Financial Instability Intensifies

In quick succession, the Bank of New Zealand’s parent company, National Australia Bank (NAB), and the ANZ Banking Group announced writedowns of bad debt flowing from the US sub-prime (read “junk”) mortgage meltdown in recent days.

On Friday, NAB, said it would be making a A$830 million (NZ$1.07 billion) provision for indirect losses incurred in the US housing market. This was followed by the ANZ Banking Group’s statement on Monday that it would be writing down a further A$1.2 billion, bringing its annual debt charge off to around A$2.2 billion.

New Zealand’s top five trading (or commercial) banks are controlled by large Australian retail banks such as NAB and ANZ Banking Group, which operates the ANZ and National brands in New Zealand. The major Australian banks have claimed in the past that they had little exposure to the US sub-prime market.

It can only be hoped that the financial news from across the Tasman has shaken the smug conceit of a panel of New Zealand economists who in a Radio New Zealand National interview on July 19 concluded that the New Zealand banking system faced little exposure to the US sub-prime market.

New Zealand does not have a deposit insurance system for bank accounts.

Time for Cool Heads at No.2 The Terrace, Wellington,
Home of the Reserve Bank of NZ
Photo: Kaihsu Tai, Wiki Commons

The day before news of the NAB debt write down, the Reserve Bank of New Zealand cut its Official Cash Rate (OCR), its lending rate by a quarter point, to 8.0 percent. It was the first cut in five years.

A half-point cut, and some months ago, might have been more in order given the increasing gravity of the financial instability and weakening macroeconomic conditions, but a policy stance single-mindedly set in recent decades on inflation control holds monetary policy hostage to outdated eighteenth century ideas.

Admittedly, the Reserve Bank’s hand is constrained by not only a legislated primary monetary target of price stability, but also the need to keep monetary conditions tight to offset the effects of a widening current account deficit. High interest rates have encouraged international capital to flow in to fund the trade deficit, but that in itself has exacerbated the high exchange rate, reducing the international competitiveness of New Zealand exporters.

In early May, in a precautionary move, the Reserve Bank expanded its lender of last resort facility to trading banks by permitting home mortgage securities to be posted as collateral in return for Reserve Bank loans.

Meanwhile, in the United States, troubled banks drew a daily record US$17.7 billion from the Federal Reserve’s discount window facility on July 23, the highest sum since shortly after 9/11 2001 when $45 billion was borrowed on Sept. 12. Average daily discount window borrowing is running at 16 billion in late July, indicative of the deep financial difficulties in the US banking system.

All Blacks Crushed by Wallabies 34-19

The All Blacks were crushed by the Wallabies 34-19 in Sydney in a tightly fought contest. The ABs, without captain Richie McCaw, had problems in the loose forward department, but there was plenty of drama with a slew of tries, a coat hanger tackle from Brad Thorne that sent him to the sin bin, and solid tackling from both sides.

As The Sunday Star-Times headline put it, "A Dingo Ate our Soft All Blacks" in a reference to Robbie "Dingo" Deans, Australian coach. The New Zealand Rugby Union board must be ruing its decision in late 2007 to continue with coach Graham Henry after a poor AB showing at the World Cup and turning away Robbie Deans, successful Canterbury Crusader coach, who shortly thereafter took up a coaching contract with the Wallabies. Down in Canterbury Crusader country, there'll be bitter feelings about the NZRU's poor decisions, a board renown for never admitting its mistakes.

With their prospects of securing the Tri-Nations series or successfully defending the Bledisloe Cup against Australia fading away, the All Blacks and their supporters in the run-up to the re-match in Auckland next week might need a boost from this 1950s All Blacks Football Song , backed by the Woolston Brass Band.

Meat Pie - Kiwi Classic Put on Diet

That Kiwi Classic, the meat pie, has been slimmed down. In response to growing consumer concern about obesity rates, pie manufacturers are altering their recipes for the Kiwi staple which has clogged the arteries of generations.

Goodtime Foods claims its line of Metro pies are lower in saturated fat and sodium with higher fibre content. The PR flyer on their website suggests the total fat content of the typical pie back in 1963 was 30g., something less than the size of a golf ball. By 2007 the typical pie was down to 23 g of total fat, 13.6 saturated fat. Now, the average Metro pie has just 13 g of total, 7.7 saturated fat.

In comparison, McDonald's Big Mac (US version) weighs in at 29 g of total fat, 10g saturated. Throw in a small bag of chips/fries and it's another 11 g total fat, 1.5 saturated.

