Speaker 1: Kiyota m Chelsea Daniels and this is a compilation episode
Speaker 1: of The front Page, a daily podcast presented by the
Speaker 1: New Zealand Herald. The economy has been in an uncertain
Speaker 1: place for quite some time, and twenty twenty four was
Speaker 1: no different. Over the last year, we've seen some improvement,
Speaker 1: though in October the annual rate for inflation had fallen
Speaker 1: from three point three percent to two point two percent.
Speaker 1: The official cash rate ended the year on four point
Speaker 1: twenty five percent. Elsewhere, though, the news hasn't been so positive.
Speaker 1: The country's gross domestic product contracted zero point two percent
Speaker 1: in the June quarter, only just missing out on a
Speaker 1: technical recession. Job cuts across multiple sectors have seen job
Speaker 1: seeker benefit numbers surged to over two hundred thousand, and
Speaker 1: the government books released just this week show that it's
Speaker 1: unlikely we'll return to a surplus until twenty twenty nine,
Speaker 1: about a year later than originally anticipated in this year's budget.
Speaker 1: So what's going on in our economy and how soon
Speaker 1: until we start to see some change. Let's start back
Speaker 1: in May, when Finance Minister Nikola Willis announced her first budget.
Speaker 1: We got analysis from Enzet Herald Business editor at large,
Speaker 1: Liam Dan starting with those much promised tax cuts.
Speaker 2: So I'm trying to give government benefit of the doubt here.
Speaker 2: They want to give people a little bit of hope,
Speaker 2: a little bit of money back, a squeeze middle all
Speaker 2: that sort of stuff. But there are some issues I
Speaker 2: think around timing. Look, no, but no tax expert i've
Speaker 2: spoken to thinks it's a bad idea to adjust these
Speaker 2: threshold It's been about fourteen years since they've been adjusted.
Speaker 2: So that's moving the brackets at which you move to
Speaker 2: the next higher tax rate, adjusting them up effectively for
Speaker 2: the inflation, it just means you don't pay quite as
Speaker 2: much tax and so we get our twenty dollars a week,
Speaker 2: probably for a large chunk of New Zealand. The issue
Speaker 2: is that the timing. When you're putting twenty dollars a
Speaker 2: week in people's pockets, it's a bit like you know,
Speaker 2: labor did different things with the cost of living crisis
Speaker 2: last year, but they cut petel taxes and things, and
Speaker 2: when you do that, it's inflationary. It sort of keeps
Speaker 2: the economy ticking over, which normally is a good thing
Speaker 2: in a recession. You want to stimulate. But we've had
Speaker 2: so much stimulus through COVID, we've got this high inflation,
Speaker 2: and that means the Reserve Bank is going to be
Speaker 2: looking at it very closely, doing the maths on them
Speaker 2: whether it really balances out, because the balancing force in
Speaker 2: all of this is the cuts to public services, so
Speaker 2: that comes out of the economy and that should be
Speaker 2: a disinflationary force, and Nikola Willis has said they've got
Speaker 2: that finally balanced so that it won't be inflationary. She's
Speaker 2: quite adamant about that.
Speaker 3: Wild times may feel tough for everyday, Kiwis right now,
Speaker 3: the economy will recover and inflation will come down. Tax
Speaker 3: relief in Budget twenty twenty four is fully funded from
Speaker 3: savings and revenue initiatives, and I can confirm that because
Speaker 3: of this, the government is not borrowing to fund this
Speaker 3: tax relief and it will not add to inflation.
Speaker 2: You know, already some economists like Cameron Baggery are questioning
Speaker 2: that because you know the timing of the cuts. We
Speaker 2: don't know that they're going to take a lot longer
Speaker 2: to implement, and frankly, it could be quite a long
Speaker 2: time before the sort of disinflationary impulse of the tax
Speaker 2: cuts flows through, whereas after July one, we should all
Speaker 2: be starting to see I say all, there's certainly all
Speaker 2: middle wage journers, and wage journers will start to see
Speaker 2: some tax back. It doesn't deliver for beneficiaries, for example,
Speaker 2: so it's worth remembering that too. So they're always going
Speaker 2: to have a hard sell at that social issues end
Speaker 2: of the political spectrum.
Speaker 1: It's hard, isn't it, Because we speak about the squeezed
Speaker 1: metal and income families, etc. But what about those beneficiaries,
Speaker 1: what about those on minimum wage? I feel a bit
Speaker 1: ecky knowing that I'm going to get more back a
Speaker 1: week than someone on a minimum wage.
Speaker 2: Yeah, and not to mention all the money you'll get
Speaker 2: back on all those properties. Even wealthier people with multiple
Speaker 2: properties investment properties will also be able to claim tax back,
Speaker 2: of course, And so there is a sense that there
Speaker 2: is a political, some might say ideological, aspect to this.
Speaker 2: National has talked about wanting to get people off the benefit.
Speaker 2: There's plenty of other people who see that as punitive,
Speaker 2: but there's certainly a sense that they want to make
Speaker 2: life easier for those who are working. Worth mentioning, I
Speaker 2: suppose that unemployment in this whole equation of economic rebalancing.
Speaker 2: Unemployment is expected to keep rising, so it's a tough
Speaker 2: job market to get off for benefit.
Speaker 4: The government could choose to prioritize keeping New Zealanders and work.
