The Kākā by Bernard Hickey

Thank you Troy Baisden, Tanya Wintringham, Sue Parsons, Bryce Adams, Sam Cray, and many others for tuning into my live video! Join me for my next live video in the app. 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

Thank you Tim, Brian Rathbone, Andrew Riddell, Carolyn Rohm, David, and many others for tuning into my live video with Verity Johnson! Join me for my next live video in the app.Here’s the PDF of the presentation I used with it. 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

The Government was insistent yesterday a move to ‘Level 4’ fuel rationing was very unlikely and it’s still forecasting economic growth and relatively moderate inflation this year.It may pay for Treasury, the Finance Minister and voters in general to have a look at what the closest observers in the global oil industry were saying as recently as last night, especially now the latest suggestion of peace talks and an opening of the Strait of Hormuz have dissolved.The world’s largest oil company, Saudi Aramco, said last night global oil reserves were being drawn down at a rate of 14 million barrels per day (mbpd) while the Strait of Hormuz is closed. That tallies with other oil analysts’ estimates of reserve drawdowns of around 100mpbd, which would drag reserves down to stressful levels by June and the effective bottom of the barrel by September.JP Morgan’s analysts have been leading the market in terms of depth of detail and forecasts on oil prices and reserves. In the last couple of days, they’ve put out a note which points out that one of the reasons the oil price has not sprinted much higher than about US$105 a barrel is that global oil reserves were being drawn down rapidly.This chart shows the oil reserves estimated by JP Morgan over the last six years or so. And you can see during COVID the reserves went up because we didn’t use so much fuel. Then during 2022 because US President Joe Biden released reserves onto the market to try to limit oil price rises after Russia invaded Ukraine. And then since the beginning of March, we’ve seen global oil reserves and in particular, the US Strategic Petroleum Reserve, drawn down heavily as Trump and others are desperate to try to contain the rise in oil prices. The International Energy Agency also released a bunch of reserves onto the market. This was with the expectation that this would be a relatively short closure of the Strait of Hormuz. People kept expecting it’s going to open any day now, particularly once the ceasefire kicked in in April. But despite lots of juicy hints from Donald Trump on Friday and Saturday that the Iranians were doing a deal, the Iranians came back with their response to the US memorandum of understanding that Trump deemed ‘unacceptable’.The Iranians want to keep their nuclear material, to not negotiate any sort of end to their nuclear ambitions, to keep control of the Strait of Hormuz with a tollbooth, and no more Israeli attacks on Hezbollah in Lebanon. They want reparations from the United States for the attacks on Iran and they want the U.S. to get its bases out of the Middle East. This wasn’t the capitulation that Donald Trump has been talking about.Despite Trump’s blatherings about the strength of the US military, it’s clear that the US Navy are not putting their aircraft carrier groups, into the Strait of Hormuz because it’s too dangerous. The US attempt to escort ships out lasted just a couple of days because Saudi Arabia and other Gulf states told them it risked sparking a resumption of hostilities. The Iranians are more than able to flick a few drones across and take out plenty of tanks and refineries in the United Arab Emirates.Iran has its foot on the throat of the world economyIt’s very clear now that Iran is in control here. Iran can blockade the straits. America is trying to blockade Iran, but has plenty of reserves of food, and obviously fuel, and is able to hold out for many more months.Meanwhile, this is a very dangerous situation politically for Donald Trump. The closer he gets to the midterm elections on November 2, the less popular the war becomes.The JP Morgan chart above shows reserves being drawn down at the fastest rate in recent history. Without the strait being open, the global oil system gets down below the 8 billion barrels. That may seem like a lot of room, but as you’d expect with a complex system of tanks, pipes, tankers, refineries, there’s a lot of oil that’s actually in the system. It’s a bit like a circulatory system filled with blood. Even though you might have however many litres of blood, you die well before all the blood is out because your blood pressure drops and all sorts of systems begin failing. And it’s the same with the oil system. The system starts failing well before the bottom of the barrelAs you drop below 8 billion barrels, according JP Morgan, things start to fail. And so that puts enormous stress on the markets. And essentially, the prices have to rise to destroy demand to match this significant drop in supply. So, so far with the closure of the Strait of Hormuz, we’ve seen a billion barrels of oil production lost. And there is only so much oil to be obtained from other places like the United States or Latin America or Africa. And of course, every time you do get it from somewhere different, that is a different length of tanker journey. It’s a different type of oil. And so you get down to what you’d describe as the bottom of the barrel. And when we get there, JP Morgan is saying, we get over US$150 a barrel and a rise towards US$200/barrel. There are some who believe that the true price in which you match demand with supply, the sort of level described as that’ll give us enough demand destruction is well over US$200 per barrel.The wisdom of the crowds on when the Strait opensIf you look at the collective wisdom of the crowds in predictions markets such as Polymarket, the current balance is that it will open by July 31st is 52%.But it’s clear that it’s falling the longer this goes on and the clearer it becomes that despite Trump’s talk, the Strait is well and truly closed. The two sides are far apart. Iran isn’t on its knees. America apparently isn’t on its knees, although the closer we get to the midterms the more the pain at the pump intensifies.That was clear because Trump said overnight he was going to suspend the 14 cents a gallon tax on gas. It’s worth remembering that our elections are five days after the mid-terms and our electorate is just as sensitive to petrol prices.Thank you Tadhg Stopford, Alexa Forbes, Tanya Wintringham, Peter J Keegan, Kris Herbert, and many others for tuning into my live video! Join me for my next live video in the app.Timeline-cleansing nature picKa kite anoBernard 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

