Today, global stock markets slumped another two percent this morning after the US Centres for Disease Control and Prevention (CDC) warned Americans to prepare for a coronavirus outbreak. Market interest rates hit record lows as investors opted for safety.
Meanwhile, Marc Daalder reports the Government will fail dramatically to reach a national target of 64,000 electric vehicle registrations by the end of 2021. The Government itself has only 89 electric-only cars in its fleet, having added four in the last quarter. That is four as in they can be counted on one hand.
Also, Dileepa Fonseka reports on why Wellington, Hamilton and Dunedin are shying away from the water meters and volumetric charging that could help solve their water infrastructure crises. A lot like pension reform has become a third rail of politics nationally, the issue of specific water charging has become the third rail of local body politics.
- The guts of it? Remember, older property owners on large sections with fixed and low cash incomes vote at much higher rates in council elections than young renters, or generations yet to be born.
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Breaking this morning...
It's getting real: US, European, Asian and UK stock markets slumped a further 2-3 percent overnight as the US CDC warned that a coronavirus outbreak in America was inevitable and residents and businesses should prepare for it. (Bloomberg)
- Key quote: “We expect we will see community spread in this country,” Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, said on a call with reporters Tuesday. “It is not a matter of if, but a question of when, this will exactly happen.”
Bans proliferate: More than 50,000 Italians in various towns in Lombardy in Northern Italy are in lockdown this morning as the Government there scrambles to contain its outbreak. Italy has disclosed 322 cases and 11 deaths. Austria halted all train traffic with Italy last night. (CNN)
- No thanks: Turkey, Iraq, Pakistan, Armenia, Jordan, Saudi Arabia and Kuwait closed their borders with Iran overnight because of an outbreak there.
- The key stat? 95 people have been diagnosed with the virus in Iran and 15 people have died.
- He did what? Iran’s deputy health minister Iraj Harirchi told reporters on Monday that mass quarantines were not necessary in the shrine city of Qom and downplayed the potential for the virus to spread. Last night he tested positive for the virus, along with an MP. Video of Harirchi holding a news conference and doing a TV interview while sweating and coughing has been released. (Guardian)
- He said what? "We’ll defeat corona. Be assured. I’m saying this deep from my heart. This virus is democratic, and it doesn’t distinguish between poor and rich or statesman and an ordinary citizen. Many might get infected, but we have enough effective medicine, take care of yourselves. Take care of the nurses and doctors who work heroically.”
Stay home: Japan warned companies to adopt remote working practices, to stagger shifts and hold meetings online. An official said there were 146 cases identified overnight in 16 different prefectures which had nothing to do with the infected Diamond Princess cruise ship or Japanese evacuees from China.
- Key quote: Shigeru Omi, head of the Japan Community Health Care Organization: “We are at the crossroads. Local transmission is already going on.”
But we're fine right? New Zealand's stock market fared better than most yesterday, ending down just 1.2 percent when others fell more than three percent. But Air NZ, Auckland Airport and Tourism Holdings shares fell more than the rest of the market, and travel software firm Serko fell sharply after it issued a profit warning because of the virus.
- Why so relaxed? The key thing to watch here is the New Zealand Government and US Treasury bond yields. If market interest rates fall as investors switch to 'safe-haven' assets such as bonds, that makes shares and other assets such as property with regular cash returns relatively more attractive.
- Cash is king: Many of New Zealand's largest listed companies have relatively high dividend yields, which means their share prices held up better. These include the likes of former state-owned utilities such as Meridian, Mercury, Genesis, Chorus, Contact, Trustpower and Auckland Airport.
- So low: The US 10 year Treasury yield, which is the main one investors watch, fell to a record low 1.31 percent. The New Zealand 10 year Government bond yield opened this morning at a four-month low of 1.18 percent. That is a proxy for the borrowing cost for the Government.
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Water meters: the third rail of council politics
Water meters seem to work to lower water consumption, but they sure won't get you elected.
That's what will be on the mind of Wellington councillors after the capital's 'summer of sewage' and a growing debate about the need for massive investment in water networks has ripped the cap off a taboo subject for ratepayers: water meters and volumetric charging.
See the story about water metering around the country from Dileepa Fonseka.
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NZME gets its Stuff together
NZME expects further details of its proposed bid to buy rival Stuff to be made public in "coming weeks" - and any Kiwishare offered to the Government to be lasting, but subject to changes in conditions in the media market.
The company's chief executive, Michael Boggs, told investors as part of the 2019 annual results presentation while the StuffMe II proposal would require the Government to accept the Kiwishare plan, NZME expected metrics within the agreement to be "open to discussion" later if competition against the combined company became stronger.
See the full story here from Newsroom Co-editor Tim Murphy.
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Government to miss yet another electric vehicle target
New Zealand will fail to meet a target to have 64,000 electric vehicles on the road by the end of 2021, according to the Ministry of Transport.
And to add salt to the wound: the target was one set by the previous National government.
There are currently more than 19,000 electric vehicles in the country and that number is expected to double over the next 22 months, but we will still fall far short of the target.
Associate Transport Minister Julie Anne Genter told Newsroom that National was never going to reach its own target, in part because they didn’t put in place effective policies to make buying an EV more affordable. But that didn't stop National transport spokesman Chris Bishop hitting back, claiming Genter had "absolutely no credibility on EVs whatsoever".