The Heart Foundation has been so impressed it's given a heart-healthy tick to the Metros. Goodtime does add the proviso that while Metros are a healthier choice, "they are an occasional food and should be eaten in moderation as part of a healthy, balance (sic) diet"

Apparently, Goodtime's other pie brands - The Classic and the Hub - are so nutritionally beneficial to its patrons that there is no need to post their nutrition facts on its website. Uni students can continue to eat them safely for breakfast.

Goodtime is reported to have infiltrated the Metro into around 500 schools as the nutrition revolution in tuck shops continues unabated.

There are reports, however, that school kids are slipping off the premises to local corner dairies to get a fix of fried chicken. The battle of the waistband continues...

Canterbury Agricultural Restructuring Continues

The Canterbury Plant, Silver Fern Farms’ meat works in Belfast, Christchurch is to close with the loss of 250 jobs. While some workers may get 70 jobs elsewhere in Silver Fern Farm’s operations, the net loss of jobs is symptomatic of the decline in the New Zealand sheep meat industry in recent decades.

A complex mix of factors has contributed to the decline: the removal of farm subsidies in the mid 1980s, a shift in consumer demand away from lamb & mutton as well as the complementary product, wool, high interest rates and an appreciating Kiwi dollar. Between 1990 and 2005, sheep, cattle, and wool output dropped by an average of over 0.5 percent per year, while dairy output expanded by an average 5.3 percent per average.

Sheep numbers in New Zealand have fallen 45 percent over the past 25 years, from a record 70 million in 1982 to 38.5 million in 2007.

In Canterbury, the province that acts as the hinterland for livestock supplies to the Belfast plant, there has been a pronounced shift from sheep & cattle farming to dairying in the past decade or so reflecting the relative profitability of the respective farming enterprises.

Strong international demand for dairy products, reflected in escalating export prices in the last few years, and the availability of irrigated pasture in Canterbury at cheaper land prices than in historically important dairying districts of the North Island have contributed to the “stampede” of cows to the South Island. (Or more accurately, the “land rush” of dairy farmers).

Higher land prices have exacerbated the problems of Canterbury sheep & cattle farmers trying to return to profitability. Increased competition for land use has also come from the rapidly expanding wine industry as vineyards have supplanted traditional sheep & cattle farming.

Sheep numbers in Canterbury fell 7.6 percent between 2002 and 2007, while in the same five years, dairy cattle numbers grew by almost 40 percent. Sheep and lamb numbers are estimated to drop by a further 2.2 million livestock units in the coming year.

The area planted in wine grapes in Canterbury grew by 125 percent over the same period to encompass an area of almost 1700 hectares, a relatively modest area compared to some 70,000 hectares in wheat and barley, but nonetheless a source of upward pressure on land prices in the province.

The influx of dairying into Canterbury has not been without its problems. Increased demand for water is highlighting the scarcity of water on the Canterbury Plains as well as the efficiency and effectiveness of the current water rights regime. There is also rising concern about the effect of increased dairy effluent and artificial fertilizers on Canterbury waterways and aquifers. It is likely this concern over runoff will result in higher costs for dairy effluent treatment.

Meantime, the meat processing industry continues to downsize, something that many Belfast workers anticipated over recent years. Substantial meat work closures and corporate consolidations occurred in the industry in the late 1980s into the 1990s. There is mounting pressure for the two major South Island producer cooperatives, Alliance and PGG Wrightson, to re-engage in merger talks that might further consolidate meat processing capacity in the South Island.

This may be small comfort to many of the workers laid off at Belfast. Many are older workers over the age of 50 who have worked at the plant for much of their careers. Their prospects for alternative employment, with a skill set no longer much in demand, in a rapidly slowing economy are likely to be slim.

Christchurch Past & Present # 2 Time Flies… Across Town

Clock tower looking south on Manchester Street, circa 1910

The Jubilee/Victoria Clock Tower was originally commissioned to be placed on one of the towers of the Canterbury Provincial Building. Designed by Benjamin Mountfort, it was made in England and arrived in Christchurch in 147 packages in December 1860. Iron tower and clock were separated when it became clear the structure was too heavy to be placed on top of the Provincial Building. The clock became the first “town clock”, curiously placed so that only the chimes could be heard but the face could not be seen. In the 1870s it was stored in the city council yard until someone had the idea to erect the clock & tower on the corner of High, Lichfield, and Manchester Streets to commemorate the 1897 Diamond Jubilee of Queen Victoria's coronation. The original iron tower was supplanted with a volcanic stone and limestone structure complete with ornate wrought iron work.

