The Kākā by Bernard Hickey

Kia ora.

Last month I proposed restarting The Kākā Project work done before the 2023 election as The Kākā Project of 2026 for 2050 (TKP 26/50), aiming to be up and running before the 2025 Local Government elections, and then in a finalised form by the 2026 General Elections.

A couple of weeks ago I asked the first of TKP 26/50’s six fundamental questions:

What population growth rate do we want on average over the next 25 years? Here’s the article, which has an amazing comment stream beneath it. The answers to the poll were broadly split between population growth rates of 0.5, 1.0% and 1.5%. No growth was the least popular option.

Now it’s time to ask the second question:

What specific improvements in Aotearoa do we want by 2050?

I wrote in the introductory TKP 26/50 post that I believed we should aim for:

* homes costing no more than 30% of average equivalised household disposable income to live in by 2050, regardless of whether they’re owned or rented;

* Climate emissions of net zero by 2050; and,

* No one reporting any of the severe material hardship measures, as specified in the Child Poverty Reduction Act.

We are a long, long way from all of those things now.

Stats NZ’s most recent household income and housing cost figures for the year to the end of June, 2023 showed:

* The average cost of housing is more than 40% of disposable income for 18.2% of all households (up 2.9 percentage points from a year ago);

* including 27.5% of households that did not own their dwelling (up 3.4 percentage points); and,

* 13.3% of households that owned or partly-owned their dwelling (including dwellings held in a family trust) (up 2.6 percentage points).

Just to be clear, average annual equivalised disposable income (after tax and transfer payments) increased from $53,192 to $56,919 (up 7.0 percent) in the year to the end of June 2023.

There are 617,400 households or 31.4% of all households paying more than 30% of average disposable income, including:

* 316,500 households or 24.8% of all homeowning households pay more than 30% of income for housing; and,

* 299,900 or 44.5% of all renting households pay more than 30% of disposable income in rent.

Our gargantuan housing affordability problem needs a massive response

Aotearoa has the highest proportion of highly stressed renters in the world. The affordability of home buying relative to pure incomes has improved in the last couple of years because prices fell at the same time as incomes rising faster than normal in nominal terms. But that affordability improvement has evaporated in the ways that matter because interest rates are higher and deposit requirements for first home buyers remain tough.

There are all sorts of ways to measure housing affordability, including:

* house price to income multiples, which are useful for home buyers, but don’t take into account changes in mortgage rates or deposit requirements, and also ignore the affordability of renting;

* weeks or years required for a couple earning a median household income to save the deposit to buy a first home, which also doesn’t take into account changes in mortgage rates or deposit requirements;

* rental affordability, expressed as rents as a share of equivalised disposable household income, and in particular the median rental shares;

* rental stress thresholds, expressed as the number or share of rental households paying more than 30% or 40% of equivalised disposable income; and,

* the number of households on the social housing register.

My preference is for a measure of the number of households having to pay housing costs of more than 30% of average household equivalised disposable income, with the aim of reducing that to zero by 2050. That threshold is the broadly accepted one to indicate anything above that is creating stress.

Using the metric of housing costs including either rent or ownership means that renters are taken account of, along with the ‘other’ costs of home ownership besides the mortgage, including insurance, rates and maintenance.

Currently, there are at least 617,400 households in the position of having unaffordable housing, including 316,500 homeowning households and 299,900 renting households. Broadly speaking, around a quarter of homeowners are in housing stress and nearly half of renters.

That is an awful indictment of our country. Solving it solves so many other problems.

Our climate actions are lax at best and dangerously deficient at worst

Currently, Aotearoa is barely on track to meet its emissions reductions budgets to achieve net zero by 2050, as legislated, but only because Governments of both flavours have relied heavily on pine planting to suck up carbon in the short term to achieve the ‘net’ part of the target. This strategy doesn’t solve the problem of how to cut gross emissions and climate warming in the short term, which is needed to avoid dangerous warming beyond 1.5 degrees above pre-industrial levels. Planting pine is a ‘once-only’ thing, given land can only be planted once, and is vulnerable to being knocked over in storms and burnt in fires that are more likely as the planet warms.

The other ‘official’ target Aotearoa has is the much tougher Paris target for 2030, which we are currently set to miss by a long way without buying emissions credits overseas, even though the emissions credits markets don’t exist and aren’t recognised internationally. And there are less than six years to go before 2030. We have signed trade agreements assuming we will reach those.

The Nationally Determined Contribution (NDC) New Zealand agreed to in updated form from 2021 was to reduce greenhouse gas emissions by 50 per cent below 2005 levels by 2030, which implies we will produce a total of 571 Mt CO2e of emissions over 2021 – 2030. We are currently on track to produce 100 Mt more than that Budget by 2030.

In the first post, I wrote Aotearoa should at least aim to reach net zero for climate emissions by 2050, as legislated for currently, and also achieve our Paris targets for gross emissions reductions without the need to buy international credits. As He Pou a Rangi-The Climate Commission has argued, we should not be using pine plantations to ‘save our skin’ in climate accounting terms. Pine planting is a crutch stopping us from doing what is necessary: reducing gross emissions.

We should be planting (native and other carbon-hungry species) with our ears pinned back anyway because it will help suck carbon out of the air right now, which is what’s needed urgently to try to take even a tenth of a degree off the rise in global temperatures. But I think that planting has to be done consciously for land use change reasons, which all at once reduce methane emissions, stabilise landscapes, increase bio-diversity and create great new places for us all to enjoy life in. Simply planting pine for climate accounting and ETS cash reasons is pointless and reckless, given the risk of storm damage, fire damage and the risks of more Cyclone Gabrielle-style slash disasters.

In my view, we should achieve the Paris agreement target by 2030 and reduce transport, housing and electricity emissions to as close to zero by 2050, with forest planting and the associated land-use change doing the work of cutting agricultural methane emissions by 10% by 2030 and 24-47% by 2050, as legislated for in the Carbon Zero Act.

Our poverty reduction aims aren’t ambitious enough, or even being met

I wrote in the first TKP 26/50 post I think we should aim to for no-one being in a position to say in the Stats NZ Household Income survey they don’t have enough income for rent, food and electricity, and that no one is in a position to say in the survey their house has a major mould problem, or is a major problem to heat.

The Child Poverty Reduction Act of 2018 specifies the Government must aim to reduce various child poverty measures, but allows the flexibility to change the end-points. Here’s what the previous Labour Government aimed for:

Here’s how it went until the end of June, 2023 at least:

Here’s what Treasury forecast:

Then, just quietly, the new Government moved the goalpost in a way that would see an extra 17,000 living in poverty, as Stuff’s Jenna Lynch reported in late July.

Under the Child Poverty Reduction Act, introduced by the Labour Government in 2018, the Government is required to set medium- and long-term targets for reducing child poverty against three measures.

The Government set new targets through a Gazette notice on June 27 for each of the measures, and two of the three are less ambitious than the previous set of goals. There was no accompanying announcement or press release as has occurred in the past. Stuff

Here’s the new targets:

So the material hardship target was lifted from 6% for the 2027/28 year under Labour to 12% under National.

In my view, the target should be 0% in material hardship by 2050.

A poll to get us started

As in the first post in the TKP 26/50 series, I’ve tried to frame up the question with a series of answers to the question in a poll. In essence, they are designed to be consistent with a status quo-ish fast-GDP growth option, two aggressive action options not necessarily linked to GDP growth, and a de-growth option.

There’s limited space for descriptions in the options, but Net 0 means Net Zero emissions, Gross 0 means Gross Zero emissions and 0 MH means zero people living in severe Material Hardship.

That’s it for now. I’ll be releasing the final four questions in the coming days.

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; here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Monday, September 9:

* Chris Hipkins widens Labour’s tax debate to include the 30% limit on the size of Government.

* Chris Bishop wants plenty of bipartisan infrastructure investment, but remains a small Government and pro-markets guy, which makes that hard.

* In solutions, National’s $1.8 billion investment of borrowed Government money to kick-start the Ultra Fast Broadband network in 2010 has been a model of public investment in a network infrastructure that benefited individuals, households, businesses and the Government alike. So why not do much more?

* In Quote of the Day, John Tookey points out that Chris Bishop’s infrastructure ambitions are simply not possible if relying on private investment.

* Our Chart of the day, the increasing weight and size of vehicles is killing more of the drivers in the cars they crash into.

* Our Climate graphic of the day, global Government subsidies for fossil fuel extraction rose last year to a record-high US$7 trillion in 2022, the IMF reports.

(There is more detail, analysis and links to documents below the paywall fold and in the podcast above for paying subscribers.)

The Top Six on Monday, September 9

1. ‘An ageing population makes the 30% rule untenable’

Hipkins says Government will have to do more due to costs of ageing

Labour Leader Chris Hipkins has widened the party’s debate about Government debt and capital and wealth taxes to the size of Government, challenging Labour’s long-held view that it should not go over 30% of GDP.

Hipkins made the comments in this interview below with Q+A’s Jack Tame aired yesterday, in which he said:

“The big question mark is what happens with the working-age population. If the working age population stays the same, and the population over the age of 65 grows, then yes we will [have to increase the percentage of tax revenue compared to GDP]”

“We have to be honest about that. Let’s go back 10 years, there are now 200,000 extra people over the age of 65. There’s another 400,000 that’ll be there in the next ten years. That means our population over the age of 65 will have gone from 14% to 21%.”

“You can’t say to people over the age of 65 that we can give them everything that we gave them when they were 14% of the population and not increase government spending – the maths just doesn’t add up.” Chris Hipkins on Q+A

2. ‘Infra Boy’ has ambitions, but has shackled himself

Bishop wants big, bipartisan moves, but remains reliant on private funds

Simon Wilson published a very good deep-dive article in The NZ Herald-$$$ on Saturday that included an interview with Infrastructure and Housing Minister Chris Bishop, which illustrated Bishop’s fundamental problem.

Bishop is ambitious for big public infrastructure investment plans that are bipartisan and stretch over decades, but remains committed to making it privately funded, which the experts say (see quote of the day) say is just not possible.

Political parties push big decisions into the next decade or the one after, or else they announce grand schemes, often without funding attached. Those projects that do reach the planning stage take too long to develop and cost much more than expected, and political opponents cancel them the first chance they get. “It’s a collective problem,” said Bishop.

“It’s both National and Labour governments in the past 30-40 years. We just need to be honest about that and face the reality, which is that there’s a $100 billion deficit.”

And that was the big question the Infra Boys asked in Australia. How did they do it?

In Sydney, the key was Infrastructure NSW, an independent agency set up in 2012 to advise the state government. In its first year, with cross-party support, it delivered a 20-year State Infrastructure Strategy.

