The Kākā by Bernard Hickey

Long stories shortest: The Government’s international investment conference ignores the facts that PPPs cost twice as much as vanilla debt-funded public infrastructure, often take longer, and often have to be relitigated or bailed out later. The biggest projects pitched also make no economic or fiscal sense for taxpayers. Also, the school lunch scheme continues imploding and long covid is squeezing our labour force.

(There is more detail, analysis and links to documents below the paywall fold and in the podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. All students and teachers who sign up for the free version with their .ac.nz or .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.)

Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Friday, March 14 are:

* PM Christopher Luxon and much of his Cabinet pitched to pension fund managers at a conference in Auckland yesterday for tens of billions of their funds to invest through Public Private Partnerships in motorways, hospitals, prisons and more. (Hear more detail in the podcast above)

* The unspoken assumption no one in the media or conference challenged was that simply using Crown borrowing to fund these projects would be faster, cost taxpayers half as much, be simpler and less risky. That’s because previous big infrastructure PPPs such as Transmission Gully were fiendishly complicated to negotiate, generated massive litigation and were eventually rewritten anyway.

* The other unchallenged problem with many of these projects is they don’t stack up in their own right as projects, often generating marginal or even negative benefit to cost ratios, even without a proper accounting for climate emissions or public health costs.

* Labour is flirting with saying it would honor any PPPs written by the current Government, while also saying it wants to retain ownership of hospitals, schools and prisons.

* In another sign of how covid’s shadow is hanging over our political economy, the share of New Zealand’s work force reporting they had to work fewer hours because of sickness or injury increased from around 2.5% of the workforce in 2020 to around 3.5% by the end of 2024. That represents around 31,000 people. (See chart of the day below)

* In line with ACT’s original campaign to shut the school lunch programme completely, a Huntly school has become the first to abandon it altogether. Kimihia School Principal Pamela Dunn told parents last night she was suspending the new Compass school lunch programme from today because of the “substandard quality of meals,” instead asking parents to ensure students brought their own lunches such as sandwiches as muffins. (See more in quotes of the day below)

My Pick’ n’ Mix Six of scoops & deep-dives elsewhere

* Media scoop: 'Shake-up is necessary' - NZME's biggest shareholder backs board cleanout NZ Herald-$$$’s Shayne Currie

* Politics scoop: Govt considers getting us to contribute more to KiwiSaver NZ Herald’s-$$$ Jenee Tibshraeny

* Politics scoop: Another ACC deputy chief executive stood down over alleged ‘inappropriate behaviour’ Stuff’s Paula Penfold

* Climate scoop: Second firm halts plans for offshore wind farms Newsroom Pro-$$$’s Marc Daalder

* Politics news: Labour open to compromise on PPPs Newsroom’s Fox Meyer

* Politics news: Power to shed light on tax of wealthy may be snuffed out. NZ’s wealthiest people look set to enjoy greater privacy once again, knowing they can’t be forced to give information to the Government about their tax arrangements. The Post-$$$’s Tom Pullar Strecker

Podcast of the day

I spoke with former Primer CEO Sean Gourley about AI and defence tech

Quotes of the day

‘The living wage allowed me to thrive’

“The Living Wage basically allows me to survive. Before the Living Wage came in I was really struggling to afford groceries, especially considering how high my rent was, and the Living Wage has allowed me to thrive in what would be seen as a very basic sense. This is all I have and if I'm not going to be paid enough then I'm going to struggle even more than I am.” Cleaner Robert Shaw commenting via RNZ on the Government’s decision this week to remove the need to pay the living wage in procurement rules.

‘They got what they wanted’

“We said it from the start - it was going to be our children who would pay the price for David Seymour’s botched school lunches programme. It’s a sad reality that some children may now go hungry and struggle in class because of his choices and the prime minister’s inability to step in.” Labour Education spokesperson Willow-Jean Prime.

Chart of the day: Covid’s shadow

Self-reported sickness reducing hours worked increased from late 2020

This chart from Stats NZ’s Household Labour force survey shows the percentage of of the labour force reporting they work less hours due to sickness or injury. The trend shows an increase in illness reducing work hours from around 2.5% of the workfrce in 2020 to around 3.5% by the end of 2024. That represents around 31,000 people.

Substack essential today

Cartoon of the day

Timeline-cleansing nature pic of the day

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 about the week’s news with regular and special guests, including:

* Robert Patman on the week in geopolitics, including Donald Trump’s wrecking of the post-WW II political landscape; and

* Health Coalition Aotearoa co-chair Lisa Te Morenga on school lunches and bowel cancer screening.

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

Long stories shortest: The IMF says a capital gains tax or land tax would improve real economic growth and fix the budget. GDP is set to be smaller by 2026 than it was in 2023. Compass is flying in school lunches from Australia. 53% of National voters say the new school lunch system isn’t working. One school is feeding the lunches to pigs, which ACT said happened under Labour. David Seymour attacked the journalist who pointed that out.

(There is more detail, analysis and links to documents below the paywall fold and in the video and podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. All students and teachers who sign up for the free version with their .ac.nz or .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.)

Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Thursday, March 13 are:

* The International Monetary Fund (IMF) has again recommended the Government reform the tax system to restart economic growth and reduce future budget deficits, saying a capital gains tax or land value tax would help incentivise productivity-enhancing investment. (See quotes of the day below)

* The IMF also warned of the risk of another mortgage-fueled surge in the housing market. It also cautioned against a loosening of Reserve Bank capital rules that would unleash such a surge, as is being investigated by Finance Minister Nicola Willis. (See quotes of the day below)

* David Seymour’s cut-price, nutrition-lite, small-portion, dangerously-hot, repetitive and unpopular school lunch programme has fallen further into disrepair. After the collapse of Libelle on Tuesday, Compass has started importing pre-cooked lunches from Australia.

* This news came as it emerged one school on the East Coast, Nuhaka, has started feeding discarded lunches to pigs, which was something ACT alleged happened in the last programme, which it wanted axed completely. Seymour attacked 1News’ Benedict Collins for pointing out the irony of Compass making pig food. (See video of the day below)

* The programme is now seen as performing badly by 53% of National voters and 65% of voters overall, including 60% who want the system reverted to its full Ka Ora Ka Ake state. as set up by the previous Labour Government.

* Retail spending and traffic movement data published yesterday showed economi activity bumping along at lower levels, struggling to recover from last year’s big recession. ANZ now sees just 1% GDP growth in calendar 2025, failing to recover the 2% fall in 2024. (See more below in charts of the day)

My Pick’ n’ Mix Six of scoops & deep-dives elsewhere

* Poverty & health deep-dive: 'I can't survive on $55 a week': Benefit cut due to hospital stayIf a person spends more than 13 weeks in hospital, their benefit is automatically cut to $55 a week. 1News-Re: News’ Zoe Madden-Smith

* Transport & heath deep-dive: Anger at speed limit changes: 'It affects so many people on the roads'A small Far North community is "angry and frustrated" it's been forced to once again fight a battle over speed limits it thought it had already won. Peter de Graaf via LDR-1News

* Infrastructure news: ‘An unworkable position’: Court wildlife ruling hangs over investment summit. Corporate lawyers are issuing urgent advice to clients right across the economy - permits they thought they had to kill local fauna may be unlawful. The Post-$$$’s Luke Malpass

* Politics news: NZTA commits to consultation on controversial Nelson speed limit increaseAfter weeks of uncertainty for residents about a speed limit increase through their suburb, NZTA has confirmed that the community will be consulted. 1News’ Jess Roden

* Health news: Health NZ's proposed digital cuts: 'We are seeing the cracks widen' RNZ on a Health Informatics survey

* Politics deep-dive: Fictional fiscal cliffs - misinterpreting budgets for political gain RNZ’s Phil Smith

Video of the day

Watch the Q&A between Benedict Collins & David Seymour (3:55)

Quotes of the day

‘Put in a CGT or land tax to actually grow sustainably’

“Tax policy can support a more growth-friendly fiscal consolidation, and reforms aimed at improving the tax mix can help increase the efficiency of the income tax system while reducing the cost of capital to incentivize investment and foster productivity growth. Options include a comprehensive capital gains tax, a land value tax, and judicious adjustments to the corporate income tax regime.” IMF in annual report on NZ.

‘And don’t just loosen capital rules to spark another house price boom’

“Given the chronic housing shortage, the already high household leverage, and the propensity in New Zealand for rapid housing credit growth, the RBNZ should monitor the effect of its easing and make full use of its macroprudential toolbox to control the emergence of risks.

“Government policies to strengthen banking competition will need to be carefully designed to preserve the primacy of financial stability. Encouraging stronger competition for deposits and loans can be achieved through measures including faster adoption of open banking, reducing regulatory barriers to entry, enhancing fee transparency, and making it easier to switch providers. The primary objective of prudential regulation should be to safeguard financial stability, calibrated to the risks and vulnerabilities faced by New Zealand.” IMF in annual report on NZ.

Charts of the day

Bumping along the bottom at 2013 levels

Stats NZ reported yesterday total card spending on retail and non-retail services was unchanged in February from January in seasonally adjusted terms, although spending in core retail industries rose 0.5%. Essentially, retail spending remains in deep, deep recession, as MusicalChairs pointed out with this real and per-capita chart showing retail spending effectively stalled at 2013 levels.

Leading indicator of demand still flat, but output today up

I always watch the ANZ Truckometer series measuring light and heavy traffic movements monthly as one of a series of leading indicators, including the monthly BusinessNZ-BNZ PMI & PSI surveys, the monthly ANZ and quarterly NZIER business confidence surveys, the monthly ANZ-Roy Morgan and monthly Westpac McDermott Miller consumer confidence surveys and the monthly REINZ data.

Retail sales remain mired at recessionary levels with renting workers and beneficiaries under intense cost-of-living pressures, mainly because rents, food and energy prices have risen faster than incomes over the last three years. There are glimmers of hope in some areas that interest rate cuts last year are beginning to flow through, but it’s slow and from a new lower base.

Here’s the latest from the Truckometer series with Sharon Zollner’s commentary on each. The consumer economy is flat on its back, while truck movements look better, possibly in part due to strong export volumes in dairy and meat this year.

“Light traffic (motorbikes, cars and vans) is generally a good indicator of the state of demand, as opposed to production. It typically provides a six-month lead on momentum in the economy – variation reflects discretionary spending on outings, movement of couriers and tradespeople etc. The trend in light traffic is flat, though it hasn’t dropped away in recent months as much as GDP has. In per capita terms, light traffic has flattened out after a sharp drop.” ANZ NZ Chief Economist Sharon Zollner on ANZ’s Truckometer survey for February.

