Choosing voters over exporters

Opinion: How John Key's borrow and sell strategy pushes up the NZ$ and favours voters/consumers over exporters/producers. Your view?

28th May 11, 6:03pm by Bernard Hickey

A higher NZ dollar makes imports such as flat screen televisions and petrol cheaper for consumers and voters. But it punishes exporters and hurts the economy in the long run.

By Bernard Hickey

This week's rise in the New Zealand dollar to a near record highs was no accident of foreign exchange markets or a natural result of overseas forces.

The New Zealand dollar jumped to a high of over 81 USc on Friday morning after Gareth Vaughan reported that China's Sovereign Wealth Fund may have allocated NZ$6 billion of its US$330 billion fund to buy New Zealand government bonds and other assets. It's not just US dollar weakness either. The New Zealand dollar hit a 3 year high on a Trade Weighted Index basis of over 70 as it firmed against the Australian dollar.

Foreign exchange traders rightly understood what this meant. At some stage in coming months the world's biggest holder of foreign currency reserves (around US$3 trillion in total) will want to buy New Zealand dollars to lend them to the New Zealand government.

This isn't particularly new because China has already been a big buyer of New Zealand government bonds and assets over the last year. That was acknowledged this week by Prime Minister John Key and confirmed by Finance Minister Bill English through his presence in Hong Kong, where he met with key investors and bankers.

But this realisation that New Zealand's borrowing and asset selling is starting to drive up our currency is now sinking in, both with traders and exporters.

Reinsurance payments of close to NZ$15 billion over the coming year or two will also push the New Zealand dollar higher.

This poses some massive questions for the government and the economy as a whole.

How is New Zealand supposed to rebalance its economy away from consumption, importing, borrowing and asset selling towards investment, production, exporting and asset buying when our currency is headed for record highs?

How credible is the talk from John Key and Bill English about rebalancing when their actions are actually encouraging a stronger New Zealand dollar?

Key has even acknowledged that a stronger New Zealand dollar is actually good for consumers, which can be read as meaning voters.

A stronger New Zealand dollar of course means cheaper imports, cheaper electronics, cheaper overseas holidays and cheaper petrol.

This is actually a political choice.

A strong New Zealand dollar is good for consumers and voters a few months out from an election.

It is bad for exporters and producers in the long term.

It is classic short term political thinking at the expense of long term economy building.

The government is essentially deciding that borrowing money from eager lenders and selling assets to eager buyers is an easier decision than increasing prices for stressed consumers.

Is this really what New Zealanders want?

This issue actually boils down to sovereignty. Every time we borrow more and sell assets we give up a little bit of sovereignty to the lender and the foreign asset owner.

Are New Zealanders comfortable doing that for the sake of cheap petrol now?

That is what this week's rise in the currency boils down to.

New Zealanders collectively, through their political decisions around asset sales and borrowing, are essentially choosing to consume now and pay later.

The biggest pressure point in this debate will come up in the coming weeks and months as the Government decides on whether Chinese Rich-lister and property mogul Jiang Zhaobai should be allowed to buy Crafar Farms. There is also the prospect that 83% of New Zealand's biggest dairy farming group Dairy Holdings will be sold to foreign interests, including the potential for China's Bright Dairy, which already controls Canterbury milk processing operation Synlait. See more here from Gareth Vaughan on the Dairy Holdings sale.

This sale is being handled by the receivers for South Canterbury Finance, and therefore the government is the driving force in the sale.

We know the government is comfortable borrowing from the Chinese sovereign wealth fund.

Is it comfortable selling New Zealand's two largest suppliers to Fonterra to Chinese interests?

Sounds like an election issue to me.

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.

67 Comments

by Wolly | 28th May 11, 6:39pm 1306564773

"classic short term thinking"...of course it is...and were it not the case this govt would be tossed out in a few months time...welcome to the endless sickness that is the nz economy.

