• Government keeps the TWG Chair on the job for 4 months longer than initially planned; Michael Cullen says he there’s to bat for the integrity of the report not the Government

    Michael Cullen will remain the Chair of the Tax Working Group for longer than he was initially contracted to be in the role.

    Finance Minister Grant Robertson said the Government extended Cullen’s appointment to June 30, because it was “aware there would be extended public discussion on the report”.

    He acknowledged this public discussion “has played out”.

    Cullen was originally supposed to be in the role until the TWG delivered the report in February. This was when the other 10 members’ contracts ended.

    However, the Government on January 30 – two days before the Government announced it had received the TWG’s final report – offered to extend Cullen’s contract.

    Robertson told interest.co.nz of the extension when it asked the Minister whether he was aware beforehand, of an interview Cullen did on Radio NZ’s Morning Report on Wednesday.

    Cullen’s commentary

    Cullen in the interview debunked National’s claim that under the TWG’s recommendations the average person’s KiwiSaver would be worse off.   

    He did so further to sending a statement to media on Monday night explaining how National hadn’t taken the recommendations that would reduce tax on most KiwiSaver members into account in its calculations.

    Up until late Wednesday afternoon, this was the only official statement Cullen released to all media further to the TWG report being released to the public on February 21.

    Cullen in the interview went further in saying: “I’d be much more likely to believe Sam Stubbs [of Simplicity] and the people he’d be using to do costings on a KiwiSaver scheme than Mr Bridges, because this is all part of this rather hysterical ‘destroy New Zealand way of life’ reaction to the report.”

    He also provided a fair bit of commentary on how he thought the Government would handle the TWG’s recommendations.

    “I’m quite sure the Government would not be going into a final decision process where KiwiSavers were worse off as a result of the package,” he said.

    “The savings industry has raised some important issues and it must be remembered that these kinds of recommendations are very much ones where there’s further rounds of consultation to go.

    “It would not at all surprise me if there were some changes to those proposals around Australian shares. I think it’s fair to say that was one of the more difficult discussions in the Working Group because there were so many different possibilities that could be applied in that regard.

    “The current regime is highly concessionary in that Australasian shares aren’t taxed at all in these areas, whereas offshore shares are taxed according to the 5% fair dividend rate proposals put in place about 12 years ago.”

    Cullen also said that history would suggest that the Opposition, if elected into government, wouldn’t overturn changes it previously spoke out against.

    Policy, not politics

    Challenged by interest.co.nz on whether he was going beyond his remit and wading into politics, almost in such a way that it appeared he was going in to bat for the Government, he said no.

    “It’s certainly my job to wade into policy. It’s not the same thing as politics,” he said.

    Cullen said there was “nothing particularly unusual” about him responding to National’s attacks over KiwiSaver, acknowledging that he “can’t jump every time someone says something a bit daft”.

    Yet he said: “When there’s egregious mischief-making by plucking numbers out of the air, I think it’s important that people understand firstly that those numbers are almost certainly wrong, and secondly, that there are various ways in which any difficulties can be resolved…

    “It’s a bit silly to be scaring people too much at this point.”

    Asked whether it was his job to be debunking myths or allaying fears, Cullen said yes.

    “My job is to defend the work of the Tax Working Group…It’s not the job of the Government to defend an independent report given to it.”

    He said he was defending both the report and the process.  

    He also acknowledged the need to do so in the case of the information National was circulating, as unlike other commentators who were arguably misleading, National’s commentary got more media coverage.

    He referred to it being front page, not page three, sort of material.

    Cullen disputed interest.co.nz’s assertion that his some of his comments echoed the Government’s very cautious sentiment, likening this to a “conspiracy theory”.

    “I’ve always been aware that this is an extended process, of which the report is only one stage. Therefore it’s very important for people to understand that there is a long way to go before decisions are made,” Cullen said.

    He believed it was premature for people to weigh in on how supposedly useless it was. Rather he said providing constructive feedback on the proposals, as many in the finance sector have done, was helpful.

    Cullen expressed his frustration over the other 10 members of the TWG being “treated like a pack of dummies” by those who implied they had nothing to do with the outcome of the report.

    He said the Group’s members were experts in their fields, and while they’ve returned to their personal lives, “It’s my job to defend the integrity of the report”.

    source https://www.interest.co.nz/personal-finance/98499/government-keeps-twg-chair-job-4-months-longer-initially-planned-michael

  • Rabobank says the sudden serious pork supply problem in China will raise demand for other meats through the whole Asian region, likely benefiting New Zealand beef suppliers

    Content supplied by Rabobank

    African swine fever (ASF) is now widespread across China and has the potential to substantially shift Asian meat trade, impacting importers and exporters, according to Rabobank’s latest global Beef Quarterly report.

    And with significantly lower Chinese pork production set to leave a supply gap which will need to be filled by other meats, Rabobank’s animal proteins analyst Blake Holgate says New Zealand beef exporters are well positioned to take advantage.

    Following the outbreak of the disease in August last year, the report says the Chinese government undertook a number of measures to combat its spread including the strengthening of border controls with one possible vector for spreading ASF suspected to be the unofficial trade of goods.

    Mr Holgate said this action at the border was suspected to have led to the recent dramatic fall in unofficial meat trade.

    “Prior to ASF, unofficial bovine imports constituted a large volume of total meat imports, and, as a result of the stronger border controls, it was reported that the government arrested a number of meat smugglers in late 2018,” he said.

