Of Interest

The labour market remains tight with an official unemployment rate of just 3.3%, and good pay rises for some workers with private sector hourly earnings up 7.1% in the June year, almost matching the highest inflation in 32 years of 7.3%.It seems as if every business you visit, and every business owner you talk to no matter what industry they're in, is looking for staff. Speaking in the latest episode of interest.co.nz's Of Interest Podcast, Shannon Barlow, the Managing Director of recruitment agency Frog Recruitment, says this does indeed appear the case."Definitely finding staff, or retaining talent, is the number one problem for businesses across New Zealand," she says.In the podcast Barlow talks about which industries are especially feeling the staffing squeeze, where workers are getting 20% to 30% pay rises, the Great Resignation, and how 2021 was the year of wellbeing with businesses recognising the importance of workers' mental health and wellbeing, but in 2022 cash is king.She also talks about how the Covid-19 pandemic added new factors and supercharged existing factors affecting labour shortages, and how towards the end of last year the balance of power shifted to employees from employers, and whether there's any circuit breaker on the horizon."With that shift in the balance of power job seekers are really using the market conditions as a bargaining chip to be able to secure better conditions, definitely including pay. And with increased living costs, I guess a lot of people are in a situation where they can't afford not to do that, and why wouldn't you take that opportunity," Barlow says.

Markets and prices for a number of asset classes are currently behaving as they tend to around the time of a recession, says BNZ Interest Rate Strategist Nick Smyth.Speaking in the latest episode of interest.co.nz's Of Interest Podcast, Smyth also says financial markets pricing in Federal Reserve rate cuts as soon as next year, despite the Fed's current aggressive hiking and US Consumer Price Index (CPI) inflation of more than 9%, suggests markets are worried about recession risk. "The market has got circa 90 basis points of rate hikes over the remaining three [Fed] meetings this year, so still got the Fed hiking quite aggressively over the remainder of this year. And then next year it's pricing just over 50 basis points of rate cuts with the first rate cut fully priced by June," Smyth says."So why is that?""The logical way to interpret it would be to say markets are worried about recession risk. And I guess you can kind of see evidence of that in various parts of the financial markets," says Smyth."So for instance the S&P 500 is down more than 20%. That's that definition of a bear market. Bear markets are often, but let's be clear not always, associated with a recession. The US yield curve is inverted, which historically has been quite a reliable leading indicator of recession.""We've got industrial commodity prices like copper, and copper's kind of used in lots of different things [and] historically that has been quite a good barometer of the strength of global demand. And that had fallen more than 30% from its peak," Smyth says."So you've got a number of asset classes that are behaving in a way they normally would in the lead up to, or around recessions. And this is taking place in the context of central banks really aggressively lifting interest rates over a short period of time, and in quite a synchronized manner."Excluding China, which has its challenges around zero-Covid, and Japan which still has relatively low inflation, Smyth notes even the European Central Bank is raising interest rates, having not done so for 10 years."So a synchronized global tightening cycle will certainly slow [economic] growth. And then we've got these other contributing factors that are giving markets concern about the rising risk of recession including the risk of lockdowns and restrictions in China, and the situation in Europe where you've got potential gas shortages and power rationing later this year.""So I think asset markets are kind of telling you that there's at least a reasonable, if not a high chance, of recession next year. And historically during recessions the Fed cuts interest rates."The Fed increased the Federal Funds Rate, its equivalent of the Official Cash Rate (OCR), by 75 basis points to a range of 2.25% to 2.50% on July 27.Smyth says markets see it peaking at between 3.25% to 3.50% in the current tightening cycle. And they see the OCR, currently at 2.5%, peaking at between 3.75% and 4%."And the New Zealand market now is reflecting that same profile as what the US is, so there are some rate cuts, albeit not as much as in the US, that are priced in to the short-end of our curve as well," says Smyth.Meanwhile, Smyth says markets see US CPI inflation, currently running at a "staggeringly high" annual rate of 9.1%, dropping to about 7.5% by the end of the year, and then down to about 2.7% by the end of 2023."So that is a really big fall. And again that's consistent with the market thinking there'll be a recession or some kind of miracle with global supply chains," says Smyth.In the podcast Smyth also talks in detail about this week's market reaction to the Fed's rate hike, what the yield curve is telling us at the moment, Reserve Bank and Fed quantitative tightening, or moves to decrease liquidity, or money supply in the economy, and expectations for Wednesday's Household Labour Force Survey from Statistics NZ, and what this will say about the labour/job market.

