HUGO Assessing the economic and political environmentvision in Confidential to February 3 2017 HUGO members

Sept 23 election – the ‘tired’ vs ‘the vibe’ Page 2 Asked to sum up the theme for this year’s election in one word, said: “growth”. He might have picked “stability”. Naming a widely expected election date early in the new year projects predictability in uncertain times, while announcing a half billion dollar policing package neutralises Labour’s law and order push. Labour will hammer themes of a “tired” govt that is “out of ideas”, while English will spend the year accusing Labour of having no new policy and projecting “the vibe” of a united Labour-Green coalition instead. The Maori Party overplays its hand Page 2 The govt is serious in wanting to bolster the Maori Party’s potential to shore up a 4th term National-led administration, but the party has overplayed its hand in promising big name candidates who have not emerged and in seeking endorsement from the Ratana movement, which was not forthcoming. It appears to understand it cannot push much further on RMA reform.

Two weeks of Trump Page 4 The election of Donald Trump as US president has been labelled the end of the neo-liberal era and the dawn of a new politics of neo-nationalism. So far, it looks very messy, but Trump’s capacity to appeal across traditional conservative and progressive bases is a powerful combination. Those who hate his immigration ban may also love his anti-trade liberalisation. The result is a minefield for business leaders.

Marlborough Sounds headache Page 3 Primary Industries Minister Nathan Guy is wandering into political danger as focus goes onto plans to use ministerial powers to relocate Marlborough salmon farms. The Thiel citizenship There are respectable arguments for granting citizenship to wealthy global citizens who make substantial commitments – both business and philanthropic – to NZ. However, the Peter Thiel citizenship issue is politically polarising and the initial handling by Nathan Guy, the minister who granted Thiel a passport, was woeful. If evidence of further such favours start to emerge, it will be a political gift that keeps on giving, especially to NZ First. May reshuffle signals in PPS appointments? Two ministerial posts will open up in May when Murray McCully and come up for replacement. By appointing five Parliamentary Private Secretaries from his caucus to assist the current ministry, Bill English is signalling advancement for at least two of them. The favoured, in order of most likely for promotion: Scott Simpson (environment and conservation), Melissa Lee (reappointed to ethnic communities role), Jonathan Young (economic development), Jian Yang (ethnic affairs), Kanwaljit Singh (police). , dropped from the English ministry, has announced her retirement from politics. The first early departures from Parliament are expected to be and , now that polling day is known.

Text finalised February 3 Contact: [email protected]. No responsibility is accepted for acts or omissions by clients as a result of items herein. © The Hugo Group 2016 HUGOvision February 3 2017

