90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Australian budget heading back to surplus; NZ budget set for record deficit; KiwiSaver, Working for Families cuts expected

11th May 11, 7:43am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Australian government announced A$22 billion of budget cuts overnight to try to bring its budget back to surplus by 2012/13.

Australia also forecast strong economic and employment growth as it benefits from an historic mining boom to feed China's appetite for iron ore, coal and gas.

See more here at The Australian.

Meanwhile, our government has announced a record deficit of NZ$17 billion is expected this year.

Prime Minister John Key is expected to announce cuts to KiwiSaver subsidies and Working for Families payments at around midday ahead of our budget next Thursday.

See more detail here on what National promised on KiwiSaver before the election and here's more detail from Key on possible cuts.

The government is expected to announce a budget with no net new spending to try to return to surplus by 2015/16 and avoid a credit rating downgrade.

Elsewhere, China announced record exports last month, suggesting the Chinese production engine is in good health and still requires resources from the rest of the world. The oil price rose in reaction.

See more here at Bloomberg on China's surplus.

Meanwhile the Reserve Bank of New Zealand is expected to release its half yearly Financial Stability Report later this morning.

It is expected to announce a toughening of capital rules for rural lending. Banks have called for the central bank to phase in the rules to reduce the pain for farmers.

See Gareth Vaughan's article here on the possible changes.

The New Zealand dollar was solid overnight on firm demand for commodities after the Chinese export news, but was weaker against the Australian economy as the relative outlooks for our economy diverge.

No chart with that title exists.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

50 Comments

by Wolly | 11th May 11, 7:53am 1305057225

I certainly wouldn't be planning ahead using the Australian budget as a guide....it has as much value as the budget BS put out by Clark and Cullen.

by Anon good nurse | 11th May 11, 10:11am 1305065492

Thank goodness our economy is now in competent hands!

by Wolly | 11th May 11, 11:48am 1305071328

Quite right anon....we can put our faith in the Fed.

by south paw | 11th May 11, 9:09am 1305061799

So the rich get masive state handouts via tax cuts and bailouts: Warner Bros, Mediaworks etc, while the govt is racking up debt to pay for it.

But ordinary kiwis get their kiwisaver scheme slashed, even though the govt claims it wants us saving, because 'We' cant afford it.

And dont forget the BMWs and helicopter rides for our hardworking, fiscally responsible leaders. After all 'we are all in this together!".

by Anon good nurse | 11th May 11, 9:17am 1305062227

Let us not forget the 50,000 taxpayer dollars per year our fearless leaders claim for themselves as an accommodation allowance after placing their million-dollar mansions in family trusts administered by their wives.

by Ricardo | 11th May 11, 9:32am 1305063146

Southpaw, don't be silly mate...the Warner Bros deal created jobs...Mediaworks loan has an interest rate of about 12% and kept many people in jobs...and the Prime Minister and Cabinet should be allowed BMW's and helicopters, they're running the country...or do you expect them to represent our country driving around in an old Ford Cortina...

by scarfie | 11th May 11, 10:48am 1305067696

Exactly the sort of comment I would expect from the Ratmeister and sums up the immature nature of our society.

You obviously have the same sense of entitlement that our politicians have.

As mush as Hone is maligned, at least he hitch hikes to parliament. None of this grandiose BS the rest of them have.

It is the core issue of the governance of this country, leaders that are out of touch with their electorate. When we have MP's that are personally accountable to their constituents then we might get some accountability.

Look at the graphs published here yesterdays top ten at #3. In Scandinavia and it is socially unacceptable to show your wealth, and look at how they are performing. None of this lording over the peasants, well at least not to the same degree.

Perhaps you view yourself as a Lord or Baron. Wannabe I suspect and you think all your property investments are going to make you one, but that won't happen.

by Wolly | 11th May 11, 11:06am 1305068760

"well located real estate is a very good long term investment"...quite right westminster...you're coming ahead in leaps and bounds...it's an even better investment if the price is 33% below peak of bubble valuation and in real $ terms 48% below the asking price..don't you think? hehe

by Anon good nurse | 11th May 11, 11:19am 1305069544

Why are you wasting your amazing intellect here when you could be out riding the RichMastery bus and snapping-up awesome property deals in hotspots such as Tokoroa and Murupara?

YOU'RE GONNA BE RICH!

by We Are Stuffed | 11th May 11, 11:31am 1305070293

You keep paying those interest payments Wastemaster. I dont want my bank to stop paying my term deposit interest just yet.

