Briefly in my Daily Chorus on Tuesday August 26, the top news, scoops and deep-dives in Aotearoa’s political economy around housing, poverty and climate are:

* The Lead: PM Christopher Luxon let slip yesterday he met with Reserve Bank Governor Christian Hawkesby last week just before the bank’s surprisingly dovish rate cut. Luxon told Hawkesby the central bank had been too slow to cut rates. He also welcomed the Reserve Bank’s proposals announced yesterday to loosen the capital requirements for bank lending, which could either ramp up lending into the housing market by as much as a further $175 billion, or allow the big banks to increase dividends to their Australian parents by up to $7 billion. (NZ Herald, NewstalkZB)

* The Sidebar: Perhaps coincidentally, Luxon also said yesterday he wanted moderate and consistent rises in house prices, rather than the falls seen over the last year. His views clash with those of Housing & Infrastructure Minister Chris Bishop, who reiterated last week via RNZ the Government’s aim was to drive down house prices and rents over the medium to long term. (Stuff, Interest)

* The first Quote of the Day is from Chris Bishop: ‘The Government is trying over the medium to long term to drive house prices and rents down’

* The second Quote of the Day is from Christopher Luxon: ‘We want to have modest, consistent house price increases. We’re focused on making houses more affordable. That means you need to have wages growing faster than house prices.”

* My suggestion for Analysis of the day is Henry Cooke’s investigation via his substack Museum Street into which voters switched from Labour to National in 2023, and are trending away from the party now. Who are the voters swinging away from Christopher Luxon?

* My suggestion for Must-Read Deep-Dive of the day is from Nicholas Jones at Stuff, documenting how a third-world-style syphillis epidemic has killed 12 babies in Auckland and Northland.

Paying subscribers get more detail and analysis below the paywall fold and in the video and podcast above. It is sent later in the day to all subscribers.

Quotes of the day

Asked if lower house prices were a good thing, Chris Bishop said:

“Well, I think it is. We've got to decouple the idea that the New Zealand economy is driven by house prices. Actually, it's artificial wealth and real productive wealth comes not from house prices, but from investments in manufacturing and technology and other things that actually drive productivity growth and drive higher wages.

“So I think it is. And that's partly what the government is trying to do over the medium to long term is to drive house prices down and also drive rents down.” Housing, Infrastructure & RMA Reform Minister Chris Bishop being interviewed by Corin Dann on RNZ Morning Report on Friday. (Bolding mine)

Asked if he agreed with Bishop, Christopher Luxon said:

“Chris is right in the sense of we want to make sure we’ve got productive growth happening in the economy and how do you get better economic productivity into the New Zealand economy which has been a problem over 30 years.

“If you don’t just want to drive an economy through immigration and house price inflation, we’ve really got to make sure we are creating a higher standard of living for people through a more productive economy. We want to be able to make sure that going forward that we have modest, consistent house price increases.”

The Government was focused on housing becoming much more affordable, he said.

“That means you need to have wages growing faster than house prices. We don't want our whole economic growth be driven by speculative house price inflation. We actually want it driven by productive growth.” PM Christopher Luxon being interviewed yesterday by Corin Dann on RNZ Morning Report. (bolding mine)

Number of the day - Five percentage points

Five - The Reserve Bank proposed a loosening of capital requirements for banks yesterday that it said would reduce their capital requirements relative to still-being-implemented 2019 reforms by around five percentage points, or $7 billion.

If banks chose to use that extra capital to increase lending, that would imply up to an extra $175 billion of lending at current capital coverage ratios of 4-5%. If the banks chose instead to use the spare capital to bolster shareholder returns, they could increase dividends back to their Australian owners by up to $7 billion, implying a much larger current account deficit.

Chart: Home loans up, while business & farm loans fall

Timeline-cleansing nature pic

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