“Heavy traffic data (mostly trucks) tends to provide a good steer on production GDP in real time, as it captures both goods production and freight associated with both wholesale and retail trade. The Heavy Traffic Index fell 0.2% in February, but this was after a sharp rise in January, and it is up 4.9% compared to a year ago (three-month average). The per capita Heavy Traffic Index has bounced back after a sharp fall in the middle of last year.” Sharon Zollner

Table of the day

Women (18-49) two to one in favour of Opposition vs Coalition Govt

The Roy Morgan poll taken monthly publishes a useful breakdown of the demographics of supporters for each of the parties, which has shown young women support Labour/Green/Te Pāti Māori (61.5%) at a rate of two to one vs support among young women for National/NZ First/ACT (30%).

Young men overwhelmingly (but to a lesser extent) support National/NZ First/Act (53.5%) vs Labour/Green/Te Pāti Māori (38%). Both old men and women support the Government.

The poll itself showed a gain for the centre-lift to the point it is now even again with the centre-right. Support for the Greens rose 4.5 percentage points to 15.5%, its highest level since February 2024.

Substack essentials

This eight-minute-long speech by French senator Claude Malhuret via Robert Reich’s substack is a must-read. Malhuret is a former President of Medicins sans Frontiere and a former mayor of Vichy. Yes. That Vichy. They weight of history hangs heavy. Especially this:

“This is not an illiberal drift, it is the beginning of the confiscation of democracy. Let us remember that it took only one month, three weeks and two days to bring down the Weimar Republic and its Constitution.

“I have faith in the strength of American democracy, and the country is already protesting. But in one month, Trump has done more harm to America than in four years of his last presidency. We were at war with a dictator, now we are fighting a dictator backed by a traitor. “ Claude Malhuret to France’s Senate on March 4.

This bit where he’s talking about fellow French parliamentarians arguing against building up Europe’s defences has an extra piquancy, given he was the mayor of Vichy.

“They say they want peace. What neither they nor Trump say is that their peace is capitulation, the peace of defeat, the replacement of “de Gaulle Zelensky” by a “Ukrainian Pétain” at Putin’s beck and call.” Claude Malhuret to France’s Senate on March 4.

Cartoon of the day

Timeline-cleansing nature pic of the day

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

Long stories shortest: Christopher Luxon denies his Government caused a homelessness crisis documented by Auckland Council. Instead, he wants media to celebrate his achievements more. Libelle’s collapse demonstrated how David Seymour has cut Erica Stanford out of the loop and how he ignored official concerns last year about Libelle and Compass. Donald Trump just doubled tariffs on Canadian steel and aluminium imports to 50%, so global markets are falling again this morning.

(There is more detail, analysis and links to documents below the paywall fold and in the video and podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. All students and teachers who sign up for the free version with their .ac.nz or .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.)

Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Wednesday, March 12 are:

* PM Christopher Luxon yesterday denied the Government’s removal of homeless families from motels without knowing where they ended up was the cause of a 50% rise homelessness, as reported on Monday by Auckland Council. He said the media should report more about lower numbers of homeless people in motels. (See quotes of the day below)

* Luxon adopted some of Winston Peters’ anti-‘woke’ campaign yesterday, asking Judith Collins to focus a Public Service Act overhaul around making it a meritocracy, without giving examples of unmeritocratic hiring. (See quotes of the day below)

* Libelle, the company making 120,000 school lunches for Auckland students in David Seymour’s cut-price lunch programme, collapsed into liquidation yesterday, blindsiding Erica Stanford and forcing the lead contractor Compass to take over its 600 staff and operations. (See quotes of the day below)

* Seymour said Libelle’s collapse was a good thing in the long run, without giving details because of ‘commercial confidence,’ although it emerged he had known about its financial problems for months. Stanford said she wasn’t aware of the ‘full and utter extent of it,’ noting Seymour had told Luxon, but not her. (See quotes of the day below)

* BusinessDesk-$$$’s Cecile Meier reported last week Government officials raised concerns about Compass and Libelle in September last year after hearing the companies were shortlisted to run the programme in September, including that both companies were poor performers in the previous Ka Ake Ka Ora programme, but were the only two providers chosen out of the 156 previously used. (See OIA of the day below)

* Donald Trump lashed back overnight at a Canadian threat to impose a 25% surcharge on electricity exports from Ontario. He announced a doubling of tariffs on Canadian steel and aluminium imports to 50% in a social media post, which hammered global stocks and bonds again on US recession and inflation fears.

My Pick’ n’ Mix Six of scoops & deep-dives elsewhere

* Bank capital rules deep-dive: With Orr gone, Willis sharpens case for relaxing bank capital rules. The Post-$$$’s Tom Pullar-Strecker

* Climate, housing & insurance deep-dive: Falling insurance cover could hurt whole economy, leaders warn RNZ’s Eloise Gibson & Kate Newton

* Politics analysis: Why Christopher Luxon approached influencer Alice Taylor. Christopher Luxon’s political judgement is not his strong suit - but he needs it now more than ever. Stuff’s Jenna Lynch.

* Politics investigation: Millions of dollars set to go to offshore gambling operators RNZ’s Guyon Espiner

* Geopolitics analysis by WSJ’s Chief Foreign Affairs Correspondent Yaroslav Trofimov: Trump Is Overturning the World Order That America Built: As the president embraces Putin, longtime allies are starting to view the U.S. not just as unreliable but as a possible threat to their own security.

