I spoke with Labour Finance Spokeswoman Barbara Edmonds last night about Labour’s first big policy idea for the 2026 election: a new sovereign wealth fund to invest in New Zealand infrastructure and growth businesses. It would be seeded with an initial grant of $200 million and topped up regularly with dividends from state-owned enterprises (SOEs) and potentially partially-owned SOEs such as the gentailers and Air New Zealand, although that wasn't confirmed due to ‘commercial sensitivities.’

I asked her what problem it solved and why other tax and more direct Government investment policies couldn’t solve it better. Here’s a lightly edited version of the conversation below, just in case the video above is too sketchy to watch. We had some connectivity issues and then the AWS wrecked my usual backups. A PDF of the policy is also attached below.

People are saying we want to see a long-term vision, we want to see a plan for the country. So this is a first step for us. Barbara Edmonds.

Edmonds said she couldn’t say which assets would be included because of commercial sensitivity and fair disclosure reasons.

“Ultimately, the fund is purpose-built to back Kiwi ideas and our small innovative businesses, and basically is here to create wealth for New Zealand, by New Zealand, for New Zealanders,” she said.

I asked what problem Labour was trying to solve.

“When we look across the world, future funds are set up to help countries recycle their wealth and help to back and grow within their own economies. New Zealand doesn’t lack talent and skills and ideas, but what we lack is backing. So one of the key things that the Productivity Commission talked about before it was collapsed by this current government is that we have shallow pools of capital,” she said.

“We want to set up this wealth fund at arm’s length to the government, similar to how the Super Fund works. But actually, it has a different purpose, which is to create wealth in New Zealand to help secure jobs, transition to clean green energy, to help us back our innovators in tech industry, and to help us build a resilient infrastructure.”

I then asked if New Zealand actually had shallow capital pools, given there was $123 billion in KiwiSaver funds as at the end of March, the NZ Super Fund has $88.6 billion and counting as of today, the ACC had $51.1 billion in funds under management of June 30 this year, and there was $302 billion in bank term deposit and savings accounts as of the end of August this year.

Why aren’t those $565 billion being invested here?

I asked why those funds weren’t being deployed into New Zealand infrastructure, businesses, jobs, new technology and jobs, and whether another fund would make a difference.

“Ultimately, there are different funds for different purposes. And what we’re saying is this wealth fund is solely dedicated to reinvesting back in New Zealand. The Superfund, for example, they invest around 11%-18 % of their funds in New Zealand. However, they’ve got a very different purpose. Their purpose is to maximize returns to help with future superannuation costs,” she said.

“We’re saying it’s a model that works well for the Superfund. However, for the future fund, we need a different pool with a different purpose to back Kiwis.”

I asked whether this fund was being announced instead of changing the fundamental savings incentives for households, which mean buying leveraged residential land was vastly more attractive in risk-adjusted and after-tax terms than in businesses, pension funds or infrastructure, given pension funds don’t receive any significant incentives, as pension funds overseas do, as in Australia.

“We will have a savings and investment policy, which we will announce in the future. However, this is just the first step to realize New Zealand’s potential. And again, it’s about backing Kiwis and making sure those that get away and see the world, there are opportunities for them to come back to. That pullback to New Zealand is diminishing,” she said.

“We have 200 people leaving every day to find opportunities offshore. People are saying we want to see a long-term vision, we want to see a plan for the country. So this is a first step for us.”

I then asked how big the fund could be and what assets it could include.

“Top of the list of the types of assets we will see the fund with will be a lot of those publicly owned commercial assets that the government owns. We also set aside $200 million one-off capital costs to go into the fund. And again, the governance of this will be at arm’s length to the politicians because it will be looked after by the Guardians of the New Zealand Superfund.

“It will grow every year, depending on the assets that are put in, the dividends that come back to it. But also, we want to be able to use those dividends better. Currently, at the moment, those dividends come back to the crown coffers. Ministers can spray that wherever they want to.

“There may not be any strategic use of it, or for example, they may be trying to go into clean energy but then they’re doing an underwrite for gas subsidies. Whereas this is different. This is saying that those dividends should remain in the fund, be reinvested into the country, and depending on what the assets are, that’ll determine the growth.”

