The Kākā by Bernard Hickey

Long story short: the Government’s austerity policy has driven the economy into a deeper and longer recession that means it will have to borrow $20 billion more over the next four years than it expected just six months ago.

Treasury’s latest forecasts show the National-ACT-NZ First Government’s fiscal strategy of trying to reduce the size of Government to reduce public debt is clearly counter-productive, increasing public indebtedness and unemployment at the same time as crunching economic growth and public services spending lower.

(I spoke with CTU Chief Economist Craig Renney about the HYEFU this afternoon in the video above. I tried to make it a ‘pop-up’ Hoon for paying subscribers to watch as a live event, but failed because I am often a technical doofus. My apologies. Here’s the recorded version for all now above.)

Just briefly, the Top Six things from the Treasury’s HYEFU are:

* Treasury has downgraded its forecasts for economic growth and tax receipts, as expected. Treasury believes the economy will barely grow overall next year, extending the already-two-years-long recession in per-capita terms well into 2025 (see Charts ju Jour, Quotes du Jour and Tables du Jour below for more);

* Treasury does not expect GDP-per-capita to recover to its 2022 peak until 2027 (See Charts du Jour);

* Treasury has raised its unemployment forecast next year to 5.4% from 4.8% currently and expects real wage growth to fall from 1.7% per annum currently to an average of just under 1% over the next four years (See Tables du Jour);

* Treasury forecasts the Government will take two years longer to get back into surplus and will have to borrow another $57 billion over the next four years, which means the gross debt-to-GDP ratio peaks at 46.1% in 2027/28, up from 42.4% at June 30, this year and 41.8% in the May 2024 Budget forecasts;

* Government debt is now expected to rise to $234.1 billion by 2029, up $24.3 billion from the May Budget forecast for the peak in 2028 of $209.9 billion; and,

* The Government has changed its main measure of the Budget balance from the OBEGAL (Operating Balance Excluding Gains and Losses) to the OBEGALx, which excludes the changes in assets and liabilities of ACC.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the Dawn Chorus podcast above and read the analysis and detail below in the Pick ‘n’ Mix. But during our ‘Gravy Day Fortnight’ until this Sunday, December 22, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deal that ends on Sunday, December 22.)

Quotes du jour

Here’s the guts of the Treasury’s forecasts and view (bolding mine):

“Compared with the Budget Update, core Crown expenses are $1.4 billion higher per year on average. The weaker economic outlook initially increases benefit expenses, particularly jobseeker support. Upward revisions to school roll projections drive higher education spending while higher core Crown debt adds to finance costs. In addition, Crown entity (excluding ACC) deficits are higher in 2024/25, largely owing to higher expenses in Health New Zealand.

“These changes delay the return to OBEGALx surplus by two years compared to the Budget Update. Adding in the revenue and expenses of ACC, OBEGAL is now forecast to remain in deficit throughout the forecast period. The larger deficits flow through to net core Crown debt of 46.1% of GDP in 2027/28, up from 41.8% previously.

“The change in the fiscal outlook is largely driven by the weaker economic outlook described in the Economic Outlook chapter. Overall, core Crown tax revenue forecasts are now cumulatively $13.0 billion lower compared to the Budget Update, which represents just over 70% of the overall change in OBEGALx. Around half of this change reflects the weaker economic outlook, which has reduced forecast GST and source deduction revenue the most. In addition, the results from recent tax outturns, which show a deterioration in income tax revenue from businesses, have contributed to the downward revisions.

“As a result of the revisions in core Crown tax revenue and to a lesser extent upward revisions to the forecasts of core Crown expenses, net finance costs have been revised up to reflect additional funding requirements now expected over the forecast period. Core Crown expenses are expected to be higher in each year compared to the Budget Update. The updated economic conditions are expected to lead to higher benefit payments in the near term with more recipients anticipated, particular for the jobseeker support benefit.” Treasury’s HYEFU executive summary.

Reactions du jour elsewhere (bolding & headlines mine)

‘It was Treasury wot did it’

“The Half Year Economic and Fiscal Update released today shows the Crown’s financial position has deteriorated over the past six years, but the economy has reached a turning point.“Inflation is back under control, the Reserve Bank has begun reducing interest rates, and household spending and business activity is expected to lift. After bottoming out in the September quarter, the economy is forecast to grow 0.5 per cent this financial year and 3.3 per cent in the following year.

“Relative to the Budget, however, there has been a further deterioration in the Crown’s financial position. The deterioration in the Crown’s financial position is not a consequence of decisions made by this Government. It has been driven largely by Treasury unwinding overly optimistic assumptions about the state of the economy.” Finance Minister Nicola Willis in a statement.

‘Talking about growth does not create it’

“The Half Year Economic and Fiscal Update is the rotten cherry on top of Nicola Willis’ first year as Finance Minister. The damage she has done to the economy means the recession will be longer and the recovery harder.

“A series of poor decisions on her part mean that unemployment is on the rise, there are fewer jobs and a Kiwi leaves every six and a half minutes for greener pastures.

“She is also attempting to manipulate the narrative by magicking up a new way to measure the deficit, but New Zealanders will see through her spin.

“Struggling to balance the books after choosing tax cuts – on top of outrageous tax breaks for landlords and tobacco companies – she’s now looking to pick the pockets of Kiwis through sneaky new taxes to pay for them.

“The Government has no plan to grow the economy other than talking about it. That’s not how the real world works.” Labour finance spokesperson Barbara Edmonds in a statement.

‘Governing for the wealthy’

“Christopher Luxon is choosing to prolong the recession and kneecap productivity through merciless cuts. Today’s HYEFU shows the Government’s trickle-down decisions come at the cost of the very ‘economic growth’ they crow so much about. It doesn’t add up and it doesn’t make sense, and they clearly don’t care.” Green Party Co-Leader and Finance spokesperson, Chlöe Swarbrick in a statement.

‘Back to the bad old days’

“Based on these new forecasts New Zealand will have been in deficit for a whole decade. The last time we experienced something like this was the awful period in New Zealand’s economic history between 1979 and 1993.

“The path back to surplus will remain very challenging. To start with the Government has not increased its operating allowance at all from the Budget. This means it is going to have to achieve expenditure restraint that has rarely been seen before not to mention requiring that restraint in the run up to the next election.

Realistically the only way that this can be achieved is for ongoing spending reductions that will become increasingly unpalatable for the electorate.” BNZ Head of Research Stephen Toplis in this note.

‘A whoppingly bad surprise’

“The Treasury has downgraded its economic and fiscal forecasts to the point where the forecast return to the OBEGAL surplus and residual cash surplus is not achieved over the forecast horizon. That’s much weaker than we anticipated.

“New Zealand Debt Management has lifted their bond issuance guidance by a whopping $20bn to June 2028, much more than we had pencilled in. Short-term issuance has had a bump too. The increased issuance guidance is primarily due to the downgrade to the economic and tax outlook, with just a little more capital spending added.” ANZ Senior Economist Miles Workman

‘The whippings will continue until morale improves’

“The Government is continuing to plan on very skinny allowances for new operational spending of just $2.4bn per year in subsequent years. After pre-commitments (including in the health sector) and assumed other non-discretionary spending (given current policy settings), the Government only has on average $0.7bn per year available to fund all new initiatives and other cost pressures at Budget 2025.

“Given that a share of the Budget 2025 allowance will be needed to fund cost pressures, the Treasury notes that:

“The Government will need to consider expenditure savings, expenditure reprioritisation and revenue-raising policy changes to stay within the signalled Budget allowance.”

“Needless to say, the risks around this profile are heavily skewed towards higher spending.

Westpac NZ Senior Economist Darren Gibbs

Tables du jour: Debt to rise by $59 billion

Charts du Jour: Longer recession and higher debt

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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Tuesday, December 17 in The Kākā’s Dawn Chorus podcast above and the daily Pick ‘n’ Mix below are:

* Finance Minister Nicola Willis is expected to have to reveal the bitter fiscal fruits of her austerity strategy in the HYEFU later today, with bank economists forecasting Treasury will downgrade its GDP growth and tax forecasts, which will force the Government to increase its borrowing programme by $6 billion to $132 billion over the next four years. See news previews below.

