Breakfast briefing: The dairy trade is saving New Zealand

Dairy prices jump; US retails sales slip; Japanese households pull back; EU hole gets deeper; Australian banks extend mortgage deferrals; UST 10yr yield at 0.65%; oil unchanged and gold up; NZ$1 = 65.6 USc; TWI-5 = 70.3

8th Jul 20, 7:21am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news most countries are struggling just to keep their economies from shrinking too fast.

But first up today, there was a dairy auction overnight and it was a very positive event. Volumes sold were strong and prices jumped a strong +8.3% from the prior auction. The gains were led by WMP which was up a startling +14%, but butter (+3.0%), cheese (+3.3%) and SMP (+3.5%) all rose by good margins as well. The overall gains were restrained by a rising dollar however so the rise in New Zealand currency was 'only' +6.8%. Still, it is a surprisingly positive result to kick off the new season. Having said all that, prices are now only back to the middle of the range that has been in effect since the start of the 2016 season. If it holds however it will mean that farm gate price estimates are under no threat of cuts.

American retail sales as tracked by the Johnson Redbook were lower again last week and are now -6.9% below the level of a year ago.

And a US immigration decision that overseas students can only maintain their education visa status if they physically show up at classes, is threatening tens of thousands in that category - because classes are moving online. If New Zealand was open to students we would likely see a flood.

Japanese household spending slumped seriously in May and by much more than was anticipated. It is not setting June up for much of a meaningful gain.

Europe is facing a grim economic future. It will sink deeper into recession than previously thought due to the effects of the pandemic. And that is according to Brussels' own forecasts. They will contract a record -8.7% this year before hopefully growing +6.1% in 2021. These are worse forecasts than those issued in May.

In Australia, banks are extending their mortgage deferral program over fears that to end it will see an out sized level of borrowers fall off a cliff. The extension is to September and it is likely the economic cost of ending it then will be even higher.

Overnight, European equity markets were lower, mostly down by a bit less than -1%. London however fell -1.5%. Wall Street is lower too in afternoon trade but only by -0.6%. Yesterday Shanghai rose another +0.4% after the very strong Monday rise but fell away noticeably at the close. Hong Kong (-1.4%) and Tokyo (-0.4%) both can't match Shanghai at present. The ASX200 ended flat; the NZX50 was up +0.8%.

The strong equity market is behind a three-month high for the Chinese currency against the US dollar. And China's foreign exchange reserves rose in June. But so did those of Singapore, Taiwan and Hong Kong.

The latest compilation of COVID-19 data is here. The global tally is 11,688,900 and that is up +194,000 since this time yesterday. Global deaths reported now exceed 540,000 (+5000). This new acknowledgement isn't positive.

A quarter of all reported cases globally are in the US, which is up +54,700 overnight to 3,061,900. US deaths now exceed 134,000. The number of active infections in the US is now up +18,000 to 1,591,100.

In Australia, there have been 8755 cases, another +169 since this time yesterday, and mainly in Melbourne which is now in a new lockdown. Their death count is unchanged at 106 but 10 people are now in ICU and their recovery rate has slipped back to 85%. There are now 1193 active cases in Australia (up +133 in a day).

The UST 10yr yield is down -5 bps to just over 0.65%. Their 2-10 curve is a lot flatter at +41 bps. Their 1-5 curve is down too at +14 bps, as is their 3m-10yr curve down to +53 bps. The Aussie Govt 10yr yield is down -6 bps at just under 0.89%. The China Govt 10yr is up again, up another +6 bps at 3.09%. And the NZ Govt 10 yr yield is down -2 bps at 0.98%.

The gold price is up by +US$14 to US$1,797/oz and that is another new nine-year high.

Oil prices little-changed. They are now just over US$40.50/bbl in the US and the international price is just under US$43.50/bbl.

And the Kiwi dollar has stayed firm at just over 65.6 USc. On the cross rates we are up at 94.2 AUc and that is a 75 day high. Against the euro we are firmer too at 58.1 euro cents. That means our TWI-5 is is up to 70.3 and its highest since January.

The bitcoin price lower overnight but only marginally, down -0.4% to US$9,289. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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106 Comments

by murray86 | 8th Jul 20, 7:24am 1594149878

What lies behind the surge in the dairy auction? Opinions? What about impacts?

by Timmyboy | 8th Jul 20, 8:51am 1594155084

Perhaps it's related to the CCP "fostering a healthy bull market".

Encourage investment in anything and everything to prevent the system going down.

