The Kākā by Bernard Hickey

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

* A screed of bank results showing yet more surges in net profit from the big four that dominate our economy and fuel our housing market, just as the Reserve Bank unveiled evidence the banks are too profitable, relative to the risk they take for shareholders. Friday’s email.

* The Reserve Bank reporting that those households with mortgages remain much less stressed than they were in the 2008 to 2015 period, thanks to almost half being ahead on their repayments and most still sitting on large equity gains built up over the last decade. Thursday’s email.

* Transport Minister Michael Wood announcing changes to the Government’s much-more-successful-than-expected Clean Car Discount scheme that he talked up as increasing emissions reductions and increasing rebates for used electric imports. But a closer look reveals a doubling of fees for double-cab utes such as the Ford Ranger and Toyota Hilux, a reduction in rebates for Teslas, and the removal of rebates for most small new and used petrol cars and hybrids, including hybrid used Toyota Aqua, Toyota Prius and Toyota Vitz, as well as the Suzuki Swift — all of which were being bought by poorer drivers. Tuesday’s email

* A survey of 150 pharmacists last month finding the $5 co-payment fee for prescriptions is leading to widespread distress, mental health incidents and unnecessary surgeries costing billions per year — all to earn the Government about $150 million a year in fees and to repay public debt just a tiny bit faster. Monday’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 co-host Peter Bale in Spain and special guests:

* Green MP Transport and Infrastructure Spokeswoman Julie-Anne Genter about railmageddons this week in Wellington and Auckland, the clean car discount changes, bank profits and a wealth tax;

* University of Otago Foreign Relations Professor Robert Patman about the drone strikes on the Kremlin, whether NZ should join Aukus Pillar II, Joe Biden’s trip to Sydney for the Quad in a couple of weeks, Foreign Minister Nanaia Mahuta pushing back at Defence Minister Andrew Little and Deputy PM Carmel Sepuloni on Aukus II after being given a talking to by Chinese officials in Beijing last month. We refer Peter’s World Weekly Bulletin for The Spinoff here.

* Climate academic and Tohu Climate Policy Director David Hall about the political economy challenges for climate change policy in an election year, especially around the clean car discount changes, pine forests vs native forests, and public transport.

* Memiapublisher and tech futuristBen Reidabout the calls to suspend AI development (The Guardian) and the shock decision this week by Google’s AI leader Geoffrey Hinton to resign with a warning about the risks. (The Information Age).

The Hoon’s podcast version above is 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.

Other places I’ve appeared this week

My podcast for The Spinoff this week

One pathway to home-ownership - I interviewed Kiwibank’s Philippa Scott and Pip Maxwell about their new Co-own mortgages, which allow flatmates, brothers, sisters, cousins, and groups of friends to save, borrow and own houses together in ways that fit around modern family structures Wednesday afternoon in Wellington for When The Facts Change, my weekly podcast for The Spinoff.

This week’s Ask Me Anything

Chat thread of the week

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

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: A screed of bank results in the coming week are expected to show yet more surges in net profit from the big four that dominate our economy and fuel our housing market.

This week the Reserve Bank compiled and unveiled evidence our banks are too profitable, relative to the risk they take for shareholders, but it is leaving any decisions about an anti-monopoly investigation in the hands of the Government.

The differences in risk-adjusted profitability may reflect a lack of competition. RBNZ

Paying subscribers were able to see more detail and analysis on bank profitability below the paywall fold and in the podcast above on Friday. I have now removed the paywall so it can be read more widely after paying subscribers asked for me to open it up. I appreciate the support of paying subscribers, which allows me to do journalism in the public interest such as this.

Much higher profitability with much lower risk

Very high profits can be justified when a company has some sort of secret sauce or special advantage it created and can’t be replicated easily by others. Profits showing double-digit returns on equity can also be justified if they are rare and linked to some sort of extraordinary event or piece of luck whereby a risk taken by shareholders pays off spectacularly.

The rule of thumb is that the higher the risk taken and the higher the volatility of a company’s profits, then the higher the profit will be occasionally and the higher it will be on average. That’s why the idea of risk-adjusted returns is drummed into investors and fund managers. If you want high returns, you have to hold tight for a long time to ride through the big ups and downs as big profits are followed by big losses or vice-versa, in rapid succession.

That high-risk strategy is expected to pay off in the long-run as you hold on as an investor through the highs and lows to get a higher return on average than lower volatility companies that are more like utilities and don’t have many secret sauces.

So are very high bank profits justified then? The RBNZ suggests not.

Government politicians and voters –borrowers and savers alike –have been asking this year whether our big four Australian-owned banks are too profitable, given the record-high profits they’re reporting again this week and next for the half year to the end of March. Those higher profits are in part due to the Reserve Bank’s interest rate hikes over the last year and the $19 billion of special low-interest long-term loans that The Reserve Bank (Te Pūtea Matua) lent the banks in 2021 and 2022.

For example, National Australia Bank’s BNZ reported yesterday its first half cash profit rose 23.5% or $157 million from the first half a year earlier to $8025 $825 million. That was driven by a $300 million or 25.8% rise in net interest income due to a 3.5% rise in mortgage lending, and a 41 basis point improvement in its net interest margin to 2.45%. ANZ is due to release its half-year results later today and Westpac’s results are due on Monday. Commonwealth Bank of Australia, which owns ASB, has a June 30 balance date and reported its first half results in mid-February.

BNZ’s results show how well it is doing from a heavy concentration of lending ever-more against residential land values in our biggest cities, and how rising interest rates and cheap Reserve Bank loans have helped profits.

A housing market with banks latched on

The fruits of our housing market are showing through in ever-growing volume of bank profits, partly driven by an increase in lending as the housing market continues to form the basis of the economy, and partly an increase in the profitability of taking in deposits, adding a margin, and lending them out again.

That margin, known as the net interest margin, typically rises whenever central banks increase interest rates because banks pass on rate hikes to borrowers faster than to depositors. The Reserve Bank even complained in late March the banks were not passing on higher deposit rates fast enough, although the central bank itself can claim some credit for the strong profits because it has given them cheap loans and pays them interest on their cash settlement accounts at the Reserve Bank. The biggest banks are also continually bearing down on costs by removing branches and going digital.