* Local Government Minister Simeon Brown and PM Christopher Luxon accused councils yesterday of reckless spending on ‘pet projects’ leading to rates increases, which they said justified a new set of reports on council rates, debt and balanced budgets for the next 10 years. See quotes of the day below.

* The Opposition and some councillors hit back, accusing the National-ACT-NZ First Coalition of starving councils of capital and of hypocrisy, given the Beehive isn’t subject to the same long-term capital planning rules as councils and refuses to share the GST and income tax benefits of population and nominal GDP growth with councils, who have to pay for half the capital costs of population growth. See quotes of the day below.

* Food banks are warning they may struggle to survive a surge in demand and Government funding cuts, with one philanthropist stepping in at the last minute to rescue one prominent food bank supplying desperate families in South Auckland. See news yesterday below.

* PM Christopher Luxon is wavering on whether he’ll attend Treaty of Waitangi events in February. See news yesterday below.

* Inflation figures yesterday showed how Air New Zealand and hotels in Auckland hiked prices in November to take advantage of demand linked to three Coldplay concerts, while rents are still rising to the limits of tenants ability to pay around 50% of income. See chart of the day below.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the Dawn Chorus podcast above and read the analysis and detail below in the Pick ‘n’ Mix. But during our ‘Gravy Day Fortnight’ until this Sunday, December 22, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deal that ends on Sunday, December 22.)

The Top Six in the Pick ‘n’ Mix for Tuesday, December 17

* Scoop: Fewer than half of families eligible for FamilyBoost get payments1News’ Katie Bradford

* News: Question mark hangs over PM’s Waitangi attendance. Christopher Luxon is considering a tour to “make sure it's a national day”.’ The Post’s Anna Whyte

* Preview: Govt may 'shift goalposts' on surplus as 2025 cuts details are revealed NZ Herald-$’s Thomas Coughlan

* Analysis: Big gigs, big prices: Stats show impact of dynamic pricing on flight costs RNZ

* Op-Ed by Public Health Communication Centre: National capacity needed to monitor misinformation to protect public health and social cohesion

* Op-Ed by Kathy Spencer in The Post The smoke and mirrors of health funding. Is investment in our health system at a record high, as Luxon suggests, or is it being cut?

The best of the rest

Scoops & Breaking News this morning

DOC, MPI acted unlawfully in failing to protect sea life. Ruling confirms conservation agency has powers to set hard limits on fishing deaths. The Post’s Andrea Vance

'Systemic failings': Court rules DoC failed to protect marine species for decades NZ Herald’s Michael Morrah

Concerns med school price tag too low ODT-$’s Matthew Littlewood

ECan councillors briefed in private by vested interests Newsroom’s David Williams

Govt fails KPI because of ‘rushed lawmaking’ Newsroom-$’s Marc Daalder

News previews

Government forecasts expected to get even worse RNZ

This Budget update will not be pretty The Post’s Luke Malpass

GDP figures expected to show NZ in recession The Post’s Tom Pullar-Strecker

'Low point' – new data to confirm NZ back in recession NZ Herald

News yesterday

Health NZ IT cutbacks: Faults could 'snowball', report warns RNZ

Government warned operating Aratere ferry until 2029 'simply not possible' RNZ

Homeless given 2 days to leave camping site RNZ

Signs o’ the times news

Roads in, social housing out in Govt ‘back to basics’ push NZ Herald

'Urban sprawl': Ex-MP's greenbelt subdivision plan hits opposition NZ Herald

'Nothing more for ratepayer': Councillor slams water infrastructure plan NZ Herald

Over 1600 car parks, millions in revenue gone in cycle lane roll out. The Post

Residents say apartments will 'ruin sun and privacy' RNZ

OT needs more funding to care for young people - advocate RNZ Checkpoint

Hutt City keeps next year’s forecast rate rise at 13.4%. The Post

Southland windfarm may face 'insurmountable' issues BusinessDesk-$’s Ian Llewellyn

Solutions & Good News

David Letele's foodbank saved, families to receive hampers RNZ

Good news for renters as landlords 'having to compete harder' RNZ

Te Tai Tokerau iwi marks 'significant milestone' in council relations RNZ

Funding extension brings relief to Wairoa’s recovery efforts RNZ

Food or school uniforms? The tough choices some families have to make NZ Herald

Timber bridges could become 'new norm' for NZ NZ Herald

Deep-dives, interviews, features & analysis

Number of youths kept in police cells 10 times higher than two years ago RNZ

The property empire that supported a multimillion-dollar criminal ring. While Chin Kok Soon was the kingpin of a massive criminal receiving ring, he and his wife collectively owned numerous Wellington properties. Then police swooped in October 2022. The Post

It happens here: Sex trafficking and slavery in NZ RNZ

Columns, Op-Eds, Editorials & Open Letters

Column by NZ Herald-$’s Simon Wilson: Hooray for the Public Servant of the Year -Rod Carr

Column by Rob Campbell in Newsroom Somewhere along the line someone always pays

NZ Royal Society Open letter on importance of research in the social sciences and humanities

NZCTU Open letter to Treasury on undue restrictions on restricted briefings

Op-Ed by Boyd Swinburn in The Post Better explanations needed for low-cost school lunch programme. Seymour needs to be explicit about how he will define success or failure of his new system.

Quotes of the day: Blaming the victim

“We see so many examples up and down the country where councils, you know, the convention centres, the hotels that they look at, and all of these other things that they want to spend money on, and you look at the language. They use the four wellbeings to justify the decisions that they're making, and we're saying that party is over.” Simeon Brown announcing the reversal of ‘Four Wellbeings’ provisions.

“We have to get our councils focused on doing the basics really well. And at the moment there have been massive amounts of distraction with pet projects and vanity projects from time to time in different towns and cities across NZ, and we want them to be very, very focused on what the ratepayer expects them to do.” PM Christopher Luxon at his post-Cabinet news conference with Brown.

“One of the biggest things driving up rates up and down the country at the moment is the need to upgrade water infrastructure. The previous government had a plan in place to make sure that the cost of that was being carefully managed, that central government had a role, and that ratepayers weren't going to end up picking up the whole of the tab. This government scrapped that, and that is one of the reasons that rates are now going up.” Labour Leader Chris Hipkins in response.

“This is about the government managing the politics of the fact that rates are going up because of decisions that the central government has taken, rather than because of decisions that local government is taking.” Hipkins.

Chart of the day: Rentiers go to the max

“Rents are doing what rents do in a supply constrained environment - rising to whatever people can afford to pay. Wages have risen in the last couple of years (chasing increased living costs), and now rents are playing catch-up.” Musical Chairs via BlueSky

Cartoon du Jour: ‘Look out, Widow Twanky…’

Timeline-cleansing nature pic: Weka on the run

Mā te wā

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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Monday, December 16 in The Kākā’s Dawn Chorus above and the daily Pick ‘n’ Mix below are:

* Transport Minister Simeon Brown is ploughing ahead with plans to toll all new Roads of National (and Regional) Significance (RONS) and some motorways already under construction, but on Friday suffered his first big defeat on tolling when he had to announce he had backed down on plans to toll the new Pahiatua Track Manawatu Gorge replacement motorway.

* Brown also announced a ‘Hydrogen Action Plan’ as a ‘key pillar’ of the National-ACT NZ First Government’s climate emissions reduction strategy, adding another distractionary and speculative policy to go along with plans to import LNG, capture carbon in gas wells and rely on unproven new technology for methane emissions reduction.

* Benefit numbers out on Friday showed almost one in nine New Zealanders between the ages of 15 and 64 are now on a benefit, including an extra nearly 50,000 in the past year to take the total to 400,000. See Chart of the day below.

