Political & Economic week that was: first anniversary of National's re-election

Trade deficit widens
The gap between exports and imports was bigger than expected in August $1 billion. Aircraft purchases totalling $230 million lifted the value of imports 19% to $4.77 billion, while exports rose 4.4% to $3.73 billion, the highest ever value for an August month.

Meat sales were the biggest contributor to export growth.

Government’s anniversary week
In politics, it’s been the first anniversary of the third term of the John-Key led government.

It has meant a torrent of comment about whether he is now content just to run a populist regime based on public opinion polls.

One of these is the continuing flag debate, which this week took up a lot of Parliament’s time as a fifth option, Red Peak, was added to the choice.

New complications also arose, such as the first round of the referendum (to be held via post, from November 20-27) using a preferential voting system.

Our analysis shows that will stack the deck in favour of the fern, which has three options, against Red Peak or the Koru.

Dairy recovery boost
Fonterra’s decision to raise its forecast milk payout from $3.85kg/MS to $4.60kg/MS may add roughly $1 billion to the economy compared with previous estimates.

Fonterra also reduced its forecast for New Zealand production volumes for the current season by “at least 5%.” This reflects a drop in herd prices and may be increased as a result of the drier El Nino weather pattern expected in the coming year.

TPP hopes flatten
The government continues to play down hopes of a bonanza outcome from the TPP talks, which will get under way again next week in Atlanta, Georgia.

Trade Minister Tim Groser says New Zealand is "holding its ground" to get a better deal for dairy but agreed with earlier comments from Mr Key the deal will be "at least the very best we can do." But Mr Groser says it will no longer be gold-plated, just as the critics have been saying.

That signals we’ll be signing regardless to gain the other benefits along with possibly paying more for new drugs.

Consumer confidence down again
It’s now at a three-year low dropping to 106 in the September quarter, from 113 in June.

That's still in positive territory where a reading above 100 indicates optimists outweigh pessimists.

But this is still below the historical average of 111.5.

The biggest drop was among high income, middle-aged men, who have been the biggest losers from declining share markets around the world.

Reforms ideas and red tape
If the government has lost its appetite for reform, the corporate sector has come up with a 23-strong wish list that might restore it.

Member companies of The New Zealand Initiative, a pro-business think tank, responded to Mr Key’s request earlier this year for them to identify problems and weaknesses in the regulatory system.

Still on regulation, the government released the report of the Rules Reduction Taskforce, which is charged with cutting central and local government red tape.

The Loopy Rules Report was compiled after 2000 submissions from the public and a round of 50 meetings.

Most of these concern the Resource Management, Building and Local Government Acts. Recommendations cover 11 ministerial portfolios.

More ACC levy cuts

Large ACC levy cuts for most businesses are on the way – but more accident-prone firms will face increases of up to 25%,

ACC Minister Nikki Kaye announced the removal of the scheme’s residual claims levy.

The changes are part of a large-scale accident compensation reform package that saw its final reading in Parliament this week.

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