Kiwi services economy leaps over Aussie

by Chris Becker

More evidence this morning that the NZ economy has a little more robustness post-mining boom with its performance of services index (PSI) print for November released this morning, expanding again:

nz-services-pmi-15-December-2014

It paints a stark picture compared to that of the latest Australian PSI in November, which printed at 43.8 and is still in terminal decline:

ozpsi

Net migration is helping immensely here, adding to services demand alongside the NZ property bubble (particularly in Auckland):

nznetmigration

More interestingly, there’s been a sharp return of Kiwis to the homeland from the usual No.1 emigration destination, Australia, which historically correlates with our unemployment rate, although this time, its leading:

netmig

Indeed the Kiwi jobless rate has now crossed below, which goes someway (plus the interest rate differential) to explaining why AUDNZD is finding new bottoms:

ozue
Chart AUDNZD, MN1, 2014.12.15 00:09 UTC, VantageFX Pty Ltd., MetaTrader 4, Real

Again, the AUDNZD cross is leading the economic divergence and may harbour suggestions of parity on the way as the situation is quite simple: the RBA is more likely to cut first.

I do recall a certain analyst suggesting investing in New Zealand a few years ago when AUDNZD was in the 1.20s….

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Comments

    • Not yet, but yes, the temp does look good. Probably move down your way first before a move across the ditch – need some more retirement money (and especially if the exchange rate stays like this).

      Cant help but look at ag property in NZ and start to salivate…

  1. Meh. An economy built on the back of an earthquake and a milk scandal in China? Sure, short term it’s better. But it’s just as unsustainable. Lets’ take a step back, would you rather own Australia over the next 100 years or that rock out in the middle of the South Pacific?

  2. Nz just having a commodity boom much like australia had with out Sydney/Melbourne parasites.

    But that said New Zealand stll vastly more intelligent than australia regarding economics.

    • Nowhere is that more the case, than in the public conversation on housing affordability and urban planning.

      Australia had a major, major opportunity in 2003, as some of the world’s smartest analysts on this subject had the argument largely proven – Alan Moran, Bob Day, Patrick Troy, Ray Brindle – and Chris Joye and several absolutely top-notch co-authors produced a “Prime Minister’s Task Force” Report that still has never been bettered for its good sense and advice.

      Had PM John Howard not personally hosed down the whole subject, Australia could have led the world in defusing this economic WMD. I had a lot of regard for Howard on many things but this makes him a total write-off in my book.

      NZ is only just now, reaching a similar point; and there is no way any PM is going to squash it. NZ has a Labour opposition ready to ride the issue to an election victory – something Australia has completely lacked. Tweedledum and Tweedledumber are the mainstream electoral options on housing, in Australia.

      • I’ve watched Andrew Little over the weeks since he has become Opposition Leaders, and he has a lot to learn. But he looks like he is up to the task. He’s prepared to learn; prepared to speak his mind and might just be the New Zealander you want him to be. I hope you’re right, Phil, for all of our sake’s. Because as you allude to, this….might be our last chance. We haven’t got the luxury of the decade or so of procrastination you have previously feared, up our sleeves…..

      • The housing affordability issue got blown out of thev water in 2004 with the seriously flawed Australian Productivity Commission report at the time.

        (Now Senator) Bob Day and I discussed this after the release of the first Demographia Housing Survey ( refer http://www.demographia.com/dhi-200502.htm ). Bob described it as “the best invention since tar-seal” at the time. It reignited the issue in Australia and elsewhere.

        It was the Housing Industry Association of Australia (HIA) that then blew the issue out of the water again mid 2007 … as I wrote about late 2007 with THE NEED FOR CLARITY …

        http://www.demographia.com/p-hia.pdf

        The vested interests … mainly the land-bankers … made sure it was buried. There was no effective advocacy around at the time to head off those guys.

        Read carefully the New Zealand Labour Party Leaders communication to members below, where he makes it clear that public polling is giving NZ politicians a very clear message on housing issues. And read also the earlier polling at http://www.PerformanceUrbanPlanning.org .

        Politicians are appropriately “poll parrots” in a democracy. Polls are a politicians currency.

        If 51% of the public believed the moon is made of cheese … National / Liberal politicians would be delivering passionate speeches on why the moon is made of blue vein cheese … with the Labour ones arguing ferociously that it’s made of cheddar !

        Sadly, there has been no credible “on the ground” advocacy emerging in Australia to date, to whack the vested interests and articulate the simple structural issues effectively. This needs to be happening at States level.

        The sooner it happens the better. It is long overdue.

