The Kākā by Bernard Hickey

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

* David Parker’s decision to give up the Revenue portfolio after PM Chris Hipkins’ ruled out the wealth tax switch he and Grant Robertson put together for Budget 2023. Wednesday’s email

* Kiri Allan’s resignation as Justice Minister and decision not stand for re-election in the East Coast electorate after she was arrested on Sunday night and charged with careless use of a motor vehicle and refusing to accompany a police officer. Monday’s email

* The torching of a 48-home Kainga Ora housing development in East Tamaki on Monday night that Police and the Fire Service are investigating as suspicious, after angry protests by neighbours worried it would lower their property values. Friday’s email.

* The publishing of a paper in Nature suggesting an early collapse of a key North Atlantic sea current because of climate change. Friday’s post from new correspondent Cathrine Dyer.

* Te Pāti Māori announcing a suite of wealth taxes and income tax changes to pay for a tax cut for the bottom 90% of income earners, alongside Labour appearing set to announce a policy of taking GST off fresh food. Friday’s email.

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

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

* 5.00 pm - 5.15 pm - Bernard and Peter Bale opened the show with a summary of the news domestically and internationally, including the latest on the string of climate records in Europe and elsewhere, and more on a concerning new paper predicting an early collapse of the AMOC in a chat with The Kākā’s new correspondent Cathrine Dyer.

* 5.15 pm - 5.35 pm - University of Otago ProfessorRobert Patman

about how damaging the replacement of President Xi Jinping’s foreign minister is for China and the outcomes of visits to Aotearoa by US Secretary of State Antony Blinken and Australian PM Anthony Albanese.

* 5.35 - 6pm - Bernard and Peter wrap the show with a discussion of the week in politics with columnist for The Post, Josie Pagani.

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.

Other places I’ve appeared this week

My podcast for The Spinoff this week

This week in my weekly podcast, When The Facts Change, I looked at open banking. I talked with Josh Daniell at FinTech firm Akahu about what’s being done in Aotearoa to accelerate the move to open banking, something already well advanced in Europe, the UK and Australia.

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

* The revelation that 480 families are living in cars. Friday’s email

* Detail emerged about the thousands of low-skilled temporary workers given high-skilled work visas under the new ‘reset’ immigration policy. Thursday’s email

* Both National and Labour released performative and gimmicky policies on crime and KiwiSaver that leave the core crises of housing, climate and poverty unaddressed. Tuesday’s email.

* The Government decided during the Budget process against providing more cash help for poorer families because it preferred a lower deficit, lower debt and lower interest rates. Monday’s email.

* Temperatures soared to record highs day after day all around the world, raising fears the climate has already started triggering tipping points that cascade together into runaway warming. This Hoon.

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

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

* 5.00 pm - 5.05 pm - Bernard and Peter Bale opened the show with a summary of the news domestically and internationally, including the latest on the politics of crime and the introduction The Kākā’s new correspondent Cathrine Dyer.

* 5.05 pm - 5.15 pm - A discussion on the latest extraordinary events with the climate with Cathrine Dyer.

* 5.15 pm - 5.30 pm - University of Otago ProfessorRobert Patman

on the missing Chinese foreign minister, Russia pulling out of its deal to allow safe passage of Ukrainian grain through the Black Sea, and the upcoming visits to Aotearoa by Anthony Albanese and Anthony Blinken.

* 5.50 - 6pm - Bernard and Peter wrap the show with more of a discussion about solutions journalism.

* 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.

Other places I’ve appeared this week

My podcast for The Spinoff this week

Te Ao Māori’s big capital challenge and opportunity - I talked with Kiwibank’s Head of Māori advisory Teaho Pihama in this week’s When The Facts Change via The Spinoff about how Te Ao Māori can build all its capitals in an economy powered by mortgages secured against freehold land that are owned by individuals, when Te ao Māori views whenua is a totally different way.

Ka kite ano

My apologies for lateness this week. Was travelling this weekend.

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: This will be a short email and not that sweet, but I think it summarises where Aotearoa is deep in the winter of 2023. There were 480 families in Aotearoa who told authorities when they were listed on the housing register that they lived in a car, up from 102 families in October, 2017.

Associate Minister for Social Development and Employment Priyanca Radakrishnan gave the figures in the answer to this question in Parliament yesterday from National Housing Spokesman Chris Bishop.

I’m going to let that sit there today, ahead of our hoon at 5pm. I’m travelling to Hamilton today so won’t be able to do the midday ‘Ask me Anything.’

I have opened it up for all. Many thanks to paying subscribers who support this coverage of our housing, climate and poverty crises.

Ka kite ano

See you all at 5pm.

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 five things that mattered in Aotearoa’s political economy that I wrote and spoke about via The Kākā for paying subscribers this week included:

* PM Chris Hipkins ruling out a wealth or capital gains tax for his time as PM Friday’s email;

* two political opinion polls showing support for Labour dropping, which is increasing the chances of a National/ACT victory in the General Election on October 14, or a hung parliament Thursday’s email and Friday’s email;

* statistics showing nearly 3,000 New Zealanders a month are migrating to Australia, more than double the number a year ago and the highest in 10 years – also recently-arrived residents are bouncing on to Australia at a higher rate than the rest of the population, now Australia has opened the door fully for New Zealand residents to become full citizens Friday’s email;

* New Zealand signed a trade agreement with the European Union that writes in a commitment to meet our Paris Accord emissions reductions or face trade sanctions for the first time Monday’s email; and

* a highly-respected central banker in Britain called on western governments to raise taxes on the wealthy to help central banks cool down inflation Tuesday’s email.

What we talked about on ‘The Hoon’ last night

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

* 5.00 pm - 5.15 pm - Bernard and Peter Bale opened the show with a summary of the news domestically and internationally, including a chat about the wealth tax article.

* 5.15 pm - 5.35 pm - University of Otago Professor Robert Patman talked about the grumpy Chinese reaction to Hipkins’ speech on security policy at NATO, along with a closer look at the Ukraine war.

* 5.35 pm - 5.55 pm - Walkleys Senior Manager for Programs and Education Corinne Podger on solutions journalism.

* 5.55 - 6pm - Bernard and Peter wrapped the show with a chat about plans for election coverage, with 95 days to go.

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.