Why not just borrow and invest directly?

I then asked why the Government shouldn’t just use its balance sheet to borrow to invest directly, which would be much cheaper.

“At the moment, the politicians are are fiddling around too much with this. Ultimately, we have government assets. We believe that they should be managed with a commercial approach. The dividends should be reinvested in New Zealand. Ultimately, where the fund will go will be set out in legislation. We want it to be reinvested back for the public good.

“Yes, the Crown may lose money because we may forego some dividend in relation to it. But ultimately, the money is staying back in our economy so that it can grow in New Zealand, as opposed to us having to wait for foreign investors and speculators to come and save us. So we truly believe for us this is about a future made in New Zealand. It’s one where we want to make opportunities for the next generation to want to stay here, or come back here because there are opportunities for them.”

So is this a good idea?

In my view, a Future Fund is try to solve problems that would be better addressed more directly, faster, cheaper, more efficiently and with more honestly and transparency by:

* firstly, the Government simply borrowing with its own balance sheet and investing directly in publicly-owned infrastructure, staffing and systems to improve housing, health, education, skills and training; and,

* secondly, changing the tax incentives that currently mean households have ploughed $1.6 trillion into residential housing, and are choosing to leave $302 billion in term deposits, ready to be deployed with yet more mortgages to make more tax-free capital gains in residential housing.

Changing those incentives would involve:

* taxing the unearned wealth bogged down in New Zealand’s housing market through a wealth or capital gains tax, and not just on the family home, given a big chunk of that $1.6 trillion is embedded in those family homes and exempting them will leave the incentive intact; and,

* providing a tax incentive to save in pensions funds, as is the case in Australia and other developed markets with much higher investment in their businesses, much better productivity and higher real wages.

For example, New Zealand’s housing market value is seven times bigger than our stock market’s value. Australia’s housing market is three times bigger than its stock market. America’s housing market is actually worth slightly less than its stock market. Australia and the United States have (imperfect but substantial) taxes on capital gains and incentives for investing household savings into businesses. New Zealand has neither.

Still wedded to the catastrophic 30/30 rule?

My concern is that Labour remains embedded in the view it and National have shared for 40 years: that the size of Government and the size of Government debt should not be larger than 30% of GDP. With both the size of Government and its debt currently above those self-imposed, unnecessary, unjustified and failed limits, both National and Labour are still contorting themselves into states of magical thinking that private investment in infrastructure and the private provision of housing, health, education and transport would be both better for the economy than the Government doing it.

Without proper changes to tax incentives for households and without a fundamental reassessment of the 30/30 rule, this Future Fund appears to be another performative, mostly ineffective and expensive distraction from the fundamental failings of the 30/30 rule to invest in the infrastructure to support our still-fast-growth and still-ageing population, let alone catch up on decades under-investment and under-maintenance and under-replacement of both new and existing infrastructure.

Labour may well have have taxation and fiscal strategies to change that view that are yet to be announced. This first policy release has a dispiritingly familiar look about it. It is suggesting New Zealand’s investment problems can be solved at arms length from politicians and the Crown’s balance sheet. It is suggesting that the current incentives and use of the Crown’s balance sheet are working. They are not. They have been disastrous for a generation, who are indeed voting with their feet, rather than their votes, at a rate of 200 day.

The Future Fund mimic versions of the NZ Super Fund (which has less than 20% invested in New Zealand), NZ First’s proposed sovereign wealth fund and various Government venture capital and green funds. It gives the impression large amounts of domestic investment is possible without political involvement and in a way that would improve the performance of the New Zealand economy and leave the Crown’s balance sheet untouched.

It reeks of performative politics and magical thinking that fail to address the elephants in the room:

* $1.6 trillion worth of mostly unearned wealth in housing has to be taxed;

* there has to be incentives for households to invest in businesses;

* the Government has to be larger than 30% of GDP in the long run to provide the public services, benefits and infrastructure we believe are essential with the population structure and growth we have; and,

* there is no good reason why the Crown can’t use its balance sheet to invest in the infrastructure, services and health of the generations that are both retiring and on the verge of abandoning the country.

