The Kākā by Bernard Hickey

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale talking with regular guests Cathrine Dyer and Robert Patman, along with special guest David Farrar, talking about his Op-Ed in the The Post-$ arguing it’s time New Zealand became the seventh state of Australia.

We talked about:

* The water treatment plant problems in Christchurch and Wellington;

* The gutting of the Washington Post’s newsroom;

* The effects of climate change on biodiversity, including the deaths of dugongs in Thailand, the deaths of bats in Western Australia, the freezing of iguanas in Florida;

* Insurance retreat in New Zealand; and,

* Rare earth minerals and a possible deal between New Zealand and the US;

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey.

The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards.

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

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.

Join us as a paying subscriber to get more analysis and detail below the paywall fold and in the podcast above. Paying subscribers can also comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.

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

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale talking with regular guests Cathrine Dyer and Robert Patman, along with special guest historian and author Jonathan Lyons.

We talked about:

* Likely issues in Election 2026 due on November 7, including anti-migration comments from Winston Peters and his comments backing Donald Trump on withdrawing from the World Health Organisation;

* The dramas this week in Global Financial Markets around the reserve currency status of the US dollar and another stalling in the New Zealand economy;

* The fallout from this month’s extraordinary weather events made worse by unaddressed climate change, and some solutions, including this EECA report on shifting power demand off-peak and this Manu Caddie post;

* Donald Trump’s latest threats to attack Iran, along with the history of revolutions in Iran and the situation there now, including Jonathan and Robert. Jonathan has written these books on Iran: The House of Wisdom: How the Arabs Transformed Western Civilization, and, Islam Through Western Eyes: From the Crusades to the War on Terrorism.

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey.

The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards.

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale talking with regular guests Cathrine Dyer and Robert Patman, along with special guests Auckland University Emeritus Professor Jane Kelsey and intensive care specialist Dr David Galler.

We talked about:

* Likely issues in Election 2026 due on November 7, including anti-migration comments from Shane Jones in the wake of protests against rockpool harvesting (RNZ) and the economy’s struggle to generate growth most can feel;

* This week’s extraordinary weather events made worse by unaddressed climate change, including this new UK paper on the environment and national security and the measures that should be taken to make Aotearoa more resilient;

* Trump’s latest rupturing of the global world order, including Mark Carney’s speech at Davos and Donald Trump’s latest threats to invade Greenland;

* How New Zealand adapts to the law of the jungle; and,

* What’s happening in our health system, and how to improve it, including discussions about this Andrea Black paper, this Deloitte paper and the launch this week of Kaitiaki Hauora, which is a national coalition of workers, iwi, union, and advocacy groups wanting to strengthen public health that includes David Galler.

Jane Kelsey has written these pieces for The Conversation on geopolitics so far this year:

* Trump is threatening more tariffs over access to critical minerals – will NZ be targeted?

* The World Trade Organization is on life support. Will Trump’s new rules finish it off?

Robert Patman has written this piece for The Conversation this year:

* As Trump rewrites the rules in Venezuela, NZ faces a foreign policy reckoning

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey.

The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards.

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Briefly in Aotearoa’s political economy on Tuesday, January 20:

* The Lead: PM Christopher Luxon unveiled a new election slogan in his State of the Nation set-piece speech yesterday, as expected, and doubled down on the Government’s strategy of running tight budgets and letting the economy do the work of getting it re-elected. It didn’t work in 2024 and 2025, but he hopes better economic signals in recent weeks will mean voters ‘can feel it’ by the election, which may be just 290 days away, on November 7.

* The Sidebar: The problem for Luxon is his Government is relying on a 1990s and mid-2000s strategy of businesses and households stepping forward to spend their savings and borrow more to invest and spend in shops, car dealerships and in the housing market. Back then, the private sector replaced the Government’s stimulus because spenders were younger and less-indebted, interest rates were cut by more, and businesses used to borrow from banks to expand. Neither have done that since 2019. Hear and see more detail and analysis below and in the podcast above.