    “Rabobank believes the increased enforcement measures have led to a sharp decline in the volume of trade through unofficial channels in the last quarter of 2018.”

    The report says increased border enforcement has also affected pricing across all Chinese meat products.

    “With the border now more heavily policed, all meat products are impacted and this material decline in the volume of unofficial product is having an impact on meat prices,’ Mr Holgate said.

    “Despite a 50 per cent increase in beef imports and a 1.5 per cent increase in domestic beef production in 2018, beef prices in mainland China have been rising.”

    New Zealand opportunities

    Mr Holgate says stringent policing of China’s borders is expected to continue through the first half of 2019 creating further export opportunities for beef exporters, like New Zealand, who solely operate through official channels.

    “In recent years, more and more of New Zealand’s beef exports have found a home in China, and, in quarter four of last year, China overtook the US as New Zealand’s single largest export market for beef products,” he said.

    “Given New Zealand’s favourable market access arrangements with China, and well established formal trading relationships, we are very well positioned to meet additional demand from China for beef imports over the coming months,” he said.

    Other key global developments

    In addition to ASF, the report says the recent USDA decision on Lean Fine Textured Beef, Brexit negotiations and February’s floods in Australia are three other important developments which will impact global beef markets over the course of 2019 and beyond.

    “In December, the USDA reclassified Beef Products Incorporated Lean Fine Textured Beef (LFTB) to now meet the definition of ground beef,” Mr Holgate said.

    “This means LFTB can be incorporated into lean beef without separately disclosing it and this will provide opportunities for better use of fattier grades of trim and will influence the demand for leaner trim.”

    Mr Holgate said the outcome of Brexit negotiations also had the potential to significantly impact beef markets given the UK is a big importer of beef from the EU-27. “Rabobank’s view is that UK beef imports will change little, if at all, during 2019, however, a hard Brexit will bring changes over time as beef exporters compete to access the relatively high-value UK market,” he said.

    The report says a further development likely to affect global beef markets is the fallout from the recent floods in Australia which have impacted approximately 13 million hectares of Northern Australian cattle country.

    “It is estimated there were approximately one million cattle in the flood area and, while the number of stock losses is not known at this stage, it is likely that these losses will impact the volume of Australian beef exports over the remainder of 2019,” Mr Holgate said.

    Softening prices forecast for New Zealand

    Mr Holgate says a shortage of supply, combined with improving US beef prices and strong Asian demand has seen a modest improvement in New Zealand farm gate beef returns since the start of 2019.

    “Prices have held up well in recent months, however, we do expect to see some softening of prices over the coming quarter as domestic slaughter rates pick up,” he said.

    “Dry conditions over the last month have started to limit feed availability in some parts of the country and will likely see farmers offload increasing number of cattle. We also expect to see New Zealand dairy farmers start to cull non-productive cows in coming months and this will further increase the supply of cattle to processors.”

    In addition to strong export growth into the Chinese market in the latter part of 2018, the report says New Zealand beef exports into other Asian countries also grew significantly.

    “Beef exports to Taiwan were up by 11 per cent in the last quarter of 2018 and up by 58 per cent to Japan for the same period,” Mr Holgate said.

    “With Japanese tariff reductions on New Zealand beef under the CPTPP taking effect from the beginning of 2019, it is likely New Zealand exports to the Japanese market will continue to grow.”

    source https://www.interest.co.nz/rural-news/98498/rabobank-says-sudden-serious-pork-supply-problem-china-will-raise-demand-other

  • A review of things you need to know before you go home on Wednesday; no rate changes, QV data eases, used import car sales weak, dairy prices jump, short-termism extreme, swaps stable, NZD falls, & more

    Here are the key things you need to know before you leave work today.

    No changes here today.

    None here either.

    QV figures show the average residential property value in Auckland has declined for three consecutive months and is now lower than it was a year ago. Everywhere else, the growth in values is slowing.

    The number of used imported cars sold in February was -7.6% lower than in the same month a year ago. This is now the 13th consecutive month of falling sales (a trend that follows 18 consecutive months of expansion). The withering of this used import category is in contrast to the expanding (but also slowing) new car category. The annual sales rate of 144,600 is now as low as what it was in August 2016 and represents a fall of -13% since its peak in January 2018.

    Today’s dairy auction brought higher prices yet again, up +3.3% and completing a string of seven consecutive gains that have raised prices almost +24% in US dollar terms. This auction saw the key WMP price rise an impressive +6% in two weeks. Overall, the gains were magnified in New Zealand dollars as the currency slipped back, and allowing a rise of +4.3% in local currency from the prior auction. Over the same seven latest auctions, prices in NZ dollars are up a bit more than +24%. Year-on-year WMP prices are up actually down -1% in USD terms despite today’s gain, but are up +6% in NZD terms.

    Customers of New Zealand banks are extreme short-termists. Only 4.3% of all customer deposits at banks are for terms of greater than 1 year. While that isn’t a record low, the trend is to even more extreme short-term profiles. Banks have no choice but to seek funding from wholesale sources to meet their core funding and matching ratio obligations. They sure can’t rely on customers

    The Australian economy expanded at its slowest pace in more than 18 months, edging up only a +2.3% annual rate in the December quarter, far below the expected +2.6% and the Q3-2018 increase of +2.8%. Inventories are up; household consumption spending growth slowed. It was a surprise that weighted in the Aussie dollar. And the NZD dipped in sympathy. (Eagle-eyes might also notice that on a per capita basis, Aussie GDP has now fallen for two consecutive quarters.)

