The Kākā by Bernard Hickey

TL;DR: There’s another call this morning to lower the voting age and to lower the threshold for parties to get into Parliament under MMP.

Elsewhere, there’s news:

* most social homes in Wellington’s high rise apartments don’t have sprinklers;

* Michael Wood faces accusations he breached the Cabinet Manual because he didn’t disclose ownership of Auckland Airport shares while Transport Minister;

* Christchurch Hospital surgery waiting lists are worsening because of a lack of anaesthetic technicians; and,

* Singapore decided to turn its last race course into public housing.

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.

‘Let’s have another go at this…’

The Independent Electoral Review chaired by Deborah Hart recommended in its interim report this morning that:

* the voting age be lowered to 16;

* the threshold for a party to be elected to Parliament be lowered from 5.0% to 3.5%;

* that the coat-tail provision allowing ‘extras’ to come in with an electorate MP be removed; and,

* a binding referendum to increase terms of Parliament from three years to four years be held.

Don't get your hopes up. This has been recommended before, but both major parties quite like the status quo.

Few sprinklers in Wellington’s high-rise social housing

It turns out just one block of just one of the many apartment buildings owned and run by the Wellington City Council has sprinklers, leaving hundreds of tenants living in high-rise apartments without the key fire safety measure, The Post-$$$’s Tom Hunt reported this morning, with confirmation by Mayor Tory Whanau.

Yet again, our housing crisis dominates everything and shows how low and poor our social housing stock has been allowed to become because of the government and council drive for low public investment, low debt and low interest rates.

Hospitals in crisis this winter, both in A&E and in surgeries

Surgeries at Christchurch’s hospital remained badly affected by a lack of anaesthesiologists in April, The Press-$$$’ Kristie Boland reported this morning.

Data released via the the OIA showed 22.4% of surgery lists were cancelled in April, worse than the 15.9% cancelled in March when the hospital introduced a reduced schedule for surgeries due to an ongoing shortage of anaesthetic technicians.

This is what 20 years of underfunding of operational and capital spending does to a system having to deal with real-per-capita spending cuts for years on end, and now having to respond to poaching from Australian hospitals.

‘I own Airport shares? Best I sell them then’

National said this morning that Transport Minister Michael Wood had committed major breaches of the Cabinet Manual because he failed to disclose his ownership of $13,000 worth of Auckland International Airport shares between late 2020 and early 2022 while Transport Minister.

Paul Goldsmith said Wood’s position may be untenable because of conflicts of interest. Wood’s office told the NZ Herald’s Thomas Coughlan the minister planned to sell the shares and had wrongly assumed they were held in a trust, which he had declared. Andrew Geddis told Wood might be hauled before the privileges committee.

This doesn't sound fatal to me, but it will be uncomfortable today for PM Chris Hipkins, who is due to do his regular media interview rounds over the next couple of hours this morning, followed by caucus run through the Press Gallery in Wellington before 10 am, Question Time at 2 pm and a post-Cabinet news conference at 4pm.

Debt deal done; ‘Goldilocks US jobs; Singapore picks homes over horse races

Overseas, US President Joe Biden signed a deal increasing America’s debt ceiling for a couple more years, staving off a default that could have been as early as this week.

Elsewhere, Saudi Arabia announced yesterday it would cut oil output by further one million barrels a day in July to stop prices falling. They bounced 1% on the news.

US stocks firmed over the weekend and this morning after a ‘goldilocks’ set of labour market data showed stronger than expected jobs growth with weaker than expected wages growth, leaving most in the markets comfortable with their view the US Federal Reserve will pause hikes next week.

Also, Singapore announced its only horse racing track on 120 hectares of land would close next year to free up land for public housing. Channel News Asia

Coming up, watch for possible RBA rate hike this afternoon

Coming up, about a third of economists think the Reserve Bank of Australia will hike its cash rate by 25 basis points to 4.1% at 4.30 pm today.

I’m also watching out for the resumption of Parliament today at 2pm and a post-Cabinet news conference at 4pm.

Tomorrow, Christchurch City Council has a key vote on the Park Terrace cycleway. Have a listen to Friday’s Hoon for more detail on that from councillor Sara Templeton.

On Thursday, Auckland City Council will have a final set of votes on its budget plan, with the big question being whether $2 billion worth of airport shares will be sold, or the Council instead opts for higher rates increases and/or more borrowing.

What did I miss? What do you want me to cover?

What we’re debating on Chat today

Here’s the most popular Chat thread in The Kākā’s community today.

Quotes of the day

A just transition in Hawkes Bay?

Tangoio Marae trustee Evelyn Ratima describing the shock of being told the Marae’s land was being red-zoned, while a housing development close to the beach was not:

"Like a kick in the guts and a punch in the heart.

"All this land was confiscated from us - this is what the government left us with. They knew it was a flood zone, we knew it was a flood zone - but we lived in it, built in it, and made it our paradise." Tangoio Marae trustee Evelyn Ratima via Alexa Cook’s piece on Newshub last night.

"It smells of inequities, it smells of those that have more money, have more opportunity to stay there and continue to build holiday homes on that part of the land." Ngāti Kahungunu chair Bayden Barber via Alexa Cook’s piece on Newshub last night.

What the exodus to Australia looks like

“When I sold my car to a dealer, the seller asked me the reason why. When I told him, he mentioned that every day he had two to three customers selling their car for the same reason: moving to Australia.” Former Henderson resident Sabrina Rey talking about moving to Australia with her young family after buying a house in west Auckland so they could earn more there to pay the high mortgage costs here, via Geraden Cann’s reporting in Stuff.

Chart of the day

Map of the day

Milestones and people moves

Former PM Jacinda Ardern was named a Dame for services to the state in the King’s Birthday honors list.

Business and political journalist and editor Colin James was awarded a Companion of the New Zealand Order of Merit.

Investigative journalist Nicky Hager was awarded an Officer of the New Zealand Order of Merit.

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

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

* The Labour Government’s announcement it would share the costs with councils and insurers of buying back about 700 now-uninhabitable homes (~$1 billion) and protecting another 10,000 at-risk homes (un-estimated) from extreme climate events after Cyclones Hale and Gabrielle, but couldn’t say how much it would or could pay, and how much it expected or would force councils and insurers to pay; Friday’s email

* Data this week from CoreLogic, Realestate.co.nz and Barfoot and Thompson showed a bottoming out of an 18-month slide in house values in a tightening market, with listings at a 16-year low in May and sales in Auckland up 53%; Thursday’s email

* I argued a clear victory for National/ACT in the October 14 election could unleash an immediate 10-20% bounce in house prices in auctions and open homes in late October and November; Wednesday’s email

* NIMBY groups were cock-a-hoop this week, calling on councils and the Government to completely abandon the MDRS housing densification rules in the wake of National’s backflip on a bipartisan deal once seen as the hope of a generation; Tuesday’s email

* Chris Bishop detailed National’s new housing policy for Election 2023 that confirms a National Government would not force councils to allow the building of three three-storey townhouses on a regular section without a resource consent — known as MDRS; 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:

* 5.10 pm - 5.20 pm - University of Otago Professor Robert Patman on drone attacks on Moscow and Kyiv and Turkey’s election result;

* 5.25 pm-5.35 pm - Newsroom National Affairs Editor Sam Sachdeva on his just-published book ‘The China Tightrope;

* Wellington City Councillor Tamatha Paul on the politics of Lets Get Wellington Moving and the great battle for the Thorndon Quay cycle way; and,

* 5.45 pm to 5.55 pm - Christchurch City Councilor Sara Templeton on the politics of the Park Terrace cycleway drama.

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

How big does Chris Bishop want us to be? - National’s Housing Spokesman Chris Bishop wants councils to zone enough land with enough pipes and roads to house 30 years worth of population growth, but not all through densification. I interviewed Chris for my weekly When The Facts Change podcast about how big he wants Aotearoa to be, and who will pay for all the extra infrastructure needed when that growth is on green fields, given National is less keen on brownfields medium density development.

Chat thread of the week

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: Our planet is now warming and generating extreme climate events faster than our politicians, voters and institutions can agree to reduce the costs and share the burden of those events fairly now and in future.

That was evident in a range of delays, non-responses, finger-pointing fudges and distractions thrown up yesterday by Aotearoa’s politicians, who by default have decided to force today’s costs down onto those who can least afford it, and push tomorrow’s costs onto those who can’t do anything right now to stop it. See those examples below.

News elsewhere from Aotearoa’s political economy on climate, housing and poverty:

* a third of babies overall and more than half of all Māori babies under six months old are now not fully vaccinated, up substantially from before Covid; The Post-$$$

* Thomas Coughlan reported for The NZ Herald this morning he understood “from people familiar with the matter that the Ōtaki to north of Levin (O2NL) expressway could cost as much as $1.9 billion based on one recent costing,” which would be up by $400 million from the last official estimate; and,

* The Earth Commission’s group of more than 40 researchers published a study in Nature overnight showing humans had pushed seven of the planet’s eight physical boundaries into areas that risk causing mass displacements, migration and conflicts.

