Latest news with #RBNZ
NZ Herald
14 hours ago
- Health
- NZ Herald
Are the Reserve Bank's employee benefits gold standard or pretty standard?
Like a small cohort of employers who favour the language of 'wellness' and 'wellbeing', the Reserve Bank (RBNZ) rolled its statutory requirement for sick leave into wellness leave in mid-2021 – a change that was concurrent with the doubling of the minimum sick leave entitlement from five to 10 days. So the bank offers an additional five days for wellness (or sickness) but beyond the semantics, there isn't much difference in how the leave can be used: Employment New Zealand notes a wide range of legitimate uses for sick leave, including 'stress'. On a tightened budget, the RBNZ is preparing to cut staff and may rein in benefits. Photo / RNZ It's difficult to get an exact read on just how common (or uncommon) an extra five days' wellness or sickness leave are, but there's an indication in work done by the remuneration advisory firm Strategic Pay. Its latest survey found that 40% of New Zealand employers provide five weeks' annual leave for 'at least some staff' and 18% offer more than the legally required 10 days' sick leave. Of those offering extra sick leave, roughly three-quarters are in the public sector and the remainder are in the private sector. The extent to which they augment the basic requirement is not clear. What is clear is that RBNZ employees tend, on average, to treat their wellness days as leave to be used if needed (albeit within generous guidelines), rather than a leave provision to be fully exhausted. An RBNZ spokeswoman told the Herald that staff took an average 7.42 days of wellness leave in the last fiscal year – half their entitlement. ''Wellness leave' replaced 'sick leave' to encourage our people to take personal responsibility for staying physically, emotionally and psychologically healthy,' she said. 'While sick leave was reactive, providing time off to recover from illness or injury, wellness leave provides both proactive and reactive support. 'It gives employees the opportunity to take time away from work to maintain their overall wellness, helping to prevent illness in the first place.' By comparison, according to a BusinessNZ-Southern Cross Health Society survey, Kiwis took an average of 5.5 days' sick leave in 2022. The RBNZ also makes a 4% contribution to employees' KiwiSaver accounts where the employee contributes 4% or more. Cathy Hendry, managing director of Strategic Pay, described this provision as better than average, but not highly unusual. Financial Markets Authority Hendry also said that, for its financial and highly numerical jobs, the Reserve Bank likely competes with financial services in the private sector, which almost undoubtedly pay higher salaries. Private sector entities themselves, such as ANZ bank, declined to provide the Herald with specific details about their benefits policies. 'Where public organisations can compete [with the private sector] is often on workplace culture, flexibility and benefits,' Hendry said. The RBNZ offers a roughly similar set of benefits to those of the conduct regulator for the financial markets, the Financial Markets Authority (FMA), an Independent Crown Entity which, alongside Treasury, often competes for staff with the RBNZ. The FMA provides employees five weeks' leave, including five days of office shutdown over the Christmas period. In addition, staff receive: an additional five days' annual 'loyalty leave' after three years of employment; a days' leave per year to volunteer their time; and an extra day of leave at Matariki (in addition to the public holiday). FMA employees can buy an extra five days' annual leave, while RBNZ employees can buy an additional three weeks' annual leave (at a cost of 2% of their salary per week). The FMA offers no work-from-home set-up allowance and no wellness allowance or leave. However, it does provide permanent employees with a health and life insurance package. A spokeswoman said it was 'not possible' to provide the value of the benefit per employee: 'This is because the premium (value to the staff member) differs pending age, gender, salary etc. There are also commercial sensitivities limiting what we can disclose, given this was negotiated with our insurance broker – Aon.' She said the benefit does not extend to employees' spouses or dependent children, but that this can be added at the employees' expense. The FMA contributes 4% to employees' KiwiSaver accounts when the employee contributes 3% or more. Finance Minister Nicola Willis reined in the RBNZ's budget, starting this year. Photo / Mark Mitchell Treasury and Public Service Within the Public Service, the core departments and ministries of government, the policy since 2009 has been that maximum leave provisions across individual and collective employment agreements should not exceed five weeks (25 days). As of 2022, 75% of fulltime-equivalent (FTE) employees fall within this maximum. However, Public Service Commission analysis from 2023 indicates that the majority of the remainder of employees are grandfathered on leave provisions that are more generous. Treasury provides five weeks' annual leave and employees have the option to buy additional leave, subject to approval and the 'business needs' of the department. Treasury provides only statutory sick leave and no wellness leave, but it does give permanent employees a 'wellbeing assistance allowance' of up to $500 per year. A spokesman said this can be used for 'gym memberships, classes providing regular physical activity, working-from-home equipment and similar activities'. Employer