Australian Interest Rates to be higher than in New Zealand?

Last week the Australian Reserve Bank has hinted that it might have to raise it's official interest rate from 7.25% due to inflation pressures.

In the meantime, New Zealand's rate is set to fall from it's current level of 8.25% as inflation pressures ease.

This could trigger an unusual situation where Australia's interest rates will be the same as, or even higher than in New Zealand. This would encourage the NZ dollar to fall from it's current levels and capital could dry up as investors may prefer to put their money into 'safer' deposits in Australia. (In case you haven't noticed, investors are very risk adverse at the moment.)

But if there is a saving grace, it's that the rapidly falling dollar would increase inflation as prices for imported and internationally traded products would rise and NZ's interest rates would rise again in response.

So, if you're thinking of those lower interest rates later in the year - don't get your hopes up.

Kangeroo Cull in Canberra

While in Canberra last week, there were protests over the culling of several hundred Kangaroos that were over-running defence land in the northern parts of the ACT.

Among the claims the protesters made were:

• Culling the Kangaroos would hurt tourism
• Culling Kangaroos was hypocritical, because of Australia's position on Japanese whaling

Neither of these claims stack up for me. Firstly, the cull was done humanely under the supervision of the RSPCA, and if the government did not reduce numbers then the Kangaroos would devastate the ecologically fragile environment and need to move on to other areas to feed, or starve.

Secondly, while I'm reasonable agnostic about Japanese Whaling, I can see a big difference between culling Kangaroos for valid reasons to control the population and prevent suffering to more Kangaroos in future plus protecting the local environment from destruction by an Kangaroo over population, and killing whales to research if they can be hunted commercially. (If all Japanese science was like that, the Sony Walkman would have needed a wheelbarrow!)

Thirdly, it would be difficult for New Zealanders to argue against the cull, as the same process (for the same reason) is used in the central plateau region to manage wild horses.

While the cull was not ideal and could have been prevented by better management a decade ago, there was little choice but to let it go ahead.

Supermarket prices cheaper in NZ than Australia

While I was in Australia, I followed an interesting story - The Australian Competition and Consumer Commission is investigating possible price fixing and overcharging by Australian Supermarkets. So, the ACCC called Woolworths chief executive Michael Luscombe in to give his perspective on the matter. (Article here.)

And Woolworths admitted that it's New Zealand stores are selling items on less margin than it's Australian stores, meaning New Zealanders are paying less for groceries.

And the reason? According to Michael Luscombe, it's becuase Woolworths is not the market leader in New Zealand and has to price itself lower than it's competitors to attract customers.

The Australian media spun this as price gouging, going shopping in New Zealand and Australia for a few common items (like Vegemite) and showing the price difference after allowing for exchange rates and GST differences. However, I think there are different reasons for the difference in margins.

Firstly, the main reason I see New Zealand as a more competitive market is that so many supermarkets in are in each area - for instance, Lower Hutt has five big supermarkets, plus another three or four smaller supermarkets for one hundred thousand people. In Australia the supermarkets I've seen are smaller, and have less competitors nearby.

Another reason is NZers buy all our groceries from supermarkets, whereas Australians buy a lot of fresh produce (fruit, veges and meat) at markets. This reduces the overheads per item sold.

Finally, there are differences in overhead costs. The wage gap between New Zealand and Australia is well documented, and in New Zealand GST is simply charged on everything. In Australia GST differs from item to item - for example, hot cooked chicken attracts 10% GST, but cold cooked chicken is exempt.

Because of this competition and other factors, the supermarkets know that raising prices will mean that customers will just go a few doors down and save money. So prices in New Zealand stay lower.

