Ah yes David, but lets not forget that under this government, butter and chocolate will be banned so that when this removed, the cost will be $30.98 or an increase of only 0.005%! Reserve bank target met!
David thanks for that. Last year I got the Society of Newspaper Designers conference in Boston, and the whole event was full of eye candy (excuse the pun) like this. Indeed imagery can be a very effective tool to communicate information. I wish our newspapers would give greater resources to their art departments to include more of this sort of stuff.
gd, considering that commodity prices in NZ as a trading nation are at the whim of international pressures, adding to that the 20% increase of fuel, how would YOU control these – go on pre tell – that is without soviet styled socialiast or muldoon price fixing?
What you do is keep 1999 tax thresholds in place for 8-9 years and then people are required to vote for middle class welfare so they can afford to feed their children. Simple really, create the environment where people are poor then offer them assistance so they vote for you – brilliant!
Hold on a second
3 of the 9 products are dairy
if one third of your shopping trolley is made up of dairy you wont have to worry about food prices too long anyway
the three dairy products made up over one third of last years price
hardly a fair sample
dairy prices have increased substantially over the last year and we all know that
this is just reinforcing how much Fonterra is screwing us over
shouldnt you be calling for more balanced reporting here???
I thought you hated unbalanced reporting?
income levels and international commodity prices are determined by a variety of factors, however political ideology and assumptions of NZ middle class welfare are not among these.
If we had had a tax cut of $20 a week 1,2,3 budgets ago, how would this have cushioned you against an 80% increase on Butter or an 20% increase on petrol. I see that crude oil closed at just below $114 USD today – your tax cut 3 years ago or so would not have covered that.
Why on earth do you suggest a tax cut of $20 a week? This government is spending an additional 22Bil a year on the state service and I’m darned if I know where. 6.5Bil extra in health and the waiting list has doubled, 7Bil more on education and the PM has admitted that 40% of kids coming out of schools with less quals than needed to get into productive employment etc.
Had Cullen and co not set up permanent residence around public toilets flushing $100 bills 24×7 we could have virtually abolished income tax altogether. What a help that would be for the poor people – and after all, isn’t that what you socialists are concerned about?
this is just reinforcing how much Fonterra is screwing us over
Really? How? Fonterra is a business in place to maximise it’s returns to its shareholders. I don’t think screwing anyone over is anywhere on their manifesto. Our dairy products are in huge demand overseas so their price goes up. Should we all get special measures because we live near where a product is produced?
I was more interested in why the block of chocolate has only gone up 14% in price compared to milk(25%), cheese(66%) and butter (81%). Is this simply because of the foreign demand for our cheese and butter (not so much our milk) has increased? (I guess cheese and butter are more exportable than milk due to their shelf lifes)
Also, these price increases are nothing compared to what’s going to happen when the dollar collapses and other countries buying power increases dramatically. Then cheese and butter prices will really go through the roof!
Paul Sorry that you missed my point which is that Clark and Cullen have been bestriding the NZ political stage for 9 years telling us how they are in charge and in command.
The reality as you so correctly stated is they are full of Bullshit.
NZ politicans have FA control over most of the economic climate Certainly over the big picture stuff
But instead of being consistent and stating the truth your lying little arsehole Socialist mates attempt to con those of us with an economic brain and say that they and they alone are responsible for the good stuff and not responsible for the bad stuff.,
And thats what pisses me off and why I enjoy dissing them so much
They need a truth brain replacement and I would gladly do the operation and without anesthetic
Gee – wow – a $20/week tax cut three budgets ago…. Who’s the Cullen parrot then ?
Look you do raise one very valid issue. Pay rises are based on a percentage. Therefore a person earning $20K a year receiving a massive (MP type level) 10% pay rise would only get an additional $2,000/year – hardly worth having so lets cut all increases in the minimum wage….
