By Alex Tarrant
Prime Minister John Key says the Australian housing market is overcooked, and has again pointed to the idea Australia has a two speed economy as its mining sector outperforms other sectors.
Asked if the Australian budget released last week made him wish he lived across the Tasman, Key replied, "not in the slightest," on TVNZ's Breakfast this morning.
Key's government is set to release its third budget on Thursday this week.
The Australian economy had its fair set of challenges, Key said.
"If you actually have a look, their mining industry is very strong. But once you strip that away, then what you see is retail consumption’s actually quite weak. Their housing market’s a bit overcooked," he said.
The Australian government's budget deficit was also "quite large this year," Key said.
Aussies looking for workers
Retail sales in Australia in nominal terms unexpectedly fell 0.5% in the March quarter month as rising living costs ate in to discretionary spending, JP Morgan economist Helen Kevans said. However the Australian economy had little spare capacity with unemployment sitting just below 5%, and as higher mining company profits flowed through to employment demand.
Australian Treasurer Wayne Swan last week announced a government cash deficit of A$49.4 billion, or 3.6% of GDP, for 2010/11, which was expected to fall to A$22.6 billion in 2011/12 before returning to surplus in 2012/13.
However, Swan and the Australian Treasury have come under fire for their budget forecasts, which include an expectation of corporate tax receipts growing 35% in two years. An increasing tax take, as well as employment growth in Australia, will rely heavily on sustained demand from China for Australian minerals over coming years.
Swan said his budget would lead to the creation of half a million jobs over two years as demand for workers in the Australian mining sector remained strong, and as government seeked to encourage Australians to move into areas of low employment such as infrastructure, transport and government services sectors.
On top of Swan's projection, an Australian labour hire company over the weekend projected the country's resource and energy sector would require an extra 500,000 workers over the next few years, with a mixture of both skilled and low-skilled workers needed.
Flexible New Zealand and Australian labour laws mean citizens of either country can work in the other without a work visa. New Zealanders have been increasingly flocking across the Tasman over the last two years of the current government, after numbers fell from record highs under the previous Labour government when National won the 2008 general election. A net 3,548 New Zealand citizens left New Zealand permanently for Australia in March, according to figures from Statistics New Zealand.
Key last week said his government was aware of the competitive jobs threat from the Australian labour market, but that there were benefits for workers staying in New Zealand. Australia also had a two speed economy as its mining sector outperformed others, Key said.
"We have a much lower top personal [income tax] rate than Australia, we’re starting to invest heavily in our infrastructure, and I think actually as the AFR [Australian Financial Review] pointed out in one of its articles a couple of weeks ago, if you strip mining out from Australia - it’s very much a two speed economy over there," Key said last week at his post-cabinet press conference.
"I think in many respects New Zealand’s doing quite well. That doesn’t mean there’s not a lot more that we need to do,” he said.
Key campaigned before the 2008 election on narrowing the wage gap with Australia and slowing down an exodus of New Zealanders moving to Australia to work. But the government has toned down its comments on narrowing the gap in recent months and disbanded the 2025 taskforce as the wages gap started widening. An average 141 New Zealand citizens a day left to live in Australia in March.
'NZ deficit will evaporate very, very rapidly'
Meanwhile, on RadioLive this morning Key said the budget on Thursday would show the New Zealand government deficit “very, very rapidly” evaporate.
Finance Minister Bill English has previously said the government was aiming for a “meaningful” surplus in 2015/16 after a record expected deficit of up to NZ$17 billion or 8.5% of GDP in the current year.
On Newstalk ZB this morning, Key said the budget would chart a way “where you’ll see New Zealand getting back into surplus,” although would not say when that would be.
“You’ll see the books looking a lot healthier, actually. You’ll see NZ$5.5 billion allocated for Christchurch. You’ll see some changes to KiwiSaver, Working for Families and interest-free student loans, but they’ll all be over time and, dare I say it, reasonably modest, I think in-so-much that I don’t think people need to be frightened," Key said.
"But there will be changes that will save the government money and allow us to have a zero budget and get back into surplus quickly,” he said.
Asked whether that would be quicker than the Treasury forecast, Key replied people would have to wait until Thursday, but added: “That’s certainly been the aim of the government.”
“We’ve gone through a global financial crisis, a couple of massive earthquakes, we’ve had the collapse of the finance companies that Labour signed us up to, we’ve had AMI teetering on the brink. We’ve had a lot of different things in two and a half years, and despite all of those negative claims that the country would have massive unemployment, etc. etc., that hasn’t happened," Key said.
"I think we’ve charted a moderate, balanced, centre pathway through that, taking New Zealanders with us," he said.