contributions to KiwiSaver are 3%. Budget and staff cuts at RBNZ The number of staff at the RBNZ exploded – along with some expansion of the organisation's remit – from 255 FTEs in mid-2018 to a current 625 FTEs. But that number is under review. The RBNZ's latest funding agreement, signed with the Government, provides an operating budget of $155 million in the current fiscal year, falling to $145m the following year (with some limited scope to carry over underspends) – the agreement provides an average $150m per annum over the next five years. That's a heavy reduction from recent years – operating expenses at the bank ballooned to $200m in the last fiscal year, according to Finance Minister Nicola Willis, and the bank's annual report shows operating expenses were $182m the previous year. The tug of war between previous RBNZ Governor Adrian Orr and the Government over funding led to Orr's resignation earlier this year, according to the bank. The RBNZ spokeswoman said the organisation has already reviewed both its executive leadership team and its leadership team and is now moving to a review of the overall bank structure and staffing. Two deputy governors resigned following Orr's departure and were not replaced, and the leadership team has reduced by eight positions to 20. 'This phase includes a formal consultation with the wider organisation. At this time, no final decisions regarding staffing numbers have been confirmed ... ' the spokeswoman said. She also said that no decisions have been made relating to any potential changes to employee benefits.
NZ Herald
21 hours ago
- Business
- NZ Herald
Inside Economics: NZ recession risks on the rise ... again! Plus: the boy who cried ‘tariff' – Trump's threats lose their bite
Recession fears resurface Nobody wants to be talking about another recession; we're supposed to be recovering from the last one (or was that two ... or three?). But sadly, there are some worrying signs that the fragile recovery petered out in the second quarter. Both the Production of Services Index and the Production of Manufacturing Index contracted again in June. These measures of business performance suggest that a large chunk of the economy is still in recession. The Production of Services Index recorded its fifth successive contraction in June. Apart from a positive bounce in January this year, it has been in contraction since March 2024. That's a hell of a tough run and reflects the gloom we're hearing from hospitality, retail and professional services. Meanwhile, manufacturing, which had started to pick up, faltered for the second month in a row in June. That's prompted BNZ head of research Stephen Toplis to publish a very gloomy note, revising down his expectation for the second quarter GDP to -0.2%. 'The last few days have seen a number of high-frequency activity indicators support our view that not only did the economy stall in the June quarter, but it is also struggling to gain momentum going into [the third quarter],' Toplis writes. 'Indeed, so poor have these indicators been that we have lowered our expectation for Q2 GDP to -0.2%, from zero, and have made exactly the same adjustment for Q2 employment.' Meanwhile, the Real Estate Institute of New Zealand (REINZ) Property Report for June showed the housing market remains subdued, with median house prices down again in Auckland. Commentators have focused on the oversupply of properties on the market and a lack of demand from buyers because of job market insecurity. We need the job market to improve to boost house prices, but we need house prices to improve and boost consumer confidence to improve the job market. Likewise, housing market demand is suffering from the falling net migration rate, but that won't turn around until the job market improves. The circuit-breaker might be more interest rate cuts from the Reserve Bank (RBNZ). But the RBNZ hit pause last week because of short-term inflation concerns. Of course, the recessionary conditions are meant to mean inflation will keep falling and the RBNZ will be able to cut further eventually. For now, though, we're stuck in a frustrating deadlock that risks further undermining already-weak business confidence. Lucky country? What's worrying about the situation is just how bad it would be if the agricultural export sector weren't enjoying its biggest boom in years. We don't have any control over export prices or agricultural production conditions, so you'd have to say we got lucky, although I suspect struggling retailers are feeling anything but. What we desperately need is for the domestic economy to pick up before the export price cycle turns against us. There is still hope, even though the wheels are turning painfully slow. I think the elevated export earnings will eventually work their way through to the urban economy. Economists also point out that the cuts the RBNZ has already made are still working their way through to consumers' pockets. Core retail spending was up in June, although Westpac economist Satish Ranchhod notes that rising grocery prices probably counted for some of the extra spending in the consumables category. More promising were increases in durables and apparel. Hospitality continued to struggle. As Ranchhod notes in his analysis, retail spending isn't going to pick up rapidly. But households with mortgages should see considerable relief in the coming six months. 'Compared to this time last year, fixed-term mortgage rates are around 170 to 200bps lower,' he said. 'The full impact of those declines is yet to be felt as most New Zealand mortgages are fixed for a period.' Over the next six months, around half of all mortgages would come up for refixing, giving many borrowers the chance to secure a much lower rate, Ranchhod said. 