Exports to China Crash

22 April 2012

In November and December 2011 log export sales to China crashed 32% over the year   before.

Sawn timber export sales fell 35% over the same period.

To all markets log exports dropped 20%      compared with just 9% for sawn timber. Sawn timber exports are much more diversified by market than log exports so benefitted from    increases to a number of small markets.

Nevertheless, of the 18 sawn timber markets we publish half of them were in negative territory.

On top of a soggy domestic market these stats are extremely worrying.

 

 

 

In November and December 2011 log export sales to China crashed 32% over the year   before.

Sawn timber export sales fell 35% over the same period.

To all markets log exports dropped 20%      compared with just 9% for sawn timber. Sawn timber exports are much more diversified by market than log exports so benefitted from    increases to a number of small markets.

Nevertheless, of the 18 sawn timber markets we publish half of them were in negative territory.

On top of a soggy domestic market these stats are extremely worrying.

Domestic consumption requires an adrenalin boost. Instead, the government is running spongy pud economic policy (as opposed to the last lot whose economic policies appeared to have been written by a curious mixture of the national    socialist union of school teachers, Hugo Chavez and Fidel Castro… anyway somewhere to the left of Kim Jong II … that we even survived that evil is a great tribute to our kiwi battlers).

So many of those traditionally sound industry sectors, which we will rely on to create any sort of real sustainable recovery, are really struggling. Timber is no exception. Even dairy ain’t that flash. Remember that the price at the farm gate and the actual return on capital are two different things as many bankers are reminding their  clients right now.

By spongy pud we mean policies which are all softly softly, smiley smiley, don’t upset anybody.

The best example was the sniffy “of course we don’t take any notice of them” attitude to the recently published treasury advise. Tapping our mineral wealth on its own would be a huge help to the so called pension crisis but no, a few screams from the greens and they back off.

This government is really into borrow and hope. They seriously underestimate the damage      happening to our industrial capacity. It will bite their bums and they will deserve it.

Relying on a strategy of forcing households to save more (companies can’t judging by the trend in company tax payments) is simply nutty.

Instead it’s a just a major sop to one of the nats most powerful supporters … the fund managers who have been suffering so badly as a result of 10 years of appalling investments and capital  destruction.  

It is simply criminal (about as bad as the bail outs of South Canterbury Finance and AMI) subsidizing the locking up of billions of dollars of private sector earnings with fund managers whether for the NZ Super Fund, NZ Venture Capital fund or KiwiSaver (who are currently burning them at a real rate of 5-10% a year) while boosting over priced public investment in pork barrel projects at the expense of cash deficits of Euro proportions.

The tax base has shrunk and the tax take     plummeted due to 8 billion dollars of tax fraud a year, weak private consumption (and its income multipliers) and the largest industries (export) escaping the value added tax. Not to mention the utter waste which riddles the entire public sector.

The debate should not be about who owns our assets but rather whether they contribute much to our collective welfare.

 The recent history of large scale tax avoidance by large foreign owned entities suggests we are all being taken to the cleaners by foreign investors.

 Turning Auckland into a language school for Asians (in reality the easy route for residency for only child plus mum and dad most of whom  belong to the Chinese communist party which directs their actions) is not the way to build    income and tax paying capacity. It is about as smart as running down to the pawn shop.

The public are very uneasy on all this stuff but can’t put their finger on just how they are being nicked. Smooth politicians quickly produce stats which show only a small proportion of productive land owned by China. But that’s not the point. There is a much bigger game at play and the public know it.

Those politicians will get   absolutely towelled if this continues. 

We Recommend the immediate halt of Kiwi Saver (for most the equivalent of a 4% wage rise and a timely boost to consumption) while the focus should be on building kiwi earners which is the best, sustainable solution for fiscal deficits and retiring baby boomers.

We also suggest public investment projects be put to international tender with the successful tenderer being able to transport their own workers and working conditions to New Zealand for the   duration of the project (Germany has guest workers and they are  not exactly poor).

Only then will there be any rebuilding sounds in the Christchurch CBD after knock off on a   Friday afternoon .

New motorways will appear as if by magic and at about one third of their current deficit financed cost. If it’s good enough for our sawmillers to have to compete with third world working conditions then the same should apply for the great beneficiaries of government infrastructure projects who spend so much time and money running round the corridors of power in Wellington and of course Christchurch.