The Kākā by Bernard Hickey

Long stories short, the top six things in Aotearoa’s political economy around housing, climate and poverty on Tuesday, February 18 are:

* A NZ Herald investigation published yesterday into the performance of EDs has found almost a third of a million patients were not seen within the recommended times in the first half of last year;

* ED doctor Gary Payinda pointed in his substack post yesterday at international research showing overcrowding and ‘bed blocking’ resulted in the deaths of one in every 83 patients stuck in EDs for more than eight hours, with the risk of death in an ED here rising by 10% if 10% of the emergency beds are taken up by patients unable to move out into hospital wards because of bed shortages;

* Yet unnecessary and self-imposed Government funding constraints are limiting the numbers of new hospital beds, and the number nurses and doctors being trained, with news yesterday that 121 nurse practitioners are about to start training without any certainty of being funded;

* Stats NZ data yesterday monthly net migration rose in December to a 12-month high of 3,810 from 2,140 in November as foreign arrivals rose for their fourth consecutive month and the rate of emigration by residents and citizens fell slightly for the month, although it remains around 200 per day;

* Workers who grew up in Aotearoa (aged 18-30) made up 27,400 (38%) of the 72,000 migrant departures of New Zealand citizens in 2024, while workers (18-44) made up 84,000 (64%) of the 130,900 migrant arrivals of non-New Zealand citizens in 2024.; and,

* Westpac NZ has doubled its forecast for net migration from 15,000 this year to 30,000 next year as even more workers on temporary work visas arrive to more-than-replace citizens leaving, and are arriving in a country where the Government is forecasting a 44% reduction in infrastructure spending over the next four years.

(Usually, there is more detail, analysis and links to documents below the paywall fold and in the podcast above for paying subscribers. Normally, if we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing. I’ve taken an executive decision to open this up from start due to the public interest involved.)

Inviting in more people before building more hospital rooms

The Government’s ‘going for growth’ strategy pivot this year is relying on ramping up cheap tourism revenues from Australia and China, and pulling on the lever to bring more migrant workers on temporary work visas.

Westpac is now expecting a doubling of net migration over the next year because of looser Government visa policies. The problem is the 30,000 expected is more than a third above the Stats NZ long-term population growth forecast and will happen as the Government is reducing its infrastructure spending by 44%, on top of a $104 billion deficit already there.

That’s evident in the scenes at the bottom of the cliff, as NZ Herald reported yesterday:

All of the country’s hospital emergency departments (EDs) are failing to assess patients with “imminently” or “potentially” life-threatening conditions on time – a trend senior doctors say is a “massive problem” which increases the chance of death.

More than 300,000 patients with time-critical conditions were not seen within recommended time frames during the first six months of last year, according to official information obtained exclusively by the Herald.

•Staff shortages, overcrowding, and hospital bed block contribute to delays, causing poor outcomes for patients and staff burnout

An analysis of official information obtained exclusively by the Herald has revealed the worst and best EDs when it comes seeing patients on time according to the Australasian Triage Scale – a best-practice standard followed by New Zealand’s EDs.

Health investigation: Watch: How does yours rate? The best and worst-performing hospital EDs in NZ revealed NZ Herald’s Michael Morrah and Chris Knox

Substack essentials elsewhere

Further reading

Today’s must read: Please read this enlightening and ultimately hopeful piece from Rebecca Macfie via E-Tangata. It’s a first-person reflection on the power of endowments in Aotearoa.

My story is remarkably similar. My great-grandfather was given stolen land, which created the wealth that allowed my grandfather to build his farm on fraudulently-bought rehab land, which gave me privilege and resources to go to University fees-free and then buy a home in 1991 for three times income.

We have a responsibility to at least acknowledge the privilege and the endowments, and not to adopt a blame culture against those who haven’t had those endowments (and worse). Rebecca Macfie: ‘What do I know of hardship?’

Scoop: Tech agencies 'failed to protect' Ardern from 'violence, misogyny' - HRC RNZ’s Guyon Espiner

Scoop: The GP who earns less than minimum wage RNZ’s Ruth Hill

Scoop: Nurse practitioner training goes ahead despite funding uncertainty RNZ’s Rachel Graham

Research: Female-dominated professions struggle to catch up in cumulative earnings RNZ

Feature: Life in an isolated valley after a flood: 'The damage took my mind off being hungry' Hawkes Bay Today’s Rafaella Melo

Explainer: What needs to change to ‘power up’ the NZ economy? Stuff’s Lloyd Burr.

Chart of the day: Egg inflation uncaged

Cartoon of the day

Timeline-cleansing nature pic of the day

Kā 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 short, the top six things in Aotearoa’s political economy around housing, climate and poverty on Monday, February 17 are:

* Engineering New Zealand CEO Richard Templer said yesterday hundreds of engineers are losing their jobs and leaving the country as work dries up due to stalling infrastructure projects;

* Templer pleaded for the Government to free up funds to restart stalled projects, but Infrastructure Minister Chris Bishop simply responded the Government had approved projects, without addressing Templer’s point;

* However, our Chart of the Day below shows the coalition Government prioritised debt reduction over infrastructure investment in Budget 2024, forecasting a 45% fall in capital spending over the next four years;

* Immigration Minister Erica Stanford said yesterday (see interview of the day below) it was her “personal view" that the foreign buyer ban on homes should be eased for wealthy migrants wanting to invest in New Zealand and that there were ongoing discussions "above my paygrade" with NZ First coalition partner Winston Peters about relaxing the ban;

* Universities have been told to prepare for a funding cut because an earlier 4% funding ‘lifeline’ won’t be renewed, The Post-$$$’s Glenn McConnell reported this morning; and,

* There’s a report this morning that everyone from church ministers to sex workers are taking advantage of Pasifika workers here to pick fruit. (See more in further reading below)

(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.)

Engineering NZ calls b******t on the Govt’s projects talk

Engineering NZ CEO Richard Templer has called out the Government’s gaslighting about its ‘Going for Growth’ strategy being focused on infrastructure development, when actual decisions on the ground in the last 15 months since the formation of the Government have been to stall, freeze and dump various state-funded building plans with the aim of deficit and debt reduction.

