The Kākā by Bernard Hickey

Briefly in the news from Aotearoa’s political economy around housing, poverty and climate on Tuesday, July 1:

* Extreme floods hit the top of the South Island over the weekend, unleashing a wall of media coverage on the ‘unprecedented’ scale of the disaster, but there was no coverage of modelling showing each degree of climate warming increases the intensity of weather events in the region by 10-20%. See more in The Lead below the paywall fold and in the podcast above.

* Worker and employer expectations of real wage deflation are worsening as the economy slides back into a mid-year stagnation, and as administered prices such as Government and council fees and rates rise faster than inflation, as do prices in the monopoly-bound food, insurance and electricity sectors. See more in Chart of the day below.

* Northland’s big new expensive motorway is likely to generate barely a seventh of the benefits modelled by NZIER for Northland businesses. See more in Quote of the day below.

* 758 construction businesses have gone into liquidation in the last 12 months, thanks in part to the Government’s freeze on transport, housing and hospital investment spending at the beginning of 2024, Centrix reported this morning. Construction jobs have fallen by 12,723 in the last year, Stats NZ reports. See more in Number of the day below.

* Taumata Orawai reported yesterday that more than 70 schools fed their kids contaminated water in the last year. See more in Doc of the day below.

* Today’s Must-Read is from Linda Hall for LDR via 1News on how a Wairoa woman had to move 14 times after toxic flooding before she finally found a home. See more in Picks ‘n’ Mixes below.

There’s more detail and analysis for paying subscribers below the fold and in the podcast above. If we get over 100 likes I will open it up in full for public reading, listening and sharing.

Ignoring climate change’s role in extreme events

Extreme floods hit the top of the South Island over the weekend, unleashing a wall of media coverage on the ‘unprecedented’ scale of the disaster, but no coverage of modelling showing each degree of climate warming increases the intensity of weather events in the region by 10-20%,

Here’s the research put out at the end of 2023 by New Zealand climate experts Greg Bodeker, Kyle Clem and Leroy Bird and the chart showing which parts of the country are most exposed.

Quote of the day:

“The NZIER report is advocacy research, paid for by people with monetary skin in the game to commercial providers of consultancy services, meaning its conclusions need to be regarded with caution by the public. The recommendation to prioritise the expressway does not logically follow from any of the analysis undertaken and estimates of benefits and costs derived by the NZIER.” Public policy academic Dr Simon Chapple in his independent analysis for Parliament’s Transport & Expenditure Select Committee of an NZIER report last year that argued the Government’s proposed four-lane Warkworth to Whangārei to Kaikohe motorway would cost $1.2 billion and generate $23.6 billion of benefits. Chapple estimated benefits of just $3.7 billion and said the costs were very uncertain.

Further reading: Jenny Ling for The Northern Advocate: Fears Northland Expressway at risk as report challenges $1.2b GDP boost

Number of the day: 758

758 - The number of construction firms that have gone into liquidation in the last 12 months, as detailed this morning in a report by credit reference checker Centrix.

Chart of the day: Real wage deflationary expectations

“This chart just keeps getting uglier. Household inflation expectations have jumped to a two-year high, which probably has something to do with food price inflation being 4.4% y/y. Even though outcomes for real wage growth aren’t likely to be nearly as grim as this chart implies, perceptions may well matter for consumers’ willingness to spend.” ANZ NZ Chief Economist Sharon Zollner in her weekly Charts That Matter report.

Doc of the day

Taumata Arowai: Regulatory action drives overall lift in drinking water safety

Further reading:

* Jonathan Milne for Newsroom: Faecal contamination of drinking water at 71 schools

* Charlie Mitchell for The Post-$: Dozens of schools served faecally contaminated water.

Top Six Pick ’n’ Mix for Tuesday, July 1

* Scoop by Gill Bonnett for RNZ: Electronic monitoring of asylum seekers being considered

* Scoop by Guyon Espiner for RNZ:Health Ministry manager 'way too friendly' with alcohol lobby

* Tom Pullar Strecker for The Post-$: ACC agrees to slash spending, get thousands more off benefit

* Deep-dive by Cecile Meier for BusinessDesk$: Food scrap U-turn chills waste sector investment

* Scoop by Stewart Sowman Lund for The Post-$: Liquor trusts under fire: Calls for liquor licensing monopoly shake-up. A new report aims to “cut through the myth” that licensing trust monopolies are needed to generate community funding. But the trusts have pushed back.

