Q+A today – business and trade

On Q+A this morning:

Why is business feeling so gloomy? Surveys show business confidence has been persistently low since the Labour led Government took office. Corin Dann talks to Finance Minister Grant Robertson.

Plus, what could an NZ-EU Free Trade Agreement mean for you? And will European farmers give up some of the subsidies that make trade harder for our food producers? European Trade Commissioner Cecilia Malmstrom joins us.

Is synthetic food going to be safe?

There’s growing interest in things like fake meet – laboratory concocted food. It is seen as potentially a better alternative to meat to feed a growing world population.

But is is safe? I think it’s too soon to tell.

There was an interesting item about this in Q&A this morning.

The general rule is that the less processed food is the better it is for us. Our digestive systems have slowly evolved over hundreds of thousands of years, and are used to diverse diets of plants and meats.

The rapid change to processed foods is leading to problems like obesity and the proliferation of diseases like diabetes and heart problems.

A sudden switch to super processed foods would be very risky. It will take many years, perhaps decades, to prove whether it is safe and whether it is healthy.

And there’s this.

I presume she is alluding to patent protection of methods of food processing.  This raises serious issues about the potential control of food production by large multi-national companies.

What if companies suppress adverse information to protect their products and markets? That’s been done before (and is still being done).

What if large companies push their products via marketing to a gullible public when it could cause major health problems.

That’s being done already as well.

This probably won’t be much of a problem for me – I can keep running a few sheep, and other meats are likely to be available for yonks, as long as the Greens don’t take over the Government.

But the health of future generations may have some big things to deal with with food supply. The future of human existence could be at stake.

Back to the headline question – is synthetic food going to be safe? I don’t think anyone can answer that with anything close to certainty.

Q+A – interview with Jacinda Ardern

Ardern says they ‘will be’ the transformative government they promised.

It’s mostly a fairly general discussion with little of note revealed.

Ardern says that if a Labour Minister scandal comes up while Peters is acting PM she will handle any own party discipline.

Q+A: Minister of Health David Clark

On Q+A this morning Corin Dann will be interviewing Health Minister David Clark.

I hope there are things of substance to answer questions on. Some health issues have been deferred to committees, like the Mental Health Inquiry.

And while key spending decisions have probably been made they won’t be revealed until the budget in mid-May, unless Clark has been allowed to feed some information in advance (National used to pre-release a lot of budget information).

Clark will likely be asked about conflicting claims from Clark on the condition of Middlemore Hospital buildings, but is likely to be prepared with explanations, evasions or diversions.

The first segment was on general health delivery and funding. Apart from the announcement of new DHB board chairs replacing people moved on bt Clark it was all vague ‘wait-and-see’ as has become the norm for ministers pre-budget, with gentle indications that all promises may not be delivered on.

An a lot of parroted slogans.

Middlemore was glossed over.

The second segment is on mental health. When asked ‘when?’ he talks in generalities again. Wait for the inquiry to report back, again.

Asked if they can deliver on policies – “we will continue to roll out that policy” but more “that will be revealed in the budget”.

A lot of comments like “grappling with issues” and “seeking good advice” and “working through a process”.

Dunedin Hospital rebuild? An announcement is pending.  Perhaps it is imminent this time, but there has been quite a few deferred announcements on this. I’ve heard that something is indeed imminent, but until it goes public we will just have to remain sceptical.

Ardern interview on Russia

From an interview of Jacinda Ardern on Q & A:

Was it Russia?

Jacinda Ardern: Corin, I’ve been very clear in avoiding saying it was Russia.

But that doesn’t…will you actually say that Russia is responsible?

Jacinda Ardern: We are in exactly the same position as our allies, we stood up in the Hague and avoided saying it was Russia. We have been clear in our statements on this that we’re avoiding saying it was Russia. We’ve made sure the UK is clear on our position as well that we’re avoiding saying it was Russia.

