What happened Wednesday

A review of things you need to know before you go home on Wednesday; no retail rate changes, more farm sales, lower dairy prices, A2 Milk up, Fletchers down, swaps fall, NZ up, & more

19th Aug 20, 3:59pm by David Chaston

ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
No changes today. (Look out for a new low rate to be announced tomorrow.)

TERM DEPOSIT RATE CHANGES
None here either.

DEALS DONE, BUT NOT AT HIGHER PRICES
Farm sales were very strong in July, with 142 sales, made up of 16 arable farms, 6 dairy farms, 52 finishing units, 9 forestry blocks, 41 grazing farms, and 18 horticultural farms. In July 2019 there were 84 sales and the average over the previous four years for a July is 102. Sales volumes may have been unexpectedly strong but prices have hardly moved, even from a year ago.

LIFESTYLE BOLTHOLES?
Lifestyle block sales were also a strong 911 in July, and that is up from 659 in June and 598 in July 2019. It was also an unexpectedly strong result. Sales in Auckland and Canterbury were especially. Maybe this is the way Kiwis do bolthole preparation.

COMMODITY DAIRY PRICES SLIP
The dairy auction early this morning came in with the expected slip with overall prices down -1.7%. WMP was down -2.2% and SMP was up +1.1%. By itself this is nothing special, but it does come after a -5.1% fall two weeks ago so that has compounded to an -6.8% drop in August alone. Demand from China rose while other key buying regions stepped back their purchases considerably. New Zealand production is about to start in the new season and that often weighs on prices, but there are many additional risk factors at play in the dairy markets and that may be a minor one. No-one is changing their farmgate payout forecasts at this time.

A ONE-PRODUCT DAIRY SUCCESS
One dairy company is having a great time - A2 Milk. They reported an operating cash flow of $427 mln in the year and a closing cash balance of $854 mln.

MORE EFFICIENT?
Producer output prices fell -0.3% in the June quarter from the same period a year ago, only the second fall since 2015. Meanwhile producer input prices fell a full -1.0%. The impact of the two should have boosted profit margins, even as profits levels have fallen as volumes decreased. (We have no indication of the 'mix' effect however.)

LESS EFFICIENT?
Fletcher Building offers a downbeat view of year ahead after confirming loss of $196 mln for year to June 2020.

PORRIDGE FOR TAX FRAUD
A Hamilton-based chartered accountant, Megan Nyree Findlay, who fabricated GST and income tax returns to fund a gambling habit and go on holidays, has been sent to prison for three years.

MISSING TARGET BY MILES
In 2016 the Government set a target of having 64,000 electric or plug-in hybrid vehicles on New Zealand roads by the end of 2021. As at July 2020, we are at just over 21,000.

EQUITY UPDATES
The NZX50 Capital Index is down a full -1.0% so far today in late trade as investors take profits after tow days of strong gains. The ASX200 is up +1.2% in early afternoon trade. Shanghai has just opened and is down -0.4%. Hong Kong is closed as Typhoon Higos lashes the city. It may reopen in the afternoon. Tokyo is up +0.2% in their opening trade. Earlier, Wall Street was up modestly with the S&P500 up +0.2% in lackluster summer trading.

SWAP RATES UPDATE
Swap rates fell sharply yesterday with the two year rate down -5 bps to just 0.08% and a new record low. Other short end rates fell sharply too. The trigger was the bank economist reports that they expect the 2021 OCR to go negative. We don't have today's change in swap rates yet and will update it here if changes are significant. We don't expect much change today. The 90-day bank bill rate is unchanged at 0.28%. The Aussie Govt 10yr is down -1 bp at 0.87%. The China Govt 10yr is up +2 bps at 2.99%. And the NZ Govt 10yr yield down -2 bps to 0.67%. The UST 10yr is down -2 bps at 0.66%.