* Elsewhere in the news: Luxon confirmed the Government was back-tracking on Housing, Infrastructure and RMA Reform Minister Chris Bishop’s ambitions for densification to generate capacity for an extra two million homes in Auckland, while Finance Minister Nicola Willis said she’d spoken to Reserve Bank Governor Anna Breman to say Breman should have rung her and MFAT at 3am for advice on whether to sign a joint central bankers’ letter backing Fed independence.

* In the Scoop of the Day: Jared Savage reports for NZ Herald-$ that the price of meth has fallen 55% in inflation-adjusted terms to a record low over the last eight years, citing a Massey University survey.

* In the Chart Pack of the Day: The Government’s claims the economy’s recovery was blocked last year by a tariff shock to the global economy were not borne out the IMF’s latest forecasts overnight showing an improving global outlook, although it’s clear many economies are struggling with K-shaped recoveries where poorer workers and renters are feeling real wage cuts and aren’t benefiting from massive asset value inflation.

* Today’s Deep-dive of the Day is Katie Todd’s latest in her series for RNZ: ‘Gold Rush: Who's Cashing In on Queenstown?,’ which looks at how a quarter of Queenstown’s homes are ‘ghost houses,’ and are hollowing out its economy, with workers unable to afford to both live and work in the boom town.

Join us as a paying subscriber to get more analysis and detail below the paywall fold and in the podcast above. Paying subscribers can also comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.

Luxon has faith the economy will save his Govt

I went to the new-car-smelling International Convention Centre in Auckland yesterday for the first big event held there: Christopher Luxon’s Election-Year State of the Nation Address. My apologies to those who dialed in to my live analysis on Substack, which had no sound. Won’t be doing that again. For those wanting that analysis with sound, I’ve done that in the podcast above.

As I wrote yesterday, his main message was that National was “fixing the basics and building the future,” but it was clear from his speech and the news conference afterwards, where I asked a few questions, that the Government’s strategy is to plough on with its tight budgets and cross its fingers and hope that households and businesses starting borrowing up a storm to spend, invest and employ make everyone feel better.

That’s the strategy adopted by both flavours of Government over the last 35 years. It worked in the early 1990s, the early 2000s and the early 2010s because it was much easier to grow Aotearoa’s economy with a young and not-so-indebted population benefiting from sharp falls in interest rates.

That strategy didn’t work in 2024 and 2025 to fire up the economy, but Luxon is hoping is does this year, and in time for many more voters to feel it before he has to ask for re-election. Here’s the key sections from his speech:

"I have to tell you, I feel more confident than ever that the recovery has now arrived and Kiwis can look forward to a year which is brighter than the last few."

“There were calls at the time (early in 2025) for a big fiscal stimulus and to open the immigration gates and pump up house prices. As I spoke about last year, we can’t risk repeating the sugar-rush economics of the past.

“New Zealand simply has to get its finances in order if it is to achieve a long-term improvement in its economic prospects. That’s why there will be more savings in this year’s Budget and no room for extravagant election promises.”

“Let’s be straight up with each other. Any party that wants to ramp up spending is being economically irresponsible. Because the only way to spend more money is to borrow it or to raise taxes.” Christopher Luxon in his SOTN speech .

Later, he was challenged by event host Auckland Chamber of Commerce CEO Simon Bridges for reassurance on the economic recovery. Here’s Luxon’s key comments (bolding mine):

“When you’re doing a turnaround job though, you’ve actually got to take action and you’ve got to get things implemented and you’ve got to get them executed so that people can feel the difference and actually see the difference.

“We’re starting to see some leading statistics and results improving. Now we need to see people feel it in their personal lives and more of them across the whole of the country as we go through the beginning part of the year and I think that is coming.” Luxon in the ‘fireside chat’ with Simon Bridges after the speech.

Here’s the full speech, fireside chat and news conference, where I asked questions about what ‘feeling it’ would look like (he didn’t say), whether Anna Breman had been ‘outside her lane’ (he wouldn’t say) and why he was scaling back plans to add housing when he had said he wanted to avoid going back to ‘sugar rush’ housing-led recoveries (he said some things that didn’t address the question).

Chart Pack of the Day: It’s not the Trump tariff shock

No, you can’t blame NZ’s slow economy on global shocks…

…but we’re not alone in having a K-shaped economic recovery.

