Here's our summary of key economic events overnight that affect New Zealand, with news China is still winding up its debt support of their economy.
But first, the US Federal Reserve balance sheet is still shrinking, now for the fifth consecutive week. After growing sharply to almost US$7.2 tln, it is now down below US$7 tln, a decline of -$248 bln.
The USDA's WASDE report has raised its forecast for imports of beef into the US and lowered its forecast of US milk production. US red meat production is falling and is projected to fall well into 2021 even if the trend is minor. Both trends will aid New Zealand's trade in these key commodities. But they do see dairy output rising in 2021 even if they missed forecasting it falling in 2020.
Canada's economy added almost one million jobs last month, as businesses reopened after their COVID-19 shutdowns. And that is on top of the +290,000 it gained in May. But despite that two-month stretch, there are still -1.8 mln fewer jobs in Canada as at the end of June than there were in February. Almost half their job gains were part-time jobs. Their jobless rate fell to 12.3% in June, down from the record high of 13.7% it hit in May. (Across the southern border, the US unemployment rate is 11.1%.)
China's economy is expanding. Their car sales rose in June for the fourth consecutive month and posted the first quarterly rise in two years. It's now the world's largest car market and 2.3 mln vehicles were sold in June, rising almost +12% year-on-year. However the industry is warning they face up to a -20% fall from here if conditions worsen.
But new debt is doing its part still. Chinese banks extended ¥1.81 trillion yuan (NZ$400 bln) in new yuan loans in June, up a startling +22% from May and up +13% year-on-year. There is nothing new debt can't solve in China.
In Singapore, as expected, the ruling PAP party swept to victory again winning all but ten seats in their general election. The Lee family reigns supreme with as corrupt an election system as any in Asia, and now including Hong Kong.
In Australia, ANZ says the six-week lockdown of metropolitan Melbourne will lead to a second wave of businesses going belly up. Further, they say homeowners may need to sell up too if they can't pay. And the Canberra government is readying more wage support as their current program comes to an end. Its a treadmill they can't get off. In fact, so far no country has shown how to get off.
Equity markets are higher today with the S&P500 up +1.0% in late afternoon trade on Wall Street. They are closing in on a weekly gain of +1.7% and taking the year-to-date loss in market capitalisation down to -US$420 bln. European markets closed the week higher on the day too, generally up more than +1%. Frankfurt was up +0.8% for the week, Paris was down -0.7% and London was down a bit more than -1%. Shanghai closed yesterday -2% lower on the day to cap a week of strong gains, up +7.3% as profits we taken at the end and State pension funds started selling. Hong Kong was up +1.4% for the week while Tokyo was unchanged for the week. Locally, the ASX200 ended the week with a -2.3% loss and the NZX50 ended with a -1.5% loss.
The latest compilation of COVID-19 data is here. The global tally is 12,342,000 and that is up +223,000 since this time yesterday. Global deaths reported now exceed 556,000 (+5000).
A quarter of all reported cases globally are in the US, which is up +69,700 overnight to 3,257,700 3,188,000. US deaths now exceed 136,000. The number of active infections in the US is now up +41,600 to 1,687,000. Both infections and deaths are on the upswing again.
In Australia, there have been 9359 cases reported, another +303 since this time yesterday, and still concentrated in Melbourne which is now in lockdown. Their death count is unchanged at 106 and 13 people are now in ICU (+3). Their recovery rate has slipped back further to 81%. There are now 1627 active cases in Australia (up +249 in a day).
The UST 10yr yield is a little firmer today, now just on 0.64%. Their 2-10 curve is up to +48 bps. Their 1-5 curve is also firm at +15 bps, and their 3m-10yr curve also firmer at just under +53 bps. The Aussie Govt 10yr yield is up +2 bps at 0.89%. The China Govt 10yr is down today by -5 bps at 3.13%. And the NZ Govt 10 yr yield is also down, up by -4 bps to 0.98%.
The gold price has slipped further, today by another -US$3 today to US$1,798/oz.
Oil prices are up today, and by a bit more than +US$1. They are now just over US$40.50/bbl in the US and the international price is just over US$43/bbl.
But the Kiwi dollar is little-changed at just over 65.7 USc. On the cross rates we are firmer at 94.6 AUc. Against the euro we are still hanging in at 58.2 euro cents. That means our TWI-5 is still at 70.3.
The bitcoin price is unchanged overnight at US$9,225. 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 ».
97 Comments
Its a treadmill they can't get off. In fact, so far no country has shown how to get off.