POLITICS AND POLICY

‘Tired’ vs ‘vibe’ – election year stated main themes for the year: law and order. One wonders whether English, who was aghast at themes emerge in opening shots the unpredicted prison muster blowout that has The potential for a more even contest between two already occurred, really feels about this policy. relatively low-charisma major party leaders has been However, National is in it to win and will use its on display in the set-piece early engagements of fiscal headroom accordingly. ’s call this election year. week for ‘more ambitious’ plans from local govt Labour will hammer the theme that National is for the $1b infrastructure fund unveiled last year, ‘tired’, ‘out of touch’ and ‘out of ideas’. National underlines the govt’s capacity to spend up large on will taunt Labour for releasing very little new policy, both recurring and capital items. relying instead on heart-pumping events that Bill English dismissed this week as “the vibe”. Meanwhile, at Waitangi … We note the following nuance in the performances by Bill English has managed to make the refusal to allow Bill English and Andrew Little so far: him to speak over Waitangi weekend work for the govt. By highlighting the Orakei Marae on Waitangi • English did impress at Ratana with his longish Day and by persuading Maori Party co-leader speech in Maori, but gifted the Opposition a Marama Fox to join him there, English appears to rhetorical club by saying the govt had “reached have succeeded in switching the focus away from the limits” of what it could for Maori. While a narrow celebration of Waitangi Day at the Bay of the audience knew what he meant – that Maori Islands into something more resembling a national are becoming increasingly well-equipped and celebration. With spending the day resourced to deal with their own issues without on the Otago Peninsula, Waitangi (the place) will well-meaning bureaucratic intervention, it was become less of a focus. Instead the govt is aligning easily interpreted as ‘giving up’; itself with the Maori Party and the Iwi Leaders’ • This fed the line Labour intends to use all year: that Forum. Expect to see more of this as the last of the English is a “competent bean-counter”, but not a big Treaty settlements get wrapped up. leader. Murray McCully’s manufactured fury at MFAT for failing to interpret the US immigration Maori Party and RMA – pushing ban’s implications for NZers quickly enought was its luck? a feint to protect English against his flat-footed early responses to a US action that raised moral The govt plans to have its RMA reform package back issues but also required appropriately diplomatic in the House for second reading in March, despite a reticence from the PM; May 10 select committee reportback deadline. But it has yet to nail down a final deal with the Maori Party • Labour is getting better at public events. Last to assure its passage. Sunday’s joint state of the nation event with the Greens was slick – an overflowing hall, a The sticking point is Section 360(d) of the amended compliant unified crowd, a carefully chosen RMA. The Maori Party believes this creates new backdrop representing the multi-ethnicity and ministerial override powers while Nick Smith insists inter-generational look of ‘real NZ’, and a clearly there is no difference from the powers he has now. conveyed sense that Little is the boss and the Animating the stand-off are two key areas of Greens are on Labour’s coat-tails. An event in difference between the govt and its support partner: Dunedin later in the week looked equally well-run. the ability of regions to declare “GE-free” status The addition of media-savvy comms chief Mike and the emergence of plans for Nathan Guy to Jaspers, is having an impact on Little’s ability to mandate the relocation of King Salmon fish-farms capitalise when English stumbles; in the Marlborough Sounds rather than leaving • Labour intends announcing very little policy in permissions either to the local council or a normal election year. This will be an Achilles heel. A joint consent hearing. However, Marama Fox appears to fiscal policy announcement with the Greens is due understand there is only so far the Maori Party can next month, followed later by a joint alternative push the govt. Budget. This will test the two parties’ capacity to “We aren’t going to walk away from the RMA work together on substance as well as ‘sizzle’; (reforms) because we don’t want them going to • National will keep stealing Labour policy. English’s NZ First for support because they will rip out use of his state of the nation speech this week to everything in relation to the Treaty, to kaitiakitanga announce a half billion dollar four year package and to Maori from it and we think it’s in a good 2 of police spending neutralises one of Labour’s place because of those things. We will continue to HUGOvision February 3 2017