I have re-recorded and this a re-send of my earlier email, but with a fresh video with full audio attached.New Zealand’s political economy has become such a housing-market-with-bits-tacked-on that it has spiralled into a self-reinforcing system, where the ever-older-and-ever-wealthier winners keep rewarding politicians that protect and enhance their gains, especially when it is at the expense of the young losers paying the rents and taxes in this system. The losers then either give up voting or leave the country, reinforcing the political power of the winners and ensuring the system can stagger on.After all, who will pay the rent to keep the system going if the young are allowed to buy their own homes after paying off their fees early?It has led to (often unpromised) policies such as ending fees-free for students and the dumping matching Government grants for first home buyers. The political energy generating this spiral is encapsulated in support for NZ First, which has reinforced and bolstered the incomes and tax-free capital gains of older home owners for decades.That support is rising, thanks to a turbocharging of anti-migrant views among older home-owners. Today’s news from our political economy encapsulates the latest twist of the spiral, including:* Winston Peters boasting on Friday the Government will dump the final first year of fees-free tertiary education in the Budget later this month, adding to its ending of first home buyer subsidy grants as unpromised budget cuts hitting young voters hardest;* A ‘poll of polls’ analysing the trend of support for the coalition of parties in Government parties vs the Opposition parties shows the Government is on track to win re-election, thanks to a surge in support for NZ First;* A survey of 506 young New Zealanders for OneChoice has found 54% now define the ‘New Zealand dream’ as being financially independent, ahead of home-ownership (44%), while 65% say hoping to own a home is no longer relevant;* The survey found 33% of renters spend at least half their income on rent, with a further 38% spending between 30% and 49% of their income on rent, while 71% are delaying starting a family and/or changing careers due to housing pressures, and 76% feel ‘trapped’ as renters being unable to save for a deposit; and,* Police Commissioner Richard Chambers has conceded to 1News he can’t compete with the salaries and incentives being offered by Australian police forces, with at least 144 officers leaving for Australia in the past year.Charts of the dayHere’s the PDF of the presentation above, which is available to paying subscribers, along with the invite to the Substack Live video above. Thank you Paul Singh, Tanya Wintringham, Laura Cendak, Andre De Groot, Bryce Adams, and many others for tuning into my live video! Join me for my next live video in the app.Cartoon du JourTimeline-Cleansing Nature Pic: Ready to flyKa kite anōCheersBernard 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

Here’s my daily Chorus in video, podcast and email form for both paying and non-paying subscribers, including my selection of the six key news items in Aotearoa’s political economy over the last day or so around housing, climate and poverty: * The OECD called on New Zealand to reform its overpriced electricity market and undersized stock market in its annual survey published yesterday, along with some ways to make NZ Superannuation more affordable in the long run. (See more detail below and in the video above)* The Climate Commission published its second National Climate Change Risk Assessment Report yesterday, pointing out: 97% of government spend is on responding to natural hazards and only 3% on building resilience, while more than half a million buildings were already exposed to inland flooding, with at least $235 billion at risk; and, damaging storm events now happen weekly vs monthly 15 years ago.* The Opportunities Party (TOP) this morning released details of its election policy for a $19,400 tax-free Universal Basic Income and a tax-free Kiwisaver 2.0 scheme phasing in contributions of 6% from employees and 6% from employers.* Oil prices fell 3% overnight on hopes the US and Iran might agree to begin peace talks after opening the Strait of Hormuz, but the details are frustratingly opaque and yet to be confirmed in a way to give any fuel price relief any time soon.* Protest marches calling for lower fuel taxes are planned in 43 towns for next Saturday. They’re being organized and amplified by through social media linked to anti-vaxx and anti-mandate protest groups, but say they don’t want to unleash Irish-style violent protests.* Police have contacted a New Zealand woman over a Facebook post that suggested the India Free Trade Agreement would begin a “mass immigration invasion” after a complaints about social cohesion. Police Minister Mark Mitchell said Police should not have contacted her, Henry Cooke reports for The Post-$.An Early Bird version of this was sent to paying subscribers earlier today with my fuller Pick’ n Mix lists of links and detail. Subscribe as a paying subscriber for the fuller and earlier version and to get access to the Substack Live version of the video above. The presentation used in the video is attached at the end of this email.The OECD lays out a smorgasbord of reform ideasThe big news yesterday for those looking for fresh ideas for economic and political reform was the annual OECD survey. The focus this year was on pensions and the electricity market, and also on capital raising by companies and the NZX, including plenty of interesting detail and charts.The OECD has come out bluntly and said the gentailor payout ratios are too high and electricity prices in New Zealand are too high. The OECD is suggesting some interesting ways on how to fix this, in particular a so-called firming market to try to break the connection between volatile international gas prices and our domestic electricity prices. This idea of a ‘firming’ market is where people are able to invest in non-fossil fuel electricity, which can be traded and in effect help replace some of the gas, which is helping to drive prices at the moment.Cheaper ways for SMEs to raise moneyThe OECD has also spent quite a bit of time looking at the capital raising and ability of small to medium businesses in New Zealand to borrow money or to get equity investment to grow. We have a relatively low amount of growth among small to medium businesses and not much capital raising from our stock market, which it turns out the OECD says is very expensive and small relative to GDP.One of the issues here is that SMEs find it difficult to get real loans in their own right. And that’s because our banks are much more interested in lending to people against their homes. And if they are lending to small business, typically it’s actually against the business owner’s home. And so what we’re seeing here is that loan rejection rates are quite high in New Zealand relative to other countries, according to the OECD. And it’s proposing that people in KiwiSaver funds and KiwiSaver funds can put money into a type of small business market using sort fund investment type systems, which is sort of interesting. The OECD idea has come up at the same time as the Reserve Bank has taken a look at profit margins charged by banks for lending to small businesses, which are also significantly higher than other countries and notably higher than in Australia. The