Category Archives: New Zealand

Aaron Hockly is Fund Manager of NZX-listed Vital Healthcare Property Trust

OPINION: On July 1, the new body replacing the District Health Boards (DHBs), Health New Zealand, will become one of the countrys largest property managers.

New Zealand has 83 public hospitals; a 2020 Ministry of Health report put the replacement value of the assets managed by the 20 DHBs at $24 billion.

The same report noted many main hospital campus buildings, some of which date back to World War II and even earlier, were at the end of their useful life.

READ MORE:* Health centres providing new investment opportunities * Maze-like, outdated IT systems at DHBs flagged in national reviews* Litany of flaws found in Christchurch hospital buildings

Also in 2020, the Heather Simpson-led report into the health and disability sector estimated that $14 billion would need to be spent on health infrastructure investment over the following decade. This figure did not include repairs, maintenance, and ICT (another area where outdated and inadequate systems are commonplace, as demonstrated by the 2021 ransomware attack on the Waikato District Health Board).

Two months ago, a report from the New Zealand Infrastructure Commission, Te Waihanga concluded the Simpson reports estimate, which was based on 2018 figures, was out of date. The review suggests the Crown will need to stump up some $20 billion over the next 10 years in order to address the current infrastructure deficit.

Years of under-investment in hospitals and other public health facilities across New Zealand mean that many are no longer fit for purpose, making it difficult to introduce the new models of care that Government intends, said Blake Lepper, GM Infrastructure Delivery at Te Waihanga.

Stuff

Vital Healthcare fund manager Aaron Hockly

This weeks Budget set aside $1.3 billion to fund priority health infrastructure projects over the next five years. That is on top of the $586 million allocated in last years Budget to just two projects: the redevelopment of Whangrei hospital and the construction of a new mental health unit at Canterburys Hillmorton.

Given the many calls on the health vote, from medicines to mental health, it is surely worth questioning whether large capital projects are best funded by the government, or whether there is a better way.

The government and its agencies have been bold in outlining the challenges faced by the healthcare sector, including the need to improve the quality of capital funding decisions, asset management and long-term investment outcomes.

Agree or disagree with it, the decision to replace 20 DHBs with two national agencies is a bold move. However, when it comes to managing healthcare infrastructure, governments approach has been to modify the status quo.

The Capital Investment Committee will continue to advise the Ministers of Health and Finance on the prioritisation and allocation of funding for capital investment and health infrastructure. Current committee members are extremely able and well-qualified for their role; however, the committee is established by the Minister of Health, can be terminated by the Minister of Health, and consists of such members as the Minister determines.

The Cabinet Paper setting out the proposed reforms asserted, somewhat optimistically, that the integration of hospitals into Health NZ will enable improved planning, supply chain, procurement and asset management and that a national service planning view should drive capital savings and a more robust consideration of the trade-offs between operational and capital investment.

That more robust consideration will not be brought about simply by structural change. It requires specialist expertise something the Simpson report recommended should be developed by the Health Investment Unit, which will become part of Health NZ.

That specialist expertise already exists in the New Zealand private sector.

The dual public-private system is well entrenched in New Zealand healthcare, but greater use could be made of private sector expertise to procuring, developing, owning and managing healthcare infrastructure.

A lack of access to staff and capital means DHBs have long relied heavily on the private sector to provide services such as diagnostic imaging and surgical procedures. That is widely accepted as a fact of life and as an economically effective way to provide better services to more patients and to meet urgent needs.

Surely it makes even more sense to involve specialists in non-core business activities like property ownership and management. Involving partners from the private sector in developing and maintaining property infrastructure would ensure a clear separation between capital management and operational management and improve the outcomes in both areas, benefiting healthcare professionals, patients and taxpayers.

Aaron Hockly is Fund Manager of NZX-listed Vital Healthcare Property Trust, a specialist landlord of healthcare real estate in New Zealand and Australia.

Originally posted here:

We need to spend billions replacing old hospitals - so who should pay? - Stuff

A MASSIVE 6.7 magnitude earthquake has struck near New Zealand and Australia sparking fears of a tsunami.

The terrifying shake happened in the Macquarie Island region in the southern Pacific Ocean.

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According to the United States Geological Survey the quake, which was revised from an initial magnitude of 7.3, had a depth of 6.21 miles.