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 bill has arrived and the grown-ups won’t pay

The understandable instinct of any leaders when confronted with a costly and unpopular choice is to play for more time and information, hoping new less painful options are magicked up, or the delay is long enough that today’s voters and shareholders aren’t around to bear the costs when they finally can’t be avoided.

That strategy — it’s more of a set of instincts — can work when the tectonic forces driving those costs and decisions is slower than the decision-making processes. Democracies, organisations and societies captured in the status quo have the slowest processes, in the absence of immediate existence-threatening crises.

Yesterday, the failure of Aotearoa’s political instincts and metabolic rates to deal with the escalating pace of human-induced climate change was starkly on display in a series of events, announcements, non-decisions and blatherings, including:

* the Government yesterday announced it would share with councils and insurers the cost of buying back about 700 now-uninhabitable homes (~$1 billion) and protecting another 10,000 at-risk homes (un-estimated) from extreme climate events, but couldn’t say how much it would or could pay, and how much it expected or would force councils and insurers to pay;

* the Deputy Mayor of our biggest and most-heavily-affected city, Auckland’s Desley Simpson, expressed alarm this morning that the Government hadn’t said how much of the sharing it would do, saying her ratepayers couldn’t pay;

* the Mayor of that city, Wayne Brown, yesterday tried to stop the country’s largest news gatherer and its (only) two television news broadcasters from attending and reporting on his very-public announcement of how he wanted our second-largest Government to respond to these climate shocks financially by cutting social spending and selling a share of the country’s most profitable monopoly, in order to protect home-owners from higher interest rates;

* the Mayor of our second-largest city, Christcurch’s Phil Mauger, ramped up efforts to rip out the safety bollards his own council screwed into one of its busiest roads to protect cyclists, just so drivers could get a lane back to pump more emissions into the climate;

* the leader of one of our four biggest political parties, ACT, said the Government was setting a dangerous precedent by agreeing to fund part of the buy-outs, which was likely to lead to councils being even more restrictive with consenting for new homes; and,

* a group of shop-owners in our third-largest city, Wellington, escalated their two-year-long legal challenge to a plan to remove 145 angled car parks outside their shops in order for the busiest commuter route into the city to have a safe cycle lane.

News briefly elsewhere…

Hawkes Bay Regional Council, which estimates its total Gabrielle flood repair costs $885 million, is fighting with the Government’s National Emergency Management Agency (NEMA) over who will pay for emergency costs. RNZ (Lauren Crimp)

NZ Post dropped service to 25% of the world, and no one knew. Newsroom Pro-$$$ (Nikki Mandow)

Government may invest up to $56 million to subsidise less-carbon-intensive inshore fishing fleet. Newsroom-Pro-$$$ (Andrew Bevin)

Kāinga Ora downsizes KeriKeri housing development by a third to eight homes and adds two car parks to 16 parks after protest by 800 residents against three-story development. NZ Herald

National MP David Bennett, who will retire at this election after being an MP for 18 years, apologises for saying Commerce Commission staff ‘need a bullet.’ RNZ

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 are fresh signs this morning the housing market-with-bits-tacked-on economy is brightening up going into winter, and just four months to the day before voting starts.

Data this morning from CoreLogic and Realestate.co.nz show a bottoming out of an 18-month slide in house values in a tightening market, with listings at a 16-year low in May. Sellers are happy and able to sit on their hands to wait and see if they can benefit from a 10-20% surge in prices (in my view) after a potential change of Government in the election on October 14. Overseas voting starts on September 27 and advance voting starts on October 2.

News elsewhere from Aotearoa’s political economy on climate, housing and poverty:

* business confidence continued bouncing in May, including in residential construction;

* the Government confirmed it had looked at taxing fertiliser, but indicated it probably wouldn’t because farmers opposed it;

* MBIE told Wellington City Council last year to do more fire safety checks on dangerous buildings such as Loafers Lodge because it was auditing at less than fifth the expected rate; RNZ

* Christopher Luxon stumbled again yesterday with his attempts to appeal to the ‘netball mum’ segment of median voters, saying National would re-impose the $5 prescription fee for contraceptives; and,

* stronger-than-expected US jobs figures overnight and hotter-than-forecast inflation data yesterday from Australia again showed how resilient jobs markets have been after the covid lockdowns, including here.

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.

Winter’s coming, but the housing economy is brightening

CoreLogic reported overnight that property values fell a further 0.7% in May from April across Aotearoa, but Head of Research Nick Goodall saw evidence in the data “the current downturn is winding up.” However, he saw affordability keeping a lid on demand in any rebound.

“Amid a stabilisation in the cash rate, slightly loosened loan-to-value ratio limits, reduced supply with fewer people listing their property for sale, strong net migration and a positive turn in Australia’s housing market, there’s confidence that the bottom is approaching.

“Affordability, hindered by high prices and contractionary monetary policy will likely keep a lid on demand for the foreseeable future. More than 50% of the average income is required to service an 80% LVR mortgage in Aotearoa compared to 43% in Australia and if property values and interest rates now start to plateau, this is unlikely to improve.” Nick Goodall in CoreLogic report for May.

One feature in Nick’s report this month was a switch by investors to new builds from existing properties because new builds are exempt from interest deductibility rules.

“Indeed, there appears to have been a change in investor behaviour due to the interest deductibility exemption for new builds. During the first quarter of this year, 34% of settled new builds went to mortgaged investors, while only 19% of existing properties went to the same group.

“After years of relative consistency between these two property types, the diversion appeared from Q1 2021, when the share was 28% for both. For properties acquired before 27 March 2021 interest deductibility is being phased out over a four-year period, for properties acquired after 27 March 2021 any interest incurred (from 1 October 2021) will no longer be deductable.” Nick Goodall

‘I’m not selling until I know if we’re getting new tax settings’

Realestate.co.nz released it’s monthly report on asking prices and listings in May this morning, also saying it was seeing the market bottoming out, particularly as new listings fell again to a 16-year low of 7,359, down 18.1% from a year ago.

The number of homes for sale or stock on hand was up with 0.8% from a year ago to 26,685, which equated to 22 weeks worth of inventory at current sales rates. That is below the long-term average of 28 weeks.

Businesses more confident in May

ANZ’s monthly business confidence survey for May was released yesterday, showing a rebound in both ‘own activity’ and wider business confidence, with easing price and cost pressures, albeit in a slow and sticky way. One feature was a solid bounce in residential construction confidence to a seven-month high. ANZ is sticking with its forecast of one more rate hike at the end of this year

Fertiliser tax? ‘Yeah….but…naah….and probably naaah’

Agriculture Minister Damien O’Connor confirmed yesterday in Parliamentary Question Time he had floated the idea of a nitrogen tax with farming leaders, but they had rejected it and he was “probably” not going to bother to put the idea to his cabinet colleagues. Hansard

Farmers were now considering their carbon sequestration options. So we can expect yet more delay on getting farmers to pay for emissions. Essentially, farmers said no again and the Government accepted that and agreed on another delay.

Here’s the quotes from O’Connor in answer to questions from ACT MP Mark Cameron (bolding mine):

Damien O’Connor: The idea of a levy that would have contributed to money for research and development was my idea of a possible good investment. The industry leaders have come back to me and said they don't like that. We now have to sit down and work on the best way forward of following through with He Waka Eke Noa, but dealing with the dilemma that they don't want to pay anything until they've worked out the full analysis of sequestration options. That will take some time. It will take more research and development. The issue is who will pay for that.

Mark Cameron: Will he now rule out a tax on urea; if not, why not?

O’Connor: There has been no considerate, comprehensive consideration of this by Government or by Ministers at all. I've had brief discussions with sector leaders; they've indicated that they don't want to proceed with that. The question I have is whether I should then bother to put that proposal up to my colleagues. I probably think not, but I'm not going to rule anything in or out here and now.

I wonder if anyone else is bothered about some sort of climate emergency thing. See map of the day too.

Council warned it wasn’t checking lodges enough for fire risk

It turns out Wellington City Council wasn’t doing enough fire safety checks on the city’s most dangerous buildings. Phil Pennington reported for RNZ yesterday that MBIE had found the council was auditing 3% of buildings a year, when it should have been at least 20%.

MBIE told the council in September it needed to do more audits of the riskiest buildings, and explicitly mentioned ‘budget accommodation.’ Loafer’s Lodge was passed as safe by the Council. A fire in the converted office building without sprinklers or two working fire exits killed five people last month.

