Finance Minister English says public service savings more important than ever in wake of Christchurch quakes

Finance Minister English says public service savings more important than ever in wake of Christchurch quakes

By Alex Tarrant

Finance Minister Bill English has cast another shot over the bow of New Zealand's public service, which he has accused in the past of creating too much 'waffle', saying changes to streamline public services were more important than ever in the wake of the February 22 Christchurch earthquake.

Government is staring down its biggest ever budget deficit, which could hit 8-9% of GDP this year as it borrows to pay for the immediate costs of the quake, books future quake costs, and has to deal with a slower-than-expected economy -- even before the earthquake struck.

The government is also wary of a credit rating downgrade as it ramps up its borrowing programme, and as international ratings agencies review the way they assess sovereign risks.

"Because most developed countries guaranteed their banks, financial markets increasingly add private and public debt together to assess credit risk. So even though our government debt is lower than some other countries, that alone does not provide an accurate picture of our position," English said in a speech to the Institute of Public Administration New Zealand.

"New Zealand's total debt to foreigners is among the highest in the world and over the next few years that will be pushed even higher by growing government debt," English said.

Getting on top of the country's fiscal position, and rebalancing the economy, necessarily meant the Government being a smaller part of the economy than it was now.

"The previous Government’s decision to massively ramp up spending in the 2000s left behind a large, structural budget deficit, and a bloated public sector that by 2008 was crowding out the competitive sectors of the economy," English said."

"Despite the best efforts of the Government and the public service since then, the deficit may reach 8% of GDP this year, which is uncomfortably high. But we believe if we make careful decisions about government spending we can still get back to a meaningful surplus in 2015/16," he said.

"After that, the Government is committed to resuming payments to the New Zealand Superannuation fund and generating large enough surpluses to pay back most of the debt we are currently accumulating. That means public spending restraint is no temporary aberration. It is effectively permanent."

Diseconomies of scale

Meanwhile, English outlined why the government thought the public sector was too bloated.

"The longer we are in office the more it is clear that the costs of running government are too high, there is too much duplication and the organisation is too cluttered," English said.

"For a country of just 4.4 million people, we have 38 government departments, over 150 crown entities and more than 200 other organisations for which the government has some responsibility. Too many agencies in the wrong place risks diseconomies of scale, transaction costs, duplication of roles and back-office functions, and in some cases reduces the cohesion and quality of frontline services," he said.

"New Zealand’s limited governance and management skills have to be spread over a large number of agencies, all of which are vying for ministers’ time and attention.

"As the Prime Minister indicated in his Statement to Parliament last month, you should expect to see more consolidation of agencies and functions over the next two or three years, where those changes have the potential to improve the direction, focus and results of the public service as a whole," English said.

Here is a video English saying many departments will not get enough money to cover inflation increases. On Monday, Prime Minister John Key said the three departments identified to get more nominal spending - health, education and justice - may get increases once inflation is adjusted for (real increases), although this was not definite. See Key's comments in the video in this article here.

(Updates with second video of English, link to Key's comments yesterday, on how these moves fit in with the credit rating debate)

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Give it a gastric bypass Bill....do it yourself...only don't just blather on about the need to take action....pull your finger out and get on with it...

Too right!

"...shot over the bow of New Zealand's public service". Not good enough!

Bureaucracy has hijacked and perverted necessary administration. The level of regulations and compliance is unbearable and unsustainable. We cannot sustain the utopian believe that government needs to deny individual freedom and responsibility in order to create a viable social society. Sadly the people have not grasped that they finance their own keepers and leeches.

Seems kind of ironic as the governments about to creare another dept for the quake which everyone whose ever dealt with beauracracy knows will not be able to do anything at all without council and relative central government approval(costs,time etc) anyway.

There was an article by Deborah Coddington in the Herald on Sunday, arguing that "A government department will create more headaches than it will solve".  
Here is a quote from one Steve Withers of Beach Haven in the comments below.  I thought it very well put: 

"Government" is the lens that focuses / filters the diverse wishes of the many into something resembling action. I don't trust people who want to dispense with consultation and democracy in the name of what they think needs to happen. Yet they are the first to squeal if their views are ignored.

Chch has been seriously damaged and what happens now will define the city for decades and more. To NOT talk about it would be criminal. Government is the one organisation empowered to engage the talk and make some sense of it and move everyone forward. No one else has the authority. People who can't see this don't really understand how their world works - and that's sad.

"Government" is the lens that focuses / filters the diverse wishes of the many into something resembling action."

Yes, and when you have more leeches than productive elements in society, then democracy turns into a tool for the masses to exploit personal freedom and private enterprise (and property), opportunistically facilitated by political quest for votes to gain power. That is the situation NZ is in. And that is not only sad, it is unsustainable.

Bloated, self-serving bureaucracies... the stranglehold on and downfall of societies.

What's your alternative?  Would you rather that Messrs English and Key were not answerable to voters and not subject to election, thus able to ignore the wishes of the majority of New Zealanders whenever they felt like it?

Don't they do that already?

An alternative could be a modified voting system for general elections, based on cognitive ability. Minimum requirements should include the ability to research, analyze, discuss and synthesize faculties like the monetary system, banking, lobbyism, economy, history and politics. Utopia? Damn right! This education is certainly not in the average citizen’s realm.