NZ DOLLAR RECOVERS
The Kiwi dollar is holding at 66 USc after the overnight gains. Against the Aussie we are firmer by +½c at 91.2 AUc. Against the euro we are also firmer at 55.3 euro cents. And that means the TWI-5 is up to just over 68.7.

BITCOIN SOFT
The price of bitcoin has fallen back today, down -3.3% to US$11,950. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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68 Comments

by GV 27 | 19th Aug 20, 4:04pm 1597809880

High Court has ruled that early Level 4 lockdown wasn't legal. Not even "pretty legal".

by bw | 19th Aug 20, 4:12pm 1597810377

"The powers existed to impose those restrictions....Public announcements Prime Minister Jacinda Ardern, and others, made between March 26 and April 3 were justified"
Process, then.

by JimboJones | 19th Aug 20, 4:23pm 1597811039

"Let's do this" was true then. Would National not have gone into lockdown for legal reasons just like when they supposedly couldn't exclude foreign buyers for legal reasons?

by Lanthanide | 19th Aug 20, 5:26pm 1597814761

The government had all the powers they needed, they just didn't use them because they were in a rush.

by Noncents | 19th Aug 20, 6:23pm 1597818201

In a rush? what a crock. They have passed some very signifcant laws under urgency, they could easily have passed one making it legal. After all, they had a few days on L2 before they moved to L4.

by Lanthanide | 19th Aug 20, 8:05pm 1597824311

If you read Bloomfield's submission, they were considering a lockdown potentially 2 weeks into the future. It got moved up to "today, now".

They could still pass a retrospective law making it legal now. But there's no point because the court found it was justified and there aren't expected to be any prosecutions affected by this ruling.

by Kezza R | 19th Aug 20, 8:09pm 1597824598

By who? It was Bloomfields call to make but some how Jacinda is calling the shots...
You are just running from explaining one Labour screw up to the next. What you need to understand is the sheer amount of screw ups Labour exceeds the normal high Govt failures rates.
These screw ups hit us all in the pocket, it is just not good enough to keep 'trying' to do better.
Do bloody better or get the hell out and let someone who can do the job to it!

by Albert2020 | 19th Aug 20, 8:46pm 1597826818

Kezza I’m deeply concerned for your health...you’re gonna have a coronary with all this ranting. Do us a favor, put the computer/phone down, go outside and breathe...it will all be ok.

by Logicthinker | 19th Aug 20, 8:58pm 1597827512

It us difficult when you have multiple lines of authority, responsibility and reporting. At least Cindy has bought the right management personnel and an authoritive sector being the army.
I am glad National isn't in government or else we would be in total lockdown with the borders being open to multi Chinese sectors until it was untenable.
You are a builder aren't you Kezza, if so, you would be frustrated beyond belief being in total lockdown for months.

by RickStrauss | 19th Aug 20, 9:28pm 1597829324

Bruh, you're losing it.

by Kezza R | 19th Aug 20, 9:48pm 1597830481

All above.
Jacinda politicised the LD and you guys are just explaining it away as nothing. It's some serious stuff.
She has just done a Trump.

by RickStrauss | 19th Aug 20, 9:54pm 1597830890

You need to go and re-read and dwell in depth on the article you posted earlier.

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12357931

There is no explaining away needed. This is a fascinating, genuinely interesting example of the law and its evolution in process. There is a difference between illegal and unlawful, and this is an interesting case of evolving what is and isn't covered in the existing legislation, and how.

No, it's not the same as Trump's illegal acts. This is about lawfulness.

by Noncents | 19th Aug 20, 8:51pm 1597827106

Yes they moved it up. But not to the extent they couldn't have addressed it under urgency.

It is simple, if we don't expect the govt to stick to the law, then why should we?

I am sure anyone of us could come up with a similar "today, now" excuse.

by Lanthanide | 19th Aug 20, 9:35pm 1597829758

They didn't need to address it under urgency. They already had the power. No need to pass any new law, no need to do anything under urgency.