Key knows he has to feed the benefit system and keep Helen's pork offerings on the table. The rent a mob march in Auckland today was a display of the problem. The bulk of the population has been conditioned to believe it can and should receive handouts. All govts have contributed to this scam.

Some of us can see past the scam and recognise the need for an end to the welfarism that at first was a blessing but became a curse. Post the election Key and Co will tinker and tweak a little more to reduce the scam but they have to contend not only with the rent a mob but also with the Sir Humphrey mob out to protect its guaranteed bloated income stream.

Expect more of the same directionless economic policy. It will probably mean National hanging on until 2017 when the electorate memory of Clark's failures and Labour's uselessness has gone and we will see the other set of fools take up position in the pigpen with a return to the stupidity of the past and any good done by National is wiped out...

Nothing else is more certain.

by Andrew R | 29th May 11, 2:22pm 1306635752

Isn't it just a continuous cycle -- put in Labour to correct National's incompetence, then put in National to correct Labour's incompetence, then put in ....

The problem is both are incompetently correcting the other's incompetence.

by JGP | 28th May 11, 7:47pm 1306568841

You are right Wolly. We must almost be at a point where we are borrowing the interest to pay for the money we have already borrored, aren't we. So when that happens how long before it all collapses.

by OMG | 28th May 11, 9:06pm 1306573574

The country will be forced to "rebalance" as they say when the liquid fuels energy crisis starts in earnest. IMO it will be brutal, just a matter of when and I suspect in about 18 months time.

by Rob | 28th May 11, 11:05pm 1306580714

NZ will learn the hard way. It is a bit like watching a slow car crash.

by Nicholas Arrand | 28th May 11, 7:53pm 1306569234

“What we’re going through is part of a rebalancing where in the economy as a whole we need to consume less … We need to ...export more to the rest of the world... Part of the squeeze we’ve seen in real incomes is associated with that rebalancing, which fiscal policy can’t do anything to offset...The next year or two will be a relatively bleak time..I’m worried about growth remaining feeble and I’m worried about inflation remaining high. That’s the dilemma.... in balancing these two very significant risks"

Yes, this is a senior official at the Bank of England's comment, but everyone wants to do the same thing at the same time! Export.... but to whom? Even the 'saviour of the world's problems', China, wants to slow its economy down, import less and export more.

Believe we are 'different' or not, but the words look spookily familiar.

by Gummy Bear Hero | 28th May 11, 8:13pm 1306570415

The $NZ is still piss weak against our major trading partner's $A . ........ And rather than embark upon a fool policy of first to the bottom , as other central bankers are attempting , Alan Bollard is keeping our currency honest .

...... Geez , Bernard , you flap on about inflation , and how Bolly oughta be bunging the OCR up , but now you whinge that the $NZ is too high . You cannae have it both ways , buddy !

by philthy | 29th May 11, 12:14am 1306584869

So you don't think the near record high dollar has anything to do with the governments record high borrowing?

If the governments wasn't going so ballastic borrowing, then the RBNZ would be able to raise the OCR nearer to where it should be.

by Bernard Hickey | 30th May 11, 3:17pm 1306725463

Ah but you can Gummy with capital controls, macro-prudential controls on how banks fund their lending and RBNZ intervention in the exchange rate markets....

cheers

Bernard

by Gummy Bear Hero | 30th May 11, 3:35pm 1306726509

Yes , and that is a zero risk strategy , Bernard ? ...... No chance that RBNZ intervention will blow up in our faces , trust Bolly to get it right ...... No risk to the long suffering Kiwi tax-payer , of another bail-out of a mega-scew up ?

