Belfast Telegraph

Kiwis brought to account in spite of rugby dreams

By Peter Bills

It is probably a good thing that New Zealand are overwhelming favourites - in reality virtual certainties - to win the Rugby World Cup this weekend.

For it seems increasingly likely that this land of four million people is going to need every bit of cheer and comfort it can glean to sustain it in what must be tough times ahead.

Forget rugby football for a moment - this country has some serious problems to confront. The New Zealand Government is said to be in debt to the tune of NZ$72bn - that's $17,500 for every New Zealander.

And, as in a lot of countries around the world, the debts keep rising due to interest charges. One-off events and incidents have also deepened the gloom.

The Christchurch earthquakes have been a disaster that will impact on every person living in this country. New Zealand is also confronting an overall loss of around NZ$50m for staging the Rugby World Cup.

Don't ask me how that works - you would have thought the host nation would be entitled to make a nice profit from all its hard work. But no. The International Rugby Board (IRB) cleans up, demanding a near-NZ$50m fee for hosting rights.

In Auckland, the mayor, Len Brown, is said to be considering a referendum on tolls and congestion charges to fund the NZ$2.4bn cost of an inner-city rail loop and other transport projects. There is said to be a NZ$10bn funding shortfall for those major transport projects.

The people of Auckland will be confronted with the sobering reality of their situation when the city's draft budget is revealed at the end of this month.

Then, in November, a general election will be held, with current Prime Minister John Key tipped to lead his centre-Right National Party to another term of office over their chief opponents, Labour.

But whoever wins that election faces some serious and highly intricate problems. Nor, it seems, can some tough, painful decisions be put off any longer.

Like a lot of Western world countries, New Zealand had become used to seeing the good times roll. But those days have long gone.

Warnings of profit downgrades for the coming months are emerging from several blue chip New Zealand companies - further signs that tough economic times lay ahead.

Until now, most commentators agree, New Zealand has escaped many of the worst ravages of the worldwide recession. But whether it can continue to do that indefinitely looks highly unlikely.

Even the Australian economy just across the Tasman Sea, buoyed by the country's wealth of minerals which are so in demand in China and India, is starting to hit stormy waters. New Zealand will inevitably follow down that path. The only question is: how bad will it get? One businessman told me: "New Zealand's quality of life has been raised to dangerously high levels of expectation, which ultimately will prove unsustainable.

"People are just going to have to accept that those good times have gone and a lower standard of living may be inevitable."

That must mean a drop in property values, especially at the top end of the market, where some prices have been raised to ludicrous levels. If that proves to be the case, those who have mortgaged themselves to the eyeballs may find an iceberg named 'negative equity' heaving into sight.

New Zealand are nailed-on certainties to win the World Cup this weekend and this rugby-mad nation will party long and hard.

But the party can't go on for that long. Reality will intrude soon enough.


From Belfast Telegraph