Reserve Bank governor Adrian Orr has a lot on his plate at present. He is battling to hose down prices which have been rising faster than they have done for 30 years, while at the same time “maximising” sustainable employment.
It’s a task none of his predecessors had to undertake. Finance Minister Grant Robertson widened his remit to include full employment, but probably didn’t expect the job being put to the test so soon.
And, of course, Robertson’s future as finance minister will hang in the balance, particularly if inflation is still raging when electors go the polls next year.
Ironically, too, it was the government’s decision for the printing of money by the Reserve Bank as the country returned to something like normal after the Covid lockdowns, which stoked the fires of inflation.
Some might see elements of Greek tragedy taking shape. Continue reading “RBNZ governor must curb inflationary pressures while keeping an eye on employment trends”
Deputy Prime Minister Grant Robertson had some fun last week at the expense of National leader Christopher Luxon for holidaying in Hawaii while a Facebook entry indicated he was in Te Puke.
This week Robertson is relishing the spectacle of the Commonwealth Games, and the achievements of New Zealand’s sports stars.
He may even succeed in forgetting, at least for a short while, the economic mess that is mounting in NZ – not that he will concede he has had anything to do with inflation breaking into a gold-medal-winning gallop on his watch.
Moreover, he keeps insisting it has already past its prime.
Only last week he was telling his acolytes in Parliament that while the government is acutely aware that many New Zealanders are doing it tough,
“… we are taking action to support them.
“We’ve boosted the incomes of seniors, students in low-income families, while a million New Zealanders are receiving the winter energy payment. From next Monday, the targeted cost of living payment will deliver around $27 a week for low and middle income New Zealanders aged 18 years and over who don’t get the winter energy payment.
“In response to high fuel prices, which have been significantly driven by the war in the Ukraine, we have cut the fuel excise duty and road-user charges and halved public transport costs. Continue reading “While our Finance Minister enjoys the Games, our living costs are high jumping and too many Kiwis are tripping on the hurdles”
“America’s next downturn may have a mild flavour—but a bitter aftertaste”. So ran a headline in The Economist.
Juxtapose that to New Zealand, and we could be served a double dose of the bitter aftertaste.
The problem here is that the authorities apparently didn’t see it coming and now, as it arrives, they could be slow out of the blocks in dealing with it.
Prime Minister Jacinda Ardern kept denying there was a cost-of-living “crisis”.
After its impact nevertheless could be seen to be hitting home, the Finance Minister tacked on to the budget some measures he hoped would assuage any pain being felt by New Zealanders — although the queues at foodbanks were already lengthening.
The latest food price index shows a 0.7% increase in food prices for the month of May. Food now costs 8.9% more than at the time of the last election and fruit and veges cost 16% more.
That has given Opposition parties a free hit at the expense of the governing party. Continue reading “Latest food price figures reinforce the economic-performance criticisms Opposition can fling at the Govt”
The Reserve Bank has raised the official cash rate to 2% – but will that slay the inflationary beast roaming the countryside.?
Point of Order doesn’t think so.
Reserve Bank governor Adrian Orr made the right belligerent noises as he fired the bullet today but he needed a fiscal -policy volley from Finance Minister Grant Robertson to demolish the monster.
Inflation, according to Robertson, is all due to overseas factors — the war in the Ukraine, supply chain congestion, China’s economic problems, you name it — but little has been done to contain it in the term of the Ardern government.
As Professor McCulloch pointed out in the NZ Herald with reference to a document signed off and “agreed by” the Finance Minister and Reserve Bank Governor, it says inflation in NZ is to be held at 1 to 3 percent over the medium term. Continue reading “Mortgage holders will wince as RBNZ takes another shot at bringing inflation back into the target zone”
Reserve Bank “not in a good place”, admits governor. This was the headline Radio NZ News ran over a report of RBNZ governor Adrian Orr speaking to an International Monetary Fund seminar.
He might have added that the average Kiwi consumer is “not in a good place”, either, when doing the daily shopping, with food costs soaring and inflation rising at a faster rate than it has for nearly 30 years.
But isn’t it Orr’s job to keep inflation under control – or can he pass the buck (as it shrinks in value) to the Monetary Policy Committee?
And whatever happened to the inflation target?
Orr does concede that the RBNZ was caught on the back foot, but argues that was the same for many other central banks, as a result of supply chain shocks and the Russian invasion of Ukraine, which had exacerbated inflation pressures.
Moreover, he contends the RBNZ had been “reasonably aggressive” in ending its bond-buying programme last year and moving to lift the official cash rate, and is also balancing risks. Continue reading “RBNZ on the back foot as inflation rises – but consumers are struggling on a sticky wicket, too, as food costs soar”
As Minister of Agriculture, Damien O’Connor has dipped into one of the troughs in his bailiwick to nurture a Maori sheep-milk enterprise. As Minister of Rural Affairs, he has declared a medium-scale adverse event in cyclone-battered bits of the North Island.