Subscribe in full as a paying subscriber for more detail and analysis in the full videos and podcasts that go out with my Early Bird and Daily Chorus email newsletters. Paying subscribers support my work being done in the public interest here, and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars and our chat room, and can comment on articles.

Ka kite ano

Bernard

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Briefly in the news in Aotearoa’s political economy around housing, poverty and climate:

This is just time-wasting magical thinking that only enables us all to avoid the hard realities.

* The Lead: Transport Minister Chris Bishop has committed to spending $1.2 billion on designs and buying land for six massive new motorway and tunnel projects that new estimates show could cost up to $32.9 billion, and which are only deemed barely economically viable because the Government slashed its interest rate assumption to 2% from 6% and doubled its payback period to 60 years.

* The Sidebar: Bishop is also ploughing ahead with the whole Roads of National Significance (RONS) Programme, which includes 10 other projects with a combined cost now estimated at between $40 billion and $50 billion, without any bipartisan approval for the projects that will span multiple flavours of Government, and without telling voters the roads will require tolls of up to $70 a trip to pay for them.

* In my view: This is a charade and an epic distraction from the elephants in the room of our political economy. Bishop and Hipkins are both in performative politics mode. They want to be seen to be ‘doing something, but not things that would put up debt or taxes (which tolls are).’ They know the roads will either never be built because they are ruinously uneconomic and drivers won’t accept the tolls, or will be built at a ruinous cost because voter revolts will force the roads to open without tolls and that the beneficiaries (landowners) will get tax-free capital gains that other taxpayers will pay for.

* The bottom line: Meanwhile, consultants and designers will be paid $675 million of taxpayers’ money and farmers and landbankers will be paid for the land next to motorways that may never be built. Other landowners will, meanwhile, bank the tax-free capital gains from the inevitable land valuation upgrades around the roads that may or may not be built, and which they won’t ever have to pay for. It’s a clear wealth transfer from taxpayers at large, especially renters and those in the South Island who won’t see many of these roads, to landowners and the consultant class. And no one will be blamed or have to accept responsibility because the spending will be memory-holed, or future-holed in the minds of voters, drivers and taxpayers at large.

* What should happen: Bishop and Hipkins should be upfront with the public that these roads will cost up to $70 a trip and/or $50 billion in debt that require higher taxes, or should never be built. The elephants must be addressed. Our Government can’t provide what we want and expect without both higher debt and taxes. The idea that PPPs or tolls or private investment through ‘Future Funds’ will pay for this infrastructure and let taxpayers off the hook for the debt and higher taxes is expensive and time-wasting magical thinking that only enables us all to avoid the hard realities.

* Quote of the day: “Tolling to support the construction and maintenance of

the road (will be consulted on later).” NZTA’s updated business cases for the RONS.

* Number of the Day: $27.4 billion-$32.9 billion. The combined projected cost of the RONS approved by NZTA this week.

* The Chart of the Day: Spending plans and revenue expectations in NZTA’s Land Transport Programme for the next decade, which show a gap between committed funds and spending plans of $30 billion. It is what the magical thinking looks like in chart form. (See chart below and on NZTA site.)

Subscribe in full as a paying subscriber to also get early access to my Early Bird daily news email with my full ‘Picks n’ Mixes’. Today’s is here. Paying subscribers can also access our webinars, our chat room and can comment on articles. Having paying subscribers allows me to open up articles occasionally for the public, as in this case.

The Lead: The problem(s) with the RONS and tolls

Housing, Transport, Infrastructure and RMA Reform Minister Chris Bishop made an announcement on Monday that should have been headlined: ‘We plan to spend up to $32.9 billion on six new roads and tunnels that we hope someone else will pay for, possibly drivers at $70 a trip. We’ll work it out later.’

Instead, the release was headlined: ‘Next steps for Roads of National Significance.’

It announced Bishop and the Cabinet had decided to spend $1.2 billion on designs and land for six RONS projects after the investment cases had been approved by NZTA.

“The Government is committed to building a long-term pipeline of transport infrastructure investments to redress New Zealand’s infrastructure deficit and build jobs and growth for Kiwis.

