Hive News Monday: English's new Kitchen Cabinet; Pre-Christmas sales buoyant despite quakes; NZ$ below 70 USc

Prime Minister Bill English announces his new Cabinet on 18 December 2016. Copyright Lynn Grieveson / Hive News

Good morning all on the day after Bill English named his first ministry.

I categorised it in my Hive News Alert (see it in full below) as a conservative reshuffle designed to create the least disruption and the least risk of caucus revolts or an early by-election.

A closer look at English's comments and the changes in the rankings show how his cabinet is shaping up as the closest clone possible to the old Key-English cabinet, at least until next May. The big unanswered question from the reshuffle is who will be the next Foreign Minister. It's also unclear yet how Judith Collins might react to her demotion and being stripped of Police and Corrections.

English downplayed the demotion in the news conference and played up Collins' other talents.

He denied Collins' move from 13 to 16 was a demotion "in the sense that, if we are bringing people through they can't all be ranked the same number in the Cabinet, so some numbers move up and down."

"With respect to the portfolios, Judith has a set of business and commercial experience and ability that we haven't been able to use, and given her strong advocacy around Police and Corrections, (she's) done a great job in those portfolios, now we can use her elsewhere in Revenue and Commerce," he said.

Stuart Nash challenged that view that Collins had done a good job, saying Collins had paid the price for a rise in crime and had failed to successfully advocate for more police. Collins was particularly critical of English's reluctance to fund extra police in the brief leadership contest.

Collins has yet to comment, although English said she happy to serve in Cabinet when told of her new portfolios.

'Not about the by-election'

English also denied the May 1 deadline for Murray McCully was to avoid a by-election in East Coast Bays, given McCully had warned he would resign immediately from his electorate if he lost the Ministry. English said he wanted more time to get up to speed with Foreign Affairs before designating a successor, and he said May 1 was also the end of the Budget round so "that seems like a sensible time."

"As an incoming Prime Minister my experience with the increasingly complex issue of New Zealand's foreign affairs and overseas interests is limited and I am keen to have the benefit of Murray's experience," English said, referring to McCully's longevity as longest serving foreign minister in the developed world.

"On the foreign affairs side, I need to get a feel for how it all works. I have done some international work as a Finance Minister, but there is a whole range of issues that the previous Prime Minister and the New Zealand foreign policy establishment are involved with that I am not familiar with, and when I have got a clearer picture of that I think I will have a better idea of what the succession should look like," he said.

Coleman, Bridges and Adams in 'Kitchen Cabinet'

English was also asked if Jonathan Coleman, Simon Bridges and Amy Adams were in his 'Kitchen Cabinet', which was previously seen to include John Key, English, Gerry Brownlee, Steven Joyce and McCully before Key's departure.

"They will certainly be more involved in the senior leadership, and that's quite a challenge because it gets you involved in the broader decisions made by government outside your portfolio and these are now quite experienced politicians and it's great to see that we've got more people than are able to take part in that senior leadership role," he said.

He again confirmed it later when asked to name his Kitchen Cabinet, although he preferred to use the All Black-like 'senior leadership group' moniker.

"I think the senior leadership isn't just a kitchen cabinet. I mean, there is an ongoing process of discussion among ministers about all sorts of issues, but the way I would describe it is that Amy and Simon Bridges and Jonathan Coleman will be part of the senior leadership team," he said.

Naming Coleman in that group appears to position him for the Foreign Minister's role after May 1 and indicates his relative demotion to 7 from 5 in the rankings is numerical rather than real, and not any sort of slap-down for his leadership challenge. It means the key players in Cabinet are English, Bennett, Joyce, Brownlee, Bridges, Adams and Coleman.

In other economic and financial news...

In another sign that retail spending and tourism spending are rollicking along going into Christmas and the summer, Paymark reported from its payments data in the first 14 days of December that sales of NZ$2.642 billion were running 6.1% ahead of the same period a year ago, with growth strongest in Waikato (8.2%) and the tourist-rich areas of Bay of Plenty (9.5%), Hawkes Bay (10.4%) and Otago (8.5%). Growth in Auckland and Wellington was solid at 6.0% and 5.3% respectively, while Canterbury at 2.7% and Marlborough at 1.2% were the weakest of the main areas, potentially because of the earthquakes. Only Gisborne (down 1.2%) fell and may have been affected by its power outage in the last few days of the period.

The New Zealand dollar fell to a seven-month low of 69.4 USc late on Friday night as the US dollar galloped ahead in the wake of the US Federal Reserve's rate hike and a surprisingly hawkish view from the Federal Open Markets Committee on interest rate hikes in 2017. The Fed's 'dot plot' indicated three hikes in 2017, which was more than most expected, and drove US short term interest rates up strongly, making the US dollar more attractive.

Coming up...

Australian Treasurer Scott Morrison is expected to unveil a deficit of up to A$40 billion in a Mid-Year Economic and Fiscal Outlook later today, up from a A$37.1 billion deficit expected in May. Australia is not expected to return to surplus until 2020/21. Officials expect Australia to lose its AAA credit rating as early as this week because of the deterioration in Australia's fiscal outlook.

The new cabinet is scheduled to be sworn in at Government House on Tuesday morning and Bill English will hold his final news conference for the year later in the day.

Statistics New Zealand is scheduled to publish September quarter GDP data at 10.45 am on Thursday. The consensus forecast is for GDP growth of 0.8% for the quarter and 3.6% for the year.

Number of the day:

US$5 trillion - The value of cargo that is shipped through the South China Sea every year, including two-thirds of Australia's exports.