Equity markets are higher today with the S&P500 up +1.0% in late afternoon trade on Wall Street.
You put a gap between those comments DC; they rightfully belong together. We are witnessing the stretching of the chewing-gum between hope and fact.
What interests me in todays report is ANZ's statement about homeowners having to sell their houses if they cannot afford to make payments. What is that going to do to the real estate market, its only going to reduce values leaving the sellers and ANZ with minimal returns. How is that good, economically,for both parties. In addition, homeowners would suffer relocation problems in what would already be a frantic rental environment. Not good combinations when you are in the middle of a pandemic.
Well it will bring house prices back down reality to wage earner levels, which is really the best solution to be honest. The crazy part, is that we're trying to subsidize and support property prices that were blatantly driven up by Overseas Speculative Investors by drastically reducing mortgage rates that puts our banks at high risk.
Property repossessions is what the rest of the Western world went through with the GFC in 2008, the reason why both NZ and Australia didn't even notice the GFC is because you were too busy greedily selling your properties and land off to Chinese speculative investors, without even considering the consequences of selling out to a foreign dictatorship.
However it is nice to see the Chinese owned developers now struggling to find buyers for their property "investments" and proposed future projects. These new immigrants/ foreign developers will have no idea what a recession in NZ looks like. If they think that they are smarter than the average Kiwi, well we will see if that's actually true.
Great responses to my intiall posting, CJ099 and Uninterested. Thanks guys.
Really?? Do you actually believe that CJ? What caused the GFC was banks bundling up unsustainable mortgages (which they never should have extended) into so called "mortgage derivatives" with artificially, and almost fraudulently, projected investment returns. If you extend a mortgage to someone who, for all intents and purposes can't pay it back, then that in my book is fraud. Selling it on, borders on Larceny. There will always be Spec investors, labeling them as greedy is disingenuous regardless of their nationality.
The death rate in Australia seems low by other countries’ experience at just over 1pc. And NSW’s death rate is almost twice that of Victoria’s for a similar amount of cases.
https://www.health.gov.au/news/health-alerts/novel-coronavirus-2019-nco…
I keep on coming back to thinking we could manage this thing so much better, masks, personal responsibility, better use of existing technology, helping the most vulnerable self isolate more comfortably...
I do remember at the height of this crisis that a French doctor said the only statistic that mattered was the number of people in icu. Australia has 13 such cases.
The problem with your thinking is non-compliance by idiots who then become superspreaders. This is evident from the numbskulls breaking their hotel quarantines. It's really simple - you and I might comply to guidelines, but the government has to account for everyone, the intelligent/sensible people AND the idiot munters. The virus doesn't discriminate, so neither can they.
You can now easily compare the different approaches, if you think NZ did the wrong thing, well the weight of evidence is against you. With US doctors now emigrating here saying NZs approach is the gold standard, maybe listen to the experts.
I have Taiwan as the gold standard. NZ was gold standard luck combined with gold standard PR (clear unambiguous communication govt to the public). Luck.
I assume you are an epidemiologist or at least a doctor? If not, I would prefer to listen to a pathologists opinion. Luck only takes you so far, our actions after the outbreak here are responsible for the containment of the disease. Thousands of people travelling the country now during school holidays, filling up ski fields and accommodation supports our approach.
No medical knowledge. Reading the news since our first case I realise we got close to our limit for contact tracing, testing and PPE. For example you may remember the arguments about lack of community testing because of our limited testing capability. I deduce luck as the biggest single factor from the cluster at the Auckland school - ninety cases from a single teacher at chool for a couple of days. It was luck we had so few clusters - could we have handled say five such clusters? See what is happening in Victoria for how a handful of cases can explode.
I still say luck but it is fair to say our medical bureaucracy and our govt did a good job of riding that luck - making hard decisions about who to test and when.
Taiwan - the figures for cases and deaths are very impressive. More so when you realise they were first in line whereas NZ could see what didn't work happening in Italy. I still give Taiwan the gold standard; they wouldn't have tolerated the way we allowed people at the beginning to return not only without quarantine but without any follow up. Taiwan didn't wait for scientific evidence that masks work before enforcing their use.
Happy to admit that NZ culture is different from Taiwan so their proven solution required an authoritarian approach that was politically impossible in NZ. That is 'was' - who knows what we will put up with next time.