Speaker 4: It could choose to prioritize lifting children out of poverty
Speaker 4: rather than forcing more children into poverty. It could choose
Speaker 4: to prioritize tackling climate change. It is not making those choices. Instead,
Speaker 4: it's choosing to prioritize tax cuts that are going to
Speaker 4: lead to higher inflation for longer.
Speaker 1: When we spoke last week, we discussed the worry that
Speaker 1: the government would end up borrowing to fund these tax
Speaker 1: cuts in some kind of way. Does it seem like
Speaker 1: that's the case now that we've actually seen the books.
Speaker 2: Well, I don't think much has changed in terms of
Speaker 2: how people are going to argue this point. Nikola Willis
Speaker 2: is adamant they are not borrowing for tax cuts, but
Speaker 2: the government will be borrowing twelve billion more over the
Speaker 2: next four years. They've got a program of tax cuts
Speaker 2: of about fourteen billion over the next four years, different
Speaker 2: pools of money. Apparently, that's what they're saying, So that
Speaker 2: they're borrowing for some other stuff, not the tax cuts,
Speaker 2: but they will have less money because of the tax cuts.
Speaker 2: In a narrow accounting sense, they're balancing up, you know,
Speaker 2: the spending cuts and the tax cuts. In the big
Speaker 2: picture of government spending, it still means we take longer
Speaker 2: to get out of deficit. So take till the twenty
Speaker 2: seven to twenty eight year instead of twenty six twenty seven.
Speaker 2: And there's that extra bond program, twelve billion dollars of
Speaker 2: New Zealand government bonds that we will go out and
Speaker 2: sell to the world.
Speaker 1: In November, as signs the economy wasn't performing as well
Speaker 1: as it could be became clearer, the Reserve Bank cut
Speaker 1: the official cash rate to four point twenty five percent.
Speaker 1: We spoke with Simplicity chief economist Schamabel Jakub for his
Speaker 1: analysis on how things had performed since the budget, starting
Speaker 1: with cuts to home loan interest rates.
Speaker 5: We desperately need this good news. For the last couple
Speaker 5: of years, people have been refixing their mortgages from very
Speaker 5: cheap to very expensive rates, and we've now just turned
Speaker 5: the corner and the lower interest rates are going to
Speaker 5: give a lot of relief to people who are refixing
Speaker 5: In the next year or so, so absolutely good news,
Speaker 5: but it takes a little bit of time for them
Speaker 5: to flow through.
Speaker 1: How much time does it take to flow through, do
Speaker 1: you think? And what kind of numbers are we going
Speaker 1: to be looking at after this decision.
Speaker 5: Look, it usually takes somewhere between six and twelve months
Speaker 5: before these interest rate cuts really kind of become broad
Speaker 5: based better news for the economy. That's because the current
Speaker 5: level of interest rates are still quite painful. They're quite high,
Speaker 5: so people aren't borrowing and investing like the who are
Speaker 5: doing during good economic times. So we probably need to
Speaker 5: assume that for the next three to six months things
Speaker 5: are still going to remain a little bit painful. We'll
Speaker 5: initially get just a better relief that people are not
Speaker 5: paying so much when mortgages, and then eventually, when interest
Speaker 5: rates get low enough, we're going to start borrowing and
Speaker 5: investing again, and that's when the party begins.
Speaker 1: If you could explain to me, like I'm a five
Speaker 1: year old, how ocr rates then translate to a better economy,
Speaker 1: could you do that?
Speaker 5: Of course, the OCA is kind of like the interest
Speaker 5: rates from very short term money. You and I don't
Speaker 5: borrow that money. But when the reserve Bank changes the OCA.
Speaker 5: It also changes your floating mortgage rate. It also changes
Speaker 5: you fixed mortgage rates, not by the same amount, but
Speaker 5: it influences all those costs of borrowing for all of us.
Speaker 5: And so when the reserve bank drives and the cost
Speaker 5: of debt, it means that we are paying less for that.
Speaker 5: And when we see less expensive debt, when we see
Speaker 5: banks being more willing to lend, not only do we
Speaker 5: get relieved from the debt we already have, but we
Speaker 5: are willing to take on more new debt. And so
Speaker 5: we are spending, we're investing, We've got more spare cash,
Speaker 5: and it means there is just more money going around
Speaker 5: in the economy. We all feel better.
Speaker 3: Since August, the rate has now been dropped one point
Speaker 3: two five points, and this is welcome news for families
Speaker 3: and businesses. For people with mortgages, the impact will of
Speaker 3: course depend on the size of their mortgage, whether they're
Speaker 3: floating or fixed, and what rates their current on. But
Speaker 3: to give one example, a family with the twenty five year,
Speaker 3: five hundred thousand dollars mortgage could expect to be about
Speaker 3: one hundred and eighty dollars a fortnight.
Speaker 6: Feet are off.
Speaker 1: The ocr is obviously just one snapshot of the economy, right,
Speaker 1: what other data have you seen recently that shows that
Speaker 1: it's doing quite well well.
Speaker 5: The OCI is very much the tool to try and
Speaker 5: influence the economy. What's going into the rest of the
Speaker 5: economy is we're just in a recession. We're quite late
Speaker 5: stage in a recession. It's this is probably the deepest
Speaker 5: and longest recession since the global financial crisis. So, you know,
Speaker 5: the pain that people are feeling, the kind of gloom
Speaker 5: that's out there entirely justified, but also is short lived.
