Archive | Trade

Prime ministers vow to continue with TPP and toward single market

New Zealand & Australian prime ministers Bill English & Malcolm Turnbull confirmed in a joint statement on Friday that they’d work together to progress the TPP (Trans Pacific Partnership) agreement with other TPP members following the US withdrawal.

They also signed an agreement to better integrate Australia & New Zealand’s science, research & innovation agendas by enabling collaboration between researchers & innovative companies on both sides of the Tasman.

And they committed to continue finding ways to make it easier to operate across the transTasman market, and for the 2 countries to continue aiming for a single economic market.

Joint statement – leaders meeting 17 February 2017

Attribution: Government release.

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NZ debt position continues to worsen

New Zealand’s net international liability position has worsened in all of the last 5 quarters, rising from $149.4 billion in June 2015 to $166.2 billion (64.9% of gdp) in the September 2016 quarter. The figures out from Statistics NZ yesterday show 3 steps of about $4 billion and, in the latest quarter, another step up of $3.2 billion from a revised $163 billion (64.4% of gdp) in June.

The value of liabilities increased by $2.5 billion in the latest quarter while the value of assets decreased by $710 million.

Statistics NZ’s international statistics senior manager, Jason Attewell, said yesterday the seasonally adjusted current account deficit increased from $1.8 billion to $1.9 billion in the September quarter, a result of more spent on imports, $686 million less earned from exports, a shortfall which was funded by the banking sector.

Meat (New Zealand’s second largest export commodity) led the fall in export goods, down $235 million. Fruit exports also fell, dairy showed little change, logs & timber exports rose by $43 million.

Mr Attewell said New Zealand’s offshore investments earned less income, the main factor driving a $71 million increase in the investment income deficit, and foreign tourists spent less in New Zealand, leading to a $16 million fall in the services surplus.

The annual current account deficit was $7.5 billion (2.9% of gdp) for the September year, down from $8.5 billion (or 3.5% of gdp) for the previous 12 months.

Balance of payments and international investment position: September 2016 quarter

Attribution: Statistics NZ tables & release.

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Propbd on Q F5Feb16 – Cruise trade, Lyttelton wharf reopens

Cruise ship based in Auckland for 5 months
Lyttelton port rebuild opens

Cruise ship based in Auckland for 5 months

P&O Cruises, a division of international cruise operator Carnival Corp & plc, will base the 1800-passenger Pacific Pearl in Auckland through to 23 June.

The liner arrived yesterday with nearly 1000 Australians on board, many of them signed up for a special cruise package which included 4 nights in Auckland and access to the rugby league Nines at Eden Park.

Carnival Australia & NZ executive chair Ann Sherry, said the Pacific Pearl would go on an unparalleled 20 cruises over the next 5 months – double the number last year – generating up to $20 million in economic value for New Zealand.

The Pacific Pearl’s schedule includes 2 voyages between Auckland & Sydney. Its 18 round-trip cruises will take it to 11 New Zealand ports.

Ateed (Auckland Tourism, Events & Economic Development) chief executive Brett O’Riley said Auckland’s record cruise season was estimated to deliver $251.7 million to the region.

Lyttelton port rebuild opens

Deputy Prime Minister Bill English and Earthquake Recovery Minister Gerry Brownlee missed the excitement of shaking hands with dignitaries signing the Trans Pacific Partnership Agreement at SkyCity in Auckland yesterday, and an insight helped by TPPA protesters into what a completely pedestrianised central area might look like.

Instead, the 2 southern ministers headed to Lyttelton to open an $85 million port expansion, the Cashin Quay 2 Wharf. The rebuild of a wharf destroyed in the 2011 earthquake turned into a 10ha reclamation, using over a million tonnes of rubble from central Christchurch.

Mr Brownlee said the port lost 30% of its operational space in the 2010-11 quakes and had to repair 14ha of container terminal.

Attribution: Company & ministerial releases.

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Propbd on Q W16Dec15 – economy: Economists study Auckland housing, dairy

Bank economists delve in Auckland’s living spaces
Reserve Bank examines severity of dairy decline

Bank economists delve in Auckland’s living spaces

ASB Bank’s economists drilled into housing statistics in a report they released yesterday, highlighting the intensity to which Auckland’s housing stock is being used, and the region’s different preferences & circumstances.

