RBNZ Chief Economist exposes limits to growth from low investment, low wage, high migration & just-work-more-hours nature of economy, which PM wants to speed up by driving faster & working longer
The reason why so many Kiwis are saying "No" is because our government spent their whole 1st year saying no ie: cutting funding to all areas of society. People lost their jobs & for people who still have jobs, money is tight.
The reason why Kiwis are saying "no" is because they are doing the very thing that wealthy people complained about other people not doing enough of.... saving money.
Interesting topic for Saturday morning! Agree the incentives for property investment as a personal wealth generator are out of whack. Part of my issue is with such a small domestic market it is difficult to find ROI for most people. There is a lack of investment opportunities, it is a chicken and egg thing. What is the average return for PPP ? Why can’t we set up an investment vehicle for NZ residents direct investment with this sort of return if people lock their money up for 10-15years? Based on NZs export product portfolio we shouldn’t actually be as wealthy as we think we are. Most developed economies have moved to service based economies (and higher productivity) and our soft commodities are price takers so we are always beholden to market pricing without any chance of adding any Premium.
This govt are not interested in the growth of the country per se. They are only interested in growth in relation to their own, and their mates, assets. We need to stop thinking Luxon et al have anyone's interest at heart except their own and their donors. Its really not rocket science. In the past National govts like Keys made an effort to mask their true agenda. These guys aren't even bothering and we r still giving them the benefit of the doubt. Look to the US. See the near future for NZ.
The COC does not have the confidence to invest and promote NZ why would the private sector. Time we stopped wallowing round in Austerity and headed in a forward direction together. The TPB and the RSB are the opposite of what we need.
Let me know if this becomes shareable please Bernard.
This just shows bluntly how wrong our direction is, and where we will end up.
The small passing commentary on exports is also critical - as others have pointed out we need to get balance of payments under control fast.
It is almost a tragedy. But not in a classical dramatic sense as it results from a consistent refusal to face up to the systemic inability of our governments to address the broader economic imbalances that are plain to see.
Hipkins is NOT a Labour person. he unilaterally rejected a capital income tax, and consequently David Parker resigned. how the Labour party can allow their prime ministers (Ardern and Hipkins) to unilaterally reject capital income tax is beyond comprehension - it should be a whole of party decision.
There are currently proposals out around reforming FIF. This would absolutely encourage investment in alternatives to rental property, and the reform is needed.
I can't figure out when you say that returns on residential property are higher than anything else, if you mean, Bernard, that people _think_ the returns are higher. That I would believe. But they are not higher in reality. That is just factually, statistically, untrue, over large sections of time.
your last sentence is erroneous/false/incorrect/untruthful/wrong !!!
I have had (up until the end of 2023) far greater capital income (tax free) from my 3 residential properties than I have had from any of my NZ electricity company shares.
returns to residential property developers might be greater.
When someone else is paying the mortgage on your rental property, you get interest deductibility and then when you sell the capital gain is not taxed then, yes, the return on residential property is higher than any other investment.
The overriding constant of this fully-paid-up Atlas Networks' Government is the deep, abiding ignorance and stupidity of its "shining light" Christopher Luxon.
He started as leader of the opposition with a deep but misguided sense of his own worth and the superiority of his "Business" model of Government - and he has not improved one bit. I am confident in the continuation of my observation that he has NOT ONCE directly answered a question but ALWAYS starts with "What i would say to you" or similar.
The man is vacuously unintelligent, incapable of learning, incapable of change, smug in his own delusional superiority and the main reason New Zealand is suffering under his pitiful lack of leadership. Every step he's taken has been misguided and unworkable, resulting in a worse new state of things. Even Winston is cringing while Seymour puffs up his chest and crows :-(
Definitely share… the more people who understand the systemic issues we’re facing, more chance of change! Especially politicos who read your newsletter but reassure themselves that “not many people read this….”
Facts seem to wither and die when confronted by magical thinking and ideology. We are 30 minutes down SH 75 and if the difference made by 100 to 80 back to 100 again makes a difference we really are squeezing the pips - not to mention the payback on the cost of a yoyo change. I can calculate the difference made but it is imperceptible in practice. Rearranging deck chair on the Titanic.
Agree trucks at 90k in lane do not allow 100k for cars. Impatient drivers overtake dangerously. If reduce trucks & shift freight by rail maybe then Simeon's speed increases could be up for
Luxon consistently shows he is the wrong man at the wrong time. He may be able to sell a chart with line go up! But he has no understanding of the fundamentals and has absolutely no clue about productivity.
For more than 5 years he allowed the implementation of iPads across the regional business (Turboprops) to be held back. This one tool allows a complete change in processes and ultimately reduces delays and allows for improvements in safety.
