Comments

David Thompson Posted:
So very, very true. It beggars belief that we consider ourselves to be a developed nation when so much of our economy is based on selling milk powder or logs. BTW, I own a Plinius amplifier (my second) that drives a set of Theophany speakers.
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David Thompson Posted:
A robust but sobering report. It concerns me that confidence is rising, yet sales and exports are down and "manufacturers and exporters are still lagging behind other sectors". Surely we should wait until we're earning more money before we start spending more?
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siemens Posted:
Yes true! The only thing that will never die in this world is the nature and its science behind it. Great post.
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Kieran Ormandy Posted:
Thanks for the question Steven, Germany has seen increases in manufacturing employment since 2009, and Switzerland has had stable manufacturing employment between 2006 – 2011, even in the face of ongoing Euro-zone issues. Korea has seen increases in manufacturing employment since 2008 and Israel experienced large increases since 1998, while being stable over the last 4 years. Singapore has had increases in manufacturing employment over the last two years. These countries all value their manufacturing sectors and work to protect them, this is reflected in the above numbers and their performance through the GFC. Note data around the above examples was sourced from OECD labour market stats.
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John Walley Posted:
Point one: you should have no doubt what our Association says publically represent the views of our members. Point two: we don’t knee jerk responses, if you trace back our comments around NZPower you will see them link all the way back to our research in 2004 and 2005. All that material is fully linked from our comments above. Point three: you will note our comments on major users, sadly the same advantage does not accrue to smaller industrial users. The perverse incentives of the LRMC approach in all this are well known. Point four: the NZMEA is not like any other Association in New Zealand we admit only manufacturers and exporters into membership, and our public expressions are the views of that restricted membership.
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30/6/11

Brian Fallow - Why door is closing on ownership dream


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Brian Fallow investigates why home ownership rates are declining  and New Zealand house prices are amongst the highest in the world in an article for the Herald.

The Prodiuctivity Commission is conducting an inquiry into housing affordability, and as Fallow notes, it is likely that they will find the same thing that the Savings Working Group did; that the tax free status of capital gains is a major factor:

"A survey of landlords in 2003 - still in the foothills of the housing boom - found capital gains the most commonly cited benefit of investing in property.

And those gains are untaxed.

For some reason our political leaders don't trust us to be able to grasp the proposition that it makes little sense to tax people if they increase their wealth by the sweat of their brow but not if they increase their wealth by holding the right asset over the right period.

Changes to the depreciation rules in last year's Budget made investment properties somewhat less attractive.

But the Savings Working Group argued that rental, and even more owner-occupied, housing is still treated favourably by the tax system compared with investment in shares or interest-bearing instruments.

It will be surprising if the commission comes to a different conclusion.

It will also be looking at how taxes have affected affordability in the housing market, especially for first-home buyers, and how the overall burden of taxation (including rates) compares with other countries.

New Zealand households have collectively been spending more than their income since the early 1990s.

OECD work indicates a correlation, though not a particularly tight one, between rising real house prices and falling saving rates. But it also suggests that in New Zealand's case the saving rate, until recently, was trending down even without accounting for house prices.

Whatever the extent to which it is housing-related, our chronically negative household saving rate has underpinned persistently large current account deficits, which represent the gap between national investment and national savings.

The gap would have been wider still if business investment over the past 25 years had not been persistently below the OECD median as a share of GDP (which in turn is nothing to write home about)."

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10735314



tags: brian fallow, savings working group, capital gains, productivity commission

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