New Zealand's banks got an extra tailwind after Covid by a surge in new mortgage lending after the Reserve Bank slashed the Official Cash Rate to almost zero and it removed Loan to Value Ratio restrictions for over a year in 2020 and 2021. That tailwind got an extra 'turbo' boost when the Reserve Bank decided to lend to banks at the cheaper official cash rate for three years. That Funding for Lending programme has closed now, but banks filled up on $19 billion in cheap loans before the end of last year. Also, the Reserve Bank is paying banks 5.25% on the $49.3 billion they have parked in cash settlement accounts with the central bank, largely due to the extra money created during Covid by the Reserve Bank using ‘Quantitative Easing’ to buy Government bonds out of thin air.

BNZ gave this explanation yesterday for its record-high profit:

This increase was due to higher earnings on deposits and capital driven by therising interest rate environment, partially offset by housing lending competitive pressures and increased funding costs driven by deposit mix. BNZ results commentary in NAB profit result presentation (page 42).

It’s not just one bank

The dark blue bank isn’t the only one making record-high profits. KPMG’s quarterly Financial Institutions Performance Survey (FIPS) report recently collated the collected results until the end of December, including higher net interest margin figures and lower cost-to-income ratios for the light blue (ANZ), yellow (ASB) and red (Westpac) banks.

But is this normal? Out of line with other banks? And other companies?

The banks have defended their higher (and high) profits by saying their profitability ratios have not risen that much over the last 20 years or so and are in line with the profitability of other big companies on the New Zealand stock market. Those statements can be true, depending on which comparisons and which time periods are used.

Some of the higher-volatility stocks on the NZX with smaller balance sheets and revenues do have double-digit returns on equity, but they are also seen as riskier because of that volatility and relative size. The big four banks’ profits are consistently large and the returns on equity are consistently in the mid-to-low teens in percentage terms. That indicates their high profitability is not matched by the same high volatility and risk that other NZX companies with similar double-digit returns exhibit.

For example, the entire NZX’s profit on equity last year was around 5%, while listed financial stocks also returned 5%. NAB didn’t break out BNZ’s return on equity figures in its presentation (page 6), but the group’s ROE was 13.7% in the first half. For example, New Zealand’s retail listed companies have returns on equity of about 12%, but are also much more volatile.

So the Reserve Bank took a look at the risk-reward relationship

This question of how much profit is too much is tricky, but the Reserve Bank took a much closer look in its Financial Stability Report this week with a special topic report on ‘Trends in Bank Profitability’. It should be required reading for every bank customer, voter and politician. The Reserve Bank doesn’t come out and say the banks are making too much profit, but the detail in its analysis is stark and shows they are the most profitable in the world with relatively low volatility or risk. I asked about this issue at the FSR news conference and the exchanges are in the podcast above.

Deputy Governor Christian Hawkesby and Governor Adrian Orr described the banks as very profitable and said they should use those profits to remain strong, to help out customers in trouble and to invest in their systems to improve resilience and service levels. Hawkesby and Orr stopped short of saying the banks were ‘gouging’ the public, but their analysis backed up former PM Jacinda Ardern’s warnings too banks in November last year that their consistently high profits were ‘wrong’ and put their ‘social licenses’ at risk.

The analysis showed a rebound in net interest margins to pre-GFC levels because of the lagged effect of term deposit rates rising slower than mortgage rates.

The Reserve Bank signalled it expected the net interest margin growth to be temporary, but also noted profitability levels had quickly bounced back to pre-Covid levels. The average bank return on equity in the 14 years since the GFC has been 12.4%, with the range for the average quarterly ROE moving between 7.3% in June 2020 to 16% in December 2011. Here’s the bank’s comments in the FSR (bolding mine):

Profitability ratios, such as the return on assets and return on equity, are more robust indicators of performance. Banks’ balance sheets have continued to grow since 2020, reflecting growth in the economy . Their equity bases have been further supported by lower dividend payout ratios, as banks have started to increase capital in anticipation of the higher future capital requirements. As a result, the return on assets and return on equity are at similar levels to those in the decade prior to the pandemic. Reserve Bank analysis

Here’s the killer chart that decides the issue

There are ways of trying to measure profitability vs volatility and risk to discover the risk-adjusted reward is worth it. The Reserve Bank produced this chart and table below showing New Zealand’s banks had the highest returns on equity in the world over the last 20 years, but were also near the bottom of the pack for volatility of earnings. That means their profitability was much higher relative to the risk for shareholders. That’s a classic sign that profitability is too high.

Here’s the Reserve Bank’s very careful reading of this apparent smoking gun chart (bolding mine):

While the banking sector as a whole does not appear to be materially more profitable in 2023 compared to the past 30 years, the large New Zealand banks have been more profitable than the rest of the New Zealand banking sector and large banks in a number of comparable economies in recent years. 

Higher risk associated with operating a bank in New Zealand relative to other countries is a potential driver of high profitability for New Zealand banks. However, the volatility of earnings, a standard measure of risk, has been relatively low in New Zealand compared to other countries in recent decades. This suggests that risk does not fully explain the relatively higher returns of New Zealand banks, although it should be noted that this has been a period of ongoing economic growth and strong housing market performance. 

The differences in risk-adjusted profitability may reflect a lack of competition. RBNZ in FSR

Here’s another view of this in table form, including other measures of riskiness showing New Zealand banks being lower risk, but much more profitable than peers overseas:

‘It could be a lack of competition. Or some other things’

The central bank and bank regulator (but not competition regulator) then went on to muse about the potential reasons for the anomaly of risk-adjusted returns, other than a lack of competition, including:

* the banks’ large scale giving them economies of scale not available to peers overseas and New Zealand;

* the banks being subsidiaries of Australian groups meant head office costs weren’t as high here, relative to domestic competitors or peers overseas;

* that the banks’ Australian shareholders may demand higher return on equity because dividends from New Zealand banks are not ‘franked’ or tax-free for Australian shareholders; and,

* the big four here have very simple banking structures without the riskier add-ons of investment banking and funds management that global peers have.

‘We analyse. You decide’

The Reserve Bank made no further comment, other than to say the banks should use their high profitability to maintain their social license and help customers.

The benefits of profitable banks are particularly evident in the current environment, with New Zealand banks in strong positions to manage increasing stress in their lending books and a deterioration in global economic conditions.

Importantly, profitability allows banks to support their customers by taking a long-term view in times of stress. It also enables the necessary investment in systems to improve efficiency and operational resilience.