Other places I’ve appeared this week

My podcast for The Spinoff this week

What does a just transition look like? - This week on When The Facts Change on The Spinoff, I talked to Troy Baisden from the University of Auckland and Catherine Leining from Motu about their guide to achieving a just transition in Aotearoa that was released this week. They say it won’t be easy and won’t work without lots of early talk and solutions from both the top down and the bottom up.

Why Labour ruled out a wealth tax - I talked about Hipkins ruling out a wealth tax on RNZ’s First Up with Nathan Rarere.

Quote of the week

“NZ used to be a property owning democracy – now it is a property-OWNERS’ democracy.” Comment from a subscriber via email to me.

Chart of the week

Almost half of UK first home buyers need parental help

Milestones

Most deadly heatwave - European health institutes estimated that more than 61,600 people died from heat-related causes across 35 European countries from late May to early September 2022, during Europe's hottest summer on record. Reuters

‘Too hot (and stormy) for us’ - Farmers Insurance announced this week it was pulling out of covering homes and cars for over 100,000 customers in the state of Florida to “to effectively manage risk exposure.” CBS News

People moves

Coming back quietly - Hipkins announced Kiri Allan would return to work on Monday and resume her full duties as a minister. “When she returns to work Kiri will receive extra coaching to support her to create the positive working environment both of us are committed to," Hipkins said.

(Very profitable) musical chairs - Former Mercury CEO and Transpower CEO Patrick Strange stepped down as a director of Mercury Energy. Former Meridian Energy CEO and Fletcher Building Construction CEO Mark Binns was appointed as a director of Mercury, along with former Auckland Airport CEO Adrian Littlewood.

When you get it wrong publicly - Reserve Bank of Australia Governor Philip Lowe was not reappointed for a new term after he incorrectly reassured Australians their mortgage rates wouldn’t rise for years. He is being replaced by his deputy, Michele Bullock, who will be the first women to head the RBA.

Supplier turned gamekeeper - The Government announced the appointment of Pierre van Heerden as the Grocery Commissioner for a five-year term. Van Heerden was the General Manager of Sanitarium Health and the Chair of the Food and Grocery Council, which represents suppliers, from 2012 to 2016.

Power switched - The Government appointed former journalist and PR person Anna Kominik as the new chair of the Electricity Authority (EA) for a five-year term to replace Nicola Crauford, who lasted just three years. Kominik had been the chair of the Electricity Retailers' Association, having now resigned that role.

One-term ACT MP Damien Smith announced he would not seek re-election.

Reports, reviews and academic papers of the week

Michael Heron KC has issued a scathing official review of dawn raids this year of over-stayers from the Pacific Island in the wake of PM Jacinda Ardern's 2021 apology for dawn raids in the 1970s.

The business-backed thinktank, the NZ Initiative, published a 20-page report recommending more widespread use of Business Improvement Districts and special purpose bonds to fund smaller local infrastructure.

The Consumer Advocacy Council, that was set up after the May 2019 Electricity Price Review, concluded in a 46 page report the EA had not done a good enough job protecting consumers.

MFAT released its once-every-three-years Strategic Foreign Policy Assessment in a 36-page report.

Comment of the week

On Hipkins ruling out CGT

So totally depressing. New Zealanders will not grasp the epic failure of our lack of CGT policy. De facto, we're the sixth Australian state exporting our young people to the other five, who will mostly never return. For the price of a modest airfare they can buy socioeconomic mobility and hope. Labor is going to lose this election anyway, they could have stood for something historically critical for New Zealand's future, instead they've cringed and whimpered and let everybody down. It's harsh I know, but I call cowardice. Tony Laver comment in the ‘Jump on the Hoon post.

Chat thread of the week

A fun thing

Gurdeep Pandher of the Yukon has some advice

It's normal to feel anxious when we're uncertain, but excessive worrying can harm our well-being. To manage anxiety, practice daily breathing exercises and gratitude. Aim to balance your worries with taking actionable steps towards progress and work towards building trust. These simple practices can help you lead a more fulfilling and peaceful life. Keep it up! Gurdeep Pandher of the Yukon via Twitter

Ka kite ano

Have a great weekend

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: This week’s decision by PM Chris Hipkins to give up on reforming the taxation of capital gains or wealth begged the question for many of: what is the point of politics anymore if you can’t seem to change an obviously wrong policy?

Listener columnist and political thinker Danyl McLauchlan has written extensively about how modern politics has created a type of administrative and captured state where voters don’t get to debate big ideas or enact large change any more, but are instead corralled by a range of forces into choosing political managers of the status quo where the real power is with unelected officials.

Here’s a few lightly edited excerpts in text form for those allergic to the audio thing, or just plain time poor, but the full interview is available for all above as well. I’ve opened this up immediately for the public, given the public interest involved. Thanks again to our paying subscribers. We welcome lots of new ones. ;)

Quotes from the conversation

On Hipkins’ decision

My reaction was just one of the sort of standard cynicism that, you know, it's a sort of continuation of Jacinda Ardern's decision. But Ardern was quite constrained at the time. She had New Zealand First as a coalition partner. You could kind of see why she said that. And I think that Hipkins’ situation is quite different.

They have this majority but they haven't really done that much with it. They must be thinking a little bit about that. And if they do lose the election, people will ask this question: what was your government for? And they can kind of say Covid, but it's hard to say. More than that, the wealth tax is reasonably popular.

On where ideas get debated now

David Parker and Grant Robertson could quite reasonably say we're a left wing party, we're a Labour party. It's kind of ridiculous that we're taking more and more tax off labour and none at all off capital. That just seems at odds with everything we stand for.

And so Christopher Hipkins has come along and said, actually, we don't really stand for anything other than being in power, so we're just not gonna do that either. It's kind of interesting to me that these ideological battles are happening within the parties rather than between the parties at this stage.

On the difficulty of taking money from some to give to others

That phenomenon you're talking about is loss aversion. That’s something that comes up a lot in cognitive psychology, that people are really strongly motivated by the idea that they might lose something. And so it messes up our cost benefit calculations.

On what sitting on the cross benches might mean

I imagine that you would say, we're gonna support you on confidence and supply or we're gonna sit down at every budget and make a deal about supporting you and everything else that you want to pass. That's just something that you negotiate with us and you'll give us something. And that would be an incredibly difficult way to govern, especially if you're having to do it with the Greens and Te Pāti Māori at the same time.