The radar on National’s median-seeking missile isn’t working

Christopher Luxon continues to stumble in his calibration of National’s appeal to the key ‘netball mum’ segment of median voters. Yesterday he dug in on National’s policy to re-impose the $5 prescription fee, and specifically the fee for getting contraceptives.

Luxon wasn’t helped by comments in Parliament by his religiously conservative fellow Auckland National MP Simon O’Connor that families needed both a father and a mother, which Labour MPs portrayed as extremist and homophobic.

The jobs markets that just won’t die, and some sticky inflation

US jobless claims data overnight showed a more resilient jobs market in the world’s biggest economy, which nudged expectations up to around 70% that the US Federal Reserve will have to put up the Fed Funds rate one more time in June. Reuters

Australian inflation data yesterday was also stronger than expected, also strengthening market views the Reserve Bank of Australia might hike again next week. Remarkably strong jobs markets has been a feature of the post-Covid lockdown world, at least outside of China, where fresh data yesterday showed a slowing of momentum in factory output. Reuters

Hastings residents block plan for social housing

Anti-intensification protestors in Hastings appear to have stopped a proposal to build 10 homes for Kāinga Ora on two sections on Ada Street. Click through to the story from Marty Sharpe to see the pictures of the protest sign for a public meeting last month that attracted hundreds of residents, and three of the men opposed to the social housing development.

This is New Zealand today. MSD reported this month there were 696 families homeless in the Hastings district in the March quarter of this year, up from 198 five years ago, including 161 families requiring homes with three or more bedrooms, such as the ones planned for Ada Street. Stuff

What happens when it rains a lot near Rotorua

News briefly elsewhere

Critics of Government water and welfare policies, Mike Joy and Michael Fletcher, have both been made redundant from Victoria University of Wellington’s Institute for Governance and Policy Studies in moves to save money. NZ Herald

Former National MP Parmjeet Parmar is switching to being a candidate ACT for Election 2023. RNZ

Quote of the day

An insight into the Auckland Mayor’s priorities

“There are a lot of people out there with mortgages in a spot of bother, and I feel sorry for them. I don’t want to make it any worse.” Auckland Mayor Wayne Brown talking in an interview with Bernard Orsman for The NZ Herald about his budget plan, which will be presented today, a day later than originally planned. Brown wants to minimise rates hikes to help homeowners with mortgages.

Map of the day

Temperatures hit record highs in 111 Chinese cities yesterday

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 are increasing signs in economists’ forecasts, auction clearance rates, migration rates, divergent tax policies and house building rates that a clear victory for National/ACT in the October 14 election could unleash an immediate 10-20% bounce in house prices in auctions and open homes in late October and November.

A similar thing happened in the wake of the mid-September 2014 election, when investors celebrated the death of Labour’s Capital Gains Tax proposal after then-National leader John Key trounced then-Labour Leader David Cunliffe in debates over Labour’s CGT plan. See more below the fold.

News elsewhere from Aotearoa’s political economy on climate, housing and poverty:

* ANZ’s economists have picked a bottom in the housing market and forecast prices would bounce around 8% over the next 18 months because strong net migration was outpacing new house-building;

* Stats NZ has reported dwelling consents have fallen by at least a quarter in the last four months and house-building is now at least 3,500 dwellings slower than it needed to be go cope with net migration of 43,000 so far in 2023;

* The He Waka Noa talks to limit farming emissions appear to have finally collapsed behind the scenes, meaning officials are now actively looking at imposing a fertiliser tax speculated at $150 per tonne or $91 million per year; Politik-$$$

* Housing Minister Megan Woods has tried to resurrect the bi-partisan housing densification accord with National, but Christopher Luxon appeared to rule out any compromise on his new MDRS-lite approach favouring greenfields’ developments over inner suburban townhouses; RNZ

* But bipartisanship might not be dead yet on transport, with BusinessDesk-$$$’s Oliver Lewis reporting this morning from an interview with Michael Wood that a bipartisan deal on congestion charging was possible before the election;

* Hundreds of residents from yellow and red-stickered homes flooded in the Hale and Gabrielle cyclones are bracing for Government and council decisions to be published tomorrow tomorrow on the prospect of managed retreat and compensation; Stuff

* Auckland Mayor Wayne Brown is set to present his final Budget proposal later today, but he appears to be back-tracking on an earlier back-track at the last minute. In an interview with Bernard Orsman published this morning in The NZ Herald-$$$, Brown threatened to reverse his previous softening of cuts to arts and social services spending unless Labour-aligned councillors Richard Hills and Shane Henderson switched back to their original plans to sell Auckland Airport shares to stop the cuts Stuff; and

* Overseas, Russia threatened retaliation at Ukraine after drones launched from outside Moscow exploded and fell on residential areas in Moscow and more than 350 AI executives, researchers and engineers published a joint one-sentence statement:

"Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war." 350 AI experts in a joint statement.

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.

House prices primed to surge 10-20% if National wins

It’s like deja-vu all over again.

House prices are primed to surge 10-20% soon after any clear National-ACT win on October 14 because:

* house building is again rapidly falling behind population growth from migration;

* investors are salivating over the potential for valuation-boosting return of interest as a taxable expense; and,

* a change of government is expected to both lower borrowing costs and widen a housing supply deficit.

The last time Aotearoa faced an uncertain election result and the potential for a real estate tax change was in 2014. Cunliffe’s fumbling of a Key challenge about the CGT effectively being an inheritance tax on family owned assets in a debate in Christchurch was the spark. House prices rose 10.3% in the nine months after National claimed a third term in September 2014 and by a full 37% during the 2014-2017 third term, although they also went on to rise a further 143% between the election of Labour in late 2017 and now.

A clear win would be the spark into a very dry pile

This time on the eve of a ‘third term’ election, there is even more dry kindling on the housing market pile to catch fire if National/ACT win clearly in their own right, including:

* National/ACT’s promise to repeal Labour’s interest deductibility rules, which would significantly improve the investment case and borrowing capacity of rental property investors;

* National/ACT’s promise to wind the ‘bright line’ test for taxing income from capital gains from landlords back from 10 years under Labour to National’s original two years;

* A likely further immediate slowdown in new house building and consenting if, as expected, National freezes new infrastructure and Kāinga Ora investment to reduce Government spending;

* A faster reduction in the Budget deficit and Government borrowing, which would drag down mortgages rates faster than under Labour, all other things being equal; and,

* An expected further loosening of migration settings to bring in more lower-paid workers to fill labour shortages, which would further increase demand for rental property and reduce wage and interest rate pressure.

All the signs the market is about to bounce are there

Even before the result of the election is know, it’s clear the momentum in the housing market is shifting, with a range of forecasters revising their house price forecasts up in recent weeks.

Te Pūtea Matua (The Reserve Bank) revised its forecasts last week for house prices by 7.8% from its February forecasts, pointing to the rise in demand from migration, both of temporary workers and big surge in those getting residency visas that allow them to buy property.

Between September 2021 and July 2022 the Government made it temporarily possible for immigrants on work visas who met certain criteria to apply for a special resident class visa.2 More than 93,000 applications have been approved so far, increasing the pool of people eligible to buy residential property in New Zealand.

This factor, when combined with strong net immigration, has led to a less negative outlook for house prices. While the outlook for house prices is highly uncertain, house prices are assumed to fall by less over coming quarters than assumed in the February Statement. RBNZ in May MPS (Page 14)

Without any change of Government, Reserve Bank forecast house prices would begin rising in absolute annualised terms by the end of next year. The peak to trough decline from 2021 to 2023 would be closer to 17% than the previously forecast 23% fall.

The Reserve Bank’s decision to keep its forecast peak in the Official Cash Rate at 5.50% also removed any immediate prospect of any further rises in fixed mortgage rates, helping to bolster house value prospects.

Actually, average fixed mortgage rates for two year and three year terms have fallen by 10 basis points and 40 basis points respectively since December. The two-year and three-year wholesale ‘swaps’ rates that the fixed rates are based on have fallen by 30 basis points and 20 basis points respectively since December, Interest.co.nz data shows. Wholesale interest rates are now only just above where they were during the 2014 election campaign and three-year fixed mortgage rates (6.23%) are actually slightly below where they were in the 2014 election campaign (6.45%).

National/ACT have yet to detail their fiscal policies and how much further downward pressure they would put on interest rates, but National Leader Christopher Luxon and ACT Leader David Seymour have both emphasised they would be tighter with the ‘purse strings’ than Labour. They have also promised tax cuts of some kind, which would increase disposable incomes for home owners already flush with equity to further leverage up their investments with more purchases.

There is ample potential for lower interest rates, more borrowing, less housing supply and more population growth to increase prices by another 10% on top of the tax change benefit of 10%.

Green shoots are popping up all over the place

Swapping metaphors, a change of Government would add water and heat to a market already showing plenty of green shoots, as ANZ’s economists pointed out yesterday in their monthly property market note titled: On the floor, ready to floor it?

