Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
Wairarapa Building Society has trimmed its one-year and 18-month rates both by 20 basis points to 6.95% and 6.90% respectively.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes.
THE SQUEEZED MIDDLE FEELING A LITTLE LESS SQUEEZED
New Zealand households have been feeling a bit perkier, according to Westpac senior economist Satish Ranchhod. The Westpac McDermott Miller Consumer Confidence Index rose 4.3 points in March, taking it to a level of 93.2. That’s still below the 100 level, signalling that the number of New Zealanders who are feeling pessimistic about economic conditions still outnumbers those that are feeling optimistic. "However, some of households’ concerns about financial pressures are starting to ease, and that seen confidence picking up to its highest level in more than two years. The lift in confidence has been seen across all income groups, but is most pronounced among middle-income households," Ranchhod says.
AUCKLAND IS TOPS, SAYS ASB
Auckland's the best performing region in the country for the second quarter in a row according to ASB's latest Regional Economic Scoreboard. But it's tough out there. ASB senior economist Chris Tennent-Brown says high inflation and interest rates are impacting households and businesses and the regions topping this quarter’s Scoreboard are those that are “hanging in there” the best, rather than “shooting the lights out”.
GOVERNMENT HAS ITS EYE ON BUILDING CONSENT DELAYS
The coalition Government's requiring councils to submit data for building consent and code compliance certificates every quarter, Building and Construction Minister Chris Penk says. "...Starting in April, Building Consent Authorities will be required to submit timeframes for building consent and code compliance certificate applications with this data being published on MBIE’s website every quarter. This added scrutiny will provide greater certainty for the sector, encourage best practice and drive innovation that will help reduce delays and let Kiwi builders get on with the job."
GOVERNMENT TO PROBE REOPENING MARSDEN POINT REFINERY
Associate Energy Minister Shane Jones says he's investigating the feasibility of reopening the Marsden Point Oil Refinery, in line with NZ First's coalition agreement with the National Party. Jones says it's part of the Government's work on ensuring NZ has a secure fuel supply. Jones says a request for proposals is being developed with a study expected to start later this year. The refinery shut down in 2022. Rob Buchanan, CEO of Channel Infrastructure - formerly known as Refining NZ - recently said the refinery was now fully decommissioned. Recommencing refining operations would cost billions of dollars and take a number of years, he said.
DOING IT TOUGH IN THE WAREHOUSE
The Warehouse has had a rough first half of its financial year, with a $55.5 million hit on the sale of its troubled Torpedo 7 subsidiary leading it to an after tax loss of $23.7 million. The company says its online platform TheMarket.com will be either closed or sold by the end of the financial year. In terms of ongoing trading across the group, CEO Nick Grayston sees challenge ahead. "Our second half is now underway, and we’ve seen much tougher trade in February with sales decline in the low teens. In March, we’ve seen some improvement with our sales decline returning to be more in line with the level of decline experienced in our first half. Given the unpredictability we’re seeing and that we expect the retail environment to remain challenging with subdued customer spending, we will not be providing an outlook for year end but we will share a Q3 Trading Update in May 2024."
'SCAMMERS ARE GETTING SMARTER'
New Zealand's Computer Emergency Response Team (CERT NZ ) says it had 7,935 incidents reported to it during 2023, a 3% decrease from 2022. Individuals, small businesses and large organisations from all over New Zealand submitted incident reports. Some 24% of incidents reported to CERT NZ included some form of financial loss, with a combined total loss of $18.3 million. Scams and fraud accounted for almost $15.7 million (86% of overall direct financial loss) in 2023. Of that loss the biggest contributor was investment scams. While the overall numbers were down slightly in the past year CERT NZ says "we see scams are evolving and scammers are getting smarter".
SOME 'MODEST' DOWNSIDE RISK TO MILK PRICE FORECASTS SEEN
Following the "broad-based decline" - of 2.8% - in dairy prices at the latest GlobalDairyTrade auction early on Wednesday, Westpac's chief economist Kelly Eckhold notes that the key Whole Milk Power (WMP) prices are down 8.6% from the early February peak, suggesting "some modest downside risk" to Westpac's $7.90 per kilogram of milk solids farmgate milke price for the current season "but is more relevant for next season’s $8.40 estimate should these weaker trends persist".
DEPARTING RBNZ ASSISTANT GOVERNOR JUMPS ON BOARD ASB
Reserve Bank Assistant Governor Juliet Tainui-Hernandez, who recently announced her resignation to focus on a career in governance, has been announced as a new director for ASB from May. She will be joined as a new director on the ASB board by Nigel Williams who works for ASB's parent Commonwealth Bank of Australia. Tainui-Hernandez who has had responsibility for Transformation, Innovation, People and Culture at the RBNZ is also a director of Ngāi Tahu Holdings Corporation Limited.