    Meanwhile, RBA governor said a surge in population and a lack of new dwellings were the main factors behind the sharp run-up in house prices in Sydney and Melbourne. He is now not looking at higher official interest rates in 2019. And he is saying that the housing woes (‘adjustment’) won’t disrupt their economy.

    Local swap rates are little changed today. If there is a shift, it is a slight softening at the long end. The UST 10yr yield is also little-changed at 2.72%. Their 2-10 curve is slightly lower at +17 bps while their 1-5 curve remains barely inverted at -2 bp. The Aussie Govt 10yr is up +2 bps to 2.17%, the China Govt 10yr is up +3 bps to 3.24%, while the NZ Govt 10 yr is down -1 bp so far today to 2.20%. The 90 day bank bill rate is unchanged at 1.91%.

    The bitcoin price is back up to US$3,827, a rise of +3.3% today.

    The NZD has eased following the Aussie GDP miss, taking us with it to 67.8 USc. But we are holding against the Aussie at 96.1 AUc, and little-changed at 60 euro cents. That puts the TWI-5 down to 72.5.

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    source https://www.interest.co.nz/news/98490/review-things-you-need-know-you-go-home-wednesday-no-rate-changes-qv-data-eases-used

  • Waitemata Harbour tunnel to tackle Auckland’s traffic congestion back on the agenda. But even if if gets the go ahead, work wouldn’t start until the 2030s  

    A tunnel under Auckland’s Waitemata Harbour is once again being considered by the Government in a bid to battle the city’s traffic gridlock.

    But even if it is given the green light, work won’t start on the proposal until the 2030s.

    The proposal is outlined in an NZ Transport Agency briefing paper from September last year to Transport Minister Phil Twyford and Associate Transport Minister Julie Anne Genter.

    The report outlines three main options, do nothing, build a new harbour crossing with light rail and road access, or build a harbour crossing for light rail only.

    It says the Auckland Harbour Bridge has reached its capacity and with the projected traffic growth future heavy vehicle restrictions will be required.

    “While public transport use is showing strong and sustained growth, the approaches to the Auckland Harbour Bridge are at capacity for vehicles in the morning (AM) and afternoon (PM) peak periods and heavy vehicle use is increasing.”

    “Further development of this project should ultimately enable delivery of a multi-modal corridor across the harbour, with flexibility for rapid transit and road to potentially be delivered in separate tunnels at separate times.” 

    And according to the briefing paper doing nothing doesn’t appear to be an option, with harbour bridge traffic flows forecast to increase by 17% by 2046. The NZTA report says using the crossing for light rail only, while using road pricing for cars using the Auckland Harbour Bridge would result in the best outcomes for the city centre.

    While the other option of a joint light rail and road tunnel would still create congestion for southbound traffic and severe congestion north of the bridge which would require further motorway widening. Morning peaks hour travel would still be congested with both options, even with the use of road pricing.

    The Auckland Transport (AT) North Shore Rapid Transit Study report from 2017 said the Northern Busway would reach its capacity in 2030s and put pressure on the Harbour Bridge and city centre public transport infrastructure. It concluded that a higher capacity public transport system would be required in the next 25 years.

    AT’s North Shore Rapid Transit Study was undertaken in 2016 and was designed as a pre-scoping study to investigate public transport options for Auckland’s North Shore and to aid the NZ Transport Agency’s Additional Waitematā Harbour Crossing (AWHC) route-protection planning.

    It found the Northern Busway was forecast to reach operational capacity sometime during the 2030s. It also said bus-only public transport was unlikely to be the sole long-term solution for the growing demand for cross-harbour public transport. The report identified light rail as the “most flexible and stage-able transport mode. It is a proven technology and could be integrated into a wider network (such as the airport link)”. It says light rail could operate almost entirely within the existing Northern Busway corridor.

    While heavy rail would cost more:

    “However, it has potential for high capacity and allows for wider long-term connectivity with the regional rail network.”

    But the latest version of the harbour crossing isn’t new. In 2016 the idea to build a $4 billion tunnel under the harbour came to light in a 2010 report from NZTA which said it could be built sometime between 2030 and 2050.

    The Transport Minister at the time, Simon Bridges, said the Government hadn’t made a decision on the project. But like all good Auckland public projects they do take time. In fact talk of another harbour crossing has been around for decades.

    NZTA spokesman Darryl Walker says a business case for the Additional Waitemata Harbour Crossing (AWHC) proposal is expected in mid-2019.

    source https://www.interest.co.nz/news/98495/new-harbour-tunnel-tackle-aucklands-traffic-congestion-back-agenda  

  • Because honest emissions cuts are staggeringly hard to make, achieving carbon neutrality anytime soon is an empty ambition. But countries continue to make big promises and massage their numbers to give a false sense of progress

    By Bjørn Lomborg*

    Around the world, ever more countries and regions are promising to stop emitting carbon dioxide sometime in the future. The European Union is winning plaudits from green activists for aiming to be “carbon neutral” by 2050. Cities from Adelaide to Boston to Rio de Janeiro are announcing similar goals, with Copenhagen saying it will get there already in 2025.

    Such promises should be greeted with a healthy dose of scepticism. Copenhagen, for example, will likely miss its target, even after spending twice the planned cost of going carbon neutral. In fact, we can learn a lot about the emptiness of these promises – and how governments fiddle with their emissions numbers – by examining the little-known story of one of the first countries that vowed to achieve zero emissions.