Therefore, profitability puts banks in a position to earn their social licence by contributing to a sound, efficient, inclusive, and dynamic financial system. RBNZ in FSR

Time for a market study then?

Reserve Bank Chief Economist Paul Conway has previously said he agrees with calls for the banks to be the next topic for a market study by the Commerce Commission. New Commerce Minister Duncan Webb hinted one was being considered in a piece in The Post-$$$ this morning by Rob Stock.

“I’ve seen the bank profits and they’re significant, and certainly that’s factoring into the decisions we are making.”

“The question is where we can get the biggest gains for consumers so we are looking across the entire market, whether that’s in banking, insurance or elsewhere.”

“But certainly banking is one area that we are interested in and when we make a conclusion on that we will make an announcement.” Duncan Webb quoted in The Post-$$$ (Rob Stock.)

‘Nothing to see here. Move along’

BNZ CEO Dan Huggins was quoted as saying a market study was not necessary and that the banking sector’s ROE range of 10-14% was appropriate relative to global peers and NZX companies. He said the public would be pleased New Zealand had a strong banking sector in the wake of bank failures overseas in recent months.

“I don’t think that (a market study) is necessary. The industry is very, very competitive.

“We certainly want to see a fair return on the money we have invested in the bank.

“There’s $11b invested, and when we look at the return on that, on an industry level, that’s 10% to 14%, and we think that’s an appropriate return when we look at global peers, and when you compare us to others on the NZX.” BNZ CEO Dan Huggins via The Post-$$$ (Rob Stock.)

In my view, I think the Reserve Bank’s analysis shows that our banks are making super-profits relative to the risks they take on for shareholders and a market study should be done.

Ka kite ano

Bernard

PS: Want this opened up?

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: - Transport Minister Michael Wood announced changes to the Government’s much-more-successful-than-expected Clean Car Discount scheme this morning that he talked up as increasing emissions reductions and increasing rebates for used electric imports.

That’s how the changes are initially being reported, but a closer look reveals a doubling of fees for double-cab utes such as the Ford Ranger and Toyota Hilux, a reduction in rebates for Teslas, and the removal of rebates for most small new and used petrol cars and hybrids, including hybrid used Toyota Aqua, Toyota Prius and Toyota Vitz, as well as the Suzuki Swift — all of which were being bought by poorer drivers.

In essence, the Government has reduced incentives to buy electric and low emissions vehicles to ensure a scheme designed to cost the Government nothing reverses a deficit that has already used up all of a $300 million loan from taxpayers. It was done to save money in the short term.

It begs the question: why isn’t the Government using some of the $3.6 billion left in its Climate Emergency Response Fund (CERF) to increase the loan by more than the extra $100 million committed today, especially when CERF spending in the about-to-end financial year is $157.7 million below its budget?

In my view, the Government appears to be again choosing reducing its cash deficit in preference to reducing emissions because lower inflation and lower interest rates help bolster residential land prices. Again, the Government is choosing the interests of median-voting land owners over reducing emissions generally, or a just transition to carbon zero in particular. The irony is that many of those median-voting outer suburban home-owners will focus instead on the doubling of the ‘ute tax’, rather than the effects on interest rates and land prices.

This punishes Ford Ranger man, as well as Toyota Aqua-buying Uber drivers

Paying subscribers can see more detail, charts, tables and analysis below the paywall fold and hear that analysis in the podcast above. I can send the full post wider later today if paying subscribers think it’s a good idea in the comments.

When fiscal neutrality trumps emissions reductions

This morning’s announcement about the Clean Car Discount scheme by Transport Minister Michael Wood was a masterclass in putting a good face on what was essentially a money-saving decision that reduces the size of emissions reductions that handicaps a scheme that had become a roaring success.

Here’s how he presented it (bolding mine), vs what the Ministry of Transport announced this morning from its 38-page review:

The Clean Car programme will reduce 50 percent more emissions than originally estimated by 2035, and 230 percent more by 2025

(It is) forecast to save New Zealand from importing 1.4 billion litres of petrol. At current prices the economy will save an average of $325 million a year on fuel

Adjustments to scheme to maintain momentum, including:

* narrowing the focus to more fuel efficient vehicles earlier than planned;

* reductions in rebates and increases in fees paid by higher emitting vehicles;

* rebates for zero emission used import vehicles will increase from $3,450 to $3,507;

* adjustment in eligible vehicles to promote EV uptake; and,

* a special rebate for new and used low emission disability vehicles introduced.

Crown to increase the Clean Car Discount’s repayable Crown grant by $100 million in Budget 2023. Michael Wood statement

So what actually happened?

It’s true the programme will reduce emissions by more than originally estimated in 2021, but that’s because it was vastly more successful than expected in increasing purchases of low-to-no emissions vehicles. The changes announced today will reduce the trajectory of emissions reductions the scheme was on this year, before the announcement of changes.

The scheme was vastly more successful than expected, especially in encouraging buying of both new all-battery cars such as Tesla 3 and Tesla Y, as well as much-cheaper used hybrids, such as the Toyota Aqua, Toyota Prius, Toyota Vitz and Suzuki Swift. The uptake of hybrids and used hybrids accelerated in phase two of the scheme that started in April 2022.

This meant the payouts for rebates was much higher than expected, while the income from fees on gas guzzlers was closer to expectations. The scheme was supposed to be back in surplus this year. Instead, the Ministry advised in the review finalised in March that the original $300 million fund would be exhausted by April — last month.

The fund was already depleted

Here’s the table of expected revenues and rebates from the original Cabinet paper on the scheme, including a scenario where the take-up is much stronger than expected, which was eerily prescient in this aside:

In 2023 if electric and hybrid vehicles are adopted at the highest modelled uptakelevel (over 60,000 vehicles), there is a risk of rebates pausing in this year due to lackof funding, supposing that fees were not raised that year. Original Cabinet paper

Here’s what actually happened, using data up to the end of December showing a $193 million deficit:

The Ministry of Transport noted in the March review (bolding mine):

Figure 3 (below) shows the fees collected, and rebates paid out for Phase 2 of the CCD from 1 April – 31 December 2022. During this data period, the rebate expense is growing to roughly twice the income from fees. Since August 2022, the proportion of brand new EVs has risen significantly.

The primary rebate cost is for brand new EVs (from which benefits also derive) and the second highest cost is from hybrids and low emission vehicles (split evenly between new and used).

