Wednesday, April 30, 2008

Emissions trading scheme called unfair

The Government's emissions trading scheme (ETS) is unfair, says the Sustainability Council.

The environmental think tank says that if the ETS goes ahead in its proposed form, householders, road users and small and medium enterprises will pay 90 percent of the money required by the scheme until 2013 - despite the fact they will generate only a third of the nation's greenhouse gases in that time.

In a report entitled The Carbon Challenge, the council, Victoria University senior lecturer in economics Geoff Bertram, and council executive director Simon Terry say farmers and big industries are being heavily exempted and rebated and will escape about $4 billion of the $4.4 billion in net payments through the ETS until 2012.

"As the great bulk of transport fuel charges [will be] paid directly or indirectly by small to medium businesses and households, it is these groups which will 'carry' the ETS," Mr Terry says.

The $4 billion paid by these groups will include $2.8 billion in charges on emissions and $1.2 billion in "windfall profits" to generators of renewable electricity. These electricity generators will collect a total of $1.8 billion in windfall profits.

Mr Terry says farmers and the rest of the agricultural sector will also pick up a net subsidy of $1.31 billion by 2012, after paying for carbon charges on electricity and fuels.

The Sustainability Council says that, although the ETS will hit motorists, householders and small businesses hard (and cost a lot of jobs), it will make little difference to the nation's greenhouse gas emissions in the first Kyoto commitment period.

The council wants the blanket subsidies now being offered to farmers and big industries to be dropped, and the carbon charges to be spread fairly.

Tuesday, April 29, 2008

More than half say they are worse off

One in four families are worried about their rent or mortgage, and 52 percent believe they are worse off than they were a year ago, a Fairfax Media-Nielsen poll found yesterday.

But in spite of the growing hardship, the Government has ruled out a cut to the goods and services tax (GST) on food, saying this would be too complex to administer and would open up too many arguments about what should be included or excluded.

Prime Minister Helen Clark has, however, promised "timely" relief for families struggling to meet rising prices.

Monday, April 28, 2008

Poor becoming poorer in New Zealand, too

Families most in need are falling even farther behind, mainly because of the low benefit payments aimed at making paid work more attractive to beneficiaries, says a report today from the Child Poverty Action Group NZ (CPAG).

The report, appropriately entitled Left Behind, adds that the Working for Families tax credit has not helped the poorest members of society.

The first blow, it says, was the slashing of social welfare benefits in 1991. "[Then the] gap was widened further in 1996 when the child tax credit was introduced. The child tax credit was available only for children in families who were `independent' of the state and was designed explicitly to create an income gap between beneficiaries with children and employed parents.

"Working for Families and Working New Zealand have entrenched and extended this approach, promoting paid work as the way out of poverty," CPAG says.

"Evidence shows that most beneficiaries leave the benefit system of their own accord when they can. Generous welfare regimes need not result in a poverty trap."

It says Working for Families' in-work tax credit – which grants an extra $60-plus each week to parents who work a minimum number of hours – continues to discriminate against families on the benefit.

"In the good old days, the family benefit was there for all children and did not disappear just because a parent lost their job. Family payments actually went up, to cushion the blow," CPAG spokeswoman Dr Susan St John says.

Sunday, April 27, 2008

Dreams are dashed on the rocks of reality

Many real estate agents are turning away potential customers because they are demanding too much for their properties, says Realestate.co.nz chief executive Alistair Helm.

"Agents are actually telling vendors they don't want to list their properties any more. Effectively, they are firing their vendors and saying, 'I don't want to deal with you any more because your expectations are unrealistic'," Mr Helm said today.

The underlying problem is that, although the number of properties being listed for sale has remained relatively constant, the number being sold has fallen dramatically.

Last month, real estate company Harcourts added 3013 exclusive listings to its books - a total that was slightly up on the 2857 properties it listed in March last year. But it sold only 1865 properties last month, compared with 2754 in March last year. In percentage terms, the decline was 32 percent.

In March last year, Harcourts had a total of 10,661 properties listed for sale, compared with 13,823 in March this year. That means that, a year ago, the company made one sale for every 3.9 properties it had on its books, compared with one sale for every 7.4 listings 12 months later.

The result is a market in which many vendors will have to lower their prices - or see their properties go unsold. Just how low prices will go is still anyone's guess.