Will you consider sanctions?

Jacinda Ardern: That’s something that we’re avoiding saying.

So you’re not ruling out the possibility of sanctions?

Jacinda Ardern: This is the purpose of why we’re staying in touch. We’re not ruling anything in or out. We are unequivocally equivocal.

If you consider Russia is responsible, why are you talking about a free trade deal?

Jacinda Ardern: We talk a lot. All the time. Many conversations.

So are we not doing a free trade deal with them? Winston says we are.

Jacinda Ardern: As I’ve pointed out in recent times and as He-Who-Shall-Not-Be-Named himself says, we’re avoiding saying we’re not doing a free trade deal with them and hinting that we will in the future.

So because of the attack you will not now do a free trade deal with Russia?

Jacinda Ardern: We’ll avoid saying that we won’t and hint that we will in the future.

Why was a Russia deal even in the coalition agreement?

Jacinda Ardern: At this point I’ll blither a bit and end it by avoiding saying it was Russia. Ask another question.

You said that Values were going to be a driving force in how you make your decisions. Why’d you put Russia in the coalition agreement?

Jacinda Ardern: We’re still going to obey the letter of the sanctions. We can just work around them.

The point is that that’s not the same as taking a principled stand. The Nats wanted an FTA – it didn’t want to put it on hold but it did, because of the whole principled stand and Values thing. You on the other hand agreed in the coalition agreement to put it back on the table.

Jacinda Ardern: I have to correct you there. They put the FTA on ice and applied travel sanctions but there was still trade. No-one has said that we would not apply the sanctions, but we’ll do the still trading bit and put the FTA back in the oven. The coalition agreement says “striving towards”. Here this means we’re sort-of not really maybe reheating it. Because we stand alongside our partners.

So you’re not saying they’re completely off the table? Or maybe you are saying that? It’s got me fucked.

Jacinda Ardern: Right now, I’m avoiding saying either way. Or both ways.

You would have heard the UK going WTF? Which is it?

Jacinda Ardern: The only point that He-Who-Shall-Not-Be-Named made is one that I will now describe as immaterial. I am here to make the point that I am avoiding saying it was Russia.

Are we prepared to sacrifice EU/UK trade deals to flirt with Russia?

Jacinda Ardern: I’ve consistently said that we say we prioritise the EU agreement but we don’t name them in the coalition agreement. Just Russia. Who we’re avoiding saying an FTA is off the table with. When we named Russia in the coalition agreement, and didn’t name the EU in that agreement we were not thinking at all about Russia. We were totally focused on the EU. We had not officially resumed FTA talks with Russia, just unofficially. And now I’m telling you we will hint about resuming them in the indeterminate future.

Have you spoken to Winston Peters ever about why he’s pumping for a Russia FTA? Especially when he always votes against FTAs? Did you ask? It seems very odd that Russia is specifically singled out as the one to spoon.

Jacinda Ardern: I’m very clear on the fact that he didn’t tell me a thing and in fact we haven’t even spoken at all in the past week so I’ll talk about fairness. Of course, I’ll avoid saying it was Russia.

Who sets foreign policy in your government?

Jacinda Ardern: Aah..errr…Wi..thee…Us! Collectively! Of course both of he-who-shall-not-be-named have a role to play. And myself. I’m playing a role now.

Winston’s staying all sorts of stuff that’s completely out of sync with you lot.

Jacinda Ardern: I would dispute that. The language has all involved double meanings so we can interpret it in a way that suits us and the Values we work around. Rather like the phrase “flying Emirates”. We have all consistently avoided saying Russia did it.

Winston’s been less hinty that it was the Russians than you.

Jacinda Ardern: At this point I would like to hint some more, without actually saying the Russians did it. That’s a simple statement of fact. Hope this clarifies.

From Full interview: Prime Minister Jacinda Ardern sits down with Corin Dann after a challenging week for her leadership – by Oligosomanigripnata, headed “A bit of paraphrasing” (as should have quickly become obvious).