Bishop wants to do the same here. He’s asked for a 30-year strategy from Te Waihanga, the Infrastructure Commission, which is an autonomous Crown entity set up by the Ardern Government in 2019.

And he will have a new National Infrastructure Agency (NIA) in place by December, established with $5 million in funding in this year’s Budget.

The NIA, independent and run by experts, will act as a “shopfront” for unsolicited proposals, organise private-sector investment, administer Crown funds and provide commercial advice. NZ Herald-$$$’s Simon Wilson

The trouble is Bishop is already kneecapped by his Government’s insistence on not borrowing more in its own right, as Infrastructure Under-Secretary Simon Court pointed out in his speech to the same Building Nations conference Bishop spoke to.

“This work accepts the reality that tapping into private capital, capacity, and capability is a necessity and not a choice, especially given the dire state of the government books we inherited.” Simon Court in his speech to Building Nations

3. Solutions: National did it before with UFB. Why not again?

The John-Key-led National Government of 2008-2017 borrowed $1.8 billion in total to invest in a rollout of Ultra-Fast Broadband (UFB) fibre to cities and towns up and down the motu.

It means 87% of New Zealanders in 412 cities and towns now have access to UFB fibre and over 1.8 million homes and businesses across Aotearoa are able to connect to the UFB network, MBIE reports.

4. Quote of the day

The most awful feedback loop in our health system

“The amount of public infrastructure that’s required maxes out the ability of private finance to be able to fund it.” Professor John Tookey from the School of Future Environments at AUT speaking to Simon Wilson in his excellent deep-dive on infrastructure funding in Saturday’s NZ Herald-$$$

5. Chart of the day

The heavier a vehicle gets, the deadlier it is for the other driver

6. Climate graphic on global fossil fuel subsidies

Just imagine what could be done if this money was spent on renewables

The best of the rest on Monday, September 9

Top six scoops

* Poverty scoop: Shock closure for family centre after funding pulled RNZ’s Ruth Hill

* Politics scoop ACT pledges pushback on supermarket crackdown RNZ’s Craig McCullough

* Politics scoop:Documents obtained by 1News show Minister Nicole McKee, a former gun lobbyist, has used a backroom process to change New Zealand law in a way that benefits gun clubs. 1News’ Thomas Mead

* Transport scoop: Promise to begin new tunnel this term in doubt NZ Herald’s Thomas Coughlan

* Politics scoop: Since being sworn in as prime minister on November 27 last year, Christopher Luxon has notched up nine overseas tripsThe Post-$$$’s Kim Griggs

* Infrastructure scoop: No funding for bridge could spell the end for the Melling line. Hutt City Mayor is going to fight for a bridge, which is a key component of Riverlink.  Greater Wellington says that without the bridge, the Melling line could close. The Post-$$$’s Nicholas Boyack

Top six deep dives

* Economics deep dive: How a mind boggling device changed history FT (free link)’s Tim Harford

* Inequality deep dive: Celebrity breakfasts, gala dinners, champagne evenings. This is how 12 schools raised more than $100m between them in a decade. The Press-$$$’s Brett Kerr-Laurie

* Transport deep dive: 'Our children are not skittles': Community rallies for safer crossings. Community leaders are urging Auckland Transport to rethink its approach to the safety upgrade of a busy roundabout that's seen 50 crashes in five years. 1News LDR’s Mary Afamata

* Transport deep dive: 'Risky, expensive and confusing' – councils challenge government's proposed speed limit changes 1News’ Mava Moayyed

* Housing deep-dive: ‘Legal nightmare’: Auckland faces ‘avalanche’ of cross-lease disputesUnfit rules set down decades ago are now resulting in scores of bitter ‘neighbours at war’ conflicts, legal experts say. The Sunday Star Times-$$$’s Jonathan Killick

* Climate deep dive: Air NZ, Mitre 10 get lowest scores in climate rankings RNZ’s Eloise Gibson

Top six interviews, columns and op-eds

* Interview: New Zealand's ongoing housing crisis is fuelling high rates of rheumatic fever among Māori and Pacific peoples, says epidemiologist Dr Jason Gurney Q+A’s Jack Tame

* Interview Mike Joy on his memoir and butting heads with Sir John Key RNZ Susie Ferguson

* Column by Janine Starks in The Press-$$$ Time for Commerce Minister to cut through bank slipperiness on fraud.  Andrew Bayly needs to follow through on his call for stronger anti-fraud measures by the banks.

* Column by Vernon Small in The Sunday Star Times Hipkins gingerly moves on tax, but is it too little, too late?

* Op-Ed by Opes Partners’ Andrew Nicol in Stuff: What’s the ‘magic’ number of properties I need to buy? Somewhere between three to five for most well-off kiwis?

* Column by Andrea Vance in the Sunday Star Times-$$$ Labour and the capital gains tax doom loop

The Kākā’s Journal of Record for Monday, September 9

* Poverty: The Public Health Communication Centre warned that NZ dementia cases are expected to double over the next 20 years, with 45% of cases resulting from preventable risk factors linked to poverty. Māori and Pacific people face higher rates of dementia risk factors, including smoking, obesity, high blood pressure, and lack of exercise. NZ Herald

* Economy: Associate Minister of Finance David Seymour announced the Government would rewrite the Overseas Investment Act to encourage direct foreign investment in NZ. He added that there had been roughly as many foreign direct investment applications in the last two months as in the six months prior.

* Economy: Stats NZ reported that the value of residential building work, including material and labour costs, was down 4.1% in June 2024 compared with June 2023, whereas the value of non-residential building work went up 7.8%. Construction costs increased by roughly 3% in the 12 months to June 2024.

* Climate: The University of Otago’s Climate Research Network launched a website which evaluates the emissions reduction activities of NZ companies using publicly available reports and their mandatory climate-related disclosure data. The evaluations focus on progress towards 2030 and 2050 net zero targets. RNZ

* Justice: Erica Stanford announced that Oranga Tamariki's Crown Response Unit, established in 2019 to co-ordinate responses to the Royal Commission into Abuse in Care, would be expanded and moved to the Public Service Commission. The new Crown Response Office would continue to plan and monitor the Government & public service's progress on the Royal Commission's recommendations.

* Te Ao Māori: The New Zealand Medical Journal published an article on the potential for Māori organisations to operate hospitals, in light of evidence showing that Māori present with more serious symptoms at hospital, more often receive sub-optimal, and discharge themselves early more often. The authors discussed successful examples of Indigenous-run hospitals in the USA and Canada.

Finally, some fun things

Cartoon of the day

‘Don’t mention the ferries’

Timeline-cleansing nature pic

A Kākā with regrets

Ka kite ano

Bernard

PS: PSA. Don’t drink and fly.

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-NZ this week, and a discussion above between Bernard Hickey and The Kākā’s climate correspondent Cathrine Dyer:

* The month of August was 1.49˚C warmer than pre-industrial levels, tying with 2023 for the warmest August ever, according to the EU’s Copernicus climate dataset. This is despite the absence of El Niño’s heat amplifying effects that were present last year.

* The Government’s National Land Transport Programme (NLTP) plans on executing a U-turn, taking us back in time to a car-dependent past, according to University of Auckland academic Timothy Welch in The Conversation. The worst thing, he suggests, is that most of the $8 billion in planned spending will go on planning, design and preparatory work, rather than actual construction.

* Debate about whether ‘climate intellectuals’ should focus on disinformation and misinformation underestimates the political versus the technical obstacles to decarbonisation, according Aaron Regunberg in the Jacobin. The critique was ‘story of the week’ on the website skepticalscience.com, who argue that systematic climate mitigation is an inherently political matter.

* The population effects of climate displacement are causing increasing concern in the US. “When multiple cataclysmic disasters strike one region in quick succession, climate change-driven phenomena called “compounding events,” they create overlapping ripples of displacement, making the movement that much harder to track. If it was tracked in real time, local officials would see disturbing trends,” according to this gnarly tale in The Grist.

* Glaciologists are in a race to collect ancient virus specimens from fast-melting glaciers after finding 1,700 mostly new-to-science ones in Tibet. Meanwhile other scientists are coming up with massive geo-engineering plans to try to slow the collapse of the so-called Doomsday Glacier in Antarctica.

* The chart of the week is putting the terrors into gulf coast communities in the US.

(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. A dead heat in August

August 2024 has come in at +1.49˚C above pre-industrial levels, tying with 2023 for the warmest August on record, according to the Copernicus ECMWF dataset.

This means 2024 is virtually certain to break the record for hottest year ever, according to climate scientist Zeke Hausfather.

Source: Zeke Hausfather on X.com

While temperatures in August 2023 were in the grip of an El Niño, the El Niño Southern Oscillation (ENSO) has now been neutral for several months. That should have resulted in temperatures dropping through the back half of 2024 compared to the El Niño elevated 2023. The size of the heat anomaly has been declining, but the effect is more muted than it should be. The decline is more visible in sea surface temperatures – it helps to look at the two side-by-side:

Source: Copernicus Climate Pulse

Some countries have been sweltering through record-breaking temperatures. Japan’s hottest summer ever has produced thousands of “extreme heat” events.

“The average temperature in June, July and August was 1.76C higher than the average recorded between 1991 and 2020, the Japan meteorological agency said, according to Kyodo news agency.

It was the hottest summer since comparable records were first kept in 1898 and tied the record set in 2023, the agency said. Japan has recorded 8,821 instances of “extreme heat” – a temperature of 35C or higher – so far this year, easily beating the previous record of 6,692 set in 2023, it added.”  Source: The Guardian

Large swathes of China also experienced their hottest August ever. China has a three-tier warning system for temperatures and was issuing warnings at the highest tier (above 40˚C) for 12 consecutive days in late August.

Meantime Australia, where it is meant to still be winter, was recording temperatures in excess of 40˚C in a series of unusual winter heatwaves. It was not just the extreme temperature but the scale:

“Bureau of Meteorology maps showed a giant mass of extreme heat from near Brisbane in the east to the interior of Western Australia – a distance of about 3700km.

Data on Wednesday showed 48% of the country experienced maximum temperatures in the hottest 1% on record for August.

Nadine D’Argent, a climatology specialist at the bureau, said there were several “wow moments” as the temperature data came in.

“Seeing 40C in August is quite rare. We generally don’t see that until late September but we’ve had 16 instances where temperatures have gone above 40C.”” Source: The Guardian

2. The land transport U-turn taking us back to the past

The Government’s evidence-free National Land Transport Programme (NLTP) plans on executing a U-turn and taking us back to a car-dependent past, according to University of Auckland academic Timothy Welch in The Conversation.