    This was New Zealand. In 2007, a year before she left office, then-Prime Minister Helen Clark set out her vision for the country to become carbon neutral by 2020. The United Nations duly hailed her as a “Champion of the Earth.” But cutting carbon is not as simple as gaining attention.

    The latest official statistics show that New Zealand’s total emissions will actually be higher in 2020 than they were when Clark set her carbon-neutrality goal. And there has been an “increasing trend” in emissions since 1990, as the government itself admits. Yet successive administrations have consistently trumpeted climate success, by relying on what authoritative assessments charitably call “creative accounting.”

    Under the 1997 Kyoto Protocol, New Zealand promised to reduce emissions to 1990 levels by 2008-12. Although much less ambitious than Clark’s vision a decade later, the Kyoto pledge still entailed a meaningful cut of almost 13%.

    But reducing emissions is hard, because it leaves countries worse off. Emissions are largely byproducts of productivity, and curtailing them implies higher costs. So when 2008-12 arrived, New Zealand’s annual emissions had actually increased by more than 20% since 1990. Despite this, the country’s climate change minister claimed, “New Zealand meets Kyoto climate target.”

    How? From 1990-2002, New Zealand’s private forest plantations increased by more than 1.4 million acres. Although not planted for climate purposes, these trees soak up carbon dioxide. New Zealand successfully negotiated to include this specific emission offset in its overall figures, neatly balancing the actual increase. For safety’s sake, the country also bought lots of foreign offsets, including highly dodgy ones from Russia and Ukraine.

    But growing forests also reduced New Zealand’s emissions in the comparison year of 1990. If we – more honestly – include the impact of forests and land use on emissions across the entire period from 1990 to 2008-12, the country’s net emissions during this period actually increased even more, by 38%.

    These days, New Zealand is promising to cut its emissions to 5% below 1990 levels by 2020 – still 95% away from Clark’s earlier target. Real emissions in 2020 will in fact be more than 23% above 1990 levels. But by continuing to include the forest effect and the other leftover offsets from Kyoto, the government is already projecting that it will achieve its goal.

    This tells us two things. First, when it comes to climate change, the important thing is to look like you are doing something. Countries that manage that can get away with massaging the data.

    The 2015 Paris climate agreement is a great example of this. Countries made a grandiose commitment to keep the global increase in temperature well below 2°C above pre-industrial levels, but all their promises together add up to less than 1% of what’s needed. New analysis shows that only 17 countries – including Algeria and Samoa – are actually meeting their commitments, in most cases because they promised very little.

    The second lesson is that because honest and deep carbon cuts are staggeringly hard, achieving carbon neutrality anytime soon is an empty ambition for almost every country.

    Strip away the statistical legerdemain, and New Zealand will be a whopping 123% off Clark’s vision of zero emissions in 2020. Current Prime Minister Jacinda Ardern now promises to achieve carbon neutrality by 2050. That’s three decades later – but it won’t happen by then, either.

    A government-commissioned report by the respected New Zealand Institute of Economic Research (NZIER) shows that just reducing emissions to 50% of 1990 levels in 2050 would cost NZ$28 billion ($19.2 billion) annually by 2050. For a country like New Zealand, with a population the size of Ireland or Costa Rica, that’s a big deal, about what the government spends now on its entire education and health-care system.

    And that’s only the cost of getting halfway to the carbon-neutrality target. According to the NZIER report, getting all the way will cost more than NZ$85 billion annually, or 16% of projected GDP, by 2050. That is more than last year’s entire national budget for social security, welfare, health, education, police, courts, defense, environment, and every other part of government combined. The report says Kiwis would need to accept a carbon tax of almost NZ$1,500. This is equivalent to a gasoline tax of NZ$3.50 per liter.

    Other countries aiming for carbon neutrality face similarly eye-watering costs. The main economic models assessing the EU plan to reduce emissions by “merely” 80% by 2050 show average costs of $1.4 trillion per year. And Mexico’s pledge to cut emissions by just 50% by 2050 will likely cost 7-15% of GDP. Climate campaigners may cheer today, but these policies will be abandoned when voters start feeling the pain.

    We need to move away from a response to climate change that relies on stirring but undeliverable promises of carbon neutrality. Rather than forcing the rollout of currently inefficient green energy, governments should invest much more in research and development to make it cheaper for the future.

    Feel-good promises are easy politics, but they don’t actually help the planet.

    Bjørn Lomborg, a visiting professor at the Copenhagen Business School, is Director of the Copenhagen Consensus Center. His books include The Skeptical Environmentalist, Cool It, How to Spend $75 Billion to Make the World a Better Place, The Nobel Laureates’ Guide to the Smartest Targets for the World, and, most recently, Prioritizing Development. Copyright: Project Syndicate, 2019, and published here with permission.

    source https://www.interest.co.nz/currencies/98488/because-honest-emissions-cuts-are-staggeringly-hard-make-achieving-carbon

  • Campaign to improve local democracy kicks off

    Local Government New Zealand (LGNZ) has announced the launch of its new #Vote2019NZ campaign to get more people to turn out for this year’s local body elections.

    In Auckland in the 2016 local body elections only 38.5% of eligible voters bothered to cast a vote. While nationwide the turnout was 43%.

    LGNZ says the # Vote2019NZ campaign is based on domestic and international research about who is and isn’t voting, why people don’t vote and what can be done to get more people to cast a ballot. The drive will run until ballots close in October.

    President Dave Cull says local body voter turnout varies significantly across different age groups and geographic areas. 