* Survey by Louise Ternouth for RNZ Checkpoint: Revealed: How much supermarket prices have gone up since 2022

The best of the rest

Politics, business, economy & geopolitics

* NZ Herald: Government tops up $75 a week flagship tax promise, now reaches ‘thousands’ more

* NZ Herald: Butter shock: 500g tub costs more than $18 in Auckland grocery store 30 Jun 08:18 PM

* RNZ: Healthy Homes, KiwiSaver, Jobseeker and more - What's changing on 1 July?

* Stuff: Teen kicked out of Government’s bootcamp pilot just weeks before it ends

* Stuff: Luxon says he is comfortable with the anticipated swelling in the prison population, modelled to grow by 1350 in the next decade, as a result of harsher sentence reforms.

* Jamie Ensor for NZ Herald: ‘Disappointed’: Māori advisory group says there was a 'breach' in relationship with Minister

Housing, transport, infrastructure & councils

* RNZ: Visa approvals for Indian students climb after steep declines

* RNZ: Horse riders excluded from shared path, told to use highway

* Stuff: Second time lucky? Deputy mayor renews push for safer Remutaka route

* Mildred Armah for Stuff: High-profile Kiwis urged to join Big Sleepout to raise awareness of homelessnes

* NZ Herald: Rebuild of bridge destroyed by cyclone comes in millions under budget

* Hawkes Bay Today: Helping homeless men: New Napier night shelter opens just in time for winter

Poverty, health, education & crime

* RNZ: Community support workers among NZ's lowest paid

* RNZ: Employer sentenced over visa lies, exploiting Thai worker

* RNZ: Ngāti Toa launch new agency to distribute Whānau Ora funds

* Bridie Witton for Stuff: Higher GP & public transport costs: This is what will change on July 1Policies coming into effect raise everyday costs, and set new standards for our homes.

* RNZ: Review into Whānau Ora commissioning funding terms released

* Azaria Howell for NewstalkZB: Oranga Tamariki service provider 'struggling' with funding cuts

Climate, environment & land

* Jamie Gray for NZ Herald: 'Pick up the pace': NZ needs faster progress on energy projects

* RNZ: Inquest into 2023's weather-related deaths gets underway

* 1News: More heavy rain forecast for some areas of NZ later this weekMetService said rain was expected from Thursday as a front moves south-east over the country.

* RNZ: Power company seeks to drain more from Lake Hāwea

* RNZ: Gas costs keep rising, but so too do the number of new householders using it

* RNZ: How much time do you need to spend in nature to see benefits?

Cartoon of the day: Don’t look up

Timeline-cleansing nature pic

Ka kite ano

Bernard

PS: Apologies for non-publication over the last couple of days. Travelling made it more difficult than we expected.

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 features co-host Peter Bale talking with regular guests Robert Patman and Cathrine Dyer about the week’s news in geopolitics and climate.

This week’s Hoon featured special guests:

author, historian and a former colleague from Reuters, former Tehran bureau chief Jonathan Lyons;

professor of international law Treasa Dunworth

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 this 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.)

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 around housing, poverty and climate on Tuesday, June 24:

* ANZ economists have slashed their June quarter GDP growth forecast to 0.1% from 0.4% after a range of leading indicators sagged in June, and just ahead of another cost-of-living shock from an oil price surge as Iran finally attacked US bases in the Gulf states overnight. See more in The Lead below the paywall fold.

* The Government hopes that higher export receipts from record high dairy and meat prices will flow through into economic growth through consumer spending and farm investment, but banks report farmers are using the extra cash to pay off debt and are buying new tractors at the slowest rate in 24 years. See more in the Number of the day below.

* Donald Trump called Vladimir Putin “THE BOSS” in a post overnight referring to comments attributed to Putin about offering to send nuclear weapons to Iran. See more in Quote of the day below.

