August 2008

This month started with the NZAMI AGM followed the next day with the NZAMI Seminar in Auckland. Thanks to the orgainsation commitee of the Seminar all went smoothly. It proved to be an interesting day with many features; speeches from the Minister of Immigration the Hon Clayton Cossgrove and from his counter part Hon Dr Lockwood Smith. A very interesting speech about migration and immigration from Professor Jacques Poot from the University of Waikato followed by a presentation from Lincoln Tan, a senior reporter with the New Zealand Herald.

The month of August may also be renamed this year to "Winston Peter's" month. It is quite amasing what is happening in this area and the news coverage it attracts. The only question and remark I would like to make is this one; who is speaking the truth?

It appears that politicians, the whole wide world over, are not bound by the truth. Why is that? Are our standards as a community, or country, all over the world, lowered or slipping because we allow politicians to get away with it? Is it because of money or power and, if so, has money or power become soo important that we do whatever it takes to obtain a slice of it or to hold on to it?

July 2008

The economy needs oxygen. Business confidence has retreated. A net 43 percent expect worse times over the year ahead, down from a net 38 percent last month. These are findings from the economists from the National Bank.

It is the trend in how firms feel about their own business that is most disconcerting. Firms' own activity expectations have sunk deeper into the red. A net 8 percent expect conditions for their own business to worsen over the coming year. Not since 1988, and the start of the survey, have we seen five successive months where firms' own activity expectations have been negative. While the rural heartland and confidence towards agriculture remain positive, it's a sea of red ink across retailing, manufacturing, construction and services.

Employment intentions have slipped once again. A net 14 percent expect fewer employees over the year ahead. To be fair, it's a small move, down 2 percentage points from last month, but there's been a clear trend now since late 2007. Employment sentiment is uniformly negative across the five major sub-groups. Investment intentions slipped another percentagepoint this month with a net 4 percent expecting less investment over the next 12 months. Profit expectations, residential and commercial investment intentions are all down. The one note of optimism in thesurvey was a slight uptick in export intentions. Praise be a lower NZD/AUD.

Survey Results

This Month        Previous Month        
Business Confidence                    -43.2                -38.7       
Activity Outlook                              -8.2                  -4.0   
Exports                                         16.5                 14.5
Investment                                    -3.8                  -2.6
Livestock                                       1.8                  -3.5
Capacity Utilisation                       -2.7                   1.3       
Residential Construction             -26.3                -21.1           
Commercial Construction            -30.0                -14.3           
Employment                               -13.6                -11.9
Unemployment Rate                   79.6                 74.6       
Profits                                        -27.1                -18.9
Interest Rates                           -42.3                -34.8   
Pricing Intentions                       43.0                 41.2       
Inflation Expectations                  3.67                3.49

The above means in my opinion that the Governemtn should take note of what is happening in the real world out there. The Government has been advised on numerous occasions by various organisations and authorities to cut, for example, taxes on petrol. They have been advised to act on the continuous increase in petrol prices. Bear in mind that the Goverment still continues to pocket the extra tax received from the increases in the petrol prices. Would it not be more advantages for companies that tax on petrol is capped, ie above a certain amount tax would not increase?

June 2008

You may be interested in the housing market in New Zealand. Please find herewith a report compiled by the National Bank providing you with a little bit of an insight;

The housing market continues to be very weak. Real Estate Institute figures for June 2008 showed sales volumes have almost halved from a year ago.

The dramatic fall in sales indicates that there is a big gap between the price expectations of sellers and those of home buyers. Sellers are proving reluctant to lower prices in spite of changed market conditions, with the result that many properties are remaining unsold. Another outcome in some areas is the trend towards advertising a reduced price for unconditional offers.

The Reserve Bank's recent announcement stated that it was likely to be in a position to reduce the Official Cash Rate (OCR) later this year. The OCR is one of many indicators that affect short term interest rates such as home loan floating rates, and one and two year fixed lendingrates. However, the impact on home lending rates may be less straightforward. The threat of inflation remains high with food and oil prices continuing to rise, which may mean rate cuts will be staggered. In addition, ongoing concerns over the global credit environment means borrowing from offshore remains more expensive.

Economists continue to expect the Reserve Bank to begin cutting the OCR from September, which is likely to see lower mortgage interest rates. This will help provide some much needed support to the housing market and see housing affordability improve.

May 2008

A month all good immigration advisers have been looking forward to. Why?

On Monday 4 May 2008 the Immigration Adviser Authority (IAA) was officially launched based on the Immigration Advisers Licensing Bill. This Bill creates a licensing regime for individuals who provide immigration advice. The purpose of the Bill is the promotion and protection of consumer interests receiving immigration advice, and to enhance the reputation of New Zealand as a migrant destination.

The Bill enhances the ability of immigration applicants to make a well-informed choice of immigration adviser. The Bill also reduces the risk of serious harm to immigration applicants by ensuring that there are consistent and enforceable standards for immigration advisers. Lastly, the Bill provides clear and accessible complaint and redress procedures for those who use an immigration adviser.