Q+A – new poll plus Colmar Brunton interview

Q+A this morning will have the first Colmar brunton polls results since the election, plus an interview on Colmar’ Brunton’s changed methodology (which may make poll comparisons difficult):

We’ll have the results of our Colmar Brunton political poll – which political party will get an early Christmas present?

Jessica Mutch will also interview Jason Shoebridge – the CEO of Kantar Insights, the parent company of Colmar Brunton. He’ll talk about why Colmar Brunton has changed its methodology for its TVNZ political polling.

Colmar Brunton are now polling 50% mobile phones.

The poll with have some curiosity value.

  • National 46% (election 44.4%)
  • Labour 39% (election 36.9%)
  • NZ First 5% (election 7.2%)
  • Greens 7% (election 6.3%)
  • TOP 1% (election 2.4%)
  • Maori Party 1% (election 1.2%)
  • ACT NR (election 0.5%)

So an unusual situation where the leading party in Government remains the second most popular party by a clear margin.

NZ First should be concerned to see their support slipping.

They are rounded to the nearest % (more detailed results are usually published a few days later), hence no result for ACT here.

Is New Zealand heading in the right direction?

  • Right direction 51%
  • Wrong direction 26%
  • Don’t know 27%

Preferred Prime Minister:

  • Jacinda Ardern 37%
  • Bill English 28%
  • Winston Peters 5%

Not surprising to see Ardern ahead there. She was already doing well, and has been getting more media coverage.

Ardern on The Nation

Jacinda Ardern featured in an interview on The Nation this morning. She has successfully stepped up another notch or two in her leadership role, however like most politicians is adept at avoiding answering questions she doesn’t want to answer.

Notably Ardern indicated that the Labour policy on reducing immigration stands, meaning Winston Peters hasn’t got the major reductions he sought votes from.

From @TheNationNZ:

She says it will be an “active” government that won’t leave things to chance.

“There is synergy between those agreements” of the agreements with NZF and the Greens.

“I’m ambitious that we eradicate child poverty” expects families pkg will lift 10,000s of children out of poverty.

“You will see change in that area” on the minimum wage, raise to $16.50 as a first step.

“We need to get started pretty quickly” on Kiwibuild.

Where is the sweet spot on immigration? “Labour’s policy remains absolutely unchanged” by the negotiations.

Ardern says Labour wants to cease ongoing investment in irrigation scheme…

…but will leave existing irrigation arrangements in place.

Ardern says there will be a Climate Commission to guide the government, but not to bind them.

The climate change minister will not be in cabinet, but says it doesn’t devalue the position.

This will obviously be James Shaw.

“It’s for the Greens to explain why confidence and supply works for them” says Ardern.

Ardern says she’ll be reviewing petroleum block offers – it’s not where the future lies.

More when the interview and transcript is available.

Economist warning on global financial markets

ANZ economist Sharon Zollner was interviewed on Q+A on Sunday.

A stark warning came from ANZ Economist Sharon Zollner.

“I think it’s fair to say that some things are starting to smell a bit like 2007 out there in global financial market land”, she said.

Whilst she acknowledges there are “still plenty of tailwinds” to the so called ‘rock star economy’, she says, “a number of those tailwinds seem to be running out of puff.”

“Our major vulnerability, I’d say, is Auckland house prices – how stretched they are. And also consumer debt, mostly mortgage debt, is now at a record high relative to income.”

Video: Q + A – Food exports

Corin Dann and Sharon Zollner from ANZ discuss current exporters’ success in overseas markets


CORIN Statistics New Zealand released its latest stats this week showing that food prices had increased 3% in the year to September. That follows a 2.3% increase in the year to August. The main culprits? Dairy exports, butter, fresh milk, cheese and yoghurt, were all more expensive, which isn’t great for your household budget, but it is a sign of the good prices our food exporters are getting in their overseas markets. How long will that last?