“Our Roads of National Significance (RoNS) programme is a vital part of this pipeline, and I’m pleased to see good progress on getting these important projects ready for delivery.

“The NZ Transport Agency (NZTA) Board has now endorsed investment cases for all of the RoNS, with the most recent endorsements including Sections 2 and 3 of the Northland Expressway, the East West Link, Hamilton Southern Links, Petone to Grenada and Cross Valley Link, SH1 Wellington Improvements including a new Mt Victoria tunnel, and the Hope Bypass.” Chris Bishop in the release.

That all sounds business as usual, although that’s an awful lot of money for blueprints and some sheep paddocks.

The answers given yesterday by Labour Leader Chris Hipkins when asked whether Labour would commit in a bipartisan way to the RONS plan gave us a hint of the problems with all of this.

“They’re all nice projects. They’ll all be nice things to have. I’m still concerned that the Government hasn’t mapped out exactly how they’re going to pay for them all, but it’s good to see progress

Hipkins said the Government needed to explain how it would pay for all the roads.

“We need to stop the stop--start nature of these projects. So we’ll be continuing to move forward. But I cannot, hand on heart, say every one of those projects will continue exactly as it is, within their time frames, because at this point the Government hasn’t made that commitment.”

He said Labour would consider its position on the tolling of roads on a “case-by-case basis”.

“There is a place for tolling. One of the criteria that we’ve always looked at is whether there are viable alternatives available. So we’d be pretty reluctant to see tolls placed on roads where there is no other way of, you know, covering that distance.” Hipkins as quoted by Thomas Manch in The Post-$

Both Bishop and Hipkins don’t want to be up front about the cost of these projects and how they’ll be paid for. Both know that the political pressures not to toll the roads after they’re built will be intense, and that the final decision to toll will probably be in the hands of another government. The best example of that is the Manawatū Tararua Highway that opened in June, but only after a local revolt stopped it from being tolled.

The political incentives for both of them are to fudge and play for time. Voters, meanwhile, get to dream of driving on the roads without having to pay for it directly, or at all. Some are able to dream about the tax-free capital gains the roads and tunnels will generate for landowners. Everyone is a winner. Except for voters, drivers and taxpayers in the future, who don’t get a vote now.

The most obvious hole in these plans is evident in quotes like this that littered through the investment cases:

“Tolling to support the construction and maintenance of the road (will be consulted on later.” NZTA in its Northland Corridor investment case (page 2, column 2, point 4.)

This is even clearer in the notes for NZTA’s summary for its ‘Two lanes to the planes’ project for a second Mt Victoria tunnel:

“The Government Policy Statement on Land Transport (GPS 2024) requires NZTA to consider tolling for all new roads. The SH1 Wellington Improvements investment case proposes tolling to support the construction and maintenance of the project. Once NZTA has completed further planning and design, the next step is to seek approval from the Minister of Transport to proceed to public consultation on tolling. If approved, public consultation will occur once construction funding is confirmed.” NZTA summary.

The investment case for the Mt Vic tunnel baldly states: “Tolling to support the construction and maintenance of the road,” without saying what the toll would be.

‘RoNS will bankrupt the nation’

Matt Lowrie has written an excellent summary of these business cases over at Greater Auckland:

He makes clear how nonsensical and farcical the process is, especially after the Government changed its assumptions on interest rates and payback time to ensure the Benefit To Cost Ratios rose above 1.0, although even then the BCRs were anaemic. Usually these projects are not approved unless the BCRs are over 3.0.

A striking thing about the RoNS investment cases is that all six of the projects now have Benefit Cost Ratios greater than one. In other words, the assertion is that (at least in theory) every dollar they cost will generate slightly more than that in benefits.

But this is only due to a significant change in the way NZTA calculates the BCR. Most notably: these projects are now being assessed over a far longer period of time (up to 60 years instead of 30), and using a much lower discount rate (2% dropping down to 1.5% after 30 years, whereas it used to be 6%).

This means projects that previously barely qualified as economical now suddenly generate more benefits than costs – and all now magically clear the (very low) hurdle of a BCR of 1.0. Matt Lowrie via Greater Auckland.