Speaker 5: Once in a recession and the Reserve Bank is cutting
Speaker 5: interest rates, we know things will get better. So right
Speaker 5: now what we're seeing is people are spending less, people
Speaker 5: are investing less. We're not buying in something houses so much,
Speaker 5: businesses are not investing so much, in not hiring so much.
Speaker 5: So that's the kind of the I guess, the anatomy
Speaker 5: of a recession. But once we kind of work through
Speaker 5: this painful part, what we tend to start to see
Speaker 5: is there is a return of hope.
Speaker 1: A big draw card for voters was nationals tax relief policy.
Speaker 1: You kind of wrap up of tax bracket changes, family
Speaker 1: tax credits things like that, has this actually done anything
Speaker 1: for the economy?
Speaker 5: Look, I mean we've still had a recession and households
Speaker 5: are still spending less. We can see that household spending
Speaker 5: is still falling and people are still struggling. I guess
Speaker 5: the counterfactual is they might have had even less money
Speaker 5: to spend, and they might have spent even less in
Speaker 5: the absence of the tax cuts. So it's a little
Speaker 5: bit hard to kind of look at it and go, oh,
Speaker 5: there has been no effect. But it's not clear that
Speaker 5: those tax cuts have actually made any difference to the
Speaker 5: current recession, because on the one hand, there is more
Speaker 5: money in consumers hands, but on the other hand, the
Speaker 5: government investment and government spending, which is also part of
Speaker 5: the economy, has been a lot less.
Speaker 1: And so do you expect that perhaps change next year
Speaker 1: with the next budget, because there have been whisperings that
Speaker 1: this budget is going to be obviously economy focused and
Speaker 1: focused on building on that government spending.
Speaker 6: Not really.
Speaker 5: I don't think there's going to be much good news
Speaker 5: in the next budget either. So this government is very
Speaker 5: focused on fiscal austerity. That means they want to spend
Speaker 5: less money. And when the government spends less money, those
Speaker 5: parts of the economy that are reliant on government spending
Speaker 5: will be smaller. Now, the question is if the government
Speaker 5: spends less, will somebody else spend more money? Well, not
Speaker 5: in health or infrastructure or education. Right, That's just not
Speaker 5: how it works. So my sense is that actually government
Speaker 5: will remain a bit of a headwind to the economy,
Speaker 5: and the recovery next year is going to be much
Speaker 5: more about the private sector. It's in spite of the
Speaker 5: government that will have a recovery rather than because of.
Speaker 1: Job losses were a big story this year. Notably, much
Speaker 1: of the public sector reduced to meet government savings targets.
Speaker 1: The news industry contracted significantly, with the entire news Hub
Speaker 1: brand shutting down, the closure of many community newspapers, and
Speaker 1: long running current affairs shows going off air. We also
Speaker 1: saw notable closures across the retail and hospitality sector. In June,
Speaker 1: we spoke with First Retail's Chris Wilkinson about the changing
Speaker 1: face of retail after Auckland, Icon Smith and Coey's announced
Speaker 1: its closure, which was eventually scaled back to a reduced
Speaker 1: physical footprint on Queen Street.
Speaker 7: The situation with department stores in that dare I say
Speaker 7: cut of that upmarket ategory is being played out across
Speaker 7: the world at the moment. So we've seen this happen
Speaker 7: in New Zealand over recent years with Circaldy and Stains,
Speaker 7: David Jones and Wellington, and then Ancient j Smiths in Southland.
Speaker 7: The challenge for the sector is that they're no longer
Speaker 7: able to differentiate in terms of their ranges. In many
Speaker 7: cases their sites are large and are going to require
Speaker 7: significant refurbishment and these economic headwinds are really affecting their
Speaker 7: customer base. So without being able to see any clarity
Speaker 7: going forward, there are a few options open to them.
Speaker 8: Yeah.
Speaker 1: Are We're seeing more brands and companies choose to open
Speaker 1: their own stores as opposed to giving their stock, say
Speaker 1: to a big departments store to sell.
Speaker 7: That's very true if we think about the brands and
Speaker 7: the categories that the likes of Smith and Cohe's have
Speaker 7: done particularly well in. Going back to cosmetics, perfumery. One
Speaker 7: of the largest supplies lv MHD luxury goods manufacturer that
Speaker 7: sells Chanel and all those other types of perfumes. You know,
Speaker 7: they've all got their own stores, they've all got investments
Speaker 7: in the likes of Sephora, and you know we're seeing
Speaker 7: these category is now develop into specialty type stores. So
Speaker 7: was a really good example. But also mec is another
Speaker 7: good example. You know, stores of very large scale but
Speaker 7: just specifically focused on these categories and in particular very
Speaker 7: appealing to younger and successive audiences.
Speaker 1: I know Sephora and Mecca. Well, is that mindset why
Speaker 1: perhaps Flybys is wrapping up here later this year? Why
Speaker 1: get your customers to join a separate rewards program when
Speaker 1: they can just join one in store.
Speaker 7: You are absolutely right. So successive audiences are less inclined
Speaker 7: to be part of these traditional loyalty programs. They are
Speaker 7: much more adept at finding deals. They're less inclined to
Speaker 7: want to sign up to things, and it's just for them,
Speaker 7: it's a fuss. They're more empowered consumers.
Speaker 1: And I guess moles in New Zealand up their game
Speaker 1: in the last decade. Hey really selling themselves as more
Speaker 1: of a destination, a place to go. Is that where
Speaker 1: retail is shifting towards and can standalone stores survive on
Speaker 1: their own anymore?
