The Kākā by Bernard Hickey

Long stories short, here’s the top six news items of note in climate news for Aotearoa this week, and a discussion above between Bernard Hickey and The Kākā’s climate correspondent Cathrine Dyer:

* Gas is worse for the climate than coal, over any timeframe that is relevant for a ‘bridging strategy’. The headlines are calling this a landmark study that changes everything, but the core findings were established by the same researcher 13 years ago. Why the delay? Or perhaps the bigger question is ‘how’, given that we probably already know why ($!).

* Have we hit a tipping point? Global land sinks temporarily collapsed in 2023,  failing to absorb any net carbon dioxide emissions. The failure of global sinks could double the pace of warming and is not accounted for in any models.

* If we haven’t already triggered that tipping point, the AMOC continues to look wobbly. This week, 44 globally renowned scientists penned a stark warning to the Nordic Council of Ministers, hoping to tip them into action.

* Lawyers for Climate Action are taking Simeon Brown to court, saying that his decision to weaken the Clean Car Standard was unlawful.

* Climate Change Commissioner Catherine Leining has co-authored a study suggesting that a set of narrow lenses on ‘national interest’ are paralysing Government action on offshore mitigation.

* The chart of the week highlights the scale of the temperature anomaly in Atlantic sea surface temperatures over the past 12 months.

(See more detail and analysis below, and in the video and podcast above. Cathrine Dyer’s journalism on climate and the environment is available free to all paying and non-paying subscribers to The Kākā and the public. It is made possible by subscribers signing up to the paid tier to ensure this sort of public interest journalism is fully available in public to read, listen to and share. Cathrine wrote the wrap. Bernard edited it. Lynn copy-edited and illustrated it.)

1. The truth about LNG emerges after a 15-year cover-up

A new study, showing that exported Liquefied Natural Gas (LNG) in the US is responsible for greenhouse gas emissions that are 33% greater than those from coal over a 20-year timeframe, has upended the industry.

The paper first appeared in a pre-print earlier this year, and is alleged to have played a significant role in President Biden’s order to put a hold on new approvals for LNG export facilities in the US.

“In January this year, seemingly out of nowhere, US President Joe Biden made a decision that sent shock waves through the trillion-dollar global gas industry.

With the stroke of a pen, Mr Biden put a pause on approvals for any new project looking to ship super-chilled liquefied natural gas — or LNG — from US shores.

It was a decision that left many in the industry floored.

After all, within just a few short years America had rocketed from a position of having no LNG industry to being one of the world's biggest exporters of the fuel alongside Australia and Qatar.” ABC News Australia.

The critical gas involved is methane, not carbon dioxide. While carbon dioxide emissions are higher when you burn coal compared to LNG, methane is a much more potent GHG, and was found by principal researcher, Professor Robert Howarth, to be leaking at every point along the chain of gas production and distribution. Methane has a greenhouse effect that is more than 80 times more powerful than carbon dioxide over a twenty-year timeframe.

“From extraction of gas at the well to liquefying it through chilling; from the transport on specially designed ships to its regasification and distribution in pipes when unloaded — in each step methane escaped into the atmosphere.” ABC News.

Howarth estimates that as much as 5% of the gas is leaked as methane from LNG projects in the US.

But the core findings from that study are not new. Howarth first published a study (with co-authors Renee Santoro and Anthony Ingraffea) showing that shale gas was worse than coal over a 20-year timeframe in 2011, thirteen years ago. They suggested in a follow-up commentary that year that the health and environmental effects of natural gas from shale were too high, that fracking should be stopped, and that shale gas should not be used as a bridge fuel.

In a 2014 review of research to date, titled ‘A bridge to nowhere’, Howarth found the best available data showed that both shale gas and conventional natural gas have a larger GHG footprint than either coal or oil over a 20 year timeframe – a critical period for reducing emissions. This was before the US shale gas boom transformed global geo-politics, delivered trillions of dollars into the bank accounts of oil and gas companies, and hastened the trajectory of global warming.

Then, and today, the oil and gas industry has vigorously challenged Howarth’s work, claiming it was inaccurate and that it didn’t use the same leakage figures as the International Energy Agency (IEA) or the US Environmental Protection Agency (EPA). They called the Scientist’s work ‘sloppy’, accused him of 'cherry-picking data' and labelled him ‘an anti-fossil fuel activist’.

In the lead-up to his 2011 study being published, his computer was hacked and an advance copy of the study were stolen, as part of an attempt to discredit his work.

What the current headlines fail to appreciate is the role that the oil and gas industry has played in submerging and overwhelming the evidence with their own disinformation. They have continued to present LNG as a less-polluting bridging fuel, capable of supporting the global transition away from coal, while banking massive profits at the expense of climate stability.

Standing, as we now are, on the precipice of several tipping points that could devastate modern global society, the question that the media needs to be asking is why this news, and an appropriate response to it, is thirteen crucial years too late.

How is industry disinformation successfully incapacitating appropriate policy measures in response to a threat so severe that it risks the habitability of the planet? Some clues can be found in the work of Drilled Media, and in the efforts of ex-MIT employee and whistleblower Edmund Carlevale on Linkedin.

2. Failing carbon sinks a tipping point that could double rate of warming

Last week, The Guardian reported on a pre-print (published online prior to peer review) by an international group of researchers who found that the amount of carbon being absorbed by global land sinks had collapsed, at least temporarily, in 2023. The researchers said that:

“In 2023, the CO2 growth rate was 3.37 ± 0.11 ppm at Mauna Loa, 86% above the previous year, and hitting a record high since observations began in 1958, while global fossil fuel CO2 emissions only increased by 0.6 ± 0.5%. This implies an unprecedented weakening of land and ocean sinks, and raises the question of where and why this reduction happened.”

If you saw the report and were wondering how important natural carbon sinks are, in the greater scheme of things, Associate Professor and Earth System Scientist James Dyke, who is not one of the researchers in the study, has your back. Picking up on a quote in the Guardian article from Professor Andrew Watson, head of Exeter University’s marine and atmospheric science group, he summarised the situation about as succinctly as you can.

Natural land and ocean carbon sinks currently absorb about 50% of human-caused CO2 emissions, while oceans currently take up about 90% of the heat caused by the rest of the GHGs that are left in the atmosphere. The models on which we rely for policy setting assume that this will continue to be the case in the future, even though “we don’t thing they’re [natural sinks] always going to be with us”.

3. Another week, another study showing AMOC close to collapse

Last week, a group of 44 renowned climate scientists, from 15 countries, took the unusual step of delivering a stark warming about the imminent danger of crossing an ocean circulation tipping point in an open letter to the Nordic Council of Ministers.

In the letter they warn that the risk of a collapse of the Atlantic Meridional Overturning Circulation (AMOC) is underestimated by the IPCC in light of several recent studies, and that ”the passing of this tipping point is a serious possibility already in the next few decades”. The impacts would be particularly devastating for Nordic countries, who would suffer major cooling, so much so that “adaptation to such a severe climate catastrophe is not a viable option”. An AMOC collapse threatens the viability of agriculture throughout northwestern Europe.

The most recent AMOC tipping point paper, still in pre-print, estimates the collapse timeframe to be “between 2037-2064 (10-90% CI) with a mean of 2050 and the probability of an AMOC collapse before the year 2050 is estimated to be 59 +/- 17%.”

4. Lawyers for climate action are taking Simeon Brown to court

Lawyers for climate action and the Better New Zealand Trust are suing the Minister for Transport for his unlawful decision to weaken the Clean Car Standard, saying that “the Government’s own advice shows this will reduce the uptake of low-emission vehicles and increase New Zealand’s greenhouse gas emissions, while ignoring the Emissions Reduction Plan targets.” LCANZI

5. Focus on ‘national interest’ paralyses progress on offshore mitigation

Catherine Leining, Climate Change Commissioner and Policy Fellow at Motu Economic and Public Policy Research, has co-authored a new research paper showing how the funding of off-shore mitigation by Aotearoa New Zealand to meet 2030 targets under the Paris Agreement, could help to accelerate global climate progress.