But wait… a person on $200K getting an MP level pay rise of 10% would get an additional $20K a year – oh dear…
So like tax cuts, which should benefit lowest earners (if you are an ideological idiot with a brain the size of a pea) then surely pay rises must also be structured the same way…. Hey I’ve got an idea – why not make pay rises a set amount for everybody – why not pay all people the same !
get a life Paul, you glorious Labour parties polices are hurting NZ workers – their ideology over common sense is a crock and no amount of spin can hide the fact they have lost the plot in their attempt to turn NZ into a country of Labour party policy dependant poor people who have no choice but to vote for welfare so they can afford to live.
“Really? How? Fonterra is a business in place to maximise it’s returns to its shareholders. I don’t think screwing anyone over is anywhere on their manifesto. Our dairy products are in huge demand overseas so their price goes up. Should we all get special measures because we live near where a product is produced?
yes we should
ever since I can remember we have been told to buy NZ made and support the local farmer
why should they return the favour
When I was a kid Woolworths in Dunedin brought in milk from outside Otago and there was a huge uproar
“support the local farmers” yada yada ya
so Woolworths stopped taking outside Otago milk
that same year we had to pay 3 times as much for cabages as usual because the local growers sent them to Auckland due to a shortage
customers are asked to be loyal so why are the producers?
Sam, in general I agree. Most of the time when shopping I see people load their trolleys with useless junk, frozen foods and so on. By making intelligent choices and thinking about means to cut your own expenditure you can live almost and possibly exactly as before and much, much cheaper. All it takes is a bit of thought and a bit of planning.
Still, that’s no excuse for the constant rise in prices and the inflation we are seeing – those are the types of things we need good, strategic governence to address. But people can lighten the impact on their pocket by acting responsibly.
Deborah: Interesting blog but as you admitted, not an apples to apples comparison. Even the $2 difference in prices you mention could be explained by NZ’s geographical isolation. I’d be very interested to know the freight costs to europe from Australia compared to NZ.
Interesting link:Australia to benefit from cheese price stability
What really frustrates me is when people take the phrase “record profit” and don’t see any of the suffering that has gone on for many farmers for a long time. Of course you have to make hay while the sun shines, that’s the nature of business. If they were ripping people off as badly as you want us to believe then there is room for opposition to come onboard and compete with them.
Deborah, where is the competition coming for NZ cheeses in NZ? Not NZ, so any competing cheese has to be imported into NZ which would add significantly to the price. Going the other way to Australia there are plenty of Australian cheeses to compete with and a bigger market so discounts would apply as well. If NZ couldn’t compete on price with Australian cheeses then they wouldn’t be there. I’m not saying I fully understand where the costs come from, I’m just saying here are some examples and lets not say that they’re ripping us off when it is a free market. If Fonterra is a monopoly and is price fixing then that is the governments responsibility.
Of course, there’s no GST on food in Australia. If I take the GST content out of the NZ price, I still get a difference of $2.20 between (NZD) the price that I would pay for a 1kg block of Mainland Tasty cheese, made in NZ and transported to Australia and sold in Australia, and the price I would pay for a 1kg block of Mainland Tasty cheese, made and sold in NZ. You would think that the transport costs between NZ and Australia would increase the price paid in Australia, but alas, it doesn’t. Instead, a 1kg block of Mainland Tasty cheese is about 15% cheaper in Australia than it is in NZ, even when GST is taken into account.
Fonterra’s monopoly position sounds like a plausible explanation for the difference to me too, labrator. Next time I’m in the supermarket, I’ll try to get some prices on other brands of cheese here. I have noticed that there are far more suppliers here, so there is much more competition, keeping prices down.
It does seem that NZ consumers are not benefitting from the formation of Fonterra, even if dairy farmers are.
Odd to find I am on Labour’s side here but they’re right – the price has gone up internationally due to a number of factors (especially those disgusting biofuel subsidies) and there is sodall we can do about it. In fact, we should be celebrating – think of all that lovely money pouring into NZ for our dairy products while the rest of the world tanks. We can only win in the long term.