Here’s the detail, as reported by Rachel Helyer Donaldson yesterday via RNZ (bolding mine):

“The shutdown of education rebuilds, the shutdown of hospital builds and upgrades the slow down on roading, the changes in the Three Waters space has meant that New Zealand engineers and New Zealand constructors, the people who build the roads, waters network and buildings, have all had to look for work elsewhere and that has seen people heading overseas or contracting to work overseas and significant numbers."

"We don't have any detailed statistics because obviously some of the firms involved are not going to put them into the public arena, but we do know that hundreds of engineers have lost their jobs as a result of these changes."

"If you think about a building project that has stopped, say like Dunedin Hospital, you have structural engineers who are building the design and the structure, geotechnical engineers who are involved in all the foundation work, fire engineers who do all the systems, building service engineers, typically mechanical engineers and electrical engineers who are doing everything inside, [from] lighting to specialised electronics.

"Then you have all the tradespeople underneath: the builders, the concrete layers, the tilers, the painters, the electricians involved in the wiring. All those trades and all those engineers are suddenly left without work to do."

Templer said he knew of "some large infrastructure firms" in Australia who were "rapidly hiring large numbers of New Zealand engineers".

Meanwhile, other engineers will be lured to California to help with the rebuild after last month's devastating wildfires.

"New Zealand engineers are valued very highly in California because California gets earthquakes, just like New Zealand."

To avoid a "brain drain", he urged the government to free up funds for delivery and firm up the infrastructure pipeline.

"New Zealand cannot afford to wait - we need to get major project design and procurement underway as soon as possible. The funds for infrastructure projects need to be prioritised and released."

"New Zealand also needs a clear, committed infrastructure pipeline that outlives each political term. Engineers need to know what is happening, and when."

"We will keep losing our engineers and will pay the price. An engineering skills crisis is evident - the time to act is now." Engineering NZ’s CEO Richard Templer via RNZ

Chart of the day

Interview of the day

Substack essentials elsewhere

Thread of the day

Further reading

Scoop: Budget leak: Universities told to prepare for funding cutLeaked information from a tertiary sector budget briefing shows a 4% “lifeline” funding boost won’t be renewed. The Post-$$$’s Glenn McConnell

Scoop: From preachers to prostitutes: Who's exploiting our RSE workforce?. There are claims that everyone from church ministers to sex workers are taking advantage of Pasifika workers here to pick fruit. Stuff‘s Tony Wall

Deep-dive: Onslow College calls for delivery on decade of ‘broken promises and underinvestment.’ The Wellington secondary school is calling for certainty after another college was given a $100 million funding commitment for the future of its school buildings on Wednesday. The Post-$$$’s Hanna McCallum

Deep-dive: 'Grumpy spaces': How a NZ architect is helping arrange the future of housing RNZ’s Serena Solomon

Deep-dive: The truth about homelessness: What NZ’s rising numbers reveal NZ Herald’s Chelsea Daniels in a podcast

Cartoon of the day

Timeline-cleansing nature pic of the day

Kā 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 short, the top six things in our political economy around housing, climate and poverty in the week to Sunday, February 16 were:

* Leading and lagging indicators showed the economy is struggling to get out of its three-year-long recession in per-capita terms, with some green shoots in manufacturing and trucking being over-shadowed by another fall in retail spending and confirmation of the loss of over 200 jobs at Kinleith.

* Poll results published over the last week showed support for the Government’s coalition of parties falling behind the Opposition in early February for the first time since the 2023 election as the lengthening shadows of the recession, high interest rates and still-high domestic inflation compound the pain of ever-tightening budgets in health, housing, transport, education and welfare;

* In a week of political distractions, misdirections and grandstanding, PM Christopher Luxon and soon-to-be Deputy PM David Seymour accused each other in public of being ill-advised over Seymour’s writing of a letter to Police in support of constituent Philip Polkinghorne. Meanwhile, Finance Minister Nicola Willis was picked out by Labour as a potential challenger to Luxon. She then announced the Government would help an as-yet-to-be identified third entrant to challenge the supermarket duopoly of Foodstuffs and Woolworths, Luxon criticised banks for restricting lending to service stations.

* More local protests against hospital staffing shortages and higher speed limits sprung up in Whakātane, Palmerston North and Nelson, adding to the political pressure on National in its heartland provincial seats.

* The Government expanded its ‘going for GDP growth’ policies by loosening rules and lowering thresholds for foreign direct investment, but immigration lawyers and estate agents said it was unlikely to ramp up investment, migration or jobs much because most of the money will simply be lent to the Government in bonds, and migrants still can’t buy their own homes.

* The Salvation Army released its annual State of the Nation report showing worsening food poverty and housing shortages meant more than 400,000 people now needed welfare support, the highest level since the 1990s, yet Aotearoa’s major annual economics conference did not discuss housing shortages, rising poverty or taxing capital gains, instead focusing on the state doing more with less and public debt reduction.

The Kākā’s Journal of Record for the week to February 16

Politics and the economy

* Polls from 1News-Verian, Curia-Taxpayers Union and Talbot Mills showed support for the Opposition parties in Parliament overtaking support for the governing coalition parties for the first time since the election, while right track-wrong track measures showed the highest proportion of voters since 2023 thought the country was going in the wrong direction.

* Ready-mixed concrete production fell 7.7% in calendar 2024 from 2023 to a five-year low that is 10% below 2019 levels, Stats NZ reported.

* Retail spending via electronic cards fell 1.6% in seasonally adjusted terms in January from December, Stats NZ reported.

* Food prices rose 1.9% in January from December and were up 2.3% from a year ago, while the stock measure of rents rose 0.1% for the month and was up 3.6% from a year ago, Stats NZ reported.

* Manufacturing sector output expanded in January for the first time in 23 months, the BusinessNZ-BNZ Performance of Manufacturing Industries (PMI) survey results for January showed.

* Heavy traffic movements rose 4.0% in January from December, while light traffic movements rose 1.0%, ANZ’s Truckometer series from NZTA data showed.

Housing, transport & infrastructure

* State housing tenants who refuse to work with Kāinga Ora to repay their rent debt now risk eviction under a new policy announced by Associate Housing Minister Tama Potaka. Potaka said Kāinga Ora is currently bringing rent debt down to "realistic" levels for tenants to fully repay.

* Overseas investors, business leaders, and construction companies will discuss infrastructure investment opportunities at a summit hosted by the Government as part of its first Quarterly Action Plan for 2025.

