A review of things you need to know before you go home Monday; mortgage rate changes; migration; overseas visitors and travel; Peter Dunne quits; teacher numbers; regional road rail; local rates up; NZD stable

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
SBS Bank has reduced its 4 yr special rate from 5.65% to 5.49%.

DEPOSIT RATE CHANGES
No changes here today.

MIGRATION
On an annual basis, net migration was at a record level of 72,400. This was made up of a record 132,100 migrant arrivals and 59,700 migrant departures. Compared with the year ending June 2016, net migrations increased by 3,400. Most migrants arriving in New Zealand were on short term work and student visas, Stats NZ said. Net migration for non-New Zealand citizens was 73,500 and net migration for New Zealand citizens was -1,100, resulting in a net 72,400 migrants. There were 33,500 departures of New Zealand citizens in the year ended July 2017, of which 62% were to Australia. Net migration from Australia, however, was 469 in favour of migrants coming to New Zealand.

OVERSEAS VISITORS AND TRAVEL
A record 246,900 visitors arrived in New Zealand in July 2017, up +4% from July 2016. This was the highest number of visitor arrivals for a July, with over half the visitors coming to New Zealand for holidays. The number of visitors arriving in New Zealand for the 12 months ending July 2017 was also a record at 3.7 mln, a +9% increase from July 2016, driven by an additional 189,100 holiday makers. In terms of kiwis travelling overseas, July 2017 was a record month, with 302,400 trips being made, up +9% from July 2016. On an annual basis, there were 2.77 mln overseas trips by New Zealanders, up +11% from the year ending in July 2016.

PETER DUNNE QUITS
UnitedFuture leader Peter Dunne has announced he is quitting politics at this election, deciding not to contest Wellington's Ohariu electorate after eleven terms, citing a shift in voter sentiment.

FUNDING TO INCREASE TEACHER NUMBERS
Education Minister Nikki Kaye has announced a $3 mln package to help increase teacher numbers, with a focus on Auckland. $1 mln will be invested in the Auckland Beginner Teacher Project and will double the projects capacity. $2 mln will be provided to assist with relocation costs of 200 returning New Zealand trained or overseas trained teachers. Estimates of vacancies in Auckland schools are around the 2% mark but with the teacher supply landscape rapidly changing, the Government is looking at options to increase supply. The other change that has been made is that South Auckland campus of Auckland University of Technology will be allowed to offer the Bachelor of Education qualification from the start of 2018, making it easier for South Auckland trainee teachers to become qualified.

REGIONAL ROAD RAIL
Labour has committed to invest in a rapid rail network that connects Auckland, Hamilton and Tauranga and also to double funding to help complete regional road projects. Initially, Labour will commit $20 mln to the Regional Rapid Rail plan, which will establish a passenger service between Auckland, Hamilton and Tauranga, the 'Golden Triangle' that contains half the country's population. Future plans may include high speed passenger and freight rail that can travel at speeds up to 160km/h. Also, to fund road projects, Labour will double the funding range for regional transport projects in the Government Policy Statement from $70 mln - $140 mln to $140 mln - $280 mln.

WHOLESALE RATES UP
Local swap rates were up +1 bp at the long end of the curve, 4yr swaps to 10 yr swaps. The 90 day bank bill rate is down -1 bp to 1.94%.

NZ DOLLAR STABLE
The NZD was stable today still hovering just below the 73.2 USc mark it started at this morning. On the cross rates we are at 92.3 AUc and at 62.2 euro cents. The TWI-5 is at 75.7. The bitcoin price is down to US$4,129.

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10 Comments

The maintenance of the narrative: benefits claimants are inherently suspect, because if they were better people they wouldn’t be on benefits. You have to watch them like hawks, and if you spend more money on surveillance than you could ever save from the detection of the fiddles you lie awake imagining, so be it – our own Department for Work and Pensions sanctions system is fantastically expensive, a fact of which the government seems perversely proud. Read more

The problem is the welfare system measures success solely on the number of people they can get off the benefit. Even if is short term , and that person is not better of working than on the benefit. It would be better if they could help beneficaries into employment by supporting them while working, or not penalising them for trying to improve their situation by things such as extra flatmates.

SV and DC - Labour's Regional Rapid Rail (R-cubed) announcement actually stems from a volunteer-compiled proposal from Greater Auckland here:
https://www.greaterauckland.org.nz/2017/08/17/introducing-regional-rapid...

I commented on this (as Wayne Findley - yes, my cover is blown) to the effect that their costings were too patchy and would be picked to pieces by financially competent common taters.

The full proposal is here https://drive.google.com/open?id=0B9EZXXytda8uaHhwTWVoRGxZM2c, but what I want to highlight here are two replies: 1) from Patrick Reynolds:

This is an unfunded schematic proposal designed to stimulate properly funded market analysis, technical feasibility, and economic benfit cost studies. The question of how much detail to go into was hotly debated; basically you’re damned if you do and damned if you don’t. It absolutely won’t be perfect, but we hope we have struck the balance near enough to lead to much more in depth work. Which frankly requires more than the hard work in our spare time….

And 2) from Nick R:

Wayne, you’re not wrong. This is a first cut overview, not a fully resolved business case (Might I remind you we are a zero-budget volunteer organisation with only so many late nights and weekends at our disposal!). I would fully expect Treasury to demand all stages of the business case process before funding anything.

We certainly haven’t got this estimate perfectly right, but it’s right enough. I have full confidence that for $400m of capital investment we could get a well functioning rapid intercity rail network that covers it’s operating costs on a day to day basis. It might not look exactly like this, but it would be more or less like this.

However, we have intentionally planned a low overhead business model, and we don’t need to fund a lot of the things you have mentioned, e.g:
-The salaries for non-crew staff are based on the assumption that the operating company is part of a larger organisation (i.e. Kiwirail or NZTA, or an international consortium). Note that Stage 2 has opex budget for about 12 management/office staff in addition to the train crews, and excluding the depot staff which are accounted for separately.
-The crew salaries and schedules are based on only 1800 in-vehicle hours per year per crew, this accounts for leave, training, sick days etc.
-No ticket booths or access control, tickets are inspected or purchased from the train manager onboard, if not prebooked online for checking.
-No park and ride as part of this scheme: Park and ride is the responsibility of local councils, who would decide if they want to fund and build them near the stations. Same with bus stops actually, although the cities with bus systems already have bus stops at the proposed station sites.
-Lighting, disabled access and handrails are included in the station build costs. They will be very basic to start with, but will meet code. No separate toilets at stations to build and service, the toilets will be onboard the trains (disabled accessible, naturally).
-There is an allocation in the capital budget for track upgrades, including passing loops. $200m in stage 2 in fact. Note that almost all of the NIMT line is already double tracked, so it’s just the ECMT that would need additional passing loops (or lengthening existing ones rather).

This would indeed be an Interesting topic to dig into (but just be gentle on the Greater Auckalnd crew, they are earnest and I suspect tender souls, unused to the cut and thrust of politics, and certainly financially naive...).

The point is of course that Labour have adopted (at $20m) an estimate which is unlikely to survive the beady eyes of more experienced analysts. I surmise they've had a quick read of the estimates and the blog, thought 'here's a winner' to judge by the comments there, figured the estimates were shonky so doubled them (GA's opex needed $2m, capex $9.6m just for the pilot), and rushed it into the election cycle.

But any sort of a non-pilot service is gonna need (from GA's estimates, Stage 2) closer to $0.4 billion. Which, using Labour's logic, should be doubled so what the hey, let's say $1 billion. A billion here, a billion there, pretty soon it adds up to real munny......

The golden triangle...why does that sound familiar?
I hope labour spends money evaluating devoting a lane over the harbour bridge to light rail and pushing on towards the Bryndwns.
Half the distance and a faster return than ever could be assured by clapped out old rail cars heading for Hamilton.

Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi will be among the officials addressing this year’s installment of the annual conference hosted by the Kansas City Fed. The summit, held at a Jackson Hole mountain retreat, comes as central banks in advanced economies creep toward the policy exit after years of unprecedented easing, even with outlooks are clouded by stubbornly tepid inflation.

Prices have been slow to pick up despite solid growth and falling unemployment, suggesting that the long-observed relationship between inflation and labor-market slack might have frayed. That puzzle will likely surface as the conference debates this year’s theme of “Fostering a Dynamic Global Economy” against the backdrop of the Grand Teton mountains. Read more

So oveseas visitor numbers up to 3.7 million for the year. This means that unrecovered costs from providing them with publicly funded health care will now be in the order of 220 million annually. Capturing their insurance details at the border and matching this with healthcare received is essential and will eliminate the current public health funding deficit of the same amount. It is not right that the private insurance industry is being subsidised by public health this amount

The other change that has been made is that South Auckland campus of Auckland University of Technology will be allowed to offer the Bachelor of Education qualification from the start of 2018, making it easier for South Auckland trainee teachers to become qualified.

Excellent - now you can qualify as a teacher by "pulling hard" on a Christmas cracker.

This govt don't get it. No one in their right mind would teach in Auckland for a measly $47k - you can entice as much as you wish - you simply won't attract good teachers to the area unless they're young <25 and happy to share a flat/bedroom/ cupboard with 10 others.
Even those on the top of the scale $76k would see it as financial suicide.

"You know it makes sense Rodders" doesn't quite cut it.

That's why part of the plan described above includes bringing in more teachers from overseas. Once you make things too unlivable for locals, the next measure is to import workers who will accept that raw deal instead.

Sounds awfully familiar. Nine years of familiar.

Rail only works in heavily populated areas, think countries of 20 million inhabitants plus. It just costs too much to run half empty trains, it will be an endless money gobbler

Well that's not true at all. When rail doesn't run in Wellington the motorway turns into a giant traffic jam. We would need to spend a fortune on expanding roading as well as increased maintenance. Off peak rail in Wellington is also shifting from running every 30 minutes off peak to every 20 minutes.

Of course something that works in Wellington region wouldn't work in Auckland with the larger population as Auckland is the exception to everything.