Canberra and other observations

Well, I'm back home after my week (and a bit) in Australia. Here are some observations from Canberra:

• The Australian War Memorial is an outstanding museum, probably the best I've ever been too.
• And it doesn't glamorise war, it just tells it like it is - one of the displays includes listening to the real radio traffic of an Australian Helicopter airlifting an injured solider to safety, only to be shot down killing all on-board, another is the story of the attack of three Japanese micro-submarines on Sydney Harbour during WWII which praises the bravery and sacrifice of the Japanese.
• I saw a real, wild Kangaroo - standing in the middle of the road as I was driving along at night. Not the best way to encounter Australian wildlife
• Australia's Parliament doesn't have the character of New Zealand's, mainly because our Parliament Buildings are a mix of different styles over 100 years, theirs is all from 1988.
• You would think that the Aboriginal protesters would have moved to the new Parliament by now.
• Driving in Canberra is unlike anywhere else I've been - becuase it is generally very good. They do run red lights, they don't try and barge their way in at merge points, and are very polite and conscientious.

I also went up the top of the Eureka Tower in Melbourne yesterday - quite an experience as the viewing deck on the 88th floor is higher than the Auckland Sky Tower viewing deck.

And this morning I managed to get an upgrade to Business Class on the flight back from Melbourne. Sitting in the Koru Lounge beats queueing for coffee in the terminal, but I was amazed at the number of China Airlines passengers who kept coming in and helping themselves (before being politely asked to leave by the lounge staff) just because the lounge was by their departure gate. Definitely a better way to travel, although I'm not sure if the extra cost is worth it as Air NZ economy is not too shabby.

Anyway, it's good to be back to the warmth of Wellington - every morning in Melbourne and Canberra has been freezing with fog on some days, and even during the day there is a chill in the air - like the way a clear crisp New Zealand winter day is in July/August after a dumping of snow on the mountains.

From Melbourne

Hello from a cold and wet Melbourne - although the locals tell me that the rain is welcome after a long drought and water restrictions.

I have been tootling around all over the place on Melbournes trams, and have so far managed to not go overboard at the discount shops. But Melbourne has changed a lot in the past five years since I was last here with so many more shopping choices!

Did have a slight bit of bother at the airport getting through customs. Was too honest and ticked the "yes" box when asked about having any commercial or business products with me - I have two plastic BNZ piggy banks to give to a couple of NAB staff members who do wonderful support and development work for our team - but the customs lady was fascinated by them and wanted to see them even after she'd xrayed them.

Also managed to catch a game of Aussie Rules at the Telstra Dome. I haven't a clue how the tackle ball rule applies - sometimes the player in possesion gets a free kick, other times the umpire bounces, and other times the opposition gets a free kick. I'm sure the rules are simple, but from the way the crowd kept booing I'm not so sure. Today's paper seems to be 80% Aussie Rules, and 10% about some drug dealer that has been flown from Greece by a chartered private business jet to serve a twelve year term in prison. I did find a tiny article about the Super 14, but didn't know who the semifinalists were until I got on the net this afternoon.

Has fined up at last so will be heading back out there now.

Spot the Difference

The cat on the left is our cat, Seska.

The cat on the right was found outside our house about 7pm last night after being run over by a car, rushed to the vet, and found to be badly bruised, hurt, but with no major injuries or broken bones.

Looks like the same cat, right?

After worrying ourselves about Seska and her accident and spending $300 on Vet treatment - we found Seska in a perfectly healthy condition after having a nice nap on the spare bed last night, oblivious to all the excitement going on over this other cat.

This strange cat is currently in the laundry recuperating (it was very, very lucky) and will be released to be able to go home tomorrow.

Hmmmmmm, donuts. D'oh!

TV channels worries about having programmes banned becuase they portray unhealthy eating, and cite Homer Simpson and Denny Crane as being bad examples - one for eating copious amounts of donuts, the other for eating Big Macs. But somehow, I don't think Health Officials have any worries about Homer Simpson or Denny Crane being role models for healthy lifestyles.

One of the recurring jokes on "The Simpsons" is Homer's low life expectancy due to his unhealthy lifestyle. In fact, he has already been shown to die of a heart attack when fired by Mr Burns for sleeping on the job - only to be enticed back to life at the prospect of his widow getting a ham.

And Denny Crane is portrayed as being mentally unstable, and possible amoral as a result.

Health Officials should get off the back of the Entertainment Industry. There have been as many examples of characters promoting healthy choices - like The Grim Reaper in "Bill and Ted's Bogus Journey" telling a smoker that he will be seeing him again "real soon" - as there are of bad examples.