* Transport Minister Chris Bishop said Cabinet has confirmed Crown funding to NZTA to deliver upgrades to SH76 Brougham Street in Christchurch, including an overbridge expected to be complete within two years.

* Government acquisition of Māori land would require joint approval from the Minister for Land Information and the Minister of Māori Development under upcoming changes to the Public Works Act. Land Information Minister Chris Penk said the changes would also see compensation paid out to all separately owned dwellings on the land, rather than as a lump sum.

* CoreLogic's latest ‘Pain and Gain’ report found that 91% of properties were resold at a profit in Q4 2024, with $289,500 the median resale profit.

* Property listings in January were up 21.2% year-on-year and national stock levels were up 18.9% year-on-year, according to Realestate.co.nz's latest report. The national average asking price of $868,969 was down 1.3% year-on-year.

* Minister of Transport Chris Bishop announced that the Government would consult on extending the time between WoF inspections for vintage vehicles and private motorhomes from 6 months to one year.

Poverty, health, jobs, incomes, living costs & justice

* NZ First introduced a Member's Bill which would repeal Act mandating water fluoridation and instead require local authorities to hold referendums on whether water should be fluoridated.

* Workers who earn over $180,00 would be barred from pursuing unjustified dismissal claims under a new Bill announced by Workplace Relations and Safety Minister Brooke van Velden. The ban would apply only to new employment agreements in the first year after the Bill is passed, then extend to cover pre-existing agreements.

* Mental Health Minister Matt Doocey announced partial Government funding for a Mental Health Foundation initiative to digitise mental health resources and re-develop its digital platforms.

* The Government announced that survivors of torture at the Lake Alice Psychiatric Hospital can choose either an expedited redress payment of $150,000, or an individualised payment determined by former High Court judge Paul Davison.

* Victims advocate Ruth Money has been appointed NZ's Chief Victims Advisor, Justice Minister Paul Goldsmith announced.

Climate, water, land & sea

* Total greenhouse gas emissions fell 0.7% in the September 2024 quarter, Stats NZ reported, but industry and household emissions rose 0.5% year-on-year. The largest decrease was in manufacturing emissions, partly reflecting a fall in manufacturing activity over the period.

* Research led by James Hansen projected that global heating will reach 2 degree celsius by 2045 unless solar geoengineering is deployed. Hansen's study also predicted the potential shutdown of the AMOC current system within the next 20-30 years.

* The Fast-track Approvals regime opened for applications. The 149 projects listed on the Fast-track Approvals Act are now able to be evaluated by the expert panel.

* NZ's newly announced climate pledge under the Paris Agreement "falls short" of the commitments of other comparable countries, University of Waikato professor Nathan Cooper commented. Cooper also criticised the Goverment's decision to postpone the entry of agricultural emissions into the ETS.

* The Government appointed independent experts for an electricity market performance review. Global consultancy Frontier Economics will lead the review, which is set to deliver its final report by the end of June.

* The Environment Court granted Meridian Energy approval to build its Ruakākā Solar Farm in Tai Tokerau. Meridian will also build a 100MW battery energy storage system expected to be operational by April.

The Kākā’s diary for the week to February 23 & beyond

Monday, February 17

PM Christopher Luxon expected to hold post-Cabinet news conference from 4pm.

Stats NZ scheduled to release international travel and migration data at 10.45 am.

RBNZ scheduled to publish its balance sheet and foreign exchange statistics, at 3pm.

Tuesday, February 18

Parliament scheduled to sit, starting with Question Time at 2 pm. Livestreamed on Parliament website.

Economy: Stats NZ scheduled to release births and deaths data, plus national population estimates, at 10.45 am.

Economy: RBNZ scheduled to publish household inflation expectations at 3pm.

Wednesday, February 19

Stats NZ scheduled to release business price indexes at 10.45 am.

Stats NZ scheduled to release vehicle registration data at 10.45 am.

Parliament scheduled to sit, starting with Question Time at 2 pm. Livestreamed on Parliament website.

RBNZ to publish Monetary Policy Statement and publish Official Cash Rate decision at 2pm.

RBNZ scheduled to release data on government bond, Kauri bond, and Treasury bill holdings at 3pm.

Thursday, February 20

Economy: Stats NZ scheduled to release child poverty stats at 10.45 am.

Economy: Stats NZ scheduled to release household income and housing cost stats at 10.45 am.

Parliament scheduled to sit, starting with Question Time at 2 pm. Livestreamed on Parliament website.

Beyond next week

February 26 - Treasury Chief Economic Advisor Dominick Stephens gives a presentation on the state of the economy for 2025.

April 8 - The NZ Institute of Economic Research releases its Quarterly Survey of Business Opinion for the March quarter.

May 12 - 14 - The Environmental Defence Society holds an Ocean Symposium and its 2-day Annual Conference.

May 22 - Finance Minister Nicola Willis and Treasury to publish Budget 2025.

Please add suggested events in the comments for inclusion in next week’s edition.

Many thanks to Eilish Grieveson for writing, editing and compiling the Journal of Record and the diary.

Kā 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 the latest from Donald Trump’s administration over Gaza and Ukraine;

* Cathrine Dyer on the week in climate news, including a major new paper on accelerating climate change from Dr James Hansen et al, and January’s surprisingly high temperature average; and,

* University of Canterbury Professor Anne-Marie Brady on the latest diplomatic tensions with the Cook Islands over China, and how New Zealand should think about our relations with China and the United States under Donald Trump.

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 link to the video above was added after the email was sent to all subscribers. Bernard and Peter discussed a discussion paper on media issued this week by Media & Communications Minister Paul Goldsmith.

We also discussed comments yesterday by US Defence Secretary Pete Hegseth that: “I’m here today to directly and unambiguously express that stark strategic realities prevent the United States from being the primary guarantor of security in Europe.”

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.)

