Sunday, June 29, 2008

Solar panels: some pros and cons

How long does it take for a solar-panel system to pay for itself?

Unsurprisingly, that depends on where you live. According to Toby Littin, managing director of importer-installer Elemental, it can take 20 to 30 years for a solar system to pay for itself in major centres such as Auckland, Wellington and Christchurch, where the cost of grid electricity (including line charges) is quite low. But in areas such as Northland, East Cape and Southland, which have high line charges, a system can pay for itself in 10 to 15 years.

Business customers can usually expect solar panels to pay for themselves in 10-15 years, Mr Littin says. And that if they are in a windy location, where they can install a turbine, that can come down to five years.

My personal feeling is that the average consumer will consider 20-30 years too long to wait.

And what is the total cost of installing solar panels - which constitute the most viable renewable energy system for an urban environment? According to the Energy Efficiency and Conservation Authority, it is in the range of $9 to $13 per Watt of power they produce.

That means a system producing 2kW of electricity - enough to power an electric heater - would cost $18,000 to $26,000. But a similar system would have cost about $40,000 four years ago, so prices are falling rapidly.

Saturday, June 28, 2008

Majority don't live comfortably in NZ

A national survey commissioned by UMR Research shows that 55 percent of New Zealanders feel their household finances don't allow them to live comfortably.

In the United States, a similar survey found that 60 percent of Americans feel the same way.

The survey asked people to say whether their household finances left them (1) able to live comfortably, (2) able to meet basic expenses with a little left over for extras, (3) able to just meet basic expenses, or (4) unable to meet basic expenses.

About 45 percent of New Zealanders said they lived comfortably, 36 percent said they met basic expenses with a little left over for extras, 16 percent said they just met basic expenses, and 3 percent said their finances didn't leave them with enough to meet basic expenses.

The survey results were announced this week.

Friday, June 27, 2008

Figures confirm NZ economy going down

Data released today by Statistics New Zealand (SNZ) showed the economy shrank by 0.3 percent in the first quarter of 2008, further raising fears New Zealand is heading for a recession. (A recession defined as two quarters in a row of economic decline.)

In its announcement of gross domestic product figures, SNZ said the agriculture and construction industries, which fell 5.6 percent and 5.2 percent respectively, were the main contributors to the decline in the first three months of the year.

Household consumption spending fell 0.4 percent, in the first decrease since the June 2004 quarter, SNZ said.

Adding to the pessimism, Bank of New Zealand chief economist Tony Alexander said the BNZ expects the June-quarter figure to be slightly worse than that for the first three months of 2008.

Tuesday, June 24, 2008

The scoffers are silent now

Well, well, what a surprise! UBS economist Robin Clements says the era of cheap fuel is over - for good.

I can't help remembering the oil shock of 1973. At the time, I had been in New Zealand for about a year, and was writing articles in which I was warning of the resource shortages of the future.

I had left Japan, where I had spent 10 years, with a conviction our way of life was unsustainable, and had assumed New Zealanders would be receptive to a call for a rethink of the practices of our industrial civilization. How wrong I was!

In an editorial in my newspaper, the Manawatu Standard, I was told that the oil crisis had given a "spurious authenticity" to my warnings, and that there was nothing to seriously worry about. Indeed, there was likely to be an oil glut in the 1980s.

The Economist said much the same thing - that, since World War II, every shortage had been followed by a surplus.

Well, the wasteful 1980s have come and gone, as have the wasteful 1990s. And now we find ourselves in the late 2000s. And guess what? The party's over!

No editorial writer is today ridiculing "eco-freaks", "eco-nuts" or "Jeremiahs", and saying that, even if resources are being depleted, technology will soon come up with alternatives. Everyone with more than half a brain knows that we have a crisis on our hands - and that the switch to biofuels is a move that creates more problems than it solves.

Monday, June 23, 2008

New Zealand's median rent level falls

New Zealand's median rent level has fallen $5 a week to $295, Massey University's Real Estate Analysis Unit said today.

At the start of the year, the median rent level was $300 a week - a record high.

The unit's director, Professor Bob Hargreaves, said the 1.6-percent drop was unexpected, as rents had been rising steadily since last year.

Prof Hargreaves said some would-be vendors, unable to get what they wanted for their houses, had apparently taken them off the market and chosen to rent them out instead.

Saturday, June 21, 2008

Kiwis flocking to Australia

A total of 40,030 New Zealanders shifted to Australia in the year to May, Statistics New Zealand migration figures showed today. It was the largest exodus since records began in 1980.