I need that money so I can buy your houses at mortgagee sale when you finally get bleed dry by them.

by scarfie | 11th May 11, 12:04pm 1305072270

To be fair Ivan I started this one, but I can't say I regret it:)

by Wolly | 11th May 11, 11:46am 1305071166

Naughty....you've been skipping lessons again haven't you westminster...it hit yes but the blow keeps coming because the debts remain and cannot be paid down by the western entities that have them...had you turned the page and done your homework on "how govts tell lies about economies" ..then you would not have made that mistake.

by We Are Stuffed | 11th May 11, 11:48am 1305071289

But Wolly, the lunchtime bell went before he could read that far and the BNZ were offering free KFC with every lunchtime loan.

by scarfie | 11th May 11, 12:21pm 1305073311

Well Ratmeister you really have no idea how much your attitude exposes you.

It is so bad that I do in fact wonder from time to time if Bernard employs you to wind everyone up on his forum. I normally can't be bothered with you, but am feeling confrontational today.

The comment regarding Hone is really quite immature and proves my point above.

Your comment about being Rich below is so telling. What you actually mean is that you have lots of money, or lots of numbers on a computer read out to be more correct. The fact you have to claim this shows you are in fact quite shallow and deprived. Most people on here I would describe as rich, as in they are thoughtful, interesting people who have a concern for what is going on around them, but not you buddy you are only for yourself.

But most of all the sad thing is that all of this will go completely over your head.

Oh and do tell me, how much money do you have in order to be entitled to describe yourself as rich?

by Carpetbagger | 11th May 11, 10:01am 1305064907

...and confirmed NZ's status as a third world country that needs to whore itself out to multinational coorporations. One of our darkest hours in recent times and no mistake.

You guys probably think the the RWC is a great deal for tax payer too!

I think Southpaw's point is that they should lead by example, rather than a "do as we say not as we do..." style

by Anon good nurse | 11th May 11, 10:14am 1305065648

THE RWC IS GONNA MAKE US ALL RICH! RICH! R I C H !

Just like the Americas Cup.

And the Commonwealth Games.

Etc.

by David B | 11th May 11, 10:29am 1305066540

"or do you expect them to represent our country driving around in an old Ford Cortina..."

How dare you, Ricardo, south paw thinks nothing of the sort! He thinks they should be on Massey Ferguson tractors!

by Sepherial | 11th May 11, 10:04am 1305065085

Good points but lets examine the statement further.

Why should any business have any handout to do business?

by Anon good nurse | 11th May 11, 10:18am 1305065908

When Warners were told they would have to pay their fair share (just like everybody else) they threatened to bugger off.

So our genius leaders got down on bended knee and sucked their...toes...(or something).

If a corporation refuses to pay minimum wage and threatens to take their business elsewhere, should we appease them?

You'd probably say yes...but then you're obviously just another greedy fool.

by Anon good nurse | 11th May 11, 10:48am 1305067681

What's that got to do with this government gifting Warner Bros a great big taxpayer-funded massage with happy ending?

by powerdownkiwi | 11th May 11, 1:44pm 1305078299

Festminister - you sound scared to me.

Is the tide going out?

Can you suggest a facet of economic growth slash job creation (such hackneyed vernacular) that doesn't require energy?

Can you point to a growing source of same?

Until such time as you do, , you and the other wide-eyed wierdo's here have no argument.

Sorry, but fact overrides mantra, no matter how often the mantra is chanted.

Sorry if you're vulnerable, but caveat empty. (In your own head be it).

by steven | 11th May 11, 3:19pm 1305083948

Hey troll of the day award...congrats.

"Look PDK, I know you hate me because I am clearly far more intelligent and successful than you. But dont let that anger completely blind you to the realities of life."

LOL, thats so funny on so many levels....

regards

by neco | 11th May 11, 10:21am 1305066078

Westminster FYI

Months before the decision to subsidise The Hobbit, officials had called for an end to assistance for the film industry, saying it was negative for the economy and presented a risk to the Government's books.

Documents issued under the Official Information Act show that Treasury urged ministers in February to discuss whether any further assistance was merited.

It said an evaluation in 2005 of the large budget screen production grants (LBSPG), available to films with a budget of more than $15 million, found the economic impact was likely to be a loss of $9m.

"The demand-driven nature of the LBSPG ... can also create forecasting problems and fiscal risks for the Crown."

Treasury considered the evaluation raised "sufficient concern about the scheme's value for ministers to approach any extension or reconfirmation of the grants with caution".

http://www.stuff.co.nz/dominion-post/news/4412700/Officials-dispute-value-of-subsidies-to-film-industry

by David B | 11th May 11, 10:36am 1305067002

I wonder if the Treasury's evaluation covered intangibles, such as increased exposure of New Zealand's brand overseas, leading to increased tourism here, and demand for NZ's products abroad?

by neco | 11th May 11, 11:24am 1305069880

Those intangibles appear to only marginally compensate for the cost of corporate welfare. I posted this on 22 November 2011:

Interesting report on Insight yesterday (to be repeated tonight) about the economic impact of big budget movies including some serious input from Berl's Ganesh Nana:

http://static.radionz.net.nz/assets/audio_item/0006/2434776/inst-20101121-0812-Insight_for_21_November_2010_-_Film-making_in_NZ-m048.asx

Some snippets:

Subsidies to Avatar + King Kong resulted in net economic loss of $36m.

Re impact on tourism, of 5,000 tourists interviewed in 2004 only 1% said LOTR was the main reason they chose NZ as a tourist destination i.e. insignificant when compared to the exchange rate impact.

Comment from UK "film industry expert" Keith Randall: "don't get too excited when Hollywood moves to your country because it may not be around for very long"

That Radio NZ link is still good; really worth a listen

by Kate | 11th May 11, 1:57pm 1305079023

I think you'll find that Mediaworks, like its counterpart The Radio Network both bought up lots and lots of radio frequencies and syndicated their programmes - meaning actually under the business model there are less jobs for radio broadcasters the country over.

Large corporations in my experience always look for means to increase productivity - which is another word for reduce staff numbers/labour costs.

That argument about "employing lots of people" is one of the myths of globalisation given the intent of these corporations is quite the opposite.

by David B | 11th May 11, 10:25am 1305066345

Could you put some numbers to your rant please, south paw, maybe then it would be more credible.

by Alex13 | 11th May 11, 11:46am 1305071194

What a rant! So much to the "robust, respectful and insightful debate "... And this is the "Comment od the Day", comrade Hickey?

by scarfie | 11th May 11, 9:26am 1305062775

Non-performing loans are elevated but remain manageable.”

A potential Tui add from Bollard.

by FCM | 11th May 11, 10:17am 1305065866

I wonder how many times Earthquake will be blamed on NZ poor performance in the budget...and then again for the great recovery....I reckon 10 times..

by Anon good nurse | 11th May 11, 10:49am 1305067782

The earthquake has become a crutch and excuse for almost all things.

by Bernard Hickey | 11th May 11, 12:12pm 1305072777

Westminster and others.

If I see the f word used in the comment stream again, the commenter will be immediately deleted from our system.

Just in case you have any doubts.

Bernard

by Wolly | 11th May 11, 12:15pm 1305072952

He's sposed to be doing his homework Bernard....!

by Christov | 11th May 11, 1:19pm 1305076783

I'm still waiting for a response to my question Wally on where a worthwhile vote would be cast....

If the question was unreasonable ...I'd understand....but your snubs begin to smack of snobbery....is that it .....

point to the post that upset you and I will clarify my point.

by Wolly | 11th May 11, 1:41pm 1305078114

Struth Christov I didn't know you had asked me nuffin...once the list drops orf the bottom it's kinda lost in the universe....

Who to vote for...that is the question....hmmmmm....that's a wobbly one.....it's easier to pin down who not to vote for on the party mad list and that would be Labour, Parkies lot, the pinky greens, Hone who, the Maori party, dunne it again....any others out there in the wilderness...what and Act to follow...!