No, I am not saying that. Your comments are a good example of some of the hysteria. One doctor has moved here, with her family. We have done really well with our approach and I am a big fan. But, big big but, Covid 19 will be around for a while and to manage it, we need to do as I said in my post. There are idiots all over the place who let the team of 5m down in many areas. I mentioned ‘better use of technology’ in my post, and I meant such things as electronic bracelets, covid cards etc. Even monitored cctv at isolation facilities.
Not hysterical at all, just facts. We have seen in Melbourne now what happens when super spreaders get out, you don't seem to realise (like many others), there is a lag in ICU cases and deaths. It's not about ICU numbers now, but in 1-3 weeks. The fact you don't get this shows you aren't informed enough to express an informed opinion. Wisdom is often about acknowledging when you understand enough about a subject to know when you are wrong or when you don't understand. The wise in these cases default to experts in the field, they don't argue belligerently, exposing more of their own ignorance.
Those things are all being looked at, this country, like many others, are not sitting still. We are looking at good ways to change our systems all the time. If you have a good suggestion, I suggest getting in touch with authorities including emailing the health minister. Our public service is actually very approachable and do listen to good ideas.
I actually want it to be military personnel on patrol with guns showing in the hotel lock downs. The people coming into the country need to know how serious we are. But human rights and all that...
Melbourne Police know how to do it. When Victorian Govt locked-down 9 public housing towers 500 police assembled outside. All inside were instantly locked-in. No mucking around. Lock-down now lifted on 8 towers.
Yesterday police issued $1500 instant fines to 16 idiots having a KFC party. All up $26,000. no mucking around. That sends an immediate message to all the other idiots waiting on the sidelines
NZ rule breakers will be charged. They will appear in court. Will apply for and get name suppression. A date will be set for a hearing. Will get home detention. Lot of mucking around
"Will apply for and get name suppression." Really? https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12347259
I think Puke does have a good point... instant fines are a lot more decisive, especially when they are reported on by our "fearless media"
Instant fines are the way to do it.
If they don't like it they can appeal. Hahahaha. If they want to.
It's the power of the message
NZ does it ass-backward
"Not hysterical at all" LMAO.. sure sounds like it when you suggest we have armed military patrolling. You'd need to declare Martial Law for that to happen, which would definitely kick the hysterics into action. There's no evidence super spreaders are responsible, merely irresponsible community members and obviously quite a few of them
Nice bit of passive aggression in your first paragraph too.
Hi David, gold at US$1978, I wish. Unfortunately it is US$1798.
A few mistakes in this one, must have been on the beers last night...
But first, the US Federal Reserve balance sheet is still shrinking, now for the fifth consecutive week. After growing sharply to almost US$7.2 tln, it is now down below US$7 tln, a decline of -$248 bln.
And that brings us up to post-2008 QE, and the irreconcilable situation the bond market presents central bankers. Former Dallas Fed President Richard Fisher accidentally said it best in 2014:
"MR. FISHER. In summary, I want to mention that, as I said earlier, most of these variations that have been suggested are very un-Bagehot-like. And what I mean by that is, twisting [or QE and yield caps] entails purchasing assets that investors are fleeing toward, not assets that they are fleeing from."
Exactly. So long as demand for safe, liquid assets is unflinching, what’s the f-ing point? No, really.Link
Aye caramba - US hospitalizations surged by over 7500 (which will no doubt be reflected in death rates in a couple of weeks) . Daily cases hit an all time new record (yet again).
https://covidtracking.com/data
This thing is burning itself out so quickly in the US that it's in danger of turning into an inferno (sarc off).
8000 plus increase in one day @ 70,000 per day and only 30,000 off your 100,000 call yesterday.
Meanwhile in NZ we think that because we are basically CV free we won't be affected by it to any great extent. Our export markets are going to see huge declines, our national debt will need further pumping and China is being aggressive.
We are in for a hell of a ride, this is only the start. I'm off to grab more cash out and stack some PM's.
Quote from Taleb ""The Lebanese are too fixated on corruption. It is bad, it causes a loss of social trust, it brings unfairness. But corruption does not necessarily slow down economic activity — red tape and patronage do. Just consider how many places thrived (Rome, Renaissance Italy, the Industrial Revolution, etc.) in the presence of a high level of corruption. Furthermore, localism tends to reduce corruption.""
Does patronage and lack of localism explain NZ's lack of productivity?
System check Saturday.
Pity the poor old MoH.
Not a great time for the bureaucracy.
Tech tips - teenagers know.
1. Once you send an email, you the sender have no control.
2. Once you send an email, to outside of internal server, assume the world can read it and its attachment (because it does).
Covid positive ID data. Folk who needed to know could have a secure server to ID, password access. Easy as. Ask any teenage gamer.