The paper identifies four competing mindsets that are paralysing progress: Dismissive Detractors, Carbon Colonialism, Domestically Driven, and Least-Cost Compliance, each of which applies a narrow lens to serving the purpose of national interests. The paper recommends shifting to a ‘cooperative mindset’ and details how the government should proceed in getting started with offshore mitigation.

6. The Atlantic Ocean’s 12-month Sea Surface Temperature Anomaly

This week’s chart comes complete with another expletive from the field of climate science. Leon Simons is an expert on the climate effects of declining atmospheric sulphate aerosols, contributing to James Hanson’s ‘Global warming in the Pipeline’ paper.

https://x.com/leonsimons8/status/1846286329711415665?s=46

Other ‘must-reads’ this week include several in the ‘solution space’

* Once we pass 1.5˚C, there is no going back in New Scientist.

* We need a new ecological economics … This critique of the ten key hypotheses that form the foundations of neoclassical economics are found to be fundamentally flawed, failing to satisfy the basic requirements of scientific practice.

* In a piece re-published on Resilience.org, Robert Jensen argues that efforts to control the world via technological fundamentalism are doomed to fail. We must instead control ourselves.

* Evidence that radical protests work: A new study in Nature Sustainability shows that radical climate protests are linked to increases in public support for moderate organisations, suggesting they are an under-utilised strategic resource within the broader climate movement.

Ka kite ano

Bernard and Cathrine

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:

* The Kākā’s climate correspondent Cathrine Dyer on the latest climate news, including another extreme climate event in the United States;

* Robert Patman on the escalating conflict between Israel, Iran and Hezbollah in Southern Lebanon; and,

* Special guest Elaine Monaghan, who is a professor of practice in journalism at Indiana University in Bloomington, and contributed to Reuters coverage of Ukraine, having long been a Reuters correspondent in Moscow, Kyiv and Washington. She was also a correspondent for The Times in Washington and co-authored the 2006 book On the Brink: An Insider's Account of How the White House Compromised American Intelligence.

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 120 paying subscribers and was produced by Simon Josey.

(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

Many thanks to everyone for all your kind comments via email and in comments and elsewhere about loss of my mum. I haven’t been able to respond individually, but please know Lynn and I appreciate every one of them.

Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Tuesday, October 22.

* Australia’s jobs market is proving much more resilient to higher interest rates than New Zealand’s, helping to accelerate the historic exodus of workers across the Tasman at a rate of one A320 load a day.

* In the scoop of the day, Matt Nippert reports via NZ Herald-$$$ that the non-tax-paying childcare charity Best Start (previously Kidicorp) paid its owners, the Wright Family Foundation, NZ$37 million this year after making operating profits of $32 million from $262 million of government subisidies within total turnover of $370 million.

* In the deep-dive of the day, Sophie Trigger reports via NZ Herald that Ministry of Social Development officials warned their minister that using payment cards as a sanction for beneficiaries could be stigmatising and open to exploitation, but Minister Louise Upston went ahead anyway, saying it worked for New Zealand.

* In solutions news, Zita Campbell reports via 1News on a forestry company that wants to set steel nets to catch slash.

* In number of the day, 400 Health NZ staff accepted redundancy on the same day it emerged Corrections had increased staff numbers by 600.

* The chart of the day shows the collapse of New Zealand jobs availability and an explosion in the number of applications per job.

(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 we’ll open it up for public reading, listening and sharing.)

What’s driving the exodus of workers to Australia

I stumbled across this chart yesterday that shows the astonishingly quick deterioration in New Zealand’s jobs market in the last six months. It shows the number of job applications per job on Seek’s New Zealand site has more than trebled in 2024 to almost double the worst Covid levels. The same chart for Australia shows just a doubling of job applications per job to same levels as Covid.

Australia’s jobs market is much healthier than New Zealand’s despite, ostensibly, the same monetary policy and similar forces in the global economy, especially around demand for its exports from China, which have also fallen.

The differences behind the relatively more robust market for jobs there are:

* the Reserve Bank of Australia started tightening later (May 2022) than the Reserve Bank of New Zealand (October 21);

* the RBA tightened less (425 basis points) than the RBNZ (525 basis points);

* New Zealand’s new National-ACT-NZ First Government is tightening fiscal policy by cumulative four percentage points of GDP within the next three years, more than it ever has on a per-capita and real basis; while,

* Australia’s Federal and State Governments have loosened fiscal policy by a collective one percentage point of GDP over the last year; and,

* local, state and Federal Governments in Australia have expanded their spending and investment over the last five years, while New Zealand’s new Government is clamping down.

The end result of this difference in demand for workers, along with the existing pay and pensions gaps, is in this chart below showing the correlation (at least) between the difference in Australian and New Zealand unemployment rates, and the net flow of New Zealanders to Australia to work permanently.

The Kākā’s Journal of Record for Tuesday, October 22

* Infrastructure: Ipsos' 2024 global survey on perceptions of infrastructure found just 17% of NZers consider NZ to have a good record of delivering national infrastructure, compared to a 33% global average. 55% of Kiwis believe increasing the housing supply should be prioritised, compared to a 39% global average. NZ Herald

* Environment: Agriculture Minister Todd McClay announced that primary producers and councils won't need consents for certain kinds of discharges into waterways under the upcoming second Resource Management Amendment Bill. Recent High Court rulings would have required consents for previously permitted discharges; McClay said the upcoming Bill will "safeguard permitted activities".

* Transport: Transport Minister Simeon Brown announced that work has begun to add two more lanes to the Hawke's Bay Expressway. Seven other new Roads of National Significance projects will begin procurement or construction over the next three years, although Brown did not give completion estimates.

* Health: The Public Health Communication Centre recommended that the Ministry of Health's suicide prevention plan for 2025-2029 move beyond a psychiatric perspective to address the structural determinants of NZ's high suicide rate, including poverty and the impacts of colonisation. The PHCC also recommended NZ follow Australia by implementing a suicide register to improve data access.

* People moves: KiwiSaver scheme Simplicity appointed New Zealand Institute of Economic Research principal economist Shamubeel Eaqub as its new chief economist & head of policy. Eaqub will collaborate with Rosie Collins, an economist focused on wealth inequality, climate change, and urban housing systems.

* Retirement: The Labour Party said the Government's decision to delay amendments to the Retirement Villages Act until the next Parliamentary term will benefit village operators, but not residents. Associate Minister of Housing Tama Potaka said upcoming changes to the Act are meant to “safeguard the interests of village residents”, and will focus on maintenance & repairs, complaints management, and repayments when residents exit a village.

Cartoon of the day

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

Many thanks to subscribers for your patience and support while I’ve been off work. My mum died in Melbourne last Sunday, and her funeral was held there on Friday. I appreciated being able to spend time with my mum before she died, and with my family and Lynn over the last couple of weeks.

Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Monday, October 21.

* The Government’s economic strategy is dependent on lower interest rates fueling higher household borrowing and a resurgence in the housing market, but the Reserve Bank’s new Debt to Income multiple controls may prove a stumbling block over the next couple of years.

* In the scoop of the day, it turns out reports of imminent Government intervention in Wellington City Council were based on briefings by unnnamed sources, rather than more substantial sourcing, Colin Peacock reported yesterday for RNZ’s MediaWatch.

* In the deep-dive of the day, Farah Hancock has written an excellent deep-dive piece via RNZ about the changes to the Resource Management Act being shunted through by the Government.

* In solutions news, the Victorian Government announced plans for 50 new higher-density housing zones around train and tram stations that could drastically change the look of Melbourne's suburbs. ABC.