We've heard a lot over recent years about jobs and professions where people could be replaced by machines and other forms of technology. Accounting features prominently in this.In the 2017 television programme What Next?, psychologist Nigel Latta suggested that over 20 years the number of accountants in New Zealand would plummet from 17,669 to just 19, with humans being replaced by robots and algorithms.Rick Jones, the New Zealand Country Head for accounting industry body CPA Australia, experienced a prompt response to the Latta programme from CPA members."It feels like yesterday that that show was on," Jones told interest.co.nz in the latest episode of our Of Interest Podcast. "I remember watching it on a Sunday evening. And then I got to work on Monday morning and had a couple of phone calls, quite early from new members who had just joined CPA Australia as an accounting professional body member. They referenced that programme, and they said, 'look, I'm not sure this is the right path for me' [as] a direct result of the Nigel Latta shows. So it was really interesting that immediately there was a short-term response," said Jones.Jones fielded additional enquiries that week from people "genuinely worried about accounting as a viable profession," wondering whether they were on the right path, and whether automation would take over their role. The TV programme certainly created a stir in the accounting industry. Some hit back at Latta, including Xero Chief Product Officer Anna Curzon via this Linkedin post.But in the time since concerns about automation haven't gone away."It still gets talked about on a daily basis with employers and with the profession. There are some roles that automation and software have taken over, but what we have seen is a whole lot of new roles have been created. So the demand for accountants and accounting roles has never been greater, but the role of the accountant is evolving and technology is actually an enabler," Jones said.He speaks about this at length in the podcast, as well as about the challenges of attracting young people to the accounting profession in a dynamic, and changing world.

Fresh from meeting with international reinsurers, Tower CEO Blair Turnbull says they are "questioning whether they want to be down under."Turnbull spoke to interest.co.nz for the latest episode of our Of Interest Podcast about insurance and climate change.Reinsurers are highlighting they've taken losses for several years in a row, Turnbull said."And they are looking very closely, as you would expect, about where they want to have insurance for insurers. And especially more recently with the floods in Australia, which are record $4 [billion] to $5 billion events, they are questioning whether they want to be down under. And that's a concern for us because we rely on that capacity. In our case we have category cover up to just below $1 billion, and we need that cover."Reinsurance is often described as insurance for insurance companies like Tower, allowing them to transfer some of the financial risk they assume when issuing insurance policies to a reinsurer.Turnbull said Tower's highlighting to reinsurers that New Zealand is not Australia. Although we too have floods, they're typically alluvial and eluvial, and not on the scale of Australia's inland river flooding where there are huge catchment areas."So what we're saying to reinsurers is 'please don't join us together and say you're the same. We're quite different and the nature of those storm events are quite different.' I think also in the case of Tower what reinsurers do like is things like risk-based pricing because we are working with customers and communities to really understand it, and to help mitigate it, and to also price appropriately for it."Turnbull also spoke about the Government's draft national adaptation plan, which is currently open for consultation. When the draft plan was released in April, Climate Change Minister James Shaw said it was designed to help communities across New Zealand "adapt to the unavoidable impacts of climate change." The draft plan includes discussion of managed retreat, or moving people, property and infrastructure away from areas at high risk."We don't have uninsurable pockets at the moment, but if we look forward and these trends continue, that is a risk. So plans like the national adaptation plan, those discussions, the Natural Hazards Bill that's going through [parliament], that's really, really important to now start informing ourselves and responding," Turnbull said.In the podcast he also talks about wanting councils to stop issuing consents that enable building in flood prone areas, on top of "a lot of newer subdivisions that are [already] in areas prone to flooding and that is causing problems."He also talks about the impact of climate change on businesses and rural areas, what Tower's data tells it about the frequency and severity of major weather events, Westport and Buller's efforts to improve flood resilience, the recent floods in Canterbury and Kumeu, the UK's reinsurance scheme Flood Re, and much more."Today we don't have uninsurable areas but we want to make sure we don't have them in the future and that's the reason we must take action," Turnbull said. "The key thing about the national adaptation plan is we're round the table talking about it."The final version of the adaptation plan is scheduled to be published in August, with a Climate Adaptation Act set to follow.