What to do now?
1. Move on the first genius that approved send confidence data by email.
2. Move on the second genius that determined the distribution list.
3. Move on one of the 3 who seem to be the current Minister of Health.
What have we learned?
NZ covid response runs fine, except for the bits reliant on MoH doing the lifting.
GPs fine.
Aged Care fine,
Pharmacy fine.
DHBs pass.
Supermarkets fine.
Compared with:
Flu vacc, PPE purchase & store, contact tracing system, Border Quarantine. Any sort of technology, any sort of reporting.
Of the spilt data, what was "leaked", what was put on the public domain. Q. Does anyone know the 18 identities?
None of this absolves the National party personalities who were involved in leaking patient data - in fact, it looks like a dead cat on the table trick.
Yes we know that you favour Labour.
Oldbloke.
What do you understand the "leak" to be? You seem to being confused with a disclosure.
The MoH put the data into an untrusted environment.
Bang. That's the leak. There has been no disclosure.
The data leak, the data breach is:
A data breach is the intentional or unintentional release of secure or private/confidential information to an untrusted environment. Other terms for this phenomenon include unintentional information disclosure, data leak, information leakage and also data spill.
https://en.m.wikipedia.org/wiki/Data_breach
Note: Your National party personalities were given some data, (remember we haven't seen it, just had it described to us).
Your next question maybe, who else other than National party personalities have been given data
If 1000s of New Yorkers (COVID hotspot), say, were arriving in NZ each week on 1-2 year Resident visas, with some escaping, & some testing positive, would it be a bad thing to make the public aware of this? Without email/privacy breaches of course.
Maybe the underlying risk to the NZ elimination achievement/goal at the border got lost in the privacy scandal?
There seems to be confusion all round but this is the way I see it:
MoH "disclosed" the info to a trusted but insecure email account. I'm sure they trusted the CEO of ARHT although why they would send it to Boag rather than the Operations Manager is curious. That seems to have malicious undertones.
It was Boag who then "leaked" the data to unrelated third parties (Williams and Woodhouse) neither of whom had credible reasons to be in possession of the data.
Williams then "leaked" the data to media.
An email can not be both trusted and unsecure.
P.S. I suspect there are several insecure email accounts in the MoH right now :)
The health ministry should have known that sending information to anyone with links to National was unsafe, then?
The ministry of health (MoH IT people) will know sending information to any outside server email is unsafe - sending data to any untrusted environment is unsafe.
That's the breach. Dreadful systems.
You can put any identities on the untrusted environment you like.
You might like to ask why the media reacted in such a political way. The reporters had the choice.
1. They could have said nothing, - no story.
2. They could have reported: MoH is released data into unsafe environments- a technical reporter would identify.
3. Rather, they said, look I have been leaked on...
Remember no public disclosure of the information has been made.
Be realistic Henry, the MoH IT people don't send operational info. This came from someone at the coalface, not the IT Dept. Also there's nothing to say the info didn't come from another private email - easy enough to take a photo of the info and email it directly. There has been no actual mention that it was an official MoH communique
It's on the Ministry of Health to fess up what entities, who the people are they are sending covid 19 positive test patient details to.
"Fundamentally there's been a failure from the Ministry of Health in releasing too much information to too many people, and what that means is the risk of somebody doing the wrong thing, either deliberately or accidentally, and allowing the release of personal information to people who just don't need to know it just gets bigger and bigger,"
Again from the Governments own voice, definition of what data breach is, and what the releasing entities obligations are.
https://www.cert.govt.nz/individuals/explore/data-breach/?topic=data-br…
Not so much "links to National" oldbloke1, but as I said - a private email address and sending to the CEO (especially Boag) rather than to the Ops Manager on the ARHT address to me seems odd - smoking gun sort of stuff.
From MoH systems view both email addresses are untrusted environments.
If as you suggest, MoH sent their data to a private email.
It would show the sender as an idiot, and in this case a dangerous idiot.
India is now a major Covid hotspot
https://www.bbc.com/news/world-asia-india-53284144
I'm not convinced MoH as an organisation was actually involved, I'm starting to be convinced this was a "rogue" employee. Certainly agree with your last sentence though
Yep, we need the circulation list and who approved the list.
Plus who approved the sending to unsafe environments....
