Reserve Bank attacks housing

The Reserve Bank has published a ‘consultation paper’ that proposes a significant increase in property lending restrictions but is also encouraging banks to act quickly on their ‘proposals’.

This may be related to a predicted further drop in interest rates.

This is just one of a range of attempts to clamp down on escalating property prices.


Reserve Bank consults on new nationwide investor LVR restrictions

The Reserve Bank has today released a consultation paper (PDF 1.2MB) proposing changes to loan-to-value restrictions (LVRs) to further mitigate risks to financial stability arising from the current boom in house prices.

“The banking system is heavily exposed to the property market with residential mortgages making up 55 percent of banking system assets. Investor lending has been increasing rapidly and is a significant contributing factor to the current market strength.  The proposed restrictions recognise the higher risks associated with such lending,” Governor Graeme Wheeler said.

Under the proposed new restrictions:

  • No more than 5 percent of bank lending to residential property investors across New Zealand would be permitted with an LVR of greater than 60 percent (i.e. a deposit of less than 40 percent).
  • No more than 10 percent of lending to owner-occupiers across New Zealand would be permitted with an LVR of greater than 80 percent (i.e. a deposit of less than 20 percent).
  • Loans that are exempt from the existing LVR restrictions, including loans to construct new dwellings, would continue to be exempt.

These proposed new restrictions would take effect on 1 September 2016 and simplify the LVR policy by removing the current distinction between lending in Auckland and the rest of the country.

Mr Wheeler said: “The drivers of the housing market strength are complex and action is required on many fronts that extend well beyond financial policy.  Broad initiatives to reduce the underlying housing sector imbalances need to remain a top priority.

“A sharp correction in house prices is a key risk to the financial system, and there are clear signs that this risk is increasing across the country.  A severe fall in house prices could have major implications for the functioning of the banking system and cause long-lasting damage to households and the broader economy.

“LVR restrictions to date have improved the resilience of bank balance sheets by reducing banks’ exposure to riskier mortgages. This policy initiative is intended to further improve the resilience of bank balance sheets, and it will assist in restraining credit and housing demand.

“We expect banks to observe the spirit of the new restrictions in the lead-up to the new policy taking effect.”

Consultation concludes on 10 August.

Mr Wheeler said that the Bank is progressing its work on potential limits to high debt-to-income ratio lending, which would be a potential complement to LVR restrictions.

“We have had positive initial discussions with the Minister of Finance on amending the Memorandum of Understanding on Macro-prudential policy to include this instrument.”

Low inflation continues

Negligible inflation continues with the latest quarterly rate being 0.4%, and that is also the last 12 month rate.

This is a bit lower than expected and increases the chances of further interest rate cuts with the next announcement on that due on Thursday.

ODT: Inflation lower than expected

Statistics New Zealand noted higher petrol and housing-related prices were countered by lower prices for meat and domestic air fares.

Petrol prices showed the largest upward contribution, up 5.3% for the quarter, which followed declines in December and March of 7% and 7.7% respectively.

Housing and household utilities prices rose 1% for the quarter, influenced by higher prices for newly built houses, excluding land, which was up 2.1%. Electricity was up 1.8% and rentals for housing were up 0.6%.

Meat prices, down 2.7%, made the largest downward contribution for the quarter, followed by domestic air fares, down 9.9%. Domestic air fares have fallen 14% since the December 2015 quarter.

Inflation to June 2015 was also 0.4% (it went down 0.5% in the December quarter), down from 1.6% from 2014.

key-graph-inflation-since-1990

This hasn’t been updated with the latest quarter yet but shows the trend.

Very low inflation and record low interest rates (which are expected to drop further) means expenses are relatively low for people with mortgages, but those wanting to buy, first home buyers in particular, will be finding it tough with house price inflation continuing to run very high.

Inflation from 1920:

Inflation1920-2016

Those wanting to return to the good old days pre ‘neo-liberalism’ should consider the inflation rates through the 1970s and 80s.

Reserve Bank speech

Reserve Bank Deputy Governor Grant Spencer  gave a speech to Wellington Branch of the New Zealand Institute of Valuers tonight. He said that a range of factors had contributed to strong demand for housing, including record low interest rates, rising credit growth, and population increases.

