Dawn chorus: Gasfitters report cancellations

Draft climate report triggers cancellations of new gas systems; Air NZ CEO regrets Covid-19 'credit' policy, but no sign yet of extended window to rebook; Study out on looser border controls

Feb 04, 2021

TLDR: Gasfitters are reporting this morning the Climate Commission’s suggestion this week of a ban on new gas connnections for homes has triggered a rash of cancellations of appliance installations. It could turn into a political issue.

New modelling out this morning suggests the border restrictions could be relaxed without too much risk, but Ashley Bloomfield is downplaying it because the modelling was done before the new more infectious strains of Covid-19 emerged and forced tighter border controls. Bloomfield is hoping for herd immunity later this after after the vaccination programme and wants to stick with elimination.

Air NZ is taking a lot of heat this morning over its Covid-19 credit policy. CEO Greg Foran says it’s his major regret and Consumer NZ want Air NZ to extend the window for re-bookings. There’s also a brewing scandal in Otago where residents in the towns of Waikouaiti and Karitane were exposed to lead levels 40 times the acceptable limits and weren’t told about it for weeks because a council staff member was on holiday and the emailed test results weren’t opened.

Overseas overnight, the Bank of England says it’s prepared to bring in negative rates, but not yet. Markets took the ‘not yet’ as the main thing and pushed up the pound. There’s big news in consulting and global business land. McKinsey is paying US$573m to settle claims it ‘turbocharged’ America’s opiod crisis with its advice to Purdue Pharma on how to market OxyContin to doctors and supppress advice it was very addictive.

In our political economy

Well that escalated: The political blow-back from this week’s Climate Commission draft carbon budget report is coming out of left field. Home owners are cancelling gas appliance installations after the Commission’s recommendation that new gas connections to homes and buildings be stopped from 2025. Stuff’s Marta Steeman reported this morning gasfitters and plumbers are in shock that a ban could come so soon and are worried about their future livelihoods.

Master Plumbers CEO Greg Wallace said hundreds of members had told him customers were reviewing their decisions on installing gas hot water, central heating and cooking appliances following the release of the draft report. Homes use just 3% of NZ’s gas each year, which represents 0.25% of the nation’s emissions.

“We’ve had gasfitters with hot water systems cancelled this week, gas hobs cancelled and central heating systems all cancelled on the back of a draft report that the Government’s put out for feedback,” Wallace said.

‘Extend the window’ - Consumer NZ is calling on Air NZ to extend its rebooking window for credits built up because of Covid-19. Air NZ said it is close to finalising new dates. As the NZ Hereld’s Grant Bradley reported this morning: unlike most other airlines operating here, including Qantas, Air New Zealand did not offer refunds on non-refundable tickets for flights cancelled due to Covid-19. Instead, it offered credits for hundreds of millions of dollars worth of outstanding tickets.

10 year recovery: Air NZ CEO Greg Foran gave a couple of interviews this week, including one to Stuff’s John Anthony published this morning and one to Newshub’s Duncan Garner broadcast on Wednesday.

Foran said it could be 10 years before Air NZ returns to its pre-Covid size of flying 19m passengers a year and he expected very little international travel for another year. After 2021, the recovery would be “quite slow and probably a little bit clunky.” He confirmed Air NZ was still burning cash at a rate of $65-85m/month and said his biggest regret was Air NZ’s credit policy, which it announced on March 15 last year and received 75,000 calls in a day. Normally it gets 9,500 a day.

Foran also admitted to Garner Air NZ’s more ‘family-like culture’ had changed on his watch. "Cultures do tend to change and when you get situations like COVID-19, it's important that you don't just sit around and expect that things will return to normal," he said.

No pressure: Immigration New Zealand has granted Ports of Auckland leave to apply for special border exemptions to bring five crane operators into the country that the Custom Brokers and Freight Forwarders Federation said could make a huge dent in Auckland’s port congestion crisis. (Stuff)

Herd immunity in 2021? Ashley Bloomfield wrote in a NZ Medical Journal article published this morning he hoped New Zealand would get herd immunity later this year, but the country’s focus needed to be on maintaining the ‘elimination’ strategy until then.

He referred to another Medical Journal article published today on a study modelling the effects of selectively opening the borders to increase arrivals from around 14,000 a month to 55,000 a month. The study modelling done in August found a slightly increased risk of bringing in Covid-19, but Bloomfield noted the emergence of the more infectious strains early this year that had forced a tightening of controls.

My view: Don’t expect relaxation. My reading of his comments and the article is a selective re-opening is unlikely any time soon, largely because of the increased risk of the infectious strains and the limit on MIQ capacity of 7,316 (which equals the 14,000 a month given the 14 day isolation period). It’s also worth noting the closure of the Pullman in Auckland in the last week has reduced that number by about 300.

4.6% GDP growth?: Infometrics published its latest economic outlook this morning and it sees GDP growth accelerating to an annual rate of 4.6% in the second half of 2021 as the vaccine rollout boosts confidence and the housing market remains rampant. However, Infometrics Chief Forecaster Gareth Kiernan sees the reintroduction of LVR limits in May dragging house price inflation back into the single digit range by the end of the year.

“The combination of an improved economic outlook and soaring house prices will intensify pressure to address the housing crisis. Strong government action is needed to ensure more equitable housing outcomes in the future,” Kiernan said.

However, he sees the medium term more challenging with GDP growth sagging back to around 2% in the mid-2020s. “International tourism is unlikely to fully recover within the next four years, and the overvalued housing market could also weigh on construction activity and economic growth further out,” he said, adding there was also need for fiscal restraint.