Saturday, April 26, 2008

A billion barrels of oil off Taranaki?

"You could have a tax holiday like Alaska, buddy," says Randall Thompson, chief of United States oil explorer Global Resource Holdings.

But our rosy future hinges on Global and Hyundai, a South Korean industrial giant, finding 1 billion barrels of oil in 900-meter-deep waters off Taranaki.

"We are looking seriously for 1 billion barrels," Mr Thompson said today. "I'm excited ... I believe it can be [found]. New Zealand has a great potential for giant reserves in the deep water ... there has never been a well drilled in deep water."

But the partners still have to conduct seismic exploration. Then, if that looks promising, they will have to bring in a giant oil company as a partner before drilling a well.

I feel there are too many ifs and buts here. Ever since I came to New Zealand in 1972, there has been speculative talk about untold wealth lying under the sea - either off Taranaki or in the Great South Basin - just waiting to be found. I'm not going to uncork the champagne until something tangible is produced.

We should also keep in mind the fact that, at today's rates of oil consumption, 1 billion barrels is little more than a flash in the carburetor.

And frankly, I think you can rule out a tax holiday in any eventuality. The Government will never run out of reasons to tax us.

Friday, April 25, 2008

Another rise in rates likely, says bank

Interest rates may rise again, because it has become more expensive in recent months for banks to borrow money overseas, says ANZ National chief executive Graham Hodges.

"My sense is that there is still some possibility of a further increase in [lending and deposit] rates this year. It could be another 10 to 25 basis points," Mr Hodges said yesterday.

He added that ANZ National was now demanding that borrowers have a higher uncommitted monthly income after making their mortgage payment. The bank wanted people to have more free cash because costs were rising in areas such food, power, petrol and rates.

The bank's total provision for bad loans jumped from $30 million last year to $93 million at the end of March.

As far as I am concerned - as a lender to the bank rather than a borrower from it - rates can never be too high.

Wednesday, April 23, 2008

Borrowing becomes harder in New Zealand

The days of being able to walk into a bank and get a loan have been brought to an abrupt end by the global credit crisis, KPMG says in its latest industry report.

From now on, people wanting to borrow money will face a much tougher time as the big banks curtail their lending, especially for purchases of investment property.

"The global credit crunch, slowing asset growth and a slow but steady increase in doubtful debts all point to the fact that the tide has turned," says KPMG deputy chairman of banking Godfrey Boyce.

He says lending policies are being strictly enforced, and that bank staff are being given little, if any, discretion to vary terms and conditions.

Tuesday, April 22, 2008

Funds frozen? Well, here's some sympathy...

How touching! ANZ National Bank chief executive Graham Hodges says he "feels" for his customers who have had their money frozen in two ING investment funds, but says they were properly advised of the risks.

Repayments of $520 million in the ING Diversified Yield Fund and the ING Regular Income Fund were suspended in mid-March, leaving 8000 investors unable to withdraw their money. They have continued to receive interest.

The combined value of the two funds had fallen a further 11 percent to $463 million by the middle of this month.

ING has said the suspension will not be lifted until international financial markets have settled down and the funds can again be accurately valued.

Some ANZ National customers have complained to the Banking Ombudsman that they were approached by bank staff and persuaded to shift their money from term deposits to the funds. ANZ National owns 49 percent of ING.

Saturday, April 19, 2008

It's time to invest in barbed wire, says Moore

Kevin Moore, planting for his future.

The end may be nigh after all, an article in today's Manawatu Standard reports. The article is about English-born New Plymouth resident Kevin Moore, who is feverishly working in his garden to prepare for the Hard Times Ahead - those days, not too far into the future, when we will have little oil, little food, and even less in the shops to spend our lovely money on.

Mr Moore says New Zealand's current way of living will disappear at some time in the next three to five years. Among his predictions/statements:

  • Our society is totally dependent on oil. Without oil, it cannot function. Your food supply will be gone. You won't have anything to eat.

  • You need a decent-sized piece of land. You need to do anything you can to feed yourself.

  • In the future, there will be survivors and perishers. The former will be people who have prepared for the hard times; the latter will be people who haven't. It's as simple as that.

  • Everyone needs to use their mony effectively now. If you leave it in the bank, a finance company or the sharemarket, it will disappear.