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 short, the top six things in Aotearoa’s political economy around housing, climate and poverty on Thursday, February 13 are:

* The coalition Government’s early 2024 ‘fiscal emergency’ freeze on funding, planning and building houses, schools, local roads and hospitals helped extend and deepen the economic and jobs recession through calendar 2024, as evident in concrete production figures released yesterday, which showed output fell 7.7% over 2024 to a five-year low that is 10% below 2019 levels;

* Finance Minister Nicola Willis is expected to lay out the groundwork for a third player to enter New Zealand’s supermarket scene in a speech this morning, although the Government itself isn’t expected to be that player or fund it;

* Just 573 of 21,000 eligible families are getting the full $150/week childcare tax credit promoted as a major part of the National-led coalition’s tax cut package;

* Pressure is mounting in the provincial heartlands of National’s support base to reverse the blanket speed increases rammed through under previous Transport Minister Simeon Brown, with school mums becoming most active in local campaigns and on social media;

* In the wake of Kāinga Ora’s announcement last week it would add just 145 homes to its housing stock next year, housing advocates are accusing Finance Minister Nicola Willis of breaking a personal pledge she signed in 2023 to “continue to increase Auckland’s state/public housing stock by at least 1,000 houses a year,” and,

* A local protest group is forming of Manawatū residents at a higher risk of developing bowel cancer who are vowing to fight a pause on surveillance colonoscopies at Palmerston North Hospital, with some already having gone private to get the procedure done.

(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.)

The concrete stats showing what 2024’s fiscal freeze did

There’s nothing more concrete in the leading and lagging indicators of real economic activity in residential and commercial construction and local water and roading infrastructure than concrete production figures. They are the ‘show me the money’ moment in the construction and development sectors that reveal what has actually been committed to and what work is being done.

Statistics NZ reported December quarter ready-mixed concrete figures reported yesterday showed exactly how the Government’s big ‘fiscal emergency’ freeze on building new homes, schools, pipes, hospitals and roads in early 2024 did to the economy.

In essence:

* ready-mixed concrete volumes fell to 3.81m cubic metres in calendar 2024, down 7.7% from the December 2023 year to their lowest level in a decade;

* quarterly volumes fell to their lowest levels since June 2014; and,

* volumes in the December quarter fell in most regions from the September quarter, with Canterbury down 17%), Northland down 8.4% and Waikato, Bay of Plenty down 3.6%), with only West Coast, Tasman, Nelson, Marlborough riseng 1.3% and Auckland up 0.1%.

Infometrics economist Matthew Allman cited the tight fiscal outlook in his note on the figures, saying:

“Non-residential building consents temporarily showed a bit of strength in October and November before recording a much weaker month in December. However, the pipeline of non-residential work is showing signs of contracting, and we expect and weak economic conditions and restricted business investment to drag down demand for concrete in 2025.

“Tight fiscal conditions will also limit the scope for additional public sector projects not yet signalled from entering the pipeline. There is some upside risk to our view of a limited recovery in residential consent numbers, as the government focuses on growing housing supply.

“The government’s appetite to boost investment in infrastructure could also help put a floor under concrete volumes over the next 18 months. However, overall we expect weak investment intentions and tight fiscal conditions to dominate, meaning the pipeline of construction activity and concrete demand is likely to continue to narrow.” Infometrics Economist Matthew Allman

Chart & Thread of the day

Cartoon of the day

Timeline-cleansing nature pic of the day

Kā 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 short, the top six things in Aotearoa’s political economy around housing, climate and poverty on Wednesday, February 12 are:

* Business frustration is growing about a lack of economic growth, with some arguing certainty and confidence is needed on Government-funded anchor projects such as hospitals, roads and railways as a priority, rather than deficit and public debt reduction;

* The last National-led Government borrowed to kick-start an economy out of a deep recession, including the successful green-lighting of debt-funded UFB, RONS and CRL projects;

* Instead, the Government is looking to unleash a fresh wave of foreign investment in residential property, pushing for Winston Peters to relent on his foreign buyers ban, although he is only talking of allowing in big investors in $50 million-plus projects;

* The real estate sector had built up their hopes the relaxation of the foreign buyers ban would be relaxed in the loosening of the Active Investor Plus settings on Sunday, but that hasn’t happened and Economic Growth Minister Nicola Willis and Immigration Minister Erica Stanford are only talking about the relaxation of the buyers ban as being a ‘work in progress’;

* The Salvation Army published its 2025 State of the Nation report this morning, finding more than 400,000 people needed welfare support in December 2024, the highest number since the 1990s, while food insecurity among families with children had also risen sharply, with half of all Pacific children reported as going without food often or sometimes; and,

* Personal relations between PM Christopher Luxon and soon-to-be Deputy PM David Seymour are said to be increasingly frosty, as indicated by Monday’s testy exchange in public between the two over Seymour’s letter to Police in support of Philip Polkinghorne, with Richard Harman reporting yesterday via Politik-$$$ that National was open to the idea of Epsom being abolished as an electorate in an upcoming redrawing of electoral boundaries.

(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.)

That time National borrowed to drag NZ Inc out of recession

Businesses frustrated by a lack of economic growth are increasingly pointing to the suspensions, cancellations or uncertainty around Government-funded anchor projects such as hospitals that have often been the catalysts for ongoing private investment in the past;

The stalling of a decision about Nelson’s new Hospital was cited last night by Nelson Tasman Chamber of Commerce CEO Ali Boswijk as one reason businesses were uncertain about their own investments.

“When we get those big central Government investments in what are essentially regional economic development projects, that become uncertain, that creates uncertainty because nobody is willing to crew up and staff up and train for a project that might not happen.” Nelson Tasman Chamber of Commerce CEO Ali Boswijk on the stalled Nelson hospital decision, via 1News.

Indicative of the uncertainty in the wake of a year in which the new Government froze funding and decisions for state-funded housing, hospital, school, rail, cycling and local roading projects, a 1News-Verian poll last night found 50% of voters were not confident Finance and Economic Growth Minister Nicola Willis would deliver good economic growth, while just 34% were confident, including just 67% of National party supporters.

Previous examples of recession-ending and confidence-building triggers for wider private investment included the Key-English National Government’s announcements green-lighting the $1.5 billion Ultra Fast Broadband (UFB) network in September 2009, the debt-funded Roads of National Significance (RONS) in March 2009 and the Auckland City Rail Link (CRL) in January 2016.

All of those projects were debt-funded, but the current National-led Government froze investment decisions and scaled back future capital spending plans in Budget 2024 because it argued public debt was too high.

It’s not (See chart of the day below).

Is the foreign buyer ban about to be eased in some way?

