Here's what the blogosphere's been saying about the economy this week. Due to a growing amount of blogs on media sites, I've included a few below as well. Have a good weekend all. Some great cartoons via Liberation.
From the left
1. Here comes Labour. The folks at the Standard are trumpeting Labour's latest rise in the first Roy Morgan poll taken mostly after the budget. National fell from 53% to 49%, while Labour jumped from 28% t o 36%. However the Greens fell from 10% to 6.5% - lower than they were before the budget. There was even a slight tick-up for NZ First...Eddie at The Standard writes:
Nat+ACT+UF fell from 55.5% to 51% while Lab+Green went from 38% to 42.5%. Labour bounced a massive 8%. I reckon part of that is just correction from a rogue poll last time that had Labour far too low but there’s an underlying shift too.
The right track/wrong track numbers continue to trend down. New Zealanders do not want asset sales, fewer work rights, and National’s nasty agenda and are realising they have to vote against that ‘Nice Man Mr Key’.
At 49%, National is entering its danger zone. Lose a couple more percent and it won’t be able to make a majority with just ACT and United Future, it would need the support of another party on every piece of legislation.
Currently, National can make a majority with either ACT or the Maori Party and, in practice, gets the support of only one or the other on controversial legislation (except for issues of confidence and supply). ACT and the Maori Party vote against each other 62% of the time – that’s more than Labour and National .
2. Can beneficiaries fill those jobs on Trade Me, and if they could, wouldn't they look to do the same in Australia for more? Danylmc at Dim-Post questions Social Development Minister Paula Bennett's claim that there are a lot of jobs available, so welfare reform pushing beneficiaries back into work will be do-able.
That’s what Social Development Minister Paula Bennett replies any time she’s asked about the massive increase of beneficiary numbers the country has enjoyed since her party came to power, unemployment beneficiaries especially. And she’s right! There are loads of jobs advertised! The vast majority of them are in two categories: IT, and Trades and Services.
My first point is that very few beneficiaries are likely to qualify for these jobs. Experienced Oracle DBA; Qualified Industrial Electrician; Senior Commercial Analyst, and so on. The second point is that even if they do qualify they’re less likely to apply for them in New Zealand, since all of these are industries in which salaries in Australia are double those offered here which is why there are national skill shortages, which is why there are always thousands of ads for these roles. This is also, by the way, a problem Bennett’s government campaigned on extensively but has stood by and allowed to further deteriorate over the past two years.
This means tilting the field even further in favour of employers. And the result will be lower wages and poorer working conditions for Kiwi workers. National thinks this is an "advantage", but its not. Instead, it is the reason why our living standards are lower than those of Australia, why our businesses are less productive, why our managers are crap - because they're insulated from their own stupidity by a favourable regulatory regime.
National, in typical fashion, is refusing to say exactly what changes it will make. This is downright deceitful. We have a right to know, so we can judge them at the election on those policies. But no doubt that's exactly what National is trying to avoid.
From the right
National would have 61/122 seats on this result - just falling short of being able to govern alone. However with ACT and United Future they have 64 seats, and if the Maori Party supported them again, a Government might have 68 votes on supply and confidence.
I think this poll shows how important the minor parties might turn out to be. The results of electorate contests in Te Tai Tokerau, Te Tai Tonga, Epsom and Ohariu could all have a significant impact.
Labour will be pleased to have gone from 25% behind National to just 13% behind. Labour know they need to lift their vote share from 34% to win. This is the 5th time the Roy Morgan poll has shown Labour over 34 per cent, but they have never sustained it for more than one poll. That is their challenge.
5. Why's the bloody NZ$ so strong. Clint Heine writing from London despairs at the level of the New Zealand dollar, asking when it's going to change, and what's wrong with the British pound. Well, they're in the schtook for starters...
I am not an economist. Far from it. I am not any sort of economic expert nor profess to be one. What I know is that I work hard, make a decent wage, take regular holidays and have some good savings in the bank. Not too long ago I could have returned to NZ and could have enjoyed an exchange rate of 3 dollars to the pound.
So what has happened? Apart from the Fonterra silly buggers, what has suddenly made the Kiwi dollar worth so much right now? Is this permanent? Will it crash and burn?
Kiwis are now able to fly over and visit Europe and the UK for longer nowadays. I recommend you do it now before it all goes tits up (both here and in NZ) as you'll have a smashing time over this side of the world.
I don't see any reason why I would transfer my savings and lifestyle to NZ even if the dollar is at an all time high. The cost of living is still mental especially in consideration of the wages being paid out.
I'd appreciate it if anybody can provide a more professional opinion to what the hell is going on and when it will end as it is getting rather silly now. I want the pound to start behaving like the strongest currency on the planet, as it should be!
6. Farmers having a once-in-a-generation year, but still being careful. Homepaddock shares her thoughts on the Reserve Bank's decision to leave the OCR on hold at 2.5% yesterday, and the help it's receiving from the government.
Today’s announcement by Reserve Bank governor Alan Bollard that the official cash rate will stay at 2.5% is part of the bigger picture.
From 1999 to 2008 Labour’s high spending policies which resulted in unsustainable growth based on consumption fuelled by borrowing kept pressure on interest rates. That increased costs for households and businesses.
Since 2008 National has been focused on reducing the burden of the state, cutting back room costs to the benefit of front line services.
Most of us have got the message that the cure for our economic malaise is savings, investment and export led growth.
