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A review of things you need to know before you go home on Wednesday; wage subsidy returns, housing boom grows, milk price and payout forecasts rise, debt stress vanishes, swaps and NZD stable, & more

A review of things you need to know before you go home on Wednesday; wage subsidy returns, housing boom grows, milk price and payout forecasts rise, debt stress vanishes, swaps and NZD stable, & more
ID 22702269 © Daniaphoto |

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

No changes to report today. Update: The Cooperative Bank has raised its four and five year fixed rates by +20 bps.

NZCU Auckland trimmed a savings rate, and the Heretaunga Building Society trimmed some TD rates. Update: The Cooperative Bank has raised its 4 year TD rate to 1.55%.

The increase in alert levels on Sunday has re-activated the COVID-19 Wage Subsidy, as Auckland will be at alert level 3 for at least a week. Businesses can apply for the Wage Subsidy from the Ministry of Social Development from 1pm Thursday, March 4, 2021. Payments will begin from Monday 8 March. "The payment is to support employers (or self-employed people) to pay their employees and protect jobs,” the Government said. This payment is available to all businesses in New Zealand that meet the eligibility criteria, not just those in Auckland, to recognise that firms throughout the country may have their revenue affected by Auckland being in higher alerts levels for longer. But you will need to be able to show that the revenue drop is due to the change in alert level, not just COVID-19 in general.

Auckland realtor Barfoot & Thompson's said their February sales were the highest since 2004, and their median price sets new record. They called the rises "exceptional" as the Auckland housing market booms.

Corelogic said the average dwelling value in the country rose by +$21,275 in February on average (and that is +$123 per working hour), with some specific places rising by more than +$50,000 in a month.

The granting of residential building consents has continued its rising pace, up +18% in January 2021 from the same month in 2020. That extends a run of strong issuance in recent months, with 39,881 new dwellings consented over the past 12 months. That’s the highest level in 47 years, impressive also given the pandemic lockdowns in the middle of 2020. Much of these rises are in Auckland, where +17,100 new dwellings were consented over the past year and a +14% increase. That’s the highest number of Auckland dwelling consents issued in decades and is concentrated in a shift to smaller, medium-density housing. You do have to wonder whether this activity is about to overshoot by a substantial margin.

Westpac is warning that the current boom in house prices may already be passed its peak. It also warns that mortgage rates are likely to rise from here. They say rising interest rates and increased housing supply with slower population growth will start to cool the housing market soon.

Westpac's NZ Chief Economist Dominick Stephens is off to take up a ten-month secondment later this month as the New Zealand Treasury’s Deputy Secretary, Chief Economic Advisor. Michael Gordon will again become Westpac's acting Chief Economist, a role he has filled previously.

Payday lender Moola has agreed to make a $2.8 mln refund for 'unreasonable' fees after challenged by the Commerce Commission. They said Moola charged unreasonable credit and default fees in 2016 and 2017. The Commission still has an 'irresponsible lending' case pending against Moola in the High Court. Moola is controlled by Edward Recordon who also owns the car loan outlet Zooma.

Today's dairy auction brought outsized gain, with overall prices up +15% and WMP prices up +21%. Some analysts rushed to raise their 2020/21 and 2021/22 farmgate milk price payout forecasts.

ANZ reported that their World Commodity Price Index lifted +3.3% in February from January to reach its highest level since April 2014. And it was up more than +11% year-on-year. The dairy sector provided much of the recent impetus, supported by strong prices for meat, forestry and aluminium.

The number of personal bankruptcies dived to their lowest-ever levels in January. No Asset Procedures remain at an historically low level. Serious debt stress where people need to clear the slate and restart their borrowing lives with this black mark really isn't a 'thing' anymore.

Despite booming new car sales, less than 15% are NEVs (new energy vehicles) and most of those are petrol-electric hybrids. Used imports are falling away faster now. The biggest new vehicle sellers are tradie utes and SUVs.

The 2020 economic activity report represented by GDP was out for Australia today, showing a -1.1% decline in the full year after a much better than expected result for Q4-2020.

The latest RBNZ release shows there are still no more takers for their FLP (Funding for Lending program). Only $1.14 bln of the $28 bln allocated has been disbursed, with only the Co-operative Bank ($40 mln), Kiwibank ($100 mln), and Westpac ($1 bln) dipping their toes into this market so far. There hasn't been any disbursements now in more than three weeks.

The China Caixin services PMI is showing the same limp expansion that their factory sector is experiencing. The steam has gone out of the Chinese economy and it is growing at a rather modest level now, quite a come-down from the 2020 COVID bounce back. When the 2021 growth data reaches the headlines, we will all need to remember it will be off a very low base in 2020. This will be true for every economy, not just China.