'The related increases in disposable income levels will be a boost for sentiment, and that should support a gradual recovery in spending as we approach the end of the year.' It feels like we've been saying that for two years now – but hang in there. Something's got to give eventually. Tariffs? What tariffs? In my diary, August 1 looks to be looming fast. But Wall Street investors seem to have decided that the new tariff deadline imposed by Donald Trump is too far away to worry about. Markets shrugged off his latest threats to impose 30% tariffs on the EU and Mexico, 35% on Canada and raise the base tariff for all countries from 10% to 20%. Wall Street indexes continued to trade near record highs on Monday. If the investors took these threats at face value, they would be extremely worrying, but I don't think anyone does anymore. The story of The Boy Who Cried Wolf comes to mind. Donald Trump's endless tariff threats are being treated as akin to one of Aesop's Fables. Leading with a big, aggressive threat is clearly a negotiating tactic for Trump. But each time he does it and then backtracks, he weakens his hand. Trump knows the risk of pushing too hard is that he'll cop an ugly Wall Street sell-off or a bond market rally that pushes up interest rates. His strategy has been to push to the limits of market tolerance and then pull back. He hasn't managed to do that this time. In the long run, Trump will likely achieve his goal of higher tariffs across the board. He'll have changed the global trade landscape and will be able to claim victory. In the short term, though, he's struggling to deliver the big bang he promised in April. No one really believes the big, scary numbers he plucks out of the air any more. Eventually, markets will have to grapple with the reality of higher tariffs. For now, they seem comfortable treating Trump's big proclamations as entirely hypothetical. The real measure of tariff impact The real measure of tariff damage arrived this morning in the form of the latest US Consumer Price Index inflation data (for June). By the time you read this, the numbers will be out already, and I'm loath to make any predictions. But whether good, bad or ugly, markets are likely to take the data a lot more seriously than the latest pronouncements from the White House. The inflation rate is a number that will have a direct bearing on the US Federal Reserve's plans for rate cuts (or lack of them). Investors will be watching closely to see what impact the first round of tariffs has had on pricing. Meanwhile, in New Zealand, we'll get our Consumers Price Index (CPI) data for the second quarter on Monday. Economists expect it will remain higher than the RBNZ would like. BNZ is pencilling in 0.8% for the quarter (from 0.9% in the March quarter). Butter Battles Q: Hi, can you please explain the economics of a pound of butter made from milk acquired from cows in Waikato and processed nearby into a product on the supermarket shelf in Hamilton costing me the equivalent of the same product in London? Various sources report the costs of transporting goods within New Zealand at 40% of a product's price, so I wonder how an economist can not account for the enormous expense of getting the pound of butter, the bottle of wine, the leg of lamb, the side of beef, the timber etc overseas. Thanks for any explanation. Regards, Peter A: Cheers, Peter. The price of butter certainly continues to grate with many people, despite my best efforts to explain the ups and downs of international pricing. Intuitively, it does seem strange that people on the other side of the world can be paying the same price as we do for a product made just down the road. But I was surprised by your assumption that transportation accounts for 40% of butter costs. Basically, by the time you stack a few tonnes on a truck, or many more tonnes on a boat, the transport cost per unit is actually very low. I double-checked this with Fonterra. It confirmed that domestic transport costs are about 1% and international costs are about 3% of the final price. So the transportation costs are marginal and don't have a big impact on the retail pricing. If New Zealand butter is cheaper in international supermarkets than local supermarkets, I'd be looking at the margins being added by the retailer. Ultimately, as I pointed out in a previous column, if we want a product such as butter to be cheaper than the market price then it has to be subsidised by someone. I don't think the Government should be forcing farmers (or any other businesspeople) to charge lower prices than they can get elsewhere. The Government could subsidise the price, of course. But they'd be doing that with taxpayer money. And it raises questions like: why butter? The Greens and Labour occasionally talk about removing GST from some food products, which would be a form of subsidy. But the focus there tends to be healthy fresh produce, which they believe we all need to eat more of. Products such as cheese and butter seem to hold special cultural importance to many Kiwis, given our history as a dairy-producing nation. Perhaps a political party could run on a policy of subsidising them specifically; it might prove popular! Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. To sign up to his weekly newsletter, click on your user profile at and select 'My newsletters'. For a step-by-step guide, click here. If you have a burning question about the quirks or intricacies of economics, send it to or leave a message in the comments section.