* The monthly average tractor purchases over the last year to the end of April has been 160, the lowest since 2001, BNZ reports. See more in Number of the day below.

* Fresh data from Auckland Council shows just 50% of building consents actually start being built within six months of the consent, suggesting a further lag in housing construction spending through 2024 and 2025 as many consents remain stalled without buyers or finance at prices builders and developers think make sense. See more in Table of the day below.

* Today’s Must-Read is an Op-Ed from Anne Salmond via Newsroom on “a lame but personally intimidating campaign launched by Deputy Prime Minister David Seymour against academic critics of his Regulatory Standards Bill.”

There’s more detail and analysis for paying subscribers below the fold and in the podcast above. If we get over 100 likes I will open it up in full for public reading, listening and sharing.

The Lead: GDP stalls just as new cost shock hits

ANZ has slashed its forecast for GDP growth in the June quarter to just 0.1% from 0.4% after a slump in leading indicators in June. It sees growth averaging just 0.9% for the 2025 year, despite the Government’s hopes for a ‘growth, growth, growth’ pickup linked to lower interest rates.

Instead, a balance sheet recession linked to the high interest rates in 2022, 2023 and 2024 a house price slump expected to extend to 2030 has stalled spending and investment, just as the Government itself froze investment and chose debt reduction over stimulus, despite its ‘growth, growth, growth’ rhetoric.

The forecast of a new winter of stagnation comes just as a new cost-of-living shock arrives courtesy of higher petrol prices, possibly as much as 30 cents a litre higher in coming days, as Iran attacked US bases in the Gulf States and threatened to close the Straits of Hormuz, through which a quarter of the world’s oil supplies pass.

Quote of the day:

“Did I hear Former President Medvedev, from Russia, casually throwing around the "N word" (Nuclear!), and saying that he and other Countries would supply Nuclear Warheads to Iran? Did he really say that or, is it just a figment of my imagination? If he did say that, and, if confirmed, please let me know, IMMEDIATELY. The "N word" should not be treated so casually. I guess that's why Putin's "THE BOSS.". Donald Trump in a Truth Social post overnight.

Number of the day: Repaying debt first

Despite record high payouts and export receipts, farmers are repaying debt first, rather than spending or investing, as demonstrated by the average tractor purchases per month in the year April falling to 160, its lowest since 2001, BNZ reported in its weekly note yesterday, with this chart, albeit noting a pickup in late May and June after Fieldays and the Government’s investment boost.

Table of the day: False starts

Top Six Pick ’n’ Mix for Tuesday, June 24

* Reuters: Iran fires missiles at US airbase in Qatar, explosions heard over Doha

* Reuters: Putin says US strikes on Iran are pushing world to 'very dangerous line'

* Fox Meyer for Newsroom: Jones says he wants to break up DoC

* NZ Herald: Supermarkets admit misleading prices, face millions in fines

* RNZ: Petrol price 'double whammy' looming

* FT-$: Germany and Italy pressed to bring $245bn of gold home from US

Breaking news & scoops this morning

* AP: Iran targets US base in Qatar

* Andrea Vance for The Post-$: Shane Jones wants to strip Conservation Department’s concession powers.

* RNZ: GPs to get $175m extra funding

* The Press-$: Christchurch mums and babies charity faces closure after 50 years.

* David Williams for Newsroom: $170m promised for EV chargers yet to materialise

* Fox Meyer for Newsroom Pro-$: Big tech wants Luxon to turn NZ into ‘sandbox’

Politics, business, economy & geopolitics

* NZ Herald: PM open to scrapping regional councils amid RMA reform

* Glenn McConnell for Stuff: All the big changes made to employment rights.

* Roeland van den Bergh for The Post-$: Brace for 30c a litre petrol price rise if Iran closes key shipping route“I've been telling everyone, fill up your tank now:”

* RNZ: Queuing for brunch & browsing shops a rose tinted memory in Ponsonby

* Julia Gabel for NZ Herald: NZ First drafting bill sees only one Ngāpuhi settlement

* Bloomberg-$: Air India Crash may hike Insurance Premiums 30%

Housing, transport, infrastructure & councils

* Liz McDonald for The Press-$:Council should reject Ohoka plan - panel.