REMINDER
If you haven't done so yet, we would appreciate it if you could complete our car insurance survey. More about it here. The survey itself is here.
SWAP RATES LOOKING LOWER
Wholesale swap rates are likely slightly lower Wednesday. Our chart below records the final positions. The 90 day bank bill rate is unchanged at 5.64%. The Australian 10 year bond yield is down 1bp at 4.09%. The China 10 year bond rate is up 1bp at 2.30%. The NZ Government 10 year bond rate is down 1 bp at 4.67%. The UST 10yr yield is down 1bp at 4.29%.
MIXED FORTUNES FOR EQUITIES
The NZX50 is heading down again, with a drop of so far about 0.2%, but in Australia the ASX200 is up about 0.2% in early afternoon trade. Tokyo is on holiday after a 0.7% rise on Tuesday. The Hong Kong market opened down 0.6%, while Singapore was up 0.1%. Shanghai was down 0.1%. In the US, the S&P500 rose 0.6%.
OIL PRICES EDGE LOWER
Oil prices edged lower again Wednesday, with WTI at US$83.16/bbl in the US while the Brent price is also slightly lower at US$87.24/bbl.
GOLD GOES UP DOWN AND SIDEWAYS AGAIN
In early Asian trade, gold was like earlier in the week having its ups and downs but at time of writing wasn't much changed up around US$2 from prices earlier in the day at just under US$2160/oz.
NZD STILL DRIFTING
The Kiwi dollar is down just very slightly against the US currency from earlier in the day at 60.5 USc. Against the Aussie we are down at a little under 92.6 AUc from a little under 92.7 AUc earlier in the day. Against the euro we just a touch lower at 55.7 euro cents. This all means the TWI-5 has its downward drift, from 69.1 Tuesday to just above 69.0.
BITCOIN'S WILD RIDE
It's been an up and down 24 hours for Bitcoin - but mostly down. Most recent price was US$62,750, which is a fall of about 5.0% in the past 24 hours.
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100 Comments
Some people designed stuff badly, and some people built stuff badly.
But like almost every other piece of compliance, everyone has to prove they're not a bad actor, and the consumer gets the bill.
We're trying to replace instinctual good behaviour with forms. I actually have seen the behaviour become worse as this has happened, because the focus has shifted from doing a good job in and of itself, to ensuring you're compliant.
We don't pay for experience, and the publics' nature is to build houses based on fashion over function.
No eaves in a rainy country. Sweet.
But generally people that are competent, are usually reliably so. Our desire to try and eliminate all risk, is fairly pricey.
That is exactly the issue. I go through property files for a living. When you look back as to what Councils accepted for building plans in the 90's which was at least professional drawings as opposed to prior to the Code of Compliance Regime coming in about 1992 the drawings today to enable consents are massive, and you have someone at council pouring over every page of detail and calling questioning the fastners etc that are used.
In the old days when only Building Permits were required (prior to 1992) the bargain was you builder are competent and know the rules-get on with the job, and we will inspect it as you go, and shut it down if there is a problem that pops up during inspection. But ever since Council's paid out BILLIONS (and hey insure the rate payers don't see the light of day as to how much they are paying as they never bring it to rate payers attention in any home mailing quarterly report that I have ever seen) and the Council became the last man standing they have charged their Consents teams to go through each Consent with a fine tooth comb.
Would make better sense to instead force Builders to put up Bonds commensurate with the Consent and let them get on with building, and then release the Bond when the CCC is granted.
This is done to an extent with commercial building, but usually as a defects/financial retention system.
But yeah some sort of insurance/bond system would be superior to the status quo.
Maybe it's just coincidence, but through all these changes, the industry leans far away from the skills and experience of the practitioner and more towards rote adherence to spec. The people actually carrying out the work aren't engendered to question or think about what they're doing.
The real question to me is why Is the council assuming responsibility for private enterprise?
Council inspectors are highly qualified in the building code but not in the physical task of building a house.
If ya want houses that work put people who know how houses work in charge.
Most of it was shit design.
Let's build houses like the Mediterranean.
So now we all get to pay, forever.
Say you knew a competent builder and architect, decades of proven track record. The chances of a failure are extremely remote, but you have to pay 30% more than you should, just to satisfy all the relevant parties.
