Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
There are no changes to report today.
TODAY'S DEPOSIT RATE CHANGES
NBS cut term deposit rates today by -5 to -15 bps.
UNEXPECTED DIP
While the number and value of new mortgages approved last week were within the recent tight ranges, the average approval amount was not, falling quite noticeably. Borrowers are being approved for the same number of loans, but the amount is lower. It is not clear whether this is just a one-off dip, or the start of a trend.
A MAJOR MILESTONE
Not only is ACC reducing its 'premiums', it has also finally built enough provisions to cover its expected actuarial liabilities. It is a significant milestone with the Scheme reaching full funding in 2014/15. It has taken 41 years to get on top of their unfunded liabilities. (Now the only major unfunded Government liability is New Zealand Superannuation - and that one is unfunded to the tune of some $325 bln (after deducting the NZ Super Fund, and the value of KiwiSaver). The GSF also has unfunded liabilities of some $10 bln. At least it is good to get the ACC one sorted.)
RENTS UNCHANGED
The September data from the MED Tenancy Bond Service for September shows no changes in median rents for last month. Rents for 3 br Auckland houses slipped marginally to $590 per week, as did rents for 2 br flats ($412/week). There were also only tiny shifts in Wellington and Christchurch for similar accommodation.
NEW UNION BORN
New Zealand has a new union. E tū has been formed through the merger of the Engineering, Printing and Manufacturing Union and Service and Food Workers’ Union. E tū says it represents more than 50,000 people working in the likes of the aviation, construction, journalism, food manufacturing, mining and cleaning sectors. Bill Newson, E tū national secretary, said all workers not in a union should take notice, with E tū here to help them achieve higher wages, better conditions and fair employment laws.
TWICE AS BIG AS THE CHINA FTA
Here is a useful perspective from Westpac's senior economist Michael Gordon of the TPP: "while the degree of access for dairy exports is disappointing, we shouldn’t lose sight of the fact that the agreement as a whole provides significant tariff savings for New Zealand’s exports – estimated at $259 mln a year, compared to $115 mln a year in the New Zealand-China Free Trade Agreement. Moreover, the experience of the China FTA shows that the gains overwhelmingly come from increased trade volumes. It’s up to New Zealand’s exporters to capitalise on the opportunities created by the TPP – which is why it’s so hard to quantify the benefits in advance."
WHOLESALE RATES
Despite small rises on Wall Street overnight and the stronger dairy prices, wholesale swap rates are all unchanged today, as is the 90 day bank bill rate, holding at 2.83%.
NZ DOLLAR HIGHER
The Kiwi dollar has moved higher again today. A weaker USD and better dairy prices are behind the moves. It is currently at 65.6 USc, 91.4 AUc and 58.2 euro cents. The TWI-5 is now at 70 again. Check our real-time charts here
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13 Comments
Despite small rises on Wall Street overnight and the stronger dairy prices, wholesale swap rates are all unchanged today, as is the 90 day bank bill rate, holding at 2.83%.
"Now the only major unfunded Government liability is New Zealand Superannuation - and that one is unfunded to the tune of some $325 bln (after deducting the NZ Super Fund, and the value of KiwiSaver"
Why deduct Kiwisaver? Surely that is something entirely different. Or is someone here suggesting that Kiwisaver means testing for NZ super is imminent?
Could someone with more knowledge than myself on this matter please explain why future health care costs are not an unfunded liability.
Why do we not fully fund health care and education ?
I struggle to see the conceptual differences between these and accident liability.
There is a big conceptual difference (I think). ACC's liabilities are for accidents that have already happened that will require care in the future.
Education is an 'expense' in the sense you spend for the service provided today. (Perhaps students that slip behind should have a future liability for today's education effort, but almost all get their current education needs from current taxes.)
Health is largely the same. You fix up unhealthy people today with today's taxes, tomorrow's unhealthy people with tomorrows taxes. Chronic cases could be a case for pre-funding, but most are acute. (The trouble with health care is that it is 'free' so everyone demands the maximum no matter what the cost. Most people want others to pay so they don't. It's now an unavoidable social bargain not an actuarial one.)
ACC is fixing yesterday's liabilities today.
Superannuation liabilities crystalise when a citizen retires, setting up a stream of payment obligations in the future.
THX David ... Let's substitute two words in your ACC explanation:
"Health's liabilities are for diseases that have already happened that will require care in the future"
Why do you still think this is conceptually different ?
Smokers for example have past health issues - no different from ACC.
Maybe we should be pre-funding actuarially chronic diseases which with an ageing population, higher life expectancies and advanced treatments - costs are going to increase for certain.
BTW I think we should regard education as an investment - not an expense which may not imply any future benefits.
I think we as a nation need to have a much expanded debate on these issues.
When you see under table 12 ex the latest stats release that the median income of those 65+ with investment incomes earn just $ 33 / week pre-tax shows how little there is for other than Government to pick up the ever increasing health tab for this cohort.
Incentives for private health care would seem to make a lot of sense.
Does ACC by any chance cover All Blacks for loss and injury and possible lack of pride for the whole of New Zealand if we lose the World Cup.
Did it cover the Japanese contingent too. I believe one or two or three or more may have been Kiwis playing away too.
We might all have our pride and other things injured, especially if all drowning our sorrows at the same time. We might all be liabilities for the surplus,
Oh wait, we all contributed magnificently in the past so that is why such an actuarial surplus. I hope it does not all turn to custard in the last minute of the game.
ACC is not just covering its past miss take, I hope and pray.
At least we won't be in the red,for a while, but in the Black as a Nation.
Go the "All Blacks" do not slip up now.....we have all just landed on our feet.
No mean feat, after years of contribution to rugby..
I'm home for a few months, anyone here got any news on the wine industry? California is falling apart, just talked to a mate and he tells me unsold grapes everywhere. Lots of it, he just got offered 20 tonne of Merlot for free, it's in the gondola with no buyer.
I'm trying to sell my grapes and wineries look to be full of last years wine, still unsold, looks like it's going to get interesting with growers struggling to get contracts and no one willing to talk prices, thats a billion dollar industry in trouble.
Beef feel heavily again today in Nth California, 4th week in a row, I need to sell cattle asap.
A wee nugget or two AndrewJ....from personal experience.
USA grapes on sale in NZ supermarkets today.
at $5:99 per KG... And that may be as good as one can get here..today.
(Probably they were getting them free too and ripping of the NZ public as per usual, but I will not belabor that point, sufficient to say our wines are over priced too, comparatively).
In France this year a decent bottle of wine was down to 2:89 Euro. And I mean decent.
An architect friend loaded up his Hymer Motor home to ship a load back from France to UK, as prices there are double, if not triple that for basic stuff.
I even paid as little as 1:29 euro for Italian...and that was in France too. I even went back for another bottle...or two.
A Brit I met bought up Portuguese wine for .80 Euro Centimes per litre for 10 litre Casks, also to ship back to UK.
Not the best, but drinkable.
It sounds like another Wine Lake I am afraid for you growers, on the horizon, Worldwide.
Sparkling Grape Juice...may be the way to go....duty free. Sell it to those forbidden Alcohol...
The Bottle is the most expensive bit...it seems, plus taxes and GST or VAT.
Plus Service over charges in Restaurants. But that is usual.
Lucky that some people can put it on the Mortgage as a tax deduction, eh. Cheap borrowings for expensive plonk, but the growers get nowt.
It is a very strange world we live in...Master Jack.
NZ has high taxes. Aldi do half decent wines in the UK at a reasonable price, the rest looked fairly pricey.
There could be a bottleneck at the wineries that the corporates are using to force down prices, the Chinese may have disappeared and we have no market to replace them, either way there will be some good buying very soon.
Funny you should mention that about Aldi....AJ..
But in general,
Both Aldi and Lidls in France are even better price wise than the UK.
Same products, better deals.
Even same beers and wines are often 20-40% less.
Taxes is some of it...just like we are over loaded here.
Moreover, the experience of the China FTA shows that the gains overwhelmingly come from increased trade volumes. It’s up to New Zealand’s exporters to capitalise on the opportunities created by the TPP – which is why it’s so hard to quantify the benefits in advance."
Does TPP address this inequity in respect of unapproved over gearing arrangements undertaken by foreign corporates operating locally.
The top 500 US companies retained $620 billion that would have otherwise been taxed and spent by the government by using overseas bank accounts, according to a report from Citizens for Tax Justice and the US Public Interest Research Group Education Fund.
“At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014,” the report states. In total, the 500 companies keep about $2.1 trillion in tax havens outside the US, most often in Bermuda or the Cayman Islands.
So-called “offshore” profits often don’t leave the US economy, however. The money is still circulating within America, just under the name of a registered foreign subsidiary of a US company. The report’s conclusion is that the real problem lies in too many loopholes resulting in too little government revenue. Read more
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