* Banking Op-Ed by Massey University’s Claire Matthews via The Conversation-RNZ: Calculated risk: Will the next Reserve Bank governor relax capital requirements for banks?

Quotes of the day

‘We should be meritocratic’

“I'd just say, when we took the keys to the place, it was pretty woke, and it's entirely appropriate that we look at what else we can do to make sure the public service delivers.

“We want to make sure it's a meritocracy, meritocracy, meritocracy... we need to make sure it's all about meritocracy.” PM Christopher Luxon telling reporters he was open to using some of Deputy PM Winston Peters’ anti-‘woke’ campaign by asking Public Service Minister Judith Collins overhaul the Public Service Act to ensure it was a meritocracy.

‘A complete and utter (insert word here)’

“Minister Seymour had updated me a little while ago that there was some difficulties. I didn’t know the complete and utter full extent. He has been updating the Prime Minister, but in terms of what happened today, I didn’t know it was at that point.” Education Minister Erica Stanford talking to reporters in Parliament about the collapse.

Making six times as many lunches for a third of the cost

“Last year they did 20,000 lunches a week and this year they were trying to do 120,000 a week, so I mean two or three times is possibly doable, but six times is quite a lot isn't it?” A Libelle worker talking to RNZ’s Checkpoint about the issues faced by the lunch provider as it sextupled lunch production at a third of the cost ($3 vs $9).

‘Why aren’t you saying nice things about us’

“I've met with homeless shelters in the past, I haven't in recent weeks or recent months, but the reality is I'm just saying to you I'm proud of the work we're doing. We're doing a great job.

“We talked about emergency housing, I remember being a big issue in the media, and I haven't heard anybody actually really pick up and say 'hey listen, great job, great job, isn't it awesome?'” PM Christopher Luxon when asked about the rise in homelessness documented in Auckland.

OIA document of the day

‘We have some concerns about Libelle and Compass’

Last week BusinessDesk-$$$’s investigative reporter Cecile Meier detailed documents provided under the Official Information Act to Health Coalition Aotearoa showing how Ministry of Education officials had warned Seymour about the poor performance of Libelle and Compass under the previous programme (bolding mine).

An email from Ministry of Education staff sent to its operations and integration leader Sean Teddy, along with previous memos detailing a litany of performance issues for both companies, was released under the Official Information Act (OIA) to Health Coalition Aotearoa.

Compass and Libelle are the only businesses out of 156 suppliers to last year’s school lunch programme to have been retained for this year’s cut-price model. They are part of a consortium, which has been under fire since the start of the first term for meals described as inedible, burned, full of leaking plastic, repetitive and failing those with special dietary requirements.

The email, entitled “ROI (Registration of Interest) process for alternative provision concerns”, reveals:

* Libelle lost nearly 60% of the schools on its books since it joined the programme in 2021. It went from delivering lunches to 196 schools down to 79 by September 2024.

* Compass failed 53% of the 38 meals assessments the ministry conducted in Term 3 and 4, 2023 in terms of meeting nutrition standards.

* Together, the companies fielded 242 complaints since 2021. Libelle had 163 complaints and incidents “predominantly related to food quality/appeal, food safety, surplus/waste and suitability to special diets”, the email said.

* Surplus levels in 2024 for both Libelle and Compass were “well above the programme average” at 11.5% and 10.6% respectively, compared to a programme average of 6.4%.

* The ministry defines a surplus meal as an “untouched complete meal that is left over after all lunch service is finished”.

* Both companies went through a six-week Performance Management Plan in early 2024, with mixed results.

* Compass lost 23 of the 53 schools it had on its books since it started in 2021 by September 2024. Meal assessment data about Compass “indicated prolonged issues with undersized meals, inconsistent portioning and meals not meeting nutrition standards overall” in 2023.

* “Libelle and Compass have partnered with Gilmours to register their interest in the alternative provision model,” the email said. “While their application was evaluated positively in its written content, the special projects team provided detailed due diligence on all suppliers early on in the process to ensure the panel were aware of the historical performance concerns,” the email says. BusinessDesk-$$$

Chart of the day

Co2 levels average over 430 ppm for first time last week

Substack essential

Henry Cooke writes via his Museum Street substack that National needs to change the economy, not their leader.

David Roberts writes via his Volts substack about how housing is a pass/fail question for climate.

Cartoons of the day

Timeline-cleansing nature pic of the day

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

Long stories shortest in Aotearoa’s political economy this morning:

* National’s pollster finds Christopher Luxon has fallen behind Chris Hipkins as preferred PM for the first time, with Labour’s support high enough to govern with the Greens & Te Pāti Māori.

* Asked about the polls, Luxon says fixing the economy will improve support for the Government, but a new survey shows voters, including National, ACT and NZ First voters, want the health system’s crisis resolved as a priority.

* Luxon has also announced another foreign trip from this Sunday, this time to India in the hopes of securing a trade deal, even if it may not include dairy access.

* The Government is offering up the first tunnel-and-bridge-laden section of the Northern Expressway motorway to infrastructure investors this week, despite being warned by the Infrastructure Commission of its brutally high costs.

* ASB, BNZ and ANZ have told MPs lower Reserve Bank capital requirements for banks under any new Governor would help lower mortgage rates.

* ASB has more than halved its house price growth forecast for 2025 to just 3.4% from 9%, with prices still falling through the first half of the year.

(There is more detail, analysis and links to documents below the paywall fold and in the video and podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. All students and teachers who sign up for the free version with their .ac.nz or .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.)