Just like the rest of the world really, except when their masters say jump....

by Kezza R | 8th Jul 20, 9:02am 1594155745

Or buy up large and create a massive stock pile then stop buying and sink the NZ dairy price and buy up more land.

by Boatman | 8th Jul 20, 7:36am 1594150612

I am not confident about the future at all. We are in serious trouble. We dont have a plan and are simply reacting to things as they unfold.

by murray86 | 8th Jul 20, 7:51am 1594151472

I tend to agree. There are too many in positions of power or influence who seem to be desperately trying to hold on to past models and methods of economics etc, in denial that things have changed, and refusing to hear or listen to the calls for change. Politics are getting nastier, and even ordinary people including many who contribute to this forum are too invested in ideology to be able to have an objective view of what is happening.

by Richardfromauckland | 8th Jul 20, 8:32am 1594153966

Don't get too down. Things are very uncertain at the moment and reactive decision making will be needed. Wish there was bit more investment towards tech and science upskilling rather than getting everyone on shovels.

by murray86 | 8th Jul 20, 8:43am 1594154639

Not down Richard, just mystified. The natural human resistance to change seems to be the dominant force at the moment as everyone seems to be waiting for things to return to 'normal', a few seem to be trying to force it. But overall for what is ahead, what will be 'normal'?

I agree that investment in tech and innovation is needed. I strongly support Dan Khans comments in yesterday's top 5, but also realise that most of that will take time, and in the immediacy, the Government is just trying to keep as many employed as possible. In some respects the upcoming election is unfortunate as they will be focused on 'populism' rather than doing something substantial that will give the country a solid future.

by oreo | 8th Jul 20, 8:48am 1594154928

I don’t think they had a plan for the future anyway to be honest.
No vision for the country being National or Labour, just keep going as usual with some little tweaks/millions here or there

by murray86 | 8th Jul 20, 9:06am 1594155974

I don't think anyone had a plan. If you had said in February that the country would be locked down for a month in April they would have tried to put a straight jacket on you, medicate you and stick you in a padded cell. What has/is happening, by conventional wisdom of all the egos, would have been considered a virtual impossibility. But it did. Now, almost overnight we are saying where's your plan? The problem is, it takes time to develop something that will work, and for the moment we are still being forced to just react.

by Timmyboy | 8th Jul 20, 9:14am 1594156461

Well I for one believe that humanity has peaked out and it is all downhill from here.

We are a fascinating species that has drawn down spectacularly on the natural capital of the planet, and we now face a barrage of consequences.

The general population, and therefore the politicians, are generally clueless about our predicament and want to grow at trend 3.5% thereby doubling our draw-down on resources that are simply not there. Interestingly, the military are aware of these problems and seem to be preparing.

I have a teenage son who is aware of these issues. But rather than get down about it, I tell him we need face up to the challenges and enjoy the spectacle. It's going to be a hell of a ride.

by Weld | 8th Jul 20, 9:25am 1594157114

Are you optimistic about seeing grandchildren in your future? I don't expect my two children to have any of their own. Got to save the planet, you know.
//

by Timmyboy | 8th Jul 20, 9:35am 1594157724

If I knew then, what I know now, I wouldn't have had any.

But I was young, dumb and full....

by Final Account | 8th Jul 20, 3:32pm 1594179146

There's plenty of resources in the solar system for humanity to grow. Its just a matter of the right distribution model. I for one am not worried about the limits of growth, the only thing stopping us from getting there is imagination. Creativity peaks at around the age of 25. Look at whose in charge. Go figure.

by ham n eggs | 8th Jul 20, 3:57pm 1594180636

this is an interesting read
https://dothemath.ucsd.edu/2011/10/why-not-space/

by Final Account | 8th Jul 20, 7:38pm 1594193884

Interesting article from 2012.

by ham n eggs | 8th Jul 20, 9:34am 1594157668

"I agree that investment in tech and innovation is needed"

No no no
Its the complete opposite of resilience
A solid future is shovels, not pixels

by powerdownkiwi | 8th Jul 20, 10:21am 1594160508

And for a goodly while, re-purposing of existing stuff. Mostly for food-production.

