Hive News Tuesday: Labour proposes variable savings rate

For the convenience of email-avoiding subscribers and samplers, here's the email sent earlier on Monday morning, including Labour's new monetary policy policy.

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Good morning all on a day Labour proposed the biggest changes to the Reserve Bank Act in its 25 year history.

David Parker delivered a speech this morning unveiling a Variable Savings Rate (VSR) to help the Reserve Bank control the economy in addition to the current Official Cash Rate (OCR). A Labour Government would also change the Reserve Bank Act to include an objective for a current account surplus.

See more detail on all that speech below.

New Zealand First also issued a release late yesterday calling for changes to the Reserve Bank Act. NZ First private members' bills to change the act failed by one vote each in 2012 and 2013.

In other political news, Labour extended the candidate selection deadline for the Tamaki Makaurau seat for the third time as it waits for TVNZ's internal report into Shane Taurima. Maori TV's Julian Wilcox is also thought to be a candidate. Opinion polls suggest Labour would win the seat from the Maori Party, given current MP and Maori co-leader Pita Sharples is retiring at the election.

In regulatory news...

Amy Adams announced the Government would re-allocate NZ$24 million to clean up Lake Rotorua.

MBIE announced its first round of visits to 44 dairy farms had found more than half were in breach of employment laws.

Coming up...

In economics news, Statistics NZ is due to release merchandise trade figures for March. Another cracking month for dairy export receipts are expected, although the 20% fall in dairy prices since February will start kicking in from April.

The Reserve Bank is due to report March figures for high LVR mortgage lending at 3 pm. It is expected to nudge up from the 4.2% of mortgage flow after exemptions seen in February. The limit is 10% so there's room to move and mortgage brokers say the banks have been re-opening their doors in recent months now they're sure of being under the limit and able to keep their banking licenses.

Some useful links...

Jim Minifie from Australia's Grattan Institute published this report "Super Sting: how to stop Australians paying too much for superannuation" , which shows fees for default funds in Australia are much higher than in New Zealand, but that Chile seems to have the lowest.

Interest.co.nz reported BNZ Chief Economist Tony Alexander has decided to stop the BNZ-REINZ survey of real estate agents, which until now has been the only source of data on foreign buying. The survey's profile has risen sharply in recent weeks with John Key both criticising it as crude and saying it showed there was zero net foreign buying.

Quote of the day:

David Parker in his 'Paying our way in the world' speech this morning at the Stamford Plaza.

The changes to monetary policy I have announced today are substantial. But they are not radical Under the policy I have announced today, the Reserve Bank’s independence is preserved, the inflation anchor is maintained, as is the floating exchange rate, and the freedom of capital movement, as is the ability of the Reserve Bank to stimulate the economy so as to avoid deflationary traps. But we believe there are tigers other than inflation to be tamed.

Number of the day:

30% of GDP. That's the percentage of GDP forecast to be generated by exports in 2018, despite the best terms of trade in 40 years. That's down from 32% in 2008 and below the 40% target set by the Government for 2025.

Cheers

Have a great day

Bernard