..... Gosh , it all sounds so easy and fool-proof , capital controls and macro-prudential controls ....... I wonder why we're not already onto it ? .....

by Les Rudd | 30th May 11, 3:49pm 1306727379

Your homework:

http://www.johnwalley.co.nz/147-price_or_volume.aspx

and see my reply to Grant A, here:

http://www.interest.co.nz/opinion/53634/nz-near-2-year-twi-highs-nza-strength-offsetting-low-interest-rates#comment-621637

"why we're not already onto it?" Ans = idelogical dogmas, the same crap thinking that landed us with GFC, that people like Singapore rejected long ago - and don't throw down the well worn objections about Singapore, systematic intervention till you've done the homework, above.

Chop, chop.

Cheers, Les.

by Matt in Auck | 28th May 11, 9:20pm 1306574418

Where would be the ideal position for the NZ dollar in terms of an economy wide stance?

I'd suggest around US67 cents...not too strong to really hamper exporters, not too weak to start causing inflation headaches...

remember too that the storng dollar will help keep the housing market subdued too. a pom wanting to come here with 200,000 pounds will now only get $400K, compared to several years ago when he would get $600K. Maybe that is just one reason why immigration from the UK is way down

Another BIG factor I believe is being ignored by the economists is the dilution of the returning OE kiwi....from 2001 to 2007 tonnes of kiwis went to the UK, and brought back pounds which they multiplied by 3 to get a whopping house deposit. For one, there are a lot less job opportunities in the UK now, and for 2 when people do come back their pounds don't go anywhere as far

by Rob | 28th May 11, 11:04pm 1306580658

We should be following chinas examples. Sell stuff to the rest of the world, and don't spend money, save it or invest it in countries like NZ (or buy up significant assets in those countries). But with interest rates so low, and inflation high, we are encouraging spending, especially with imports being so cheap.

by Roadhouse Blues | 29th May 11, 12:06am 1306584394

Couldn't agree more Bernard it's an election issue and a sovereign issue.

Personally I wont be voting National because of this direction and I encourage young people to take to the streets in protest as you can say that not only did the baby boomers lock us into unaffordable mortgages, low income jobs, university loans ext... now they are selling the country to pay for their non means tested, retirement, dole payments.

One thing is sure should I live another 25 years and retire I wont receive retirement income from the government.

by muzza | 29th May 11, 2:31pm 1306636268

Yep, wouldn't it be good if everyone instead of spending almost everything before they are 65 yrs and actually took more responsibility to be self-reliant when they retire. But no, won't happen because it seems once a person in this country hits 65 yrs they feel a strong sense of ENTITLEMENT to receive annual government hand-outs. Even reasonable people seem to become incredibly self-centred once they hit elderly age. Yet the number receiving national super willl rise by 89,000 in next 4 years, an extra cost of $2.8 billion or 7 times as much as the forecast increase in all the welfare payments combined. Those of us in the younger age group look at the selfishness of the elderly, and yet some oldies even turn around and rave off at those of us who are making investment decisions like buying properties in order to create a self-reliant passive income stream etc.

by Nicholas Arrand | 29th May 11, 2:42pm 1306636979

That 'entitlement 'may be all you have at 65, muzza, after all the benefits of a self-reliant passive income stream are eroded over the next few budgets. Although I concede that , by then,you may have to wait until you're 80 to get it!

by philthy | 29th May 11, 12:08am 1306584502

This government has done more to push up the dollar than any previous Labour government had done, single handedly, through all their borrowing and now asset sales.

by michael | 29th May 11, 1:00am 1306587659

Good for Made in China not so good for Made in New Zealand.

by michael | 29th May 11, 1:12am 1306588320

You are right to belive that this is a political choice, make people feel that their money has good purchasing power.

Voters get the mode. this is also reflected in the political language wich has moved from talking NZ as an Australian parasite to an equal.

I belive that this will be reflected in the exchange rate down to AUDNZD @ 1.2200.

by SimonP | 29th May 11, 6:39am 1306607994

It's the deliberate devaluation of the USD pushing our dollar up. The government has very little control over what is going on.

by Les Rudd | 29th May 11, 10:20am 1306621230

Ask Singapore how they are coping.

by Neville C | 29th May 11, 3:27pm 1306639674

The NZD has been around 1 SGD for years.

