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The Spinoff
2 hours ago
- Business
- The Spinoff
What did Nicola Willis's cost-of-butter meeting with Fonterra actually achieve?
The butter price crisis prompted a high-profile meeting at the Beehive – but global markets, not politicians, are still calling the shots, writes Catherine McGregor in today's extract from The Bulletin. Was the butter meeting a damp squib? Finance minister Nicola Willis says she was surprised by 'the almost breathless excitement' around her Tuesday evening meeting with Fonterra chief executive Miles Hurrell, reflecting a week of coverage perhaps more suited to a major sporting event than a wonky meeting about dairy economics. The Post dubbed it 'the butter meeting heard round the country' while news sites ran red breaking news banners as Hurrell and Willis sat down to talk. With 500g blocks of butter topping $11 in some supermarkets, the stakes, at least symbolically, were high. Willis said the conversation covered many topics, but she did ask Hurrell to clarify how butter is priced and why New Zealanders often pay more than overseas consumers. The main outcome, according to the Herald's Thomas Coughlan? A suggestion that Hurrell will publicly explain the breakdown of butter pricing later this week. 'He was so good at communicating about [butter prices], I have encouraged him to provide that information to New Zealanders,' Willis said. Labour smells spin The political optics of the meeting have raised eyebrows, particularly given Willis's own six-year stint in senior roles at Fonterra, reports Bridie Witton in Stuff. Labour's finance spokesperson Barbara Edmonds questioned whether the meeting was more about performance than policy, arguing Willis should already understand how butter is priced. Willis pushed back, saying she worked in government relations and environmental strategy – not pricing – and refused to 'pre-judge' Fonterra's explanations. Her office also noted she meets with the dairy giant regularly, and the discussion this week wasn't solely about butter. Still, the intense buildup and media framing gave the impression of a high-level intervention, when in fact the levers to influence pricing remain limited. 'The lesson here is that performance politics doesn't work,' Newstalk ZB's Heather du Plessis-Allan said. 'In fact … it runs the risk of backfiring, which is exactly what's happening here.' So why is butter so expensive? As Blayne Slabbert explains in The Press (paywalled), 95% of our dairy products are exported and domestic prices reflect what those products earn overseas – a model known as export parity pricing. Recent Stats NZ data shows butter prices, driven by the global market, have surged 46.5% in a year, reaching an average of $8.60 per 500g. While world dairy prices dipped slightly in July, they remain far above historical levels. Global supply is tight, and demand – especially in China and Southeast Asia – continues to climb. 'You get to the situation we're in now where butter is at extraordinary heights and everyone wants their butter on toast,' High Ground Dairy consultant Stu Davison tells Newstalk ZB's Michael Sergel. 'We don't see it running right back to where we were five years ago.' That international appetite for grass-fed butter benefits our farmers and boosts export revenues, but leaves local consumers squeezed at the checkout. A changing role for Fonterra As butter becomes a lightning rod for public frustration at the cost of groceries, Fonterra may soon exit the retail fray altogether. The co-operative plans to sell off consumer-facing brands like Anchor and Mainland, focusing instead on its business-to-business operations. Writing in The Conversation, agribusiness professors Alan Renwick and David Dean say the move makes commercial sense. While some fear an overseas owner could lead to higher prices for consumers, they think it could help disrupt the current 'cosy' relationship between Fonterra and the supermarkets – potentially even bringing prices down. In the Herald, Clive Elliott, a barrister specialising in intellectual property, argues that the sell-off is a strategic error. 'Our prosperity and ability to remain a first-world economy depends on our ability to add value,' Elliott warns, arguing Fonterra is abandoning decades of brand equity. Regardless of who ends up owning the dairy brands, the butter pricing system is unlikely to shift dramatically. For now, New Zealanders will have to settle for an unsatisfying explanation rather than meaningfully lower costs.