That would just be really hard work. can't quite imagine what that government would look like. I suspect Labour would do just about anything to avoid being in that position. Cause you just need to pass so much legislation just on a day-to-day basis to keep the country running.

And if you're having to sit down and hammer something out and give something away every single time, that would just be really difficult.

On bureaucrats and the ‘captured’ state

They do seem to have tremendous power and influence, especially over spending and procurement, the types of things that this government especially is spending money on. This frustrates the government itself. They kind of don't know why allocating money for mental health, for example, is just not going anywhere or doing anything.

The Infrastructure Commission came out with a report recently into why that was and they said it was because the officials driving that just didn't really know what they were doing. So they just kind of wasted lots of money and, and didn't deliver anything, which is amazing.

It's an amazing challenge to the left because if you kind of think, we need state capacity and we just need to tax the wealthy more that will kind of overcome neoliberal austerity and we'll be living in a better society.

The idea that you could do all of that and just still not be delivering anything to the public because the officials in charge of it don’t know what they're doing is quite a big challenge to that project.

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: That’s it. It will now be almost impossible for a wealth or capital gains tax to be implemented within the next decade or two.

The future of Aotearoa’s political economy will now remain frozen in its stagnant, unequal, unjust, unproductive and unhealthy state for the forseeable future. That’s what our leaders, and ultimately the only voters that matter, have decided. Those hoping to change that frozen landscape should now look after themselves and their families, and/or hope and work for an electoral miracle that gives parties who want such taxes dominant positions in any post-election negotiation.

The prospects of a combined Green/Te Pāti Māori/TOP vote growing from around 15% now to above National-ACT on 50% are infinitessimal within the next 94 days. It would require all Labour voters to switch, and quite a few New Zealand First and other flotsam and jetsam to switch. As much as some might want that, it’s simply not realistic to believe it will.

Any renters without family resources or strong prospects of marrying into wealth need to know they now have no normal pathway to home ownership for their families for another generation. Realistically, they should look to migrate to Australia, which has a capital gains tax that helps fuel higher capital investment, higher productivity, higher wages and a much better prospect of saving a house deposit after the rent (albeit high and rising) is paid.

Stockholm syndrome powered by tax-free gains on land

PM Chris Hipkins’ decision announced yesterday from Stockholm to rule out a capital gains tax or wealth tax in his political lifetime has effectively shut down the discussion again. It signifies another complete victory for those median voters who own homes in the suburbs, and who can’t see any other financially viable or stable future for themselves or their families without leveraged and tax-free capital. Their main focus now will be on leveraging up even more tax-free equity to afford to help their own children with deposits to ‘get on the ladder’.

The announcement yesterday of the freeze on the full wealth tax debate probably added another 10-20% overnight to land values, thanks to the removal of any uncertainty about a threat to the existing model of our ‘churn and burn’ economy of a housing market with bits tacked. The division between landowners and renters is now brutal and stark. All that those on the renting side who choose to stay in Aotearoa can hope for is to marry into wealth or win Lotto.

Savers and entrepreneurs still thinking their simplest and least-risky way to financial security and wealth is to invest in their own and others’ businesses and their own income and skills should revist that assumption again. Clearly, the easiest, simplest and least risk way to higher wealth is to:

* do whatever it takes as fast as possible to buy more residential land;

* to leverage it up as much as possible from a bank with proof of income from rent and one or two solid waged jobs (rather than uncertain and variable business income); and,

* then sit back and wait for massively leveraged and tax-free gains to arrive, possibly with the help of using any political influence to block new consents or infrastructure funding that would add more land that more houses could be built on.

Investing in businesses, managed funds and bank accounts that pay interest or dividends that are taxed and cannot be leveraged is a mug’s game. Unlike the rest of the world, where capital gains beyond the family home are taxed and where managed funds are often lightly or not taxed before retirement to encourage investing in real businesses, New Zealand will remain uniquely exceptional: a place where leveraged investment in residential land is tax preferred and politically untouchable.

Captured by a real estate industrial and political complex

Anyone who wondered how this situation could be politically sustainable for very long needs to be just as pragmatic and clear-eyed as Chris Hipkins.

He weighed up the numbers and decided challenging homeowners was not politically realistic. He realised he and the country is now so captured by the $1 trillion in tax-free capital gains made over the last 30 years and now held by median voters that it can never be changed. He gave up on changing the status quo, just as his predecessor Labour PMs Jacinda Ardern and Helen Clark did.

National/ACT will never agree to a wealth tax to redistribute income or increase public and business investment. Unless parties in favour of such taxes get more than 50% of the vote, that will not change in our lifetimes. Why? Because more than 70% of voters are residential land owners and they won’t or can’t see beyond the immediate and obvious financial and emotional interests of their families.

They believe the status quo works for them and can be sustained. All they need is plenty of renters in work and not nearly enough new homes built. That’s why both Labour and National favour very-high population growth through migration of temporary workers and not-nearly-enough investment in the infrastructure needed for enough homes for all the population. That:

* keeps rents growing to sustain the leverage in the land values;

* keeps land values rising because of a lack of new homes to slow rent growth or stop values rising;

* pushes budgets back into surpluses and lowers public debt through high GST and income tax receipts from the temporary workers, but without capital investments; which,

* keeps mortgage rates lower than would otherwise be the case to support land owners with high leverage; and,

* allows room in Budgets for tax cuts for middle income earners, who can then use that extra disposable income to apply for more leverage from the bank.

Here’s what Chris Hipkins said yesterday (bolding mine):

“I’m confirming today that under a Government I lead there will be no wealth or capital gains tax after the election. End of story.” Hipkins’ statement as Labour Party leader.

He’s right. That’s it. The story is over.

Don’t believe me? I argue the case lower down.

Usually, at this point in the email, I insert a paywall which means only paying subscribers can see more detail and analysis on these political economy issues around housing, climate and poverty below the paywall fold and in my podcast above. But I’ve decided to open this one up immediately for full reading, listening and sharing, given the public interest involved.

