If only Bill English was in charge of Australia

By Leith van Onselen

New Zealand Finance Minister, Bill English, gave an interesting interview to ABC’s The Business last night, which provided a welcome contrast to the political imbeciles running Australia.

Some key points from the interview include:

  • The New Zealand Dollar is too high, particularly relative to Australia.
  • The RBNZ’s macro-prudential controls on high LVR mortgage lending have been “worthwhile” and “worked for a while”, but is now running up against record high immigration and solid income growth.
  • Auckland, in particular, is dealing “with the legacy of planning processes that were designed to prevent Auckland growing, going back starting in the late-’90s”. The Government’s top priority, therefore, is to “get [the] supply of land for new houses on the ground faster” although “it’s proving to be a long, complex job, but we’re making progress… Everyone realises this market’s out of balance and they want to see action on it”.
  • Nevertheless, English still recommends that Australia [RBA/APRA] look to macro-prudential controls, because “the market needs to see that an institution like – a reputable institution like the RBA – taking the issue seriously [and] that a fast-rising housing market is not an unmitigated good. It’s a potential risk to the macro economy and also for householders who pay too much. So, I think it’s – in our experience, it’s worthwhile, we’ve set up a framework that enables the RBNZ to – to exercise – use those tools and Australia’ll make its own decisions”.

As I keep saying, New Zealand’s Government recognises the issues around its unaffordable housing and is taking action to mitigate risks, including by supporting the RBNZ.

Compare that to Australia, where few in the political system even acknowledge that problems exist.

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Comments

  1. i have a lot of time for Bill English, certainly more so than Key. But its folly to think that they will be able to address Auckland’s CHRONIC housing bubbe without a) MASSIVELY reducing immigration and b) changing tax laws. National dont seem to want to touch these. And comments from nick Smith and John Key recently seem to indicate they dont think property is unaffordable.

    Aussie has FHOGs, high immigration, unenforced foreign buyer restrictions, neg gearing and CGT halved. NZ has NO CGT, neg gearing, high immigration and NO restrictions on foreign investment. Not sure who is worse.

  2. Do you?
    Let’s remember that Bill English oversaw the dubious resolution of the failure of finance company South Canterbury Finance – $1.6 billion odd, that saw bond holders miraculously made-whole, in spite of the fact that the Government Guarantee available to bond holders was that only an amount up to $1,000,000 each was payable under default. Those who had over that amount, even the day before default, were selling the bonds at up to 80% discount to salvage some equity. Imagine how they felt when, lo and behold, Bill English came out with “Well, actually we are going to give all bond holders 100% of their entitlement, regardless of the amount they hold”. Rumours still swirl about “who was that party that got their $60 million (or whatever) back instead of just the $1 mio that they were entitled to”. I won’t add more, but if you want a Bill English style Treasurer in his entirely…..there’s a mix of average, poor and bad…

    “In its final days, South Canterbury Finance quietly loaned $300m to related-parties. Breach of the deposit guarantee scheme’s rules. Nats did nothing. When SCF collapsed the related parties got off scot-free – if they owned SCF bonds…” http://thestandard.org.nz/the-biggest-fraud/

  3. Honest question for somebody who knows the New Zealand situation.
    What effect would an Australian banking collapse have on the New Zealand banking sector?
    Are the financial sectors of the two economies intimately linked?

    By “collapse” I mean a situation bad enough that the Aust Govt would need to nationalize one or two of our big four banks as discussed in David Lindsay’s book.

    • See above. There’s, collapse, and then there’s collapse. What it means varies from minute to minute in New Zealand…..

      • Well to put it another way, who are the biggest Banking companies on your side of the ditch? I imagine ANZ bank is among the top 5 players?

      • The Big Aussie 4 really ARE our banking system. The locals chaps, Kiwibank, SBS, Heatland Bank (cough…I want to write something regarding my previous post here, but I’ll refrain) are all tiny compared to ANZ, Westpac, ASB (CBA) and BNZ ( NAB)…. So, whatever affects you, affects us….and visa-versa, of course! We do now have ( about a year odd) the Open Bank Resolution Act, that sees depositors account frozen, immediately, if any locally incorporated bank gets into trouble, for whatever reason. So many are heading into Government Bonds, as those are outside the OBR.
        http://www.rbnz.govt.nz/regulation_and_supervision/banks/policy/4430900.html

      • Kiwi depositor’s would also be covered by the Australian govt’s deposit guarantee for the Big 4 would they not? How do your local banks compete with that?

