Prime Minister John Key says he talked about high and rapidly increasing house prices in parts of Australia when he met with the heads of the Australian, UK and New Zealand Treasury Secretaries last week.
The three Treasury Secretaries - New Zealand's John Whitehead, Australia's Ken Henry and the UK's Nicholas Macpherson - met in the Hawkes Bay from Wednesday to Friday to discuss a range of issues including the global growth outlook and the European debt crisis.
Key met the Secretaries over lunch on Friday, and talked about how to “make the boat go faster and what they were seeing in Australia and the UK”.
Price bubbles?
Asked whether they talked about a possible Australian house price bubble, or an asset price bubble in China, Key said they “recognised that they are issues that are there”.
“One of the reasons why it’s very important you don’t get housing bubbles is you end up, if you do, in the situation Ireland’s finding itself in now,” Key told media at his weekly Monday afternoon press conference in Wellington.
Key said he wouldn’t want to comment on how dangerous an Australian house price bubble could be because he was “not the expert in it”.
“But I certainly asked them whether they thought that was an issue, and how they thought that might play out,” he said.
“It’s probably not for me to comment verbatim, but we all acknowledged that there’s been very high and rapidly increasing house prices in Australia - in parts of Australia,” Key said.
Asked whether the Australian Treasury Secretary was worried about that, Key replied, “Well I wouldn’t want to put words in his mouth.”
Meanwhile, on the issue of a possible asset price bubble in China, and authorities’ moves there to restrain bank lending, Key noted the Chinese government had been taking steps “to address what they perceive as a problem”.
Asked whether a slowdown could affect New Zealand’s growth prospects, especially as the New Zealand government was so keen on jumping on the 'Australia-China growth train,' Key said from the government’s point of view, New Zealand was facing different issues.
“Our issue, I think, is how we can grow the productive sector and the tradable sector of New Zealand – that’s the sector that’s been in recession for a long period of time, it’s a sector that’s shed jobs,” Key said.
“We know that we should be doing a lot better there. We know that commodity prices are supporting New Zealand growing its export volume and value, and that’s what the government’s focussed on,” he said.
Key said further that a slowdown in Australia and China would make it more difficult to grow New Zealand’s tradable sector because the two were this country’s biggest export markets.
“Number one is Australia, number two is China. So, as I’ve noted in my speeches before, there are some externalities which are beyond our control, but we’d obviously hope that there is a strong Australian economy and a strong Chinese economy to support our economy,” Key said.
Asset sales
Here is a video of Key talking about asset sales on Monday afternoon:
(Updates with second video of Key)
35 Comments
Yeah I got the impression he didn't want to talk about it, or else he thought it was a silly line of questioning - if he thinks that he better get used to being asked those type of questions.
Or else he was just thrown because they weren't questions about Liz Hurley or catwalks...
Cheers
Alex
It was more of a joke Rob. When the Liz Hurley and catwalk 'sagas' came out, questions on those issues took up the most of the press conferences at the time. Oh, and Hone - who is a MP in another party, not a minister, and was definately not about to take down the government. There were a lot of questions on Hone.
My god, he really does talk through the hole in his ass.
"We (NZ) has a different set of issues", ah......no we don't. Look around Jonny, there's more bubbles here in NZ than in one of Fonterra's milkshakes and YOUR talking to the yanks about phhh 'free trade" which is not even a reality without undermining every remaining profitable NZ industry which your obviously quite prepared to do YOU TRAITOR!
Where's the NZ media on this issue? always out to lunch when the real shit is going down
Have put in another vid of Key Monday arvo on asset sales
All vids also on our YouTube account here
http://www.youtube.com/watch?v=KWvYE1bEkis
Cheers
Alex
While in Libya the parliament is burning Crude and Gold are currently going up fast. Another worrying sign, how relatively small events, have such a worldwide impact, dictating our daily life’s – a new phenomena.
...and PM Key is talking about assets sales and the "Aussie" housing blable. When do our leaders start talking publicly about the consequences for NZ under the current fast changing world ?
...and when do we see some real actions ?
...and in stead of gathering for voters, when does the government change it's course and start seriously gathering for decent employment opportunities for (young) Kiwis ?
..and when PM do we see the reformation of our economy - real sustainable NZproduction ?
“One of the reasons why it’s very important you don’t get housing bubbles is you end up, if you do, in the situation Ireland’s finding itself in now,” Key told media at his weekly Monday afternoon press conference in Wellington You prick John....why are you incapable of saying NZ housing is seriously unaffordable because we too had a blooby bubble.!
As for this belief you have that the tradeables sector can replace the jobs lost as the economy went into 'frugal mode' when the credit splurging madness stopped.........you are either off your nut or an outright bloody spin merchant.
There is no way the tradeable sector can create that many jobs...not a hope in hell.
