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Across the Ditch: Teina Pora Compensation + $448m Meth Bust + All Blacks V Wales

Across the Ditch: In this week’s Across the Ditch bulletin Australian radio FiveAA.com.au’s Peter Godfrey and EveningReport.nz’s Selwyn Manning discuss: Weather comparison Latest NZ headlines In depth: ITEM ONE – Teina Pora Compensation New Zealand Government announces $2.25 million compensation will be paid to Teina Pora after wrongfully being convicted of the murder of South Auckland woman, Susan Burdett. Teina Pora served 21 years in prison after being found guilty twice, despite there being no evidence of him having been at the murder scene and the fact that DNA extracted from semen found at the scene matched the notorious lone wolf serial rapist Malcome Rewa.

Teina Pora is affected by Foetal Alcohol Syndrome. Shortly after the killing of Susan Burdett in 1992 the Police issued a reward for information leading to the conviction of the prime offender.

Pora believed that if he made up a story, and the Police believed him, then he would get the reward. Instead, he found himself confessing to a murder he didn’t commit.

After a persuasive media investigation into the case by journalists Paula Penfold and Eugene Bingham, and earlier work done by the New Zealand Herald’s Phil Taylor, Teina Pora’s case was tested at the Privy Council. It found in favour of Teina Pora and quashed the Crown convictions.

The Minister of Justice, and the New Zealand Police have unreservedly apologised for this most awful injustice.

Meanwhile, serial rapist Malcolm Rewa remains in prison under a preventive detention order, and the murder of Susan Burdett remains unsolved. Surely now, the Police ought to put Rewa back before the courts and seek justice for Susan Burdett and her family.

http://livenews.co.nz/2016/06/15/teina-pora-to-receive-compensation/

http://foreignaffairs.co.nz/2016/06/15/nz-police-comment-on-teina-pora-announcement/

http://livenews.co.nz/2016/06/15/pora-case-a-case-to-learn-from/

ITEM TWO – Meth Bust: New Zealand Police bust part of a methamphetamine ring with a HUGE haul of P (ice) valued at $448 million on the street. The bust followed people in Northland, around the Kaitaia and Ninety Mile Beach area reporting unusual and suspicious activity in the area. Strangers were seen attempting to launch a board into the ocean off the sandy beach. And vehicles said to be from out of town, and a few people paying locals large sums of money to help them launch the boat, raised suspicions even higher.

The Police investigated and found suitcases packed with the drug onboard the boat and later found even more buried in sand dunes at the remote location.

Three men have appeared in court charged with relative drug offences. Police investigations are continuing.

http://livenews.co.nz/2016/06/14/northland-police-make-record-seizure-of-methamphetamine-with-approx-nz-street-value-of-448-million/

http://foreignaffairs.co.nz/2016/06/15/update-on-northland-methamphetamine-investigation/

SPORT:

The All Blacks beat Wales last Saturday. The first half was a bit of a worry for All Black fans and saw Wales go into the break ahead with 18 points. But the second half was a demolition by the All Blacks with a win for New Zealand 39 – 21.

The All Blacks winning streak against Wales going back to 1953 looks fairly likely to continue this weekend, with Wales having been beaten by Waikato’s provincial Union the Chiefs 41 – 6.

The All Blacks haven’t been beaten here in New Zealand in 39  winning streak goes all the way back to September 2009 when the Spring Boks beat the ABs at Hamilton.

BUT… stats are one thing, to maintain the standards displayed by the previous All Black era, this generation of players will have to build on their second half performance from last weekend, and take it up a notch or two.

Across the Ditch broadcasts live weekly on Australia’s Fiveaa.com.au and webcasts on EveningReport.nz LiveNews.co.nz and ForeignAffairs.co.nz. Image of Teina Pora courtesy of https://givealittle.co.nz/cause/teinaporawhanautrust

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Jane Kelsey: A new era of openness? RCEP stakeholder process just ticks the box

Source: Professor Jane Kelsey. [caption id="attachment_6181" align="alignleft" width="150"]Professor Jane Kelsey. Professor Jane Kelsey.[/caption]Trade Minister Todd McClay has proclaimed a new era of openness for trade and investment negotiations in the Regional Comprehensive Economic Partnership (RCEP) negotiations, urging critics of the Trans-Pacific Partnership Agreement (TPPA) to “Leave your protests and your placards outside and come and join the conversation”. ‘If he is serious there needs to be a genuine conversation, not giving people two minutes to express serious concerns about impacts on health, workers, environment, the Treaty’, says Professor Jane Kelsey, who has urged the government to open up the secretive RCEP negotiating process. ‘It turns out that industry has an additional session tomorrow to advise negotiators on what regulations they want changed.’ At the last round in Australia, where that government organised the first tentative ‘stakeholder’ engagement, concerned local experts had the opportunity to sit with negotiators on investment and intellectual property to discuss the issues with them. ‘Today’s “stakeholder” programme was a matter of ticking the box’, says Professor Kelsey. ‘Ironically, the process has gone backwards from the frustrating TPPA rounds. MFAT’s own account of the Auckland round in December 2012, before the TPPA negotiations went underground, said more than 300 stakeholders from over 200 organisation made over seventy-one presentations on topics including Intellectual Property, Labour, Environment, Market Access, and Investment and a briefing with Chief Negotiators.’ ‘I have a simple message for the Minister: If you don’t want RCEP to turn into another TPPA disaster for the government, open this process for effective input and release the negotiating texts now’.]]>