other area where the OECD has come up with some new ideas is around our New Zealand Superannuation system.They proposed changing the way we tax our savings. At the moment, before you put money into a KiwiSaver account, it is taxed. And then while it’s in the KiwiSaver account, the earnings from that are taxed. And it’s only not taxed when you pull the money out. Now in other countries, that’s not how it works. You get a tax break going in, you’re not charged tax on earnings that you put into some sort of pension fund. And often while it’s in the fund, it doesn’t get taxed either.And that means by the end of it, you’ve got a much bigger chunk of money. And that’s when the returns or the withdrawals get taxed. The OECD worked out you’d actually get a lot more funds in these pension funds if you didn’t tax it on the way in and while it was in.My Top Six Pick ‘n Mix* Scoop: Cecile Maier for BusinessDesk-$: Drury-linked startups speak on harassment allegations* Scoop: WSJ-$ (gift): Saudi Arabia, Kuwait Lift Restrictions on U.S. Military Access to Bases, Airspace* Interview for 1News: 1News: Jacinda Ardern opens up on Sydney life - ‘taking it as it comes.’ ‘The former PM joked she had considered putting “washed-up politician” on flight arrival cards into Australia.* Deep-dive by Lauren Crimp for RNZ: David vs the Media: Has Seymour gone too far?* Op-Ed by Waikato Uni’s Tahu Kukutai, John Bryant, and Polly Atatoa Carr for The Conversation: NZ is overdue for a population strategy – but there is only so much governments can do* Interview with Quilae Wong by Alexia Russell for RNZ/Newsroom’s The Detail: The party that would be everyone’s coalition friendCartoon du JourTimeline-Cleansing Nature PicCheersBernard 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

Here’s the six things that stood out to me in Aotearoa’s political economy in the last day around housing, climate and poverty:* Chris Bishop has dumped his plan to dismantle regional councils and replace them with mayoral committees, instead telling councils to present their amalgamation plans to the Government within 90 days or ‘we will do it for you.’ * The ultimatum is the latest in a multi-decade series of Government pleadings and orders to councils under both Labour and National to amalgamate to find synergies and make it easier to find private capital for infrastructure. It’s driven by their bipartisan and doctrinaire belief that central Government should squeeze itself under 30% of GDP. To do that, it always needs to get someone else to pay for the infrastructure to cope with the migration-led population growth the Government enables and benefits from. Meanwhile, councils get none of the GST or PAYE from population growth, but own 35% of infrastructure, and get 11% of taxes to fund it.* Unions Wellington will present an in-sourcing proposal to the Wellington City Council tonight, estimating the Council could save $65 million by bringing legal and engineering work back in-house.* The Investigation of the Day is from Chris Knox and Ben Leahy at NZ Herald-$ documenting how Kainga Ora has sold 777 state homes for $330 million since July 2025, including 34 Auckland homes sold for 13% less than their 2024 Council Valuations (CVs).* Business groups and unions have written a joint letter to Employment Relations Minister Brooke van Velden calling for changes to Health and Safety law changes that exempt small businesses and loosen laws written after the Pike River disaster.* Deep-dive of the day: FTAlphaville’s Robin Wigglesworth wrote overnight global oil analysts were increasingly worried about a growing risk of a ‘non-linear spike’ in oil prices as oil stocks near rock bottom.The presentation used in the video above and the video above are available to paying subscribers, with the PDF of the presentation and more details in text and chart form below the paywall fold. Usually this is point where the article goes behind the paywall. But I’ve decided to open this one up immediately to all as a taster to see what you get. Subscribe as a paying subscriber if you want to support my work doing this. An eternal hunt for magical merger gains & private capitalThe magical thinking goes on and on. It’s about time someone called b******t on it because it’s not working. It never worked. It won’t work. But it goes on because the eternal hunt for the magic solution to infrastructure funding that doesn’t require ratepayers or taxpayers to pay allows everyone to believe in the magic, without taking the tough decisions. Denial, delay and deflection are essential tools for modern politicians.For at least 20 years Governments of both the Labour and National varieties have been on a quest to squeeze the size of central Government below 30% of GDP, while also trying to get someone else to pay to build and maintain the infrastructure needed to cope with the migrant-led population growth enabled by their central Governments, which collected all the GST and PAYE from that growth.The problem is councils own 35% of the infrastructure and get just 11% of all taxes, and none of the GST and PAYE. So the incentives to unleash population growth are horribly skewed, leading to population growth without the infrastructure and constant fights between councils and the Government over who will and should pay.Government doesn’t want to pay because that would imply higher taxes. Councils don’t want to pay because that implies higher rates. Government loves population growth because it buys easy and fast GDP growth without the immediate need for investment funded by either (or both) taxes or debt. So we end up with a constant fight between councils and Government, with councils calling for shares of GST and capital grants from Government, and the Government telling the councils they need to spend less on ‘nice to haves’ and bring in private capital to fund the infrastructure.Both Labour and National have tried to rewrite the laws to make it easier for both councils and the Government to bring in private capital to pay for infrastructure. Labour tried in 2020 with the Infrastructure Funding and Financing (IFF) Act, which was supposed to unleash a welter of council bond issues from special purpose vehicles to private investors, which would be funded by levies on homeowners in new developments. It was modelled on the Milldale development on the North Shore.But just two projects used the IFF in five years because it was more expensive than simply issuing council or Government bonds and it turns out bond investors didn’t want fiddly and small scale bonds linked to specific projects. It also didn’t take into account that densification plans actually needed water and transport network-wide investments, rather than greenfield investment, which the IFF was designed for.Bishop is now trying to amend the IFF to make it easier to do bigger and wider deals that include both NZTA and KiwiRail, and that incorporate changes to development levies that are also being proposed, which are also designed to front load and offload the big capital costs of infrastructure to the new residents of cities and new home owners. That’s