ANZ increased its own forecasts by around eight percent, even with another rate hike that the Reserve Bank is not itself expecting.

Here’s ANZ’s reasoning (bolding mine):

“The RBNZ’s relatively muted response to surging netmigration and additional fiscal stimulus in the May MPS surprised us. Ultimately, for a time at least, this implies looser monetary conditions than we have been expecting. This, combined with surging net migration and the confirmed loosening in LVR restrictions from 1 June, has led us to upgrade our house price forecast. '

“We now expect quarterly house price inflation to return to around its historical average pace over the second half of 2023 before sticky inflation (and its implications for the OCR outlook) puts renewed upwards pressure on mortgage rates. Net migration is a huge wild card for the outlook currently.

“The recent explosive pace alongside slowing construction activity is resulting in a rapidly widening housing deficit, adding pressure to house prices. In short, housing tailwinds now appear to be blowing a little stronger than the headwinds.” ANZ economists in their May Property Focus note.

In particular, they focused on the growing supply imbalance as housing supply growth stalls and population growth from net migration surges.

They also noted tight supplies of houses for sale as owners who are not any pressure from their banks wait for the election, rather than take low prices now.

“While sales are low, new listings are also very weak, and that’s helping to keep the market relatively tight. Low levels of new listings also suggest that households and investors aren’t being forced (at least en masse) to sell up because of rate rises.

“Putting it all together, we are seeing a tentative tightening in the market, with the number of properties available for sale off recent highs.

“Auction clearance rates in Auckland certainly suggest this market is coming back to life quickly, and even suggests some upside risk to our forecast.” ANZ economists.

ANZ’s economists also pointed for the potential for changing LVR rules and tax settings to turbo-charge the rebound.

“Policy changes will matter too. The LVR changes could provide a near-term shot in the arm, but even more important is the future of the deductibility of interest payments on investment properties when calculating expenses for tax purposes.

“It’s uncertain whether the risk in practice is that the non- deductibility policy staying will cause a flurry of sales, or whether the policy going will cause a rush of purchases. But either way it’s potentially a big driver of the market this year.” ANZ’s economists

The potential for the election result to be an inflection point for house prices is strengthening, further raising the stakes in the election campaign for land owners and renters.

Just as our economy is a housing market with bits tacked on, our political calculus is often also a housing market with bits (taxes, migration settings, fiscal policy, state house building) tacked on.

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: NIMBY groups are cock-a-hoop this morning, calling on councils and the Government to completely abandon the MDRS housing densification rules in the wake of National’s backflip on a bipartisan deal once seen as the hope of a generation.

The residents’ groups also called (in reports in The Press-$$$ and The NZ Herald this morning) for a halt to greenfields housing developments in our two biggest cities as well, saying there was plenty of land already zoned for housing. See more detail below.

News elsewhere from Aotearoa’s political economy on climate, housing and poverty:

* Hundreds of Nepali migrants who paid agents for work visas and jobs here are now living and working like slaves in Aotearoa, Lincoln Tan reports for The NZ Herald;

* Despite talk of recession and incomes not keeping up with inflation, Stats NZ reports Aotearoa’s economy created 13,193 jobs in April and grew gross earnings at an annual rate of 8.96%, well ahead of CPI inflation at 6.7%;

* Tiwai Point is set to keep turning 13% of Aotearoa’s renewable power into 660,000 tonnes of carbon emissions each year for another 15 years, Marc Daalder reports for Newsroom;

* A Wellington City Council review has found another 25 Loafers Lodge-style high-density boarding houses operating in the city, including four without building warrants of fitness Stuff; and

* National’s Chris Bishop had to pull Transport Spokesman Simeon Brown back into line after Brown suggested National was opposed to bilingual road signs. Biship said National approved the bilingual signs in principle. NZ Herald

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.

NIMBYs want MDRS dumped and greenfields' stopped too

Anti-densification residents’ and ratepayers’ groups in Auckland and Christchurch are cock-a-hoop over National’s partial backflip on MDRS over the weekend and have ramped up their campaigns to stop densification in their areas, and also to stop new housing developments on the fringes, which they believe they’ll have to subsidise.

Christchurch’s Combined Residents’ Associations (CRA) called yesterday on the Labour Government to ditch its stance on housing intensification and for the city to halt work on new rules until after the general election, Liz McDonald reported in The Press-$$$ this morning.

It also called for an end to re-zoning of farmland into ‘greenfields’ residential areas on the fringes of Christchurch and challenged National’s retention of support for six-storey buildings on rapid-transit routes in this statement (my bolding):

“CRA still has significant concerns about allowing developers to build six storey apartment buildings along transport corridors and around shopping centres, unless it can be proven those heights are needed to meet housing demand, and it is done in accordance with already-established council controls.

“It also wants councils to ensure greenfield development is not approved on highly productive rural land.” Combined Residents’ Associations (CRA) Christchurch statement.

The CRA went on to call for the full demolition of MDRS, given the bipartisanship was over, and a suspension of Christchurch’s ongoing District Plan rewrite for MDRS:

“CRA now suggests the Independent Hearings Panel process in Christchurch be immediately set to pause, to avoid wasting more ratepayers’ money on a process that is now deeply uncertain.”

“The government has already indicated a desire to “tweak” the legislation in response to National’s proposal, so there will inevitably be some changes after the election, whatever the outcome.” CRA

Auckland NIMBYs celebrate and push for more too

Auckland’s Character Coalition called for a complete rethink of the MDRS legislation and also opposed new greenfields developments, Bernard Orsman reported this morning in The NZ Herald

Coalition spokesperson Sally Hughes wrote she was pleased the bi-partisan political support for MDRS had evaporated, and said the alternative greenfield developments backed by National were ‘problematic’ too. Here’s more from her statement (bolding mine):

“It’s not a binary issue. It’s not a choice between either intensive housing or sprawling housing. We need more affordable housing and more of it. Character Coalition has always acknowledged that, but greenfield development brings challenges too; with poor transport choices and infrastructure deficits that are already constraining Auckland. The Coalition’s position is that it’s possible to preserve both character and heritage and intensify the city.

“Auckland’s Unitary Plan allowed for planned intensification with an identified 900,000 sites across Auckland allowing for population growth for the next 30 years.” Character Coalition spokesperson Sally Hughes statement

YIMBYs despondent as bi-partisan hope dissolves

A City for People, a coalition of Gen Zero, Greater AKL and Coalition for More Homes that has called for more climate-friendly and affordable housing through densification, wrote via Twitter that National should re-commit to the bipartisan deal, although Labour has also sent National a letter saying it was willing to work on tweaks.

Here’s the statement in full. I could bold all of it, but…you get the picture.

“National and Labour’s bipartisan support for making it easier to build more homes was an inspiring moment of political unity. We are deeply disappointed by National Leader Christopher Luxon’s indications that he no longer supports this transformational policy.

“Allowing councils to opt-out of building enough homes is a slap in the face for anyone who wants affordable housing or cares about the environment. Young people should rightly despair for their future if this backdown is the new direction for housing policy in New Zealand

“National's alternative is the status quo: greenfields. The cities in Aotearoa will continue to sprawl outwards. House prices and rents will continue to sky-rocket, locking our young people out of secure housing futures, and pushing more and more vulnerable people into poverty

“More sprawl will force people to be dependent on their cars, spending hours a day stuck in traffic. His vision means more congestion and more carbon emissions – it will become impossible for us to meet our zero-carbon commitments.

“The MDRS are already subject to sensible carve outs - light planes, open space, privacy, and exemptions for sea level rise, flooding and colonial characters. Councils are already are trying to take these too far - they don't need more control.

“Backing down on this policy is bad for the political culture in Aotearoa. We all like seeing the politicians we elected come together and collaborate constructively to build a better future for all of us. We don't like seeing them turn our futures into a political football.” A City for People statement.

So what happens now?

In my view, the debate over densification is now at risk of ‘going nuclear’ and into full ‘culture war’ mode during the election campaign, depending on how Luxon, Housing Spokesman Chris Bishop, Deputy Leader Nicola Willis and Transport Spokesman Simeon Brown decide to deal with it, and assuming they’ve thought about and are operating with some sort of coherent stategy and plan. My fear is they aren’t.

Brown has already nudged into culture war territory with his comments on cycling and a ‘war on cars’ by urban activists. See more below on this. It depends just how much Luxon wants National to appeal to younger voters nearer the centre, or how many votes he thinks can be switched with an appeal to suburban conservatives railing against ‘daylight robbery’, ‘living in hutches’ and ‘too many cars for too few roadside carparks’.