Jane Kelsey: Australian Labor Party says no foreign investor rights to sue in new agreements, including RCEP

ALP leader Bill Shorten

Source: Professor Jane Kelsey.

[caption id="attachment_10539" align="alignleft" width="150"]ALP leader Bill Shorten. ALP leader Bill Shorten.[/caption]

The Australian Labor Party has promised not to give foreign investors the right to sue the Australian government in any future free trade and investment agreements. That policy would include the Regional Comprehensive Economic Partnership (RCEP) currently being negotiated in Auckland this week, says Auckland University law professor Jane Kelsey.

The promise forms part of the ALP’s policy platform in the current general election campaign. Latest polls have Labor slightly in the lead for the election on 2 July, which makes this a real possibility.

‘Presumably the Australian government is now in caretaker mode and can’t make commitments to the controversial investor-state-dispute settlement (ISDS) mechanism in RCEP’, Professor Kelsey said.

According to Professor Kelsey, a leaked text of the RCEP investment chapter from last October showed Australia – and New Zealand – had yet to table a position on ISDS. India proposed quite radical moves to strengthen governments’ rights to regulate, while Japan and South Korea sought to transfer some of the worst parts of the TPPA investment chapter across to this deal.

‘A change of government would shift the balance in the investment negotiations and provide important impetus to other countries, and the New Zealand Labour Party, to follow suit’.

Background

Previous ALP governments had a similar policy, following the Howard Liberal government’s position that produced the only US free trade agreement not to contain ISDS. The Philip Morris dispute against Australia over plain packaging tobacco deepened opposition to the use of offshore investment arbitration.

The current Liberal-led government took a case by case approach, including ISDS in the agreement with South Korea and in the Trans-Pacific Partnership Agreement but not in the deal with Japan.

Successive reports by the Australian Productivity Commission have challenged the value of ISDS in such agreements.

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Bryce Edwards’ Political Roundup: Where to go to war next?

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Political Roundup by Dr Bryce Edwards.

[caption id="attachment_4808" align="alignleft" width="150"]Dr Bryce Edwards. Dr Bryce Edwards.[/caption]

Seemingly out of the blue, the Government has come up with a proposal for a colossal $20 billion dollars of new expenditure on the military over the next 15 years. What’s the thinking behind this massive increase? Is it too much, or not enough? Does it mean New Zealand will be going to war more, or better defending the country’s economic resources and people?

New Zealand’s defence forces could be set to expand, with a focus on going into a greater number of new wars around the globe. That’s one interpretation of the Government’s new Defence White Paper released last week. But there are a few other views of where Government policy is taking the military. Unfortunately, there’s not really a full public debate occurring in this vital area, with politicians failing to provide leadership and diversity of views on the future of warfare and peace for this country.

Military expansion and opportunity – despite no real threats

New Zealand’s military is about to expand significantly, with new military engagements likely to occur throughout the world. That’s the possible outcome of the new Government policy according to some of the more considered analyses of the White Paper. Robert Ayson of Victoria University’s School of Strategic Studies says that at the heart of the new proposals, the Government wants “to have real military options for operations further afield”, and the new spending spree “is not just about preserving the status quo” but instead about new combat-ready capabilities – see: A Defence Force for New Zealand conditions?

Ayson suggests that the White Paper couches these ambitions within the more politically acceptable justifications of the military patrolling New Zealand’s backyard: “Yet appearances can be deceptive. New Zealand doesn’t need to spend $20 billion on capital items in the next dozen years to send non-combat ships around its extensive periphery. These plans only make sense if we also want options to deploy forces into potentially more dangerous places.” 

Ayson’s analysis of increased military foreign engagement is backed up by a Dominion Post editorial, Questions remain about $20 billion defence spend-up. The editorial also complains, “the paper is vague about which foreign hot spots defence forces might be sent to.”

Similarly, Gordon Campbell argues that New Zealand simply doesn’t face any significant threats that would justify the huge new expenditure. He argues that it’s going to happen because defence chiefs believe that “there are always other things we can find to do with some of this great stuff, once we’ve bought it” – see his in-depth analysis, On the new Defence White Paper

Campbell suggests that the new expenditure “looks more like a Defence bureaucracy seeking to perpetuate itself – by relying on WWII or Cold war precedents that no longer hold water – than a case based on genuine relative worth.” He details how even the National Government has strongly expressed its belief that New Zealand faces no likely threats. 

