Don't raise rates - we're more porn star than rock star

DUNCAN GARNER
Last updated 05:00 19/07/2014

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OPINION: Do you want another reason to resent Auckland?

This one sucks money right out of your wallet.

With another interest rate rise seemingly inevitable this Thursday, pushing up the floating mortgage interest rate again, you can blame the City of Sails' ridiculously priced housing market. Of course, Reserve Bank Governor Graeme Wheeler will spout his usual spiel - but interest rates will rise in a few days' time because he wants to cool the hot Auckland property market.

Sure, the number of sales in the city are down a bit, but the prices continue to rise to unsustainable levels. The last time I looked, the average sale price was $732,000.

But there's plenty of evidence to suggest Wheeler could leave interest rates alone. We were labelled a "rock star" economy by an international economist at the start of the year: I reckon it's more "porn star". I just don't believe the hype. First of all, prices aren't rising that fast. Inflation or the cost of living has risen just 1.6 per cent over the past year. That's a reasonably safe level and shouldn't normally trigger a hike in interest rates.

Even the Government's own books indicate a lack of activity and revenue.

And look at the backbone of our economy - farming and dairy prices. More than $4 billion has just been ripped out of farmers' pockets in recent months.

Dairy prices have slipped by a third across the last 10 fortnightly auctions. This means money we thought was coming into our economy now won't be.

It's not just on the farm, it's in the forests too. Log prices are down 20 per cent in recent months, with Chinese demand falling away.

Rock star economy? More like a one-hit wonder at best.

All this means Wheeler can actually afford to put on hold any interest rate rises for the time being. Give us all a break, Graeme.

No other Western economy is hiking interest rates right now. Central banks in Australia, Britain and the United States are all holding tight.

We've had three recent interest rate increases and they're starting to bite. Are our regional economies doing that well? No. The higher interest rates will add to the demise of many small towns and regions which have no growth and plunging house prices.

And, when interest rates rise, more money will pass into the hands of the Aussie owned-banks. They already strip a combined $4b a year out of the economy in profits.

The heat is in Auckland and to a lesser extent Canterbury. But we're all about to be punished for Auckland's inability to plan and build enough houses. Having immigrants pouring into the city and needing to be housed doesn't help the picture either.

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I know this column will have absolutely no impact on the man once tipped to lead the World Bank, but I urge Wheeler to spare a thought for the rest of New Zealand before Thursday's announcement.

Let's hope after that they go on hold. There's plenty of evidence to suggest we're the worst kind of porn star - an ageing one.

Speaking of rock stars, Wellington gets one back next year - in the form of rugby royalty.

I've always liked Ma'a Nonu and in recent years I've got to know him and his family. His mum helped nurse my dying father at Mary Potter Hospice a few years back. I'm eternally grateful for her caring and quiet bedside manner. So was Dad.

Nonu is a shy bloke, from humble stock, who has missed Wellington dreadfully. He doesn't court attention, he'd much prefer no fuss.

People need to remember he was rushed into the All Blacks on the eve of his 21st birthday in 2003. It all happened so fast. Of course, some guys struggle with the fame. And Nonu was no different. But you can't argue with his rugby.

The game needs stars, crowd-pullers and big-match players. Nonu is all of that and more. He has played 91 tests for the All Blacks. He's one of greatest second fives ever.

And his return is just what the Hurricanes need.

He's a hometown boy. His kids are here. His mates are here. He's never actually left the city - he just swapped jerseys while Mark Hammett was in charge of the Hurricanes.

It's fair to say Nonu has grown up. He has been humbled by his absence from the capital and looks excited again by the chance of one last season in a yellow jersey.

These sorts of players don't come along often. He's special.

Let's get in behind him.

- The Dominion Post

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