Most folk haven't a clue - politicians included. They were of the past, we need to be addressing the future.

by frazz | 8th Jul 20, 8:39am 1594154375

Any ideas welcome Boatman...team 5 million remember.

by Kezza R | 8th Jul 20, 9:11am 1594156275

Our politians know better. All we need is a shovel and a hug.
The underlying feeling I get from Jacinda is that it is team Jacinda, she knows better and will protect us from ourselves.

by frazz | 8th Jul 20, 9:50am 1594158641

Really? Thats a bit sad? I just get on with life and things seem to be moving - not much thoughts on Jacinda personally. She seems competent enough.

by Kezza R | 8th Jul 20, 10:18am 1594160329

Competent?? Jacinda?? I'm not getting that at all, she looks like she has a grip, gives a smile and it's all under control but really it's all pie in the sky ideas and no delivery.
Did you not hear the 'I will continue to hug people', 'we are prepared' and all the rest, then boom Lock Down is the only way. What was really going on was they were not prepared, they did not have anything under control and they had totally been asleep at the wheel underestimating the situation. All wrapped up in a lovely PR spin of we will go early and hard and get this under control.
Do they have a viable plan for the future?? No they don't it's all shovel ready knee jerk projects.

by frazz | 8th Jul 20, 10:20am 1594160453

Jeez..get a grip its not like we are under lockdown again? Are you sure feel asleep and woke up in Melbourne this morning? Whats your viable plan for the future given the current state of the world?

by Kezza R | 8th Jul 20, 11:03am 1594163020

Kiwi's have a 'look at us we are doing great, world leaders in this, that and the other thing' attitude. We are a speck of dust on the global scale of things but somehow we think we will ride this out with minimal consequences by building a few roads. The old saying is if the US sneezes, the rest of the world catches a cold. The US has more than just sneezed, it is a shambles. You are confusing, NZ will do better than most with the harsh reality that the world is in a state that has never been seen before that is insanely bad and getting worse.
You need to go and read up on the 90 at 9.00 on here for the past few months and take it in.
You ask for my plan.. I do not understand why you ask this. Maybe you think that for anyone to point out the issue they need to have a plan? That is not the case at all and a silly way to look at it.

by frazz | 8th Jul 20, 11:21am 1594164060

So we agree then - you nor the government have a viable plan for the future?? If anyone was silly this morning it was not me ( re read your posts)

by Kezza R | 8th Jul 20, 12:02pm 1594166522

Mate, back the truck up. You are the one saying that Jacinda is competent.. now it has changed to the Gov't dosen't have a plan.... scratching my head here.
FYI. 'A silly way to look at it' is not saying you are silly.
The difference of opinion here is that you are looking at the here and now and I am looking out to the future.

by frazz | 8th Jul 20, 12:32pm 1594168359

Yes Jacinda is competent.. - Muller I don't think so. Plan for the future?..well thats going to take a lot of work from a whole bunch of people (not just Jacinda). If you look out the window its seems to be changing daily ..so hard to plan long term.

by Kezza R | 8th Jul 20, 1:16pm 1594170975

A competent Jacinda would be a delivering Jacinda.
We can all agree that Jacinda is not effective at delivering and that it is highly unlikely that anything will change. As you say it will take a lot of people to make a change, Jacinda dose not have people that deliver.

I have no confidence in Muller and distain that National continues to be in bed with the CCP. In saying that I do not have to put up and agree with the next best option just because it is the next cab on the rank.

by the Joneses | 8th Jul 20, 10:33am 1594161214

The communication approach seemed to work well to get NZ onboard and to comply with the lock down. There is no community transmission. There were no demonstrations in the street against the lock down like in the USA.

So what is Mullers plan for the future? I think he mentioned building one road, and opening the border faster somehow (that is the extent of the detail).

by bender | 8th Jul 20, 11:16am 1594163768

Look at Melbourne. I thank Jacinda et al for resisting the push to open the borders for the tourism sector.

by donny11 | 8th Jul 20, 9:09am 1594156146

I mean lets be honest losing our tourism industry was always going to leave us in a would of pain.
What surprises me is the lack of major infrastructure projects that have been announced in an attempt to full the void.
I would have thought by now we would have major keynesian policy announcements in this regard. The east/west link comes to mind, as does light rail to airport. What about the 2nd runway for Auckland, perfect time to get that done??
Instead we seam to just be sitting on our hands waiting for the wage subsidy to run out in September, then there will be carnage.