Introduction

New Zealand is experiencing a housing market boom. House prices are increasing at 13 percent per annum nationally, and at 15-20 percent in Auckland and close-by regions. Evidence from housing cycles in several advanced economies suggests that the longer this continues, the more likely there will be a severe correction.

The Reserve Bank is mandated to promote the soundness and efficiency of the financial system. Our concern is that a severe housing correction would pose real risks for financial system stability and the broader economy. The banks are heavily exposed to housing with mortgages making up around 55 percent of total assets. Household debt, at 163 percent of household income, is at a record level.

Many domestic and international factors are contributing to the strength of the market. The current record low interest rates are a world-wide phenomenon linked to post-GFC caution and very low inflation in the global economy. Also driving local housing demand has been an unprecedented net migration inflow over recent years reflecting New Zealand’s stronger economic performance relative to many other advanced economies.

While strong demand has been underpinned by low interest rates, rising credit growth and population increases, the housing supply response has been constrained by planning and consenting processes, community preferences in respect of housing density, inefficiencies in the building industry, and infrastructure development constraints. The resulting housing market imbalance has been exacerbated by New Zealanders’ on-going preference for investment in bricks and mortar over financial investments, due in part to the ready availability of credit and a tax system that favours debt funded capital gains.

Given the complexity of factors underlying the housing situation, there is no simple policy solution. We need to tackle housing on many fronts. The key challenge in the long run is to expand housing supply to meet the growing demand. The Reserve Bank has no direct influence over supply, but can influence housing demand through the credit channel.  The Bank’s interest rate policy is targeted primarily at keeping future CPI inflation between 1-and-3 percent on average over the medium term, although it must also have regard to the soundness and efficiency of the financial system. The Bank’s other relevant instrument is macro-prudential policy. This can improve the resilience of banks’ balance sheets on a lasting basis and help restrain credit and housing demand, at least for a period.

He then went into detail on:

  • Initial loan-to-value (LVR) restrictions
  • Recent worsening of housing imbalances

The he talked about a broad policy response being needed, and outlined the role the Reserve Bank can play.

Conclusion

In conclusion, the Reserve Bank is concerned about the risks to financial and economic stability inherent in the growing housing market imbalances. Auckland pressures are re-emerging following an easing in the market from late 2015, and house price inflation has accelerated in a number of regions.

The causes of the imbalances are complex with a number of important drivers on both the demand and supply side. Addressing these imbalances will require policy action by a variety of agencies on a number of fronts. The underlying housing shortage needs to be urgently addressed, particularly in Auckland where population growth continues to outstrip housing construction. A step up in supply is required and finalisation of the Auckland Unitary Plan will be a key opportunity to facilitate such a step.

On the demand side, the key drivers are population growth and easy credit. The low cost of credit is making higher debt levels affordable, particularly for investors who can deduct interest costs from taxable income. Residential investors are accounting for an increasing share of house sales and new mortgage credit.

The Bank’s interest rate policy must have regard to financial stability concerns, but the global environment is likely to keep interest rates low for some time yet. Macro-prudential policy can assist in containing the growing risk to financial stability as the current housing market reaches new extremes. In light of the growing risk, the Reserve Bank is closely considering measures that could be progressed in the coming months.

In short, it’s complicated with no easy or quick fixes.

Full speech: Housing risks require a broad policy response

Media release: Housing risks require a broad policy response

Cash rate stays, foreign buyers go

Yesterday the Governor or the Reserve Bank, Graeme Wheeler, announced there would be no change to the record low cash rate of 2.25% and also warned that property investors could soon be targeted with new Loan to Value ration rules.

Wheeler said that rising house prices as a risk to the country’s financial stability.

Later in the day, possibly in part at least in response, the Westpac and ANZ banks said they would no longer lend to overseas buyers of New Zealand properties due to financial risks.

This follows similar moves recently in Australia. Other banks are expected to do likewise.

This is expected and hoped to have some impact on escalating property prices.

NZ Herald: Westpac, ANZ Bank shut out foreign buyers

Westpac New Zealand has announced that from today it will no longer lend to non-resident borrowers with overseas income.

Borrowers on temporary resident visas will only be accepted if they have both a New Zealand address and a New Zealand-based income.