The economy has entered what will be a very long period of stagflation because the govt has decided to go with debasement of the currency...exactly the policy dictated by Bernanke...funny that!
Here is the truth Mr Key......
"Hats off to Iceland for a second time for telling the IMF, the UK, and Netherlands to "Go to Hell" over the most recent Icesave proposal, better thought of as Ice Torture."
http://globaleconomicanalysis.blogspot.com/2011/02/iceland-once-again-tells-imf-uk.html
These are the headlines the NZ public do not get to read. Iceland is leading the way in telling the banks to get stuffed and feck off....this is why the liar agencies have opted to polish their spin on the stability of the banks....it explains why the bank ratings are set to drop...why the banks will have to pay more for money...and why those owing debt in NZ will see rates rise regardless of the effort Bollard is making to keep credit cheaper for longer to solve a problem caused by credit being too cheap for too bloody long.
The chances that the rest of the PIIGS lot will follow along this Icelandic path are very high...looks like the banks have their heads on the block John!....and the pollies too....because elections are due...listen to the heads fall John.......whop.....splurt....thud.
Well said, Wolly; love reading your contributions.
I hope Kiwis follow Iceland's example on the bank guarantees. Why put yourself on the hook for tax rates at least 10% higher for at least 30 years? A collapsed banking system would sort itself out a lot less painfully than that.
More honesty here Mr Key!
"Bundesbank President Axel Weber said debt-burdened nations may yet have to face the “most painful passage” while calling on governments to include private state- debt holders in any future bailouts. Compared with a marathon, problem countries have maybe managed the first 15 kilometers,” Weber, who is also a European Central Bank council member, said at an event in Dusseldorf today. “Given my experience on this track, I can tell you that the most painful passage will come at a later point.”
And from the same site....some blatant lying BS!
"European Central Bank Executive Board member Juergen Stark said policy makers will act “quickly and decisively” if they see any signs of faster inflation becoming entrenched."
Harrrrrrrrrrrrrhahahaha...yeah sure they will.
Yet more BS.....
“Any monetary authority and, certainly one with the competence and capability of the Bank of England, can see through temporary increases in price levels and look to permanent threats,” Osborne told reporters in Paris yesterday following talks with Group of 20 finance ministers. "
I am more concerned that Key said “One of the reasons why it’s very important you don’t get housing bubbles is you end up, if you do, in the situation Ireland’s finding itself in now”. Ireland has a problem because the Government guaranteed the the Banks’ debt. New Zealand has a housing bubble – still – and in November 2008 when the big Four were in a parlous state the NZGovernment guaranteed their overseas funding for New Zealand. I have heard, and I don’t know whether it is still correct, that that guarantee is still on the Government books but that it is not counted because it is considered so unlikely to happen. I don’t know whether the Australian Government did the same for their overseas funding in Australia but I would imagine so. So if there is a crash and the big Four end up in Queer Street then that Government guarantee will be called upon. We WILL be like Ireland but only because of the Government Guarantee. Then there are those covered bonds……………
The only thing that matters in this, is that the median multiple house price to income ratios, are every bit as bad here as they were in Ireland. All the other info is just peripheral.
It is becoming obvious that every housing bubble in the world had SOME unique features. THE common one, is artificial regulatory constraints on land supply, and median multiples ramping up.
Don't know if you have been recently to Ireland, Phil. I spent some time there mid last year.
You have missed one major factor that is very different. Ireland has huge housing divisions of spec properties where nobody lives. A huge over-supply of houses were built . In this respect Ireland is like USA where there are also huge spec housing projects with nobody. Didn't happen in NZ. This factor is not peripheral to the depressed state of house prices in Ireland
Don't know if you have been recently to Ireland, Phil. I spent some time there mid last year.
You have missed one major factor that is very different. Ireland has huge housing divisions of spec properties where nobody lives. A huge over-supply of houses were built. In this respect Ireland is like USA where there are also huge spec housing projects with nobody. Didn't happen in NZ. This factor is not peripheral to the depressed state of house prices in Ireland.
The way things are shaping up in NZ, with the lowest number of houses been built since 1965, with issues unfortunately associated with earthquakes and leaky homes, we are the exact opposite to Ireland in terms of housing supply (we do have a surplus in beach coastal areas where few people actualy live and work, but prices are now beginning to reflect that there)
i think you guys need to be a bit more positive about John Key. He aint perfect but at least:
1) he clearly thinks Aus has a bubble and is prepared to broach the subject (albeit couched in diplomatic terms) ... and this follows on from Bill Emglish's comments earlier in the year.
In Aus it is sacriligious for a major party politician to even consider the possibility of a bubble existing
2) he openly acknowledges that we are overinvested in the housing market and has taken small steps to deal with this.
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