POLITICS AND POLICY go back and discuss the difference between what we disclosures hit the NZX last week. negotiated and what is in the drafting.” EU-NZ trade deal … and on electoral chances? Bill English confirmed this week that the EU-NZ Notwithstanding Bill English’s statement this week trade agreement is the govt’s top trade policy. that he would prefer to continue working with the Angela Merkel is believed to be enthusiastically Maori Party –- along with and Act – in favour and there is a suggestion that the EU after the election, things have not all been going the would like to send a message to London that the Maori Party’s way this year. Hone Harawira is clearly old colonies can deal more easily with Brussels. unwilling to do an electorate deal where Mana only But the govt has to be careful. Trade Minister Todd stands in Te Tai Tokerau, where he would be up McClay says he is under pressure from the beef against Labour’s high-performing Kelvin Davis. and lamb lobby to do a deal with Britain. However, And despite Te Uruora Flavell’s claim the Ratana what also looks like the opening up of more Middle movement’s traditional loyalty to Labour is a thing Eastern markets this year (trade deal with the Gulf of the past, Ratana leadership itself said nothing Co-operation Council plus possibilities in Iran) may to actively support the Maori Party at the late Jan assuage that lobby to a certain extent. It is clear commemorations. Most frustrating for the party the prospects for accelerating the GCC FTA was at president, Tuku Morgan, must be the party’s failure least part of the govt’s calculus in supporting the to attract more big-name candidates. Former union UN Security Council resolution opposing Israeli leader and talkback host Willie Jackson defected to settlements on Palestinian lands. Note also that the Labour this week after discussions with the Maori newly appointed US UN ambassador, Nikki Haley’s Party, while attempts to woo Sir Mark Solomon to comment that the US will be “taking names” for stand in Te Tai Tonga foundered late last year. those allies that “don’t have our backs”. Marlborough Sounds headache NZ would seem to fall into that category on the looming Security Council initiative, which the Obama administration allowed the US The discovery by the govt that it could use Clause abstain from, but which the Trump CEO Retreat dates 360 of the RMA to approve King Salmon shifting administration regards as betrayal This year’s CEO Retreat at six salmon farms in the Marlborough Sounds is of Israel. Haley’s full quote: “Our Millbrook is scheduled to run fraught with potential obstacles. There are both goal with the administration is to from dinner on Thursday, political and commercial fish-hooks in the issue. August 24 to lunch on show value at the UN and the way Saturday, August 26. Though an independent panel will hold hearings that we’ll show value is to show We are working on the on King Salmon’s application, there is apparently our strength, show our voice, have no obligation on the part of the Minister to accept programme now to bring the backs of our allies and make members a mixture of the recommendation. The clause allows Primary sure that our allies have our back actionable business insights Industries Minister Nathan Guy to approve the as well. For those that don’t have and the traditional Retreat application as long as it is “not inconsistent” with our back, we’re taking names, we “deep dive” into domestic and global affairs. the RMA as a whole. Not only will environmental will make points to respond to that and iwi groups oppose the application but it is accordingly.” Mark your calendar now! likely the inter-island ferry companies will oppose the application to move one farm to a position not far from the ferry routes south of Tory Channel. The Who might replace repositioning is also critical for the fortunes of recently Graeme Wheeler? NZX and ASX-listed King Salmon, whose development RBNZ governor Graeme Wheeler is expected to plans were delayed for years while a landmark RMA announce his intention to retire from the role in decision wound its way up to the Supreme Court. the next few weeks. Wheeler is nearing 66 years of The company raised around $70m last Oct, allowing age and must retire at 70. Among NZ names being a $45m payday for major shareholders, who quit the thrown around for what could yet be an international register. Now the company has revealed it needs to search: Rodd Carr, RBNZ board member and VC shift its existing salmon farms to meet regulatory at Canterbury University. Carr will leave the board requirements. If permitted, they will move to far when his term expires in July and has been both more productive sites. If not, the company will face deputy governor and acting governor in the past; significant commercial challenges. While the FMA Adrian Orr, head of the NZ Super Fund; and three says it is content with the degree of disclosure on internal candidates, of whom deputy governor Grant the issue in the King Salmon IPO prospectus, the Spencer looks a more likely than fellow D-G Geoff shares took a dive before recovering when detailed Bascand or chief economist John McDermott. 3 HUGOvision February 3 2017

