Yes Matt, I think we are headed for a nasty recession. The only thing holding it back at the moment are milk fat prices. But there is a serious loss of confidence in several major areas of the economy, and I predict investment will plummet in 2008. Add into that extreme interest rates and a shaky Chinese economy, and things are looking nasty. If the Chinese have a crisis – due to internal factors (peasant farmers), inflation problems or other economic dislocations, then NZ is in for a very unpleasant period.

I wonder if Michael Cullen will take the credit for that, too?

Rudd is an economic conservative lefty, his mirror imaging of Howards economics is legendary.

Take this to the bank, any AU govt that pays one dollar of “carbon fines” to Eastern Europe or anyone else, is dog tucker.

Tho expect him to pretend a lot for the comrades.

The money is there for you right now, time to back your US$ dribble-down call.
It’s not a bad one.

Following the Aussie up from 88.4 to now with a number of contracts is a profit of AU$47k.

95 beckons.

Most socialist wankers don’t like the profits I make while refusing to trade and take the downside risk themselves.
They want profit without risk.
Guess that’s socialism in a sentence.

New roads, rail, power stations etc. Also applying tax credits for machinery purchases would help.

However other younger people could form their own party and insist on their manifesto housing policy being adopted before supporting any coalition government. Perhaps the “House” Party. The new hippies.

The RB has suggested adding a surcharge to mortgage cost (this would allow the OCR to fall while maintaining an anti-inflationary domestic consumption policy) and reducing the amount of interest income that can be taxed (using 2% – as a standard inflation adjusted figure allowance) so more people would still save despite the lower OCR rate. The resulting lower dollar is initially inflationary but higher import costs would reduce consumption and thus also the BOP deficit.

I support this approach. A benefit is that it allows business greater profitability in the international market (more favourable dollar value) and also lower borrowing costs. I would go further and reduce all tax on interest income to one low rate 20%.

Originally the idea of a surcharge on mortgages was posed as one for existing mortgages as well. I would apply them only to new fixed rate arrangements and floating mortgages. The irony is that with this occuring in co-ordination with a low OCR, the actual mortgage costs to the public need not increase – but this device allows the lower OCR to take down the currency value.

whoar..!

which ‘hall of delusion’ does he reside in..?

and how can his words have any credibility..?..if/when he excludes these realities..?

they make everything he says a nonsense..

phil(whoar.co.nz)

Picking the 90 day bill rate to fall to 6% in 2009 seems a bit steep to me. If thats the case the presenter must have expected NZ economic growth to bail over the next two years – that would involve at least a 200 basis point cut in the OCR over this time. It’s entirely possible, but I think issues stemming from global inflation will probably keep rates up for a little while yet.

“Mining in Australia is only 7% of GDP and 2% of their workforce so incorrect to credit the minerals boom for their economic growth”

Huh, is this only looking at the mining factor in GDP statistics? Agriculture is only just over 4% of our ‘GDP’ by that measure. I think the important thing about an export industry is that it injects income into the economy, something which heads around the circular flow helping growth around the economy.

Or do you want a stagnating economy going no where with the best and brightest heading offshore leaving the old and infirm and growing numbers of baby boomers who will consume huge amounts of super and medicare

Of course we know what the Socialists want Maximum numbers depending on them for at least part of their income (WFF etc) and those outside the welfare cage of dependency being bleed dry whilst being laughed at and scorned for their efforts.

Those in the welfare cage too frightened NOT to vote for the Soicialists lest they lose the comfort blanket that encircles them

Outside minerals, AU’s high value income stream is not mostly from elaborately transformed manufactured goods but from financial services, educational services, technical services sectors.
There is nothing stopping NZ participating fully in this part of the boom.

The mining industry has always been the driver in WA and QLD. However, agriculture used to nearly match it.

The NZ economic system seems to do 1st world ok on most infrastructure, but it needs to match AU in that slippery concept of “attractiveness”. The dead hand of socialism is a feeling westward bound Kiwi’s know well and it doesn’t appear in any OECD report.

The point by gd is well made, you want a booming economy, slash and burn taxes, accept the inflation adjustment and get on with it.

I shake my head at the current govt.

As for minerals, NZ is actually loaded with them. It’s just too hard to get consents etc. Here’s a thought / fact though. An average sized mine is about the same size as an average sized farm. The farm will directly support 1 or 2 families over its long life span. The mine will directly support dozens, if not hundreds, of families over its much shorter life span.

Both the farm and the mine take up the same area of land and cause similar enviro impacts (loss of natural habitat. assuming each controls wastes, which mines do today). In fact the mine is better because it reverts once the mine is at an end.

The mine is significantly superior to the farm on all measures.

The ONE perception that prevents greater mining activity is that an operating mine looks dirty whereas an operating farm looks clean with its pretty green grass. Both are industrial sites.

2c (I am an ex-geo/miner)

NZ exports are simply not high-value by comparison with many of our trade partners but we can’t magically create a different nation, we have to add-value to what we have and open more and more markets. NZ has low trade-intensity, circa 30 per cent of GDP, I agree that the goal is increasing this which is why recent achievements in opening up new trade arrangements are so significant.

My point was that the Australian economy is more diverse and currently benefiting from strong regional demand for a commodity for which they are the majority supplier. If you think that’s irrelevant to the discussion it’s only because you’ve already made up your mind. NZ economic system, your words not mine, is world class by almost any and every measure. What David’s presenter talked about was its performance. In fact, NZ GDP growth has been stronger than Aust/OECD averages for a while now but we’re still behind compared with historical standards. I agree emigration to Australia is something worth considering but lets not forget NZ has net migration and that migrants almost always have more skills than the domestic workforce therefore we’re not losing skills even if we’re not attracting or retaining as many as we might wish for.

That way they don’t have to confront anything about the mineral-less NZ economic system.

I would have interpreted a 7% contribution to GDP for only 2% of the workforce something that could not be dismissed as a contributor to growth as easily as the presenter did.