This declaration (he announced) enabled the government to dip into other troughs to provide support for farmers and growers hit by the storms.
For starters, a modest – almost trifling – sum of $200,000 was made available for local Rural Support Trusts and Mayoral Relief Funds to use to help recovery efforts in Taranaki, Wairarapa, and the Waitomo district.
Damien O’Connor popped up again to announce state support for Māori landowners to invest in New Zealand’s rapidly growing sheep milk industry.
“We are backing the Māori Agribusiness Sheep Milk Collective, which has ambitious goals to have multiple farms milking about 25,000 sheep and potentially employing more than 100 people by 2030,” Damien O’Connor said.
“Global demand for sheep milk and sheep milk products is booming. Exports of New Zealand sheep milk products were valued at $20 million in 2020.”
But if business is booming, why is government funding needed by the 20 collective Members, comprising Māori Land Trusts and Incorporations that own primary sector assets with a combined area of more than 24,000 hectares of land stretching from the western shore of Lake Taupō to the Hauraki Plains?
Continue reading “Baa humbug! Demand for sheep milk is “booming” but taxpayers are being milked to help a Maori collective invest in the industry”
If it’s true that Labour’s great run is now ending, Opposition parties should be vibrating with new-found confidence.
This may be the case with ACT, but so far there has been little sign of it in National. In fact judging by the volume of speculation about National’s leadership among the political cognoscenti in the weekend media, the inner circle of the party is stressed out over its leadership.
A party on top of its game certainly would be scoring some big hits. On the other hand it may be argued that the preoccupation with Covid has stifled interest in other political issues.
Still, as economic uncertainty deepens, and managing the Covid Delta variant exposes the government’s vulnerability, the country is looking again for something different, if only to measure accurately how the government is performing.
Beyond the leadership issue, the problem for National is that it does not speak to all elements of its base. It appears singularly out of tune with the regions and particularly with farmers, who are facing vocal lobby groups campaigning against what they call “dirty dairying”— never mind it is dairy export earnings that are sustaining the country’s balance of payments. Continue reading “Labour is giving opposition politicians plenty of issues to exploit as it is stalled by ‘an end-of-year fug’”
The clock is ticking on global warming, the Dominion-Post warned this week ahead of the Climate Change Summit in Glasgow.
The opening paragraph of the report was ominous:
“Even after countries — excluding NZ — unveiled ambitious new pledges to cut emissions, it’s still not enough to achieve the global of 1.5 degrees Celsius of climate warming, a new report found.”
The article points out that NZ has been notably absent from the burst of announcements that have been made, but suggests we may make our declaration in Glasgow.
It argues that, as a small economy, NZ’s nationally determined contributions (NDCs) will not sway the dial much.
But Green co-leader James Shaw, who is representing NZ at the conference, may find anything he says is not greeted with applause. NZ, like Australia, is regarded as a laggard on climate change. Continue reading “NZ has yet to announce climate-warming pledge for Glasgow summit but RBNZ is developing guidance for our finance sector”
The Ardern government may have been stirred, but it wasn’t shaken, by the nationwide protest by farmers last Friday. And no matter how far the protest may have turned heads in the rest of the population, it leaves farmers no further advanced in persuading ministers to modify or revise the policies which their action targeted.
So if ministers won’t back down on their environmental reforms or their climate change policies, where can the farmers go? Parade through Wellington to Parliament? Mount a 24-hour vigil in Parliament Grounds?
So far there has been silence from the originators of the Groundswell and if there is a new sense of unity in the rural regions, it has yet to be channelled into the kind of pressure that automatically achieves change.
Farmers may be disenchanted with being told how to farm, but the evidence of climate change has been rammed home in the provinces in recent days hard enough to convince churlish sceptics of the need for urgent climate action. Continue reading “Grimes’ grouches with the effects of govt policies on Kiwis’ wellbeing may sting more than the Groundswell protest”
The Labour government has floated skyward on a cloud of public adoration for many months now and, given the conviction of those who believe Jacinda Ardern can do no wrong, may do so for as long again.
On the other hand, harsh realities may be hitting home, at least in some households.
This week Statistics NZ reported consumer prices rose a massive 1.3% (quarter on quarter) in the June quarter. This was stronger than the expectation of a 0.9% lift (3.0% year on year).
Annual CPI inflation rose to 3.3%, breaking through the top of the Reserve Banks target band, and a post-2008 high.
ANZ Bank economists had one word for that: “Monstrous”. Continue reading “Rising prices raise the prospect of householders bringing Ardern down from the clouds of adoration”