They just didn't use the power they already had, because they were in a rush. The court said it was justified.

by Roger the dodger | 19th Aug 20, 9:41pm 1597830094

They, being the govt, did not have the power. The director general had the power. He is not part of the government. The govt assumed powers that it did not have.

by RickStrauss | 19th Aug 20, 10:20pm 1597832444

The Crown Law Office gave advice on how the act could be used, and the government and Bloomfield acted in line with advice. The High Court's interpretation has added clarity to how the law may correctly be used.

Bit less sensational, really, BUT more interesting.

The Court even noted that the law had been written with dynamic circumstances and flexibility in mind:

But the court found the spread of the virus, a need to protect public health, and the nature and history of emergency powers under section 70 reinforced the need for a liberal interpretative approach to the legislation.

They said the section was meant to be read as applying to circumstances as they arise, and that the powers clearly contemplate the restriction of fundamental rights in a public health emergency.

It is good the case was brought to the court, and it's good to get clarity out of the case.

by Roger the dodger | 19th Aug 20, 10:04pm 1597831451

Your reply does not make this clear, wellto me at least. Note I am not disputing that lockdown should have happened.

Could you tell me if I am correct in saying the director general had the power to issue the lockdown order and the PM did not?

by RickStrauss | 19th Aug 20, 10:21pm 1597832511

My impression from reading as much as I have so far is that the law was written to allow plenty of room to move, room to respond to an unknown range of possible emergencies the government and director of health might face. Plenty of room to move...and then this case has been around whether all the moves were still properly within the bounds of that law.

The one clarification that the Court did hold up was essentially: "the statements of the government gave people the impression that under the Director General of Health's existing call they had to stay at home, social distance etc." when under that first call in that first nine days, they weren't actually required to by the call the DG had made. It was one of his powers, and when he then made the call, the law did require people to do that from that point on.

The NZ Law Society's write-up is genuinely interesting: https://www.lawsociety.org.nz/news/legal-news/high-court-releases-judgm…

Seemed to me from the earlier statements that the Crown Law Office thought they had it right, but perhaps it was then realised that people weren't required to stay home unless the DG made another order. Was pleasing to see the NZ Law Society got a lot of bigwigs involved and carefully gave their submissions.

The Court also found that no other laws were suspended by the mistake.

by Roger the dodger | 19th Aug 20, 10:43pm 1597833790

Thanks, it is clear that there was a disconnect between what DG ordered and the PM said was required of us for that short period.

Seems to me that there have been repeated instances of confusion between the two parties to date. Aviation have well solved the who is in charge problem. I think there is a serious lack of practical people involved.

Bluntly, there are too many lawyers and professional politicians in our parliament (over all parties)

by RickStrauss | 20th Aug 20, 8:47am 1597870035

All seems pretty fair.

Regarding aviation, I would point out that solving and codifying these issues has often come as a result of post-hoc analysis of what went wrong in disasters.

by Kezza R | 19th Aug 20, 4:24pm 1597811053

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12357931

by TheTor | 19th Aug 20, 4:36pm 1597811769

So in other words.... "meh"

by solardb | 19th Aug 20, 5:42pm 1597815731

I just knew my rights were been violated in those first few days.

by Roger the dodger | 19th Aug 20, 6:29pm 1597818548

So Bloomfield had the power, but Adern was determined to be the one wielding it.

As I understand it, the Director General was supposed to be the one in charge of the response. This is presumably to remove politics from the situation. I recall reading about that being the case in the 1918 epidemic.

by Kezza R | 19th Aug 20, 7:56pm 1597823770

Jacinda hijacked the CV response. That is some major news.

by Roger the dodger | 19th Aug 20, 9:14pm 1597828479

Yep, but some people need it spelled out in black and white and confirmed by the high court before they will accept it.