Cartoon of the Day: No stars from the star fish

Timeline-cleansing nature pic of the Day: Bee breakfast

Ka kite ano,

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale talking with regular guests Cathrine Dyer and Robert Patman.

We talked about:

* US President Donald Trump’s attack on the US Federal Reserve’s independence and why it matters to us;

* RBNZ Governor Anna Breman’s defence of the Fed’s independence;

* NZ First Leader and Foreign Minister Winston Peters’ criticism of Breman, despite his votes in favour of central bank independence over the years;

* How Trump’s strike on Venezuela is upending ever more global norms;

* record-high sea temperatures and how climate change is already a major part of the affordability story; and,

* a rocky election year ahead of misinformation in the absence of 3News, Sunday, Fair Go and a larger number of climate journalists.

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey.

The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards.

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale talking with regular guests Cathrine Dyer and Robert Patman.

Our special guests this week were Philippa Yasbek, who heads Gun Control NZ and Doyen: NZ Jews Against Occupation, and Lee Feinstein, former US ambassador to Warsaw and senior diplomat under Democratic administrations, Dean of the Hamilton Lugar School of Global and International Studies at Indiana University Bloomington, long-serving board member of the United States Holocaust Memorial Museum.

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey.

The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards.

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Briefly in the news from Aotearoa’s political economy on Wednesday, December 17:

* Treasury published its Half Yearly Economic and Financial Update (HYEFU) report yesterday, lowering its GDP growth forecast, raising its unemployment forecast, reducing the Government’s tax revenue forecasts and delaying its forecast for a return to surplus by another year to 2029/30.

* Finance Minister Nicola Willis pledged the Government would stick to its strategy of restraining Government spending growth to crunch the size of core Crown spending below 30% of GDP from almost 33% now, in order to cut borrowing. She hopes this reduces mortgage rates to grow the economy faster.

* That strategy depends on households and businesses stepping up to borrow, spend and invest to offset the Government withdrawal, as they did through similar fiscal tightenings in the early 1990s, the early 2000s and the early 2010s.

* But those expansions were mostly driven by households taking on more debt to spend and invest in residential land. That was possible because household debt was much lower then than today, banks were still shifting from mostly business lending to mostly mortgage lending, and mortgage rates dropped substantially each time.

* Household debt to disposable income rose from under 50% of disposable income in 1989 when mortgage rates averaged around 15%, to a peak of 179% in 2009 after mortgage rates fell to 5.5%.

* Another surge in lending came as interest rates sagged towards 5% before LVR controls in 2013 and higher bank capital requirements stopped the rise in indebtedness. There was another bounce back in household-debt-to-disposable-income of 175% in 2022 as mortgage rates fell as low as 3%, but the rise in mortgage rates to around 7.5% by late 2023 stopped any further rise.

* In my view, the Government’s strategy isn’t working because households simply can’t take on much more debt, banks don’t have much spare capital to generate lending at double-digit rates, and landlords can’t borrow quickly in the face of falling rents and DTI limits.

* The end result is a grinding periods of intermittment contractions and small expansions, driven by falling real wages for most households and weakened spending appetites from the rest as they feel the effects of shrivelling household net worth. It is an attritional balance sheet recessions and slow debt deflationary spiral.

* Willis amplified the pressure on any households and businesses dependent on incomes from the Government yesterday, saying the need to contain spending growth was even more intense and she had written to ministers to ask for more spending cut ideas ahead of Budget 2026.

* This was evident in Marine Lourens’ report for The Post-$ today that Health NZ had been told to find a further $510 million in savings in the coming year.

* This ongoing pressure on consumer spending appetites and housing market activity, with Worldline reporting yesterday that retail sales were down 0.3% in the first 14 days of December from the same period a year ago, and REINZ reporting house prices fell 0.3% in November from October, having fallen 0.2% the previous month.