ANZ has also announced restrictions that will effectively shut out most non-resident, overseas-based borrowers, including restricting lending to owner-occupied properties.

The restrictions will not affect New Zealand passport holders living abroad and purchasing property funded by overseas income.

A Westpac spokeswoman said the restrictions “reduces risk”.

“Verification of foreign applications is essential to meeting our lending criteria and obligations, but is operationally difficult in these cases.”

An ANZ spokesman said the changes were made to ensure the bank was “appropriately positioned in the current housing environment, taking into account supply pressure in certain areas”.

Auckland mortgage broker Bruce Patten, of mortgage brokerage Loan Market, said he expected more banks to follow Westpac and ANZ.

The majority of non-resident, overseas-based buyers would take out New Zealand bank loans for purchases here, unless they paid cash, Mr Patten said.

“Most banks around the world won’t take security in a country other than their own…it is going to cut any overseas purchases out.”

Mr Patten believed the change was partly driven by the Australian-owned banks wanting to follow developments across the Tasman – but there could also have been pressure from Government or the Reserve Bank.

“If this has an impact on slowing the house price rise down, then perhaps they might decide that they don’t need to bring [other] measures in.”

Time will tell how much effect this will have on the property market and house prices.

OCR unchanged

The Reserve Bank has left the OCR at it’s record low today, as expected.

Official Cash Rate unchanged at 2.25 percent

Statement by Reserve Bank Governor Graeme Wheeler:

The Reserve Bank today left the Official Cash Rate unchanged at 2.25 percent.

The outlook for global growth has deteriorated over recent months due to weaker growth in China and other emerging markets. Prices for some commodities, including oil, have picked up but remain weak.

Monetary conditions are extremely accommodative internationally, with considerable quantitative easing and negative policy rates in some countries. Financial market volatility has eased in recent weeks, but markets continue to watch closely the policy settings of major central banks.

Domestically, the economy is being supported by strong inward migration, construction activity, tourism, and accommodative monetary policy. Dairy export prices have improved slightly, but are below break-even levels for most farmers.

The exchange rate remains higher than appropriate given New Zealand’s low commodity export prices. A lower New Zealand dollar is desirable to boost tradables inflation and assist the tradables sector.

There are some indications that house price inflation in Auckland may be picking up. House prices remain at very high levels and additional housing supply is needed. Housing market pressures are building in some other regions.

There are many uncertainties around the outlook. Internationally, these relate to the prospects for global growth, particularly around China, and the outlook for global financial markets. The main domestic risks relate to weakness in the dairy sector, the decline in inflation expectations, the possibility of continued high net immigration, and pressures in the housing market.

Headline inflation remains low, mostly due to low fuel and other import prices. Annual core inflation remains within the target range. Long-term inflation expectations are well-anchored at 2 percent. However, as we have previously noted, there has been a material decline in shorter-term expectations.

We expect inflation to strengthen as the effects of low oil prices drop out and as capacity pressures gradually build. Monetary policy will continue to be accommodative. Further policy easing may be required to ensure that future average inflation settles near the middle of the target range. We will continue to watch closely the emerging flow of economic data.

New Zealand still has hardly any inflation and it’s expected to take until the first quarter of 2018 until it gets up into the target range:

CPIForecast

 

 

Hosking slams MediaWorks over leak

NBR journalist Rob Hosking has been scathing of MediaWorks after it was revealed today that at least two of their employees had been responsible for a leak of a confidential OCR announcement from a lock-up.

“…frankly a contemptible lack of integrity all round”.

He is also scathing of modern shock-horror journalism.

Rob Hosking blasts Mediaworks’ OCR leak on

cgdpnqeuyaaudj1

NBR article (paywalled): The Reserve Bank leak – a matter of integrity

Hosking also made some comments in a thread on Twitter:

Well for a start people lied. Call me old fashioned.

Secondly, its a breach which could have led to a crime.

I didn’t see it as defending Mediaworks, only the value of lockups but lock ups are clearly of more value without Mediaworks in them. Can’t be trusted.

This wasn’t just stupidity. This was an absence of integrity.