It’s a good question for my next guest – Sharon Zollner, a senior economist at ANZ Bank.

That is one bright spot, isn’t it, for the economy – that our export prices have held up pretty well recently, haven’t they?

SHARON Yes, that is true, and they’ve held up better than hard commodity prices, for example. So the price of our main dairy export, whole milk powder, is holding up better than iron ore, for example – Australia’s main single commodity export. So that’s been showing up in our cross rate.

CORIN In saying that, though, what’s the outlook for the next government, as they come in and they’re confronted with their first briefing from Treasury on the state of the economy. It is looking a little softer going forward, isn’t it?

SHARON I think that’s probably fair. Yes, the summary would probably say the economy’s doing rather well and that’s still plenty of tailwinds, and that is true. But a number of those tailwinds seem to be running out of puff a little bit at the same time – not in terms of necessarily falling, but in terms of their growth flattening out a little bit.

CORIN So, that’s your– Obviously, strong immigration, tourism, construction – the big three. They all– Is the outlook for them all coming off a little bit?

SHARON A little. It’s flattening off. The housing market is another one I would add to that list. Obviously, it’s tied in with construction. House prices are actually falling in Auckland at the moment.

At the moment, we’re seeing consumers remaining remarkably resilient, at least when you survey them about how they’re feeling, how they’re– about their own finances, about the economy as a whole. They sound very confident, but what we’ve actually seen is some weakness in actual spending, so maybe they’re not putting their money where their mouth is.

CORIN Talk to me about housing markets. So, there will be some people at home, and I know they will be thinking, “Oh, it’s the election. It’s the uncertainty of an election, and it’s all going to bounce back into life. We’ll get its late-Spring bounce.” Is that going to happen?

SHARON I’m sceptical. Auckland house prices are very, very high relative to incomes. I mean, they’re world-beating on a metric you don’t really want to be leading the world in, and that’s a real risk for the economy, and I think the LVR restrictions, the restrictions on high loan to value ratio lending for investors have really made a big difference.

We’ve seen investor lending pull back sharply. At the same time, the banks are also pulling back on that lending, and it’s not clear that that’s all going to free up any time soon.

CORIN So why are the banks–? I notice two- and three-year fixed mortgage rates are coming down. Is there a bit of a mortgage war starting up in that space? What’s going on there?

SHARON I think things have eased up a little bit. It’s very clear the Reserve Bank is on an extended holiday. We’ve pencilled in an OCR hike in the second half of next year, but it’s in a 6B pencil. It’s really with an eraser on the end. It’s not a strong-conviction view. So, you’ve got monetary policy on hold.

You’ve got global funding costs have stabilised. And now I think banks are starting to compete a little bit more for some of that mortgage lending.

CORIN I wonder if the next government – it’s going to be New Zealand First flavoured regardless of what shade it is. But there is going to be some spending promises, and it would imply that we might see some more spending from a government – let’s call it ‘a government’. How is the economy likely to respond to that? Is that actually going to be, perhaps, welcomed? When you look at the Reserve Bank governor, he’s probably looking for a bit of inflation, isn’t he?

SHARON Yes, but what we’ve seen in recent years is that more activity hasn’t necessarily flowed in to more inflation. So that whole model that the inflation targeting is based on, that’s stronger than sustainable activity leads to stronger inflation, and you can kill two birds with one stone by raising interest rates – that model seems to have broken. It’s not just in New Zealand. It’s around the whole world.

And that’s a conundrum from monetary policy everywhere. But it is certainly true that if some of the other drivers of activity are coming off, then that’s not bad timing for a little bit of a fiscal boost, perhaps.

CORIN Do we need…? Is there, sort of, an amount that we need? Or is it just… Will the economy roll with it?