* Matt Lowrie for Greater Auckland : Inside Bishop’s transport rule changes

* 1News: Nearly 200 people apply for 'golden visas' in 3 months.

* Tina Law for The Press-$: Mayor backs Govt on rates caps & regional councils

* RNZ: Golf NZ rejects council plan to halve Takapuna course

* Nona Pelletier for RNZ: Retirement villages operating on razor thin margins

Poverty, health, education & crime

* Anusha Bradley for RNZ: Abuse compensation claims at $50 million so far

* RNZ: Woman lay dead more than two days in supported accommodation

* Jack Riddell for Hawkes Bay Today: Cheap food boxes in Hawke’s Bay, if you attend cooking and growing workshops

* RNZ: Hospital staff concerned about combined cleaner-security officer roles

* Stuff: Documents obtained by Stuff include sector modelling that shows how much more aged care residents could pay, according to their assets.

* Stuff: GPs to see largest funding boost in NZ history, health minister says.

Climate, environment & land

* RNZ: Climate Minister says gas shortage will lower greenhouse emissions

* RNZ: The ageing 'vulnerable' rain radar running out of time

* Victor Waters for RNZ: New mapping tech to help Auckland combat floods

* RNZ; Stewart Island solar farm to fight high power prices gets funding

* WSJ-$: A Battery That Lasts 50% Longer Is Finally in Production

* AP: Want to plant trees to offset fossil fuels? You’d need all of North & Central America, study finds

Cartoon of the day: ‘Some bits are falling off’

Timeline-cleansing nature pic

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

Morena and glad to be back online after a couple of weeks of leave. Briefly in the news from Aotearoa’s political economy around housing, poverty and climate on Monday, June 23:

* Chris Bishop says he wants to unleash a housing supply shock and last week announced the Government would force councils to allow more houses if they kept saying no, adding to a swathe of repeals and reforms he has launched. But it his Government’s own ‘no’ to council requests for funds and ‘no’ to new Kāinga Ora homes that has actually shocked new house building into reverse. See more in The Lead below the paywall fold.

* The scale of the housing crisis remains intense as winter heating bills go unpaid and heaters are turned off. Reporting over the weekend detailed cases of pensioners and children sleeping in cars in Christchurch, and Tenancy Tribunal rulings revealed examples of a family being evicted from a tent in the front yard of a condemned rental and a father and his five-year-old being kicked out of a windowless storage unit days before Christmas. See more in The Sidebar below.

* Pressure is mounting on retirement villages to repay the families of deceased residents much faster. It’s clear the big standoff in the housing market between buyers fearing over-paying and sellers waiting-just-a-bit-longer for prices to start rising again is causing a cash crunch for retirement villages holding onto cash until they also start seeing prices rise again. See more in Quote of the day below.

* The average time for a hearing at the Tenancy Tribunal has risen to nine weeks from eight weeks in February. See more in Number of the day below.

* The carbon budget to ensure climate warming stays less than 1.5 degrees above pre-industrial levels has fallen to just three years of emissions. See more in Chart of the day below.

* The Must Watch of the day in my Picks ‘n’ Mixes below details the lives of people sleeping rough in Christchurch’s red zone. Via Stuff.

There’s more detail and analysis for paying subscribers below the fold and in the podcast above. If we get over 100 likes I will open it up in full for public reading, listening and sharing.

A supply shock in exactly the wrong direction

I admire Housing and Infrastructure Minister Chris Bishop’s ambition and plain talking when it comes to improving housing affordability through increasing the supply of housing. He has been one of the rare politicians in recent years to admit he’d like to cut real house prices and rents through a housing supply shock.

And he’s been a regulatory action man to back the big talk in the Government’s first 18 months, repealing the RMA, reinventing Labour’s Three Waters into Local Water Done Well to increase water infrastructure investment and pushing hard to improve housing density rules near city centres, rail lines and bus stations. He has had to fight hard against opponents of densification and more affordable new housing among those in his coalition Government’s parties, and their allies in councils.