    But according to LGNZ the highest voter turnout in the 2016 local body elections was in the 70-plus age group (89%), while the lowest was in the 18-29 age group (34%).

    While the main reasons for people not voting are not knowing enough about the candidates (33%), they forgot or left it too late (23%), or they were not interested or too busy (each 16%).

    New Zealand’s local body voter turnout is lower than a number of OECD countries with similar forms of government, including Ireland, Denmark and Norway. Cull says in order to improve the statistics the first step is raising public awareness of the value of local government and the role it plays in our everyday lives.

    “By making that connection, we hope it inspires Kiwis to take a more proactive stance on the issues they care about in their communities,” he says. “Citizens can get involved by voting for their preferred candidate this October, and maybe even deciding to stand as a candidate themselves.”

    Cull says creating a larger pool of skilled candidates is another key step to improving local democracy.

    “Local government in New Zealand faces major challenges, from environmental issues to major infrastructure replacement, often in the face of demographic change.  We need to ensure elected representatives have the abilities, training and diversity of skills to rise to these challenges.”

    Cull says the final step is ensuring voters have access to the information they need about the candidates and the voting process, including when, where and how they can vote.

    “The research shows us there is a significant number of citizens who are interested in the process but don’t vote, or, who want to vote but say it’s too hard to find the information they need to make an informed decision. The #Vote2019NZ campaign will address these issues.

    “Democracy is both a privilege and a responsibility. By participating in the local government process and casting your vote you help ensure it rests on the right shoulders.  Our goal is that, for the first time in nearly two decades, local government will be elected by a majority of New Zealanders,” he says.

    In May 2018 Auckland Council announced that it was planning to trial online voting at this year’s campaign. But its support was conditional on the government passing amendments to the Local Electoral Act 2001 in time to allow an online voting system to be trialled. The council also called for the management of the online security risks, confirmation of related costs and final Auckland Council Governing Body approval before the trial could go ahead.

    Goff said at the time that online voting was the future and if the Auckland Council continued to rely solely on postal voting it risked losing a whole generation of voters.

    “We need to adapt to changing circumstances with how people participate in democracy, access information and communicate. There is strong support for online voting with 74% of Aucklanders telling us after the 2016 election that they would prefer to vote online. 

    “It won’t solve all of the problems of low voter turnout at local elections but we should be looking to facilitate a 21st century way of voting that is more accessible for our growing and diverse communities.”

    But the online voting trial was cancelled at the end of 2018 due to a lack of funding from central government and the fact the law changes wouldn’t make it through parliament in time for the October ballot.  

    For more information go to www.vote2019.co.nz 

    source https://www.interest.co.nz/news/98472/campaign-improve-local-democracy-kicks

  • Fixing Northland’s rail network to relocate the Ports of Auckland will come with a hefty price

    Upgrading the Northland rail network and installing a link to Whangarei’s Northport could cost up to $500 million according to Infrastructure Minister Shane Jones.

    He made the comments after questions about the Upper North Island Supply Chain Strategy working group which the government established last year to look at the development and delivery of a freight and logistics in the country’s Upper North Island. It has also been tasked with investigating the feasibility of relocating the Ports of Auckland to Northport in Whangarei.

    The group is being chaired by former Far North Mayor Wayne Brown and includes KiwiRail chairman Greg Miller, who Jones describes as an international expert in logistics, as well as Susan Krumdieck, Shane Vuletich, Sarah Sinclair and Noel Coom.

    The New Zealand First MP has previously stated his commitment to seeing the Ports of Auckland’s operation shifted to Whangarei’s Northport. But before that can happen the rail network north of Auckland would need to be upgraded to handle the massive amounts of freight that would be involved.   

    Jones says he’s waiting for a report by consultants Deloitte and Aecom looking at future rail options in the region.

    “I’m expecting that report in the next month,” Jones says.

    He says the study will tie in with the Upper North Island Supply Chain Strategy working group’s final report which he hopes to present to cabinet soon.

    But the proposed works won’t be cheap.

    “There wouldn’t be any change out of $500 million to put in the spur and upgrade the northern rail line. And the task of rehabilitating the country’s rail network to the point of making it a real alternative to road based freight will take more than one budget,” Jones says.

    “However, with the Provincial Growth Fund (PGF) we’ve always planned to use a big chunk of that for the rail network.”

    Jones says while the government has earmarked $3.5 billion in the 2019 budget for rail projects, its goal of reducing net Crown debt to less than 20% of GDP in the next five years will also have an impact on spending options.

    In January KiwiRail Acting Chief Executive Todd Moyle announced it had completed the first stage of an investigation into installing a 20km spur, or secondary line to Northport at Marsden Point.

    “Our teams have spent the past three months drilling into hills, land and coastal areas to gain a full picture of the challenges of building what would be rail’s first new significant branch line in more than 50 years,” Moyle says. “This is not an easy job but it is a real signal of the Government’s commitment to boosting regional economies through rail.”

    He said KiwiRail’s work had focused on the areas where the most engineering work would be needed.

    “Concurrently we are looking at how we can upgrade the North Auckland Line between Auckland and Oakleigh. The tunnels on that line are old, low and narrow. We have had two significant derailments on the line in recent months due to a lack of funding for maintenance. It has been unable to carry passengers for the past year and freight options are restricted.”

    But any talk of upgrading Northland’s rail network so the Ports of Auckland could be shifted to Whangarei won’t sit well with Auckland Mayor Phil Goff who last month stated his opposition to such proposals. 

