Challenges ahoy for future finance minister
With Prefu out, both parties were blowing a victory horn of sorts, but the economic seas ahead will not make for plain sailing, no matter who's in charge
Mōrena and welcome to The Bulletin for Wednesday, September 13, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: Air New Zealand warns of ‘significant’ disruption due to engine issues; total loss to Northland region following storm-related road clsoures now estimated to be at least $112.8m; Auckland council is calling for proposals for a national stadium in the city; but first, the ‘books’ were opened yesterday revealing challenges for whoever becomes the next finance minister
Everybody was Prefu fighting
To start this morning, I’ll be honest and say I’d quite like to just recommend the crossover podcast event of the fiscal election season “Everybody was Prefu fighting” and leave it there. But we press on with 31 days to go until the election. I really do recommend listening to Toby Manhire and Bernard Hickey talk through yesterday’s Prefu and what it means in a bonus episode of Gone by Lunchtime. Great historical context on why the pre election economic and fiscal update is now such a big feature of the lead up to our elections and Hickey provides some helpful global context.
For those who prefer to read, here are the topline facts and figures:
Treasury’s forecasts were not quite as bad as expected, signalling a recession has been avoided
Average annual economic growth of 2.6% is forecast between 2023 and 2027
Return to surplus has been pushed back a year from 2026 to 2027
The tax take has “fallen short of expectations”
Inflation is expected to drop down within the normal range by the end of next year, while interest rates are forecast to remain elevated in the meantime
Record net migration a saving grace but interest rates will stay higher for longer
As BusinessDesk’s Patrick Smellie writes (paywalled), it was immigration to the rescue, again. “Inward migration is underpinning a slightly stronger economic growth outlook over the next year and an earlier-than-expected turnaround in house prices,” he writes. Provisional estimates from Stats NZ show New Zealand experienced a record net migration gain of 96,200 in the year to July. Treasury secretary Caralee McLiesh noted yesterday that the surge in migration of recent months was likely to make it harder for the Reserve Bank to get inflation back into its target band and it’s now expected that interest rates would need to stay higher for longer than was forecast at the Budget update.
Different sides of same coin, same warning no matter who is in charge
Labour’s Grant Robertson and Chris Hipkins said the forecasts were a sign the economy was turning a corner. National leader Christopher Luxon said the country was seeing economic mismanagement on a scale it had not seen before, labelling Robertson "one of the worst finance ministers this country has seen". Newsroom’s Marc Daalder writes that the Government's books gave little cause for celebration or catastrophising, which didn't stop politicians from doing both. interest.co.nz’s Dan Brunskill has a good read on what Prefu really means for future governments. Treasury has essentially warned that future governments will have to keep a tight lid on spending for more than a decade. This morning on The Spinoff, Max Rashbrooke finds little cause for celebration, noting that while Prefu might not have delivered any short-term shocks, it’s a reminder that Labour has not solved the long-term problems that bedevil the economy – such as a tax system that doesn’t raise enough revenue. The Herald’s Thomas Coughlan (paywalled) analyses the serious questions Prefu presents for all political parties.
Cost of petrol, food and rent
Electronic card spending data was added to the bundle of economic information yesterday. Overall spending on cards rose by 0.9% last month but petrol was a significant contributor, with the rising price of fuel cited as the key reason. There are a couple of final touches to add to the economic snapshot today, with the release of the Stats NZ food price index and rental price indexes. Data from a rental firm on Monday indicated the number of prospective tenants viewing a rental property in Auckland had increased to 50 on average from an average of five over the past six months. Keep in mind, this is the last set of chunky economic forecasting and data we get before the election. The next round of inflation data via the consumer price index doesn’t land until three days after the election.
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Engine issue on Air New Zealand planes to cause significant disruption
Air New Zealand says continued problems affecting certain engines will cause significant disruption into next year. The Pratt and Whitney engines are used on the airline’s A320/321neo aircraft which service Australia and the Pacific Islands, and domestic routes in New Zealand (to a lesser extent). Air New Zealand has 16 of these planes in its fleet of 106 aircraft and has emphasised the engine problems do not present a safety issue. The airline says ‘‘While there is no immediate impact to Air New Zealand’s flights, it is likely the airline will need to make adjustments to its schedule in coming months, some of which may be significant.” The issue is hitting airlines all over the world, with Pratt and Whitney’s parent company RTX saying it estimates it will have to pull a total of 600 to 700 engines off its Airbus A320neo jets for lengthy quality inspections between 2023 and 2026.
Northland’s leaders would like a word
Northland’s current MP, Labour’s Willow-Jean Prime holds the slimmest majority in the country. She won the seat in 2020 with a majority of just 163 votes over then-National MP, Matt King. A new Taxpayers’ Union – Curia poll released last night shows National’s candidate Grant McCallum comfortably ahead of Prime on 43%. Prime is on 18%, New Zealand First’s Shane Jones is on 13%, King, now standing for Democracy NZ is on 4% and Act MP Mark Cameron is on 2%. The victorious candidate can expect to have their ear bent over the state of Northland’s roads. A new report released on Monday has revealed that for each of the 58 days the Brynderwyns’ section of State Highway 1 (SH1) was closed after damage caused by Cyclone Gabrielle, the region took a $1.94m economic hit. The total loss to the region is now estimated to be at least $112.8m. Northland Mayoral Forum chair Vince Cocurullo said the mayoral forum was signalling loud and clear that the Brynderwyns fix was a crucial issue for Northlanders and therefore any politicians wanting to represent the region.
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Click and Collect
Auckland council is calling for proposals for a national stadium in the city (paywalled)
The property king and queen of Ōpōtiki - great new follow up to a 2021 series on mega landlords from Stuff’s Ged Cann
A vote about voting systems at the Hamilton city council has ended in a tie and the city is stuck with the single transferable vote system for now.
Click and Elect
New Guardian Essential political poll shows neither a Labour nor National coalition could form a government without the support of New Zealand First
Advertising watchdog dismisses complaint made about Labour MP’s flyers saying it did not reach the threshold to breach the advertising codes
Photos from the campaign trail yesterday featuring pies and ice cream, again. I’m begging them to eat a vegetable.
How can a candidate be running for two different parties? Andrew Geddis explains.
Shanti Mathias reports from the hot seat of Rangitata where National is putting its faith in a fresh new face to reclaim the Canterbury electorate. Toby Manhire has seven suggestions for Labour following recent poll results. A relief teacher in a small town extols the virtues of living communally for the Cost of Being. Gabi Lardies talks to legal experts about the blurred lines in our age of consent laws. Tommy de Silva lists all the ways you can get a te wiki o te reo Māori fix without leaving the couch.
Sporting snippets
Shaun Johnson is back, returning to the Warriors side to face the Newcastle Knights this weekend
Thanks to a sponsorship dispute, the ultimate timekeepers at the Rugby World Cup, the referees, aren’t wearing watches
A 12-year-old schoolboy wins a national golfing title after only having played three rounds of golf in his life
The Decomposition of Rotten Tomatoes
A good read from Vulture on the now ubiquitous review-aggregation website, Rotten Tomatoes. Lane Brown writes that it can make or break films, with “implications for how films are perceived, released, marketed, and possibly even green-lit. The Tomatometer may be the most important metric in entertainment, yet it’s also erratic, reductive, and easily hacked.”
Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.
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