* In number of the day, AAP reported 36,721 New Zealanders had acquired Australian citizenship in the 15 months since ANZAC Day last year when Anthony Albanese's government allowed Kiwis access to an Australian passport after four years of residency.

* The chart of the day shows the number of New Zealanders on a main jobseeker, disability or sickness benefit hit a record high last week.

(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 we’ll open it up for public reading, listening and sharing.)

Relying on higher household debt to fill the fiscal hole

Big Govt spending cuts need replacing to return to GDP growth

Treasury has warned that the Government is embarking on its biggest fiscal tightening ever over the next three years to return the Budget to surplus and start repaying debt. The Government has also said it wants to fire up economic growth again. But how will that happen if the Government is spending less? Which sector of the economy will pick up where the Government left off? And how will that sector pay for it?

Finance Minister Nicola Willis told me a couple of weeks ago that interest rate cuts would do their magic and stimulate the economy again. The Government no doubt hopes that spending will come from business investment and household spending and investment, which is possible if they borrow.

But the recent history of business investment and borrowing is that it’s mostly to buy property, both residential and commercial, and it’s relatively small vs household ‘investment’ in new and existing homes, and the spending that is triggered by that on furnishings, renovations and all of the spending around a property transaction.

In an economy that is a housing market with bits tacked on, the way to engineer economic growth from the private sector to offset less Government spending is to engineer a surge in house sales and prices. That’s because business borrowing and investment on anything other than farm land and commercial and residential property is much less than it used to be.

At various points over the last 20 years, the Government has tightened fiscal policy and repaid debt, in both nominal terms and as a percentage of GDP. But it was only able to do it with economic growth when there was a surge in household debt, house prices and the population through migration.

Collectively, the Government is planning to pull around four percentage points of GDP worth spending out of the economy in the next four years. That’s about $20 billion worth of spending and debt that needs to be stacked up somewhere else by the fourth year, or around $50 billion over the four years. In the past, that was mostly done by households gearing up to buy each others’ houses, and by foreign investors buying assets here or investing in new assets — mostly Government and bank bonds.

The Clark/Cullen Government ran tight fiscal policy and repaid public debt from 1999 to 2007 just as the housing market really took off, thanks to increased bank lending. The Key/English Government tightened policy from 2012 to 2017, and Labour carried that on through to 2020. Over the last 25 years, household debt has sextupled from $60 billion to $360 billion, while business debt has only quadruped from $35 billion to $135 billion. Housing debt growth outpaced business debt growth by a rate of three to one. The fiscal tightenings of 1999 to 2007 and 2012 to 2020 were only possibly with sharp increases in bank lending against existing homes. The issue became so acute in 2013 that the Reserve Bank introduced Loan to Value ratio restrictions to slow the growth.

That difference in business and household borrowing is even starker since 2020. Household debt has risen $82 billion since January 2020, while business debt rose $14 billion. As these charts below show, the periods of fiscal tightening (pink above the line) were associated with asset sales to foreign investors and extra borrowing by households.

The guard rail stopping another huge housing borrowing binge

The problem for the Government is that it will be harder to engineer another housing boom through household debt growth due to lower interest rates because high Debt to Income multiple lending is limited now by the Reserve Bank.

From July 1 this year, the Reserve Bank has limited banks to 20% of owner-occupier lending to borrowers with a DTI ratio greater than 6 and 20% of investor loans to investors with a DTI ratio greater than 7. That hasn’t reduced lending much since July 1 because the limit was broadly set at current levels.

But to get an idea of how important high DTI lending is in creating any housing boom, here’s the chart showing that between 60% and 80% of the lending growth driving the 2020 and 2021 surges in house prices came of high DTI lending to existing owner-occupiers and investors. It means that rises in house prices can’t turbo-charge lending by increasing equity and therefore enabling high LVR lending. Incomes aren’t connected to house prices, especially when you don’t have to declare income from capital gains anymore.

This restriction is the guard rail making it difficult for the Government to find economic growth from another spectacular rise in house prices and household lending. That leaves foreign investors pumping money in to buy existing assets such as land and bonds (mostly) and to create new assets through business investment. That’s why David Seymour has been pushing so hard to relax foreign investment restrictions, and why NZ First is under such pressure to relax its opposition to sales of residential and farm land to foreign investors.

Meanwhile, Nicola Willis will struggle to find an alternative source of growth. Her preference would be for business investment in plant and equipment and private investment in infrastructure. Both are unlikely to deliver much, in part becase companies don’t have big enough balance sheets and they face the same unequal playing field as households: leveraged investments in residential land far outperform business investments after tax and relative to the risk involved.

Charts of the day: more beneficiaries than ever

Headed for worst share since GFC

The Kākā’s Journal of Record for Monday October 21

* Environment: The Environment Committee's draft report on the Fast-track Approvals Bill recommended that expert panels, rather than Ministers, be given final approval on projects. The Environmental Defence Society praised the recommendation, but called the Bill’s expert panel process a "rubber-stamping exercise". Parliamentary Commissioner for the Environment Simon Upton said the Bill's “objective” is to override environmental protections. RNZ

* Inequality: Following backlash from lobby group Hobson's Pledge, the Solicitor-General took down new prosecution guidelines encouraging judges to use restorative justice approaches more frequently and to "think carefully" about how different demographics are disproportionately affected by the criminal justice system both as victims and offenders. Solicitor-General Una Jagose KC said her wording in the Introduction "missed the mark", and that she'll republish the guidelines before they come into effect from January 2025. RNZ

* Migration: RNZ reported that migrants working via the six-month Migrant Exploitation Protection Work Visa will be unable to apply for an extension to the visa under changes coming into effect on October 31. Immigration Minister Erica Stanford also announced that a team is working on reducing wait times for accredited employer work visas.

* Electricity: A survey by Curia for Octopus Energy found 68% of NZers think power company profits are "unreasonably high", with 45% expressing support for separating the generation and retail arms of large power companies. Octopus Energy Chief Operating Officer Margaret Cooney said high prices had forced some employers out of NZ, and that breaking up gentailers as had happened in the UK would increase competition.

* Infrastructure: Land Information Minister Chris Penk announced the Government would change the Public Works Act in order to simplify the process by which the Government acquires land for public infrastructure. Penk said the Act's requirement that projects be of national significance is holding back regional infrastructure.

* Economy: A CPTPP panel of arbitrators ruled last year that Canada breached its Partnership obligations by blocking NZ exporter access to its dairy market; Trade and Agriculture Minister Todd McClay announced NZ has now triggered mandatory negotiations over the matter. McClay said if Canada owes NZ compensation if it refuses to meet its CPTPP obligations; the Labour Party supports the move. RNZ

Cartoon of the day

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

Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Wednesday, October 9:

* The Government has cut $6 million from subsidies for an Auckland social housing provider with three days notice, which will force it to leave houses empty that needed refurbishing, Auckland Councillor Richard Hills said last night.

* In thek scoop of the day, BusinessDesk-$$$’s Oliver Lewis reveals MBIE’s advice to Simeon Brown and Shane Jones that sharply higher electricity bills next year will hit businesses and add to pressure on hospital A&Es from poor households skimping on power and getting sicker in winter.

* In the deep-dive of the day, Marc Daalder starts a major series of articles at Newsroom on the effects of Long Covid.

* In solutions news, the Government provided $35 million to jump-start a Tainui plan for 100 new homes.

* In quote of the day, a group of eminent climate scientists warned overnight of an irreversible climate disaster without urgent action to decarbonise and decelerate the global economy.

* The chart of the day shows how rising global temperatures have massively increased air moisture.

(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 we’ll open it up for public reading, listening and sharing.)

1. Govt cuts $6m in subsidies for Auckland social housing

Coalition actions at odds with preference to use community providers

The Government has talked up its willingness to get Community Housing Providers to take over the role of building new social housing, but its actions so far appear at odds with that.

