Auckland Inc losing faith in Govt's economic strategy

Briefly in my Picks ‘n Mixes and Dawn Chorus for full subscribers on Friday August 8, the top news, scoops and deep-dives in Aotearoa’s political economy around housing, poverty and climate are:* The Lead: Auckland Chamber of Commerce CEO Simon Bridges has electrified the political and economic landscape by calling for Government stimulus to help Aucklanders struggling with 6.1% unemployment.* Bridges was effectively calling time on Auckland Inc’s patience over the Government’s pray-for-GDP-growth-from-OCR-rate-cuts strategy. See more analysis and detail below the paywall fold and in the video and podcast above. * Finance Minister Nicola Willis said she was “open to suggestions for actionable insights,” but gave no indication the Government would backtrack on its adherence to its tight budget policy to achieve surplus and debt reduction in the next four years, in order to cut mortgage rates. See The Lead below.* Former National PM John Key put his finger on the economy’s ‘problem’ in comments to Auckland business leaders recently, saying: “The guts of what’s wrong is that the housing market is going down, not up.”* In my view, it’s not going up because of the wealth effect of the four-years-long-and-counting 10%-20%-plus slump in prices freezing the market, along with restrictions on bank lending. Essentially, our economy, which has relied on mortgage lending booms to restart after the last three recessions, can’t handle the truth of a balance sheet recession because of a frozen market and shackles on bank lending.* Coincidentally, Labour Leader Chris Hipkins also nailed the problem, saying: “Let’s be really frank. We have an over-emphasis on the housing market. We can’t get rich as a country by buying & selling houses from one another.”* Hipkins is holding a mid-winter offsite strategy meeting with the Labour caucus in Queenstown this weekend, where it is expected Labour will sign off (again) on a policy of a Capital Gains Tax beyond the family home.* In my view though, that won’t work to change the incentives that turned our economy into a housing-market-with-bits-tacked-on because households will still see opportunities for massive tax-free and leveraged capital gains on their own homes, and there is still no incentive to save more in productive real assets. A wealth or land tax would be much simpler, more effective and fairer, in my view, along with incentives to save in pension funds, as are used overseas.* The Scoop of the Morning is from Steve Kilgallon for Stuff: Left in faeces, blood under nails - daughter ‘appalled’ at mum’s hospital stay* The Must-Read Deep-Dive of the day is from Adam Burns for RNZ: 19-year-old cyclist Fyfa Dawson's death largely due to flawed traffic management - coroner Paying subscribers can usually hear more detail and my commentary in the podcast and video above and get the links from the Picks ‘n Mixes below the paywall, while non-paying subscribers just get this opening brief into. I have decided this morning to open this one up immediately and fully for public reading, listening and sharing as part of our public interest mandate. Thanks in advance to paying subscribers.The Lead: Auckland calls time on failed economic strategyYesterday’s intervention by Simon Bridges has shifted the landscape of our political economy, revealing in public the growing private frustration among business leaders, big and small, about the failure of the Government’s strategy of cutting spending to lower interest rates to get the housing market going again.It’s not working because bank lending is restricted and the housing market is frozen in time near its 2022 lows, cementing in a wealth-effect wet blanket on spending, which is being worsened by falling real wages for renters. The market is frozen because of a standoff between sellers waiting for the inevitable rebound and buyers worried they might buy and then see more falls evaporate their leveraged equity. See the quote below from from a recent buyer, Jason Walls, to get a sense of the mood.Quote of the day: ‘I caught the falling knife and it hurt’“I’m looking down the barrel of a massive loss in the house that I own, and we’ve got a lot of my friends that are moving overseas. A lot of it is getting quite personal now, and people vote on the personal.“If you start seeing some of your friends, some of your colleagues losing their jobs as we see unemployment ticking up, that starts to become a problem, and people want to look for someone to blame.” NewstalkZB Political Editor Jason Walls on why the National-led Government is in damage control mode, via NZ Herald.Further reading: * Interview with Simon Bridges on RNZ Morning Report: 'Pretty grim': Bridges calls for government to help Auckland* RNZ Morning Report: No simple solution to stimulate economic growth - Minister for Auckland* Deep-dive on the jobs drought by Pretoria Gordon for RNZ: Workers moving towns in desperate quest for jobsThe Sidebar: ‘It’s not working. We need to change it.’Labour Leader Chris Hipkins talked up the need to change the incentive at the heart of our housing-market-with-bits-tacked-on, which is the lack of a capital gains tax on residential land. He didn’t say Labour had chosen to adopt such a policy (again,) but the drums are beating in that direction after Labour’s policy council was reported last weekend by former Labour Ministerial adviser Vernon Small to have opted for a Capital Gains Tax beyond the family home over a wealth tax.