The Home economics report was prepared by bank economist Kim Mundy: “In this paper we have drilled into the detailed composition of Auckland’s households. We have made some observations and discussed some of the potential reasons for the differences we have noticed. At the very least, we can conclude that Auckland’s housing stock has been used with a greater intensity than elsewhere, and that this utilisation has increased over time. The next step will be to see if we can econometrically account for some of the differences and, in doing so, gain some insights into the extent of Auckland’s housing shortage.”
First observations were that, in 2013, relative to the rest of the New Zealand Auckland had:

  • fewer empty/unoccupied houses
  • more people living in each house
  • more households with 2 or more families in one house (over half of the country’s total)
  • faster growth in the number of households with 3 or more people (especially households with more than 6 people), and
  • within Auckland, wards with lower median household income tend to have more people/house.

Link: Home economics report

Reserve Bank examines severity of dairy decline

A paper jointly published yesterday by the Reserve Bank & DairyNZ elaborates on the state of indebtedness of the dairy sector.

The paper’s authors – Ashley Dunstan, Hayden Skilling from the bank, Matthew Newman & Zach Mounsey from Dairy NZ – said: “Dairy sector debt increased from $11.3 billion to $29 billion between 2003-09 due to rapid increases in land prices, a flurry of dairy conversions and significant on-farm investment. This rise in debt left highly leveraged farmers exposed when milk & land prices fell sharply in 2009. A swift recovery in global milk prices subsequently helped to limit the degree of financial stress, although nonperforming loans increased to a peak of around 4% of sectoral debt.

“This experience has resulted in increased caution among dairy farmers and a slower rate of debt accumulation. However, debt levels remain at elevated levels of more than 300% of trend milk income. As at June 2015, dairy debt reached $37.9 billion, representing around 10% of total bank lending. Developments in the dairy sector are therefore an important consideration in assessing financial system risks.”

The authors said global dairy prices fell by more than 65% in $US terms between February 2014 & August 2015, due to increased global supply, sanctions on Russian imports and reduced Chinese demand following a build-up of inventories during the 2013-14 season. Over this period, the exchange rate depreciated, dampening the fall in $NZ terms. Dairy prices have since increased from August lows, but recent outturns have not been favourable and prices remain well below their long-term average.

“As a result of sustained lower milk prices, dairy farmers are currently facing significant cashflow pressures. Following a record 2013-14 season, Fonterra’s payout fell considerably and farmers are now expected to face consecutive sub-$5/kg of milk solids payouts. The impact of the low payouts is amplified by an increase in average break-even payouts since the 2006-07 season, reflecting increases in debt levels and a shift to more cost-intensive operating structures.

“The worst cashflow pressures are expected to emerge in the current season (2015-16), compounded by low retrospective payments from the 2014-15 season. The cashflow shortfall for the average dairy farmer is estimated to be more than $1/kgMS (based on DairyNZ forecasts of $4.15 for effective milk revenue, taking into account the latest Fonterra forecast for the headline payout).”

Despite the cashflow pressures, the authors said dairy farm land values had been supported by low interest rates and a largely positive long-term outlook for the payout. The Real Estate Institute’s dairy price index continued to grow at about 10%/year throughout the summer of 2014-15. However, land values had recently shown signs of weakening, on limited sales volumes.

“There is a risk that land values could fall if cashflow pressures persist, especially if confidence in the longer-term milk price outlook deteriorates. Downward price movements could be amplified by reduced liquidity in the farm market, if demand to purchase farms falls alongside the increased risk of rising stressed sales. The extent of financial system losses in this scenario hinges critically on how debt is distributed within the dairy sector.”

Link: Reserve Bank Bulletin

Attribution: Bank releases.

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NZ formalises stake in Asian infrastructure bank

New Zealand has formally became a member of the Asian Infrastructure Investment Bank.

Finance Minister Bill English said this week members providing half the bank’s capital needed to ratify its establishment, and that should be completed this month. The bank would start operating in January

“New Zealand was the first developed western nation to join negotiations to set up the bank, and our membership will enhance our already strong economic, trade & investment links with the Asian region.

“Through our role in establishing the bank, we have been able to ensure it has strong governance, environmental & social policies, and transparency – so we have good reason to expect it to deliver efficiently & effectively.

“New Zealand is benefiting from the rapid & sustained economic development across Asia. For this to continue, the region needs to address constraints posed by infrastructure bottlenecks.”

The bank will have initial capital of about $NZ150 billion to promote sustainable development in the region.

Attribution: Ministerial release.

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New visa to keep NZ competitive in international student market

Tertiary Education, Skills & Employment Minister Steven Joyce and Immigration Minister Michael Woodhouse announced a new student visa on Friday, saying it was designed to make New Zealand more competitive for retaining & attracting top international students.

Their release indicated it was introduced to catch up with competing countries which had moved ahead of New Zealand.

The ministers said: “The pathway student visa will allow international students to undertake a pathway of up to 3 consecutive programmes of study with selected education providers. A pathway can be offered by a single education provider or in partnership with other selected education providers. They will be valid for a maximum of 5 years.”