I think posterity will look back on NZ's response to COVID19 & be firstly impressed by how it achieved elimination, but then be scratching its head on how it stood there idly while its economy imploded.

by redcows1 | 8th Jul 20, 9:19am 1594156785

Well for a start two of your suggestions are reliant on a dead tourism industry, the other one is for more vehicles.

by donny11 | 8th Jul 20, 10:28am 1594160889

I mean I'm assuming the shut down is temporary & we will reopen between 6 months & 2 years from now one way or another. Tourism will then take off again. My point is we should try & aggressively push forward some big infrastructure to take the edge off the job losses & stop the economy becoming a complete basket case. Just being pragmatic.

by murray86 | 8th Jul 20, 11:44am 1594165445

We could ask a bigger question; what is the point of tourism? Superficially the answer seems obvious, but underneath there is some complexity that leads to other questions. The superficial parts are just about learning about other places in the world, learning to appreciate other cultures and people in general. Some of the complexities will be scouting somewhere better to live, learning about where and who to do business with, looking for weakness's in a potential conquest. Those questions that arise will be; who are our friends and who are not, how much population can our nation support (includes visitors), what's in it for us, and so on. Serious debate. So far, from what I have seen, none of the debate has had any depth to it at all.

by Kezza R | 8th Jul 20, 1:47pm 1594172850

I don't see tourism start in any mass for at least 5 years due to the level of personal debt and I'm guessing at PR drives to holiday at home and get your country working. Effective marketing campaigns will push a negitive sentiment on those who choose to holiday elsewhere instead of holidaying and spending in their own country.
A blast from the past. Don't leave home till you've seen the country... "a word of advice to all New Zealanders' .... that is some serious wording.
https://youtu.be/PVH7uBzQX7I

by Logicthinker | 8th Jul 20, 9:10am 1594156244

Interesting to see where our dairy products are being sold - at the moment China is taking 28% the other 72% is a mixture of domestic, Australia, USA, South America and the rest of Asia.
In the next 10 years our exports are set to double to China, according to Fonterra's website.
No wonder "the government doesn't want to rock the boat"
Interesting.

by Weld | 8th Jul 20, 9:27am 1594157228

There are risks in putting too many of your export eggs into a fascistic dictatorial basket. I don't know if the CCP has New Zealand's well-being at heart.

by Lanthanide | 8th Jul 20, 9:31am 1594157487

Not sure what you expect NZ to do differently really. We're simply not large enough to stand on our own, ambivalent to what occurs outside our borders. Australia isn't really either.

by Logicthinker | 8th Jul 20, 12:10pm 1594167012

Agree, Lanthanide
What else can we do, the USA and UK are our only potential markets but they are protecting their own dairy product markets to a large degree.
We can only diversify in NZ to the degree of reproducing the products we gave to China to manufacture but they would retaliate by reducing our dairy products. We have been poor negotiationors in the past, particularly under the Key government where we accepted sub-standard products like railway locomotives. Having said that it is not easy to negotiate with a super-power, in particular a communist one.
Dont like to be negative, but there could be a world war on the horizon between China and Twenty Eyes.

by Kezza R | 8th Jul 20, 12:45pm 1594169152

The US and China were at war before this started with their to and fro on trade tariffs. China seems to be throwing their weight arround at present to appear strong when they are weak. The US would love a proxy war to get the oil price to rise and sell arms but sending troups off is going to spread CV19 further and possibly render the force ineffective. I think we will see a war but more like a cold war scenario.

by Logicthinker | 8th Jul 20, 2:12pm 1594174365

I think it might be more than what you say Kezza.
India and Australia is in direct conflict at the moment. The UK has said goodbye to Huawei. As you say, the trade wars are continuing with the US, but today the FBI has disclosed a privacy breach on US residents by chinese government hackers. China is losing manufacturing capacity due to Covid and being uncompetitive. Why Musk built the Tesla manufacturing plant there is beyond me.
There is also the Hong Kong situation - the UK and Aussie want to take 3M residents each - this has angered China.
Does the Twenty Eyes want to antagonize China and vice-versa.
Where does this situation place Russia.
The current situation is building and must come to a conclusion, lets hope it is not too ugly - for want of a better word.

by Kezza R | 8th Jul 20, 2:35pm 1594175750

I expect it to be really bad.
Russia and China look like they have been working together for years and I kind of get that is basically a response to the US after decades of action against them especially Russia, the US has really stuck the boot into them a lot over the last 60 or so years.
I dont see any side being able to back off. The West would do it hard walk8nfa way from China but China would wear the brunt of it.
Yeah it is an escalating shocker.