The Government's push to develop a national supply chain strategy doesn't make much sense because supply chains need to be matched to specific products, says a leading supply chain academic.Tava Olsen, Professor of Operations and Supply Chain Management and Director of the Centre for Supply Chain Management at the University of Auckland Business School, spoke to interest.co.nz for the latest episode of our Of Interest Podcast.Earlier this year the Ministry of Transport issued the New Zealand freight and supply chain issues paper.In the wake of global supply chain disruption caused by the Covid-19 pandemic. Transport Minister Michael Wood said the Government was "taking action to future proof our supply chain, limiting the impact of the next global shock on our businesses across the country."Olsen said while the paper does an excellent job of outlining the background and all the issues, she's not convinced a national supply chain strategy is a good idea."I don't think a national supply chain strategy makes much sense. A freight strategy maybe, quite possibly. But in our very first class on supply chain what we teach is that you don't have one supply chain strategy. You have to match your supply chain strategy to the type of product.""So Fisher & Paykel Healthcare exporting their high tech, light masks, are going to need a completely different supply chain than Fonterra exporting their low value, heavy milk powder bags. Those are two fundamentally different supply chain types. And if you look at what you're going to emphasize, you're going to emphasize responsiveness for Fisher & Paykel Healthcare, and you're going to emphasize minimising cost for the Fonterra milk powder," Olsen said."The other issue I have with their proposed strategy is they don't seem to recognise that. So they want productivity or efficiency, and they want responsiveness or resilience. Yes, we want both of those but where's that trade off? Which one do we want to emphasize? Well, it depends on what product we're actually thinking about. So I think coming up with a country strategy for supply chain, it doesn't make a whole lot of sense.""Coming up with a country strategy for freight, thinking about the modes we want to use, and whether we want to subsidise rail more, or roads more, or coastal shipping more, that makes a lot of sense. So yes, we should be thinking a lot more in terms of our strategic planning for our country's freight network," said Olsen.The Ministry of Transport says it received more than 70 submissions on the issues paper. Some will be published, along with a summary document, by the end of July.In the podcast Olsen also argues NZ should "absolutely be looking at" developing a system for compulsory stocks of critical supplies such as fuel, medical supplies and key foods that are brought in from overseas. Additionally she talks about whether the "just in time" model has a future, the concept of a national shipping line, how local government ownership prevents a shift to a hub and spoke model for NZ export and import ports, coastal shipping, automation and robot deliveries, supply chains and climate change, the tyranny of distance, and the need for NZ businesses to upskill their supply chain knowledge and her desire for more investment in research and development.

Whilst the Reserve Bank views the Official Cash Rate (OCR) at its current level of 2% as neutral in that it's neither stimulating nor constraining economic activity, the steep rise in mortgage interest rates over the past year means they are well past a neutral level and are unlikely to rise much further, mortgage broker John Bolton says.Bolton, founder and executive director of mortgage broker Squirrel Mortgages, spoke to interest.co.nz for the latest episode of the Of Interest Podcast.While the average bank two-year fixed mortgage rate, typically the most popular term with New Zealand borrowers, bottomed out at about 2.51% in mid-2021, it's now at 5.4%. This type of move leads to big repayment increases, or mortgage shock, for borrowers when they refix their mortgages. But Bolton says after the sharp rise in mortgage rates, he believes they are starting to peak."I don't think they're going much higher. We are going to go into a recession, and I think even in the last week or so you've started to see the swap [rate] market come off a little bit. I think the economy's going to come off quite hard and fast, and you're going to see those longer term swap rates [which influence bank mortgage rate pricing] come back a bit," says Bolton."We talk about the OCR being neutral at 2% but we are not neutral, we are way past neutral at the moment. Because the Reserve Bank has talked it up so hard that mortgage rates are already pretty much pricing in every [future] OCR increase. We've tightened incredibly fast. So it's not surprising that has flowed through to the housing market. I mean we shouldn't be surprised."The Reserve Bank is forecasting the OCR will peak at about 4% by mid-2023.It started increasing the OCR from its record low of 0.25% as recently as October last year."The OCR's going to go up but it's already fully priced into mortgage rates, so I think mortgage rates are going to start to stabilise quite quickly. We get this panic that runs through our market and everyone's like '[mortgage] rates could get to 8% or 9%'...Clearly no one could afford that. So I think that panic will start to dissipate when people start to see that interest rates are stabilising, they're not nearly moving as quickly as they have been. And that people just settle into the fact that, 'ok I've got to plan a future that says that mortgage rates are going to be hovering around 5% to 6%.' That's not the end of the world for most people and most people can adjust to that. So that will just gradually work its way through and people will get used to it," Bolton says."We're not seeing a lot of [mortgage] distress, I think we're starting to see a little bit. But the distress that we're seeing is probably people that just need to adjust their living expenses. Every generation goes through this."He does, however, see higher mortgage rates having a broad impact on the economy by reducing the discretionary spending of mortgage holders."The thing that I find with the higher mortgage rates is it's going to translate into the real economy really fast because about 60% to 70% of the housing market is fixed on terms of less than a year. So you're going to get a really rapid reduction in discretionary income. When you reduce