The six things to know this morning

Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Tuesday, March 11 are:

* A monthly poll published yesterday by National’s pollster, Curia, for the Taxpayers’ Union found support for Christopher Luxon as preferred PM fell below support for Labour leader Chris Hipkins for the first time. Support levels for the centre-left parties rose more than for the centre-right parties, entrenching the Opposition’s ability to govern if an election were held now. (See charts of the day below)

* Challenged on the poll results at yesterday’s post-Cabinet news conference, Luxon said: “Our job is to focus on what New Zealanders want, and that is all about us fixing the economy and making sure we get the money into Kiwis’ back pockets.”

* Luxon also talked about his work improving relations overseas, pointing to plans announced yesterday for him to lead a business delegation to India, leaving on Sunday.

* However, a poll published yesterday by Horizon Research of voters’ top concerns found fixing the health system ranked above all else, including the economy and the cost of living, and especially among National, ACT and New Zealand First voters. (See table of the day below)

* CEOs and Chairs for ANZ, ASB and BNZ told MPs yesterday at a select committee hearing that lower Reserve Bank capital requirements for banks such as theirs would lower banking costs for customers. Finance Minister Nicola Willis has already asked for advice on loosening the rules set by now-on-leave ex-Governor Adrian Orr, which would allow banks to lend much faster into the housing market. Interest The Post-$$$

* ASB lowered its house price inflation forecast for this year, with Chief Economist Nick Tuffley saying: “The pick-up in sales has been sluggish so far and there is a lot of stock on the market, so that will temper how soon prices lift. And migration flows have fallen quite sharply.”

My Pick’ n’ Mix Six of scoops & deep-dives this morning

* Politics scoop: No regional ‘cities deal’ for Wellington after mayors can’t agree The Post-$$$’s Andrea Vance

* Housing deep-dive: Maker of tiny homes fights to keep them consent free Stuff’s Marty Sharpe

* Poverty & Health news: Bowel cancer screening changes 'driven by ideology, not facts' RNZ’s Susana Leiataua

* Politics news: School lunch failures: Provider told to show daily visual evidence of quality RNZ’s Louise Ternouth

* Politics news: A 'destruction of Whānau Ora by stealth' - providers RNZ’s Tuwhenuaroa Natanahira

* Transport news: Advocacy group takes government to court over speed limit increases RNZ’s Samantha Gee

Charts of the day

Table of the day

Luxon focuses on the economy, but even his own supporters don’t

Quote of the day

‘A country we can no longer trust’

“A person who worships at the alter of Donald Trump will kneel before him, not stand up to him.

“These are dark days. Dark days brought on by a country we can no longer trust.” New Canadian Liberal Party leader and soon-to-be Canadian Prime Minister Mark Carney in his victory speech BBC

Substack essentials of the day

Cartoon of the day

Timeline-cleansing nature pic of the day

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

Long stories shortest in Aotearoa’s political economy this morning:

* Within months and before Parliamentary approval is obtained, the Government plans to strip non-Maori landowners of the right to use the Environment Court to stop compulsory acquisition for fast-track projects and big new motorways.

* The Government also wants to buy off landowners who volunteer to sell early by paying them up to $150,000, with all non-volunteers getting up to $92,000 extra.

* Iwi land owners will also get paid off, but can still appeal to the Environment Court under changes to the Public Works Act to be legislated next year.

* A survey taken in late February found 55% of New Zealanders have struggled to pay for or gone without essentials such as food and doctors’ visits.

* The Government will host a conference for foreign infrastructure investors this week, but Shamubeel Eaqub asks why they would invest when the Government itself is cutting investment. (See quote of the day and chart of the day below)

* A new Horizon poll has found 36% of NZ First voters are disappointed with the coalition Government’s performance, endangering its ability to get over the 5% threshold at next year’s election.

(There is more detail, analysis and links to documents below the paywall fold and in the video and podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. 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.)

The six things to know this morning

Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Monday, March 10 are:

* Infrastructure Minister Chris Bishop and Land Information Minister Chris Penk yesterday announced plans to amend the Public Works Act “within months to accelerate the acquisition of land needed for the public projects that are listed in Schedule 2 of the Fast-track Approvals Act, and the Roads of National Significance listed in the Government Policy Statement on land transport 2024.”

* They said the changes would apply six months before amendments from a wider review of the Act goes through Parliament, which was not expected until next year. They said objectors to land acquisition would not be able to appeal to the Environment Court, although iwi would.

* Meanwhile, the Government would offer voluntary sellers a premium of up to 15% of their land’s value, while non-volunteers would all get up to 5% extra to a maximum of $92,000 each.

* A ResearchNZ survey of 1,006 adults taken from February 20-24 was published yesterday, showing 55% said they had struggled to pay for or gone without essentials such as food, doctors’ visits and power bills.

* The survey found 71% of those aged 18-34, 62% of those living with children and 60% of women said they had struggled or gone without. It showed no overall improvement in two years. A third of those surveyed said they had been unwell and gone without medical care in the last three months.

* Simplicity Economist Shamubeel Eaqub says the Government is asking foreign investors to have confidence to invest, when the majority of the Government’s own spending cuts in the last year were cuts in investment.