The problem – well, one of the problems - is that our driver, Simeon Brown, hasn’t looked over his shoulder for following traffic, or at the dashboard for useful statistics, before attempting to execute the manoeuvre. 

The $8 billion price tag, Welch points out, won’t actually build anything for decades. The massive price tag is for planning, design and preparatory work (presumably headed for the pockets of some much-maligned contractors) rather than actual construction.

“The approach effectively commits billions in taxpayer dollars to preparatory work without delivering any tangible infrastructure improvements. New Zealanders will likely find themselves stuck in worsening traffic, waiting for highways that may never materialise.

These projects could easily be sidelined by future budget constraints or changing political priorities. A growing recognition of induced demand – where new roads generate more traffic rather than alleviate congestion – and the looming challenges of climate change risk these carbon-intensive projects being obsolete before they even begin.

Meanwhile, projects that could address far more severe congestion in the main cities are being cut back or indefinitely postponed.” Source: The Conversation.

On the one hand, there is hope that these backward looking, demand-inducing “asphalt aspirations” will melt before our eyes, with some good sense materialising before they do. On the other hand, nobody gets what they want anymore (credit to Marlon Williams Music). Read it, or sing it, and weep.

3. Fighting Climate disinformation the urgent priority

A debate about the value of focusing effort on fighting climate disinformation (and misinformation) has been bubbling quietly in climate circles this week after an article by Holly Buck appeared in Jacobin, followed swiftly by a powerful critique from Aaron Regunberg.

Buck claims that the amount of attention currently being placed on climate misinformation is creating a sizeable distraction, particularly in the US, from the funding that is landing on the ground courtesy of Biden’s Inflation Reduction Act (IRA).

‘Climate intellectuals’ ought to be focusing on efforts on the ground, knitting together the people working on resilience, and creating a narrative story that fuels motivation, Buck claims, instead of waging a “an information war focused on uncovering what Big Oil knew and policing speech.” Her assumption is that such climate disinformation does little to curtail climate action.

But Regunburg suggests this underestimates the political versus the technical obstacles to decarbonisation.

“The fossil fuel industry remains the biggest obstacle to the clean-energy transition, and climate disinformation remains its most potent tool. It is very much in Big Oil’s interest for climate advocates to, as Buck suggests, stop “obsessing over climate disinformation.” But we should resist such suggestions. The climate movement can walk and chew gum at the same time; we can work hard to fight climate disinformation while using other on-the-ground organizing frames when they’re more appropriate. Indeed, given the urgent tipping point deadlines the climate crisis imposes on us, we don’t have time for anything less.”

The extent to which public finances, including in Biden’s IRA, are being directed toward fossil-fuel backed projects that are based on a layer cake of misinformation is unignorable. It could very well succeed in driving global emissions into overshoot and diverting global financing toward speculative technologies that may never work at the scale required.

The website skepticalscience.com covered the debate as their ‘story of the week’, saying that “Downplaying or ignoring intentional deceit delivered on an industrial scale is a bit like thinking that wishing hard enough to stay dry is as good as an umbrella when encountering a rainstorm. Climate remedy will happen via effective public policy, public policy is an outcome of politics and hence systematic climate mitigation is an inherently political matter.”

4. Disturbing trends in climate displacement

“Those who remained did so for one of two reasons: They could afford to stay, or they couldn’t afford to leave.”

For many of us, the concept of climate displacement or migration is something we assume will happen to other people, mostly in developing countries or low-lying island nations. We also fail to recognise the immobility of those who don’t or can’t migrate as an adaptative response to increasing risks.

 The Grist gives us a gnarly tale this week about the largely under-estimated and under-reported extent of climate displacement already occurring in the US. They ask whether the US census, undertaken once per decade and which then informs district lines, congressional representation, and the distribution of federal and state funding, can keep up.

“‘After Hurricane Katrina in 2005, for example, New Orleans knocked down much of its affordable housing, damaged during the hurricane, deeming it a safety hazard. The new buildings that went up were more expensive, and the new construction very quickly gentrified neighborhoods, forcing even more people out in a second, extended wave of displacement. New Orleans absolutely became a city that was whiter and wealthier than it was beforehand,’ said Daniel Aldrich, a professor of political science at Northeastern University. But it was difficult to capture those changes as they were happening, Aldrich said, because the initial population shifts occurred so quickly and because many of the people who left the city were renters.” Source: The Grist

The population effects of the 2010 and 2011 earthquakes in Christchurch offer some local insight into the way post-disaster displacement can change a city or region. Christchurch’s population composition changed in terms of gender, age and ethnicity with both temporary and more lasting effects.

5. Gotta catch ‘em all: Collecting ancient viruses

Scientists have uncovered more than 1,700 ancient viruses from a glacier in Tibet, most of them not previously known to science. They date back as far as 41,000 years and differ markedly between colder and warmer eras, shedding light on how life evolved through previous climate shifts. The scientists are now in a race to collect as many more as they can before the glaciers melt.

Also on the subject of glaciers: the Doomsday or Thwaites Glacier is back in the news. Fears that the glacier may be on the verge of total collapse were somewhat allayed by a new modelling study published last week suggesting that at least one possible trigger was less likely than previously thought. However, the question of whether the glacier has already passed the point of no return, and entered a death spiral remain. The latest suggestion is that geo-engineering, in the form of a massive underwater curtain, up to fifty miles across, could be erected to seal off the Thwaites Glacier and adjacent Pine Island Glacier, from the remorseless Antarctic current.

“Opponents of the plans, including many glaciologists, say such outlandish proposals are a dangerous diversion from the real task of mitigating climate change by curbing carbon emissions. But advocates say the two glaciers can’t wait. “We can’t mitigate our way out of this,” says Moore. “We need other tools.””  Source: YaleEnvironment360

6. Chart of the week: Heat content beyond the boundaries

Heat content in the Gulf of Mexico is currently hotter than it’s ever been, with a single chart explaining the region’s looming hurricane problem, according to Vox.

Chart source: Brian McNoldy/ University of Miami ‘Ocean Heat Content’ series

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 and Peter Bale talking about the week’s news with:

* The Kākā’s climate correspondent Cathrine Dyer on the latest climate science on rising temperatures and the debate about how to responde to climate disinformation;

* Robert Patman and special guest Helen Clark on the latest from Gaza and AUKUS, plus Helen Clark on the moves to restrict iwi claims on the Foreshore and Seabed; and,

* Special guest Caroline Shaw, Associate Professor in the Department of Public Health at the University of Otago, Wellington, who has just written an Op-Ed in The Conversation on research about the health benefits of cycling.

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

Mōrena. Long stories short; here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Friday, September 6:

* The Government keeps arguing its cuts on spending in real-percapita terms in health, education, child welfare, housing and public transport are needed to both pay for ‘income tax relief due to a cost of living crisis’ and to deal with ‘the dire state of the Government books we inherited.’ It also argues there’s ‘no money left’ when saying it will have to use private finance, tolls, water levies and congestion charges to pay for new roads, pipes, hospitals and schools, rather than Government borrowing.

* But the professionals who analyse the Government’s books and have to put their money and careers on the line week after week by buying NZ Government Bonds (NZGBs) think there is no crisis whatsoever. Just last week, local and international bond fund managers and central banks bid a record $22.76 billion for an initial offering of $3 billion worth of a new 12-year Government bond with a fixed interest rate of 4.25%. The demand was so strong Treasury decided to double the amount of bonds it sold to $6 billion.

* In solutions news, the opportunity for the Government and councils to signal a bi-partisan and decades-long programme of water, housing, transport, health and education investment funded from the Crown’s balance sheet from borrowing is obvious to these professionals, but not to either of the main parties. They remain trapped in the thought processes forged during the real Government economic crises of 1984 and 1991, back when the Crown had to beg foreign investors to stay and there were no KiwiSaver or NZ Superannuation funds to lend to the Government.

* In Quote of the Day, an emergency medicine and patient safety doctor at Middlemore Hospital points out funding restrictions on GPs and primary health care are rebounding into even more demand to already-stretched EDs.

* Our Chart of the day shows how massive demand for Government bonds comes mostly from New Zealand and mostly from banks and central banks who are literally forced to buy these bonds by savings surpluses among the richest households of New Zealand, Europe, Japan, China and the United States.

* Our Climate graphic of the day shows how climate change has played a role in a drop in global olive oil production by a third in recent years.

(There is more detail, analysis and links to documents below the paywall fold and in the podcast above for paying subscribers.)

The Top Six on Friday, September 6

1. There is no fiscal crisis in New Zealand. Full stop.

Lenders actually clamour for Government to borrow much, much more

You wouldn’t know it by listening to ministers of the Crown talking about the nation’s finances and why they can’t afford to build new hospitals or pay enough to GPs, nurses and doctors to avoid them burning out and flying to Australia.

But there is actually no ‘shortage of money’ nor a financial crisis that means the Government has to cut spending abruptly and abandon plans to resolve a $100 billion infrastructure deficit. There is no burning platform. There is no mess to clean up, no fiscal cliffs or fiscal holes.

How do we know? We know because the professionals who are paid more money than even PM Christopher Luxon to know about these things and make judgements are week in and week out desperate to lend to the New Zealand Government at historically very low interest rates. They would lend tens of billions more to the Government in a heartbeat if politicians of both sides said the nation wanted to borrow for long terms to invest in infrastructure that would make us all healthier, happier, more productive, earning higher incomes and therefore massively increase future income tax and GST revenues in amounts far higher than the interest payments on the debt.

“Asset managers are screaming out for supply.” Westpac Head of Debt Capital Markets Mat Carter

Yet that is not what we hear from our leaders, both from the new Government and the Labour-led Opposition who just left Government. From Luxon all the way down through Finance Minister Nicola Willis, Housing Minister Chris Bishop and to Infrastructure Under-Secretary Simon Court, there have been a series of sometimes hysterical and sometimes sombre drumbeat warnings of a fiscal crisis. They talked repeatedly of how, just like households, the Government’s finances were in trouble and the Government needed to ‘tighten its belt’ to restore Budget ‘sanity’.

Here’s Court last week saying in a speech to the infrastructure industry that the Government’s plans were based on the assumption that the Government simply could not afford to fund new infrastructure itself, and needed to bring in private finance in the form of Public Private Partnerships (PPPs) (bolding mine):

“Alongside that enabling resource management work, we are laser focused on providing fit for purpose funding and financing tools to unlock infrastructure delivery, for which the NIA (National Infrastructure Agency) announced yesterday by Minister Chris Bishop will be a front door to access. This work accepts the reality that tapping into private capital, capacity, and capability is a necessity and not a choice, especially given the dire state of the government books we inherited”. Simon Court

‘There are fiscal cliffs & holes. We have no choice. There’s no money left.’