Auckland Councillor Richard Hills said last night that $6 million had been cut from subsidies for Haumaru Housing, an Auckland social housing provider with 1,400 pensioner units, with just three days notice, which will force it to leave houses empty that needed refurbishing.

“The government has cut about $6m a year from the subsidies they were providing for Haumaru Housing, who provide senior housing, for older Aucklanders who can least afford housing. (About $200 per week per resident).

“This was done for no particular reason they can explain. This will mean more empty senior housing units as there will be extremely limited budget for them to refit and upgrade the current ones as tenants leave, let alone invest in any new ones.

“These funds were providing homes for older residents through the model set up between Auckland Council and the Selwyn Foundation. With one of the main benefits being the ability to access the income related rent subsidies.

“Haumaru Hosuing received THREE days notice of this dramatic change.” Auckland Councillor Richard Hills via X

2. Scoop of the day: Inflation, business & health warning

Administered prices from monopoly providers of essential services such as electricity are set to keep inflating much faster than CPI inflation, which in turn will pressure already stressed households and the health system.

BusinessDesk-$$$’s Oliver Lewis reports this morning MBIE’s advice to Simeon Brown and Shane Jones that sharply higher electricity bills next year will hit businesses and add to pressure on A&Es from poor households skimping on power and getting sicker in winter. Here’s the detail (bolding mine):

“Electricity prices are likely to rise significantly over the next two years. The relative stability of electricity prices during the past decade masks several underlying trends that will affect power bills,” MBIE said.

“Several generator-retailers (‘gentailers’) have recently signalled that household prices will increase by modest amounts in coming months. More significant rises are expected in 2025 when the regulated allowable revenue for Transpower and many electricity networks are reset.

“Some distributors fear that the commission may put too much emphasis on protecting consumers from price increases when determining the next price-path reset, which they worry could constrain the investment needed to support electrification and supply resilience.

In their advice, the MBIE officials said network investments were likely to be the largest driver of bill changes during the transition to 2050 (presumably net zero 2050).

“Greater network investment will be essential to avoid outages, support economic growth and moderate longer-term household bills,” the advice said.

“Much of New Zealand’s electricity grid was built in the 1950s and 1970s and requires major replacements and refurbishments to remain resilient to extreme weather, seismic hazards and cyber threats. A step up in investment will also be required to expand grid capacity and connections as households and businesses electrify their transport, heating and industrial processes.”

Brown and Jones were warned of the impacts of higher electricity bills and told of steps – or levers – the Government and others could take, including supporting more flexible electricity use to help soften peak demand and providing targeted support for at-risk households.

“The risks of households not being able to afford energy are serious and wide-ranging. More than 110,000 households in NZ could not afford to keep their home adequately warm for the year ended June 2022, putting them at risk of worse outcomes from health conditions like respiratory diseases," officials said, noting NZ is one of the last high-income countries in the world with significant rheumatic fever.

This would put increased pressure on the health system, the advice added.

“Higher electricity prices also increase the costs to industry, large and smaller businesses of electrifying, which could harm future economic performance.” BusinessDesk-$$$’s Oliver Lewis

Honorable mentions

Health: Health NZ wants to cut four chief medical officer roles RNZ’s Phil Pennington

Infrastructure & Poverty: ‘Disturbed’: Corrections’ bid to nearly double Auckland Prison capacity blindsides council, locals NZ Herald’s Jamie Ensor

Housing: Kāinga Ora board member slams Bill English review in resignation letter NZ Herald-$$$’s Azaria Howell

Health Struggling GP practice says Health NZ committee told it to start cafe to bring in cash RNZ’s Checkpoint

Climate: ‘Round the clock’ hazards monitoring at risk from funding gap Newsroom Pro-$$$’s Sam Sachdeva

Climate & Business: Breathing space proposed for climate reporting businesses BusinessDesk-$$$’s Greg Hurrell

3. Deep-dive of the day

Health: The Burden: Long Covid sufferers’ quality of life close to MS patients Newsroom’s Marc Daalder

Honorable mentions

Education & Infrastructure: Auckland schools bursting at the seams: How it could leave out of zone students in the cold NZ Herald’s Chelsea Daniels

Health & Politics: Health NZ finances reveal when fractures began to show. The private frustration and panic in the lead-up to the Government installing a commissioner at Health NZ is clearer after a massive dump of documents. The Post-$$$’s Rachel Thomas

Foreign Policy: NZ’s independent foreign policy hugely compromised Helen Clark and Marco de Jong in Newsroom

4. Solutions news: More houses

Housing: Government and iwi partner to build affordable homes RNZ

Honorable mentions

Climate: Offshore wind company doubles-down on opposition to seabed mining RNZ

Climate: Wind farm big enough to power 150,000 homes could be fast-tracked RNZ

5. Quote of the day: ‘A critical new phase’

"We are on the brink of an irreversible climate disaster. This is a global emergency beyond any doubt. Much of the very fabric of life on Earth is imperiled. We are stepping into a critical and unpredictable new phase of the climate crisis.” Prominent climate scientists, including Johan Rokstrom, Michael Mann and Stefan Rahmstorf write jointly in an Oxford University Press paper published in BioScience overnight. It’s called: The 2024 state of the climate report: Perilous times on planet Earth.

6. Chart of the day: Too much heat = too much water

The Kākā’s Journal of Record for Wednesday, October 9

* Building and Construction Minister Chris Penk announced the Government is considering creating a new offence for deliberately hiding non-compliant work from remote inspections, with penalties of $50,000 to $150,000. The Government is also considering "strengthening" existing competence and accountability requirements for building professionals.

* Associate Housing Minister Tama Potaka announced the Government would contribute $35 million to a Waikato-Tainui project to build 100 affordable rental homes on the iwi group's land north of Ngāruawāhia. Separately, BNZ announced a framework to lend for housing on Māori land using leasehold mortgage lending practices.

* Tertiary Education & Skills Minister Penny Simmonds and Social Development & Employment Minister Louise Upston announced funding for Apprentice Boost, a $500 monthly payment made to employers taking on apprentices, would only be available for first-year apprentices in sectors will skills shortages from January 2025.

* The Financial Markets Authority filed proceedings against ASB Bank, alleging it misled customers by failing to apply fee exemptions and multi policy discounts for certain customers, and falsely suggesting, in some cases, that customers were eligible for discounts. The FMA estimated the issue affected 23,062 customers and led to roughly $2.8 million in overcharged premiums. Stuff, BusinessDesk

* Transport: The Government will temporarily extend the amount of time people can drive on overseas driving licences from 12 to 18 months, Transport Minister Simeon Brown announced, citing long wait times for licence tests. Brown said there's still "more work to do" to meet the target of 90% of practical tests being taken within 30 days of booking.

Cartoon of the day: Adrian’s tool kit

Timeline cleansing nature pic of the day

Nature wins in the end

Ka kite ano

Bernard

PS: Lynn and I are travelling to Australia to be with a family member in ill health for the next couple of weeks so these emails may be truncated or dropped while we’re doing that. Our apologies and we’ll do our best while travelling.

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

Long story short: Treasury has warned again public debt will rise exponentially in the decades to come because of the rising costs of our ageing population, unless we change one or more of our New Zealand Superannuation promises, publicly-funded healthcare or tax settings.

The current Government isn’t planning any changes, other than to try to squeeze more services out of existing spending. Treasury says that won’t go far. National and Labour talked briefly yesterday after finding a bipartisan approach, but that dissolved within a few hours.

In my view, the only way to avoid the exponential rise in debt in the long run while keeping the current NZ Super and health settings is to increase tax revenue from wealth.

What Treasury advised and how Nicola Willis responded

I interviewed the Treasury’s Chief Economic Adviser Dominick Stephens on Wednesday about the fiscal challenges of our ageing population. It was published this morning via When The Facts Change on The Spinoff. The full interview is embedded below.