Campbell also wrote about the so-called Defence Pretence in April, asking: “Why keep spending billions on defence, when there’s no discernible threat?” He points to the Government’s own Defence Force Assessment of last year, which said “the threats that New Zealand faces are (a) limited and (b) of a nature that would give us time to upgrade and to prepare, should that ever be needed”. Furthermore, the type of potential threats of cyber threats and terrorism are hardly going to be prevented with a focus on “brand new batch of frigates or cargo planes or spotter planes”. 

Another military critic, blogger No Right Turn, says that the latest leap in military expenditure will simply enable the defence forces to “fight other people’s wars, the wars the New Zealand public opposes” – see: Toys for the boys

He takes issue with the new equipment being suitable for regional non-military needs: “The big fancy cargo plane NZDF wants as a replacement for the current Hercules? It will need a long runway to take off, won’t be able to land on rough airstrips, and there will be only one of them rather than four. So, the basic role of delivering aid to the Pacific after disasters, the one the planes actually get used for and that the public overwhelmingly supports, will be sacrificed for a gold-plated status-symbol useful only for providing logistical support for other people’s wars. Those ASW planes? What we actually need is something to monitor illegal fishing, do post-disaster damage assessments, and look for lost ships – not… imaginary submarines from thirty years ago.”

The blogger suggests the massive increase in expenditure is simply about keeping up with, and pleasing, the Americans and Australians. And according to NBR editor Nevil Gibson, the big expansion “will be welcomed by New Zealand’s allies, such as Australia and the US, who may detect a stronger commitment to defending this country’s wider interests than just the immediate maritime environment” – see: Defence paper takes right step forward

There is no doubt that the proposed increase in expenditure here comes in the context of rising defence spending in both our region and the world. Gordon Campbell outlines how New Zealand’s allies are “throwing money at Defence as if there is no tomorrow”, with the Australians planning to increase military spending by 81 per cent – see: The Defence Pretence

This escalating expenditure is also detailed by the University of Waikato’s Alexander Gillespie, who says “Collectively, the world has gone from spending $1675 trillion on weapons in 2001 to some $2590 trillion today. This is over 10 times the amount spent globally on foreign aid each year” – see: Defence spend hangs on our Pacific role

But hasn’t the international environment become more threatening, necessitating substantial upgrades to New Zealand defence capacity? This argument is highlighted by Stacey Kirk, who says that “A lot has changed since 2001” when then Prime Minister Helen Clark pronounced that New Zealand existed in a “benign strategic environment” – see: Not the ‘benign strategic environment’ of old, the Defence Force targets sights closer to home. She puts a particular emphasis on potential aggressive foreign motivations towards Southern Ocean and Antarctica, suggesting New Zealand needs to increase its expenditure to protect its resources there. 

However, the latest Global Peace Index gives New Zealand a ranking of fourth in the world for its peaceful environment – this suggests that our strategic situation is still relatively benign – see the 2016 report

No real debate or party differences?

Despite the huge significance and major spending proposed in the defence white paper, there has been very little public debate, or even strong political party reaction to it. As Chris Trotter says today, “hardly a voice has been raised in protest at this monstrous outlay on the NZ Defence Force” – see: How many houses could we get for $20 billion spent on defence?

The one exception has been from New Zealand First, whose defence spokesperson Ron Mark, who has strongly criticised it for its omissions, lack of imagination, and for not increasing defence spending enough – see his eight-minute interview with Paul Henry: NZ First: More than $20B needed for ‘sci-fi’ warfare. Mark proposes that more emphasis should be put on the use of drones, and rebuilding an air strike wing of the air force, even if the planes had to be built in New Zealand. 

Other opposition parties have been relatively silent. According to Victoria University’s David Capie this is possibly because it’s “a very politically astute White Paper”, and there’s little for them to disagree with – see: For all the thrill of cyber armies and drones, there’s more to NZ’s new defence strategy

 

We might therefore see a multi-party consensus develop in favour of the various proposals: “I suspect Labour’s caucus and perhaps even the Greens are actually pretty comfortable with the increased attention on our immediate neighbourhood and the stress given to non-traditional defence activities.”

Likewise, TVNZ reports that political editor Corin Dann “says the ‘general thrust’ of the report seems to have been welcomed, with even the Greens saying they’re pretty comfortable with it and he thinks that’ll give the Defence Force ‘the confidence it needs to go about trying to make those purchases’.” – see: Defence to replace frigates and planes – but with what?

In fact the Greens surprisingly gung-ho approach to the military can be seen in the statements of the party’s global affairs spokesperson Kennedy Graham, in Rosanna Price’s Inequality widens, global peace drops: is New Zealand doing enough? Graham argues that New Zealand is not contributing enough to UN-sanctioned military engagements, suggesting that the Greens might quietly welcome the new military expansion in the Government’s white paper. 