different from the 1930s to 1990s when existing taxpayers and ratepayers fronted up as a group to pay upfront so that future residents would get the benefits. Then along came the theory that existing residents shouldn’t pay for new ones (but should collect the benefits).Abracadabra all over again. And again. And again.It’s a dumb and failed idea that simply led to population growth without enough well-maintained infrastructure, and allowed both politicians and voters to pretend they could have it all.Aside from the IFF reform and the development levy reform, both Labour and National Governments have believed the magic solution required both a new Resource Management Act and bigger councils able to do bigger projects with bigger bond issues that fund managers might actually bother to look at and analyse. The theory was that (somehow) merged councils would be more efficient too.The model here is the ‘Super City’ that slammed together the Auckland Councils. To be fair, it has eventually led to some more public transport projects and the Auckland Unitary Plan, but I have yet to see proof it actually reduced costs per extra household.Auckland is a special case too. It does have the scale for a single big Council. Canterbury and Wellington might, but even then the gains are small. Labour tried to solve the water infrastructure part of the issue with Three Waters, which National, ACT and NZ First picked off with a campaign targeted at the co-governance aspect of it. National has now co-opted Three Waters in its Local Water Done Well plan, shorn of co-Governance and many of the scale benefits. Both were designed to smuggle user pays for water across most councils who had yet to adopt the Auckland/Watercare model of using meters and volumetric charging. To create all these synergies and ‘big deals,’ the Government needs more amalgamations. The trouble is local voters don’t want them, and neither do local politicians. So we now have another attempt to force them through, despite National saying in the last election campaign they would not do that and were all in favour of ‘localism.’‘I didn’t need a mandate’ Bishop acknowledged that yesterday, saying:“We didn’t campaign on local government reform. That doesn’t mean the Government can’t do it.” Bishop in the news conference below.Give up already on the 30%. There’s good reasons why it has to rise.The guts of all this is the Government is still hunting for the magical solution when bond investors and ratings agencies have been saying forever that all they want are simple Government and council bonds they can easily analyse and rely on. They are cheaper and easier to get, but require both central and local Government to accept that the size of Government has to rise above 30% of GDP in the long run. There’s good reasons for that change in the structure of the economy and the role of Government, including:* an ageing population inevitably costs Government a bigger share of GDP to look after, if it keeps the current promises of NZ Superannuation and publicly-funded healthcare;* healthcare costs keep rising because new drugs and technologies keep getting invented which are good, and the obesity and mental healthcare crises are increasing costs in the long run;* climate change is lifting the costs of transport and water infrastructure; and,* a population growing at 1.5-2.0%, as New Zealand has on average for the last 25 years, cannot grow sustainably without a bigger commitment to publicly-funded infrastructure, which is the cheapest, simplest and fastest kind.Briefly in the news this morningIn Aotearoa’s political economyThe Government told councils to propose amalgamations within 90 days or they would do it for them; and, ANZ reported spending through its cards in April fell 2.4% from March sales increased fuel spending forced consumers to cut discretionary spending elsewhere. In Geopolitics & the Global EconomyThe Strait of Hormuz remains effectively closed for a 67th day, despite US Navy efforts to open it up. Just one vehicle carrier got through with an escort yesterday, when normally as many as 140 ships would transit in a day. Iran kept firing missiles and drones at the UAE overnight and the US Navy said it had destroyed six small boats and shot down numerous missiles and drones. However, the conflict hasn’t escalated beyond that. US Secretary of War Pete Hegseth said the ceasefire remained in place and the Pentagon said Iran’s attacks had not reached its threshold for a breach of the ceasefire. So oil prices fell a bit. Meanwhile, oil industry analysts are increasingly worried stocks are running low, creating a growing risk of a ‘non-linear spike’ in oil prices, as FTAlphaville’s Robin Wigglesworth wrote overnight.My Pick n’ Mix* Scoop: Hannah McCullum for Newsroom Pro-$: New school curriculum cuts mention of ‘mental health’* Investigation: Ben Leahy & Chris Knox for NZ Herald-$: Auckland’s ‘goldmine’ state home sell-off mapped out, sweeping offload nets $330m nationwide* Deep-dive: Auckland Uni’s Jay Marlowe and Timothy Fadgen for The Conversation: Is New Zealand sliding toward a US-style approach to immigration and asylum?* Analysis: Jonathan Milne for Newsroom: Carrot and stick: Govt backs some councils to merge, others in fight for life * Column: Joel MacManus for The Spinoff: New Zealand’s immigration debate is like something out of the 1870sAct is chasing NZ First who are chasing the anti-immigration vote. * Good news: Jimmy Ellingham for RNZ: New wetland could strip Lake Horowhenua of its ‘most polluted’ labelVideo of the day: I had a chat with the NZ HeraldCartoon of the day: Who will look after old David?Timeline-cleansing Nature Pic: Ka kite anōBernardPS: Here’s the PDF of the presentation used in the video above. 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

In the news this morning from Aotearoa’s political economy around housing, climate and poverty:* Nicola Willis is confident oil prices will drop soon and save the economic recovery the Government has relied on to get re-elected, even though experts globally are increasingly concerned the Strait of Hormuz will stay closed for many more months and cause a global recession.