Edit:
https://i.stuff.co.nz/national/health/coronavirus/120967553/coronavirus…

by refactornz | 19th Aug 20, 4:13pm 1597810422

A2 profit up. A2 share price down 5.4%

by realterms | 19th Aug 20, 4:34pm 1597811664

Well obviously. Bad news makes shares go up now, right?

by Cowpat | 19th Aug 20, 4:47pm 1597812461

BNZ make a threesome and also now have changed forecast and see the OCR lowered below zero by April 2021. The question for the RBNZ , is why, irrespective of what was previously announced, wait until 2021 to do so, given the scenarios outlined by the RBNZ If one or more of the retail banks is not adequately prepared at this time to accept negative rates , and that is very doubtful it still applies to all, then the worst case is that any laggards will have a disproportionate increase in commercial deposits and likely lowering of profits.

by Glitzy | 19th Aug 20, 4:52pm 1597812771

Agreed. I thought the only possible reason was a question of whether the banks were reporting their readiness for negative OCR to the RBNZ ? If the banks have indeed already tested their systems there is no logical reason to wait.

by Lanthanide | 19th Aug 20, 5:27pm 1597814860

It's probably more a case of the RBNZ giving them all effectively a deadline to have their systems ready by that date, so going ahead of that date would be breaking their promise.

That was December 2020, btw.

by waymad | 19th Aug 20, 5:08pm 1597813710

Lifestyle bolt-holes? Too big to Mow, too small to Plow. And it's hard to subsist on Ponies and Thistles. Still, glass half full and taking a leaf from NK - could always eat the dogs first, then the ponies next.....

by solardb | 19th Aug 20, 6:16pm 1597817765

The increase doesn't surprise me. A lot of people are re-evaluating their lifestyle after the lockdown. Many discovered the joys of nature.
however many soon find out they are a lot of work , and often referred to as life sentence blocks. You can subsist off a surprisingly small piece of land though .

by Noncents | 19th Aug 20, 6:29pm 1597818544

"You can subsist off a surprisingly small piece of land though ."

Exactly, It's not the size of the land, rather the time to maintain.

I had a neighbour who turned his 300m suburban block (including house) into solid vege garden. He was 100% self sufficient in fruit and veges. With significant excess to give away. He used to buy a small bit of meat, eggs (chickens not allowed due to council restrictions) and some dairy.

But they key was he was retired so had the time to maintain it.

by Uninterested | 19th Aug 20, 7:15pm 1597821343

I have guava moth here in Ak so all my fruit is stuffed now.

by scarfie | 19th Aug 20, 7:19pm 1597821595

A serious probably not talked about, it is spreading. However I know someone in Whangarei having some success managing it.

by Hook | 19th Aug 20, 6:41pm 1597819299

Dream on mate. There is no way, after costs, you can "subsist" on a postage stamp block of land, unless you want to go "total irish" and just eat potatoes.

by RickStrauss | 19th Aug 20, 10:28pm 1597832923

The Irish subsisted on potatoes? I thought the big problem was a lack of potatoes.

by youngdumbandbroke | 20th Aug 20, 8:24am 1597868661

That's literally what he said though?

by RickStrauss | 20th Aug 20, 8:48am 1597870083

True, on rereading.

by Hook | 19th Aug 20, 6:36pm 1597818982

Depends what is classed as a "lifestyle block". I've seen RE ads trying to promote a 1 acre section as a lifestyle block. BTW, I think I'd put the ponies in the pot first

by solardb | 20th Aug 20, 9:12am 1597871545

Lot of mums and daughters would put dad in the pot before the ponies.

by nz-it-worker | 19th Aug 20, 5:35pm 1597815346

Another excellent article in Stuff about New Zealand's unrelenting cases of worker exploitation, the crooked retail liquor industry, and the ongoing edu-migration sham.

Vicious cycle: Why are some Indian migrants so badly exploited in NZ?