If you’re cool with insider trading – whether or not it’s a crime – this is no big deal I spose

First, a disclosure. I’ve been covering Reserve Bank monetary policy statements for 19 years. I was in the lock up last month when a journalist from Mediaworks’ radio outlet, Radio Live, sneaked the decision out an hour before the embargo was lifted.

The intro calls the Reserve Bank OCR as one of the country’s most sacrosanct embargoes.

Andrew Paterson: Well the decision by the Reserve Bank to discontinue it’s six weekly OCR media and analyst lock-ups in the wake of an embargo  breach by a junior  MediaWorks reporter has raised the ire of seasoned business journalists who have condemned the actions of the reporter in question for breaching what had been one of the country’s most sacrosanct embargoes.

The Reserve Bank took the action after preparing a detailed report into the breach.

Joining me to discuss this is NBR’s political and economic correspondent Rob Hosking.

Rob you’ve obviously been a veteran of these lock-ups, you must be disappointed in this action by the Reserve Bank.

Rob Hosking: Disappointed puts it mildly. I’m more disappointed in the actions of MediaWorks, because look, it was their actions that triggered this, right. They had the choice.

I don’t think the Reserve Bank had any choice but to take some drastic action, I think they’ve gone too far and we’ll come back to that a little bit later, but the point about these lock-ups is they’re a contract, which each journalist, and the organisation they represent, enters into when they go into that lock-up.

And that basically is you do not communicate with the outside until the embargo is lifted.

And the reason for that contract is not some cosy little stitch-up or anything, the reason is you have two hours, absorb in the case of the monetary policy statement, what is often a quite complex document, it often contains significant changes in the outlook for the economy, and it certainly often contains changes in the Reserve Bank’s thinking on the economy and where it’s next move might go.

And it’s the opportunity to quiz a couple of Reserve Bank economists on just sort of what they mean by some of the material that’s in documents, and it means you can report on it fully and accurately and you can actually not only just report on what’s in there but you can give some analysis of it.

And that is very very important the conduct of the economic debate in this country, which for a long time when i was growing up was very very poor.

And i think those lock-ups have helped contribute quite significantly to the quality of economic debate in this country.

And don’t forget one of the things the Reserve Bank acts as is as a sort of referee on the Government policies of the day no matter who that Government is, and that role which is not actually written into the Reserve Bank Act.

But it is effectively because of what the Reserve Bank does it often has to respond to bad Government economic policy, and it will say it is doing that, not in quite as blunt terms as that, but if you know, you understand monetary policy and you understand why the economic and fiscal policy, you will be able to report on that.

So it’s all a part of the accountability process in New Zealand. So that’s very very important.

But what has happened in the past few years is more and more coming into that lock-up being journalists from organisations who are interested in a quick shocking grab, they’re not there to do the analysis, they’re not there to absorb the contents of that document.

They want a shock horror, and they want to beat each other by nanoseconds.

And that’s what’s driven this action  here.

This was from an organisation that in no way provides in depth analysis of anything apart from maybe Kim Kardashian’s backside.

It’s completely, and what the Reserve Bank should have done, is first say ok MediaWorks, I mean this is obviously an organisational and cultural problem within MediaWorks, right, because this wasn’t, nobody at the news desk when this reporter contacted them said ‘whoa, what’s going on here’.

They simply said ‘ok, let’s start lining people up.

So this is not one reporter, right. And so MediaWorks would say ‘look, ban him for a couple of years’. No question about that.

But secondly they should have said, look ok, the risk is in these organisations that do not report the full flipping statement anyway, so keep them out until the press conference, which happens about five minutes after the embargo, and still have you know the analysts and the journalists in there who do do that analysis to do their job.

Andrew Paterson: So the question is should a relatively junior reporter with no background in business or economics, should have been in that situation in the first place.

Rob Hosking: Yeah exactly. And even if look you know sometimes people do go in there young, and look there have been very smart young reporters I might say, we’ve got one or two on NBR staff, but you know there are some wiser heads sitting on the news desk where if something like this does happen they firstly make sure it doesn’t cause any damage, and secondly they kick the young reporter’s backside.

Ah and none of this seems to have happened in this case. It just seems to have been you a, look frankly a contemptible lack of integrity all round.

“Do you think this also reflects in the case of MediaWorks, the fact that when you don’t train journalists appropriately, these accidents, these sorts of mistakes will happen?

