NZ | Economy Thread

[Neitzsche]

Originally Posted by Kane007

Looks a lot like Trickledown Economics or Reaganomics at work. Definately works well in Australia, just take a look at the Aboriginal situation or Cabramatta or The Block in Redfern.

Yep if Bill Gates earns another US$10 billion this year then that definately means the US GDP per capita just increased a further US$33!

Exactly - you know what they say. Lie dam lies and statistics. I haven't a shadow of a doubt that Oz is the richer country, what I'm interested in is how the money is spread around.

To be honest I'm rather worried about the Oz economy. Whilst the mineral resources will always be a source of income there are more than a few things that bode as ominous signs. First up there were reports that the current drought and El nino weather pattern this summer will knock about 10 billion NZ$ out of the economy - further damage to an already suffering rural sector. Secondly, and climate related again is the lack of water. A friend was over from Brissy the other day and told me how the local government is asking farmers to stop farming for a year to allow the water to be used in the cities. That screams desperate measures to me - and its experiencing such huge population growth rates. As a clever chap once said "things that can't go on forever don't". Add to that the likelyhood of increasingly expensive oil (fertiliser). I know a few of my ozzie mates are worried but in general across the ditch it seems very much like 'she'll be right mate'. And at a time when these climate conditions are only getting worse. I'd be pretty stressed. Again thoughts anyone?

[Kane007]

Yep! Solar, wind, wave, tidal or nuclear generated water desalination plants along the coasts!

Or if cheaper, water pipelines from South Islands West Coast - bonus we could charge something like bottled water - US$234 a barrel (DISCOUNTED FOR OUR AUSSIE MATES). Though the price could jump for any bad mouthing!

Water could be the new black gold of the 21st Century.

[Neitzsche]

I know of the one desalination plant being built in Sydney - so they are making plans? I do know there is a lot of resistance to the use of the euphamistically labeled 'grey water'. Mmm, yum. I think i'd go with the South Island pipeline thanks.

[Kane007]

Grey water, whats the problem, astronauts on the space stration drink loads of it!

Yeh the pipline I like too. But why hasn't the government built one across to Canterbury yet to relieve its water issues? But maybe the problem there is nothing compared to Aus.

[OverseasKiwi]

Originally Posted by Neitzsche

Exactly - you know what they say. Lie dam lies and statistics. I haven't a shadow of a doubt that Oz is the richer country, what I'm interested in is how the money is spread around.

To be honest I'm rather worried about the Oz economy. Whilst the mineral resources will always be a source of income there are more than a few things that bode as ominous signs. First up there were reports that the current drought and El nino weather pattern this summer will knock about 10 billion NZ$ out of the economy - further damage to an already suffering rural sector. Secondly, and climate related again is the lack of water. A friend was over from Brissy the other day and told me how the local government is asking farmers to stop farming for a year to allow the water to be used in the cities. That screams desperate measures to me - and its experiencing such huge population growth rates. As a clever chap once said "things that can't go on forever don't". Add to that the likelyhood of increasingly expensive oil (fertiliser). I know a few of my ozzie mates are worried but in general across the ditch it seems very much like 'she'll be right mate'. And at a time when these climate conditions are only getting worse. I'd be pretty stressed. Again thoughts anyone?

Having just moved to australia from the UK (Mum moved there from when we were in Spain, WHY you ask? i have no freaking idea, still slightly pissed at the decision...and since i'm only doing a Masters next year might as well check out aus )
Farmers here in Aussie are probably going to be compensated with 700million package deal from the Aussie govt. Remember they have an anual GDP of roughly around 650billion AUD. So i was quite suprised at how small that package is. There is drought yes, but here in Australia in the news they dont seem to worried about it. They are more worried about the Ashes it seems (silly buggers) and are plotting on how to beat us in sports (unfortunately Netball and Rleague arent going our way grrrr)

Problems with the aus economy? yes. $10billion NZD off? small change. Thats only knocking off 0.7% growth. The slack will be taken up by the new increases in prices of commodities. Their job data just came out, they have the lowest unemployment in a generation. An extremely strong job market which is putting inflationary pressure on the economy thus the Governor of their Central Bank has indicated another rate rise. Forecast more strong growth due to more ties with ASEAN countries.