Makes you wonder why so many are so keen to get this sorry state of affairs back up and running again.

by Ngrrk | 19th Aug 20, 6:03pm 1597817011

“Every student who comes from overseas spends 30 grand on their studies – and nobody is going to spend that if they’re not going to get residency at the end.”

So it wasn't because of our high quality educational institutions?? Who wudda thunk it?

by Advisor | 19th Aug 20, 6:23pm 1597818219

So you're implying successive governments have been lying to us when saying that thousands of international students each year coming to study business courses at PTEs such as the Auckland Institute of Studies are doing so for reasons other than the international ranking and reputation of these esteemed institution.

by RickStrauss | 19th Aug 20, 10:37pm 1597833460

I am stunned. I cannot believe I missed Stephen Joyce's raised eyebrows when he said everyone was coming here for the high quality education.

by Advisor | 19th Aug 20, 6:14pm 1597817682

Makes you wonder why so many are so keen to get this sorry state of affairs back up and running again.

It's horrible on the part of education agents, private institutions and unscrupulous employers to exploit vulnerable migrants. That being said, most of these migrants are aware of their rights but choose not to do anything about the exploitation since they believe it is a price to be paid for permanency in NZ.
INZ allows liquor stores, dairies and small cafes to sponsor PR and their low-wage migrant employees are obviously aware they don't stand a chance to settle in NZ without these employers gaming the system.

by Taxbreak | 19th Aug 20, 6:31pm 1597818702

And the employers doing the exploiting (predominantly previous generations of Indian immigrants is appears) obtain a competitive advantage against other legitimate NZ business (lower costs, higher profitability, unjust enrichment, tax avoidance via paying illegal wage rates, selling employment positions or kickbacks, etc.). This is a distortion in our labour market. Its too easy for these employers to tip their dodgy businesses into liquidation when caught, suggesting the sanctions and risk of being caught is far to low. Why don't we see a law change and funding to enable INZ, Labour Department and IRD to actively and more aggressively fine and recover unsubstantiated/illegal gains from the directors and shareholders of the companies these dodgy employers hide behind?

by redcows1 | 19th Aug 20, 6:41pm 1597819299

They're not real criminals though. Better to target the dope smokers and driver's of unregistered cars etc they're the real Crim's. Also much easier.

by Uninterested | 19th Aug 20, 7:19pm 1597821559

Hang on, I thought that certain ethnicities get an easy ride as far as expired regos and wofs though....

by Hook | 19th Aug 20, 6:48pm 1597819736

Before you start banging the perennial drum about Immigrant exploitation just be sure to qualify your statement that most exploitation is being committed by migrants (now PRs) on other migrants. In a lot of societies overseas that supply our migrant influx this is a natural way of things - the connected and the corrupt prey on the vulnerable, but the vulnerable make themselves easy targets by believing the promises made by their countrymen.

by Fritz | 19th Aug 20, 7:13pm 1597821187

Interesting. So the first 9 days of lockdown was not lawful but was 'right'. Who decides what is right or wrong?
Surely the law must prevail over subjective judgements over right and wrong?

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12357931

by frazz | 19th Aug 20, 7:25pm 1597821949

Get a lawyer..

by scarfie | 19th Aug 20, 7:29pm 1597822180

That is the correct conclusion to come to. No mention that Police were acting unlawfully either. Personally I think our justice system has become as lackluster as the MoH has proven to be, second rate personalities at the helm. No one capable of critical thinking, the comments in this forum displaying the same issue, plus a large dose of emotion over principle. The whole of lockdown was unlawful until they changed the law, the change of law being guilty knowledge.