Is $20 billion too much or too little?

New Zealand First says the Government actually needs to double its spending on the military, taking defence spending as a proportion of GDP from one per cent to two per cent – see: NZ First: More than $20B needed for ‘sci-fi’ warfare.

For the strongest case for the need to upgrade the military’s equipment, see Karl du Fresne article for a foreign audience, in The Spectator – see: Off the radar. Published last month, before the white paper was released, du Fresne argues that “The gap between Australia’s and New Zealand’s defence capabilities is an embarrassment”, due to public complacency, and the fact that the defence sector simply doesn’t have much influence anymore in New Zealand. Previously, he says, “the Returned Services Association was arguably the country’s most powerful lobby group.”

The low funding of defence, according to the NBR’s Nevil Gibson, is explained in his editorial, Defence paper takes right step forward. He says: “The absence of thinktanks and defence commentators has created a vacuum filled largely by ideas promoted by pacifists and anti-American activists.  This wasn’t helped by the abolition under Labour of the air force’s strike wing, some strange procurement decision for unsuitable ships and armoured vehicles, and an emphasis on peace-keeping, humanitarian support and disaster relief.  Important though these last three items are, they are no substitute for a well-armed and trained force.”

Gibson salutes the proposed new expenditure, but bemoans it’s still much less than for social purposes: “A $20 billion spend over 15 years is nothing against the $16 billion that will be spent on health alone for the coming financial year.”

David Farrar also seems to suggest that current expenditure is too low, emphasizing “1% of GDP on defence is around half the world average”, and he details a range of OECD countries spending more – see: Defence spending to remain modest

But maybe much of the planned expenditure is unnecessary. Keith Locke argues that New Zealand should get rid of its frigates, rather than upgrade them, and that “New Zealand is better placed to be a peacemaker, not a warmaker, in our region” – see: First sell the frigates, not the patrol boats

In fact, why not just get rid of the military? Today Chris Trotter proposes the abolition of the defence forces, along the lines of Costa Rica, where “The monies previously spent on the military were reallocated to education and culture” – see: How many houses could we get for $20 billion spent on defence?

Trotter says the money could be better spent elsewhere in New Zealand: “Imagine the number of state houses and affordable apartments this country could build over the next 15 years with even half the $20 billion currently promised to the NZ Defence Force. Surely, in a democratic state, it is the adequate provision of health, education, housing and employment that should take priority over the vast sums required to purchase the most up-to-date weapons of war?”

Finally, for an indication of just how much the military environment and debate has changed, see Nicky Hager’s argument in favour of US warship visits to New Zealand – see: Let the US send a warship. He says that although such ships have been a key part of killing 100,000 in the Middle East, displacing millions, and making “the world a less safe place”, we should bring them here in order to prove that New Zealand has won our nuclear-free debate. And, for another Nicky Hager-related item, see TVNZ’s Q+A flashback item from 1988 – a one-minute video of Hager and others protesting against the last massive increase in defence spending – see: No more frigates

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Jane Kelsey: Secretive talks on China-led rival to TPPA starts at Sky City

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Source: Professor Jane Kelsey.

The 13th round of the Regional Comprehensive Economic Partnership (RCEP), the China-led rival to the Trans-Pacific Partnership Agreement (TPPA), will be held at Sky City in Auckland in the coming week.

[caption id="attachment_6181" align="alignleft" width="150"]Professor Jane Kelsey. Professor Jane Kelsey.[/caption]

‘Talks on RCEP were launched back in 2012, but it has remained largely under the radar and over-shadowed by the government’s clear preference for the US-led TPPA’, says Auckland University Law Professor Jane Kelsey. ‘Now that deal is threatened by American domestic politics, attention has turned to RCEP as the fall-back option.’

Last month, US President Obama depicted the competition between TPPA and RCEP as a battle over whether America or China makes the rules for the Asia-Pacific region.

‘As the two goliath’s face off, the New Zealand government is trying to keep a foot in both camps. It ignores the fundamental question: why should the rules that decide our future be made by either of these superpowers?’, Professor Kelsey said.

Like the TPPA, the details of these negotiations have been shrouded in secrecy. Recently, Trade Minister Todd McClay refused to name all the chapters being negotiated in response to an Official Information Act request made by Professor Kelsey, withholding the titles of 7 out of 29 chapters, annexes and schedules.

However, draft texts of the investment and intellectual property chapters have been leaked, including different countries’ positions. According to Professor Kelsey, they show Japan and South Korea are seeking to export some of the worst parts of the TPPA into RCEP, notably provisions relating to medicines and foreign investors’ rights and enforcement powers.

‘To date there has also been no opportunity for “stakeholder” engagement in RCEP, although corporate lobbies have had access to negotiators. The Auckland round will be the first such event with a session on Tuesday afternoon’, Professor Kelsey said.