The conservative party here have pleaded not to do so, to protect their poor oh so poor farmers (their voter base of course) and of course they do so without putting any thought on what would happen to the rest of the economy if inflation spiralled out of control. (commodities become penny to the pound for overseas buyers, and australians can't then afford to import) argh how i detest agriculturally based parties. if i had the chance i'd shoot all the ministers in europe who push farm subsidies f******s

[OverseasKiwi]

Originally Posted by Marky Mark

Would like to see some more figures myself ............Overseaskiwi ? the statement " you can buy more for the same amount of Cash " in Aussie , do you have the figures there ?
Being in the housing / building market in Melbourne , we deal with alot of immigrants , mainly from the UK lately , we have had several sales fall through recently , from immigrants deciding to return home , they say the only item that Australia lived up to , was plenty of sunshine LOL their promised income , wasn't what was promised { included a large proportion of super , that they don't see until in a wheelchair } and alot of other items thrown in to make the package attractive , but wasn't actually cash in hand ....
Actually thats a good point , most Salary Packages here include a chunk of super which is compulsary , say mine as an example 12 % , its a good thing I guess , but its not cash in hand until retirement .

Thats what the PPP adjustment is for. Purchasing Power Parity. The GDP of all the countries are compared to a common Index (or a common basket of goods if you will) To which then their exchange rates and GDP are adjusted to a common factor. The actual GDP/per C may be higher or lower. Using china for instance, they have a low actual GDP per capita (USD) but when adjust for PPP its shoots up by about 20-25%. I can include figures if you want.


Neitzsche. You are correct about NZ being stronger in the 70's. Then because about 70% of trade was to the UK, when they joined the eurozone and barriers shot up, nz hit a recession. Include the fact that there was the oil shock then as well, its was a bad time for NZ. But the same was true for australia. They had a smaller % of their trade to the Uk (about 50%) but it was still a large shock. Yes their mining operations are strong, but low commodity prices in the early 90's and late 80's (aftershocks of the oil hit) did not help them.
The difference between us and the australians are basically size. They have resources that they can sell whilst we dont. The level of internal inequality in NZ and Aus are more or less the same (wage wise, is this what you meant?) but makes no difference. The average wage in australia is still higher then New Zealand.

Becuase of their size, they can build the infrastructure which we cannot, giving them more of an edge. You will notice that the larger countries always do well (bar India but they probably did the biggest economic meltdown in the world in '91, only themselves to blame. ) But basically size = more resources, labour, etc etc. There are a whole lot of other factors(ie good policies, good governence). Basically new zealand in order to compete concentrates on Niche markets, which we excell at. Bio-tech, wine industry, tourism. You will notice that we dont have any large scale manufacturing plants, ie automotive, electronics. We just dont have the scale economies to manage it. Whilst Australia does.




The problem with the income part is that Aus is experiencing an extremely competitive job market, as i've mentioned above. I'm afraid that the recent influx of immigrants from NZ and elsewhere is giving employers more power to dictate wage levels. And of course, for them the lower, the better.

[KIWIKAAS]

Originally Posted by Neitzsche

Could anyone correct me on this? I was having a chat to a mate about the difference in GDP per capita, something NZ enjoyed a higher level of until the 70's when mother England joined the Euro common market. He explained as such - While part of the reason was OZ being quick at establishing other trading links the main reason for the higher GDP is the mineral industry. Apparently the extra money brought into the country by mining operations equates to a similar amount to the difference in GDP per capita and almost a quater of OZ's wealth comes out of WA. Because the wealth comes in from concentrated industries it doesn't trickle down to all areas of the economy - hence the wage gap isn't as bad as some statistics make out. Kindda makes sense but not my forte. Thoughts anyone?

As far as I know NZ and Austr jostled for possition within the top 5 at that time. Austr was generally the wealthier but NZ had better infrastructure (for instance many suburbs in Australian cities has no sewerage systems in the 1970s! It is unthinkable to NZers that suburban houses had outhouses with septic tank collection in the 1970s .).