Paying subscribers can comment below and also have exclusive access to our Chat channel, which includes an active community and plenty of news updates and insights. Payers can also get into our weekly ‘Hoon’ and ‘Ask Me Anything’ on Fridays at 5pm and midday respectively Free subscribers can join the community now and support our public journalism work on climate, housing and poverty by upgrading to a paid subscription. Come and join us.

Well that escalated. So what actually happened yesterday?

It’s worth looking at how the announcement was made, and why yesterday, to understand both how close Labour came to grabbing the third rail of a wealth tax, and how far away it is now.

While travelling in Europe, Chris Hipkins issued a statement as Labour Leader that ruled out a capital gains tax or wealth tax in his political lifetime too, saying this was the 'end of story'.

He did that on the same day Treasury released its Budget 2023 advice documents showing the Government considered a wealth tax 'switch,' whereby net wealth over $5m was taxed at 1.5%/year, excluding the family home. Treasury now routinely puts out its Budget advice a couple of months after the Budget for geeks like me to pore over for the occasional nuance of ‘what might have been’ in a proposal rejected in the months before the presentation of the Budget.

But this wealth tax switch was the biggest ‘what might have been’ in living memory.

Treasury said it would have applied to 25,000 individuals (0.5% of the population) with $5bm in assets and raised $3.8b/year by 2025, in order to allow the first $10k of income earned by all to be tax free: effectively a $1,000 a year tax cut for the 95%.

Hipkins had to say something about the plans and to shut down a fresh debate about a capital gains or wealth tax before it got out of hand. Simply ruling them out was the simplest approach, and to reinforce that by saying his stance would apply “under a government I lead”.

Hipkins said he decided not to go ahead with the tax switch because Labour did not have a mandate for a wealth tax and he wanted to keep things simple at an uncertain time. Here’s Hipkins again (bolding mine with my footnotes):

"With many Kiwi households struggling, now is simply not the time for a big shake-up of our tax system.

"New Zealanders I talk to want certainty and continuity right now, and that’s what I’m delivering with this policy.

"When I became Prime Minister I said the Government I lead will focus on the basics. Experimenting with a wealth tax doesn’t fit that approach which is why I’m ruling it out. My position on CGT is a continuation of the position the Government has held since 2018.

"While work was already underway on a potential wealth tax and CGT as part of a tax switch in the Budget I ultimately made the call not to proceed with it. We simply didn’t have a mandate to implement those tax changes.

"Instead we have moved to address inequity in our tax system by increasing the top trust tax rate to match the 39% top income tax rate. This will help prevent trusts being used as a tax shelter and ensures the ultra wealthy pay their fair share. It also aligns with the increase to the top tax rate we implemented at the start of the term.

So what’s the point of Labour again?

Finance Minister Grant Robertson, who was the instigator of the Treasury studies and no doubt informed Hipkins throughout the policy advice process in February and March, said in a standup news conference in Parliament he would have preferred the wealth tax switch, but he was not gutted and was a team player.

“(The tax switch was) an idea that clearly I think has some merit, but I also am a team player and I'm also somebody who's very conscious of the economic conditions that we are in. Robertson in the standup (see audio above)

He said he thought it was still worth supporting Labour because he loved social justice and fairness.

"There are a lot of things that the Labour Party stands for. One of them is fairness, we've made some tax changes in that direction, we considered others and decided not to go ahead with them.” Robertson in the standup (see audio above)

Labour capitulated on a bank windfall profit tax too

Treasury documents also show the Government looked at imposing a retrospective windfall profit tax on $1b of bank profits in 2020 and 2021 to raise up to $700m, but decided against it because Treasury worried about 'significant unintended consequences.'

Here’s Hipkins again justifying the non-action (bolding and footnotes mine):

"Some people might call it boring, but the times call for restraint and simple and smart policies which grow our economy, help drive inflation down and provide targeted help to those families who need it the most.”

"Details of our tax policy will be released soon, but New Zealanders can be assured the Government I lead is listening and will be focused on making life a little easier without implementing big uncertain changes.” Hipkins in his statement.

So what was the point of the Greens again?

Green Co-Leader James Shaw said he was disappointed and there was a "very real possibility" the Greens would not work with Labour in a new Government, and instead sit on the cross-benches. Although that does imply the Greens grant Labour a supply and confidence agreement that allows Labour to govern with Te Pāti Māori, rather than National-ACT.

Shaw’s statement was much more declarative and critical of Labour than his comments to reporters above. Here’s some of that statement (bolding and footnotes mine):

“For too long, governments have been tinkering at the edges - constrained by self-imposed refusal to tax the wealthy - instead of taking the bold decisions people need right now. If political leaders are not willing to take those decisions on behalf of the people of the country you purport to lead, then why be in politics at all?

“The Green Party’s plan shows that poverty is a political choice - and it’s possible to lift every single family out of poverty through better social support paid for with a fair tax system. I would argue that any party that stops short of promising to change the tax system so we can lift every family out of poverty, is actively choosing to make life harder for thousands of people.” James Shaw in his statement.

TPM co-leader Debbie Ngarewa-Packer said the move was arrogant and unwise. National and ACT said it showed the 'Coalition of Chaos' was divided and secretly planning a wealth tax.

So what can and should we all do now?

Those wanting to stay in New Zealand (see more below) and create change will have to accept it is now extremely unlikely for at least another decade or two, unless over 700,000 non-voting renters engage politically and vote in their own interests. That number is down from the ‘missing million’ in 2014 because of hard campaigning work and the measures taken by the Electoral Commission to encourage participation. That job just got much harder. Why vote when there is no real hope?

Things can be done by those with the luxury and privilege of owning their own homes and believing the situation needs to change. I’m choosing to report the heck out of the situation and call b******t on it whenever I can. That’s largely because I can’t be sacked when I do it and I have the luxury of a large buffer of unearned and tax-free capital gains from over 30 years of home ownership (due only to the privilege of being born when I was) along with the privilege of the support of paying subscribers. Hardly anyone else has that combination.

The main newspapers increasingly rely on the real estate and banking industries for the bulk of their advertising revenues. Both television news operations are increasingly unprofitable in their own right. Only RNZ is large enough and independent enough to report on this issue with clarity, although it too will come under pressure when a conservative Government is in charge. National-ACT are learning from the playbooks of the Tory and Liberal parties in Britain and Australia, both of whom have actively starved the BBC and ABC respectively of funding.