Matt’s analysis of the investment cases is rightly savage:

They help to illustrate the scale of the unaffordability crisis racing towards us. It’s hard to avoid the conclusion that the Government is not just kidding themselves, they’re trying to fool the public as well. It’s hard to avoid the conclusion that the Government is not just kidding themselves, they’re trying to fool the public as well.

They know they can’t deliver all of these projects, but they want to pretend they still can. It will be interesting to see how long they keep up this game.

Especially now, in this economy – knowing that even building just half of these mega-roads will suck an enormous amount of public capital away from being able to build schools, hospitals, or anything else our nation urgently needs.

It seems that whatever the question, this government’s answer is “More RoNS”. But more RoNs will bankrupt the nation. Matt Lowrie via Greater Auckland.

Questions for the Minister. And the Opposition Leader.

There are a few ways this bubble of magical thinking could be punctured, but a couple of sharp questions in public to people named Chris would be a good start, including:

* To Chris Bishop: What will the toll per trip be for the road you’ve just decided to plan and buy land for?

* To Chris Bishop: Why aren’t you capturing some the land value uplift to pay for the motorway?

* To Chris Bishop: How many cars and trucks do you expect to use the road with that toll?

* To Chris Bishop: Will you guarantee there will be no Government borrowing and the resultingly higher mortgage rates and tax rates to pay for this road?

* To Chris Bishop: What would the BCR for the road be if you assumed a 6% discount rate and a 30 year payback period?

* To Chris Bishop: Will you include the forecast liability in the Crown Accounts for buying emissions credits needed because of the road’s building and use?

* To Chris Hipkins: Will you guarantee to build the road and apply the toll to fund it if you are in Government?

* To Chris Hipkins: Will you guarantee not to borrow the funds directly to pay for the road?

* To Chris Hipkins: Why aren’t you capturing some the land value uplift to pay for the motorway?

* To Chris Hipkins: Will you include the forecast liability in the Crown Accounts for buying emissions credits needed because of the road’s building and use?

* To Chris Bishop, Chris Hipkins & Christopher Luxon: Do you expect to be a minister or Prime Minister when this road is opened?

Chart of the day: 10 years of magical thinking = $30b

My Pick n’ Mix Six of links elsewhere today

* The Lead: Anna Whyte for The Post-$: 65% of public support mega strikers, new polling suggests.

* The Sidebar: Lillian Hanley for RNZ: Ads targeting strike ‘absolutely unbelievable’, Labour says

* Scoop of the day: Amy Williams for RNZ: Very few beneficiaries offered non-financial sanctions

* Investigation of the day: David Williams for Newsroom: Behind NZ Pork’s campaign to keep farrowing crates – Part 2

* Deep-dive of the day: Ruth Hill for RNZ: Man with infection can’t get ambulance to hospital, finds 50 people in waiting room

* Op-Ed of the day: Chris Finlayson for NZ Herald-$: Chris Finlayson: Where does Jim Bolger sit among the leaders of the 20th century?

The full Picks ‘n Mixes is available earlier today only to paying subscribers here.

Cartoon of the Day: (Not) locked and loaded

Timeline-cleansing nature pic: A beachy scene

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

I spoke with Mangawhai Pharmacy owner Lanny Wong today to about plans barely-announced or covered this week by Associate Health Minister Casey Costello to deregulate the nation’s pharmacies.

Lanny said she was shocked at the details revealed in full in Cabinet papers released proactively on Monday, particularly because there had been no consultation with the pharmacy sector, which would be upended by the removal of its current regulatory model. Costello barely mentioned the likely industry transformation in a release on Tuesday titled: ‘Medical Product Bill taking shape.’

Costello characterised the deregulation as “allowing for more flexibility and innovation that will improve safe access to medicines and healthcare,” but Lanny, who is the spokesperson for the Independent Community Pharmacy Group (ICPG), said the reforms risked creating a US-style sector dominated by big corporates, where turnover and profit are prioritised over the health of customers and communities served by pharmacists, who own the businesses and live in those communities.

“This means that pharmacy are no longer needed to be owned by pharmacists and pretty much means anyone can own a pharmacy if you’ve got enough capital. It means every supermarket can have a pharmacy, every corner dairy, and it no longer needs to have majority ownership by a pharmacist.” Independent Community Pharmacy Group (ICPG) Lanny Wong in the interview above.