Stephens gave a speech last week about how our current publicly-funded NZ Superannuation promises, publicly-funded hospitals and tax settings were not sustainable in the long run because public debt and interest costs would rise exponentially. Here’s the interview, which is focused on the speech.

Yesterday, Finance Minister Nicola Willis and Labour Finance Spokeswoman Barbara Edmonds spoke at The NZ Herald’s Mood of the Boardroom event below. They both spoke about Stephens’ speech.

The ‘news’ from the event was they agreed in a brief exchange at the end to talk in a bipartisan way about NZ Superannuation settings. Here’s the essence of the exchange, as reported by Glenn McConnell at Stuff.

“Barbara, if you’re up for tough conversations, at the last election my party started a tough conversation about New Zealand superannuation.” Nicola Willis

“I am more than happy to have that discussion, and have it together on superannuation. It is a big challenge we are going to face.” Barbara Edmonds

Concluding: “Let’s have that conversation.” Barbara Edmonds

Willis replied, “Well, that’s an achievement.” Nicola Willis via Stuff.

However, the discussion didn’t last long, given Labour’s current policy is not to change the settings and Edmonds told Stuff it was not debating a change.

Edmonds, speaking to Stuff after the debate, seemed less committed to the superannuation conversation.

She said, “If someone is offering to have a conversation, whether it’s the minster of finance, a business CEO, or a local constituent, I’m keen.” Given Willis offered to talk on stage, Edmonds said: “You’d look stupid to turn it down.”

She said it had “only been a few hours” since she agreed to have “a conversation” and so didn’t have a view on whether there should be a change in superannuation policy. She said that wasn’t Labour’s policy, and wasn’t a conversation Labour was having.

“I was surprised at her offer, but let’s have a chat,” Edmonds said. She added, it would be a “high level” chat only.

And with that, the “conversation” effectively wound up. Stuff.

I interviewed Willis in person shortly after the Mood of the Boardroom event and asked about the Stephens speech.

The full discussion is in the video above and the transcript is there too.

Cheers

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, here’s the top six news items of note in climate news for Aotearoa this week, and a discussion above between Bernard Hickey and The Kākā’s climate correspondent Cathrine Dyer:

* “Why does everywhere seem to be flooding right now, Vox asks, as a new study predicts that 70% of humanity will be hit by extreme weather events within the next 20 years.

* Distilled examines insurance retreat as Hurricane Helene wipes out entire communities in states where fewer than 5% of home owners have flood insurance. A 2020 study predicts full insurance retreat from flood-prone coastal properties in Aotearoa’s four main coastal cities within 20 years, with partial retreat occurring within the current decade. Loss of insurance cover can trigger mortgage defaults.

* “A child born now will experience 24 times the number of extreme climate events as a politician born in the 1960s.” Tim Winton rails against leaders who collaborate with fossil fuel colonialists, in this Guardian op-ed. He encourages active resistance as a way to restore agency, dignity and health.

* Alert to the risk such action poses to their social license to operate, fossil fuel lobbyists have been co-ordinating with lawmakers to enact new laws that apply harsh penalties, including lengthy prison sentences, for peaceful protest.

* In the same week that the UK celebrated the closing down of its last coal-fired power plant, the Australian government approved a plan to expand mining operations at three NSW coalmines, a plan that will ultimately generate more than three times Australia’s entire annual emissions.

* NASA has produced a set of high-resolution maps depicting coastal and groundwater flooding at the request of Pacific Island countries highly vulnerable to sea-level rise. The analysis shows irreversible sea level rise by 2050 that will now occur regardless of changes to greenhouse gas emissions in coming decades.

(See more detail and analysis below, and in the video and podcast above. Cathrine Dyer’s journalism on climate and the environment is available free to all paying and non-paying subscribers to The Kākā and the public. It is made possible by subscribers signing up to the paid tier to ensure this sort of public interest journalism is fully available in public to read, listen to and share. Cathrine wrote the wrap. Bernard edited it. Lynn copy-edited and illustrated it.)

1. Extreme weather will hit 70% of global population

In the wake of Hurricane Helene, Vox asked ‘why does everywhere seem to be flooding right now?’. Of course, the answer is that climate change is responsible for an increase in all sorts of extreme weather including tropical storms, heavy precipitation, droughts, extreme heat, and wild fires. All are expected to escalate in coming years.

A new study from the Center for International Climate research (CICERO) in Norway predicts that 70% of humans will face extreme weather within the next two decades, with their modelling suggesting that most of this is already locked in.

“"Like people living in a war zone with the constant thumping of bombs and clatter of guns, we are becoming deaf to what should be alarm bells and air-raid sirens," Woodwell Climate Research Center climate scientist Jennifer Francis told Seth Borenstein at the Associated Press, in response to the new Copernicus data.

Iles and team's modelling suggests further extreme weather changes will occur even more rapidly than we have seen so far. This increases the chances that more dangerous extremes in temperatures, rain, and winds could occur in succession or even simultaneously.”

[...] "In the best case, we calculate that rapid changes will affect 1.5 billion people," says physicist Bjørn Samset from the Center for International Climate Research (CICERO) in Norway. This lower estimate would only be reached by dramatically reducing greenhouse gas emissions – something that is yet to occur.” Science Alert

2. Hurricane Helene highlights issue of insurance retreat

The death toll from Hurricane Helene climbed to 160, making it the second deadliest hurricane to hit the US in the last fifty years, after Hurricane Katrina, which killed at least 1,833. Many people remain unaccounted for in the six affected states.

“Scientists found climate change, primarily caused by fossil fuel pollution, exacerbated the severity of Helene. The new findings align with previous scientific research, which has shown that storms are intensifying more quickly and producing more rainfall.” CNN

With drones showing the extent of damage across the six states, early estimates suggest the damage to property and infrastructure will be steep. Unlike other hurricanes, much of the damage occurred inland, where few homeowners have flood insurance.

“For years climate risk experts have been warning that America’s flood insurance system is deeply flawed. According to one of the most advanced modelling efforts conducted by First Street, 6 million homes in the country are at severe risk of flooding and yet are left out of the federal government’s flood risk maps.

The national flood insurance program is also in a deep financial hole. The only way out of it, according to the Congressional Budget Office (CBO) is higher insurance rates or more federal debt. The CBO predicts that flood insurance rates will double over the coming years. Half a million Americans will see their rates rise by more than 300%.

Built in the more stable climate of our past, America’s flood insurance system is cracking at the seams as the world warms. Like much of our infrastructure and institutions, it wasn’t built for a rapidly warming world. “ Distilled

The deep dive in Distilled goes on to examine why floods are the most costly of natural disasters and therefore one of the largest sources of climate risk, and the challenges it poses to insurance provision. In the US, the insurer of last resort is the federal government’s flood insurance program, which relies on inaccurate and outdated flood risk maps that are hiding the true level of climate risk.

In Aotearoa, insurance retreat is already a hot topic. Most residential mortgages require insurance and its withdrawal can trigger default. Insurance retreat modelling conducted by experts from Climate Sigma, Niwa and Te Herenga Waka, Victoria University of Wellington examined four Aotearoa New Zealand cities and estimated that “insurance companies will start retreating from offering full insurance for flood damage in Aoterearoa’s coastal cities within a decade, with full insurance retreat for coastal-flood prone properties occurring within 20-25 years.

“The only intervention that permanently reduces the risk we analysed herein is one of managed retreat — the relocation of at-risk properties away from the escalating risks (Hino et al. 2017).” They note, however, that these are notoriously difficult to implement, with no country having succeeded in designing a systematic programme of voluntary retreat that has had significant uptake.

3. Leaders “collaborating with fossil fuel colonialists”

Tim Winton’s op-ed for The Guardian zeroes in on the buried rage and climate grief affecting young people in particular, suggesting that our current leaders are collaborating with ‘fossil fuel colonialists’.