* Productivity statistics published yesterday showed New Zealand’s labour productivity collapsed to barely a tenth of its long-run average in the four years after Covid. One reason is research and development investment remaining at half the OECD average, thanks to most businesses and households directing their savings instead to leveraged and still tax-free residential property worth $1.6 trillion.Paying subscribers joined me for the recording of my daily Chorus above earlier today. I’ve opened all of this post up for all paying and non subscribers today as a sampler.Willis still sees oil prices down soon. Oil experts don’t.Finance Nicola Willis said yesterday she believed advice from Treasury that New Zealand’s economic recovery has only been delayed by the fuel crisis, rather than derailed. She said a rapid fall in the oil price was still the most likely scenario, rather than the worst-case scenario put forward by Treasury of an extended period of oil being US$180 a barrel or higher, which it forecast a month ago would lead to 0.8% GDP growth this year and 7.4% inflation. That confidence is despite the ‘wholesale’ price of diesel at Singapore’s refineries being US$193 a barrel yesterday and oil industry experts expecting the Strait of Hormuz to be closed for months, with many more months of constrained supply after that. The Economist-$ reported last night that global oil markets were on the ‘verge of disaster,’ the FT-$ reported oil industry executives warning this week of an unprecedented hit to the global economy. This interview on Bloomberg TV with industry analyst Paul Sankey via Youtube captures the mood of the sector this week.The US Navy also warned Congress overnight that it would take six months to clear mines from the Strait of Hormuz. Donald Trump has pledged to keep blockading the Strait until Iran agrees to give up its nuclear material. Iran doesn’t want to give up its nuclear ambitions, seeing what happened to Libya when it gave up its ambitions, and how North Korea is now untouched because it does have nuclear weapons. It has also discovered how much power it can wield over the United States and the rest of the world simply by throwing a few mines into a small patch of sea from a few speedboats. The experts and the wisdom of the crowds sees months-long closurePrediction markets now see only a 60% chance of the Strait being open by the end of June, down from a 92% chance seen on April 18 immediately after a now-indefinitely-extended ceasefire was called. Most US oil and gas executives don’t expect the Strait to be opened until August at the soonest, with more than 30% expecting to remain closed beyond November, when New Zealand’s General Elections are scheduled.Our productivity disaster in one table and a chartMy Picks n’ MixesTop Six* Scoop: Henry Cooke for The Post-$: Government considered $350 payment to everyone making under $100k* Reportage: RNZ: Residents and businesses count cost of Wellington floods* Deep-dive: WSJ-$ (gift): Air War in Iran Gives Way to Crippling Stalemate* Feature: Nancy Keates for WSJ-$ (gift): Burnt-Out Doctors Leave U.S. for Timaru* Analysis: Te Aniwa Hurihanganui for 1News: Govt risks another colossal hīkoi* Op-Ed of the day: Sean Whittaker for ODT: Trust endangered by donation rulesScoops & Investigations elsewhere* Marc Daalder for Newsroom Pro-$: Ministers knew one thing on methane target rollback, the public another* Christopher Pugsley for The Listener-$: Cost-cutting threatens invaluable guide* Pheobe Utteridge for Stuff: Inside the mouldy lunch investigationPolitics, Geopolitics, Economy & Business* Deep-dive by Jake Kenny for Stuff: Bernard Whimp used investor funds himself* NZ Herald Video: How algorithms are quietly rewriting the stateHousing, Transport, Infrastructure & Councils* Azaria Howell: Goldsmith backs move-on orders despite cost warnings* Jonathan Milne for Newsroom: Bishop orders cost-benefit review of RONS* NZ Herald Video: NZ house sales keep falling as first-home buyers drive demand* RNZ Morning Report: ‘$49 billion over next 10 years’: The big bill to fix our pipes* ODT: Otago can handle the tourism boom, but only if we build smarterPoverty, Health, Education, Incomes, Living Costs, Justice & Crime* Damien Venuto for Stuff: The Kiwi dream of ‘work hard, live well’ is dying* NZ Herald: Massage business fined $210k for ‘egregious’ exploitation of workersClimate & Environment* Nick James for The Post-$: Council cash unlikely if buyouts needed* Peter de Graaf for RNZ: Housing planned for flood zone ‘beyond belief’, locals sayGood news & Solutions* Malisha Kumar for Waikato Herald: Job boost: $100m Waikato steel plant* Leonie Sheehan for Gisborne Herald: New bowel screening project comingCartoon of the day: To India, driver!Ka kite ano, Bernard This is a public episode. 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The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale in Auckland talking with regular guests Cathrine Dyer from Wellington and Robert Patman in Dunedin about geopolitics, the economy, climate change and politics.This edition also includes discussions with special guests Jonathan Lyons, PhD from Vancouver and Shamubeel Eaqub in Auckland on Iran and social cohesion in New Zealand, respectively.This week:* Bernard and Peter began with a chat about the conflict in the Middle East and the fuel crisis, along with Christopher Luxon’s leadership vote in the National Caucus and the ensuing clash with Winston Peters. * Bernard mentioned in passing a podcast series he recently listened to on the Suez crisis and compared New Zealand’s current fuel crisis to the 1973 fuel crisis. Peter referred to a Guardian article about Donald Trump’s voter fraud claims this week. He also referred to a podcast on Israel and a collapse in US voter support for Israel mentioned in an Ed Luce article in the FT. Bernard mentioned a WSJ-$ article on the drama in Trump’s White House.* Bernard, Peter and Cathrine then talked about this week’s report from The Macdiarmid Institute on CleanTech. There’s more commentary on that from the Science Media Centre. Cathrine mentioned the ideas of Joseph Tainter, who wrote a book called The Collapse of Complex Societies.* Bernard, Peter, Robert and Jonathan talked about events in the Middle East, including the history of the Islamic Revolutionary Guard Corps (IRGC) and Jonathan’s substack post about how the assassination Iran’s Supreme Leader Ali Khamanei also killed off his religious edict against nuclear weapons.* Bernard, Peter and Shamubeel talked about yesterday’s second annual Social Cohesion in New Zealand report from the Helen Clark Foundation.The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey. The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards. (This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)Ngā mihi nui.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 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 public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Thank you Trinity, Max Du Frene, and many others for tuning into my live video! Join me for my next live video in the app. 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 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 public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey & Peter Bale talking with regular guest Cathrine Dyer about geopolitics, the economy, climate change and politics .This edition also includes discussions with with special guests Rania Abouzeid, a New Zealand-born journalist calling in from Beirut, and BusinessDesk co-founder Pattrick Smellie, on his column about a big new renewable energy plan.This week:* Bernard and Peter began with a chat about the conflict in the Middle East and the fuel crisis. They mentioned this scoop (gift link) by Maggie Haberman and Jonathan Swan in the New York Times yesterday. * Bernard, Peter and Cathrine then talked about new research on the increasing intensity and frequency of weather events in Aotearoa, before another intense weather event expected this weekend. They also talked about the effects of heatwaves on humans.