Clock tower looking northwest up High Street, circa 1910

A wider view looking in the same north-westerly direction.

The dog would be in violation of leash laws a century on, leaving its owner liable to a fine and the dog to the animal control officer.

With the growth of motorized transport, the clock tower came to be viewed as a traffic hazard, reducing vision at the intersection. The solution was to move the clock tower to the corner of Victoria Street and Montreal Street in 1930 where it remains to this day.

Clock tower at Victoria Montreal Streets - clock must have been stopped or broken this day because this picture was taken around 9pm in January 2007.

In 2004 at a ceremony unveiling restorative work on the clock tower, then-Mayor Gary Moore, conceding the word icon had been overused in New Zealand in recent times, observed that the clock tower was truly deserving of the iconic descriptor given its place in Christchurch tradition. It was also, he said, “a victim of many a committee decision over the years. It has known both glory and exile. It is one of the great political survivors of our city.”

And what of the former corner at High, Lichfield, and Manchester Streets? Phil Price's "Nucleus", flapping in the wind, er, kinetic sculpture. According to the artist, "the artwork is a celebration of place. The simple singular form made of four equal parts is a reflection of Christchurch, with its well planned and laid out built environment.... The plinth, with its exposed structure and beauty through function, is a celebration of Christchurch’s engineering and industrial base." A less fortunate committee decision, perhaps?

Price, "Nucleus"

The Last Voyage of the Loch Lomond, July 1908 - Part 1

The sailing ships Loch Lomond and poop deck of her sister ship, Loch Katrine at Geelong, Victoria, Australia, circa 1887.

The barque Loch Lomond, a three masted sailing ship, was purchased by the Union Steamship Company of New Zealand for ₤3,500 in May 1908. The Union Co. planned to either use the vessel as a training ship for its officer cadets or to convert it to a coal hulk to be positioned in Fiji. Determination of its future role hinged upon its arrival in Lyttelton, Canterbury from Australia where it had been berthed, at which time it would be assessed in competition with the Dartford, another sailing vessel the Union Co had purchased with similar intent.

The Loch Line, previous owner of the Loch Lomond, had a reputation as an “unlucky” line: 17 of its 25 vessel fleet over a half century sank in accidents, disappeared, were wrecked or torpedoed in oceans and ports around the globe. The Loch Line ran general cargo schedules between Glasgow and Adelaide, South Australia. By 1908, the Loch Lomond was 38 years old.

Captain C Angus, recently chief officer of the Union Co’s Maheno, was given his first – and as it turns out last – command. The vessel was refitted and sailed from Melbourne to Newcastle, NSW, Australia on June 6, 1908 to load a cargo of coal for Lyttelton.

On July 16, 1908, one hundred years ago today, the Loch Lomond sailed from Newcastle bound for Lyttelton, New Zealand. She and her crew were never seen again.

All Blacks Go Down in The House of Pain, 28-30

In an intensely-fought, see-saw Tri-Nations game, the All Blacks were edged out of a win by the South African Springboks 30-28 in Dunedin at "The House of Pain". The loss ended a world record 30-match home winning streak by the All Blacks and posted a first test win at Carisbrook for the Boks.

Dan Carter's golden kicking boot posted 23 points but it wasn't enough in a game of slim margins. The Springboks scrum performed much better than a week before in Wellington where the margin of loss could've been greater and kicks were followed up downfield more aggressively.

It came down to a spectacular try by Bok halfback Ricky Januarie who dummy passed from a ruck, ran downfield, chipped over AB fullback Leon McDonald, then raced for the ball that bounced just right, gathered it up & dived over the try line to put the Boks ahead in the last minutes. That try will go down in Springbok history!

Springbok high tackles, tackling off the ball, and eye gouging by Bok hooker du Plessis marred the game some, but congrats are due to the Boks for their close win. They now face the Wallabies in Perth next week. A young All Black side will now have to play just that bit more harder & creatively to stay in the race for the Tri-Nations title.

Christchurch - Past & Present #1

Christchurch, on the east coast of the South Island, is this blogger's original home town. It has often been described as "The Garden City" and used to be referred to as the most English of cities outside England but that has been changing in recent decades.

These past & present views are of Worcester Street looking east from the bridge over the River Avon towards Cathedral Square where the English Gothic architecture of the cathedral helps explain the most English of English label. Rather ironically the older postcard view circa 1910 shows no tram lines (perhaps the photo was taken before the advent of trams in Chch) while the present (2007) view incorporates the very touristy tram that runs a circuit around the inner city.