My view so far is Luxon appears not able to pivot back to the centre and do the sort of surprise bipartisan deal that then-National-leader (and Luxon mentor) John Key did before the 2008 election with then Labour PM Helen Clark over anti-smacking legislation. Key was able to stare down the social conservatives in his caucus and win the attention of ‘netball mum’ median voters in the big cities with his surprise stance.

So far, Luxon has done little to rebuke or shut down the more extreme views on social, transport and environmental issues from the likes of Simeon Brown, Chris Penk, Simon O’Connor, Judith Collins, Harete Hipango and Maureen Pugh.

Elsewhere in more detail in our political economy

Bishop forced to pull Brown back on bilingual road signs

National Leader Christopher Luxon continues to struggle to keep National aimed at the centre. Last night Chris Bishop had to pull Transport Spokesman Simeon Brown back into line after Brown suggested on Friday in a meeting with National supporters in Tauranga that the party was opposed to bilingual road signs.

Here’s Brown quoted by the Bay of Plenty Times from last Friday:

“We all speak English, they should all be English” when asked was asked his opinion on Waka Kotahi NZ Transport Agency’s proposal to introduce bilingual signs.

“My view is it will make signs more confusing,” he said, telling the transport agency to just “do your job”.

Labour PM Chris Hipkins accused National of dog-whistling to a racist base with the stance in his post-Cabinet news conference yesterday.

“The current leader of the National Party tried to trademark “kia ora”. So I’m not entirely sure where they’re going with that unless it’s just an outright dog whistle.” Hipkins at his post-cabinet news conference yesterday. Transcript.

Shortly after, Bishop told reporters National approved the bilingual signs in principle.

“If they want to have bilingual road signs with te reo and English on them, that’s fine. But we just don’t think it’s a particularly good use of resources right now.”

He said, however, it was “very important” that English was “extremely prominent”.

“Because that’s what the vast bulk of New Zealanders understand. So we’ve got no issue with bilingualism, but we just don’t think it should be the priority for the Transport Agency right now.” Bishop via NZ Herald

In my view, Brown's culture war-ish stance on the 'war on roads' in Transport is dangerous for Luxon and National. It may win votes from ACT, but plays into Labour's hands, who want to paint National as Brash-like extremists who can't be trusted in power.

FYI, here’s more from Simon Wilson via NZ Herald-$$$ on this:

Elections are won and lost in the middle, according to conventional wisdom. This one is being fought for the hearts and minds of voters who swung to National under John Key and then swung to Labour under Jacinda Ardern in 2020.

Those voters are not angry about uppity Māori. On the contrary, they’re likely to be not just “familiar” with te reo, but pleased about its expanding use. Ruby Tui gave powerful voice to that sentiment when she sang Tutira Mai at the Rugby World Cup.

Tui is a much-loved national hero and it was a thrilling moment, not just because she did it, but because an enormous proportion of the crowd clearly knew and loved the song.

How did that happen? Because in middle New Zealand, kids of all races and ethnicities learn waiata and haka at school, and the tikanga that underpins them, and bring home a degree of cultural competence that’s vastly different from their grandparents’. And their parents are likely to be good with that.

In this “middle”, the use of Māori greetings and placenames is a welcome component of the TV news and widespread in daily use. We have a local language that’s English inflected with te reo, and it’s a living language, evolving all the time. We’re good with that too.

We’re not likely to get freaked out by a marae visit, because whether through school, work, a sports club or in some other context, we’ve done it and learned from it and loved it.

National understands all this. At least, it did under Key and Bill English. Co-governance arrangements were created in a range of situations and, according to Te Arawhiti, the Ministry of Māori Crown Relations, their Government passed into law 46 Treaty settlements, worth almost $1.24 billion. It’s an impressive achievement.

Because of all this, the Key/Ardern voters of middle New Zealand are likely to be repelled by the racism that has emerged on the right. Back on Track? Not if it’s a dog whistle to grumpy voters sick of having to accommodate Māori in their lives.

Which brings us to Luxon’s dilemma. He can’t win both these audiences at the same time, because appeasing either one horrifies the other. Simon Wilson via NZ Herald-$$$

Generating hydro-electric power to produce carbon

Those thinking the massive chunk of renewable power produced at Manapouri (12% of Aotearoa’s total output) and used to smelt aluminium and emit 660,000 tonnes of carbon per year might be available to help our transition to renewable power any time soon should think again.

The Tiwai Point Smelter, which buys electricity from the state-controlled Meridian Energy at 3.5c per kilowatt hour while residential consumers pay about 19c per kilowatt hour, looks set to stay open until 2039, Marc Daalder reported yesterday via Newsroom Pro-$$$. It’s now open to all on Newsroom.

Marc cited a letter from the Rio Tinto-controlled NZAS to ministers in November that he obtained under the OIA saying the smelter thought it could sign a multi-provider power deal until 2039. It's actively in those talks now.

"NZAS [New Zealand's Aluminium Smelter] believes there is sufficient volume across generators' portfolios to develop a long-term, multi-supplier power agreement framework that will enable us to operate through to 2039," the smelter wrote.

BusinessDesk-$$$’s Brent Melville also has a useful piece on the negotiations, including that they’re complex and not assured of success.

Rio Tinto is arguing its aluminium production produces a sixth of the carbon emissions of its many of its global rivals at two tonnes of emissions for each tonne of aluminium produced. It is also angling for a NZ Steel-style chunk of climate fund money from the Government.

The thought of the Government paying Rio Tinto anything like the $140 million it paid to NZ Steel to keep producing aluminium and carbon emissions that represent about 10% of Aotearoa’s likely shortfall of the Paris Agreement would be galling for a few Green Party members…

More detail on Wellington’s housing crisis

It turns out the Loafers Lodge awfulness in Wellington is just the tip of the iceberg. Wellington City Council has identified 25 high density accommodation providers similar to Loafers Lodge, of which four don't have building warrant of fitnesses, Gianina Schwanecke and Tom Hunt report this morning for Stuff.

The review ordered by Mayor Tory Whanau found one of the four lodges is not required to have a building warrant of fitness and the council is waiting on information from the other three building owners.

Ka kite ano

Bernard

PS: I’m sending an early cut of this news analysis directly to paying subscribers who are signed in via the Sutbstack App and Substack’s website from around 6.30 am. We have a great chat over there every day. Here’s a sample:

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: Chris Bishop has detailed National’s new housing policy for Election 2023 that confirms a National Government would not force councils to allow the building of three three-storey townhouses on a regular section without a resource consent — known as MDRS.

Rushed into the announcement after his leader Christopher Luxon let slip in a public meeting last week that the formerly bipartisan ‘Town House Nation’ policy was “wrong,” Bishop said councils could opt out of the MDRS policy, but would have to show they had zoned enough land for 30 years worth of housing demand, both via greenfields and brownfields development.

Below the fold, I examine the full details of the policy, Labour’s reaction and include my analysis of what it might mean for housing supply, councils, infrastructure funding, and house and land prices. I also have a look at the political economy issues at play, including whether and how councils, landbankers, suburban land owners will benefit (or lose). For fun, I have also added a suggested alternative at the end.

Long story short: I doubt MDRS-lite+twists will actually increase housing supply enough to cope with future unplanned and under-invested population growth, let alone make housing much more affordable or rectify past deficits. National is mostly using more of the same policies that have previously failed under both National and Labour, albeit with some tweaks. There are also major unanswered questions around population growth, new social housing funding and what it means for Aotearoa’s climate emissions trajectory.

Long story very short: Suburban home-owning NIMBYs, landlords and landbankers will love it, Councils will smirk and ignore it, and young renters with skills are unlikely to change their plans to re-start their lives and start their families in Australia.

Briefly elsewhere in the news this morning

* Labour confirmed it would keep the age of eligibility for NZ Super at 65 and extend its Apprenticeship Boost programme

* Labour’s leaders contrasted their low-target policies with a National/ACT ‘coalition of cuts’ at their weekend Congress, but without proposing new policies or talking much about its record;

* A 1News/Kantar poll published last night found 52% of voters wanted a tax cut, but didn’t ask how they wanted to pay for it;

* Nearly 600,000 people in Aotearoa have debt to MSD and IRD that averages $4,000 each and totals $2.4 billion, including $1 billion or 42% owed by 217,000 Maori, data out this morning showed; and,

* America’s debt ceiling crisis appears to have been averted by a deal. Maybe.

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.

Inside National's housing backflip with twists and rolls

Assessed as an exercise in a politician swallowing a rat under a very public spotlight, Chris Bishop gave a spirited and relatively smooth account of himself yesterday.