Based on the monthly running totals of the net financial position, as of February 2023, Waka Kotahi has forecast that there are sufficient funds to last until April 2023.

The aside above suggested what officials thought the Government would have to do if it was ‘too’ successful: completely suspend the scheme. Instead, it chose to throttle the rebates for hybrid and Tesla buyers, and ramp up the fees for gas guzzlers. That will reduce emissions from double-cab ute drivers, but also restrict emissions reductions from those who now won’t buy hybrids. It punishes Ford Ranger man, as well as Aqua-buying Uber drivers.

‘Look at the Leafs, not the Aquas’

Wood’s statement was misleading in also pointing to an increase in the rebate for buyers of used all-electric cars, such as the barely-available Nissan Leaf, but not mentioning the lower rebates for new and used hybrids and low emissions vehicles such as the Toyota Aqua and Honda Fit hybrids, and not specifying the scale of the extra fees for buyers of double-cab utes and SUVs.

Choosing to throttle the benefits of the scheme and further punish double-cab-ute buyers without electric-powered choices is not only dumb policy. It is dumb politics.

Here’s the changes below in chart form from the Ministry of Transport paper showing the higher fees for double-cab utes the lower rebates for hybrids and used low-emissions imports. The table below shows exactly how the fees and rebates change for new and used vehicles. The key things to note from that table are:

* Ford Ranger fee doubles to $5,290 and Toyota Hilux fee rises 88% to $5,635;

* New Suzuki Swift loses its $1,923 rebate entirely;

* Toyota RAV 4 Hybrid loses its $2,387 rebate entirely;

* Tesla Y and MG ZS rebates fall 19% to $7,015;

* Mitsubishi Eclipse and Outlander plug-in hybrid discounts fall 30% to $4,025;

* Toyota Corolla petrol goes from no fee to a $920 fee;

* Honda Jazz petrol goes from a rebate of $1,098 to no rebate;

* Toyota Yaris Cross SUV and Kia Stonic lose their $1,511 and $1,202 rebates entirely;

* Used hybrid Toyota Aqua and hybrid Toyota Prius see their rebates drop from $1,615 and $1,409 respectively to $1,179 and $891 respectively; and,

* Used hybrid Honda Fit loses its $1,285 rebate entirely.

The only improvements were increases in the rebate for used battery-only imports (VW Golf and Nissan Leaf) by $58 to $$3,508, which was the thing Wood focused on. He didn’t mention the rest in his statement.

If only the scheme was allowed to keep running

The scale of the need for increasing emissions reductions using the scheme was illustrated in the Regulatory Impact Statement in the original Cabinet paper, which estimated emissions reductions from the scheme of 2.6 million tonnes to 9.2 million tonnes between 2022 and 2050. This was pointed out by Treasury in its advice:

…current net emissions are in the order of 70 million tonnes per annum, and growing, but this needs to be 60 million tonnes (14% lower) every year from now until 2030 to reach our Paris Target

Even more importantly the cost per tonne reduced, the marginal abatement cost, was actually minus $170 to minus $199 per tonne. That means there was not a cost, but a benefit to the economy, as Treasury pointed out in explaining the negative abatement cost:

“This is primarily due to the significantly reduced ongoing fuel costs that New Zealanders would pay by being able to afford to buy a zero or low emission vehicle through this policy. This makes the Clean Car Discount an effective and efficient policy to reduce emissions.” Treasury advice in the Cabinet paper.

These changes now mean the emissions reductions will be lower than the current trajectory, yet Wood painted this as a positive:

“The scheme is also now forecast to reduce emissions by 3.4 million tonnes by 2035.  That’s an additional 50 percent out to 2035 over and above what was forecast when it started. It will deliver twice the emissions reduction forecast between the start of the scheme and 2025.” Wood.

But how many more million tonnes could it have been? The 2021 advice suggested potential reductions of up to 9.2 million tonnes by 2050. I have yet to find the numbers of the potential reductions if the scheme had been allowed to run in its current form by 2035. Given the effective ‘free’ non-cost to the economy of minus $170 to $199 per tonne, it would have been justified in climate emissions accounting terms to keep going.

So why not use other climate funds to subsidise the scheme?

The Government had other choices, rather than to just throttle the scheme and limit the financial cost to another $100 million. It could have used the Climate Emergency Response Fund (CERF), which Treasury reported at the end of March still had $3.6 billion in it, and that spending in the just-about-finished 2022/23 financial year of $462.6 million was $157.7 million below the budgeted amount of $620.3 million. The amounts able to be spent from the CERF are forecast to go up to $791.5 million.

There was money there in the fund to keep going at full noise with the scheme, which Treasury has advised was not only a cheap way to reduce large amounts of emissions, but actually earned the economy more money.

So why decide to bottle it?

In my view, the Government’s focus on fiscal neutrality and getting the Budget back into surplus so as to reduce public debt and make interest rates slightly lower than would otherwise be the case is clearly its top priority.

It is prioritising lower inflation and lower interest rates help bolster residential land prices, choosing the interests of median-voting land owners over reducing emissions generally, or a just transition to carbon zero in particular.

Politically, the changes also aren’t that clever. The Government will further inflame the anti-ute-tax Groundswell constituency, while also losing the support of both its left-leaning voters and those reliant on second-hand Toyota Aquas and Suzuki Swifts.

The Government effectively chose the worst of both worlds: both alienating Ford Ranger Man and punishing Suzuki Swift buyers because of the success of its own policy, without getting credit for the short-term financial benefit in the form of a few basis points of lower mortgage rates.

It could have just left the scheme running, or even increased the incentives for electric car buyers, while reducing the fees for double-cabe ute buyers.

Choosing to throttle the benefits of the scheme and further punish double-cab-ute buyers without electric-powered choices is not only dumb policy. It is dumb politics.

The Craic

Cartoon of the day

‘This road is mine. How dare you take it off me’

A fun thing

‘Can everyone just look at these hopping lemurs.’ Nature is Amazing on Twitter.

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: - A survey of 150 pharmacists last month has found the $5 co-payment fee for prescriptions is leading to widespread distress, mental health incidents and unnecessary surgeries costing billions per year — all to earn the Government about $150 million a year in fees and to repay public debt just a tiny bit faster.