RNZ News
a day ago
- Business
- RNZ News
Former Reserve Bank boss Adrian Orr joins Cook Islands Super board
Adrian Orr quit as RBNZ governor in March after a dispute over future funding of the bank. Photo: Former Reserve Bank governor Adrian Orr has become a member of the Cook Islands National Superannuation Fund (CINSF) board. Orr has family links to the Cooks and has supported the fund previously, with advice from its formation. Fund chair Heinz Matysik said Orr was a welcome addition. "Adrian brings a wealth of industry knowledge and leadership that will strengthen our board," he said. "His appointment comes at a pivotal time, as the fund enters its next phase of growth and development." The CINSF said Orr had supported uncle and former MP Norman George to get the fund established "Since the fund's inception, Mr Orr has provided strategic and operational support to the board and executive, contributing to the fund's continued development." The board seat is Orr's first public appearance since he abruptly quit as RBNZ governor in early March, after what was later confirmed to be a dispute with the RBNZ board over future funding of the central bank. Orr headed the New Zealand Super for close to a decade, before moving to the RBNZ. The Cook Islands Fund turns 25 this year and has about $300 million in assets under management. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
a day ago
- Business
- RNZ News
Banking and investment behaviour faces considerable change as the population ages
An RBNZ report said the ageing population will likely force changes in the financial system. (File photo) Photo: Unsplash/ Towfiqu Barbhuiya The country's banking and investment behaviour faces considerable change as the population ages, according to a new report from the Reserve Bank. The central bank said the financial industry needs to understand and get prepared for what may be complex, long term changes, that may also increase risks to the financial system. Report co-author Enzo Cassino said over the next 25 years or so it foresaw higher savings, different investment patterns, affecting interest rates, bank lending, as well as the insurance sector. "Overall we think there'll be lower demand for housing loans and also higher deposits as older people want to hold more in lower risk investments such as term deposits, so this will affect business models that banks are using." He said similar changes would likely affect the insurance sector with increased demand health insurance and lower demand for life insurance. Increased saving would also would put pressure on interest rates and lift the value of assets such as housing and shares. Such a shift might then steer banks to increase lending to other sectors, and with more domestic savings and sources of capital, would reduce borrowing overseas. Cassino said it wanted to alert banks and other financial businesses to potential changes and how it might affect them. "We want to encourage banks and other financial institutions how an older population will impact their business model over the coming decades. "The greatest risk may be that these institutions may not be preparing or necessarily thinking about these changes will affect them." Cassino said the RBNZ was not raising the alarm or concerns for financial stability. The report has been published in advance of its inclusion of the next RBNZ financial stability report due in November. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Bloomberg
2 days ago
- Business
- Bloomberg
RBNZ Says Aging Population May Weigh on Neutral Official Cash Rate Over Time
New Zealand's aging population is likely to put downward pressure on the neutral level of the Official Cash Rate over time, according to Reserve Bank research. 'We expect an aging population to put downward pressure on the neutral interest rate, but other factors may offset its impact,' the RBNZ said in a report published Tuesday in Wellington. Any impacts are likely to be gradual over decades, it said.