The information was confidential. All specific data relating to patients is, and should only by accessed by clinicians who need to for a valid reason. It doesn’t need to be password protected/secure to be confidential. My old doctor had a filing cabinet which wasn’t locked. If I’d copied the file on Mr X while the doc had left the room briefly and then sent it to the media, it would have been an illegal act. Boag and Walker disclosed confidential information, knowing it to be so. Woodhouse received such information and says he did not disclose the fact immediately. Lot of water to flow under this bridge.
Agreed.
Pietro, yes, the circulation list, all the people and groups MoH was sending this private data is troubling.
The other way, equally true is.
1. Walker, with evidence of terrible MoH systems and process - sending data to unsafe environments,
2. Walker went to the media.
3. The media asked for proof.
4. Walker showed them the file - as media would not accept the row and heading titles only.
5. Media then say they have been leaked on.
Remember if Walker wanted to disclose the line by line patient records, he could just blog post it all. The story was the MoH chronic systems that we see time and time again.
Remember no public disclosure has been made.
It could really be that funny, and sad......
I am buying cattle, hopefully a dollar or two in it. We are still dry on the farm but getting 10mm a week so enough for the grass. Blew 150k in the last two days alone, hoping they will be in demand, with so many cattle being killed due to drought. I don't think many people are aware just how many animals had to be dispatched early and light this last 5 or six months.
Everything from in lamb ewes in calf cows, light bulls and heifers, they all got the chop. I have friends down to half stocking rate, they have stopped spending and will retain female stock but that's going to knock incomes. I came back on the ferry last month, trucks were full of light steers going to works in Nth Island, both ferry's full of stock trucks. I like my steers to weigh 600 kg +, these would have struggled to be 450 kgs, that weight yield poorly. Should have been kept at least 6 months.
Interesting times with massive beef surplus in USA.
Haha, hope you got plenty of feed Andrew otherwise you may well have definitely blown your 150K. With this cold snap going through, that's the grass growth stopped so you may well be keeping them for that 6 months and hard feeding them for 4 of those. Could be pricey with a feed shortage.
I over sowed with italian type grasses, I am close to Havelock north, 180 ft above sea level, so warm winters, Im outside with only a shirt on at the moment. My italian grass is 8" high, so no chance of running out of grass. Also added swedes and khale to the mix, that has really shot away, so mountains of feed. I avoided urea but dumped serpentine on, i'm low on Mg.
Agent came around the farm yesterday and couldn't believe how much grass I have, been empty for 6 months. Cattle have walked about 2 meters from gate with heads down. I am a bit of an old campaigner, been around and survived. droughts floods and all the other challenges. My father used to have 3000 head of cattle, i have served my time.
That's why I didn't buy cattle earlier, i waited till I had feed, happy to pay $100 per head extra, as it turned out I didn't have to pay anymore than in early June. So basically someone grazed them free for 6 weeks, it was a big risk I took and I wouldn't do it every year, just this exceptional one.
Back to mowing the lawn every two weeks.
Nice. Good luck to you then. I'm in the Eastern Bay, just had 5 consecutive frosts ( good ones) and cold days (see your breath stuff) so that's the end of my growth. Your right about prices,, should be good going into Sept/Oct/Nov.
I thought you would have been warmer than me, my soil temps are still over 10º which is a bit unusual, We just had some seriously cold days and a light frost this morning.
I love the way italian grass can move in winter. Some of my fields are seriously stuffed from drought, thankfully i went hard out oversowing.
I'm a little higher, probably 300ASL. Also place is mostly hilly so would've had to fly the seed on. In hindsight I should have done it anyway but that's farming. I'll wait till early spring and restart the year. My place got hammered with the dry too. Only run stores (bit too steep to finish) so I'll buy some youngsters at the end of the spring rush and hope we don't get another drought. Farming.. gotta love it or you'd hate it.
I looking at trialing C4 seed, japanese millet or Teff ( williams love grass), will be interesting to see how they will go, millet can give you a lot of feed in a hurry but both frost tender, so could be better suited to you, we can get light ground frosts up to early November.
https://www.progressiveforage.com/forage-types/other-forage/teff-grass-…
Interesting, thanks for the link. I like the Italian ryes but these new ones just don't hang around long, 5 yrs and you're resowing again. Hopeless.
italian ryes hardly last a year in the dry here, I get cheap seed from down south and just go for it. Prairie grass really suits my place and some of the new cocksfoots.
Im trying seed mixes but the last two years have been dry and cold so not a lot of luck.
These guys have some interesting videos on different pasture options you just need to hunt through all of them on a wet day.
https://www.youtube.com/watch?v=uDChYjyxS84
Craig Smith seeds in Canterbury have Sainfoin available, it's the good Oregon strain. It's grown all over the UK. He's harder to find than i thought here is his web page. He is way cheaper than the locals.