To the left just over the bridge, lies the former Christchurch City Council chambers (1887-1924) which are now known as Our City O-tautahi. The Christchurch City Libraries website states that architect Samuel Hurst Seager introduced to Christchurch the eclectic blending of Gothic, Elizabethan and Dutch motifs. On the right far corner is the Clarendon Hotel. By 2007 only the facade has been preserved, as many older buildings failed to meet earthquake standards, with a new building erected inside the outer walls.

To the west on Worcester street, i.e. behind the photographer, lies the Canterbury Museum at the western head of the street on the edge of Hagley Park & the Botanical Gardens. It may be to these perennially popular places that the mother in the older view is taking her children.

New Zealand Sinks Teeth into Sub Antarctic Toothfish Pirates

The High Court in New Zealand has rejected attempts by a Namibian fishing company to gag the New Zealand government. The court ruled that the Government acted within domestic and international law in inspecting Namibian-based Omunkete Fishing (Pty) Limited’s Paloma V fishing vessel when it sought to unload nearly 100 tonnes of Patagonian toothfish in Auckland in May 2008.

As soon as the High Court released its decision, the government filed its report with the Commission of the Convention on the Conservation of Antarctic Marine Living Resources (CCAMLR). The report details evidence obtained in the search of illegal fishing and collaboration with other known pirate vessels in sub Antarctic waters. New Zealand also recommended that the Paloma V be blacklisted from entry to the ports of the 34 CCAMLR signatory countries.

The Patagonian toothfish is known as the "white gold" of the Southern Ocean, commanding high prices in the luxury end of the seafood market. It is sold under the trade name “Chilean sea bass” in the United States and is a top-end sashimi item in Japan. The illegal catch is estimated to be up to five times the legal catch.

The toothfish is highly vulnerable to overfishing because its stock is not very resilient. While it lives up to 50 years, it takes 6-9 years to become sexually mature. Combined with relatively low fecundity, the minimum population doubling time is as long as 4.5 to 14 years.

It seems a corporate shell game (excuse the pun) is at work in the illegal fishing of toothfish. In documents submitted to the High Court, NZ Fisheries alleged the computer evidence from the Paloma V showed that Omunkete is controlled by a Spanish company, Vidal Armadores, and a Uruguayan company, Mabenal SA. Omunkete appears to be a vehicle for re-flagging the Paloma V from Uruguay to Namibia in order to obtain a licence to fish in CCAMLR fisheries. Indeed, a CCAMLR licence was issued.

NZ Fisheries further alleged that Mabenal SA has had continuous ownership of the vessel since it was built in 2004. Moreover, Vidal Armadores and Mabenal SA have strong links to illegal, unreported, and unregulated fishing (IUU) in the southern ocean. Documents found onboard the Paloma V show these two companies have interests in the operation of at least 5 fishing vessels currently entered on CCAMLR’s IUU list of vessels. Inspection of the Paloma V’s computer records showed that it had contact with known illegal vessels engaged in pirating toothfish stocks and had engaged in resupplying them at sea. Thus, it appears the Paloma V is operating as part of a larger fleet of vessels flying different flags engaged in IUU fishing activities. It is a small step to conclude that corporate interests are seeking to circumvent international treaties by re-flagging to countries like Namibia where monitoring and enforcement capabilities are weak.

This evidence undermines Omunkete Fishing's James van Zyl’s claims in Namibia that the whole affair was related "to the vessel's history" when it was an Uruguay-flagged vessel. "The allegations have nothing to do with the vessel now. They are all historical. We definitely have not been involved in any illegal fishing practices." (The Namibian, July 9, 2008).

Van Zyl suggested that blacklisting of the Paloma V would make Omunkete’s operations uneconomic. He said it takes about 25 days to get to the Antarctic Ocean, with the vessel using approximately 5 000 litres of fuel a day. "There will be no point if we travel all the way there, and not be able to offload at the nearest port, but would have to come all the way back - another 25 days at 5 000 litres fuel of per day. We'll go bankrupt," Van Zyl said.

The Paloma V left New Zealand in late May and docked in Walvis Bay, Namibia on July 3, where it offloaded the 100 tonnes of frozen toothfish for export to the United States.

Sources:

The High Court decision may be found at (enter Omunkete as the search term)

NZ Ministry of Justice – judicial decisions online

Press release, Minister of Foreign Affairs, Winston Peters, July 8, 2008

“Namibian trawler netted in Pacific for illegal fishing,” The Namibian, July 9, 2008.