However, the fact that we have the only western government in the world that was, until now, not committed to tax cuts has been a huge hinderance over the last 9 year when (if you’ll pardon the pun) we should have been creaming it.
Funny, the trolley is full with dairy products – the price of which have been driven up by increasing global demand. All Labour’s fault of course.
If you only calculate bread, weet-bix, flour and coffee then the price has gone up 10% in one year. That is pretty significant in terms of a price increase and you can’t say that any of the prices have gone down. This is also against our record exchange rate making imports easy. Inflation is bad and is as a result of fluctuating prices, up and down, and the government has control over how we react to this. The Reserve Bank Act is government legislation and Cullen pointed out that he can step in and take emergency measures a while back. So yes, inflation is the sitting governments responsibility and with 9 years of possible legislative changes before them, it is the Labour governments fault. Why have an inflation target if you have to admit you have no way of influencing it?
Oh, don’t worry, when Labour stops attacking everyone who’s against them, telling us how to lives our lives, and generally doing everything they can to ignore the real issues, they’ll get around to the economy…then we’ll be royally fucked.
“your lying little arsehole Socialist mates” stunning political analysis there, inline for an overseas diplomatic post with those sort of comments. Chair of political studies at Harvard?
Given that the majority of the pressures upwards on out good and services in NZ are foreign (despite the fact they are NZ companies) HOW would things be different under national? Come on, this is very low level analysis.
The market prices according to what the market can bear and if an 80% increase in the price of butter is acceptable to the market then that is the price.
It is stunning if not astounding that those of the right whom decry the virtues of the lassiez faire markets are suddenly having a go at the government for the ills of the market place. Either the govt has bugger all to do with the prices fixed on the free international market or it doesn’t you can’t blame them for things out of their control.
Whilst international commodity prices have a lot to do with what we pay domestically dont forget that labour costs and the mountain of regulatory compliance that this government has dumped on business is being passed onto consumers by way of increased prices.
This is something that the government does have some control over.
Paul Geez again you miss the point ITS ABOUT BEING CONSISTENT..
Your mates claim credit for the good things that happen that are international in cause and then run a mile and blame dolly for the bad things.
I want to see consistncey and truth and thats from ALL politicans. I have railed and ranted against the RIGHT and will continue to do so.
I want to see good governance .
I dont see good governance.
Good governance aint rocket science Google it and you will see the same principles set out time and again by respected authors and commentators.
I want to see these principles applied in all sectors across our society
Reason Good Governance is good business Good business makes for a good society
Again you can Google studies on the effects of good governance across various sectors.
For Example Prof Michael Adams Sydney Uni study PLCs that are seen to have good governance have a share price premiun of 15% to 20%.
I belabour this point all the time but it is worth mentioning. People who often cannot afford decent fresh food from the supermarkets often have considerable land available to them for growing veges in the form of large sections. Our fresh homegrown vegetables are a wonderful addition to our larder and save us money. we have been giving away tomaotes this season and have rhubarb plants that grow like weeds – so much so that the neighbours come over and get some as we don’t use it all ourselves. I would much rather see some corn growing (or winter veges at this time of year) than weeds, long grass and rusting cars.
Food prices are as much of a mystery as flight prices.
Living in the Arabian desert I am surprised and delighted to see a range of NZ produce in my local supermarket and even NZ apples (packed, again mysteriously, in a French carton) in the ‘dairy’ on the ground floor of my apartment building.
The NZ meat and fruit I can buy at the supermarket are significantly cheaper than they are in NZ. Anchor cheese, for example, is about 25% of the price I paid in my former local Foodtown.
The relationship between food miles and retail price seems to be inversely proportional. How does THAT work?
Those bastards. All of 2-300 people voted for them at the last election and they get so much credit.
