The Kākā by Bernard Hickey

TL;DR: The podcast above features co-hosts Bernard Hickey and Peter Bale , along with regular guests Robert Patman on Gaza and AUKUS II, and Cathrine Dyer on climate change.

The six things that mattered in Aotearoa’s political economy that we wrote and spoke about via The Kākā and elsewhere for paying subscribers in the last week included:

* Climate: Ongoing double-digit hikes in council rates and insurance linked to climate change helped pump up March quarter inflation and is helping to delay mortgage rate cuts until late this year, or even early 2025. So should the Reserve Bank look through climate change inflation? It says no, but there’s a risk climate shocks drive up inflation and interest rates, delaying de-carbonisation investment. See more in Thursday’s email.

* Transport Minister Simeon Brown asked Waka Kotahi-NZTA to again consider digging a 4-km-long four-lane motorway tunnel from The Terrace to Kilbirnie, shocking Wellington’s transport planners yesterday, who said the $10-billion-plus cost was prohibitive and wasteful. See more in Monday’s email.

* Housing: Construction industry leaders say the Government’s freezing of funding for Kāinga Ora and water infrastructure was generating “weak” and “vague” signals about future pipelines for infrastructure and housing, which was helping to drive many builders closer to collapse. See more in Monday’s email.

* Health: Associate Health Minister Casey Costello never passed official advice on to Cabinet with an analysis for the BMJ showing that keeping Labour’ssmokefree changes would have boosted consumers’ disposable incomes by $51 billion by 2050, more than offsetting $19 billion in net losses for the Government. See more in Monday’s email.

* Climate: The size of the global economy will shortly peak, and then begin a steep decline, falling by at least one fifth by 2050 as a result of climate damages according to a new study by the Potsdam Institute for Climate Impact Research (PIK) and published in the journal Nature. See more in the Hoon in the discussion with Cathrine Dyer and here in the article and video we published earlier today.

* Population: Stats NZ reported a record-high 226,000 non-New Zealand citizens migrated here in the year to February, while a record-high 74,900 New Zealand citizens migrated elsewhere, with just over half leaving for Australia. That equals a full A320 each day, with most getting off in Australia. See more in Monday’s email.

What we talked about on ‘The Hoon’ on Thursday night

In this week’s podcast above of the weekly ‘Hoon’ webinar for paying subscribers at 5pm on Thursday night:

* 5:00 pm - 5:10 pm - Bernard Hickey and Peter Bale opened the show with a discussion about their favourite books and bingeing shows.

* 5:10 pm - 5:20 pm - Peter and Bernard talked with Cathrine about the Potsdam paper in Nature. They also mentioned a Wired article downplaying the role of cloud seeding in Dubai’s floods this week, and an article by Auckland University’s Kevin Trenberth about the risks of geoengineering.

* 5:20 - 5:50 - Peter and Bernard talked with Robert Patman about a growing debate about whether Aotearoa-NZ should join AUKUS Pillar Two. They mentioned an article by Robert and Marco De Jong on AUKUS.

* 5:50 - 6:00 pm - Peter and Bernard talked about Bernard’s idea that a 1% levy on digital advertising to raise $21 million per year could support journalism by being distributed to subscription news producers at a rate of $2 for each $1 earned in new subscriptions.

The Hoon’s podcast version above was produced by Simon Josey.

(This is a sampler for all free subscribers. Thanks to the support of paying subscribers here, I’m able to spread the work from my public interest journalism here about housing affordability, climate change and poverty reduction around in other public venues. I’d love you to join the community supporting and contributing to this work with your ideas, feedback and comments.)

I produced an episode of When The Facts Change via The Spinoff, including this interview with Kiwibank Chief Economist Jarrod Kerr about a major shift in views on inflation and interest rates here in Aotearoa and globally this week: they’re now seen high for longer because the ‘last mile’ of inflation is proving harder to reduce than expected.

We also produce this 5 in 5 with ANZ daily podcast and Substack for ANZ Institutional in Australia, which you can sign up to via Spotify and Apple and Youtube for free.

Ka kite ano

Bernard

PS: Here’s the climate wrap we also produced this week with Cathrine, and the one-off podcast on the Potsdam report.

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

TL;DR: Here’s the top five 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 is systematically dismantling environmental and climate policy architecture, while claiming that targets are safe. This is not credible and suggests a plan to ‘fail quietly’.

* Submissions for the Fast-Track Approvals bill close at the end of this week. According to national treasure Dame Anne Salmond, the bill represents a “naked grab for power” and “a shift toward authoritarian governance by ministerial fiat”.

* Once ecosystems are destroyed, they are gone forever in what is known as ‘the humpty dumpty’ effect. Professor Margaret Stanley gives five reasons why the bill threatens already fragile ecosystems and explains what we stand to lose from the bill in The Conversation

* The Climate Change Commission released three big draft reports this week. Newsroom’s Marc Daalder helps to make it all digestible with these five key takeaways.

* El Nino conditions have come to an end, according to the Australian Bureau of Meteorology. All eyes are on what happens next after March’s all-time record global surface temperature of 1.68˚C above the pre-industrial average shocked scientists. Will temperatures revert back to the norm, or will we be forced to accept an acceleration in climate change has taken place?

(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.)

Dismantling on the quiet

The Government’s claim that it will achieve the country’s 2030 climate targets, without buying additional international offsets and while it systematically dismantles climate policy architecture, is not credible.

It appears the Government is planning to fail quietly, believing that its own voters don’t care, and that the issue lacks salience among all voters at election time, in the midst of other real and created crises. Research has shown policymakers rarely wish to make plain or visible their desire to dismantle environmental policy, least of all to the young.

LinkedIn post from the Minister for Climate Change Simon Watts, in response to young climate protesters.

Rather than using traditional democratic and legislative processes to establish new approaches to environmental management, the current government is devising workarounds, that functionally destroy existing policy architecture without, or prior, to officially dismantling it. The public submissions process offers, at best, a passing nod toward democracy. If anything, it is a way to channel those who loudly disagree toward a void they can shout into, from which no echo will ever escape.

Submissions on the Fast-track Approvals Bill close at the end of this week. If you want yours to be read, publish it on social media and make your views explicit. Among the many reasons to be concerned about the Bill, two commenters from the academic world have made particularly strong cases highlighting its dangers.

Dame Anne Salmond warns that the bill is a

“a naked power grab – an assault on democratic checks and balances in New Zealand, and a shift towards authoritarian governance by ministerial fiat.”

The list of projects that will be fed into this process will not be available for public scrutiny until after the select committee has completed its deliberations. This reduces the possibility that large swathes of the population will come to understand, before it is too late, that their welfare, their way of life, and the places that are important to them, may be sacrificed in the name of ‘economic development’ that largely benefits an economic elite. By veiling the specifics, the government is reducing the visibility of their dismantling project. According to Salmond, the three Ministers with ultimate power over future projects

“are setting themselves up as judge, jury and executioner, despite their limited personal expertise and knowledge of the relevant legal and technical issues.[...] Nor are there rigorous protections against conflicts of interest including campaign donations, hospitality and lobbying, despite a lack of transparency about ministerial decision-making. The potential for pork barrel politics and corrupted decision-making is obvious.”

Can’t put it back together again ..