If you think Singapore is doing it right and the NZD tracks the SGD, then the logic is New Zealand must have the right exchange rate!!

by Les Rudd | 29th May 11, 6:40pm 1306651220

Nope, it's about trade. Check the TWI comparison chart here:

http://www.realeconomy.co.nz/29-getting_things_done_the_singap.aspx

Cheers, Les.

by mich | 29th May 11, 7:47am 1306612056

Excellent piece, nail head bulls-eye etc. Really, really good for the World Financial Empire. Sells fine to voters, until tollbooths in all forms pop up everywhere.

Thx Bernard, this needs in the media a LOT more.

by Les Rudd | 29th May 11, 10:19am 1306621177

Apols in advance, I've posted this a few times on Int.co recently - I wonder why ....

http://www.johnwalley.co.nz/151-slip_sliding_away.aspx

"Increasing foreign ownership and offshore debt sets up a flow of interest and profits out of NZ. Given that: we either earn more with what is left or spend less, otherwise foreign ownership will continue to expand making surpluses ever harder to attain – asset sales are not material in this regard (they equal around 0.5% of the GDP in the budget projections).

Any current account deficit effectively demonstrates we are likely on a trend to greater pain and more cuts as history shows us unable to increase earnings. This will not change until the policy framework changes and we effectively control domestic inflation and the value of the New Zealand dollar via capital controls or some form of foreign exchange transaction taxation.

Start thinking in terms of our National debt not Government debt and get real. Currently our cost of funds is being tolerated, but if current trends continue the cost of offshore funds will begin to increase as will the cost of domestic lending (regardless of the OCR) compounding the debt problem (as more of whatever funds are available are soaked up in debt servicing) exacerbating the difficulty of investing and earning more.

We are on a slippery slope and it is getting steeper."

Dismal eh. And guess what, it ain't going to change any time soon, because so few voters understand the problem and so few (nil) polys have what it takes to lead effective solutions on this issue. Operative word being effective, in the previous sentence - which effectively means NIL polys have what it takes.

Question - how does MMP stop effective communication of the issue? (This should be fun.)

Onwards and upwards dear donkeys, not.

Cheers, Les.

www.mea.org.nz

by neco | 29th May 11, 12:15pm 1306628158

Exactly right. Having strong dollar policies AND a structural current account deficit is like running a Ponzi scheme. The deficit can only be made up by borrowing more or by selling assets, neither of which can go on for ever. An eventual collapse of the NZD would be inevitable, question is will we have any sort of export sector left by then to capitalise on it?

by Kate | 29th May 11, 10:54am 1306623252

Anybody see John Whitehead on Q&A this morning? Total waste of airtime. Glad to be exporting him.

by Carpetbagger | 29th May 11, 12:39pm 1306629572

Winston Peters must be rubbing his palms together at the thought of this. Wasn't even going to vote this year but might throw a protest vote his way...

by Gummy Bear Hero | 29th May 11, 12:48pm 1306630125

A vote for NZ First is equivalent to a vote for Labour . That old dog Winnie was neutered by JK , in February .

by Carpetbagger | 29th May 11, 3:48pm 1306640890

But worse, a vote for National is, well, a vote for National...

by Gummy Bear Hero | 29th May 11, 3:57pm 1306641458

And a vote for ACT is a vote for National , as it seems improbable that Don Brash's " Dead Men Walking " party could work with Labour .

..... I like Matt McCarten's honesty in the NZ Herald today , calling on Labour to oust Goofy .

by steven | 29th May 11, 7:21pm 1306653689

No a vote for National is a vote for ACT in Govn....and ACT's growing % in the polls (or not) is the trend to watch considering the swing voter put National in Govn. By defination they are middle of the road and could vote Labour....so if ACT's % increases and so does Labour in say the next one ie lagged and at the expense of National, Goff could yet get in....

regards

by Gummy Bear Hero | 29th May 11, 7:40pm 1306654829

The TVNZ-Colmans Mustard poll shows National on 51 % support , well ahead of Labour's 33 % ....... But here is where it gets really interesting , in the preferred P.M. stakes , JK sits on a healthy 48 % support , but Goofy only musters 7 % !