Willis talked regularly about fiscal holes and cliffs as the Government abruptly stopped billions of dollars of construction work on new buildings, roads, footpaths, cycleways and homes by Kāinga Ora, the Ministry of Education, Waka Kotahi and Te Whatu Ora earlier this year. Civil contractors lamented the complete stop to new orders and work digging, pipe-laying and road building, while housing consents have dived. Social service providers report their bills being unpaid and unspent payments being clawed back. Principals were aghast at previously planned new buildings being cancelled at the last minute.

The Government even removed the board of Te Whatu Ora and parachuted in an emergency manager with an order to cut $1.4 billion of spending immediately, triggering a hiring freeze and delaying and downsizing hospital building plans in Dunedin, Nelson, Wellington and Whangarei. It even reneged on KiwiRail’s already-signed ferry building contract mid-construction in a move that may endanger our diplomatic relations with one of our biggest trading partners.

Those abrupt actions, shock firings and tearing-up of contracts sure sound like the sorts of thing a household would do when it ran out of cash. But why is the Government doing it? It must have run out of cash too, right? Surely, the banks are about to close the proverbial ATM and tell the computers that the Government’s cards should trigger ‘insufficient funds’ warnings?

Because that’s what a household would do if it had just been told by the bank that the overdraft won’t be extended and the customer’s credit rating was about to be downgraded.

There is no shortage of cash or a lack of lenders. Exactly the opposite.

So where’s the warnings of sovereign credit rating downgrades? Where are the spikes in interest rates on NZ Government Bond (NZGB) markets? Where are the Treasury bond auction failures? Where are the ratings agencies saying ‘something must be done’ to resolve this ‘fiscal crisis’?

We haven’t seen them because they’re not there. In fact, the exact opposite is what is happening on bond markets, in bond auctions and in discussions among the actual experts who have to stake their bonuses and careers on the line daily with their judgements about the creditworthiness of the New Zealand Government. They are saying the Government has low levels of debt, can easily pay the interest and they would lend much, much more to the Crown if only it asked.

Yet no one is, and it’s not because there’s no work that needs doing or no actual holes and shortages in health, education, welfare, transport and housing. The Infrastructure Commission says there is at least a $100 billion deficit. See quote of the day below to see what endemic under-funding is doing to the health system, let alone the health and productivity of workers, which means taxpayers.

2. A bond auction to prove there is no crisis

A moment of truth shows huge demand to lend long-term to the Crown

Late last month, Treasury’s Debt Management Office decided to launch a new 12-year government bond through a syndicate of bankers. This is a big deal in bond markets and has the ability to go badly if the timing is wrong or there is shortage of demand from fund managers and bankers. It offered $3 billion of bonds maturing in 2036 and offering a coupon (fixed interest payments) of 4.25% each year for 12 years. It said the most it could offer was $6 billion and indicated the final price would be somewhere between seven and 11 basis points over the May 2025 bond already trading on secondary markets.

So what happened? Surely, if the professionals believed Luxon, Willis, Bishop and Court, they would be reluctant to lend? Or at the least would only lend with high interest rates? Nothing of the sort. The wisdom of the crowds in financial markets is that New Zealand Government bonds are AA+ ok.

The auction gathered a record-high $22.7 billion worth of bids for the $3 billion of bonds. Treasury decided to borrow the maximum $6 billion and was able to do it at nine basis points over the market yield for the May 2025 bond. That meant the final ‘yield to maturity’ for lenders was 4.36%. In bond market terms, that is a stonking success and indicative of huge demand.

This actually wasn’t a surprise to the professionals. All the time that Willis and her colleagues were scaring the press gallery and voters with tales of fiscal holes, they had been talking amongst each other about how attractive New Zealand bonds were and how much demand there was from banks and fund managers, both here and overseas.

Here’s a sample from a panel discussion in Wellington in June hosted by KangaNews, which is a trade publication for bond managers and traders (bolding mine):

“Although in New Zealand we have good reason to focus on our debt levels, foreign investors view them as quite positive compared with many other countries. For NZDM, having a bigger issuance programme has actually had some benefits – we receive feedback that it has improved liquidity and global participation in our market.” NZ Debt Management’s Kim Martin

“New Zealand’s geopolitical stability presents an attractive future and supports investment in the jurisdiction. In short, New Zealand remains a key diversification market for some investors and provides a stable and reliable option for those looking to mitigate risk.” World Bank Capital Markets Financial Officer Chihiro Fujimoto

“Our orderbooks over the last two years have largely been driven by the domestic investor base, in particular bank treasuries. Regardless of where rates are, these investors need to buy for their liquidity portfolios so I expect there will continue to be demand domestically.” Nordic Investment Bank Head of Funding and Investor Relations Jens Hellerup

“About five years ago, annual programmes were about NZ$6-8 billion (US$3.7-4.9 billion). If you told me then that NZ$38 billion was going to be business as usual I would have been sceptical – but this is what we delivered last year and are intending for this year.

“Domestic capacity is finite: all the bank balance sheets need to buy our bonds to a certain level. There is also the regular inflow into KiwiSaver – some of which makes its way to NZGBs – and there are fund managers making choices every day. But our growth really is offshore.

“We are pretty comfortable with demand: our proportion of offshore ownership is more than 60 per cent and we see some new names every time we run a syndication. The bigger programme has made NZGBs more attractive to global investors that previously thought the credit story was fantastic but the market was just too small to invest time into looking at NZDM as an issuer.” Martin

“In the year to date, we’ve had reasonably robust supply from high-grade issuers excluding the (Supranational, Sovereign and Agency) SSA sector. But in the here and now there is absolutely an imbalance. Asset managers are screaming out for supply.

“For bank balance sheets, there has been a focus on the higher capital requirements coming in 2028. They are concerned about whether issuance in senior format could cannibalise their future capital programmes, including the continued refinancing of these programmes.

“Lack of supply in the Kiwi market is leading investors to look at Australian dollars, outright and on a swapped basis.” Westpac Head of Debt Capital Markets Mat Carter

3. Solutions: Decide our infrastructure deficit is fixable

Perhaps both major political parties should look at what lenders to the Crown are actually saying and doing, rather than using the ‘greatest hits of the 80s and 90s’ again and again about a ‘debt crisis’ and ‘cutting our cloth to fit’ and ‘living beyond our means’.

4. Quote of the day

The most awful feedback loop in our health system

“Seeing the flow on effects from this in the ED at Middlemore. Can’t access primary care = worsening of condition = come to ED in worse state, and in high numbers ++.” Carl Horsley, an intensive care specialist and Clinical Lead for Patient Safety at Middlemore Hospital commenting via X upon seeing the photo and article in the NZ Herald on queues for doctors in South Auckland.

5. Chart of the day

Huge demand for NZ Government bonds

6. Climate graphic

The best of the rest on Friday, September 6

Top six scoops

* Politics scoop: Secretive legal advice argues charter schools likely to breach labour rules RNZ’s John Gerritsen and Russell Palmer

* Health scoop: New advice about when to prescribe ‘puberty blockers’ has been kept sealed. Stuff’s Glenn McConnell

* Housing scoop: Govt to bear more building consent liability BusinessDesk-$$$’s Dileepa Fonseka

* Tax interview Labour Leader Chris Hipkins paves way for capital gains or wealth tax Stuff’s Tova O’Brien

* Energy Interview Max Bradford says we should be open to nuclear options. Wairarapa Times Age-$$$’s Piers Fuller

* Transport interview: The Nat MP who lobbied for speed humps at his local school Newsroom’s Jonathan Milne

The Kākā’s journal of record for Friday, September 6

* Economy: Commerce and Consumer Affairs Minister Andrew Bayly announced the Government would reform laws to make it easier to borrow, saying New Zealand had an overly "conservative lending environment". It would reform laws so lenders would not be punished if there was a “lack of financial harm,” and ensure directors and senior managers would not have personal liability for Credit Contracts and Consumer Finance Act breaches. NZ Herald

* Infrastructure: Building and Construction Minister Chris Penk announced legislation to allow a wider range of building products to be imported, claiming a lack of competition in the construction supply chain was responsible for an over 40% increase in building costs since 2019. Upcoming legislation would also exempt projects under $65,000 from the building levy, and allow builders to make minor customisations to projects without needing a new building consent.

* Economy: Reserve Bank manager Christian Hawkesby gave a speech about the RBNZ's financial stability framework for resilience and competition in the economy, aiming to maximise both where possible.

* Environment: Forestry Minister Todd McClay announced proposals to remove what he called an "unworkable regulatory burden," on the forestry sector by replacing a number of council-applied standards for commercial forestry with one nationally applied standard. He specifically proposed to repeal a clause that allows councils to apply stricter rules. RNZ

* Economy: The Commerce Commission announced that mobile network operators need to make it easier for New Zealanders to compare coverage between providers. The Commission said mobile providers should standardise their coverage maps to allow customers to switch providers without penalty.

* Economy: ANZ's Commodity Price Index for September found that NZ exporters are reporting increased shipping costs due to congestion in the Port of Singapore. The volume of cargo through the Suez Canal is now at one third of normal levels due to tensions in the Middle East.

Finally, some fun things

Cartoon of the day

‘Spooky in a bad way’

Timeline-cleansing nature pic

‘Shut up! I’m trying to sleep off a migraine. Too many squishy berries.’

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; here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty:

* Simeon Brown is cutting planned investment on cycling and walking over the next three years to $460 million from the $1 billion planned from 2021-24, but there is actually no new funding for 2024-27 as the $460 million is coming from money not spent over the last three years.

* Waka Kotahi-NZTA has disclosed that Brown’s shift to spending more on motorways will increase climate emissions, although it says it has been told not to worry about emissions in the short term. NZTA also hasn’t analysed the health or wider social costs of the pivot to petrol and diesel, despite its previous analysis showing faster speeds and more driving increases accidents, which its 2023 analysis showed cost the nation nearly $12 billion in 2022.

* In solutions analysis, overseas studies show each $1 of spending on walking and cycling infrastructure produces $13 to $35 of economic benefits from higher productivity, lower healthcare costs, less congestion, lower emissions and lower fossil fuel import costs.

* In Quote of the Day, Brown said the public were sick of spending money on cycling and he instead wanted to focus spending on increasing the economic benefits of driving more and faster.

* Our Chart of the day shows how land taxes and estate duties generated more than a third of Crown tax revenues for almost 40 years between the early 1930s and the early 1970s, when land taxes and estate duties were phased out and as income taxes and consumption taxes were increased.

* Our Climate graphic of the day shows how temperatures at Svalbard, the Norwegian archepelago in the Arctic once known as Spitzbergen, had its hottest August ever, with temperatures a full 11 degrees celsius above normal.