To make clear what is at risk, Professor Margaret Stanley penned this excellent summary for the Conversation, highlighting five reasons why the Fast-track Approvals Bill threatens New Zealand’s already fragile ecosystems by emphasising short-term economic gain.

“Ecosystems cannot be restored. Once destroyed, they are gone forever. This is known in restoration ecology as the “Humpty Dumpty effect.” Here are just some of the facts:

·       only 22% of Aotearoa’s original vegetation remains

·       at least 79 species extinctions have been recorded

·       remaining species currently threatened or at risk include 94% of reptiles, 90% of seabirds, 74% of land birds, 76% of freshwater fish and 46% of plants

·       90% of our wetlands have been lost, as well as 80% of our active sand dune ecosystems

·       63% of rare ecosystems are threatened

·       46% of lakes over one hectare are in poor or very poor ecological health.”

New Zealand has been designated one of 25 global biodiversity “hot spots” for conservation priority because so many of our endangered native species are not found anywhere else on the planet. Stanley also emphasises how the environment underpins the economy, health and culture, contributing an estimated NZ$57 billion(27% of GDP) to human welfare in 2012 alone. Although this can only be a substantial underestimate, given the limitations inherent in attempting to valorise that which is priceless. Nevertheless, mounting losses will increasingly undermine the welfare of people and society in Aotearoa going forward.

Digestible takeaways from three draft reports

Last week, the Climate Change Commission released three major draft reports. The first considers whether New Zealand’s 2050 net zero and methane emissions targets should be changed, the second looks at whether to include international aviation and shipping emissions in domestic targets, while the third proposes targets for the next five-year carbon budget. Journalist Marc Daalder makes it all digestible, offering five key takeaways from the reports, including:

1)        Climate change is getting worse faster than expected and we should consider strengthening the targets for 2050.

2)        The country has made more progress toward our current climate goals than expected. It should be noted that three key drivers of this were more rapid uptake of electric vehicles than expected (the government has since cancelled the clean car discount), reductions that stemmed from the previous governments subsidies for decarbonising industry (the GIDI fund, which has since been cancelled in favour of tax cuts) and a spike in pine tree planting (the current government intends to limit farm to forestry conversions). These mean that the country is now on-track to achieve net zero long-lived emissions by 2042, although methane emissions are still not on track against 2050 targets.

3)        There are net social and economic benefits to acting ambitiously on climate change compared to business-as-usual, particularly in the transport sector. (It should be noted that the draft Government Policy Statement (GPS) on land transport, released in early March, has earned the ire of experts for its backward steps on climate).

4)        It is possible to achieve net-zero emissions in the 2030s under the commission’s demonstration pathway.

5)        International shipping and aviation should be included in targets, to enable the country to better do its share toward the global target.

The Climate Change Commission is consulting with the public on its draft advice until the end of the May, with the final report due to be delivered to the government at the end of the year.

“Crucially, the commission didn’t think there has been any “important or notable change in the understanding of the physical science of methane” that would necessitate watering down the methane targets. It specifically stated it had “found no evidence to support weakening the current 2050 target” even as the Government has launched a separate review of the methane target with an eye to weakening it.

The arrival in overseas markets of new methane-inhibiting technology for livestock and new understandings of the risks to carbon stored in forests also gave reason for potentially strengthening the target, the commission said.”

Much of what has been working to reduce greenhouse gases in Aotearoa has now been cancelled by the new Government including the GIDI fund, cycling and walking initiatives, the clean car discount, funding of rail, and the commitment to 100% renewable energy. New commitments that work in opposition to climate change mitigation include the intention to restart oil and gas exploration, commitment to a massive road building programme, and another delay to agriculture’s entry into the ETS. No credible pathway to achieving the 2030 targets has been offered.

On Page 28 of the Climate Change Commission’s draft advice on the fourth emissions budget, lurks a comment that may shed some light on one fudge that the government may be planning to apply to 2030 targets:

“For this draft advice, we are not proposing any changes to the current accounting rules. However, the Government has indicated it plans to make two changes in its approach to measuring and reporting emissions, which may impact emissions budgets:

·       The Government has said it intends to make changes that will allow emissions and removals from pre-1990 forest management activities to be included when calculating Aotearoa New Zealand’s emissions.

·       It has started work to include new, additional sources of emissions and removals, which are not counted under current accounting rules.

Without careful consideration, these changes could make it possible to achieve set emissions budgets without meaningfully reducing gross emissions. This would impact how effectively these budgets can help Aotearoa New Zealand step down its emissions in line with achieving the 2050 target and contributing to global efforts to limit warming to 1.5°C above pre-industrial levels.”

The gap between the country’s erstwhile climate ambitions and the means to achieving them have been growing at a steady pace, alongside periodical assurances that the targets are safe.

Governments are required under Net Zero legislation to respond to the Climate Change Commissions advice, but they are not required to take that advice. In assembling a new ‘independent panel’ to consider methane emissions targets, the Government is signalling its willingness to ignore the existing independent panel (that the public is already paying for), in favour of finding an alternative ‘independent panel’  that will likely be comprised of experts whose advice it prefers. This is yet another workaround that effectively dismantles the architecture of environmental policy, while pretending to endorse it.

The quiet dismantling of environmental protections, whilst claiming to be delivering on them is b******t of a particularly dangerous kind because it undermines the welfare of the collective,  while serving the short-term economic interests of a few. There is no rule that requires the media or the public to give the government the benefit of the doubt for this amount of time when the facts simply don’t stack up and the stakes are so high. Humpty Dumpty is sliding off the wall.

Adiós El Niño

In other news, El Niño conditions have reached an end. The Australian Bureau of Meteorology says waters have cooled substantially over the past week. That announcement is seasoned with uncertainty about what will happen next, according to Matt McGrath at the BBC.

“A string of recent global monthly high temperature records has led some scientists to fear that the world could be tipping into a new phase of even faster climate change.

Scientists say that the months after the end of El Niño will give a strong indication as to whether the recent high temperatures are due to accelerated climate change or not.”

March 2024 had the hottest temperatures on record - +1.68˚C warmer than the pre-industrial average according to the EU’s Copernicus Climate Change service. Whether or not temperatures revert to something more aligned with the expectations of consensus climate science will be revealed over the next few months.

“The critical question is what happens next and on this scientists are divided.

US researchers recently said there was 60% chance of a La Niña developing between June-August, and an 85% chance of this happening by Autumn.

But the Australian Bureau say such statements such be treated with caution. They expect neutral conditions to last until at least July. “

A La Niña would have a stronger cooling effect but would also herald a more active hurricane season in the Atlantic.

Sources referenced:

Paterson, M., Wilshire, S., & Tobin, P. (2023). The Rise of Anti-Net Zero Populism in the UK: Comparing Rhetorical Strategies for Climate Policy Dismantling. Journal of Comparative Policy Analysis: Research and Practice, 1–19. https://doi.org/10.1080/13876988.2023.2242799

Stevenson, H. (2021). Reforming global climate governance in an age of b******t. Globalizations, 18(1), 86-102. https://doi.org/10.1080/14747731.2020.1774315

Ka kite ano

Bernard and Cathrine

PS: After this was written, the epic Potsdam Institute paper estimating the economic damage from climate change was published in Nature.

Cathrine and I did an emergency one-off podcast and article on that here to ensure it was covered in a timely fashion.