He confirmed in an excellent interview (in full below) with Jack Tame on TVNZ’s Q&A that National had dumped its support for the compulsory (Medium Density Residential Standards (MDRS), saying:

* councils could choose to opt out of the rule that means three three-storey townhouses can be built on a section without a resource consent;

* but councils must immediately zone enough land as residential for 30 years worth of housing demand, although that’s unspecified, or;

* a National Government could use unspecified ‘reserve powers’ to enforce re-zoning if councils didn’t do enough, while:

* National is agnostic on whether councils choose greenfield or brownfield developments, but;

* a National Goverment does retain the current NPS-UD rule that six-storey buildings can be built within walking distance of rapid transit stations; and,

* it beefs up that rule by encouraging mixed-use developments; and,

* a National Government would reduce the amount of land protected for food growing on the fringes of cities.

‘Show us the money then’

The full policy document, which is also embedded below, shows a National Government would:

* offer up to $1 billion in incentives for Councils that consent more homes than their five-year average, which would have meant Auckland received $152 million last year because the incentive is $25,000 per consent;

* reform the current Infrastructure Funding and Financing Act to ‘remove red tape’ to allow councils to create new debt vehicles paid for via targeted rates;

* use ‘value uplift capture’ tools so the Crown could recover funds from land owners receiving private capital gains from public infrastructure investment; and,

* making that infrastructure ‘user pays’, either through development contributions in the hundreds of thousands of dollars, or through targeted rates that depress land values throughout.

Pros, cons and policy gaps

In my view, the highlights, lowlights and cliffhangers from the policy are, starting with the positives:

* retaining six-floor developments within walking distance of rapid transport routes stations and strengthening rules to allow them to be more mixed-use is great, as it will actually allow more city-centre densification;

* the $25,000 per extra consent is positive, although it would overly benefit small and slow growth councils that have not seen the strong growth of recent years experienced in Auckland, Christchurch, Hamilton and Queenstown, and would mean no new funds for those big cities for a few years, given weak demand at the moment;

* talking about Government using ‘value capture’ to fund developments is positive and actually using it would be more than Labour has actually done, although Labour has talked about using it too (see more below in the unanswered questions section); and,

* talking more about requiring land to be zoned to supply 30 years of housing supply is positive, although see more in unanswered questions below.

The negatives are:

* not addressing the issues of Kāinga Ora’s future building programme;

* not including detail in National’s plans to resume community housing capital grants or extend income related rent subsidies (I suspect due to the earlier-than-planned release);

* National not detailing its population growth expectations or plans was disappointing, especially as the key 30-year growth expectations depend on them; and,

* National not adding any net new funding for infrastructure development is disappointing.

Mind the gaps

The key unanswered questions are:

* What population growth levels will National plan and manage for in the 30-year demand growth plans?

* What exact changes in the IFF will encourage councils to use it because only one council (Tauranga) has used it in five years, and only after commissioners were appointed?

* How much will fully funding Greenfield’s infrastructure through targeted rates and development contributions add to new house prices, and reduce land values through targeted rates?

* How much extra net money is going into housing infrastructure, given the $1b is using funds unused in KiwiBuild, the existing Housing Infrastructure Funds and a ban on Kāinga Ora buying new land?

* What measures will force land bankers to release land into the market in a way that improves affordability, when they are currently able to ‘drip feed’ parcels out to keep land prices from falling?

* What are National’s plans for Kāinga Ora’s build programme and grants and subsidies for community housing? They received only passing mentions in the policy document, suggesting it was released in a hurry after Christopher Luxon let slip last week that “MDRS was wrong.” Labour has committed to one extra year of Kāinga Ora house building in 2024/25 to add a net 3,000 homes to the social housing stock. National does not mention its plans.

* What does 30 years of housing demand actually mean? Does it specify enough demand to improve affordability, or enough demand to house population growth? How does it deal with the need to renew the existing housing stock?

* What does ‘within walkable catchments of rapid transit routes and stations mean? Councils have interpreted both the catchments and rapid transport routes and stations in various ways. For example, Wellington City Council voted to say its Johnsonville rail line wasn’t rapid transit, while Auckland Council has actually excluded all the homes along the proposed Auckland CBD to Airport route from any densification pending confirmation of station locations, and the line itself.

Here’s the interview, where Chris does a reasonably elegant job of consuming the hairy little bugger in front of three cameras and a sharp interviewer. He said Luxon let the news slip without telling Bishop because he was asked a direct question in a public meeting about it and gave a non-politicians’ direct answer. I have my request in for an interview with Chris covering the questions and points above. Fingers crossed.

In conclusion…

Long story (not quite as) short: I doubt it will actually increase housing supply enough to cope with future unplanned and under-invested population growth, let alone make housing much more affordable or rectify past deficits. There is a $100 billion infrastructure deficit from past population growth outpacing Government and Council investment in the roads, pipes, trains, schools, hospitals and community facilities needed to cope with 1.5-2.0% population growth.

That compares with the less than 0.5% annual population growth expected in any planning sense over the last 30 years, and over a time when both arms of Government were on a decades-long infrastructure funding squeeze to enable tax cuts and limit rates increases. Then there’s another $100 billion needed, according to the Infrastructure Commission, to fund another 30 years of population growth estimated at 0.5% per year. Remember: population growth is already running at 2.5% per year again. A net zero addition to central Government infrastructure funding to deal with a $200 billion task is just not credible.

It’s always, always about the 30-30 rule

It’s also not credible to rely on some sort of reboot of the 2020 Infrastructure Funding and Finance Act to help councils fund development, which has been a total failure from all viewpoints and has cost at least six wasted years in hoping the private sector would somehow step up with the money. The only reason the first and only and currently last deal was done with Tauranga City Council for $175 million was the centralised control of Commissioners there implanted there by the Beehive. Saying that ‘cutting red tape’ would suddenly give IFF the momentum and scale to make a difference does not inspire confidence. It’s a failed idea. It should be allowed to die on the statutes.

IFF was always about enabling both National and Labour Governments to avoid the tax increases and the debt increases needed to properly fund the infrastructure at the lowest cost. Only the Crown has the balance sheet strength, the long investment horizon and the power to tax allowing the borrowing of large amounts for long periods cheaply. Put simply, the obsession of both flavours of Government with keeping net debt below 30% of GDP and getting tax down to or below 30% of GDP is just incompatible with paying the $200 billion++ infrastructure bill needed to properly handle 1.5%++ annual population growth for decades past and future.

Problems with value capture & fully-user-pays funding at the fringes

Value capture is a positive idea for funding infrastructure, but leaving the power and the revenues with the Crown will always be difficult and again robs councils of agency and revenue streams to solve these problems. Landbankers will lobby very hard against this. It breaks the basic business model of our housing-markets-with-bits-tacked-on economy, which is to buy land with borrowed money and then wait for lower interest rates, population growth, restrained infrastructure investment and no tax on capital gains to generate massively leveraged and untaxed gains much larger and with lower risks than other forms of investment.

The idea of forcing councils to zone land fully residential immediately in the hope of triggering some sort of wave of land supply is also magical thinking. Zoning a chunk of land residential does not mean it can be built on. That requires pipes and roads etc, so it always dependent on the funding for infrastructure.

More expensive homes and ‘lease’-like land is a bad combo

Loading all the costs into development contributions simply adds potentially hundreds of thousands per house to the up-front cost of housing, which only get paid once a house is bought and paid for. It means councils and developers have to borrow to cover that gap between zoning and building anyway. It also discourages large-scale developments because of the issues funding such big amounts on a council or developer balance sheet. It also means that the marginal cost of new housing goes up, which resets the price of existing houses higher. Magical indeed.

The other option is the targeted rate option, but as mentioned above, it isn’t popular with buyers and bankers because it complicates the freehold idea. It looks a lot like a lease, where the valuation is at the whim of whoever controls the targeted rate. Leasehold properties are often unbankable, which means they don’t have access to the juicy leveraged and tax-free gains that home owners are actually chasing.

The end result is the land is re-zoned, land bankers get the immediate benefit of the value uplift, there are endless years of debate and dealmaking to fund the infrastructure costs, and few new houses are built. There’s also the unpriced increase in the Crown’s climate emissions liability, already at up to $23.7 billion, which we can look at another day.

Here’s the policy document in full and I welcome the assessments and questions of paying subscribers in the comments below.

Long story very, very short: Suburban home-owning NIMBYs, landlords and landbankers will love it, Councils will smirk and ignore it, and young renters with skills are unlikely to change their plans to re-start their lives and start their families in Australia.

So how could or should it be done?