Farmers are having the sort of year which probably only happens once in a generation but most are being very cautious with the unexpectedly good returns. Reducing debt is the major focus.
All of this has taken pressure off interest rates and inflation.
7. A hikoi of dairy farmers marching on Parliament will not be enough to change the government's view on Pharmac. Radio New Zealand's economics correspondent Nigel Stirling has started writing pieces for NatRad's website. In this piece he looks at the debate stemming from New Zealand's Trans Pacific Partnership negotiations with the US, and the issues around Pharmac, dairying and intellectual property.
A trade source has recently told Radio New Zealand that a "hikoi of dairy farmers, marching on the grounds of Parliament" would not be enough to convince the Government to make major changes to Pharmac. That's because, the source says, the improvement in market access for New Zealand's farm exports the Americans could offer in return in the TPP are likely to be pitifully small.
In return for a poor deal on dairy and sugar, Australia, in its trade deal with the US in 2004, made changes to its drug-buying scheme, the Pharmaceutical Benefits Scheme. While they were not major changes, they are thought to have watered down the scheme's effectiveness by excluding some drugs from the reference pricing that helps it drive better deals from the pharmaceutical industry.
And Pharmac's just a little goal it seems, much bigger is intellectual property rights.
American pharmaceutical interests are not particularly worried about the dent to their bottom line from the way Pharmac goes about its business, which must be miniscule.
What really worries the industry is the precedent it sets if other countries adopt a drugs-buying model similar to Pharmac and the TPP does nothing to stop it. The threat is magnified if the TPP is expanded to include more countries and becomes the template for the hoped-for Free Trade Area of the Pacific, including all 21 APEC countries.
An even bigger target for the US pharmaceutical industry in the TPP is patent reform. The issue is likely to have flown under the radar of most New Zealanders because politicians here haven't been asked about it; the drug-buying policies of Pharmac hogging the limelight instead. But change in this area is potentially just as damaging for Pharmac.
The pharmaceutical companies are furiously pushing in the TPP for ways to extend the life of patents.
Because Pharmac is a big buyer of generic drugs, that would have either the effect of pushing up its drug-buying costs, or, more likely given its cost-conscious approach, keep patent-protected drugs off their shopping list for longer.
8. The Chinese are coming...who cares? Dominion Post political journalist John Hartevelt wonders why all the hooha over Chinese investment? It makes up very little of overall foreign investment in New Zealand, and hey, we need the cash. But perhaps because this is unchartered territory, we may need some stringent tests as we get used to it.
There has actually been not a single significant sale of farm land to a Chinese buyer approved by the Overseas Investment Office in more than five years.
So why would there suddenly be concern now? Why would Labour have concocted a policy more or less preventing the sale of 5-hectare blocks of farmland to foreigners? And why would John Key have suddenly started dropping mentions of fearful debt levels specifically to China into his post-Budget interviews and speeches? Who was buying our debt before? And why has Key never singled other countries out in the past?
The unavoidable conclusion is that somehow, politically, Chinese investment is scarier than that from any other country.
It's not just politics, either, where an Asian face is a byword for bad. The rebranded Shell, now called Z Energy, boasts in its advertising of having hauled back its call centre from overseas, depicting this with a white face tearing a telephone headset off a befuddled Asian face. And remember those Kiwibank ads where the green car drove about foreign cities populated with stereotyped caricatures of the locals, explaining why New Zealand was so much better of a country?
Economic purists have understandably been perplexed, even infuriated, by the political hex that's gone on China.
If New Zealand wants to keep funding the services it already does and if it wants to attract capital to pay for new things, the cash has to come from somewhere, they say.
"If you suspect a man, don't employ him, and if you employ him, don't suspect him,'' a Chinese proverb says.
But there is a quite legitimate and actually entirely sensible argument for caution here.
Key last year announced a new aim of doubling two-way trade to China to $10 billion within five years. That'd be a 15 per cent compound boost year after year. China is already the clear number two on our list of trade partners and there is no other country in the world where the growth aims are so lofty.
We're talking about rapidly expanding, large-scale investment from a country that has entirely different business practices, different goals and different mores from our own. Plainly, this is uncharted territory for any developed country, let alone New Zealand, so who could quarrel with some lines being placed on the map?
9. Why do firms seem so unimportant to New Zealand. Paul Walker at anti-dismal wonders why no NZ university economics departments seem to offer courses on 'the theory of the firm'. New Zealanders do love small-medium enterprises, which you'd think makes it harder to export stuff (reduced economies of scale). Perhaps time for a re-think and devise some policies promoting big firms that can better compete on international markets, or looking at how we can make existing medium sized firms bigger?
From the viewpoint of New Zealand the theory of the firm looks more like a struggling intellectual corner dairy than a big business. The halting never seems to have ended in New Zealand. No matter how fertile the fields no one seems to be ploughing them in this part of down under.
But I figured this could just be me, what do I know?, so I wasted a whole pile of bandwidth and checked out the websites of New Zealand’s universities (most of which are awful by the way) to see how many of the economics departments have courses on the theory of the firm or on organisational economics. Answer, none. Or at least, none that I could find. Yes I’m sure that the theory of the firm get a mention in courses on industrial organisation or managerial economics or in more general microeconomics courses but its in passing or just as background needed to deal with whatever the course is really about. There appear to be no dedicated courses on the subject. Are firms really considered as unimportant to the economy as this would suggest?
10. Here's some funny cricket commentary. Have a good weekend all.