GLOBAL AFFAIRS

The Trump phenomenon between 2015 and 2016 in trust by both the general public and so-called ‘informed publics’ as a It’s hard to believe that Donald Trump has been US “systemic threat”. president for barely two weeks, given the extent of the chaos he has unleashed in such a short time. “We have moved beyond the point of trust being From the perspective of his voter base, he is doing simply a key factor in product purchase or selection no more than keeping his word. It remains to be seen of employment opportunity; it is now the deciding how and whether the rising discomfort of political factor in whether a society can function,” according and business ‘elites’ will express itself. to Edelman principal, Richard Edelman. From a practical perspective, business leaders and NZ was included in the Trust Barometer for the first financial market participants are looking to the Trump time in 2016, with results due for release shortly. We will administration for concrete proof of the fiscal stimulus be briefing on both the global and NZ trust outlook at promised by infrastructure spending and tax cuts. In Hugo Group breakfasts as soon as the NZ results become their absence, this week’s Fed meeting was opaque available. on the timing of further interest rises and the steam has been coming out of US equities. The ‘Trump French elections wide open rally’ appears to need new positive information The scandal engulfing French presidential candidate to counterbalance the domestic and international Francois Fillon’s employment of his wife as a political uncertainty his administration is creating. personal assistant on an eye-watering salary has thrown the French presidential election wide open. US business leaders’ response While a win by the National Front leader Marine Global businesses are also facing a balancing act in Le Pen must still be considered an outlier outcome, response to consumer backlashes that may extend to so too were the Trump presidential victory and the consumers far beyond the US electorate. Brexit votes last year. The task is made all the more difficult because Trump’s ‘neo-nationalist’ revolution appeals across UK votes for Brexit the political spectrum in unusual ways. For example, The UK is now on the road to formally exiting the opponents of his immigration ban are also commonly European Union, following a decisive parliamentary supporters of his decision to exit the TPP. endorsement this week for the triggering of Article 50 – the so-called ‘divorce clause’. However, businesses connected to global supply chains are concerned that a new protectionism will see tariffs imposed on inputs, upsetting their Uncertainty rises in Ukraine and competitiveness. Iran While the US pharmaceutical industry will take Also in the geo-political mix now are the apparent heart from Trump’s determination to ensure other tests being set for the Trump administration by countries pay their “fair share” for US-produced both Iran and Russia. Iran’s ballistic missile test this drugs, a who’s who of other major US companies has week may or may not be a breach of the Obama been flushed out to criticise as much the uncertainty administration’s sanction-busting deal, but it is as the substance of the new administration’s clearly a provocation. So, too, is the upsurge in decisions. A sample of those now expressing dismay fighting between Russian-backed separatists and on behalf of their shareholders, employees and Ukrainian forces in the east of the country. If Trump customers includes: Amazon, Goldman Sachs, makes good on his desire not to engage in other Citigroup, Mastercard, Ford, Coca Cola, Google, countries’ problems, the Ukrainian govt may find Tesla, Starbucks and General Electric. itself imperilled. Distrust on the rise Navarro outlines US trade deal All the more challenging for both political and template business leaders trying to find a way to work with US National Trade Council director Peter Navarro the Trump phenomenon is the fact that Trump’s has outlined standard requirements for the bi-lateral approach plays directly into a dramatic collapse in FTAs the Trump administration says it wishes to global trust in traditional institutions: govt, business, pursue. These include tighter country-of-origin media, and NGOs. rules, a 90 day ‘bad behaviour’ clause that could The 2017 Edelman Global Trust Barometer, released see an agreement annulled, US product purchase 4 late last month at Davos, described the deterioration requirements, and tighter anti-dumping rules. HUGOvision February 3 2017