Quotes of the day 2025 v 2024: ‘This time is different’

“At some stage, of course, we’re going to get some upward surprises in the forecasts. I very much look forward to that day, and those upward revisions will help us reduce the deficit further.” Finance Minister Nicola Willis speaking to reporters yesterday (December 16, 2025) while releasing the 2025 HYEFU. Via BusinessDesk-$

“At some stage, we’re going to get some upward surprises in the forecasts. I very much look forward to that day,” Finance Minister Nicola Willis speaking to reporters on December 18, 2024 while releasing the 2024 HYEFU. Via NZ Herald-$

Chart pack of the Day

My Picks n’ Mixes of links elsewhere today

Scoops, deep-dives, Op-Eds & columns

* Deep-dive by Cecile Meier for BusinessDesk-$: School lunch wastes millions despite savings

* Glenn McConnell for Stuff: Why it will soon cost more for disabled people to travel

* Deep-dive by Damien Venuto for Stuff: It’s the hardest time in 30 years to find a job.

* Deep-dive by Colleen Hawkes for Stuff: Home of the future? NZ’s first on-site 3D-printed house completed

* Joel MacManus for The Spinoff: Billionaire NZME director funding defamation lawsuit against TVNZ, court told

* Hayden Donnell for The Spinoff: Judge finds widespread voter fraud ‘infected’ the Papatoetoe local board election

Substack posts

* Connor Sharp for Greater Auckland:What’s in the RoNS files?

* Dr Bex: Disabled? You get to stay home

* Martien Lubberink: Big Banks, Farmers, and Capital Requirements: 2025 Season Finale?

Cartoon: We’re right, right? Right.

Timeline-cleansing nature pic

Ka kite anō

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Briefly in the news from Aotearoa’s political economy on Tuesday, December 16:

* New Reserve Bank Governor Anna Breman pivoted away yesterday from a tacit approval of higher wholesale interest rates to outright opposition, but not in time to stop the largest bank, ANZ, from increasing its fixed mortgage rates by 20-30 basis points. (Interest)

* Breman said in a statement issued at 3pm she would do media interviews yesterday and today that commented on market interest rates, saying: “Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR.”

* Breman went on to tell 1News last night that: “My perspective is that if we see a lot of tightening, we have to be very vigilant because we don’t want that tightening to reduce the growth that we’re starting to see happening right now.”

* Wholesale interest rates fell about 10 basis points and the NZ dollar fell as much as half a cent after the statement from Breman.

* Her comments came after Kiwibank Chief Economist Jarrod Kerr wrote in note published on Saturday the Reserve Bank had made a ‘mis-step’ by allowing markets to price in rate hikes next year, when the RBNZ’s own forecast from November 26 suggested no rate hike until early 2027.

* I spoke with Jarrod last night about the pivot in the video above.

* Elsewhere, the BusinessNZ-BNZ (PSI) survey of activity in the services sector in November found a further contraction of the biggest part of the economy that employs the most people, including a worsening of downturns in new orders, sales and employment.

* In Quote of the Day below, BusinessNZ CEO Katherine Rich said the result “put to bed any immediate hope that the sector was heading somewhere towards expansion.”

* The Chart of the Day below shows the combined PMI/PSI surveys of manufacturing and services were consistent with economic growth in early 2026 of around zero.

Quote of the day: ‘Can’t see the growth yet…’

“The November result put to bed any immediate hope that the sector was heading somewhere towards expansion. All five sub-index values were in contraction, with Activity/Sales (45.8) experiencing the greatest level of contraction for the current month. While New Orders/Business (49.3) still hovered just below the no change mark, Employment (46.4) also took a dip from October.

“Despite a stronger level of contraction during November, the proportion of negative comments for November (52.9%) was lower than October (54.1%) and September (58.0%). Negative comments received show the services sector overwhelmingly citing the weak economic environment, including low consumer confidence, high living costs, inflation, interest rates, and reduced spending, as the main factors affecting recent activity.” BusinessNZ CEO Katherine Rich in the PSI release.

Chart of the Day: Inconsistent with ‘growth, growth, growth’

My Picks n’ Mixes of links elsewhere today

Scoops, deep-dives, Op-Eds & columns

* Deep-dive by Lucy Xia for RNZ: Homelessness in Auckland more than doubles in a year

* Jamie Ensor for NZ Herald-$: Foreign buyers ban change passed at night under urgency – so what could be the impact on house prices?