Mr 7 % !.... Oh dearie me , poor old Goofy... . A mere 21 % of those who prefer Labour over National , want you as PM !!!

....... Goofy is a hindrance to Labour's chances of election victory . He is a liability . If they have any wish to win , they must chuck him out .

If Labour do not wish to win , they ought to disband as a political party . The name of the game is winning , not coming a gallant second place .

regards

by Neville C | 29th May 11, 3:37pm 1306640228

Its not all one way.

Shell bought by Infratil (and considering the transfer pricing Shell got up to, the profit / tax take in NZ hands will be much higher).

Whitcoulls bouught from the Australians.

Here's one that didn't go to the Chinese.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=107…

by Gummy Bear Hero | 29th May 11, 3:53pm 1306641201

The last I heard of it Shell (NZ) was bought 50/50 by Infratil and by the Cullen Fund ..

..... Hopefully they will re-brand themselves as " Kiwi-Pumps " ... And then we'll all have a sense of patriotic duty to go off for a drive , to build greater profits for our future superannuation entitlement .

by JC050 | 29th May 11, 6:13pm 1306649618

I work for an innovative manufacturing exporter. The exchange rate has been very cruel to our business. We have made massive gains in productivity, saved costs where ever possible, but the current exchange rate means little or no profit.

I love my job, I would have it over a over a cheap flat screen TV any day of the week. I truly despair that no one in the Beehive seems capable or willing to do anything about the exchange rate.

by steven | 29th May 11, 7:28pm 1306654100

I feel sorry for you and your company.....but there is actually little NZ can do IMHO, other countries are doing a race to de-value and thats the path to hell...NZ is so small that we cant try that, if the Govn cant sell bonds then we are all in deep doo doo.

Our/your problem is not the beehive, or really TVs, its the debt the private/housing sector has taken on to buy houses....its this debt that has us in a corner...so blame the property gamblers not the Pollies who have been given a bad hand IMHO...

regards

by deanbo | 29th May 11, 8:02pm 1306656151

It's not just the exchange rate it's also inflation that is finally catching up with the world's economy including NZ. In the meantime the US continues it's race to the bottom of the currency barrel in order to out cheap China and bring export orders back to the US.

by Number 6 | 29th May 11, 8:19pm 1306657149

The yuan is pegged to the US$. Where the US$ goes, the yuan goes. Unless the Chinese decide otherwise, and decide to 'out race' the US to the bottom, and devalue ahead of them to keep Chinese exports moving. China is in the box seat. It isn't about to give that up!

by steven | 29th May 11, 9:30pm 1306661427

Where is the data showing inflation is a problem in NZ? USA?, EU? Japan?

If you ignore the waffle then there are two graphs from the OECD for inflation in the USA and EU.....its all of 2% and the projections indicate its looking like staying there..

http://krugman.blogs.nytimes.com/2011/05/26/still-crazy-after-all-these…

regards

by deanbo | 29th May 11, 7:54pm 1306655644

I think the best thing anyone can do at present is start preparing themselves for hyperinflation by investing in something tangible as at least tangible investments can't disappear off someones hard drive so to speak. Though with the housing market sounding the way it is I think investing in a house now could be a very sour idea. Gold and silver are a natural hedge against inflation, but I'm not sure how much you could gain buying gold now though either. Silver anyone?

by Number 6 | 29th May 11, 8:04pm 1306656240

Gold and silver are not a narural hedges against inflation. Gold is yet half what it was valued at in 1980 on an inflation adjusted basis. To have even kept pace with inflation it should be closer to US$2500 per ounce. It currently about US$1500. Silver? It was US$53 per ounce in also back in 1980. Today it's US$37. How is that inflation protection?! Precious metals are just another commdity to trade with.

by steven | 29th May 11, 8:38pm 1306658285

Somebody said a great thing (IMHO) on gold and silver, and agree with it. It goes along the lines of, precious metals are a way to store/protect wealth while passing through a fairly short term economic/political event and not to use during the event or as a long term wealth gain strategy....