However, I could think of a system of Meritocracy, a system of government wherein appointments are made and responsibilities assigned to individuals based upon their "merits", namely intelligence, credentials, education,wisdom, honorable humanistic achievements, etc.. This ‘grail of the wise’ could be moderated by a grand committee of individuals (polis) with the earlier-mentioned extraordinary requirements. This ‘polis’ could deliver a grand consensus finding process in an advisory (maybe vetoing) role to the meritocratic government.

Just as Bill E lambasts a bloated bureaucracy, Gerry B announces the creation of a new govt agency - the Canterbury Earthquake Recovery Authority - http://www.nzx.com/home/4819195/Five-year-task-for-Christchurch-earthqua...

Kunst : Do you think that big Gerry is doing a good job now ?

And ten years from now when the rebuilding starts, the then govt will change the name to Disaster Recovery Authority...the DRA....with a permanent staff of oh about 500 and a billion dollar computer programme to manage the salaries. Plus there will be another snout at the cabinet trough..the Minister in charge of the DRA....can't wait...can you!

So do people think we are going to shrink our Public Service ( that's job cuts; less new intake at the bottom; no replacement on retirement etc) and keep immigration intake up? How do we explain to those who have to compete against 'new imports' for their liveleyhood, that we need more people at this point in time? We don't! Let's use what we have, first; those who have paid for what we have here already, before we set about increasing the population. ( And...if you're a foreign domiciled NZ'der who is in default of their Student Loan by specified criteria, pay up, before you're allowed to re-enter the country )

Why do er need to keep the immigration intake up?  if these ppl are coming in and getting jobs well one has to wonder why NZers are not filling them...if they are not getting jobs then that measn the DPB....that should nto be happening.

Simple cut it out while we sill have so many un-employed...

regards

Immigrants have to compete against those with NZ qualifications, against native speakers, against those that now the culture, have the connections, and all the right papers.

And you are telling me the immigrants are still winning??

So true. As Steven asks above "if these ppl are coming in and getting jobs well one has to wonder why NZers are not filling them" (and if they are not getting jobs then I don't think that measn the DPB; as far as I am aware a condition of "entry" is that you can support yourself for 2 years, job or not, and are not entitled to any govt help/subsidy).

You have fallen victim to what is known as the "lump of labour fallacy", the idea that there is a fixed amount of work that we are all competing for. This gives rise to the claim that immigrants "steal" jobs from the locals, as expressed so eloquently by the rednecks on South Park who shout, "They took our jobs!"

This is not true. Immigrants only "take" jobs if they are either more productive or willing to do the same job at the same level of productivity for a lower price. As Winston Peters has demonstrated time and again, immigrants are convenient scapegoats for problems caused by stupid government policies.

Having now read Gareths post with the details/checks and balances, appeals,consultations etc all needed,this is going to be a bigger catastrophe than the original quake. 

Bill English: Because most developed countries guaranteed their banks.

Well, stop doing that then.

We need crony capitalism as much as socialism.

The first bureaucrats to squash are the ones stifling ChCh. 

Why after 5 weeks can we not enter OUR OWN PROPERTIES on streets where their is NO DAMAGE, NO SAFETY ISSUES AND NO OBSTRUCTIONS.

There is no logic to the handling of the earthquake "recovery", the people who are needed to rebuild the city are simply getting worn down by pen pushers who have no idea what they are doing.

EVERYONE I talk to who owns a business or property that is damaged is NOT talking about rebuilding - they are talking about walking away - often walking away from NZ.

Key, Brownlee, English and co have no idea.  Probably 20,000 jobs will go.  Insurance cash won't go to rebuild the CBD, it will go to pay off debt and the rest will probably head overseas with the business and property owners.

What is turning into months of hell for ChCh people is spelling the end for NZ's economy.

There IS no recovery and there will be no recovery.  Everyone has had enough.

Feb 22 may have been a disaster, the response has been a catastrophe.

Christchurch is of national interest – not Coronation Street

 Chris – approach TVNZ - the media and organise a one hour program with invited guests Key/ Brownlee and business people of Christchurch included – debating the issue(s). The presentation of the problem(s) to the NZpublic is the only way to make progress.

 In the current worldwide situation I do not understand why  NZmedia are not debating publicly and make our government (politicians) accountable.

 The government should be challenged to come forward to debate a number of issues publicly - urgently.

Kunst, thanks for the encouragement, however like everyone else I'm just so exhausted.

This morning, I was still battling to get an engineer in to view our some of our properties which are one door inside the red zone.  They are timber framed 2 storey houses, Civil Defence want them demolished, we at least want the opportunity to fix them.

Last week they wouldn't let our engineer in because he wasn't a CPEng.  This week the senior associate came and they wouldn't let him in because they needed a safety crew of 5 Civil Defence people to go with him, and there was only one crew on and the wait was too long.

It's so ridiculous, and no one cares.

I've asked Bernard to look into doing some stories on it.  I even sent him photos showing that there are huge building code issues (near new buildings collapsing), this hasn't been covered by any media, no one cares.

I've spoken with Gerry Brownlee, with councillors, with TVNZ, with Campbell live, NO ONE CARES.

Facts are being swept under the carpet, ChCh and NZ is being destroyed. No one knows what to do and NO ONE CARES.

There is incompetance of staggering proportions AND NO ONE CARES.

I don't normally give in easily, but the situation was bad before the quake now it's beyond, beyond everything.

Like everyone else my view is that I will take the insurance settlements, abandon or sell what's left and go to Australia.

Being dealt with in this way leaves me with no reason to stay.

If NO ONE CARES, then WHY SHOULD I?

Hi ChrisJ,

Would you mind if I tried uploading the entire pdf you sent Bernard along with the commentary in it?

Cheers

Alex

Hi Alex, it's fine with me if you want to do that.

Chris J

We care. My apologies for not uploading your pictures. We had some technical challenges and we're working on it. Alex has volunteered to finish the job.

Meanwhile, Amanda is doing some good work trying to dig stuff up

http://www.interest.co.nz/insurance/52834/insurers-pushing-streamlined-u...

Also, check out all our insurance stories.

http://www.interest.co.nz/insurance

cheers

Bernard

Thanks Bernard.  From what you see on the news you'd think everything was under control and on the way to recovery.  The reality is very little has changed since Feb 23 except for the power and water being on.

The workplaces of about 60,000 remain locked down.  Need I say more.

Recovery is just a distant dream.  It's been nearly 7 months since the first quake, 5 weeks since the second, those in charge don't understand what needs to be done, nor how it should be done.  Nearly everyone I've spoken to are talking about taking the insurance money and not rebuilding or using the option in their policies to rebuild elsewhere in the country (which includes persons with $20m+ hotels).

Undoubtedly, we will get big news stories when the first big commercial building is rebuilt or the first house finished (surely your thinking that the first replacement houses (from Sept) must be built by now - I believe the figures were 2 rebuild consents approved by the end of January or something just as ridiculous).  The only finished rebuild I know about thus far is a small corner flower shop.

The reality is many of the big old buildings torn down after Sept were simply put up for sale as vacant lots:

http://www.primecommercial.co.nz/l/1476750/431-colombo-street-christchur...

http://www.primecommercial.co.nz/l/1489079/200-st-asaph-street-christchu...

http://www.naiharcourts.co.nz/Property/View/CIC22482/Waltham-344-Ferry-Road

http://www.primecommercial.co.nz/l/1381319/central-city-land

Those four above are just a few of those hardy enough to leave them on the market.  After the current ordeals, I'm doubting few will look to rebuild without huge incentives which no one can afford.

The powers that be, have failed to realise that disenfranchising those that they need to do the actual spending in a recovery is setting up the whole process for failure.

Ironically the most helpful at present seem to be the banks.  Perhaps they are rightly scared? 

It's all a sad state of affairs and it is one that many will choose not to be part of.

I got back in mid-February , and the  figure I heard was for just 27 house  rebuild consents ............ So I de-waxed me lug-holes ............ And heard the same figure repeated elsewhere ..............

........ What the fecking hell have the CCC been doing in the 5 months between Q1 and Q2 ?

I'm not trusting these bozos , gonna make candles outta the wax , just in case !

Chris my thoughts are with you down there. I have a broad based set of skills that might have been useful in the initial emergency response, but it took them a week just to sort out a register for volunteers. The only contact number that the 0800 help line could give me was the CCC, and no one would answer there. Having the previous professional experience I have I though it was all a joke. I knew you were all stuffed from very early on.

As for the media I can only say I have shared your frustration on a handful of occasions. They are a complete joke. I have even been instructed on what to say to the camera because they had already written the story.

I made an appearance on the news late last year when the result of an investigation by a government department had been released. They were looking for comment and sent their most senior reporter, a veteran that everyone would know. Well I was shocked to find that he had not read the report. Again he just had a list of question that his producer had given him. And this was in relation to something that made headline news around the world.

I dont watch the news much, but you will notice that they use these stupid little throw away pun type lines constantly. It seems this is more important than telling the news.

Don't expect any help from them unless you can cook up something sensational that will make the news. Perhaps grap together 100 people and just bowl on into town. With that many you would probably overwhelm the Police. Just make sure you advise the TV stations to be there. Seriously though, you have would have to contrive an incident to get their attention.

There is no doubt that Central Goverment is bloated but what about the 3 tiers of Gov't below.  Why do we need Regional Councils, District Councils and Community Boards?  

Andy:  Hmmmm...

If u look at the British example, the Conservatives are trying to move decision making etc down the line to the local level.  So maybe you are ordering these the wrong way around?

Cheers to all

Philly - what I am saying is why do we need 3 levels of Gov't below the central level.  One tier would be enough.  Just scrap the two that are not required.

A good start would be getting rid of unneccesary positions within the public sector, not at the frontline but in various levels of management.

Here are some of the positions being advertised at jobs.govt.nz 

 Housing NZ Corporation - Learning and Development Consultant

Reporting to the Learning and Development Manager we are seeking the expertise of an experienced Learning and Development Consultant who has previous experience designing and developing innovative, value for money learning solutions for staff and managers within both technical and non technical environments.

The purpose of this role is to work alongside the organisation to identify and diagnose learning needs, develop appropriate training-based solutions alongside frameworks and programmes which align with Housing New Zealand's strategic plan.

Department of Internal Affairs - Systems Thinking Advisor

 The Department's ongoing performance and productivity programme uses a Systems Thinking method to deliver better to those we serve, and support business improvement across the organisation.  This is an exciting programme that challenges the way we think about, design, manage and measure the impact of our work.

Initially, you will learn about the specific methodology being used (Vanguard Systems Thinking), as part of hands-on interventions with experienced consultants and senior managers.  You will then bring your analytical, advisory and coaching skills to bear, as you guide and support further interventions alongside senior leaders in the Department. 

In addition there are 42 policy and analysis positions available.  And BE wonders why a lot of "waffle" is being created.  I just don't see the need. 

 Department of Labour - Mumbai, Support Officers

    Take one part Hollywood; six parts traffic, equal parts of antiquity and techno modernism, add some aromatic spice, sprinkle swirls of colour and add a zest for life; mix together and set against a backdrop of swish bars and restaurants alongside ancient bazaars, and presto: Mumbai.

 Mumbai, the biggest metropolis of India, is a city that virtually never sleeps and is where the maximum share of the country's revenue is generated. Mumbai has the country's largest production houses, stock exchanges, sea port, and offices of many esteemed companies of the world, and now this includes Immigration New Zealand (INZ).

Why does Immigration NZ need a branch in Mumbai?

Id start by getting rid of whoever writes those ads.

What exactly is a "hands-on intervention" anyway ?  

@meh

This is mind boggling!

Oh my gawd...at first I thought you made up these ads. THEY ARE REAL!!!

UNBELIEVABLE

The bloated will defeat Dipton every time. He lacks the courage needed to swing the axe...aint that right Bill.....!

Sir Humphrey understands what is needed....a hint here and a word there...a promise of efficiency and savings and whatever the Minister wants..in threes...to be followed by an astute administrative slight of hand that hides the bloat...protects the fat salary and creates the image of greater Ministerial control..hey presto one happy fool in the Beehive. Then it's just a matter of waiting out the storm until Labour slither their way back to the pig trough.

Good on yer Bill.  Take a scalpel to govt services.  Likely to be literally a scalpel, since the impact will be partly on essential services, eg cancer surgery. 

I have no problems with reducing the bureaucracy, but even if you totally rationalised it & cut it to the bone I doubt you would save as much as $1 billion pa - hardly likely to create a step change in our fiscal position.  Anything further will affect primary schools etc.

But Bill, hey, its the only thing you can do.

I mean, you couldn't possibly cut out the bloated WFF scheme, cut out tax dodges for landlords, or get people to pay tax on their capital gains!

Good heavens no!!  Think of those votes!!

Cheers to all

The best thing I got from all of this was when they released the speech to media (ie the one attached above), it was 135 pages long - 15 copies of the speech one after another.

I asked English's media guys whether this was a sly joke about public service waffle and repetition...to which they released a pdf with just one copy of the speech :)

Update soon with English talking about out credit rating in the scheme of things.

I can see why he thinks there is waffle. Some of the questions from the floor took an eternity, and English rather humourously matched them with long answers - something he was happy to have a chuckle about afterwards.

What are those paper pushers supposed to do in the 'real world'? 

Join the dole?  We need jobs and as long as China keeps undercutting the wests manufacturing  its not going to happen, so unemployment rises. The West needs to get together and stop the destruction of our manufacturing base by Chinese crap.

China did not undercut the wests' manufacturing.  The wests corporates, under capitalism, globalisation and the neverending chase for higher profits chose to move their manufacturing to lower wage countries.

The paper pushers would've chosen different career paths if the public sector hadn't expanded in the way it did and provided the illusion that these were neccesary positions.

Globalisation is the issue but nobody saw the consequences.  Now we have to figure out how to manage it. 

Cheap labour can be overcome by implementing better technology. In manufacturing this means smarter automation. I dont care how cheap your labour is, a machine that can do 5 peoples jobs, 24/7, in the dark,  without complaining will always create better bottom lines in the long run.

Video in there on credit rating.

Cheers

Alex

My voting will be heavily influenced by the CONCRETE steps taken to reduce government 'middle people'. The number of people gettting paid for adding little value AT ALL to new zealand amazes me.

Bernard: More articles based on research of the bloated government services. Its killing our economy, and the awareness of where our tax dollars are going needs to be raised.

No, banksters, private debt and peak oil is killing our economy....so called bloated govn services is a long way behind.

regards

Yeah! a voice of reason... amongst the Lynch Mob!.  

A tip for English: encourage property investors to provide housing and the government can step out of this activity completely, saving millions in taxpayer funds.

Landlord:  True.  Existing tax-breaks such as the ability to deduct losses against income, followed by tax-free capital gains (in most cases) aren't enough. 

What do you suggest as the logical further step?  A straight-out subsidy? 

Cheers

Hello Philly. No I don't support subsidies, they are just another government cost.

If the government gets out of building houses it saves money. If they want to they can act as a property manager and lease private houses for their (the government's) tenants. 

The government can also allow tax breaks that everyone else gets eg depreciation.

The government can also tell property investors they are a valuable part of the economy.

A free market will compensate property investors sufficiently for their terrific efforts.  

PIs are not a valuable part of the economy on the scale they are at present doing what theya re doing ie the problem is doing PI for capital gain and not income.....

"Free market", no such think its a myth...

Steven, the PIs chasing capital gains by selling are not PIs, they are speculators.

Very few of them left now anyway as there isn't much capital gain to be had these days.

But PIs are valuable in the economy, providing always-available, affordable housing to those who choose to avail themselves of the service.

As a breed, PIs are a damn good bunch and the govenment should acknowledge them as such. 

Yeah because PI's make efforts for the good of the country and the people they house ay, not for themselves at all, they are incredibly selfless people. Haha.

@ Your Landlord: The Dodo didn’t die out because it was killed off by hungry sailors looking for an easy feed ~ It died-off because it failed to recognise the danger in an environment that had fundamentally changed. It failed to ‘read the news’, that those fellas that came over the horizon from time to time, were dangerous. And they kept coming more often, until the Dodo was dead. Similarly, Property Investors fail to recognise that the market, the world, has fundamentally changed in the last 3 years or so, and is continuing to do so. What do you think the Government means when it says it is going to ‘rebalance’ the economy? Making property less affordable to many sectors of our society, I would suggest, is not part of their re-balancing! We now have younger people who can’t afford to buy their first home; older folk who have lost all their savings to finance companies and leaky homes; elderly owners who are selling up to enjoy what’s left of life or just to survive. The buyer of first and last resort for New Zealand property….has all but gone. It makes no sense to buy when it’s alternative, renting, is cheaper. And when incomes are not rising and expenditure is being watched like a hawk, rents won’t rise much either. So when in years to come you look at what’s left of your property investment portfolio, remember one word from my post…Dodo.

Nicholas:  I agree with your sentiments. 

However, when you say "Making property less affordable to many sectors of our society, I would suggest, is not part of their re-balancing! We now have younger people who can’t afford to buy their first home", I think you are mistaken. 

Key has made it very explicit several times that he is not at all keen to let the property bubble deflate.  Most recently last week when he confirmed he would never consider a CGT. 

Cheers

I understand that, Philly. And that's Wollys point of view ( I think!). But Key also said 'he wouldn't put up GST". A small thing, I know. But needs , must. And New Zealand certinly 'needs' right here; right now. We are in real strife...Key knows it...look at his face next time it's on TV. Somehting has to give, and all we have is...property. That's where the wealth is; and one way or another it has to be extracted to keep us afloat. The alternative is that it gets done for us; not something any of us would relish. I guarantee you that other Western Governments didn't want their property markets collapsing, either! But it didn't stop it happening.

Interesting point....and yes at some stage and it might be 5 years from now we will start to see a property/land tax becasue there wont be many others options left.  Trouble is I dont think the properrty market could stand it...because its to over-valued and debt ridden to cope....

regards

That's exactly why they have too/ will do it! They will hit second+ property owners first BIG time. What better way to boost a dying economy than find all the money and tax the thuck out of it!

This is now a question of survival for many world economies. If the poor go down than rest assured they will take the rich with them. Hence the bank bailouts overseas. Only problem is they have used that ACE up and they can't afford to use it again

I would hope you mean more affordable?, it really needs to drop 50%.....property that is....trouble our economy is now so biased to property that such an evernt would be catestrophic I think.....be interesting to see though if property was to drop 50% just what would happen to the exodus to OZ.....it should I suspect and hope stop......I came here in 95 and bought while "cheap", but Ive noticed in the last few years that ppl now say NZ is too expensive to move to in terms of property, so they dont....

The crazy thing is property isnt worth what ppl think it is IMHO, its only worth what ppl can afford to pay....based on that and whats coming PI fools are over-paying right now....

regards

Nick, what an astonishing comment. The property market will not in any sense resemble the Dodo bird. Why, you yourself said older people may choose to rent more. Demand for houses will always be here as many people, for their own good reasons, decide to rent.

As a landlord, I am happy to accomodate their choices.

The world is indeed changing and the future for long-term PIs looks very good indeed. Rising rents and later on rising house prices will put smiles on investor's faces.

See, it's started already :)

Let me be crystal, Your Landlord, as I have been on this site over some 2 years now, and for over 5 years since I formed my view....property prices will fall, nominally and substantially in New Zealand ( see my smile, there, :) and rents will follow in companionship, although at a lagging pace. Nothing will stop that happening given the parametres that have come into play. The GFC  has only delayed the timeline; and made the ultimate outcome far worse for those that would otherwise have had an easier escape. If you wish to be a landlord, fine; that fills a commercial need, and that is all. There is no social science to it. It is all about money, after all, and that is about become in short supply in the world. Those who have cash, the more the better, will do well. Those with debt are likely to be wounded, if not obliterated. ( PS: Enlighten me. What do those older folk who sell their house to rent, do with the house they leave - assuiming they stay in NZ? Burn it to the ground? I'd suggest either - another owner/occupier inhabits it or.....it goes into the renatal pool. Oldies cashing up their home is a zero sum game. But those who die, do not need another house/rental; and those who have renters for their supperannuation will do what? Sell, them I guess?)

Nick, you are stuck in the GFC time frame I believe. It is true that times change and they are changing now.

To a situation where property is an increasingly good place to be.

Your strategy, over 5 years now, was good. But you need to change mode now and adopt another strategy.

I don't fancy your way though. Too much transaction costs, to much worry over timing decisions, and more generally, too many decision all up which only increases the chances one or more decisions are the wrong ones.

Just buy and keep...less decisions, less activity generally.

By the way, why the comments about "no social science" and "all about the money"? Seems to me you seem a bit bitter about something to do with property?

What motivates this view of the property world I wonder.

You're right! I am stuck in the GFC timezone...so are you, but you fail to realise it..." Oh look, another ship is coming over the horizon. It must be different this time". Property is an awful place to be, Your Landlord. Because of it's low liquidity and it's a negative real cash earner in New Zealand. If it were positive, I'd agree with you. If you'd read my post over the years you'd see that I believe that rents should always be MORE than the cost of owning an equivalent property. But they aren't. The rest is for you to decide. But if you are relying on capital gains....as Iv'e popsted several times to you today....Good Luck. And as for my 'motivated 'view? It's  is merely a mathematical one. I invest where I see a return; and exit where I see problems; and I see problems aplenty for the property market here. There's a time to buy and sell.... everyting. As Christchurchians will attest, 'years' is too long.....

Does anyone think its a tad ironic for him to be announcing this on the same day a new bureaucracy is announced for Christchurch?

If property investor's costs are pushed up then all the renters should be aware their rents will rise in compensation for the property investors.

Landlord:  an often repeated claim, but hard to see any substance in it.

If landlords could put up rentals they would.  The idea that landlords see themselves being in the business of landlording to provide an essential public service is bunkum.  Landlords are in the business to make money, either thru rents or capital gain, preferably both.  They already have rents at the level the market will bear.  Any more and the tenants will move to cheaper premises, double up, or some such. 

The acid test is this:  do tenants have extra dicretionary $$$ at the end of the day to cough up for Mr No-more-nice-guy landlord?  Not the ones I see!

Cheers.

Philly, tenants will cough up. Accomodation is a requirement, not an option. As the number of houses to live in gets less, market participants will pay more.

By the way, most landlords will still be nice guys.

No,  they will just leave the country or condense their living arrangements or go live with mum and dad till they are in their mid thirties like many now do in the States.

If thats the kind of economy you think you will get rich off in the longterm then I feel you are dreaming.

You're right...but you can hardly resent someone or a group of people, in this case PIs, for being in business in order to make money. That's the whole point of being in business. And businesses are not particularly known for their "niceness". If they wanted to be, they would set up not-for-profit organisations instead.

That's the thing Elley, It's NOT a real business! It's parasitic, they produce nothing, they don't export. They "extort".

Simple question:

If PI's are so good for the economy then WHY are we after a decade of GLOBAL incentives backing such behavior now come such a cropper?

I agree with you. I also don't think that "landlording" is a real business but I believe that  in NZ it is in fact treated as a business (as far as tax laws are concerned anyway).

In this case, it is possibly a flaw in the system but we can't blame a business to be in business to make money. Personally I think things should change, ie, like in some countries where CGT applies as a matter of fact depending on how long you've held a property for, where losses can not be deducted from one's income and where you have in fact lots of extra taxes to pay just to own a second home which all make property investing rather unattractive. But by the PM's comments such changes don't look likely to happen here anytime soon.

PI's or maybe Im going to say professional Landlords provide a service/good that ppl wish to buy....so it is a business when its a cashflow positive thing with a bit of capital gain over time....

PIs mostly in NZ however are there for the capital gain the result houses are over-priced and because they think they can make such profits they try to....in this case its speculation / gambling. To an extent I'd say carry on however the problem is as we have seen in Ireland the bubble bursts, banks then have to be supported by the tax payer....moral hazard.....someone elses failed business plan is my tax hit.......

"Such a cropper" due to free markets and extremely low interest....now we have a sector thats bloated in support staff etc....yet more un-employed.

regards

Justice,

I resent that you call me a parasite. 

I have self storage sheds used by a mix of people to store their vintage cars, builder for storage of materials, business storing bulk items, couple with households goods and one has some documents for a local firm.

Concur that I don't produce anything physical, I don't export and don't employ anyone.

I am probably no different of someone in say, the transport industry, end of the day they don't produce anything but are part of the production chain.

Property is cashflow postive and is part of a investment approach which includes Kiwisaver in growth funds (I get emplyer contributions as additioan part of salary package) and another property which is a retail property.

My aim is to repay the debt which is happening and any capital gain is a bonus as cash is what is required to service what is somewhat conservative debt levels.

Whether you call it a real business is up for debate but my tenants need somewhere to storage their goods or operate their retail business from. There choices are: Rent off someone, buy a property for themselves or don't go into business.

Relax , the lad seems to believe that only production or manufacturing matter to the economy . ....... blithely ignoring the massive contribution that the service sector makes ...

.... Cleaners " produce " nothing to export either , but we'd be a bunch of dirty little monkeys without  them . ....

.... Nurses too ...... ahhhh , better grab a box of tissues before I wax lyrical about the positive effect that they have on me .......... mmmmmmmmmmmmmmm ......

.......... Carry on Regardless !

 blithely ignoring the massive contribution that the service sector makes ...

You could call it the Auxiliary sector :-P

You can try! Try it now in fact?  You fail to realize as you put on more financial pressure then so too will be the expectations your properties must meet. By tenants and Government. You might think you have total control, but try this little test, double your rents NOW! Go ahead! See who sticks around.

Clowns like you fail to realize that the 'market' must meet the 'wages' and living costs. Your extortion concept will not work, no here, not anywhere.

Hey 'Your Landlord'..don't let Justice, Nicholas et al bother you, their all RENTERS. thats right their bitter about it and having a go at anyone who's been able to get ahead like you have. See, they where sucked in with the belief that a good education alone is all you need too live the good life and as you and i know, on its own thats not enough..eh!

Yes, I am a renter with 6 figure savings and 'IP'(Intellectual Property)  under my belt. I rent because I'm not a mug who is willing to pay 6 figure sums for tin sheds or pretty new boxes to impress the inlaws. In April I will no longer be a renter in NZ as I will be moving to the US and taking my 'IP' with me. Good luck Neil! LOL

Thank you NeilD.

I am not bothered at all by the pro-rent guys. They have their views and I have mine.

What I do repeatedly notice is that property investors seem generally to be happy with their lot and investment activities. They are often passionate about what they do.

Others though, on this site anyway, too often express upset and gloom, doom and despondency about their investments and the economy. They like to pick on property investors in particular.

I admire anyone who makes their own way in the world, in any industry. If someone makes a million dollars, legally, good on them and I think we all benefit.

I suspect many on this site are really disgruntled employees.

Whatever you do, all the best for it.

 

I think people get annoyed at you landlord because a lot of landlords think that somehow because they own property they are a better class of people. This is inherently wrong. I own property, doesnt make me any different to the Joe living down the road.

Thank you Muppet King. As you say, it is inherently wrong that landlords think they are a better class.

I don't know why some on this site believe that landlords think they are better. I know many landlords and all of them are just like you...they believe it doesn't make them any different, as you say, to the Joe living down the road.

The befief that landlords think they are better is only an idea on this site. Don't let it put you off being a property owner.

Oh I cry every day that I have to rent. But the lovely rural sea views from my lounge sort of compensate. Then I think about the fact that my landlord probably makes a 1.5% return on investment and that makes me a little happier again. Then I pull out the encyclopedia and read about economic cycles, and I wonder if a severe contraction is going to occur in property. Slowly the tears subside.

If this is your business model.....all I can say is "oh my god".....it is not limitless, raise rent and renters move out.........

regards

They'll probably trash the place too.  Rapacious dickholery on the part of landlords tends to invite payback.

Fortunately though Kakapo, most landlords are nice guys. I know this because I know a lot of them.

Coming to as town near you, just wait and see.

NZ Police have sufferend from years of substandard wages that has lowered the quality of the recruiting pool. Also due to compliance issues they produce only 50% of the output they did 20 years ago.

Could be quite a nasty place in a few years, I wouldn't want to live in a city. Wouldn't want to own property in a city either.

Wouldn't be the first time this bonehead move has been pulled in the NZ Police.  Politicians make a lot of noise about 'frontline' staff and 'bloated' backroom staff, all the cheap civilian data entry and admin people are given the shove, and officers have to do their own data entry and admin, and do it extremely badly or not at all, at about three times the price.  Eventually sanity prevails and the data entry positions are re-established, except now there's a big gap in the database which will never be rectified.  Too bad if the lost information contains something like the Molenaar gun collection.

Start with local councils Bill ! Councils have become bloated beyond belief and they just can't seem to get it through their thick heads that OUR money is NOT their money to spend on every 'white elephant' idea put infront of their elitist eyes.

English made a comment in the Q&A session after the speech that councils were not included in this drive from govt. He expected them to sort themselves out.

Funny, 1991 feels like a long time ago but switch on the telly and its all the same, americans bombing for peace, no jobs for kiwi's, a low tax take making the public service look "bloated", a national government talking up a recovery but only digging deeper...

Ground hog day! Yes, I remember those days well also. We continue to vote for Muppets is why because most of the general populous ARE Muppets with NO economic sense whatsoever. They actually believe money can just be printed and borrowed forever and no consequences will ever come to bear

Years of no deposit, no interest for 'x' mths will do that to you.

"For a country of just 4.4 million people, we have 38 government departments, over 150 crown entities and more than 200 other organisations for which the government has some responsibility. Too many agencies in the wrong place risks diseconomies of scale, transaction costs, duplication of roles and back-office functions, and in some cases reduces the cohesion and quality of frontline services," he said.

So how do we compare to other countries? I work in both health and education, and all I see are systems barely keeping their heads above water due to lack of a resources.

Perhaps Bill is startig to regret those tax cuts...

About time! Some of us knew the day of reckoning had to come for our overpaid ,inefficient  bureaucratic public service eventually. The country couldnt sustain such a proportion of non productive jobs in the public sector. Its just very sad it took 2 earthquakes to force some action. But at this stage its still rhetoric . I wont hold my breath until i see the closures and lay offs

What Mr Bill is saying is that we could never afford the tax cuts.

So instead of admiting that (and that he is wrong about capital gains tax, land tax and a tobin tax) it is better to make everyone suffer by cutting public services.

At least it is totally in ideological character.

Andrewj

I tend to read your posts with interest and see the logic in your comments however I do not agree with your view that Chinese are destroying the WEST. The west is being eroded by its own Corporations and Govt.policies. Blaming Chinese is not going to solve anything,public needs to see through the so called free market and hold real culprits accountable. Just look at the Tax avoidance by Big US companies.

Hi Nomad

 I just think its all about the jobs. Im in good company.

http://finance.yahoo.com/blogs/daily-ticker/howard-davidowitz-obama-does...

 

also a good couple of clips by Stoneleigh

http://theautomaticearth.blogspot.com/2011/03/march-26-2011-stoneleigh-t...

 

and Nassim Taleb

http://www.youtube.com/watch?v=foeK9NjM_ZI

fuck me - you tossers that think the state sector isn't bloated are on another planet ! 40%+ is disappearing done the drain each and every year. wake up.

45 % of the country's GDP is in the hands of the government ......

..... Michael Cullen must be so very very pleased that Bill English has only slowed the rate of the government  spendfest , but not actually stopped the growth of the government's spending ......

.... And David Cunliffe promises to increase the government spend further and faster , should Goofy & Klinger beat JK and Wild Bill , in November .

Hahaha

Anyway apparently before the great depression, American ran on 3%.

In conclusion....the hype and hooplah from Bill English is aimed at keeping happy the IMF and liar agencies...and you are most unlikely to see any real effort to shrink the size of the state in NZ.

The budget will be a fudge and whitewash affair with pretty numbers pointing to surplus and a fabulous emergence of a dynamic wealthy balanced economy. The 'Sir Humphrey' industry will remain in charge because Bill English and John Key and all the rest lack the guts to swing the axe no matter how bloody obvious the need is.

Proof of this is to be seen in the way these two are relying on the 'Sir Humphrey's' to do the dirty work of determining the savings and fat cutting.......all will be mirrors and smoke and good looking numbers....after which it will be Gin and Tonics down at the club.

The members of this exclusive club know bloodywell that Labour will be back to restore the 'damage' and then some!...it's just a matter of waiting out the storm...obfuscate and befuddle them who think they run the country long enough until the other lot come back.

Here's a classic example of bloated bureaucracy that affects every New Zealander who travels.

A civil servant deemed it necessary "for security reasons" that New Zealand passports - uniquely in the world - should have a reduced validity of 5 years.

Fact: There has been no technology update of the passport since the introduction of the amendment in 2005

Fact: The necessity to maintain validity of at least 6 months (the requirement for entry into most countries) effectively reduces its period of use to 4.5 years

Fact: The annual cost of a passport is significantly higher than for most other countries.

 

Revenue gathering and jobsworth employment for no perceived advantage,

It's a great red tape rort JB...bureaucrats making sure they are needed...fooling whatever idiot govt is in. The advantage is to the department capable of inventing the need. Leads to more staff. Fatter salary for the Sir humphrey's.

I hope things improve for you Sore loser....good luck and stay well.....the world needs many like your good self. 

There's a heaping lot of sore losers around here , at interest.co.nz , but only one true poet laureat SORE LOSER : No one does caps-lock as well as you do buddy !

Gummy Bears to that man .

I'm currently reading 'the Bolger Years' and coming up to the section on the mother of all budgets. Can't wait.

.... Did Bernard threaten you with a posting to Libya or something ? .... I'd need a powerful incentive to read  "  the Bolger years  " ........ Crikey Alex , the things that the big guy makes you do .......

Yeah that's like nasty stuff....maybe Alex was late to work.

Well well I non real estate thread does a hundy, can't happen all that often?

See if Bernard can match that eh Alex.

Mind you parts of it were hijacked by the PI's.

Yes scarfie, don't miss us PIs contribution to this particular ton.

I did my best to jam PI'ing into the debate and consequently stirred up a few of the fusty regulars.

A great thing about property is that anything that goes on in the economy has an impact on property markets, so a PI like me can comment on almost anything.

Which is only fitting as PIs are usually very well read, articulate and entertaining.

A great thing about property is that anything that goes on in the economy has an impact on property markets, so a PI like me can comment on almost anything.

Seems to me that most PI's think that property is the economy and is what drives it. Probably quite right for NZ.

Which is only fitting as PIs are usually very well read, articulate and entertaining.

Are they really? I hadn't noticed, in fact I just skim most of the property threads because they are a bore. Very shallow and myopic would be my obervation of PI's, but hey you are here and can change all that:)

I agree scarfie, the property threads are often a bore. So many doom, gloom and depondency types on them. Interest.co.nz seems to attract that type a bit.

Easy to get them going though.

 

  "Nearly 2000 core public servants jobs have been lost in the past two years, and the Government has indicated more will join them" stuff

That's normal losses due to retirement and departure....an indication of a govt that for 2 years did stuff all to cut the bloat out...

It don't look good for the bureaucart capital of bloated state salaries....quick, sell that property now.

 

Great news out of the US this morning, with figures confirming an ever brightening labour market.

Growth is on again I think, in the world's biggest economy. This can only mean good things for New Zealand and its economy as well.

"Great news out of the US this morning, with figures confirming an ever brightening labour market."

I don't think its particularly good news considering the positive news only relates to employment figures in the private sector and discount the losses in the public sector, which will only grow as state and federal agencies deal with the massive U.S. deficit.

 

"Planned payroll reduction dropped 18 percent month-on-month to 41,528 jobs in March. Job cuts were down 39 percent from last year, when 67,611 positions were axed."

"Despite the decline from last year, it is difficult to be optimistic about the outlook for government workers," said Rick Cobb, executive vice president of Challenger, Gray & Christmas. "Most cities and states have only just begun to address their massive budget deficits and we have yet to see how budget cutbacks are going to impact workers at the federal level."

http://www.rttnews.com/Content/AllEconomicNews.aspx?Id=1586899&SM=1

...... ummmmmm , did I read that correctly , that you believe an increase in private sector employment and a decrease in public sector employment is not particularly good news ? ......... The USA is on a roll , towards recovery . All goody good .

We wish we could be so lucky here in NZ , and it'd take luck , 'cos the bozos in parliament are brainless wonders who still believe that the government drives the economy . ..... Private sector job growth , oh that'd be so sweet !

FYI, here's an A-Z of NZ government agencies. Quite a fun game to go through them wondering which ones we could do without or merge :)

http://newzealand.govt.nz/directory/