(There is more detail below the paywall fold and in the podcast above for paying subscribers.)

The Top Six

1. ‘Get off your bike and drive (faster) to work’

Cycling & walking funding halved in transport plan for 2024-27

Transport Minister Simeon Brown has published his first National Land Transport Programme (NLTP) for spending by Waka Kotahi-NZTA on national and local transport modes and projects over 2024-2027, including more than halving planned investment in cycling and walking to $460 million from $1 billion in the 2021-2024 plan. There was actually no new funding for the new three-year plan because the $460 million came from funds not spent in the 2021-24 NLTP.

Here’s the key section of the new NLTP’s section on cycling and walking (page 33, bolding mine):

“The overall strategic direction of the GPS prioritises economic growth through road capacity expansion and travel time improvements. There is a significant carry-forward of projects from the 2021-24 NLTP meaning there is no available funding for new projects.” Waka Kotahi-NZTA in its NLTP for 2024-2027

2. ‘It means more emissions, but not our problem any more’

NZTA says new NLTP will increase emissions, but that’s not its concern

The NLTP and Brown’s comments were notable for the absence of any analysis about the economic, health or emissions impacts of spending much more on motorways with faster speed limits and dramatically less on public transport, cycling and walking. The bigger projects emphasised in the new NLTP have low Benefit to Cost Ratios (BCRs) that are usually barely more than $1 of economic benefits for each $1 of Government money invested.

But the NZTA did make some comments about emissions deep in the bowels of the document, including that it didn’t have to worry about the plans’ higher emissions affecting the Government’s current Emissions Reduction Plan, which was being rewritten, and it had been told the the Government would use other tools, including the Emissions Trading Scheme (ETS), to reduce emissions. NZTA said it did assess the NLTP against the legislated 2050 emissions reductions targets and found it was “not inconsistent” with the budgets for that target, without giving detail.

Here’s its comments on emissions (bolding mine):

“Analysis has been undertaken using the CATI and MOAT tools on the proposed NLTP, to assess the programmes impact on emissions. The CATI tool was developed by NZTA to help qualitatively assess the emissions implications of investment programmes. The MOAT tool was developed by Aurecon (and peer reviewed by Monash University) to help assess quantitatively assess emissions and other outcomes from investment programmes (including economic benefits and DSIs).

“The MOAT is a relatively new tool and is not yet sufficiently developed to robustly model economic benefits and DSIs (deaths and serious injuries), so has not been used for these purposes. There are also important limitations to its use when modelling emissions, which have been taken into account in assessing the implications of the NLTP 24-27.

“Together the analysis indicates that the total estimated NLTP expenditure is marginally weighted towards activities that are estimated to increase emissions particularly if all committed and probable projects are fully implemented in this or subsequent NLTP periods. The results of the CATI and MOAT analysis are not inconsistent with the 2050 target and emissions reduction budgets because:

“The total estimated NLTP expenditure is marginally weighted towards activities that will increase emissions but this does not take into account other potential transport- related policy interventions which may counterbalance this e.g. the Government’s policy to increase the number of EV charging stations.

“Inclusion of an activity in the NLTP does not mean that it will be fully funded through to construction and separate statutory decisions for funding are required, at which point more project specific emissions information will be available.

“The 2050 target and emissions budgets are national figures, achievement of which will be affected by both non-NLTP transport policy initiatives and non-transport policy initiatives which are not modelled by CATI or MOAT.

“The Government has indicated that the key tool for achieving the 2050 target and emissions reduction budgets is the Emissions Trading Scheme (ETS) which are outside the scope of NLTP 24-27. The MOAT analysis does not take into account the effects of the ETS on transport emissions.” Waka Kotahi-NZTA in its NLTP for 2024-2027

In essence, NZTA is saying:

* its own models were not very good and, anyway, don’t show how transport funding and the ETS work together to change emissions;

* Also, the ETS is ‘out of scope’ of the NLTP and 2050 is a long way off so anything could happpen; and,

* Anyway, the Government might come up with something else, so we don’t have worry about how this $32.9 billion spent over three years on the future of transport effects emissions.

Basically, it has been told not to care, so it isn’t. And, therefore, we can just park any thought of emissions on a motorway somewhere while the Government encourages tree planting in the ETS to achieve the 2050 net zero target.

No worries then.

Hope the planet doesn’t notice.

Or our trading partners.

3. Solutions news: Cycling generates $15 for each $1 spent

Simeon Brown argued in deciding not to invest any new central Government money in cycling and walking in the 2024-27 that he preferred too spend the money on boosting economic growth, but international studies show a benefit to cost ratio of 13 to 35 to one of cycling investments, as University of Canterbury Professor Simon Kingman noted in this piece from May 2022, citing a Transport for London study, including this panel.

4. Quote of the day

‘We’re sick and tired’

“There's less money going into cycleways, and I think New Zealanders are sick and tired of the amount of money going into cycleways.” Transport Minister Simeon Brown announcing the NTLP.

Brown’s views seem connected to his own views and feelings and chats with others..

An actual survey of 3,170 people from Auckland, Wellington, Christchurch, Dunedin, Hamilton and Tauranga that was commissioned by Waka Kotahi-NZTA and conducted between January and December last year found that 61% supported investments in cycling, up four percentage points from the previous year.

5. Chart of the day

For 40 years, land tax & estate duty made up 35% of Crown tax revenue

6. Climate graphic/chart/pic of the day

Uncharted territory near the Arctic circle

The best of the rest

Top six scoops and deep dives

* Poverty and health scoop: 'Heartbreaking': Patients queue in cold from 6am to see doctor NZ Herald’s Michael Morrah

* Politics deep dive: Political blame game: Three PR experts on 55 press releases that reveal Govt tactic NZ Herald-$$$’s Shayne Currie

* Education: 'At breaking point': Summit seeks solutions for teacher shortage 1News’ Kate Nicol-Williams

* Poverty analysis: Crunching the numbers: Over-65s spending almost all of pension on sky-high rent RNZ’s Louise Ternouth

* Housing:Public-private partnership for NZDF housing no different in cost than usual approach, officials tell Govt RNZ’s Phil Pennington

* Poverty: MSD still referring clients to budgeting services facing closure over cuts by MSD RNZ’s Amy Williams

The Kākā’s journal of record

* Transport Minister Simeon Brown announced the 2024-27 National Land Transport Programme (NLTP) would allocate $32.9 billion over the three years, including halving funding for cycleways, lower rail transport funding, $7.01 billion for state highway improvements and new roads and $5.5b towards pothole prevention. RNZ, NZ Herald

* Justice: The Human Rights Commission, in its role as a watchdog for the UN Convention Against Torture, published a report finding that prisons and youth justice facilities in NZ were under-staffed and overly reliant on seclusion and restraint, with Māori disproportionately affected. In contrast, community-based remand homes offered meaningful activities for youth and had less need for restrictive practices.

* Economy: Credit bureau Centrix's monthly insights report for July found that although financial hardship applications were up 27% compared to July 2023, fewer New Zealanders were behind on debt payments. 46% of those hardship cases related to mortgage payments, 29% to credit card debt, and 17% to personal loans.

* Electricity: Commerce and Consumer Affairs Minister Andrew Bayly and Energy Minister Simeon Brown announced the Government would consult on regulations to increase competition in the banking and energy sectors via 'open banking' and 'open electricity'. Brown said open electricity would mean increasing customers' ability to compare energy plans and access to their energy usage data. RNZ

* Electricity: Lobby group Energy Resources Aotearoa, formerly the Petroleum Exploration and Production Association of New Zealand, called for a "cross-party consensus" on energy and resources policy, saying it will work with any cross-party group looking to rebuild NZ's gas reserves.

* Poverty: Mental Health Minister Matt Doocey called for submissions on the next three-year strategy to minimise gambling harm. He said the Government's priorities for the strategy include increasing access to gambling harm support with an emphasis on prevention and early intervention.

Finally, some fun things

Cartoon of the day

Timeline-cleansing nature pic

‘I’m keeping an eye on you…’

Ka kite ano

Bernard

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

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

* The Government announced changes to the Fast-Track Approvals Bill on Sunday, backing off from the contentious proposal to give final say on development projects to just three government Ministers. Instead they now propose to allow the expert panel (selected by a government-appointed convenor) to make the final determinations. That change may appear substantive, but critics argue that it is a classic 'bait and switch'.

* In the wake of this, we ask whether the standard ‘public submissions’ approach to such powerful legislation does sufficient service to deliberative democracy? What would a genuinely responsive consultation process look like?

* Academics James Dyke, Robert Watson and Wolfgang Knorr deconstruct climate double-speak in this must read article in The Conversation UK. They argue that the concept of ‘overshoot’ and the ‘net zero’ Paris approach are increasingly detached from reality and have become more like science fiction.

* A new global stocktake study evaluated 1500 climate policies implemented over the last 25 years identified just 63 successful interventions. Collectively, these policies reduced emissions by between 0.6 billion and 1.8 billion tonnes of carbon dioxide (CO2) We emit over 35 billion tonnes globally every year.

* In NZ chart of the week, there’s a startling look at actually how much gross emissions are expected to fall here, and where the real burden lies; and,

* In global graphic of the week, there’s a new type of climate stripes.

(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. Ministerial override removed - but watch for the ‘bait & switch’

On Sunday, the coalition government announced five proposed changes to Fast-Track legislation in response to public submissions.

The headline change dilutes the concentration of power whereby three government ministers were to have the final say over development projects, with power to overrule an expert panel. Under the new proposal, the expert panel will have the final say.

While some critics are satisfied that their concerns have been heard, others are pointing to the landing of a predicted bait and switch, as Fox Meyer reports;

“On the first day of oral submissions for the fast-track bill, Forest & Bird’s chief executive Nicola Toki warned of a bait and switch: “Removal of ministerial override is meaningless unless environmental protections and public participation in existing legislation is retained. I want to make that really clear: that can’t be the only thing.” 

Other submitters pointed to legal vulnerabilities, Treaty obligations and a lack of environmental provisions as their chief concerns.“ Newsroom

The overarching aim of the bill is to facilitate economic development, but the failure to include any environmental consideration in the Bill’s framing was highlighted during oral submissions, including by the Parliamentary Commissioner for the Environment, Simon Upton, whose concise and impactful submission you may recall.