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

TL;DR: The global economy will be one fifth smaller than it would have otherwise been in 2050 as a result of climate damage, according to a new study by the Potsdam Institute for Climate Impact Research (PIK) and published in the journal Nature.

(See more detail and analysis below, and in the video 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.)

The economic modelling of climate change, on which planners have relied for decades, is proving to have been catastrophically wrong about the scale of damages that will result from greenhouse gas (GHG) emissions.  

Economic planners and policymakers will now need to focus their attention on how to manage economies that risk slipping into long-term decline, rather than managing for relentless growth. The implications for global leaders are profound. At the same time, opportunities to mitigate future damages abound, with the economic rationale for investing in them now magnified.

The Potsdam Institute study is based on recent empirical findings from more than 1,600 regions worldwide over the past 40 years. Researchers studied the economic impacts of climate change that have already occurred and the persistence of those impacts on economic growth over time. They used this information to construct projections at a regional and global level, based on established emissions pathways used in physical climate models.

Relative to a baseline without climate impacts, they estimate global damages will fall within a likely range of 11-29% by 2050, allowing for uncertainty. These damages from temperature increases are already baked in as a result of historical emissions and socio-economic inertia. The researchers used a range of emissions scenarios to estimate future damages, with a high emissions pathway (represented by RCP8.5) delivering global economic damages as high as 60% by 2100. Damages to which we are already committed outweigh, by a factor of six, the cost of mitigating emissions to limit global warming to 2˚C.

The commitment and divergence of economic climate damages versus mitigation costs

Source: Kotz, Levermann & Wenz, 2024 paper

A further devastating finding from the study is the level of inequity that economic damages will impose. Co-author Anders Leverman said:

“Our study highlights the considerable inequity of climate impacts: We find damages almost everywhere, but countries in the tropics will suffer the most because they are already warmer. Further temperature increases will therefore be most harmful there. The countries least responsible for climate change, are predicted to suffer income loss that is 60% greater than the higher-income countries and 40% greater than higher-emission countries. They are also the ones with the least resources to adapt to its impacts. It is on us to decide: structural change towards a renewable energy system is needed for our security and will save us money. Staying on the path we are currently on, will lead to catastrophic consequences. The temperature of the planet can only be stabilized if we stop burning oil, gas and coal.”

The injustice of climate damages applies across two dimensions, firstly on the basis of culpability for historical emissions and secondly, based on existing levels of socio-economic welfare. Those who are most vulnerable and have done the least to contribute to climate change are likely to suffer the worst economic damages. However, according to lead author Maximilian Kotz,

 “Strong income reductions are projected for the majority of regions, including North America and Europe, with South Asia and Africa being most strongly affected. These are caused by the impact of climate change on various aspects that are relevant for economic growth such as agricultural yields, labour productivity or infrastructure.”

The injustice of committed climate damages by cumulative historical emissions and income.

Global damages overall are estimated to be at 38 trillion dollars in 2050 (with a likely range of 19-57 trillion dollars). This is likely to be a conservative estimate as it is derived from the effects of rising temperatures, rainfall changes and temperature variability, but does not account for other weather extremes such as storms or wildfires, which would raise the costs even further.

Study co-author Leonie Wenz points out:

“Our analysis shows that climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly developed ones such as Germany, France and the United States. These near-term damages are a result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. And we have to cut down our emissions drastically and immediately – if not, economic losses will become even bigger in the second half of the century, amounting to up to 60% on global average by 2100. This clearly shows that protecting our climate is much cheaper than not doing so, and that is without even considering non-economic impacts such as loss of life or biodiversity.”

The committed economic damages of climate change by sub-national region and climatic component

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

My pick of the six newsey things to know from Aotearoa’s political economy and beyond from the last 24 hours to 9:46 am on Thursday, April 18 are:

* The Lead: Ongoing double-digit inflation in council rates and insurance linked to climate change is pumping up domestic inflation and is helping to delay mortgage rate cuts until late this year or even early 2025. So should the Reserve Bank look through climate change inflation? It says no, but there’s a risk climate shocks drive up inflation and interest rates, delaying de-carbonisation investment. (See more detail and analysis below, and in the podcast above)

* Chris Penk announced a four-year delay in the remediation deadlines for quake-prone buildings this morning, giving a repreive to building owners in many provincial towns and in Wellington.

* The Ministry of Education and Oranga Tamariki announced more than 1,000 job cuts yesterday. Unions described the cuts as brutal and likely to hit services for disabled people and kids’ lunches. Nicola Willis denied the cuts were to pay for tax cuts and said the Budget would include more spending on Education and OT.

* Te Whatu Ora-Health NZ released an initial report from Sapere for its Aged Care Funding and Service Model Review yesterday. It described the sector as under “extreme pressure” and unprepared for an expected surge in demand. It said an extra 12,000 beds were needed by 2032. There are currently only 32,000.

* The Office of the Inspectorate of prisons released a damning report yesterday into the treatment of prisoners at Paremoremo, saying staff shortages meant over 100 prisoners were not allowed out of their cells for days at a time over nine months last year. Corrections denied its new staff cuts in the current Budget round would affect conditions.

* President Joe Biden has just announced the United States will triple tariffs on imports of steel from China. Reuters

(Thanks for the feedback on yesterday’s experiment. The response was positive, but people are also keen for my selection and analysis of the key items, along with less repetition. So I’ve included a link to the ‘Pick ‘n’ Mix’ in this Dawn Chorus, which has the podcast. My apologies for not getting the podcast out yesterday. A bit too much on. Paying subscribers can see more detail and analysis below the paywall and in the podcast above. We’ll open it up for public reading, listening and sharing if we get over 100 likes)

The Lead: Climate inflation a factor delaying rate cuts

Paid content below this line

Inflation data out yesterday from Stats NZ showed domestic services inflation was higher than the Reserve Bank’s forecasts, which led to financial markets shifting their expectations for the first OCR cut further out into the second half of this year. Some economists (ANZ & Westpac) see a rate cut unlikely until early 2025.

Much of that domestic services inflation came from insurance and council rates costs, which was partly prompted by Cyclone Gabrielle and the need to catch up on under-investment and under-maintenance in roads and pipes and rail. Climate change is expected to generate more of these extreme events, delivering a sort of structural shock to inflation that central banks will have to react to as if they were short-term cyclical issues. That risks creating feedback loops that worsen the situation as higher interest rates slow investment in de-carbonisation.

Some central banks are openly talking about having a dual system for interest rates1, or even widening and raising their inflation target bands to given them flexibility that allows them to ‘look through’ such climate inflation shocks.

Here’s a chart showing the effects on insurance and rates in Aotearoa-NZ in yesterday’s figures.

I spoke to Kiwibank Chief Economist Jarrod Kerr yesterday for tomorrow’s When The Facts Change podcast. He pointed to the climate effect in a discussion a rise in neutral interest rates. Our discussion is included in the podcast above and in the transcript below (bolding mine):

Jarrod: What will be interesting from not this year, maybe not next year, but future years will be how do we handle the structural increases in inflation that we are going to see from climate change and other forces. I think climate change is an interesting one because we're still trying to figure it out and the cost of substituting away from fossil fuels is inflationary. The cost of rebuilding houses that are in prone areas for cyclones or sea level rise, that's inflationary. The insurance costs are obviously inflationary.