Willis and Immigration Minister Erica Stanford have started talking up the prospect of a reversal of NZ First-inspired-and-enforced ban on foreigners buying existing homes and residential land as a way to kick-start a stalled housing market, with Willis telling Bloomberg Television in an interview yesterday:

“Those are issues that we are discussing as a government. It may be that there are changes on that in the future, but we’ve not made that decision at this point.” Nicola Willis via Bloomberg TV-gift interview yesterday.

NZ First Leader Winston Peters also started used the ‘work in progress’ phrase, saying in an interview with NewstalkZB’s Mike Hosking last week:

“If someone has come to this country like they do to other countries and brings $50m to invest in a huge industry and to ensure that we’ve got employment where there’s no employment now, potential exports where there are no exports in this area now – then we will look at it certainly and that’s always been our view.

“Because that means you’ve got a serious investor committed to the New Zealand economy and [it’s] not just a bolthole in case they want to come here one day.”

We are going to have to construct an economy, which answers the question why invest in New Zealand, and that has to be detailed and specific. And we are not selling ourselves out if you are investing in New Zealand and you are going to have a massive part in building our economy if homeownership, while you do that, is part of it. That rule doesn’t have to be automatic no, but let’s see the details first.

“I know that there are people with interest and the money to seriously start yesterday. We have to frame our country’s policies wisely like Ireland, like Croatia doing like a rocket now, like Singapore did and make some sense for New Zealand people. We’ve got the assets, we’ve got the people, we just haven’t got the structural framework.” NZ First Leader Winston Peters talking to Hosking via OneRoof.

There is certainly pressure building from the real estate industry for the ban to be lifted, along the lines of National’s election policy of allowing sales of homes worth more than $2 million.

Expectations had been raised that the Active Investor Plus changes announced on Sunday would include some sort of relaxation of the ban, as detailed via OneRoof on Friday.

New Zealand Sotheby’s International Realty managing director Mark Harris told OneRoof in January: “If you are a foreigner investing $15m into the Active Investor Plus program to obtain a NZ visa, an investment in a residential home could contribute towards qualifying.”

Harris, who wrote an open letter to the Government last year calling for changes to the foreign buyer ban, did not think there would be a price threshold for foreign purchases if they were incorporated into the Active Investor Program.

“The economy needs the investment and if [the changes] encourage them to invest in New Zealand companies and infrastructure, and to employ people, then that is a positive,” he said.

Bayleys agent John Greenwood told OneRoof last month he had noticed more Overseas Investment Office applications – particularly investment assets – being approved under the current Government.

“We are now quite confident that a strong application with all the right criteria in the plus $10m bracket will normally be processed,” he said.

“If somebody is wanting to invest $10m in a residential house in New Zealand, I would recommend that they actually apply because the Government is wanting offshore money – they are just not prepared at the moment to say that’s the case.

“Because that is not out there, we are only getting people looking who have some form of association with New Zealand – either through family, business or what have you.”

Barfoot & Thompson prestige agent Paul Neshausen told OneRoof: “I think just opening the doors for foreign investment in real estate for anything over $5m would be the catalyst that we need to get our economy going.” OneRoof

The lack of changes to the ban in the announcements on Sunday were disconcerting to some in the audience, as RNZ’s Anneke Smith reported yesterday:

Immigration Lawyer Nick Mason said the 2018 ban on foreign home ownership would still prevent prospective investors from taking up the revamped Active Investor Plus scheme in April.

"Let's say we all have $15 million and I choose to invest that in New Zealand and I can get permanent residency. That's great, I can stay in New Zealand as long as I like but I can't own my own house until I've spent at least six months of a 12-month period there.

"People with that sort of capital, they don't necessarily spend six months anywhere and so I think that might be a considerable barrier for many investors."

Mason said repealing the foreign buyer ban for homes worth more than $2 million, as proposed by National on the 2023 election campaign, was "a no brainer".

"If we want these people to come establish a life here, which is the end goal, we need to let them buy a house and buy a house reasonably quickly because these people have options and I expect, given current geopolitical state, we're going to see a lot of interest out of the US and those people are going to want to make permanent shifts and not necessarily be in temporary housing while they do it." Nick Mason via RNZ

Chart of the day: there is no fiscal crisis

Further reading

Politics news: Ex-public servants still searching for work after last year's public sector cutsRNZ

Politics analysis: 'They all got sacked' - PM scores own goal at Question Time RNZ’s Jo Moir

Climate deep-dive: 'World leading' climate disclosure rules likely to be weakened RNZ’s Eloise Gibson

Health deep-dive: Palliative care on the rocks RNZ-Newsroom’s The Detail

Housing news: Government taking too long to fulfill social home pledge - provider RNZ’sLauren Crimp

Transport news: Auckland Transport delays charges for overnight street parking until March 2026 RNZ

Infrastructure news: Water Bill makes the government 'the evil penguin' - Hamilton councillorRNZ’s Natalie Akoorie

Infrastructure news: Gravel road debate: Council to further delay decision RNZ

Cartoon of the day

Timeline-cleansing nature pic of the day

Kā 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 short, the top six things in Aotearoa’s political economy around housing, climate and poverty on Tuesday, February 11 are:

* Polls out overnight from Curia and Verian confirmed last week’s reading from a Talbot Mills’ poll that combined support for the governing coalition of National, ACT and New Zealand First fell behind the combined support for Labour, Green and Te Pāti Māori in the first six weeks of 2025;

* The polls also showed voters thought the governing coalition had put the country on the wrong track to the greatest extent since well before the 2023 election, while personal support for Christopher Luxon as preferred Prime Minister has fallen to record lows since he became Prime Minister;

* Also this morning, Luxon faces his biggest internal ructions within the coalition since the election, with David Seymour reacting badly last night to Luxon’s comments late yesterday that Seymour had been ‘ill advised’ to write a letter in Police in support of his constituent Philip Polkinghorne;

* Unions and tech experts have called for official inquiries into the safety and privacy of Health NZ’s IT systems after the new IT boss there told the 1,000 staff she was sacking that “failing often and failing early is the way to succeed,” RNZ reported last night;

* Former ACT party advisor and now-Auckland University economist Robert MacCulloch has written a scathing Op-Ed in The Post detailing the internal workings of the governing coalition’s relationship between National and ACT titled: “The core reason why the Coalition is failing;” and,

* Donald Trump said overnight the United States would impose a 25% tariff on all aluminium and steel imports, including those from Canada, Mexico, Australia, Japan and New Zealand, which would send an immediate inflationary burst through US food and manufacturing supply chains, preventing US interest rates from being cut, which would hold New Zealand fixed mortgage rates up. Reuters

(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.)

