How’s the weather?

The tenth most visited NZ site in July with over 500,000 unique browsers…

metservice.co.nz

Yup, that about sums it up doesn’t it!

Trade Me still dominates, with 2.8 million unique browsers and over 1 billion page impressions.  That’s 64% of all recorded domestic page views!  And they’re still hiring.

Meanwhile, according to latest figures there are now 1.5 million internet “subscribers” in New Zealand.  Of these 59% are broadband users (I’m not sure what definition of broadband is used here, but we’ll take it as meaning not-dial-up).  

So, while that has improved a lot in the last year (see my previous post: Broadband usage still under 50% from March 2007), that’s still a lot of dial-up users out there.

I wonder if iPhone users are counted as subscribers yet?

Usage stats from Neilsen Online, subscriber numbers from Statistics New Zealand via NZ Herald

Online Retail

The NZ Herald ran an article this week about the The Warehouse’s new online site (I would include a link to the site, but it’s not actually live yet).

I was interested in the list of online retailers that was included at the bottom:

All four are traditional retailers.  While all four sites are okay, none of them really feel like online natives – for reasons I can’t explain all include banner like advertising (promoting their own sales and the like), and all prominently include a “Locate a store” feature.

I doubt that online sales are contribute significantly to the bottom line of any of them (if I’m wrong about that I’m happy to be corrected).

If you didn’t click the link, here are some quotes from retail analyst Tim Morris, of Coriolis Research from the article:

“Internet retailing in New Zealand is behind where it is in other countries, and that’s got nothing to do, I think, with the innate willingness of New Zealanders to buy things online. I think where it falls over is in the execution.”

“There’s really not a lot of good models in New Zealand for New Zealand-based companies doing everything right, especially as you get closer and closer to moving real things, not just nominal things like airline tickets.”

He’s right about Air New Zealand.  They kick ass, with a top-ten site.  While none of the four sites listed above are listed in Neilsen’s ratings.

But what about the pure online retailers?  We have them in NZ too, right?

I’m much more likely to buy from Ascent (Computer hardware and software), Fishpond (Books, DVDs and Music) or Mr. Vintage (T-shirts etc) than any of those stores listed above,

My guess is that there are some really successful small/medium business selling new stuff online, not the least because they don’t have to pay high street rents, but the reporter from the Herald probably hasn’t heard of any of them.

So, let’s make a list.  Where do you love shopping for new goods online?  I’m looking for New Zealand based retailers only.  Add your suggestions in the comments below or flick me an email and if I get enough responses I’ll publish a list of the best ones in a future post (if you post about your own business I’d appreciate it if you could identify yourself as the owner etc).

Disclaimer: I am indirectly a shareholder in Fishpond.

Working for families?

This is the second post in a two part series about the tax changes announced in the budget last week. Part one is Tax matters?.

In all of this talk of tax nobody seems to be saying much about what our tax dollars are actually spent on.

David Slack’s post last Thursday reminded me of an idea that Jimmy Wales (founder of Wikipedia) put forward a while back for a transparent budget.

When people struggle to keep on top of how much they personally earn and spend, then it’s probably also true to say that they really have no idea how much tax they pay, or (more importantly) what it is spent on.

Imagine if we were each sent a statement at the end of the year which included the total amount of tax we had paid and a breakdown of how this had been allocated to the various things that the government decided should be funded using this money.

Now that so many more of us are beneficiaries, via Working For Families, Kiwisaver, Student Loan Interest Write-Offs etc, then those “credit” payments could be incorporated into the statement too.

I suspect people would think differently about our “free” health and education systems, for example, if they better understood how much of their money was spent on it each year.

How much tax did you pay last year?

And what was it spent on?

Don’t you think you should know?

Tax matters?

This is the first post in a two part series about the tax changes announced in the budget last week. Part two is Working for families?

“New Zealanders expect far too much from the tax system. It now seems unfashionable to regard the tax system as simply being the Government’s primary means of collecting revenue to run the country. People expect it to also resolve poverty, reduce income inequalities, compensate for surging food and petrol prices and incentivise savings.”
— John Shewan, Chairman of PricewaterhouseCoopers, commenting on this weeks budget.

Who would want to be a Minister of Finance?

Can you wait until the election campaign, and the “my tax cut is bigger than yours!” smack down contest, starts? Or will it be the “my propensity to cut spending is bigger than yours!” content now?

Now the team in the red corner has announced their package, how many more blocks of cheese can you afford? That seems the be the question.

And, how many blocks are you expecting the blue corner to offer?

Have you factored in the cost of petrol?

A litre of 91 unleaded now costs NZ$2.00, which is about US$1.56 at current exchange rates. Let’s hope that the dollar doesn’t drop back to 62c anytime soon (like it did at the peak of the last economic cycle), as even assuming the price of oil stays the same as it is now (which seems unlikely) that would mean we’d be paying closer to $3.00 a litre. Suddenly cars are a luxury item!

There is no point, surely, in having the cash for an extra block of cheese when you can’t afford to drive to the supermarket to pick it up.

Do we pay too much tax? Compared to what?

Does the amount of tax we pay make us all less productive?

I don’t know, but I suspect there is an argument to say that lower tax rates just mean that those who are motivated to be successful either way get to keep more of the money they earn.

Although it does create the right incentives for government to keep their spending under control (just like an over-funded start up business, they don’t seem to struggle to find ways to spend the money they have). More about this tomorrow.

Like John Shewan explains above, I think we’re all expecting too much from “the system”.

Is it up to the government to make us feel rich?

Or is it more about the number on the top line of our pay slips (i.e. the bit we influence)?