The Independent Community Pharmacy Group survey found the co-payment fee, which is $5 per prescription up to a maximum of $100 per year, contributed to their most vulnerable patients suffering strokes, heart attacks, sight loss, failed kidneys, breathing problems, mental health crises, and amputations. The group called this morning for the fee to be dropped, citing a University of Otago study released in February that showed each extra dollar earned by the fee was costing $18 in extra hospital costs — effectively meaning the $150 million in fees are costing taxpayers $2.65 billion per year, as I wrote in February.

Paying subscribers can see more detail and analysis on the co-payment issue below the paywall fold and in the podcast above. Please advise in the comments if you want the full post opened up for public consumption, sharing and listening.

Penny wise and pound soul destroying

Any suggestions that the Government is concerned about or measures long-term and overall wellbeing in making budget decisions should be set against what it actually does with policies that appear not to assess the true costs of not spending in certain areas in health, education, transport and housing.

Here’s a couple more examples today, starting with the pharmacy prescription co-payment.

The Independent Community Pharmacy Group survey published today found the co-payment fee, which is $5 per perscription up to a maximum of $100 per year, contributed to the most vulnerable patients suffering strokes, heart attacks, sight loss, failed kidneys, breathing problems, mental health crises, and amputations. The group called this morning for the fee to be dropped, citing a University of Otago study released in February that showed each extra dollar earned by the fee was costing $18 in extra hospital costs — effectively meaning the $150 million in fees are costing taxpayers $2.65 billion per year, as I wrote in February.

Pharmacists called the fee "inhumane" leading to "soul destroying" consequences in the survey. Here’s a selection of quotes from the survey:

Schizophrenia and organ transplant patients

"Since with each [untreated] episode of schizophrenia, the impact of the illness gets progressively worse, it was heartbreaking to watch," reported one pharmacist. Organ transplant patients and patients with infections are also affected: "A young man [was] unable to pay for his flucloxacillin prescription. He ended up in hospital on iv antibiotics for a few days," reported another.

What happens when the fee is removed

In some areas where the government temporarily removed the prescription fee after Cyclone Gabrielle, pharmacists reported the waiver had immediate community health benefits.

"Without the fee, their patients were happier, less stressed and more engaged, and everybody picked up all their prescriptions," says Chan. "These on-the-ground, immediate, real-time effects give us hope. They show our vision of a more equitable and effective health system due to fees-free prescriptions is well within reach.

"Removing the patient co-payment prescription fee for everyone is the easy thing to do and the right thing to do for community wellbeing and to ease the burden on our over-stretched health system."

‘One day he had a massive stroke’

​"The worse case I know of is a man who didn't pick up medsbecause of the price. He didn't tell anyone, even his whanau. Then one day he had a massive stroke." Wellington pharmacist

Funding for pregnancy scans blocked again last year

Secondly, there’s the situation with pregnancy scans, which cost $30 to $165, as Nikki Macdonald reports this morning in The Post-$$$

Pregnancy scans, which screen for potentially fatal abnormalities and check growth rate, are a costly anomaly in what is supposed to be a free maternity system.

Way back in 2000, health authorities called for pregnancy ultrasounds to be fully funded. And report after report since has identified them as a barrier to keeping the most vulnerable babies safe. But the service remains a postcode lottery, after a 2022 budget bid to increase funding was rejected.

Instead, health funders in some areas pay the surcharge, making ultrasound free for pregnant women. In other regions, prospective parents face bills of hundreds of dollars, and in rural areas women can wait a month for the timecritical scans. The Post-$$$ (Nikki Macdonald)

​Elsewhere in the news this morning

Housing matters - The University of Auckland released its latest wave of research (Now we are twelve) from its Growing Up in New Zealand longitudinal study this morning, including its findings from the experiences of 4,500 12-year-olds, including that:

* around seven percent of young people experienced homelessness at some point in the last few years;

* about half of young people had moved homes at least once between age 8 and 12; and,

* about 20% of young people had experienced unstable tenancies or worsening residential stability since birth.

Food matters - The same study found 15 percent of twelve-year-olds were living in households with moderate levels of food insecurity and another two percent were living in households with severe food insecurity, which was similar to what the study found when the children were eight, but the use of special food grants and food banks among the families had increased from 6.4 percent to 10 percent

Nah….yeah - National Finance Spokeswoman Nicola Willis pledged in an interview with Jack Tame on TVNZ’s Q+A that a National Government would keep making contributions to the NZ Superannuation Fund, breaking with the previous National Government’s policy of suspending contributions. NZ Herald (Jenee Tibshraeny)

Overboard on the opioids - Doctors and surgeons are over-prescribing opioids to patients post-surgery, a study of patients in Aotearoa has found. It found opioids were being prescribed at twice the volume of what was consumed by patients in the week after surgery. NZ Herald (Lincoln Tan)

Toll for Penlink - Transport Minister Michael Wood is expected to announce this morning a toll of $3-4 each for cars and up to $8 for trucks on the O Mahurangi-Penlink highway connecting State Highway 1 to the Whangaparāoa Peninsula, to help pay for the $830 million project. Stuff (Jonathan Killick)

Nah…no holiday for you - More than 1000 years of annual leave is owed to New Zealand’s senior doctors and four centuries’ worth to junior doctors, with some saying they can’t take leave without risking even more surgery cancellations. Stuff (Rachel Thomas) The Post-$$$

Golden handcuffs? - National announced it would pay nurses’ and midwives’ student loan repayments up to $4,500 a year for the first five years of their career, as long as they signed a bonding agreement committment to stay working as a nurse for up to five years. National also said in its policy document it would:

* offer qualified overseas nurses and midwives an automatic six-month temporary visa to enter New Zealand without a job offer to look for work;

* allow qualified overseas nurses and midwives who are coming to New Zealand (to complete competency assessment or search for a job) to bring their immediate family members with them on a six-month work or study visa; and,

* offer up to 1,000 qualified overseas nurses and midwives relocation grants worth up to $10,000 each to support them to move to New Zealand.

National said funding would come from $151 million per year in unallocated savings remaining from National’s commitment to reduce spending on contractors and consultants by $400 million a year.

Please explain - The PM’s office confirmed yesterday Transport Minister Michael Wood will call in KiwiRail executives to his office today to get them to explain why KiwiRail’s only track checking machine broke last week, causing a cascading series of commuter rail disruptions in Wellington, and to ask what KiwiRail will do about it. The Greater Wellington Regional Council announced the disruptions on Friday in a statement titled: KiwiRail equipment failure holds North Island rail network hostage and leaves Metlink passengers in the lurch.