        This is mainly a political problem. There is nothing particularly technical … and spare the thought intellectual… about it.

      • JOHN HOWARD & HOUSING …

        It was early 2007, as I recall, when Federal Treasurer Peter Costello launched the superb book “The Tragedy Of Planning” by Dr Alan Moran of the IPA.

        Mr Costello was extremely keen at the time about dealing with the housing affordability issue in Australia.

        That is … until his boss Prime Minister John Howard subsequently told him “Peter … I have never heard of people complaining about rising house prices … so drop the subject.” Mr Costello did as he was told.

        Instead … voters dropped Mr Howard and his Government late 2007 for … you guessed it … excessive mortgage loads … as reported in the SMH following the ’07 election FEAR OF LOSING HOMES DROVE LABOUR WIN …

        http://www.smh.com.au/news/national/fear-of-losing-homes-drove-labor-win/2007/12/07/1196813021229.html

        I covered this and other matters March 2008 with GETTING PERFORMANCE URBAN PLANNING IN PLACE …

        http://www.performanceurbanplanning.org/performanceurbanplanning.html

        Rather amusingly … former Prime Minister John Howard, since leaving office, has been giving speeches around the planet about his political achievements as a reformer !

        Clearly, it is not a good idea to listen to a retired politician’s version of his / her own history !

  3. Maybe Russell Crowe will join the stampede back to NZ…Go Rusty Go!

    As long as they don’t return Phil Rudd in retaliation… more than enough people here with that surname already.

  4. Ah yes. Our Rockstar economy…..

    “The median Auckland house price was up by $54,900 to $561,700, while the median household income was down by $4700 to $70,600. Tauranga is the second least affordable urban area, with a median multiple of 6.6 – houses cost an average of $364,800, while the median income is $55,000.”

    Who wants to come on over to live in one of our Top 5 cities, for a household median of NX$55,000 = A$50,000? http://tinyurl.com/kybauka
    As our beloved PM tells us ” We should celebrate our low wages, as that make us competitive” ( or words to that effect)

    • Not rockstar, more like folk singer – im just pointing out the cleaner sheet in a very dirty basket of South Asian laundry Janet.

      NZ has very similar economic problems to Australia, (probably worse with regard to property obsession) but culturally, politically and geographically has some distinct advantages (temporary and permanent).

      No rose colored glasses here!

      • No worries! I will happily concede that the RBNZ does appear to be at least cognisant of the horrible situation that we face as a country, but is as hamstrung by the Government as you chaps are by yours.

        Did I suggest buying the NZ$ at 1.22 to fall to 1.08 ( to Greg, some time back?) Sure did! And did I also suggest that we’d be headed back to 1.37 in due course? Ditto. We’ve over shot, sure, but one advantage that I have is being long A$ against our fundamentally weaker currency! At parity, if I’m wrong :(, then I’ll just have to come and live over there….and that’s the same view that many other Kiwis will have…….

      • Janet … the salary numbers are not the point. It’s the living costs that matter … and that’s why we need to be learning about Texas and Houston in particular …

        Houston Strategies: Joel Kotkin Opportunity Urbanism event this week and Houston vs. San Francisco

        http://houstonstrategies.blogspot.co.nz/2014/10/joel-kotkin-opportunity-urbanism-event.html

        America’s Opportunity City by Joel Kotkin and Tory Gattis, City Journal Summer 2014

        http://www.city-journal.org/2014/24_3_houston.html

        Focus … get those Local Governments under control and ALLOW affordle housing to be built … and the rest will pretty much take care of itself.

        This is very much just a “follow the numbers” exercise. Let the numbers do the talking.

      • Hugh PavletichMEMBER

        The Reserve Bank of New Zealand … and in particular its superb leadership with Governor Graeme Wheeler and his Deputy Grant Spencer … have played a huge role assisting in politically progressing the housing issues in New Zealand.

        The purists here are not impressed with Macroprudential … but it is an essential component of the political pressure required on the Central and Local Authorities.

        The major purpose of Macroprudential is to protect the financial system of course. New Zealand is extremely vulnerable with its housing bubble, as I explained with NEW ZEALAND’S BUBBLE ECONOMY IS VULNERABLE …

        http://www.scoop.co.nz/stories/HL1404/S00166/new-zealands-bubble-economy-is-vulnerable-hugh-pavletich.htm

        Haven’t we learnt anything from Ireland … as just one “housing bubble” lesson of many ?

        I trust this post, and the others I have on this thread illustrate, that the “machinery of government” across the board is very much ACTUALLY DEALING (past the talking stage) with the serious housing issue in New Zealand.