Here is a interesting comment about the changes to the business tax system which were introduced earlier this year:

“Businesses need to ask themselves two basic questions. Will a bit of tax relief for export marketing and R&D be worth the bureaucratic trouble to get it? And is your failure to export or do R&D simply a matter of being short of a few dollars? Or is it a fundamental failure of ambition, management skills and strategy?”

— Rod Oram, in Dominion Post (sorry, the link I have no longer works: http://stuff.co.nz/4042265a1865.html)

I think the same questions could be asked of individual tax payers too.

What do you think?

What will you do with your tax cuts?

Will they make you work harder? Or bugger off to Australia?

Does a few dollars a week change your vote in either direction?

Or, are there other things that are more important?

Bernard, on stuff and things

When I first started to read the business pages in the Dominion the editor was Bernard Hickey.

(As an aside, I’m often surprised by how people who read the business pages assume that everybody else does too. Anecdotally, that just isn’t the case. But, I wonder if there are any hard numbers to prove or disprove this?)

Later I briefly crossed paths with him during my time at Trade Me. He was then Head of Digital at Fairfax Media and was part of our advisory board.

He now works as the Managing Editor at interest.co.nz and seems to be popping up as a commentator all over the place (good PR for the site, I suppose).

He also still runs a blog that I enjoy on stuff.co.nz:

www.stuff.co.nz/blogs/showmethemoney

Lately the business and finance news has thrown up a number of great topics for him to get stuck into. Here are a few that have caught my eye over the last couple of months…

On why a capital gains tax is unlikely:

“Why wasn’t there more of a debate about the issues behind the serious [housing affordability] proposals?

My theory is that the New Zealanders who run the place haven’t really confronted and don’t want to confront the ugly truth. I’m talking about the generations who graduated in the 1970s and 1980s and who now run both central and local goverments, who run the media and who generally set the parameters in a national debate.

These are the generations who graduated without student loans into good jobs when a home loan cost less than 40% of after-tax pay to service. They bought houses before 2003 and are now sitting on massive capital gains. Many have become semi-professional landlords with fancy Loss Attributing Qualifying Companies that allow them to offset operational losses on their rental properties against their salaries to reduce their tax bills. They have become addicted to the tax free capital gains on these properties. They’ve started consuming some of those gains in the form of holidays, electronics, cars and boats financed through their mortgages.”

Helen’s lucky and selfish generation

On the meltdown on Wall St. and it’s implications for NZ:

“Put simply, panic and fear rule in the world’s financial capitals right now and it will cost us all in one way or another and sooner or later.

In previous periods any panic on financial markets affected us most directly through our stock market. When Wall St fell, that hit the New Zealand stock market. Back in 1986 we had a lot of money invested in stocks, proportionate to our total net worth. Reserve Bank figures showed that 50% of household net wealth was in financial assets in 1986, mostly in shares. The other 50% was in the value of our houses. So when Wall St sneezed we caught a cold fast.

The direct link is much more muted now. The most recent Reserve Bank figures show financial assets, again mostly shares, made up NZ$186 billion or just 31% of household net worth in 2006, whereas housing (minus housing debt) makes up $407 billion or 69% of household net worth. But that housing debt is now much more important than it used to be. Whereas in 1986 we had $65 billion worth of financial assets, we had over $150 billion of housing debt at the end of 2006.

What does that all mean? It means we care more now about interest rates and how they affect house prices than we do about share prices. But this global financial crisis is affecting both of these things too. It’s just not as direct and immediate as in previous crises. This global credit crunch has increased interest rates globally and that’s how this financial crisis is hitting us this time.”

What panic on Wall St means for us

On Fonterra’s decision to suspect their plans to float part of the company:

“This decision shows that the most important single group of investors in New Zealand (the 11,000 farmers who own Fonterra) don’t have faith in the managers of Fonterra, don’t believe in our capital markets and don’t have the ambition to become a truly global company.

Just like so many investment decisions made by our mostly elderly investing classes, they are so obsessed with property valuations and their own searing experience of the 1987 stockmarket crash that they can’t bring themselves to take any risk associated with the equity markets and the professional managerial classes. Instead they are more than happy to take enormous risks with debt-fund investments in property they can walk on. It shows a lack of imagination and, frankly, intelligence.”

NZ investors addicted to medioricity

On the prospects for property prices:

“The property-owning generation who do know the famous line from Dad’s Army have been reciting it to each other and their real estate agent friends for a few months now.

“Don’t panic Captain Mainwaring (yes the spelling’s right, although it is pronounced Mannering),” they’ve been saying about the threat of falling house prices. It will never happen here, they say. We have never had big falls in prices before and it won’t happen this time, they say. We’ll have a period of relative stability and then we’ll be back up, up and away on our merry way. Sit tight, they say.

But they are wrong. The latest batch of statistics say they are wrong and any rational examination of housing affordability in this country shows they are wrong. Prices here are currently at least 30 per cent over-valued and it’s now a question of how much and how fast they fall rather than if they will fall.”

Don’t panic Captain Mainwaring, don’t panic

Our Information State Highway

We have some friends from the UK staying with us at the moment, so I’m in the habit of making excuses for our infrastructure.

To anybody who has driven on the motorways overseas what we call “State Highway 1” is a bit of a joke.

Seriously … one winding lane each way with no median barrier?

And where are all of the cars?

Likewise, what we call broadband really isn’t.

The international speakers who were here for Webstock last week were too polite to complain about it in front of us, but you can tell what they really thought by reading their twitters.

How embarrassing.

Full credit to Jeremy Wells from one of his ‘Unauthorised History of New Zealand’ episodes for the title of this post.