Jarrod: And then there's council rates with the lack of infrastructure and needing to build better infrastructure for the future, not just trying to keep up with what the current population demands. That's inflationary as well, and a lot of this is structural. So I think that the discussion we will have after central banks have got inflation back to 2% to prove their credibility is, actually, there's going to be much higher inflation over the medium term. What do we do? Do we relax our targets? Probably. Do we play around with the CPI basket and extract the climate related stuff out of it? Probably. That's the discussion I think we're going to have in coming years.

Bernard: Some are talking about having two different types of interest rates, a green interest rate, one that essentially is lower than the rest because it strips out the effect of climate change and tries to encourage investment and electrification, and then a normal (or brown) interest rate. Because when you look at some of the fast growing components of insurance here, certainly post-Gabriel, we've got house and car insurance inflation of 12-13%, you've got council rates inflation of 8-9%, in part because there's a bunch of councils, including our biggest one (Auckland), that have had to spend a lot of money on buying land that can't be lived on anymore, or repairing roads. And that is really starting to turn into a bit of a price shock that normally the Reserve Bank or central banks like to look through as temporary price shocks.

At the end of February I spoke to RBNZ Governor Adrian Orr for When The Facts Change and I asked him about whether climate shocks were a factor raising the neutral rate, and whether a different type of ‘green’ interest rate was needed.

I’ve included the exchange in the podcast above and in the transcript below (bolding mine):

Adrian Orr: A lot of the things you talked about is the price of a particular good or service. And they will always change depending on demand, supply, quality, needs etc. And they will get knocked around by different shocks — the demographic aging, climate change. So relative prices are moving. Our role is to make sure that a relative price shift that reflects supply or demand doesn't turn into aggregate inflation. That is everyone hiding behind a cost increase and doing cost plus pricing, and then getting into that inflation spiral. So that's the role of monetary policy, to control the price of money, to make sure it restores and retains its value through time.

But you are correct. The demographics, the climate change, these are all things that can impact on the productivity of an economy. And the productivity is the underlying driver of the potential supply capacity of an economy. In New Zealand, just using our local example, productivity is very low. It's our number one bane. We can increase output by having more inputs, but to do it on a sustainable basis, you have to also do things more productively or do better things. A low productivity economy means that its potential growth rate is very low before inflation starts raising its head. And so that's in large part what's happening globally.

Bernard: Just looking now at that climate issue, one of the concerns people who'd like to see an awful lot of investment in electrification and decarbonification say is if we keep putting up interest rates to control inflation all the time, we're not going to be able to invest what we need in all of these new renewable electricity plants and systems. What's your view on whether monetary policy should take into account the need to get to carbon zero fast.

Adrian: I think that's, without disrespect, that's silly thinking. The number one enemy of investing is inflation. You think of the cost of construction, cost of investing over the last three to five years. If you're doing a project that's going to last longer than 12 months, then what confidence do you have of the eventual bill you will pay if inflation is high and variable? So the interest rate is a tool around managing overall inflation.

The investment you're talking about is critical long term and can be managed through smart balance sheet management. You don't lock in today's interest rate forever, you lock in today and roll it as you need and think about the long term gains through that. So I would say the biggest constraint on investing in alternative energies is the current low cost of fossil fuels. You know that they are always being priced where it makes the alternative just not quite worth the effort. That's the nature of markets operating.

Chart of the day

The EQNZ and Gabrielle effects

Climate graphic of the day

Running hot

Just in case you missed it

Cartoon of the day

Dubai and Oman drown

Timeline-cleansing pic of the day

Jellied beach(ed)

Ka kite ano

Bernard

1

See more here on dual rates via GreenCentralBanking.

View draft history

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

TL;DR: The six news items that stood out to me in the last day to 8:26 am today are:

* The Lead: Transport Minister Simeon Brown announced yesterday he had asked Waka Kotahi-NZTA to again consider digging a 4-km-long four-lane motorway tunnel from The Terrace to Kilbirnie, shocking Wellington’s transport planners yesterday, who said the $10-billion-plus cost was prohibitive and wasteful. (See more detail and analysis below.)

* Migration: Stats NZ reported yesterday a record-high 226,000 non-New Zealand citizens migrated here in the year to February, while a record-high 74,900 New Zealand citizens migrated elsewhere, with just over half leaving for Australia. That equals a full A320 each day, with most getting off in Australia.

* Housing: Construction Industry Council executive director Tommy Honey told RNZ last night the Government’s freezing of funding for Kāinga Ora and water infrastructure was provide “weak” and “vague” signals about future pipelines for infrastructure and housing was helping to drive many builders closer to collapse. (See more detail and quotes below)

* Economy: A BusinessNZ-BNZ survey published yesterday found services sector activity “came to a screaming halt” in March, falling into contractionary territory and the weakest levels in 15 years, outside of the covid lockdown periods. (See more in Charts of the day below)

* Housing: Funding to support people leaving emergency housing find other housing and stay in it is due to run out within weeks (June 1) and the Government is refusing to commit to extend it, RNZ’s Lauren Crimp reported yesterday.

* Climate: The US National Ocean and Atmospheric Administration (NOAA) last night declared a global coral bleaching event had begun, which would be the second such event in 10 years and the fourth-ever on record. The NOAA said climate models predicted these events would be more frequent and severe as the planet warms. (See more below in Climate Graphic of the day)

(Paying subscribers can see more detail and analysis below the paywall and in the podcast above. We’ll open it up for public reading, listening and sharing if they give permission by getting over 100 likes. Achievement unlocked.)

Is saving Simeon one minute of time really worth $1 billion?

Transport Minister Simeon Brown shocked Wellington’s planners and councillors yesterday by reviving a plan for a four-kilometre-long road motorway tunnel that the locals said could cost over $10 billion in today’s money. That would be $17 billion in 10 years time if construction costs rose as fast as the CPI did over the last decade.

The plan for a road tunnel through a major earthquake fault and a swamp from The Terrace to Kilbirnie was briefly looked at in 2001 before being abandoned for cost reasons. That was before the currently-longest motorway tunnel at Waterview in Auckland (2.4 km) saw major cost inflation to $1.4 billion and before a quadrupling of costs to $5.5 billion to drill the 3.45km City Rail Link (CRL) in Auckland.

Brown argued the tunnel could save him 12 minutes on a trip to Wellington airport. That’s the equivalent of about one billion dollars per minute of saved time. Others have estimated each trip through the tunnel would cost $60 if the costs were allocated to drivers through a toll, with the cost double that if a Public Private Partnership model was used.

Brown said Waka Kotahi-NZTA would now look at the idea again.

“Boosting economic growth and productivity is a key part of the Government’s plan to rebuild the economy. The Long Tunnel option aligns strongly with priorities in the Government Policy Statement on Land Transport (GPS), including a reduction in travel times, greater resilience for the SH1 corridor, and improved safety for road users, pedestrians, and cyclists,” Mr Brown says.

“The Long Tunnel option has the potential to deliver up to 15-minute travel time savings between the region and Wellington airport, compared to around 2-3 minutes for the current parallel or diagonal tunnel proposals at Mt Victoria and the Basin.” Brown in a statement.

Wellington Regional Councillor and Transport Committee Chair Thomas Nash (Green) dismissed the rehashed idea, which he estimated would cost at least $10 billion.