Sainfoin
https://www.youtube.com/watch?v=uDChYjyxS84
legumes
Love to hear your on-the-hoof reports, both of you. Worth an entire Occasional Report in the Rural section.
Tiwai Point smelter - the saga continues - it's political and has been since 2013
The medium sized guns are coming out in support of keeping Tiwai smelter going with government subsidies amounting to pocket-fluff compared to the $60 billion being thrown around. As discussed yesterday one of the largest users has been the aircraft industry. Trouble is the aircraft manufacturing industry is in trouble. The other problem for the use of high-grade aluminium is the increased substitution with composite materials. The Boeing 787 dreamliner is 80% composite by volume. By weight, the material contents is 50% composite, 20% aluminum, 15% titanium, 10% steel, and 5% other
Newsroom has published an article today advocating the continued operation of the smelter. To do that the NZ Government would have to be the buyer of the aluminum and stockpile it along the lines of the 1990's Government owned wool stockpile - remember that - what happened to it
The other consideration is that the NZ Govt has known of the difficulties since 2010. It has had 10 years to address the issues of connection to the grid and the expansion of the HVDC across Cook Strait and has done nothing
The 2013 subsidy of $30 million in 2013 was a political move to protect the public float of the gentailers (as confirmed in the newsroon article) - they got the floats away and still did nothing. And that puts into perspective the NZ Government's passive resistance to encouraging and subsidising household roof-top solar installation. It should be noted that Meridian was an active participant in the Californian roof-top solar industry in its early days - before the public floats while still in government hands. 75% of all residences in Australia now have roof-top solar installed coupled with a large uptake by commercial building owners
Unfortunately for Southland, I doubt the Govt will directly subsidise Tiwai. The town of Invercargill will just become collateral damage in the Labour/Greens philosophical dislike of large multinationals. They may lean on MEL to sharpen it's pencil, Transpower to advance the transmission price changes and maybe some other behind the scenes assistance but with public opinion firmly in the "good riddance" camp, they won't do anything as vote damaging as a direct subsidy. The maths stacks up for another subsidy (say 50mil) but the perception of bailout is too onerous for them to consider.. unfortunately the jobs will be sacrificed, unless public sentiment changes.
Why is the Transpower $165 million dividend more important than 2600 Southland jobs? Yet another example of Labour abondoning its roots.
Why is carbon intensity and "leadership" important sometimes and not others? Throwing away being a world leader in low carbon intensity aluminium shows the paucity of the global warming leadership argument. Like the gas ban our cleaner activites will replaced with low grade Chinese and Indonesia coal.
What is the carbon intensity of a $600 million upgrade to the network vs. maintaing an existing transmission line? $70 million for Transpower to maintain an exisiting line - nice work if you can get it.
Yes profile, that's the sad world we now live in. One where political expediency/individual job security (for said politicians) trumps foresight and just doing the right thing
Actually the 70mil is to upgrade Clutha/Waitaki line, something which wouldn't be needed if Tiwai stayed long enough to build a replacement industry down there. As I said, the maths for a subsidy/bailout stacks up.
The $70 million is annual transmission fee paid to the SOE Transpower. $70 million/annum for the Manopouri-Tiwai line. I'm not suggesting a bail out is required. Transpower needs to pull its head in. Yet again an infrastucture monopoly is working against the citizens of the country.
Sell the lines to the smelter and let them do the maintenance. Sell 49% of the dam.
Plenty of practical solutions if the COL believes in high quality jobs and being a leader in low carbon.
The transmission lines from Manapouri to Invercargill are owned by Meridian, not Transpower. NZAS uses only about 40Km of TP lines between Invercargill and Tiwai.
On a do nothing basis Tiwai's annual exports of $600 million will be seriously reduced. Tiwai is in the business of exporting captured electricity. By shutting the smelter down and re-directing $600 million of electricity into the domestic consumer market simply creates a different problem. It must have a negative effect on the monopoly prices currently being obtained. The largest demand 66% is in the North Island. NZ uses standardised national consumer pricing. The cost of mass-immigration into the North Island is obvious. Continued mass-immigration becomes even more evident. The need for the Cook strait connection will become even more evident as time goes on. The Electricity Authority has been playing with revising the transmission pricing model for years to better reflect a user pays system which would substantially reduce consumer prices in the South Island while increasing prices in the North Island. The bleeding-hearts are in full flight. The eco-warriors want to shut down Tiwai while the bleeding hearts in the North Island don't want more expensive power. Who will win that battle.