So if you believe in a huge inflationary event being on the horizon and its timescale to be about 3 to 5 years ie a financial system freeze then precious metals are probably the best way to come out the other side with minimal losses...its a protection strategy, nothing more. Personally I thing its deflation/depression (and not inflation) and Im unsure how effective precious metals are in that scenario...Everyone I see whos a gold bull is a inflation bull as well...Ive yet to hear a good comment from gold bulls in a deflationary situation....

regards

by steven | 29th May 11, 8:11pm 1306656660

I dont agree with your outlook on [hyper-]inflation...deflation is far more likely, significantly more likely IMHO. When you have deflation cash is king...Japan is an example of this....and given the present circumstances a good one I think. If we dont have deflation/depression then the next best likelyhood is stag-flation.....hyper-inflation doesnt even enter my calcs.

I personally think gold is over-rated and risky....so I suppose if I had spare $ and wanted a hedge yes I'd look at silver...

Right now I think being out there ie having money in anything is too big a risk, ive sold all my shares etc...YMMV as they say....(your mileage may very)

regards

by Basel Brush III | 29th May 11, 9:25pm 1306661132

We have cash overseas which would have been brought in some time back if the rate had allowed.

It is not huge but enough to buy a decent house in Auckland, if we didn't already have one. We put a chunk into Oz from UK some time back at 2.10 (now 1.54) and brought some of that in to NZ a week back. Fortunate because on Friday last we would have got just on $5000 less.

There must be quite a few returning Kiwis face with a similar dilemma though some do not have the flexibility to hold off.

by steven | 29th May 11, 9:35pm 1306661703

Its a hard call, my parents pension has dropped considerably....I dont see anything in the near term suggesing an improvement in terms of bringing money home....but since I regard the present situation as plain crazy I just dont know...

I certainly would bring it back to buy a house and lose on that as well IMHO....

regards

by Plan B | 29th May 11, 10:19pm 1306664379

John Key is a currency trader, If I need to know whatthe NZD/USD is going to do in the next 15 minutes maybe I would ask him. But that is about it, He has not demonstrated that he has an actual coherent plan for new Zealand. He is a master of the next 15 minutes, trading or sound bites it is all the same. But try and go any deeper and look at what have witnessed over the last nearly three years, not a lot. Get rid of him and try someone else, Stop rewarding failure. And stop listening to elites who tell us what is best for us all the time.

by Grant A | 29th May 11, 9:57pm 1306663045

Steven - if you believe in deflation then you believe that central banks (ie. the Fed) will stop printing money . Q2 will be eventually followed by Q3 within 6 months in my books. You will no doubt be right in the end, but not in the short/medium term I fear. Print enough you eventually get inflation.

Where's inflation, outside of all the emerging nations you mean that already have very high inflation rates, nearly 5% in the UK for a start, and a now rapidly rising US inflation rate of 2.7% annualised, but 5-6% if you annualise the last 5 months or so.

Nothings for sure in this global economic environment, but higher inflation for everyone is definity one of the big risks, one currently not priced into the market here

by steven | 30th May 11, 7:13am 1306696396

Grant A there is quite a lot of good info out there supporting my point of view.....in fact most of it does IMHO.

So you understand the difference between NET and GROSS?

The biggest issue is the "zero bound trap which Japan has suffered from for 20+years...

Next you get inflation in two distinct situations the increase in money supply ie money in actual active circulation and where also wages are increasing (unemployment is either dropping or very low), we have neither...US unemployment ie real unemployment is close to 20%....certainly above 15%...