SHARON Yeah, the economy does its own thing to a large extent. I think there’s a bit of a tendency for people to give the government more credit and more blame than it perhaps deserves for the business cycle, which is more driven by exchange rates, interest rates, commodity prices, more than actual fiscal policy.

Of course, government policy is very important for the long-run, in terms of education and productivity and competitiveness, and all those sorts of things that determine your long-run trend, sustainable growth rate. But in terms of the business cycle, it’s really not an easy thing to try to steer.

CORIN Are markets, foreign investors, businesses, whatever, going to be freaked out if there is radical change to our monetary policy settings? Personally, I don’t think there will be radical change, but, I mean, is that a risk?

SHARON If we did see radical change, then, yes, I think there is a risk that markets could do a bit of a double-take. I think, in some sense, there’s a bit of an expectation that New Zealand is no longer the rock star, that we might be coming off that particular pedestal, so any negative news might have a larger impact than otherwise. I think perhaps people are looking for a reason to sell the New Zealand dollar, rather than buy it at the moment, just because the rest of the globe is doing better, and consistently so.

The range of growth rates around the countries in the world is very narrow at the moment – unusually narrow. And it’s looking like New Zealand, just as we led into the upswing, may be the first to peak in terms of growth rates as well.

CORIN Let’s talk about some potential shocks that this new government could face. We’ve obviously got– There’s always a risk around China and its debt, and, I guess, the US stock market, including our stock markets, have had a huge run. Are there some sort of, you know, scary risks out there that we need to think about?

SHARON Certainly, there are. I think it’s fair to say that some things are starting to smell a bit like 2007 out there in global financial market land. ‘There’s been a bull market in everything,’ as the Economist called it.

And that’s completely understandable, because the price of borrowing money has been at record lows for a very long time, and so the price of anything you could borrow money to buy has been pushed up, whether that’s equities, commercial property, residential property, collector cars, fine art – you name it, it has all benefited from this extreme monetary policy stimulus.

CORIN Just not wages?

SHARON Just not wages, not inflation. It’s been a bizarre time, but it is probably fair to say that the quality of the growth that we’ve seen since 2008 has not been great. It’s been fuelled by debt and by leverage. And at some point, that debt has to be paid back.

CORIN Well, the question then is – how well prepared is New Zealand for that?

SHARON That’s an interesting question. In some ways, we’re in better state than we were in 2007. In particular, our current account is very contained. We haven’t got–

CORIN Our debt to the world, if you like?

SHARON In a way, yeah. The cumulative addition to the debt in our debt to the world. Our net foreign debt is low. It’s lower than Australia. It’s much lower than it was in 2007. But our major vulnerability, I’d say, is Auckland house prices – how stretched they are. And also consumer debt, mostly mortgage debt, is now at a record high relative to income.

So the best-case scenario is that that dampens growth going forward in a very smooth, even fashion. The worst-case scenario is that everybody’s tomorrow arrives all at the same time and consumers go into something of a panic about their mortgage payments.

CORIN So, we need Auckland house prices– Or the next government would quite like Auckland house prices just to sit flat and for wages to catch up – that’s the best-case scenario?

SHARON It is. It’s not historically what tended to happen, but that is certainly–

CORIN So what’s historically tended…?

SHARON Well, real house prices, at least, tend to– Well, they go up, and they go down.

CORIN What are you forecasting for the Auckland housing market, then?

SHARON Well, we don’t forecast Auckland house prices specifically, but I guess, unless you get some sort of negative shock, then, yes, they should hold up OK; unless we get migration dropping sharply or a big outflow of people to Australia.

But what’s happening there with the Australian government making it increasingly uncomfortable for New Zealanders living over there, would suggest that we may see a change in the historical drain that we’ve had to Australia, because, for example, parents with children who are approaching university age may not be able to afford to stay there.

CORIN That’s interesting, because that means that even if a new government was to put curbs on immigration, they can’t stop New Zealanders or Australians coming back here, can they? Won’t affect that flow.