Then it's down to your electorate Christov...an easier decision usually....and finally the choice of many...not to vote for any of them.

by Anon good nurse | 11th May 11, 1:55pm 1305078919

You "forgot" to include National in that list of worthless, incompetent and 100% dishonest electoral options.

by Wolly | 11th May 11, 2:14pm 1305080053

Bugger...so I did. Where did that mob what promised to concrete over the entire West Coast go to...Mc Gilacuddy something or other.......?

by Christov | 11th May 11, 2:39pm 1305081551

Thank you for your considered response Wally.......my point being that a non vote or no vote is as vote for the sitting Govt....... and so in the light of your general cross party revulsion it was more a case of where.................YOUR..........worthwhile vote was going .

but thanks for getting back to me anyway.

by Vanderlei Luxemburgo | 11th May 11, 2:54pm 1305082452

terrifyingly i'm considering the greens because all the parties have no idea about the economy, and at least the greens care about pollution.

and that scares the bejaysus out of me.

by Elley | 11th May 11, 3:04pm 1305083057

Speaking for myself, I'm never gonna vote for a party who thinks they can dictate to me what water pressure I can use for my shower!

by Kate | 11th May 11, 3:23pm 1305084198

Spoken like a true beggar-thy-neighbour, Elley.

That may sound harsh, but at the end of the day we all have to start becoming less precious about our profligate ways with the environment. I don't know the first thing about the showerhead recommendation they made, but I somehow think the intent wasn't actually all that ridiculous after all. Many NZ communities who rely on reticulated water are running our rivers and aquifers dry. That's a fact. Perhaps a better idea to shower pressure is requiring all residences to have on site water storage. More costly than a new showerhead, but more effective as well.

That aside, the Greens are a massively better prospect in my opinion since the leadership changes. The far left social side of the party hierarchy is gone and they are in my opinion becoming a smart green green, as opposed to an ideological red green.

by Vanderlei Luxemburgo | 11th May 11, 3:51pm 1305085902

yeah i get that elly, but the nats and labour have so lost the plot i'm going elsewhere.... not sure whats worse...a govt that gives billions in my tax $ to AMI and SCF and lets our rivers get filled with poop, or a govt who is nosey about my shower pressure......

don't get me wrong elly, i'm not happy about this, but evildrbrash, smiley-wavey, and goff are all equally as loony as the greens so at least i can send a message that says its time for some real change.

by steven | 11th May 11, 4:32pm 1305088355

Not the pressure but the flow.....simple we are moving into an energy and water constrained world....and just like having more than 2 kids its going to be morally difficult to justify one person using more than another.....

Recall the "let them eat cake" line....

regards

by Elley | 11th May 11, 4:43pm 1305089001

I can tell none of you have thick, long hair to wash :) I've tried crap flow and even crappier water pressure in the UK, felt like it was the 17th century with my husband having to bring me buckets of hot water to do the job lol. So if I can avoid the experience again I will!

And btw, a strong flow doesn't necessarily mean you use more. My husband is the kind of guy who likes to spend 20 minutes in the shower, with little flow/pressure. My showers are closer to 3 minutes long with high flow/pressure. I'd be interested to know who uses up the most water.

by Sepherial | 12th May 11, 1:41am 1305121281

mmm.... Not Voting....It may appear that way of supporting the rulers.... but no... it really means you keep your power to yourself rather than giving it away to some numbnut minor league globalist corporate stooge you have never meet...and probably never will...

Any way its obvious we live in a one party state elections are illusions of freedom. All NZparties adhere to the AGENDA and thats set from other places by other people...

ie IMF, World Bank, UN, WTO, WHO, etc etc all unelected stooges telling you what to do what to eat what type of pharma poison you need to get in debt for! EU is one of the best examples of unelected bludgers furthering the AGENDA and filling up personal bank accounts with OPM...

by AndyC | 11th May 11, 12:29pm 1305073765

"factual"? was that the f word? ;) jjks

by Christov | 11th May 11, 1:13pm 1305076393

Thank you Bernard....I was so embarrassed.....your consistant approach to robust but clean debate is appreciated.

by David Chaston | 11th May 11, 3:30pm 1305084649

The latest mortgage approval data is out for last week, from the RBNZ.

http://www.interest.co.nz/charts/credit/mortgage-approvals

The bounce-back after Easter seems a bit lower than the pre-Easter levels. But the average approval value is remaining high.

by Wolly | 11th May 11, 6:46pm 1305096378

"The big news here today is with government accounts. GDP is lower than expected, and revenue are down way more than expected (down 16.2% compared with a predicted drop of 12.8%).

Therefore, the government is looking at another few billion in borrowing this year and its schedule of deficit targets is thrown out of line"

HaHa you thought this was about NZ didn't you....not so cos it's the ESSS in piigs ...but are we any better off? .....

http://globaleconomicanalysis.blogspot.com/

by Wolly | 12th May 11, 6:43am 1305139417

Bernard.....you gotta read this

http://www.marketoracle.co.uk/Article28073.html