Ghosts of Gondwana

How come New Zealand’s plants and animals are so different from those in the rest of the world, even nearby Australia? In Ghosts of Gondwana, Kiwi scientist George Gibbs sets out to provide some answers through historical biogeography – “the study of what lives where and why”.

Fortunately, one doesn’t have to be a scientist to understand the broad answers to how plants & animals got where and why they did. How plants and animals got to New Zealand is explained by current historical biogeography in terms of vicariance – they were on the tectonic plates that broke away to form New Zealand – they were in “Moa’s Ark”; dispersal – they arrived under their own power or caught a ride by air or water after the crustal plates separated; or by extinction – species survive in one place and not another for various reasons.

What sets New Zealand apart as “a completely different experiment in evolution”? What new niches were created by 60 plus million years of isolation? New Zealand’s endemic life (found nowhere else) is perhaps symbolized best in the modern mind by the flightless, nocturnal kiwi bird.

But there are also the tuatara, a long-lived reptile

the now extinct moa, shown here under attack by the extinct Haast's Eagle:

John Megahan

the weta, an insect among the largest and heaviest in the world

Less well-known, even among many New Zealanders, are the New Zealand Wrens – non-singing passerines (song birds) who at best can raise a tiny squeak – giant carnivorous land snails, and many insect species including the batfly and marine caddisflies.

Bush Wren - extinct in modern times

While not endemic, the stick insect is another one of New Zealand's oddities:

courtesy Landcare NZ

Just as revealing of the effects of geographic isolation are the species absent from New Zealand, despite many of them being present in nearest neighbour Australia: mammals, except native bats & seals, marsupials or monotremes (eg platypus), snakes, tortoises, scorpions, few butterfly families, and amongst the plants, cycads and horsetails. In the absence of mammals who might have acted as predators, many bird species evolved to be flightless and some also became nocturnal such as the kiwi and kakapo.

With the arrival of man, a number of introduced species including the kiore or Polynesian rat that arrived with the Maori and the Norway rat, the stoat and weasel, feral cat, and opossum that arrived with the European (pakeha) have severely reduced many endemic species, some to the point of extinction.

Gibbs’ summation of the current state of the scientific knowledge on New Zealand native species is that the evidence points to a mix of both ghosts of Gondwana, evolved species whose ancestors were separated by plate separation 60-80 million years ago and others that dispersed subsequently across the ocean barrier such as the kea, takahe, and pukeko.

George Gibbs, Ghosts of Gondwana, Craig Potton Publishing, is available at

www.craigpotton.co.nz

Note – This publisher provides exemplary international book sales service at a fair price. It's founder, a nature photographer, has produced superb work over the decades. But don't take my word for it, go check out the site. (And, no, I receive no benefit for saying so!)

Begin at the Beginning

Or at least at that point in deep time, some 60 to 80 million years ago (MYA), when what we now know as New Zealand broke away from Australia.

The science of plate tectonics suggests that the supercontinent of Gondwana formed around 170 million years ago and began splitting apart about 130 MYA as shown in the stylized map below. It was the southeastern region of Gondwana (diagonal lines) that acted as the platform for the evolution of life that would populate Australia & New Zealand.

Between 80 and 60 MYA, what would eventually become New Zealand began to drift away from that part of eastern Gondwana comprising Antarctica and Australia. The last piece to separate from New Zealand was New Caledonia which explains why the two have a number of species in common although evolution continued to take its divergent paths after separation.

from Gibbs, The Ghosts of Gondwana, 2006.

Isolated from the rest of the world’s land masses, life in New Zealand took its own distinctive path, leading scientists such as Jared Diamond to assert that “New Zealand is as close as we will get to the opportunity to study life on another planet” and Tim Flannery to call it “a completely different experiment in evolution from the rest of the world”.

Was this Moa’s Ark – a hermetically-sealed time capsule of life from Gondwana plus evolution over 60 million years – or was it also the result of later dispersals before man introduced new species?

Welcome to the New Zealand Journal!

Welcome to this small beginning of a journal covering anything and everything about New Zealand - Aotearoa by a Kiwi in the diaspora. Topics covered may include: history, culture, politics, science & the environment, sports, business & economics, literature and music, or whatever else comes to hand.

The journal is not intended to be an opinion piece, though some may creep in, but a reporting of matters related to New Zealand in the past and the present. Some topics will undoubtedly receive more attention than others because they are current in NZ society or because of the personal interests and biases of the author of this blog.

Hopefully over time a modest accretion of entries will garner some reader interest & curiosity.

Kuaka