Upton said the bill posed “significant risks to the environment”, comparing it to the Muldoon government’s similar – and deeply unpopular – legislation: “Even the much-maligned National Development Act 1979 had more environmental checks and balances.” Upton didn’t hold back, writing that the bill would “achieve sub-optimal outcomes through poor decision-making, poor allocation of resources, a lack of legislative durability, and increased litigation risk.” The Spinoff

Beyond scrapping the role of ministers as final decision-makers, and elevating environmental considerations in the process, Upton also said that project eligibility should be restricted to those that provide significant public benefits rather than private gains alone. Neither of those recommendations, nor the Auditor-General’s urging for the inclusion of better tools for managing conflict, have been meaningfully taken up.

2. Is the public submissions approach fit for purpose?

The Fast-Track Bill attracted a high number of submissions, some 27,000 from individuals and organisations.

However, a recent study of submissions to the Auckland 2050 plans showed huge demographic asymmetries (older, wealthier, Pākehā voices were loudest) .

The process is also largely one way, with no assurance that policymakers will make adjustments that are in any way scaled to the size or seriousness of the public response.

Koi Tū, The Centre for Informed Futures, housed at the University of Auckland, has been looking at alternative models for holding complex public conversations, resulting in this analysis for the International Public Policy Observatory (IPPO). The role of citizen assemblies in complex decision-making is growing internationally and has seen some early success here.  

Where the current coalition Government shows no sign of deepening public involvement in policymaking (rather, the opposite), we see enormous potential for a broad expansion in the number and types of public conversations we have about complex issues ahead of the next election, but we desperately need to equip people with the tools and opportunities to have them.

3. Time to get real

On the subject of critical conversations – there is a ‘must read’ one in The Conversation UK this week on the overshoot myth.

Academics James Dyke, Robert Watson and Wolfgang Knorr use plain language to address the dissolution of the Paris Agreement’s aims into failed framings designed to ‘work-around’ the need to reduce fossil fuel use, the failure of any country to strengthen its pledges at the last three COPs while emissions continued to grow, the warning signs we have ignored including the record temperatures over the past two years (that we cannot fully explain) and the looming threat of failing natural carbon sinks and climate tipping points. Instead, we have implicitly accepted overshoot scenarios that rely on science fiction solutions to rectify the situation sometime in the future.

“It’s clear that the commitments countries have made to date as part of the Paris agreement will not keep humanity safe while carbon emissions and temperatures continue to break records. Indeed, proposing to spend trillions of dollars over this century to suck carbon dioxide out of the air, or the myriad other ways to hack the climate is an acknowledgement that the world’s largest polluters are not going to curb the burning of fossil fuels.

Direct Air Capture (DAC), Bio Energy Carbon Capture and Storage (BECCS), enhanced ocean alkalinity, biochar, sulphate aerosol injection, cirrus cloud thinning – the entire wacky races of carbon dioxide removal and geoengineering only makes sense in a world of failed climate policy.” The Conversation UK.

The article cuts through climate double-speak to debunk claims such as Exxon’s call to use carbon capture and storage (CCS) to produce net zero hydrogen from fossil fuels, pointing to the recent exposure of industry-wide greenwashing on CCS. They also highlight the folly of relying on large-scale BECCS in IPCC pathways that stay below 2˚C, despite clear evidence that it would have very “adverse effects on biodiversity, and food and water security given the large amounts of land that would be given over to fast growing monoculture tree plantations.” As we reported last week, the burning of biomass appears to be increasing carbon dioxide emissions at the moment, with the UK’s Drax biomass power station producing four times as much carbon dioxide as the country’s largest coal-fired station, despite millions in emissions trading scheme subsidies.

Dyke, Watson and Knorr make four suggestions: 1) Leave fossil fuels in the ground, 2) Ditch net zero crystal ball gazing targets, 3) Base policy on credible science and engineering (i.e. focus on doing the things we already know work) and 4) Get real!

4. Taking of stock of what has worked

While global climate policy approaches appear to have largely failed, there is a small subset of policies being implemented by countries that have proven successful in reducing emissions.

A new global stock-take study evaluated 1500 climate policies implemented in 41 countries across six continents over the last 25 years, identifying just 63 cases in which large emissions reductions materialised as a result of policy action (including in Aotearoa).

The amount of emissions reduced by these policies is modest – collectively between 0.6 billion and 1.8 billion metric tonnes of carbon dioxide (CO2) over the entire study period (we emit over 35 billion tonnes of CO2 globally every year), so a gradual adoption of these climate policies will not suffice.

However, the insights generated by the work should provide building blocks that inform future paths.

The study, which used machine-learning approaches to analyse data, found an important role for market- or price-based mechanisms within ‘well-designed policy mixes’ in developed countries, with a stronger role for more regulatory approaches in developing countries.

While the importance of sector-based strategies and mixed policy approaches have been pointed out before (it was mentioned in the latest IPCC working group III report), it has been difficult to assess which combinations of policies “effectively unfold complementarities” to deliver stronger emissions reductions. This is the first study that has been able to empirically evaluate mixes of multiple, simultaneously combined policy instruments.

Of the successful policy interventions identified, 24 were in the building sector, 19 were in transport, 16 in industry and 10 cases were in electricity sectors.

Effective Policies and Policy Mixes

Fig. 4. Effective policies and policy mixes from the paper Climate policies that achieved major emissions reductions: Global evidence from two decades

(A) On the basis of point estimates for country-specific breaks in emissions (tables S12 to S19), we compared the average effect sizes of all breaks in which a policy instrument appears individually with that of all breaks in which this policy instrument appears in a mix. For non–price-based policies, the black thick line also indicates the average effect size of a mix with a given policy instrument and pricing (through taxation or reduced fossil fuel subsidies). (B) Euler diagrams (SM materials and methods) show which combinations of policy types [definitions of categories are provided in (A), x axis] are effective in each sector separately for developed and developing economies. For each circle area, the percentage indicates which share of successful interventions in this sector was made up by a specific individual policy type or a specific combination of policy types. An individual policy type encompasses breaks that match a single policy instrument (for example, one subsidy scheme) or a combination of policy instruments of the same type (for example, two or more different subsidy schemes).

5. NZ chart of the week

Submissions have now closed on the Government’s ERP2 consultation, but just before they closed, climate policy and carbon market expert Christina Hood shared these charts on LinkedIn, showing just how few gross emissions reductions (the orange part) are planned compared to the Climate Commission’s central (i.e. not most ambitious) scenario. It should be noted that most of the orange you can (just barely) see in the Government’s EPR2 proposal (on the left) is based on an assumption about CCS potential.

According to Hood “In the government's path, if ambition on gross reductions stays the same, to meet the third budget new forestry planting between now and 2030 would need to be double what is suggested (i.e. 54 thousand hectares per year (kha/yr) rather than 27kha/yr).”

The Parliamentary Commissioner for the Environment (PCE) has just released details of their submission on the plan. In short, the submission criticises the ‘least-cost approach’ for risking passing on significant costs to future generations, over-reliance on the ETS, and lack of policy coherency. They recommend:

* forestry be decoupled from the NZ ETS, with alternative incentives applied to drive afforestation

* a much greater margin of error be built into the emissions budgets

* delivery of an Energy Strategy to address long-term issues in the energy sector

* greater support for existing and affordable emissions reduction technologies in transport, energy and agriculture

* an aviation departure levy on all flights out of New Zealand be imposed to fund possible solutions for aviation emissions

6. Global chart of the week: The Pacific Ocean’s acidification stripes

We spoke last week about ocean heating and some of the effects it was having, noting in passing that the oceans absorb about 25% of the carbon dioxide released as a result of human activity. As most readers will be aware, that carbon dioxide is causing ocean acidification, and you can see just how much from both a global perspective and across various marine ecosystems and ocean basins at this website. The chart below shows the ocean acidification stripes for the Pacific Ocean. Even if carbon dioxide emissions were not causing global warming, we would still need to rapidly phase out fossil fuels because of their effect on another planetary boundary, ocean acidification.

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 and Peter Bale talking about the week’s news with:

* The Kākā’s climate correspondent Cathrine Dyer on the latest science of changing sea temperatures and which emissions policies actually work;

* Robert Patman on the latest from Ukraine, Gaza and AUKUS II;

* Journalist and author Aaron Smale talking about his book just published by BWB called: Tairāwhiti: Pine, Profit and the Cyclone, and his work covering abuse in state care.

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

Mōrena. Long stories short; here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Thursday, August 29:

* A quietly-administered and arbitrary freeze on funding ordered by Social Development Minister Louise Upston effectively means disabled people currently living with carers will only have a chance of getting into residential care if they’ve committed a crime, are leaving mental health care or hospital and have no appropriate place to go, or have escalating needs that can only be meet by hospital-level care.

* A expert in Public Private Partnerships (PPPs) has estimated doing $50 billion of projects via PPPs would add $25 billion in interest costs to the Government because private borrowing is much more expensive the public borrowing.

* In solutions news, a Rewiring Aoteroa report estimates electrification benefits at $10.7 billion per year by 2040 because locally generated electricity powering transport, farming, homes and industry is much cheaper than imported fossil fuels.

* In the quote of the day, nursing advocates say a blanket redundancy offer to up to 20,000 hospital admin, IT and support staff risks destabilising the health system and appears to be setting it up for privatisation..

* Our Chart of the day shows how young people are being hurt first and most by a jobs recession that is on track to be as bad as during the Global Financial Crisis.

* Our Climate graphic of the day shows the scale of the opportunity for Aotearoa to import an entire fleet-load of EVs from China’s factories, which are now able to export millions, but face huge tariff increases from Europe, the US and Canada.

(There is more detail below the paywall fold and in the podcast above for paying subscribers.)

The Top Six on Thursday, August 29

1. ‘You have to commit a crime or be insane to get in now’

Upston says she’s ‘ripping the scab’ off funding mess

Whaikaha, the Ministry of Disabled People, has quietly told parents and carers of severely disabled people living with them that there will be no more places in residential care in the current financial year. The abrupt funding halt means the only hope disabled people currently living with carers have of being considered for residential care is to commit a crime or be so mentally or physically unwell they have been hospitalised and can no longer be cared for at home, or are facing completely-out-on-the-street homelessness.

Carers and advocates are shocked at the completely arbitrary and mean approach being taken by Social Development Minister Louise Upston as she rips services out of Whaikaha and drumps them in MSD. The block on net extra places in residential care was never formally spelled out by the minister in a release, but is clear in a fact sheet buried in the Whaikaha website.

Here’s the words in a section titled: Freeze Funding for Residential Care (bolding mine):

“This recommendation will maintain current levels of funding for residential facility-based care for 2024/25 pending commissioning and completion of a detailed and urgent review of the contract and pricing models.

“While the number of people in residential care has been relatively constant for several years, the cost of delivering the service has increased by 29% between 2015/16 and 2022/23.

This financial year, current levels of funding will be frozen.