Just last week, Bishop again talked up the need for much, much more affordable housing in our biggest cities, rattling his sabres in a speech to about the potential to remove Auckland’s calamitous ‘view-shaft’ rules stopping densification in view of the city’s volcanic cones and forcing councils to budget for 20% faster population growth than Statistics NZ currently projects. He also revealed he would soon have new powers to over-rule council decisions “if they negatively impact economic growth, development capacity, or employment”.

He is serious and is no doubt working hard on all these things, but the Government’s first priority of stopping new debt-funded Government investment and rejecting council pleas for more funding tools and capital grants, along with more public transport investment has created a much bigger shock in exactly the wrong direction.

Stopping the biggest house-builder from building doesn’t help

Last week’s long-foreshadowed announcements by Kāinga Ora of the cancellation of over 100 projects to build over 1,650 new homes is a major part of the negative supply shock, along with uncertainty caused by the freezing of funding and delays in planning for schools, hospitals and public transport projects. The upheavals, again, of rules around District Plans, the RMA and Local Water Done Well, set developers and planners further back on their heels, after two years of interest rate pain that has yet to abate.

The numbers are clear in this chart via Tony Alexander showing dwelling consents have slumped back to pre-GFC norms and the chart below that from Musical Chairs showing consents falling, just as house prices are still falling.

And therein lies one of the problems for Chris Bishop. Relying on the private sector to build homes only works when house prices are rising, because tax-free capital gains are the major incentive for developers and buyers. If a supply shock pushes prices down below profitable levels, they stop building. There is a market failure to be solved by some sort of public subsidy, which Bishop is removing. Further reading:

* RNZ: Youth offending drops with safe, stable housing - study

* RNZ: Quarter of households rely on government housing support

The sidebar: A market failure and a social catastrophe

These articles below demonstrate just how much of a market failure there is, and the scale and nature of the crisis. Further reading:

* Deep-dive by Phoebe Utteridge for Stuff: ‘Heartbreaking’: Pensioners, children sleeping rough in Christchurch’s red zone.

* Tara Shaskey for Open Justice via NZ Herald: 'Gut-wrenching': Father and 5yo daughter illegally living in storage unit kicked out days before Christmas

Quote of the day: ‘Why rising prices are needed.’

Retirement Village Association (RVA) president Graham Wilkinson operates six villages and argues against faster capital repayment times.

“The reality is the reason it’s become an issue is the real estate market. Have you tried to sell a house in Auckland? People are just giving up ... the real culprit in terms of causing extra angst is the slow real estate market.

“People calling for mandatory repayment are the same people who took three, four, six months, sometimes, to sell their house, to move to the village. And yet now, now they expect everyone to suddenly, miraculously, do it in days. It doesn’t really make sense.” Via The Post-$: Dying for a payout ‒ a David vs Goliath battle.

Number of the day: Nine weeks for a hearing.

Figures released to the Sunday Star-Times show the average wait time for a hearing at the Tenancy Tribunal has grown in the last six months to just over nine weeks. Via Deep-dive by Jonathan Killick for Sunday Star Times-$ :Kirsty Maree found herself living in a tent and locked in a bitter dispute with her landlord.

Chart of the day: Three years of emissions left

Top Six Pick ’n’ Mix for Monday, June 23

* Deep-dive by Nicholas Jones for Stuff: Aged care investigation: Blind and deaf 98-year-old died in isolation. Sylvia Mowat died during isolation and conditions that shocked her family. Her story is told as part of a Stuff investigation into the state of aged care in New Zealand.

* Glenn McConnell for Stuff: ‘Despot’ or housing saviour? Chris Bishop to gain power to overrule councils

* Stuff: WATCH: The life of those sleeping rough in Christchurch's Red Zone. The life of those sleeping rough in Christchurch's Red Zone.

* Deep-dive by Amanda Gillies for Newsroom/RNZ’s The Detail: ‘Nowhere to go’ for more than 100,000 Kiwis

* Deep-dive for WSJ-$ (gift) Stephen Miller’s Fingerprints Are on Everything in Trump’s Second Term

* Tim Harford for FT-$ (gift opens three times): Notes on the resistant reader

Best of the rest: Breaking news & scoops this morning

* Scoop by Jenee Tibshraeny for NZ Herald-$: ACC faces scrutiny over slow payouts after law change

* Scoop by Sam Sachdeva for Newsroom: Seymour’s ‘light up’ message alarms tobacco researchers

* Scoop by Tim Murphy for Newsroom: Cabinet frets over funding for Māori foreshore claims

* Phoebe Utteridge for Stuff: ‘Disturbing’ spike in demand for food at schools, children’s charity says.

