Economy

1. The perplexing topic of food pricing

   Published on Thursday, July 15th, 2010

   The past week has shown that grocery foods are a perplexing topic, as media have prominently featured several items and angles relating to food and supermarket pricing.

   Green MP Sue Kedgley led off last week with calls for a government enquiry and a code of practice for fruit and vegetable margins. Not surprisingly she was joined by fruit and vegetable interests giving dire warning of the industry’s demise.

   No sooner had we digested that than we were reminded of the Bill to come before Parliament next week proposing to exempt GST from Healthy Foods.  However, by day’s end we learned the National Party is going to nip that proposal in the bud and the Bill is as good as “dead in the water”. Meanwhile Labour is finalising its proposal to exempt GST from fresh fruit & veg. This and the healthy foods exemptions, we are told, are because of the need to encourage healthy eating and make food more affordable. (Curiously in discussions about Kedgley’s supermarket margins and the proposals for GST exemptions, the cheaper prices offered by dedicated produce stores are largely overlooked! The reality is many consumers are willing to pay more for convenience.)

   Move on one day, and the Department of Statistics trumpets officially that food prices have dropped year-on-year and it’s the biggest such drop in the life of most of us – over 50 years.

   We are funny creatures, on the one hand we (and our media) tut-tut when Kedgley tells us that fruit and veg margins are extortionist, a claim not supported, as far as I have read, by growers who are also produce marketers. On the other, we rejoice at the news of falling grocery prices. I see many papers actually featured decreases in grocery prices as “Good News”.

   For the average Kiwi it is difficult to make sense of all this, and I think it is mainly because of glib use of statistics.  For example, compared with May, lettuce prices for June were up 77%. Yet the June to June year lettuces were down 30%.

   I followed up on startling grocery prices presented to us by one weekend paper, based on data from the Department of Statistics. One popular grocery item was shown to have increased in price, between July 2008 and May 2010, by 43%. On investigation it seems clear that our official statistician compared the pricing of the item when it was promotional (discounted) with the non-promotional pricing. In fact, this product is most frequently purchased at the promotional price.

   While statistics are excellent headline grabbers, they seldom tell a full and honest story and distortion is not uncommon.

   

2. Plenty for the Commerce Commission in the holiday homes market

   Published on Tuesday, February 16th, 2010

   Last week the Commerce Commission issued a “warning” to the bookshop chain, Borders, over a misleading voucher scheme which the retailer promoted before Christmas.

   This promotion offered $20 in vouchers for every $75 spent at Borders until Christmas.  In the small print, however, it was specified that the customer could redeem one $10 voucher in January and the second $10 voucher in February. The Commission received complaints from consumers saying they felt mislead, and the Commission agreed.

   After another Christmas holiday experience, perhaps the Commission could turn its attention to the rental market for holiday homes.

   Do you expect a road in front of your Northland cottage, when the promotional site declares “absolute beach front”, and it is clear that all the photos studiously avoid showing the road?  Do you expect the advertised “Sky TV” in your Napier pad to be restricted to the sports channels only? 

   And then, there is the $460-a-night Waikehe property… Do you expect access to this non drive-on property, which you’ve been told is a “short 25 metre walk” to the beach, to in fact be 151 metres from the very closest carpark on the street?!  And do you expect this same premier rental to require cleaning, and for the charcoal barbecue to have only one fixed wheel and no charcoal?  If you are interested in this property, we suggest you contact Waiheke Unlimited which promotes itself as the only personalised specialists in self-catered holiday accommodation on Waiheke.

   Yes, there is plenty that could occupy the Commerce Commission in this sector, which is crying out for an independent evaluation and assessment vehicle in order to protect our reputation as a tourism destination. When it comes to holiday home rentals, there is too frequently a gap between the blurb and the reality. And of course, prices of these homes well exceed the value of the Borders voucher.

   

3. Government showing deft communication touch

   Published on Friday, February 12th, 2010

   The Government’s handling of the tax changes to be announced in the May budget show a masterly understanding of managing long term communications.

   Delegate the task of putting forward ideas to a third party (a commission) and then immediately reject the most controversial (phew, it’s not going to be as bad as it could be!); talk up some of the remaining unpalatable ideas, and then in the first formal statement of the year reject them too (saved again!).

   Now we have a pretty clear understanding of what will be in the budget some three months in advance, even if we don’t have the detail. By the time the announcements are made in May all the best emotional and rational condemnations from opponents will be out in the public domain, and Government can fine tune its final decisions to ease back on those that will upset us most.