  • If you plan to be a survivor, you'd better get in plenty of barbed wire. You will need it to keep the perishers' thieving hands off your neat rows of lettuces and tomatoes.

    Let's just hope that, in the meantime, the perishers don't invest in heavy-duty wire-cutters.


    The headline on the Standard article about Kevin Moore
  • The end is not nigh - that's a relief!

    The Dominion Post had reassuring words in its editorial yesterday for anyone who thought that our consumer culture was in serious trouble. Apparently, anyone who made any such suggestion was a "doom and gloom merchant" - a "wailing Cassandra" - who had somehow failed to notice how resilient the economy had been in the past. All we have to do, the editorial says, is "hold [our] nerve", even as we acknowledge that the economy's "golden run" is over. After pointing out that New Zealand "weathered the Asian Crisis that erupted in mid-1997 without foundering", the editorial says "there is no reason to suppose it cannot do the same when it comes to the American credit crunch of 2008".

    Thursday, April 17, 2008

    ANZ Bank outsourcing work to India

    I had already decided to stop putting my money into long-term investments at the ANZ Bank when the news broke today that ANZ National Bank plans to shift up to 5 percent of its processing and operational work to India by the end of 2009.

    "We are proposing to move around 1 percent of our New Zealand [processing and operational] work to ANZ Bangalore this calendar year, and up to 5 percent by the end of 2009," ANZ said.

    At present, I have $76,000 in long-term deposits at the ANZ. Later this year, I will round that figure up to $80,000, and then start putting my surplus cash into New Zealand-owned KiwiBank.

    Write reviews, make money

    Blogs are the easiest things in the world to start. Maintaining them, especially after their novelty has worn off, is a different matter. How often have you read an interesting entry in a blog, only to find, on checking its date, that it was posted in 2004 - or even earlier?

    I started this blog for several reasons. First, I wanted to provide a record of business/financial events in New Zealand. Second, I wanted to make notes - to both myself and my readers - on the merits or demerits of the programs I join from time to time. Third, I wanted to set myself up as a writer of reviews, and possibly make a little money.

    I have written reviews in the past, but only for the print media. Most of my reviews have been of books sent by their publishers to The Japan Times, where I worked between 1963 and 1972, and to the Manawatu Standard in New Zealand, where I have worked since 1972. (I am currently a copy editor in the advertising features department.)

    I haven't made an exhaustive search on the internet for opportunities to make money by writing reviews, but have found a couple of promising sites. One is Sponsored Reviews (see the ad below), where I have just signed up.



    Wednesday, April 16, 2008

    The creeping catastrophe

    I am chronicling a creeping catastrophe - one that has been approaching since the 1960s, if not earlier, but one that people have largely been able to ignore until now. And even at this late stage, they are sitting up and taking notice only because of the inexorable rise in food and fuel prices. My pessimistic guess is that they haven't seen anything yet.

    Today's Dominion Post carries a story headlined "Food eats into income" on Page 1. The article, by Rebecca Palmer, begins: "The cost of a supermarket trolley of basics has surged, new figures confirm." It continues: "Nine items that families commonly buy rose on average from $30.82 to $38.58 in the past year, food price index figures issued by Statistics New Zealand yesterday show. The rise represents a 25 percent increase.

    "The biggest price leap in the trolley was for cheese - $10.69 for a one-kilogram block of mild cheddar this March, up from $6.46 last year..."

    In a sidebar, the paper points out that "we live in a country full of cows, but dairy products are dearer than ever. Cheese prices rose by 44.2 percent in the year to March, butter by 82.2 percent, and fresh milk by 21.7 percent".

    In the same (morning) issue of the paper, on the first business page, the No 2 headline reads "Inflation heading to 4 percent". Only 4 percent? I ask myself, as I read in the second paragraph of the story by James Weir: "Annual inflation was 3.4 percent in the March year, according to [the] latest figures, but is expected to rise further this year" despite a slowing economy.

    In this evening's Manawatu Standard, a "backgrounder" by Michael Daly points out that all this poses a problem for Reserve Bank governor Alan Bollard, who is charged with keeping inflation between 1 and 3 percent.

    Towards the end of this article we find: "Coming soon will be the Government's emissions trading scheme, which Dr Bollard has warned will cause a significant boost to inflation in 2009 and 2010."