If anyone wants a deeper look at how piss poor we are served by the Justice system look through the Dotcom case. The original search warrant was a crock and should have been thrown out at the first opportunity. But lots of weasling saw only parts of the search to be illegal. People who think this legal chicany is isolated to the virus should have another think about what sort of justice system they want serving them. Same for the Police force.

by Fritz | 19th Aug 20, 7:44pm 1597823042

There are those on this website that have and will say ' So what?'
Personally I think this is massive.

by Noncents | 19th Aug 20, 8:55pm 1597827335

It really is much bigger than everyone is making out. The Govt broke the law! They impeached Trump (and Clinton) for less.

by Fritz | 19th Aug 20, 9:32pm 1597829521

Yes headline at Granny Herald and quickly relegated down a few rungs. Interesting.
It raises all sorts of questions.
I assume it's ok for me to assist my dying dad's brother with euthanasia? After all, it may not be lawful but it's 'right' when someone's illness is terminal and they are in excruciating pain...

by Lanthanide | 19th Aug 20, 9:37pm 1597829824

The health of millions of people is a little different than the health of one person. Just saying.

by Fritz | 19th Aug 20, 9:54pm 1597830859

It's the principle that I'm interested in.
And I'm not saying it was the 'wrong' decision.

by RickStrauss | 19th Aug 20, 9:41pm 1597830099

They broke the law? This case was about the actions being unlawful. Not illegal.

by Fritz | 19th Aug 20, 9:48pm 1597830528

Not a huge difference.

by RickStrauss | 19th Aug 20, 10:26pm 1597832769

Only if you're not a judge, lawyer or legislator. Or don't care about the actual legal case we're discussing.

But given the legal case we are discussing is about the law and precision in interpretation, the distinction is very important because it is at the heart of the matter.

by RickStrauss | 19th Aug 20, 9:40pm 1597830011

The actual case is more interesting than the sensational reactions here.

The court did not find any laws were "suspended", and said the power to impose the restrictions existed but was simply not used until April 3.

And mention was made implicitly of police action during those nine days, suggesting they didn't take much action during those days:

It's believed there will be few, if any, prosecutions affected by today's findings.

Also note the case was about the calls actions being unlawful, not illegal. I.e. not encompassed and defined in the current law, rather than being in contravention of the law.

by Fritz | 19th Aug 20, 9:53pm 1597830783

Oxford Dictionary:

Illegal and unlawful have slightly different meanings, although they are often used interchangeably. Something that is illegal is against the law, whereas an unlawful act merely contravenes the rules that apply in a particular context.

by Fritz | 19th Aug 20, 9:59pm 1597831154

It's rather curious. A couple of weeks ago I heard law experts on the radio saying this was a very meaningful case, with a lot hanging on it. Presumably if the lockdown decision was found to be unlawful.
The decision came our today - unlawful - yet so far I have seen no meaningful commentary on it. Maybe it's just a matter of time.

by RickStrauss | 19th Aug 20, 10:02pm 1597831379

In law, according to a British constitutional law expert (where the basis of our law comes from):

"Illegal means that it is forbidden by a law that has been passed. Unlawful means that it is not authorised by law because no such law has been passed."

You can see that reflected in the very nature of the case brought:

Borrowdale argued these further restrictions were not "prescribed by law" and therefore unlawfully limited some of the public's rights and freedoms under the New Zealand Bill of Rights Act

The whole discussion in the Herald article is far more interesting once this is understood. I expect commentary from legal experts, the NZ Law Society etc. will be genuinely interesting too over the coming weeks.

by Fritz | 19th Aug 20, 10:07pm 1597831660

Thanks, I understand now. I've learnt something.
It's effectively where there is a gap, isn't it.
It's still not a great look though, is it?
But it certainly is quite distinct from 'illegal.'

by RickStrauss | 19th Aug 20, 10:14pm 1597832091

Yeah, I've actually been enjoying this case from a nerdy perspective. It's a look in to how the Health Act - which was from the comments of the judges deliberately designed to be pretty wide-ranging and flexible - actually gets interpreted by Crown Law and the High Court to clarify what is and isn't proper use of it. Within law that was deliberately legislated fairly loosely.

Seems like the bods at the NZ Law Society found it genuinely interesting too: https://www.lawsociety.org.nz/news/legal-news/high-court-releases-judgm…