The news that mattered this morning
Please explain - The FMA and the Reserve Bank called in the heads of the big four banks in New Zealand on Monday to ask them for concrete evidence that they weren't using the same practices as their Australian parents, which are now under the glare of a Royal Commission over the Tasman.
RNZ reported the FMA had warned the banks to comply or face court action. "We've asked them to provide reassurances to us that they have scrubbed their business models, and they have a basis for being confident that those issues don't exist here," FMA chief executive Rob Everett said.
Bill for Bunnings - Former Prime Minister Bill English has joined his predecessor John Key on the board of a major Australian company. English was appointed a non-executive director to the board of Wesfarmers yesterday. It owns Coles, Bunnings, Kmart and Officeworks and has annual revenues of A$70 billion and profits of almost A$4 billion.
English will get almost as much from this part time job as he did as Prime Minister. Non-executive directors were paid around A$300,000 a year last year, along with various sizes of share and options issues. Key was appointed to ANZ Group’s board and is widely expected to become chairman of the full group. He already chairs ANZ New Zealand.
Big bill for developers - Auckland Council yesterday announced a plan for developers to fund an additional $800 million over 10 years needed to pay for extra infrastructure to support its housing targets. But some in the construction industry worry that putting additional costs onto developers will just push up the cost of houses, Newsroom's Nikki Mandow reported.
Another delay - Sky City announced yesterday another six month delay to December 2019 in the construction of its new convention centre and hotel in Auckland. Sky City said last year the Fletcher Building project had been delayed from the original completion date of February 2019 to mid-2019. Sky City said it still expected to spend $703 million and indicated it would pursue Fletcher for cost over-runs (BusinessDesk).
2. What happened to Z's biofuels plant?
Newsroom's reporters and editors sometimes are able to go behind the scenes of a story and dive deep into an issue. Not many issues are bigger at the moment than climate change and New Zealand's ability to use technology to reduce our net emissions.
Z Energy announced in 2014 it would build a biofuel plant to produce 20 million litres of diesel a year from waste animal fats. So what happened?
Newsroom's Business Editor Nikki Mandow went to the still idle factory in Manukau to find out what's holding up production and why Z Energy is still pushing ahead.
It's an excellent deep dive into just how hard it is to make new climate change technology work for New Zealand conditions.
See Nikki's report in full published first here on Newsroom Pro this morning.
3. MFAT a budget winner again
Foreign Affairs Minister Winston Peters looks to have delivered the budgetary goods for his ministry for a second time.
Finance Minister Grant Robertson and Prime Minister Jacinda Ardern yesterday indicated MFAT has won extra funding in the Budget process.
The Budget itself is not due to be delivered until May 17, but most of the major decisions have already been taken. Other departments, including health, have not been so lucky with news emerging in recent days of "phasing in" of pre-election plans, rather than the full delivery in this month's Budget.
See my full report published first yesterday on Newsroom Pro on the details of the comments from Robertson and Ardern, and the history of Peters' being able to secure a big funding increase for MFAT in 2007.
Ardern also told reporters before Labour's caucus that the $700 million in savings referred to yesterday morning by Robertson had been found in smaller amounts across a range of ministries, rather than in one or two big lumps. She also confirmed a delay in a $10 cut in fees for doctors' visits.
"Yes, we have talked about phasing GP visits. But we have an announcement to make in that space too that we'll be making in two weeks time," she said.
Opposition Leader Simon Bridges said the Government was backtracking as the Budget approached because it had over-promised.
“I think what you’ve got there is a really clear situation of a Government saying it effectively doesn’t have enough money so it’s going to slap on more taxes and it’s going to dial back, in fact break, the promises they’ve had. Well I think that’s a complete cop out," he said.
4. The practicalities & politics of the 'Amazon tax'
As previewed yesterday, the Government announced long-planned moves to extend the application of GST on services bought online from overseas to goods being bought for less than $400 million.
Essentially, the Labour Government has extended the National Government's 'Netflix tax' into an 'Amazon tax' that it was also planning, which helps explain the more sanguine reaction from National in Opposition.
“We agree in principle with this online GST move, it levels the playing field," National Leader Simon Bridges said.
"It’s a pretty minor thing, I don’t know what it raises exactly but it’s in the tens of millions of dollars, but I would say this: if you are going to do that, why on earth do you have to have other taxes like up in Auckland that’s going to sock it to a bunch of motorists up there, why can’t you meet some of the core promises you made when you’ve got the revenue, you’ve got more taxes, you’re borrowing more.”
But raising those tens of millions of dollars (the Government estimates $57 million per year by 2022) may be harder than it thinks.
