Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Friday, November 7:

* Despite pledges the Government is ramping up capital spending to reduce infrastructure deficits and spark economic growth, Treasury yesterday published accounts for the first three months of the financial year showing the Government’s capital investment spending rose 1.6% to $918 million in the first quarter from a year ago, growth which is less than half the CPI inflation rate.

* The capital investments in the September quarter were at least $267 million less than forecast in the May Budget and were less than half the depreciation recorded in the accounts for the quarter of $2.101 billion.

* The accounts also showed Government spending on wages fell 1.6% to $9.95 billion in the quarter from a year ago. Public sector wages grew 2.4% in the quarter from a year ago and household living costs grew 2.4%, which amplified the effect on wider consumer spending of public sector job cuts.

* The cost of building and servicing the PPP debt on Wellington’s Transmission Gully motorway has blown out to $3.75 billion over the next 25 years, including $1.25 billion to build it and $2.5 billion to service the debt over 25 years, and that’s before an extra $32 million per year from this year to maintain the road. It would mean the motorway cost $139 million per km to build and a non-inflation-adjusted $132 million per year $5 million per km per year or to run. The Post-$

* Troy Bowker, a Wellington businessman who has accused most New Zealand media outlets of left-wing bias and helped lead a nearly-successful takeover of NZME by activists wanting less left wing content in the NZ Herald, has bought the building in Petone containing Stuff’s printing plant for The Post and many other newspapers in the bottom half of the North Island.

* The lease is up for renewal next year with a potential one-year extension to 2027, raising the possibility Bowker either buys and publishes The Post, which is again reportedly up for sale, or shuts it down by refusing to extend the lease, given the high costs of removing and re-housing the printing plant. NZ Herald-$

* Today’s top must read, in my view is Amy Williams’ deep-dive on homelessness in Auckland for RNZ this morning. Homeless becoming more desperate, court worker says

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A miserly & investment-lite Government

The Government continues to argue it is investing heavily in infrastructure to grow the economy and is not using short-term financial management, but the Crown Accounts for the first three months of the current financial year show a different story.

The bottom line most focused on from yesterday’s figures was the budget deficit being $496 million worse than expected at $3.955 billion, thanks to weaker tax revenues from a stuttering economy, shell-shocked consumer spending and job losses. But the cash bottom line deficit of $1.362 billion was $1.639 billion better-than expected. That meant the Government’s net core Crown Debt of $184.673 billion was up $2.5 billion, but was around $5.2 billion less than expected, after revaluations.

That appears not to compute, until you look more closely at the capital spending line, which was $918 million for the quarter, which was $287 million less than forecast. Total capital committments for future years were $15.53 billion, down from $16.865 billion a year earlier. A wider number for capital committments for the year also fell, as Treasury pointed out:

“The lower than forecast net core Crown capital outflows was owing to lower than forecast net purchase of investments ($1.6 billion). This largely reflects capital funding from the core Crown into Crown entities and SOEs which are mainly used for the purchase of property, plant and equipment.” Treasury commentary on page 3 of the Crown Accounts for the September quarter.

A simpler measure, as detailed below, showed capital spending of $918 million, less than half the depreciation noted in the accounts.

The Government has argued it can’t afford to keep growing spending or ramp up capital spending dramatically because Government debt and interest costs were too high.

However, the accounts show net interest costs of just $628 million after the receipts from interest and dividends, which is barely 1.5% of total revenues. Would you worry about your debt to the extent to restrict spending on life-saving equipment and staffing because your mortgage costs had risen to 1.5% of your disposable income?

Chart of the Day: A generational issue

My short Pick n’ Mix of links elsewhere

A few subscribers asked for me to continue the Picks n’ Mixes, even in limited form.

Politics and the Economy

* Deep-dive by Amy Williams for RNZ: Homeless becoming more desperate, court worker says

* RNZ: Govt pays $6.3m for Michelin restaurant reviewers to tour NZ

* Deep-dive by David Williams for Newsroom: Who Benefits: The rise and rise of the Free Speech Union ‘A free speech advocacy group looks ahead but struggles to shake off the label of a dark money think tank’

* Laura Walters for Newsroom: Officials warn school board changes breach Treaty ‘In a political flip-flop, Education Minister Erica Stanford has decided to remove the Treaty of Waitangi obligations on school boards without consulting Māori’

* Susan Edmunds for RNZ: $50 an hour, 12% superannuation: Australian recruiters target jobseekers

* Gareth Vaughan for Interest: BNZ says lower interest rates enabling customers to pay down loans faster

Housing, Climate & Poverty

* Tova O’Brien for Stuff: Wellington depression recovery centre to close after no funding reprieve. ‘Accidental meeting invite from Health NZ gave false hope but no reprieve for Wellington mental health service’

* Deep-dive by Maddy Croad for The Press-$: ‘Abandoned and betrayed’: Disabled community still hurting a year after funding cuts. ‘Ruth Jones says many Kiwis are still struggling to recover mentally, financially and physically - unable to get funding for basics like carers or incontinence pads.’

* Investigation by Jonathan Milne for Newsroom: Govt answers fishing chief’s billion dollar question on climate disclosures ‘There are a handful of corporates that stand to benefit from Commerce Minister Scott Simpson’s unexpected call to dramatically loosen climate reporting requirements; some are political donors’

* Column by Marc Daalder for Newsroom Pro-$: Govt’s climate strategy: Let it burn ‘Since the election, the Government has pursued policies that boost climate pollution – even if they cost more or jeopardise NZ’s reputation. We lay out the long list of retreats on climate action.’

* Column by Barbara Fountain for Newsroom: Stop telling health professionals to get back in their box ‘By trying to silence health professionals, the Govt risks smothering advocacy, equity and reform’

* Deep-dive by Nikki Mandow for Newsroom: When everyone lived in an affordable home

Cartoons: Cliff diving economics

Timeline-cleansing nature pic

Ka kite ano

Bernard

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