discretionary income, you're taking it out of hospitality, takeaways, retail, domestic tourism. So we're talking about a whole lot of industries that have been through two years of pain already that are now losing their customer base really, really fast. People just aren't going to be eating out as much, they're not going to be taking those domestic holidays...There's an increasing part of the population that's thinking 'I've got to hunker down for a while'," Bolton says.In terms of house prices, Bolton estimates they are down between 10% and 15% from last year's peak already. "The media's going to be reporting that [falling house prices ] for at least another six to 12 months. I think most of the absolute change is already there in the market, [but] it's going to take a while to work its way through in the statistics," says Bolton."They [prices] are down 10% to 15% in absolute terms, I don't see them going much further. I think it will stabilise around that level. I think there will be vendors that just take their properties off the market, and there's not a lot of supply out there."Parts of the market, where there's still a supply-demand imbalance, are still holding up quite well, Bolton says, adding that the house price fall isn't as big a drop as seen in the prices of other assets."The S&P 500's down over 20% this year, the Nasdaq's down 30%, crypto's down 60%. The everything bubble's popping, [and] property has probably done comparatively well. Where else do you put your money?"In the podcast Bolton also talks about bank behaviour, cashbacks being offered to borrowers, the opportunity for non-bank lenders, the impact of December's changes to the Credit Contracts and Consumer Finance Act, comments from Reserve Bank Chief Eco

By Gareth VaughanClimate Change Commission Chairman Rod Carr says he's optimistic about New Zealand's transition towards a zero carbon future despite the massive challenges we face, including from inflation.Carr spoke to interest.co.nz in an episode of the Of Interest Podcast.In the podcast he discusses the impact on inflation from moves to combat climate change, and from climate change itself, and what can be done to mitigate it. This includes so-called "fossilflation," "greenflation," and "climateflation."In a world that now has high consumer price inflation I ask Carr whether he's concerned this may slowdown efforts to combat climate change. For example, by reducing petrol excise duty and road user charges to give consumers some relief from high petrol prices while we are trying to wean ourselves off fossil fuels, does the Government risk countering measures such as clean car rebates and cash for clunkers to encourage the take-up of electric vehicles?We also discuss the big global electrification push and what this is doing to demand for key mined metals and minerals required in the green transition such as copper, lithium and cobalt.Then there's the rising number of severe weather events, and the impact this has on food product, supply and prices. "I would not underestimate the challenge that humanity faces in decarbonising our livelihoods and lifestyles. The fossil fuel technology that has been developed and deployed largely since the middle of the 19th century is incredibly powerful as a source of energy. And we have embedded that in our civilisation, in the way we earn our livings, and how we live our lives. And that transition is going to be costly. And that transition needs to be done with urgency. And the consequence is that relative prices will change. The price of high emission lifestyles will rise, and the vulnerability of high emission livelihoods will increase," Carr says."The major cause of the consumer price inflation we see today is not climate change or our response to it. The amount of pricing of carbon emissions in the global economy is modest and has only risen slightly over the last decade. The real challenge is that in our response first to the global financial crisis in 2008, and then more recently to the pandemic in 2020, the world's central banks, supported by the world's governments, have created an enormous amount of very low cost credit. And it is that abundance of low cost credit that has put pressure on the demand side of consumer pricing, while the pandemic itself has constrained supply. And that has been compounded in some product supplies, particularly in agriculture products, by the war in Ukraine. So don't over interpret climate as the driver of the current decades high levels of consumer price inflation."Carr is also a former Chairman, Deputy Governor and Acting Governor of the Reserve Bank. So what does all this mean for fiscal policy, or the Government using spending and tax policies to influence the economy, and the Reserve Bank's efforts to use monetary policy to maintain price stability and support maximum sustainable employment?Carr says he remains optimistic about the transition to a zero carbon future because there are "very real opportunities" for NZ in this transition. NZ farmers, he says, must face the challenge of showing and leading the world how to create protein and carbohydrates with year-on-year reductions in environmental impact."And that if we can understand those opportunities that make for a better, cleaner, greener and healthier society for all New Zealanders by 2050, where we reduce gross emissions from how we earn our livings and how we live our lives, we will see that as an opportunity not a threat. We will see fiscal policy as an investment not a cost, we will see the new jobs that are created as being more sustainable and less vulnerable than the old tasks which we are no longer fulfilling," says Carr."And I think that's what the optimism comes from, is from the opportunity that is real. New Zealand is not soldiering alone on this campaign. The world recognises the challenge. Other countries are already seeing and seizing the opportunities. We see it in the way in which the UK has developed offshore wind which it now sells to the world, we see it in Norway that has developed some of the most advanced infrastructure for supporting electrification which it now sells to the world, we see it in China in its advances in the solar panel technology where it is now the world's largest global manufacturer of solar arrays. So there are opportunities here to be not as I said at the bleeding edge, but now that the die is cast , seeing and seizing the opportunities that must be developed to create the more sustainable, low emissions future within the next 30 years."