* Discontent is growing in the provinces over Simeon Brown’s attempts to increase speed limits, especially around schools, including at the top of the South Island, where Tasman District Councl Mayor Tim King described the process as "entirely stupid" and "such a load of s***". 1News

* Treasury is expected to unveil a deterioration in the Government’s budget position and a higher borrowing programme tomorrow, putting the pressure on Finance Minister Nicola Willis to continue an even more aggressive austerity strategy for the next three years to meet the Government’s surplus and debt reduction targets, or relent for the sake of the economy and the coalition’s popularity.

* GDP figures for the September quarter on Wednesday are expected to show New Zealand’s economy is still in a triple-dip recession, with manufacturing sector data for November showing an even deeper contraction is continuing in some parts of the economy in to the December quarter. This is related to number 5.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the Dawn Chorus podcast above and read the analysis and detail below in the Pick ‘n’ Mix. But during our ‘Gravy Day Fortnight’ until this Sunday, December 22, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deal that ends on Sunday, December 22.)

The best of the rest

I’m up from 3am daily and read around all sorts of news websites to get a sense of what’s happening in Aotearoa’s political economy around housing, poverty and climate, both here and overseas. The full Pick ‘n’ Mix is usually available only for paying subscribers. Here’s my Top Six in the Pick ‘n’ mix as of 8.00 am on Monday, December 16:

The Top Six in Monday’s Pick ‘n’ Mix

* Poverty & Austerity: Foodbanks face closure with funding to stop RNZ’s Amy Williams

* Health & Austerity: Women living in ‘pure hell’, while thousands of gynaecologist referrals declined. One gynaecologist said if women got the right people to write letters their referrals would be accepted to avoid complaints. Other clinicians sought therapy to deal with the distress of not being able to help patients.

The Press’ Maddy Croad

* Climate & Austerity: National’s quiet U-turn on $247m pledge. Christopher Luxon promised more money to reduce EV range anxiety. Instead, his Government shrank the pot. The Post’s Olivia Wannan

* Poverty & Health: 'Significant challenge': Calls to address equity in gastric cancer care for Māori and Pacificia NZ Herald

* Health & Poverty: ‘If we can't get this right, our health system can't ever function’. Māori paediatrician Owen Sinclair has spent the past decade pushing to get kids vaccinated. But amid a whooping cough epidemic, with measles sure to follow, the rates just keep falling. The Sunday Star Times’ Nikki Macdonald

* Column by Andrea Vance in Sunday Star Times: Why Christopher Luxon just made (another) tactical blunder. The PM humiliated his finance minister, and his lack of loyalty hasn’t gone unnoticed.

The Pick ‘n’ Mix for Monday, December 16

Scoops & breaking news

Health & Infrastructure: Former health boss dismayed at Dunedin Hospital ‘debacle’. The cost of delays to the Dunedin Hospital rebuild had already reached $5 million a month before Te Whatu Ora took over, Chris Fleming says. The Press’ Louisa Steyl

Climate & Austerity: GNS job cuts: Emergency management bosses told of 'significant risks' for natural hazards watchdog NZ Herald-$$$’s Jamie Morton

Poverty & Austerity: Children’s charity staves off closure after striking deal with Government. The Post’s Andrea Vance

Deep-dives, interviews, features & analysis

Transport & Politics: Was the ferry ‘decision’ good? A bid to explain the unexplainable. The Sunday Star Times’ Kevin Norquay

Transport & Climate: Safer option or backwards step? Cycle lane debate reignites. Moving the Kent/Cambridge Terrace bike lane to the central footpath is being touted as better for riders ‒ with the added benefit of restoring lost parking ‒ but cycling and walking advocates have rubbished the idea. The Post’s Justin Wong

Politics Interview: David Seymour says ‘half of the ideas’ from Government come from ACT. Seymour talks about the “core tension” in the Coalition, as the Government turns one. The Post’s Thomas Manch

Columns, Op-Eds & Editorials

Column by Janet Wilson in Weekend Post: Year 1 of the coalition: struggling economy and a stumbling PM. He enters his second year as Prime Minister as the weakest leader in the coalition, a nowhere man who stands for nothing and falls for everything.

Solutions & Good news

Housing & Economy: Westfield operator looks to build apartments on shopping centres RNZ

Climate & Environment: Whanganui rejects fast-track seabed mining project RNZ

Housing & Te Titiri: Ngāti Toa purchases 80 hectares of school land in Hutt Valley RNZ

Chart du Jour: Almost as bad as in the GFC

Cartoon du Jour: Following yonder fiscal strategy

Timeline-cleansing nature pic: Short but sweet

Mā te wā

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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Friday, December 12 in The Kākā’s Dawn Chorus above and the daily Pick ‘n’ Mix below are:

* The National-ACT-NZ First Government, which has a ‘Going for Housing Growth’ policy designed to massively increase housing supply to improve affordability, has just blocked a Kāinga Ora-led ‘Specified Development Project’ to develop 2,600 ha of greenfields land for up to 37,000 houses in the ‘Western Corridor’ area of Tauranga, saying the ‘costs and benefits outweigh the risks’. Public notice and via Newsroom Pro-$’s Andrew Bevin this morning.

* The Hamilton City Council has opted out of housing densification rules under the once-bipartisan Medium Density Residential Standards (MDRS) that were designed to allow the building of three three-storey townhouses per normal section without a resource consent. The move dramatically reduces the future housing capacity of one of Aotearoa’s fastest growing cities and came after Councillor Geoff Taylor described the MDRS rules as “cooked up by someone’s feverish mind somewhere in Wellington,” and that Hamilton already had too much in-fill housing, The Waikato Times’ Stephen Ward reports this morning.

* After one day as Railways Minister, Winston Peters has declared the ferry plans announced by Finance Minister Nicola Willis on Wednesday as “on hold,” saying he was now in charge and there were many options yet to be considered. Peters also told off his soon-to-be successor as Deputy PM, David Seymour, for commenting ‘unhelpfully’ on the ferries issue. See more in Quote du Jour below from Thomas Manch’s reporting this morning for The Post.

* Retail spending figures published yesterday by Stats NZ show retail spending per-capita after adjusting for inflation remained stagnant at 2013 levels in November, despite interest rate cuts and tax cuts having started in August. Economists for BNZ, Westpac & ANZ are now both forecasting GDP figures due next Thursday will show GDP fell another 0.4% in the September quarter.

* BNZ’s revelation to a select committee earlier this week that it has told petrol stations to repay their debt by 2030 because of climate concerns has spooked the sector and is worrying farmers who think they may be next, as Ke-Xin Li reports this morning for The Waikato Times.

* ACC announced yesterday a range of levy increases for the next three years that are set to be double expected CPI inflation. It’s another example of the Government’s austerity drive simply driving up costs of living for consumers as agencies and councils starved of central Government funds pass those costs on with administered inflation.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the Dawn Chorus podcast above and read the analysis and detail below in the Pick ‘n’ Mix. But during our ‘Gravy Day Fortnight’ until Dec 22, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deal until Dec 22.)

The best of the rest

I’m up from 3am daily and read around all sorts of news websites to get a sense of what’s happening in Aotearoa’s political economy around housing, poverty and climate, both here and overseas.

Here’s my top six in the pick ‘n’ mix as of 9.00 am on Friday, December 13 for all subscribers.

Top 6 links in Friday’s pick ‘n’ mix

* Health & Austerity: Retrofit not recommended ODT’s Matthew Littlewood

* Politics & Austerity: Nicola Willis likely to exceed target for reducing consultant spending, saving $800m NZ Herald’s Thomas Coughlan

* Transport & Politics: 'Such a load of s***' – Speed limits test Tasman mayor's patience 1News’Max Frethey

* Transport & Politics Seymour wrong on cost of ferry replacement project, says Peters"You're talking to the minister in charge now, not the one that's not in charge," Peters said. 1News

* Politics: 'Dashboard crap': Peters says he doesn't have quarterly plans, contradicting PM NZ Herald’s Jamie Ensor

* Health & Austerity: Govt could waste ‘once-in-a-generation’ chance with new Mental Health Bill, experts say. A group of mental health professionals has denounced the new Mental Health Bill as being “the old act with some new lipstick”. The Post’s Mariné Lourens

Quote du Jour:

“Those plans are all on hold. There’s a new minister – well the old minister’s come back. We’re starting as fresh as we can, and we’re in day one. There are far more viable propositions that are yet to be considered.” Winston Peters on the new Cook Strait ferry project via The Post.