Speaker 9: I'm thinking Queen Street.
Speaker 7: Green Street's a really good example because once upon a
Speaker 7: time brands coming to New Zealand would have almost certainly
Speaker 7: needed to be in Queen Street. That would have been
Speaker 7: their flagship site because that's where the population was, that's
Speaker 7: where the audience was. Nowadays, those retailers are being attracted
Speaker 7: by the likes of Sylvia Park or Westfield or Commercial
Speaker 7: Bay and those walls need those types of businesses to
Speaker 7: create that differentiation. But increasingly so that's where the consumers
Speaker 7: are as well. That's where a very certain audiences and
Speaker 7: in particular those types of environments play into this big
Speaker 7: shift that we've seen from goods to experiences. So going
Speaker 7: to a place like Sylvia Park will give you a
Speaker 7: great range of food, it'll give you entertainment, it'll give
Speaker 7: you the likes of health services and all these other
Speaker 7: types of things that you would need on a day
Speaker 7: to day basis. So that's where our big shift is happening.
Speaker 7: And again this is a global trend that we've seen.
Speaker 1: And after a series of high profile restaurant closures, we
Speaker 1: discussed where to next back in August with Harold, Deputy
Speaker 1: Lifestyle Editor Joanna Thornton and aut hospitality and tourism professor
Speaker 1: David Williamson.
Speaker 9: Joanna can you run us.
Speaker 1: Through some of the restaurants that have closed down so
Speaker 1: far this year. Yeah, there's a few.
Speaker 10: I mean, I suppose the biggest or the most shocking
Speaker 10: was Espqure, which closed in July after thirty two years.
Speaker 10: We had Madame George on kd Unhappy Road, which was
Speaker 10: a huge loss. It's one of Viva's top fifty restaurants.
Speaker 10: There was also Floor on K Road as well, which
Speaker 10: is a cute little wine bar. Homeland is closed down.
Speaker 10: Orphan's Kitchen Omni which is a little yakatory spot on
Speaker 10: Dominion Road. Stanley AV Winebar and Milford. We also had
Speaker 10: Conch which was more sort of a bar and restaurant,
Speaker 10: the Wine Cellar and Tiger Burger is another one that's closed.
Speaker 1: God, there's so many. What have some of the reasons
Speaker 1: been behind their closures?
Speaker 10: There's a few, and Madame George said it was the
Speaker 10: economic downturn. Stanley AV said that there were a host
Speaker 10: of reasons like the pandemic, weather events and strained economic conditions.
Speaker 10: And I actually saw the Restaurant Association reported in a
Speaker 10: recent survey that the main challenges businesses are citing is
Speaker 10: just customer downturn.
Speaker 1: David from your years of experience in the hospitality industry.
Speaker 1: Is this speed of closures unusual or is it kind
Speaker 1: of par for the course.
Speaker 8: It's sort of hard to differentiate that it is an
Speaker 8: unusual time.
Speaker 6: I'm not sure the number.
Speaker 8: Of closures is particularly different, But I think what is
Speaker 8: different is that people are really struggling in this sector,
Speaker 8: and I think we're going to see more closures coming through.
Speaker 8: I was talking to a couple of veterans from the
Speaker 8: industry recently and they were adding to that suggestion of
Speaker 8: what's really going on is not just the difficulties right now,
Speaker 8: but the history of really impactful changes over the last
Speaker 8: sort of periods since COVID. So you have to understand
Speaker 8: that this industry was shut down or massively disrupted for
Speaker 8: a number of years through COVID, when the boarders shut
Speaker 8: they had huge staff shortages. Then you have those weather events.
Speaker 8: Just as we're coming out of COVID and starting to
Speaker 8: recover from that, we get smashed with weather events, which
Speaker 8: was really impactful on the industry. And then you have, yeah,
Speaker 8: the high inflation cost of living. People have a lot
Speaker 8: less discretionary income to spend on things like restaurants, cost
Speaker 8: of goods for these industries that record high. They are
Speaker 8: paying top interest rates on any debt they're holding. There's
Speaker 8: perceptions of higher crime and the inner city for people
Speaker 8: in Auckland who are coming in to dine out at night.
Speaker 8: So you know, there's an awful lot going on, and
Speaker 8: it's just been one challenge after another. So a lot
Speaker 8: of these businesses are small, standalone, own or operated businesses.
Speaker 8: They don't have huge amounts of capital reserves to survive
Speaker 8: periods like this. So it's not so much a question
Speaker 8: I think of, gosh, why are restaurants going down At
Speaker 8: the moment, it's a question of how on earth are
Speaker 8: they not going down? Given you the conditions that we've
Speaker 8: had over the past few years.
Speaker 11: For decades, Aucklanders have enjoyed a long lunch in the
Speaker 11: sun at Ponsomby Institution SPQR.
Speaker 9: But now the.
Speaker 11: Doors are shouting it's in liquidation, owing creditors over two
Speaker 11: million dollars, another casualty of rising costs and people keeping
Speaker 11: their wallets firmly shut.
Speaker 1: Johanna, can you explain to us what happened with SPQR
Speaker 1: in particular?