By Gareth VaughanBy late 2020 it was clear central bank and government monetary policy and fiscal policy responses to the Covid-19 pandemic had prevented a major economic downturn, and thus the Reserve Bank should've been looking to move monetary policy to a neutral rather than super easy setting, says Grant Spencer.Spencer, Adjunct Professor at Victoria University's School of Economics and Finance, is also a former Reserve Bank Deputy Governor, and was Acting Governor for six months up to his departure from the central bank in March 2018.Spencer spoke to interest.co.nz about inflation in the second episode of the Of Interest Podcast, where we delve into big issues and new developments in the economic and financial worlds.New Zealand's March quarter Consumers Price Index (CPI) inflation came in at 6.9%, the highest it has been since 1990, and well above the Reserve Bank's 1% to 3% target range. CPI inflation is even higher in other parts of the world, reaching 9% in the United Kingdom, 8.6% in the United States, 8.1% in the Eurozone, and Australia's last reading of 5.1% is expected to rise.Inflation, Spencer says, is always driven by persistent excess demand."And in this situation over the past two-and-a-half years we've had persistent excess demand resulting from an adverse supply shock and expansionary demand policies, in particular monetary policy and fiscal policy."By about September-October 2020 Spencer says it was apparent the emergency Reserve Bank and government policies had been successful in preventing the high unemployment and "drastic economic downturn" people had feared was coming in early 2020."I think it was around September-October 2020 when bond rates, interest rates, that had been falling, started to move up again. And that was in response to emerging economic indicators both here and internationally, which were saying the out-turn for real activity in the global economy is not going to be as bad as we thought, unemployment's not going to be as bad as we thought. "After that Spencer says the Reserve Bank should've been thinking about moving the Official Cash Rate (OCR) back gradually towards a more neutral position rather than waiting until October 2021 to increase the OCR from its record low of 0.25%, where it had been reduced to in March 2020."Different countries had different sets of indicators. But I think that shape of the trend in bond rates was generalised across the major markets, it wasn't just New Zealand. So that's when the information started to turn," Spencer says."The key is the interpretation of that so-called inflation, price increases. Is this a temporary shock, supply side blip, or is it something that policy should respond to with a generalised firming of policy? And that's always the nature of the discussion. And it's very easy to be biased in one direction and just sit pat until you've got a convincing case that overall core inflation, or underlying inflation, is moving therefore we need to move.""It's difficult for policymakers to turn policy because as soon as you turn policy the markets will expect that you're going to continue to tighten. And the whole shape of the interest rate curve will change and you can have a significant effect on things just by that decision to start to make one increase rather than being on an easing mode," says Spencer."That's why they're nervous about shifting from an easing to tightening cycle until they can see the whites of the eyes of inflation. But that's also the challenge, because as it has turned out they really should've been tightening earlier."He says the Reserve Bank should've started shifting the OCR back towards a neutral setting sooner than October last year, but won't give a specific time when he thinks this should've started."They should've been moving back to neutral. The default should be seen as neutral, not as super easy," Spencer says.The neutral OCR rate is the level where it's deemed to be neither stimulating nor constraining economic activity. The Reserve Bank currently considers the neutral rate to be about 2%. That's where it's now at, after a 50 basis points increase on May 25. It was at 0.25% as recently as October last year. Spencer says the neutral OCR may be higher than 2%.The record low OCR wasn't the only aspect to easy monetary policy. Between March 2020 and July 2021 the Reserve Bank bought $53.5 billion worth of NZ government bonds and local government bonds on the secondary market off banks in its first foray into quantitative easing. This was aimed at suppressing interest rates."You know if you've got super easy policy you should be moving back towards neutral if you think that things are starting to change, and you shouldn't be just focused on one of the dual mandate objectives," Spencer says.The Reserve Bank's monetary policy remit states that it must both maintain price stability and support maximum sustainable employment.In the podcast Spencer also talks in detail about what is causing the high i