* Emily Ansell for NZ Herald: 'Not tackling backlog': Back-up court trial system under scrutiny

* Hanna McCullum for The Post-$: Wellington kindergarten fears further funding pressures.

Politics, business, economy & geopolitics

* Russell Palmer for RNZ: Labour moves ahead of National on controlling cost of living, Ipsos poll finds

* Andrea Vance for Stuff: ‘No BS’ Budget fails to deliver Nats a poll lift.

* Andrea Vance for Stuff: Jacinda Ardern remains most popular politician as Luxon slumps in new poll.

* Rob Stock for The Post-$: Households could be forced to pay more for residential aged care.

* WSJ-$ (gift): Stablecoin Legislation Will Juice Demand for Treasurys—to a Point

* Bloomberg-$ (gift): What if Iran Tries to Close the Strait of Hormuz?

Housing, transport, infrastructure & councils

* RNZ: House prices to be '20% lower in 2030s than 2021' - forecast

* Op-Ed by Len Cook for Newsroom: ‘Population storm’: Govt Statistician must face questions about census

* Stuff: ‘A huge win’: Ō2NL plans for interchange and overbridge back on the table.

* Deborah Morris for The Post-$: Social housing in Wellington slashed, with hundreds more up in the air.

* RNZ: Waka Kotahi keeps lowered speed limits for 13 stretches of highway

* RNZ: New Plymouth ponders first-ever PPP for inner-city revamp

Poverty, health, education & crime

* Deep-dive by Shannon Pitman for NZ Herald via RNZ: 'I wouldn't wish it on anyone': Why are victims having to wait until 2027 for justice?

* Deep-dive by Indira Stewart for 1News: Many NZ sex workers start as children: What's being done to stop it?

* Deep-dive by Michael Daly for Stuff: A home so cold a visitor started to lose feeling in her feet.

* NZ Herald: 'Save a lot more lives': Stage 4 cancer survivor's plea for earlier screening

* The Post-$: Funds for new services to help Wellington’s homeless

* Deep-dive by Marine Lourens for The Press- $: What life is like as an ICU doctor.

Cartoon of the day

Timeline-cleansing nature pic

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 features co-hosts Bernard Hickey and Peter Bale talking with regular guests Robert Patman and Cathrine Dyer about the week’s news in geopolitics and climate.

This week’s Hoon featured special guests:

* author, historian and a former colleague from Reuters, former Tehran bureau chief Jonathan Lyons;

* Noted author and critic of Israeli policy, Antony Loewenstein talking about this week’s events in Iran and Israel; and,

* New Zealand economist Andrea Black on her Post Op-Ed on Budget 2025’s investment boost policy.

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 this 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 features co-hosts Bernard Hickey and Peter Bale talking with regular guests Robert Patman and Cathrine Dyer about the week’s news in geopolitics and climate.

This week’s Hoon featured special guest New Zealand freelance journalist Andrew Gunn speaking from Kyiv.

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 this 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 features co-host Peter Bale talking with regular guests Robert Patman and Cathrine Dyer about the week’s news in geopolitics and climate. Bernard couldn’t get on because of technical issues.

This week’s Hoon featured special guests Jamie Shea from Chatham House and Auckland Uni’s Treasa Dunworth.

Peter mentioned this New Yorker article about Curtis Yarvin.

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 this 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

News last week that Auckland Council had confirmed plans to charge housing developers $6 billion worth of Development Contributions (DCs) over the next 30 years to partly pay for $19 billion in capital spending on parks, public transport and water infrastructure didn’t get nearly enough attention.