“For the cost of what would be New Zealand’s longest road tunnel, we could get new inter-islander ferries and terminals, or surface light rail in Auckland or do most of the upgrades to triple passenger rail in Wellington.”

“It doesn’t help public transport, doesn’t support more housing and makes little or no difference to most drivers. We need to focus on doing the transport basics well in Wellington. Bus ridership is growing fast so let’s put in more bus lanes and bus priority at intersections.

“Rail use is constrained by much-needed maintenance and renewals so let’s fund that. First, get all those priorities properly under way and then we can talk mega projects.” Thomas Nash via X

Funding freezes & job cuts help extend & deepen recession

Another house building firm collapsed last week and the building industry is warning of another bust in the boom-bust cycle if the Government allows ongoing uncertainty about Kāinga Ora’s build programme, school building projects and water infrastructure funding to continue.

Timaru-based Tony Boyce Builders shut down over the weekend after its pipeline of work dried up.

“I was talking to a builder this morning and he normally has two and a half years work in front of him. He does housing all the time. He's down to eight months and he's really worried. He's got a big, big staff. So it's affecting everyone really.

“Everyone sort of is just closing up their wallets because they're worried that there might be a recession in front of us. And the high interest rates, and they're just sort of pulling the pin really.” Tony Boyce talking to Lisa Owen on RNZ Checkpoint last night.

Construction Industry Council executive director Tommy Honey said some of the changes introduced by the new Government were welcome, such as bringing in building materials from overseas, but the funding freezes and a lack of pipeline certainty were worsening the situation. Here’s his comments (bolding mine):

“What we've also noticed is this government's pretty good at stopping things, but not so good at starting them, or not telling us what they're going to start and when.

“I know one architect in Wellington lost $800,000 of architectural fees and projects that they were contracted with the government to do, and they've just completely stopped.

“The industry is actually carrying the brunt of the delays in decision making. The two things that we're not getting from the government that we would love are clear signals and a clear direction. The signals we're getting are weak and the directions a little bit kind of vague at the moment and that contributes to the uncertainty that we're all experiencing.

“If we knew that in July this was going to happen, and in December that was going to happen. So there's not much clarity and a lot of the government's talking points across many sectors really is we will start to think about talking about considering what we will review.

“But boy do we need clarity and we need certainty. Certainty is actually what drives the industry. (Building firms) they will continue to fall over unless someone picks up the can and starts saying, this is what we're going to do, or even this is what we're not going to do. Be absolutely clear about where you're stopping and people will put the energy in a different direction.

“We're either in a recession or facing one and people are concerned about that, and so there's a lot of hesitancy or reluctance and so any strong signals from the government about their investment in say social housing via Kāinga Ora or other things that they want to do. We've got some interesting work happening in the building consenting space trying to reduce regulation, we definitely support that but give us a timeline, a schedule.” Construction Industry Council executive director Tommy Honey talking to Lisa Owen on RNZ Checkpoint last night.

Honey also noted the uncertainty would discourage people buying new homes off the plan and sackings at MBIE would further complicate moves to speed up consenting and approve new building materials.

Charts of the day

Govt funding freezes and job cuts deepen and lengthen recession

It could be worse

Climate Graphic of the day

Bleached as

Comment of the day on The Kākā

Sick of it

“Can someone please explain the need to reduce sick leave? As I understand it business doesn't have to accrue it on the balance sheet like annual leave so is the argument that because it's more people will abuse it? Seems pretty cold hearted to me as we all know one flu can hit us for 5 days and then you're done for the year.” Matt in yesterday’s Dawn Chorus.

Cartoons of the day

A double negative

Timeline cleansing nature pic

Yum?

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

TL;DR: The six news items that stood out to me at 7:26 am today are:

* The Lead: Casey Costello never passed on to Cabinet official advice with an analysis for the BMJ showing that keeping Labour’s smokefree changes would have boosted consumer disposable incomes by $51 billion by 2050, more than offsetting $19 billion in net losses for the Government. Newsroom Marc Daalder (See more analysis and detail below)

* Geopolitics: Iran attacked Israel for the first time, firing hundreds of missiles and drones, but almost all were shot down by Israel’s ‘Iron Dome’ defence system, along with help from US anti-missile ships and anti-missile defences in Jordan and Saudi Arabia. Iran said it had finished the attack. Israel is considering a response, but the United States has said it won’t support an Israeli retaliation. Axios

* Scoop: Data from cameras on board commercial fishing boats has revealed what conservationists have long suspected: that deaths of ocean wildlife in nets and lines have been significantly under-reported. Sunday Star Times-$$$ Andrea Vance

* Deep-dive: It was a scheme Ross Berry hoped would make millions. Instead, 40 hungry men wound up crammed in a house, and his business is in ruins. Stuff Steve Kilgallon

* Politics: Brooke van Velden is pushing for the Government to halve sick leave to five days, despite assurances from National this would not happen. Sunday Star Times-$$$ Rob Stock

* Housing: An Independent Hearings Panel ruled in favour of a 5,000 home development on the old Formosa Golf Course in East Auckland on Friday, overcoming the objections of local residents and Auckland Council.

(Paying subscribers can see more detail and analysis below the paywall and in the podcast above. We’ll open it up for public reading, listening and sharing if they give permission by getting over 100 likes.)

‘Massive benefits for consumers offsetting losses for Govt’

The Government’s surprise decision to reverse Labour’s smokefree changes appears to fly directly in the face of its self-professed drive to help consumers and taxpayers reduce the cost of living and be an enemy of ‘big government’ and high taxes.

Official advice provided to Associate Health Minister Casey Costello and obtained by Newsroom’s Marc Daalder for his article published on Friday showed the main benefit for the Government of reversing the changes would slow a reduction in smoking and therefore increase excise tax revenues by $1.5 billion in the next four years.

However, the advice to Costello included an analysis done for the British Medical Journal (BMJ) showing that keeping the smokefree changes would create a benefit for consumers and taxpayers totalling NZ$51 billion (US$30.7 billion) by 2050 through earning more money over longer lives and spending less on tobacco. This would have more than offset projected losses to the Government of NZ$19 billion (US$11.5 billion) over that period through lower excise revenues and lower pensions payouts because people died earlier.

Costello did not pass it on to Cabinet, emphasising instead the extra tax revenues.

Here’s the core part of the analysis with the key chart below (bolding mine):

Our modelling suggests that the Smokefree Aotearoa 2025 Action Plan passed into law by the A/NZ Government in 2022 is likely to produce substantial economic benefits for the population in addition to the previously calculated health and health equity benefits. From the perspective of citizens, a cumulative gain in post-tax income of US$1.8 billion was seen by 2050, resulting from reduced tobacco-related morbidity and mortality in the working-age population. This was also met with a cumulative gain in disposable income by US$29 billion by 2050, due to reduced expenditure on tobacco. From a government revenue perspective, both gains and losses were observed. A reduction in healthcare expenditure by US$1.3 billion, and a combined increase of US$1.9 billion in income tax and GST revenue resulted from the policy package. However, due to increased superannuation payments and reduced tobacco excise tax revenue, the government would experience a cumulative shortfall of US$11.5 billion by 2050.