Polls show voters see Luxon’s coalition on the wrong track

Prime Minister Christopher Luxon came back early from his summer holiday in the first week of January to rejig his Cabinet and pivot to a pure ‘Growth, Growth, Growth’ strategy, aiming to get ‘Back on Track’ — again. But within days he was embroiled in controversies of his coalition partners’ choosing and looking increasingly shrill with his ‘hustle harder’ exhortations to an economy that remains uncooperatively stuck in a recessionary rut early in 2025.

Voters don’t buy either the cabinet reshuffle or the shouting at the economy to start growing, according to three polls taken in the first six weeks of 2025, including two published last night.

The Taxpayers Union-Curia poll and the 1News-Verian polls confirmed last week’s reading from Talbot Mills’ that combined support for the governing coalition of National, ACT and New Zealand First fell behind the combined support for Labour, Green and Te Pāti Māori, which would result in a change of Government if an election was held now.

Here’s the key charts and details:

‘And you’re on the wrong track too’

Both polls showed voters thought the Government was on the ‘wrong track’ in a net sense, with the Curia poll showing net wrong track measure of minus 15.8%, which is the worst levels since late in the previous Labour Government and down 1.8 points from January. The 1News-Verian poll asked the question for the first time and found a net 11% saying it was headed in the wrong direction.

Moving fast and breaking the health system

An extraordinary story was published yesterday on RNZ about comments from Health NZ’s new head of IT, Dr Lara Hopley, in a webinar for staff (see below), including the 1,000 being sacked out of 2,000 workers in IT.

Hopley talked in the video on 4 December about having to save $99m from data and digital, while facing the prospect of "further under-resourcing".

She then stated the number one problem was "waste". The solution included to "fanatically minimise waste" and to fail often.

"Failing often and failing early is the way to succeed ... failing early is a sign of success in and of itself," Hopley told staff. RNZ

Chart of the day: A rising cost of living = lower popularity

Thread of the day

Cartoon of the day

Timeline-cleansing nature pic

Kā 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 short, the top six things in Aotearoa’s political economy around housing, climate and poverty on Monday, February 10 are:

* A loosening of rules to entice rich foreigners to invest more here is unlikely to “turbocharge our economic growth,” as claimed by the Government, because they will still have to rent when they live here, and most of the money will be lent to the Government in bonds, rather than invested directly in businesses;

* The revelation in yesterday’s Herald on Sunday-$$$ that ACT Leader David Seymour wrote a letter to Police in support of Philip Polkinghorne would have forced him to resign if he had been minister, Audrey Young writes in today’s NZ Herald-$$$;

* Chris Bishop has started back-pedalling on former Transport minister Simeon Brown’s blanket speed limit increases after revolts from National’s provincial heartland electorates, RNZ has reported;

* Simeon Brown was warned before deciding to push ahead with massively expensive road tunnels in Wellington that they would increase (not decrease) congestion by 15% and 20% on two key roads, but he went ahead anyway, The Post-$$$’s Tom Hunt reported this morning.

* More than half of cardiac surgery patients are overdue for surgery, according to Health NZ figures reported by NZ Herald-$$$’s Nicholas Jones on Saturday, while The Press-$$$’s Louisa Steyl reported on Saturday 30% of dermatology referrals to Christchurch Hospital were not being accepted because there are now only two dermatologists in the South Island’s entire public health system; and,

* Donald Trump’s massive tariff plans are mostly stalled this morning, with Mexico and Canada still avoiding the 25% tax on imports and Trump having to back-track over the weekend on his plan to apply a 10% tariff on all small parcels imported Temu-style from China after chaos at the borders. Reuters

(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.)

Looser ‘golden visa’ rules unlikely to ‘turbocharge’ GDP

The Government has presented looser ‘golden visa’ rules as a major measure to ‘turbocharge economic growth’ this year, but the reality is it’s unlikely to generate many new jobs or businesses because most of the new money will go into New Zealand Government bonds and any real explosion of foreign direct investment would require Winston Peters to allow rich foreigners to buy existing homes and land. The new visa rules will, however, allow foreign residents who lend $13 million to the Government to get residency for five years, but only have to spend an average of six days per year in the country.

PM Christopher Luxon, Economic Growth Minister Nicola Willis and Immigration Minister Erica Stanford yesterday jointly announced a loosening of rules and investment thresholds for New Zealand’s Active Investor Plus scheme to encourage wealthy foreigners to invest more here, which Stanford said would “turbocharge our economic growth, bringing brighter days ahead for all Kiwis.”

The new rules applying from April 1 will grant a residency visa to anyone who invests either $5 million directly in New Zealand businesses over three years, or $10 million in bonds, stocks and new residential properties over five years, which is less than the $15 million threshold under the previous Labour Government and allows more market investments.

The new residents also won’t have to pass an English language test and can reduce the usual residency requirement of 105 days over five years to just 18 days over five years if they invest $13 million, rather than the minimum of $10 million, in the new ‘balanced’ category of the visa allowing ‘passive’ investments in bonds.

The previous Labour Government toughened the rules on the ‘golden visa’ scheme in September 2022 to require $15 million of direct investment in businesses, rather than in vanilla Government bonds. Just 33 visas were issued in the first two years to investors who put $65 million into the economy. That contrasted with more than 3,000 visas being issued to investors over the visa’s previous 12 years when bond investments were allowed, which saw $14 billion into the economy, mostly in bonds.

A return to those policies would see an average of $1 billion put into the economy each year, but most of it would simply go to the Government as purchases of Government and Local Government bonds, rather than investment in actual businesses.

‘It’s peanuts without an end to the foreign buying ban’

Lawyers and real estate agents said that the changes were unlikely to unleash a flood of new investment because of the restriction on buying residential property.

Immigration Lawyer Nick Mason told RNZ’s Anneke Smith the retention of the 2018 ban on foreigners buying residential properties and land would continue to handicap the scheme. He said the adoption of National’s election policy of allowing foreign buyers of homes worth more than $2 million would make a difference and was a “no brainer”.