Speaker 10: Yeah, well, I mean, I suppose the announcement seemed pretty
Speaker 10: dramatic when they said they were closing in July, but
Speaker 10: I think it had definitely, you know, the quality of
Speaker 10: the food maybe had dropped off in recent years, and
Speaker 10: it wasn't sort of the hottest spot to be anymore
Speaker 10: where it had been in the past. And owner Chris
Speaker 10: Rupe just released a really brief statement saying that he
Speaker 10: was really sorry for the current situation and sort of
Speaker 10: encourage people to get out there and support hospitality. But
Speaker 10: then it turned out they were placed into liquidation with
Speaker 10: the business owing more than two million in land revenue
Speaker 10: and it owes over one hundred thousand two staff in
Speaker 10: unpaid wages and holiday pay. And then The Herald also
Speaker 10: reported that the business that owns Specure withdrew nearly one
Speaker 10: point four million from the business before it went into liquidation.
Speaker 10: So I think we're going to hear a lot more
Speaker 10: about that story.
Speaker 1: It is quite jarring when some of our favorite places close. Hey,
Speaker 1: I mean, Peter Gordon's Homeland closed this year's citing issues
Speaker 1: with renewing it's lease. How often is an issue like
Speaker 1: that to blame for a space taking on a new life.
Speaker 10: Well, I mean I heard that the problem with Homeland
Speaker 10: was There's a massive new retirement village going in there
Speaker 10: called Cracker Bay, So I think the development of that
Speaker 10: whole West Haven area didn't include keeping Homeland there. So
Speaker 10: I'm not sure how often you a lease is to blame.
Speaker 8: Yeah, I think there's a whole range of problems like
Speaker 8: that that certainly would finish off a lot of places.
Speaker 8: But yeah, again, I think it's a more complex and
Speaker 8: a multifaceted number of pressures which brings these organizations to
Speaker 8: the edge of collapse.
Speaker 6: I think what is.
Speaker 8: Interesting is it's such a resilient and it's such an
Speaker 8: innovative industry. Often describe restaurants that's extremely nimble, and so
Speaker 8: you know, at the moment where you have these really
Speaker 8: difficult trading conditions, hospitality shows up as an area where
Speaker 8: businesses do suffer and go down, but when conditions pick up,
Speaker 8: hospitality is also the first industry to recover. We sort
Speaker 8: of go into recessionary times quicker and lower, but we've
Speaker 8: come out of them faster and higher. So it's a
Speaker 8: very nimble industry. And Ram's just pointed out in their
Speaker 8: last report that you know there is nineteen thousand, five
Speaker 8: hundred and eighteen restaurants still in New Zealand. It's the
Speaker 8: largest number we've ever had in the country. The growth
Speaker 8: has very flat since twenty twenty three, only zero point
Speaker 8: one percent growth and restaurant numbers. But you know, it's
Speaker 8: not an existential crisis. We're not going to certainly run
Speaker 8: out of restaurants, but it is a very real crisis
Speaker 8: for the people who are running these businesses.
Speaker 1: One New Zealand company that enjoyed success this year was
Speaker 1: rocket Lab, the country's premier space business, celebrated its fiftieth
Speaker 1: launch in June, around the time the Coalition government ramped
Speaker 1: up investment in the era space sector. I spoke with
Speaker 1: the company's founder, Sir Peter Beck, about where too next
Speaker 1: for the company.
Speaker 6: The space industry isn't just launch.
Speaker 12: In fact, you know, two thirds of their businesses building
Speaker 12: satellites and spacecraft and that's kind of geographically agnostic. And
Speaker 12: there's some great startups actually in New Zealand now, great
Speaker 12: space startups, and we're really started to see an ecosystem
Speaker 12: build which is super exciting. So I think New Zealand
Speaker 12: can contribute in the space industry. You know, like I say,
Speaker 12: launch Away steals a show, but does a tremendous amount
Speaker 12: of opportunity across the whole space sector, and you're starting
Speaker 12: to see a number of little startups and in even
Speaker 12: traditional companies play.
Speaker 1: Yeah, it's quite exciting to see. Hey, we've spoken to
Speaker 1: Space Minister Judith Collins just after she was overseas promoting
Speaker 1: New Zealand space industry. In the US. She told us
Speaker 1: and New Zealand was number four last year in the
Speaker 1: number of launches worldwide, after the US, Russia, and China.
Speaker 1: How incredible was that?
Speaker 6: Yeah, I think I look as a proud keV.
Speaker 12: I think it's wonderful and she's been right, like America
Speaker 12: launches the most amount of rockets, and then it's China,
Speaker 12: then it's Russia, and then it's the Maha Peninsula, then
Speaker 12: it's Europe and India and so on and so forth.
Speaker 12: So no, I think it's awesome, and you know, it
Speaker 12: shows where New Zealand kind of sits in ranks in
Speaker 12: the international industry and such a short amount of time.
Speaker 1: Are you excited to see the real possibilities for New
Speaker 1: Zealand when it comes to space.
Speaker 12: Absolutely, I mean it's exactly the kind of thing that
Speaker 12: New Zealand does really well. And that's kind of testament
Speaker 12: to our success and been able to be successful in
Speaker 12: scale in New Zealand and New Zealand, as I said before,
Speaker 12: I had incredibly smart people, were very innovative and the
Speaker 12: ability to kind of move across multiple functions and disciplines,
Speaker 12: which is really important in space industry. So no, I look,
Speaker 12: we've already seen a bunch of Rocket Lab has spin
Speaker 12: out and start their own ventures.