(Updates with Australian retail sales comments, Key RadioLive, Newstalk ZB comments, with Aussies looking for workers, corrects Australian retails sales to monthly from quarterly.)
85 Comments
It's interesting to compare the Aussie mining industry and NZ's property bubble market.
One is extracting a useful commodity from the Earth and exporting it to foreign markets, while the property market consists of a bunch of suckers selling houses to each other for ever-increasing prices*.
Even if China drastically cuts back its imports, the Aussie mining industry will always have other customers, even if their margins markedly decrease.
But the housing bubble? Once that dance of the retards ends, all the suckers are left with are their massive debts on property for which they paid laughably high prices.
A hugely productive industry vs. a pathetic ponzi scheme: Aussie has them both, but we only have the one, and naturally it's the *wrong* one.
*In Auckland.
I'll bite.
The Aussies have one of the worst property bubbles in the history of the world as a result of the hugely-productive mining industry.
See, something that's actually worth something has lead to a worthless side-effect, their silly housing bubble.
But mining is worth so much that the bubble is being sustained, although the end is probably in sight for the latter.
What does NZ have? An agricultural sector that always gets the lion's share of available resources, yet earns a relative pittance.
And we have a drooling, brainwashed populace that is convinced the only way to get rich is by selling houses to itself.
If the Aussie mining bonanza ever ended, the Aussie property bubble will implode, and the Great Depression will be fondly remembered as the good old days.
But mining isn't likely to collapse, so the property bubble in Australia will more likely fizzle out gradually over a long period.
But the NZ economy consists of low-rent agriculture - and if you think it's anything more than that you're an idiot, seriously - and the stupidest property market outside of Ireland of the 2000s.
Our bubble is doomed, and, unlike Australia, we have no lucrative industry-based safety nets or parachutes.
Firstly, valuations going sideways does not prove that a bubble does not exist. It proves that the bubble has not burst. If a bubble exists it cannot be a very sustainable situation.
Secondly, the NZ dairy industry can be cyclical as well and can also experience horrendous slumps when things slow down. Also note some of the subsidies our agriculture industry has provided to it - ETS exemptions, govt investment in irrigation/waterway pollution - costs that the farmer is exempt from incurring.
Thirdly, our agriculture industry is not going to pull NZ out of the doldrums by itself and the likes of you and other self centred, narrow minded, blinkered PI's and pollies and ignorant sheeple are what put NZ in the doldrums in the first place.
Fourthly, your entire argument and general point of view makes no sense and quite frankly is moronic.
Later.
And meanwhile......
We have sold enough of our productive assets to overseas leechs to hog tie the economy for a very long time even if we stop now.......and JK wants to sell most of the remaining SOEswhile pretending we still control same with a 50% holding.
Much of this could have been avoided with control of real estate lending and lending for farm aggregation based on false valuation (again the bank lending criteria)
Westminster would have been living in a different world but would probably have gone off to Australia where he would fit in nicely, I suspect.
hey nurse, with reference to your comments about the dairy industry subsidies, I think you are on shaky ground. I assume you wont be drawing a pension or partaking of `free' health services??
Isnt every NZ er subsidised in some manner? family support enables families to live better, spend more and helps them get a house which sustains house prices or even have more children and create more demand. Home prices, vehicle sales, food, beverage ...everything the handout dollar gets spent on is a form of subsidy to those who benifit.
What else gets a tax payer handout? ...Roading, infrastructure, education, dole, sickness benefits,...the list is endless and every person in this country gets a `subsidy' at some stage of their life.
Good try Smiley Wavey....distracting the Kiwi peasants is a great game...remind us about the 6 part strategy John....we haven't had that one for months...are you having wine and cheese with S&P before or after Billy boy's budget tinkering is announced? Bit late to invite the head of the IMF for lunch John...the boys in blue got to him first.
Let's get this right. Mr Smiley Wavey thinks Oshtralia has a two speed economy and their housing market is overcooked, take out their strongest industry and retail consumption's a bit weak. Can someone explain the concept of dramatic irony to him or maybe he just got his scripts mixed up.
Do I detect a little bit of envy - the Oshtralian economy has "it's fair set of challenges".
Ashamed to admit that I voted for him last time round. I had no idea that he was so shallow.
Asked if the Australian budget released last week made him wish he lived across the Tasman, Key replied, "not in the slightest," on TVNZ's Breakfast this morning.
He added, "Why would I want to? I have this country by the balls! Over the years I've gouged a fortune, and now I pay essentially no tax at all, and I've made sure none of my cronies have to pay any tax either. Once I've grown bored with running this country into the ground, I'll collect my parliamentary Lotto-like pension, then retire into seven diferent Directorships, where I'll be paid obscene amounts to 'phone into board meetings once a year. No, my life is as good as any life can get. Here, I'm a very big fish, but if I go to Australia, I'm just another immigrant Kiwi. Why do you ask such stupid questions? And my shoes are looking a little dusty, so itear your shirt into strips and shine up the leather, before I have you "downsized" out onto your arse. I can do that." The prime minister then threw the contents of his glass over everybody within reach, while laughing smugly.