An 18-month pilot programme will start on 7 December, covering 500 primary, secondary & tertiary institutions.

Figures released this month showed the number of international students studying in New Zealand on a student visa went up by 16% in the 2014-15 financial year to 84,856.

Mr Joyce said: “The industry & Government believe pathway student visas will help retain more international students and make New Zealand more competitive with countries such as Australia which already offer pathway programmes.

“The international education industry is already worth $2.85 billion in foreign exchange each year and pathway student visas are an important initiative that will help us in our goal to double the value of international education to New Zealand by 2025.”

Attribution: Ministerial release.

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Propbd on Q T27Oct15 – Fletcher wins whole convention centre job, Metlife says no to Manukau golfcourse, 2 Goodman sales, tourist spendup

Fletcher wins convention centre & hotel contract
Metlifecare turns down Manukau golfcourse opportunity
Goodman sells 2 Addington buildings
Foreign tourists spend $1.7 billion more

Fletcher wins convention centre & hotel contract

SkyCity Entertainment Group Ltd has appointed The Fletcher Construction Co Ltd to build the NZ International Convention Centre & a 5-star hotel beside it, on the Hobson-Nelson Sts block in Auckland (pictured).

SkyCity chief executive Nigel Morrison said today the company had agreed the terms of a binding $477 million contract with Fletcher Construction Company Ltd to build & complete the design of the centre & 1327 parking spaces under it, the 5-star 300-room Hobson St hotel and the retail laneway linking the 2 streets.

He said the parties were confident work could begin by Christmas.

Metlifecare turns down Manukau golfcourse opportunity

Metlifecare Ltd has decided against buying a 5.5ha site on the Manukau golfcourse from Fletcher Residential Ltd for a retirement village.

Chief executive Alan Edwards told Metlifecare’s annual meeting today: “After an extensive review, the company has determined that the proposed project did not meet Metlifecare’s key risk/return thresholds & capital allocation criteria.”

He said the company was still progressing its due diligence investigations into the 3ha site in McClymonts Rd, Albany, and its resource consent for 5ha at the Peninsula golfcourse, Red Beach.

“Investigations continue on possible acquisitions of other sites in the targeted areas, primarily Auckland, Bay of Plenty & Hamilton,” he said.

Goodman sells 2 Addington buildings

The Goodman Property Trust has sold 2 Christchurch buildings as part of its asset recycling programme. Local investors have bought the amenity & IAG buildings at 12 & 14 Show Place in Addington for $33.2 million. Settlement is scheduled for 25 November.

Trust manager Goodman (NZ) Ltd’s chief financial officer, Andy Eakin, said today: “Ongoing asset sales are currently the preferred source of funding for new development activity. It’s a successful & sustainable approach that is improving the cash earnings of the trust while enhancing an already high quality property portfolio.”

Earlier story:
28 August 2015: Goodman puts 5 Christchurch buildings on market

Foreign tourists spend $1.7 billion more

Statistics NZ said today continued growth in visitor numbers from Asia & North America contributed to a record $1.7 billion increase in international tourist spending in the year to March.

2.95 million overseas visitors came to New Zealand in the March year. 6 months on, annual arrivals had topped 3 million.
The number of international visitors rose 7.1% and they spent 17.1% more – $11.8 billion – in the March year after a 4.5% increase the previous year.

Statistics NZ’s Tourism satellite account 2015 showed domestic tourism spending up 6.3% to $18.1 billion and the total up 10.3% to $29.8 billion, following a 4% increase the previous year.

Link: Tourism satellite account

Attribution: Company releases, Statistics NZ.

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Judge delivers the Janet & John of government practice: Tell first, withhold second

Trade Minister Tim Groser knows the Trans Pacific Partnership agreement so well he could have ticked a few paragraphs to show anti-TPP campaigner Jane Kelsey without upsetting 11 trading partners.

After all, once the agreement was finalised a week ago, Prime Minister John Key felt at liberty to explain that some aspects of the agreement opponents had been criticising wouldn’t be as damaging as they’d made out: “Many concerns raised previously about TPP are not reflected in the final agreement. For example, consumers will not pay more for subsidised medicines as a result of TPP and the Pharmac model will not change.”

He cited other sections of the agreement too. How, then, could Mr Groser hope to keep the whole document under wraps (minus the lines he & Mr Key chose to slip out) with a blanket refusal to release under the Official Information Act?

Auckland University law professor Kelsey & 7 other applicants sent a simple message to the High Court, in a request for judicial review: “Let’s see it.”