To our knowledge, our study is the first to evaluate the potential fiscal consequences of implementing a tobacco endgame strategy from both government and citizen perspectives. Our estimates are consistent with a large body of evidence documenting the detrimental impact of tobacco spending on household budgets, particularly for the most disadvantaged socioeconomic categories. An analysis of A/NZ census data has estimated that among low-income households with at least one member who smokes, up to 14% of the non-housing budget was spent on tobacco. Similar findings have been reported in other high-income countries as well as low-income and middle-income countries. A recent modelling study evaluating the economic loss attributable to cigarette smoking in the USA estimated the total loss in annual population income in 2020 at US$735.1 billion. In A/NZ, smoking is strongly concentrated among Indigenous Māori and people on low incomes; therefore, our estimated increases in disposable income would represent a pro-equity income transfer. Analysis done for the British Medical Journal (BMJ)

Chart of the day

Rich Americans keen to fly

Climate graphic of the day

AMOC running amok

Cartoons of the day

Progress?

Choices made

Timeline-cleansing nature pic of the day

Locked and loaded

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

TL;DR: The podcast above features co-hosts Bernard Hickey and Peter Bale, along with regular guests Robert Patman on Gaza and AUKUS II, Merja Myllylahti on AUT’s trust in news report, Awhi’s Holly Bennett on a watered-down voluntary code for lobbyists, plus special guest Patrick Gower on the closure of Newshub.

The six things that mattered in Aotearoa’s political economy that we wrote and spoke about via The Kākā and elsewhere for paying subscribers in the last week included:

* Chris Bishop rejecting a Hamilton community housing provider’s plea for capital to build 42 new affordable rentals, contrasting with National’s ‘supercharging social housing’ promise in its ‘Going for Housing Growth’ manifesto last year. See more in Thursday’s email.

* Christopher Luxon announcing “nine ambitious Government targets to help improve the lives of New Zealanders.” Seven would return results to pre-Covid levels and one is adopted from Labour. Only one is newly ambitious: 80% school attendance. See more in Tuesday’s email.

* Another opinion poll showing a collapse in the coalition Government’s lead over the Opposition and a further deterioration in Christopher Luxon’s popularity, including that Chris Bishop is now seen as less unpopular than his leader. See more in Wednesday’s email.

* Warner Brothers Discovery and TVNZ confirming the sacking of a combined 380 journalists from Newshub and 1News, which represents 21% of the nation’s entire journalist workforce of less than 1,700 gone in one day. See more in Thursday’s email.

* The closure of the Sunday and Fair Go programmes meaning the number of dedicated full-time and paid investigative journalists publishing in public has more than halved to less than a dozen in the last six months, including the folding of Stuff’s Circuit team late last year. See more in Thursday’s email.

* The Government setting up its own experts group to review the goalposts for farmers to reduce methane emissions by as much as 47% by 2050, effectively side-stepping the Government’s official advisors at the Climate Commission, who said there was no evidence to support such a move. See Monday’s email.

What we talked about on ‘The Hoon’ on Thursday night

In this week’s podcast above of the weekly ‘Hoon’ webinar for paying subscribers at 5pm on Thursday night:

* 5:00 pm - 5:10 pm - Bernard Hickey and Peter Bale opened the show with a discussion about this week’s loss of 21% of the nation’s journalists.

* 5.10 pm - 5.20 pm - Peter and Bernard talked about March being the 10th consecutive month of record high temperatures and a 38.5 degrees celcius jump in a temperature measure in Antarctica. See more in our weekly climate wrap with Cathrine Dyer published earlier today.

* 5.20 - 5.35 - Peter and Bernard talked with Robert Patman talked about US exceptionalism on Gaza, and why it’s complicating the push to include Aotearoa-NZ in AUKUS Pillar Two, which Japan has also now been invited to.

* 5.35 pm - 5.45 pm - Peter and Bernard talked with the Co-Director of AUT’s Research Centre for Journalism, Media and Democracy, Merja Myllylahti, on the centre’s Trust in News report published this week.

* 5.45 pm to 5.55 pm - PR and comms firm Awhi’s owner Holly Bennett on a quiet watering down of a voluntary code of conduct for lobbyists detailed by Transparency International here.

* 5.55 - 6.05 - Paddy Gower on the demise of Newshub confirmed this week.

The Hoon’s podcast version above was produced by Simon Josey.

(This is a sampler for all free subscribers. Thanks to the support of paying subscribers here, I’m able to spread the work from my public interest journalism here about housing affordability, climate change and poverty reduction around in other public venues. I’d love you to join the community supporting and contributing to this work with your ideas, feedback and comments.)

I produced an episode of When The Facts Change via The Spinoff, including this interview with Kiwibank Economist Sabrina Delgado on how inflation impacts everyone differently and reveal who is being hit hardest by the current spike.

We also produce this 5 in 5 with ANZ daily podcast and Substack for ANZ Institutional in Australia, which you can sign up to via Spotify and Apple and Youtube for free.

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

TL;DR: Here’s the top six news items of note in climate news for Aotearoa-NZ this week, and a discussion above that was recorded yesterday afternoon between Bernard Hickey and The Kākā’s climate correspondent Cathrine Dyer :

* Antarctic researchers have been shocked by the speed of events unfolding there over the past two years. A new paper outlines the evidence supporting their belief that a ‘regime shift’ has taken place in Antarctica over the past decade.

* A regime shift is an abrupt change in a system’s response to external drivers (a definition proposed by Lenton et al. (2023) ), which may or may not be permanent (a tipping point). The study authors have not considered whether or not this regime shift is permanent, so they are not yet calling it a tipping point, although it is indistinguishable from one at this stage.

* The Guardian reports the massive 38.5˚C temperature leap  - the single largest temperature increase ever recorded at a meteorological centre on earth –  at east Antartica in March, 2022, and outlines concerns that significant sea level rises could occur in the next few decades. The melting of ice sheets and glaciers in west Antarctica could contribute as much as five meters to global sea levels.

* This follows hard on the heels of new research in 2022 showing Arctic heating has occurred at four times the rate of the rest of the rest of the world since 1979, a rate of amplification that is double that previously described in the literature. The authors of that paper suggest climate modellers are seriously underestimating the rate of arctic amplification.

* A sudden acceleration of polar amplification in both the Arctic and Antarctic simultaneously represents a new and alarming phase in global warming.

* Meanwhile, the European Court of Human Rights released a far-reaching decision today, finding that state failure to act sufficiently in response to climate change could constitute a violation of human rights.

(See more detail and analysis below, and in the 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.)

The dizzying speed of change in the polar regions

Antarctic researchers have been shocked by the speed of events unfolding over the past two years with the region switching from record highs to record lows in surface temperature and sea-ice cover with dizzying speed. Their belief that the Antarctic has reached an abrupt turning point, shifting it from one state to another, has been laid out, with detailed statistical support, in a paper published this month in The Journal of Climate.

The Guardian quotes Professor Michael Meredith, science leader at the British Antarctic Survey, describing the single largest temperature increase ever recorded by a meteorological centre as “simply mind-boggling”. The 38.5˚C leap was recorded at East Antarctica in 2022.

“In sub-zero temperatures such a massive leap is tolerable but if we had a 40C rise in the UK now that would take temperatures for a spring day to over 50C – and that would be deadly for the population” said Meredith.

The article goes on to discuss the widespread implications of such abrupt changes, to such things as sea levels

“... there is now a real danger that some significant sea level rises will occur in the next few decades as the ice sheets and glaciers of west Antarctica continue to shrink. These are being eroded at their bases by warming ocean water and could disintegrate in a few decades. If they disappear entirely, that would raise sea levels by 5m – sufficient to cause damage to coastal populations around the world.

