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Deputy Prime Minister Winston Peters tells businesses downbeat on the residential construction sector to take note of the high number of consents issued in 2018

Deputy Prime Minister Winston Peters tells businesses downbeat on the residential construction sector to take note of the high number of consents issued in 2018
Deputy Prime Minister Winston Peters

Deputy Prime Minister Winston Peters is dismissive of business confidence in the residential construction sector falling to a 10-year-low.

Asked in a post-Cabinet press conference about the fact a net 16% of businesses surveyed by ANZ were pessimistic about the residential construction sector in March – a fall from February when a net 3.8% were optimistic – Peters said their views didn’t “square up” with reality.

He referred to Statistics New Zealand’s latest data showing the number of building consents issued in the year to February being the “highest by a mile” since around 1974.

ANZ economists, in their commentary accompanying the survey results, recognised the dramatic fall in residential construction intensions could’ve (to some extent) been a kneejerk reaction to the Tax Working Group recommending the introduction of a capital gains tax on investment property, business assets, intangible property and shares.

Asked by about the extent to which he was considering New Zealand’s immediate need for more houses, as he weighed up how to reform the tax system, Peters said: “Housing in this country has never been more critical in terms of trying to get on top of a supply-side equation…”

He again mentioned the disconnect between consents issued (a backward-looking measure of reality) versus ANZ’s survey results (a forward-looking measure of opinion), before concluding: “All I’m saying to some business people is, stop being so pessimistic.

“There is more money in this economy than you’ve ever seen. And if you’re any good at business, you should be able to earn some.”

Peters moments earlier also pointed out the Government had not yet decided whether to implement the Tax Working Group’s recommendations. Its decision is due to be announced at an unspecified date in April.

Perception vs reality 

There has been a sometimes-patchy correlation between residential construction intensions and consents issued in the past. The question is whether the particularly wide gap between the two at the moment is an anomaly.  

Business confidence and businesses’ intensions of their own activity fell when the Coalition Government was elected (as they have historically when Labour-led governments have taken office) but have struggled to bounce back.

In a similar vein to Peters, Jacinda Ardern in one of her first formal addresses to the business community as prime minister in February 2018 noted the difference between businesses’ perceptions and the reality of how the economy was performing.

However since making that comment, economic growth has slowed.

Growing by 2.3% from the 2017 December quarter to the 2018 December quarter, gross domestic product (GDP) undershot the Reserve Bank's 2.7% forecast.

This, along with a deterioration in the global economic outlook and a dovish stance adopted by central banks around the world, contributed to Reserve Bank Governor Adrian Orr last week saying the next Official Cash Rate (OCR) move would more likely be a cut.

Asked in the press conference whether Orr’s dovishness was playing into his thinking as he considered his response to the Tax Working Group report, Peters said no.

He said that as per the speech he delivered after the 2017 election, he saw international headwinds on the horizon. 

“Some of us did say, on the very night we began this government, that there could be some corrections in the future.

"We forewarned of it because of international circumstances like trade competition and also the slowing of other economies such as China and such as Australia.

“But New Zealand’s economy is holding up seriously well against that.”

In light of Orr's OCR commentary, economists will pay particular attention to the New Zealand Institute of Economic Research's business outlook survey released on Tuesday. Being a quarterly survey, rather than a monthly one like ANZ's, it is less volatile and seen as a more reliable measure.

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Fair enough WP did warn about possible forthcoming setbacks being encountered, fall out, in other words, from the big economy players. But anybody could or would say that. It is nothing new for NZ to rise and fall in the wake of the super powers. Business as usual then? Remains to be seen!

What would Winnie know?
More rear view mirror stuff

Maybe he should try building a house from subdividing a section to moving in , in Auckland .

Maybe he will understand .

Oh, sorry, I forgot , he is trying to build ............... 100,000 of them .

The whole residential building process is broken , broken , broken , and his government knows this , but does not have the political will to do anything about it

They are considering repeal and replacement of the RMA in consultation with industry and the NGO sector;

Granted it's a long process and it should have been started years ago.

Maybe don’t go on live TV when the whole nation is watching and say you think there is going to be a “massive economic slowdown”

Seriously what’s this guy smoking? Economy may have slipped into recession very recently given RBNZs response lately, and this lovely man trying to talk it all up.

Winston's new favourite song is "Even the Bad Times Are Good"
If we dont sing along with him he will bring out the CGT stick.
He switched from his alternative version "even the Good times are Bad".

Where is KiwiBuild in all this construction?
I see from the HUD website, at latest count we do officially have a whopping 58 KiwiBuild homes now occupied.

KiwiBuild is a sticker that the Government is putting on other people's projects. Other than some underwriting more important moves would be to provide HNZ accommodation and places for homeless to stay. It's up to the Government to talk about what it's doing.

Agree with you, dictator.
A flagship policy which seems to have failed; unfortunate for both FHB and those in need.

"When the day seems to drag along
And all that I do is workin' out wrong
Still I find that I never cry
As long as I know that you're standing by
Then all I've gotta do
Is run to you (Winston Peters)"

I would think they are pessimistic because they can see building in Akl right now is a big risk for a developer. Huge costs, massive tangles of red tape, low sales volumes and substantial chance that prices will continue to soften (or slight chance they will take a dive like Aus)
Not many are going to risk losing money, but their will be plenty happy to build for kiwibuild so they can operate their business, make money and have the government(taxpayers) take the losses.

Companies watch their PL results, their orders pipeline, and their financial position, not some wizened pollie running his mouth.

Winnie hasn't been anywhere near the real world since the mid 1980's. If he has half a brain & any relationships worth anything he should try to stitch Ngapuhi together & get their WT deal over the line. Yeah right!

Just because they have been consented doesnt mean they will actually ever be built. Across Australia many previously consented developments have now been shelved, some of them in the middle of being built. Of course, there is the NZ corporate welfare for developers plan (aka Kiwibuild) where developers build and the Government buys them all at above market prices when they fail to sell.

Peter's pride must have suffered serious damage at the photos of him asleep at critical junctures of his Turkey trip, his failure to carry out Ardern's orders to engage with Erdogan and the various 'you are past it, time to move on old chap' media articles . His resurrection today of a tired week old story about the awful Aussie MP Anning and his noxious views, shows his desperation to achieve some traction. The coalition must be anxious about his declining mana with voters so look for their spin team positioning him as the valiant Leonodis holding back the CGT Persian hordes at Thermopylae.