* Bernard, Peter, Robert and Rania then talked about Israel’s strikes on Lebanon, which threaten to upend this week’s ceasefire and which are prolonging the closure of the Strait of Hormuz. * Bernard and Peter then talked with Pattrick about his column, which referred to this research this week by the Sustainable Business Council.The Hoon’s podcast version above was recorded on Thursday night during a live webinar for over 200 paying subscribers and was produced and edited by Simon Josey. The Hoon won the silver award for best current affairs podcast in last year’s New Zealand Podcast awards. (This is a sampler for all free subscribers and anyone else who stumbles on it. Thanks to the support of paying subscribers here, we’re able to spread my public interest journalism here about housing affordability, climate change and poverty reduction other public venues. Join the community supporting and contributing to this work with your ideas, feedback and comments, and by subscribing in full. Remember, all students and teachers who sign up for the free version with their .ac.nz and .school.nz email accounts are automatically upgraded to the paid version for free. Also, here’s a couple of special offers: $3/month or $30/year for under 30s & $6.50/month or $65/year for over 65s who rent.)Ngā mihi nui.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 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 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 public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Thank you Korimako Song, Gaye Sutton Woodcock, Bryce Adams, Noeline moon, Tony Chamberlain, and many others for tuning into my live video! Join me for my next live video in the app. 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 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 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 public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit thekaka.substack.com/subscribe

Briefly in the news in Aotearoa’s political economy around housing, climate and poverty Tuesday, March 17:* Finance Minister Nicola Willis has spelled out the terms of any Government help for households dealing with the fuel cost shock from the war in Iran, saying any help would have to be ‘timely, targeted and temporary,’ and could not worsen the Government’s Budget position.* She said the Government did not want to cut fuel taxes or suspend future fuel tax increases because drivers who didn’t need the help would also get the help, and it would increase Government borrowing.* Willis also rubbished suggestions of a new ‘cost of living’ payment for all and was reluctant to endorse suggestions for using Working for Families for payments.* In effect, the Government has decided households should use their own resources to deal with this economic ‘rainy day,’ rather than the Government.* That’s despite the Government’s debt being a third to a quarter that of households, relative to incomes, and its net interest costs being less than a fifth that of households.* Elsewhere, the pain for households is set to mount if banks choose to pass on the 60 basis points of rate hikes that wholesale markets now see later this year. Paying subscribers can see more below the paywall fold & hear more in the podcast above.Govt prefers households take the pain insteadIf this isn’t a rainy day, I’d like to know what is.Both Labour and National Governments have argued in the last 30 years against Government spending or higher taxes now on the grounds it was more important to have a big enough ‘buffer’ of low debt to deal with a ‘rainy day,’ such as a natural disaster or financial crisis.The argument being the Government would be in a better position than households to deal with a shock ‘out of the blue’ to incomes or infrastructure. This was why in 2008/09 the-then National Government ran big deficits to support the economy and avoided 1991-style austerity measures during the Global Financial Crisis. It’s why the previous Labour Government repeatedly provided across-the-board financial support to households and businesses in the form of wage subsidies, ‘cost of living’ payments and fuel tax cuts during Covid and the Ukraine war fuel price inflation.So it’s fair to ask whether the 30-50% shock of higher fuel prices now rumbling through the economy should count as another one of these ‘rainy days’. Nicola Willis indicated yesterday she thought this fuel crisis didn’t qualify as a rainy day yet, and even if it was, then the Government couldn’t afford to help much and households were best placed to absorb the shock.The trouble with that analysis is that the Government’s gross debt of around 40-50% of GDP is less than a third of household debt/GDP of around 150%, and the Government’s net interest costs at less than 2% of its revenues are a fifth that of households, who are currently paying 10% of their disposable income in interest costs.“I simply don’t accept the idea that giving subsidies to millionaires in Remuera would help those afflicted by high petrol prices.” Nicola WillisCharts of the day: ‘You absorb the shock. Not us.’Govt debt/GDP less than a third that of households……which means Govt interest costs are less than a fifth of households…Cartoon: ‘My mess is your mess now’Timeline cleansing nature picKa 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

Briefly in the news in Aotearoa’s political economy around housing, climate and poverty on Monday, March 16:* New Zealand’s political economy faces its biggest energy shock since the 1973 Yom Kippur war, which preceded an inflation and growth upheaval that unseated the-then Labour Government after one term, and led to a decade of stagnation.* Iran’s moves to block the Strait of Hormuz effectively just defeated the United States and Donald Trump, who cannot reopen the Strait quickly.* Without re-opening within a week or two, the Asian refineries that rely on oil going through the Strait of Hormuz will have to drastically cut production of diesel, petrol and jet fuel. Physical prices of jet fuel are now over US$200/barrel.* The conflict escalated last night with US strikes ‘totally demolishing’ Iran’s key Kharg Island terminal, Donald Trump said overnight, as he asked for other nations to help the US Navy reopen the strait.* To emphasise the success of Iran’s asymmetric warfare, its drone strikes shut the UAE’s main oil export terminal with a loss of 1 million barrels per day.