Correct Stagflation is that of low growth with high unemployment coupled with policies that are designed to halt this result in runaway inflation. Although growth has been relatively low, if it had been greater the Reserve Bank would have jumped in telling us that the economy was too ‘hot’ and put up interest earlier.
3.4% inflation as a result of high international commodity and resource prices is not runaway inflation.
Stagflation more correctly is defined as “perceived size of ones bollocks as the Stag of the group divided by the reality of the miniscule member resulting in the fallacy of ones poor phallus being common knowledge”
The joke is that there are mechanisms out of the control of the MPs that despite what they and you think they are capable of, is actually removed from reality.
Key would have done very little differently to safeguard against a mismanaged US economy (low US dollar) which along with supply has led to crude Oil spikes, or he would have had little influence in the mismanagement of US lending institutions through Sub Prime mortgages, which led to the collapse of a whole sector of the money market, which in turn has led to overflows into the mainstream markets globally. I doubt very much if Key was able to set the price of Cheese on the international market without adversely pissing off the farmers.
You people don’t get out or look around very much do you. Every day I scan (as my role as a designer) the front pages of dozens of international newspapers (http://www.newseum.org/todaysfrontpages) and all of the concerns that we Kiwis are facing are global in their dimension and international in their causes.
Why not remove GST from essentials, like civilised countries do? And by essentials I mean non-processed foodstuffs, children’s clothing/footwear, medical expenses and rates, which is a tax on a tax after all. Sure the “rich” will get the benefit of that as well, but at least there will be an incentive for the lower-paid to stop stuffing their faces with KFC.
Apparently NZ supplies 23% of the worlds diary needs and as the population of NZ is only 4 million, I imagine that as a percentage of this 23% we barely register. Hence the high price for not being able to get into economies of scale, also any competition has to ship their product too NZ as well.
HOW would things be different under national? Come on, this is very low level analysis.
Why does it need to be National fixing this issue? Is Labour admiting that it can’t change anything to do with inflation? If so why does Cullen say that tax cuts are inflationary? Either he has admitted he has no control over inflation or tax cuts aren’t inflationary. The government controls legislation responsible for controlling inflation in the Reserve Bank Act. This is very old news. Cullen has said he has emergency powers to do something about it but now he has no control? There are many ways of dealing with inflation but Labour has ignored the fact there is a problem let alone put into place a solution. One way of reducing inflation is to have more immigrants to relieve pressure on the labour market so we don’t have labour prices sky rocket. Raising the youth minimum wage was inflationary, so since that came from the Greens, I guess Labour is right when it says it has no control over inflation! Does this help you understand why 1% inflation is a good target?
Growing your own vegies…. yes, it can be done. But many people may not have the skills to do so. They tend to be skills that are passed from one generation to the next, and if your own parents and grandparents weren’t gardeners, then chances are you really don’t even know how to go about starting a garden. Sure, you can go learn it from books, but that implies access to public libraries, and the skills to use them.
Stephanie Alexander has started an innovative project in a inner city Melbourne school, growing a kitchen garden, and using the food in school cooking lessons.
Her idea was to get a school to establish a kitchen garden, where the children would grow fruit and vegetables, and then they would use that produce in a school kitchen, cooking the food they had grown. They would learn how to garden and how to cook, and along the way, they would learn to eat good, fresh food.
She had the merest inkling of an idea. But the principal and staff, and the community of Collingwood School in Melbourne picked up her idea, and didn’t just run with it – they exploded out of the starting blocks, and with her help, and the help of dedicated staff and generous volunteers and donors, the primary school students learned how to garden, how to cook, how to enjoy real food. The children love it, and they take their gardening and cooking knowledge home. This is real education about good food. The Kitchen Garden Project has spread beyond Collingwood School; it is now being seeded at about 190 schools nationwide.
I might go and get some of the last remaining spuds and that lamb in the freezer, good night for a roast.