NZ Herald
a day ago
- Business
- NZ Herald
Reserve Bank chairman Neil Quigley responds to allegations around Adrian Orr's resignation
When Newstalk ZB asked Quigley about the alleged 'Statement of Concerns' on Tuesday night, he said, 'I can't go into that'. When it asked Quigley about the swearing allegation, he responded, 'I can't comment on that. That's a matter of privacy that I don't think I should discuss.' On the day Orr resigned, Quigley refused to elaborate on what led to the surprise decision, hurriedly announced the day before the Reserve Bank hosted an international economics conference. Quigley said it was a 'personal decision' that Orr made. Then in June, the Reserve Bank issued a more detailed statement saying Orr resigned because he disagreed with the board over the amount of government funding the bank should pitch for. However, Reddell's source suggests there was an element of Orr being pushed to resign. When Newstalk ZB quizzed Quigley on Tuesday over his explanations for Orr's resignation, he made the point that Orr did not have to resign over the funding disagreement. 'There was nothing about that, that required Adrian to resign. He chose to make it a personal decision that he would resign at that point,' Quigley said. A Reserve Bank spokesman told the Herald the bank didn't plan to release any more information about Orr's resignation in addition to its June statement and accompanying documents released under the Official Information Act (OIA). 'The Reserve Bank believes that we have provided what information we can within our legal obligations, noting that the Ombudsman is investigating a complaint related to our handling of these information requests,' the spokesman said. Orr declined the Herald's request for comment. Willis prepped to answer questions about raised voices Reddell – who is often critical of the Reserve Bank – said, in his Croaking Cassandra blog post, he did not know the identity of his source and could not independently verify their claims. However, he believed the source's tone and the way their claims aligned with material in the public domain, gave them credibility. For example, it is known that Willis' press secretary warned her journalists might ask about Orr's conduct. A document released to the Herald under the OIA in April shows that on the morning of Orr's resignation, the press secretary jotted down several answers Willis could use in response to questions she might be asked be journalists. One question he suggested Willis might be asked was: 'Did you ever have disagreements with Adrian Orr?' The press secretary advised Willis to respond: 'I'm not going to discuss what happens in meetings that discuss confidential and sensitive matters.' He suggested a follow-up question could be: 'Did the Governor ever raise his voice with you?' Willis was advised to respond: 'As I've said, my relationship with Adrian Orr was professional. It's not appropriate for me to comment further on meetings that discussed sensitive and confidential matters.' When the Herald asked Willis on Tuesday whether Orr raised his voice with her during the meeting they had on February 24, she said, 'As I've said previously – not that I recall.' Put to her that she surely did remember what happened, Willis said Orr did not raise his voice with her. She distanced herself from the issue, saying it was an employment matter between Orr and the Reserve Bank board. The Herald has asked Treasury to comment on the allegation Orr lost his cool during the February 21 meeting. A copy of the meeting minutes has also been requested. Reserve Bank chairman Neil Quigley says he can't comment on allegations around what led to Adrian Orr's resignation. Photo / Mark Mitchell February 27 board meeting pivotal The Reserve Bank, in its official June explanation for Orr's resignation, said that by the time the board met on February 27, it was clear that it and Willis were willing to agree to a 'considerably lesser amount' of funding for the bank than Orr deemed necessary. 'This caused distress to Mr Orr and the impasse risked damaging necessary working relationships, and led to Mr Orr's personal decision that he had achieved all he could as Governor of the Reserve Bank and could not continue in that role with sufficiently less funding than he thought was viable for the organisation,' the Reserve Bank said. Secretary to the Treasury Iain Rennie texted Willis during the evening of February 27 to say he had spoken to Quigley. Details of the exchange were redacted, but Willis responded, 'Thanks for the update.' February 27 is also the day Reddell's source alleges Quigley sent Orr a 'Statement of Concerns'. The Reserve Bank said that following the board meeting, Orr and Quigley 'entered discussions, which led to Mr Orr's decision to resign. Both parties engaged senior counsel to negotiate an appropriate exit agreement.' Quigley involved in appointment of new Governor Orr hasn't spoken publicly about his resignation. His concerns over funding for the bank are detailed in an email, released under the OIA, which he sent board members on February 14. He noted the tension between submitting a funding proposal the Government wanted to hear, versus one that supported the bank's goals. 'The importance and clarity of operational independence for central banks is judged by global financial markets now and in the future. Not by any current Government,' Orr told the board. Since Orr's departure, the Reserve Bank has embarked on a major restructure that has involved several executives leaving and senior roles being cut. The board is in the process of finding someone it will recommend Willis appoints as Governor. In the meantime, Orr's former deputy, Christian Hawkesby, is acting Governor. When in Opposition, Willis was unhappy Quigley recommended Orr be reappointed Governor for a second term. However, last year, she reappointed Quigley chairman until June 2026. Jenée Tibshraeny is the Herald's Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.
