High inflation delays first Fed rate cut, holding up NZ mortgage rates for longer; Insurance costs spiral in structural shift due to climate change; $1.1b of benefits paid to 50,000 earning >$100k/yr
I'm incredibly cyncial about ANZ's call for higher interest rates. There are too many signs that the economy continues to be in recession and a further move upward in interest rates will only deepen the recession without having a particular impact on inflation. RBNZ data shows the average rate on home loans in NZ increased 13bp in December - thats half a normal OCR tightening in one month thats likely to be repeated in January. The tightening of monetary policy continues without having to move the OCR. ANZs own data today shows reductions in tradeable inflation continuing to tick through and they openly said there is downside risk to their next inflation forecast. Businesses who carry debt are at the point where they need to put prices up to cover the increasing cost of the interest, pushing interest rates up further may actually push the domestic inflation rate up!
The cynic in me suggests ANZ's trading position might need to be investigated prior to that announcement. Lets keep an eye on their trading profits in their half year results.
Bernard thanks for highlighting this issue. Good to see some sense being talked about the fiscal pressures of ageing instead of putting our collective heads in the sand.
We can easily save 10% of expenditure (over $2 billion currently ) without hurting anyone. We used to gain 10% saving from the old surcharge- this is a more sophisticated simpler way of doing that. It has many advantages of the other levers like age and level and means testing if costs are to be constrained.
Can we please not make the same mistake with super that we are with benefits - means testing is expensive and inefficient as you'll need to hire an army of bureaucrats to administer a complex set of means testing criteria.
Make super and all benefits universal and raise taxes to claw it back on those who can afford it to pay for it, as is often done in Scandinavia.
Broad base, low complexity, and fair should be the ideal for benefits as for tax.
But Bernard... Many economists and property industry friendly (funded) media have been telling us that OCR cuts are going to happen imminently and another 'golden age' in property prices is just around the corner.... They couldn't possibly be wrong. Economists... Never!
Thanks Bernard. I’d like this opened for general access
Means testing of superannuation seems a great way to save a lot $$
How could the Min of Fin not agree?
I'm incredibly cyncial about ANZ's call for higher interest rates. There are too many signs that the economy continues to be in recession and a further move upward in interest rates will only deepen the recession without having a particular impact on inflation. RBNZ data shows the average rate on home loans in NZ increased 13bp in December - thats half a normal OCR tightening in one month thats likely to be repeated in January. The tightening of monetary policy continues without having to move the OCR. ANZs own data today shows reductions in tradeable inflation continuing to tick through and they openly said there is downside risk to their next inflation forecast. Businesses who carry debt are at the point where they need to put prices up to cover the increasing cost of the interest, pushing interest rates up further may actually push the domestic inflation rate up!
The cynic in me suggests ANZ's trading position might need to be investigated prior to that announcement. Lets keep an eye on their trading profits in their half year results.
Thanks for an interesting read! Definitely happy to have this opened up for general readership.
Why are we concerned about what Mike Hosking has to say! Are we expecting him to play God!
Interest rate rises - we don't need them.
Mortgage holders don't need them. There is no justification for further interest rate increases, no matter what the banks tell us.
Means testing to receive NZ Super should be on the table. This needs to be opened up to universal readership.
We really need to bring back the 1995 to 1998 surcharge. Deeply unpopular of course.
But a claw back tax on super anuitants so they paid back super starting at say 90k and disappearing at 130k would be entirely fair.
Please open it
Please open this for discussion. Extremely informative and important information to share.
Means testing or clawback?
Bernard thanks for highlighting this issue. Good to see some sense being talked about the fiscal pressures of ageing instead of putting our collective heads in the sand.
PIE (formerly RPRC) has researched a feasible, simple income test that does not sacrifice the good things about NZS ( eg universality, simplicity, age 65 indexation to wages). We suggested changing NZS into a genuine basic income in a 2019 paper for the Retirement Commission. Treasury kindly did the modelling and costing for this approach in 2019 and for an update in 2021. I am working on a 2024 update. Here is the 2021 paper https://www.auckland.ac.nz/assets/business/about/our-research/research-institutes-and-centres/RPRC/PensionBriefing/Pension-briefing-2021-2-NZS-as-basic-income.pdf
We can easily save 10% of expenditure (over $2 billion currently ) without hurting anyone. We used to gain 10% saving from the old surcharge- this is a more sophisticated simpler way of doing that. It has many advantages of the other levers like age and level and means testing if costs are to be constrained.
Those higher earners pay more tax on tgei
Those rich people on
Those rich people pay higher tax on their super.
I am 70 and still work, certainly do not earn > 100k! They have cut my pension by a certain amount not sure if this is the norm.
Can we please not make the same mistake with super that we are with benefits - means testing is expensive and inefficient as you'll need to hire an army of bureaucrats to administer a complex set of means testing criteria.
Make super and all benefits universal and raise taxes to claw it back on those who can afford it to pay for it, as is often done in Scandinavia.
Broad base, low complexity, and fair should be the ideal for benefits as for tax.
Jeeze Bernard, thanks for the downer....=)
But Bernard... Many economists and property industry friendly (funded) media have been telling us that OCR cuts are going to happen imminently and another 'golden age' in property prices is just around the corner.... They couldn't possibly be wrong. Economists... Never!