More time - Environment Minister David Parker and Forestry Ministry Peeni Henare announced on Friday they had extended the 30 April deadline for the Ministerial Inquiry into woody debris (including forestry slash) and sediment in Tairāwhiti/Gisborne and Wairoa until May 12 to give it more time to consider 313 submissions, “many of them fulsome and comprehensive.”

More trains - Finance Minister Grant Robertson and Transport Minister Michael Wood announced on Saturday the Government would co-fund a fleet of 18 hybrid four-car trains and upgrade rail tracks in the Manawatu and Wairarapa to increase commuter capacity by 1.5 million trips per year and reduce emissions by 0.5 million tonnes. The co-funding was at least three years late, less than proposed, and was prioritised behind a $1.6 billion motorway with a benefit-to-cost ratio of less than a tenth that of the rail project.

Motorways first - This post on Greater Auckland from Darren Davis & Malcolm McCracken, who has this SubstackBetter things are possible, explains the background. The original business case for this 22-car project costed at $587.3 millio and co-funded with the Greater Wellington Regional Council was first made in 2019, updated in 2021 and rejected in the 2022 Budget round, even though its Benefit To Cost Ratio of 1.5 to 3.1, compared to the  0.22-0.37 for Ōtaki to North of Levin Expressway (before its cost blew out to $1.5 billion).

‘Taihoa ehoa on the AUKUS talk’ - Foreign Minister Nanaia Mahuta told Simon Shepherd in an interview on Newshub Nation on Saturday that the Cabinet was a long way from the substantive discussions needed to joint pillar two of AUKUS, effectively downplaying more positive comments about joining AUKUS-2 by Defence Minister Andrew Little and Deputy Prime Minister Carmel Sepuloni.

Just briefly:

Recovery visa sold for more than $30,000 by unlicensed agents, immigration adviser says RNZ (Gill Bonnett)

China factory activity unexpectedly cools in April Reuters

First Republic auction underway, with deal expected by Sunday Reuters

Useful longer reads and listens

A tram pole and a overgrown concrete milk stand - Erin Gourley reports today for The Post-$$$ on the detail inside Wellington City Council’s application to avoid densification rules in the District Plan, including details about a Tram Pole (picture below) and a Milk Stand (picture below) being protected. The Council paid for reports amounting on 45 pages and 64 pages respectively on these heritage items.

Milestones

The yuan (48.4%) has overtaken the USD (46.7%) to become the most widely-used currency for cross-border transactions in China for the first time. Reuters

Solar PV passed the massive 1TW globally installed capacity milestone in 2022. PV Tech

People moves

The Icehouse announced the apppointment of Lindsay Zwart, Chief Enterprise Director at One NZ (formerly Vodafone New Zealand) and former-Finance Minister Steven Joyce to its board.

One of the founding partners of Jarden’s Australian business, Dane FitzGibbon, is leaving the business. AFR-$$$

In the raw

Documents, speeches, surveys, interviews and papers

Covid effects - Following the advent of Covid-19 and the resulting shift towards working from home, rents in Auckland’s lower-density, city-fringe suburbs increased more than those in the city centre, according to a study published in the International Journal of Housing Markets and Analysis.

Quote of the day

Wellbeing effects of reducing public debt by $150 million, which helps keep mortgage rates a basis point or two lower

"In one case I have heard a parent say to their child, ‘It’s either medicine or food, we can't afford both’.” Pharmacist in the Independent Community Pharmacy Group survey

Chart of the day

A melting planet

Map of the day

Wondering where climate refugees will go? Siberia or NZ.

Comment thread of the day on The Kākā

Friday’s AMA got 114 comments

NickB Any insights into the internal dynamics in Labour right now? Truly bizarre to get a speech on the injustice of the tax system from David Parker promptly followed by a speech from the PM negating everything his revenue minister just said. PS - Have you ever owned/do you own a ford ranger? Link to comment and replies.

A fun thing

A sleepy red panda for your troubles Twitter

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: This week’s news in geopolitics and Aotearoa’s political economy I covered via The Kākā for paying subscribers included:

* An Inland Revenue Department study of Aotearoa’s 311 wealthiest families with combined wealth of $85 billion and annual income in 2020/21 of $14.6 billion has found just seven percent of their income was taxed as personal taxable income that year because of the lack of a capital gains tax; Special report on Wednesday and Wednesday’s Dawn Chorus

* That meant their effective tax rate was 9.5% across all their income, even after calculating their payments of GST, which compares with an effective tax rate of 30% for a PAYE salary earner of $80,000 per year. Those 311 families alone would have paid $3.4 billion more in tax in 2020/21 if they had paid the same tax rate as middle-income New Zealanders; Special report on Wednesday and Wednesday’s Dawn Chorus

* PM Chris Hipkins hosed down talk of a Capital Gains, Wealth or Flood Levy tax in Budget 2023 on May 18, saying in a speech to business leaders he wanted to produce a ‘no-frills’ Budget that paid for flood repairs by cutting spending elsewhere and using unallocated spending announced in previous years. Thursday’s Dawn Chorus,

* Hipkins emphasised in his speech the Government’s focus was on getting inflation and interest rates down, while ramping up net migration to 100,000, which effectively put a floor under the housing market this week, along with lower long-term mortgage rates and a loosening of LVR rules announced by the Reserve Bank. Friday’s Dawn Chorus

* PM Chris Hipkins acknowledged the Government is flying blind on net migration to Australia after the weekend announcement of a four-year pathway to dual citizenship for the 300,000 New Zealanders living there since 2001 and the ones eyeing up going for bigger salaries and after-housing-cost disposable incomes; Monday’s Dawn Chorus

* Hipkins told reporters the figures couldn’t and haven’t been modelled, although he was still confident the much-more-assured pathway to citizenship would not increase the numbers of New Zealanders migrating to Australia, even though net migration of NZ residents trebled to over 1,000 a month in the year to the end of September.

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 co-host Peter Bale in Oslo and special guests:

* Robert Patman from University of Otago, who came on from 5.10 pm to 5.25 pm to talk about the latest on Sudan, China vs US and AUKUS;

* Max Rashbrooke, who came on from 5.25 pm to 5.35 pm to talk about the IRD tax reports and the political reaction;

* Nick Goodall from Core Logic, who came on on from 5.35 pm to 5.45 pm to talk about the housing market and this week’s LVR news; and,

* Josie Pagani came on from 5.40 pm to 5.50 pm to talk about politics and tax, along with her column in The Post.