Rob Hosking: That’s partly it. But again I come back to that contract, and a basic matter of integrity. You should not need any training as a journalist to know that when you agree to something you stick to that agreement.

That’s got nothing, I mean that’s not about being trained as a journalist, that is basic integrity.

Andrew Paterson: Now you’ve written to the Reserve Bank yourself?

Rob Hosking:Yeah I’ve suggested that they do something along the lines of what I’ve suggested and that they reconsider the decision. I’m not hopeful.

But I think that you know there needs to be some, if you want to see the quality of economic debate improve effectively,and you know there is a level of knowledgeable economic debate in the country that just wasn’t there  when I was growing up in the seventies when we desperately needed some I might add, then it should be reconsidered.

As I say I’m not hopeful, but we’ll have to wait and see.

Reserve Bank leak and MediaWorks

In March a journalist from MediaWorks leaked information about an OCR announcement that could potentially have resulted in insider trading, and another MediaWorks employee passed the information on to a blogger.

This was a serious breach.

Journalists had been brief on impending announcements so they cold prepare stories on the condition secrecy was maintained until the official announcement was made.

Yesterday the Reserve Bank issued this press release:

Reserve Bank takes action after investigation confirms leak

Thursday, 14 April 2016, 2:15 pm

Reserve Bank takes action after investigation confirms leak

An independent investigation has confirmed that highly sensitive and valuable market information on the March Official Cash Rate (OCR) cut decision was leaked by a journalist ahead of the official release, the Reserve Bank said today.

Following the investigation, the Bank will tighten its procedures for the release of confidential information. The Bank will discontinue embargoed lock-ups for news media and analysts ahead of announcements of interest rate decisions, Monetary Policy Statements and Financial Stability Reports.

The investigation by Deloitte’s forensic unit found that, contrary to the rules of the lock-up, information on the Bank’s decision to cut the OCR was transmitted by a Newshub Mediaworks reporter to several people in the Newshub office from the media lockup for the Monetary Policy Statement on 10 March.

This information was then passed on by another person in Newshub Mediaworks, well before the MPS official release, to an economics blogger. The blogger only alerted the Bank to the leak after the MPS was officially released.

Deloitte was assisted in its investigation by Mediaworks’ legal team, who undertook an internal investigation, uncovered emails that confirmed the leak, and reported these to Deloitte.

Governor Graeme Wheeler said: “The leak is a serious and disappointing breach of many years of trust. It created the opportunity for improper gain on financial markets and damage to the integrity of the Bank’s communications. I am extremely disappointed that the information was leaked initially and then communicated more widely.

“The fact that several people outside the Bank, who had access to the information improperly, failed to alert the Bank immediately, was irresponsible and left open a significant risk that the Bank could have closed down quickly with an immediate official release.”

No evidence has emerged that the leak gave rise to any financial market impact.

The Bank has considered alternative arrangements relating to information security. However, none completely mitigated the technology and human risks, said Head of Communications Mike Hannah.

“We have reviewed the procedures of several central banks. None provide lock-ups for analysts prior to major policy announcements, and the few that provide embargoed lock-ups for media representatives take extensive measures to control the media environment in the lock-up that are not viable for us. Most central banks do not provide embargoed lock-ups.”

Mr Hannah said that from the 28 April OCR statement release, the Bank will issue OCR and MPS statements via its pages on Thomson Reuters and Bloomberg screens at 9:00am, as is currently the case, followed by release on its website and to email subscribers. In the case of the quarterly MPSs and six-monthly FSRs, the release of a news release and these documents at9:00am will be followed an hour later by a press conference.

“The decision not to provide lock-ups for media or analysts means that these parties will receive the information at the same time as other financial market and public audiences.”

More information: Investigation into leak of March 2016 OCR announcement

MediaWorks issued their own press release:

MediaWorks Response to Reserve Bank Statement

Thursday, 14 April 2016, 2:07 pm

Mark Weldon, Group CEO, MediaWorks said: “MediaWorks unreservedly apologises to the Reserve Bank for this incident. Once MediaWorks was aware a leak had taken place, it conducted its own investigation to determine whether the leak had come from within MediaWorks and self-reported that to the Reserve Bank.”