China has always taken food security very seriously. And this is a challenge for Beijing to manage when tastes go up-market and more 'Western'. According to a recent report, the per capita consumption of meat has reached 55 kgs, a +10% rise in just four years. It is a colossal demand rise.

Gold is trading in Australia, and soon in Asian markets. So far today it is at US$1734/oz and up +US$10 from where it was at this time yesterday. At the close of New York trading earlier today this price was at US$1738/oz, while in London it had closed earlier at US$1724/oz.

The S&P500 ended today down -0.8 with a late retreat. At its opening, the very large Tokyo market is little-changes, Hong Kong is up a modest +0.4% and the Shanghai exchange has opened an even more modest +0.1%. The ASX200 is up +0.7% today on a strong of good earnings reports, while the NZX50 Capital Index is down -0.1% in late trading.

We don't have today's closing swap rates yet. If there are movements today, we will note them here later when we get the data. Today the 90 day bank bill rate is unchanged at 0.31%. The Australian Govt ten year benchmark rate is up +3 bps at 1.70% after the RBA review. The China Govt ten year bond is unchanged at 3.27%. And the New Zealand Govt ten year is also unchanged at 1.76%. But that is above the earlier RBNZ fixing at 1.73% (-2 bps). The US Govt ten year is under pressure today as the bears re-emerge and is currently down -1 bp at 1.41%.

The Kiwi dollar is up to 73 USc. On the cross rates we are softer at 93.2 AUc as the Aussie again makes stronger gains than us. Against the euro we unchanged to 60.4 euro cents. That all means our TWI-5 is holding at 74.4.

The price of bitcoin is flat today, now at US$48,691 and a dip of -0.6% from this time yesterday. It fell away until about 6am this morning but has recovered most of yesterday's price since. Volatility over the past 24 hours has been a more modest +/- 2.9%.

This soil moisture chart is animated here.

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

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Another interesting thing is happening these days . Wage is rising. From $50 to $130 per bin. Hm, maybe RE agents can finally make a buck in this country ??


Amazing isn't it, reduce the supply of Labour and wages rise. Keep going and keep immigration down. CRITICAL skills only!


A list of migrant approved jobs is urgently needed. And there needs to be phase out dates for nearly all jobs. When Sky City opened they were allowed to employ a number of specialized foreigners (mainly Yanks) on the gaming floor as kiwis lacked the skills and experience. But there were strict conditions placed on Sky City that ALL the foreign labour had to go within 2 years so of course kiwis were trained, took over jobs held by foreigners and everything ran smoothly once the foreigners left. It is not rocket science and the right thing for NZ.

Yeah but it didn't work long term because I worked there as a Gaming Technician and the pay was pathetic and the jobs were eventually all taken by people from the Philippines. You couldn't even make the average wage and that was for horrendous shift work while they made hundreds of millions in profit every year.

Good money. Wouldn't mind doing that for a while and living in the back of a Kombi van.

Dr Eric Crampton is wrong

Now the orchadists have to pay $5,520 MIQ fee per RSE worker.
Suddenly the rate per bin goes from $60 to $130 - the cheapskates
They don't want to pay the MIQ fee
They could pay more all along
Remember this next time they scream for more temporary imports

He's usually wrong. He largely clings to neoliberal doctrine.


Finally businesses are being forced to do the right thing and employ kiwis instead of pretending they need skilled workers in order to save money by employing slave labour. There are currently 300 000 long term migrants in NZ on work, student and family visa which is probably about 280 000 too many. A list of specific migrant approved jobs needs to be drafted urgently and needs to include a phasing out timeline for every job so that by the end of the decade there will be less than a few thousand migrant workers in NZ at any one time.


Bizarre, I thought orchards were tapped out and couldn't afford to pay anymore, hence their screeching about how they rely on cheap slave migrant labour.

Congratulations to Dominic Stephens on his secondment.
Yeah, I know lots of anonymous keyboard warriors have slagged him, but to do doesn’t take any intellect. Clearly Treasury having far greater wisdom think otherwise.

I've always enjoyed reading his and Tony ALexanders analysis. Bagrie was good but you don't hear much from him these days. Zollner & the RBNZ guys are simply way off.

What is not appreciated by some is that economics is not an exact science. Reading a range of opinions and figuring things out and coming to one’s own conclusion is what makes it enjoyable - and more likely to make more successful economic decisions. Those that don’t appreciate this display an ignorance.

Disagree. That is merely self-defense followed by self-justification, rounded off by denigration.

Those who think economics can be of use while avoiding things like finite stocks, by calling them things like 'externalities', are the ones adhering to an ignorance.

Economists are merely today's astrologers.

Psychologists are new-age witchdoctors.

I've always enjoyed reading his and Tony ALexanders analysis

Alexander was outed on Linkedin for spinning false narratives from his 'panel' (it's not a panel, it's a subscriber database).