My pick’ n’ mix six of scoops & deep-dives this morning

* Housing scoop: Auckland homelessness spike prompts 'please help' letter RNZ’s Katie Todd

* Politics scoop: Andrew Bayly takes a break to climb Everest Stuff’s Andrea Vance

* Housing deep-dive: Why a $62m Auckland plot has sat empty for 20 years. The chunk of land once home to a popular bowling club has sat empty for two decades, despite a Chinese developer’s grand plans for a $453m apartment project. Stuff’s Caroline Williams

* Housing deep-dive: Leaking sewage, no hot water, and stabbed walls: The ‘unsanitary’ flats two women felt they couldn’t refuse. The women were placed in the dilapidated units by a prisoner reintegration charity after being released from jail. Now they’ve been awarded more than $25,000 in damages. Stuff’s Edward Gay

* Climate analysis: A case of when, not if, Government dumps NZ’s 2030 Paris ‘pledge’ Prime Minister Christopher Luxon’s unwillingness to restate commitment to key carbon-reduction pledge has unnerved Labour and the Greens. The Post-$$$’s Tom Pullar-Strecker

* Housing deep-dive (and good news): Improving NZ’s woeful housing situation, one panel at a time.Your home should not send you to hospital, and this joint venture has devised simple tech to build passive-style airtight homes anywhere in the country. Gill South in Stuff

Quote of the day

‘You should invest, but I won’t’

“Cutting investment spend and asking others to invest instead seems fraught,” Simplicity Economist Shamubeel Eaqub via a LinkedIn post yesterday.

Chart of the day

‘Government is cutting capex, not opex’

Simplicity Economist Shamubeel Eaqub yesterday put the correct framing around the Government’s conference on Thursday and Friday for foreign infrastructure investors. Why would foreigners invest when the Government isn’t? And why has the fiscal austerity so far been all about quickly turning off investment? Here’s Shamubeel in his LinkedIn post with the chart above (bolding mine):

“Fiscal austerity so far has been reduced investment and not much else, because red projects were turned off by the blue team.

“In the 7 months to Jan-25, government net cash spend (opex+capex-revenue) into the economy was down 41% from the previous year. [See left chart.]

“Rising tax revenue may surprise; they would have increased more without income tax cuts. Operating spending is still growing (1/4 from NZ Super!), despite announced cuts. So, tax cuts have not been offset by spending cuts and efficiencies. NZ is borrowing money to fund operations not investment, as a prudent country does. “The biggest slashing has been in investment spending, which slowed sharply in the 2024 calendar year, down $2.3b or 14% from 2023. [See right chart.]” Simplicity Economist Shamubeel Eaqub via LinkedIn post.

Substack essential of the day

Cartoon of the day

Timeline-cleansing nature pic of the day

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 about the week’s news with regular and special guests, including:

* Robert Patman and Elaine Monaghan on the week in geopolitics, including Donald Trump’s wrecking of the post-WW II political landscape; and,

* Cathrine Dyer on the week in climate news.

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

Long story short: Reserve Bank Governor Adrian Orr has resigned unexpectedly and without explanation, three years before the end of his second five-year term. Finance Minister Nicola Willis and soon-to-be Deputy PM David Seymour never wanted the-then Labour Government to reappoint him in late 2022, arguing (with hindsight) his actions worsened the 2022-23 inflation shock by stimulating the economy too much and criticising his increased regulation of banks for stifling competition.

The big four banks also opposed Orr’s pre-Covid drive to make them hold much more of their own capital to back their loans, and to restrict highly-leveraged lending to rental property investors. Without having to change interest rate policy, a replacement could loosen those rules to try to fire up more competition in banking, which risks creating a new 2004-style ‘unbeatable’ mortgage war and another credit-fuelled housing price boom.

Done fast enough, that wealth effect and surging house sales volumes would in turn unlock much stronger consumer and construction spending in an economy which remains a housing-market-with-bits-tacked-on because of a lack of affordable new housing supply. Such a splurge credit-fuelled economic growth might be big enough and fast enough to get the Government’s political support ‘back on track’ ahead of the 2026 election.

It will depend on who Willis appoints, how quickly she does it, and whether the central bank loosens those bank capital and rules for lending to landlords fast enough to trigger a pre-election boom. The clock is now ticking, for both the housing-market-with-bits-tacked-on, and the Government.

(I spoke with CTU Economist Craig Renney in a live video chat for paying subscribers last night. It is published above for all to watch now. Usually, there is more detail, analysis and links to documents below the paywall fold and in the video or podcast above for paying subscribers, but I’m opening this up immediately for full public watching and reading, given the public interest involoved.

Usually, If we get over 100 likes from paying subscribers we open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. 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.)

Unpopular with the Govt & the big banks, Adrian Orr resigns

Adrian Orr appeared to surprise everyone early yesterday afternoon by announcing his immediate resignation as Reserve Bank Governor, just two years into his second five year term. The (still) unexplained reason for the departure has added to the mystery and shock, although the financial market reaction was much more muted.

In any other country where a decidedly independent central bank governor who was often at odds with his finance minister resigned without reason, there would have been market chaos. Perhaps the institutional and constitutional buffers between and around the bank and Government were enough to reassure traders and investors, or perhaps the current weakness of the US dollar in the wake of Donald Trump’s latest tariff shocks was enough to calm the farm.

Orr didn’t include a reason for his resignation in his statement, Willis said she wouldn’t say, and left it to RBNZ Chairman Neil Quigley to give more detail in a hastily arranged and unusual 5pm news conference. Quigley, in turn, was also frustratingly non-specific about the reason/s, other than to say Orr felt ‘it was time.’