‘The Minister has promised more openness than his predecessor, so hopefully this will be a free and frank exchange, rather than the stonewalling from Ministry officials that we experienced throughout the TPPA. If not, they can expect this negotiation to come under the same intense scrutiny, and face challenges to its legitimacy for undermining sovereignty and te Tiriti o Waitangi and by-passing proper democratic process.’

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History repeats itself with tragic impact in Papua New Guinea

Report by David Robie. This article was first published on Café Pacific Student footage as the Papua New Guinean police tried to arrest the leader, Kenneth Rapa, moments before opening fire on the crowd. Video: Cafe Pacific on YouTube By DAVID ROBIE BARELY had the whiff of teargas and gunshot smoke drifted away from the University of Papua New Guinea campus this week when the blame game started in earnest with the O’Neill government pointing the finger at the parliamentary opposition and also international media. The media were blamed for initial reports by some reputable international brands that up to four people had been killed. There were no deaths, but four of the 23 people reported to be injured were taken to Port Moresby General Hospital critically wounded and stabilised. It could have been an even worse tragedy. Sadly, the scenes of chaos shown on campus and chaotic news reports are typical. I lived in Papua New Guinea for five years during the 1990s when I headed the journalism programme at UPNG. There were at least two occasions when I was there when police came onto campus – a provocation in itself as there is an understanding that police don’t do that, if not actually illegal – and fired teargas at protesting students. Teargas canisters themselves can cause serious injuries as our award-winning Uni Tavur newspaper student reporters and photographers showed at the time in graphic reports and images. The police arrived on campus last Wednesday heavily armed and in camouflage fatigues – to quell another peaceful protest (after more than five weeks of them)? Clearly somebody in high authority had given the green light to the police to use any steps necessary – maximum force – to crush the protests once and for all. The police were ready for business. Students have traditionally seen them themselves as the “people’s” opposition, providing checks and balances on the power elite in the country which they regard as corrupt and opportunistic. They are the voices to raise the questions that grassroots people cannot easily express. This editorial in The National on Thursday sums up the situation quite well:

HISTORY has repeated itself. In 2001 protesting University of Papua New Guinea students were fired on by police resulting in four deaths. Of great concern is that this is not the first time police personnel have fired on unarmed civilians in tense and provocative situations. Two years ago also in Port Moresby’s Hanubada Village, police fired indiscriminately into a crowd after a confrontation between National Capital District rangers and street vendors turned violent. Two men were allegedly shot by police. What took place [on Wednesday] morning at UPNG in Port Moresby will go down as another tragic chapter in the country’s history. Students, who had organised themselves en masse to conduct a peaceful protest at Parliament House were stopped by armed police as they tried to board buses. The situation quickly got out of hand after students refused to call off their planned protest. Shots were fired by police personnel and according to a press release from the office of the Police Commissioner Gari Baki, 23 students were wounded with five in a critical condition at the Port Moresby General Hospital. Plunged into chaos The city was then plunged into chaos as news of the shootings quickly spread by word of mouth and particularly on social media websites like Facebook. Public safety is paramount and the police have a duty to keep the peace and ensure public as well as private property is protected and no one’s rights are infringed upon.   Sadly, they failed to uphold their constitutional duty when they fired into the crowd of students. If this how the police are going to handle public protests by students and basically any group wishing to exercise their democratic and constitutional rights, than something is terribly wrong with this State body. 
The police have claimed that they were attacked initially by some of the protesters with stones and responded with force. But they cannot seem to understand that there is no place for meeting this kind of rowdy and belligerent behaviour with maximum force. It is completely disproportionate to the offending act. Over the past five weeks UPNG students had boycotted classes and protested calling for Prime Minister Peter O’Neill to step aside and answer allegations of corruption that have hung around him for some time. The police and the National Executive Council, which is headed by O’Neill and his senior ministers, should have foreseen the potential of an event such as this taking place. The police have continued to use strong arm tactics as their first course of action when dealing with the public. These aren’t one off instances, there is a clear pattern showing the reactionary nature of how police carry out their duty. Fearful, angry public Police have managed to restore peace and order but there is no doubt that the public is both fearful and angered by the conduct of the police force. This situation must be handled with a great deal of care and consideration. Today and the coming week will tell us how much damage has been done to public confidence in the O’Neill government. If it was at all time low levels then it has hit rock bottom or near enough now. The government will not come out of this looking good. Opposition MP Gary Juffa recently questioned the government’s continuous suppression of free speech and the right to protest indirectly by remarking that the police were carrying out a fear campaign against anyone or group, including the media. Juffa asked some pointed but valid questions. Rhetoric vindicated The rhetoric has been vindicated by the events that transpired yesterday. The question now remains as to what the government will do to rebuild that faith and trust that has significantly been eroded by events yesterday. How are they going to mend this bridge? Or will they be happy to watch it burn and continue unabated? The acting chancellor of UPNG, Dr Nicholas Mann, told foreign media he did not know the full details of what happened. “I understand that police had not given them the clearance or approval to do [a march on Parliament], so when there was defiance of lawful instruction there was bound to be consequences.” That is almost a rebuke of his own students. O’Neill told Parliament he was not aware who had authorised the armed policemen to shoot the students and vowed that there would be a full inquiry into the UPNG unrest.
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Tony Alexander’s New Zealand Economic Overview 9 June 2016

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Economic Analysis by Tony Alexander.

