Covid-19July 15, 2021

The Bulletin: OCR unchanged, but ground shifts under interest rates

Good morning and welcome to The Bulletin. In today’s edition: Ground shifts under interest rates, Ardern aligns with US in big foreign policy speech, and Collins brings up a year as National leader.

The Reserve Bank has left the official cash rate unchanged, but quite a bit happened at yesterday’s announcement that is worth unpacking. Specifically, it now seems overwhelmingly likely that we will see the OCR go up before the end of the year. And as the NZ Herald reports, the “money-printing” stimulus (or Large Scale Asset Purchase programme) will come to an end. With the overall settings, there is seen to be a big risk of inflation cranking up beyond the Reserve Bank’s targets – some figures on the cost of living are due out on Friday, and will be closely watched.

What are we to make of the reaction? There was a useful analysis piece by Interest’s David Hargreaves, who noted both the RBNZ and bank economists are swinging to a more “hawkish” position – i.e, that rates will be raised sooner than previously forecast. “What you can say is that the RBNZ has not just cleared the table for a rise, but has sent the cutlery flying with the speed it has whisked the table cloth off.” In a curious bit of timing, before the announcement both ASB and Kiwibank lifted their term deposit rates, with ASB also lifting their mortgage rate. These aren’t directly tied as such to the OCR, but are strongly influenced by it, so it acts as another signal the banks expect the OCR to go up.

On the LSAP programme, a major criticism of it has been that it heavily juiced asset prices, particularly in the housing market. And the effects of that may be being seen in how homeowners are feeling right now. As Business Desk’s (paywalled) Dan Brunskill reports, they’ve told a Kiwi Wealth survey they’re feeling rather wealthy and economically confident right now. That’s good for them, but given we also know price inflation is hitting those with less harder, it won’t be a nationwide sentiment.


Words matter a lot in foreign policy, and in a major speech yesterday PM Ardern used the sort of wording that more closely aligns NZ with the US. Stuff reports the specific term that jumped out was “Indo-Pacific”, to describe the general region of the world we’re at the southern end of, though Ardern stressed that it wasn’t intended to be understood as exclusionary of China. Politik (paywalled) also noted a speech to the conference by senior US diplomat Kurt Campbell, describing the vibe that came out of it as a close friendship between the US and NZ, rather than an alliance.


Judith Collins has now been leader of the National party for a year, and by the metrics that matter it has not been a success. That’s the conclusion drawn by Stuff’s political editor Luke Malpass, who wrote a blunt but fair column to mark the milestone. Part of that fairness is noting the extraordinarily difficult circumstances that led to Collins taking over, but given the polling hasn’t gone anywhere since the election and only a relatively small group of MPs are providing effective opposition to the government, the conclusion still stands today. Of course, in politics fortunes can change very quickly, and the possibility of that happening for National and/or Collins shouldn’t be ruled out.


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Local Government NZ is having their annual conference this week down in Blenheim, and water reforms are likely to be high on the agenda. Central government wants them to go ahead, some councils are keen but others really aren’t, and Auckland Council could end up leading the revolt. As the (paywalled) NZ Herald’s Thomas Coughlan writes, this is the biggest flashpoint in a relationship full of wider disquiet, and with local elections coming up that could turn into a wave of candidates effectively standing against central government.


An astonishing skirmish in the fight over Wellington’s heritage: Stuff’s Damian George reports new Snapper ticketing machines for the train station have been opposed by Heritage NZ on design grounds. To caveat that, Heritage NZ were supportive of the machines “in principle”. The machines would help Wellington have an integrated ticketing system for public transport, something which is generally considered desirable in modern cities.


National Māori Authority chair Matthew Tukaki has called for a notorious racist to have their residency cancelled, and be sent back to England. In a post on the Māori Everywhere site, Tukaki said he had written to the immigration minister about Lee Williams, a far-right extremist who came to prominence through his Youtube videos. Tukaki said “I find it abhorrent that we allow these people to even cross our borders let alone gain residency. Mr Williams and his online tirades against the Tangata Whenua of this country is akin to racism at its most extreme.”

This story is getting a lot of heat online, and I want to make a personal observation about it. I understand where Tukaki is coming from – the views Williams holds are truly horrible. But this is a terrible proposal, and one that would set a dangerous precedent that would almost certainly end up being used against minorities and the vulnerable. Williams holds residency status, and as such has rights – and the universal application of those rights must be defended, or else they aren’t worth anything for anyone else.


A grim update on Afghanistan: foreign governments are urging their citizens to leave immediately. That detail comes from this Asia Times report on the advance of the Taliban, who now control a huge amount of territory outside of the cities. In doing so, they’re effectively in a position to lay siege, and are warning urban residents to not resist, lest those cities be damaged in the fighting. The Guardian reported earlier this week from Kabul on concerns inside the Afghanistan National Army, and the last-ditch gambit to empower warlords to fight against the Taliban on the government’s behalf.


Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz

Image: Tina Tiller

Right now on The Spinoff: Justin Giovannetti reports on the dismal prospects for those trying to get a MIQ spot. Laura Walters assesses the latest outcry over gangs. Josie Adams has a very thoroughly reported piece about UFO sightings in NZ, and what to do if you see one. Sam Brooks describes the experience of using voice-activated Alexa while having a stutter. Jihee Junn rounds up the best and most absurd complaints made to the Advertising Standards Authority. And James McOnie has a well written and well-meaning (but ultimately incorrect) opinion piece calling for the abolition of penalty shootouts in football.


For a feature today, a bit more on the tech industry battle around working from home, and one executive getting a pretty sweet spot. CNET reports there has been anger within Google over senior executive Urs Hölzle’s decision to work from New Zealand, which is nice for him. But those on the shop floor aren’t getting the same sort of opportunities. Here’s an excerpt:

“After three decades in the US, my wife and I both felt it was time to consider a new location,” Hölzle wrote. “We’ve decided to spend a year in New Zealand and see how we like it. To be clear: I am not retiring, just changing my location!”

In the email, he calls the move an “experiment” and says it won’t be a problem for him to continue working in the Pacific time zone because he is an “early riser.” He ends the note with “Kia pai tō rā,” or “Have a nice day” in Māori.

Two Google employees said Hölzle’s situation encapsulated the company’s “hypocritical” policies. Both complained that the relocation represented a double standard in which different rules apply to executives in senior ranks. While his approval came last year, Google employees now undergoing the remote work application process have been told decisions won’t come until August, at the earliest. Approval for Hölzle’s move came before the procedure was instituted.

A note on that story – Stuff has since reported an update, asking NZTE why it decided to help Hölzle move to New Zealand. They declined to respond.


In sport, a deep analysis of the English psyche and what happened around the final of the Euros. The Guardian’s Jonathan Liew – a simply gorgeous writer – has looked at why there was severe crowd trouble and concerning behaviour before the game, but almost none afterwards, despite an agonising penalty shootout loss against Italy. His conclusion sweeps through a combination of history and culture, but doesn’t land on easy or glib answers.


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Mad Chapman, Editor
The Spinoff has covered the news that matters in 2021, most recently the delta outbreak. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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