Posts Tagged ‘economy’

New branding, but same old tories

Prime Minister John Key just squeezed himself into the New Zealand Rich list. With an entry requirement of NZ$50 million, John Key has just made it with $55 million personal worth. Compared with world standards, this can hardly be called very rich. However, among the world's leaders, he's ranking is quite high above - 18th.

What this reveals is that he must be quite clever to gain that amount of wealth, and succeed in both economic and political arena.  As a banker, you can also safely assume that he is highly financially literate. So lack of knowledge can hardly used to explained Key's comparison of wage gap between Australia and New Zealand:

Loyalty dictated John Key take the support option. To loud guffaws from the Labour benches, Key told Parliament that he had been advised that the gap between gross average weekly earnings in Australia and New Zealand, adjusted for purchasing power parity, was $160.25. "That is certainly a lot less than it was in 2005, when it was $187.60."

Indeed it is. But National did not win the 2005 election. It was elected in 2008 when - according to Key's own figures - the income gap had narrowed to $138.

There are two things that I definitely did not expect - 1. how did he become a millionaire? 2. I am actually very surprised to find out that the wage gap actually decreased - at a quite considerable rate, at the time when Labour was at the helm until the recession. I guess this is just another example of misconception that the right-wing biased media has created.  You thought you know the very essence of politics, but in fact you only know the facts as being digested and manipulated by others.

nine-day fortnight work plan released

In one sentence, Government will pay minimum wage of $12.5for up to 5 hours per day to employees who have taken an extra day off. For rest of the scheme:

• Will be available to businesses with more than 100 employees. There are about 1600 companies which fit this category and they employ 580,000 people.
• Will be available to businesses from March 27, 2009 through until December 31, 2010 - but only for up to a six month period within these dates.
• The government’s contribution will be paid direct to employers to give to the workers it has negotiated a voluntary agreement with to reduce work hours to a nine-day fortnight.
• Will be available to up to 10 employees for each averted redundancy.
• Will apply to employees who have been full-time for the two months preceding going into the scheme.
• Is anticipated to be picked up by between 20,000 and 25,000 workers, making the approximate cost $16 million to $20 million.

Overall I'm pretty happy about it, and I think it will be a way reduce redundancies in big companies. In a recession the most import thing to maintain is not just economic growth, but fundamentally, confidence. If employees are given the promise that they will not be made redundant, it will give them confidence, and they are more likely to spend rather than save for the unforeseeable future.

But I do have a mixed feeling about this. Employees are not responsible for the current economic situation, making them suffer should be the last resort to keep this economic going.  There are long suspicions that some employers are using economic recession as an excuse to carry out restructuring. I think this scheme should only be available for companies who are experiencing losses, not just a reduction of profits.   I can see the same greed which was responsible for the current situation, is still in the market. Companies should just accept a significantly reduced profit for now, rather let the same greed take over, dreaming of the high profits they've experienced in the last few years.

The scheme will only work if employers are welling to join it, but I don't think they are. As a employer,  how much can you save from this? Let's assume a company maximises its opportunity, put 10 employee who receives an average $20 wage and work 8 hours a day in this. So the calculation goes like:

13 x 10 x 20 x 8 = $20,800

For a 100 employees company, that's kind of nothing -  make one employee redundant saves more than this, and that size of businesses don't fail for short of 20,000 dollars.

Or maybe the whole thing is just another publicity stunt from John Key?

Recession? What recession?

Just back from holiday. It went quite well, very relaxing, and the the weather seemed to be moderate than usual.

Weather was not the only thing that went well. Economy.  NZ as a whole, despite the worries,  spent more compare with the last holiday season. Even me, a typical Chinese who loves to save rather than spend, nearly exhausted my purse.

However, it doesn't mean that I and other shoppers have full confidence on the economy, instead, I feel exactly the opposite. That's why I have spent most of my money on  stocking up  clothing,  small appliances and  other stuffs I really need rather than luxuries,  so I don't need spend another cent on non-necessities until the next Christmas.

Most businesses fully realised this kind of thinking among the shoppers.  They also need  to  keep themselves alive in 2009,so there was also an urgency for them,  that they need to convert stocks to cash as soon as possible before the recession hits them hard.

It's kind of a win win situation, both shoppers got what they want in the holiday.  Actually I'm now starting to think that recession isn't that bad as I first thought - reduced price on food, oil ... nearly every thing, aren't those what we wanted a year ago? This sounds more like greedy businessmen's recession, rather than the one for the general public.

For those who are likely lost their jobs in the new year (National predicts that will be about extra 4% of the work force), a comprehensive and working social safety net is where their confidence lays.People know the state will help them if they found themselves in trouble, so when come to spending, they were less hesitated to open up the purse.

About ... the oil price

Caltex raised the petrol price at NZ $2.06 per litre for #91 in Auckland earlier today. This price is simply mad, and more people are now really feeling the pinch.

When I first settled in New Zealand, that price was around 90 cents.

I started to commute by bus around the time when the price of oil was somewhere around $1.80. The fuel cost simply does not justify the benefits of our car dependent lifestyle. I now need around $100 to fill up the tank, however, the monthly bus ticket, which costs just about the same.

If you are that sort of people who work in one place, and live in another place 50km away, I think it’s the time to change your lifestyle. Next time when you are on the move, try to move somewhere close to your workplace, or at least close to a public transport.

Yes, it is a little sacrifice of freedom of moving around, but it saves you a considerable amount of money, and our environment.

That’s also why we need to buy back the railway system, make it a not-for-profit service.

However, our daily commuting is only a small part of adverse effect resulted by this high oil price. Nearly everything in this society is sort of oil related. Food, daily commodities ... nearly everything we use was transported by oil-dependent transportation like Airplane or ships at some stage.

High oil price fuels inflation, especially on basic commodities like food.

Dr Cullen may has his point on not to cut the tax on petrol, but something has to be done to save suffering families, otherwise what’s the point to have a finance minister receives his salary from tax payer’s money, but doing nothing?

May I suggest removal of GST on basic food like milk and bread. It’s not major source of government income, yet it is important for the survival of families.

Also, taxing food is something that’s simply very wrong anyway.Right to life is one of the essential human rights in Universal Declaration of Human Rights, so why should any form of government or authority has the power to tax on my survival?

I also have serious concerns on what kind of roles oil companies have played. When the oil price increased oversea, they usually reacted by a price hike in very next day, regardless of the fact that the oil they purchased oversea need about a week or two to be transported to New Zealand.

But when the price oversea is down, those international oil companies suddenly all start to remember the fact that the oil we use here were purchased when the price was still high, so no price cut.

I read about this somewhere a long time ago, it was said that government was monitoring the profit margin of those oil companies, and the margin was quite consistent.

I have found it very hard to believe.

Anyway, we are in the middle of a crisis. My prediction is that the #91 price will peak about $3.5~4 a litre before any relief from international market.

No matter where the price will peak, it is very unlikely that the oil price can every be reduced the “good time” level, i.e. 90 cents per litre.

Unless ... one day we suddenly discovered a large reservoir of oil below Southern Alps or Auckland Islands, or genetic modifications enable us to grow a pair of wings on everyone’s back.

Unfortunately, both are very unlikely to happen in a near future.

So a total lifestyle change is the way to go.