      • Are far as I know, NZ banks are separate entities to their Aus parents. After all, the RBNZ imposes its own capital requirements, regulations etc, which are independent to Aus. The Aus parents can give directives only from a shareholder/director level. If the Aus banking sector were to enter a crisis, it would only be able to utilise any NZ sector resources provided they could still maintain RBNZ regulatory requirements.

    • NZ depositors are on their own, if I understand their ‘rights’ properly. The Aussie banks are required to have locally incorporated, arm-length subsidiaries. The Aussie Depositor Guarantees won’t apply to our savers. They, we….will have to stand in line as unsecured creditors if any bank goes down. Even if it’s a subsid of one of yours.

  4. ” welcome contrast to the political imbeciles running Australia”

    To be fair, interviewing an amoeba would illustrate a “welcome contrast to the political imbeciles running Australia”

  5. Bill English is a typical neoliberal career politician who did nothing else in his life except dirty politics.

    There should be a low preventing career politicians like him getting into PM position.

    BTW. So many lies in so few sentences: he helped with his policies and narrative NZD go up, macro-prudential never worked in NZ, Auckland prices are driven up by speculative demand not supply issues – booming house prices in 2012-2013 stimulated high immigration in 2013-2015, not the other way around (population growth was at record lows when house prices boomed during 2012-2013), and he is still able to fix everything in a day if he is willing to do so

  6. The solution to Auckland’s property bubble(note Auckland not NZ) is to work on both the supply and demand sides. On the demand side immigration needs to be cooled, and a capital gains tax introduced. The Key/English Government will do neither because they are political wimps. They will focus on the supply side because there are no votes to be lost doing that, and leave RBNZ to roast on the spit. We will probably all go down together I’m afraid.

    • I have to disagree! Funny that 🙂 But it IS a New Zealand problem. Do we really think that property prices in Waipu, 3 hours north of Auckland where I visited last weekend, would be the ludicrous price that they are had it not been for the Auckland prices pushing up, last decade? Of course they wouldn’t be. They escalated as the Auckland investors were squeezed further afield to get whatever they could before property prices rose. I recall when selling in Christchurch 7 years ago (doesn’t time fly!) that it would be ‘the Auckland buyer’ that would set the price. And so it was. And so all prices remain tied to the price of Auckland property. WHEN Auckland adjusts, all of New Zealand will be re-calibrated. That’s when we will see that it isn’t just Auckland….but a New Zealand problem.

  7. Wow, isn’t it refreshing to see politicians exhibiting actual ‘leadership’ – something sorely missing from the Australian landscape.

  8. reusachtigeMEMBER

    Thankfully this fella isn’t in charge, he’d ruin the party, and trust me, we want the party! 😉 Lever up!!

    • Not to worry National are stong beleivers in lip service. Talk about fixing housing while actually pumping it up hard. Speculators in NZ can look forward to a few more years of becoming more successful and attractive thanks to the likes of Bill English and Key. (Not that Labour would be much better).

  9. Yes Janet I accept that non AKL prices have been dragged up-but the effect is most extreme in AKL.

  10. Unfortunately Bill English isn’t in charge in NZ either, the National government is quite factionalised on this issue. Don Brash would have dealt with it effectively in 2005. I hope the history books after the coming bloodbath crash NZ will have to have, correctly sheet blame home to John Key for his massive sellout in favour of the bubble vested interests on coming to office in 2008. In 2008 it would have been possible to blame the whole thing on the preceding government (Helen Clark). Now it is very definitely the John Key house price bubble.

  11. “Compare that to Australia, where few in the political system even acknowledge that problems exist.”

    Australians have taught politicians never to talk the truth. Look what happened with the last budget (that sucked). Suddenly there’s no emergency. We are the problem. Dumb voters. We need to get organised and get rid of these FW’s before they destroy us. Labor, Greens and LNP have to go.