Thursday June 9th 2016

[caption id="attachment_10490" align="alignleft" width="150"]Tony-Alexander-BNZ-1 BNZ economist, Tony Alexander.[/caption] As was expected the Reserve Bank left its cash rate unchanged at 2.25% this morning and retained a warning that a further reduction may be needed. They in fact have one pencilled in which we think will arrive in August, and forecast no rate rise until beyond the end of their forecast horison which is the middle of 2019. This ongoing good environment for borrowers can do nothing other than provide continued support to a housing market replete with more and more people seeking accommodation but restricted by some existing shortages and less than optimal construction growth. House prices will rise further and the chances are now very high that soon the RB will strengthen existing loan to valuation rules – though it pays to note that the RB estimate that their effects in restraining the housing market can only be temporary. Some exporters might be surprised by the NZD’s rise above US 71 cents this week. They shouldn’t be. As we have long pointed out, compared with the rest of the world NZ looks politically stable fiscally and economically robust, our currency has already factored in a one-third fall in commodity prices, post-GFC developments suggest US monetary policy will tighten little and may reverse direction quickly, and our current account deficit is below average. But at current levels the NZD is looking stretched in the short-term so importers might want to discuss hedging with their currency advisors – at the BNZ of course. For the full analysis, continue reading below or Download document (pdf 373kb)
Low Interest Rates For A Long Time This morning the Reserve Bank released their latest Monetary Policy Statement and reviewed the 2.25% level of the official cash rate. As was near universally expected the rate was left at the 2.25% it was taken to in March and exactly the same words were used to describe the RB’s view that further easing might be needed. “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” http://www.rbnz.govt.nz/monetarypolicy/monetary-policy-statement/mps-june-2016 Does inflation seem headed for such midground? Not really. The current inflation rate is 0.4%, the exchange rate is about 4% above the long-term average, the World Bank last night cut its global growth forecast to 2.4% from 2.9% for 2016, and recent growth measures have been weak in the US, Japan, China, Europe and the UK. Wages growth still shows no signs of accelerating, Offsetting this oil prices have moved back above US50 a barrel overnight, measures of capacity utilisation have lifted slightly, and inflation expectations seem to have stopped falling. But with foreign inflation measures still generally declining the clear risk is that the Reserve Bank will find that further interest rate stimulus needs to be applied to the NZ economy. This is especially so as they have assumed both that the world economy improves and our currency declines. The chances are that the official cash rate will be cut again in August to 2.0%. For your guide, in their Monetary Policy Statement the Reserve Bank see the 90-day bank bill yield, currently just over 2.3%, still sitting at 2.1% come the middle of 2019. In other words they anticipate no need for higher NZ interest rates for at least the next three years. Housing Nothing new to add this week having written quite a bit on this subject recently. Insufficient construction, low interest rates for decades, strong population growth, ever rising construction standards and costs etc. all add up to high and still higher prices. Watch for a new credit supply control soon from the Reserve Bank as with the one hand they stimulate the housing market through record low interest rates and with the other try to impose restraint while waiting for supply to catch-up over the next decade or so. Note that in this morning’s MPS the RB wrote “House price inflation is likely to persist in the near term.” NZ Dollar Commensurate with our long held view that there is a big list of factors strongly supporting the Kiwi dollar we have this past week seen the NZD trade above US 71 cents. The main cause of the three cent jump from a week ago was the worse than expected employment growth number for the United States. Jobs grew just 38,000 in May rather than the 160,000 which had been commonly estimated. The implication of this outcome is that the next tightening of US monetary has – surprise surprise – been pushed back out yet again. Our warning since last year has been that assumptions of a steady upward path for US interest rates need to be restrained in light of complete rate rise reversals in numerous countries since 2010. These include New Zealand, Australia, Sweden, the Eurozone and so on. The way things are going there may be no further US rate rise this year and if there is then it could be reversed next year. The weak US jobs growth might not be quite so concerning if US firms were strongly investing and therefore presumably raising labour productivity. But investment indicators have been weak recently. This means the global development post-GFC of weak productivity growth (NZ included) shows no signs of changing in the US. The poor jobs report also calls into question the sustainability of recent strength in US consumer spending. Nevertheless, the monthly job results can jump all over the place so this latest outcome, nearly the weakest in six years, does not lead to a conclusion that US growth is slowing rapidly. Not yet anyway. But for ourselves the outcome is that with a reduced chance of further US monetary policy tightening our currency seems set to go higher rather than lower as many others have been forecasting on the basis of a blind extrapolation of the expected NZ-US interest rate differential. It pays to note that with oil prices recovering recently the general tone toward commodities has improved and this traditionally adds some support to the NZD. But in the absence of any strong sign of reduced milk production in the EU it would be unwise to simply assume rising oil prices mean a solidly rising track as yet for NZ dairy prices. The second major factor pushing the NZD higher this week was this morning’s Monetary Policy Statement and official cash rate review by the Reserve Bank. There was no cut in the cash rate, and although this was largely expected it appears some punts were nonetheless taken that a cut would come and covering of those positions has pushed the NZD to a one year high against the greenback near 71 cents. Against the Aussie dollar this week the NZD has changed little with the AUD also rising against a weaker USD and lifted by the RBA decision on Tuesday not to cut their cash rate again – for the time being. In Japan the Prime Minister has officially delayed indefinitely the planned consumption tax rise for next year in an effort to remove the risk of recession reappearing. But with the Three Arrows policy having failed because of the simple demographics of a shrinking old population plus absence of very strong structural reforms (the third arrow), it is hard to imagine the Yen being strong. However there is a big caveat to this view. If the Americans are stupid enough to vote Donald Trump as their President in November (President Obama’s lasting legacy?) then the lift in global geopolitical and economic uncertainty will boost flight-to-safety buying of the Yen. The Euro however faces a test in two weeks with the UK referendum on whether to remain within the failed cooperative structure which used to be called the Common Market then morphed into the European Union/track to political union. Same for the Pound. Event risk is huge so be wary of having FX transactions planned involving those two currencies in the next four weeks. Longer term the Euro looks like suffering from ongoing structural economic, political and social woes. No wonder our net migration numbers are so high. Taking all of these factors plus many more into account we get the point we have been making for a number of years now. New Zealand looks like a bright shining fiscal, economic, social and political light during ongoing days of so much darkness in the rest of the world. This will strongly support the Kiwi dollar. As previously mentioned, exporters should look for occasional bouts of weakness in the NZD to boost hedging. If I Were A Borrower What Would I Do? Were I borrowing currently I would have about 20% or so floating and fix the rest for two or three years. I would fix five years if I thought inflation might be a problem two or three years from now – but I don’t.
The Weekly Overview is written by Tony Alexander, Chief Economist at the Bank of New Zealand. The views expressed are my own and do not purport to represent the views of the BNZ. To receive the Weekly Overview each Thursday night please sign up at www.tonyalexander.co.nz To change your address or unsubscribe please click the link at the bottom of your email. Tony.alexander@bnz.co.nz
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Keith Rankin: Moving Auckland’s Port – The Tamaki Ship Canal

