PGF provides $800,000 for new Rural borrowing cost questioned Greymouth harbour dredge
THE Government has stumped up a further $800,000 from the provincial growth fund (PGF) for the Greymouth port, this time for a whole new dredge.
It follows a $750,000 grant from the PGF last year for the urgent dredging of the fishing harbour, which had silted up.
The Grey District Council will chip in $200,000 towards the cost of the new dredge, which will be constructed locally by Dispatch and Garlick.
Parliamentary Undersecretary for Regional Economic Development Fletcher Tabuteau said yesterday the dredge would ensure the regional fishing fleet had a reliable and productive harbour.
‘‘Last year the movements of vessels in the lagoon were restricted to high tide as water levels were reduced to less than a metre in places whereby fishing boats need a depth of 3m4m at low tide to move freely,’’ Mr Tabuteau said.
‘‘The current state of the harbour threatens the viability of the high quantity of fishing fleet, which can total up to 70 boats during peaking fishing seasons, and also the local processing plants that rely on a regular supply of fish.’’
Without an affordable and permanent solution, the port would have to rent an expensive dredge, the minister said.
Some parts of the lagoon would remain undredged, leading to the risk that commercial fishing vessels ceased to operate out of Greymouth.
Grey Mayor Tony Kokshoorn welcomed the announcement as a breakthrough.
‘‘I can’t praise the PGF enough for coming to the party. Otherwise we would have been in deep trouble.’’
The council’s $200,000 share would be loan funded, and would go to a special council meeting next week.
Without this the council would have been forced to bring back the Westport dredge in seven years’ time, at a cost of $1.3 million.
Mr Kokshoorn hoped the new dredge would be ready in about six months.
West CoastTasman MP Damien O’Connor said the Greymouth port was crucial infrastructure for future opportunities.
‘‘Government has been funding and supporting cooperation between the two ports [Greymouth and Westport] on the West Coast — which are vital to the local economy.
‘‘The reality of Greymouth port, though, is that it does require a tailormade solution, so I very much welcome this investment.’’
The council will buy a longreach digger on a pontoon, with a separate selfpropelled bottom dumper barge.
‘‘As there are none on the market, it will be custommade at the foundry in Greymouth.
It will replace the current dredge, nicknamed by the fishing industry as ‘‘the lemon’’, which the council bought secondhand from Tasmania but now admits is inadequate for the job. — Greymouth Star WELLINGTON: Reserve Bank governor Adrian Orr says rural borrowers are facing higher lending costs, despite interest rate cuts over the past year, and that the regulator is gauging whether banks are bolstering their balance sheets in advance of tougher capital requirements.
After a decade or so of aggressive lending to households and the dairy sector, the banks have spent the past year ‘‘revisiting this wisdom’’ at a time when the official cash rate was cut to a record low 1%, Mr Orr said.
‘‘Over the last 12 months or so, as we have been working with all stakeholders on our capital proposals, we have reduced the OCR by more than the banks’ estimated costs of the higher capital requirements. Yet, for some sectors of the economy, such as agriculture, their borrowing costs have risen. This can only happen if banks are significantly raising their margins,’’ he said.
Mr Orr said that was not a sign of longterm thinking or competitive banking. He called it ‘‘procyclical, fairweather, behaviour’’ that leads to misallocated capital, booms and busts and a greater impact on society at large.
‘‘We are monitoring this behaviour to assess the degree of any ‘frontloading’ of our capital proposals, and I encourage all customers to question their banks on issues of competition,’’ he said. The central bank has proposed licensed lenders hold a higher degree of capital on their books as a means of reducing the risk and impact of a bank failure, while also sharpening up banks’ focus on longterm customers by having more skin in the game.
Mr Orr told a business audience in Auckland that the Reserve Bank would make its final decision in early December — previously the central bank has said November — but said the outcome would mean banks have to hold more capital of a higher quality, and any transition would be at a ‘‘sensible pace’’.
The big four Australianowned banks have pushed back against the proposals, which would set a tier 1 capital requirement equal to 16% of riskweighted assets for them and 15% for all other lenders. The current requirement is for a 6% minimum plus a 2.5% buffer, although the banks’ current equity averages about 12%.
Mr Orr also spoke on monetary policy after the monetary policy committee held the OCR steady at 1% on Wednesday.
He said the 50 basis point cut in August was having the desired impact, as the lending rates for many businesses and consumers had fallen and the exchange rate has eased.
Central banks around the world are grappling with the lowinflation environment, which is leading to a lower neutral interest rate than in the past.
‘‘The good news for New Zealand, unlike many other OECD economies, is that our government’s books are in good shape, with room to expand investment, and there is already a strong fiscal impulse under way from public spending and investment,’’ he said.
‘‘The same can be said for corporate balance sheets in New Zealand. With relatively low levels of debt, and strong demand for goods and services, our businesses are well placed to perform.’’
He said the Reserve Bank was thinking about unconventional monetary policy tools, such as negative interest rates, but it was unlikely to use them. — BusinessDesk