"If we want these people to come establish a life here, which is the end goal, we need to let them buy a house and buy a house reasonably quickly because these people have options and I expect, given the current geopolitical state, we're going to see a lot of interest out of the US and those people are going to want to make permanent shifts and not necessarily be in temporary housing while they do it." Immigration Lawyer Nick Mason via 1News last night.

Marcus Beveridge, a business migration specialist and managing director at Queen City Law in Auckland, welcomed the changes as being well over due, and predicted to Bloomberg-$$$ they could give New Zealand’s sluggish residential property market a shot in the arm.

“Over the last couple of decades every time we do something like this the property market picks up. It’s not so much about huge numbers coming across the border but what happens is that the cash investment primes the pumps and our local market takes off.” Immigration lawyer Marcus Beveridge via Bloomberg-$$$

Further reading elsewhere

* Scoop: Patient data at risk over ‘dangerous’ IT job cuts, union warns. The Public Services Association wants the Privacy Commissioner to step in, as Health NZ touts a “fail early, fail often, succeed over time” strategy to IT staff. The Post-$$$’s Rachel Thomas

* Scoop: Palliative care reform at risk from possible Health NZ cuts RNZ’s Rachel Graham

* Interview: The independent candidate looking to shake up Auckland’s mayoralty election. The current councillor for the Auckland Whau ward, Kerrin Leoni, says it’s time to turn attention to the city’s suburbs. Stuff’s David Long

* Interview: The economist (Kerrin Leoni) who wants to be Auckland’s first Māori mayor NZ Herald’s Joseph Los’e

* Deep-dive: Is our love of utes and SUVs going to be the death of us?They’re big, and aggressive, but researchers suggest most of the risk they pose comes from drivers, rather than the vehicles themselves. Sunday Star Times-$$$’s Kevin Norquay

* Analysis: Flood-threatened ratepayers pay insurance triple-whammy Newsroom’s Jonathan Milne

Chart of the day

Thread 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 short, the top six things in our political economy around housing, climate and poverty in the six days to Saturday, February 8 were:

* The Government announced it was stopping building new state houses to reduce its deficit and cut $5 billion of borrowing, but the housing market remains in crisis and reliant on the private sector to flood the market with affordable housing, which it has failed to do for 30 years;

* Local business and political leaders are growing uneasy over the Government’s ‘going for growth’ strategy, which is reliant on population growth from low-wage temporary migration and cheap new tourists, because the growth in numbers will again come before investment in already-stretched infrastructure and a debate about population;

* Jobs contracted in the December quarter at the fastest rate since the Global Financial Crisis, increasing unemployment to a four-year high and helping to drive more than 200 citizens a day to emigrate permanently, mostly to Australia, which is generating jobs growth because of looser fiscal and monetary policies;

* The Government tightened sanctions on jobseekers, arguing they needed to prove they were doing more to look for and apply for jobs, as well as do more training, which ministers said would increase the number of people working and improve economic growth, even though job advertisements are back at 2014 levels;

* Nicola Willis and Christopher Luxon suggested a corporate tax cut was on the cards to boost investment and growth, even though previous cuts haven’t done that and a tax cut would make achieving a Budget surplus even harder; and,

* The climate scientist who warned of the dangers of a warming planet in 1988, launching the path to the Paris agreement aimed at keeping warning under 1.5 degrees (or at least 2 degrees) published a paper with colleagues documenting a dramatic increase in warming over the last four years because of a regulation reducing sulpher in shipping oil, which they warned could collapse a key ocean current by 2045 and unleash metres of sea-level rises.

(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.)

So much growth talk, but not about housing

Housing and Infrastructure Minister Chris Bishop announced on Tuesday Kāinga Ora would finish building a net extra 145 houses this year and then stop expanding its social housing stock for the next 30 years at 78,000, which is less than 4% of Aotearoa’s total housing stock currently. The compares with the 7% level New Zealand was at in the 1980s before our population grew by 2.1 million, and the current OECD average of 6.9%.

This is designed to stop Kāinga Ora increasing Government debt and adding to the current Budget deficit. The measures announced this week, including selling bare land and 800 homes per year in leafy suburbs, will carve out $1.4 billion in operating costs over four years by cutting 1,000 staff and will see Kāinga Ora return to ‘sustained cash surpluses’ by 2026/27. Public debt would be $5 billion lower by 2026/27 under this plan than under the previous Labour Government’s expansion plan.

The Government’s idea is that the private sector and Community Housing Providers will now fund and build and operate new affordable housing to address New Zealand’s housing crisis, which was created over the last 30 years by relying on the private sector and allowing the social housing stock to atrophy.

Where last year Bishop and the Government talked about ‘going for housing growth’, it has now turned off the Government-funded tap for housing growth and turned it over to the private sector. Building consents fell 10% overall in calendar 2024 and construction employment fell by more than 10,000 as the Government suspended and then stopped Kāinga Ora’s housing stock expansion, froze building of new classrooms for six months and stopped planning new hospitals.

Prime Minister Christopher Luxon mentioned housing just once in his State of the Nation speech on January 23, in which he said ‘going for growth is without a doubt priority number one.’ That mention was in relation to reducing the number of children living in emergency housing by 1,700 in the last year. The problem is the Government doesn’t know where almost half of them went.

The housing crisis at the heart of our political economy is far from solved, even though the Government is now spending over $4 billion a year on rent subsidies and accommodation supplements. New Zealand is equal worst in the world with 25% of renters paying more than 40% of their disposable income on rent.

Further reading

Treating public housing as an investment, not a cost. Other countries grappling with high costs and other inflationary pressures are choosing to sustain or increase investment in public housing, rather than diminish it. Op-Ed in The Post by Alexis Harris

Going for population growth, but without consent or debate

The other theme this week was a growing realisation the Government is going for growth by welcoming in more temporary workers, students and cheap tourists, but without either solving or even addressing the housing, roading, public transport and public infrastructure shortages already in place.

This week, business and political leaders in places where the stresses are already acute started to voice their doubts about ‘going for growth’ via population growth without extra investment first.