I’ve been reporting on this issue for over 30 years, including actively in New Zealand over the last 20 years. The situation has actually gotten worse in reality, even though clear choices and advice have been available to both the voting public and those in public life shaping and framing the debate and decisions.

We saw the problem. We had options. And we chose the status quo.

That may seem a nihilistic or hopeless way of looking at it. I actually see it as clear-eyed and stiffens my resolve to keep going hard to report on both the problems and the solutions. I am keen now to focus as much as I can on the potential range of solutions and issues, outside of the usual debate in official circles and between political parties. It’s clear now those solutions won’t emerge from this frozen and poisoned landscape of politicians, officials and the usual people in public life.

There is one caveat to this rather bleak analysis, and it is a long shot. It is possible the children of today’s home owners don’t want to have to rely on their parents and push back at those suffering this Stockholm syndrome, by engineering another hostage situation.

They could tell their parents and their parents’ friends to normalise the tax incentives in our political economy to make it fairer and more productive by voting for a capital gains or wealth tax.

Or those parents will have to watch their grandkids grow up in Australia via WhatsApp, and through the occasional visit — pandemic lockdowns permitting.

News elsewhere in the political economy here and overseas today

A dead heat - A new Taxpayers Union - Curia poll showed support for both National and Labour falling, while support for Te Pāti Maori rose to 7%. If replicated on October 14, the poll would see Parliament hung with National-ACT on 60 and Labour-Green-TPM on 60.

Support for Chris Hipkins as preferred PM fell 6 points to 23%, while support for Christopher Luxon fell 3 points to 20%. The net ‘right track-wrong track’ measure of minus 42.4% (down 9.8%) showed the worst result ever

RBNZ holds for now - Te Pūtea Matua (The Reserve Bank) held the OCR as expected at 5.5% yesterday, saying it expected to leave it there for the 'forseeable future,' while the effects of its 12 hikes in 22 months works its way into the economy over the next year or so.

However, inflation pressures continue to abate overseas. Data out overnight from the the US Bureau of Labor Statistics showed annual inflation in the world’s largest economy fell from 4.0% to 3.0% in June, while core inflation halved in the month to 0.2%, leaving annual inflation ex food and energy of 4.8%.

Markets still expect one more 25 basis point hike on July 26 from the US Federal Reserve to a range of 5.25-5.0%, before a long pause. The key US 10-year Treasury bond yield fell to 3.899%, from 3.980%, while the two-year yield fell to 4.736%, from 4.894%. That fall in bond yields and stronger hopes for a soft landing pushed up US stock prices.

The fall in US yields matter because local bank moves in the last fortnight to raise one and two year fixed mortgages, in tune with the US 2 year yield's rose over 5%, now look out of date. Look out for possible mortgage rate tweaks lower in the coming weeks.

Taking action in the face of political reality - There was a provisional net migration loss of 13,400 people from New Zealand to Australia in calendar 2022, more than double the loss of 5,400 in 2021, Stats NZ reported yesterday.

It’s the largest loss for a calendar year since 2013, but well below the largest net loss of 43,700 in the March 2012 year. Losses averaged about 30,000 a year during 2004–2013, and 3,000 a year during 2014–2019.

Into Australia via a back door - Of New Zealand citizens who migrated to Australia in 2022, 36% born outside of New Zealand. This compares with an average of 33% in 2016–2019 (before COVID-19), and 22% in 2004–2011. This is slightly higher than the overseas-born share of New Zealand’s population, which rose from 19.5% in 2001 to 27.4% in 2018.

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

TLDR: The week’s news in Aotearoa’s political economy I covered via The Kākā for subscribers included:

* The Opposition’s reckless talk about a ‘mortgage bomb’ hitting the housing market and economy, which I showed was out of line with what home owners and their banks are actually doing. Friday’s email.

* The Human Rights Commission’s conclusion in the final report from its landmark housing market study that the Government and others breached our international human rights obligations. Thursday’s email.

* Reports emerged of migration scams dragging in thousands of temporary workers with fraudulent claims of jobs and promises of residence. Monday’s email.

What we talked about on ‘The Hoon’ last night

In this week’s podcast above of the weekly ‘hoon’ webinar for paying subscribers at 5pm on Friday night, I talked with special guests:

* 5.00 pm - 5.15 pm - Bernard and Peter Bale opened the show with a summary of the news domestically and internationally, and a chat about Bernard and Lynn’s trip to Europe.

* 5.15 pm - 5.35 pm - University of Otago ProfessorRobert Patman talked about PM Chris Hipkins’ speech on security policy ahead of his trip to NATO early next week, plus the latest on what on earth is happening in Ukraine and Russia;

* 5.35 pm - 5.50 pm - Human Rights Commission Housing Inquiry Manager Vee Blackwood talked with Bernard and Peter about the Commission’s housing inquiry final report;

* 5.50 - 6pm - Bernard and Peter wrapped the show with a chat about plans for election coverage, with 99 days to go.

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

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.

Other places I’ve appeared this week

My podcast for The Spinoff this week

Why land prices are 60% over-valued, but sustainable (spoiler alert: it’s the tax advantage)

In 2021 the Reserve Bank told everyone house prices were unsustainably high and would probably fall 15% or so. It was right, and now prices are bottoming out. But that implies house prices are officially at sustainable levels now. Surely, that can’t be right? Especially house price to income multiples are two to three times higher than they were 20 years ago and most people on regular incomes can’t buy their own homes without massive parental support or a lotto win.

This week on When the Facts Change talked to Reserve Bank researcher Andrew Coleman about his in-depth work on how to measure house price sustainability, and why the tax preferences for owner-occupied residential land make it 60% more expensive than it would be if taxed neutrally.

Chat thread of the week on The Kākā

I also host regular discussions on the Chat section of The Kākā for paying subscribers.

Here’s one of the most commented ones this week, which was open to free subscribers too. Almost all are only open to paying subscribers and I’m thrilled at high level, depth and collegiality of the conversations we now have there as a community.

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 Greens have proposed a smorgasbord of $15.5 billion worth of wealth taxes annually for Labour to pick and choose from, or ignore completely, in any government-forming negotiations after Election 2023 on October 14.

So now the rule-in-rule-out game begins. Labour started carefully yesterday, saying it would roll out its own tax policy in the coming weeks. National and ACT leapt to assign all of the Green tax policy to the ‘coalition of chaos’.

