Archive for May, 2010

NZ Economy: Good News On The Financial Front- But Also A Warning

The Govt had some good news to savour on the eve of the budget. First there was an indication the dairy payout in 2011 might rise as high as $8kg of milksolids. And the Reserve Bank reported the outlook for the financial system has improved over recent months, reflecting a recovery in the NZ economy […]

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NZ Foreign Policy: NZ Gets Access To Top Level Intelligence

Senior Ministers have confirmed the Key Govt has returned NZ to the top levels of the US and UK primary intelligence systems. Not for the best part of 30 years has Wellington enjoyed such access to the primary intelligence which guides Washington, London, Ottawa and Canberra. Senior Ministers have confirmed the streams of intelligence flowing […]

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Political Leadership: Key Shows The Steel In His Leadership

John Key has often baffled his opponents, and even commentators, with his style of leadership. Nothing ever seems to faze him. Critics who would like to write him off as a lightweight tried on a dismissive nickname “Smile & Wave.” But if anyone doubted there’s steel at the core, they have only to look at […]

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Budget Special 2010

Building the Recovery Tax Reform Biggest In 25 Years “We owe it to hard-working Kiwi families to provide them with the financial security, opportunities and higher take-home incomes which allow them to get ahead here in this country, instead of chasing better opportunities overseas. The budget does those things and sets out a path to […]

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Govt Draws Line In Sand – Gets Broadside From Turia

The Dominion Post’s warning “Key must allay Kiwis’ unease,” reverberated round the Beehive. It reinforced what National’s strategists have already been telling Ministers. Anxiety has been mounting within the party on how far Key is seen to be making concessions to the Maori Party. Even the wider electorate’s capacity to absorb Whanau Ora, the UN […]

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Closing Tax Loopholes Essential Element Of Reform

Another salient issue is how Bill English will deliver on his undertaking to align taxation income more closely with economic income, and on the extent loopholes such as the inability to look through trusts in determining eligibility for Working for Families and other benefits will be addressed. Specialists in the area will also be looking […]

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Budget Will Be A Litmus Test Of Government’s Commitment

Budget 2010 will be a real litmus test of the Govt’s commitment to use the tax system to achieve some of its transformational objectives. While it is clear GST will rise to 15% (probably from October 1) and depreciation on buildings will either be denied or significantly curtailed, again from October 1, the unknown issue […]

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International Turmoils Gives English A Fiscal Break

The international turmoil triggered by Greece’s debt crisis has, in a sense, made Finance Minister Bill English’s task easier. The Govt has already proved its fiscal rectitude, and it won’t be under the kind of scrutiny from ratings agencies which is provoking nervousness in global markets about the sovereign debt of many European countries, even […]

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Economic Debate – When To Lift Interest Rates

The Reserve Bank of Australia again has raised its benchmark interest rate (this time to 4.5%), saying inflation will move into the top half of its average 2%-to-3% target range in the year ahead. The RBA board has been out in front in lifting interest rates in the wake of the global economic recession. NZ’s […]

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NZ Foreign Policy: Key Cops Flak For Gulf Mission Miscue

John Key’s decision to abandon his Gulf mission to return for the funerals of RNZAF personnel killed in the ANZAC Day helicopter tragedy is expected to delay the opening of NZ’s newest offshore post in Abu Dhabi. The Gulf State’s authorities are expected to defer approval in response to his decision. As Trans-Tasman reported last […]

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NZ Defence Policy: NZ’s Afghan Commitment To Wind Down Before Election

NZ’s military commitment in Afghanistan will be wound down well before next year’s election. Cabinet is unlikely to deviate from this decision, despite pressure exerted on John Key in Afghanistan this week to maintain NZ’s military presence for longer. The NZ Herald threw its weight behind NZ continuing beyond current mandated commitments, in order to […]

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Hold Down Inflation, Or Choke Recovery?

NZ’s economic recovery remains fragile, despite the commodity export boom (the ANZ says its NZD Commodity Price Index hit a new record high in April, with ten of the 13 commodities monitored rising during the month). As shown in the Crown’s financial accounts, corporate tax revenue is well below forecast, reflecting in particular how the […]

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Govt To Turn Around State Sector Spending

The Budget is all but locked down, and Finance Minister Bill English concedes he is “happy” with the way major departments have buckled down to living within the cap of $1.1bn of new spending. It had been a big challenge to turn around the state sector spending “super-tanker,” but by re-prioritising programmes, and knocking some […]

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English’s Budget To Tilt Economic Dynamics

In the budget next month Bill English may have to exercise the skill of a Jeremy Clarkson in driving the economy, putting his foot on the accelerator to speed up economic re-balancing, stamping on the brake in holding Govt spending. He’s got to avoid putting it into a tailspin and sliding into the ditch. The […]

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Early Signs Economy Is Shifting Its Focus

In the GDP figures for December, the Govt sees some early signs of the shift in the NZ economy it wants. A shift it believes can be accelerated by tax changes in the budget. Housing and consumption have not taken off as expected before Christmas, Govt administration has shrunk for the first time since 1999, […]

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Budget To Blow Away Economic Uncertainty

AXA chief economist Bevan Graham says “we could look back on this year as the dawning of new age of prosperity, if the risks can be as successfully managed as the financial crisis was.” Govt strategists in the Beehive are not quite as bullish, but they reckon the Budget will reduce a lot of the […]

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Tax Changes Fiscally Neutral – But Will It Damage Growth?

The Govt is insisting its tax package will be fiscally “neutral,” and at the same time, taxpayers will be better off, even after GST is lifted to 15%. A Sunday Star-Times report at the weekend speculated the new tax levels could be set at 10c, 19c and 33c, without any movement in the thresholds. This […]

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Economic Debate – What’s Best For Drinkers?

The Govt quickly ruled out the likelihood of raising liquor excises, a key Law Commission proposal for reducing the harm from alcohol. It thus spurned a two-fold benefit. First, increasing the revenue collected from our favourite tipples would reduce the sum needed to be collected from income taxes. Anybody who drinks would pay more excise […]

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NZ Economy: Key Govt Strides Towards Economic Transformation

Without much fanfare, some significant progress is being chalked up in re-balancing the economy, turning it from debt-fuelled consumption excess to export-led expansion, and out of cyclical recession to sustainable growth. Alongside the headline success of the resurgent dairy boom and the forestry sector reaping the rewards of insatiable demand for logs from China, manufacturers […]

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NZ Economy: Returns From Dairy, Log Exports Booming

In boosting the milk payout to its second highest level on record, Fonterra told farmers to expect much the same again next year. In-hand income for farmers should reach or top $8bn, up around $1.6bn on last season. Some of this will be offset by higher costs for farmers in drought-afflicted regions. It’s predicted the […]

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