New Zealand households have been feeling a bit perkier. The Westpac McDermott Miller Consumer Confidence Index rose 4.3 points in March. Some households’ concerns about financial pressures are starting to ease, and that has seen confidence picking up to its highest level in more than two years.
I would advise these people not to read the Interest comment's section!
Haha, certainly not! I didn't want to mention any material benefits like overseas travel, nice cars etc… because I know how the majority of commenters feel about financially successful people (even though this is a financial website). Maybe I could add: "... and enjoy the fruits of our life" ?
Is sad but true. You can meet people from all stations of life, with varying morality. I know rich and poor shitbags, and rich and poor salt of the earth types.
Life involves a bit of luck and serendipity, but there's also some attributes of successful people that are worth observing and adopting.
I don't know the full extent of how Yvil makes his money or conducts himself. Could be a cool dude, could be a rascal. But he's right, this site seems to foster mindsets that are antithetical to financial success. Which is fine, but fairly badly straying from what the intent of the site seems to be.
Can't agree.
I think the fact Yvil built an architecture business that employs other Kiwis is great and should be incentivised. Reward value makers!
Money from speculating on exisiting assets deserves no particular credit, as it's effectively about being a policy beneficiary.
We should tax speculators and give tax cuts to productive business builders.
I'll leave this here. Do Landlords feature in this chart?
Probably not to a significant extent.
We also don't know why all those entities ceased, but the common assumption is a very high rate of business failure, particularly in the early years.
I don't know how you'd have a government mitigate the risk aspect of forming a business. Part of the high number of failures will stem from the fact we have a very easy environment to start a business. Which is kind of what you want, to foster new business generation, with the downside of having a lot of marginal entities form.
If you have a proven business, funding for expansion generally isn't that hard.
But the repeated calls for "promoting business", are fairly vague. Business usually involves some sort of innovation or entrepreneurship, which is something governments are fairly ignorant to.
Well you wouldn't give businesses the same tax breaks as landlords, that would be one way to incentivize investment into productive enterprise. You certainly wouldn't allow landlords to access capital at half the going rate a normal business would do, often on interest only terms.
Nothing to do with good guy or bad guy.
Point was that we should incentivise/reward value-adding activity (building a productive business) via policy, not value-taking. And that we should celebrate and credit building a productive enterprise.
Whereas being a beneficiary of policy that incentivises and supports (including through taxpayer welfare) speculation is not an achievement and has no merit to be celebrated or credited. Any more than receiving any other benefit should be celebrated as an achievement.
In the US the capital gains tax on Residential Investors (Landlords) does exactly that. I remember the shock I got decades ago when selling the Rental House we first lived in for 7 years and then lent out for the next 10. That profit from the sale lifted our income into a much higher tax bracket resulting in 40% of the profit being taxed away--which is why so few Boomers in the States ever became residential landlords. Instead all their retirement money was long ago plowed into the US "Super Saver" schemes-as even the yearly contributions were non taxed.
So you will survive till 2025 Y? As your old preacherman 10% Tony just said to the pearl and sphincter clenching landlording class.
He already walking back his 10% gains call for 2024. The guy is a total financial clown
Just sad how he led many over the financial cliff from 2020.....
Associate Energy Minister Shane Jones says he's investigating the feasibility of reopening the Marsden Point Oil Refinery,
Recommencing refining operations would cost billions of dollars and take a number of years
Dinosaur's running the country like its 1980 again
Not sure. The greater question is whether or not NZ as a nation is more secure in its operation and services without that previous industrial ability functioning. In the past Helen Clark’s Labour government made the strategic call, quite correctly in my opinion, that NZ needed to have control of a functioning railway and airline. Even if the operations were at a loss they were too vital for the running of the country, to entrust in overseas or even entirely private ownership.In a similar vein believe it would have been meritorious for Bolger’s National government to have similarly baled out the BNZ.
I don't think the refinery fits that bill, you still have to import the unrefined oil.
A case could be made for locally based strategic fuel depots so that an interruption in global shipping doesn't cause our fuel supply to grind to a halt, which would be the case whether or not we have a local refinery.
In addition shifting away from being dependent on foreign sourced fossil fuels to locally generated electricity where feasible will also help in this regard.
Since its shut down NZ has had several instances of contaminated jet fuel that grounded airlines, shortages of CO2 that shut down the supply of food and beverages, and is the reason why the roads are permanently requiring repair (due to inferior imported bitumen). Also hark back to the AdBlue shortages. It seems to me that the shutdown of Marsden Pt on the basis "we don't need to make petrol" was a rash decision that did not take into account all the other important products it was responsible for.