Charts du Jour: Spending like it’s 2012

Timeline-cleansing nature pic

Mā te wā

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:

* Cathrine Dyer on the Government’s inadequate final emissions reduction plan and pro-business climate appointments;

* Robert Patman on the lightening overthrow of Bashar al-Assad’s regime in Syria and what might happen next in Ukraine as the world’s diplomats, traders and markets brace for Donald Trump’s re-inauguation on January 10.

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

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

This is the second-to-last Hoon for 2024. Our special last edition of the year is on December 19 and will include our regulars Cathrine Dyer and Robert Patman, plus special guests Helen Clark and Josie Pagani. Our first Hoon of 2025 will be on Thursday, January 23.

(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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Thursday, December 12 in The Kākā’s Dawn Chorus and Pick ‘n’ Mix are:

* Finance Minister Nicola Willis has announced a Cabinet decision to tender for two new Cook Strait ferries won’t happen until March. An actual order is not likely until late next year, before delivery in 2029 of smaller ferries than the iRex ones that were to be built this year for delivery next year, but were cancelled a year ago by Willis. She wouldn’t give a cost estimate or confirm they would be ‘rail enabled’ rather than ‘rail-compatible’, but David Seymour let slip the ferries and port rebuilding would cost around $1.5 billion.

* The Wellington Regional Council and Marlborough District Council would then have to decide to borrow and invest in the less-long-lasting and less-resilient port facilities for the (maybe) rail-enabled ferries were disappointed about the lack of certainty. Mainfreight, retailers and unions also said they were frustrated by the delays and uncertainty, all because the Government won’t use its strong balance sheet to borrow and invest in infrastructure needed to cope with un-forecast population growth, quakes and climate events over the next 50 to 100 years.

* Seymour celebrated his success in getting the Government to essentially decide to privatise the Interislander by setting up a partly-state-owned private company to buy the ferries. He is now at odds in Cabinet with new Rail Minister Winston Peters, who wants to retain the ferries and keep them rail-enabled.

* In another case of Government decisions to push costs and borrowing to councils that are pushing up inflation for consumers, Christchurch City Council is planning to put up bus fares 50% after funding cuts by the Government, which is focused on motorway building. The Picton and Wellington Ports are expected to put up fees for freight operators using new facilities, while the new company owning the ferries would have to increase ticket prices to pay for higher finance costs and dividends for private shareholders. All would increase inflation and living costs.

* Road traffic figures for November show the per-capita recession is set to extend well into 2025. See more in the charts of the day below. Mortgage brokers also report a slowing of borrowing by landlords in December as concerns about job losses and DTI restrictions on lending start kicking in. The Government is depending on household borrowing to take over from Government borrowing next year to restart the economy.

* Australian scientists said they appalled at the Government’s decision to cancel pure research funding for humanities and social sciences, saying it was necessary to deal with the challenges of a modern economy where private and public investors build infrastructure and businesses to increase productivity and real wages. See more in the quote of the day below.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the Dawn Chorus podcast above and read the analysis and detail below in the Pick ‘n’ Mix. But during our ‘Gravy Day Fortnight’ until Dec 22, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deal until Dec 22.)

The best of the rest

I’m up from 3am daily and read around all sorts of news websites to get a sense of what’s happening in Aotearoa’s political economy around housing, poverty and climate, both here and overseas.

Here’s my top six in the pick ‘n’ mix as of 7.30 am on Thursday, December 12 for all subscribers. The full list for paying subscribers is below the paywall fold (usually):

Top 6 links in Thursday’s pick ‘n’ mix:

* Politics & Tax: Ngarewa-Packer stands by $200b 'Soviet' Capital Gains Tax NZ Herald’s Thomas Coughlan

* Population & Migration: Residence visa approval numbers up 59% compared to pre-Covid levels Interest’s Greg Ninness

* Climate & Economy: Mobil’s owner Exxon sets 5-year plan to boost oil and gas output by 18% Reuters

* Column or Analysis: Transport & Climate: Wayne Brown’s terrible plan to abolish one of Auckland Council’s best agencies Column by NZ Herald-$$$’s Simon Wilson

* Climate & Banking: BNZ wants out of gas stations by 2030, farmer lobby group not happy Interest’s Dan Brunskill

* Austerity & Science: Researchers pen scathing open letter to Minister over Marsden Fund changes RNZ

The full pick ‘n’ mix for for paying subscribers (usually)

Scoops this morning

Environment & Politics: ECan councillors briefed in private by vested interests Newsroom Pro-$$$’s David Williams

Politics & Environment: Winton 'stands to gain millions': MP BusinessDesk-$$$’s Maria Slade

Justice & Diplomacy: ‘A lifetime of trauma’: Young women indecently assaulted by foreign officials. A Stuff investigation can finally reveal two men, who were visiting on official business, indecently assaulted two young women at a Wellington restaurant. Stuff’s Olivia Wannan and Paula Penfold

Transport & Infrastructure Hillside future‘ vague’ after announcement ODT’s Matthew Littlewood

News breaking here and overseas this morning

Transport & Economy: Mainfreight calls progress on ferries 'frustratingly slow' RNZ’s Morning Report

Transport & Politics: Seymour's comments on ferry plan 'unhelpful', Peters says RNZ

Transport & Cost of Living: Canterbury bus fares to increase by 50% The Press’ Will Harvie

Economy & Austerity: 'It has never been this hard' - Hawkes Bay's economic woes revealed in new report RNZ’s Alexa Cook

Poverty & Health: 'Tidal wave': Cocaine, methamphetamine use soars RNZ

Economy & Trade: Chinese authorities are considering a weaker yuan as Trump trade risks loom Reuters

Geopolitics & EU: Germany on path for early election after Scholz requests confidence vote Reuters

Solutions & good news

Housing & Transport: Sixty-six cars to be stacked 20 levels high at new apartment block NZ Herald-$$$’s Anne Gibson

Housing & Climate: Napier’s new flood maps could lead to more homes built on piles, says architect NZ Herald-$$$’s Greg Hamilton Irvine

Costs of living & Banking: Commerce Commission to push surcharges 'right down' but 'not to zero' Interest’s Gareth Vaughan

Deep-dives, features, interviews & explainers

Politics & Leadership: Luxon on cross-party collabs, 'corporate speak', and Hipkins: 'He was a terrible PM' Luxon interviewed by NZ Herald’s Chelsea Daniels

Wages & Equality: An 'embarrassing' pay gap, and the government's plan to fix it RNZ/Newsroom’s The Detail

Austerity & Justice: Lawyers' worried for safety in 'pressure cooker' court houses RNZ’s Nine to Noon

Op-Eds, columns & analysis

Transport & Politics: Ferry flop - Govt reveals it still hasn't sorted its ship out Column by NZ Herald-$$$’s Georgina Campbell

Politics & Leadership: 'Political desperation in his voice' - why Luxon's messaging isn't landing Op-Ed by Sarah Maguire in NZ Herald-$$$

Politics & Transport: Nicola Willis delivers a masterclass in incompetence Column by Jack McDonald in The Post

Politics & Performance: Ranking National's 20 first-term MPs Column by NZ Herald-$$$’s Audrey Young

Politics & Economy: Dairy should be NZ’s economic growth engine not immigration Column by Richard Prebble in NZ Herald-$$$

Quote du Jour: What Australian scientists think

The Australian Council of Learned Academies took the unusual step yesterday of putting out a statement on slashing of funding for pure science research via the Marsden Fund.

Australia invests a lot more public and private research and development and in business and infrastructure investment and worker training. That’s why it’s productivity growth has been higher than New Zealand’s over the last 30 years and has widened the real wage advantage in Australia to more than 30%. It’s why well over 100 New Zealand residents a day are leaving permanently to work and live in Australia.