On-shore advisers are required to be licensed before 1 June 2008 and all off-shore advisers (those not based in New Zealand), also need to be licensed one year later, otherwise the regime would be critically undermined if off-shore advisors were not included. The Bill exempts those who provide immigration advice in an informal or family context as long as the advice is not given systematically or for profit. It also exempts persons providing advice off-shore in relation to student visa and permit applications only. Other professionals such as Lawyers are exempt as well.

A Registered Adviser will provide professional service and plays a significant role in assisting and representing migrants, temporary entrants and refugee status claimants.

All people who give immigration advise and assist immigrants with their applications are now all called Immigration Advisers.

We have been looking forward to this change as we have heard many many sad stories of immigrants being ripped off or treated very badly. Through the introduction of the IAA, we suggest that this will now be minimal or even eliminated.

More information about the IAA, please click here

April 2008

Months are slipping away quickly ..... evenings are getting shorter ..... summer is now definitely coming to an end ...... 

In April we have seen quite a lot of intersting issues coming to the front. The much heralded China Free Trade Agreement and the alleged abuse of powers by the boss of the Immigration Service. The slump in the house market resulting in a decrease of house values and the increase of petrol prices at the pumps. Please refer to the News Page for further details.

Despite all the above, New Zealand still requires a fair amount of skilled migrants. Even here it appears that more New Zealanders are leaving than coming into the country. According to our clients, New Zealand has lost its attraction in many countries. New Zealand appears to be less competitive in what we are able to offer to our immigrants compared to other countries. In addition the general immigration policies tend to focus more on people with degrees, certificates and diplomas. 

New Zealand though is a small country with just over 4 million people, and with many small companies. The people we do need are not all people with degrees, certificates and or diplomas. We also need hands-on people working in the front line. We need people willing to establish, open or purchase a business and employ other New Zealanders. That appears to me one of the solutions the government should be focussing on.

 

March 2008

As you may be aware the immigration industry is going through some positive developments; we will be regulated and any person giving immigration advise is required to be licenced by the Government. This will start on 1 May 2008 and immigration advisers have one year time to obtain such an annual licence. We will keep you advised how this is going.

In March we all may have read the news about Air New Zealand and its Chinese workers being paid peanuts, we all may have read the news about INZ ignorance appals migrants and we all may have read that the NZ Government is footing a $1 milion bill for HIV positive refugees.

In my opinion, and this is in relation to the regulation of immigration advisers which I do support fully, it appears to me that  the Immigration Service and or even the Government, both with its inconsistent decision making processes, requires regulating! 

February 2008

February, a month where we have seen various interesting newspaper articles. The performance of the Immigration Service, Winston Peters starting his election year stating that NZ is seen as a soft touch while the NZ economy has been torpedoed by the government through the fall of immigration.

Newspapers report that the job market remains tight with employers complaining how difficult it is to find employees.

The Skilled Migrant Category I believe is only partially addressing this issue as only applicants with a high level in education and experience may be able to meet the requirements. It appears that one is forgotten that New Zealand is only a small country with many small companies; 85% of the companies employ up to 5 people.   New Zealand needs, next to bachelor and university degree people, also "normal" people.

I would suggest that there are options for the government to improve the current impasse through the relaxation of immigration. This may mean that employers may be able to find their employees and that the house market may improve. It way it is going now only means that we will be pulled down through an increasing economical down spiral. 

January 2008

Wishing you and all your loved ones a Happy, Prosperous, Healthy and Safe New Year!! May all your dreams come through and we at Terra Nova Consultancy  Ltd will do our best to assist you to achieve those dreams.

The holidays are over and every-one, except a few lucky ones, are or at school, studying or back at work. We started again and we have had to up-date our website with the various changes in the immigration policies. The most changes have been in the Investor and Skilled Migrant policies. Please read up on some of those changes:

• Investor Category 
• Skilled Migrant Category

By the way, do you know where our common Kiwi accent originates from? Well,  here are a couple of interesting (?) facts;

• The common Kiwi accent was formed with the arrival of British immigrants around 1850.
• They brought with them their regional dialects and spread these dialects all over New Zealand when transport improved
• The future of our common Kiwi accent will continue to change through the arrival of more immigrants from all over the world.

December 2007

The National Bank states in their monthly Business Outlook for December 2007 the following, under the appropriate heading The joyous season?

The festive season has eluded business confidence. A net 25 percent of businesses expect business conditions to deteriorate over the coming year. This is down from 20 percent in November. Confidence ebbed lower in the retail, construction and service industries, while the pulse in agriculture and manufacturing improved a tad.

But the Grinch is far from stealing Christmas. Such pessimism has not pervaded across the entire survey. Firms’ own activity expectations have nudged higher, with a net 18 percent expecting better times for their own business over the coming year, up from 16 last month. Employment intentions followed suit. Conversely, investment intentions retreated to a six-month low – a potentially disconcerting signal about raising the supply-side capacity of the economy. Profit expectations dipped marginally. Our composite growth indicator from the survey continues to point to relatively robust growth of around two-and-a-quarter percent over the coming year.