Regarding the specifics of the matter, Richard Sutherland, Acting Chief News Officer, said: “The leak was caused by a failure within News to follow proper process and changes have already been made as a result. We are addressing the breach with those concerned and new policies and training will be implemented moving forward.”

There was a strong response on Twitter from journalists from other companies who were very annoyed their privilege of lock-up provide information in advance had been removed.

Some suggested that MediaWorks only should be penalised, which is a fair point.

Others said that much stronger action would be appropriate from MediaWorks, with sackings amongst the suggestions.

It was pointed out that if a Reserve Bank employee or politician had leaked information like this the media would be all over the story, they would have identified the people involved and named and shamed them.

Instead they muttered on Twitter where it was also suggested that they protect their own.

Except Rob Hosking from NBR who was scathing. See next post.

 

New labour index

The Reserve Bank is introducing a new labour index that puts less importance on the unemployment rate in an increasingly complex labour market.

ODT reports on a speech by Reserve Bank deputy governor Geoff Bascand in Dunedin yesterday.

New labour index more sensitive

The Reserve Bank has introduced a new labour market index in response to the varying and, at times, contradictory information provided by a wide range of labour market indicators.

Reserve Bank deputy governor Geoff Bascand said in a speech in Dunedin yesterday rapid growth of the workforce, boosted by new migrants, women and older workers, had helped create strong economic growth over the past four years, without driving up inflation.

The main drivers of the rapid growth in labour supply had been population and increased participation.

“Over the past four years, New Zealand’s population has grown by a quarter of a million people, with over half that number coming from net migration.”

The economy had expanded steadily since 2011 and created 180,000 extra jobs but the unemployment rate had declined only modestly, Mr Bascand said.

Quite a few more jobs but more immigrants and returning Kiwis looking for work.

Mr Bascand identified large flows from non-participation into employment, flows that were much higher than those witnessed in other countries.

About two-thirds of the newly employed were non-participants in the previous quarter.

That is a significant shift into employment.

The largest recorded surge in migration in 100 years had contributed to housing and consumer demand and job growth but without the inflation pressures accompanying the previous wave.

Because migrants increased overall spending in the economy, and also increased the labour supply, the net effect on inflationary pressures could be ambiguous, he said.

“Higher labour force participation by women and older workers, together with the characteristics of this particular migration cycle, go a long way to explaining why wage and non-tradeable inflation pressures have proven less than expected.”

Much of the current surge of migration was explained by weakness in the Australian and world economies, making New Zealand a relatively more attractive place to live, Mr Bascand said.

“Because our labour supply has increased at a time when businesses are facing lower world demand, it results in lower wage and inflation pressure.”

Employment and unemployment rates.

key-graph-employment

That shows a flattening in employment when New Zealand moved into recession around 2007 and a reduction when the Global Financial Crisis hit soon afterwards.

Since 2013 employment has trended upwards again and unemployment has dropped a little.

I don’t know how the new labour surveying will affect ongoing comparisons.

Wages have recently been rising slightly faster than the lowest inflation rate since 1999.

key-graph-inflation-since-1990

 

Hickey’s housing slant

The official description of ‘Bernard Hickey’s Opinion’ column says that  ‘Bernard is an economics columnist for the NZ Herald’.

In his column today, Use that power, renters, Hickey has strong words about Auckland’s housing problems

Finally, Auckland’s Generation Rent has found someone who is talking about the elephant in the room – rampant speculative demand for housing by landlords.

Everyone worried about Auckland’s astonishing house prices should read Reserve Bank deputy governor Grant Spencer’s speech.

He spelt out in the plainest language yet that property investors are taking advantage of tax incentives to use cheap debt to buy as many houses as they can.

The Reserve Bank has exhausted its toolkit, having put up interest rates and set limits on high loan-to-value ratio (LVR) lending. It is looking to increase capital requirements for landlords’ mortgages, but it knows it’s not enough.

Exasperated, the Reserve Bank has asked for help to control the risks to New Zealand’s banking system, which relies on house values to back 60 per cent of its loans.

Spencer called for the Government to revisit the tax incentives for landlords.

Fair enough listening to and quoting the Reserve Bank Governor.