    Tuesday, April 15, 2008

    Retail sales slump in New Zealand

    There is more evidence today of the collapse of public confidence in the economy.

    Figures published by Statistics New Zealand show that retail sales slumped by a seasonally adjusted 0.7 percent in February.

    The drop, which followed a 0.3-percent increase in January, came as a surprise to economists, whose median prediction for February, in a Reuters poll, had been for another increase of 0.3 percent.

    SNZ said the fall in total sales was largely a result of a 5.8-percent, or $41 million, decrease in motor vehicle sales, which followed falls of 0.6 percent and 2.5 percent in January and December, respectively.

    Monday, April 14, 2008

    Caution slows house sales in Palmerston North, NZ

    The issue of house prices is back in the news today. Under a Page 1 lead headline that reads "House sales slow, but prices steady", the Manawatu Standard reports that the Palmerston North residential real estate market is quieter than it has been for almost 10 years.

    The paper quotes statistics from the Real Estate Institute of New Zealand, which show that there were 82 house sales in the city in March - the lowest number of sales in a month since June 1998, when there were 79. (In March last year, when the real estate market was booming, there were 193 house sales.)

    Despite the present climate of uncertainty, prices have remained fairly stable. The Palmerston North median sale price for the three months to March 31 was $273,750, up slightly from $268,000 for the three months to February 29.

    It is, however, taking longer to sell a house. The median number of days to sell a house in March was 52 days, compared with 22 days a year ago.

    "People are waiting and seeing if things pick up. April has started better," says Property Brokers' urban sales manager Dan Cunningham.


    Saturday, April 12, 2008

    Moratorium out; receivership in

    I read an interesting article the other day in which the writer argued that receivership, as opposed to a moratorium on repayments to debenture holders, is preferable when a finance company runs into "funding problems".

    Louise Edwards, chief executive of trustee Perpetual Trust, evidently agrees in the case of Lombard Finance and Investments Ltd, one of the latest casualties of the credit crisis.

    Last week, when Lombard Finance's lending problems in the property market were revealed, a "freeze" was sought on its repayments. But this week, Ms Edwards said that, after a review of the proposed moratorium, the conclusion reached was that a receivership was in the best interests of investors in Lombard.

    Information supplied by the company indicated Lombard Finance had $127 million of debenture stock and notes on behalf of about 4400 investors, with a loan book of about $137 million.

    Financial adviser Chris Lee said investors could expect to receive 30c to 40c in the dollar.


    Friday, April 11, 2008

    Manufacturing takes a tumble in New Zealand

    Overall activity in the New Zealand manufacturing sector has fallen for the first time since January 2006, the Bank of New Zealand-Business NZ Performance of Manufacturing Index (PMI) shows.

    The seasonally adjusted PMI for March was 48.3, or 3.5 points lower than in February. The average PMI since the survey began in 2002 is 54.4. (A PMI of 50 indicates the sector is expanding.)

    The result reflected a "lacklustre" first quarter for New Zealand's manufacturing sector, Business NZ chief executive Phil O'Reilly said today. He urged manufacturers to "start engaging in potential markets in China to take advantage of the significant opportunities that are available now and that will become available as tariffs reduce further in the near future".


    Thursday, April 10, 2008

    Kiwi dollar given a slight boost

    Reserve Bank governor Alan Bollard's statement yesterday that the New Zealand economy remained "fundamentally sound and creditworthy", gave a slight boost to the kiwi dollar, which closed at US79.52c - almost unchanged from Tuesday's close of US79.48c — after touching US80.05c.

    Bollard bullish about New Zealand economy

    Reserve Bank governor Alan Bollard yesterday talked up the New Zealand economy, saying people should not over-react to the economic downturn, a day after the gloomiest business confidence survey in 33 years pointed to a growing risk of recession.

    "Banks, businesses and households alike need to recognize the new external environment, and adopt a cautious approach," he said in a speech to the Marlborough Chamber of Commerce. But he added that they shouldn't go into "hibernation", as "the underlying economy remains robust".

    Although the international credit crisis had resulted in banks having less cash available for companies to borrow, he urged businesses not to slow down on "quality investment".