The quake initially sparked tsunami fears but the U.S. Tsunami Warning System said there was no tsunami warning.

It comes as Wellington was also shaken over the weekend after a 4.7 earthquake hit.

The location of the quake was recorded as 15 miles west of Paraparaumu on the Kpiti Coast.

A tweet read: "A morning shake for some today with a M4.7 earthquake offshore of Paraparaumu. It was felt in the lower North Island and northern South Island".

An initial recording by Geonet put the quake at 4.2 and a depth of 17m.

Geonet has received more than 12,000 "felt" reports about the quake, NZ Herald reported.

Cops said there were no reports of any damage relating to the quake.

The two quakes follow another disaster in New Zeland that left only a few survivors.

Back in 2019, a catastrophic volcanic eruption left six people dead, including British tourists.

The hugeblast on White Island sent 12,000ft plume of smoke and rock into the air and left survivors with serious burns.

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Massive 6.7 magnitude earthquake hits near New Zealand and Australia prompting Tsunami fears... - The US Sun

Al Best will ride the "Zombie Tracker" for the first time in the Distinguished Gentleman's Ride. Photo / Michael Craig

When Al Best heads out on the Distinguished Gentleman's Ride (DGR) tomorrow he'll be alongside more than 900 bikers across Aotearoa New Zealand who have raised over $80,000 towards men's health this year. And he'll be riding a new motorbike built just for the occasion.

"The design concept is for a 'Zombie Apocalypse' vehicle," Best says.

"It's a metaphor to get people off the couch and put down their phones and enjoy life through motorcycling."

Dubbed the "Zombie Tracker", Best's motorbike is a custom build based on a Street Scrambler 900 donated by Triumph NZ for the DGR.

Best approached Triumph through his magazine Submachine with the concept to design and build the Zombie Tracker in time for tomorrow's ride.

"They loved the idea, supplied me with the Street Scrambler and left me to it."

The process has been a collaboration of ideas and skills, bringing people together to make it happen, Best says.

"A small community has formed around this motorcycle and my hope is that it draws attention to the DGR, which raises millions of dollars each year for men's health through the Movember Foundation."

A graphic and fine artist, Best is passionate about "art, cars, motorcycles and optimism", things that he describes as "The Community of the Cool". His passion turned into daily reality when he launched Submachine in the middle of the Covid-19 pandemic last year.

"I was advised against it but the response has been humbling. I have met so many talented people and their stories and feedback from readers have been amazing."

The Distinguished Gentleman's Ride was inspired by a photograph of uber-cool fictional character Don Draper from the TV series Mad Men. Sydneysider Mark Hawwa saw Draper sitting on a 1957 Matchless bike, "wearing his finest suit", and the themed rally connecting motorcycle enthusiasts around the world while raising money "to support the men in our lives" was born.

A decade later, the DGR boasts it has raised more than $50 million with 340,000 riders taking part in 115 countries around the world.

Covid has, of course, marred the picture after the peak of 116,000 riders from 678 cities raised $9.5m in 2019. The 2020 ride was a solo and virtual affair, but last year 65,000 riders took part in limited number events and nearly $6.5m was raised for men's health charities.

For Best, taking part in and supporting events like the DGR is a metaphysical experience.

"Submachine relates to humans being part of the machine. We're all machines, if you like, but without us, the machines don't do anything. They're just inanimate objects.

"Events like the DGR have been good for men of a certain age to reconnect after dedicating their lives to work and raising families. It's good for their mental health.

"The positive mental health benefits seen in the motorcycle community are well documented but I hope to inspire people to seek out creativity where they can. It could be life drawing, basket weaving or a welding course.

"These things are good for the soul."

Check out more on the Distinguished Gentleman's Ride https://www.gentlemansride.com/ and see how Al Best put the Zombie Tracker together at https://www.facebook.com/submachinemagazine

Excerpt from:

Easy ride to mental health - New Zealand News - New Zealand Herald

The country has begun to feel the early impacts of MetServices predicted winter blast, expected to hit west of the South Island, Northland and eastern Bay of Plenty.

MetService meteorologist Ashlee Parkes said the west coast and South Island were expected to be hit hardest, heavy rainfall had already been felt in Fiordland as one station measured 146.5mm in the last 24 hours.