And Justice David Collins, 6 years the solicitor-general before he was appointed a judge in 2012, agreed – or went so far as to tell Mr Groser he would have to provide good reasons to refuse to provide information.

Justice Collins took Mr Groser back to the genesis of the Official Information Act 1982, saying Mr Groser and the Ministry of Foreign Affairs & Trade’s approach had been akin to that of the Official Secrets Act, which it replaced.

The Chief Ombudsman, Dame Beverley Wakem, followed the same line as the minister in her determination on Professor Kelsey’s complaint: “The considerations favouring disclosure must outweigh the interest in withholding. If the competing considerations are so equally balanced that the decision-maker (and Ombudsman on review) is in 2 minds as to whether the information should be disclosed in the public interest, notwithstanding any harm to interests protected under section 9(2), then the information should be withheld.”

As the judge made clear, wrong decade: Both minister & ombudsman are dwelling under the Official Secrets Act.

However, that doesn’t mean Professor Kelsey will be swamped with truckloads of documents. Justice Collins quashed Mr Groser’s blanket refusal decision today and gave the parties 6 months to make progress toward information release.

That would still beat full publication, not expected to occur until it’s signed and tabled in Parliament with a national interest analysis. It’s not expected to come into force for 18-24 months.

Link: Kelsey v the Minister of Trade, decision

Attribution: Judicial review decision.

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TPP finalised, and now what?

The TPP (Trans Pacific Partnership) agreement between 12 countries was finalised early on Tuesday morning NZ time after 6 years of talks but remains a confidential document, with leaks of selected detail now coming from the parties instead of outsiders.

The next step is to sign it. The Washington Post said US President Barack Obama “must wait 90 days after the TPP agreement is completed before he signs it and sends it to Congress for a vote, and the text of the accord must be made public for at least 60 of those days.”

NZ Prime Minister John Key didn’t go into release specifics, but said: “New Zealand supports the release of the text before it is signed by TPP governments, but these arrangements are yet to be finalised. TPP is expected to come into force within 2 years, once countries have completed their domestic legislative procedures.”

Sharp US newsletter Agora Financial, describing the agreement as “the massive crony-capitalist giveaway – er, ‘trade agreement’ – noted that only 5 of the TPP’s 29 chapters cover trade. “The rest cover labour, the environment, agriculture, medicine, the internet, human rights, intellectual property rights: A butterfly can hardly flap its wings without coming under the auspices of the TPP.”

Mr Key referred yesterday to one issue which has been a major bugbear for opponents, and which he hasn’t tried to defuse before – corporates suing governments: “Some people are concerned that ISDS (investor-state dispute settlement) provisions give foreign investors the right to seek compensation from the NZ Government, simply for introducing laws or policies they claim have hurt their investments. This is not correct. To succeed, an ISDS case has to show an actual breach of the TPP investment obligations and the hurdle for this is high. If the NZ Government acts in good faith, for legitimate public policy reasons, follows a proper process and doesn’t discriminate on the basis of nationality, then the risk of an ISDS case being taken – let alone being successful – is very low. New Zealand has had ISDS provisions in international agreements, including the China free trade agreement, going back 27 years and no case has ever been taken against it.”

The Government said the partnership agreement would “contribute at least $2.7 billion to our economy by 2030 and save our exporters around $259 million/year in tariffs”.

Australian consumer organisation Choice said its government should release the text before signing the agreement. Campaigns manager Erin Turner said claims that TPP would be transformational, delivering huge benefits for the citizens of nations involved, “have been made with no independent assessment and no cost:benefit analysis of the agreement for Australia. Australia has no need to rush. The US will spend months assessing this new trade deal and we should do the same. We need a full cost:benefit analysis conducted by the Productivity Commission as well as a chance for genuine public consultation on the impact of the new agreement.”

Links: Specific outcomes for industry sectors
Government Q&A

Attribution: Government & Choice release, Agora Financial.

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Trade agenda updated

Economic Development Minister Steven Joyce & Trade Minister Tim Groser said strengthening key market relationships and diversifying into new markets were a major theme for the update of the export markets workstream of the Government’s business growth agenda, released yesterday.

Their strategy to lift linkages for New Zealand companies around the Pacific Rim and into Europe will target existing relationships in South-east Asia, China & Latin America, and advancing a free trade agreement with the European Union.

They want to develop a new partnership with the Pacific Alliance countries in South America, launch the European negotiation, negotiate an upgrade of the free trade agreement with China and seeking a successful conclusion to the Trans Pacific Partnership negotiations.

They said a key initiative was to lay out a longer-term roadmap for trade negotiations. Mr Groser said this would bring in other key markets like India & the Gulf states.

Link: Building export markets paper

Attribution: Ministerial release.

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