Tweets of the day:

Donald J Trump further complicating negotiations between America and China over the return of an underwater drone captured by China in international waters just off the coast of the Philippines and outside China's 'nine-dash' line claiming the South China Sea as its territory:

We should tell China that we don't want the drone they stole back.- let them keep it!

Sanjay Patel:

Power rankings of JCs in NZ this week: 1. John Campbell (-) 2. Jesus Christ ( -) 3. Jeremy Corbett (up 1) ... 982. Judith Collins (down 979)

Have a great day.


19 December 2016

Hive News Alert: The winners and losers in Bill English's conservative first Cabinet

Hive News Alert: The winners and losers in Bill English's conservative first Cabinet

Bill English took a mostly conservative approach in naming his first cabinet today, laying out a path to the election in the second half of the year with the least disruption, the most continuity and the fewest possible sources of unhappiness in and around the backbenches.

The reshuffle removes the prospect of an awkward by-election in East Coast Bays and bumps potential caucus challenger Judith Collins down the ranking without completely banishing her to the back-benches. It is also incomplete in the longer term, given English chose not to replace the retiring Murray McCully and Hekia Parata now. Instead, they will go on May 1. McCully's replacement was not named, while English said a recovering Nikki Kaye was in line for the Education portfolio.

But there are some significant winners and losers in the new ministerial list.

The winners are...

Amy Adams and Simon Bridges have clearly been marked out as key players in English's thinking. Adams was named Minister of Social Housing and Housing NZ Corp, and given the new role of Social Investment, a task close to English's heart. Her cabinet ranking was unchanged at 6, but she also retained Justice and the Courts, giving her bigger role closer to the heart of Government. Bridges' ranking was lifted to 5 from 8 and he picked up Steven Joyce's Economic Development portfolio and Adams' Communications portfolio.

Michael Woodhouse was lifted up to 9 from 16. Although he lost Revenue, he retained Immigration, Workplace Relations and Safety and picked up ACC. Annette King speculated after the announcement that Woodhouse was elevated into a high position to be ready to take Health if, as she and others expected, Jonathan Coleman is given Foreign Affairs on May 1 when Murray McCully relinquishes the role.

Paula Bennett was already a winner in being selected by the National Caucus as Deputy Leader, but her workload was increased with the addition of the Police, Tourism and Women portfolios, on top of Climate Change and State Services. Her only loss is Social Housing, which goes to Adams.

The biggest winner on National's backbenches was Alfred Ngaro, who went straight into Cabinet at number 21 as Minister for Pacific Peoples and the Community and Voluntary Sector. He will also be the Associate Minister for Children and Social Housing, which are key roles supporting big areas of reform that English is focused on.

Ministers outside cabinet Louise Upston and Paul Goldsmith were elevated into Cabinet and given new and bigger ministries. Goldsmith relinquished the Commerce and Consumer Affairs portfolios, but was lifted from 24 in the pecking order to 19 and picked up Joyce's Tertiary Education, Skills and Employment and Science and Innovation ministries. Upston rose from 23 to 20 and was given Judith Collins' Corrections ministry.

Mark Mitchell, Jacqui Dean and David Bennett were the winners on the backbenches who were elevated into Ministries outside Cabinet. Mitchell was given Land Information and Statistics, while Dean was given Goldsmith's Commerce and Consumer Affairs, along with Foss' Small Business. Bennett was given Veterans Affairs and Food Safety.

The losers are...

Craig Foss and Sam Lotu-liga said last week they were stepping down and out of the Government, so their demotions were no surprise, but Jo Goodhew's demotion to the back benches was unexpected. She said she was disappointed, but pledged to contest next year's election.

Judith Collins was stripped of her beloved Police and Corrections ministries, and was demoted to 16 on the list from 13. She was given Michael Woodhouse's Revenue portfolio and Bridges' Energy and Resources portfolio, along with Lotu-liga's Ethnic Communities portfolio.

Nick Smith's ranking dropped to 15 from 11 and his title changed to Minister of Building and Construction from Minister for Building and Housing. The removal of the Housing Minister title was noted in the news conference and King picked on it in her comments after the naming of English's Ministry.

The other losers in Caucus were Todd Muller and Chris Bishop, who were widely seen as candidates on the backbenches for elevation.

The ministries who have seen their status downgraded or changed included Broadcasting, which has been disestablished and shifted into Communications and Arts, Culture and Heritage portfolios, and Housing, which has been removed altogether, although English said it was catered for within Social Housing, Housing NZ, Building and Construction.

The main talking points

The removal of Housing is shaping up as the key one. English was quizzed on it in the news conference and King was critical of the move, which she described as unprecedented and a sign the Government was not addressing the housing crisis.

English downplayed the removal of the Housing tag.

"It's just a change in the title. There hasn't been someone designated as 'the' Minister of Housing. We are consolidating the portfolio a bit. We have been through a long phase of policy development and getting the government's building programme up and running," English said.

"Those are in good shape now, so we are able to consolidate the portfolio," he said.

King described the changes as cosmetic.

"More and more New Zealanders will see the Kiwi dream of owning your own home slipping away. Any hopes that Bill English would bring a fresh new approach have been dashed. It’s all a bit underwhelming really," she said.

Challenged again about who within Government would answer questions about Auckland house prices going over NZ$1 million, English pointed to the Auckland Council.

"The questions about that are best directed, actually, to the Auckland City Council. They make all the rules and the decisions about housing in Auckland. In so far as there's an ongoing ministerial interest in it, that will be Nick Smith," English told the news conference.

The other main points of interest were the demotion of Bennett and the removal of her Police and Corrections portfolios.

Tweets of the day:

Toby Manhire:

Bill English has ingeniously solved all the challenges of housing and broadcasting by binning the portfolios altogether.



19 December 2016