DOMESTIC ECONOMY

Interest rates rising more than two years in the 4th quarter on higher fuel and property-related prices. The CPI rose 0.4% in the Interest rates have started to push higher across quarter for an annual pace of 1.3%. Petrol prices rose the board, including for home mortgages. Upward 4.1% in the quarter, reducing the annual decline to 0.5%. pressure on longer dated US bonds started the process but focus on the RBNZ’s timetable for NZ had record tourists and immigrants in 2016 tightening is also now having an impact domestically. with more migrants coming in on work visas and While most formal forecasts assume no OCR hike more holidaymakers than ever before. Annual net before mid-next year, financial markets are pricing migration reached 70,600 in Dec, with the biggest in a rise before the end of this year. The only factors net migrant gains from , India, the UK and the preventing a wider consensus on a 2017 rate hike Philippines. Migrant arrivals rose 4% to 127,300 in are the continued strength of the NZ dollar and the year, also a record, while departures fell 0.5% to the absence of wage inflation. In next week’s 56,700. Short-term visitors rose 16.2% in the year to full monetary policy statement from the RBNZ, 1.8m, with most holidaymakers from Aust, China expectations are set for no change to the cash rate, and the US. PM Bill English signalled there were accompanied by removal of the central bank’s easing “likely to be more changes this year” to immigration bias. In other words, expect the OCR to remain at settings, but gave no specifics. 1.75%, along with an ‘on hold’ statement. Residential property values continued to rise in January, with strong growth in regional towns Unemployment may have close to main centres like Auckland, Wellington and bottomed out Queenstown and interest from foreign buyers. The While there’s little observable wage inflation and job average value of a home rose 13.5% to $631,302 in Jan creation continues apace, the latest labour market versus the same month a year earlier, QV data shows. statistics suggest NZ may have seen the bottom The monthly trade deficit was little changed in Dec of the current cycle for unemployment. However, from the year-earlier month at $41m as imports and that is not a sign of weakness so much as that the exports both slid by about the same amount. Dec participation rate – at 70.5% of the workforce in Dec exports fell 0.9% to $4.38b and imports fell 0.9% to – is at record highs for this country and very high $4.42b. by OECD standards because job creation has been The govt’s accounts recorded a smaller-than-forecast so strong in the last year. That pace of job growth is deficit in the first five months of the fiscal yearon a levelling off now and falling behind the growth in higher-than-expected inflow of corporate and goods the labour force, boosted as it is by ongoing record and services tax. The operating balance before gains inward net migration. and losses was a deficit of $768m, compared with a While this should all theoretically keep the lid on forecast deficit of $1.7b in the HYEFU. wage pressure, skills shortages are becoming more widespread and wages may also start responding to Aussie-kiwi parity in 2018? the new environment in which CPI inflation flickers The Aussie-kiwi dollar cross-rate has been stuck in a back into life. narrow trading range since about May last year, and we see that continuing, centred about the A95 cents Growth topping out too mark, through to the end of 2017, with an eventual Annual GDP growth appears to have peaked in move to parity in 2018. the Sept quarter last year at 3.5%. While activity was modestly derailed by the Nov 14 Kaikoura KiwiRail partially reopens earthquake, this will stimulate activity because of unforecast additional infrastructure repair spending. Blenheim-Kaikoura track GDP forecasts are nudged higher, with 2.9% growth The upper South Island rail link that was cut between now expected over calendar 2017 and a further 2.5% Kaikoura and Blenheim by the November earthquake in calendar 2018, compared with 3.2% in 2016. As has been reopened as far south as Lake Grassmere, they currently stand, leading indicators suggest that allowing service to resume for the Dominion Salt outlook may prove pessimistic, especially as dairy company’s operations. Of the 709 repair sites on recovery continues to bolster rural confidence and the line, work is complete on some 100, with track the global economy continues to recover, barring realignment occurring ahead of numerous bridge shocks. repairs and replacements. At this stage, KiwiRail says the work is on schedule, but that continuing seismic Economic indicators activity in the area makes a completion date “difficult Consumer prices rose at their fastest annual pace in to commit to”. 5 HUGOvision February 3 2017