Five metres of sea level rise would hit coastal cities hard. It would, for example, put Auckland Airport out of action.

Why is this happening, and what does it mean for our future?

Scientists have long understood that global climate change would cause more dramatic warming at the poles than at the equator. This affect, known as polar or arctic amplification, is built into climate models. However, the Northern pole (the Arctic) and the southern pole (the Antarctic) do not behave in the same way, and both ends of the earth have demonstrated a tendency to take us by surprise.

It has recently been established that the rate of warming in the Arctic is double what has been represented in most of the scientific literature to date or anticipated in climate models, while the recent regime shift in the Antarctic has shocked scientists with its early and rapid onset.

Polar amplification is one of the key relationships in climate modelling along with climate sensitivity (how much the temperature rises when you double CO2 in the atmosphere). You can draw a diagonal line on a graph starting with the average temperature in the Antarctic or Arctic to the relatively higher average temperature in the tropics. That line is known as the atmospheric pressure gradient. When the poles warm faster than the rest of the globe, the pressure gradient begins to flatten and this in turn weakens linked ocean and atmospheric currents, although the dynamics of this are still highly contested within the scientific community.

In the Northern Hemisphere, one important ocean current that is known to be weakening with potentially devastating consequences for many regions, is the Atlantic Meridional Overturning Circulation (AMOC). Arctic amplification is believed to be the main cause of the AMOC’s recent weakening. (See our previous coverage of this)

The major Southern Hemisphere  ocean and atmospheric currents include the  El Niño-Southern Oscillation (ENSO), the Southern Annular Mode (SAM), and the Indian Ocean Dipole (IOD). These redistribute heat from one place to another and are key drivers of the climate conditions and weather events that we experience. Australia’s national science agency CSIRO released a report earlier this year highlighting the lack of Southern Hemisphere specific knowledge about tipping points and their effects.

Changes in polar amplification, particularly ones that we don’t fully understand, are a big deal.

What is a ‘regime shift’?

Satellite data, available since 1979 showed a trend of growing ice coverage over several decades in the Antarctic, peaking in 2014 with a record high. Over this same period, the Arctic region was showing steadily increasing temperatures and sea-ice losses, as one might expect in a warming world.

The difference has to do with the fact that the Northern Hemisphere has much more landmass, while the Southern Hemisphere has much more ocean. Oceans have absorbed 90% of climate heating to date and this delayed the onset of polar amplification in Antarctica. This changed after 2014 with an abrupt shift toward extremely low sea ice cover in multiple summers (record lows were recorded in 2016, 2022, 2023), that extended into the following winter seasons.

The 2023 winter maximum was one million km2 lower than the previous record low. Researchers have found that the variability of the summer sea-ice record has doubled over the past decade, and this has been accompanied by a longer season-to-season sea ice memory.

Generally, the primary driver of Antarctic sea-ice variability is the atmosphere, but the measured changes over the last decade cannot be explained by atmosphere alone. Some physical mechanism of change has shifted. This is likely to have something to do with the ocean, and the amount of mixing between different heat stratas. However, there is insufficient monitoring of ocean mixing at Antarctica, so there is no physical evidence to support the theory. Scientists are forced to rely on statistical evidence that provides a less direct measure of the shift’s impact.

In addition to increased variability, they are now finding that winter sea ice coverage is predictive of summer sea ice coverage, showing that events have become more persistent. This never used to be the case. The increased correlation that has been observed over the past decade is also visible at key times in the paleo-climate record, as a precursor to abrupt changes in Earth’s history. Increased variability in key measures is known to act as an early warning signal ahead of tipping points and is sometimes referred to by experts as ‘flickering’.

According to the study, these two changes are consistent with a regime shift having taken place over the last decade. A regime shift is an abrupt change in the system’s response to external drivers (a definition proposed by Lenton et al. (2023) ), which may or may not be permanent (a tipping point). The study authors have not considered whether or not this regime shift is permanent, so they are not yet calling it a tipping point.

Doubling of Arctic Amplification

In 2022, a study in the journal Nature came out showing that the Arctic has warmed nearly four times faster than the rest of the planet since 1979 . The study authors warn that climate models are seriously underestimating the magnitude of Arctic amplification.

“Everybody knows [the Arctic] is a canary when it comes to climate change,” Peter Jacobs, a climate scientist at NASA’s Goddard Space Flight Center, told the journal Science. “Yet we’re misreporting it by a factor of two. Which is just bananas.”

They suggest two reasons why the reported rate of amplification has been out of whack. 

One is just that the commonly used estimate of Arctic warming as double the rate of the rest of the world was accurate in the past but had become outdated. The second reason was that estimates can vary depending on the timeframes used and where you situate the southern boundary of the Arctic circle. In this study they used the period after 1979, from which satellite data was available and used an accurate southern boundary for the Arctic Circle of 66.5˚N. You would get smaller amplification ratios if you used a boundary such as >60˚N, that corresponds with latitudinal lines commonly used on maps, but which includes more land area (and less sea ice loss).

Acceleration of polar amplification in both the Arctic and Antarctic simultaneously represents a new and alarming phase in global warming.

Climate inaction a human rights issue, the brewing insurance nightmare, more shattered records

In other climate news:

* In a powerful and far-reaching decision, the European Court of Human Rights has ruled that inadequate policy action to address climate change is a violation of human rights. The case was brought by a group of older Swiss women who claimed that their age made them particularly vulnerable to the effects of heat waves related to climate change. The court agreed that Switzerland’s efforts to address climate change had been ‘woefully inadequate’. The binding ruling will directly influence all 46 European countries in which the European Court of Human Rights has standing and may have impact beyond.

* Homeowners are choosing to under-insure their houses and ratchet up their excesses as they struggle to pay for massive increases in insurance premiums, RNZ reported this week. They warn that it is merely a taste of what is to come according to leading researchers. Climate change and disaster economics researcher Ilan Noy has previously told RNZ that premiums would continue to go up as climate change increased the risk of natural hazards such as flooding and landslips. They describe cases where people are facing increases in annual premiums of up to 60%.

* The tenth straight month of shattered global temperature records continues to alarm climate scientists, some of whom are expressing concerns that waiting to see if the anomaly is the result of natural variation or a signal of accelerated warming may leave too little time to act. The last twelve months has seen average temperatures exceed pre-industrial levels by 1.58˚C. “If the anomaly does not stabilise by August – a reasonable expectation based on previous El Nino events – then the world will be in uncharted territory. It could imply that a warming planet is already fundamentally altering how the climate system operates, must sooner than scientists had anticipated.”  Gavin Schmidt, director of Nasa’s Goddard Institute for Space Studies (successor to James Hansen).