Cheer up ..Yesminister...."contribute nothing"..? I take exception with that.....how would you get up in the morning with those feelings of superiority...without peering in here to eavesdrop on all our wretched miserable posts.
I am contributing to your sense of wellbeing.....don't tell me that aint worth something.
Anon good nurse, do you donate your salary to charity? If not why not? Do you do any good works for your community? Do you give anything back?
I understand that the Prime Minister donates a large poportion of his salary to charity.
You strike me as an excellent example of why so many New Zealanders are so dirt poor. Wrong thinking, a bad attitude dude, and a lefty.
Enjoy the crumbs buddy.
Ah, you silly little troll.
Let's play!
Years ago, I served my country with "dedication, devotion, distinction and valour".
How about you? When you leave school, will you do the same? Not bloody likely.
One of the reasons I'm not dirt poor is because I don't like debt, and I refuse to have any. Instead, I do without while working and saving very hard, then I invest the money I've made in to something productive: investments which have paid off handsomely, and continue to do so.
One day, when your mum and dad and your inlaws gift you never-never loans, and your grandparents leave you their house, you can blow it all on the kinds of worthless shiny things that so appeals to spoiled kids such as yourself.
And you can kid yourself that all your debt, all the interest you're paying on all your debt, is somehow a good thing, and that you are in some way contributing to NZ, rather than just the executives of some foreign owned bank.
Good luck with the future, little boy.
Nice try, anono, but water off a duck’s back, chump. I am neither little, nor a boy, nor bitter like you.
I said it before, I’ll say it again. You strike me as an excellent example of why so many New Zealanders are so dirt poor. Wrong thinking, a bad attitude, and a lefty.
Enjoy the crumbs bud.
By the way you didn’t answer my question. Do you or do you not donate your salary to charity?
Well I almost peed myself...............Hey...! Hey..! look over there......look over there while i scrape something over this poo here afore it catches your nostrills.....
Ever watched "Distraction" where you've gotta concentrate while a fat old naked guy cavorts around in front of you...........where the host says you've got to answer five questions and for every wrong answer you'll have to burn some more of your money....?
Life immitates art ....eh..?
I will be glad when the election is over then all the Pinkos can then go home and off this site and start killing one another starting with poor old Goofy. Key may not be the answer to NZs problems but hell what else is available does not bear thinking about. When the Pinkos have to say Key is spending so much money painting "his" house in Wellington which all of New Zealands owns, then they are stuffed 100%. Then again Hone might do a better job than Key! Cheers.
A quote I saw on someone profile the other day. So good I am going to use it myself.
"Think about just how stupid the average person is, and then realise that half the people are even more stupid."
That is why I haven't voted for years, you can't beat the stupid people.
damn your smooth GBH.....you have achieved "trusted" status.....ah well I keep my eyes peeled for other oportunities........funnily enough I'm coping with the rejection quite well....................................I have to ........go.......... now....sniff 0)-:}
.
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Of course you can, I trust you Gummy:)
But wouldn't that add a nice twist to the voting process. If you don't want to vote for anyone, as Christov has been at pains over, then you just save it up for the next election. If you have enought people like me, with six or seven saved up, then you might make a difference.
Or perhpas if more people voted NOTA than any other vote, then the election is invalid.
Went to the Auckland inventors club last night. Gee that was interesting.
Apparently there are a few dotted around the country, even one in Wellington would you believe.
They have taken up the slack from the inventors trust, which used to do appraisels and match venture capitalists to inventors. No money around anymore so they have wound down.
But only tea and biscuits I am afraid, which I would have though would be home made but no just your standard fare.
How about the touch tone phone being invented in the 50's? No one wanted to know at the time because it mean changing a lot of the hardware. Now I bet you could get some solutions to the economic woes from that bunch of guys, but no one listens to us inventor/designer types:(
meh Yup...!...but...then the void still exists....so I guess where I'm coming from is involvement prior to the event......it is better to send the message in strong voter blocks pre election than during....or..post......case in example Winston(I am not in it for the baubles of power) Peters meteoric rise and installment thanks to a great big grey vote that were feeling a little disenfranchised at the time and quite liked the Nationalist Rhetoric...
There is a hole there if an existing party or new party wants to tap it.......but ...whatever form that takes, it would probably need National (cleaned and gutted) to create meaningful reforms to a social welfare dependance society...........and that will take some outflanking.