Here’s what their scientists think:

“The pressing problems of our time – climate change and biodiversity crises; managing the challenges posed by Artificial Intelligence; the worsening crisis of misinformation and disinformation; managing geo-political tensions – require a skilled and adaptive workforce, and a robust multi-disciplinary sovereign research capability.

“As is clear in Australia’s 2024 National Science and Research Priorities, our national challenges are complex and intertwined. Solutions grounded in research across a broad range of disciplines are key to addressing those challenges and to adapting to rapidly changing contexts.

Social and cultural research must go hand-in-hand with scientific and technological research to realise societal and economic benefits; there are no two-ways about it.” The Australian Council of Learned Academies (ACOLA) statement via Dr Katherine Woodthorpe, Chair ACOLA and President of the Australian Academy of Technological Sciences & Engineering

Charts du Jour: Not-so-much vroom vroom

ANZ’s Truckometer measures of light and heavy traffic per capita are good leading indicators of GDP spending and GDP Production respectively. Both are showing at least another six months of recession in per capita terms.

Cartoon du Jour: Will it float?

Timeline-cleansing nature pic

Mā te wā

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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Wednesday, December 11 in The Kākā’s Dawn Chorus and Pick ‘n’ Mix are:

* The National-ACT-NZ First Coalition Government is set to announce today it will spend $900 million on new ferries to replace the two bigger ones already being built in South Korea for $551 million, but that it cancelled a year ago in an unnecessary panic about spending. The Government is set to argue it will be cheaper for taxpayers overall because it will not include port infrastructure costs, but those costs are expected to be larger in the long run for ferry users because of higher user-pays fees from the ports. Stuff’s Jenna Lynch published the scoop last night, including that Winston Peters is expected to be named as Rail Minister later today.

* Climate Change Minister Simon Watts has released the Government’s formal emissions reductions plan this morning. It relies on unproven and undeveloped carbon sequestration and renewable energy tools such as carbon-capture, hydrogen and biogas. It includes carbon capture, utilisation and storage in the ETS. Initial reports from RNZ’s Eloise Gibson, Newsroom’s Marc Daalder, The Post’s Tom Pullar Strecker, BusinessDesk-$$$’s Greg Hurrell

* The Government’s escalating efforts to slash health spending is about to leave hospital IT systems stranded on Windows 2012 operating systems, which doctors and nurses fear will expose them and patients to cyber attacks and equipment failure during operations. The Nelson Mail’s Amy Ridout and RNZ’s Phil Pennington include details in their reports on the risks and implications of over 130 IT projects being cancelled arbitrarily.

* Nearly 4,000 vulnerable children face losing wrap-around care provided by Stand Tū Māia after its $21 million contract was cancelled abruptly by Oranga Tamariki under austerity-era instructions to immediate cut spending. The Post’s Andrea Vance reports the charity is set to sue Oranga Tamariki.

* A new British book based on University of Glasgow research shows Britain’s austerity programme from 2010 led to a drop in life expectancy there after decades of improvement.

* New charts below show how rents rise almost exactly in step with incomes, with almost half of median renters’ incomes consumed by rents, although occasional surges in supply when the usual rules restricting development are broken can soften the link.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the Dawn Chorus podcast above and read the analysis and detail below in the Pick ‘n’ Mix. But during our ‘Gravy Day Fortnight’ until Dec 22, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deal until Dec 22.)

The best of the rest

I’m up from 3am daily and read around all sorts of news websites to get a sense of what’s happening in Aotearoa’s political economy around housing, poverty and climate, both here and overseas.

Here’s my top six in the pick ‘n’ mix as of 7am on Wednesday, December 11 for all subscribers. The full list for paying subscribers is below the paywall fold (usually):

Top 6 links in Wednesday’s pick ‘n’ mix:

* Scoop: Transport & Politics: Government sets aside $900m for smaller Cook Strait ferries than the two cancelled that were to cost $551 million. Winston Peters to be named Rail Minister. Port build cheaper for Government now, but long-run cost to be higher and passed on to port users. Stuff’s Jenna Lynch

* Scoop: Health & Austerity: Children’s charity seeks injunction against Oranga Tamariki. Stand Tū Māia had a three-year, $21 million contract to help vulnerable kids and their families cancelled, which it believes is an “egregious breach of good faith”. The Press’ Andrea Vance

* Deep-dive: Health & Austerity: ‘People will die’ if IT cuts go ahead. Cuts to Te Whatu Ora’s specialist IT team will put strain on an already under resourced department. The Nelson Mail’s Amy Ridout

* Column or Analysis: Economy & Competition: Why the criminal charges against the supermarkets probably won’t mean cheaper prices. Stuff’s Brianna McIlwraith

* Op-Ed: Health & Inequality: How the UK’s austerity policies caused life expectancy to fall Gerry McCartney & David Walsh, University of Glasgow

* Solutions & good news: Community & Urbanism: South Auckland market celebrates entrepreneurs, ‘Southside pride’ and karaoke RNZ’s Mary Afemata

The full pick ‘n’ mix for for paying subscribers (usually)

Scoops this morning

Abuse in care & Poverty: Furious minister calls ‘please explain’ meeting over Lake Alice payments Newsroom’s David Williams

Health & Justice: Calls for health inquiry into billion dollar Kiwi dietary supplement Newsroom’s Jonathan Milne & Mike Wesley-Smith

Health & Austerity: Govt told Dunedin Hospital redesign too risky — HNZ - ODT’s Matthew Littlewood

Environment & Economy: Second audit finds more consent breaches by Macraes gold mine RNZ’s Farah Hancock

Economy & Politics: Cabinet approves $5m loan to support private buyer of NZ’s biggest ski field Newsroom Pro-$$$’s Andrew Bevin

Housing & Austerity: Progress called for on stalled Dunedin state house build at Port Chalmers ODT-$$$’s Matthew Littlewood

Politics & Wellington: Beehive lobbying ‘deeply problematic’: Wellington mayor. The Post’s Julie Jacobson

Politics & Austerity: Public servants offered support to retire or move to Australia amid job cuts NZ Herald-$$$’s Azaria Howell

News breaking here and overseas this morning

Health & Austerity: Nurses begin rolling strikes RNZ’s Mary Argue

Environment & Politics: Fast-Track projects: Speaker rules no private benefit in list RNZ’s Russell Palmer

Jobs & Politics: 'The government can't step in and save every business': Local MP Louise Upston on Tokoroa’s Save Our Mill RNZ

Te Tiriti & Politics: Poll: More NZers oppose than support Treaty Principles Bill 1News

Economy & Recession: Why Kiwis are staying home for the summer holidays RNZ’s Mahvash Ikram

Transport & Infrastructure: KiwiRail to shut pedestrian access to popular Hutt River bridge RNZ

Deep-dives, features, interviews & explainers

Economy & Politics: Conspiracy theories overwhelm Reserve Bank submissions Newsroom-Pro-$$$’s Andrew Bevin

Geopolitics & Security: ‘We don’t want to live under fear’: Chinese dissidents call for inquiry into foreign interference Stuff’s Bridie Witton

Op-Eds, columns & analysis

Science & Politics: Anne Salmond: Research cuts an own goal Op-Ed by Anne Salmond via Newsroom

Health & Politics: NZ is consulting the public on regulations for puberty blockers – this should be a medical decision not a political one. Rona Carroll, University of Otago

Solutions & good news

Transport & Urbanism: Auckland's Wynyard crossing bridge expected to re-open this week RNZ’s Jessica Hopkins

Economy & Technology: Google says it has cracked a quantum computing challenge with new chip Reuters

Charts du Jour: When wages rises, rents take almost half

As Musical Chairs points out via BlueSky, just under 50% of median earnings of renters in New Zealand are consumed by rent and the relationship is remarkably correlated. But there is hope, because the link was softened in Auckland after the Unitary Plan allowed (some) more densification and in Christchurch from 2013 after the Government broke its own rules about local infrastructure funding by borrowing to pay for it, and by effectively suspending the RMA in the years after the earthquake.