News elsewhere in Aotearoa’s political economy

* National pledged to end bans on gene editing and genetic modification;

* Auckland City Council agreed a compromised Budget that sold some airport shares, added more debt than Mayor Wayne Brown wanted, and cut a bit less from social services than he wanted;

* A Curia - Taxpayers Union poll showed the centre-right bloc still high to govern alone with 62 seats, while the centre-left bloc including Te Pati Maori would have 58 seats; and,

* The same poll found Christopher Luxon closed his net favourability and preferred PM deficits with Chris Hipkins.

Usually, I put in a paywall for paying subscribers at this point in the email newsletter and lock off the podcast above from free subscribers. But I want to experiment until the end of June with publishing everything to everyone immediately to see what happens with subscription rates, revenues and email opening rates. I want to thank paying subscribers in advance, who are still the only ones able to comment and get access to our very active chat section and webinars. Join our community by subscribing in full to support my journalism in the public interest about housing (un)affordability, climate change (in)action and poverty (not enough) reduction.

Greens put $15.5b worth of wealth taxes on Labour’s menu

Election 2023 may well turn into another debate about wealth taxes, but only if Labour allows any vacuum to form after an inevitable set of demands it ‘rule-in-or-rule-out’ whether it will adopt some or all of a Green tax and welfare smorgasbord laid out on Sunday.

The policy suite includes:

* a 2.5% tax on net wealth above $2 million for individuals and $4 million for couples, which the Greens estimated would apply to about 0.7% of taxpayers;

* a 1.5% tax on wealth in privately-held trusts;

* a new 45% tax rate on incomes of over $180,000 per annum;

* an increase in the corporate tax rate from 28% back to its 2008 level of 33%;

* a tax-free income band up to $10,000, which would increase incomes of everyone earning under $125,000 per year, with incomes up by between $16 to $26 a week for 3.7 million residents;

* a guaranteed income for those in or out of work, along with students, of at least $385 per week for an individual or $770 for a couple, or $725 for a single parent;

* the replacement of Working For Families with a single payment for caregivers of $215 every week for the first child, and $135 a week for every other child;

* the lifting of the abatement threshold for this payment from $42,000 per year under Working For Families to $60,000 a year, along with reducing the abatement rate from 27% to 18%;

* a payment of $140 for every child under three, which doubles and universalises the existing Best Start payment; and,

* the reform of ACC into the Agency for Comprehensive Care, which would provide a minimum payment of 80% of the full-time minimum wage for those not in work because of a health condition or disability, paid for by switching to a flat levy rate for employers and removing the maximum threshold for employees.

Here’s the policies in chart and table form

So how might Labour react?

The last time the Greens proposed a wealth tax, Labour completely ruled it out before the election. Finance Minister Grant Robertson didn’t rule in or out a wealth tax in his first comments last night, saying only that Labour’s tax policy would be relased ‘shortly.’

National and ACT wasted no time in trying to insert the Green wealth taxes into any vacuum created in the gap until Labour’s official policy releases.

“This massive tax grab by the Greens is exactly what the country doesn’t need – but unfortunately it is exactly what Kiwis can expect from a Labour-Greens-Te Pāti Māori Coalition of Chaos.” National Finance Spokeswoman Nicola Willis in a statement.

Labour is most likely to adopt the $10,000 tax-free threshold.

Cartoon of the day

‘No golf courses were harmed in the making of this budget’

Ka kite ano

Bernard

PS: Lynn and I are on holiday, so these emails are shorter.

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: National has released its infrastructure policy for the election, opting for a tweaked version of a bipartisan and 30-year-long low-infrastructure-investment and low-public-debt strategy that created our housing and climate crises and has dug a $200 billion infrastructure hole for future generations to live with or fill.

Elsewhere, there’s news in our political economy on climate, housing and poverty, as:

* Chris Hipkins revealed Michael Wood was asked to sell his Auckland Airport shares 12 times, prompting the opposition to call for his sacking;

* Auckland City councillors will decide today on the fate of $2 billion worth of Auckland Airport shares owned by the council, even though three councillors have also declared their interest in Airport shares; and,

* The Christchurch City Council voted 10-6 last night to retain the Park Terrace cycleway in a victory for local cycling supporters against a backlash from pro-car councillors.

Usually, I put in a paywall for paying subscribers at this point in the email newsletter and lock off the podcast above from free subscribers. But I want to experiment until the end of June with publishing everything to everyone immediately to see what happens with subscription rates, revenues and email opening rates. I want to thank paying subscribers in advance, who are still the only ones able to comment and get access to our very active chat section and webinars. Join our community by subscribing in full to support my journalism in the public interest about housing (un)affordability, climate change (in)action and poverty (not enough) reduction.

The holes (still) in National's infrastructure policy

The magic remains strong in the thinking of our mainstream political, economic and infrastructure strategists, despite 30 years of failure. Somehow, voters and other decision-makers keep believing in the magic too, if the policy options and debate are anything to go by.

Somehow, the magicians say, we can have strong population growth, affordable housing, achievable emissions reductions, good public services, low tax, low public debt and no tax on capital gains, inheritance and wealth — all at once.

All it requires is someone else’s balance sheet or wages to pay for it, rather than taxpayers and ratepayers through higher public debt, taxes and rates. Those other private balance sheets of pension funds, overseas investors and developers haven’t yet stumped up their own billions, but the magicians keep pleading: ‘one day they just might pay…one day…with a few more tweaks…voters should believe in the magic….again.’

But the results of 30 years of this magical thinking is far from magical in the housing, climate and poverty crises that are now threatening to overwhelm Aotearoa’s hospital, justice and education systems, let alone the Crown’s balance sheet, if those long-term liabilities were properly costed. Aotearoa now has:

* the highest housing costs in the world and the most stressed renters in the world relative to incomes;

* a climate emissions liability in the current Paris Agreement expiring that Treasury has estimated at up to $24 billion within six years;

* diabetes, obesity and mental health crises that are grinding their way into billions of dollars per year in health and justice system costs, none of which ae costed in the Crown’s future liabilities; and,

* endemically stagnating productivity growth and real-per-hour-wage growth because of a lack of infrastructure, research and development and business investment, along with the corrosive effects of the housing, health and climate crises cited above.