The Government’s top economic adviser has said landlords’ tax incentives should be reduced and central Auckland apartments should be built in defiance of the Nimbys controlling Auckland politics.

Council and Government politicians are refusing to take that advice.

What I find interesting about this is the apparent one-sidedness of Hickey’s column. It seems that he has used the Reserve Bank Governor to support a hobby horse.

Now this column may have been written before yesterday morning.

But at 9 am yesterday Hickey participated on a Twitter discussion for The Nation about their interview with Treasury Secretary Gabriel Makhlouf who has different views on housing than the Reserve Bank Governor.

Join our Twitter panel and at now!

Those alternatives weren’t mentioned at all in Hickey’s column – and he should have been well aware of them before listening to the Makhlouf interview.

On the panel Hickey displayed what looked like a pre-decided slant. He has a clear preference to Reserve Bank advice to Treasury Advice.

Here’s another view on China for ‘s Gabs Makhlouf to read after

He tries to educate Makhlouf on his angle.

Big gap there between @nztreasury & @ReserveBankofNZ. Gabs Makhlouf sceptical about CGT just 3 days after bank called for debate.

But Hickey doesn’t seem \want debate, he wants to promote his views which happen to side with the Reserve Bank advice.

Got a feeling the @ReserveBankofNZ would have liked a bit more support from @nztreasury on housing taxation than that.

Ok, he has ‘a feeling’ he and the reserve Bank are right.

In Muldoon era it was the @nztreasury offering the freest and frankest and most critical advice. Now it’s the @ReserveBankofNZ

Is that because it’s the freest and frankest? Or because it’s ‘most critical advice’ that happens to fit his opinion?

For #nationTV3 viewers wanting an alternative housing view, here’s the speech from @ReserveBankofNZ’s Grant Spencer http://www.rbnz.govt.nz/research_and_publications/speeches/2015/action-needed-to-reduce-housing-imbalances.html … …

Diverting viewers to something he prefers to the Nation interview.

Another example here of how NZ’s leaders today are pushing the costs of current consumption onto their kids/grandkids http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11433784

He’s not discussing the Makhlouf interview at all, he dismissed it and is linking to alternatives he agrees with.

Counter-factual for a CGT is what happened to Auckland house prices post-election after buyers realised no CGT. Up 20%

Has Hickey got any evidence supporting that ‘counter-factual ‘? House prices almost certainly didn’t go up 20% solely because the election result meant no wider Capital Gains Tax. Did it have any effect at all?

Unless Hickey can produce facts I will remain very dubious about that claim.

And I’m very disappointed he simply dismissed Makhlouf  and made no attempt to lead any discussion. In his The Nation panel tweets and in his Herald column he looks more like an economic activist than a balanced economic columnist.

Labour versus Reserve Bank on immigration

The Reserve Bank Governor points out an obvious flaw in Labour’s claims they can control immigration numbers.

Wheeler pours cold water on Labour’s anti-immigration policy

Labour’s plans to control immigration look to have been dealt a blow by the Governor of the Reserve Bank.

Labour has promised to control immigration and introduce what it’s calling moderate and sensible measures to help address pressures on housing prices.

But Reserve Bank Governor Graeme Wheeler says it’s very hard to fine tune immigration to meet demand purposes.

“By the time you make an adjustment you may well find the situation’s completely changed.”

What Wheeler says was obvious as soon as Cunliffe opened his mouth about immigration.

But Labour deputy David Parker is sticking to Labour’s policy (that hasn’t actually been defined, just that they would do something).

Labour confident of immigration policy

Reserve Bank Governor Graeme Wheeler says it’s very hard to fine tune immigration to meet demand purposes.

Labour Party Finance spokesman David Parker says the comments don’t undermine his party’s proposals to control immigration.

He says anyone who says so is wrong, maintaining excessive immigration does put pressure on housing supply.

“We don’t accept this unambitious view of the current government that you can’t do anything about house speculation, anything about house prices, or anything about the peaks in immigration.

“You certainly won’t be able to do any of those things if you don’t try.”

a) Smoothing out immigration is extremely difficult when some of the biggest movements – New Zealanders leaving and returning – can’t be controlled at all by the Government.

b) Still no details from Labour about how they might avoid getting peaks in immigration.