Finally When you look at the US's GDP, 70% of it is consumerism..say for simplicity dake its 10Trillion USD, so 7Trillion USD is consumer spending which has colapsed significantly per year...the fed in contrast has been QE'ing mere Billions per year. Add in the money isnt being released by the banks into the economy, so actually the Fed's money printing effect could be short b a factor of ten in some estimates...

US un-enployment is twice if not three times what it should be, these ppl have no money, that cantthereofre consume....many others are frightened of losing their jobs so their consumption is cut back....and few are getting wage increases....

So the problem is I dont believe you are allowing for the NET effect....because consumers have stopped spending its a way bigger effect than what the Fed has been doing, at least 3 if not 5 times difference....and could be ten times too small....

Look at all the core inflation figures not CPI...these are low around <2% and in fact there are signs of dis-inflation in that core figure....this is bad bad news.....so QE3 is around the corner...or We get a recession/depression this year...

I also posted some inflation graphs for US and EU yesterday from the OECD and its shows core at best flat and CPI dropping back and projected as into 2012. So with CPI you are looking at volitile numbers....I mean at least look at annual trends of CPI and not quarters.....

Much of the recent jump is CPI is GST/VAT and fuel one offs...these are not something you can fight against with a OCR rise if ppl are not earning more...to do so would be a double whammy....

Inflation significant? not in the OECD and here in NZ....deflation is very probable....just place your bets with your money (ie invest as you see fit) and we'll see who is right.....

regards

by Nicholas Arrand | 30th May 11, 8:08am 1306699689

Where is inflation showing up, Grant? In everyday necessities. The Japanese have been printing for 20 years odd, and all that has happened is ~ 'inflation in all you need; deflation in all you own'. Their property market being a good example of the result of printing. So is America's property market; as is the UK's etc. and so will ours. When you've run out of money to pay the grocery bill, you sell the house ( asset sales being a national level example of that!)

by Grant A | 29th May 11, 9:58pm 1306663138

Sorry Plan B, who knows more ?

by Plan B | 29th May 11, 10:26pm 1306664799

A great many people, the public for one. The New Zealand public are solidly against selling off our power stations. Somehow John Key thinks he knows what is best, The damage he will do to get three more years will last 30. Not a great trade for the rest of us.

by Plan B | 29th May 11, 10:26pm 1306664767

If Labour tried the 'borrow like crazy just before an election to make everything look sort of OK' trick, Most people here would be up in arms. Yet somehow Keys does it and its fine. All he is doing is placing a bet to win the next election.The fact that he has borrowed the money he is betting with and that it is us that will have to pay it back seems to have escaped people.

by Gummy Bear Hero | 29th May 11, 10:55pm 1306666524

Labour have not indicated that they will cut government spending , after the next election . So where is the munny coming from to support their new policies , and to prop up all the old ones of Michael Cullen ?

.... Clearly they wish to raise taxes on the " rich pricks " , on farmers , and the rest will be funded by borrowing !

What other choice do they have , austerity ? ..... aha ha ha ...... Cullen got out in the nick of time , he bequeathed his toxic bag of seriously dopey vote bribes to Wild Bill . And what can Labour's Cunny do with it either . Cullen neatly screwed both of the contenders to the financial throne .

by powerdownkiwi | 30th May 11, 9:06am 1306703205

GBH. Best to stick to the truth, otherwise things get a bit twisted.

Cullen didn't want to do tax cuts, wanted to do saving, and wanted a debt-free budget.

He had to do tax-cuts to compete for the vote, a move pushed by the Nats.

That tells you it's an immature electorate - don't blame Cullen for that.