Currently, pharmacies are a regulated facility where only a pharmacist licensed with Medsafe is allowed to own the pharmacy, and can’t own stakes in more than five pharmacies. Pharmacists operate under a code of ethics and the patient’s code of rights.

“So there’s a lot of law that govern what we do in the pharmacy and the activity that happened in pharmacy. That’s why we’re different from a retail, from a vitamin shop.

“Pharmacists actually provide clinical care. So when you go into a pharmacy, you have the right to receive the care that you request and have the right to understand your medicine. That’s why pharmacists always have to be present in a pharmacy to be able to provide a patient with that care The pharmacist is actually a health professional that you can see every day, anytime, for free.” Lanny Wong

Lanny gave the example of a pilot she is working on with Te Whatu Ora-Health NZ to screen for rheumatic fever in her practice, which would not be profitable.

“That is something that I do because I want to have a good relationship with Te Whatu Ora and that’s in my community. If a pharmacist is no longer in effective control of a company, then decisions like that can become quite challenging to make when it’s not churning out the profit or the margin that you desire.” Lanny Wong

Lanny said the reforms appear designed to enable a ‘Hub and Spoke’ model of pharmacies where pharmacists making the key decisions are centralised and the workers serving customers in stores are not enabled, incentivised or expected to provide independent advice or decisions that might reduce sales and profits.

“When pharmacists no longer have business and financial control of a pharmacy, it means the corporates can call the shot on how a legislation should be written.” Lanny Wong.

Lanny gave the example of the hub and spoke model enabled by deregulation in Taiwan, where medicines are allowed to be distributed that way without the supervision of a health professional, often online. She also referred to the way the oxycodone crisis developed in the United States, where ‘pill mills’ distributed pills in large numbers to swathes of customers without supervision.

“The overseas evidence definitely show in deregulated environments, for example the United States with its oxycodone crisis, that’s precisely the type of risk that can happen when profit basically is more important than care.” Lanny Wong.

Lanny also contested comments in the Cabinet paper that deregulation would encourage innovation, or that consolidation and economies of scale would result in lower prices. Examples of innovation in New Zealand often began with independent pharmacies working with doctors and hospitals in their areas to try things out.

“In the short term, there might be some that type of benefit, but I think everyone in Aotearoa will probably understand in the long term once a monopoly or duopoly situation that has been established, prices go back up and service drop.” Lanny Wong

Lanny also referred to the loss of regional and provincial pharmacies in remoter communities after a similar deregulation in the UK.

I have requested an interview with Casey Costello.

She said in the release the reforms would introduce a new role of supervisory pharmacist, which would be required in all companies that operated more than one pharmacy. The supervisory pharmacist would be responsible for compliance with pharmacy standards and regulation for the company as a whole. Costello said the bill would be introduced next year. It would also include “allowing unapproved medicines to be advertised and promoted in some circumstances.”

Chapters

00:00 Introduction to Pharmacy Deregulation

03:01 Understanding the Role of Pharmacists

05:48 The Impact of Deregulation on Pharmacy Ownership

08:50 Risks of Deregulation: A Global Perspective

11:46 Innovation in Pharmacy: Independent vs Corporate

14:55 Legislative Process and Industry Consultation

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcasts that go out with my Early Bird and Daily Chorus email newsletters. Paying subscribers support my work being done in the public interest here, and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

Ka kite ano

Bernard

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

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night features co-hosts Bernard Hickey and Peter Bale talking with regular guests Cathrine Dyer and Robert Patman about the global economy, local and international politics and climate change.

This week’s special guests were independent climate change policy expert Christina Hood and former NZPA foreign correspondent and Evening Post Business and Economics editor Bruce Kohn.

We talked about:

* Jim Bolger’s legacy;

* The debasement trade, the price of gold and trust in the idea of money;

* The future of the Gaza ceasefire and the latest in Ukraine war;

* The Government halving of our methane emissions reduction target (Christina Hood’s LinkedIn post summarising the news);

* The Government’s non-decision yesterday on climate adaptation (Newsroom);

* Treasury’s decision to again leave our Paris climate liability out of the Crown Accounts (Page 25)

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

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

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

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

I spoke with economist and Motu researcher Arthur Grimes yesterday about a paper he has just published today with Amelia Blamey and Norman Gemmell about the effects of monetary policy on wellbeing and inequality.