Peter and I also talked about the news in geopolitics this week, including Hugh Grant saying in court that Rupert Murdoch’s The Sun broke into his flat (The Guardian) The Hoon podcast version is 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.

Other places I’ve appeared this week

My podcast for The Spinoff this week

An interview with David Parker - I interviewed Revenue Minister David Parker on Wednesday afternoon in Wellington for When The Facts Change, my weekly podcast for The Spinoff.

I was on TVNZ’s Breakfast show on Friday on Hipkins’ Budget speech

Chat thread of the week

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

Ka kite ano

Bernard

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

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

TL;DR: Prime Minister Chris Hipkins firmed up his re-election strategy this week by reiterating his ‘no frills’ and low-risk approach to governing, downplaying any talk of a re-run of the difficult debates about a Capital Gains or Wealth tax.

Instead, he is focusing the Government on doing whatever it can to:

* lower inflation and interest rates by reducing the Government’s deficit and debt forecasts through limiting spending growth and delaying capital investment;

* stimulate nominal GDP growth and lower wage inflation via a migration surge he is happy to see go to 100,000 a year; and,

* increase subsidies for first home buyers, just as the Reserve Bank loosens lending restrictions — all of which are designed to reignite the wealth effect of a rising housing market.

The Labour Party leader and former proponent of a capital gains tax virtually ignored the results of a bombshell IRD study released on Wednesday showing the richest families pay less than half the tax rate of middle-income New Zealanders. Instead, he preached the benefits of the Government treating its finances just as a struggling household would, tightening its belt in tough times. Here’s the language he’s using (bolding mine):

I think it incumbent on leaders to not only walk in the shoes of others, but to reflect those experiences in the choices we make. 

That means it’s not right for households to be tightening their belts if the Government doesn’t too. 

I’d call it a no-frills approach, and that characterises the decisions we’ve made since I became Prime Minister as well as decisions we have made in the upcoming Budget.  Chris Hipkins in his pre-Budget speech.

Appeals to ‘we’re all in this together’ just fall flat now

In my view, the trouble for Hipkins is this week’s wealth, income and tax reports show that the richest are not tightening their belts or sharing the burden with ‘hard-working Kiwi families’. This report changes the framing of the tax debate. Those in the highest tier are not even paying the same effective tax rate as middle-income earners, especially those who are younger, renting and without children.

Hipkins can claim solidarity with the ‘stressed middle’ against the God-given ‘weather’ of inflation and a recession and the untouchable rich if there was nothing he could do about those things. But he can touch the rich. He’s just not choosing to. Yet.

I asked him yesterday why NZ’s 311 richest families worth $276m each shouldn’t also be sharing the burden of his ‘no frills’ approach, or at least paying the 30% effective tax rate that wage-earning renters getting $80,000 per year pay. All of my questions and his responses are in the podcast above, which is in shortened form for free subscribers and includes my analysis and commentary for paying subscibers.

Currently, those 311 families pay an effective tax rate of 9.5% and would have added $3.3 billion to tax revenues in 2020/2021 if they paid the same as that $80,000 per year salary earner. Instead, they will go on under-paying their taxes and the government is planning an austerity budget on the eve of a recession, which will swap spending elsewhere to pay for $4.5 billion of flood repairs. That $3.3 billion would have been handy right about now.

Paying subscribers can usually see and hear more below the paywall fold placed here and in the podcast above, but I’ve decided to open most of this one to all immediately given the public interest involved, and to recognise the support I get from paying subscribers to publicise my journalism on housing unaffordability, climate change inaction and poverty reduction.

The Beehive and RBNZ just put a floor under house prices

Meanwhile, the actions of the Government and the Reserve Bank this week have just reignited that engine of tax-free wealth for asset owners. They did this by:

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

TL;DR: PM Chris Hipkins is expected to squelch any revival of talk about a Capital Gains Tax when he gives a luncheon speech to business leaders in Auckland today. The speech will squash any momentum that might have built after yesterday’s stunning report revealing Aotearoa’s richest pay tax at a rate anywhere between a third and half the rate of middle-income earners.

Instead, Hipkins is reported to be preparing to reassure business leaders that the tax system status quo is safe and that the Government will look to fund any extra post-Gabrielle spending through ‘belt-tightening’ in other areas to ensure the Budget deficit and Government debt remain low.

Paying subscribers can usually see and hear more below the paywall fold place here and in the podcast above, but I’ve decided to open most of this one to all immediately given the public interest involved, and to recognise the support I get from paying subscribers to publicise my journalism on housing unaffordability, climate change inaction and poverty reduction.

Exposed yet untouchable: our housing market with bits tacked on

PM Chris Hipkins is set to plough on and ignore the exposure of the scale of the hole in Aotearoa’s tax system that is massively widening inequality and distorting our economy into a housing market with bits tacked. Opposition Leader Christopher Luxon is also in no mood to use the research released yesterday to drive tax change. He flat out denied that wealthy property owners should pay more tax when pressed on the report’s implications yesterday, saying instead the solution was income tax cuts for middle income earners. (See more in quotes of the day below)

That focus on keeping overall taxes and public debt low by not taxing capital gains and not investing heavily in public infrastructure preserves Aotearoa’s existing economic model focused on creating the conditions for wealth creation for home owners through leveraged and untaxed capital gains on residential land, rather than investing in real businesses, infrastructure and skills that increase productivity and real wages.

That model was exposed yesterday with the release of IRD research showing New Zealand’s richest 311 families are worth an average of $276 million each and generate 93% of their effective income in ways that are not taxed, meaning their effective tax rate was 9.5% in 2020/21. If those families had been taxed at the same 30% effective rate as a PAYE earner on $80,000 per year (as measured in a Treasury report), that would have generated extra tax revenues of $3.3 billion — more than enough to pay for flood repairs.

RBNZ and Govt act to put floor under house prices

The model was further reinforced by the Reserve Bank’s announcement yesterday it planned to loosen LVR settings from June 1 to allow banks to resume mortgage lending growth and stop house prices from falling much more than the 15-20% forecast by the bank. A bottoming-out of house prices is set to reverse the negative wealth effect that has pushed the economy towards a recession.