Milford Sound airport has seen 93mm of rainfall in the same timespan.

GEORGE EMPSON/Supplied

George Empson took this shot early Thursday in the Mackenzie Country.

There was also a high risk of thunderstorms in Westland and Fiordland on Thursday, with 912 lightning strikes being recorded in concentrated areas of both regions in two hours alone.

READ MORE:* Weather watches for Canterbury High Country* Weather warnings in place for Southland * Winter blast: MetService forecasts 'dangerous' waves, severe gales, rain and snow

Ricky Wilson/Stuff

MetService meteorologist Ashlee Parkes said the west coast and South Island were expected to be hit hardest.

Other South Island regions were also feeling the rainfall on Thursday morning, with Haast Pass having 47.2mm of rain and Franz Joseph seeing 35.4mm.

Parkes said the numbers were likely to increase as the day continues.

Heavy rain warnings were issued by MetService on Wednesday for the eastern Bay of Plenty, Northland and the western South Island.

The eastern Bay of Plenty past ptiki was expected to accumulate between 70 and 100mm of rainfall until 8pm on Thursday.

Canterbury high country was on strong wind watch, as were regions surrounding Otago, Wellington, Marlborough Sounds and Wairarapa.

Meanwhile, the Crown Range Road and State Highway 94, Milford Road had been issued road snowfall warnings.

NZTA/SUPPLIED

Crown Range Rd and State Highway 94, Milford Rd have been issued road snowfall warnings. Photo shows when heavy snowfall hit Milford Rd in May last year.

A warning was also in place for the Desert Rd, with showers expected to turn to snow from 7pm Friday until 1am Saturday.

The strongest winds at the moment are through central Otago. It will be a busy week of weather, as well as the weekend, said Parkes.

After a rough night of wind and heavy rain at Lake Takap/Tekapo, photographer George Empson was out early on Thursday taking shots of the sky as the weather and clouds whirled around the area.

GEORGE EMPSON/Supplied

The strong westerly blows snow off the ridges in the South Island.

Empson, a long-time Mackenzie resident, said there were westerly fronts running across the sky.

For a short time the sky is angry then clears, Empson said.

I could see to the deep south of the basin, and it looks clear. Snow showers are also running across the ranges, but normally they do not come too much from the west.

GEORGE EMPSON/Supplied

The storm rolls over photographer George Empson.

If it changes to the south we might get some decent snow out of that, maybe.

There was some fresh snow on the ranges, but the westerly was blowing it off the ridges, he said.

Another MetService meteorologist, Angus Hines said people would have to be very careful if they were near the coast in the next few days.

It is not unprecedented wave heights, there is nothing coming that we haven't seen before, but it is right at the upper end of what size waves have hit these western coastlines, he said.

The largest waves will be out over slightly deeper water, just a little bit away from the country, but the waves that do reach the coast will be around 5m or 6m, something of that kind of scale, and potentially very damaging.

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Snowfall warnings as severe 'winter blast' bears down on New Zealand - Stuff

STORY: New Zealand Prime Minister Jacinda Ardern has tested positive for COVID-19 and has moderate symptoms.

Thats according to a statement from her office on Saturday, which said Ardern began showing symptoms on Friday evening.

Her partner Clarke Gayford and their daughter both tested positive earlier in the week.

Ardern is now required to isolate until the morning of May 21, and will undertake what duties she can remotely.

She will not be in parliament for the government's emissions reduction plan on Monday and the budget on Thursday.

Deputy Prime Minister Grant Robertson will address the media in her place on Monday.

In the statement, Ardern said she was gutted to miss what she called the governments milestone week.

But added that "isolating with COVID-19 is a very kiwi experience this year and my family is no different."

ARDERN: "Today represents a significant milestone in our recovery plan."

On Wednesday, Ardern announced New Zealand would fully reopen its international borders on August 1.

The country's had some of the strictest COVID measures throughout the pandemic and one of lowest death rates in the world.

Link:

New Zealand's Ardern tests positive for COVID-19

Al Noor mosque shooting survivor Temel Atacocugu points to the scar of a bullet wound in his arm during an interview at his home, Feb. 25, 2020, in Christchurch, New Zealand. Mark Baker/AP hide caption

Al Noor mosque shooting survivor Temel Atacocugu points to the scar of a bullet wound in his arm during an interview at his home, Feb. 25, 2020, in Christchurch, New Zealand.