Both main parties are in bed with the CCP. Labour has light heartedly stood up this week but is still looking not to anger China, National is just blatantly in bed with them and expects Kiwis to turn a blind eye towards that.

by CJ099 | 8th Jul 20, 7:37am 1594150629

BBC Coronavirus: China's workers and graduates fear for their future. https://www.bbc.com/news/business-53303357

by Ngrrk | 8th Jul 20, 7:54am 1594151679

An example of why business data coming from China should be taken with a very small pinch of salt. I'm sure this scenario is replicated all over the country.

by Glitzy | 8th Jul 20, 9:09am 1594156148

Still no air pollution in Hong Kong, the implication being factory activity in the Greater Bay area is not happening.

by theglc | 8th Jul 20, 8:22am 1594153357

But isnt China telling us everything is fine and dandy

by RickStrauss | 8th Jul 20, 9:23am 1594157010

Best leader in the world. Of all the current lot of race based nationalist leaders with thin skins and easily provoked tantrums, Winnie the Flu trumps the lot.

by Fritz | 8th Jul 20, 9:58am 1594159112

Yeah, and this is why I think the CCP is getting even more dictatorial and aggressive. They fear uprisings, stemming from a weak economy and other latent things, and are making statements...

by The Person | 8th Jul 20, 7:53am 1594151631

For all this talk of drought in the upper North, those soil moisture levels have been looking bang on normal for some time now

by Andrewj | 8th Jul 20, 8:10am 1594152621

We are still dry, green and had rain but still way below what we would expect this time of year. My creeks are still dry and none of the springs are flowing.
It feels like we are still stuck in the dry weather pattern of the past two years. I am buying cattle and stocking the farm but cautious.
There is going to be such a shortage of stock in spring, it will take a year or two to sort out and get back to normal. In the meantime lots of animals will need to be kept back for breeding.

by redcows1 | 8th Jul 20, 8:59am 1594155594

Just got home last night from two weeks away. Wet as here no in eastern Bay of Plenty. Not sure how much rain we've had but creeks are now all full. Still take a bit to get the water table full but certainly things are better and growth rates have been normal or above lately. Feeling positive but that may just be the time off.

by Andrewj | 8th Jul 20, 9:33am 1594157594

Talked to a friend in Nth Canterbury and like us there is still a weather pattern that is worrying locals. Those rain events you are getting don't make it down here. You could drive a car over my hills without leaving a mark.
We get 5mm here and there but no real rain. I have feed and soil temps are above average at 12º, normally i'm well under 10º by July. Would not want to go into spring with these moisture levels, August is our wet month so lots of time yet. Just in the back of your mind that little hamster is twitching.

by Kezza R | 8th Jul 20, 2:39pm 1594175993

Mean while in Dunedin you couldn't drive a two wheel drive across a park at present... it is saturated and still another day of rain to come, two days fine then more rain. Basically it has rained for the last two weeks, last winter was very dry.

by profile | 8th Jul 20, 7:57am 1594151848

Plenty of feedlot grain out there to chase strong dairy prices. "FAO’s forecast for world cereal production in 2020 has been revised upward by 9.3 million tonnes this month and now stands at almost 2 790 million tonnes, with the global output set to surpass the record-high reached in 2019 by as much 3.0 percent (81.3 million tonnes)."
http://www.fao.org/worldfoodsituation/csdb/en/

by blobbles | 8th Jul 20, 7:58am 1594151901

Brazil's president testing positive is fantastic, hopefully he will take it more seriously once he experiences the effects first hand. I also expect NZ banks to allow mortgage deferral basically forever, likely backed by you and me... No risk to anything if taxpayers bail out everyone taking risk.

by theglc | 8th Jul 20, 8:26am 1594153590

Perfect lets all buy a new house and never have to pay anything towards it

by RickStrauss | 8th Jul 20, 9:24am 1594157052

State housing, essentially.

by MissyChung | 8th Jul 20, 12:19pm 1594167593

it's the Muslim way -isn't it. No Interest. interest is bad

by bw | 8th Jul 20, 8:43am 1594154638

"No risk to anything if taxpayers bail out everyone taking risk."
Taxpayers?
With MMT you don't need taxpayers! Just a good set of spreadsheets....,

by nigelh | 8th Jul 20, 10:22am 1594160527

OBR. Some taxpayers but specifically anyone, not just taxpayers, who have deposits with the banks will take a haircut. Anything from 10-100% of your deposit. Your guess on % as good as mine.

by streetwise | 8th Jul 20, 12:00pm 1594166405

My aged mother and myself will be bailing out of term deposits with a big Aussie bank (rating AA-) when they mature over the next few months. We'll be putting our investments in Kiwibonds (rating AA+). Not interested in the interest yield......just preserving capital.

by Andrewj | 8th Jul 20, 8:21am 1594153274

Labour is going for big increases in Ag exports all while reducing nutrient leaching and Co2 emissions.
Abracadabra
https://www.stuff.co.nz/business/farming/122055134/prime-minister-jacin…

by youngdumbandbroke | 8th Jul 20, 8:42am 1594154540

Maybe she's banking on the referendum voting yes??

by Advisor | 8th Jul 20, 9:03am 1594155813

I'd rather our government use the tax proceeds from a larger agricultural economy to provide a capital boost to our farming businesses for digitisation that create decent-paying jobs and attract local workers into the sector than throw regulatory roadblocks that hinder growth and prosperity altogether.