See the full story here on Newsroom Pro
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The NZ Super Fund's magical thinking
By underfunding investment in the young we've been able to create budget surpluses to be siphoned into the NZ Super Fund at the current rate of nearly $2.5b a year.
This has some serious impacts for a lot of families, writes Susan St John for Newsroom.
See the full op-ed here.
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What are the fiscal policy options if there's a global recession?
Finance Minister Grant Robertson said on Monday Treasury was considering what interventions the Government could make in the event of global recession.
In Australia, in the immediate aftermath of the near-death of the global banking system in September 2008, then Prime Minister Kevin Rudd awarded a straight one-off payment to every Australian taxpayer of $900.
I asked on Monday if that sort of thing was being considered here. Robertson was vague but agreed that sort of thing was possible.
However, Prime Minister Jacinda Ardern ruled out increasing benefits in the way recommended by her Welfare advisory group. It proposed a significant one-off increase in benefits costing $5.2 bilion.
I asked why the Government could not do that now, Ardern said the Government wanted to keep a strong fiscal position. Yesterday she released child poverty figures showing no real improvement in the last two years. She was traveling in Fiji.
This $5.2b increase in benefits should be the first cab off the rank to be considered if the Government is considering emergency measures. It would go to the people who need it most and would all be spent.
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Here's what happened to real incomes for the median male?
Most measures of real incomes in developed countries show improvement over the last 50 years, along with relatively low measured inflation over the last 20 years or so.
So why are people in places like America and Britain and many parts of New Zealand still feeling grumpy and as if they have gone backwards. Here it is mostly about housing costs, but in America it is all about medical and education costs, as this latest research and chart shows. (WaPo)
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5G lab - Vodafone New Zealand has opened its first Vodafone 5G Innovation Lab in Ōtautahi, Christchurch, and announced a partnership with the University of Canterbury to co-deliver a speaker series, aiming to showcase 5G's potential.
Pay up please - MBIE has released a discussion document (available from 9am today) setting out options for action to tighten the rules around payments for small businesses and lessen the stress of late payments. Minister for Small Business Stuart Nash says he is prepared to legislate to set minimum standards for payment terms. The Government is proposing a maximum payment term of 20 days to ensure small businesses are reimbursed for their services more quickly, and giving small businesses the right to charge interest on overdue invoices and debt recovery fees for late payments. Other options in the discussion document include a disclosure regime requiring large businesses to publicly report on their payment terms and payment times, or whether there should be a voluntary code of practice.
Crime could really pay - Cyber-attacks could cost New Zealand’s financial sector more than $100 million a year on average according to a new Reserve Bank bulletin article, highlighting the need for industry resilience to counter these threats.
Mahia money - The Provincial Growth Fund is investing $8.3 million on a roading package for Mahia, comprising: $7 million for traction sealing and other works to 12.5km of road on the Mahia East Coast Road; $1 million to seal a 4km adjoining road on Onenui Station that leads to the Rocket Lab launch site; and $300,000 to investigate realigning the 11.3 km Nuhaka-Opoutama Road.
Cash for Kawerau - $19.9 million from the Provincial Growth Fund will help develop essential infrastructure for the Putauaki Trust Industrial Hub in Kawerau. The funding will go to three projects: Kawerau Container Terminal (KCT Co Limited) - $9.6 million; Putauaki Trust roading extension and infrastructure (Putauaki Trust) - $7.5 million; and Kawerau Off-Highway Road (Sequal Lumber Ltd) - $2.8 million.
Fiji forensic - On the first day of her visit to Fiji, Jacinda Ardern announced a new partnership programme between the New Zealand Police and Fiji Police to focus on combatting transnational organised crime and enhancing investigative skills. The programme will see: ESR providing support to the Fiji Police forensic laboratory to ensure successful prosecutions following drug seizures; technical assistance to the Fiji Proceeds of Crime Unit and provision of New Zealand Police trained tracker dogs; and roll out of the UNDP “First Hour” programme in Fiji.
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Coming up
Parliament is in recess this week and will resume March 3.
Today
Meridian releases its half-year results
Gentrack AGM, Auckland, 4:00 PM
Transport and Infrastructure Select Committee considers the Land Transport (Rail) Amendment Bill, the Land Transport (NZTA) Legislation Amendment Bill and Racing Industry Bill
(Detailed Select Committee schedules can be found here)
Thursday
a2 Milk Co. releases its half-year results
Air New Zealand releases its half-year results
ANZ releases its monthly Business Outlook Survey
Māori Affairs Select Committee considers the Te Ture Whenua Māori (Succession, Dispute Resolution, and Related Matters) Amendment Bill
(Detailed Select Committee schedules can be found here)
Friday
Kiwibank goes cheque-free
February 28 – Deadline for political parties to submit to the Electoral Commission for public broadcasting funds
Next week
March 3 – Parliament resumes sitting for three weeks
Further ahead
March 22-28 – Winston Peters leads a New Zealand delegation on a tour of the Pacific
March 25 - Reserve Bank Official Cash Rate decision
March 31 – End of Q1, Rio Tinto expected to make a decision on the future of Tiwai Point
End of March - The Treasury will release its four-yearly Long-term Fiscal Statement
April 1 – Consumer power price announcement
May 14 - Budget 2020
September 19 - New Zealand’s general election and referendums on cannabis and voluntary euthanasia
November 3 - US Presidential election
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Some dedicated photoshop work here
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