Quigley did suggest there had been tension between the bank and the Government in recent weeks over its 2025 Budget round funding proposal, which others have reported was for an increase at odds with the Government’s expectations. But the chairman didn’t confirm suggestions that either the latest funding debates were the trigger or some sort of straw that broke the camel’s back, or there had been some sort of performance or behaviour dispute.

Whatever the case, Orr is now gone and using up his leave before the formal end of his employment. His deputy, Christian Hawkesby, is now the acting Governor until March 31, from when the Government will have up to nine months to appoint a permanent replacement for the next five years.

So what now? First, some context and background.

The public became aware of the current Government’s antipathy to Orr in late 2022 when then-Opposition Finance Spokeswoman Nicola Willis wrote a letter to then-Finance Minister Grant Robertson to protest at the reappointment of Orr to a second five year term without consulting with the Opposition in the leadup to the 2023 election. ACT Leader David Seymour had been even more critical of Orr’s operation of monetary policy and bank regulation.

But unhappiness had been swirling around the banking system well before the Reserve Bank’s actions during covid. Orr led a dramatic increase in capital requirements for the banks from 2018 to 2020, arguing they should have enough to cope with a 1-in-200 year financial crisis, rather than the global standard of 1-in-100 years. The banks pushed back hard, saying it would force them to hold more of their own expensive capital in reserve in a way that increased costs for customers, and would make it harder for new entrants to compete.

The banks were also less-than enthused about the central bank’s proposals, now enacted from July 1 last year, for limits on debt-to-income multiples (DTIs). They were designed to act as a guardrail to limit future lending to rental property investors as interest rates fell. Mortgage brokers now report the DTI limits are kicking in and frustrating rental property investors wanting to buy more properties.

The economy’s very slow recovery from its per-capita recession through 2023 and 2024 under the weight of high mortgage rates is becoming equally frustrating for the Government. What it needs now is the usual surge of mortgage lending to fire up the economy through the wealth effect and cash surges from a jump in house sales volumes and prices, but the DTIs are frustrating that, as is a lack of competitive tension between the banks.

‘Show us the competition’

Willis also wants more competition in banking to force banks to pass on more of the benefits of lower interest rates to mortgage borrowers and businesses. She and others have argued the Reserve Bank’s increased regulatory and capital requirement zeal has thrown a blanket over those competitive urges.

A replacement for Orr who loosens the capital requirements and lowers the DTI limits would create the conditions for another 2003-to-2007-style mortgage lending boom, fueled by the BNZ’s ‘Unbeatable’ campaign to ‘beat’ any competitor’s two-year fixed mortgage rate. There was also a fresh surge of competition through 2011 and 2012 as ANZ under then-CEO David Hisco fought to increase ANZ’s market share in Auckland as it ramped up for the merger of its ANZ and National brands.

It was only the introduction of Loan to Value Ratio (LVR) controls in 2013 by then-Governor Graeme Wheeler that put a dampener on the housing market again, before ever-lower interest rates in the lead-up to covid helped accelerate things again. Orr’s Covid-era decisions to print money to lower longer-term interest rates, to lend very cheaply to banks so they could in turn lend cheaply to home buyers, and to remove the LVR controls in 2020 that lit the blue touch paper on the housing market and the economy through late 2020 and 2021.

The blue touch paper is ready again. It just needs a new Governor with the ‘right’ approach to getting our housing-market-with-bits-tacked-on economy ‘back on track.’

The only question is how fast the match can be struck.

What the previous booms looked like (follow the red line)

Thank you Thomas Mitchell, Judith Paulin, and many others for tuning into my live video with Craig Renney! Join me for my next live video in the app.

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

In summary today: PM Christopher Luxon is increasingly at odds with leaders in other countries in saying he trusts Donald Trump and the United States as reliable partners, despite this week’s tariffs and alliance swaps that have shocked and alarmed both New Zealand’s allies and global financial markets.

Meanwhile, Luxon is also being criticised as being out of touch with his support of David Seymour’s school lunch programme, which potential Luxon replacement and Education Minister Erica Stanford wants Seymour to ‘please explain.’

(There is more detail, analysis and links to documents below the paywall fold and in the video and podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. 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.)

Long stories short, the six key things that stood out in Aotearoa’s political economy around housing, climate and poverty on Wednesday, March 5 are:

* PM Christopher Luxon has alienated teachers and parents and ignored the concerns of his own Education Minister Erica Stanford, a potential replacement for him, by dismissing critics of David Seymour’s school lunch programme to “go make a Marmite sandwich, and put an apple in a bag,” and that he trusted Seymour to fix the ‘teething troubles.’ Stanford declined to express confidence in Seymour and demanded Seymour ‘please explain’ in an 11.30 am meeting yesterday, which Seymour stood her up for because, he said, ACT’s caucus meeting ran long. (See quotes of the day below.)

* Luxon also said yesterday he trusted Donald Trump and saw the United States as a reliable partner, just as Trump upended 80 years of US-led stability in trade and security by imposing disruptive sanctions on his allies and cutting off support for Ukraine in its war with Russia, which Trump now wants to relax sanctions on.