Alexander has always stated in his news letters and reports that it is either from respondents to a survey which he mails out to all those on his database or for selected surveys - such as mortgage brokers - those on his database who have identified as such.
The so called "outing" on Linkedin appears simply as a malicious post as he has from my memory never referred to a "panel".
I have read his reports - along with others - for at the least the past 15 years during both his time as BNZ chief economist and since he has gone out independently. I am a paying subscriber of his since he introduced a subscription option and never, never been under any impression that his reports are based on anything other than his opinions, research, and surveys - never have there been any indication that he was using a "Panel".
Personally I don't see any issue with his surveys and reports - just you being desperate. I thought we all knew we should question and take care not to rely on social media.

Read it all with my own eyes. Just because you like the sound of his narrative doesn't mean it's not shoddy research (which it was).

Please reference the specific report(s).

Nothing to do with content. Alexander was passing off his database as something that it's not: a representative panel.

Can you reference when he was passing off his database as a panel where this has been significant and “worthy of outing”
As said I have followed him closely and consistently and never been concerned about reference to a “panel”.
Not sure either how a database of mortgage brokers could not arguably be legitimately referred to a “panel” being a group of invited people with expertise.
Simply meaningless attempt at slagging off which in desperation you have bought into.
However, still interested in you referencing any specific claim where he refers to a panel.

It's a database of 'people who subscribe to his newsletter.' That's what it represents.

Exactly. And it will, of course, be full of bias.
Scientific my ass.
And he calls himself an 'economist'...

Exactly. And it will, of course, be full of bias.

And even more biased if TA uses leading questions. Mind you, Granny Herald has no issues with referencing his tosh.

JC and Fritz
Both really desperate attempt to slag off. Pathetic.
Never claimed that the surveys to be anything else other than the views of those - such as REA and mortgage brokers - with some insight.
Even the response from one respondent far, far more illuminating than either of you and Mikekirk can provide.

He was exposed and had to backtrack and change his narrative. No point me saying this if it didn't happen.

Ad hominem.

P8, he calls himself an economist. Economists don't rely on flawed and heavily biased surveys.
Good night.

NZ needs its own Martin North.

Not really we already have MikeKirk to overload us with data only to be consistently, perpetually wrong

The fact that local reserve bank drives house prices to a crazy levels just before any hint of dropping by even 1% doesn’t make Mike’s analysis wrong. He just reminds you when the economy wants to be “market economy“ but the majority seems to be happy to live in the planned one.

I didn't say Mike's analysis was wrong, just like Martin North's analysis is not wrong either but both their predictions of house price drops certainly have continuously been wrong

Martin North does not make predictions. He collates data and presents it.

Those guys still end up drawing the wrong conclusions from the data. Remember watching their video a couple of years back on all the building going on in Tauranga on a wet and windy weekend and them claiming nobody would buy all these houses and it would be a ghost town, well look how that turned out. They like many create sensationalistic bits of video to get viewers but they are full of shit.

Clearly Treasury having far greater wisdom think otherwise

What's your benchmark for 'wisdom'? I think that this 'relationship' between bureaucrats and private banks is part of the major economic issues facing NZ.

Couldn't agree more. Witness the current RBNZ Governor:

Adrian... worked for a short time as a Chief Analyst at The Treasury, before returning to the National Bank as Chief Economist.

Adrian was appointed Chief Manager of the economics team at the Reserve Bank of New Zealand in 1997, providing core economic and policy advice to the Governor.

Between 2000 and 2003 he served as Chief Economist for Westpac Banking Corporation.

Let's take a wild guess at who is being groomed as the future RBNZ Governor...


Reminds me of this old, but relevant article: Priceless: How The Federal Reserve Bought The Economics Profession

The Fed failed to see the housing bubble as it happened, insisting that the rise in housing prices was normal. In 2004, after "flipping" had become a term cops and janitors were using to describe the way to get rich in real estate, then-Federal Reserve Chairman Alan Greenspan said that "a national severe price distortion [is] most unlikely." A year later, current Chairman Ben Bernanke said that the boom "largely reflect strong economic fundamentals."

The Fed also failed to sufficiently regulate major financial institutions, with Greenspan -- and the dominant economists -- believing that the banks would regulate themselves in their own self-interest.

Re: What’s my Benchmark for "Wisdom" - something your comment clearly doesn't reflect.

I note Westpac another indicating upside to mortgage interest rates. As I have been posting for some time, if I had debt I would be looking at paying it down and certainly questioning the need - and at least looking to delaying - discretionary spending on larger items.

RBNZ have specifically said this week they're going to keep rates low...