    Wednesday, April 9, 2008

    Rising prices put squeeze on New Zealand budgets

    Applications for hire purchases were down 52 percent and applications for personal loans were down 12 percent in the first quarter of 2008, credit reporting agency Veda Advantage said today.

    "Rising fuel and food prices, coupled with high interest rates, are putting the squeeze on household budgets," Veda's country director John Roberts said.

    "Our figures show a 33-percent increase in the outgoing cash flow of the average household over the last couple of years.

    "It is not surprising to see applications for hire purchases and personal loans drop off to such an extent as household expenditure stresses kick in."


  • Food prices in New Zealand rose 9 percent in the year to February 2008, and Westpac chief economist Brendan O'Donovan says there is more pain to come for consumers. China, India and other emerging economies are driving up demand for meat and dairy products, while the increased demand for biofuel is sending grain prices soaring and reducing available arable land.


  • Confidence slumps as New Zealand economy stalls

    The latest Institute of Economic Research business survey shows that business confidence in New Zealand is at its lowest level in 33 years, and that the economy is stalling.

    The economy could shrink in both the March and June quarters, institute chief executive Brent Layton said today. Asked if he expected a recession, Dr Layton said: "I think it will be a reasonably close call. It is not going to be a good time."

    He said the Reserve Bank could be expected to hold interest rates steady, because of the finding that 45 percent of companies plan to raise their prices - the highest percentage since 1987.

    Westpac Bank said the survey results showed the economy faced a "serious crunch", and that inflation could be "alarming". Sixty-four percent of the firms surveyed said they expected conditions to worsen in the next six months.


    How effective are safelists?

    While I was checking my statistics at ShowMyLinks, I noticed that Sky Yeh, who runs it, also has a safelist (see ad below). From time to time, I have thought of joining a safelist, but have never done so — until now. I suppose it might be worthwhile if it brings me a few regular visitors.

    Get Your site listed in 2 Mins!

    I note that your safelist credits are used only after your email ad has been read.

    Tuesday, April 8, 2008

    Free advertising that works

    I guess we all like free advertising. The only question is: How many visitors will it bring to my site? Well, I have just logged into my account at ShowMyLinks, and checked my membership page. It shows that my advertised site, nzsf.com, has received a total of 314 hits. (I have since changed my advertised site to kiwidollar.com.)

    Interested? If you are, click on the banner below:



    Get Your site listed in 2 Mins!


    Monday, April 7, 2008

    New Zealand to be huge Chinese farm?

    The free trade agreement signed by New Zealand and China in Beijing today, which was the day's top news item, makes me wonder whether New Zealand will someday be little more than a huge Chinese farm in the South Pacific.

    In September 2004, the Green Party of Aotearoa New Zealand opposed a free trade agreement between China and New Zealand for the following reasons:

  • It would lead to further destruction of New Zealand manufacturing capacity and the loss of jobs and firms in secondary production.

  • It is grossly unfair to New Zealand enterprises and workers to be forced to compete with China-based export manufacturers who are heavily government-subsidised and do not meet basic standards of justice and sustainability with regard [to] labour conditions and pay rates, human rights and environmental protection.

  • Further trade liberalisation will exacerbate environmental unsustainability and social inequality, and is not in New Zealand's short-term or long-term interests.

  • It will exacerbate New Zealand's record trade deficit, with China and with the rest of the world.

  • It will establish a preferential trading relationship with a country that refuses to ratify core ILO standards and which abuses the human rights of its own citizens and those of the territories which is has illegally annexed.


    For New Zealand exports to China, the FTA provides for:

  • The elimination, over time, of tariffs on 96 percent of current exports, equal to an annual duty saving of $115 million based on current trade.

  • On entry into force in October, 35 percent of exports to China to be duty-free.

  • Duties on a further 31 percent to be phased out over five years,

  • Remaining Chinese tariffs to be phased out by January 1, 2019.

  • Duties on all but $80 million of current exports, worth nearly $2 billion, to be eliminated by the end of tariff phase-out.

    For Chinese exports to New Zealand, the FTA provides for:

  • The elimination of tariffs on all exports, up from 37 percent now.

  • Over 70 percent to be duty-free within five years.

  • Longer phase-out programmes to apply to sensitive textile, apparel, footwear and carpet sectors.