   By the time the changes are finally introduced in October (10 months from raising the issue to their implementation) we will have mentally adjusted, and rather than outrage we will take them in our stride.

   It is good strategy, and the Government’s media managers are demonstrating a deft implementation touch.

   Cast your mind over some of the other contentious issues – mining in conservation reserves; fundamental economic reform to ‘catch up with Australia’ and even the national standards for primary schools have been on the agenda for months.

   When the going started to get tough over national standards, Key & Co showed their ability to up the game aggressively with a ministerial realignment, Key personally entering the confrontation, and outspoken challenges to the teacher’s union and boards of trustees.

   Labour will undoubtedly have the skills to win a few skirmishes as we move into the year, but they are going to need to be at the top of their game to outmanoeuvre National.

   

4. Will New Zealander’s need to rethink their stance on GE foods and Nuclear Power so we can keep up with the rest of the world?

   Published on Tuesday, November 10th, 2009

   First off, I need to state that I am a complete fence sitter when it comes to GMOs and Nuclear power. The way I see it is that in an ideal world, we would enjoy the potential benefits while we fully manage the risks. But reality is always less simple.

   It has occurred to me of late that in the not too distant future, New Zealanders are going to have to think quite seriously about the potential of GMOs, nuclear power and other technologies that will enable us to meet our carbon emission targets, growing power demands and attempts to stay in the game, let alone keeping ahead of it.

   British scientist Dr Robert Winston has said that we need to be more open to new technologies so we can keep pace globally. He’s not wrong. Last week at the annual Food and Grocery Council conference, two of the keynote speakers highlighted changes that may need to take place if we are to feed the world and ensure human intelligence keeps pace with computers. 

   If GMOs are the only means of preventing billions of people starving to death, it will be pretty hard to keep it in the box. Then on the flip side, movies like Food Inc paint the food industry as giant manipulators of the world in order to reap the profits. Are we equipped to reconcile these positions and at the same time solve these very real problems?

   Honest and transparent communication will become even more critical, but often the truth is too boring. We truly need a media who report, not sensationalise the realities of these positions. With shrinking newsrooms under increasing commercial pressures and the more experienced journalists often being let go, this is sadly less likely to happen. Perhaps the emerging social media sphere will evolve into a forum based on true expertise?

   New technologies always raise new questions. Would a science that enabled a paraplegic to walk be halted because it breached our moral ethics? Currently there is already a scientist in Europe who uses himself as a human guinea pig – or should I say android, to test mind driven robotic implants. 

   The reality of new technologies being able to solve some very serious and imminent problems is upon us. And as clean, green nuclear free New Zealand, how well are we informed to be able to manage these dilemmas?

   As the Hon Maurice Williamson pointed out, had we invented Viagra we would be sitting very pretty economically. But we didn’t! So what’s next? Which companies will have the intestinal fortitude to take on people power for causes that they believe are for the good of the people? This is an interesting dilemma but who is debating it?

   

5. Media serves up hard economic information … but are we interested?

   Published on Wednesday, September 30th, 2009

   The economist Edgar Fielder, who served under Presidents Nixon and Ford, is quoted as saying ‘ask five economists, and you’ll get five different answers – six if one went to Harvard’.

   This self deprecating comment would draw mirth from his peers because they understood the complexities and intricacies of taking historical economic data, and trying to forecast what it means for the future.

   For those of us who are not economists, and who try to make sense out of what will happen on the basis of the media coverage of economists’ comments, the result can be bewildering.

   We are no sooner buoyed by headlines proclaiming New Zealand’s recession is ‘over’ than we are brought down to earth by headlines elsewhere forecasting the economy is going ‘nowhere fast’ over the next 18 months or that unemployment will ‘continue to rise’.

   How can this be? Well, the answer certainly isn’t the economists are playing mind games with us, or the media is misquoting or misunderstanding what the economists are saying.

   In part it is the price we pay for trying to understand an issue as complex as the economy on the basis of sound bytes, or a 250 word précis of a 60 page report.

   It is also a reminder that we should view potted media coverage of most topics as the start point – and that there is far more to the full story than the media will ever give us.

   If we want that full story, then we are required to go out of our way to learn more.

   Which bring us round to the issue of whether it is the media’s role to inform us, or to report what others are saying?

   It can be argued that economics is one area where the print and online media in particular do try to inform and give a balanced view, through comment by in-house and external columnists, and by in-depth coverage of personal finance, business and agricultural items.

   Whether we choose to read the in-depth economic stuff with the same desire for knowledge as when we are looking at the All Blacks’ performance or nutritional and health issues, is another matter.