* In my view, New Zealand should launch a war-styled decarbonisation on our economy, starting with rapid and massive importation of electric cars, trucks and buses, along with shiploads of solar panels and batteries from China to install over any roof facing north. Paying subscribers can see more below the paywall fold & hear more in the podcast above.Iran just beat the US. NZ now faces a 1970s-style shock We haven’t seen anything like this since the early 1970s. Most New Zealanders alive today have never experienced anything like it, and simply can’t imagine what it means, even though the signs of an economic shock are obvious and blaring of a clear and present danger to the New Zealand economy, including:* Singapore diesel futures prices are now over US$170/barrel, implying a doubling of wholesale diesel costs and a 75% rise in the cost of the fuel that runs the economy;* Jetfuel costs are already over US$200/barrel, implying a trebling of fuel costs for our domestic airlines and the international airlines that carry the source of our second largest export earners;* US and Israeli strikes on Iran’s military infrastructure are now escalating to its oil terminals and refineries, including the ‘total demolition’ of the Kharg Island export terminal for 90% of Iran’s oil;* Iran’s retaliation against Gulf states hosting US bases and its closure of the Strait of Hormuz has shut down production and export of 20% of the world’s crude oil and 30% of its LNG;* The United States cannot quickly and safely re-open the Strait because Iran’s ‘asymmetric’ rocket, missile, drone, artillery and mine forces are deadly in the close proximities of the Strait;* The closure and/or destruction of oil fields, refineries, terminals, tanks and pipelines in Saudi Arabia, the Gulf states, Iran and Iraq will take months to restart and/or repair to previous capacity, even if hostilities stopped immediately; and,* New Zealand depends on importing refined fuels from Asian refineries, which rely on the Middle East for over 60% of their crude oil feedstocks and will this week receive the last of the shipments that got through the Strait before the war started.‘Not much to see here. Move along now’However, New Zealand’s economic and political decision-makers, including Finance Minister Nicola Willis, Assistant Energy Minister Shane Jones and Foreign Minister Winston Peters have cautioned against ‘panic’ and downplayed the need for immediate action to preserve or ration the 50 days of fuel stocks either here or in the nine ships on their way here over the next 14 days. “We don’t need to ration it, because we know we have enough in the country for at least 50 days of provision at normal levels.” Nicola Willis in the Q+A interview with Jack Tame (below) yesterday.This is a bigger shock to supplies than anyone has ever seenThose born after the oil shocks of the 1970s and 1980s may not be aware of just how large the current disruptions are. This one is far bigger.New Zealand has already moved to level one of its four-level National Fuel Plan and is currently on track to move up the levels through April and into May, given the last scheduled fuel delivery is on March 30.Here’s the last ship scheduled to arrive at Mount Maunganui on March 30Charts of the day: Our exposure to the closed StraitSingapore and Korea are more than 65% reliant on Middle East oil……and over 75% of NZ’s fuel is imported from Singapore & Korea……so petrol is already over NZ$3/l & diesel is headed to NZ$3/l……especially with refined diesel prices already at US$170/barrel……and there’s a correlation between diesel inflation & NZ CPI inflation.Cartoon: Charlize Theron?Timeline cleansing nature picKa 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.comBriefly in the news in Aotearoa’s political economy around housing, climate and poverty on Monday, March 9:* Brace for US$100+ per barrel oil this week as the Iran war widens and lengthens.* Iran hit oil fields and refineries in Saudi Arabia, Bahrain and Kuwait overnight after US and Israeli air strikes blew up Iran’s biggest refinery in Tehran.* Petrol prices set to top NZ$3/litre in New Zealand this week, especially as oil prices keep rising and refining margins in Asia jump — thanks to China’s move to ban exports from its refineries.* Diesel prices here are expected to surge over $2.50 per liter. And remember that diesel price inflation is very closely correlated with CPI inflation, as the chart of the day below shows.* The key thing to watch is the Strait of Hormuz, and how long it takes to restart production and refining in the Gulf. It looks like many weeks, rather than days. It’s still closed and the US promise of insurance and warship escorts isn’t working.* The key question here will be whether the fuel tax hikes set for 2027 (12c) & 2028 (6c) will actually be enacted, given an election coming up on November 7 and cost of living being voters’ top concern. Paying subscribers can see more below the paywall fold & hear more in the podcast above.

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

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This is a free preview of a paid episode. To hear more, visit thekaka.substack.comBriefly in the news in Aotearoa’s political economy around housing, climate and poverty on Wednesday, March 4:* Global stocks slumped 2.5% overnight on inflation fears triggered by 40-60% rises in gas prices and surge in oil prices to US$82/barrel. Paying subscribers can see more below the paywall fold & hear more in the podcast above.* Housing and Justice officials advised the Government against introducing ‘Move-On’ orders for homeless people in our big cities.* Infrastructure giant Downer, which has 26,000 workers, is set to announce job losses this afternoon after NZTA spending freezes and cuts over the last two years.* Demand for business credit fell 1% last month as liquidations rose 16% in the last year to a 13-year high.* IRD is now triggering 70% of liquidations as it chases overdue debt, up from 30-40% during Covid.* New Zealanders are mostly opposed to the idea of New Zealand joining Australia as a seventh state, a poll has found.Global markets in turmoil as Iran war worsens inflation fears

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Briefly in the news in Aotearoa’s political economy around housing, climate and poverty on Monday, February 23:* The Lead - Justice Minister Paul Goldsmith and Police Minister Mark Mitchell announced yesterday the Government planned to change the law to allow Police to ‘move-on’ homeless people aged over 14 from city centers for 24 hours, with breaches punishable by a $2,000 fine, which most won’t be able to pay, or 90 days in prison, which would cost the taxpayer $49,680 per person at a cost of $552 per night for 90 nights. * The Sidebar - The move to threaten to imprison the homeless came after the Government saved the annual equivalent of $156 million over the last 18 months by removing 3,525 people from emergency accommodation in motels at a cost of $233 per person per night. Social service providers reported a doubling of homelessness to 940 in Auckland by September last year after the emptying of motels.* The Reaction - Homeless people described the ‘move on’ orders as ‘draconian bullying,’ while social service providers said the homeless needed to be housed rather than imprisoned. PM Christopher Luxon told NewstalkZB this morning: “The bigger issue is like Chuck and Mary coming in for their once-in-a-lifetime trip to New Zealand on a cruise ship, walking around downtown and getting intimidated because someone’s sitting on the doorstop of a shop they’re trying to get into, threatening, shouting at them, abusing them. Right now it doesn’t trigger an offence under other pieces (of legislation), but by putting this in place that helps.”