CORPORATE ROUND-UP

Corporate actions Energy Bapcor has succeeded in its $352m takeover of NZ’s relatively flat demand for electricity continues Hellaby Holdings, crossing the 90% threshold ahead to weigh on the listed generator-retailers Contact, of its offer closing on Feb 7. The ASX-listed auto Mercury, Meridian and Genesis Energy, which all firm’s primary interest is in Hellaby’s automotive reported lower retail sales in the final six months division. HEB Construction, which was bought by of 2016. Meridian Energy has lost its dispute with France’s Vinci Group in 2015 for 43m euros, posted the Wellington City Council over $1.2m in rates an annual loss of $23.5m after writing down the paid for its wind farms, with the High Court ruling value of a major project by almost $31m. the council acted lawfully in declaring the West Wind and Mill Creek wind farms to be rateable Healthcare as commercial rather than rural land. SolarCity, The Overseas Investment Office has cleared the solar PV installation company, has won its Australian-controlled Home Care BidCo Pty to buy application to have the Electricity Rulings Panel rule up to 40% of home health and disability services on Unison network’s so-called ‘solar tax’. provider Healthcare of NZ in a deal worth more In the Jan 20 edition of HUGOvision, we referred than $40m. Better Health Co has sold an 80% stake to Greenpeace protests against seismic survey to an Asian private equity fund to help the Lower work on behalf of Statoil. In fact, this work is being Hutt-based supplements maker break into export undertaken by Schlumberger on behalf of NZ markets in a deal signed off by the OIO in December. Petroleum & Minerals, with Chevron NZ and Statoil, ORA NZ, a private equity fund ultimately controlled who are 50/50 JV partners in three offshore licence by pan-Asian alternative asset fund manager areas, contracting for data relating to its permit areas. China Diamond Holdings, acquired the stake in “sensitive land” and “significant business assets”. Telecommunications The consideration paid was withheld. Douglas The four existing companies partnering with the govt Pharmaceuticals has signed a research and licensing to build the nationwide ultrafast fibre broadband deal with the University of Manchester’s innovation network, Northpower, Ultrafast Fibre, Chorus and unit, UMI3, to repurpose an HIV drug to prevent Enable, have each got a slice of the govt’s $300m early-stage cervical cancer. Under the deal, Douglas expansion to the project. They have been awarded will sponsor research at Manchester University to contracts to extend the network to 151 extra towns, build on work, including a phase one trial in Kenya, extending fast internet coverage to 85% of the that’s found a drug commonly used to treat HIV was population by the end of 2024. active against human papilloma virus (HPV), which causes almost all cases of cervical cancer. Primary sector Innovation Fonterra director Michael Spaans has stepped down from the board due to ill health, and has been Phitek Systems, which supplies noise cancellation replaced by Ian Farrelly, who retired from the role and audio enhancement equipment, has been sold last month, until the 2017 annual meeting. Fonterra to New York-listed Amphenol Corp for $60m before has sought to reassure shareholders after its Chinese adjustments. Snakk Media, which aggregates partner Beingmate Baby and Child Food cut its full- publishers’ advertising space on mobile devices and year guidance, projecting a loss of 750m-800m yuan. matches it to demand, said its gross margin was CFO Lukas Paravicini said Fonterra is “confident in 60% in the third quarter, tracking near its full-year our overall China strategy, of which our Beingmate target of 62%. It said internet users are becoming partnership continues to be an important part.” increasingly desensitised to advertisements on mobile sites and apps. G3 Group, the NXT-listed Transport and tourism mail operations and document manager, was ahead Analysts at Craigs Investment Partners lowered their of its annual margin targets in the third quarter of share price target for Air NZ to $2.09 from $2.17 its financial year, though it remains behind on its and said earnings before tax are likely to come in at inventory turnover target. The operating margin of the lower end of expectations because of increased 23.8% in the three months ended Dec 31. Callaghan rivalry and rising fuel prices. Air NZ’s first-half Innovation has appointed a panel of intellectual passenger revenue declined, led by international property specialists in a programme to help firms routes. Short haul passenger revenue fell 6.3% and understand the value of their IP and how they can for long-haul passengers the decline was 14.3%. profit from it. International visitors are continuing to drive up 6 guest nights, which rose 6% nationally to 3m in Oct HUGOvision February 3 2017