Housing Minister Megan Woods also yesterday announced increases in the caps for first home buyers grants, including increases cited at HUD of as much as $150,000 to $650,000 for new builds in regional areas such as Gisborne, central Hawkes Bay and Whanganui. The Government also halved the mortgage guarantee insurance to 0.5% for first home buyers, meaning someone with a $600,000 home loan now only has to pay $3,000 upfront for insurance, rather than $6,000, which leaves them more money for a deposit to leverage up into a higher bidding price.

I’ll be attending Hipkins’ speech in Auckland later today and welcome suggestions for questions in the comments below and in the chat on the Substack app if you’re out and about on mobile.

Scoops and news breaking elsewhere this morning

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

TL;DR: Wellington City Council officials have repeatedly acted to block new housing supply, despite the express instructions of the majority of councillors in key votes last year and in the face of the desperation of young workers facing the most expensive and lowest quality rentals in Aotearoa.

I spoke to pro-housing councillor Rebecca Matthews last week about what it’s like to try to shift the centre of political gravity inside councils suffering from the sort of ‘democratic deficit’ diagnosed by the Productivity Commission in its repeated conclusions that councils block new housing supply to please older NIMBY home owners, who vote at much higher rates than young renters in council elections. I wrote about it in last Monday’s Dawn Chorus.

The Dominion Post’s Erin Gourley reported via Stuff last week that Wellington City Council staff had quietly reinserted 797 villas into the Council’s district plan, despite express instructions from Council after a heated debate and vote last year that character zones stopping building be cut by 72%.

Also yesterday, Erin reported via Stuff the number of protected residential properties would jump from 90 to 440 under the Hutt City Council’s Plan Change 56 which proposes six new heritage areas in Petone, Moera and Wainuiomata. Within the heritage precincts, owners would not be allowed to increase the footprint of their homes.

Here’s a sample of the interview:

Do these people have no shame? Don’t they see their grandkids and their grandkids’ mates who rent who are going to be living in brutally expensive, unhealthy housing?

“This has been such a weird, difficult, horrible journey to be on, because when I came on council, I just assumed having enough housing, so everybody could have somewhere to live near where they wanted to work was such a clear public good, but it feels like I was an innocent bunny hopping through the woods thinking nobody was against it.

“And when I came onto Council, I saw that this whole thing was a racket to stop housing being built, and within our organisation around the council table and the community. It just made me so mad, I couldn't believe the injustice of it. And that all of the resources, and all of the power seems to be stacked up on one side against the other. And as a councillor, who's pro housing, I'm the devil incarnate with it.

“It's just how do you upset the status quo? What do want to leave people. Would you want five storey apartments built next to the sidewalk, because then people would have homes to live on. And, the pricing of our housing would come down, and we'd be able to grow as a city, especially these areas. It's the best land, but they want to tie up forever with their old houses. And for young people who rent these older homes, they're often terrible places to live. They might be nice if you live in one and you've restored it and it's beautiful, you bought it cheap in the 80s or 90s. But that pathway is closed off to younger generations and they live in them as really crappy rentals. We don't feel that these kind of old houses represent our future in any way.” Rebecca Matthews.

For paying subscribers below, there is a lightly edited transcript of the key sections of the interview. The full audio of the interview is available for free and paying subscribers above.

‘We voted for more houses. They over-rode that’

TLDR: This week’s news in geopolitics and Aotearoa’s political economy covered on The Kākā for paying subscribers included:

* Council staff in Wellington going rogue on their council, quietly reinserted 797 villas into the Council’s district plan, despite express instructions from Council after a heated debate and vote last year that character zones stopping building be cut by 72%; Monday’s email

* A law change designed to tighten the number of free carbon credits allocated to major polluters could instead allow them to emit more carbon for free; Tuesday’s email

* The IRD confirmed the release next Wednesday of much better wealth data and a speech on wealth and income from Revenue Minister David Parker; Wednesday’s email

* Auckland Transport, at the behest of Mayor Wayne Brown, abandoned a long-running drive for special powers to remove kerbside parking for things like cycleways and has dropped a proposal to charge at park-and-ride stations; Thursday’s email

* The Government, which still says it is treating emissions reduction as a climate emergency and a nuclear-free moment, defended its decision to allow NZ Steel to extend the consent on its Glenbrook steel mill until 2046 without the Auckland Council having to consider climate change in the consent process. Friday’s email.

My podcast for The Spinoff this week

Going wider for new workers - Employers are struggling to replace staff of all skill levels and the Reserve Bank says it has no choice but to hike interest rates because it says the economy is at full employment. But in this week’s When The Facts Change, I challenged that assumption in an interview with Autism NZ CEO Dane Dougan about the thousands of workers unnecessarily unemployed because of their autism, and how to change that.

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 co-host Peter Bale in Perugia (!) and special guests:

* Merja Myllylahti from AUT on this week’s dramas in media globally, including Fox News’ defamation settlement payout and non-apology for lying about US election fraud and her Trust in News survey (more here) from 5.20pm to 5.40 pm; and,

* Christina Hood from Compass Climate to talk about the Climate Commission’s advice to the Government to actually reduce emissions from 5.40 to 5.50 pm. 

Peter and I also talked about the news in geopolitics this week, including the beginning of spring offensives in Ukraine and the new civil war in Sudan. The Hoon podcast version is 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.

Ka kite ano

Bernard

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

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

TL;DR: Next week the Climate Commission will unveil its draft advice for Aotearoa’s 2026-30 emissions budget. Chair Rod Carr tells me in the interview above for both free and paying subscribers the Government is falling behind after rejecting the Commission’s advice on the Emissions Trading Scheme, bringing agriculture into the ETS and using pine forests as carbon sinks. He says time is running out.

PM Chris Hipkins’ Cabinet has repeatedly opted for climate policy options that prioritise lower fuel costs over further emissions reductions and avoids any moves that might prompt industrial emitters to cut jobs. Hipkins defended the Government’s approach in answer to my questions at a news conference yesterday, saying the Government planned new policies to get back on track. Energy and Resources Minister Megan Woods also said Aotearoa needed to meet its emissions targets without de-industrialising. Here’s the exchanges from the news conference:

For paying subscribers below, there is a lightly edited transcript of the key sections of the interview with Rod Carr.

‘We gave advice. They chose to do it differently’