But it was a commercial decision. The Government kept their grubby mitts out of private enterprise, like everyone (I imagine including yourself) loudly proclaim they should do.
Had the Government stepped in, you'd be wailing about how many millions was spent buying the asset and many more giving it a spruce up. Because guaranteed BP, Mobil and Z won't sell it for nothing.
The story up here in Marsden Pt was that the fuel companies wanted 4c/l more to keep it refining fuel. Govt. of the day said no.
It would be great if we upgraded the plant to refine our own high grade oil. We do have oil fields in NZ but it all gets exported, I think mostly directly from the drilling platforms too, doesn’t even make the mainland.
If that's true and not just reckons, well, Marsden Point had a refining capacity of 135,000 barrels a day. At 4c per liter on 158 liter barrels, that's about $860k per day or $315 million per year.
An awful lot of money to subsidize private enterprise that more or less is a price setter, not a price taker, don't ya think?
The Warehouse has had a rough first half of its financial year, with a $55.5 million hit on the sale of its troubled Torpedo 7 subsidiary leading it to an after tax loss of $23.7 million.
The Warehouse is NZ's primary retail discounter. In the rest of the developed world, discounters are in high demand, but cost to serve is high. Therefore the businesses are running on slim to no margins. The mighty Audaxes posted about the closure of Dollar Tree stores in the US (see below) while Japan's Daiso and TopValu store brand seem to have it worked out.
Family Dollar, the struggling discount chain that caters to low-income customers predominantly in cities, said Wednesday it will close nearly 1,000 stores.
Years of mismanagement and poor conditions in stores have hurt Family Dollar’s brand. Family Dollar, which is owned by Dollar Tree, was recently fined more than $40 million for a rat infestation at a warehouse that forced hundreds of stores to temporarily close.
https://edition.cnn.com/2024/03/13/investing/family-dollar-dollar-tree-…
You used to be able to find the same items Torpedo7 and others sell, unbranded on AliExpress for much cheaper. People tire of paying a lot more simply for a local logo - unless it's of high enough value and the company reputable enough that you pay for local warranty service and returns.
There is a thing called the retail cycle. (Not just products, the operators)
Innovators come in and disrupt the existing pattern. Then they rise and settle into a pattern. Then a new innovator comes in and disrupts them.
Farmers did it 100 years ago. A guy Laidlaw I think.
Warehouse and other big boxes again in the last thirty years. Small owner operator stores vastly reduced since.
Recently it's online and couriers. Not sure that's total victory.
What is the next thing ?
It's been an up and down 24 hours for Bitcoin - but mostly down.
Ratty down 12% over past 7 days and many alts down 20%+.
Normies are screaming "told you this would happen" and "glad I didn't buy that sh*t".
Could get a heck of a lot worse before it gets better. We'll see how strong the ETF buyers' hands are.
Small business getting squeezed in Raglan. Maybe the landlords are correct in that CRE valuations in Raglan are booming, even though they appear to be collapsing globally.
Raglan business owners say a landlord monopoly in the small beach town is jacking up rents, forcing them out.
Prominent Raglan music venue and bar Yot Club will soon be up for sale because the owner Andrew Meek says he’s “had enough of the landlords”.
Other operators spoken to by the Waikato Times said there was a power imbalance between tenants and owners with some having seen up to 95% rent increases in less than a decade.
https://www.waikatotimes.co.nz/nz-news/350208345/raglans-yot-club-close…
https://www.nzherald.co.nz/business/imf-warns-against-borrowing-to-fund…
The International Monetary Fund (IMF) is urging the Government to ensure it can pay for its tax cuts without borrowing more.
The organisation is wary of the fact New Zealand is still battling inflation, so fears that putting more money into the economy, without taking an equivalent amount out, could exacerbate the problem.
“The planned personal income tax relief is targeted predominantly at low and middle-income earners and families with children, which have a higher propensity to spend,” the IMF said in a report prepared following a routine review of New Zealand.
“To avoid any upside pressure to inflation it is important to calibrate the funding, timing, and the parameters of this tax relief to be fiscally neutral.”
The International Monetary Fund (IMF) is urging the Government to ensure it can pay for its tax cuts without borrowing more.
Why? Is there an economic theory or rationale behind their recommendation?
You would think the IMF would have been better off advising NZ on creating credit / boosting money supply to play Monopoly on a relatively fixed housing stock.
Bit too late now.
Just checked IMF's original charter. It's job is to provide funding for countries as and when they need it, under conditions and terms that make the IMF think there is some sort of chance they will get their money back. There is no mention of them advising the NZ government on the finer points of their tax policy.