Speaker 6: Which I absolutely applaud and support. Long may that continue.
Speaker 12: I think there's this tremendous opportunity and it's one of
Speaker 12: those things that every country has recognized the value of
Speaker 12: space and investing deeply in it.
Speaker 6: I mean it's kind of like the other AI.
Speaker 12: I mean, there's AI is obviously the talk of all
Speaker 12: the conversations, but equally, you know something that is scaling
Speaker 12: just as fast as space.
Speaker 1: Amongst the policies of the coalition government, reform of the
Speaker 1: Holidays Act is one of the many areas in the spotlight.
Speaker 1: It's the responsibility of Workplace Relations Minister Brook van Velden
Speaker 1: to oversee this. Just this month, she's directed officials to
Speaker 1: change the proposed direction of the reform based on consultation feedback.
Speaker 1: But in June, we caught up with her on what
Speaker 1: her plans were for sorting out this part of the economy.
Speaker 13: One of my top priorities is that we need religious
Speaker 13: lit of change in this term of government. I understand
Speaker 13: many successive Ministers of Workplace Relations have tried and failed
Speaker 13: to get a Holidays Act change across the line, and
Speaker 13: I'd love to make it easier for businesses and workers
Speaker 13: to pay out the right entitlements and for those workers
Speaker 13: to know that they are getting paid the right amounts.
Speaker 13: So that's top priority for me. We're on track to
Speaker 13: get this out in September, and it'll be targeted consultation
Speaker 13: because it's a very technical law. But I very much
Speaker 13: look forward to all of the feedback that comes back
Speaker 13: to let us know if we're on the right track
Speaker 13: to make it simpler. The last thing I want is
Speaker 13: a new law change that's even more complex.
Speaker 1: It is kind of one that would be difficult to
Speaker 1: explain to someone on the street, right because it's a
Speaker 1: lot of backroom situations in terms of payroll and things
Speaker 1: like that that perhaps employees don't exactly see totally.
Speaker 13: Absolutely look for most people, they'll assume that their business
Speaker 13: or their manager is getting it right. They might get
Speaker 13: their pay slip every fortnight or every month, and it
Speaker 13: tells them how much they're earning that week, how much
Speaker 13: they may have in holidays pay coming up, or you know,
Speaker 13: what their sick leaving titlements might still be. By and large,
Speaker 13: most people are doing a very good job. But because
Speaker 13: the law is so complicated and so complex, even some
Speaker 13: of our largest organizations have been getting it wrong. You take,
Speaker 13: for example, the Ministry of Business, Innovation and Employment. You
Speaker 13: know they even got holidays pay wrong. Now, if the
Speaker 13: law is so complex that even the government department that's
Speaker 13: supposed to look after this law is getting it wrong,
Speaker 13: there's serious work that needs to be done because at
Speaker 13: the heart of this I want all workers to know
Speaker 13: they're going home at the end of the week with
Speaker 13: the right pay, with the right holidays pay, with the
Speaker 13: right sick leave, and that businesses have far more time
Speaker 13: to actually do what they do well, which is their
Speaker 13: real job, not figuring out compliance.
Speaker 1: In July, Minister Chris Bishop announced that the government wants
Speaker 1: to flood the market with more houses to improve growth
Speaker 1: and bring down prices, going against Kiwi tradition we're owning
Speaker 1: houses is pretty much the cornerstone of our economy. To
Speaker 1: discuss how this might work, we spoke with Opus Partners
Speaker 1: economist Ad mcnight.
Speaker 14: Well.
Speaker 15: I think the Housing Minister christ Bishop is talking a
Speaker 15: big game, and certainly his incentivized to do that. Lots
Speaker 15: of people want house prices to be stable over the very,
Speaker 15: very long term. I think there will be some benefits
Speaker 15: to it. For instance, they're saying they are going to
Speaker 15: remove any minimum requirement about how big a house or
Speaker 15: an apartment has to be. That will mean we get
Speaker 15: more smaller sized departments built. On top of that, councils
Speaker 15: won't be able to have a say in terms of
Speaker 15: whether apartments have to have balconies or not, or how
Speaker 15: large those balconies have to be. Well, with all of
Speaker 15: those rules gone, we should see some cheaper and certainly
Speaker 15: smaller apartments coming through. And at the margin, yeah, maybe
Speaker 15: a couple more developers will build those sorts of properties,
Speaker 15: and that will be good for people who are okay
Speaker 15: and happy to live in slightly smaller properties. I always
Speaker 15: take what politicians say with a grain of salt, because
Speaker 15: they're very good at saying that they're going to do
Speaker 15: something big and meaningful and then it doesn't always materialize,
Speaker 15: and I'll give you an example of that. The Housing
Speaker 15: Minister is saying that they want every single council in
Speaker 15: the country to open up or zone for thirty years
Speaker 15: of population growth, and often christ Church is the shining
Speaker 15: example that the government holds up because immediately after the
Speaker 15: earthquakes they zoned for thirty years of population growth. There
Speaker 15: was a lot of housing being built and for a
Speaker 15: time house prices were pretty flat down in christ Church.
Speaker 15: But what a lot of people miss is that during
Speaker 15: the COVID boom from twenty nineteen onwards, christ Church house
Speaker 15: prices actually increased at a much faster rate than the
Speaker 15: likes of Wellington, Auckland, Dunedin. And so I'm not sure
Speaker 15: whether zoning a whole heap of land is going to
Speaker 15: fix all of the problem, but it will certainly help.