The Spinoff
2 days ago
- Business
- The Spinoff
The government's consistent, principled approach to economic data
If it's good, the government did it. If it's bad, it's someone else's fault. When data came out showing inflation at a 12-month high on Monday morning, the government quickly started channelling the enduringly popular and intergenerationally relevant reggae fusion artist Shaggy. ' It wasn't me,' said prime minister Christopher Luxon, in an interview with Newstalk ZB's Mike Hosking. 'All I can do is the bit that I can do, which is the fiscal side of things. The Reserve Bank controls the monetary policy,' he said. 'It wasn't me,' said finance minister Nicola Willis, in a press release noting inflation remains within the 1 to 3% target band. 'The effect of council rates on inflation is a concern,' she said. 'That's why this government has also been clear in its call to councils to focus on the basics and keep rates under control.' Both politicians have a point. Inflation is the mercy of an array of local and international factors. The economy could be humming along, only for one of Donald Trump's brain worms to writhe the wrong way and prompt him to bomb the Middle East or raise tariffs to 150% on Gondwanaland. International dairy prices could spiral, sending the price of 400g of Westgold to roughly the equivalent of 400g of actual gold. Local councils might suddenly realise they've forgotten to properly maintain or upgrade their pipes for 50 straight years, forcing them to raise rates to stop town centres being drowned beneath spontaneously formed lakes of raw sewage. All these events are, to varying degrees, outside the control of the current government. Inflation is to a large extent the result of decisions the Reserve Bank made a year ago while weighing up an array of factors. But if Luxon and Willis aren't responsible for inflation, several of their past statements seem perplexing, starting with all the times they've directly taken credit for inflation. Similarly, Luxon has regularly taken credit for the Reserve Bank's decisions to cut the official cash rate, which are interlinked with inflation and similarly subject to the international economy. Some would see double, or at least inconsistent, standards in these statements. On the face of it, that's fair. But on a deeper level, they're in line with a consistent and principled approach from the government when it comes to interpreting economic data. It's routinely applied the same standard, whether it's to a wellbeing indicator or a GDP update. The method boils down to a single precept: if it's good, then the government did it, and if it's bad, it's someone else's fault. Take young people moving to Australia. Prime minister Chris Luxon has shrugged off the government's potential role in the return of the brain drain. Though some could point to the cancellation of dozens of public infrastructure projects and the subsequent slowdown in the construction sector as a factor in rising migration across the Tasman, he has eschewed that for other explanations, telling Ryan Bridge that stemming the outward tide comes down to delivering better education, more efficient access to healthcare, and improved public safety. In 2023, Luxon's deputy David Seymour said ' Kiwis [were] voting with their feet ' when roughly 24,000 New Zealanders left for Australia. When 30,000 people departed last year, he blamed the economic wreckage left by Labour, telling reporters it was down to a 'hangover from Covid'. When GDP goes up, it's the government's plan working. When it goes down, it's six years of economic vandalism under the last one. When food prices rise under Labour, it's Labour's cost of living crisis. When they rise under National, it's still Labour's lingering cost of living crisis. If something goes wrong, like the government failing to fund 13 new cancer drugs it promised to sick patients during the election campaign, it's Labour's fault. If something goes right, like 7,000 new state houses getting built, it's thanks to National even when they were funded by Labour. It's a bipartisan trend. For several long years after it was elected in 2017, Labour screamed the words 'nine long years' in response to any criticism from National. It's been critical over the latest inflation data, pinning the blame entirely on the government's economic management. When inflation went up while it was in power, it was a victim of the global inflation pandemic. Some of their criticisms have merit. Some of their self-aggrandisement is fair. But the overarching message from our politicians is that if something makes you sad, then it's the other guy's fault, and if something makes you happy, it's theirs. Maybe a more honest, responsible approach would be to admit that some things are beyond the control of politicians on a small island at the bottom of the south Pacific; that the weird conniptions of great and terrible global powers could make and break our economy at any moment; that the cost of living in New Zealand is far more reliant on the whims of Chinese parents than bike lane-loving councils; that we have only a small amount of control over our own affairs and chaos beckons at every corner. You may think that's impossible. 'You may think it's a ridiculous hope, borne of political naivety. But if you do, then I have a response you'll have to accept: this is all my editor's fault.