But unfortunately NZ enjoyed a 1st world standard of living in the 1950s and 60s with what was basically a 3rd world style economy. It was doomed to fail eventually and with the UKs entrance to the Common Market NZ's fate was sealed (despite guarantees at the time from the UK govt that nothing would change).

[Kane007]

Originally Posted by OverseasKiwi

Thats what the PPP adjustment is for. Purchasing Power Parity. The GDP of all the countries are compared to a common Index (or a common basket of goods if you will) To which then their exchange rates and GDP are adjusted to a common factor. The actual GDP/per C may be higher or lower. Using china for instance, they have a low actual GDP per capita (USD) but when adjust for PPP its shoots up by about 20-25%. I can include figures if you want.


Neitzsche. You are correct about NZ being stronger in the 70's. Then because about 70% of trade was to the UK, when they joined the eurozone and barriers shot up, nz hit a recession. Include the fact that there was the oil shock then as well, its was a bad time for NZ. But the same was true for australia. They had a smaller % of their trade to the Uk (about 50%) but it was still a large shock. Yes their mining operations are strong, but low commodity prices in the early 90's and late 80's (aftershocks of the oil hit) did not help them.
The difference between us and the australians are basically size. They have resources that they can sell whilst we dont. The level of internal inequality in NZ and Aus are more or less the same (wage wise, is this what you meant?) but makes no difference. The average wage in australia is still higher then New Zealand.

Becuase of their size, they can build the infrastructure which we cannot, giving them more of an edge. You will notice that the larger countries always do well (bar India but they probably did the biggest economic meltdown in the world in '91, only themselves to blame. ) But basically size = more resources, labour, etc etc. There are a whole lot of other factors(ie good policies, good governence). Basically new zealand in order to compete concentrates on Niche markets, which we excell at. Bio-tech, wine industry, tourism. You will notice that we dont have any large scale manufacturing plants, ie automotive, electronics. We just dont have the scale economies to manage it. Whilst Australia does.




The problem with the income part is that Aus is experiencing an extremely competitive job market, as i've mentioned above. I'm afraid that the recent influx of immigrants from NZ and elsewhere is giving employers more power to dictate wage levels. And of course, for them the lower, the better.

Yes I agree, we'll never bet economies of scale, its just the nature of the beast. 20 million Aussies v 4 million kiwis is sort of like the Aussies trying to compete with 300 million Americans! P.S. you can actually watch the clock growing every few seconds as it races to the 300 mill mark - last I looked it was 4500 off, increasing at 1 every 5 seconds, so in about 6 hours the Americans are going to hit the 300 million mark.

Anyways, Indias' on the rebound, catching up with China ASAP!

I prefer using the Big Mac Index but each to their own.

As at 2006/03/25 NZs PPP was 1.44, and Australias 1.05. Whats really eye catching is the other selected countries PPP.

[dubious]

What a defeatist attitude by everyone above. Sheesh no wonder NZ is quickly slipping behind in world standards if most people have the mindset that "it's all too hard".

The size of a country's population will most likely have an effect on its GDP, but not GDP per capita. 8 out of the top ten countries for per capita GDP have populations less than 10 million. Luxembourg at the top of the list with a pop of just 465,000 has a per capita GDP which is $27,500 more than Norway in 2nd place.

The main difference between NZ and Australia is their desire to succeed. Australians consider their country the best in the world, and want to keep it that way through innovation and constant development. On the world stage NZ shies away from attention and is more than happy to settle for less. It's refected by this current government which believes that where we are now is the best NZ can get. We'll think of every excuse imaginable to avoid doing something that might change the status quo, and only implement something if the lack of doing so is already having a negative affect on people's lives (eg. Auckland roads/ public transport).

[SYDNEY]

NZ a land of coffee-loving beachgoers

Thursday October 19, 2006

New Zealand is a nation of great hostels and plucky, tolerant, coffee-loving beachgoers, according to the latest edition of tourist guidebook The Rough Guide.

