News | Politics
23 Apr 2018 6:19
NZCity News
NZCity CalculatorReturn to NZCity

  • Start Page
  • Personalise
  • Sport
  • Weather
  • Finance
  • Shopping
  • Jobs
  • Horoscopes
  • Lotto Results
  • Photo Gallery
  • Site Gallery
  • TVNow
  • Dating
  • SearchNZ
  • NZSearch
  • RugbyLeague
  • Make Home
  • About NZCity
  • Contact NZCity
  • Your Privacy
  • Advertising
  • Login
  • Join for Free

  •   Home > News > Politics

    Politics keeps business world on its toes

    Analysts and economists ended the year relatively upbeat about 2018, but they have to unexpectedly deal with a Labour government.

    New Zealand Parliament
    New Zealand Parliament

    Political rumblings came into focus in the business world through the tail-end of 2017 as Jacinda Ardern's unexpected rise to the prime minister's office brought a fresh approach to dealing with burgeoning capacity constraints and introduced a level of regulatory risk that's been ignored for the past decade.

    Market analysts and economists generally predicted a Bill English-led National Party would retain the Treasury benches for a fourth term, propped up by NZ First and ACT.

    Those odds narrowed as support for Labour's Ardern built up rapidly following her August elevation to the leadership.

    Investors were unsettled by the campaign on a stronger response to migration, new levers to deal with infrastructure issues in housing and transport, and new regulatory measures to combat climate change more aggressively.

    Business confidence has soured with the Beehive's red hue. However, the economy is in good heart with the figures showing gross domestic product expanded 2.7 per cent in the September quarter from a year earlier.

    Expanding population kept retailers' tills ringing, a tourism boom kept hoteliers busy, and the massive pipeline of building work continued to stoke construction activity.

    "We've been employing a lot more people and the size of the labour force has expanded, but productivity growth has been weak," ANZ senior economist Phil Borkin said.

    One headwind faded this year with the recovery in dairy prices.

    Fonterra plans a bigger payment to farmers for the current season, although it most recently reduced the forecast.

    Water use has continued to be major issue, spurring claims of a rural-urban divide if Labour pushes ahead with plans to introduce a tax for commercial users.

    That didn't eventuate after NZ First rejected anything beyond a levy on water exporters, but has chilled agricultural businesses who are the most pessimistic about the state of the economy heading into 2018.

    House prices reached dizzy new heights, albeit on a smaller turnover as the volume of sales slumped by about a fifth on tighter credit conditions, Reserve Bank-imposed restrictions on highly leveraged borrowing, and heightened uncertainty about the election.

    "Now the warmer weather has returned, there is the prospect of reduced LVRs in the New Year and there is more certainty post-election, we're looking forward to things returning to normal," Real Estate Institute chief executive Bindi Norwell said.

    The government expects its $2 billion Kiwibuild programme will spur greater activity to meet the housing shortfall, while plans to block foreign buyers of existing residential property are also expected quell the market in future booms.

    Foreign buyers were a thorny issue this year, with the Overseas Investment Office given a hurry-up when several transactions were caught in a twilight zone for some investors who couldn't see an end in sight.

    Others got around that by becoming citizens, such as outspoken Silicon Valley tech billionaire Peter Thiel, whose questionable Kiwi roots were outed this year.

    But China's HNA couldn't shake the growing unease about its debt-fuelled expansion and was turned away from buying the country's biggest finance company, UDC.

    Migration also remained a hot topic. It peaked in July at an annual net inflow of 72,400, underpinning consumer demand and helping firms fill jobs in areas where skill were short.

    Still, that inflow has been largely stuck in Auckland, putting pressure on infrastructure, and prompting policymakers on both sides to try to turn off the tap.

    The new government expects to slow that further, although the latest figures are already starting to show the tide turning, notably in the number of Kiwis heading across the Tasman.

    The trans-Tasman shuffle isn't just limited to people though - NZX-darling Xero is set to shed its local listing in favour of being solely represented on the ASX.

    The move was a blow for the stock market operator, which has had to watch a number of firms depart the bourse without a steady pipeline of initial public offerings to replace them.

    Reserve Bank Governor Graeme Wheeler cut the official cash rate to 1.75 per cent at the start of the year and kept things pointing in the same direction until his exit in September.

    The central bank is in for a shake-up under the new administration with the governing legislation up for review, and outspoken NZ Super Fund head Adrian Orr tasked with running the Reserve Bank from March.

    The Commerce Commission played an active role through the year, rejecting the planned merger of dominant newspaper publishers NZME and Fairfax NZ, turning down Vero's bid to buy insurer Tower, blocking a tie-up between Vodafone New Zealand and Sky television, and filing an injunction of a planned private equity purchase of OfficeMax.

    Analysts and economists ended the year relatively upbeat about 2018, with the growth outlook still relatively robust despite a need for productivity gains, and as the benchmark S&P/NZX 50 Index looks set to post its best return in five years.


    © 2018 NZN, NZCity

     Other Politics News
     22 Apr: Victorian Government offers cash incentive to help households get better energy deal
     22 Apr: Sod turned on one billion tree programme
     21 Apr: Govt, lawyers at odds on NZDF foam problem
     20 Apr: Rebiya Kadeer to go on hunger strike to protest against treatment of Chinese minorities
     20 Apr: Online scammers used minister's identity
     20 Apr: `I would go into the mine': Little
     20 Apr: Young Maori fight mega-prison at UN forum
     Top Stories

    Brumbies lose to Jaguares in Super Rugby More...

    Bank inquiry not needed in New Zealand More...

     Today's News

    Berisha wins it for Victory in A-League 23:06

    A-League semi-finals preview 23:06

    Brumbies lose to Jaguares in Super Rugby 22:37

    Rugby League:
    NRL high-flyers fall to earth in round 7 22:16

    Rugby League:
    Injury-hit Sharks beat Panthers in NRL 21:56

    Black Ferns Sevens defend Japan crown 21:06

    Whincup calm after Supercars disaster 21:06

    Kangaroos v Hawks, Lions v Suns: AFL round seven live scores, stats and commentary 20:36

    Rugby League:
    Pearce out for four months with pec injury 20:16

    Accident and Emergency:
    Swimmer remains missing at Omanawa Falls 19:16

     News Search

    Power Search

    © 2018 New Zealand City Ltd