The practical solution to environmental destruction is planning and implementing sustainable practices, not pulling the plug on entire industries.

by murray86 | 8th Jul 20, 9:08am 1594156088

They don't need taxes to do that. They just need to fund it by getting the RBNZ to provide the funds. Question is, is it on their priority list?

by Audaxes | 8th Jul 20, 10:47am 1594162057

What funds? - The RBNZ buys government bonds from banks which have already been monetised by private sector savings. The banks have just swapped one interest bearing government asset for another. It is obvious from recent data banks are contracting their collective balance sheets while expanding their investment in RBNZ reserves - nothing more. If the government issues more bonds private sector savers can further monetise them to facilitate the government's aim to spend those savings into the economy.

by murray86 | 8th Jul 20, 10:56am 1594162617

MMT, Audaxes, remember the article a few days ago to MMT (here) where the economist Stephanie Kelton talked about the powers of a sovereign fiat currency owner? Debt doesn't come into it. She basically disassembles the myths of money supply that we have all been sold for the last 40 or so years.

by Audaxes | 8th Jul 20, 6:46pm 1594190808

That's how it could be, not what it is.

by murray86 | 8th Jul 20, 8:28pm 1594196936

Could be - should be. We have an opportunity to change the way things are done, not hold on to the past which limited what could be done at the expense of the majority and the benefit of a few. Why not?

by powerdownkiwi | 8th Jul 20, 10:29am 1594160980

Advisor - there were a lot of key-words in there, but coherence? MIA.

You cannot have 'growth and prosperity' and 'sustainable practices' concurrently. That's just a fact. Sustainability isn't just 'offsetting carbon' or banning single-use plasic. By the time you are actually sustainable, ag-wise, you are no longer industrial.

Sigh.

by redcows1 | 8th Jul 20, 9:12am 1594156328

To be fair, at least it appears to want to focus on value rather than quantity, I notice the National party rebuttal still failed to get their heads around that as they did a few years ago.
This bit might need some fairy dust. As many on here have said, great product but...
"Later in the week he would be releasing a Wool Industry Project Action Group report that sets the path for future growth of a strong-wool sector. This would be a key part of the roadmap, he said."

by Andrewj | 8th Jul 20, 9:27am 1594157242

I sort of think we lost our competitive advantage a while back. Lots of food in the world, unless we go organic then it's hard to differentiate. Organic would be a very difficult shift for most of us. Land is finite and many owners are happy bumbling along in a strong low cost operation without much risk. To get them to up production would increase nutrient limits and require borrowing they probably don't want to do. Councils would then limit activity due to nutrient overloading of streams.
So do you want clean green New Zealand or industrial yukkie NZ? The first thing the gov't needs to do is abolish Regional Councils. Most of us wouldn't even notice they had gone.
I always keep my ear to the ground, at present i'm thinking the opportunities will be in the USA due to their low cost environment. Unless land prices start to collapse in NZ and Australia, gov't up depreciation, the investment will be elsewhere.

by blobbles | 8th Jul 20, 9:27am 1594157262

This seems like fantasy stuff... their report however is really focused on productivity improvements, but then somehow wants to employ an additional 10k kiwis in the sector? That's generally not productivity improvements if you are using more labour to extract goods. Their plan is to make the goods higher value, which is exactly what is needed. The only question is whether they can execute and we all know their history of execution...

by ham n eggs | 8th Jul 20, 9:38am 1594157891

"Their plan is to make the goods higher value, which is exactly what is needed"

This is the fantasy part
Where is the abundance of consumers that can miraculously pay more for stuff?

by powerdownkiwi | 8th Jul 20, 10:33am 1594161219

Good to see someone who gets the systems-relativity of all things.

Money is merely a proxy for processed resources, future-delivered. That requires future energy, to do the future work. So the underwrite of money was always going to fall short, and even shorter with time. Yet we still have folk bleating on about 'higher value'.