“If young people feel they’ve been conspired against, it’s because that’s exactly what’s happened. The numbers are in. A child born now will experience 24 times the number of extreme climate events as a politician born in the 1960s.” 

Drawing on the experience of Algerian resistance to French colonial power, he suggests that the act of resistance can restore agency, dignity and health.

“What prosperous, educated westerners are experiencing is a form of paralysis, a shutting down and closing off. Frantz Fanon described something similar in Algeria in the 1950s when he observed “the tense immobility of the dominated society”.”

However, protecting the status quo is energising politicians who are busy drafting laws designed to constrain peaceful protest, restrict legal avenues and ensure that fossil fuel developments are able to progress along a smooth path.

4. ‘Lock ‘em up’: Anti-protest laws fuelled by oil lobby

A months-long investigation by the Guardian has uncovered evidence of fossil fuel interests coordinating with lawmakers to develop new laws that expose peaceful protesters to harsh legal penalties, including lengthy prison sentences.

“Records obtained by the Guardian show that lobbyists working for major North American oil and gas companies were key architects of anti-protest laws that increase penalties and could lead to non-violent environmental and climate activists being imprisoned up to 10 years.

Emails between fossil fuel lobbyists and lawmakers in Utah, West Virginia, Idaho and Ohio suggest a nationwide strategy to deter people frustrated by government failure to tackle the climate crisis from peacefully disrupting the expansion of fossil fuel infrastructure by enacting tough laws with lengthy jail sentences.

‘Draft bill attached,’ wrote a lobbyist representing two influential fossil fuel trade groups to the lead counsel for the West Virginia state energy committee in January 2020.”

Protestors in the UK have recently been handed lengthy prison sentences simply for being involved in organising disruptive protests, including four years given to 22-year-old climate protestor Cressie Gethin. Her crime was helping to organise a protest against new government licenses granted to oil companies to drill for oil in the North Sea.

A study by Climate Rights International claims that rich countries are preaching about rights elsewhere while they act to silence climate protestors. The report ‘On Thin Ice: The Disproportionate Responses to climate Change Protesters in Democratic Countries’, documents the increasingly heavy-handed treatment of climate protests in Australia, Germany, France, the Netherlands, New Zealand, Sweden, the United Kingdom, and the United States. The report demonstrates how, in cracking down on climate activists, governments are violating their legal commitments to protect basic rights to freedom of expression, assembly, and association.”

5. Australian mine “immoral & unacceptable” says Tuvalu

In the same week that the UK celebrated the closing down of its last coal-fired power plant, the Australian government approved a plan to expand mining operations at three NSW coalmines.

“The shutdown of the 57-year-old power plant on Monday ends more than 140 years of coal power generation in the UK – an industrial story closely interwoven with Britain’s socioeconomic and political history.

Between the point when Britain’s first coal power plant began generating in 1882 until Ratcliffe’s closure, the UK’s coal plants burned through 4.6bn tonnes of coal and emitted 10.4bn tonnes of carbon dioxide, according to analysts at Carbon Brief, more than most countries have ever produced from all fossil fuel sources.” Guardian

The closing of the plant in Ratcliffe-on-Soar in Nottinghamshire marks a very swift transition away from a form of power that produced 80% of the country’s electricity in the early 1980’s.

Source: Guardian

In the same week, in a move deemed “immoral and unacceptable” by Tuvalu’s climate minister, the Australian Government approved expansion plans for three coalmines in NSW. The three mines are expected to produce more than 1.3bn tonnes of greenhouse gas (GHG) emissions over the next 24 years, an amount that is three times Australia’s entire annual GHG emissions, according to the Guardian who also produced this excellent graphic.

6. Islands face irreversible sea level rise, says NASA

A team of sea level change experts at NASA undertook analysis of the Pacfic region at the request of several Pacific Island nations including Tuvalu and Kiribati, in coordination with the US State Department, to help them with mitigation planning.

“In the next 30 years, Pacific Island nations such as Tuvalu, Kiribati, and Fiji will experience at least 6 inches (15 centimeters) of sea level rise, according to an analysis by NASA’s sea level change science team. This amount of rise will occur regardless of whether greenhouse gas emissions change in the coming years.”

The agency released a set of high-resolution maps showing where Pacific Island nations are vulnerable to high-tide flooding by the 2050’s, with mapping of further island nations to be progressively added. The maps visualise the risks of both oceanic flooding and groundwater flooding.

Chart of the Week: Waiting on La Niña

Sea surface temperatures in the ENSO (El Niño Southern Oscillation) zone are hovering around normal, but a weak La Niña is still odds on to form this spring.

Climate change coming for your coffee, and other news:

* Up to 50% of land suitable for growing coffee will be lost by 2050 due to climate change, with small farmers forced to abandon coffee cultivation. The decrease in supply coincides with increasing demand, so expect prices to soar in coming decades. As is the case with chocolate, this threatens livelihoods and economies, in addition to our daily cup of caffeine fix.

* The Parliamentary Commissioner for the Environment’s submission on the Crown Minerals Bill notes that reversing the ban “risks our international reputation and relationships”, is “promoting more environmental damage” and, without amendments to decommissioning rules, risks burdening taxpayers with clean-up costs. They also note the “extremely short time-frame for consultation” of just four days constraining fuller analysis. Here is climate and ETS expert Christina Hood’s submission too.

* Melting glaciers have forced Switzerland and Italy to redraw their Alpine border due to land form changes beneath the Matterhorn.

Ka kite ano

Bernard and Cathrine

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:

* The Kākā’s climate correspondent Cathrine Dyer on the latest climate news, including another extreme climate event in the United States;

* Robert Patman on the escalating conflict between Israel, Iran and Hezbollah in Southern Lebanon; and,

* Special guest Dr David Galler, a former intensive care specialist at Middlemore Hospital, board member of the Health Coalition Aotearoa and author of the semi-autobiographical book Things That Matter: Stories of Life & Death.

The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 120 paying subscribers and was produced by Simon Josey.

Bernard mentioned in the episode he interviewed former Kāinga Ora director Philippa Howden-Chapman at a public event in Auckland last Friday night. The video of that is here and below.

(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

Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Wednesday, October 2:

* PM Christopher Luxon was able to escape having to pay ‘brightline’ capital gains taxes of up to $70,200 on the sale of his Kate Sheppard apartment in Wellington because the sale was delayed until after his Government changed the rule by the PM’s requirements for the refurbishment of Premier House, as reported last night by NZ Herald’s Thomas Coughlan and The Post-$$$’s Thomas Manch.

* In the scoop of the day, Health NZ is looking at privatisation ownership and operation of hospitals.

* In the deep-dive of the day, Māori are twice as likely to die or be hospitalised from accidental poisonings and overdoses.

* In solutions news, Germany has installed 550,000 solar panel arrays on balconies in a year to generate 200 MegaWatts of solar.

* In quote of the day, Luxon reassures listeners on NewstalkZB he’s not worried about his personal finances being discussed publicly because ‘it’s ok, I’m sorted.’

* In charts of the day, the gap in business confidence in September between future and existing conditions was starker in NZIER’s survey released yesterday than in ANZ’s survey released on Tuesday.

(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 we’ll open it up for public reading, listening and sharing.)

1. Luxon escapes paying capital gains tax by a few months

Apartment sale gains would have been caught by test if done before July

Timing matters in politics, and in tax.

It was reported last night by The NZ Herald’s Thomas Coughlan and The Post-$$$’s Thomas Manch that PM Christopher Luxon managed to escape having to pay up to $70,000 in capital gains tax under the five-year brightline test for capital gains in place before July 1 this year because his Government changed the rule back to the two years originally set by National, and because the sale of the Wellington apartment in question was delayed from earlier in the year by Luxon’s requirements for a refurbishment of Premier House. The sale of his Onehunga rental property earlier this year would not have been subject to any of the bright line rules because it was bought in November 2016 when only a two-year rule applied.

