10 March 2006
Government Booms, Economy Busts
In a slowing economy, government spending will continue to boom. Wellington office blocks currently offer the best
returns in commercial property, and the state wage bill is rising by $1 billion per year. So the Reserve Bank has to
hold the line on interest rates, and they have, signalling it will be a while before rates come back.
Fortunately, the export sector can give a glimmer of hope with the exchange rate falling 10% in recent weeks, but the
Reserve Bank is determined to knock back the rest of New Zealanders' appetite for debt.
Household expenditure has been rising faster than household income for several years and it can't keep going. Over the
next 12 months, house prices should ease and business investment will slow. Farmers look for any excuse to pay more for
land and the fall in the dollar will likely be enough to keep farm values robust.
Everyone's a Winner
The great thing about success in a small country is that everyone can be part of it. My mum is in the same Invercargill
rest home as Sam Morgan's grandma.
Everyone's a Loser Often it's the small issues that tell the story. Timber processors in the south are fighting a battle
with bureaucracy on behalf of everyone who will build a house or a shed in the next 10 years. Someone, somewhere has
decided that all framing timber now has to be made by a machine rather than the traditional visual grading test, which
could cost up to $40,000. It's all extra costs to the consumer on top of the new extravagantly stupid Building Act.
However, the costs of the new stress test could force local sawmillers out of the framing timber market. Odd how the
proposed regulation is supported by big operators like Carters.
So the local sawmill operators have tried to find out why the traditional visual grading is no longer acceptable. It
turns out no one really knows. If houses were crumbling around us because of weak framing, that would be persuasive. A
few calls around local government building inspectors reveals that it's never been a problem. So this new requirement is
a solution looking for a problem. The Building Authority is digging in. When the requirement is irrational there is no
sensible way to defend it. But there seems to be no way of stopping it.
Dawn Raids On Again
Wednesday morning in Te Anau saw the first and maybe only dawn raids ever in Southland - at Takaro Lodge. Guests,
including the Vice-President of Disney Corporation, were disturbed by a large presence of police and immigration staff
who rounded up 12 alleged overstayers.
The staff concerned had been refused work permits and are now overstayers. But why were they refused work permits? It's
almost impossible to get staff for hospitality jobs in Queenstown, and all sorts of non-New Zealanders are getting work
permits to fill the gap. Takaro is isolated and its requirements specialised, and they just can't get any suitable
Takaro is setting out to establish itself as part of the "spa industry", where high net wealth individuals pay large
amounts of money to spend time on health and wellness. We need this tourism business and more like it. So did these
immigrants break all the rules, or is it a case of bureaucratic bumbling? I want some answers.