The paper attached below and linked above and below is titled: Impacts of macroeconomic policies on objective and subjective wellbeing: The role of housing tenure and concludes:

“Using survey data from 84,732 representative households collected by StatsNZ, we find that, relative to outright owners, higher property prices are associated with a decline in NHE for each of private renters, public renters and mortgaged homeowners. In addition, relative to homeowners, renters report significantly lower life satisfaction as house prices rise, with heterogeneous effects depending on age, income and local house price: rent ratios. Our results indicate that macroeconomic policies, operating through the property market, can exacerbate wellbeing inequalities associated with housing tenure.” Motu paper

We discussed:

* how monetary policy has driven up housing prices in New Zealand;

* the implications for renters vs owners;

* how homeowners benefit from rising property prices, but their life satisfaction does not improve;

* how renters experience a decline in well-being as property prices rise;

* The lack of a capital gains tax distorts the housing market in New Zealand;

* Political dynamics favor homeowners, complicating housing policy reform;

* There is potential for reducing house prices through policy changes;

* The current housing market is heavily influenced by macroeconomic policies;

* Supply constraints have worsened housing affordability issues; and,

* there’s a need for tax reform such as a capital gains tax to address housing affordability.

This chart tells the story of housing costs for renters both in private rentals and state homes, homeowners with debt and homeowners without debt.

Chapters

00:00 Introduction to Housing Economics and Well-being

02:54 The Impact of Macroeconomic Policies on Property Prices

06:00 Winners and Losers in the Housing Market

08:52 The Political Economy of Housing in New Zealand

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcasts that go out with my Early Bird and Daily Chorus email newsletters. Paying subscribers support my work being done in the public interest here, and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

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

This is a free preview of a paid episode. To hear more, visit thekaka.substack.com

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate:

* The Lead: Jim Bolger, a centrist National PM who backed Treaty settlements and sacked Ruth Richardson, has died at the age of 90.

* The Sidebar: New polls put support for National below 30% again and show almost half of voters want National to replace Christopher Luxon as leader, with 16% preferring Chris Bishop as a replacement. (Stuff)

* The Number of the Day: 400 people have applied for a dozen Pita Pit jobs. (RNZ)

* Quote of the day: “We still have too many brown babies die and be harmed. And that has not changed in the 14 years they’ve been looking at the perinatal mortality stats - we have not got better, at all. It has not changed.” Health Researcher and New Zealander of the year Bev Lawton via (Stuff)

* The Chart of the Day: The World Meterological Association published its annual report for 2024 data overnight, showing Co2 rose by 3.5ppm in the year. This was the largest one-year increase since modern measurements began in 1957.

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcast above and below the paywall below. There’s a two-minute free preview for browsers. Paying subscribers support my work being done in the public interest here and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, and my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

The National PM that sacked Ruth Richardson

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Briefly in the news in Aotearoa’s political economy around housing, poverty and climate:

* The Lead: Without warning, consultation or a permanent Governor in place, the Reserve Bank yesterday loosened mortgage lending restrictions in a way that will increase house prices, accelerate sales activity and turbo-charge the residential industrial complex that has become the economy’s main driver.

* The Sidebar: The Reserve Bank justified the move, which was welcomed by the Government and landlords, as possible now because house prices had fallen to ‘sustainable’ levels. It views ‘sustainable’ as a level unlikely to trigger a crash, rather than affordable relative to incomes.

* The Number of the Day: 16% is the share of owner-occupier and rental property investor lending the Reserve Bank expects to be at a Loan to Value Ratio (LVR) of over 80% after the loosening of the rules. That is up from 13% currently and would be higher than at any time in 11 years.

* The Chart of the Day: Where the Reserve Bank thinks ‘sustainable’ house prices are.

* Quote of the day: “Luxon is now a drag on the brand rather than an asset to it.” The Post-$ after publishing a poll showing PM Christopher Luxon’s net favourability rating was -24%, vs -10% for the National Party.