* Those sanctions and the shock of Trump appearing to choose Russia’s side over Europe this week have rocked global markets again overnight, shredding the rest of the ‘Trump Bump’s US$3.4 trillion of gains in US stocks since November, and raising doubts about the US dollar’s role as the global reserve currency. US GDP growth expectations also collapsed. (See charts of the day below)

* In another bipartisan and potentially inflationary shift to user pays for roads, National and Labour voted last night for ‘time of use charging’ legislation just as Auckland Council published a report showing road congestion cost the economy $2.6 billion per year. (See charts of the day below)

* More detail has emerged of pleas by Finance Minister Nicola Willis’ own advisors last March to reverse her December, 2023 cancellation of the Government’s $551 million contract with Hyundai, which Treasury estimated would force break fees of $300 million, and which new Rail Minister Winston Peters is now trying to revive with Hyundai.

* Non-residential building consents slumped again in January, while housing consents nudged higher, showing the freeze on Government capital spending on roading, cycling, housing, hospitals and schools has reverberated through into this year. (See charts of the day below)

In scoops elsewhere this morning:

* Jenee Tibshraeny reports new Commerce Minister Scott Simpson has recused himself from decisions about supermarkets competition because a family member owns a supermarket;

* Richard Prebble wrote in his weekly NZ Herald column he had resigned from the Waitangi Tribunal because he didn’t want to turn the Treaty into a ‘socialist manifesto,’; and,

* Jem Traylen reports S&P Global Ratings last week downgraded its assessment of New Zealand councils’ institutional framework because of funding reversals and political uncertainty generated by the Government’s repeal of Three Waters and transport and infrastructure funding freezes.

Quotes of the day

‘Let them eat marmite’

“If you really are unhappy with it, for God's sake, go make a Marmite sandwich, and put an apple in a bag, just like you and I had.” PM Christopher Luxon in an interview with NewstalkZB’s Mike Hosking yesterday morning.

‘It’s disrespectful’

“He lives a life where you have the things you need. For a lot of families, making lunch is doable, but for some of our students there wouldn’t be anything to make lunch from. We just have lots of hungry kids at the end of the day.” East Otago High School principal Helen Newcombe telling today’s ODT-$$$ Luxon’s comments were disrespectful.

‘They deserve safe and healthy meals to learn’

‘‘The images of plastic melted into school lunches served to our children is heartbreaking. These children deserve safe and healthy meals, delivered on time, so they can learn.’

‘‘No one would invite a child into their home and then serve them melted plastic, an ingredient they might be allergic to, or food that didn’t fit with their religious beliefs. The government should treat all children with the respect any caring person would.’’NZEI president Ripeka Lessels via the ODT-$$$ this morning.

Charts of the day

Infrastructure, commercial, retail & industrial building slumping

Housing floor area built lowest in 2024 in 10 years

US GDP forecasts slump as Trump sets tariffs and DOGE slashes jobs

Substack essentials today

Cartoon of the day

‘Did the United States just swap sides?’

Timeline-cleansing nature pic of the day

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

Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Tuesday, March 4 are:

* The Government is widening its drive to turn public capital and investment costs into consumer price inflation that the Reserve Bank has to control with high interest rates.

* In recent days a rash of Government-controlled and driven price setters have signalled double-digit rises in prices, rates and fees in the next couple of years, due to the Government’s drive to reduce public borrowing and force their capital costs and investments off into private sector and council debt serviced through new or higher user charges, and higher council rates.

* They include: Metlink (43% increase for off-peak bus and train fares from July 1), 51%-Government-owned gentailer Mercury (9.7% increase in average residential electricity bills from April 1), Environment Canterbury (9.9% rates increase from July 1) Dunedin City Council (10.5% from July 1, followed by 10.2% and 10.1% increases in the following two years), Tauranga City Council (12.5% from July 1), Hutt City Council (13.4% from July 1, then 12.9% in 2026/2027), Invercargill City Council (9.5% from July 1) and Ashburton District Council (9.8% from July 1).

* This comes on top of plans announced over the last year to increase Government insurance levies by as much as 72%, to nearly treble the international tourist levy, to hike work visa fees 53%; to increase motor vehicle registration fees by 45%; to lift MPI fees by 18%; to reimpose the $5 prescription charge, and to remove subsidies for electric vehicles.

* The Government has argued it needs to return the Budget to surplus and reduce borrowing to take inflation pressure off the economy, which would allow the Reserve Bank to lower interest rates faster than would otherwise have been the case, which would in turn stimulate the economy.

* However, the administered price shock is forcing the Reserve Bank to hold interest rates higher for longer than expected and higher than seen after previous recessions, which means the cost-shifting and debt-shifting is proving counter-productive.

(There is more detail, analysis and links to documents below the paywall fold and in the video and podcast above for paying subscribers. If we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, although we’d love it if you subscribed to support our ability to make this journalism public. 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.)

Substack essentials today

Chart of the day

Third worst road traffic death rate in OECD, and getting worse

Quotes of the day

Auckland councillors on enforced speed increases

“$8.8 million to change signs to make our roads less safe. Have sourced figures and can confirm this equates to nearly 7 YEARS worth of Henderson-Massey LB's transport capex budget. I won't be supporting any cuts to transport investment in the West to meet this unfunded mandate.” Auckland City Councillor Shane Henderson via X

“Make no mistake. Govt’s forcing us to make streets, schools & neighbourhoods less safe will KILL KIDS. Some people don’t like me saying that but it will mean that. We have 2nd highest DSI (death and serious injury rate) in the OECD next to USA. We have almost 3x the deaths on our roads compared to the UK.” Auckland City Councillor Richard Hills via X

Cartoon of the day

Virtual navy

Timeline-cleansing nature pic of the day

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