'Less depletive' would be the better measure

by ham n eggs | 8th Jul 20, 12:58pm 1594169931

exactly
its pointless floating these NZ centric "high value add" solutions
NZ (along with 99.9% of countries) is knee deep in the quagmire that is the global economy

And its all a zero sum game now .. the pie cant get bigger and is on the decline

by waymad | 8th Jul 20, 11:04am 1594163059

It's simply magical thinking to entertain the notion of a doubling of Ag export by dollars on the one hand, and tighter enviro regulations on t'other. Lot of That about.

But a contra - more Robots, more IoT, more AI, some zero-carbon nuclear energy, all applied to Ag, and land productividdy might well improve. But none of Those are gonna assist with employment, at least not in the 000's. And good luck with retraining coffee-mongers and bed-makers into any of Those highly skilled professions....

by Foyle | 8th Jul 20, 12:01pm 1594166474

3 year electoral cycle and low information voters means that you never get called to account for your promises. Labour polling at 50+% after failing at pretty much everything they promised shows politicians that all that matters is your propaganda - grow that comms team. Actually delivery is irrelevant. Longer timelines for promises make it even easier to avoid having to answer for them.

by Kezza R | 8th Jul 20, 3:17pm 1594178228

We're not allowed to point that out or even measure that, it is all happy clappy Jacinda has done well.
The only thing saving Labour at present is how bad Nation is.

by Advisor | 8th Jul 20, 8:44am 1594154655

If New Zealand was open to students we would likely see a flood

This statement shows how clueless our media is clueless about our export education sector. Edit: policymakers get this very well and have over the years tipped the resident visa points system in favour of ex-students to keep our low-value education mills running.

Neither our universities have the international reputation nor our industries come anywhere close to corporate America in promising high-value jobs for foreign students post-study.

International students would be better off going to Germany or the UK instead of coming here and getting stuck with limited STEM career prospects.

by Final Account | 8th Jul 20, 5:06pm 1594184774

Depends what STEM field you are in. NZ is top of the world when it comes to genetics. Hence the Chinese interest in NZ breeding programmes, diabetes research Captain Cook pigs, protein tweaking on invasive species etc. Scratch the surface and you'll be surprised. All these are scalable. I'd rather not advertise it.

by frazz | 8th Jul 20, 8:38am 1594154326

I am starting to wonder just who is controlling the National Party. They seem desperate and go to any lengths to discredit the current government? Why has no one been fired? CCP controllers getting heavy for results..

by Lapun | 8th Jul 20, 8:59am 1594155599

They should have stuck with Simon

by bw | 8th Jul 20, 9:12am 1594156363

Michelle Boag was instrumental in ousting Bridges in favour of Muller. What does Todd do now with his patron?
If she doesn't go, Muller is dead in the water.

by dollar_bill | 8th Jul 20, 11:45am 1594165501

Bring back Bridges!

by profile | 8th Jul 20, 9:03am 1594155831

Yeah how hard can it be to discredit the current crowd given the amount of sensitive data they leave lying around? National can't even pull off a decent hit.

by youngdumbandbroke | 8th Jul 20, 9:13am 1594156401

They scored a great self uppercut with Walker though!

by RickStrauss | 8th Jul 20, 9:25am 1594157140

Turns out it wasn't even really lying around. Took some very deliberate manipulations and leaking from National stooges.

by profile | 8th Jul 20, 11:58am 1594166304

This is AKA lying around - what a circus - "The information that I received was not password protected by the Government. It was not stored on a secure system where authorised people needed to log on. There was no redaction to protect patient details, and no confidentiality statement on the document."
https://www.rnz.co.nz/news/political/420717/how-the-hamish-walker-covid…

by RickStrauss | 8th Jul 20, 1:31pm 1594171907

He should probably take that lack of password protection up with Michelle Boag, from the sound of it.

by profile | 8th Jul 20, 1:47pm 1594172869

Don't get me wrong - I think MB and HW are brain dead. This sort of info should never been on a spreadsheet in the first place.

by Foyle | 8th Jul 20, 12:25pm 1594167932

Walker has displayed attributes unacceptable for an MP. Dump him.

