Molesworth & Featherston Weekend: Dec 16 2005

Rolling average poll
Even the roly poll can’t separate them

We’ll put the new NBR poll into the masher next week to wrap up the year. The Colmar Brunton TV1 poll came into the numbers this week showing Labour suffering from a very negative week of Benson-Papal news, and more signs the economy is slowing and that the Reserve Bank is not yet convinced. The Colmar Brunton though has a history that suggests the nine point lead it gave to National is overstated.

So the rolling average poll of polls shows the two big parties into a dead heat. The Greens continue to dominate the minor placings. – a result which will drive them up the biodegradable wall as they watch on from the cross benches.

As usual we have assumed sitting leaders hold their seats and the Maori Party holds its four constituencies. So, the numbers are:

percent seats
Labour 40.60 52
National 40.60 51
Greens 7.39 9
NZ First 4.34 0
Maori 2.47 4
United Future 1.74 2
Act 1.32 2
Progressive 0.80 1

It’s a 121 seat Parliament with a one-seat Maori party overhang. Before you pen that email accusing us of pernicious left-wing bias for giving Labour an extra seat, even though its percentage is the same as National’s, it’s not our fault okay. It’s the way the Electoral Commission's ready reckoner reckons it.

Try it yourself if you don’t believe us. If we had taken things to a few more decimal places, or nominated the exact number of votes, we might have broken the deadlock. However, then we would likely get emails from that other group of people who say we are a bunch of pseudo-scientific morons for taking something as uncertain as a series of opinion polls and calculating it as if it was pi … so we thought we would just blame the commission and leave it at that. As a result the seat allocations are a bit redundant, but they point to a Labour-Green (and Jim Anderton) Government – and will continue to do so until New Zealand First fights its way above the threshold or National gets a sight more popular than it is.

NZIER’s newest quarterly prediction says the economy’s rate of growth will slow just 0.9 percent in the year to March 2007 before picking up again to 2.9 percent in the year to March 2010.

NZIER says many economic cycles are at or near their peaks -- the businesses they talk to are reporting slowing activity; house prices will decline; investment will slow as the kiwi dollar begins to depreciate and imported capital costs rise; consumption will also ease as import prices rise.

But the falling dollar will also drive a recovery in exports after a while and NZIER thinks interest rates will begin to be cut about then.

But before we get too gloomy, let's go back to the 1st of June 2004, when Molesworth & Featherston carried NZIER’s prediction that the economy would slow to ‘2.8% in the year to March 2005, before easing further to 2.1% in the following year.’ In fact GDP growth in the year to March 2005 was 4.2 percent. Or go back to 2003, when NZIER forecast growth in the year to March 2005 would come in at a miserable 1.8 percent.

Back in June 2002, NZIER forecast growth for the year to March 2003 of a modest 2.4 per cent-- the actual result was 4.4 per cent.

There is a pattern here of consistently low-balling growth..

Meanwhile out in the actual economy...

The ANZ Bank survey of job vacancies shows vacancies are pretty much holding steady nationally. Vacancy rates are down a little in the North Island but not sufficiently to drive the national rate higher.

The merchandise terms of trade fell 0.6 percent between July and September. That’s the measure of how many imported goods we can buy for a given quantity of our sales. The decline is mainly the result of higher oil prices inflating the cost of imports. Our export prices have been rising.

Quotable Value’s November property stats show residential property values increased by fifteen percent over the last year. That’s the highest growth rate this year and “a turnaround from the slowdown that occurred in October”.

Top rates of growth included Wanganui (38.3%) Whangarei (34.5%), Gisborne (28.4%) and Rotorua (27.7%). Auckland was up only four percent. The average price of a house there is $475,841. (A whopping $584,837 in the gladed Eastern burbs).

A discussion paper on New Zealand’s food industry boils down to a call for better integration of our food industry into the world economy.

The Food and Beverage Taskforce claims New Zealand has advantages of cost competitiveness, quality, and food safety, when these are being increasingly sought after by consumers. These are debatable - we still dump sacks of frozen chops in supermarket freezers where competitors refine and package tastier cuts; We grow tasteless, dull fruit and vegetables compared to most of the world. Our cost advantage is coming under pressure as lower cost competitors emerge.

The report says our drawbacks include our distance and small local market, which make production a problem.

(Leaving aside the invention of refrigerated shipping the century before last, why should New Zealand food businesses focus on selling New Zealand-grown produce?)

The most profitable future for the industry is “the development of new, higher-value products and strong brands that command a price premium, and entering highgrowth, high-value markets.” But New Zealand hasn't had much success to date, other than in markets such as Australia where, the report notes, there were cultural similarities, limited competition, superior management and a sound capital platform.

Hopes for the sector lie in its innovation potential. But it will also need to increase the quality of its management and its ability to create and participate in global value chains.

All the ICT in China

The world’s largest exporter of information and communications technology goods like cell phones, laptops and digital cameras is now China. New OECD figures show its exports of $180 billion of ICT goods outstripped the US (USD140 billion) for the first time in 2004.

China’s exports were up in the year by nearly fifty percent, from USD123 billion the year before.

The OECD says trade is shifting towards Asia. “To manufacture laptops and advanced mobile phones, China previously relied on electronic components, such as computer chips, imported from the EU and U.S. These are now also being increasingly sourced from other Asian countries."

Media tattle

The Parliamentary Press Gallery’s annual poisoning-byalcohol took place on Tuesday December 13, lubricated with a slice of this esteemed newsletter’s annual turnover.

Prime TV won the rights to screen the free-to-air lukewarm repeats of Sky TV’s live footie broadcasts next year.

TVNZ and 3 have long seen the writing on the wall and been publicly deprecating the value of free to air footie, although with an expanded Super 14 and re-formatted NPC, audience interest should be high. Prime says an increase in viewership of one percent will make the investment worthwhile, perhaps making its a bid a classic case of Pareto optimality (well we’re just pointing it out for the front rowers who discuss these things).

Canwest-Mediaworks said revenues for the first quarter of the current financial year were up four percent on last year, to $72.8 million. Earnings before interest, tax, depreciation and amortisation were down eleven percent, which it said was because TV3 made a “conscious decision” to screen more local programmes in the quarter.

But it will show less later in the year and expects to make up the lost earnings.

APN is splitting its newspapers in two; each is to become a newspaper company (which will own the masthead and employ editorial, advertising and telemarketing staff) and a printing company, (employing press, prepress and publishing staff.)

The well-thought-of Ainsley Thomson is leaving the New Zealand Herald’s press gallery team in the New Year for a spot of OE (if we double the sponsorship will you stay Ainsley?), but with Kevin Taylor and Ruth Berry supporting political editor Audrey Young and complemented by sound politicial analysis by John Armstrong the Auckland paper will still have a strong team.

Well-liked and well-respected Listener chief sub Tom McWilliams is taking well-earned retirement after more years than anyone can remember at the Listener. The company is advertising for a replacement.

Media maestro Michael Gibbs has left the Public Service Association to return to the halls of Parliament – this time as a political advisor to Chris Carter. His successor at the PSA has not yet been named.

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