WELLINGTON, New Zealand If the Buffalo supermarket shooter had learned anything from the massacre in New Zealand that apparently inspired him, it should have been that the violence didn't achieve any of the gunman's aims, a survivor said Tuesday.

Temel Atacocugu was shot nine times when a white supremacist opened fire during Friday prayers at two mosques in Christchurch three years ago, killing 51 worshippers and severely injuring dozens more.

Atacocugu continues to recover from the gunshot wounds in his mouth, left arm and both legs.

One of the stated aims of the Christchurch gunman was to sow discord between racial and ethnic groups, eventually forcing nonwhite people to leave. But if anything, the opposite happened as Muslims and non-Muslims embraced each other in a shared and enduring grief.

Atacocugu said the news about the shooting in Buffalo, New York, and its connections to the Christchurch massacre was scary, triggering flashbacks for him.

"Violence does not solve the problem. They should see that. People, including the extremists, should see that violence does not fix anything," he said. "Peace will fix it. They have to learn to talk with people around them, too."

Atacocugu said he was heartbroken for the families of the Buffalo victims and wished governments around the world would do more to stop extremism.

"They went to do their shopping and they had no idea what's going to happen," he said. "They were just thinking to buy their food, maybe they're feeding their young kids at home."

The 18-year-old gunman accused of killing 10 Black people in the Buffalo attack had watched a copy of the livestream video the New Zealand mosque shooter had taken, according to a document attributed to him.

People wait outside the Al Noor mosque following a mass shooting March 15, 2019, in central Christchurch, New Zealand. Mark Baker/AP hide caption

People wait outside the Al Noor mosque following a mass shooting March 15, 2019, in central Christchurch, New Zealand.

In a 180-page diatribe, Payton Gendron said he subscribed to the same racist "great replacement" theory that the New Zealand gunman Brenton Tarrant wrote about in a similar 74-page screed.

And like Tarrant, Gendron allegedly painted slogans on his gun and used a helmet-mounted camera to livestream his attack on the internet.

Gendron, who surrendered inside the supermarket, has pleaded not guilty and was jailed under a suicide watch.

After eventually pleading guilty, Tarrant, an Australian citizen, in 2020 became the first person in New Zealand to be sentenced to life imprisonment without the possibility of parole, the toughest sentence available.

The Christchurch attack was livestreamed for 17 minutes and viewed by hundreds of thousands of people on Facebook before it was taken down. The video and Tarrant's screed were quickly banned in New Zealand but can still be found in dark corners of the internet.

Since Christchurch, social platforms have learned to remove videos of extremist shootings faster. The Buffalo shooter allegedly livestreamed the attack to the gaming platform Twitch, which is owned by Amazon. Twitch said it removed the video in less than two minutes.

The Christchurch attacks also prompted the New Zealand government within weeks to pass new laws banning the deadliest types of semi-automatic weapons. Police paid owners to hand over their guns and destroyed more than 50,000 of them.

"We saw in New Zealand the gun control thing," said Muti Bari, another survivor from the Christchurch attacks. "We saw some measures taken by the government immediately after. We are still waiting to see what the U.S.A. government does. But unfortunately, we haven't seen anything like that."

Bari, who hid in a bathroom at the Linwood mosque as the shooter killed people just feet away, said he tries not to think about that day too much but is reminded when he meets his friends, including one family that lost both a father and a son.

He said the easy access to guns in the U.S. coupled with constitutionally protected free speech and the seeming prevalence of hate speech was a potent mix that the U.S. government needed to consider more seriously.

The Christchurch attack has also inspired other white supremacist shootings, including a shooting at a Walmart in El Paso, Texas, that left 23 people dead.

Atacocugu, the survivor who was shot nine times, this year retraced the route the gunman drove from Dunedin to Christchurch on the morning of the attacks.

Despite his lingering injuries, Atacocugu walked and biked for two weeks along the entire 360-kilometer (224-mile) route. He wanted to bless the route, spread peace and change a journey that began with hate.