    He says the Ports of Auckland are an important asset for the council and the people of Auckland and any decision to move it or its operations shouldn’t be taken lightly. The council has invested hundreds of millions of dollars in it over the years and it returns a healthy annual dividend of $51.1 million to the Auckland Council as its owner.

    Goff says before the Ports of Auckland, or any of its operations are moved, it’s important that there’s a strong business case supporting it.

    And he says before any agreement is reached it’s important that the Auckland Council, on behalf of the city, has its say.

    source https://www.interest.co.nz/news/98487/fixing-northlands-rail-network-relocate-ports-auckland-will-come-hefty-price

  • Guy Trafford calls on the sheep and beef industry to hire more qualified local women rather than call for more immigrants. The WRA drives for innovative water solutions

    Waikato River

    By Guy Trafford

    Fiona Gower, the National President of Rural Women recently spoke about the important role women have on the farm and how they need to be valued. Everything she said was correct highlighting the roles women have in managing the books to having a major role in the making of the farm financial decisions.

    However, in my view she had her farmer wife’s blinkers on and stopped well short of where she could have gone.

    Most applied areas of agriculture, as opposed to the service sector, are on record as complaining about the lack of quality staff available in New Zealand and hence are looking overseas for staff to full roles on farm. I have just completed 12 years lecturing at Lincoln University, mostly involved in the Ag Management papers servicing the B.Com Ag and Ag Sci degrees. In recent years student numbers have been steadily building, against the national trend, although this year they appear to have plateaued.

    A major reason for the success in these programmes is largely due to the influx of young, and some not so young, women who are looking forward to a career in agriculture.

    I think I’m correct in stating that Lincoln for the last couple of years has had more female than male students in the undergraduate programmes. Up until my recent ‘retirement’ I was teaching a couple of core ag papers and so met and got to know a lot of the agricultural students (however, don’t expect me to recall all your names as with 200+ a year they start to blur). The point I am, slowly, getting to is that I took an active interest in where students ended up when they left Lincoln.

    Lincoln has the reputation of being the University having the most graduates ending up with a career of choice one year out from graduation and this is largely due to the large (relative to other Lincoln students) numbers of ag focused students, without doubt New Zealand’s most important sector and therefore making committed graduates an attractive employee.

    Unfortunately, in my view, this claim to fame is likely to come under threat. It is due largely to its success at attracting female students wo although helping to bolster numbers for the Uni are then left languishing, applying for jobs they are quite capable of fulling but getting turned down or not even getting to the interview table. The dairy industry is arguably ahead of other sectors in employing women who are reasonably well represented, but the sheep and beef industry would have to be the laggard.

    Farmers seem to expect the new graduate to come with a dog and capable of putting up a fence.

    Women may not be as skilled, at least initially, at repairing a fence or hanging a gate, but then it is highly likely they weren’t the one responsible for putting the cattle through the fence or hitting the strainer with the tractor. Everybody has skills but sometimes the employer has to revise what skills may be required within the business and be prepared to reframe how they operate and their expectations to accommodate skills a new employee may bring and then work to those skills.

    So, when I hear about the labour shortage and then see disillusioned women being turned away, I’m afraid I can’t help but be a bit cynical.

    Fortunately the service sector is not so bogged down and companies like Farmlands, Wrighties, FMG and others are active employers of women. But these are not always the roles that many of the graduates had in mind when they started their academic career.

    Waikato River strategies

    On a totally different note an interesting ‘innovation’ is taking place in the Waikato River catchment which may be of interest to farmers in other regions especially where issues around water quality is of concern.

    The Waikato River Authority (a crown/Iwi organisation setup in 2010 to oversee improving the wellbeing of the Waipa and Waikato rivers) launched an ambitious plan to raise funds to purchase 12-18 dairy farms in sensitive areas with the aim to convert them to organics to reduce potential pollutants flowing off the farms into the rivers.

    Launched last November the aim was to invest $100 mln into organics.

    To date interest has come from local investors as well as from Europe with a European based 6,000 cow dairy company getting its organic certification and presumably looking to expand into New Zealand.

    There has also been interest from a sheep milk supply company and a company considering constructing a dryer for A2 and organic milk. CEO of WRA Bob Penter said “We have had the whole of the [dairy] supply chain come and touch the opportunity.”

    While the issues regarding nutrient flows into water in the Waikato are not identical to other regions, there are enough similarities to make the idea worth a second look. It would at least give the opportunity to those who criticise dairy farming to put some money where their mouths are and help go some way to fixing the problem.

    source https://www.interest.co.nz/rural-news/98485/guy-trafford-calls-sheep-and-beef-industry-hire-more-qualified-local-women-rather

  • Gareth Vaughan on the NZ links to major international money laundering scandals, Iceland’s GFC bounce back, reversing China’s one child policy & the phenomenon of Alexandria Ocasio-Cortez

    This Top 5, comes from interest.co.nz’s own Gareth Vaughan. Note, Top 5 has replaced our previous Top 10 column.

    As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.

    We are always keen to find new Top 5 contributors so if you’re interested in contributing, contact gareth.vaughan@interest.co.nz.

    1) Another major international money laundering scandal breaks and once again there’s a New Zealand link.

    The Organized Crime and Corruption Reporting Project (OCCRP) has this week unveiled what it’s calling the Troika Laundromat. The OCCRP, which has a strong track record of unearthing major money laundering scandals involving Russia and its neighbours, says the mastermind behind this latest one was Troika Dialog, once Russia’s largest private investment bank.