My dad taught me to grown my own vegies and the small plot we have in the garden supplies at differing times of the year:
Garlic, Onions, Peas, Corn, Potatoes, Cabbage, Lettuce, Broccoli, Leeks, Rhubarb, Strawberries, Cauliflower, yams, asparagus, carrots but to name a few.
“Why does it need to be National fixing this issue” Because all the ills of the world at the moment are Labours problem apparently, so I was wondering how wonderfully different it would have been under national.
Reserve bank ACT yeah, but isn’t that left wing interventionism.
Relieve pressures on the labour market, hang on I thought we were underpaid now we are over paid, come back from Australia everyone we are over paid, the labour pressures are too great. Raising the minimum wage may have been inflationary, but I would love to know how much that actually contributed to the overall rate (0.0000001%?), Nationals nirvana promised lands tax cuts are going to be inflationary too but these are essential? If the majority of those leaving for OZ are the youngest and brightest then raising the minimum youth rate was a good thing.
Nationals nirvana promised lands tax cuts are going to be inflationary
So the government can control inflation somehow! If tax cuts are inflationary, the answer is simple, increase taxes which would be deflationary obviously. Paul your remarks are generally incendiary and yet some how you expect rational responses all the time yet you are anything but rational in how you structure your questions.
I mentioned that the Government has legislative power over our inflation protection mechanism and you’ve come back with “but isn’t that left wing interventionism”. 9 years in power and nothing has been changed, that’s lack of intervention when it is required. So by not intervening when it needed it, it’s okay because Labour was worried about being called interventionists?
Who said we were underpaid? The Unions did and they’re striving to drive up pay which is inflationary which means that pay will need to go up again to cover the costs of the pay rises etc etc. You were asking for a reason to target inflation at 1% the other day. Do you need more reasons? The food inflation alone is really hurting poor people.
And no, all the worlds problems aren’t Labours fault, you’re saying that not me. However, as the sitting government, they cannot sit there and take the credit for a global economic boom but when prices start affecting all the little people (that vote for them) still go and honestly say that it’s global economics and we have no control over it. That is having your cake and eating it too. There have been a number of suggestions here as to how to reduce inflation but we haven’t seen one from the Labour government, which makes inflation and the fighting it Labour’s problem. I haven’t said that they can’t do it but to state that National couldn’t do anything about it is a fallacy.
Food prices, let’s look at cheese. This product was not made yesterday or last week. Cheese take time to mature. Fonterra is ripping us off for a product made 6 to 18 months ago!
Now the GST has increased by 86 cents and the Govt don’t mind one bit.
Now the Socialist workings:
You have a pan of water and put a frog in it. The frog don’t mind. Over a period of say 9 years you very slowly turn the heat up. The frog stays, gets agitated and pissed of, but stays. The frog gets used to the heat.
Chuck a frog into hot water and it will jump out!
Go figure why the taxpayer has the shits with this Govt.
Labrator – carrying on from the earlier thread on inflation. It’s a real concern that there seems to be no recognition of the issue and that action needs to be taken quickly. A variable rate of GST would simply take too long to implement, as immediate action is needed. The alternative is to increase GST across the board but offset with tax cuts. At the same time I would reverse the tax break that foreign investors get, immediately, and signal an additional tax on foreign deposits to apply before the end of the year (this is only really needed while our OCR is way above anyone else’s). This should reduce the exchange rate but not by the severe drop that will occur if the OCR is reduced. Doing this would see prices increase across the board so under the current reserve bank rules there would be no chance of reducing the OCR. So while the OCR is high some means of encouraging investment (in productivity and to support export opportunties) needs to be implemented, but I have no faith in a government department picking winners and our banking system (focussed on real estate) can’t do it so maybe there’s scope for a special offset for banks that can propose a development finance programme for industry.
Deborah – You are right – growing your own food is a skill to be learned. But saying that, you can buy seedlings or seeds and have a go. It is not hard, but requires some hard work…..and that is the problem. Too hard.
