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Winning is having Resilience and Confidence

John Lenihan
Australia vs New Zealand

Another All Black triumph at the weekend against the Aussies, keeping hold of the Bledisloe Cup, made doubly sweet by the Black Ferns wins as well.  It was the 14th successive win over the Wallabies. 

A good Aussie would point out that New Zealand excels at Australia’s fourth favourite sport.

The Wallabies coach Michael Cheika was quoted as saying "It's not always about instant gratification. In the modern world I know that's what everybody wants, but you have to use these times, the harder times, as watershed moments, to make some changes in a certain direction, because they were hard games to lose. But we've been here before, we've bounced back, and we will again." What he is saying is you have to be resilient and have confidence, and that delayed gratification can bring a longer-term benefit.

According to many NZ economists, our consumers and business owners need to do the same thing. ASB chief economist Nick Tuffley was quoted this week as saying: “there's been enough "Chicken Little" talk about the New Zealand economy, and Kiwi businesses need to cheer up”. Consumer and business confidence has dropped, but this is ignoring the current strengths of the NZ economy.

Australia, by comparison, has some actual worries. Housing prices have been declining, new car sales are declining, wage growth continues to decline, construction and agricultural activity has declined, as has the balance of trade. Inflation is higher than NZ, government debt as a proportion of GDP is double that of NZ, unemployment is higher than NZ, and to cap it off they just saw another Prime Minister hit the dust, the 6th prime minister in 8 years. Despite all this Australian consumer and business confidence has been positive this year. Aussies have confidence and resilience in spades; some would argue they could tone it down, but it's what drives success.   

New Zealand by way of comparison has been enjoying record consumer spending, house prices, car sales, construction levels, agricultural outputs, tourism, migration and record low unemployment, low inflation, low-interest rates etc. 

This is somewhat remarkable given the Global Financial Crisis was 10 years ago, and we have had a series of major earthquake(s) directly affecting 20% of our population.

Arguably all this activity and growth is hard to sustain at such a pace, so we are seeing a plateau in indicators. The NBR 2018 rich list reported a 26% growth in wealth over the previous year and we note that sales of ultra-luxury cars have increased this year by 5%. It seems our main gripe is getting that wealth spread over everyone in NZ, our teachers, nurses, police and so on, who are demanding a share of all this growth and wealth creation.

Our new government is really a reflection of this swing of voters, who probably felt they have delayed gratification for long enough, and wanted a change. 

Even the All Blacks coach took the opportunity and asked the government for money this weekend.

So to borrow a phrase from our “best global brand” we have to stay up on our feet and keep moving with confidence and resilience, and not waste time and energy worrying and complaining.

Constructive Thought | Registration High

Registration High

Vehicle imports, one measure of economic confidence and activity, have climbed to astonishing highs in the last year or two. In the year to June 2018, 269,000 cars were registered in New Zealand, a record. 109,000 of them were ‘new’ rather than ‘used imports’, also a record and by far the highest total since New Zealand’s car market was deregulated in the 1980's. For comparison, around 75,000 ‘new’ cars were registered each year in the mid-2000's.

For commercial vehicles, the trend is even more astounding. Registrations closely follow the economic cycle, so we had around 35,000 a year in the mid-2000s, a post-GFC dip to 18,000, and have now reached a whopping 63,000.

In the Press

Local Media highlights from the past week...


Rodney Dickens criticises Auckland Council's economists, claiming their desire for higher density housing near rapid transport routes taints their analysis

Special events are the mainstay of news but too often economists also give excessive weight to them.

This appears to be the case with Auckland Council's (AC's) chief economist's assessment of the impact of the Unitary Plan. Based on an article on, AC's chief economist is attributing too much to the Unitary Plan and not enough on other factors (e.g. building by Housing NZ, Special Housing Areas and section market developments).

(Source: Interest)


Z Energy takes huge stake in Flick – will its petrol-into-power move work?

Z Energy sells more petrol than anyone else in New Zealand while also trumpeting its environmental record. Today it put its money where its PR is in purchasing a large majority stake in Wellington startup Flick Electric Co.

An unlikely marriage – more an adoption, really – has just been announced between Z Energy and Flick Electric Co, with Z buying a 70.1% stake in Flick for $46m. The transaction sees Z, New Zealand’s biggest petrol retailer, moving into the electricity sector, one dominated by vertically-integrated so-called ‘gentailers’ like Meridian, Mercury and Genesis. These businesses both generate electricity and retail it to consumers; many are also majority owned by the government, meaning they are considered to be amongst New Zealand’s most entrenched business opponents.

(Source: SpinOff)


PM announces new business advisory council

Ms Ardern has delivered a speech in Auckland aimed at directly addressing stubbornly low business confidence.

Rather than the elephant in the room, she said, it was a huge, flashing neon sign.

(Source: RadioNZ)


Kiwi firms told to ditch the blues

There's been enough "Chicken Little" talk about the New Zealand economy and Kiwi businesses need to cheer up, ASB chief economist Nick Tuffley says.

The bank, in releasing its latest economic forecasts, has pleaded for firms to be less downbeat after business confidence slumped to levels not seen since the global financial crisis.

(Source: NZ Herald)

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