Not because it was surprising or unusual or unexpected. It wasn’t. It’s now the standard way for councils to reduce the ‘burden’ of having to pay for at least half the infrastructure costs from population growth. Ratepayers, councillors, the Government and even developers seem to accept its fair and good, although developers often complain about the scale and increases. That’s understandable, given the breadth and scale of the latest increases in Auckland, as reported by Jonathan Killick for Stuff (bolding mine):

The highest leap in charges is in the inner northwest suburbs of Redhills, Westgate and Whenuapai where new builds will incur average charges of $72,000 per house, up from $25,000.

It’s one of five “investment priority areas” identified for growth. Others include Mt Roskill where contributions will increase on average to $33,000 and Mangere with contributions increasing to an average of $27,000. Jonathan Killick for Stuff

The reason it’s remarkable is that this ongoing and increasing use of DCs is an essential tool in a multi-decade exercise in magical thinking by both central Government and councils, in which they both believe enough infrastructure can be funded by private borrowers to sustain 1.5% per annum population growth. It goes like this:

* Governments under both Labour and National wanted to reduce public debt-to-GDP ratios so always looked for the beneficiaries of public investment to pay for it, rather than the Crown more broadly, so have enabled councils to charge DCs;

* Councils weren’t allowed to run budget deficits and also believe they must keep debt low, so they charged DCs and have progressively increased them to cover more of the direct water infrastructure for housing and widened them to include paying for parks and buses as their debt has risen; and,

* Developers have accepted them because they can be easily itemised and passed on to the buyers of sections and/or house and land packages.

Back before DCs

But it wasn’t always like this. Before the late 1980s, the central Government, council water departments, electricity lines ‘boards’ and Telecom simply paid for the infrastructure, sometimes with debt and sometimes out of retained surpluses from rates and lines charges. They often laid the pipes, built the roads, moved the earth, put up the lines and dug the ditches with the help and planning of the Ministry of Works.

That wasn’t the only help the Government gave developers, builders and buyers of new homes, especially first-home buyers. The Government enabled young families to capitalise their child benefits into a deposit for a home with a 3% home loan from the state. The Government also guaranteed to buy unsold homes built on new suburbs and provided simple (and free) to use designs for developers and builders to use.

Then everything changed when Governments of the day from 1984 onwards took the view that New Zealand would not have much population growth and that previous Governments (ie Muldoon’s) had over-invested with foreign debt, which should never happen again.

The Government then took the view that the beneficiaries of public investment could be identified and charged, to avoid both other taxpayers and ratepayers having to pay, and to restrict new Government borrowing, in order to reduce the size of the Government and its debt relative to GDP over the long run.

A perfect solution. Higher house prices and lower mortgage rates.

So DCs started. These DCs have inflated new house prices in a way that has pumped up prices of all houses because the price of a new ‘marginal’ item of supply often drags up the resale price of a long-lived and tradeable product such as a house. That inflation is painful for those trying to ‘get on the ladder,’ but is welcome news to existing homeowners and their bankers able to use those higher (tax-free) capital valuations to enable further leverage.

Higher DCs are the perfect tool for voters in both council and general elections because they enable;

* (slightly) lower mortgage rates through lower Government borrowing, which in turn increases land values and enables more leverage;

* they discourage new housebuilding, which in turn reduces overall supply and elevates both the values of their own homes and the rents underpinning the values of their rental properties;

* they directly increase the value of their own homes by increasing the cost of the marginal unit of supply; and,

* they reduce the cost of rates for all existing homeowners, which in turn increases the disposable incomes needed to obtain more leverage to buy more existing homes.

That means DCs are one of the key tools in a suite of measures that have shifted wealth in a one-off way from the young to the old.

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 features co-hosts Bernard Hickey & Peter Bale talking with regular guests Robert Patman and Cathrine Dyer about the week’s news in geopolitics and climate.

This week’s Hoon featured special guest Janet H Anderson from the podcast Asymmetrical Haircuts, which covers international justice.

Peter mentioned these two articles:

* Tom Friedman: Will Israel’s War Ever End?" NYT

* M Gessen: Beware: We Are Entering a New Phase of the Trump Era" NYT

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 this 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 features co-hosts Bernard Hickey & Peter Bale talking about Budget 2025 with:

Vic Uni political scientist Lara Greaves;

CTU Economist Craig Renney; and,

Tax commentator Terry Baucher.

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 this 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