“This means that the rates providers are currently paid for people in their care are the rates they will continue to be paid for the remainder of the 2024/25 financial year (until 30 June 2025). The current bands and rates for residential care pricing remain the same.

“Where a person’s support needs have changed, the NASC may agree to an increase in the rate paid for that person. They will need to manage this within their residential care budget.

“We anticipate this change will mean that the overall number of people in residential care will not increase in the 2024/25 financial year. Whaikaha fact sheet.

Dr Rebekah Graham from Parents of Vision Impaired NZ wrote about the changes on her Dr Bex’s Substack on Tuesday (bolding mine):

“The restrictions are so severe that there is significant risk of harm to disabled people and their families, particularly for aging parents who are finding care work increasingly difficult.

“Disabled people will now have to compete for residential care, with priority being given to disabled people in court ordered care (forensics – those who have committed a crime), those in the care of Oranga Tamariki (often severe, with no family support), those exiting Mental Health care (including secure care), those needing to exit hospital care and have nowhere to go, and people whose health is deteriorating and need hospital-level care (usually aged care).” Dr Rebekah Graham via her substack

She gave an update on the situation after an online meeting between carers, advocates and Upston last night.

“She was pretty short with disability community representatives/stakeholders at on online meeting last night, stating that she was 'cleaning up the mess' and "ripping off the scab to deal with the mess underneath", and "there are areas of waste at the moment". She also said that she "objects to disabled people being used as bullets towards me". The Minister was absolutely certain that she was doing the best thing by disabled people, had the support of disabled people, and that any disagreement was purely politically motivated.” Dr Rebekah Graham

2. PPPs cost 50c extra in interest for every $1 spent building

Expert tells conference $50b of PPPs would cost $25b extra in interest

One of the core problems with PPPs, which are the centrepiece of Chris Bishop’s Infrastructure Strategy announcements yesterday, is they use higher interest rate debt than Crown debt. These comments from KPMG Partner Karen Mitchell at yesterday’s Building Nations summit in Auckland make that clear, as reported this morning by BusinessDesk-$$$’s Oliver Lewis.

‘Using a hypothetical example, Mitchell said if New Zealand delivered $50 billion of infrastructure using public-private partnerships (PPP), the Government would incur $125b of debt repayments over 25 years.

‘Referring to the lower Crown borrowing costs, she said: “The difference between that private sector and public sector borrowing means that we have to extract $25b of value out of those projects essentially.”

(The $25b is the hypothetical difference in repayment costs over the period).

“You really are looking for the projects where you can extract value and essentially close the gap between the cost of private capital and the cost of public sector borrowing,” Mitchell said.

‘Under the PPP model – which has been used to varying degrees of success in NZ, including for the Transmission Gully and Pūhoi to Warkworth motorways – the private sector partner designs, finances, builds and manages a public asset for a contracted period of time; the Government makes ongoing availability payments and the asset returns to public control at the end of the contract period.’

“You need to be able to understand what the PPPs do when they hit your operating expenditure and what that means for your capacity to do other things. I think there’s possibly a limit from an operating perspective to how many PPPs you can actually stack up.

“There is definitely a limit to the number.” Karen Mitchell via BusinessDesk-$$$’s Oliver Lewis.

3. Solutions news: $10.7b/yr of benefits for the taking

Rewiring Aotearoa has published a report titled: Investing in Tomorrow: the electrification opportunity, which estimates the benefits of a rapid electrification of Aotearoa’s economy with renewable power at $10.7 billion per year by 2040, simply because costs of solar, wind and batteries have collapsed in recent years to be much cheaper than fossil-fuel-generated power.

4. Quotes of the day

‘A rash, reckless, unhinged, unplanned & unfocused slashing & burning’

“We’re already hearing horrifying stories of 72-hour wait times and worse for mental health care. Gouging at the foundations of an already stretched-to-breaking system will mean people won’t get the care they need.” Public Service Association Te Pūkenga Here Tikanga Mahi National Secretary Kerry Davies said.

5. Charts of the day

The young hit hardest and first

On track to repeat the GFC for jobs growth

6. Climate graphic/chart/pic of the day

A huge opportunity for Aotearoa

The best of the rest

Top Six scoops and deep dives for Thursday, August 29

* Housing deep dive: Offsite building industry struggling to stay afloat BusinessDesk-$$$’s Cecile Meier

* Health scoop: Woman says she waited 16 hours at hospital ED RNZ’s Natalie Akoorie

* Health deep dive: Cost of living taking toll on health RNZ’s Checkpoint

* Climate scoop: Meridian pushes pause on Southern Green Hydrogen Stuff’s Louisa Steyl

* Housing deep dive: New rules 'tighten the gateway' into emergency housing, including homeless having to prove they didn’t cause their own homelessness

RNZ’s Lauren Crimp

* Health cuts: Gisborne GPs overwhelmed: Only telehealth available after hours NZ Herald

The Kākā’s journal of record for Thursday, August 29

* Climate: The Electricity Authority (EA) and the Commerce Commission announced the creation of a taskforce to find solutions for high electricity prices, including helping new generators to enter the market and requiring gentailers to contract more with independent retailers. RNZ, BusinessDesk

* Poverty: People living in areas with the lowest median incomes pay the highest electricity prices, according to an MBIE survey of domestic prices. Powerswitch manager Paul Fruge said about 40% of a typical power bill covers infrastructure costs, leading to higher prices for regions further away from power sources and with lower population densities. RNZ.

* Infrastructure Minister Chris Bishop announced yesterday a new 30-year National Infrastructure Plan being developed would be informed by Australia’s Infrastructure Priority List and released in December 2025. Bishop also announced a new National Infrastructure Agency, intended to foster private infrastructure investment, would be established in December this year. RNZ

* The New Zealand Infrastructure Commission-Te Waihanga launched the Infrastructure Priorities Programme to identify pressing infrastructure issues and possible solutions. The commission called for councils and the private sector to propose potential projects to be assessed by the Programme, and that successful proposals would be included in the National Infrastructure Plan.

* Economy: Stats NZ reported that filled jobs fell 0.1% in July and fell 3.1% for 15-24 year olds. In the year to July, the largest decrease was in admin and support service jobs, down 12.7%, followed by construction and hospitality.

* Health: Te Whatu Ora announced it had offered redundancy to admin and IT workers to save money. Labour said the offer made to up to 20,000 non-clinical staff was being forced by arbitrary cuts of $1.4 billion to Te Whatu Ora’s budget, alongside a hiring pause on doctors and nurses. The NZ Nurses Organisation said the offer breached collective contracts, would destabilise public health and was a prelude to privatisation.

Finally, some fun things

Cartoon of the day

Timeline-cleansing nature pic

‘Spring is springing all over the show’

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.

The Sunday before last I proposed restarting The Kākā Project work done before the 2023 election as The Kākā Project of 2026 for 2050 (TKP 26/50), aiming to be up and running before the 2025 Local Government elections, and then in a finalised form by the 2026 General Elections. That would give us time during 2024 to:

* Ask six fundamental questions about what Aotearoa wants and how to get there;

* Discuss those questions and possible solutions with a range of people in a series of interviews and special ‘Hoons’;

* Run a series of surveys and polls of readers and subscribers to understand a wider view on the answers to these questions;

* Propose a draft set of options as a base for refining and testing them; and,

* Gather and crystallise those views into a more refined set of policies by the end of 2024.

Then through 2025 we would:

* continue thrashing out and tempering those aims, assumptions and solutions through the process of covering the 2025 Local Government elections; and,

* finalising a set of coherent policies in an edited book and/or section of The Kākā that would be refined and finalised by the end of 2025.

Then during 2026, we would:

* launch a section of this website and/or book for free to a wider public for discussion through public webinars, online surveys, articles and podcasts from early 2026, up to and including the general election of late 2026;

* the website or book would be called The Kākā Project of 2026 for 2050 (TKP 26/50) and include an edited summation of our exploration, the views of the people and subscribers we talked with, and the settled set of policies, as of the end of 2025; and,

* I would interview as many party leaders and politicians through 2026 and cover their election positions and policies in relation to the policies outlined in (TKP 26/50)

It was one of our most popular posts in nearly four years of publishing. The overwhelming feedback was to go ahead with the plan, including dialing back on some of the news curation work I’ve been doing and thinking a bit longer term about solutions, rather than just the current problems.

Aotearoa’s problems and opportunities

Regular readers and listeners will be familiar with the problems I see facing Aotearoa in our political economy around unaffordable housing, worsening poverty and climate inaction, and the opportunities for improvement, but if only we could agree on what we want and how to get there. The frustration for many is the lack of a coherent framework to change things in a substantial way that more than 50% of voters could agree on to change our collective ‘operating system’ as a nation. We know we need a ‘reboot’ to:

* Make housing affordable to rent and buy again;

* Vastly reduce poverty and improve everyone’s health and happiness; and,

* Massively reduce climate emissions quickly and future-proof our lives for a much warmer, stormier and unstable planet.

It feels impossible right now, but we have actually done this three times before in the last 130 years or so. In times of crisis, we have used our democratic processes to change the size, structure and way our Government runs the economy and society to solve what we felt were nation-threatening problems. In times of crisis, we have pivoted, changed almost everything and improved things (mostly) for the next two or three decades. We have done it roughly once every 40-50 years since the early 1890s and we’re due another one. My bet is 2026 or 2029 are the potential launching-off points.

So what could or should this next transformation look like? And how could it happen?

Three quick bits of history in reverse

Forty years ago, voters and our political classes from both sides of Parliament decided on a radical period of reform that was to last a decade and flip the political economy from being a state-led, high tax, high public foreign debt, high investment, high(er) equality and more homogenised economy, to one that was low tax, small(er)-state, low investment, high local household debt, vastly unequal, poverty-ridden, much more diverse, less cohesive and divided nation.

Back in mid-1984, nearly two-thirds of voters wanted to change the way the economy and government were run in fundamental ways, albeit they weren’t sure what exactly they wanted or how to achieve it and the vagaries of First Past the Post (FPP) meant 43% was enough for Labour to change everything. Broadly, voters were sick of then-National PM Robert Muldoon deciding everything in the economy and society and believed, but didn’t know the full extent, the levels of inflation, economic under-performance, unemployment, foreign debt and stifling controls on everything were unsustainable.

Labour won the July 1984 snap election in a landslide and discovered within two days the country was basically broke and effectively unable to service the Government’s foreign-denominated debts, let alone buy enough imports to continue a modern economy. For two days after the election, New Zealanders couldn’t buy or sell foreign currency after the Reserve Bank shut down the markets to avoid a complete emptying of our foreign reserves and a collapse. The central bank only reopened it when Muldoon was shunted aside by his own caucus and the new Government agreed to devalue the New Zealand dollar by 20%.