Further reading

How many tourists do we want, and need? The Government wants “many more” international tourists to kickstart economic growth. But some hotspots already face parking, pooing and pushback problems. Sunday Star Times-$$$’s Nikki Macdonald

Bumpy ride ahead for rural networks as councils struggle to maintain roads Farmers Weekly

'We can't afford tourists': Government’s ‘grow agenda’ could hurt ratepayers. A Canterbury council in a tourism hotspot is concerned the Government’s mission to boost tourist numbers will be to the detriment of its ratepayers. The Press’-$$$ Sinead Gill

A grinding jobs recession without end

Stats NZ reported on Wednesday unemployment rose in the December quarter from 4.8% to a four-year-high of 5.1%, thanks to a 32,000 fall in jobs numbers over the year and a 33,000 rise in the number of unemployed. The unemployment rate would have risen even higher without a fall in the participation rate, given there had been an increase in the working age population of 59,000 because of migration.

The lagged effects of tight monetary policy and the Government’s heart-of-the-economy-stopping freeze on transport, house construction, school building and hospital designing in the first half of 2024 flowed through into lower jobs in both the public and private sectors. The fall in employment, which was the fastest since the GFC, was seen locking in another 50 basis point rate cut by the Reserve Bank on February 19.

Further reading

Turning the finger of blame for joblessness on the jobless

Social Development Minister Louise Upston announced on Monday a toughening of sanctions on jobseekers to force them into work, but job ads, beneficiary numbers and new employment data show those being sanctioned are trying to find work when there are fewer job ads and employment is flat to falling. The percentage of beneficiaries not complying in the past has been between 3-5%, yet the PM has continued to talk about such sanctions as increasing the number of people in work, and therefore increasing GDP.

Nicola Willis has begun talking about a corporate tax cut

Hunting for stories to suggest a boost to growth, a corporate tax cut is one suggestion in recent days from Finance Minister Nicola Willis. The problem is it’s at odds with the drive to reduce the fiscal deficit and hasn’t worked in the past, as Edward Miller points out here:

Further reading

Earth set to warm 2 deg C by 2045, James Hansen says

Last week we learned January had been much hotter than expected, given we’re in a La Nina pattern, which was supposed to cool things down. This week the grandfather of climate science, James Hansen, released a paper with colleagues titled: Global Warming Has Accelerated: Are the United Nations and the Public Well-Informed?.

They document the warming effects from a 2020 International Maritime Organisation regulation of the sulphur content of shipping oil down from 3.5% to 0.5%, which reduces particulates in the atmosphere dangerous to human health, but which also brighten clouds and reduce the heating effect of the sun. They said that without urgent action to reduce climate emissions, temperatures are likely to exceed 2 degrees celcius above pre-industrial levels by 2045, accelerating arctic ice melt and an early collapse of the Atlantic Meridional Overturning Current (AMOC).

As a result, shutdown of the Atlantic Meridional Overturning Circulation (AMOC) is likely within the next 20-30 years, unless actions are taken to reduce global warming – in contradiction to conclusions of IPCC. If AMOC is allowed to shut down, it will lock in major problems including sea level rise of several meters – thus, we describe AMOC shutdown as the “point of no return.” Hansen et al paper.

Paper by Hansen et al

The guts of the paper argues the IPCC have underestimated the speed of warming and that much more needs to be done more urgently to reduce emissions. It is beyond sobering.

Here’s an hour-long webinar with the authors I plan to watch over the weekend, although I’m a little bit scared to.

Further reading

New Research Led by James Hansen Documents Global Warming Acceleration Inside Climate News’ Bob Berwyn

Climate change target of 2C is ‘dead’, says renowned climate scientist The Guardian’s Damian Carrington

Expert reaction to to study looking at shipping aerosol emissions, ocean surface temperatures and rate of global warming. Science Media Centre

Longer reads, listens and watches for the weekend

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 short, the top six things in our political economy around housing, climate and poverty on Friday, February 7:

* PM Christopher Luxon and Finance Minister Nicola Willis are set to announce another apparently splashy growth policy on Sunday of offering residence visas to wealthy migrants, but like the Invest NZ foreign direct investment policy announced last month, it is another low-impact and slow-burn measure that won’t do much to juice economic growth this year;

* The political imperative is growing for the personally-unpopular Luxon to fire up economic growth fast, given the usual suspects are absent because of the Government’s restrictive Budget policies on investing the Government’s own money, its only-just-begun fiscal tightening and lending restrictions on landlords;

* New Zealand’s economy also faces new economic headwinds globally as Donald Trump’s tariff (and other) shocks derail investment and spending plans, as well as potentially generating another covid-style shock to global supply chains;

* The Government’s hope that a sharp and extended drop in mortgage rates would fire things up in 2025 is beginning to fade as the US interest rates that underpin our fixed mortgage rates that most borrowers use are holding higher for longer, thanks to fears Trump’s tariff war and tax cuts will pump up US inflation;

* Willis has begun in recent days floating the prospects for a corporate tax as a way to juice economic growth, but past experience shows it hasn’t increased investment from either local or foreign investors, and would also place an extra drag on Government revenues at a time it says it wants to tighten policy (see chart below);

* Luxon’s choices for juicing growth are narrowing to a tool that would quickly ignite the animal spirits in the economy and allow him to soften some of the political pain coming his way from restrictions on spending in health, construction, transport, education and social services: a fiscal policy loosening in the Budget on May 22.

(There is more detail, analysis and links to documents below the paywall fold and in the podcast above for paying subscribers. Normally, if we get over 100 likes from paying subscribers we’ll open it up for public reading, listening and sharing, but after recent feedback and experience this week I’m opening this one up early.)

Substack post of the day

This is an interesting post from NZ Energy on why we have a recession that we can’t seem to shake off. We don’t have enough electricity and gas, which is a factor in an accelerating de-industrialisation.

“This is different to any other recent recession. In the past economic activity could be stimulated by monetary policy because we were not energy constrained.

“This time the economy needs energy, not monetary stimulus to grow.“ NZ Energy

Chart of the day

‘It could have been worse’

Ganesh Nana makes an excellent point via Notes that the fall in the participation rate in the last year has disguised an awful deterioration in the jobs market.

“If the participation rate has remained unchanged, then the change in the labour force would have been about 40,000 over the year. As pictured, this scenario would have resulted in the official unemployment number rising by a catastrophic 73,000; with the total at 190,000 - or a rate of 6.2%.

“So, thanks to those staying not entering the labour force (or exiting) over the past year, the picture can be reported as bad, rather than as catastrophic.” Ganesh Nana via Notes

Further reading

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