I’d suggest:

* a broad-based and low-rate housing and transport infrastructure levy or land tax on all residential-zoned (so not iwi or farm land and including owner-occupied land) of (say) 0.5% per annum, which would raise $5 billion a year on current total residential land value of over $1 trillion;

* that this levy be at least twice that general level (ie 1.0%) for residential-zoned land that is not built on, which would encourage land bankers to get greenfields land serviced and sold, and/or to buy brownfields land that is not subject to the un-built ‘super levy’, and discourage land bankers from getting ‘future urban’-type of zoning that locks out competitors and generates unearned value uplift;

* that the levies are collected by the Crown and shared equally with councils on a per-new-resident basis so both Councils and the Governent can use those regular revenue streams to fund at least $200 billion of borrowings for terms of 30 to 50 years to build the infrastructure necessary for an agreed 1.6% population growth rate to 7.6 million by 2050 and 17 million by 2100;

* that the Government creates a new Ministry or Agency of Works for Housing and Transport that combines the likes of Kāinga Ora, NZTA, the Infrastructure Commission and the Climate Commission to plan and deliver low-emission housing and transport with councils and regional authorities;

* that this Ministry or Agency be legislated with the funding powers above and the Reserve-Bank-styled independence needed to achieve a trajectory towards zero emissions from transport and housing by 2050 and homes being worth four times the median incomes in each town and city by 2050, with renting costs no higher than 30% of disposable income; and,

* that there be no consent fees or development contributions or targeted rates for land owners, developers and home buyers, in order to lower costs and land values.

That would incentivise and fund councils, ministries, land owners, developers and home buyers to plan for zero emissions and affordable homes and transport, with the infrastructure, affordability and emissions to cope with:

* a likely influx of (wealthy) climate refugees from the Asian Hemisphere;

* where at least two billion people will be living in areas likely to be uninhabitable by 2100; and,

* where at least 100 million of those people will have the resources to migrate to somewhere like Aotearoa, which will need the skills, people and resources for a population that eventually hits 17 million that will be living in a climate at least two or even three degrees warmer than pre-industrial times.

It would also more immediately reduce inflation generally, including of rents, and improve health with increased use of walking and cycling and many, many more warm, dry homes close to where people live, learn and play.

Your thoughts? What’s wrong with this? What problems doesn’t it solve. What would the unintended consequences be? I welcome suggestions and insights from paying subscribers in the comments below.

There’s already an active discussion going on here with paying subscribers in the chat.

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 Labour Government’s announcement it would pay NZ Steel $130 million to install an electric arc furnace to cut 800,000 tonnes of emissions a year. Lynn and I travelled to the Glenbrook steel mill south of Auckland for the announcement event. Here’s the analysis and podcast I sent in Monday’s email;

* Very strong net migration in recent months has meant the per-capita stimulus in Budget 2023 was much weaker than the headline figures suggest. Here’s my analysis and podcast in Tuesday’s email;

* The Ministry for the Environment (MfE) is looking at a ‘carbon dividend’ scheme that would recycle cash from the Emissions Trading Scheme (ETS) back into the pockets of consumers, but I argued in Wednesday’s email a better alternative would be to recycle up-front an equal emissions rebate to residents as emissions-reducing vouchers or spending that effectively ‘buys’ even more emissions reductions through, for example, bigger discounts on public transport, electric bike discounts, solar panel installation vouchers and discounted energy-efficient appliances and lights;

* National Leader Christopher Luxon said this week National’s 2021 bipartisan deal with Labour to make it much easier to put three townhouses on a regular section was ‘wrong’, which I wrote in Thursday’s email that Luxon risked killing the hopes of young renters, just to win a few extra NIMBY votes.

* National and ACT pulled ahead of Labour and the Greens in a fresh poll out this week that would see the Opposition elected to Government without the need for another coalition partner, if the poll results were replicated on October 14. I wrote about that in Friday’s email.

What we talked about on the ‘hoon’

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

* 5.10 pm - 5.20 pm - University of Otago Professor Robert Patman on the Belgorod incursion, the Five Eyes warning about China’s Volt Typhoon hackers and Chris Hipkins’ PNG visit;

* 5.20 pm-5.30 pm - CoreLogic head of research Nick Goodall on the RBNZ’s hike and then pause, mortgage rates and house prices;

* 5.30 pm to 5.40 pm - India Logan Riley on Auckland Mayor Wayne Brown’s partial U-turn in budget cuts and struggles getting support for selling the Airport shares; and,

* MRCagney urban planner and SubstackerMalcolm McCracken on National’s MDRS U-turn.

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

How to be less foolish with our pounds - Aotearoa has been penny wise and pound foolish with its investments in maintaining and building public infrastructure and services. This week talked with Well-being economist Katherine Trebeck about how the machinery of government, politicians and voters can think and plan differently to avoid that same pound foolishness again.

Chat thread of the week

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 have there as a group.

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: National/ACT could govern alone after October 14 if last night’s 1News/Kantar poll was replicated in the election, although Christopher Luxon remains less popular than Chris Hipkins, who is honing in on trust as a weakness for National.

Elsewhere in the news in our political economy this morning

* Wayne Brown looks set to lose his bid to sell Auckland’s airport shares;

* Nicola Willis is being forced to bring forward the release date for National’s election policy costings;

* Tower is putting up car and home insurance premiums based on local flood, slip and coastal inundation risks;

* Fitch is warning it may downgrade America’s AAA credit rating because of its debt ceiling impasse threatening financial markets and banking systems; and,

* The IEA says solar investment will surpass oil investment for the first time this year.

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 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 exclusive chat section and webinars. Join our community by subscribing in full to support my journalism in the public interest about housing unaffordability, climate change action and poverty reduction.

National and ACT pull marginally ahead

1News published its latest Kantar political poll results last night, showing National and ACT could govern alone after the Labour/Green bloc fell five points and the National/ACT bloc rose three points. The poll was taken in the aftermath of Budget 2023 and after a couple of weeks’ news noise dominated by the defection of Labour Minister Meka Whaitiri to Te Pati Maori, the resignation of Green MP Elizabeth Kerekere and fears Budget 2023 would push up mortgage rates. Green support fell four points and Labour fell one, while National rose three points and ACT was unchanged.

Long story short? National/ACT would have 62 seats in a 120 seat Parliament if these results were replicated in the October 14 election, but MMP elections are usually this tight and too flighty in the middle to be sure about a result. Micro-movements around the median and the size of Te Pāti Māori’s caucus will decide. Assigning meaning or reasons to this poll’s micro-movements this far out is not useful, other than to say the poll was taken after certain events and to leave others to ascribe causality.

Luxon closes his popularity deficit. A bit.

The 1News/Kantar poll also found Natonal Leader Christopher Luxon still trailed Labour PM Chris Hipkins as preferred PM, but the gap closed to seven points from 10 points a month ago.

So what? Luxon still has a popularity and authenticity problem that Labour will try to exploit during the election campaign. A Taxpayers’ Union - Curia poll earlier in the month showed Hipkins’ net favourability falling from its honeymoon highs, but that Luxon’s net unfavourability rating remained negative and the worst for a National leader since the last month of Judith Collins’ leadership in November 2021.

Here’s an example yesterday from Hipkins pouncing on Luxon’s comments about killing National Deputy Leader Nicola Willis’ MDRS policy.

“This was driven by his own deputy, Nicola Willis. So she can’t trust (Luxon) to stick to a policy she signed National up to. New Zealanders can’t trust National to hold a consistent position on anything.” Chris Hipkins via Stuff yesterday.

Pulling a low target slightly forward

National Finance Spokeswoman Nicola Willis said yesterday National would release its Budget costings before the Pre-Election Economic and Fiscal Update (PREFU), which is expected around month out from the election. That’s earlier than Willis previously indicated and comes after CTU Economist Craig Renney called for much more time to examine National’s cost-cutting plans to pay for $8 billion worth of tax cuts.

Long story short? National’s vagueness about exactly what would be cut to pay for its slightly-less-vague set of tax cuts is part of its low-target strategy of giving as little as possible for as short a time possible for Labour to attack. Labour has its own low-target strategy and is just as guilty of starving voters of time to debate its tax policies.

Wayne Brown set to lose Airport sale vote

Auckland Mayor Wayne Brown doesn't have enough councillors supporting his plan to sell Auckland Council's airport shares, Bernard Orsman reports this morning for NZ Herald-$$$, citing an unnamed source that there are 12 votes against the sale and only 9 in favour.

Climate Change getting more real by the day

Tower announced yesterday it would expand its risk-based pricing to include landslide, flooding and coastal hazards for its car and home insurance. Tower was the first insurer in New Zealand to move to risk-based pricing by region and location for earthquakes after the Christchurch earthquakes, which triggered a rash of price increases for the likes of Wellington. Interest

Banks becoming friendlier to landlords

Independent economist Tony Alexander reported yesterday his survey of rental property investors this week showed they were finding it easier to get loans from their banks.

Gamers to run logistics instead?