Cartoon du Jour: An inventive mother…

Timeline-cleansing nature pic

Mā te wā

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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Tuesday, December 10 are:

* The Government is planning for a new type of privatisation of buildings in the health sector in particular, announcing last night it had directed officials to use ‘strategic leasing’ or what it calls ‘PPP-lite’ for health centres and other ‘technical’ buildings.

* Finance Minister Nicola Willis last night put off more aggressive Government intervention in the banking market by asking the Reserve Bank to consider competition when regulating banks, and by suggesting a float and sale of new Kiwibank shares to pension funds to inject new capital for growth, but only after the 2028 election. She said the banks were ‘on notice.’

* In another move to limit workers’ powers to strike for higher pay, ACT Deputy Leader and Brooke van Velden announced last night the urgent reintroduction before Christmas of pay deductions for partial strikes, saying it was needed ahead of a wave of public sector pay deals expiring in the first half of next year.

* Two polls show support for Te Pāti Māori (TPM) surged to record highs in November around the hikoi, taking TPM ahead of NZ First in the 1News/Verian poll and being equal with NZ First in the Taxpayers Union-Curia poll. However, both polls showed National-ACT-NZ First remained comfortably ahead of Labour-Green-TPM. (See more in the charts below).

* Replacing climate academics with business leaders, Climate Change Minister Simon Watts appointed former Governor-General Dame Patsy Reddy as the Climate Change Commission's new chairperson with former Fortescue Future Industries director Felicity Underhill and Te Manahuna Aoraki director Devon McLean as Commissioners, replacing Catherine Leining and James Renwick.

* CTU economist Craig Renney and a Taxpayers Union representative were both blocked from attending next Wednesday’s Treasury briefing for media and analysis’s on the Half Yearly Fiscal and Economic Update (HYEFU), despite regular attendances for years. Treasury said it was tightening up the rules to limit it only to accredited media and financial organisations such as banks and consultancies providing information to financial markets and businesses. NZ Herald

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the podcast/video above and read the analysis and detail below. But during our ‘Gravy Day Fortnight’ until December 21, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deals, including the 50%-off introductory offer, the $30/year for under 30s deal and the $65/year for renting pensioners deal, respectively.)

Govt says get ready for ‘PPP-lite for health centres

Nurses, doctors and patients alike have feared the National-ACT-NZ First Government’s real agenda for the health system is a type of creeping privatisation, starting with buildings.

Health Minister Shane Reti fuelled those fears last week when he said his policy on privatisation was ‘not overt’. Here’s the full quotes via RNZ’s Ruth Hill (bolding mine):

Following his speech to the Association of Salaried Medical Specialists conference in Wellington today, Dr Reti was asked whether the government's approach was creating a two-tiered system, "with private healthcare for the haves, and the underfunded public system for the have-nots".

"Mr Seymour says he's going to privatise health. So what are your comments on that? Is it true?" asked the union's national president, Dr Catherine Ben.

"I have the privilege of being the Health Minister and that's not my overt policy," Reti replied.

He would like to see "greater collaboration" with private facilities and private operators, particularly on the government's list targets.

However, his message to the private sector was that taxpayer money had to benefit the public, and they had had a "quid pro quo responsibility" to build capacity in the public system.

"That is the deal - this is not just Crown funding going to your balance sheet, God bless you....so you will see us increasing the relationship and outsourcing to the private operators - that is not at all a step toward privatisation at all, that is not my agenda.

"My agenda is to lift the capacity of the public system so it's there when we need it." RNZ’s Ruth Hill

Late yesterday, Infrastructure Under-Secretary Simon Court fleshed out some of the Government’s thinking on how to involve the private sector more in the health system, announcing a new ‘strategic leasing’ policy.

Here’s his key comments (bolding mine):

“On a basic level, strategic leasing is like any other government leasing arrangement, where the government takes out an exclusive lease from an asset owner in exchange for regular payments, such as for office accommodation.

“However, this new strategic leasing guidance will help government agencies tailor leasing arrangements to apply to a wider range of assets. This could include technical buildings such as health centres, or accommodation after a natural disaster.

“Strategic leasing adds to a suite of infrastructure delivery pathways, recognising that the Government doesn’t need to own every asset it uses. It offers a sweet spot between knowing we have what we need – when and where we need it – and flexibility to change as our needs do."

Mr Court says elements like private finance, and the corresponding discipline and incentives this drives, makes strategic leasing akin to ‘PPP-lite’.

“Like with PPPs, lease payments depend on the asset being delivered and available at a certain standard, which drives strong asset delivery and performance incentives.” Simon Court in a statement

Court also made clear the genesis of the coalition’s thinking.

“Health infrastructure is an especially important area of need in New Zealand, and one for which strategic leasing presents great opportunity – something recognised and prioritised in the ACT-National coalition agreement.”

Top six news and longer-reading links elsewhere

* Breaking: Charges will be filed separately against Woolworths NZ, Pak’nSave Silverdale, and Pak’n’ Save Mill Street 1News

* Scoop: Healthcare staff asked to 'fill in' on reception RNZ’s Ruth Hill

* Deep-dive: More than half of government targets behind track RNZ’s Farah Hancock

* Column: When a ban is an accolade: Our media person of the year 2024 Newsroom’s Tim Murphy

* Op-Ed: To call this voodoo economics is an insult to voodoo Rob Campbell via Newsroom

* Solutions & good news: Breaking barriers: How new doctor champions Māori health in medicine NZ Herald

Charts du Jour: TPM on a tear

Cartoon of the day: Machine politics

Timeline-cleansing nature pic

Mā te wā

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

Mōrena. Long stories short, the six things that matter in Aotearoa’s political economy around housing, climate and poverty on Monday, December 9 are:

* Warkworth residents are angry that Transport Minister Simeon Brown has blocked work on a long-planned upgrade to a dangerous intersection because it included plans for walking and cycling, RNZ’s Peter de Graf reported on Saturday. It’s the latest National electorate where Brown’s abrupt and ideological rulings have overturned locally driven plans and expectations for safer and toll-free roads.

* The Greens launched a set of alternative emissions reduction policies yesterday that co-leader Chloe Swarbrick said would cut emissions five times more than the current Government’s policies. The policies included a jobs guarantee, a Green Ministry of Works, removing forestry from the Emissions Trading Scheme, subsidising solar rollouts, investing heavily in regional passenger rail, possibly buying back the gentailers, reinstating the Clean Car Discount Scheme and banning oil & gas exploration again.

* Building and Construction Minister Chris Penk will today release new insulation standards designed to reduce costs by between $2,300 to $15,000 per home, The Post-$$$’s Luke Malpass reports this morning, although the reported shift to a ‘modelling’ approach from a ‘prescriptive’ appears little different to changes proposed by the previous Labour Government.

* ACT Leader David Seymour’s proposed legislation to get rid of red tape isn’t necessary, says the new Regulation Ministry he set up, The Post-$$$’s Andrea Vance reports this morning.

* The Government is expected to announce by Wednesday what will replace the iRex Cook Strait ferries canceled by Finance Minister Nicola Willis. The focus is on whether any new ferry or ferries include capacity for rail freight to ‘roll on and roll off’ as trucks and cars do.

* Both the NZ Herald-$$$ and the ODT−$$$ ran editorials this morning calling on the Government to reverse Kāinga Ora’s decision to stop buying local wool carpets in a quest to cut costs.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the podcast/video above and read the analysis and detail below. But during our ‘Gravy Day Fortnight’ until December 21, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deals, including the 50%-off introductory offer, the $30 for under 30s deal and the $65 for renting pensioners deal, respectively.)

Yet more provincial voters angry at Simeon Brown’s dogma

Transport Minister Simeon Brown has managed to aggravate another set of voters in the provinces and suburbs with his pro-speeding, pro-tolling and anti-cycling views of the transport system.

