There is growing concern in the business community about the effects of housing affordability in Auckland on businesses' ability to recruit and retain staff, but also more broadly on the social fabric of the nation.
The NZ Herald's Mood of the Boardroom series highlighted these risks with 70% of those surveyed saying the Government needed to do more to dampen house price inflation and 72% saying they were concerned about young Aucklanders being priced out of the housing market. Auckland's housing affordability was ranked as the third most important factor affecting business confidence behind Auckland growth pressures and infrastructure.
Kiwi Property CEO Chris Gudgeon was quoted as saying the Government had lost sight of its social role in providing affordable housing and said the Government had been "lazy, naive and negligent."
Meanwhile, KordaMentha partner and corporate heavy-hitter Michael Stiassny said the middle classes were being priced out of the Auckland housing market, which was undermining the sustainability of the city.
Speaking at a University of Auckland Business School panel discussion on the Auckland Council elections, Stiassny (quoted by the Business School) said housing affordability was an issue for those in middle class jobs.
“The middle class is being disenfranchised and disappearing,” said Stiassny, who is the chair of the Vector and Tower boards.
“We need nurses to be able to live and work here. We need teachers, police, we even need office workers at Vector," he said.
“This is one of the fundamental issues: making Auckland a place where the middle class can afford to live and want to live because without them we are not going to be sustainable.”
Key soft-pedals on EA reforms
Meanwhile, John Key told his post-cabinet news conference yesterday afternoon (7 mins 10secs onwards) that he expected the Electricity Authority to review its transmission pricing changes, which would increase charges for those in Northland, Auckland and the West Coast, including the likes of New Zealand Steel and Norske Skog, while lowering costs for those in the south of the South Island, including the Tiwai Point smelter.
See more on the opposition to the plan detailed in our May 18 Hive News email on the proposals. The opposition has intensified in the last week after EMA Northern, the Ashburton District Council, the Auckland Chamber of Commerce, Counties Power and its consumer trust, EA Networks, EMA Northern, Entrust, Auckland Federated Farmers, Northpower, Norske Skog, New Zealand Steel, Top Energy, Trustpower and Vector launched a campaign to stop them.
Asked by Richard Harman what he thought of the EA proposals, Key said those who did well would be quiet, while those who lost out would want them changed.
“I think there’s a lot of water to flow under the bridge before these charges actually happen,” Key said.
“For a start off, they're going through a process of considering the feedback. The Electricity Authority may well come back and have another look at the matter, and as we know it’s a fairly litigious area where it is likely whatever decision they make will be challenged in court," he said.
“My view is that nothing is going to happen quickly.”
In other economic and financial news...
Westpac reported its McDermott Miller survey of employee confidence about the labour market improved in the September quarter from the June quarter. "It suggests the solid momentum in employment growth over the first half of the year is likely to be have been maintained into the second half of 2016," Westpac's Anne Boniface said.
Statistics New Zealand reported a goods trade deficit of NZ$1.3 billion in August or 37% of exports, which was above the 25% average for the last five August months. This was the second–largest monthly deficit recorded behind the September 2014 deficit of NZ$1.4 billion and the largest deficit for an August month. In another sign the high New Zealand dollar is affecting the tradable sector, exports fell 8.6% on a seasonally adjusted basis in August from July and the trend for goods exports has been falling since April, with dairy exports down 12% in August in seasonally adjusted terms, logs down 8.7% and machinery exports down 14%.
Also to update yesterday's email piece on the gap between building consents and Statistics New Zealand dwelling estimates, a correspondent has pointed out that one reason for the 12-13% gap cited by Statistics NZ between the 2006 and 2013 censuses was the unusually high number of demolished or uninhabited buildings in Christchurch after the earthquakes, and that Statistics New Zealand analysis has shown less than 1% of the total consents were not actually built.
Quotes of the day:
Iain Lees Galloway on the issue of Indian students facing migrant abuse and deportation, and after National list MP Kanwaljit Singh Bakshi was quoted as comparing the students to "faulty fridges" that should be sent back. Bakshi has said he was referring to the Private Training Establishments rather than the students.
"Many international students are falling victim to a cycle of exploitation. They are exploited in their home country by dodgy immigration agents. They are exploited by rogue employers in New Zealand. They are exploited by fringe education providers who turn a blind eye to their plight while they take their money for inferior courses."
Number of the day:
US$32 trillion - Total Chinese bank assets (including loans and reserves) at the end of 2015, which is almost three times China's GDP of US$11.4 trillion. For comparison's sake, New Zealand's total bank assets of NZ$509 billion represent just over two times New Zealand nominal GDP.
Have a great day.