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Article by Keith Rankin.

The Nation on Saturday (4 June), ran a panel interview (including Phil Goff and Winston Peters) about where and when Auckland’s main Waitemata Harbour port would be moved to some other location, just as most other big city ports around the world have outgrown their original city locations (The future of Auckland’s Port).

While the key assumption that Auckland’s main port will someday be moved en masse rather than incrementally is probably not correct, all the alternative port options mentioned were unconvincing. Clearly the best location for a new port is the Manukau Harbour, near the substantial infrastructure around the airport, the Otahuhu freight rail terminus, and the existing Metroport in Southdown. The obvious problem is that large numbers of large ships cannot and should not negotiate the dangerous Manukau Bar.

Winston’s preference of Whangarei could only be a solution for a partial move, rather than a complete relocation of Auckland’s container port. The infrastructure needed to get this mass of goods from Whangarei to Auckland (and points south) would be both expensive and an environmental nightmare. (I am imagining a rail tunnel underneath Glen Eden, from Henderson to Mangere.) Other suggested options, such as having a port like Sydney’s Botany Bay in the Firth of Thames, seem as far-fetched.

So I put on my engineer’s hat, and thought, “why not use the Tamaki River and build a ship canal across the Otahuhu portage, into the basin of the Manukau Harbour east of Onehunga’s Mangere Bridge?” The 3km route I thought looked best goes south of Sylvia Park between the Eastern Line railway (which is also the North Island Main Trunk) and Panama Road, coming into the Mangere Inlet of the Manukau between Southdown and Westfield, just a kilometre from Metroport Auckland. My vision was that the Mangere Inlet east of the Mangere Bridge would be dredged, with a causeway just east of Mangere Bridge built from the tailings, creating a large shipping marina bordered by Mangere, Favona, Otahuhu, Westfield, Southdown, Te Papapa and Onehunga. A locking system could connect the new harbour with Port Onehunga, exploiting the two-three hour tidal difference between Auckland’s two coasts.