Aotearoa’s political economy now appears trapped in its own special definition of insanity, where it does the same thing over and over again, expecting a different result.

NIMBYs + NOMBY = endemic and growing infrastructure deficits

National’s new infrastructure policy for Election 2023 released yesterday certainly sits within that definition of insanity in our political economy. It still leans heavily on the NOMBY (Not On My Balance sheet Yet) principle that has dominated Governments run by both sides of politics for 30 years. The key is in the ‘yet’. The only reason the results of this failure are not crystallised on the national balance sheet is Treasury is failing to do the actuarial analysis its own ‘Living Standards Framework’ says it should do to assess the Crown’s long-term liabilities.

It is another warmed up version of a policy of trying to shift all the new infrastructure costs and debt to Public Private Partnerships , developers and new home buyers has failed so spectacularly to invest enough to house a fast-growing population and lower emissions enough to avoid a massive climate liability.

National is not alone. Labour has also used the NOMBY approach to mesh nicely with the NIMBY approach at local government level, all in the service of keeping Government debt low to keep mortgage rates low and to keep inflating land values, which is how to win the median voters who only know how to get rich through leveraged and tax-free gains on land values. The only reason it has been politically sustainable for so long is the constant promises of ‘just one more time with feeling and tweaks’ from the ‘grown-ups’ in Treasury and the big consulting firms and banks who promote PPPs and off-balance-sheet vehicles.

At some point someone has to call b******t on the NOMBY + NIMBYs = MAGIC thinking. How many more times will the young renters eyeing up higher-paying jobs with relocation expenses paid in Australia believe that more of the same will change their own disposable income and housing affordability equations.

So what’s in National’s policy? And what isn’t?

National released its infrastructure policy for Election 2023 yesterday, including dumping its Election 2020 policy of creating a publicly-owned Infrastructure Bank and replacing it with a ramped-up version of the existing Crown Infrastructure Partners (CIP). It would 'provide advice and expertise to the Crown on new financing models for infrastructure, including public-private partnerships, tolls, and value capture instruments.'

National said it would bring in long-term city and regional partnerships with councils to plan and manage infrastructure.

But the plan doesn't suggest how much of the Crown's balance sheet would be used to borrow or invest in the plan, or say how much of the $100 billion current infrastructure deficit would be filled, or the further $100 billion needed to cope with 0.5% population growth over the next 30 years.

Although National would make the Infrastructure Commission responsible for a 30-year infrastructure plan, again without any indication of likely population growth. The word 'climate' is not mentioned in the document.

What we’re debating on Chat today

Here’s the most popular Chat thread in The Kākā’s community so far this morning. I put up sneak peeks of this Dawn Chorus to paying subscribers from 6 am onwards.

Quotes of the day

Watch this exchange to see political discomfort

Chart of the day

How China is winning the EV sales racen’s

Cartoon of the day

Ka kite ano

Bernard

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

TL;DR: There’s more awkward political news for Chris Hipkins this morning, with a fresh revelation of an appearance of a conflict of interest for just-stood-down Transport Minister Michael Wood.

Elsewhere, there’s news in our political economy on climate, housing and poverty, as:

* National dumps its support for He Waka Eke Noa, which was supposed to price farm emissions before a Zero Carbon Act deadline of January 1, 2024;

* Foodstuffs warns of a 57% increase in shoplifting early this year;

* James Renwick asks if Aotearoa is ready to become a climate refuge; and,

* we’ll find out later today if Christchurch City Council’s pro-car councillors will be able to vote through the dismantling of the Park Terrace cycleway.

Usually, I put in a paywall for paying subscribers at this point in the email newsletter and lock off the podcast above from free subscribers. But I want to experiment until the end of June with publishing everything to everyone immediately to see what happens with subscription rates, revenues and email opening rates. I want to thank paying subscribers in advance, who are still the only ones able to comment and get access to our very active chat section and webinars. Join our community by subscribing in full to support my journalism in the public interest about housing (un)affordability, climate change (in)action and poverty (not enough) reduction.

‘For the 6th time Michael, can you please sell those shares?’

The revelation yesterday that Michael Wood didn't sell his $13,000 worth of Auckland International Airport shares after six warnings from the Cabinet Office was messy and 'unacceptable' enough for PM Chris Hipkins to stand Wood down as Transport Minister until it was 'resolved'.

It's about to get messier. Thomas Coughlan reports for NZ Herald this morning that Wood blocked a plan for a new airport on the North Shore in 2021 to be formally made an Airport Authority, while owning the shares secretly, and despite officials saying it was a good idea.

In my view, Wood will probably survive and be brought back as minister after multiple mea culpas and a share sale. There are much bigger conflicts of interest at play here and plenty of reasonable reasons to stop the creation of a North Shore Airport Authority. The 51%-state-owned Air New Zealand is deeply invested in Auckland Airport being Auckland’s only commuter airport for a start.

But it's uglier today than yesterday. Hipkins and Wood will not welcome the distraction sucking up political oxygen for a day or two and frustrating Labour’s campaign to focus voters’ attention on the ‘Coalition of Cuts’. Instead, this plays into National/ACT’s attempts to frame the Government as the ‘Coalition of Chaos’.

ACT Leader David Seymour called for Wood’s dismissal as Transport Minister this morning.

And there's collateral damage. Wood's wife, Auckland City Councillor Julie Fairey, has also had to revise her pecuniary interests declaration to include Wood's ownership stake. Sigh.

Bipartisanship breaks. First it was MDRS. Now it’s HWEN

Another bipartisan position aimed at solving a long-term and politically very-thorny problem has dissolved.

National's new(ish) Agriculture Spokesman Todd McClay confirmed yesterday to reporters in the Press Gallery the party had dropped its support for the consultative He Waka Eke Noa (HWEN) process designed by Labour to work with farmers to shimmy their nitrous oxide and methane emissions into some sort of split-gas reduction scheme somewhere near the farmgate. (Marc Daalder via Twitter)

McClay says National will reveal its own policy to reduce on-farm emissions some time before the election, possibly in a few weeks, which might or might not include some attempt to price farmers’ emissions. Somewhere. We hope.