Research released yesterday by Hanga-Aro-Rau, the government-funded Manufacturing, Engineering and Logistics Workforce Development Council, found the sector needed an extra 4,700 to 18,000 workers by 2028 without some sort of intervention. It suggested recruiting gamers to run drones and robots. The industry certainly struggles to employ young people, as this chart on page 73 of the report shows:

The debt ceiling impasse is getting more real by the day too

Ratings agency Fitch warned overnight it may downgrade the United States' AAA sovereign credit rating because of a failure (so far) by political leaders to agree on lifting the US Government's debt ceiling before 'X' date, thought to be June 1, which would force the US Treasury to stop making payments, including eventually defaulting on US bonds.

Where is our solar surge?

The International Energy Agency reported overnight it saw global investment in clean energy rising to US$1.7t in 2023, with solar investment set to surpass oil investment for the first time. So why is New Zealand so slow in incentivising and rolling out solar?

Risky business model

Yevgeny Prigozhin, the boss of Russia's Wagner Group mercenary army, said overnight Russia could face a "revolution" and lose its war in Ukraine unless the country's "elites" fully commit to the fight and put the country "into North Korea mode". He should stay clear of open windows in high buildings and politely decline offers of tea.

Not so hot

Germany fell into a technical recession in the March quarter after all. Fresh data overnight revised German GDP to a fall of 0.3% from being flat. A warmer-than-expected winter had earlier squashed fears of a deep European recession over winter.

Coming up

Paying subscribers should look out for email invites to my weekly Ask Me Anything session for an hour at midday and our weekly webinar wrapping up the week’s news with Peter Bale at 5pm called ‘The Hoon’.

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: National Leader Christopher Luxon looks set to abandon within weeks the bipartisan ‘Townhouse Nation’ policy agreed and championed by his deputy Nicola Willis and his housing spokesman Chris Bishop.

He has caved to the NIMBYs in his party who are campaigning to stop houses being built anywhere near them for all the migrants they (paradoxically) want employed to provide the services they need to keep living in those houses. These NIMBYs essentially want new New Zealanders to drive much longer to work than they already do, and are relaxed or unaware about the brutally high housing costs and emissions liabilities this will impose on first home buyers and renters alike.

It either hasn’t occurred to them or hasn’t been explained to NIMBYs that they are sentencing themselves to watching their grand-kids grow up in Australia on WhatsApp, and are deciding to pass on crippling climate emissions liabilities to any of their offspring still left in this country. (See a lot more analysis and detail below the paywall fold).

Elsewhere in the news in Aotearoa’s political economy today

* The RBNZ surprisingly dovish rate hike drove wholesale interest rates down about 35 basis points yesterday and could lead to mortgage rate cuts before the election;

* The RBNZ saw the Government’s spending and taxation tracks as helping, rather than hindering, its inflation fight, which contrasted with the Opposition’s accusation that Budget 2023 would lead to higher mortgage rates;

* There are 723 kids and over 1,500 people overall who are living in motels in Christchurch with an average stay of over six months, Sinead Gill reported for The Press-$$$ this morning;

* The European Central Bank published a research paper that estimated that the climate change expected by 2035 would cause global increases in annual food and headline inflation of 0.92-3.23 and 0.32-1.18 percentage-points per year respectively; and,

* Talks between Democratic US President Joe Biden and Republican speaker of the House of Representatives Kevin McCarthy about raising the US debt limit stalled overnight, increasing the risk the US Government would run out of cash as early as next Thursday and default on its debt — an event feared as catastrophic for global financial markets and banking systems that rely on US Treasury bonds as liquid and safe investments underpinning their balance sheets.

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 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 exclusive chat section and webinars. Join our community by subscribing in full to support my journalism in the public interest about housing unaffordability, climate change action and poverty reduction.

Luxon kills the hopes of the young to win the votes of the old

National Leader Christopher Luxon told voters in Birkenhead yesterday that the Medium Density Residential Standards (MDRS) that Willis shaped with Labour Housing Minister Megan Woods in 2021 were a mistake. The MDRS essentially allows the building of three three-story townhouses on a regular suburban section without a resource consent. Luxon said he preferred greenfields housing development.

Here’s what he was reported as saying by Simon Wilson in the NZ Herald today:

He revealed the change of heart during question time at a public meeting in the North Shore suburb of Birkenhead today, where he said: “I think we’ve got the MDRS wrong.”

Questioned later by the Herald, he said he was “ruthlessly obsessed” with building more houses, but would prefer to see a much greater focus on greenfields developments. Simon Wilson in the NZ Herald

This has been building for a while

Owners of stand-alone homes in the leafier inner-city suburbs in particular have been up in arms ever since MDRS was passed, saying they want lots of houses built and lots of new migrants, but just not next to them. When everyone says that in existing suburbs, the only choice is the outer fringes of the greenfields, and all the extra motorways and pipes and sub-stations water treatment plants that implies. Councils and the Government won’t pay for that infrastructure because that would force them to have higher taxes, rates and debt, all of which the old leafies also oppose.

Hence the housing shortages that have given Aotearoa the most expensive houses in the world to own and rent relative to incomes, along with the most stressed renters who can barely afford the rent, let alone food. Nearly 500,000 New Zealanders now need $4 billion a year in accommodation supplements and rent subsidies from the Government and are forced to use food banks to get enough to eat.

The surprising and welcome cessation of political hostilities that led to the bipartisan MDRS in mid 2021 had appeared to be a serious attempt to break the logjam in our political economy that looks like this:

* the Government wants to run surpluses and keep public debt below 20-30% of GDP, which means it skimps on infrastructure investment and encourages population growth to bolster GST and PAYE receipts;

* the Government does this to ensure interest rates generally and mortgage rates in particular are kept lower than would otherwise be the case;

* those low interest rates support residential land values being at much higher levels than previously and much higher relative to incomes than in other countries;

* those low mortgage rates protect the unearned, untaxed and leveraged capital gains median voters need to keep expanding so they can help their own kids get on the ladder;

* Councils aren’t allowed to run deficits or borrow enough to pay their half share for new infrastructure because of rules set by Treasury in Wellington that allow Councils to borrow through the Local Government Funding Agency with a Crown guarantee;

* those borrowing rules are designed to protect New Zealand’s AA+ sovereign credit rating, which helps keep interest rates low etc, etc;

* these skimpy approaches to Crown and Council infrastructure spending mean they both try to pass the marginal cost of new infrastructure needed to cope with population growth onto the buyers of new homes, through development contributions and capital charges from electricity and telecommunications network providers; and/or

* Councils and the Crown are structurally inclined to reject applications for greenfields and brownfields developments because of the cost of new infrastructure, even after the imposition of the DCs and capital charges, which don’t cover all the costs;

* Residents and incumbent businesses wanting to protect their views, noise-levels, profits and on-street car parks can use the Resource Management Act to block and delay developments; and,

* the politics of all of these intertwined blockages to housing development reward the owners of residential-zoned land and the owners of land on the fringes of cities, who can benefit from value increases from rezonings and don’t have to worry about competition from a densification of housing closer to city centres.

It’s a gnarly problem at the heart of our political economy

The ability to make tax-free and leveraged capital gains is at the heart of this gordian knot restricting housing supply. It is reinforced by population growth that is engineered without either debate about the infrastructure necessary to support it in any sustainable way, or permission from council and general election voters.

One potential solution is a supply shock of extra land or houses that drag down house prices overall and land prices in the outer suburbs, which would destroy the expectations of fast and un-ending rises in land prices that drive the land-bankers’ business models and the investment appetites of owner occupiers.

That’s why ‘Townhouse Nation’ was so important. It threatened to unpick the gordian knot, albeit without the funding needed to fund much of the infrastructure needed for brownfields development. The basic problem of Luxon’s greenfields preference is that it has to include commitments from Governments and Councils to fund the developments because it won’t happen at any significant scale at the moment. Development contributions are not nearly enough.

Luxon, Willis and Bishop have to yet to say how such development would be funded by Government or others. But the usual playbook from both National and Labour is to talk about capital being introduced from private sources through Public Private Partnerships (PPPs), whereby Governments, Councils and investment funds or private land owners contribute both debt and equity for projects. But these have proven problematic, complicated, slow and expensive at any large scale both here and overseas.

PPPs are largely discredited, even with market-oriented conservative Governments in Australia and Britain. In New Zealand, PPPs can best be written off by referring to the experiences of the two major PPPs done in recent years: Transmission Gully and the new Mt Eden Prison. Serco was dumped six years into a 10-year $300 million contract managing Mt Eden and Transmission Gully was delivered three years late with a crumbling surface and hundreds of millions over budget.

So what happens now?

We’ll see just how dead MDRS would become under a National Government, although it’s now almost irrelevant whether or not National wins the election because the opponents of MDRS at council level and the potential developers and off-the-plan buyers will know to run a mile if their plans depend on MDRS.

Other views with more detail

Henry Cooke writes well about the political aspects of Luxon’s comments in this Museum Street piece out overnight.

Here’s Malcolm McCracken’s Better things are possible Substack with a piece on the issues.

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