Fresh from alienating the Wairarapa and Manawatu by planning to toll the new motorway linking the provinces, Brown has angered residents of Warkworth by cancelling the upgrade of a key intersection to make it safer because it happened to include some cycling and walking infrastructure. Residents in Whangapararoa Peninsular are also unhappy about Brown’s plans to toll the Penlink motorway now being built. There are also a number of grassroots campaigns in provincial electorates against Brown’s rulings lifting speed limits outside schools.

Here’s the detail in this Peter de Graf article via RNZ from Thursday on the latest shock ruling from Brown (bolding mine):

One Mahurangi Business Association manager Murray Chapman described it as particularly dangerous.

"If you can imagine an intersection designed by somebody going through emotional turmoil. There's five roads leading into it. Some people bully their way through. Some people will sit at the give-way signs for what seems like hours because they're too scared to go anywhere," he said.

Warkworth Lodge owner Liz Bays said the intersection actually had traffic coming from seven directions.

Warkworth residents have been lobbying roading authorities to fix the intersection for decades, and plans have been floated since at least 2010.

In 2023, Auckland Transport announced a solution involving two roundabouts had finally been found, and construction would start within 12 months, funding permitting.

However, a rejig of priorities meant the project no longer makes the cut in the government's 2024-27 roading funding plan, and it is not clear when it could be built after that. Peter de Graf article via RNZ

Then all became clear…

By Saturday, the reason for the rejection had become clear. Simeon Brown didn’t like the speed bumps and the cycleways included, so dumped the whole thing. Here’s the detail via RNZ’s Peter de Graf again (bolding mine):

Transport Minister Simeon Brown said that was because the Northern Motorway extension and the new Matakana link road had reduced traffic through the intersection, but also because the design included at least five new speed bumps and three sections of cycleway.

Brown said that did not align with government policy or his expectation that investment in transport infrastructure would get back to basics. If Auckland Transport wanted to advance the project, they would need to redesign it, then re-submit it to NZTA to apply for co-funding, Brown said.

Dave Stott, who co-chairs the One Mahurangi Transport and Infrastructure Forum with MP Chris Penk, said he was "extremely disappointed".

"We were appalled by the minister's comments about having to redesign the intersection with particular reference to cycling and pedestrian access, given that we've had a process of design engagement with Auckland Transport and NZTA … In fact, we felt insulted.

"This process has been going on now for about six years. We've had a number of our own engineers working side by side with the engineers at Auckland Transport to come up with what we believe to be the most economic and most effective design for that intersection."

Stott, a former roading engineer, said a raft of groups and government agencies had been involved in coming up with an integrated transport plan for the town that took into account the needs of motorists, pedestrians, cyclists and public transport.

The cycleways had been designed to link up with cycleways planned by three new housing developments in the Hill Street area - Arvida, the Kilns project and Templeton - as well as with the Matakana Coastal Trail.

"So what we are doing is tying in to a network proposed by a number of other parties, but also taking account of the fact that there's probably going to be up to 10,000 people living in the northeast of Warkworth in future.

"They, in particular school kids, are going to have to come through that intersection, because all the schools are to the west or the south.

"So we're looking at huge safety issues for schoolchildren and cyclists to get in to Warkworth," Stott said.

While it was true the number of vehicles using the intersection had fallen since the motorway extension had been completed, Stott said projections showed that once the three housing developments had been built, traffic volumes would be even higher than they had been pre-motorway. RNZ’s Peter de Graf

Simeon Brown is increasingly a political liability for Christopher Luxon

Brown’s anti-cycling, pro-speeding and pro-tolling crusades are making him and National increasingly unpopular in the provincial and suburban seats it currently occupies.

Warkworth-raised transport commentator Connor Sharp summed up the reasons for the rejection this morning via Greater Auckland:

When news broke that, after decades of going in circles (as we wrote over 10 years ago on this very blog), this construction-ready community-led design has had its funding pulled by NZTA, meaning the project is effectively cancelled – it’s safe to say the local community was furious.

This is a direct result of the Minister of Transport Simeon Brown’s crusade against safe streets and cycleways. His Government Policy Statement on transport essentially forbids NZTA from co-funding any multi-modal designs, especially if they include safety elements for walking, cycling, rolling and scooting, and even if communities want them. Connor Sharp from Greater Auckland

Connor doesn’t hold back, and he’s right, in my view:

This is what happens when your politicians are more concerned about ideological purity than actual people: they make up issues that are divorced from reality, and leave communities in the lurch.

Keep in mind that Warkworth is traditionally a National stronghold – having a solution snatched away, after decades of delay and failed attempts. Led and progressed by, and with, the community – then cancelled, because one Minister personally doesn’t care about safety and is somehow triggered by cycleways.

How many more millions will be spent redesigning this project to suit this one Minister’s conceit? How many more years will this take? What does that mean for safety in the meantime? And how lethal will the redesign need to be before this Minister will approve it? What if he’s not even the Minister any more, after Warkworth has been put through a whole stupid process all over again, just to please him?

In my view, Simeon Brown and Shane Reti are now Christopher Luxon’s main political liabilities, alongside Luxon’s own personal unpopularity. Their rulings and approaches on provincial projects could yet be the source of revolts from National’s back bench, which is packed with provincial MPs being peppered by complaints from their home towns.

Luxon may find it more convenient to ditch Brown and Reti before the revolts reach the top.

Cartoon du jour: The only way is up, baby…

Timeline-cleansing nature pic

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

Mōrena. Long stories short, the six things that mattered in Aotearoa’s political economy around housing, climate and poverty in this week were:

* PM Christopher Luxon said his Goverment was ‘re-learning’ the austerity-infused economic lessons taught by former National Finance Minister Ruth Richardson in 1991, when she slashed spending to reduce public debt and the size of Government (and was then sacked in 1993);

* The National-ACT-NZ First Coalition Government signalled it would renege on our nation’s Paris Commitments to reduce climate emissions by saying the Government would not buy emissions credits offshore;

* The Government further reinforced the low wage, low investment, high immigration, high emigration, small-state and evidence-light nature of our economy by halving funding for research in humanities and social sciences without warning;

* The OECD recommended the structural separation of our mostly-state owned ‘gentailers’ to boost competition, lower power costs and revive productivity, which is a move that has been called for by anti-poverty campaigners and competitors for years, but rejected by dividend-hungry Governments;

* Infrastructure & Housing Minister Chris Bishop detailed the Government’s infrastructure funding strategy of using private finance and user charges to both pay for and limit the amount built, rather than using Crown borrowing, which means in practice that little will be built quickly; and,

* Stats NZ reported the 2023 Census found there were 112,496 people (2.3% of the population) living in severe housing deprivation, up from 99,462 in 2018, with 18,761 either sleeping rough or in tents, boarding houses or marae, up 62%.

(Normally at this point we would have a paywall for free subscribers and only paying subscribers could both listen to the podcast/video above and read the analysis and detail below. But during our ‘Gravy Day Fortnight’ until December 21, we have opened everything up for all immediately to give everyone a full taste of the public interest journalism your subscription supports. And here’s our ‘Gravy Day Fortnight’ deals, including the 50%-off introductory offer, the $30 for under 30s deal and the $65 for renting pensioners deal, respectively.)

The six things that mattered this week

1. The problem is it didn’t work then and is proven not to work now

Jack Tame’s interview with PM Christopher Luxon last Sunday on TVNZ’s Q+A was revealing for all sorts of reasons, but it was Luxon’s comments on the economy and the ‘economic lessons’ he had learned that struck me the most.

Here’s his comments in full:

“What I’d just to say to you is: we've kind of forgotten the laws of economics I'd say that we learned 35 years ago and we've taken good economic management for granted. When you increase spending by 84%, when you drive up inflation domestically, you have to then take interest rates up. When you take interest rates up, you've put the economy into recession, and when the economy is in recession it leads to unemployment.

“That's why we've always said if you actually care about working New Zealanders you actually are fiscal conservatives you actually run the economy well because the pain is ultimately unemployment and that's what we've actually been seeing.