        It is hugely heartening.

      • The Reserve Bank of New Zealand … and in particular its superb leadership with Governor Graeme Wheeler and his Deputy Grant Spencer … have played a huge role assisting in politically progressing the housing issues in New Zealand.

        The purists here are not impressed with Macroprudential … but it is an essential component of the political pressure required on the Central and Local Authorities.

        The major purpose of Macroprudential is to protect the financial system of course. New Zealand is extremely vulnerable with its housing bubble, as I explained with NEW ZEALAND’S BUBBLE ECONOMY IS VULNERABLE …

        http://www.scoop.co.nz/stories/HL1404/S00166/new-zealands-bubble-economy-is-vulnerable-hugh-pavletich.htm

        Haven’t we learnt anything from Ireland … as just one “housing bubble” lesson of many ?

        I trust this post, and the others I have on this thread illustrate, that the “machinery of government” across the board is very much ACTUALLY DEALING (past the talking stage) with the serious housing issue in New Zealand.

        It is hugely heartening.

    • Chris Becker December 15, 2014 at 11:21 am

      “Not rockstar, more like folk singer – im just pointing out the cleaner sheet in a very dirty basket of laundry…”

      Love it!

      NZ is The Flight of the Conchords

      Australia is Kevin Bloody Wilson

      Neither of them are rock stars

      Both of them are a joke

  5. NZ the Liechtenstein – Panama of the southern pacific… cough services.

    Skippy…. So the plain is for Australia to emulate it? Did America [wolds largest tax haven] give us the thumbs up????

    • Skippy … the earthquakes have been useful as a further “political prod” in dealing with housing supply / affordability.

      I have written extensively on this issue. It is my home as well.

  6. There is in New Zealand at least a deepening recognition of the housing bubble problem … to illustrate with one example … from today’s Nelson Mail …

    Nelson and Tasman added to housing (accord) scheme | Anna Bradley – Smith | Nelson Mail

    http://www.stuff.co.nz/national/64161218/nelson-and-tasman-added-to-housing-scheme

    … extract …

    “Nelson Mayor Rachel Reese said the council had identified housing affordability and choice as priority issues and she applauded the minister for adding Nelson to the legislation.”

    “What I have observed is housing affordability being a handbrake to regional growth. I say that because I look at people who are considering moving to Nelson and housing affordability is a disincentive.”

    • COPY COMMUNICATION TO MAYOR RACHEL REESE OF NELSON COUNCIL …

      Hello Mayor Rachel …

      Congratulations on your most constructive comments reported in the Nelson Mail on housing affordability !

      I have sent a few strong comments to Local Government National President Lawrence Yule on this issue, which were posted at the bottom of this Kiwiblog thread over the weekend …

      http://www.kiwiblog.co.nz/2014/12/more_state_sector_salary_data.html

      Within the Introductory Section of this years Demographia International Housing Affordability Survey (http://www.demographia.com/dhi.pdf ) I make it clear that this is a basic human rights issue. The impediments to the provision of affordable housing must be dealt with.

      No if, buts or maybe’s about it !

      It is to be hoped LGNZ’s submission to the Productivity Commission on the land supply issue is robust.

      Your clear comments reported in the Nelson Mail are most helpful … and I wish you and your team at the Nelson Council every success in working with Minister Nick on this issue.

      With best regards,
      Hugh Pavletich
      Co-author Annual Demographia International Housing Affordability Survey

      • RECENT COMMUNICATION FROM NEW NZ LABOUR PARTY (OPPOSITION) LEADER ANDREW LITTLE ON THE DATE HE WAS APPOINTED …

        ———- Forwarded message ———-
        From: Andrew Little, Labour Leader
        Date: Tue, Nov 18, 2014 at 5:59 PM
        Subject: Housing
        To: ………

        As someone who’s shown an interest in issues affecting Kiwis, I wanted you to be one of the first people I wrote to in my new role as Leader of the Labour Party.

        I’m committed to fighting for fairness and opportunity for all New Zealanders. Over the next three years, I hope you’ll join me in that fight. From taking away our tea breaks, to selling off our state houses, this government has shown its priority is the few at the top, not everyday Kiwis.

        But by working together, we can cast a light on the bad decisions this government’s making. We may not win every battle we fight, but we can use our combined strength to stop the worst of their plans.

        And that’s why I’m writing today. Thousands of people recently completed a survey about the state of housing in New Zealand. A staggering 97% of people reported that they’re concerned about the country’s housing crisis.