* OneRoof: ‘When? What?’ - NZ’s top agents surprised as foreign buyer ban quietly reversed

* Deep-dive via RNZ Nine to Noon: Nearly 5000 children with rotten teeth waiting in pain for surgery

* Deep-dive via Russell Palmer for RNZ: Infrastructure Commission calls for government business cases, budget submissions to be public

* Investigation by Jeff Horwitz & Engen Tham for Reuters: Meta tolerates rampant ad fraud from China to safeguard billions in revenue

* Investigation by Fox Meyer for Newsroom: Who Benefits: How monopoly money bought NZ’s gambling scene

Substack posts

* Max Rashbrooke for Good IDEAs: How IDEA is already sparking change on welfare-to-work policy

* Paul Krugman: MAGA, the Broligarchs and the Media

* Lina Khan: On Zohran Mamdani, Corporate Welfare & the FTC | The Weekly Show with Jon Stewart

Cartoon: A dose of salts

Timeline-cleansing nature pic

Ka kite anō

Bernard

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Briefly in the news from Aotearoa’s political economy in the week to Saturday, December 13:

* National Finance Minister Nicola Willis and former National Finance Minister Ruth Richardson sparred over where and how to debate whether Willis is ‘fudging’ the Budget and ‘failing’ to cut spending enough to slash debt even more.

* Richardson wants the debate hosted on NewstalkZB, while Willis first suggested it be moderated by Juggernaut podcast creator Toby Manhire from The Spinoff, and then by economist and National Party adviser Cameron Bagrie.

* In my view, Toby should moderate a debate broadcast on NewstalkZB and/or any other platform, as long as he could challenge Willis and Richardson about alternatives to austerity, the track record of austerity since 1991, and the assumptions still underpinning their views on public debt.

* In my view, this way this debate is framed is frozen in time in 1991, stuck with the now-wrong assumptions that New Zealand faces being locked out of global markets, that the New Zealand Super Fund does not exist, and that austerity will work to grow the economy again because households can borrow much more to pick up the slack left in the economy as the Government contracts as a share of GDP. (Hear more in the Soliloquy above)

* This week in politics, two new polls showed the governing coalition parties had just enough support to win a second term if an election was held now, largely because support for Te Pāti Māori and Green slumped in the respective polls. (See more below in Chart Packs)

* Elsewhere in politics, the Government proposed two new bills to replace the RMA next year, two years after the National-led coalition repealed the two bills enacted by Labour to replace the RMA, after six years of consultation and deliberation. Also, the Government legislated under urgency and without consultation to cut methane reduction targets.

* This week in the economy, a few more small green shoots poked through, including data showing stronger-than-expected retail spending through credit and debit cards in November and a survey showing slightly increased expansion in manufacturing activity in November. (See more below in Chart Packs)

* However, there was also data showing a contraction in manufacturing volumes (excluding meat and dairy) in the September quarter and a slight fall in truck and car movements in November, as measured by ANZ’s Truckometer series. (See more below in Chart Packs)

* Economists are forecasting Stats NZ will publish GDP data next Thursday showing a GDP rise in the September quarter from the June quarter of about 0.9%, just enough to offset set the 0.9% contraction reported in the June quarter.

* But the recovery faces a new headwind as both Westpac and The Co-operative Bank increased their longer-term fixed mortgage rates by around 30 basis points, following a 60 basis point rise in 30-60 basis point rise in one to two year wholesale ‘swap’ rates in the last six weeks. (See more below in Chart Packs)

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Politics Chart Pack of the week

Economics Chart Pack of the week

My Pick & Mix of links elsewhere this week

* Marty Sharpe for Stuff: ‘Likely to cause injury or death:’ Boarding house used by vulnerable people deemed dangerous

* Kate Newton for RNZ: The day the climate consensus died

* Op-Ed by Bill McKay for The Conversation: Faster, cheaper … but better? The devil in the RMA reform detail

* Deep-dive by Kirsty Johnson for RNZ: ‘Rock and a hard place’: Inside the forced move from gas

* Op-Ed by Auckland Uni’s Tim Welch for The Conversation: Higher speeds lower productivity: what the data shows crash delays really cost Auckland

* Mike Dolan for Reuters: Fade the Fed, global rates are heading higher

Cartoons of the week

Timeline-cleansing nature pic:

Ka kite ano

Bernard

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