It's easy to pooh-pooh some the challenges with the iPad but they have allowed 10s of thosands of pages across multiple manuals to be available and easily searchable and it's an absolute game changer. But it was a productivity improvement, like many others, that he was unwilling to implement because he was too short-sighted to see how it would make line go up.
It's so shameful that around the world we end up with leaders so lacking in vision.
This is a particularly pertinent illustration of Paul Conway's analysis. We needed iPads but instead found our ferries had been cancelled.
I am reminded of the Marxist (as in Groucho) assessment of a politician: he looks for trouble, finds it everywhere, diagnoses it incorrectly and applies the wrong remedies.
In all honesty I don't know that it was alway him directly blocking them but there was at least one instance towards the middle of the project where he wouldn't give sign off. Later on it was those down the chain of the inflated middle management that came up with the excuses.
It was very much the culture he created of siloing the business and utilising layers of management to slow roll any spending.
The project would have originally been more expensive due to having Turboprops operated by 2 separate entities meaning certification would have to be done twice through two separate operating certificates.
Those separate entities and thus separate contracts was something he was keen to maintain for industrial relations purposes, at the expense of the long-term savings of iPads as a flight crew productivity tool.
Lack of vision is personal to life experience. If not walked in others shoes need to engage brain & try to envision others experience. Takes effort & can be enlightening & humbling.
A cynic would argue that the evisceration of the media was all part of the plan. The money goes to Meta and Zuck pays $25m of it straight back Trump for (correctly) banning him for attempting a coup on Jan 6.
1News has just one economics and business reporter. Katie does a great job, but there’s just one of her. I don’t know, but a chief reporter might have argued we’ve heard all this before…
Instead of trying something different, can we just keep doing the same thing but harder, and maybe it'll work this time
The bits tacked on to this housing market economy seem to be falling off!
The reason why so many Kiwis are saying "No" is because our government spent their whole 1st year saying no ie: cutting funding to all areas of society. People lost their jobs & for people who still have jobs, money is tight.
The reason why Kiwis are saying "no" is because they are doing the very thing that wealthy people complained about other people not doing enough of.... saving money.
Interesting topic for Saturday morning! Agree the incentives for property investment as a personal wealth generator are out of whack. Part of my issue is with such a small domestic market it is difficult to find ROI for most people. There is a lack of investment opportunities, it is a chicken and egg thing. What is the average return for PPP ? Why can’t we set up an investment vehicle for NZ residents direct investment with this sort of return if people lock their money up for 10-15years? Based on NZs export product portfolio we shouldn’t actually be as wealthy as we think we are. Most developed economies have moved to service based economies (and higher productivity) and our soft commodities are price takers so we are always beholden to market pricing without any chance of adding any Premium.
This govt are not interested in the growth of the country per se. They are only interested in growth in relation to their own, and their mates, assets. We need to stop thinking Luxon et al have anyone's interest at heart except their own and their donors. Its really not rocket science. In the past National govts like Keys made an effort to mask their true agenda. These guys aren't even bothering and we r still giving them the benefit of the doubt. Look to the US. See the near future for NZ.
Please do share this with wider public , if only it were “required” reading - what might it encourage
The COC does not have the confidence to invest and promote NZ why would the private sector. Time we stopped wallowing round in Austerity and headed in a forward direction together. The TPB and the RSB are the opposite of what we need.
Let me know if this becomes shareable please Bernard.
Shareable now. Sorry for the delay. Thanks Rob.
That sandwich board is a chalked up metaphor for Seymour's school lunches. 🥪
Yes please share.
This just shows bluntly how wrong our direction is, and where we will end up.
The small passing commentary on exports is also critical - as others have pointed out we need to get balance of payments under control fast.
It is almost a tragedy. But not in a classical dramatic sense as it results from a consistent refusal to face up to the systemic inability of our governments to address the broader economic imbalances that are plain to see.
100% and much as I like Hipkins I dont think he has the balls to do what is needed either.
Hipkins is NOT a Labour person. he unilaterally rejected a capital income tax, and consequently David Parker resigned. how the Labour party can allow their prime ministers (Ardern and Hipkins) to unilaterally reject capital income tax is beyond comprehension - it should be a whole of party decision.
Few would appear to take that stand. And that is a key problem.
Agreed 1💯
There are currently proposals out around reforming FIF. This would absolutely encourage investment in alternatives to rental property, and the reform is needed.
I can't figure out when you say that returns on residential property are higher than anything else, if you mean, Bernard, that people _think_ the returns are higher. That I would believe. But they are not higher in reality. That is just factually, statistically, untrue, over large sections of time.
your last sentence is erroneous/false/incorrect/untruthful/wrong !!!