“It feels to me like He Waka Eke Noa is all but dead. And it’s the Government’s fault. They ran out of time. They’ve shown extreme bad faith to the sector. And now they’re dreaming up taxes that put up the price of food and put farmers out of business.” Todd McClay

HWEN was already in trouble and appears to have been put on the back-burner by the Labour after farmers were unhappy last year the Government rejected their plans to claim all the emissions-offsets from their new trees near rivers and streams against their methane and nitrous oxide emissions.

The clock is ticking though. Labour has said it wanted to start legislating something for the Agriculture sector before Parliament rises on August 31 for the October 14 election. Cabinet was supposed to decide on ‘something’ earlier this year, but talks with farmers have gone awfully quiet.

Currently, there has to be a price for farming emissions by January 1, 2025 under the existing Emissions Trading Scheme and the new Zero Carbon Act. There are only 25 sitting days left and last week Agriculture Minister Damien O’Connor said he ‘probably’ wouldn’t propose a tax on nitrogen fertiliser to Cabinet as a way to price emissions by farmers.

National’s bi-partisanship on climate issues was always predicated on the ideas that emissions could be reduced without increasing prices much or reducing farmer or business incomes much. As the rubber as gotten closer to hitting the road, it’s become clear that’s not possible. The magic in the thinking is dissolving.

National’s approach while in Government was to buy dodgy credits from Ukrainians and Russians described as connected to the mafia. When National eventually stopped doing that because it had been exposed as dodgy and wouldn’t be accepted by the climate referees, this time-buying exercise was always going to be in trouble.

Now trouble has arrived. For everyone.

Shoplifting sirloin steaks and boxes of beer to order

This will get some attention today. Foodstuffs North Island (Pak'n'Save, New World, Four Square) reports this morning that shoplifting incidents in its stores are up 57% to 2,541 in the February to April quarter from the same quarter a year ago, with an increasing number of brazen 'walk-in-pick-up-and-walk-out' cases of shop-to-order crime. 1News

Foodstuffs North Island CEO Chris Quin cited one instance of a repeat offender stealing 31 whole eye, scotch, and sirloin fillets over a period of weeks, valued at almost $3,200.

"Our grocers have never seen retail crime at these levels. It's an extremely concerning trend and it's unacceptable.

"Retail crime is coming through the front doors of grocery stores and impacting our teams every day. Grocers are focused on keeping their people safe and that means investing in de-escalation and conflict management training and helping people to cope in a situation which involves aggression.” Foodstuffs North Island Chris Quin via 1News. 

We've seen this personally at a Countdown we shop at in Auckland. A couple of weeks ago Lynn was there when a beefy looking guy strolled in, picked up two boxes of beer and, as the store’s security guard trailed him at a distance quietly asking him to please stop, just walked out with his spoils.

So what happens if we become a climate refuge?

Keep any eye on this as well. University of Victoria Climate Scientist James Renwick told Jesse Mulligan on RNZ yesterday that Aotearoa's relatively benign position dealing with a warm climate would make us attractive as a climate refugee destination, which we needed to think about.

"A lot of people around the world are going to look at this country and think, 'oh, would be quite a good place to go to avoid some of these extreme events we're experiencing where I live'.

"We might have a lot of people who want to come here to live to get away... So how we deal with that, how that plays out, I think as an important issue - whether we end up with a much larger population because we are this climate change oasis. I'm not entirely sure. But there are consequences of being a country that doesn't feel the effects of climate change quite so intense as some others." James Renwick via RNZ.

I've been pointing to this recently. There's going to be about 100 million rich people able to migrate in our Asian hemisphere (China/India/Indonesia) out of a couple of billion living on increasingly uninhabitable land by 2100.

Going north into Europe, North America and Siberia (!) will be very difficult. All they can look to in the liveable south is parts of Australia and all of Aotearoa.

We have no plan or strategy to deal with this. Or any debate. We should have one. My view is we should plan for ongoing population growth of around 1.5% to 2.0% per annum for the next 70 years or so, which would mean our population would be on track to grow to 17 million.

We’re certainly not investing on that basis, even though most the infrastructure, houses, public transport, pipes, roads, hospitals and schools we’re building now will still be around 2100, when our climate might be two or three degrees warmer.

A dam breaks, and there was a surprise rate hike

Overseas overnight, Ukraine accused Russia of blowing up a dam to flood a large part of the war zone of southern Ukraine near Crimea, warning it could cause a nuclear accident because the dam's water is used to cool its reactors.

Also, the Reserve Bank of Australia announced last night hiked its cash rate by 25 basis points to 4.1% last night, which only a third of economists had expected. However, last night China's authorities did a bit of monetary policy easing, telling banks to cut their deposit rates to push consumers into spending more. Reuters

Elsewhere, the World Bank announced it had lifted its growth forecasts a bit for this year, but cut them for next year by more.

Will the Park Terrace cycleway survive?

I’m watching out today for the result of the vote by Christchurch City Councillors on whether to rip up the pop-up cycleway on Park Terrace.

It has turned into a flashpoint in our own little culture war brewing between urban activists in favour of cycling and medium density living, against double-cab-ute driving suburbanites aggrieved about the repurposing of traffic lanes and parking space they feel entitled to.

The Press' Editor Kamala Hayman took the unusual step of writing an editorial favouring the retention of the cycleway at the top-right position of page three. That's as close to a front-page editorial as you can get, without quite taking the final step. Good.

What we’re debating on Chat today

Here’s the most popular Chat thread in The Kākā’s community so far this morning. I put up sneak peeks of this Dawn Chorus to paying subscribers from 6 am onwards.

Quotes of the day

A ‘life admin’ problem

“I’m not sure that Michael himself even has a really good explanation for that - it would simply be one of those life admin tasks that he doesn’t seem to have gotten around to. I don’t think that that’s acceptable, having indicated back in 2020 that he was intending to dispose of them, he should have done that.” PM Chris Hipkins talking in yesterday’s post-Cabinet news conference (YouTube 19 mins in) about Michael Wood’s failure to sell his Auckland Airport shares after six warnings. Wood said he had been busy and information on his holding had been sent to an old email address.

Chart of the day

How Joe Biden’s green industrial policy pivot is playing out

Map of the day

Canada’s worst-ever wild fires blanket the United States in smoke

Cartoon of the day

Ka kite ano

Bernard

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