From here, though, they're (L and N) both on the wrong track. So are the Greens at this point, though they're closer than anyone to 'getting it'.

by Gummy Bear Hero | 30th May 11, 9:31am 1306704667

Truth be told , I'd totally forgotten about those teensy tax cuts that Helen Clark forced Cullen to make ..... Instead , I was referring to the seriously dopey welfare policies that Cullen dreamt up off the cuff , to beat Don Brash at the 2005 election .

...... And as Brash said at the time , WFF & interest-free-student loans would cost the tax-payer far in excess of Cullen's figgers . ..... And they did .

by steven | 30th May 11, 10:21am 1306707687

Well in terms of debt junkies at least Labour stands up pretty well, ie M. Cullen paid down all the debt, the only reason we are not in such deep doo doo is the fact that NZ Govn debt was negligable...Unfortunately the main reason we are in such doo doo is that Cullen was forced to expand WFF in 2005 to counter Brash's tax cut bribe....

Why do you care about NZ tax you dont even live here, so pay no tax eh?

There isnt any Govn spending to cut, the fat is long gone, so that leaves tax rises..and if the base is broadened aka IMF suggestions and a land tax, Im all for it....and a CGT...stop the running at huge losses/break even to dodge tax until they sell brigade....

regards

by Christov | 30th May 11, 8:58am 1306702712

I'm being slow walked...to the guillotine...and yet I don't struggle...I just lost interest along the way.

Cest la vie.

by Nicholas Arrand | 30th May 11, 9:08am 1306703285

Let's not forget how quickly the Egyptian revolt came on; out of nowhere, and the encumbent powers, so entrenched, were swept away. Louisette is still away off, down the Rue . And where there is life...

by steven | 30th May 11, 10:23am 1306707781

and the Egyptions gained what? jsut a different set of "masters".....its going to get worse, ppl first and foremost want to eat....if a regime cant even do that its going to fail.

regards.

by powerdownkiwi | 30th May 11, 9:09am 1306703343

someone else will get a head, then...

by philthy | 30th May 11, 1:57pm 1306720646

Yeah I must admit it's got me, National borrow like mad, make a mess of the economy, push the dollar through the roof - while the OCR is at record lows (not when it's a record highs like the previous government had to contend with).

And yet somehow people still think they are great, imagine how popular they would be if they weren't ruining the economy.

by Grant A | 30th May 11, 8:27pm 1306744044

Roadhouse Blues

"One thing is sure should I live another 25 years and retire I wont receive retirement income from the government"

I guess you also won't be paying 66% tax like some of my father's generation did who helped pay for alot of the infrastructure etc that you now enjoy ? Every generation has its burdens mate

by Les Rudd | 30th May 11, 9:13pm 1306746807

Grant - thoughts?

http://www.interest.co.nz/opinion/53634/nz-near-2-year-twi-highs-nza-strength-offsetting-low-interest-rates#comment-621637

If you reply, do so with the reply option, that way I'll get notification. (Don't just tack one onto the end of the thread. Int.co is more sofistikatted than that.)

Cheers, Les.

by Chris_J | 31st May 11, 3:12pm 1306811522

I think Key's chosen Labour voters over National voters too.

Don Brash is a shoe in.

by Nicholas Arrand | 31st May 11, 3:24pm 1306812243

Fixed! Cheers.

by Bernard Hickey | 8th Jun 11, 9:09pm 1307524164

FYI from a reader: Hi Bernard, Liked your article. Yes, the high New Zealand dollar will put some more exporters to the wall. The important question then becomes how do we lower the New Zealand dollar? One idea I have not seen in the media is the huge borrowings by the NZ Government. You simply cannot borrow these sums without it affecting the exchange rate. There are other ideas in the website www.growNZeconomy.co.nz One of these is a good tax structure. Very briefly: * Nil income tax * Tax cars & fuel * Tax money borrowed from overseas * Real estate only able to be bought by New Zealand citizens ( and permanent residents) This combination would lower the exchange rate to the benefit of exporters and our economy. You may also be interested in the spreadsheet in the NZ Govt Budgets tab.

Kind Regards Brian