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New Zealand shooting survivor says violence achieved nothing - NPR

WELLINGTON, New Zealand (AP) New Zealands government said Monday it will help pay for lower-income families to scrap their old gas guzzlers and replace them with cleaner hybrid or electric cars as part of a sweeping plan to reduce greenhouse gas emissions.

The government said it plans to spend 569 million New Zealand dollars ($357 million) on the trial program as part of a larger plan that includes subsidies for businesses to reduce emissions, a switch to an entirely green bus fleet by 2035 and curbside food-waste collection for most homes by the end of the decade.

This is a landmark day in our transition to a low emissions future, Prime Minister Jacinda Ardern said in a statement. Weve all seen the recent reports on sea level rise and its impact right here in New Zealand. We cannot leave the issue of climate change until its too late to fix.

The plan represents a step toward the pledges the nation made under the 2016 Paris Agreement on climate change and New Zealands stated goal of achieving net-zero carbon emissions by 2050.

Ardern, who was scheduled to launch the plan but cancelled after testing positive for COVID-19 late last week, said every community and sector had a role to play and that reducing reliance on fossil fuels would help shield households from volatile price hikes.

The plan also sets a target of reducing total car travel by 20% over the next 13 years by offering better transportation options in cities as well as improved options for cyclists and walkers.

The programs will be paid for from a 4.5 billion New Zealand dollar ($2.8 billion) climate emergency response fund. Officials said that over time, money collected from polluters would pay for the programs rather than taxes from households.

But the plan remained short on some details, including for the gas guzzler replacement plan which the government said would be finalized over the coming months.

And some critics said it continued to give an easy ride to the nations huge agriculture industry, which creates about half of the nations total greenhouse gas emissions but is also vital to the economy as the nations biggest export earner.

Some of the policies announced, like the cash-for-clunkers system, are proven to be dogs and have been tried and failed overseas, said David Seymour, leader of the libertarian ACT Party.

Seymour said consumers should be able to choose how they reduce emissions through the market-based emissions trading scheme.

More:

New Zealand to help pay for cleaner cars to reduce emissions - The Associated Press

New Zealands house prices are on track to drop by up to 20% in the next year the biggest drop since the 1970s two of the biggest banks have predicted, which would take prices back to where they were just over a year ago.

For years, the country has been plagued by a runaway housing market. The cities of Wellington and Auckland have some of the least affordable property markets in the world, and homeownership rates have been falling since the early 1990s across all age brackets, but especially for people in their 20s and 30s.

Now, New Zealand is in the midst of some of the largest drops and slowdowns since the aftermath of the global financial crisis. The number of houses sold in April was down 30% from the month prior, according to the Real Estate Institute and, according to Westpac, prices fell by 1.1% in April now down 5% from their peaks in November.

Price drops and supply increases will be welcome news for prospective buyers, but recent first homebuyers who spent up large now to own an asset that is less valuable, and increasing interest rates due to inflation, could make paying off a hefty mortgage more challenging, as a cost of living crisis also bites.

Two of the countrys largest banks, Westpac and ASB, have now both sounded the alarm about dramatic drops in house prices over the next year, with ASB economists citing the three big housing nasties as the reason behind the receding prices: tighter credit conditions, higher mortgage rates and increased supply of new housing.

However, the bulk of the house price impact from the mortgage rate surge is yet to come. About 60% of all mortgages rates will be reset over the coming 12 months, ASB said.

Interest rates could nearly double for some households, ASB economists said, but it does not expect the change to lead to widespread mortgage distress or forced sales. But the rate shock will siphon a bunch of extra disposable income out of Kiwis wallets this year, hitting discretionary retail spending hard.

Westpacs acting chief economist, Michael Gordon, told news website Stuff that while 20% sounded like a big drop, it would put prices back only on par with where they were at the start of 2021. Median house prices rose 31% in the year to July 2021.

That illustrates the ferocity of the rise in house prices during what turned out to be a brief period of super-low interest rates, he said.

Gordon added that increasing incomes and a rise in household savings would take the edge off a downturn. The slowdown were forecasting looks more likely to be a soft landing, rather than a crash.

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New Zealand banks predict 20% drop in house prices over next year - The Guardian

New Zealand has long been seen as the moderate, even absent,voiceonChinain the "Five Eyes" western alliance, so much so thatitscommitment to the group was questioned just 12 months ago.