Here’s the detail (bolding mine):

According to online property data, the sale was made on September 9. Luxon paid $795,000 for the apartment in 2020. According to documents seen by 1News, the apartment was sold for $975,000, making a $180,000 capital gain. The sale has yet to be settled.

The Herald has verified the figure. Luxon’s office would not confirm nor deny the price, which was $15,000 below the apartment’s RV and well above most digital price estimates. OneRoof estimates the property is worth $745,000.

Luxon bought the apartment when investment transactions were subject to a five-year bright-line test. The bright-line test is a kind of capital gains tax that taxes the gain someone makes on a property, excluding the family home, at the owner’s marginal tax rate if it is sold within a certain time period.

The test was brought in by the Key Government in 2015 and set at two years. In 2018, Labour extended the test to five years and in 2021 it extended it to 10 years. Main homes, defined by the Inland Revenue Department as the home to which you have the “greatest connection”, are excluded from the bright-line test –but Luxon’s main home is in Auckland, meaning the apartment would have been caught by the tax.

Because Luxon bought and sold the apartment within five years of purchase and he bought the apartment after the introduction of the five-year test, he would have been required to pay tax under that test at a rate of 39% – equating to a maximum tax of $70,200.

However, on coming into office, Luxon’s Government scrapped both of Labour’s extensions of the bright-line test, shifting it back to two years as of July 1, 2024. That means Luxon avoided being caught by the five-year test by just over two months and saved himself up to $70,200. If he had sold the apartment in February, when he declared he would move into Premier House, he would likely have been required to pay the tax. The NZ Herald’s Thomas Coughlan

However, the liability may have been reduced because of renovations to the apartment, both The NZ Herald and Post reported. A spokesman for Luxon also suggested the delay in selling was due to the apartment being renovated, rather than Premier House.

A spokesman for the Prime Minister said, “the management of the Luxons’ properties are private matters which are unrelated to Mr Luxon’s capacity as Prime Minister”.

The timing of Luxon’s move into Premier House is due to the fact it was recently renovated and not because by selling the apartment now, Luxon has avoided the bright-line test. The NZ Herald’s Thomas Coughlan

The Post-$$$’s Thomas Manch also reported the sale price and that the sequence of events meant he did not have to pay the capital gains tax.

Luxon bought the Wellington apartment for $795,000 in September 2020 when entering Parliament, according to property records. Sales data not yet publicly available shows he sold the property, with the settlement still pending, for $975,000 on September 8, being $180,000 more than he bought it for almost four years earlier.

Under the prior brightline test rules, changed by the Government in July, this sale would have attracted property sales tax on any capital gain, as it was bought between 2018 and 2021, and sold within five years.

But the Government changed the brightline test on July 1, lowering the threshold to two years after purchase. That meant the sale of Luxon’s apartment no longer attracted a property sales tax on capital gain.

Luxon also sold one of three Onehunga, Auckland rentals he owned on September 5. The two-bed, one-bathroom house was bought by Luxon in 2015 for $650,000, and was sold for $930,000, equating to $280,000 more than he purchased it for.

This property would not have attracted a capital gains tax under the former or current brightline test. The Post-$$$’s Thomas Manch

2. Scoop of the day: Hospital privatisation suggested

Jessica Roden reported for 1News last night that Te Whatu Ora-Health NZ is now looking at privatising ownership and maintenance of hospital buildings through Public Private Partnerships (PPPs) to avoid the Government having to use its own capital, even though that is much, much cheaper.

Earlier this year, Health New Zealand told ministers given the scale of investment required, "a range of options for different financing and commercial arrangements may be needed".

Build and leaseback arrangements, where private companies own the buildings, would help free up funds.

They also floated "Public Private Partnerships", and said they are widely used overseas.

Health NZ chief infrastructure and investment officer Jeremy Holman said PPPs are "a whole spectrum of how the private sector could work with the private sector from that side of it so there are many different options in there".

On the suggestion, Minister of Health Shane Reti said: "I won't reiterate all the advantages and disadvantages. The most obvious is the freeing up of capital that the Crown can then deploy elsewhere." As reported by Jessica Roden for 1News

3. Deep Dive: ‘Twice the rate of deaths’

1News looked in depth at the issue of drug overdoses in a piece published online last night and based on the The Drug Foundation’s Drug Overdoses in Aotearoa 2024 report. It turns out Māori are twice as likely to die from an accidental drug overdose than non-Maori and are twice as likely to end up in hospital with drug poisoning.

Here’s the detail (bolding mine):

Otago University research fellow and Māori health researcher Dr Michaela Pettie (Ngāti Pūkenga) says the data is “disheartening” and “deeply worrying”, but it aligns with what they already know – how accidental drug overdoses disproportionately harm Māori.

Michaela says she backs the Drug Foundation’s recommendations to build a national overdose surveillance system, as it can give more information about drug poisoning and accidental overdoses.

The Drug Foundation’s Overdose Prevention Plan says a national overdose surveillance system could provide timely data on drug supply changes, and fatal and non-fatal overdose patterns, which is crucial for an effective overdose response. Currently, there isn’t a national system in place.

“From that information, we can make more informed decisions about how we can support Māori communities,” Michaela says.

She says there needs to be improved access to education, employment, and housing – all of which play into why people would use drugs. 1News Explainer.

4. Solutions news: Embracing ‘balkonkraftwerk’

This is an inspiring story via Grist about how Germany put half a million solar panels on apartment balconies in a year. They call it ‘balkonkraftwerk’ or balcony solar.

Unlike rooftop photovoltaics, the technology doesn’t require users to own their home, and anyone capable of plugging in an appliance can set it up. Most people buy the simple hardware online or at the supermarket for about $550 (500 euros.)

The ease of installation and a potent mix of government policies to encourage adoption has made the wee arrays hugely popular. More than 550,000 of them dot cities and towns nationwide, half of which were installed in 2023. During the first half of this year, Germany added 200 megawatts of balcony solar. Regulations limit each system to just 800 watts, enough to power a small fridge or charge a laptop, but the cumulative effect is nudging the country toward its clean energy goals while giving apartment dwellers, who make up more than half of the population, an easy way to save money and address the climate crisis. Grist

5. Quote of the day: ‘Don’t worry about me. I’m ok.’

"If we're going to criticise people for being successful, and, you know, let's be clear, you know, I'm wealthy, I'm, you know, sorted.” PM Christopher Luxon on NewstalkZB yesterday when asked by Heather du Plessis Allan how he felt about his personal finances being reported the previous evening on 1News.

6. Charts of the day: Hope before revenues

The Kākā’s Journal of Record for Wednesday, October 2

* Competition: The Commerce Commission declined clearance for Foodstuffs North Island and South Island's proposed merger, saying it would make it easier for Foodstuffs to push down supplier prices and for Foodstuffs and Woolworths to co-ordinate prices. Foodstuffs North Island said it was disappointed, citing a streamlining of back-end support functions. NZ Herald, The Post

* Economy: The New Zealand Institute of Economic Research’s (NZIER) September quarter survey found a net 5% of firms expected general economic deterioration ahead, as compared to net 40% last quarter. ANZ, commenting on the survey, said indicators of capacity stretch and pricing pressures suggest the improvement in business confidence won't get in the way of reducing CPI inflation to the RBNZ's target. BNZ changed its view for next week’s RBNZ decision to a 50 basis point cut from 25 basis points.