Revenue Minister Stuart Nash said yesterday IRD hoped 75 percent of online overseas retailers would comply with IRD's request to start collecting the tax at source.
Newsroom's Thomas Coughlan reported on this story for us yesterday and found Trade Me and others suggesting even 50 percent compliance, which is the Australian target, could be optimistic.
Many online retailers told Australia’s Senate Economics Committee that charging vendors rather than freight firms risked an epidemic of non-compliance.
Joo Man Park, managing director and vice-president of eBay for Australia and New Zealand, said he was told by Australia's Treasury that they expected compliance of just 25 to 30 percent.
But Nash is optimistic. He said that revenue raised from extending GST to online services had raised $113 million in its first year, far exceeding the $40 million forecast by Treasury
See Thomas' full report here on Newsroom Pro, where it was published first yesterday.
5. What is Nanaia Mahuta doing with 3 Waters?
More than six months into its term, the water industry and local government is wondering what Internal Affairs Minister Nanaia Mahuta is up to with a long-flagged review of New Zealand's ageing and inadequate '3 waters' infrastructure.
Newsroom's National Affairs Editor Shane Cowlishaw took a closer look at what's happening behind the scenes with a review of waste, storm and drinking water infrastructure. The numbers are big and the stakes are high, as everyone found out with the Havelock North disease outbreak and the resulting need for $2.2 billion of new pipes in that town alone.
Many are surprised the final Havelock North report is being separated from the 3 Waters review.
John Pfahlert, chief executive of Water New Zealand, said the two were intrinsically linked and he was surprised a clearer direction had not been announced by the Government.
He understood that it was a complex issue that would result in some big decisions, but the sector still had no idea which direction things were heading in.
“I’d expected that there might have been some more really hard, concrete decisions by now … I would have thought five months was sufficient time for the Government to at least have preliminary views about whether they wanted to establish a drinking water regulator and whether they wanted to mandate chlorination of public water supplies and things like that.”
See Shane's full report here on Newsroom Pro, where it was first published yesterday.
6. 'Distance is no longer our friend...'
Newsroom's Foreign Affairs and Trade Editor Sam Sachdeva is back from a holiday in Mexico and Cuba, and is now more familiar with our Latin American connections.
He found out more at a Centre for Strategic Studies’ conference on maritime security in Wellington yesterday about the growing threats from drug traffickers in Latin America, along with climate change.
Jamie Bamford, NZ Customs’ intelligence, investigations and enforcement group manager, said there had been significant changes to trafficking activity in recent years.
Bamford said that was fuelled in part by the record prices that Kiwis paid for narcotics: a kilogram of methamphetamine had a wholesale price of about $6000 in the United States, but up to $500,000 in New Zealand, making the latter a far more appealing destination for traffickers.
The country was being targeted by Asian organised crime networks, but there had been a recent “explosion” in regional activity from South American and Mexican cartels.
Bamford said adapted fishing vessels were being used to bring narcotics to the Pacific from Asia and other areas, with New Zealand’s geographical isolation no longer the barrier it once was.
“We are no longer immune - distance is no longer our friend.”
See Sam's full report here on Newsroom Pro, where it was first published yesterday.
7. 'Great and dangerous expectations'
One of the biggest threats to the new Labour-led government is the heightened expectations of its supporters.
Dr Bryce Edwards of Victoria University argues in his weekly column the promises and symbolism of transformation need to be matched with substance.
See Bryce's full and exclusive column here on Newsroom Pro, where it was first published today.
8. Coming up...
Statistics New Zealand is scheduled to publish labour force figures for the March quarter at 10.45 am today. Economists expect the unemployment rate to nudge down to a nine year low of 4.4 percent from 4.5 percent in the December quarter.
Quarterly employment growth is expected to be around 0.5 percent or up 3.2 percent from a year ago. Labour cost inflation is seen remaining moderate around 0.4 percent for the quarter and still just below 2.0 percent for the year.
The US Federal Reserve's Open Market Committee is not expected to announce an interest rate increase at the conclusion of its two-day meeting tomorrow morning New Zealand time, though it might flag a steeper pace of rate hikes ahead. Economists expect the Reserve Bank to leave the Official Cash Rate on hold until well into next year.
BP executives are expected to visit Energy Minister Megan Woods in the Beehive tomorrow afternoon.
Health Minister and local MP David Clark is expected to announce the new Government's plans for a new Dunedin hospital on Friday.
One fun thing...
This is absolutely hilarious, via The Independent:
"Sainsbury's CEO caught singing 'We're In The Money' while waiting for ITV interview."