Speaker 1: We've already seen the growth of new builds in Auckland,
Speaker 1: for example, outpaced population growth. So what do we need
Speaker 1: to keep building more houses?
Speaker 15: Well, if I take you back a couple of years,
Speaker 15: every single media outlet, including the Herald, was talking about
Speaker 15: a massive housing crisis and we needed to build more
Speaker 15: and more and more homes. I think this is just
Speaker 15: part of the catch up.
Speaker 1: Do you worry about their plan to remove the urban
Speaker 1: rural boundaries?
Speaker 15: I worry more about the infrastructure. It's quite interesting because
Speaker 15: if you remove the rural urban boundary, you're going to
Speaker 15: get more housing sprawl, right, so you are likely to
Speaker 15: see more housing built out Pocono Way just south of Auckland,
Speaker 15: and also down in Bookacoi in some of those more
Speaker 15: rural communities. Now, that obviously has benefits and drawbacks. The
Speaker 15: benefit is that if I am a person who is
Speaker 15: willing to live an hour out of the city because
Speaker 15: I want a standalone house, prices are a bit cheaper
Speaker 15: and I want that kind of lifestyle, I kind of think, well,
Speaker 15: why do we have all these rules in place? But
Speaker 15: we also know that we're not so good at building
Speaker 15: infrastructure here in New Zealand. So all good, We're going
Speaker 15: to get rid of the rural urban boundary. But now
Speaker 15: it's Auckland Council and Auckland Council ratepayers who are now
Speaker 15: responsible for building that infrastructure that goes in there to
Speaker 15: support those houses. Now, yes, the developers have to pay
Speaker 15: some taxes what's called development contributions in order to build
Speaker 15: those properties. But often my understanding is that a lot
Speaker 15: of that infrastructure is ultimately financed by the poor old ratepayer.
Speaker 1: Those plans to decide the minimum size of new apartments,
Speaker 1: could that see kind of like an influx of shoebox
Speaker 1: style apartments, the ones that we see I'm thinking in Japan,
Speaker 1: you know, one by one meter, et cetera.
Speaker 15: Well, that is the risk if you don't have a
Speaker 15: rule in place. A developer will build them if they
Speaker 15: think they can sell them, and if they think they
Speaker 15: can make more money by selling those shoe box apartments
Speaker 15: compared to building something else. So ultimately it comes down
Speaker 15: to what are home buyers or investors willing to purchase.
Speaker 15: And if an investor is buying those kinds of shoe
Speaker 15: box apartments and saying, y'reh okay, I'll buy that at
Speaker 15: whatever price the developer are selling it for, whether people
Speaker 15: are actually willing to rent those properties. I considerably foresee
Speaker 15: a future where there are a lot of studio apartments built.
Speaker 15: Investors then purchase them, and there we have new stories
Speaker 15: about how small these properties are and the rents that
Speaker 15: people are paying for them. But it ultimately comes down
Speaker 15: to what are people willing to build? What are people
Speaker 15: willing to buy and what are people willing to rent?
Speaker 1: Finally, no wrap of the year in ki we business
Speaker 1: would be complete without touching on the saga of the
Speaker 1: Deval group. The home of company founders Kenyon and Charlotte
Speaker 1: Clark was rated by police in early August as part
Speaker 1: of the investigations into the Auckland apartment developers. Court hearings
Speaker 1: have followed over recent months, and a court case between
Speaker 1: the Financial Markets Authority and PwC against Duval and the
Speaker 1: Clerks is set for June next year. We caught up
Speaker 1: with Enzid Herald property editor Anne Gibson in late August
Speaker 1: when Deval was placed into statutory management by the government.
Speaker 14: This company is a relatively complex group, with about seventy entytes.
Speaker 14: It is essentially an Auckland apartment and townhouse developer. Now
Speaker 14: on its website it said it had settled the sale
Speaker 14: of seven hundred and seventy four homes in the last
Speaker 14: six years and it has two hundred and seventy eight
Speaker 14: homes under construction. Are those are mainly apartments as well.
Speaker 14: It has what their Commerce and Consumer Affairs Minister Andrew
Speaker 14: Bailey told us yesterday one hundred and twenty to one
Speaker 14: hundred and fifty investors, home buyers and commercial lenders.
Speaker 1: What more can you tell us about the people behind
Speaker 1: this group?
Speaker 14: Well, essentially there were four people according to the Devai
Speaker 14: business Now, the first two are the founders husband and wife,
Speaker 14: Charlotte and Kenyan Clark. She's the CEO, he's the former CEO.
Speaker 14: Then we have John Delzel. Now he's had many years
Speaker 14: experience in the Auckland property market and he was Auckland
Speaker 14: Council's waterfront regeneration project here that was see in city
Speaker 14: were the real focus on the Winyard Quarter many years ago.
Speaker 14: And he's the chairman of Deval. And then we've got
Speaker 14: a lawyer on Culiny. He's also a director.
Speaker 1: Kenyon and Charlotte Clark seem like they were quite high flyers, hey,
Speaker 1: or at least they were trying to portray that image.
Speaker 1: Weren't they filming a reality show about them or something?
Speaker 14: Yes, this show is called The Property Developers and one
Speaker 14: season is evidently made. It is a number of parts
Speaker 14: and there was talk about a second season being made.