I have had (up until the end of 2023) far greater capital income (tax free) from my 3 residential properties than I have had from any of my NZ electricity company shares.
returns to residential property developers might be greater.
When someone else is paying the mortgage on your rental property, you get interest deductibility and then when you sell the capital gain is not taxed then, yes, the return on residential property is higher than any other investment.
Adjusted for risk and leverage. I can borrow against my house. I can’t to buy or invest in anything else.
The overriding constant of this fully-paid-up Atlas Networks' Government is the deep, abiding ignorance and stupidity of its "shining light" Christopher Luxon.
He started as leader of the opposition with a deep but misguided sense of his own worth and the superiority of his "Business" model of Government - and he has not improved one bit. I am confident in the continuation of my observation that he has NOT ONCE directly answered a question but ALWAYS starts with "What i would say to you" or similar.
The man is vacuously unintelligent, incapable of learning, incapable of change, smug in his own delusional superiority and the main reason New Zealand is suffering under his pitiful lack of leadership. Every step he's taken has been misguided and unworkable, resulting in a worse new state of things. Even Winston is cringing while Seymour puffs up his chest and crows :-(
Definitely share… the more people who understand the systemic issues we’re facing, more chance of change! Especially politicos who read your newsletter but reassure themselves that “not many people read this….”
Facts seem to wither and die when confronted by magical thinking and ideology. We are 30 minutes down SH 75 and if the difference made by 100 to 80 back to 100 again makes a difference we really are squeezing the pips - not to mention the payback on the cost of a yoyo change. I can calculate the difference made but it is imperceptible in practice. Rearranging deck chair on the Titanic.
The 80k to 100k comparison is false if it is a 2 lane highway with 90k trucks in the line of traffic.
Agree trucks at 90k in lane do not allow 100k for cars. Impatient drivers overtake dangerously. If reduce trucks & shift freight by rail maybe then Simeon's speed increases could be up for
discussion.
Soo many interesting graphics to digest. A great summary of the RBNZ and what you have been saying for a long time
Luxon consistently shows he is the wrong man at the wrong time. He may be able to sell a chart with line go up! But he has no understanding of the fundamentals and has absolutely no clue about productivity.
For more than 5 years he allowed the implementation of iPads across the regional business (Turboprops) to be held back. This one tool allows a complete change in processes and ultimately reduces delays and allows for improvements in safety.
It's easy to pooh-pooh some the challenges with the iPad but they have allowed 10s of thosands of pages across multiple manuals to be available and easily searchable and it's an absolute game changer. But it was a productivity improvement, like many others, that he was unwilling to implement because he was too short-sighted to see how it would make line go up.
It's so shameful that around the world we end up with leaders so lacking in vision.
This is a particularly pertinent illustration of Paul Conway's analysis. We needed iPads but instead found our ferries had been cancelled.
I am reminded of the Marxist (as in Groucho) assessment of a politician: he looks for trouble, finds it everywhere, diagnoses it incorrectly and applies the wrong remedies.
Penny wise pound stupid. Only interested in lining their own pockets
I’m curious Kurt. Why did he block the iPads?
Cheers
Bernard
In all honesty I don't know that it was alway him directly blocking them but there was at least one instance towards the middle of the project where he wouldn't give sign off. Later on it was those down the chain of the inflated middle management that came up with the excuses.
It was very much the culture he created of siloing the business and utilising layers of management to slow roll any spending.
The project would have originally been more expensive due to having Turboprops operated by 2 separate entities meaning certification would have to be done twice through two separate operating certificates.
Those separate entities and thus separate contracts was something he was keen to maintain for industrial relations purposes, at the expense of the long-term savings of iPads as a flight crew productivity tool.
Lack of vision is personal to life experience. If not walked in others shoes need to engage brain & try to envision others experience. Takes effort & can be enlightening & humbling.
Yet to watch the speech by Paul Conway, but as ever, I was blissfully unaware as it wasn't reported on one news.
Just went and checked the bulletin from Wednesday. Here's the top 5 stories:
1. Israeli soldiers on their holibobs
2. Winston does a racism
3. Speed limit free for all
4. Country running out of GPs
5. Sky TV not working
So my question is why does Conway's speech not get reported?
A cynic would argue that the evisceration of the media was all part of the plan. The money goes to Meta and Zuck pays $25m of it straight back Trump for (correctly) banning him for attempting a coup on Jan 6.
1News has just one economics and business reporter. Katie does a great job, but there’s just one of her. I don’t know, but a chief reporter might have argued we’ve heard all this before…
'Evidence based policy'