Political & Economic week that was: TPP finally reached
Rob Hosking breaks down the political and economic week that was on NBR Radio and on demand on MyNBR Radio.
Rob Hosking breaks down the political and economic week that was on NBR Radio and on demand on MyNBR Radio.
Parliament wasn’t sitting, but by a confluence of miracles, the week was dominated politically by matters of substance.
The long awaited trans-Pacific Partnership agreement was finally reached, in the face of howls of outrage from its enemies and even some scepticism from friends of free trade.
The agreement falls short in a number of critical areas – most notably dairy – but is still progress for New Zealand’s non-dairy industries, including meat and kiwifruit.
National is moving now to exploit divisions within the opposition parties over the agreement.
New Zealand First will oppose it bitterly simply as a matter of course. The Green Party, too, can be expected to come out firmly against it: new co-leader James Shaw is being watched with suspicious eyes by many on the Left, who suspect him of being too friendly towards things like trade. This is his chance to reassure them.
Labour is – as on so many things – divided, with a dwindling band of economic realists fighting a rear-guard action against the party’s more dominant political theorists and aging student activists.
The other big action was on tax: the OECD’s long awaited outline of proposals for taxation of multinational companies. There is a very big risk of New Zealand getting into a lose-lose situoan on this: New Zealand firms will have to pay more tax, sooner, when they go overseas, and less to the New Zealand government, as well as face higher compliance costs and information requirements. The New Zealand government, though, is not likely to scoop up any extra tax revenue from the likes of Google or Apple.
Economically, the news is better – well, slightly. There are signs the economic slowdown following the record dairy prices of 2012-14 is going to be more gentle than anticipated even a month or two ago.
This is not just a matter of the dairy price recovering. Other sectors of the economy, too, are proving more robust and business mood surveys show firms are maintaining relatively strong investment and hiring intentions.
Plans for investment in plant and machinery, while off recent high levels which had not been seen for 20 years, are still well above the long term trend.
And even hiring intentions are turning upwards again: the New Zealand Institute of Economic Research’s latest quarterly survey of business opinion suggests firms are taking advantage of the lower than expected wage inflation to hire more skilled staff.
RAW DATA: Ministry of Foreign Affairs and Trade's summary of the Trans-Pacific Partnership (PDF here)
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