The figures also showed that only 8504 people moved in the opposite direction in the same period.

The reason for the exodus to Australia is not hard to find: Council of Trade Unions economist Peter Conway says Australian average wages are 36 percent higher, when adjusted for purchasing power and currency differences.

Another factor, according to BNZ economist Tony Alexander, is that "we are possibly in a recession at the moment, while they are still growing at 2 or 3 percent".

Friday, June 20, 2008

95,000 jobs will go, says Berl

New Zealand's inflation-targeting policy will cost 95,000 jobs during the next three years, independent economic researcher Berl said today. (The Reserve Bank of New Zealand has a "target band" of 1-3-percent for inflation.)

Acknowledging the figure was based on a "cursory analysis", Berl said it would be the equivalent of about $7.4 billion of gross domestic product.

Berl is predicting economic growth of 1.6 percent in the year to March 2009, 2.7 percent in the year to March 2010, and 3.1 percent in the following March year.

Personally, I think any such predictions in today's volatile world are worthless.

Thursday, June 19, 2008

Air New Zealand service was lousy

"Air New Zealand has tied for third-best carrier in the world, trailing winner Singapore Airlines and Indian carrier Jet Airways," the New Zealand Press Association reported today.

It's a report I can't allow to pass without comment. When I flew from Auckland to Melbourne in January 2007, all Air New Zealand could offer me for lunch was a greasy meat pie. I refused it, with appropriate disgust.

Four days later, I flew from Melbourne to Wellington on Qantas, which was much better. But Wellington Airport had been fog-bound that morning, and the congestion at check-in resulted in my missing my flight to Palmerston North.

That was my fault, Air New Zealand told me. I should have pushed my way to the front of the queue - as though a civilized person could do such a thing. I was offered a seat on a flight the next day. Needless to say, I didn't take it. I returned to Palmerston North by bus.

In today's report, NZPA said the airlines were chosen on the basis of a survey by British consumer magazine Which?

Singapore Airlines, which carries 18 million passengers a year, won top prize, while India's Jet Airways, which carries about 10 million passengers, was runner-up.

Air New Zealand, which carries 12 million passengers, shared third place with Palmair, which operates only one plane, a 34-year-old Boeing 737, that carries 70,000 passengers a year.

Wednesday, June 18, 2008

NZ financial meltdown continues

Dominion Finance Holdings Ltd

Dominion Finance today became the 21st New Zealand finance company in the past two years, and the 18th in the past two years, to get into difficulty.

The company's total of debentures fell 22 percent to $276 million in the year to March, which meant that there was a net outflow of $79 million of investors' money.

As a result of its liquidity problem, the company today said it was investigating a moratorium on payments.

This means that a total of $2 billion of investors' money is now in question in New Zealand.

  • Despite the economic downturn, New Zealand is to retain its Aaa sovereign credit rating, Moody's said today.

    The ratings agency said in its regular review that the country's high per-capita income, institutional strength and sound government balance sheet continue to underpin the rating.

  • Tuesday, June 17, 2008

    Kiwi dollar's fall expected to continue

    There was bad news today for all those, like myself, who buy internet services with US dollars.

    Currency watchers said they expected the New Zealand dollar to maintain the downward momentum that has taken it US7c off late February's peak of US82.15c.

    One such watcher, the Bank of New Zealand, said it expected the kiwi to trade down to US72c by September 30 and to US69c by December 31.

    (By 5pm today, the kiwi was buying US75.61c, compared with US75.06c at 5pm yesterday.)

    A level of US69c sounds incredibly low these days. Yet there was a time, in the early 1990s, when I was happy to get any rate above US60c.

    Monday, June 16, 2008

    Kiwi dollar remains steady

    The New Zealand dollar remained steady today in quiet trading. It closed virtually unchanged at US75.06, compared with Friday's close of US75.02c.

    Sunday, June 15, 2008

    Kiwibank cements its position at the top

    I love the comment made today by Kiwibank chief executive Sam Knowles, after Kiwibank won the third annual Sunday Star-Times Cannex Banking Awards.

    Taking a swipe at those silly television commercials in which the big banks strive to be perceived as friendlier than their rivals, Mr Knowles pointed out the obvious: that people are not desperate to have a deep and personal relationship with their bank.

    "What people want is good, honest value. The only time they want the bank to be their friend is [when] they want to borrow money," he said.