The recent signing of asecuritypactbetweenChinaand nearbySolomonIslandsappears to have changed that.

New Zealand's tone on bothsecurityand Beijing's growing presence in the South Pacific has toughened, a shift analysts say reflects concerns the agreement will give Beijing a strategic foothold and potentially a military presence in the Pacific that could destabilise Western influence.

Also read |Australia-Solomon Islands meet, discussions include China deal

"It's a real challenge to New Zealand's sense of where the Pacific is heading," said Robert Ayson, Professor of Strategic Studies at Victoria University of Wellington.

Prime Minister Jacinda Ardern described thepactas "gravely concerning" and called onSolomonIslandsto discuss it within the PacificIslandsForum.

"What is really changing around us is the level of assertiveness and aggression we see in the region," Ardern said later at a United States-New Zealand Business Summit.

New Zealand has previously often shied away from such criticisms, which analysts put down to the country's heavy trade reliance and close economic relationship withChina.

BothChinaand theSolomonIslandshave said the newpactwill not undermine peace in the region. Details of the final agreement have not been released but Chinese foreign ministry spokesman Wang Wenbin said the agreement called forChinato help theSolomonIslandsmaintain social order and cope with natural disasters, and did not pose a risk to the United States.

Watch |The Pacific power struggle: US officials land in Solomon Island

Soft power

But statements by Ardern and Foreign Minister Nanaia Mahuta were a clear signal they shared U.S. and Australian concerns about Chinesesecurityengagement in the Pacific, said Anna Powles from the Centre for Defence andSecurityStudies at Massey University.

"It also sent a signal to the Pacific that New Zealand supported regional collectivesecurityinitiatives, and to third parties, specificallyChina, that regional crises in the Pacific would be managed by the region," she said.

While small and with limited military capabilities, New Zealand's soft power in the Pacific is arguably stronger thanitsallies. It has a large Pacifika population and strong family, business, sporting and cultural ties along with territories in the region.

New Zealand seesitself as a Pacific country and wants stability and prosperity foritsneighbours, and needs a free and open Indo-Pacific to protect trade and telecommunication connections.

David Vaeafe, programme manager at non-governmental organisation Pacific Cooperation Foundation, said the relationship with the Pacific was not all about money but about listening and understanding what the region needs.

"New Zealand's foreign policy towards the Pacific is slowly evolving and engaging from being 'you shouldn't do this' to consulting and being part of that process," he said.

Also read |Senior White House official Kurt Campbell visits Solomon Islands after it signed security pact with China

Five Eyes Criticisms

A year ago, there were questions over Wellington's commitment to the Five Eyes alliance with Australia, Britain, Canada and the United States, after Mahuta said Wellington was uncomfortable with expanding the role of the group.

There had been criticism after New Zealand opted not to sign joint statements from other Five Eyes members, including one on Hong Kong and another on the origins of COVID-19.

White House Indo-Pacific coordinator Kurt Campbelltold a business summit earlier this month that New Zealand's underestimation ofsecurityrisks in the past appeared unlikely to be an issue.

"I think there is an understanding that the challenges that are presenting themselves on the global stage are not so distant - they're closer and they have direct implications," he said.

Already New Zealand and Japan have announced plans to increasesecurityties and other moves are afoot.

Mahuta visited Fiji at the end of March and signed an agreement that among things will facilitate information on sharedsecuritychallenges.

Also read |Security deal with China won't affect peace, says Solomon Islands prime minister

At the start of the month, a partly New Zealand-backed tuna processing plant for theSolomonIslandsthat is set to create more than 5,500 jobs was announced.

The Ministry of Foreign Affairs and Trade has quietly shuffled more money into Pacific development cooperation budget for 2021-2024, according to changes made onitswebsite. The fund has been increased since December by nearlyNZ$120 million ($75 million) to $1.55 billion.

New Zealand's budget on Thursday will likely give further detail on Pacific spending with New Zealand's defence minister previously highlighting the region as a priority.

"New Zealand is quite strongly aligned to the United States and Australia," VUW's Ayson said. "That doesn't mean we always see eye-to-eye and it doesn't mean the we're as closely aligned as Australia, but New Zealand'ssecurityalliance is quite strong."

