New Zealanders see an affordable house price as being almost $200,000 cheaper than a KiwiBuild house in Auckland. China wants New Zealand to correct its "wrong statements" about China's activities in the Pacific. The economy continues to show signs of cooling ahead of key inflation figures next week.
Businesses' confidence about their 'own activity', as opposed to the wider economy, fell to a five year low. Construction sector confidence crashed. It's time the Government and the Reserve Bank looked at stimulating the economy to fix our infrastructure deficits, lift inflation and keep unemployment falling. Phil Twyford set the upper threshold for couples bidding for KiwiBuild homes at $180,000, which sparked outrage but was needed to ensure enough demand for the 100,000 homes. It highlighted how unaffordable the $650,000 cost of KiwiBuild homes in Auckland has become, and why land price falls are needed to improve affordability. Dame Margaret Bazley's report into sexual assaults and bullying at Russell McVeagh revealed a toxic culture for women. The IMF encouraged the Government to use its balance sheet to fix infrastructure deficits. Donald Trump is set to ramp up his trade rhetoric in meetings with Nato, the Queen and Vladimir Putin over the next 10 days.
In the political economy this week, business confidence fell, China was forced to ease policy to boost its cooling economy, the New Zealand dollar hit a two year low, the Government eased migration policy, the Reserve Bank should have adopted an easing bias and Winston Peters suggested a housing affordability target that would either require house prices to halve or workers in Auckland to wait 100 years for their living wages to catch up.
US interest rates rose above New Zealand interest rates for the first time as house prices continued to rise here. Winston Peters led the Government in Parliament and is set to become acting Prime Minister. Labour's political vulnerability over justice and corrections issues was exposed. The Public Service staged a "manny-go-round." Shane Jones triggered a debate about Fonterra's future by attacking its performance and chairman. Trump got played by Kim Jong Un, but it may not matter.
The Government launched reviews of employment law and climate change law aimed at soothing the nerves of employers and farmers respectively. It appeared to rule out a breakup of the Reserve Bank and started considering introducing a deposit insurance scheme. Better foreign ownership data showed almost 20 percent of property buyers in central Auckland in the last year were not citizens. Documents showed officials advised the Government against its decision to stop issuing new offshore oil and gas drilling licenses, saying it would actually increase emissions because coal would be used instead of gas. The economy may have slowed a bit in the March quarter as construction sector activity and confidence continues to wane. Donald Trump waged trade wars ahead of G7 meetings and his summit with Kim Jong Un.
The 8 things that mattered this week included big Government decisions on mycoplasma bovis and methamphetamine contamination of houses, the return of Heather 'H2' Simpson to oversee a major and potentially problematic health sector review, fresh criticism of New Zealand as the 'soft-underbelly' of the Five Eyes security alliance, Rob Everett's warning to banks operating at the 'edge of the law', the Law Society's mea culpa in the wake of the #metoo moment at Russell McVeagh, the frustrating weakness in business confidence and the latest turmoil around Donald Trump's trade wars and the eurozone debt crisis.
Here are the eight news events that mattered this week in New Zealand's political economy.
The eight news events that mattered in the week around our political economy included the key details in Budget 2018, the emergence of mycoplasma bovis as a macroeconomic and fiscal issue, pressure building on New Zealand's big four banks to detail their conflicts over Kiwisaver sales, and a wider crackdown on retailers not paying workers at the start and end of shifts.
Here's my read on the eight things that mattered in the political economy over the last week.