Key Papers:

Hobbs, W., Spence, P., Meyer, A., Schroeter, S., Fraser, A. D., Reid, P., Tian, T. R., Wang, Z., Liniger, G., Doddridge, E. W., & Boyd, P. W. (2024). Observational Evidence for a Regime Shift in Summer Antarctic Sea Ice. Journal of Climate, 37(7), 2263-2275. https://doi.org/https://doi.org/10.1175/JCLI-D-23-0479.1

Rantanen, M., Karpechko, A. Y., Lipponen, A., Nordling, K., Hyvärinen, O., Ruosteenoja, K., Vihma, T., & Laaksonen, A. (2022). The Arctic has warmed nearly four times faster than the globe since 1979. Communications Earth & Environment, 3(1), 168. https://doi.org/10.1038/s43247-022-00498-3

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

TL;DR: These six things stood out to me over the last day in Aotearoa-NZ’s political economy, as of 7:06 am on Thursday, April 11:

* The Government has refused a community housing provider’s plea for funding to help build 42 apartments in Hamilton because it said a $100 million fund was used up, the Waikato Times’ Stacey Rangitonga reported. It currently spends 40 times that each year on housing subsidies. (See more analysis and detail below)

* Interest rate cut hopes for 2024 are fading globally after higher-than-expected US inflation figures overnight dragged expectations down to 25 or 50 basis points of cuts this year by the Fed. Early in 2024, 175 points of cuts were expected this year. (See charts of the day below)

* The Reserve Bank reinforced those fears yesterday by sticking to its view that high interest rates were needed to drag inflation down into its 1-3% target band. Economists said mortgage rates may not fall until very late in 2024, if at all. RBNZ

* The central bank also pointed to high electricity, insurance and council rates inflation for keeping the OCR at 5.5%. That inflation is partly due to Government freezes and cuts to spending on roads, social homes and water infrastructure, along with high dividends to the Crown from state-owned gentailers. (See quotes of the day below)

* Warner Bros Discovery yesterday confirmed the closure of Newshub and TVNZ told staff it would stop producing 1News’ midday and late night news bulletins and stop producing Fair Go and Sunday. (See quotes of the day below)

* The 380 affected staff amount to 21% of the motu’s entire journalism workforce sacked in one day. It follows a 60% fall in advertising revenues for newspapers, television stations, radio and magazines to less than $1 billion since 2006. (See more in charts of the day below)

(Paying subscribers can see more detail and analysis below the paywall and in the podcast above. We’ll open it up for public reading, listening and sharing if they give permission by getting over 100 likes.)

Going for housing growth?

The Government, which was elected with a ‘Going for Housing Growth’ platform that ‘supercharges’ community housing providers, has refused a community housing provider’s request for funding help to build 42 apartments in Hamilton because it said a $100 million fund was fully allocated, the Waikato Times’ Stacey Rangitonga reported yesterday.

The Government spends over $4 billion a year in rent subsidies, accommodation supplements, first home buyer grants and emergency housing costs.

Bridge Housing Trust’s plans to build a 42 apartment complex on the corner of Tristram and Liverpool Streets in Hamilton central were left under a cloud of funding uncertainty after its application to the Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development (MHUD)’s affordable housing scheme was denied.

Under the nationwide initiative, housing providers commit to charging no more than 80% of median rent. In return MHUD pays half the cost of the build. Waikato Times’ Stacey Rangitonga

Housing Minister Chris Bishop made the final decision.

“As we advised the Bridge Trust in February of this year, their proposal was unfortunately not selected to be funded and with the fund itself now fully allocated, we are not able to reconsider that decision.

“The Ministry has considered whether there are other ways we could help progress the Hinemoa Apartments development, but unfortunately there is no suitable alternative funding source currently available.” Chris Bishop quoted by The Waikato Times.

National had campaigned on providing support for Community Housing Providers to build more social housing, rather than continue Labour’s policy of focusing social house building on Kāinga Ora.

Here’s the section in their housing policy titled “Going For Housing Growth”, which is also attached below.

Charts of the day

From 4,000 to 1,300 since 2006

News advertising revenues down 60% since 2006

Mortgage relief drifting away

Fed cuts pared back

Quotes of the day

Will you help, Minister?

"I don't think I can save anything. I'm the Minister for Media and Communications. What I can do is provide a level playing field so that media can be more sustainable, modernise and innovate.” Melissa Lee in Parliament yesterday when a reporter asked whether she thought she could save the media industry. Stuff

Government-driven inflation

“The Committee discussed upside risks to the inflation outlook. Members agreed that persistence of services inflation remains a risk and goods price inflation remains elevated. Anticipated near-term increases to local government rates, insurance, and utility costs, could also further slow the decline in headline inflation.” RBNZ MPC statement.

Comment of the day on The Kākā

“Re Simeon Brown's wish for greater speeds and the impact on emissions. Changing the top speed limit does not impact heavy vehicle speed limits. A pet peeve of mine is the fact heavy trucks on the Waikato Expressway are not being policed for speed. On a 110km/h stretch of road, their speed limit is still 90 km/h but it's being flouted. No wonder the road is falling apart. Dan Adams on yesterday’s Dawn Chorus. More here

Cartoon of the day

More rabbits and holes

Timeline-cleansing nature pic of the day

Painting and weeding required

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

TL;DR: The six news items of note for me in Aotearoa-NZ’s political economy as of 9:06 am on Monday, April 8 are:

* PM Christopher Luxon announcing “nine ambitious Government targets to help improve the lives of New Zealanders.” Seven would return results to pre-Covid levels and one is adopted from Labour. Only one is newly ambitious: 80% school attendance. (See and hear more detail and analysis below and in the podcast)

* The targets to shorten emergency department wait times, reduce cut treatment wait times and reduce child and youth offending and violent crime were achieved just before covid, or just before the Labour Government was elected in 2017.

* None of the targets address Aotearoa-NZ’s worst-in-the-OECD levels of rent stress or house-buying unaffordability, worsening food poverty and growing mental health problems, or set more ambitious emissions targets than the 2017-2023 Government. Accountability is not due until the 2032 election.

* The unchanged emissions ambitions came as the Climate Commission said more aggressive cuts should be considered. It also rejected the Government’s review of methane goalposts, saying there was “no justification” for a lower target.

* The owners of a Parnell boarding house that burned down on Sunday night also owned nine motels and had been paid $22.4 million by the Government emergency housing grants over six years from 2017 to 2022. The boarding house (or self-described ‘backpackers’ hostel’) failed its building warrant of fitness twice last year because of fire escape issues, the NZ Herald reported this morning.

* The Ministry for the Environment offered voluntary redundancy to all its nearly 1,100 staff yesterday. The Ministry’s staff numbers have trebled since 2019 due to RMA and water quality reforms, plus much more climate change work. Stuff reported this morning 1,051 public service jobs had been cut so far in response to the Government’s demands for 6.5% or 7.5% spending cuts.

(Paying subscribers can see more detail and analysis below the paywall and in the podcast above. We’ll open it up for public reading, listening and sharing if they give permission by getting over 100 likes.)

Back to 2019 levels by 2030, but not for housing or poverty

PM Christopher Luxon yesterday announced nine Government targets to improve measures for education, health, crime and climate emissions, but only one target is well above pre-Covid levels: for school attendance. The rest either take the measure back to pre-Covid or pre-Labour levels, or are the same as Labour’s measure.

There are no targets for housing affordability, or for child poverty improvement, although these are legislated in the Child Poverty Reduction Act 2018. The targets are to be achieved by 2030, which means the Government cannot be held accountable until the 2032 election.

These charts show best what success looks like in an historical context. There is more detail via factsheets at Department of Prime Minister and Cabinet (DPMC) and attached below.

Climate graphic of the day

Need an airport?

Cartoon of the day

Branch office

Timeline-cleansing nature pic of the day

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Bernard

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