Longbow – “where do you get $1.38 sliced bread and $3.25 milk (2L?)” Not sure where you live of course, but Pak N Slave Lower Hutt sells bread for less than a $dollar a loaf. The brown bread is not too bad. I often buy it. Milk – about $3.50ish a two litre bottle. I was at the Mount last week and the local supermarket there was selling it for over $4 a two litre bottle. My local diary has milk for $3.69 which is some of the cheapest around here.
Fred, we’re definitely thinking the same way and those are some suggestions worth looking at. I certainly agree with raising GST across the board and if possible cutting it for essential items. This has the added benefit of encouraging savings and debt repayment. The Reserve Bank Act is so one dimensional it is scary and requires legislation to change. A tax on foreign investors to allow our exchange rate to settle before going to a basket of currencies tied to our major trading partners is a good idea. I’ve long thought that floating a currency as small as ours is a recipe for artifical outside interference, of course the counter argument is that we’re no longer in charge of our currency but I think it’s obvious to see we never were.
All in all there are things that can be done but they’re drastic and haven’t been done before in NZ. So rather than rocking the boat, it seems the sitting government is unlikely to make any changes, especially before an election. If National gets in, they’d probably have to wait for the crash before they would think about doing anything but they’re certainly not going to tell Labour how to do it before the election. So, politics is getting in the way of actually protecting the people at most risk of getting into real trouble over the coming 2 years. Oddly, the only word I hear ringing in my ears is “diddums” but that just confirms our current state of politics, sad.
Steve GST on Cheese is not the reason Cheese is so bloody expensive.
Do not link rapidly rising international commodity prices on ‘socialists’. Firstly Labour are not Socialists (or do I start calling ACT and National, Nationalist Fascists – thats how inaccurate yours and everyone’s slurs of Labour are).
Secondly if this was a soviet styled socialist govt (this seems to be the most feared and hated type) then prices would have been fixed artificially, and funny the last govt in NZ to do that was National under Piggy, so cut the crap out.
Thirdly, to compete in an international MARKET and congratulate the farmers when things go well, and then turn on the govt when things go bad is a very disingenuous way to address the issues.
You may as well be talking about flower arranging as that is about how relevant to the argument your analysis was.
Brian and Deborah – growing vegetables is a bit of a skill, but it takes nothing to learn, and it’s a basic human trait to try to learn something. And thanks for the inspiration, my taties and other veggies were brilliant with tonight’s dinner.
..and then turn on the govt when things go bad is a very disingenuous way to address the issues
The only turning going on here is the blind eye of the government to the problem of rapid increases in our inflation figures. I don’t care which government fixes it but this government has taken all the credit for a global economic boom and said it was their policy that caused this and now things are going a little sour they don’t know what to do and are saying they’re not in control of that. Now you’re saying that by discussing it and pointing these things out to people we’re turning on them? I don’t follow your rational.
We can go on and on about what the difference is between socialism and capitalism and roll out examples of right wing Labour behaviour and left wing National behaviour or we could just focus on the issue that the current Labour government has no response to inflation figures and has ignored warnings about it during their long reign. Maybe they will tomorrow but today they don’t.
Firstly Labour are not Socialists (or do I start calling ACT and National, Nationalist Fascists – thats how inaccurate yours and everyone’s slurs of Labour are).
Have we not seen what Socialists do in the last 9 years?
Get a grip Paul, of course Labour are socialists. Helen would be proud of the term, in fact I bet we could find quotes from her where she says it.
But you are right, international commodity prices have nothing to do with Labour. Nor do our good economic fortunes, and to a large extent nor do our impending poor fortunes. Having said that, Labour have taken credit for all the good things, they must either admit they had no influence over those, or also accept blame for the bad things. Labour should, however, take the blame for creating an economy that is less resilient, and for squandering the opportunity that those great economic times provided, without improving the government service, without changing the nature of the economy, in fact, without investing any of that money in any meaningful way.