Loss of export earnings. Waitaki upgrade. Cook Strait upgrade. 20% reduction in national retail power revenue. Loss of 2600 jobs. Increased joblessness. Increased welfare. The $2.8 billion drop in the capital values on the stock market of the gentailers has only one explanation. Share prices have been sustained by a government-directed nonsense market. The pointy-heads have been asleep for a long time
Who will win that battle? Cindy's lifestyle has been subsidised by Southland smelter workers for years. "Since 2004, $1.3 billion has been spent on the upper North Island grid, yet only 39 per cent of the investment has been paid for by the upper North Island.
Since that time, transmission prices have increased by 330 per cent in the South Island, 225 per cent in the lower North Island, and 40 per cent in the upper North Island. ...For the 2017 pricing year, NZAS' transmission costs will increase by another $5 million to reach a total of $72 million."
https://www.stuff.co.nz/southland-times/news/93150828/transmission-cost…
Not just Cindy. The Nats also caved to northern NZ voter power. Auckland MP Judith Collins instructed the electricity authority's review of transmission cost pass pack to consumers: "the review of distribution pricing underway presents challenges in terms of balancing this with the impact on consumers as they transition to potentially quite different pricing models. I expect the Electricity Authority to be cognisant of the impact of price shocks on consumers while progressing this work". ie consumers south of the Waikato must continue to subsidise the price AKL consumers pay for their power. Both parties cravenly sacrifice fairness and user pays principles in currying favour with the critical AKL voting bloc.
True. Cindy was just an Aucklander that sprang to mind.
It's like a buyer saying to a manufacturer if you want us to consume your product you need to get it to our doorstep with minimal transport costs and to achieve that other customers closer to your plant must pay the cost of sending it to us. Oh, and by the way, any complaining and the government will force you.
Profile - yes - saw your comment yesterday - powerful points - got me going
You are seriously confused with your sums. Tiwai doesn't export 600mil for a starter, the rest of your argument just doesn't remotely stack up
You can do better than that
All the govt export data I've seen (over the past 5 years) says $600 million pa - what do you say
Here you go
extract: Facts showing impact of aluminium smelter closure at Tiwai Point August 2021. Employ 992 people, plus 1200 ancilliary jobs. Spends $422m in NZ pa. Generates $600m export earnings pa
https://worldnewsinpictures.com/tiwai
Just went through the Pacific Aluminium (New Zealand) annual reports, I owe you an apology regarding earnings. Interesting read that report - some transactions appear engineered to produce a desired outcome i.e. a loss, - maybe I'm missing something
http://reportingnz.org/wp-content/uploads/2018/07/59-Pacific-Aluminium-…
AEP has a contrarian view of China's 'inevitable rise': "The ledger is brutally clear. Xi Jinping’s regime has no allies of global economic weight or credibility.....China is not rising any longer. It is ageing more quickly than the West. The great reserve army of migrant workers from the villages has dried up. The work force is already contracting and will shrink by 200 million over the next thirty years in a spectacular demographic collapse....If the democracies bide their time and hold together, China will eventually settle down and accept that it too is a graying status quo nation and perhaps even that its bid for global supremacy is going nowhere."
There isn't enough energy or resources left in the world for China to overtake the USA, that was clear to me ten years ago and you'll probably find my comments stating that. Was never going to happen. However it doesn't make them go away either, things between the USA, China and Russia will be more like a stalemate. War is on the way, but who knows who the combatants will be just yet.
It's a wacky world alright, with the comments/posts topics jumping around a bit as well. Interesting for me the way the msm crucified the Nats when there is just as much blame inside MoH somewhere. As always it's as much about what they don't tell you as it is what they do. Who can you trust these days? No one.
Apparently lately on here you have to conform, everything Labour dose is good, everything Natioal amd Trump dose is bad.
Dp
Be nice if we could drop the xenophobia and nationalism.. might be able to have a reasoned debate. Unfortunately not holding my breath
xenophobia implies nationalism. But the reverse is not true - I can support my rugby team without diminishing the skills and efforts of other teams. Like many immigrants I'm a conciously proud Kiwi but have no trouble assuming other nationalities are equally proud of their countries.
I don't disagree with you Lapun, but some of the anti immigration, anti China rhetoric is tiresome and IMO not always supported by facts or indeed particularly balanced.