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcast above and below the paywall below. There’s a two-minute free preview for browsers. Paying subscribers support my work being done in the public interest here and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, and my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

Going for Growth, Growth, Growth. In house prices

This is a free preview of a paid episode. To hear more, visit thekaka.substack.com

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate:

* The Lead: A swathe of new mayors are promising local austerity after voters punished councillors and mayors who pushed through big rates increases in the last two years. This will add another wave of uncertainty and fear into local economies already worried about central Government spending cuts.

* The Sidebar: The Government has shifted the goalposts for methane reductions to half way up the field to reduce the pain for farmers, which the Greens and Labour argue is a breach of an election promise.

* The Number of the Day: 32.65% - That’s percentage of enrolled voters who voted in local elections nationwide, as of Saturday night. (LGNZ) The turnout in the metropolitan areas was 28.8%, while rural and provincial councils had a combined turnout of 43.6%.

* The Chart of the Day: Net interest paid by central Government improved from $2 billion to just over $1 billion by the end of March, which represents less than 1% of total Government revenues.

* Quote of the day: “The Government has framed this decision as one grounded in science. In reality, this is a political choice. It is inappropriate and dangerous to imply that it aligns with global scientific understanding of the emissions reductions necessary for 1.5°C, or that it is ethically defensible.” Lawyers for Climate Action Executive Director Jessica Palairet in a statement.

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcast above and below the paywall below. There’s a two-minute free preview for browsers. Paying subscribers support my work being done in the public interest here and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, and my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

The Lead: Austerity V2.0 is about to begin

I spoke to Association of Salaried Medical Specialists (ASMS) Economist Andrea Black this week about a report she’s produced on the economic, social & financial costs of the worsening health of our workforce.

The 52-page report, titled Managed decline: The Health of New Zealand 2011 to 2024, details a worsening in the health of the working-age population, in particular around mental health and obesity.

Andrea used Treasury cost-benefit models to work out the potential costs to society and the economy of up to $10.6 billion per year through lost hours worked, falling productivity, presenteeism and lost taxes because of the sickening health of the workforce. She estimated that a continued worsening at the same rate would increase that loss by an extra $3.3 billion by 2035/36.

We talked about:

* How the self-rated health of New Zealanders has declined significantly.

* 80% of health determinants were outside the health system.

* How 22,000 more people are out of work due to health issues.

* Presenteeism contributes significantly to lost productivity.

* Mental health issues had a substantial economic impact.

* Social determinants like housing and income were crucial for health.

* Health impacts not only individuals but also families and communities.

These tables charts in the report tell the story:

Chapters

00:00 Introduction to Health Trends in New Zealand

03:07 Self-Rated Health: A Decline in Perception

06:05 Economic Implications of Health Deterioration

09:05 Social Determinants of Health and Community Impact

Subscribe in full as a paying subscriber for more detail and analysis in the full video and podcasts that go out with my Early Bird and Daily Chorus email newsletters. Paying subscribers support my work being done in the public interest here, and via my appearances on other media such as RNZ & 1News. Paying subscribers also get early and full access to our webinars, our chat room, my morning ‘Early Bird’ post with the full ‘Picks n’ Mixes’ digests of news links, and can comment on articles.

Ka kite ano

Bernard

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The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night features co-hosts Bernard Hickey and Peter Bale talking with regular guests Cathrine Dyer and Robert Patman about the global economy, local and international politics and climate change.

This week’s special guest was Israel Cooper from The Home Foundation.

We talked about:

* The economy, the Reserve Bank’s rate cut and global financial bubbles.

* This week’s annual report on the marine environment by the Ministry for the Environment and Stats NZ, including how the seas around Aotearoa are warming 34% faster than the rest of the world and that $180 billion of residential property is exposed to floods and slips. We also talked about this Op-Ed by James Renwick et al for The Public Health Communications Centre on the health dangers of climate change.

* The Gaza peace plan and the controversies here about New Zealand’s Gaza stance;

* The housing crisis and how to solve it (no biggie).

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

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

(This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)

Ngā mihi nui.

Bernard

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