FYI from The Australian. The Mining sector is quite a big caveat
HALF a million extra workers will be needed to complete a range of resource and energy projects, according to labour hire company Skilled Group chief executive Mick McMahon.
The government announced in the budget that it would allocate 16,000 places in the skilled migration program for regional areas as well as new migration agreements for large resource projects.
Hello Count ! ....... I went 11 whole days without blogging ........ it was a personal challenge , becos' " southpaw " reckons that I blog an " awalful lot " here ............
........ he's bloody well right !
Good to be back in the fray . When the Head Boy biffed out my good buddy Westminster I had to say summit .
........ So I can't use either of the " F " word or the " M " word ?
What a hoot to see the guys " fecking " at each other the other frigging day ........ You popped one in there too , Count ... nice to see that you can still rumble with the larikans , when you choose to .
Why not to live in Australia:
Believe it or not, 'Middle Australia' is actually worse off now than it was during the depths of the GFC.
Today, these households have their backs against the financial wall. They face acute cost of living pressures as demonstrated by the latest inflation data. Partly as a consequence, they are paying the steepest mortgage rates in the developed world, rates which are only heading higher with no real signs of relief. Non-resources exporters, such as manufacturers, and import-competing industries, like tourism, are being rendered non-competitive by the record exchange rate that risks flying to further record highs over the next several months.
With the nation’s prospects being pinned on the mining sector, and four government-subsidised banks raking in oligopoly profits, we face the spectre of the economy resembling an inverted pyramid. A little turbulence out of China and India, and it is liable to topple over.
As the good Westminster ( R.I.P. ) noted , we have little reason to be smug . NZ is a mirror of Oz , just that we are pegging our hopes on the dairy boom continuing ...
.... The clown prince finance ministers in both countries are spinning a good yarn about " growth " ...... But their empty words will be forgotten by the gullible populence , in a year or two , when the faecal material impacts upon the wind oscillating device .
Please please please Mr China ........ don't screw up , we need you , really we do .......
Don't worry too much about the Duke of Westminister....he'll be back maybe as Lazarus......I just can't see that kind of spirit laying down n taking it....not in him.
Always remember GBH they are not dead if we choose to remember them.......like Champer's n Lord haw haw......
Banned....I tell ya....BANNED......
Opinions will never change FACTS either here or for the West-minster Duke..
And the fact is that the future depends on the spin you put on the facts to miss-lead the punters at the next election and the next investment.
Westminster or here.....or even US-less of A...with Obama.
Never let a view, Cloud your view.
Sony may be sorry ....they ever did.
I trust the voter will keep their eyes wide open to the tax advantages being offered....at your expense.......and the QE 3.....benefits pertaining...........for sum.
yeah right....RIP.
we don't have a bubble. we have a housing shortage. a mismatch of demand and supply. we need 25000 hosuses a year we are getting 14000. we are now short 40000. furthermore the construction industry is f^$&'d and builders are leaving / being enticed across the ditch by higher wages, strong demand, and a government that embrases them. Inflation and a massive shortage is driving up rents particlurlay in Auckland. Prices are on the increase again. They can't go in any other direction. Study economics 101 and leave the crysatl ball gazing to the soothsayers. If you really want to see a bubble collapse, then ramp up supply, much like what occured in the States and Ireland, and watch as everything collapse like a hose of cards!
I wonder if it would help if we could see some numbers in the growth of the amount of money that is out there. We seem focused on one half of the equation. Land/house and not the money they are measured in. The amount of money created in the last few years has been incredible of course it has caused a great many things to go up in price by an unbelievable amount. Yet the explainations for these rises never include what they are measured in- namely money. New Zealanders have taken on fabulous amonts of debt to buy the land we already had. If we look at GDP growth over the years 2001-2007 vs the increase in the money supply over the same time it should be obvious what has happened. To my mind successive governments have pretended that they are not in charge of the money supply and allowed it to ramp up and in the end swamp us with debt money that has distorted the domestic economy completely. Our money has halved in value over that time 2001-2007 (approx) and noone seemed to notice. The thing is that is a really short amount of time for it to happen.
Just can't help this little cracker........"If you actually have a look, their mining industry is very strong. But once you strip that away, then what you see is retail consumption’s actually quite weak. Their housing market’s a bit overcooked," he said.
The Australian government's budget deficit was also "quite large this year," Key said.
And if you take away Fonterra John Boy....?
BHP has discovered that their uranium deposit at Olympic Dam , in South Australia , is 4 km long , 3 km wide , and 1 km deep . SA will become a boom state as this gives the mine a 100 year life . There's also the likelihood of producing 500 000 tonnes of copper annually from the ore . And ......
........ NZ has some cows ........... ahem , righty-oh , John .
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