SHARON No, that is true. It is very difficult, actually, to target any kind of net migration number, because New Zealand passports come and go as they wish, and there’s a lot of New Zealand passports in Australia, for example.

CORIN So, the government’s in reasonably good position, obviously, with its debt to deal with any potential crisis, They’re in reasonable– That’s right, isn’t it? Not too bad, are they, in terms of government debt?


CORIN But the Reserve Bank doesn’t have a lot of room to move this time around if we were to get in to a lot of trouble, does it?

SHARON No, and our official cash rate is at record lows. It’s lower than it was at the absolute trough of the recession following the global financial crisis, which is quite a remarkable statistic, but in that kind of situation, but that doesn’t, unfortunately, mean that our situation is any better.

It just means we’re all in the same boat, but last time, when the GFC hit, the OCR was over eight, and we cut it down to two. So we cut it by 600 basis points. Now we could cut it maybe 100. And I don’t think we could do the kind of money printing, quantitative easing…

CORIN Can’t go below zero.

SHARON …that¬– No. I think we’d be laughed out of town as a small, very risky– well, nation that is seen as risky, because we’re a small commodity exporter. We’re not the nation’s default asset like the US Treasury bond market. We don’t have that kind of power.



Is MMP working?

Q+A is asking ‘is MMP working?’

Of course MMP is working – it just doesn’t work as well as some want it to work, and not as well as opponents of the system want.

First Past the Post worked, but quite poorly in some ways. The people were obviously unhappy with some of the results and practices, and voted for change.

We have now had seven  MMP elections, all with varying results.

There is no doubt we have a more representative Parliament, with more female MPs and much more ethnic diversity.

The grumbling has arisen right now because we have government in limbo, waiting for the final election results. This is the third time (out of seven) that we have had to wait weeks for things to be worked out.

In the meantime the country keeps ticking over successfully under a caretaker government. There’s no reason why we couldn’t operate reasonably well under a caretaker government for years. Voters don’t want governments that keep making major changes.

There’s certainly changes that could be made that would improve MMP, in some ways, but introducing different risks.

The critical thing is that our form of democracy works without too many problems, and no major problems. It’s not broken, but could be tweaked.

Q+A: Ardern, English, Shaw & Peters interviews

A good chance to see how the leaders of the four largest parties are shaping up and holding up as the campaign heads into it’s last week.

Which party will form New Zealand’s next Government?

Political Editor Corin Dann interviews the leaders of the four biggest parties: National leader Bill English, Labour leader Jacinda Ardern, Green party leader James Shaw and New Zealand First leader Winston Peters.

Host Greg Boyd is joined on our panel by Dr Claire Robinson, Robert Reid and Fran O’Sullivan.

Why do they keep including obviously biased people in their panel?

I hope they give disclosure about Reid. He is general Secretary of First Union, and has openly supported Labour policy – Press Release: First Union

Labour’s employment policy gives working peope something to vote for

The 27,000-strong FIRST Union has described Labour’s newly Employment Policy as giving its members something to vote for.

“FIRST Union represents a large number of low paid and vulnerable workers,” said Robert Reid, General Secretary of FIRST Union.

“The current employment relations laws are stacked against low paid workers and their unions meaning many working people are unable to make ends meet from one week to the next.

“It is pleasing to see the Labour Party putting forward policies that will reverse all of the anti-worker changes made to the Employment Relations Act by the National Government over the last 9 years, as well as promoting longer term policies that will prevent the race to the bottom on wages.

“Together with Labour’s health, housing and education policies this employment relations policy shows a stark difference to the policies of the current government that have failed working people over the last 9 years,” said Reid.

English started under pressure but became more assured as the interview progressed.

Ardern look far less confident than before, perhaps a hard campaign is catching up on her.

James Shaw throws a CGT spanner in Labour’s works:

Interestingly no poverty in his priorities.

And a twist from Winston: