News and Opinion, sponsored by RaboPlus

By Emma Geraghty

New Zealand’s Privacy Commission is set to debate a move likely to be recommended within weeks in Australia towards a ‘comprehensive’ credit reporting regime that would see banks and card providers capture more data about consumers’ credit habits.

This move towards a more ‘positive’ reporting regime used in most other countries, including the United States, allows lenders to better target credit cards at those who have demonstrated they are a good risk. New Zealand’s current ‘negative’ reporting regime records only credit failures (including defaults or rejected applications) rather than successes (such as paying bills on time and receiving salaries). New Zealand, France and Australia are the only OECD countries who still use ‘negative’ reporting.

Some bankers and credit card providers argue a more comprehensive system makes it easier to provide credit to those who can pay and makes it easier for banks to more accurately price and market credit cards.

However, the move could prove controversial. Some have accused US lenders of using these more detailed credit histories to push card deals repeatedly and directly at those who can still afford it, increasing the total amounts borrowed using such cards in a predatory way.

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TVNZ has commissioned a poll by UMR of 1,000 Australians and 1,000 New Zealanders on whether New Zealand should become the 7th state of Australia. It found about 40% of respondents thought the idea was worth debating, but that 71% of New Zealanders and 52% of Australians opposed the idea.

The poll found 37% of New Zealanders believed the economy would be better off if New Zealand was the 7th state, while 27% believed it would be worse off and 25% said it made no difference.

A net 10% of New Zealanders believed the economy would be better off, while a net negative 12% of Australians believed their economy would be better off. The poll found 32% of Australians believed the economy would be worse off, while only 20% believed it would be better off.

The full results of the survey are here on TVNZ’s website.

My view

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By Bernard Hickey

New Zealanders don’t know how lucky we are that our economy is joined at the hip to the lucky country. Also luckily for us, our creditors aren’t too worried about just how lucky we are rather than how virtuous we are. They’re just going to lend us the NZ$240 million a week we’re asking for without asking too many questions and just assume we’re a suburb of Australia, which is a province of China.

It’s worth pointing out our luck again after the last week’s news from Australia, which appears to powering a new confidence (or complacency) at the top of New Zealand’s policy making tree.

Listening to Reserve Bank Governor Alan Bollard and Finance Bill English in recent weeks has been like listening to someone explain how they got away with the economic policy makers’ version of selling a slightly dodgy old campervan to a foreign tourist for more than it was worth. They hope the tourist will get around the South Island without any trouble, but they’re not absolutely sure the head gasket won’t blow somewhere on Arthur’s Pass.

Bill English talked this week about having to convince 28 year old bond traders in New York to buy our government bonds. All they wanted to know, he said, was how closely connected to Australia we were.

“All I have to tell them is we’re hooked in to Australia, which is hooked into China,” English told a business audience in Auckland with a wry and almost embarrased smile. Bollard has also pointed to the same foreign investor confidence, saying our connections to China via Australia are positive for our image on international markets.

O so lucky

Let’s look first at just how lucky the lucky country has become.

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Australia’s December 2009 quarter’s gross domestic product (GDP) came out at +0.9%, seasonally adjusted, according to todays release from the Australian Bureau of Statistics.

This what what the market expected and was up from a (revised) +0.3% for the previous quarter. Year on year, GDP was +2.7%, not a shabby result in the middle of a global recession.

By comparison, New Zealand managed minus 0.7% in the year to September 2009. Our December GDP results will be released Thursday, March 25, 2010.

Growth in Australia came from private investment in machinery and equipment (+0.8%), public capital investment (+0.6%) and household consumption (+0.4%). Offsetting the growth were imports of goods and services (minus 1.6%).

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The Reserve Bank of Australia has today left its benchmark official cash rate target unchanged at 3.75%

For more analysis of the RBA decision, see interestratenews.com.au

Here is the RBA statement.

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Alex Tarrant presents an Economic Weather Report in association with BNZ looking at the possibility of Kiwis resuming their strong exodus across the Tasman following news of a strengthening Australian labour market.

Watch on our video page here.

Watch on YouTube here.

For more on the Australian labour market see our sister site interestratenews.com.au.

Also see this Bloomberg article discussing strikes and skills shortages.