Of Interest: In this episode Gareth Vaughan discusses the progress the New Zealand central bank is making on its digital currency development with Ian Woolford.The Reserve Bank of New Zealand (RBNZ) considering launching a central bank digital currency (CBDC) is in part a defensive move to protect it and NZ's monetary sovereignty, says RBNZ Director of Money and Cash Ian Woolford.The RBNZ is one of dozens of central banks around the world considering introducing a CBDC. A few, including those of The Bahamas and Nigeria, have already done so.A CBDC is the digital form of a country’s fiat currency. That means an RBNZ issued CBDC, like the physical NZ dollar, would be a liability of the RBNZ, backed essentially by trust in the Government and its institutions. By law the RBNZ is the sole supplier of NZ banknotes and coins, with this being a key raison d'être for the central bank.Although most financial transactions are already done electronically, Woolford points out these are done using digital forms of private money."Most people use private money in the form of their bank accounts with registered banks in New Zealand. I guess the main point of difference is you are effectively taking a credit risk with your bank, so your claim is on the bank. Whereas with a central bank digital currency your claim would effectively be on the Government, which typically and is the case in New Zealand, has a higher credit rating than private institutions," Woolford says.He says the RBNZ hasn't yet made a formal decision on whether it will launch a CBDC or not, and it's likely to be years not months before it does. Nonetheless he says the RBNZ considers that a CBDC "will make sense."In a world of cryptocurrencies, stablecoins and big technology companies such as Apple, Facebook and Google pushing into payments and financial services, Woolford acknowledges there's a defensive aspect to the RBNZ looking to launch a CBDC."Yes, I think that it's fair to say that to a degree this is a defensive play," Woolford says."I don't want to come across as too defensive, but I think it's hard to argue otherwise if you are interested in protecting monetary sovereignty, and that threat [to it] could come from private forms of digital currency [or] big tech firms.""Monetary sovereignty matters in that it enables us to operate monetary policy, to set interest rates that reflect the state of the New Zealand economy," says Woolford."If you don't have monetary sovereignty you end up usually, and you've seen this in a number of countries around the world, being dollarised. So the citizens lose confidence in their own currency...Dollarised typically refers to the US dollar, so they lose control of domestic monetary policy.""It's really important first and foremost that New Zealand retains monetary sovereignty. Monetary sovereignty can be undermined or threatened through a number of channels. One channel, for example, could be the advent of cryptocurrencies or stablecoins. People choosing not to transact in the New Zealand dollar whether it's a private form of digital currency like a stablecoin, or whether it is using another country's central bank digital currency. So effectively you'd be dollarised," Woolford says."Dollarised" refers to when a country begins to recognize the US dollar, which is viewed as the world's reserve currency, as a medium of exchange or legal tender alongside or in place of its domestic currency.In the podcast Woolford talks in detail about the RBNZ's work on a CBDC, including what introducing one would mean for cash and privacy. Among other things, Woolford also talks about how the RBNZ believes a CBDC could bolster competition and innovation in the NZ financial system, and the potential for a CBDC to reduce or eliminate the role of banks.

Dipping our toes into the world of podcasting, we look at whether it would be possible and/or desirable to engineer a housing market correction.That means a deliberate move by the government, with the cooperation of the Reserve Bank, local government and banks, to push house prices down.Such a move would require a government prepared to see house prices fall by a significant amount.We look at why homeownership is desirable, whether it would be possible to engineer a housing market correction, whether it would be desirable to do so, whether a housing market correction could be controlled, and whether homeowners who would be hardest hit by a correction could be compensated.