regulatory risk (delayed?)
DESCRIPTION
Regulatory risk (delayed?). Red Meat Sector conference Colin James 8 July 2013. Timescale of comments. Out to 2018 Goes through two elections here — change of govt 2017 if not before Sees through unwinding of QE, China adjustment Two big FTAs? Or neither? - PowerPoint PPT PresentationTRANSCRIPT
Red Meat Sector conference 8 July 2013
1 www.TheHugoGroup.com
Regulatory risk (delayed?)
Red Meat Sector conferenceColin James8 July 2013
Red Meat Sector conference 8 July 2013
Timescale of comments
• Out to 2018• Goes through two elections here — change of
govt 2017 if not before • Sees through unwinding of QE, China adjustment• Two big FTAs? Or neither? • Climate change issues higher profile• Maybe: US-China trade/security crunch; MidEast
mess
2 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Context
• Firm domestic growth through next 18 months, slower thereafter
• Depends on global conditions — expect bumps• Outlook good for high-end food• 210m more households by 2025 on $US20,000 a
year; Chinese households on $US16,000-34,000 go from 14m to 168m by 2020; 3bn more in “middle class” ($US10-100 a day) spending 2030
• But those straight-line projections; diversion risks (China, water, food, geo-security)
3 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Domestic policy/political overview
• GDP growth dominates till next election• National 55:45 to win third term — NZ First may
hold balance• If National wins 2014, policy continuity (modified
a bit by deals with small parties)• If Labour+Greens win 2014, major policy
reversals on RMA, local govt, labour• Labour+Greens odds-on in 2017 if don’t win 2014• If Labour+Greens win 2014, 50:50 National 2017
4 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English Joyce
5 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English Joyce
6 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English Joyce
7 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English Joyce
8 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English Joyce
9 www.TheHugoGroup.com
The strongest line
What happens if this line frays?
Red Meat Sector conference 8 July 2013
A triangle at the top
Key
English Joyce
10 www.TheHugoGroup.com
The strongest line
What happens if this line frays?
Second tier of other sector-leading ministers— corresponding to departmental sectors
Red Meat Sector conference 8 July 2013
Till 2014 election: GDP growth is king
• Fiscal consolidation to reduce state crowdout• Balance, then debt reduction below 20% GDP• Improved asset management• Asset selldowns for investment funds• PPPs (but warily)• “Better public services”:efficiency, effectiveness• 2014 budget won’t be a vote-buyer but some doles• Tax policy mainly tidy-ups
11 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Till 2014 election: GDP growth is king
• More mining, more irrigation• Research geared more to food/agriculture• Deregulation of labour market• Big RMA changes: economy trumps environment• Local councils required to get in line• Exceptions: re-regulation in finance and to deal
with political embarrassments (quake rules, mine safety, very low wages — maybe more
• Has the economy rebalanced? Lab+Greens say no
12 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Till 2014 election: other policy
• FTAs: TPP, RCEP and whoever else will play; not much trans-Tasman
• Climate change: all sectors firm target for 2020 but ministers wary about effect on GDP growth
• Education: more emphasis on technology, professionalisation of teachers
• Health: increasing output; spending constraints• Welfare: get them into jobs (actuarial/investment)• Foreign policy: independent but friendlier to US• A four-year fixed term? 13 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
The 2014 election
• Alternative govt has taken shape: Lab+Greens (+maybe others); voters have choice (unlike 2011)
• Polls give Nat big lead over Lab but little or nothing above Lab+Greens
• Household finances/confidence key factor: so far, so good but watch the global economy
• Leadership: Key popular but now some doubts; Mar-April dip might be repeatable
• Norman looks too much like opposition leader for Labour comfort; might stop Nat—>Lab transfers
14 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Polls still good for National but Lab+Green close
15 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical 2014 election outcome — NOT forecast
• Nat has real prospect of 44%• ACT may get 1 seat (but needs new candidate) • Maori party 0-3 seats, let’s guess 2• Conservatives get 2011 2.7% (=3 seats if in Parlt)• Lab should get 35 at least (electorate score 2011)• Greens likely to be lower — but at least 8%• Mana 1 seat• NZ First 60:40 to clear 5%• Peter Dunne out16 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical election outcome—NOT a forecast