Wellington received especially glowing reviews, being described as the country's most exciting city. Despite being buffeted by Cook Strait winds most days, the compact city was easily walkable and had a buzzing arts scene. Its "big heart" and sophisticated cafe society made up for its small size, the authors said.

Although often regarded by visitors as being chiefly a transit hub, Auckland had a beautiful harbour and warm weather. Prim wooden villas with big gardens created a small-town feel beyond the glitzy city centre. Karangahape Rd got a special mention for its trendy cafes.

Christchurch was a relaxed city where parks and gardens rubbed shoulders with gothic architecture, according to The Rough Guide. However, its Englishness was largely skin-deep, the book said, and in recent years the city had acquired a "youthful, bohemian edge".

Dunedin, meanwhile, was "darkly attractive", with iconic architecture crafted from local stone. Its green, tree-filled Octagon drew praise, and the authors suggested tourists visit during Otago University's term-time, when local nightlife took off.

The Rough Guide, scheduled for release next week, had few pointed comments of the sort that appeared in the Lonely Planet handbook released last month. The Lonely Planet authors described Bluff as shabby and Kaitaia as crawling with thieves, while most of Central Otago's small towns were dismissed as having little to offer.

The Rough Guide was gentler in its criticism. Whangarei was "a bit disappointing", while Akaroa was attractive but twee, and New Zealand's growing sophistication (This is very true, I have noticed this in the last couple of months, especially in Auckland) seemed to have passed Westport by. Other towns fared better. Nelson was beguiling and "supremely placed" among beaches and national parks, while Cambridge was peaceful, understated and attractive in a rural way.

The authors pointed out that people hoping to see elves and wizards roaming countryside dotted with stone fortresses would be in for a shock. Kiwi food and drink in general got a resounding thumbs-up, with the authors recommending local favourites including cervena, feijoas, hot dogs and lamingtons.

Budget accommodation was also singled out as being particularly impressive. "New Zealand has pioneered the backpacker hostel. Found all over the country, hostels offer superb value to travellers. Wherever you stay, you can expect unstinting hospitality and a truckload of valuable advice."

Furthermore, New Zealanders liked to think of themselves as tolerant and open-minded people, and foreigners were generally welcomed with open arms. Holidays were a major part of the relaxed New Zealand lifestyle, the book said, so perhaps it's no wonder locals did such a good job as hosts. "Kiwis identify strongly with the land, and perhaps even more so with the sea. During summer large swathes of the population decamp from the town and cities to baches or camping spots by the beach."

The country's rugged beginnings also played a big part in shaping the national psyche. "At its core the Kiwi personality is rooted in the desire to make a better life in a unique and sometimes unaccommodating land. New Zealanders are inordinately fond of stories of plucky Kiwis overcoming great odds."


SO THEY LIKE US (A selection of comments from the Rough Guide travel handbook):

Landscape

Despite its diminutive size, New Zealand packs in an enormous diversity: unspoiled sub-tropical forests, rich volcanic basins, boiling mud pools and geysers, intricate and rugged coastlines with golden sand beaches and spectacular alpine regions.

Race relations

In theory, biculturalism gives equal status to the beliefs and values of Maori and Pakeha with distinct but complementary systems for things like health care and education. Such measures have detractors - some see it as pointless tokenism, while radicals see it as going nowhere near enough. While acknowledging its faults, most people are proud of their country's race relations.

Media

Travellers are always griping about low TV standards but, while much prime-time viewing is unashamedly populist, there is high-quality stuff out there. All the main papers are politically fairly neutral [but] newspaper journalists get little scope for imaginative or investigative journalism.

Sport

If God were a rugby coach almost every Kiwi would be a religious fundamentalist. Newspapers and TV news often give prominence to sport, and entire radio stations are devoted to sports talkback, usually dwelling on the occasions when Kiwi underdogs have overcome better-funded teams from more populous nations.

Sir Edmund Hillary

He embodies the qualities Kiwis hold most dear: Hard-working, straight-talking and, most of all, modest. As he said on his return from [conquering Everest]: "Well George, we knocked the bastard off." That's what gets your face on every $5 note in the country.

