Briefly in Aotearoa’s political economy on Tuesday, February 3:

* The Lead: Just when the Government is hoping voters will feel the ‘green shoots’ of an economic recovery ahead of the November 7 election, the headlines are instead showing another surge in company liquidations and cost of living pressures. Paying subscribers can see more detail below the paywall fold and hear more analysis in the podcast above.

* The Sidebar: The liquidations are linked in part to the IRD’s crackdown on overdue tax debts and Covid loans. Four years of falling-to-flat house prices have also proven the death knell for many ‘zombie’ small businesses dependent on home equity withdrawals to get through the rough years.

* News elsewhere: Auckland Transport CEO Dean Kimpton has resigned after three years without a replacement and DOC’s Director General Penny Nelson has decided not to seek reappointment.

* Chart Pack of the Day: Stats NZ’s Housing Living Costs Indices published yesterday showed the poorest 20% of households, beneficiaries and pensioners experienced significantly higher inflation in the last year than the Consumer Price Index inflation measure of 3.1% reported last month, and higher than the 0.8% experienced by the richest 20%, who benefited from lower mortgage costs.

* Scoop of the Day: Kate Newton reports for RNZ that Woodend in North Canterbury has become the second town that AA Insurance is withdrawing from after Westport, although this time it is for earthquake risk rather than climate-change-drive flood risk.

* Today’s Deep-dive of the Day is from Amy Williams at RNZ about an Auckland Council plan to change one of its flood buyout policies to avoid having to buy out 13 homes for $14 million that were damaged in the 2023 floods.

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IRD crackdown lifts liquidations to 16-year high

PM Christopher Luxon’s key question to himself, his party and voters at large in his State of the Nation speech last month was whether the economic recovery he claims responsibility for would happen fast enough and broadly enough for most voters to ‘feel it’ by the election on November 7.

The green shoots evident in business and consumer confidence surveys and building consents have yet to generate employment growth, while retail spending remains moribund at best, by most measures. But the Government is also having to contend with the lagged effects of the last two years of recessionary quarters, a delayed crackdown on Covid and other tax debts by IRD, along with the inevitable closure of ‘zombie’ small businesses kept alive for decades by equity withdrawal from ever-rising residential land values, given they have yet to bounce from their 2022 lows that remain 10-20% below their peaks.

These lagged effects are coming home to roost now through the liquidation and mortgagee sales figures. Credit ratings firm Centrix detailed a rise in liquidations to a 16-year high in calendar 2025 in its January report published this morning.

“Rising liquidations underscore ongoing financial strain across parts of the economy, as well as the IR’s ongoing crackdown on outstanding debts. Company failures are now at their highest level since 2010, with hospitality, retail trade, transport and construction seeing significant increases.” Centrix Chief Operating Officer Monika Lacey in Centrix’s January Credit Indicator Report

Lacey pointed out business liquidations increased unevenly, with the sharpest rises in hospitality (+50%), retail trade (+34%) and transport (+27%). Companies in construction (+13%), manufacturing (+12%) and property/rental (+17%) also recorded higher liquidations, despite a decline in credit defaults and an improvement in average credit scores.

New restaurant closures

The drumbeat of business closure news continues to lead newspapers and television and radio bulletins too. That includes the closure of renowned Petone restaurant, Soprano, and Newtown’s Rice Bowl Burger Bar, along with BBQ specialist The Smoking Que in Christchurch in items published today in The Post and The Press.

IRD’s data shows a rise in tax debt to nearly $9 billion by the middle of last year from under $4 billion in 2020.

Chart pack of the day: Inflation hits some harder than others

Poorest feel inflation of 3.7%, while richest feel 0.8%

Poorest spend three times more on power than rich, as a share of income

Rent inflation higher than housing costs overall for 12 of last 16 years

Picks n’ Mixes of the best of the rest elsewhere

Scoops & Deep-dives

* Tom Hunt for The Post-$: GST oversight blows $56m hole in council budget

* Ben Leahy for NZ Herald-$: Govt intervenes at two Auckland schools in one zone

* Column by David Farrar for The Post-$: Time for New Zealand to become the seventh state of Australia

* Op-Ed by James Bush for The Post-$: Why I’m farewelling my NZ life (again)

* Op-Ed by AUT’s Mark Kirby for The Conversation: NZ’s $2.5 billion shoddy building bill: how to fix the ‘build now, fix later’ culture.

Politics & the economy

* Thomas Coughlan for NZ Herald-$: Wellington jobs fall by nearly 10,000 since election ‘Willis ducks blame for jobs crisis in Wellington.’

* Brodie Stone for Northern Advocate: Fears of disconnect as NZ Post pulls services

Housing, infrastructure & councils

* Tom Pullar Strecker for The Post-$: Public backlash likely if roads tolled without clear benefit, AA says

* Kelvin Davidson for One Roof: Bank switching goes ballistic

* Susan Edmunds for RNZ: Who’s paying the price for cash back offers?

* Liz McDonald for The Press-$: Wolfbrook spends $42m on land for luxury homes

* Blayne Slabbert for The Press-$: Christchurch eyes bigger airport stake

* Tom Eley for NZ Herald: ‘A lifeline’: Push to keep Te Huia train rolling

* Explainer by RNZ: What to know about the entity replacing Wellington Water

Poverty, health, living costs, incomes & education

* Joanne Naish for The Post-$: Patients reject telehealth in favour of seeing own GP

* Harriet Laughton for The Post-$: Nurses say big jump in assaults due to under-staffing & patient frustration

* Anne Gibson for NZ Herald-$: ‘Thousands of families suffering from overheating’ – what’s changed?

Climate & environment

* RNZ: Auckland Council starts flood research project

* Julie Jacobson for The Post-$: Dangers of shallow, fast-moving floods highlighted

* Op-Ed by Matt Halliday for The Post-$: Where did all the petrol ads go?

* Louisa Steyl for The Southland Times-$: Storm damage fuels calls to reform tree regulations near power lines

Cartoon of the Day: Stuck in the mud

Ka kite ano,

Bernard

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