CORPORATE ROUND-UP from a year earlier. Guest nights rose 6.5% in the speculation about three US vulture funds circling North Island and 5.3% in the South Island. Domestic Fairfax’s Aust and NZ assets. Platinum and Fortress guest nights fell 0.6% to 1.76m while international Management are touted as a potential buyers of the guest nights rose 17% to 1.24m. Aust assets, while NY-based Apollo, which describes itself as a “contrarian” investor, is reported to have Food and beverage sector been assessing the NZ assets. NZME and Fairfax NZ Binxi (Oamaru) Foods, the unit of China’s NZ reiterated in answers to questions from the Heilongjiang Binxi Cattle Industry Co, says it won’t Commerce Commission that its proposed merger lift its $2.20 per share offer Blue Sky Meats. Last would allow a “real opportunity” to compete with month, Blue Sky’s directors said they want NZ the likes of online ad giants Google and Facebook. Binxi to lift its offer by 30c after a strategic review Fairfax appears to be in an investment and hiring outlined what the Invercargill meat processor needs freeze pending the March 15 decision, with group to do to drive profit growth. Oceania Natural’s ceo Greg Hywood signalling withdrawal from third-quarter revenue fell to $327,000 in the quarter regional titles in NZ a likely outcome of a merger ended Dec 31 from $1m three months earlier as refusal. Sky TV will pay an early interim dividend an unstable grey market in China prompted the ahead of the planned merger with Vodafone NZ honey and noni juice products maker to rethink and raise the cash portion of its acquisition of the its distribution arrangements. Smallgoods maker telecommunications carrier to reflect a bigger return Hellers has acquired family-owned packaged foods than their agreement provided for. Sky TV will pay business Gramart Foods, which trades as Flavour 15c per share, or $58.4m, on Feb 22. House, for an undisclosed sum. Heineken-owned DB Breweries, which owns bars and liquor brands Banking, finance and insurance including Tui, Monteiths and Redwood Cider, has Spotcap, a Berlin-based lender to small and medium- bought Kapiti boutique brewer Tuatara Brewing sized businesses, is to enter the NZ market offering Co for an undisclosed sum. The founding Vasta unsecured credit lines and business loans of up family will continue to produce beer from breweries to $250,000. At the same time, Heartland Bank in Kapiti and Wellington. Winegrowers remain announced a funding facility for Spotcap Aust that it upbeat about this year’s harvest, despite earthquake says will help grow its presence across the Tasman. disruptions and adverse weather. NZ Winegrowers Turners, the car auctioneer, is to sell its loan book CEO Philip Gregan said the biggest producing in a securitisation deal with BNZ worth an initial regions had been relatively unscathed by poor $150M million. Partners Life, whose owners include weather and an “average” sized harvest is forecast. private equity firm Blackstone, has appointed Jim Minto as its new chairman, replacing Sam Knowles, Real estate who will stay on as a director for both Partners Life Wellington-based private equity group Canniwi and its immediate parent Partners Group Holdings. says it has capacity to invest $150m to $200m in Australian insurance claims management company larger scale commercial and industrial property Stream Group has sold its NZ subsidiary Symetri in regional NZ. Canniwi principal Troy Bowker to multinational claims manager Gallagher Bassett is targeting $20m+ transactions in Dunedin, New for up to $25m. The liquidators of investment Plymouth, Bay of Plenty, Nelson/Marlborough, management company Hansa say they have Manawatu and Hawke’s Bay. Canniwi has brought frozen the assets of director Paul Hibbs after initial former Olympic rower and chef de mission Rob investigations showed it appeared to have been run Waddell on as a co-investor. as a Ponzi scheme. The liquidator of Ross Asset Management has lifted settlements with investors to Northland Inc, the Northland Regional Council’s $6.1m and got $161,585 from share sales in the past economic development arm, is seeking to cash in six months but its job is partly on hold pending a on the ‘halo effect’ of Auckland’s rapid house price Supreme Court decision. appreciation, putting a tender out for a feasibility study into developing a high-end, community-based Sharemarket retirement village in Dargaville. The development agency is touting to semi-retired NZers in the “55- NZX shares were reiterated as ‘outperform’ by plus age group, who are still pretty much engaged brokerage First NZ Capital, which raised its earnings but are cashing up and heading north.” forecasts for 2017 and 2018 primarily to reflect the market operator’s sale of the unprofitable Clear Media Grain Exchange. News Corp’s The Australian newspaper carried 7 HUGOvision February 3 2017