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Alarmed by Solomon Islands-China pact, New Zealand finds its voice on security - WION

Uncertainty in the aftermath of Russias invasion of Ukraine has wreaked havoc with the international commodity markets.

In the normal pattern of the global economy, commodity exporting countries like New Zealand benefit from a rise in commodity prices and the subsequent strengthening of their currencies.

But these are not normal times.

In 2022, commodity prices have risen but the New Zealand dollar has failed to strengthen. So what is different and what should consumers expect?

The Russian invasion of Ukraine has contributed to extreme uncertainty in financial markets, including the currency markets.

The war resulted in significant increases in global commodity prices, particularly for energy and agricultural commodities.

But on May 13, the value of New Zealands currency against the United States dollar dropped to its lowest in two years. The New Zealand dollar was buying US68.32 cents on January 1, peaked at US69.75c on March 31, and then dropped to US62.39c on May 13.

Again, this imbalance between the commodity markets and our currency is not normal.

The New Zealand dollar is classified as a commodity currency, along with the Australian dollar, Canadian dollar and Norwegian krone. Primary commodities (dairy, meat and timber in the case of New Zealand) constitute a substantial part of these nations exports.

For countries like New Zealand, the changes in global commodity prices are one of the main drivers of the countrys terms of trade fluctuations and, therefore, the currency value.

Generally, the value of the currency the exchange rate increases when export commodity prices increase. The New Zealand dollar, for example, tends to increase in value when global dairy prices increase.

But recent research has revealed a blip in the normal pattern.

The authors studied the relationship between the changes in value of 31 currencies (including the New Zealand dollar) and commodity prices over the past ten years. The analysis confirmed the traditional positive relationship between the changes in the currency values and commodity prices.

Read more: Boycotting Russian products might feel right, but can individual consumers really make a difference?

However, around the start of the Ukraine war this relationship reversed and became negative. The reversal was particularly evident for commodity currencies.

This study showed that despite the substantial increases in global commodity prices between January and March 2022, the expected corresponding increases in the value of commodity currencies did not occur.

The value of the New Zealand dollar dropped 0.6% from January 18 to March 1, despite sizeable increases in the global commodity index, the S&P GSCI (Standard & Poors Goldman Sachs Commodity Index), and the global dairy trade index, which increased 17.74% and 13.4% respectively over the same period.

It appears the breakdown in the relationship between the value of the currencies and commodity prices was due to the extreme uncertainties and geopolitical risks during the January to March period.

This global study also found that the closer a currency was to the conflict, the worse it performed. So, New Zealand has been advantaged by its geographic distance from the war.

The New Zealand dollar value held better during the January to March period compared to the value of other currencies.

Currencies of Eastern European countries that border Ukraine (Czech Republic, Hungary, Poland, Slovak Republic) lost, on average, more than 5% from January 18 to March 1.

Perceived uncertainty due to the conflict has reduced as the war has dragged on and the global commodity markets reversed their upward trend.

During April and May, global dairy prices decreased 13.1%, potentially due to the expected global economic slowdown and subsequent reduction in consumption, Chinas zero-COVID policy with lockdowns and the corresponding drop in demand, as well as the seasonal adjustments of dairy prices.

The New Zealand dollar has lost 10.6% of its value since its peak in March. It seems the expected positive relationship between commodity prices and the value of New Zealand dollar is evident again.

That said, a weak New Zealand dollar is bad news for New Zealand consumers as it increases the prices of imported goods, including fuel, further contributing to already high inflationary pressure.

It also makes it more expensive for New Zealanders to travel overseas, something many people were looking forward to after two years of closed borders.

Read more: New Zealand is overdue for an open and honest debate about 21st-century trade relations

On the flip side, a weaker New Zealand dollar can give a much needed boost to the New Zealand tourist and tertiary education sectors, as it makes New Zealand less expensive and therefore a more attractive travel and study destination.

A weakening New Zealand dollar is also beneficial for exporters of products like wine, as it makes them more competitive in global markets and increases external demand for these products.

While the war in Europe had a global and unexpected impact on New Zealands currency, the normal state of play is returning. The reemerging trends can give businesses and consumers a small sense of certainty after months of things being upside-down.

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The Russian invasion of Ukraine made everyone nervous, upending trade patterns for exporting countries like New Zealand - The Conversation Indonesia