A Tamaki canal was first proposed in 1860 by one Colonel Moule at £22,876 (Paddle your way around Auckland, Colin Moore, NZ Herald 25 Feb 2002). In 1887 Public Works engineer JW Blair upped the cost to £250,000 (reported in Waitemata-Manukau Canal, NZ Herald 6 Jun 1907). Interest was quite high in the 1907-11 period (eg Waitemata-Manukau Canal, NZ Herald 5 Sep 1911). The idea was back on the agenda in 1960: “District must get behind Tamaki ship canal project now that there is a distinct possibility, it would open the way for new industries in area”. And in 1962, for the Otahuhu Golden Jubilee publication, a section was titled History of the Canal Scheme.

More recently we have this amusing piece by Chris Barton (Canals in Auckland’s south, NZ Herald 8 Apr 2005). And there’s this interesting 2007 (9 Feb) blog entry (and visualisation) by scientist David Haywood (The Geeks Shall Inherit the Earth), which refers to this entry (Manukau Harbour, European Settlement) in the 1966 Encyclopedia of New Zealand (“Future development of the harbour will depend largely on the construction of a canal linking it with the Waitemata, where the tides are approximately two hours later”).

In all these times the suggested solution was on a much more visionary scale than the problem being addressed. Now, however – as expressed on The Nation – the problem really has come. Port Waitemata has reached its growth limits (or exceeded them, given the city’s need to reclaim its harbour and gulf as Auckland’s playground and tourist magnet). Yet the visionary thinking that characterised our past seems to have gone.

I searched the newspaper literature for arguments why a Tamaki Ship Canal could not be built as a part of solution to Auckland’s growth. I could find none. Much bigger ship canals were built long ago in Greece (Corinth, completed 1983), Manchester (also 1893), and Kiel (1895). The Tamaki proposal seems puny in comparison. Yet this seemingly obvious piece of development infrastructure for Auckland is almost never mentioned in polite circles. If planned for, it could be a perfect ‘shovel-ready’ project for New Zealand’s next Great Depression (probably in the late 2020s); as the Sydney Harbour and Golden Gate bridges proved to be in the 1930s.

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Across the Ditch: NZ Housing Minister Looking More & More Out of Touch + All Blacks V Wales Looms

In this week’s Across the Ditch bulletin Australia radio FiveAA.com.au‘s Peter Godfrey and EveningReport.nz‘s Selwyn Manning discuss how the National-led Government is looking more out of touch with the real impacts of a hot ballooning housing market.

Also discussed is sport with the All Blacks set to take on Wales in a three test series in New Zealand.

First up: Weather comparison and a Headlines roundup.

ITEM ONE

Politics: The National-led Government looks increasingly out of touch, especially over housing with its Housing Minister Nick Smith stating Wednesday that homes in Auckland are more affordable than they were when his party became the government in 2008.

Smith, who two weeks ago was interviewed on television standing in front of a roaring warm open fire, had insisted homeless people sleeping rough had options, even as winter descended on New Zealand.

This week, the Minister who once had to resign from Cabinet over inappropriately expediting a friend’s challenge for Accident compensation (a portfolio he was responsible for), told reporters: “In the debate around housing affordability, I do challenge people to not just look at house prices, but also look at interest rates that are at the lowest level for 50 years.”

“In 2008 you had interest rates of about 11 per cent, and now they’re 4 per cent. And that has a really strong impact on the capacity for people to be able to service mortgages.”

As the New Zealand Herald reported: Smith was citing a report by Massey University that scored housing affordability by comparing the average weekly earnings, with the median dwelling price, and the mortgage interest rate.

Auckland’s index in February 2008 was 38.73, compared to 33.8 in February 2016.

Smith conceded that some home owners were paying up to 100% of their wages toward their mortgages and that the market was not affordable for first home buyers. But he insisted the Auckland housing market is more affordable than it was when Labour was Government in 2008.

What Smith clearly doesn’t realise is people are not stupid, they weigh up what is affordable based on their disposable income. Auckland voters are also intolerant of a small town politician trying to tell them how things are for them in a big city. And it seems almost everyone is tired of this career politician attempting to score political points against his opposition in a pathetic beltway scrape.

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=11653048.

ITEM TWO:

Sport: All Blacks take on the touring Wales side in the first of a three test series beginning on Saturday at Eden Park in Auckland.

There is a mix of experience and new talent lined up to take on Wales. There is anticipation on who will lead the Haka as the teams square off on the field. And an uneasy excitement over whether the All Blacks will roll out a new style of play to challenge their northern hemisphere rivals.

While Wales are competitive and respected here in New Zealand, they have not beaten the All Blacks since 1953. Can they break that spell?

Across the Ditch broadcasts live weekly on FiveAA.com.au and webcasts on EveningReport.nz LiveNews.co.nz and ForeignAffairs.co.nz.

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