I'm in the close Tiwai down camp. The situation will balance itself over time. The skilled jobs and industry can relocate. Always a complaint about skills shortages. The hospitality as service industries will just have to join the rest, Queenstown and others. The rentier class will have to take a haircut or sell up.
Maybe Venture Southland can re-hash the silicon mining and the silicon smelter. May not stack up though with low Si prices. Oh wait this is a smoke stack industry no go for the CoL.
Tiwai-Bluff-Invercargill. "The skilled jobs and industry can relocate".
Relocate: Not so easy. Try selling your house in Bluff for $200,000 and relocate to Auckland and buy for $800,000 or more. Plus removal costs. That's the real world
Yeah, even a shift from Invercargill to Christchurch is not financially feasible for many. The way posters based in large Metropolitan centres casually dismiss the travails of workers affected by plant closures is repellent. Glee at sticking it to Rio Tinto is the theme of the day, from Ardern and Woods down. Never mind that successive governments have concurrently extorted punitive transmissions costs from NZAS for the 40KM of lines they use out of the 12K operated by transpower, while neglecting to even begin creating the additional lines that a high school kid could have worked out we'd need sooner or later. A powerful negotiating lever against Rio would have been extra carrying capacity already under construction. Contingency planning and tactical thinking are foreign concepts to our short termism politicians.
Distance between Manapouri-Bluff
As the crow-flies = 128 kilometres
Via road distance = 165 kilometres
Meridan owns the line from Manapouri to Invercargill. Transpower owns the 40KM from Invers to Tiwai.
Thanks for the clarification - I misunderstood your 12km and 40km
So by the 40/12000km reckoning 0.33% of the lines paid for 42% of the 18/19 Transpower dividend?! And Rio are the bad guys here. The smelter workers deserve a medal not a bag given how they are propping up Transpower and $2.8 Billion of energy stock value.
"By shortly after 11am, investors had wiped more than $2.8 billion off the value of NZX-listed electricity companies."
https://www.stuff.co.nz/business/300052786/tiwai-point-aluminium-smelte…
https://www.transpower.co.nz/news/transpower-releases-201819-annual-res…
NZAS pays about 9% gross of transpowers total national transmission levied costs. The electricity authority in 2017 proposed a fairer regime that would've sliced 34% from $60m to a still significant $40m. Bridges agreed but AKL business lobbied that NZAS should continue to be extorted to subsidise northern power prices and under Judith Collins heavying the authority caved. The anti smelter brigade argue the same plant closure outcome would still be the result because subsidised competing coal fired power sources in other countries would always undercut us. That's possibly correct but we shall never know as we didn't really try all that hard, partly because heavy industry wrinkles green noses with distaste. Woods is trotting out the same BS fantasy spin as she did after kneecapping the Taranaki energy - ie we shall do great things to make up for the loss.
That leaves me speechless
Examples of "journalistic" opinions that don't even come close
Bernard Hickey - Newsroom - pro
https://www.newsroom.co.nz/why-is-labour-letting-tiwai-pt-shut-now
Rod Oram - Newsroom - anti - eco-warrior
https://www.newsroom.co.nz/oram-now-we-can-see-our-future
Agreed, both Hickey and Oram brought little to the table in regards to insightful opinion.. just repackaged claptrap, mind you.. no surprises there
Thanks all you lot, I had no idea what was going on regards transmission charges etc. If we lose Marsden point, Glenbrook and the smelter it's going to be a hard to see a recovery. Perhaps we should roll out Helen Clarkes knowledge economy or Keys finance hub?
Pretty harsh, callous, and dismissive position you're taking regarding people and their livelyhoods nigel. I'm picking you're in a nice safe job somewhere on the beltway.
Having read the WSJ online , I pick oil falling well below US$40 ppbl.
Even the most optimistic reports of increased demand cannot fudge the truth about excess supply and "new " or " resumed "supply in the coming weeks
Anyone who follows this will know that falling demand in the US could see oil inventories RISE to a surplus of between 6,000,000 barrels to 10,000,000 barrels in the US alone
Libya will also start pumping again tomorrow ( Monday ) as its lifted its force majeure on blocked exports from Eastern Libya .
This oil will add to an already over-supplied market .
Saudi Arabia which cut crude production in May is now going to increase production according to the Wall St Journal (yesterday 11 July 8.15 pm Eastern Time )
The market is going to be awash with oil in a month or 2 from now
Add the COVID-19 mess to this which will almost ensure lower demand , and oil prices will have to fall to get rid of the stuff .
Very true Boatman.. you know there is a problem when traders hire tankers as storage
Crazy times.
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