Govt spending does not grow the banks balance sheet, helping people pay off debt shrinks the balance sheet. The austerity plan is surely to choke the economy of public funds and force increases in private debt to make up the "shortfall", money supplied by... banks... then due to risk of default, force the hand of the central bank to lower interest rates to a point where low incomes can service extraordinary debt. We've just seen it all play out like this.
"Stop supporting your nation, force them to borrow. Sincerely, bank."
"Ok!" - Prime Minister whose assets values increase when the balance sheet grows relative to incomes.
Balance is the key to any balance.. sheet... we're looking $5.6b less balanced than we did back in October. Last year, Grant was slammed for govt spending negating the effects of interest rates on inflation. Wonder if Nicola and her plebs are facing the same scrutiny behind closed doors, lack of forecast revenue negating the effects of interest rates on inflation. In both cases it's the inflationary impact of being a shite finance minister.
To be fair, the inability to balance the books at this point is one of the probably two things preventing the downturn from being much much worse on paper.
A reminder here of where NZ's at, post Marsden Point, in terms of fuel security and a few other key areas - https://www.interest.co.nz/economy/124907/covid-19-pandemic-and-other-recent-global-disruptions-have-heightened-awareness-new
Oyster Property Group's Linkedin page from 2 days ago:
What a fantastic night celebrating our recognition as finalists in the Building Sustainability through People category at the NZHR awards. This achievement speaks volumes about our dedication to sustainability and the incredible teamwork that made it possible. Thank you to everyone who has played a part in this journey!
Don't seem overly concerned when you're being showered in woke glory.
This article? Unfortunately the NZH Freemium Chrome plugin is no longer working.
Oyster fund $19.4m profit turns to $22.5m loss, Pastoral House payments stopped
https://www.nzherald.co.nz/business/oyster-fund-194m-profit-turns-to-22…
The Aussies who bought a lump of Oyster have either been tricked by the Oyster shareholdes selling to them, or they have syphoned off a whole lot of money back home, leaving the Kiwi branch in the lurch. A bit of research into their fund flows and reprinted here would be great.
Lots of $1 reserves! https://www.oneroof.co.nz/news/take-advantage-of-sellers-misfortune-com…
It appears to me that most commentators here have little idea of the building consent process for residential buildings. It starts with design and if that it short of information it'll be returned for an RFI (request for information) delaying by about two weeks. For a new build , a simple single storey, there'll be a minimum of ten drawings involved with substantial detail. More likely to be closer to twenty. Gone are the days of two or three dwgs as the case was in '76 for the house i live in. It relied on the builder filling in the gaps. Not today. A builder builds to design dwgs and is not there to fill in the gaps on design omissions. I personally prefer it this way.
Unfortunately its not to say there are likely to be a few consenting officials being dicky opposite and asking for information that at best does not enhance the structural integrity of the building and at worst a delaying tactic.
The Nats, years ago, introduced consent in two weeks or some such ridiculous figure and did not take into account the number of BCs in the queue or the staffing requirements needed to handle cyclical work.
At one stage NP was farming out to BCs to contractors in Akl to help improve the turn around. You don't shake a tree and get a dozen BC specialists dropping out. The flip side is over staffing with staff doing little or no work during lulls and likely calling for needless RFIs to show they are busy.
I don't object to stats being provided about how long a BC takes and every quarter is about right. It does help focus people on the job.
Commercial and three storey residential houses are another story. I don't think NZS 3604 covers three storey residential and may very well have far longer delays in the BC process than a single or two storey.
I think HM is in the building design profession but may be commercial buildings. I'm sure he could comment from real world experience to my comments above.
I agree, building has gone from one man overseeing and doing most of a build, to a large team of specialists just doing their little part, and plans are so much more important. The remaining land is much more difficult to build on, infrastructure is stretched, houses are so much more complicated, expectations are very high. The council have to make sure new builds are done to a high standard.
I do find it annoying though that all this stuff also stands in the way of making improvements to existing dwellings.
The fundamentals are essentially the same.
What has changed, is rather than have a proven system or method and running with it for decades, we have a steady string of new products and designs, attempting to re-invent the wheel.
It can take decades for the flaws in these new and improved products and systems to materialise. Much of the leaky homes debacle was a reliance on silicone to act as a water barrier. Which sounds great, except kiwis don't really do maintenance well, and silicone breaks down over time. Something like a weatherboard house with eaves detracts water ingress by its inherent properties.
Although now, we make some pretty bad weatherboards. Fingerjointed garbage or some sort of heat treated compressed sawdust.
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