleeced“ by fuel companies.  But today we revisit the issue.

Ardern turned on the companies during a post-Cabinet press conference when discussing rapidly rising (and politically awkward) petrol prices.

She aimed to assure us not to worry – her government is on the case and will be stepping up plans to give the Commerce Commission new powers to investigate the villains.

She mentioned New Zealand having one of the lowest pre-tax fuel costs in the OECD in 2008. Ten years on, we have the highest.

No-one befogged by a flair for fancy footwork and cries of foul over fuel ‘fleecing’

PM Jacinda Ardern  reckons consumers are   being “fleeced”  at the petrol pump.  She  blames the big petrol  companies  and says the government  will  rush legislation  through Parliament.

To do what?   You guessed  it:  to gather data for another study.

She is aiming to get the  Commerce  Commission to  “investigate” the  margins  on  fuel  and  present a  report next year.

And where   will the  petrol  price   be  by then?   That’s  anybody’s guess,

But  given the  trend in   international  crude  oil prices, which  have risen  from  around  $US50  a  barrel  to  $US86  (for Brent crude)  in  the past  six months , a period in which the  NZ  dollar has fallen 12%  against the the US dollar , they’ll almost certainly  be  higher.