    Kiwibank came out on top in the Awards by sweeping five of the 17 categories, and placing second or third in four others.

    In the past year, Kiwibank has introduced a credit card with no annual fee, a rechargeable Visa debit card, and term deposits wrapped up in a tax-advantaged PIE fund. It passed the 600,000-customer mark in February.

    Friday, June 13, 2008

    Kiwi dollar falls to below US75c

    By 8am today, the New Zealand dollar was buying US74.98c, compared with US75.40c at 5pm yesterday. It is thus at a five-month low in relation to the greenback.

    Thursday, June 12, 2008

    Food prices soar in New Zealand

    Today's announcement by Statistics New Zealand that food prices leapt another 1 percent in May, driving the Food Price Index (FPI) up 6.8 percent in the year to May, led to more ritual hand-wringing on the evening's television news show. And as New Zealand is a big producer of dairy products, much of the debate was about the high price of milk. Perhaps that should read "prices", as not all supermarkets and dairies (corner stores) charge the same amount per liter.

    During the course of the year, fresh milk prices rose 21.5 percent, cheddar cheese prices 59.4 percent, and butter prices 80.1 percent. A two-litre plastic bottle of milk, bought from the supermarket today, cost us $4.26. When we came to New Zealand in 1972, we bought milk by the pint and paid the princely sum of 4c per pint (in a glass bottle) delivered to our gate by the milkman.

    Remember the clink, clink of the bottles in the crate?

    Wednesday, June 11, 2008

    Recession fears rise in New Zealand

    A survey by the Royal Institution of Chartered Surveyors, published on Tuesday, showed house prices in Britain are falling at rates not seen in at least 30 years.

    The situation in New Zealand is not as bad - yet. Today's figures from the Real Estate Institute, which show that house sales fell more than 50 percent in May from a year ago to their lowest level in 16 years, led analysts to predict further price declines.

    These figures, plus today's report from Statistics New Zealand that seasonally adjusted export volumes fell 3.5 percent in the March quarter, stoked fears of a recession.

    "You'd have to say that the chances of recession are increasing," said Mark Walton, economist at Bank of New Zealand.

    The New Zealand dollar showed little reaction to the data, holding above a four-and-a-half-month low of US75c hit yesterday.

    Monday, June 9, 2008

    New Zealand house prices still falling

    New Zealand house prices rose by 2.4 percent in the year to May, down from 4.9 percent in the year to April, Quotable Value said today in its monthly report.

    "There are increasing reports that, where sellers aren't under financial pressure or needing to relocate, they are choosing to take their properties off the market or rent them out rather than accept lower offers," QV's Mark Dow said.

    "Both our preliminary statistics and feedback from our valuers in the field suggest that this decline [in prices] is set to continue for some time yet."

    Just how low will they go? Last week, the Reserve Bank forecast a fall in house prices of 13 percent, or 22 percent adjusted for inflation, from their peak last year. But perhaps we should look back to 1970s for an indication of what might happen. After the first oil shock in 1973, real house prices fell 38 percent.

    QV said that in May the average house price in New Zealand fell by about $1000 to $387,299.

    Sunday, June 8, 2008

    Kiwis shivering to save electricity

    In view of the possibility of power cuts in New Zealand this winter, because of the fall in hydro lake levels to 50 percent of average for this time of year, I'm glad we have a wood-burning stove - something that will not only keep us warm, but on which we can also heat a pan of water, if necessary.

    Thanks to a reasonable income, we also don't have to worry too much about rising electricity prices. These are hitting many people hard, if the results of a recent survey, announced today, are anything to go by.

    The poll, by Research New Zealand, found that 68 percent of households with an annual income of under $40,000 are cutting back on power use. The figure for those in the $70,000-plus bracket is not much lower at 55 percent.

    The findings have raised fears of a rise in health problems among people living in inadequately heated homes.

    Saturday, June 7, 2008

    Will we all be forced back on to bikes?

    One of the first things I did, after coming to New Zealand in 1972, was buy a bicycle. As we lived (and still live) only a mile from my office, and as Palmerston North is almost entirely flat, a bike seemed to be the logical means to get from home to work.

    I rode a bike for more than 20 years, before I finally acquired a car - a little red Honda Civic. In the 1970s and 1980s, biking could be enjoyable. There wasn't much traffic on the road I used, and there was always space for my bicycle in the company bicycle shed. Only when there was heavy rain and strong wind did I dread going out.