Speaker 14: Now for some years the Herald has reported on the
Speaker 14: Property Developers and you can see a trailer online which
Speaker 14: is most interesting. It has never screenmed. But when I
Speaker 14: talked to the person behind that in Queenstown about a
Speaker 14: week ago, he said that he was hoping to secure
Speaker 14: distribution to an international business and he has previously mentioned
Speaker 14: Netflix and Neon and the likes of those sorts of businesses,
Speaker 14: but we've never yet seen it. He did tell me
Speaker 14: that it's more likely to be shown overseas before it's
Speaker 14: shown in New Zealand.
Speaker 1: Right, is it some kind of selling Sunset esque kind
Speaker 1: of thing. I don't know whether you watch that or not.
Speaker 14: It's a reality sort of behind the scenes of what
Speaker 14: is the life of a property developer, and so it
Speaker 14: is a reality serious where the clerks are shown and
Speaker 14: their children are shown. They're filmed in different parts of
Speaker 14: New Zealand and it looks pretty amazing. It'd be really
Speaker 14: interesting to see it. I look forward to it.
Speaker 1: I'm really concerned that there are some pretty serious issues
Speaker 1: with it.
Speaker 3: Do you know what, I actually need to call my lawyers.
Speaker 7: It was kind of funny, but if he's putting this
Speaker 7: up publicly, the yeah, I mean.
Speaker 4: This is just this week's problem.
Speaker 10: Let's just say that I think that we basically just
Speaker 10: burned a million dollars.
Speaker 1: The company's troubles first became public earlier this month. Why
Speaker 1: did they come to the attention of the Financial Markets Authority?
Speaker 14: It dates back to twenty twenty one when the FMA
Speaker 14: talked Val to remove advertising for a mortgage fund. It
Speaker 14: was about twenty million dollar fund and the FMA basically
Speaker 14: said that that advertising gave the impression to people it
Speaker 14: was low risk. But Kenny Clark said in response that
Speaker 14: there hadn't been anyone who had complained and had raised
Speaker 14: twenty million dollars via that mortgage offer. So that was
Speaker 14: the first time that we began to realize that there
Speaker 14: was action by the Chrome Authority against Juvail Group.
Speaker 1: Take us through the events on August second, when these
Speaker 1: actions became public and the group was put into interim
Speaker 1: receivership is well, that's.
Speaker 14: When the FMA announced that three accountants of Peter Receiver
Speaker 14: interim receivers and managers of sixty four deval entities. So
Speaker 14: there's a companies as well as partnerships, and also they
Speaker 14: had control over Kenyon and Charlotte Clark. And so the
Speaker 14: FMA had said it had been to the court to
Speaker 14: have that appointment made although there had been a number
Speaker 14: of actions by the FMA against Deval, and Deval had
Speaker 14: challenged at least at one of those. Was the first
Speaker 14: time on August two, when we realized the quite serious
Speaker 14: nature of what was occurl Do.
Speaker 1: We know why police were involved in showing up at
Speaker 1: the Clark's house. It seems pretty unusual in a situation
Speaker 1: like this.
Speaker 14: So my college John Weeks, went to the police and
Speaker 14: asked why they were involved. We knew that when the
Speaker 14: FMA went to the Clerk's house on the second that
Speaker 14: the police had been there as well. Now the police
Speaker 14: said that no arrests were made, but that they had
Speaker 14: taken custody of several firearms at the property. Now they
Speaker 14: said staff were quired to take custody of those and
Speaker 14: that had been seized as property. One of our photographers,
Speaker 14: Alex Burton, took photographs of police going into this home
Speaker 14: with what appeared to be gun cases.
Speaker 1: A few weeks after that interim receivership, the government intervened
Speaker 1: earlier this week. Can you walk us through the government moves?
Speaker 14: Yes, that was a real surprise as well. There have
Speaker 14: been a number of surprising aspects to this. So the
Speaker 14: FMA confirmed that the Governor General, on the advice of
Speaker 14: the Minister of Commerce and Consumer Affairs, had declared that
Speaker 14: a number of entities within the Duval Group be placed
Speaker 14: in statutory management. Now this is under the Corporations Act
Speaker 14: and statutory management means effectively that one entity, in this
Speaker 14: case PwC and those accountants who are also the receivers
Speaker 14: and the managers of the De Rold business. As it
Speaker 14: gets really complicated, one entity is in charge.
Speaker 1: Now.
Speaker 14: The FMA thought that was important to limit or prevent
Speaker 14: the risk of further deterioration in the financial affairs of
Speaker 14: their businesses or any fortunate activity. It to preserve the
Speaker 14: interests of the critics and to enable the affairs of
Speaker 14: Duval Group to be managed and what if you may said,
Speaker 14: was a more orderly way.
Speaker 1: That's it for this compilation episode of The Front Page.
Speaker 9: You can read more about the stories featured in.
Speaker 1: This episode and extensive news coverage at enziherld, dot co,
Speaker 1: dot and z.
Speaker 9: The Front Page is produced by.
Speaker 1: Ethan Sills and Richard Martin, who is also our sound engineer,
Speaker 1: along with Paddy Fox.
Speaker 9: I'm Chelsea Daniels.
Speaker 1: Subscribe to The Front Page on iHeartRadio or wherever you
Speaker 1: get your podcasts and tune in tomorrow for another compilation episode,
Speaker 1: taking a look back at some
Speaker 9: Of the year's biggest stories.