NZ Herald
3 days ago
- Business
- NZ Herald
Regional airline Sounds Air forced to drop routes as it sells part of fleet
A Sounds Air nine-seater Pilatus PC12 plane. The airline is selling off its PC12 fleet. Photo / NZME Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech. Regional airline Sounds Air forced to drop routes as it sells part of fleet A Sounds Air nine-seater Pilatus PC12 plane. The airline is selling off its PC12 fleet. Photo / NZME Regional airline Sounds Air is dropping some routes as it sells off part of its fleet amid rising costs. Sounds Air chief executive Andrew Crawford told Newstalk ZB it was just another blow to regions in this country. 'We just can't keep going with the ever-increasing costs that are being imposed on the business. 'In particular, because everything we buy is in US dollars, the currency is so weak, and costs have gone up so much since Covid, it's just no longer viable to fly some of our fleets. 'We've had over half a million of costs imposed in the last three months that we've really got no way of getting back except for passing onto customers.'
NZ Herald
3 days ago
- Business
- NZ Herald
Listen live: PM Christopher Luxon speaks after NCEA credibility concerns, new school builds
Prime Minister Christopher Luxon is speaking on Newstalk ZB this morning on the back of announcements on millions of dollars of new classroom construction and revelations of concerns about NCEA. Luxon was yesterday in Drury, Auckland, with Infrastructure Minister Chris Bishop and Finance Minister Nicola Willis. They said $6 billion worth of construction projects would begin between now and Christmas. Today, Luxon is due live on air about 7.37am. Listen to the interview via the link below. Education Minister Erica Stanford last Friday announced a $120 million spend on building more classrooms in Auckland, along with the creation of a new school property agency. Two new school sites were also revealed. It had earlier been announced the Government was ditching open-plan classrooms and opting for standard designs. Following the education policy announcements, the Herald then revealed a briefing document to Stanford about NCEA. The damning Government briefing raised significant concerns about the credibility of the country's main secondary school qualification. The document, obtained exclusively by the Herald, was presented by officials to Stanford in June. The minister is expected to announce proposals for the future of NCEA. Among the red-light alerts to the minister is that the flexibility built into NCEA, including regarding what assessments students sit, means courses can be structured around those perceived to be 'easier' to accumulate credits. The Auckland schools getting new classrooms include: Bucklands Beach Intermediate – 2 classrooms Helensville School – 1 classroom Kauri Flats School – 4 classrooms Lincoln Heights School – 6 classrooms Macleans College – 8 classrooms Massey High School – 8 classrooms Mission Heights Primary School – 6 classrooms Mountain View School – 6 classrooms Northcross Intermediate – 8 classrooms One Tree Hill College – 6 classrooms Orewa College – 12 classrooms Panama Road School – 4 classrooms Papakura Normal School – 10 classrooms (in addition to the two learning support classrooms already announced) Papatoetoe Central School – 4 classrooms Papatoetoe East School – 4 classrooms Papatoetoe Intermediate – 6 classrooms Papatoetoe South School – 6 classrooms Puhinui School – 2 classrooms Pukekohe North School – 4 classrooms Rangitoto College – 10 classrooms Te Kura o Pātiki Rosebank School – 4 classrooms Takanini School – 4 classrooms Tuakau College – 6 classrooms Whenuapai School – 6 classrooms Projects announced yesterday included:
