By Alex Tarrant
The New Zealand dollar is too volatile and overvalued, according to New Zealand First leader Winston Peters. Meanwhile, affordable housing policy is likely to be boosted no matter which of National or Labour leads the next government.
I know they're two more cases of state-the-obvious, but at least questions on these topics didn’t receive the regular ‘talks are confidential’ cold shoulder from the Kingmaker. And I’ll admit I’ve got a new game – putting specific topics that are in the news to Peters to see how he’ll respond, rather than just asking which policy areas were canvassed during government formation talks.
‘Government formation’, meanwhile, might have become too broad a description for the negotiations – if you’re of a mind to read into how Peters described the process on Tuesday. Peters twice said NZ First was holding “coalition” talks, only to scramble to add a further line such as “or whatever they might be...”
Emerging from a two-hour session with Labour Tuesday lunchtime, Peters said progress was being made. Talks were “very serious,” and “very meaningful.”
On whether a decision would be made on Thursday, he replied: “Well, we’re worried about Tuesday and Wednesday – the next couple of days – nothing else but that.” But he then indicated New Zealand First was not expecting to extend the timeframe.
When a comment Labour leader Jacinda Ardern made after the talks, that social change was one area being looked at, was put to Peters, he said: “It’s quite possible, in the big picture of politics, that social and economic change would be core to what we’re talking about. We did have a campaign about it for the last eight months.”
Onto the specific topics referenced above. I asked Peters about his thoughts on the New Zealand dollar hitting a four-month low – seemingly due to uncertainty around a change of government.
“We have the most volatile currency in the whole wide world,” he said.
So, would the next government be looking at ways to make it less volatile?
“Well, I think exporters will be pleased. And we are an export-dependent nation,” he replied.
“If you’re an export-dependent nation, why would you go ahead and persist with an inflated dollar, which even the IMF says is over-valued? Why would you just ignore all the best advice in the world? But then again, this is not an academic matter.”
Another journalist jumped in: Was it fair to say then, that exporters would be pleased by the outcome of the negotiations?
“I’m just answering Mr Tarrant’s question,” Peters said.
Then back to yesterday’s topic: “The reason why the Overseas Investment Office doesn’t know a recent deal done by the ANZ bank, for the last eight months, that’s the kind of sad country we have become, and that’s what we intend to address in these coalition talks, or whatever they might be.”
Peters was also asked about his stance on the Maori seats. Was a referendum on them discussed during the talks?
“You know full well that we’re not talking about the substance of our coalition – or whatever arrangements we might have – discussions, and I can’t talk to you about that now because of the same description I put on in the first place.”
The same journalist started putting to Peters that two weeks ago [I think he meant a tad longer - ie before 23 September] he had said a referendum of the Maori seats would be required to get NZ First’s support. “Two weeks ago, the election hadn’t been held,” Peters snapped back.
On another subject close to Interest.co.nz readers’ hearts, I asked Peters his thoughts on the news Tuesday morning about the low number of affordable houses being built in Auckland’s special housing areas. Was it something that would be tackled, no matter which way the government went?
“Precisely, yes.”
And was it a subject of the talks, particularly given NZ First’s substantial policy prescription for first home buyers?
“I’m so delighted you’ve finally cottoned on to it, two weeks after the election.”
Peters was set to meet National from 12:30 Tuesday afternoon.
41 Comments
Re RNZ article, ... We are now playing with words like "retained affordable" and "Relative Affordable" all to make it more confusing for Joe Blogg ... it is pretty rich from the ACC to claim that these house prices are high when more than half of the building cost is Council fees and expenses ... Unless the land is offered for FREE, no average 3 bdrm house can be built in Auckland under $600K .... any stupid buildable section starts @ $350K ...and that could well be a 160m2 one :) !!
Not sure if Auckland will be turned into a shonky town full of Caravans called affordable housing !! like the ones Mr, Peters claim he can build for $130K
For once I mostly agree with you, however "a shonky town full of Caravans called affordable housing !!" might still be better than people sleeping in cars which has now crept into Auckland Central Suburbs like Mt Albert & New Windsor!!! and coming to a quiet street near you.....................
I take it Fritz you mean the government should be building and keeping state owned housing to replace the ones they sold, so to rent to the needy because they created a housing boom pushing prices far out of reach of the lowest income earners . Other than that seeing’s that they started this bubble and did nothing to stop it they should crush the market to 2011 prices which make perfect sense to fix this unaffordability problem. I was having a heated discussion with a mate the other day. He said house prices were fear. I said you couldn’t afford your own home today. He said yes I’m in it. I said exactly. I said you brought it for $400k didn’t you not that long ago with a $200k mortgage a . He said more or less. I said that wasn’t that long ago and now it worth $800k so if you brought that same house today with your same approximate $200k could you afford a $600k mortgage. He said hell no and I said then why should we expect anyone else too. Crash the bloody market and get the national government to publicly apologise of there utterly stupid plan for growth
Tell me Kate . Why do we seem to think FHBers should buy new homes. Shouldn’t old homes be the cheapest homes so FHBers with the least amount of money because they’re just starting out only buy old homes and older Fock who have save and worked up in there job over time earning more money be treating themselves to a new home and if retiring that new home could be further out of town anyway as a city generally grows . We seem to always connect FHBers with new homes. It seems stupid the way a city grows and the cost of the two, seems backwards. So new home are to expensive and there stuff all land anywhere in Auckland and slightly run down homes are to expensive as well. Maybe new homes are best build some where else and we need more crappy houses made cheap for FHBers
I imagine a lot of FHBs would move relocated homes onto their sections. Very common as first homes in the past, particularly so on LSBs, because for many years now those have been the only sections without covenants and/or being offered without a bundled build package.
But also in the past you had new Keith Hay Homes and similar which were pitched at the FHBs.
That's not to say I disagree with you on the fact that existing 120m2 homes are overpriced in today's AKL market - they are way over-priced. That would change quickly should the government start selling sections under the NZ First proposal.
I wasn’t talking about relocating homes I was trying to say FHBers seem to get incurraged to buy new. With government help by way of deposits in the past that are higher if they buy new etc etc. it’s stupid . There’s areas in Auckland that have cheaper old houses . They mighted be the best areas but if you’re a FHBer shouldn’t you be working your way up. New homes should be for pegople who can afford them and afford to live future out where there more land. Give FHBers $100000 at 2% over 30 years to buy old haha . Build new homes for retirees 50 miles out of Auckland on cheap land to free up these old homes in Auckland. There I’ve fixed the housing crisis. I’ll send you my bill. PS if a 65 year old goes one day over 65 they are fined &10k haha
Thing is, many FHBs have children and therefore the primary school in the area of purchase is an important consideration. One of our kids, rented in the area near the primary that they wanted to send the kids to - got the first enrolled and attending there and then later bought their first home out-of-zone (in a more affordable area and yes, they bought old - 1960s) but they were able to continue sending not only that child, but the subsequent younger siblings into that same primary school. They would not have been able to afford 'old' (in fact wouldn't have been able to afford a vacant section) in-zone for that particular primary.
Ridiculous really - in our day, all the primary schools were good schools and the feeder neighbourhoods had both low end and high end properties. That is the kind of age and wealth diversity you get when neighbourhoods are allowed to grow more organically because vacant sections are sold and folks build what size/design they want and what they can afford on them.
I agree that it would be ideal if retirees in a 1950-1970s family home could afford to downsize to new, but very often new (even if significantly smaller) is more expensive (check out the cost of a detached or semi-detached cottage in a retirement village complex!).
So, yeah, I agree, major big problems with old folks not moving on as well!!!!
Kate I guess at the end of the day if we turn the clock back only 5 years ago the cheaper Auckland housers were half what they are today but new homes probably not as much so Auckland in 5 years has come unaffordable for old homes and have been unaffordable for new homes even longer unless they’re a little box or miles out. So older smaller houses ever have to come down or FHBers can’t be a part of Auckland unless there incomes is doubled. Auckland’s priced itself out of FHBers haha sad but you gotta laugh really. Push the little darling families into a studio apartment
I don't know what the kids reasoning was - it's a small school (by today's standards) roll-wise - in a lovely, uncongested setting (like a rural school in a city environment) with a good sized school hall, lovely staff, good before and after school care options and good playground equipment and sports courts/fields. It has a small neighbourhood/family feel about it;
http://www.belmont-lowerhutt.school.nz/community/about-the-school/
...and a weaker exchange rate enables all NZ residents with substantial assets overseas to bring more money to NZ to buy more assets/houses/land at a discount rate...especially if the housing market weakens further whilst Joe Bloggs with a big mortgage suffers.
Many that wish for a housing bust often fail to realise that the cash rich wealthy actually want a bust so they can acquire more assets cheaply.
Talk of an incoming government trying to manipulate the dollar down will have members of the foreign investor brigade turning their twitchy gaze to the exit door - do I follow my instinct and bolt now or do I wait, trusting my head that says no government is clever enough to meaningfully control its own currency. Luckily for the property spruikers foreign investor influence on the market is insignificant, so there will be no impact should they all try to fit through that exit door at once.
One would think that the 16th of September 1992 never happened based on your comment. Countries trying to control their own exchange rates have resulted in some of the largest transfers of wealth from the public purse into private pockets in recent history.
http://www.investopedia.com/ask/answers/08/george-soros-bank-of-england…
Exactly, politicians and their mandarins often aren't the smartest players in the room. The slow motion train wrecks they orchestrate routinely attract the "black" epithet, when in fact the outcomes are very much golden for a very small minority.
As far as the new government’s exchange rate policy goes, we’ll have to wait to see what that is and what hand the law of unintended consequences deals us. But anyone paying attention knows the ultra smart money and insiders will play their hand with searing intellect and brutal force. (Well, okay, the insiders probably won't have the searing intellect part, but they'll make up for that deficiency with excessive dollops of feverish greed.)
Winston will fix house prices by controlling population growth.
Winston will improve exports by lowering the value of our dollar.
Winston will get rid of the foreign investors Which even if it was only 3% will make a big difference.
Winston then has to try and find the money to build the deficit of infrastructure and services that NZ now needs to support the last 10 yrs of population growth.
Thank goodness for Winston, The media are treating him with a bit more respect. That would be good if he could sort them out as well. Instead of being the eyes and ears of democracy our media are ego driven, self opinionated, propaganda pumping, bunch of fools.
I my opinion WP is a Arrogant Narcissist and stuck in the past,. Northland Hippy I hope you realise WP in the past was all for free open markets. We live in a world market not a closed off backward Government controlled economy which was exactly the case pre 1984. Exporters are fine with the current NZD value, a floating dollar reflects the true value, it most importantly allows it to fall in value when needed like in the Asian crisis, GFC etc And 04normal many people on here like you have to blame somebody so the Government get it. You talk like house inflation has never happened before, it happens every 9 years look at data over the
last 50 years. The biggest increase was 2002-2008 under Labour. The world has not seen interest rates this low since the 60's so interest rates down prices up, WP will do as he always does and cause political problems and instability. Wake up NZ nothing is ever perfect, there is always room for improvement if you are not happy in this booming economy your really not going to like it when we have a recession - smell the roses
Yeah its a booming economy if you have investment houses or land to sell.
Our export income has gone down despite increasing our population by 390,000 people in 5 yrs.
Even I could run a booming economy if you let me borrow 50 billion dollars.
Winston has to try and clean up this financial mess and yes it will hurt.
Roger Douglas was the economic wizard who embraced the free market starting our sell off of the countries assets and productive industries. Roger was a failed pig farmer and we gave him a country to run.
"Our export income has gone down ... in 5 yrs".
That is just plain wrong. In the year to August 2017 our export income from goods alone was $49.1 bln, its highest level ever. The same number in the year to August 2012 was $45.2 bln.
But focusing on goods is now only a part of the story. The real story about New Zealand's exports are Services which have now grown far faster. That is another $29.1 bln in 2017. In 2012 I don't have the exact data but it was less than $10 bln.
Every aspect of exports are records, goods and services, they have never been higher.
Exports of goods and services have gone from $55.2 bln in 2012 to $78.2 bln in 2017 and that is a +41.6% rise. In the same time our population has risen from 4.4 to 4.8 mln, only an +8.7% rise.
And this export growth has been done with a "high" exchange rate.
Your claim is a complete myth.
An artificially lower exchange rate makes exporters lazy; they no longer need to do any transformations, just sell commodities. No longer need to make what customers want, only sell in down-market bulk exchanges.
Selling more product as commodities, lowers our productivity rate (and before you claim that has been declining, note that is another myth. It just hasn't been rising as fast as we would like).
And of course, an artificially low exchange rate makes NZ wages lower by international standards and reduces our standard of living.
Artificially lowering our exchange rate to "promote exports" shows a naive understanding of the modern New Zealand economy, one stuck in a 1980's mindset. Most of us have moved on.
By any standard, a "high" exchange rate has been an outsized success for New Zealand's export performance, raising exports far, far faster than population growth.
that's very good.
But what's the quality of that growth? How much has it really added to the wealth of the country and it's people?
The crude figures have value, but it's only one measure.
Service exports would presumably include 'export education', which I think most people would agree has very mixed value to NZ.
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