Long story short, the Labour and National Governments in power from 1984 to 1993 enacted a series of fundamental changes to how Goverment was run, the size and nature of Government, and how the economy ran. The four centrepiece pieces of legislation underpinning these reforms were the Public Finance Act (1989), the Reserve Bank Act (1989), the Resource Management Act (1991) and the Employment Contracts Act (1991). Despite a few tweaks and failed reform attempts, they (still) are our Four Horsemen of the Apocalypse, or our four foundational pillars of prosperity, depending on your point of view. Listen to Juggernaut for a much more comprehensive and compelling version of this period of radical reform.

Back in late-1935, New Zealand’s economy was wracked by unemployment and despair after the depressions of the 1920s and early 1930s, and after the shock of the Hawkes Bay earthquake of 1931 that destroyed Napier. Some feared wars were coming in Europe and Asia that would drag New Zealand in and it felt as if to-the-death battles were coming between democracies and autocracies, and between capitalism and communism. There had been two weak and divided coalition Governments after the 1928 and 1931 elections that had failed to turn things around after 15 years of being in and out of depression after World War One and the 1918/19 flu pandemic. They were led by the United and Reform parties, which eventually merged to become National.

Labour won the November 1935 election in a landslide and proceeded over the next 10 years to create and/or expand big chunks of the welfare state and publicly funded health and education systems we still largely have. The state grew dramatically and so did income taxes, particularly during World War 2 when the threat of extinction and the need to arm and support ‘our boys’ was paramount. State houses were built in huge numbers relative to the size of the population at the time and our modern electricity, phone and roading networks were filled out. Both National and Labour Governments largely preserved the status quo settled by 1945, at least for the next 40 years, although it was fraying by the early 1980s.

Back in 1891, after more than a decade of depression, a reforming Liberal Government was elected under John Ballance, who was quickly succeeded on his death in 1893 by Dick Seddon, who was PM until his death in 1906. Over a decade of dramatic reforms, the Liberals enacted sweeping changes to land ownership and the way Government was elected and operated. It broke up massive stations owned by a squatocracy into small owner-operated farms from 1893, brought in votes for women in 1893, introduced the Old Age Pension Act in 1898 and introduced the Industrial Conciliation and Arbitration Act in 1894. It was the first state-run system for deciding wages and working conditions that was only really reformed with the passing of the Employment Contracts Act of 1991.

The point of this little economic history tiki tour is to say that Aotearoa’s political economy has gone through periods of massive reform lasting a decade each after an economic crisis and/or nation-threatening event, and that there have been three such episodes, about 40-50 years apart. Each was preceded by periods of intense economic stress and fear of war, and often happened during war or as war was ending.

The period of Liberal reforms from 1893 to 1903 followed a long depression and a period of intense globalisation and industrialisation, along with one overseas war New Zealanders fought in (The Boer War). The 1935 to 1945 era of reform was book-ended by the 1930s Depression and World War Two, both of which provided crises that weren’t wasted. The 1984 to 1993 reforms followed the stagflationary economic shocks of two oil supply crises (1973 after the Yom Kippur War and 1979 after the Iran-Iraq war) and ended as the Cold War was ending with the breakup of the Soviet Union in 1991.

We’re due for a shakeup

I argue the economic and social pressures building in our economy and society feel similar to those generational step-changes, and perhaps not coincidentally, we have just been through the economic and inflationary shocks of Covid and the Ukraine war, which dramatically worsened our existing housing and poverty crises. Some fear we are in a similar leadup to a global conflict between the United States and China/Russia/North Korea that would shut down an era of globalisation. Right now, our Government is edging away from our main trading partner, China, towards joining the American camp.

So what could a program of reform look like if a Government was elected in 2026 to significantly change the nation’s trajectory?

The Kākā Project of 2026 for 2050 (TKP 26/50) is our attempt to come up with better definition of the problems and a coherent set of solutions that have been chewed over in public.

Here’s the first of six questions with options to frame things

The six questions I’d like to pose to subscribers, general readers and interviewees over the rest of the year as the core of TKP 26/50 start with:

1. What population growth rate do we want on average over the next 25 years?

Over the last 20 years, Governments of both flavours projected and assumed population growth of around 0.5%, but delivered average growth through net migration of 1.5% to 2.0% per annum, which deepened our infrastructure deficit to an estimated $100 billion. We continue to project population growth over the next 50 years of around 0.5%, even though we are a climate haven and our current economic structure is pre-set to suck in temporary migrant workers to keep wages and investment low.

This accidentally-on-purpose population-policy-without-debate keeps growing nominal GDP through population growth to achieve budget surpluses and low public debt through GST and income tax growth, without public infrastructure investment to match. It is an essential ingredient behind the current ethos shared by both Labour and National that they can keep the size of Government under 30% of GDP and Government debt under 30% of GDP, without having to change the settings for publicly provided health, education and NZ Superannuation, and without having to tax capital gains.

This is the first question to answer because the answers about Government structure, tax levels, infrastructure investment and economic performance flow directly from this answer. It also forces us to have the debate about the inconvenient truth of our nation from the last 20 years: we grew our population very quickly without investing in our productivity. It’s why our real GDP per hour worked has been in recession for two years and has fallen back to where it was almost a decade ago.

I’d like to see a high population growth, high investment growth, high wage and vibrant economy and society that is a stable democracy where we’ve consciously embraced our unique geographic position to become a climate haven deliberately, rather than chaotically and accidentally.

But I know others want to stop the growth and believe in de-growth in the traditional GDP sense. That’s a viable choice, but it has to be taken consciously and after a debate. Currently we assume we’re doing a version of this, but we’re not.

This is just the first. I’ll do more posts with each of the remaining five questions over the next five days:

* What improvements on housing, climate and poverty do we want by 2050?

* What size and structure of Government spending and debt to GDP is needed to achieve those 2050 targets?

* What would an emergency response to achieve the housing targets look like?

* What would an emergency response to achieve the climate targets look like?

* What would an emergency response to achieve the poverty targets look like?

My initial view

For the purposes of discussion and context, my answers in various forms would be something like:

* If we aim for our population growth rate to remain unchanged from its rate of the last 25 years at around 1.5% per annum, that would mean Aotearoa’s population would grow to 7.7 million by 2050, and 19 million by 2100. We are likely to increasingly become a climate refuge for a small portion of the richest 100 million people living within the overall population of 2 billion living in East Asia (China, India, Southeast Asia);

* I believe houses should cost no more than 30% of average equivalised household disposable income to live in by 2050, regardless of whether it’s owned or rented.

* Aotearoa should aim to reach net zero for climate emissions by 2050, as legislated for currently, with any offsets bought and created in Aotearoa at NZ$150/tonne of C02 equivalent emissions reduced and/or stored permanently, with a broad-based carbon and carbon equivalents tax on all gases rising in $5 per year increments from $50/tonne in 2030 to $150/tonne by 2050, replacing the ETS from 2030.

* I think we should hope that no one is in position to say in the Stats NZ Household Income survey they don’t have enough income for rent, food and electricity, and that no one is in a position to say in the survey their house has a major mould problem, or is a major problem to heat;

* The size of both central and local Government spending to GDP and net central and local government debt to GDP should be 45% of GDP on average in the 20 years to 2050;

* I want Parliament to enact emergency bipartisan legislation (The Aotearoa by 2050 Act (2026)) to create independent agencies answerable to Parliament to achieve the targets above by 2050, just as the Reserve Bank Act was legislated in 1989 and agreed by both major parties to independently achieve inflation of around 2%.

The sorts of policies that could achieve these aims include:

* Agreeing a broad-based and low-rate annual Aotearoa by 2050 levy on the value of residential-zoned land of 0.5% for occupied land, 1.0% for unoccupied homes on residential-zoned land and 1.5% for residential-zoned land that is not built on;

* Agreeing that Aotearoa by 2050 levy be used to achieve the Aotearoa by 2050 Act (2026), including paying for servicing the debt needed to build the necessary long-term water, housing and public transport infrastructure, as well as maintain the infrastructure;

* Agreeing the levy be used to ensure those infrastructure and consenting costs are paid for by the levy and the debt it services, rather than the individual home buyers, land owners, developers or councils, in order to dramatically lower the marginal costs of new homes, and the levy be used to prioritise the building of new homes and public transport networks that dramatically lower housing costs, gross climate emissions and the number of unhealthy homes;

* Agreeing that capital gains on real business values and non-residential-zoned land remain tax free and that savings cordoned off until retirement such as KiwiSaver funds do not pay tax on earnings while cordoned off;

* Creating a publicly-funded joint job, education, health, food, power, housing and income guarantee for 18-35 year olds, including volunteering and unpaid family caring and community work as choices in that guarantee, and agreeing that the current arrangements for NZ Superannuation of incomes indexed to average wages, no means testing or asset testing and no change in the age of eligibility of 65 also apply to the income guarantee and the age thresholds; and,

* Agreeing a fixed and progressive income tax scale for wages, salary, interest and dividend income of 25%, 30% and 35%, where the thresholds rise at the same rate as average incomes;

* Agree the GST rate be progressively reduced to 10% by 2050;

* Fixing rises in administered prices of Government and council services, including water, transport, rates, publicly leased land and other fees and charges to no more than 2% per annum until 2050; and,

* That the Government pay council rates on Crown land and rebate GST on rates back to councils.

Interviewing experts, participants and politicians

I’d look to do individual interviews and arrange Hoons with a range of people through the rest of 2024 and until the local elections in late 2025, to discuss current issues and The Kākā Project of 2026 for 2050 (TKP 26/50), including;

* Mayors, councillors and council candidates from all councils and parties;

* Ministers, MPs and candidates from all parties in and out of Parliament;

* Home builders and Community Housing Providers currently building and/or managing more than 1,000 homes per year;

* Bankers, fund managers, insurers and regulators currently financing, insuring and regulating the building, renting and operation of those homes;

* Academics, consultants, planners, architects and economists working, researching and teaching on housing, climate and poverty; And,

* Authors here and overseas of books on economics, politics, housing, climate and poverty.

This email and podcast was sent to all 21,500 free subscribers in full and is able to be fully shared, read and listened to. Only paid subscribers can comment and vote in the poll.

Nga mihi nui and now we’ve gone past terminal velocity to be a few metres in the air.

Bernard

PS: To do this consistently over the next couple of years, I’ll need to tighten up my daily emails and podcasts so please don’t be too surprised or disappointed if they’re shorter and less detailed. I’ll be dedicating more time to more detailed deeper dives, interviews and ‘Hoons’ for and about The Kākā Project of 2026 for 2050 from now on. If this is not what you want as a paying subscriber, please speak now or forever hold your peace.

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