* RNZ: Labour leader Hipkins hints at capital gains tax* Analysis by Anneke Smith for RNZ: Labour MPs inch towards a tax policyMy Picks ‘n Mixes for Friday, August 8Other Scoops this morning* Investigation by Guyon Espiner for RNZ: Officer made claims about things that 'did not happen' in fatal shooting* Glenn McConnell for Stuff: Govt emails hacked to send scams to 56,000 people* Anna Whyte for The Post-$: One in five roles could go at the Reserve Bank* Jamie Ensor for NZ Herald-$: Labour declined offers for NCEA briefings* David Williams for Newsroom Pro-$: Health NZ’s parking income tops $22m* Todd Niall for Newsroom: Wayne Brown firm faces delisting over regs omission* Andrea Vance for The Post-$: Security warnings dismissed in red tape reforms.Other Must-Reads this morning* Video on the Fyfa Dawson cycling death case via Al Williams for NZ Herald: 'The impact of her loss is beyond words': Calls for change after teen cyclist killed* Deep-dive by Emma Ricketts for Stuff: ‘By 26, I owned a home and business’: why this young Kiwi chose a trade over a degree* Deep-dive on migration by Gill Bonnett for RNZ: $2 shops, high-tech exports and buying retirees' firms - Entrepreneur visa changes likely* Feature on Selwyn’s growth by Eva Kershaw for Frank Film via Video and NZ Herald: Rapid change brings challenges for NZ's fastest-growing district* Bella Craig feature for RNZ: Laundromats awash with people trying to save cashThe Best of the RestPolitics & Geopolitics* Anna Sargent for RNZ: Residents furious as police proposing area's two officers* 1News: Iwi Māori partnership boards unite to oppose health law changes* Good news via RNZ: NZ signs new agricultural trade deal with IndonesiaEconomy, Global Economy, Business, Tech & Media* RNZ: Industrial gas users group to meet with Resources Minister over supply* Lauren Crimp for RNZ: AI saves doctors time, but makes mistakes - study* Phil Pennington for RNZ: Police too loose with number plate camera system* Rob Stock for The Post-$: Foodstuffs matches Woolworths’ refund policy. * Michaela Gower for Hawkes Bay Today-$: Hospitality’s winter storm: 'People just haven’t got the expendable dollar'* Good news via Penny Miles for RNZ: Craft wool processing to stay in NZHousing, Transport, Infrastructure & Councils* Explainer by Nik Dirga for RNZ: What we know so far about new RUCs* Oliver Lewis for BusinessDesk-$: 'Shared disappointment' over courts PPP snub* Analysis by Thomas Manch for The Post-$: Improving the nation’s creaking and insufficient infrastructure will take more than just a politically acceptable plan.* Thomas Manch for The Post-$: Govt ready to use ‘stick’ over water reforms.* Thomas Manch for The Post-$: How Australia's 'asset recycling' could work in NZ* RNZ: Dunedin students face rising rents despite more properties on offer* Lois Williams: DOC offers olive branch to Punakaiki locals over parking fees* Anne Gibson for NZ Herald-$: NZ 10 busiest house builders - how they copeCouncils* Amanda Gillies for The Detail: Battling apathy over local government* LDR via 1News: Ōhau wall: Legal threat looms as* Diane McCarthy 1News: Road works 'pointless' if bridge is underwater* Lauren Crimp for 1News: Wellington councillors baulk at $7m fencing* Zita Campbell for LDR via Gisborne Herald: Former Green MP eyes local role* Tina Law for The Press-$: Christchurch council spends $120,000 consulting public a second time on speed limit drops.Health, Education, Poverty, Living Costs, Incomes, Benefits & Justice* Susan Edmunds for RNZ: The people working for $10 - and less - an hour* Deep-dive by Steve Macmillan for Stuff: Nurturing future rural GPs.* RNZ: 'Patient harm is going to soar' - Nurses on St John changes* RNZ: Aged care sector needs sweeping reform, woman with elderly parents says* The Northern Advocate-$: Schools roster students home amid teacher shortages* Ava Whitworth for Stuff: Couple ‘saved thousands through dental tourism’* RNZ: 'Insulting': Primary teachers reject ministry's 1% pay rise* RNZ: First portion of social investment funding to prioritise children* Matthew Rosenberg via LDR for RNZ: Soaring demand sparks change at Invercargill's Total Mobility service for disabled* Solutions news via Pokere Paewai for RNZ: WĀHI looks how best to support mental health of young Māori in rural Bay of Plenty* RNZ: Students leaving school with no qualifications highest in a decadeClimate & Environment* Deep-dive by Phil Pennington for RNZ: Wildfire questions around saving farms, forests from burn* Will Harvie for The Press-$: No snow: Some skifields may not open this season.* Andrea Vance for The Post-$: Slip-affected homeowners left in disbelief over council inaction.* Susan Edmunds for RNZ: Kapuni plant may shut due to gas supply concerns* Solutions news via RNZ: Kiwis told to embrace renewable energy boomOp-Eds, Columns & Editorials this morning* NZ Herald-$: Editorial: Are emergency housing policies in need of tweaking?* NZ Herald-$: Matthew Hooton: Economic woes should take priority over race* NZ Herald-$: Audrey Young: NCEA masterclass – Stanford schools colleagues* Joel McManus for The Spinoff: The life-changing power of blaming everything on road cones* OneRoof: Tony Alexander: Banks aren't cutting rates because sunny days are around the corner* Kidney Health NZ’s Curtis Walker: NZ failing confront kidney disease crisis* MTA’s James McDowall: RUCs move levels the field - but what about WOFs?Docs of the Day* Treasury Long-term Insights Briefing* NZ Herald video of news conference by Christopher Luxon and Erica StanfordCartoon of the day: Bread & CircusesKa kite ano. 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