. . . but for how long and what is meant by “low”?
Compared to the norm of OCR pre GFC of around 8% even 2.5% could be considered “low”.
But it’s fine, if you are a property owner with a large mortgage as well as other debt and not concerned about being prudent , I have no problem.
There is no certainty as to where mortgage rates are heading, however if bank economists are consistently commenting on possible upside then I would not be foolish enough to think I know better, bury my head in the sand, not take note, and not be prudent.

Bank of Japan shares limit up three days in a row. Perhaps the RBNZ should list on the NZX.
With the demise of some Dr Suess titles perhaps the New Zealand region could provide alternative titles "One house, two house, three house, four" or "Orr and Morr and Morr", "Orr if I ran the RBNZ"

BoJ is the largest owner of the Nikkei 225 ETFs.

It beggars belief that this person can be retained as Aussie Attorney General given todays carry on:

Christian Porter was warned over public behaviour with young female staffer by then-prime minister Malcolm Turnbull...At the time, Mr Porter had a wife and toddler at home in Perth...Mr Turnbull described Mr Porter's conduct with young women as "unacceptable". .

And Turnbull was also right about "Mr Turnbull said the culture.....reminded him of the corporate world in the 1970s or 1980s."

Today's press conference was incredible. Self-entitled silver spooner claiming 'it never happened' and being grilled by journos. He's finished.

I'm sure there will be some delighted uber drivers out there. The resurgence payments plus the wage subsidy clock in at something approaching $5,000, correct me if I'm wrong? Not bad for a week and a half off work. Sadly not quite keeping up with the daily income of hardest working and highest remunerated unit of our society, the Auckland residential house.

1500 + 400 + 585 doesn't add up to $5,000.

You've left out the second resurgence payment: 1,500+400+1,500+400+585. Not far off $5k. The resurgence payment isn't taxable either, so grossed up the total value is more like $7k.

OK. I see now that you meant both lockdowns. I just read that the resurgence payment doesn't attract tax but Gst is payable on it. Complicated!

More than that. I know couples with 2 or 3 ‘businesses’ who have received a payment each for each business. I.e x 6. Not bad when also on Nat Super as well. Great payday for many.

Quite an astonishing quote from a article arguing against a wealth tax:

"Here is the problem. Suppose you are a retired couple and your primary asset is your house which is currently valued at $5 million. If you get a $2m exemption, you are still liable for a wealth tax on $3m. Even if the wealth tax is 1 per cent annually, this amounts to $30,000 per year!

Would most couples in this situation be able to get their hands on $30,000 short of selling the house?"

If you are a retired couple who has decided to stay in your 5million dollar house (how many people would be in that position???) rather than downsize to a more modest (!) 2m dollar house, then yes, I reckon you can probably get your hands on 30k. You'd both be getting more than that from the pension, in any case. Why should taxpayers (many of whom can't afford a house at all, let alone a 5 million dollar one) subsidize a couple who cant stomach the thought of moving from their 5mil house to a mere 2mil one? (Imagine the horror!).


And that just highlights the problem with property price rises, for the sake of growth.
In all likelihood your elderly couple might have bought their home as newly-weds in 1970 for, what was then an expensive $50k.
Time and suburban expansion have made it 'worth' $5m today, yet it's been their home for 50 years.
Is it their fault? Should they have to move? (My wife has a great-aunt on the Te Atatu Peninsular in just that situation. It was grazing land in 1970 - fields of not much else. And she's now on her own.)
It's not just the young that are being penalised by property price rises out of all proportion to everyday costs, but the rapidly increasing cohort of aged.

There is now no good answer.

Both ends of our demographic spectrum are going to suffer - and, those in between. But doing nothing is not the answer. That will only make things worse.
What a mess we have made of this.


Even now I dont think there are many ordinary homes of the kind a mum, dad and kids would have moved into 50 years ago that are worth 5 mil.

But one thing I think is notable is the difference in how we talk about young people and old people. Young people are expected to suck it up, move away from places they've lived their whole life, cut themselves off from wider family networks and better employment opportunities, deprive their kids of close relationships to grandparents, just to 'get on the ladder'. But the suggestion that a retired couple sitting on a 5 mil asset who apparently have no other savings should either give back some of their taxpayer funded pension or move to a mere 2mil home? Beyond the pale, apparently.

Theres a reasonable chance the hypothetical couple (and your great aunt, for that matter) could get a reverse mortgage as well. On a 5 mil property, taking out just 15% would get you 750k - enough to pay the proposed wealth tax for 25 years. The heirs inheriting 4.25 mil as opposed to 5 mil is hardly a disaster, surely.

More tax just so the Politicians can distribute it to buy votes. There is no free lunches, we need this Country run by people with the right credentials. Why has nobody put the hands up. Why would you want too to be vilified by the ignorant

In a few years 5 million will get you a nice 2 bedroom unit

Overlooking of course that the tax will drive down house prices and thus the tax you just calculated.