by Becnz | 8th Jul 20, 9:14am 1594156467

Labour keeps spouting on about shovel ready projects and the biggest one is we have 18000 people on waiting lists for affordable homes.
This project is much needed as keeping them in motels etc is costing tax payers a fortune.
Why not just think big and build a new town lets say next to Bull/Ohakea and use the land that governent owns to keep costs to a minimum and maybe ban investors from buying and flipping.
I know many people would love to be able be part of it and it would take pressure of lower NI house prices and maybe boost economy as it could be built with lower cost base to allow businesses to invest in new tech etc and may create a hub to make better use of the surrounding land/air strip.

by Fritz | 8th Jul 20, 10:01am 1594159299

Nice idea!

by FCM | 8th Jul 20, 11:25am 1594164342

Tired that, it was called Kiwi Build. Most of those shovel ready projects are years away, a good tender will take 4 months at least, then they take another 4 months to review...be nothing quick in shovel ready.

by Foyle | 8th Jul 20, 12:30pm 1594168243

If you put a whole lot of low socio-economic people in one area you get a slum, trapping kids and adults that live there into crappy lives predated upon by gangs and other nasty people with little hope of escape. It normalizes bad behavior in the community. It's been tried in every country and produced the same failures of high crime misery and awful schools dominated by thugs.

by RickStrauss | 8th Jul 20, 1:33pm 1594171985

That's why our social housing has always been spread among the suburbs, indeed. And why it makes no sense for people in gentrified suburbs to be moaning that state housing should be sold off and people relocated into slums.

by Andrewj | 8th Jul 20, 9:18am 1594156688

Tooze
https://twitter.com/i/status/1280506351165362177

by ngakonui gold | 8th Jul 20, 11:07am 1594163247

Dragged into Hamilton Central by the other half this morning as she had found an electrical item that she thought i wanted/needed
Wet weather,school holidays and just my sh..ty mood were all good reasons not to go.
To my surprise very few kids,weather was still bad,more security guards than customers it was great.
My favourite coffee shop has closed down along with fashion shops and others.
This is just the beginning of the end for some surviving businesses.Ending of the wage subsidies will see businesses closing down at a great rate.
Only those that have prepared well will still be around next year, unemployment will be rife.
JMO on this rather bleak day.

by frazz | 8th Jul 20, 11:16am 1594163811

Sounds like the normal scene in Hamilton downtown when I last visited (2 years ago)?

by mikekirk29 | 8th Jul 20, 11:17am 1594163871

Just a note to say, when forecasters say GDP will fall 8.7% in 2020 and rise 6.6% say, in 2021, this is not as rosy as it sounds because the rise is from the lower base due to the previous drop. So rather than % they need to give inflation adjusted figures for GNP

by blobbles | 8th Jul 20, 12:33pm 1594168382

Yep, a fall is bigger than a drop. So using those numbers for an economy worth 100b pre COVID:

2020 = 91.2b
2021 = 97.2b

Still 2.86% growth rate needed in the next year to get back to where you were before... and as you suggest, that's before inflation.

by mikekirk29 | 8th Jul 20, 11:21am 1594164086

A la "dairy saving NZ"
Please could we be informed what % of GDP comes from dairy and what % is made up of consumer spending??
Exports cannot save NZ unless imports come down.
AS NZ has a propensity to make v little and import lots of tat from China, its exports have to be maintained to pay for this tat.
And exports need customers with consistent demand, which is falling due to world recession.
This is not acknowledged I am afraid, and NZ consumers certainly don't get it

by Casual Observer | 8th Jul 20, 4:30pm 1594182603

https://www.dairynznewslink.co.nz/wp-content/uploads/2020/06/Dairy-sect…

by mikekirk29 | 8th Jul 20, 11:24am 1594164271

Commentators and TV this week have been repeating a blatant falsehood: that Kiwis are flocking back to NZ
This v week, Interest showed table from Customs authority showing precisely opposite: that net immigration is FALLING and has been for last 3m = more folk leaving than arriving. How do they get away with this garbage without fact checking

by Galaxie | 8th Jul 20, 11:55am 1594166103

Don’t know the figures, but maybe those leaving are largely not Kiwis- returning tourists etc. Thus there may be a net influx of Kiwis.

by Kezza R | 8th Jul 20, 3:49pm 1594180151

Have to keep flogging the positives and get people spending.
Heaven forbid that someone actually stood up and said.. ' The future is very shakey globally and likely to get worse. NZ is in a good position and we are trying to make viable long term plans to weather out this storm '. Calling it as it really instead of lying to us would be a welcome change.
The biggest lie that we have heard lately was 'early and hard' a week before Jacinda said 'we are prepared and I am still hugging people'. Whoops the reality was they were not even close to prepared and we had to go into LD immediately.