Much of the economic news over the month appears more in line with the fall in headline confidence, as opposed to the relative stability shown across the majority of the survey. The New Zealand dollar continues to be propelled higher. While export intentions continue to retreat in the face of the high New Zealand dollar, a net 18 percent of exporters are expecting increased volumes over the coming year. This is perhaps remarkably robust considering the outsized surges in the NZD/USD, but more recently the rise in the NZD/AUD from a low of sub 0.83 cents in October to the 0.89 region of late. The housing market continues to weaken, retailing is soft, incomes and profits are being squeezed by rising costs, the New Zealand equity market has lost five percent in three months, and around the globe wide-spread concerns over a full-blown credit crunch have resurfaced.

Of course countering the trend was the widespread expectation around the country that Fonterra would end up raising the dairy payout (although the actual announcement was received after the survey was closed off), and choruses for tax relief given supersize-me Government Fiscal surpluses.

Again, we are left searching for the possible intangibles which explain shifts in business confidence relative to people’s expectations about their own business, or what the underlying messages are. We could put this down to politics or the switch between rugby and cricket seasons. However, there look to be broader forces at work.

Net-on-net, when you have inflation pressure (and pricing intentions nudged back up this month, led by the construction sector) the growth negatives need to outweigh the positives. The headwinds for the economy are getting stronger. Businesses appear aware of the growing challenges and the general economic environment. The combination of a repriced credit risk, wider spreads, easing wealth gains from assets, a higher currency and tight monetary policy, have delivered financial conditions that are the toughest for businesses since 1996/97, and just prior to the last ‘global event’.

Yet the economy still seems to have reasonable momentum. We suspect there is a strong base effect pervading, even as momentum eases. This merely slows the economy from a gallop to a canter. When you’re facing capacity constraints and inflationary pressure, stopping for a cup-of-tea (with respect to a former Prime Minister) is a welcome development. It’s very much a slow-burn turn in the economic cycle, consistent with the fabled soft landing that appears to be being engineered. Strong balance sheets have businesses in a robust position relative to previous cycles.

Moreover, the relative dichotomy across the survey is perhaps also reflective of the massive divergences we are seeing across the economy as a whole. Sheep meat is suffering but dairy doing well. Rural (dairy) aligned regions are set to outperform urban counterparts. Middle-to-low income families are being weighed by burgeoning living costs. While others are insulated. Such a dichotomised picture is also consistent with economies that go through inflection points in their cycles.

Cascading back to the last material disinflationary inspired change in the business cycle (1996/97), business confidence remained relatively robust initially, as the process of inflationary purging via tight financial conditions and slower growth progressed. Touchwood, a relatively benign and soft landing for the economy will be achieved. All the risk towards a counter outcome looks to be stemming from offshore.

November 2007

Business Outlook for the month of November 2007 from the National Bank states the following;

Down but far from out. 

Business confidence has ebbed lower. A net 20 percent of businesses expect business conditions to deteriorate over the coming year, reversing a portion of the gain seen in October. Confidence eased in all sectors, with the exception of services.

The slippage in general business confidence is reflected across the entire survey. Firms’ own activity expectations have nudged lower, with a net 16 percent expecting better times for their own business over the coming year, down from a net 20 percent last month. Profit expectations and employment and investment intentions all eased. Residential construction stands out as the weakest sector in the survey, with a net 18 percent expecting a deterioration over the coming year. In contrast, commercial construction intentions remain robust, although easing from last month.

Looking ahead to summer, we have to look at a glass that is half full and there are three bright-spots in this month’s survey.

First, our composite growth indicator from the survey continues to point to relatively robust growth of just over two percent over the coming year. The fabled soft landing remains in reach. If this is truly the trough in the business cycle, it will be the most modest in recent history.

Second, the overall decline in confidence is relatively small – a development we take as being reasonably encouraging considering the barrage of global credit unease, fears of a recession in the United States, surging food prices placing a squeeze on disposable income, the high currency, calls for higher interest rates, and rising petrol prices. Of course, a lot of these developments really emerged in the second half of the month, so timing could be key. But stepping back, the equity market has taken on a rather sombre note, retail momentum is waning, and the housing market remains weak. Against the grain, prospects for tax cuts, still booming commodity prices and infrastructure spending remain powerful support factors to growth.

Finally, inflationary pressures have eased a tad with inflation expectations nudging lower and pricing intentions receding to an 11-month low. A net 27 percent of businesses expect to raise prices over the coming year, compared to a net 31 percent last month. Of course one swallow does not make a summer. Both inflation expectations and pricing intentions remain high. Currency sensitive areas including agriculture and manufacturing showed the largest falls in pricing intentions, while pricing intentions in the service sector increased to a 7-month high. Yet net-on-net, pricing behaviour has once again turned in the right direction, a development that will likely be welcomed by the Reserve Bank.

Looking at the broad picture, the economy looks to be in a sweet spot. A reasonable base to growth has formed. However, growth – courtesy of a slowing housing market – is easing, albeit from a gallop to a canter, a necessary requirement to dampen inflation pressure. Yet if the inflationary beast can be tamed with a trough in the economic cycle of 2 percent, it will surely be viewed as an economic success.