    The scheme was discovered in a large set of banking transactions and other documents obtained by OCCRP and the Lithuanian news site 15min.lt. The data, which was compiled from multiple sources, represents one of the largest releases of banking information ever, involving more than $470 billion sent in 1.3 million leaked transactions from 233,000 companies.

    The main purpose of the system we’ve named the Troika Laundromat was to channel billions of dollars out of Russia. But it was much more than a money laundering system: The Laundromat allowed Russian oligarchs and politicians to secretly acquire shares in state-owned companies, to buy real estate both in Russia and abroad, to purchase luxury yachts, to hire music superstars for private parties, to pay medical bills, and much more.

    To protect themselves, the wealthy people behind this system used the identities of poor people as unwitting signatories in the secretive offshore companies that ran the system.

    Regular interest.co.nz readers may remember that back in 2017, when the OCCRP unveiled the US$2.9 billion international money laundering operation known as the Azerbaijani Laundromat, a series of New Zealand companies were up to their necks in it.

    Well surprise, surprise. Early coverage of the Troika Laundromat shows the involvement of another NZ company, Lankon Ltd, as reported by Denmark’s Berlingske. Lankon is a NZ company created by the infamous Taylor family. NZ Police have received more than 350 criminal investigation enquiries about NZ companies the Taylors established. Note the paragraphs below are translated from Danish.

    One example is transfers to Nordea customer Lankon Limited from Delico Corporation. The company, based in Azerbaijan’s capital Baku, transferred from its account to the Lithuanian bank Ukio Bankas $ 19.7 million. NOK to an account in Nordea’s Vesterport department belonging to the company Lankon Limited. The total of 40 transfers takes place in the period February 2008 to May 2011, and in all cases the reason for the payment is stated as “for equipment”.

    Lankon Limited had an address in New Zealand and the associated director was Nesita Manceau through Vicam (Auckland) Limited. Nesita Manceau lived on the island and the Vanuatu tax haven, but has since moved back to his home country, the Philippines. Despite her “profession” as a housewife, she has been deployed as director in more than 400 companies from 2007 to 2011.

    When Nordea entered Lankon as a customer in Copenhagen, the bank should have seen many red flags , stresses Graham Barrow.

    »Why should a New Zealand company with a Filipino housekeeper as director open an account with a bank in Copenhagen? Why? And then: Why should the company receive over $ 19.3 million in more than three years? kroner from a company based in Baku in Azerbaijan via a Lithuanian bank? At what level does it make any sense? It just doesn’t. And Nordea should have discovered it, ”he says.

    Nesita Manceau was Taylor family patriarch Geoffrey’s housekeeper in Vanuatu.

    UPDATE: An OCCRP story out overnight in the Troika Laundromat series features another NZ company, Vantrel Invest Ltd.

    2) Dark Money. 

    On the subject of money laundering I recommend ‘The Dark Money Files’ podcast series. It features Graham Barrow who is quoted in the Berlingske article above. In the tweet below Barrow is referring to Megacom Transit Ltd.

    As previously reported by interest.co.nz, Megacom was a client of Danske Bank, the Danish bank at the centre of a €200 billion money laundering scandal. Megacom also featured in the fraud perpetrated against Bill Browder’s Hermitage Capital Management and the Russian taxpayer, that resulted in the Magnitsky Act, – named after Browder’s lawyer Sergei Magnitsky who died in Russian custody in 2009. And Megacom featured in this NZ Herald story.

    3) Iceland’s GFC bounce back continues.

    Remember how hard Iceland was hit by the Global Financial Crisis? The country’s three biggest banks – Glitnir, Landsbanki and Kaupthing – all collapsed having amassed assets 10 times the size of Iceland’s annual GDP. Iceland has bounced back strongly and its government is now looking to establish a sovereign wealth fund worth about 300 billion kronur, or US$2.5 billion, which is equivalent to about US$7,000 per Icelander.

    Here’s Bloomberg;

    It’s a testament to Iceland’s success — and hard work — in steering its way out of the financial ruin that hit in 2008. Largely out of necessity, politicians unveiled a string of policies that were as controversial as they were successful, including trapping foreign investors, nationalizing banks and writing off consumer debt. The nation was also blessed with a boom in tourism, bringing a rare surplus in its accounts with the rest of the world.

    “The upswing of the past years is unique in the history of the country,” said Gylfi Zoega, a professor at the University of Iceland and a member of the Icelandic central bank’s monetary policy committee. “Usually an upswing has been driven by foreign demand and ended in a currency crisis, but now it’s export driven and there has been a lot of domestic savings.”

    The fund will — on top of Iceland’s already sizable currency reserves — provide a buffer to protect the small North Atlantic island against major unforeseen events. To avoid overheating the local economy, it will invest abroad, snapping up stocks, bonds and even private equity.

    4) China’s one child policy problems.

    This effort by the Chinese government is one of many fascinating issues to watch in China. I have to admit though that I’ve been rather sceptical of the one child policy for some time. This is because of what a friend of mine, who lived in China, told me several years ago. He said he befriended a neighbour who was his family’s second child. Officially this guy didn’t exist, and could never get things such as a passport. But in reality he very much did exist, and according to my friend there were millions more like him in China.

    Here’s The Guardian;

    Faced with a population that is shrinking and ageing, Chinese policymakers are attempting to engineer a baby boom after more than three decades of a Malthusian family planning regime better-known as the one-child policy. Central policy planners have loosened restrictions on family sizes, and now all married couples can have two children. There is talk of the limits being dropped altogether, and amid aggressive propaganda drives, local officials are experimenting with subsidies and incentives for parents.