LEGISLATION

Parliament resumes under “transitional exemptions” cannot place a taxpayer in a worse position. The Point England Parliament resumes on Feb 7 with the PM’s Development Enabling Bill is also a priority for Statement to the House, which should lay out the proof of progress on Auckland housing shortages. govt’s legislative priorities. It is facing opposition from locals who object to Behind the scenes Cabinet is dividing up bills into the reserve land being developed for housing. The different priorities. These range from those which Outer Space and High-Altitude Activities Bill is must be passed by law (such as bills setting taxes), a headline-grabbing commitment to innovation. those which must be passed for other reasons To iron out kinks in the Ultrafast Broadband roll- (usually political or administrative reasons) through out, the Telecommunications (Property Access to those with little or no political priority. and Other Matters) Amendment Bill is ready to pass through its final stages. The rush of Treaty Among legislation for which policy decisions have settlement bills is not abating with National keen yet to emerge and are starting to look late: decisions to get as many completed as quickly as possible. on the review of the Telecommunications Act 2002; The Te Ture Whenua Maori Bill is a high priority for the Resource Management Act package of reforms; the Maori Party, although it remains the subject of and the Dairy Industry Regulation Act, which intense opposition and confusion about how changes includes a July deadline. The RMA reforms appear would work in practice. It could yet end up on the likely to return in March. (see Politics and Policy) backburner. Several bills remain stranded on the Parliament’s time is already constrained by set piece Order Paper , most notably the Commerce (Cartels debates, including the Address in Reply to the PM’s and Other Matters) Amendment Bill. The long- statement, which runs for 14 hours, or almost a full stalled bill now becomes newly appointed Commerce sitting week. Election year places extra pressure Minister ’s problem. on the legislative agenda, since the House will rise • Italics denote update from previous edition of Hugovision on Aug 22 for the election campaign ahead of the • A full compendium of the legislation before the House is Sept 23 poll. Resumption will depend on the govt available on The Hugo Group website, www.thehugogroup. formation process, with final results due on Oct 7. com Also on the agenda for passage will be the Kermadecs marine reserve bill, back on track Bills in Progress after running into serious political problems over Fire and Emergency New Zealand Bill: Introduced consultation and quota compensation issues with June 30 2016. Reported back on Dec 23 2016 with many changes. Much of the focus was on how the levy to fund Maori. National will want this completed before FENZ would work. Includes preventive measures against the election to burnish its blue/green credentials. levy avoidance, although amendments “clarify that merely Whether it gets new legislation before the House to reducing one’s sum insured, or under-insuring, would not reform marine reserve legislation for coastal areas is amount to avoidance”. yet to be seen. It has been promised for many years, Food Safety Law Reform Bill: Introduced on June 2. but does appear to be drawing closer finally. Reported back on December 19 with minor changes. The committee rejected bids to insert mandatory country of The Taxation (Business Tax, Exchange of origin and GE labelling. Submissions from small-scale food Information, and Remedial Matters) Bill needs to manufacturers about high compliance costs were judged pass and was near the top of the Order Paper last outside the scope of the Bill. year. Much of the political focus on the bill has been Contract and Commercial Law Bill: Introduced May around new rules for foreign trusts. Opposition 24. Modernises the laws underpinning contracts and parties want trust disclosure rules extended to commercial transactions. Reported back Dec 14 with only minor changes reflecting its status as a revisions bill. lawyers, accountants, and real estate agents and publication of a public register. There are also Point England Development Enabling Bill: Introduced Dec 7. Completed first reading Dec 13 with no opposition amendments to override provisions if changes and sent to the Local Govt and Environment Committee to IRD’s business systems means they can’t be with a shortened report back of April 28. implemented. The bill now says any such changes

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