        But housing’s an issue this government just doesn’t seem to want to fix. They should be lowering house prices by building new homes. Instead, they’re planning on selling off our limited stock of state houses, and removing the safety net which makes sure all our kids have a warm, dry roof over their heads.

        As one of my first actions as Leader of the Labour Party, I’m going to launch a housing campaign. But I need to know how much people are willing to get involved, so I can decide how much of our limited resources we should put into the campaign.

        So tell me: would you back a campaign to fix our country’s housing?
        Yes – and I’ll chip in to help fund it

        Yes – but I can’t chip in

        No – I won’t back a housing campaign

        There are heaps of ways we could campaign: from signing a petition, or writing to MPs, or chipping in to help fund a newspaper ad across the country.

        Together, we can make this a huge campaign which the government have to pay attention to, and take action on.
        Click here if you’ll back a campaign to fix our housing crisis.

        The strength of power in numbers is where the Labour Party came from, and I’m committed to proving that notion still has value today, as we campaign together over the next three years – starting with this housing campaign.

        Thanks,

        Andrew Little
        Labour Party Leader

        New Zealand Labour Party • New Zealand Click here to unsubscribe..
        Authorised by Tim Barnett, 160 Willis Street, Wellington.

      • From October last year …

        Housing market needs supply boost and demand restraint … Reserve Bank of New Zealand

        http://www.rbnz.govt.nz/news/2013/5489838.html

        Current imbalances in the New Zealand housing market present risks for both financial stability and price stability, Reserve Bank Deputy Governor Grant Spencer said today.

        To reduce those risks will require more responsive supply, as well as restraint on demand, Mr Spencer said in a speech to the Property Council in Auckland.

        “The underlying issue in the New Zealand housing market is a shortage of supply. In Christchurch this is a direct result of the earthquakes. In Auckland, the shortage has been growing over a much longer period, with weak rates of house building since 2005.” … read more via hyperlink above …

  7. It is well known, that with its tiny economy and GDP per capita, New Zealand public servants at both central and local level are grossly overpaid, with massive bureaucratic bloat

    In a number of the States of the United States it is mandatory to disclose the salaries of public employees. For example … the Texas Tribune reports …

    http://salaries.texastribune.org/

    In Australia and elsewhere, Local Government Councillors work is properly treated as a part-time job (as it used to be here). Luke Malpass explained a few years ago with COMPARATIVE COST OF COUNCILLORS …

    http://www.cis.org.au/publications/ideasthecentre/article/2835-comparative-costs-of-councillors

    Government … and Local Government in particular … has degenerated in to a bureaucratic gravy train, that is out of control, as John Roughan of the NZ Herald explained recently with UP CLOSE, COUNCIL IS WORSE THAN IMAGINED …

    http://www.nzherald.co.nz/john-roughan/news/article.cfm?a_id=5&objectid=11373428

    No wonder our Taxes and Rates are through the roof.

  8. THE POOR REPUTATION OF NEW ZEALAND LOCAL GOVERNMENT … RESEARCH …

    A message from LGNZ President, Lawrence Yule – YouTube

    https://www.youtube.com/watch?v=WT0ROcaQg3A

    Within the above brief address to LGNZ members, National President Lawrence Yule makes mention of a “Reputational Review” Survey of 3,500 Mew Zealanders.

    The results, according to Mr Yule, are “challenging”.

    Why hasn’t there been media reporting and public discussion about the results of this Survey ?

    Little wonder the reputation of local government in New Zealand is so poor … Mr Yule in the NZ Herald a day or two ago …

    Lawrence Yule: Wider approach needed on housing – Business – NZ Herald News

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11372214

    … extract” …

    “However, when considering housing supply and affordability, it is important to recognise the many factors at play.”

    “Overall, land shortages are not the issue. Independent research commissioned by LGNZ found that apart from a small number of metropolitan areas, residential land supply shortages are not a universal problem.”

    Again … has there been any media reporting and public discussion of this “commissioned independent research” by LGNZ … which happens to fly in the face of overwhelming and indisputable reputable international evidence ?

    New Zealand does have a massive Bureaucratic Cancer Problem … particularly within the larger Local Authorities.

  9. Immigrant boom means more housing pressure – Yahoo Finance New Zealand

    https://nz.finance.yahoo.com/news/immigrant-boom-means-more-housing-003923273.html

    … extract …

    Finance Minister Bill English, speaking to reporters after the update was released, said more arrivals simply meant that more houses would be needed.

    “We have to get more houses on the ground, and councils must understand that if more people turn up, more land is going to be needed.”