    But these efforts appear to be too little too late. Birthrates have fallen and are likely to continue to drop as parents like Xu decide against having more children. More young women are pushing back against state propaganda and family pressure, while improving education standards and income levels have delayed marriage and childbirth. Moreover, decades of the one-child policy have made single-child households the norm, experts say.


    Demographers warn that China’s population will begin to shrink in the next decade, potentially derailing the world’s second-largest economy, with a far-reaching global impact. China’s birthrate last year was at its lowest since the founding of the People’s Republic in 1949, with 15.23 million births, dramatically lower than the 21-23 million officials had expected.

    By 2050 as much as a third of the country’s population will be made up of people over the age of 60, putting severe strain on state services and the children who bear the brunt of caring for elderly relatives.

    5) Alexandria Ocasio-Cortez takes US politics by storm. 

    Alexandria Ocasio-Cortez, the first term Democrat congresswoman from New York, is making waves in US politics. Whether it be through the Green New Deal, promoting Medicare for all, a 70% tax rate on income above $10 million, a guaranteed living wage or attacking campaign finance laws, AOC – as she is known – has quickly developed a high profile.

    At just 29, and with a background in bar-tending and waitressing, she cuts a very different figure to senior, elderly Democrats such as Nancy Pelosi, Elizabeth Warren and “grumpy grandpa” Bernie Sanders. Ocasio-Cortez, a Democratic Socialist, has shown herself to be a social media star. But she’s revealing some substance as well. Witness her slick performance questioning President Trump’s former lawyer Michael Cohen at the House Oversight Committee last week.

    It’s clearly too soon for Ocasio-Cortez to run for President, and being under 35 she’s too young to anyway. However who she endorses in 2020 could be influential, especially among young people. 

    Ocasio-Cortez comes from a generation who don’t recall the Cold War, and thus don’t see “socialism” as a dirty word as it has tendered to be treated in US politics. Trump, who is from the Cold War generation, is unsurprisingly making much of “socialist” Democrats.

    With the likes of Ocasio-Cortez and Sanders on the Democrat side, and crony capitalist Trump having lurched the Republicans well to the right, the options for American voters next year may be starkly different, which hasn’t always been the case. Meanwhile, this quote from a New Yorker article demonstrates that when it comes to Trump, Ocasio-Cortez has a refreshing attitude to his extreme narcissism.

    Ocasio-Cortez says that she has tried to keep her focus partly by avoiding watching Trump on television: “He relies and thrives on attention, and so the less attention he’s given, even if it’s just one set of eyeballs, the weaker he is.” 

    Certainly one to watch on the left of US politics.

     Cartoon below by Matt Wuerker of Politico.

    source https://www.interest.co.nz/opinion/98466/gareth-vaughan-nz-links-major-international-money-laundering-scandals-icelands-bounce

  • The Opening Bell: Where currencies start on Wednesday, March 6, 2019

    By the XE Corporate team

    The NZDUSD opens lower at 0.6802 (mid-rate) this morning.

    The NZDUSD fell overnight as the USD climbed after better-than-forecast data on the US services industry and new single-family home sales eased concerns about the strength of the US economy.

    Milk prices climbed while volumes dropped at Fonterra’s first Global Dairy Trade auction of the month. The GDT index rose 3.3%, while prices for major Whole Milk Powder category surged 6.0%.

    The AUD rose a little after the Reserve Bank of Australia left the cash rate unchanged (1.5%) yesterday and clung to a relatively upbeat outlook, despite recent softer data. The RBA’s central forecast is for the Australia economy to grow at 3.0% in 2019. The NZDAUD dipped in response.

    RBA governor Lowe is due to give a speech titled “The Housing Market and the Economy” this morning, followed by the eagerly anticipated Q4 GDP release.

    The GBP fell on speculation few UK lawmakers would back Prime Minister Theresa May’s proposed Brexit deal, and there was little progress in talks with the EU.

    The CAD weakened due to a combination of trade troubles with China, political scandal, and expectation that Bank of Canada may be getting close to reverse interest rate policy direction and begin to cut rates.

    There is no data scheduled on the NZ calendar today.

    Global equity markets were mostly higher on the day – Dow +0.4%, S&P 500 -0.3%, FTSE +0.7%, DAX +0.2%, CAC +0.2%, Nikkei -0.4%, Shanghai +0.9%.

    Gold prices are fell 0.1% to USD$1,285 an ounce, while WTI Crude Oil prices rose 0.1% to US$56.59 per barrel.

    Current indicative rates:

    NZDUSD 0.6802 -0.2%
    NZDEUR  0.6016 0.0%
    NZDGBP 0.5164 -0.2%
    NZDJPY 76.07 -0.1%
    NZDAUD 0.9598 -0.1%
    NZDCAD 0.9073 -0.1%
    GBPNZD 1.9365 0.2%

    Upcoming Data releases (NZST):

    • No local data today
    • 11:10am – Reserve Bank of Australia Governor Lowe speaks on the Australian housing market and the economy
    • 1:30pm  – Australian Q4 GDP release



    To subscribe to our free daily Currency Rate Sheet and News email, enter your email address here.


    Marcus Phillips is the Affiliate manager at xe money transfer in Auckland. You can contact him here »

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    source https://www.interest.co.nz/currencies/98482/opening-bell-where-currencies-start-wednesday-march-6-2019