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A review of things you need to know before you go home on Wednesday; clean over here, no LVR relief yet, more Auckland consents, no leverage progress, Apple casual about our law, swaps drop, NZD stable

A review of things you need to know before you go home on Wednesday; clean over here, no LVR relief yet, more Auckland consents, no leverage progress, Apple casual about our law, swaps drop, NZD stable

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
No changes here either.

NO TAINT HERE
The FMA and RBNZ jointly reported the results of their assessment of culture risk in New Zealand's banks. They say they have found no evidence of systemic behaviour like that seen in Australia which prompted their Royal Commission inquiry, and concede banks operating here haven't undermined their "social licence". The responsible Government ministers accept the findings.

KEEPING THE LID ON; ITS HELPING
In their latest Financial Stability Review, the Reserve Bank says financial risks have lessened but they will not be loosening their LVR restrictions at this stage and will wait till November 'at least' before any loosening is contemplated.

MORE BUT AVERAGES FALL
Building consent levels are rising in Auckland, but slipping elsewhere. That is good news for Aucklanders with the number of new dwelling consents up and average values falling, suggesting a shift towards more affordable new housing.

NO LEVERAGE PROGRESS
With the release of the Dashboard data today, we are able to complete our bank leverage update to March 2018. That shows little improvement. Other than Rabobank, which has sensible leverage, all other retail banks have too little capital invested in them with leverage ranging from about 12x or 13x times more assets than shareholders funds (for the four Aussie owned banks) up to 12x to 15x times for locally owned banks. Depositors provive the bulk of the capital in these institutions but don't get rewarded for that risk. As we have called for in the past, shareholders need to step up. The worry is the lack of progress on this score.

IT IS BAD, BUT NOT FOR ALL FARMERS
The serious issues facing the dairy and beef industries around mycoplasma bovis as well documented. But sheep and deer farmers are doing very well (as are other non-livestock farmers). In fact, saleyard store lamb prices this week are +31% higher this week in the North Island that in the same week a year ago. In the South Island, the rise is +18%. Venison and velvet prices are also sky-high, and not suffering an off-season drop as is usual in this sector.

OTHER CONSENTS UP STRONGLY
Non-residential building consents are rising. Infometrics reports: "The value of non-residential consents in April was up +29% from a year earlier, driven by a 41% increase in consents for new buildings. Breaking this increase down by regions shows that Canterbury was the biggest driver of this growth, and has been the largest driver of consent growth in the past three months. Although non-residential consents in the Canterbury region have come down from their post-quake highs, there’s still a lot of building to go."

WINTER BENEFITS RISING
The new Winter Energy Payment is to help with the cost of heating your home over winter. It will amount to a total of $266 if you are single, $414 for a couple. Couples and people with dependent children will get an extra $31.82 a week. If you're single, you'll get an extra $20.46 a week. These payments will start from 1 July and continue until 29 September 2018. The Winter Energy Payment won't affect other payments you get from us and isn't considered income (for tax purposes). And it isn't means tested for anyone on NZ Super. It will cost taxpayers $375 mln per year.

APPLE CASUAL ABOUT NEW ZEALAND CONSUMER LAWS
The Commerce Commission has warned Apple Sales New Zealand after it likely misled consumers about their Consumer Guarantees Act (CGA) rights and about its replacement products being new. Apple told some customers that their products were only covered by consumer law for two years and the Commission considered that this was misleading as the guarantees in the CGA do not expire after a legally prescribed period of time. The Commission also warned Apple in relation to: telling consumers that they must accept a defined number of replacement goods before an alternative remedy would be made available when the CGA imposes no such limits on available remedies; excluding liability for consequential losses when consumers might be entitled to compensation for some losses of that kind under the CGA, depending on the circumstances; providing conflicting information on Apple’s website about whether spare parts and repairs would, or would not, be available for some products; leading consumers to believe that their faulty Apple products were being replaced with new products when they were in fact supplied with re-manufactured products.

BENCHMARK INTEREST RATES SHARPLY LOWER
Local swap rates flattened and fell sharply today following Wall Street last night. Actually, our one year swap rate rose +3 bps,our two year fell -1 bp, our five year fell -4 bps and out ten year fell -6 bps and now just 3.06%. The 2/10 curve is now only +86 bps, down from +115 bps in mid February and back to the levels we last saw in mid April. The UST 10yr yield has risen after Wall Street closed to now be up +3 bps to 2.82%. The Aussie Govt 10 yr is now at 2.64% (down -8 bps). The China 10 yr is at 3.64%, unchanged. And the NZ Govt 10 yr is up +2 bps to 2.76%. The 90 day bank bill rate is up +1 bps to 2.01%.

BITCOIN BOUNCES
The bitcoin price is now at US$7,527 which is up +5.9% from this time yesterday.

NZ DOLLAR HOLDS
The NZD is down to 69 USc but that is unchanged from where we started this morning. But we are slightly higher against the Aussie at 92.2 AUc, and also up slightly against the euro at 59.9 euro cents. That has the TWI-5 now at 72.3 and little changed from yesterday.

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23 Comments

Why are NZ super 'earners' never means tested? They get a form of benefit which is fully paid out no matter how much they earn or own, they get free public transport and trips to Waiheke no matter how much they earn or own, and now they get subsidised power no matter how much they earn or own. And then you hear them on the talk back complaining about poor people getting comparatively f all in benefits. Makes me sick.

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Because it is cheaper and easier for the Government to have a flat, modest, universal Super with no perverse incentives. A means test would penalise those who had saved, invested and paid off a house over their working life (& paid most of the tax) & reward those who wasted their resources.
Keep It Simple

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But the free power is means tested for everyone other than pensioners. How is that simple?
And free public transport could easily be restricted to those with little income.

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NZ Super is relatively cheap, & ensures that all our elderly are kept out of poverty.
NZ has an enviable system, & helps the young by encouraging retirement for older workers.
In fact NZ Super is a model for a universal UBI for the future automation state.

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True. We need something similar for parents - a universal child benefit paid to both parents if living together. Keep it simple and it stops the cheats. Those who are wealthy will be paying tax on it as per superannuation.
That Waiheke benefit - used it once in 4 years - hard to justify but the goldcard is a great bonus for pre-retired drivers: it gets me and similar to me off the road. It is also good for public transport to have more usage out of rush hours and lifts the average level of poshness on buses besides good for the mental and social life of isolated elderly people. Cheaper than putting a few more in state paid care homes. The Goldcard is a win win win and all you have to do is live long enough.

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I was thinking about something like this only yesterday but instead of the parents getting the money the kids get it. Perhaps all children get a bank account created when they start school and money is transferred to that account monthly.

If children are proven to be violent or bullies their payments will reduced or stopped. Much like in the corporate world. You wouldn't put up with the nonsense that kids have to at school at your modern workplace.

Kids need to be treated like adults. Teachers need to stop the shouting and stupidity like making kids sit for a long time in the sun or on cold concrete. Honestly half the teachers need to be replaced by robots already to bring some humanity back to schools. Ahh the irony!

Schools need close surveillance and a security system, even a type of police to address violence and bullying. A lot of schools are like zoos or third world penitentiaries and its just not good enough.

I don't think a harsh school environment makes tough kids - quite the opposite. What I detailed a bit above would work wonders. If you wanted tougher kids you could focus on a type of military training and sports mentoring that was one on one and tailored for individual kids. None of this making all kids fit into one box nonsense.

It's actually something that could easily be achieved with smaller families these days.

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It is by no means cheap- 12 billion a year is a massive chunk of government expenditure and rising, not to mention rising healthcare costs of the elderly. MSD manage to means test other benefits and smash the beneficiaries who cheat the system, why not super? Why should millionaires with rental property empires receive a handout from middle class families struggling to make rent?

For a graphic representation of this check https://i.stuff.co.nz/business/better-business/88353916/chart-of-the-da…

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Generally we cut things for the younger Kiwis and only ever increase allowances to old folks, regardless of need. Comes with voting power. The pension used to be a benefit for those in need, like other benefits.

Young people are like slowly boiling frogs, as the >60% of the social welfare budget handed out to old folks regardless of need gets paid for out of their taxes while they must face the prospect of no pension and having to save for their own retirement via Kiwisaver. While they start life with student debt, because we prefer to lower taxes.

And then we subsidise company wage costs and property investors...what a capital world we live in!

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The fact is that most of the wealthier people have paid a lot more tax and been less of a drain on the state than the less financial people.
The fact is that everyone who retires does not have the same amount of wealth or lack of it!
Why do you beleive that people who have worked hard or invested wisely should not get NZ Super when so many people have not worked or,invested and been a heavy drain on the NZ taxpayer????

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I do agree with this, next thing people will be suggesting that we means test the public health system.

One person earning $100k pays $25k in Income Tax every year.
Two people earning $50k each pay a total of $17k in Income Tax every year.

All 3 people are entitled to the same Super if they reach retirement, but one person has paid $240k more in income tax over 30 years (ignoring inflation for simplicity of the argument).

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you forgot the gst

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Let’s say you pay 25k per year in tax for 40 years, then you get 25k per year in super for 40 years (quite conceivable these days), then overall you haven’t paid a cent of tax on your life. I sure hope you never got education, health care, roads, family support, etc.
it’s a big ponzy scheme that we can’t afford.

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Have you ever heard of compound interest? Einstein praised it. And you are forgetting that super is taxed. I'm only commenting because I feel guilty having a UK state pension (we contributed for 30 years) so if you plan to make super means tested would become better rewarded than my fellow retired kiwis.
If you are saying the age limit should be altered as in most other countries then you are right. Your example of 40 years pension gets a retiree to 105 which is unusual but not impossible.

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First sensible point you have ever made.

Geezer, what ever medication you're on, must be good

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HO, if that was aimed at “The Man” then I will take that as a compliment however I will point out that everything I state is sensible,

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I could easily argue that those that have negative geared their property investments, put properties into trusts and put money in the bank instead of spending it (and therefore paying GST) have in fact paid less tax than Joe Average wage and salary earner who hasn't taken advantage of those tax dodges... so why exactly do these tax dodgers deserve superannuation?

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Doesn’t apply to “The Man” as he pays tax on each and every property plus people he employs pays tax on what I pay them!
I think you will find that investors that have negatively geared homes are also paying there fair share of tax
There is a large percentage of people who rely on welfare all their lives and then get NZ Super when they are 65 and in fact they have been retired for a helluva lot of years prior to them being 65, they are the drains that we don’t really need!

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There are plenty of people capable of working well past 65, why are we also giving them a benefit? Especially when the people paying for it are unlikely to get it themselves.

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Auckland woman fighting for Double Grammar Zone to become independent from NZ!!
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12061325

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Is that yourself

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Sounds great, we wouldn’t have to listen to all their entitled bitching and moaning!

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A recent experience of a friend suggests retailers supply Apple products in NZ are trying to opt out of their responsibility by claiming water damage. They tell the owner to make an insurance claim, therefore socialising the cost of warranty claims. Good business model if you can sustain it. Seems the source of the problem is that there isn't a primary Apple agent in the country, and claims have to go via Australia. It is too slow an convoluted for retailers so they are falling back on the water damage.

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Who buys Apple products - they are PITA. Some of the security is over the top and oxymoronic.

Disclaimer - part of my job involves supporting Apple products so I might be a bit biased.

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