“The last 3 to 6 months is the lagged effect of that. If you're a business that's hung in there with high inflation, high interest rates, suppressed demand, the last thing you're left with is is actually laying workers off and we've seen some of that this year so that's why we're working our way through those five components (Government spending, inflation, interest rates, unemployment, growth) but you've got to work through them sequentially so you get the show going.”

“You have to take your medicine. You actually have to work through the economy and that's what we're doing. You get spending under control as we have been doing. We haven't thrown the economy into austerity. We've got a very balanced approach to that.” Luxon to Jack Tame in the interview below.

In my view, Luxon is pointing to the Ruth Richardson ‘lessons’ from 1990-93 when she slashed spending dramatically and worsened unemployment to 11% at the same time as Don Brash was running high interest rates to get rid of inflation. Then National PM Jim Bolger sacked Richardson in 1993 when it became clear the medicine was making the patient sicker.

The ‘austerity medicine’ economic lesson has been proven repeatedly over the last 35 years to have failed to restart economic growth. The actual evidence in the last couple of years via the OECD, IMF and World Bank shows budget cutting doesn’t work to grow economies, instead reducing GDP, especially when the tightening is done during a recession when monetary policy is tight

Luxon is also plain wrong when he says his Government is not pursuing an austerity approach. Treasury advised the Government months ago that its fiscal track would generate the biggest real per-capita cuts in New Zealand’s economic history, bigger even than under Richardson.

2. NZ signals to EU & UK we’ll break our trade deal climate promises

It was a big week for climate news from the Government and other players in the debate, including:

* Trade Minister Todd McClay telling RNZ the Government wouldn’t buy emissions credits overseas to meet our Paris Agreement commitments for emissions reductions, even though the latest forecasts are that Aotearoa will be short of at least 90 million tonnes by 2030 and our EU and UK trade agreements include these committments;

* The Climate Change Commission telling the Government it needs to dramatically increase its emissions reductions efforts in order to be ‘net negative’ by 2050 by sucking 20 million tonnes out of the atmosphere (RNZ’s Eloise Gibson);

* The Government releasing advice from a science panel it appointed that said cutting methane 14-15% by 2050 could be enough to stabilise global warming from our sheep and cows at today’s levels, which contrasted with the Commission’s advice methane should be cut by 35-47% by 2050 (RNZ’s Eloise Gibson);

* McClay announcing the Government would partner with private foresters to plant pine and native trees on low value Crown land, including low value Conservation land, but excluding National Parks; and,

* McClay and Climate Change Minister Simon Watts announcing pine forest planting would be limited on high-value farmland.

In my view, the Government is playing for time with vague, handwavey and gaslighty comments about both meeting the targets and not doing anything that is either financially or politically difficult. It appears to be hoping the Paris Accords fall over or are blown apart by others before the bill comes due.

I’m surprised those serious about addressing climate change, including big corporates, sustainable bond fund managers, banks and independent agencies beyond the Climate Commission, such as the Reserve Bank, the Financial Markets Authority and the Natural Hazards Commission, have not called b******t on the Government’s approach as disingenuous, reckless and irresponsible, if only to ensure New Zealand can continue to obtain reinsurance and foreign capital that is mandated for investment in countries doing something about climate.

Almost every policy announced since the formation of the Government a year ago has increased New Zealand’s likely emissions, as often advised by officials, including:

* focusing all new public transport investment on motorway building and maintenance;

* ending any new cycling and walking investment, forcing councils to cut back or suspend new cycling lanes and other active mode transport spending;

* planning to increase the cost of buses and trains for commuters so more public money can be spent on roads;

* restarting drilling offshore for oil and gas;

* increasing speed limits in ways that will increase emissions;

* ending subsidies for electric cars and imposing new registration and road user charges on existing electric car owners, triggering a collapse in sales; and,

* focusing all public investment activity in new electricity generation on importing gas.

The figleafs used by the Government so far are to suggest these increases can be offset by more tree planting, new definitions for farm emissions and vague ideas of carbon capture and storage. I shouldn’t be the only one calling b******t on this.

Quote of the week

“Those who continue to promote the combustion of fossil fuels in the open air without permanent carbon capture & storage are, in my view, committing a crime against humanity.” Outgoing Climate Commission Chair Rod Carr in his final Environment Select Committee Appearance on Thursday. Vimeo

3. Doubling down on our low investment, evidence-lite political economy

The Government further reinforced the low wage, low investment, high immigration, high emigration, small-state and evidence-light nature of our economy by halving funding for pure research in humanities and social sciences through the Marsden fund without warning.

“By their nature, these mission-led projects produce evidence that is convenient to government. It asked for it, after all. What cutting social sciences and humanities from the Marsden Fund dramatically reduces is the ability of researchers to produce inconvenient evidence.” Tom Baker, an associate professor in Human Geography at the University of Auckland and a Marsden Fund grant awardee via this Newsroom Op-Ed.

4. ‘Break up the gentailers to improve productivity’

The Government talks a good game on productivity, but does little. The OECD this week again proposed via its 2024 Economic Outlook report (NZ is on page 215) that it break up the gentailers.

The OECD arguing New Zealand’s productivity growth had fallen markedly since 2021 because (bolding mine):

“GDP growth has been driven by an expansion of labour supply via migration, 80% of which is low and medium skilled. High bank margins and capital costs reduce demand for credit, and a lack of competition reduces pressure to invest and innovate.

“As a result, the capital-to-labour ratio and business R&D as a share of GDP are low. The government should foster productivity growth by increasing competition, including by lowering barriers to entry for digital banking platforms.

“High futures electricity prices for industry will exacerbate productivity problems by weakening business investment, especially in the green and digital transitions, as electricity is a core input for both. The electricity regulators and the government have launched reviews of the electricity market.

“Despite previous reforms to improve competition, electricity futures prices are high and above the threshold considered sustainable for the economy in the long run. These reviews should re- examine separating the generation and retail operations of large electricity companies to boost competition in the futures market and provide industry with more hedging options.” OECD report

The OECD report out on Thursday night was itself based on a more detailed report specifically on New Zealand’s competition reform in August.

Both reports are attached below.

Oecddec4note

7.77MB ∙ PDF file

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Download

Oecdonnzcompetition

1.12MB ∙ PDF file

Download

Download

Charts of the week

Commerce Minister Andrew Bayly announced a ‘major review of competition to lift productivity’ on the same day as the OECD report came out. We’ll see.

5. ‘We’ll get someone else to pay (ie: it probably won’t happen)’

Infrastructure & Housing Minister Chris Bishop announced on Monday the Government’s infrastructure funding strategy of using private finance and user charges to both pay for and limit the amount built, rather than using Crown borrowing. His speech included more details.

In my view, that’s unsustainable and unnecessary, given our $100 billion-plus infrastructure deficit, still-rapid population growth and huge structural, local and global demand for New Zealand Government and Council bonds, rather than the debt crisis portrayed by the Government.

6. Our homelessness crisis got much worse over the last five years

Stats NZ reported on Wednesday the 2023 Census found there were 112,496 people (2.3% of the population) living in severe housing deprivation, up from 99,462 in 2018, with 18,761 either sleeping rough or in tents, boarding houses or marae, up 62%.

In my view, this has worsened because we haven’t built enough affordable houses for decades and housebuilding is dropping again because of the new Government’s actions, particularly the suspension of new Kāinga Ora home-building to reduce the Government’s deficits and debt — unnecessarily in my view.

The lack of new housebuilding is because Governments of both flavours have chosen a small-state and low public debt way to govern without the need to tax capital or wealth, unlike in every other country. That means they have underinvested in infrastructure and extended the massive tax incentives for borrowing and buying residential land, rather than investing in real businesses.

TKP 26/50: I don’t believe this will change until the tax incentives playing field tipped back up to the set of incentives used overseas to invest in R&D, business development, training, and productivity improvement that increases real wages. That means taxing land and/or capital gains and/or wealth while restoring incentives to save in pensions. That means using that tax revenue to invest in the infrastructure for affordable, warm, dry and cheap-to-live-in homes that connect with well-developed public transport, cycling and walking networks.

Table of the week

Ngā mihi nui

Bernard

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