    Since then, the number of cyclists has dropped dramatically, while the numbers of vehicles on the roads has shot up. Two of the factors behind the decline in cycling were (1) the introduction of a law that made the wearing of a bicycle helmet compulsory, and (2) the fears of parents that cycling to school was, for one reason or another, no longer safe.

    I found the bicycle helmet inconvenient, to say the least. As I have sensitive skin, and have to wear a peaked cap to keep the sun off my face, the helmet had to go on top of my other headgear, which made me look a little odd. I was also annoyed by the fact you couldn't leave the helmet with the bike in the bicycle shed, or beside the road, without running the risk of having it stolen. So you had to either continue to wear it, sometimes even while you went shopping, or carry the wretched thing around.

    In the past six months, as the price of gas has gone up and up, I have looked for an increase in the number of cyclists on the roads in Palmerston North. So far, I haven't noticed any. But with no end to the rise in petrol prices in sight - and with experts predicting there will be no end, in view of depleting oilfields - I wonder at what stage people will dump their cars and take to two wheels.

    How fortunate we are to live so close to the city center and within walking distance of almost everything we need, including our doctor, dentist and vet.

    Thursday, June 5, 2008

    Kiwi dollar falls to three-week low

    Reserve Bank governor Alan Bollard today held the official cash rate at 8.25 percent, but indicated the bank will be in a position to lower rates later this year as the economy slows.

    The announcement immediately sent the New Zealand down. At 0500 GMT, the kiwi was at $0.7653/63 - a three-week low - compared with $0.7799/01 in late local trade on Wednesday.

    So although I'll have to pay more whenever I buy something through the internet, I'll continue to enjoy high interest rates on my long-term bank deposits for a little longer.

    In making his expected decision to hold rates at the level they have been at since July last year, Dr Bollard said the RBNZ expected annual inflation to peak at 4.7 percent in the December quarter and to return to the targeted 1 percent to 3 percent range over the medium term.

    Wednesday, June 4, 2008

    Confidence up again in NZ, survey shows

    The findings of a Bank of New Zealand survey, released today, show that the outlook for business has improved for the third month in a row.

    A net 30 percent of businesses surveyed said they expected the economy to worsen in the year ahead. There has thus been a steady improvement since March, when a net 62 percent expected worse times. But many sectors of the economy remain gloomy, especially the building sector.

    The survey results follow the personal tax cuts announced in the national Budget on May 22.

    Tuesday, June 3, 2008

    Journalism slips deeper into the abyss

    The shareholders of the New Zealand Press Association, who are the country's major newspaper publishers, want costs reduced but efficiency enhanced.

    That was the explanation today from NZPA chief executive Lincoln Gould as he announced the axing of seven full-time jobs at the country's national news agency.

    Yes, costs will be reduced. But realitically, can we expect efficiency to be enhanced? My educated guess, as a person who has been in journalism since 1963, is that either the association's coverage will be restricted or it will be downgraded as copy is rushed through.

    The standards of journalism in New Zealand are already low - as they are throughout the Western world. How much lower can they go, before we all give up and go home?

    Mr Gould adds that the agency's international wire services will also be "rationalised". Again, that's just a euphemism for "debased".

    Monday, June 2, 2008

    Nail in coffin for finance companies?

    The future is looking even bleaker for struggling finance companies in New Zealand, in the wake of Kiwibank's weekend announcement it is launching the Kiwibank Term Deposit PIE.

    (PIEs, or Portfolio Investment Entities, are exempt from capital gains tax on most New Zealand and Australian shares. Also, the tax paid on investment income is at the tax rate of the individual investor, capped at 30 percent, rather than at a flat rate.)

    The Kiwibank product will replicate the characteristics of the bank's term deposits, but boost investor returns. In fact, Kiwibank chief executive Sam Knowles says Kiwibank has calculated that if all term deposits convert to PIEs, savers will pay $100 million less in tax.

    From this week, investors in the Kiwibank Term Deposit PIE will be offered a one-year rate of 8.4 percent, which is equivalent to a before-tax rate of 9.64 percent on an ordinary term deposit for 39-percent taxpayers.

    This compares with the 9.75 percent paid by Fisher & Paykel Finance, the 10.05 percent paid by Hanover, the 9.85 percent paid by Orange Finance and the 9.75 percent paid by South Canterbury Finance.

    Investors in the higher tax brackets are therefore going to ask: Is that little extra worth the additional risk?