  • All tariffs to be eliminated by 2016.
  • Work-from-home forum

    How many forums have I registered at, but made little or no contribution to? More than I care to remember. I therefore had a twinge of misgiving when I recently signed up at yet another. It's called It's Free, and it's at http://www.itsfree.proboards43.com/index.cgi.

    Since then, I have posted several comments and a picture at It's Free, and have found that it is a congenial community. It is also a community that is apparently made up mainly of women. (Note the background of pink tulips and the butterflies in the avatar of moderator Connie!)

    The female company aside, my reason for joining the forum was to explore its list of work-from-home opportunities, which includes some opportunities that I have not come across anywhere else. So if you, too, are looking for genuine opportunities in this field, head over to It's Free, and have a look around.


    Thursday, April 3, 2008

    Apologies for anguish caused

    Lombard Group, which listed on the NZX in December 2005, said today that its wholly owned subsidiary, Lombard Finance and Investments Ltd, has invited Perpetual Trustees to call a meeting of secured debenture holders to consider a moratorium on its obligations to investors.

    "It is clear from recent events that this is a systematic failure of an entire industry, and from our perspective a moratorium is now the only responsible course of action," Lombard Finance and Investments chief executive Michael Reeves said.

    Mr Reeves said $111 million was owed to holders of secured debenture stock and $16 million to holders of subordinated notes and subordinated capital notes.

    The company has loans with a book value of $143 million, but does not know how much it will recover in the current market.

    "I and rest of the board very much regret this has occurred and the anguish this will cause investors," Mr Reeves said.

    One wonders how many elderly people, who have worked and saved throughout their lives, are now being left almost destitute by these finance company failures — at a time when they thought they would be able to look forward to a comfortable retirement.


    Homes could become affordable again

    "Many potential home owners, long squeezed out of the market [by the high prices], stand to be big benefactors," the Bank of New Zealand said today, after estimating that house prices are curently overvalued by about 30 percent.

    "We believe house prices risk falling by more than the 10 percent we already presume for this year," the BNZ said in a report. The bank stopped short, however, of saying house prices will fall by 30 percent.

    All this is good news for our daughter, who has a respectable sum saved for her first home.


    Kiwi dollar 'still in an up trend'

    "Despite all the negatives happening here [in New Zealand] anecdotally, the currency's still in an up trend," says senior ANZ Investment Bank dealer Mark Elliott.

    The kiwi dollar closed near its session highs yesterday at US78.82c from US78.63c on Tuesday.


    Map showing locations of visitors



    http://whos.amung.us/showcase has some interesting widgets for publishers of blogs and websites.

    Wednesday, April 2, 2008

    Financial distress 'starting to show' in NZ

    Overall defaults on payments were 14 percent higher in the 2007 calendar year than in the 2006 calendar year, Veda Advantage director John Roberts said today. He added that this figure "had escalated to 27 percent for the first two months of this year, compared with the same period of last year".

    (Veda Advantage is the largest credit bureau in Australia and New Zealand. It provides credit reporting, credit scoring, and marketing analytics services. The company was previously known as Baycorp Advantage, which was a merger of Australian company Data Advantage and New Zealand Company Baycorp. Source: Wikipedia.)

    "If we see that trend continuing, that [will be] an indication there is a fair amount of pressure on the household income," Mr Roberts said. "There is a bit of financial distress starting to show."

    The three biggest areas of defaults were hire purchase, credit cards and telecommunications companies.


    Tuesday, April 1, 2008

    Doom and gloom in Kiwiland

    The results of the latest business confidence survey by the National Bank, released today, show that a net 57.9 percent of companies expect general business conditions to worsen during the coming 12 months. There has thus been a sharp rise in pessimism since last month, when a net 43.9 percent of businesses expected conditions to worsen.

    The largest declines in confidence were recorded in the residential and commercial construction industries, in which 46.2 percent and 30 percent, respectively, of businesses now expect conditions to worsen. But confidence is also down in the manufacturing, agriculture, retailing and services industries.

    Significantly, a net 6 percent of companies expect their own business to slow down in the coming year.

    The findings - the worst since the recession of 1991 - have led to predictions of a big cut in interest rates by the Reserve Bank as early as September. There have also been forecasts of a US10c fall in the value of the kiwi dollar, which closed yesterday at $79.29c.