• National 44.2% • ACT 1.0% • Maori party 1.4% • Conservatives 2.7% • TOTAL NATIONAL 49.3%• NZ First 5.5%• Labour 35.0% • Greens 8.0% • LABOUR+GREENS 43.0%• [Mana 1.0%]
17 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical result 1: Peters over 5%, Craig out
• National 44.2% 55 seats• ACT 1.0% 1 seat• Maori party 1.4% 2 seats• Conservatives 2.7% 0 seat • TOTAL NATIONAL SIDE 58 seats• NZ First 5.5% 7 seats• Labour 35.0% 44 seats• Greens 8.0% 10 seats• LABOUR+GREENS 54 seats• [Mana 1.0% 1 seat]
18 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical result 2: Peters over 5%, Craig a seat
• National 44.2% 54 seats• ACT 1.0% 1 seat• Maori party 1.4% 2 seats• Conservatives 2.7% 3 seats • TOTAL NATIONAL SIDE 60 seats• NZ First 5.5% 7 seats• Labour 35.0% 42 seats• Greens 8.0% 10 seats• LABOUR+GREENS 52 seats• [Mana 1.0% 1 seat]
19 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical result 3: Peters under 5%, Craig a seat
• National 44.2% 57 seats• ACT 1.0% 1 seat• Maori party 1.4% 2 seats• Conservatives 2.7% 3 seats • TOTAL NATIONAL SIDE 63 seats• NZ First 4.5% 0 seats• Labour 35.0% 46 seats• Greens 8.0% 10 seats• LABOUR+GREENS 56 seats• [Mana 1.0% 1 seat]
20 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Hypothetical result 4: Peters under 5%, Craig out
• National 44.2% 59 seats• ACT 1.0% 1 seat• Maori party 1.4% 2 seats• Conservatives 2.7% 0 seat • TOTAL NATIONAL SIDE 62 seats• NZ First 4.5% 0 seats• Labour 35.0% 46 seats• Greens 8.0% 11 seats• LABOUR+GREENS 57 seats• [Mana 1.0% 1 seat]
21 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Repeat — hypothetical NOT A FORECAST
• Take Nat down 1% and it gets more marginal• Likewise if ACT cannot get a credible candidate• If Dunne in, may add a seat (but very big “if”)• If Nat up 1%, chances improve• If Lab 38%+Green 8%, Nat in trouble• If Peters has balance of power, unclear if he goes
with Nat (is ex-Nat but angry at Key’s 2008 attacks) or Lab+Greens (doesn’t gell with Greens)
22 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Outcome 2014
• Election likely 29 Nov; Key may announce date early Feb
• 55:45 National third term• But support mix may make it difficult to manage
so might not see out full term: NZ First hard to accommodate, Maori party needing more distance
• Key goes by end-2016 (if a loss he goes quickly)
23 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
If Nat-led govt post-2014
• Policy continuity but qualified by: —need to attend to voter preferences —need to attend to small parties—if Key retirement: Joyce, Collins, Adams?—possible economic/other upsets so hasty fixes—possible deregulatory over-reach• Higher cabinet rank: Adams, Kaye, Bridges;
ministry posts: Goldsmith, Lotu-Iiga, Ross (Lee?)• Leadership convulsions in Labour24 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
If Lab+Green-led govt post-2014
• Significant regulatory risk for business• Would reverse/repeal several 2008-14 policies —
RMA, local govt, house consents, workplace law, protest, Sky City; plus tougher on climate change
• “Seesaw factor” in policy: the bigger the 2008-14 “see”, the bigger the post-2014 “saw”
• More active economic policy: monetary, capital gains tax, compulsory KiwiSaver, govt agency to buy electricity, research tax credits, high-end manufacturing, venture capital, apprenticeships
25 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
If Lab+Green-led govt post-2014
• Balance budget (but some slippage?)• Social policy focused on “child first”• “Living wage” ($18.30 now) for state employees
and contractors/suppliers• Greens push on social, environmental policy;
oppose mining (but Lab mostly prevails), oppose FTAs (but Lab gets Nat support)
• NZ First push on immigration• Would it last more than one term?
26 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
2017 election and beyond
• If Nat third term 2014, 75:25 Lab+Green-led win in following election
• IN SHORT: a Lab+Green govt sometime in the next five years
• So regulatory risk is real but may be delayed• If Lab+Green win 2014, 50:50 Nat back 2017
27 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Lab+Green govt post-2017
• Generally similar to post-2014, except that Y-gen MPs more significant, baby-boomers/X-gen less influential —so Robertson, Ardern, Clark, Hipkins up
• Who would be leader/deputy after Shearer dropped 2015?
• May not reverse as much policy as would have if elected 2014: the longer between the “see” and the “saw” (of policy seesaw) the better the chance of a smaller (or no) “saw”
28 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
Get ready for change
• If not 2014, then 2017• Post-1984 orthodoxies not secure• Regulatory risk significant
29 www.TheHugoGroup.com
Red Meat Sector conference 8 July 2013
30 www.TheHugoGroup.com