Kea

These kleptomaniac parrots can be persistent and frequently grab sandwiches from inattentive lunching walkers. Trampers have been known to wake up to a clinically dismembered rucksack or, in more extreme cases, a semi-digested tent.

Nuclear power

For decades, no one dared suggest New Zealand should invest in nuclear power. But the power pinch and the need to follow Kyoto commitments is beginning to change that. It would take a brave Government to take the first step but the nuclear option is no longer a total no-go.

Speech

Throughout the country, Kiwis add an upward inflection to statements, making them sound like questions; most are not and, to highlight those that are, some add the interrogative "eh?" to the end of the sentence, a trait most evident in the North Island, especially among Maori.

WHAT DID THEY SAY ABOUT YOUR TOWN ?

Hamilton:
Most visitors pass straight through Hamilton but it's a pretty enough place, well-sited on the banks of the Waikato River.

Gisborne:
Not overly endowed with attractions but its relaxed pace and easy-going vibe make it gently appealing.

Rotorua:
No amount of bad odour will keep visitors away from this small, ordered city, with its origins firmly rooted in tourism.

Taupo:
This unobtrusive resort town attracts Kiwi and foreign tourists alike, the latter increasingly due to its skydiving.

Napier:
A Mediterranean climate and a population barely touching 50,000 make it an easy place to warm to.

Blenheim:
A sleepy service town surrounded by some of the most highly regarded vineyards in the land.

Queenstown:
There is no doubt it is one of the most commercialised resorts but remains an idyllic spot, attractively set beside Lake Wakatipu.

Invercargill:
Sprawling over an exposed expanse of flat land, the monotony is relieved by huge parks and friendly people.

[Kane007]

Yes, read this morning in the NZ Herald also. Atleast we are finally being credited for more than just our landscape and rugby. Yes I agree we are getting really good with our coffees.

That bit about hot dogs was just perfect. You know in my travels arround the world I've allways used my hotdog scale to judge a location. Americans and Canadians make the best but the Poms and frogs have absolutely no idea. Brought a dog outside big ben and it only consisited of the bun, sausage (not that good) and tomotoe sauce - no onion, cheeses, gherkins, mustards, nothing! Actually very poor.

I know, its sad that I judge a society on their ability to produce a good hot dog!

[Davee]

Speech

Throughout the country, Kiwis add an upward inflection to statements, making them sound like questions; most are not and, to highlight those that are, some add the interrogative "eh?" to the end of the sentence, a trait most evident in the North Island, especially among Maori.


This is so true - I'm working with a visiting colleage from Dunedin here in the UK - and the inflection in his speach is increadable. Folk find it rather strange - I find it funny - Why Australians and Kiwi's do it, I don't know

[Kane007]

southerners are more noticable thant the rest of NZers. Sort of like Victorian accents v Queenslanders!

[Davee]

"eh" up north

and

"rrr" down south

[Kane007]

International visitor numbers are continuing to rise. 2006/10/21

Figures for September show the number of visitors to New Zealand last month up 1.7 percent on last year.

Visitors from China and Korea showed the strongest growth, both up by about 30-percent. The UK and US markets both showed growth of just under 2 percent, however, the number of Australian visitors has fallen away by 1.8 percent.

Tourism New Zealand chief executive George Hickton says there are mitigating factors that have had an impact on the Australian market in September. He says there was a 7.5 percent increase in Australian visitors in 2005, due to a large number of conferences and rugby's Bledisloe Cup.

Mr Hickton says this year has also seen some Australian school holidays change months.

[SYDNEY]

Forbes Lavishes Praise On NZ

25/10/2006

United States business magazine Forbes has praised New Zealand as an investment destination, arguing against Kiwis' opinion of their country as small and isolated. In an opinion piece, Barclay Partners Asset Management president William Buechler said he was surprised at a pervasive lack of optimism and confidence among New Zealanders, despite the "unfailingly bright and motivated" business men and women he met on a recent visit.

The country was a democratic, largely self-reliant, law-abiding society, with an investor- and business-friendly legal environment, and a high-yielding but undervalued, under-owned and under-appreciated stock market, Mr Buechler said. New Zealand was not small compared with Ireland or Israel, examples of strong economies built out of the technology revolution, nor isolated in a technology-driven world.

Downsides include the currency risk, and concern that political leaders "may misunderstand the needs of maintaining efficient capital markets while failing to grasp that strong economies generally go hand-in-hand with strong capital markets". "As for leadership and vision, the Kiwis have it, although getting everyone to share that vision will be the next progressive step for them," he said. While it was not easy for an outsider to grasp the nuances of investing in New Zealand, Mr Buechler said returns from Telecom and the NZ stock exchange's index-related funds were good.

"As other investors from around the world realize the opportunities and advantages of investing in New Zealand, new money from these outside investors - both retail and institutional - will flow to New Zealand in amounts well beyond anything experienced in the past and will serve as the catalyst that jumpstarts an economic boom in New Zealand that will simply defy current expectations," he wrote. Only three New Zealanders feature in the magazine's list of worldwide billionaires - brothers Richard and Christopher Chandler at 382 with a net worth of $US2 billion ($NZ3.05 billion), and Graeme Hart at 451 on $US1.7 billion.

[Melburnian_in_sydney]

Hi Guys,

Didn't think this was worthy of posting a new thread so decided to ask my question here.

Does anyone recommend any books on New Zealand Foreign Policy?

Half through my thesis and needing some FP books with an NZ perspective.

Cheers,

[Neitzsche]

Originally Posted by Melburnian_in_sydney

Hi Guys,

Didn't think this was worthy of posting a new thread so decided to ask my question here.

Does anyone recommend any books on New Zealand Foreign Policy?

Half through my thesis and needing some FP books with an NZ perspective.

Cheers,

Can't think of any books off the top of my head but I can prob suggest some articles that may be of use. What's your thesis on?

[Melburnian_in_sydney]

In not so many words it's about 'The validity and legitimacy of the multilateral trading system and the effect of the increasing prevalence of bilateral preferential trading agreements.'

Already exhausted the Australian POV on the topic so was looking for other perspectives.

[SYDNEY]

No change in official cash rate

9.05am Thursday October 26, 2006

Home owners, businesses, and unions can breath easier today after Reserve Bank governor Alan Bollard left the Official Cash Rate (OCR) unchanged at 7.25 per cent. In his regular six-weekly review of the OCR, Dr Bollard said: "The balance of inflation risks remains skewed to the upside."

The announcement caused the NZ dollar to fall against its US counterpart to US65.74c immediately afterwards. Against the Australian dollar the kiwi dropped from A86.85c to A86.42c. A slim majority of economists had expected Dr Bollard to hike the rate today to try and quell inflation that has been outside the bank's 1-3 per cent target range for five quarters.

However, yesterday's Consumer Price Index rise of 0.7 per cent in the September quarter was lower than anticipated, resulting in the annual rate falling from 4.0 per cent to 3.5 per cent. Today the bank said there had been a significant improvement to the near-term inflation outlook since its September Monetary Policy Statement. In a statement, it said: "We expect lower fuel prices, together with the recent rebound in the exchange rate and Statistics New Zealand's reweighting of the CPI, to give an unusually low December quarter CPI increase."

It said inflation pressures appeared to be abating gradually but that some indicators of resource pressures "continue to signal caution". "Taking all of this into account, monetary policy pressure will need to be maintained for some time to bring inflation back sustainably within the 1-3 percent target band," it said. "In this regard, the policy outlook is little changed from our September statement.

"The balance of inflation risks remains skewed to the upside. Further monetary policy tightening cannot be ruled out, and any easing of policy remains a considerable way off." Dr Bollard refused to take questions after announcing the OCR decision. Citigroup senior economist Annette Beacher said the Reserve Bank had chosen to talk hawkish and sit tight on rates, which she considered to be the right choice.

"A hike would have caused too much uncertainty. They were so hawkish in September that it was easy to just keep that tone and they've clearly warned that inflation risks are to the upside and they may have to tighten again," she said.