* Environment: The Finance and Expenditure Committee's inquiry into climate adaptation recommended the Government implement a national adaptation framework geared towards ensuring "adequate housing", not "preserving people's wealth". The Environmental Defence Society said the report echoes many of its own recommendations; the Green Party said its own adaptation approach would focus on support & “clear guidance” for local governments. NZ Herald, The Post

* Economy: Stats NZ reported a 20% drop in the number of new homes consented in the year to August, with a 39% drop in Wellington. Construction and property statistics manager Michael Heslop said the number of apartments consented in the year ending August was "the lowest in 10 years."

* Housing: Building and Construction Minister Chris Penk announced that, under changes to the Building Act, builders could make small changes to plans, such as substituting like-for-like building products, without having to apply for a building consent amendment.

* Kākās: The Department of Conservation said Wellingtonians should check eaves and attics for mated pairs of kākās looking for sheltered, enclosed spaces to nest. Kākās often nest in hollow trees, but in an attic can "sound a lot like rats or mice."

Cartoon of the day

‘It should be here’

Timeline cleansing nature pic of the day

Sunny days in a quiet place

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

Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Tuesday, October 1:

* PM Christopher Luxon has made $460,000 in tax-free income this year from capital gains on the sale of two of his rental properties, almost as much as the $484,200 gross income from his actual job, which he, like other earners of wages, has to pay tax on. Asked about not paying tax on the income from capital gains, he said he didn’t see the point of questions about a capital gains tax as it removed the incentive for wealth creators. 1News

* In the scoop of the day, Guyon Espiner reported for RNZ yesterday that officials advised NZ First Minister Casey Costello that most of the benefits of the Gov $216 million tax cut for heated tobacco products would go to Phillip Morris.

* In the deep-dive of the day, Public Housing Futures has produced a map of stalled and empty Kāinga Ora sites throughout the motu, showing thousands of half-finished or bare land where work has stopped, despite close to 100,000 people being registered as homeless. See more in an interview below, done the day after Luxon moved into Premier House, now the drapes and carpets and paint are up to his preferred standards.

* In solutions news, the world’s largest battery maker, CATL, has announced it is moving long-life vehicle batteries to production that will last 15 years or 1.6 million kilometres, with a ten-year guarantee.

* In quote of the day, Clutha Mayor Bryan Cadogan says he is livid the Government has chosen $14 billion in tax cuts over a proper hospital for the lower half of the South Island.

* In charts of the day, business confidence about the future economy and firms’ own futures improved markedly in September, but actual experienced conditions remain in recession territory.

(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 we’ll open it up for public reading, listening and sharing.)

1. Luxon says wealth generators need tax incentive

Luxon makes more in tax-free income from capital gains than PM’s salary

PM Christopher Luxon was questioned yesterday about the $460,000 in tax-free income from capital gains he is reported to have made this year from the sale of two rental properties, including his apartment in Wellington now that he has moved into Premier House. His gross annual salary as PM from July 1 was $484,200, which IRD’s calculator shows would require he pay $168,260 in income tax, if that was his only taxable income.

He was first asked if he should pay tax on the capital gains income.

“No, we don't have capital gains tax in New Zealand. We think it would be bad for New Zealand because you don't tax your way out of recession."

Asked if he made good money off the sale, Luxon said the "sale is still progressing".

"I don't know what the point of the questioning is.” Luxon via 1News’ Maiki Sherman last night. (From 4:52 on in the video below)

Luxon went on to say wealth generators needed the incentive of not paying tax on income from capital gains.

"We don't believe in a capital gains tax or a wealth tax. We think, for people who actually generate wealth in this country, it's a massive disincentive and as I've said along the way this is a Labour government that took the keys to our economy, put the car in the ditch.

“We're getting it out of the ditch and they want to put it back in there again by increasing taxes, by increasing spending and borrowing more." Luxon.

2. Scoop of the day:

Guyon Espiner reported for RNZ yesterday that officials advised NZ First Minister Casey Costello that most of the benefits of the Gov $216 million tax cut for heated tobacco products would go to Phillip Morris.

Honorable mentions

Health: The 3 key documents about Dunedin Hospital yet to be released RNZ

Auckland: Auckland mayor seeks to scrap city’s economic development agency. Tātaki Auckland Unlimited has been criticised and its budget slashed ‒ and it now faces being disestablished completely The Post-$$$’s Dita De Boni

Councils: Govt's lack of faith in Hawke's Bay Regional Council revealed in letters. Minister for Local Government Simeon Brown told the council he didn’t believe it could deal with situation without a Crown Manager appointed. Stuff’s Marty Sharpe

Health: Man waited at ED for more than an hour as blood poured from his mutilated fingers. He was made to stand in a queue after a workplace accident. Stuff’s Shilpy Aurora.

3. Deep Dive: Mapping less homes and morehomelessness

Housing activist group Public Housing Futures has produced a map of stalled and empty Kāinga Ora sites throughout the motu, showing thousands of half-finished or bare land where work has stopped, despite close to 100,000 people being registered as homeless. I spoke below with Public Housing Futures’ Vanessa Cole about the map and the data

Honorable mention

Climate: No new gas likely for 10 years despite Govt exploration plans. Repealing an oil and gas exploration ban is unlikely to significantly bolster gas supplies in the short term, according to government modelling. RNZ’s Eloise Gibson

4. Solutions news: A battery for buses lasting 1.6m kms

Contemporary Amperex Technology (CATL) is the world’s largest battery maker and has just announced it will start producing a low-density and long-life battery for buses that will last 15 years and 1.5 million kilometres. CATL is even providing a 10-year 1 million km guarantee. BatteryIndustry.tech

5. Quote of the day: Clutha’s mayor rips into Govt

"We're livid. Definitely the messaging that we received was at a tangent to what ministers Reti and Bishop gave last week."

“People will die here if the health facility is not up to scratch now, it won't be fit for purpose purpose in the future, and a building like this that's not fit for purpose ultimately correlates to deaths.

"So they're putting lives of the South on the line to save some money. You can't give $14b in tax relief and then turn around and say 'Oh, I can't make the books balance, I'll build half a hospital' ... If you get one chance to build a hospital, don't build half a hospital." Clutha Mayor Bryan Cadogan speaking with Lisa Owen on RNZ’s Checkpoint last night after 35,000 marched in Dunedin on Saturday after the changes.

6. Charts of the day: Hope before revenues

Business confidece is surging, but activity remains very weak

Experienced activity suggests NZ is still in a recession

Still on track for a recession into 2025

The Kākā’s Journal of Record for Tuesday, October 1

* Climate: Greenpeace Aotearoa sued Fonterra, alleging it misled customers by labeling its Anchor butter as 100% grass-fed. Greenpeace claimed up to 20% of a Fonterra dairy cow's diet could be fodder crops, including imported palm kernel feed linked to deforestation in Southeast Asia. RNZ

* Economy: ANZ's NZ Business Outlook reported that business confidence was up 10 points in September, and that residential construction intentions were at their "highest since mid-2021". NZ Herald

* Environment: The Environmental Defence Society said the Resource Management (Freshwater & Other Matters) Amendment Bill will enable “a full-blown assault" on freshwater and biodiversity, including by establishing a consenting pathway for new coal mines near significant natural areas.

* Investment: Ethical investment nonprofit Mindful Money found that socially or environmentally harmful Kiwisaver investments fell significantly over the past six years. Tobacco and alcohol investments dropped 74% and 33% respectively, and nuclear weapons-related investment fell from $100 million in 2019 to $13 million.

* Environment: Research from Kantar and the Sustainable Business Council found only 22% of respondents believed NZ businesses were taking significant action to address community and social issues.

* Climate: The Environmental Law Initiative launched High Court action against Environment Southland, arguing it breached its duty to use the Resource Manage Act to monitor & protect Southland wetlands. The ELI said drainage of wetlands for dairy farming required a resource consent, but that no resource consents were found for 61 wetland losses investigated in a 2020 report.

Cartoon of the day

To the doghouse?

Timeline cleansing nature pic of the day

Not really a spider about to be scuttled off

Ka kite ano

Bernard

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