* The Perspective - The Government has added 2,000 beds to the prison system since its election in November 2023, while its moves in Budget 2024 and Budget 2025 have delivered 420 new social homes and it has funded places for an extra 113 people in ‘Housing First’. * In my view - The Government is betting it will have to imprison a much lower number of people than it housed in motels, even though it costs more than twice as much per night to house a person in prison. The Government’s fiscal position would be net better off if it imprisoned fewer than 774 homeless people. If it only imprisoned 280 people over a year for 90 days each then the total annual cost of $13.9 million would still leave savings on motels of $142 million per year.* In summary - The Government has chosen to threaten homeless people as young as 14 with prison in order to save $142 million per annum, and to reduce its borrowing requirements by $142 million, as requested by Treasury, which worries global bond investors might boycott New Zealand Government debt, even though last week’s bond tender of $450 million of bonds received bids of nearly $4 for each 1$ offered. * The bottom line - The savings for New Zealand taxpayers as a whole due to the lower borrowing requirement would amount to less than a tenth of a basis point, equivalent to savings to the taxpayer of $208,500 per year, or less than 3.7 cents per person per year. A tenth of a basis point off the cost of a mortgage would save the average mortgage payer $3.38 per year or 6.5 cents per week.My Picks n’ MixesScoops & Breaking News this morning* RNZ: ‘Hard to know how this is a solution’ Homeless move-on orders questioned* RNZ: Uncertainty likely to remain with US tariff ruling - trade minister* Henry Cooke for The Post-$: Govt considers requiring car parks in new developments again* Fox Meyer for Newsroom: What Trump’s America wants from NZ’s mines* Deep-dive by Nicholas Dynon for Newsroom Pro-$: Why NZ’s retail crime statistics rose so sharply… and then declinedHot topics: Densification downgrade* Column by Andrea Vance for SST-$: Housing reform in the too-hard basket, and the base cheers ‘Every nervous homeowner in Epsom or Remuera matters more to the coalition than a young family struggling to get on the housing ladder.’* Stewart Sowman-Lund for SST-$: Voters back intensification - just not in their backyard ‘As Auckland’s housing plan gets watered down, new polling reveals how voters in the super city feel about potential growth.’* Deep-dive by Stewart Sowman-Lund for SST-$ A crazy nightmare: what housing developers feel about politicians’ flip-flopping ‘Housing policy often treated as a political football, and the game may not be over quite yet.’* Column by Henry Cooke for The Post-$: The many knives in Chris Bishop’s back ‘The Housing Minister’s latest backdown may not be the last. His experience will turn off other politicians keen to take a punt on our knottiest issues.’* Column for NZ Herald-$: Matthew Hooton: Interest rates and Auckland housing U-turn could give Luxon election tailwindPolitics in Aotearoa* Henry Cooke for The Post-$: Exclusions spark tension as Greens tighten list rules. ‘Members complain that the new process has created a “very James Shaw party list” of people who play “respectability games”.* Andrea Vance for The Post-$: A hard sell in the capital: National’s Wellington North candidate drought* David Fisher for NZ Herald-$: ‘Totally inappropriate’: Coalition upset over Army’s new te ao Māori bicultural plan* Column for NZ Herald-$: Thomas Coughlan: A policy that could win the election, and keep thousands of Kiwis in NZ - raising the student loan repayment threshold* Colin Peacock for RNZ Mediawatch: Mediawatch: Immigration amping up in election yearGeopolitics & the Global Economy* FT-$: Trump’s new flat-rate tariff is a boost for China and Brazil* Reuters: Tariff ruling won’t end uncertainty for trade partners* Reuters: Iran and US views on sanctions relief differ, new talks planned* AP: Armed man shot and killed after entering secure perimeter of Mar-a-Lago, Secret Service says* Reuters: Trump’s aides urge him to focus on voters’ worries, not war with Iran* Reuters: Blue Owl halts redemptions at one of its funds, deepening selloff in private equity sharesNZ Economy & Business* Jenee Tibshraeny for NZ Herald-$: IRD quietly consults on bank tax tweaks – is a bigger tax grab in the works?* Column for NZ Herald-$: Fran O’Sullivan: New Zealand’s fiscal ‘directors’ are sailing us towards a debt reckoning* David Chaston for Interest: Westpac actions u-turn on longer mortgage rates ahead of rivals* RNZ: Consumer NZ urges government to press ahead with fixing surcharge ‘mess’* RNZ: Soaring bills put households’ spending on ice* RNZ: Fonterra raises forecast farmgate milk price for season* Blayne Slabbert for The Press-$: Reserve Bank governor urges the country to ‘look to Canterbury’* Joel MacManus for The Spinoff: Reserve Bank signals a ‘structural change to the housing market’ in Anna Breman’s debutHousing, Transport, Infrastructure & Councils* Bernard Orsman for NZ Herald-$: ‘Shame on them’: Community fears housing plans behind Anglican trust’s legal fight over sports club* Nikki Preston for One Roof: Why NZ’s ‘rock star’ MP is now selling houses* Nikki McDonald for The Post-$: What’s the magic visitor number? Queenstown searches for optimal tourism. ‘Mountain mecca Queenstown Lakes has developed a way to measure the benefits and burdens of more tourists. It measures the impact of tourists on everything from the economy and jobs, to roads and sewerage.’* Ayla Yeoman for LDR/RNZ: ‘Full circle’: No housing for Parau Farms as city reverts to sports field plans* RNZ: Neighbour fears losing thousands as unfinished apartment owner faces deregistration* Op-Ed by Rehette Stolz for The Post-$: Latest weather crises highlight funding plight for local govt. ‘We need to have a clear conversation about how we pay for a stronger emergency management system as a country.’* Mike Tweed for Whanganui Chronicle: ‘Why don’t we just fund it?’: The bridge replacement battle* Blayne Slabbert for The Press-$: The $3b plan to stop Canterbury being isolated by bridge failures ‘A new report urges Canterbury to bundle ageing bridges into a 30-year upgrade plan, funded by a new regional fund, asset sales and targeted charges.’* Tina Law for The Press-$: Christchurch’s Civic Building now considered ‘earthquake prone’, but still safe to occupy, council says* Op-Ed by Barney Irvine for NZ Herald-$: Barney Irvine: A new Waitematā Harbour crossing? Break the cycle of planning failure firstPoverty, Health, Education, Incomes, Living Costs & Justice* Deep-dive by Isaac Davison for Stuff: Boston was two months old. His death is part of a nationwide problem that hasn’t gone away* Mary Afemata for LDR/RNZ: Charity requests $30k to keep Pacific seniors gatherings running* Rosie Leishman for NewstalkZB: ‘Students are really doing it hard’: Part-time jobs dry up for uni students* Gary Hamilton-Irvine for Hawkes Bay Today-$: Baby bust: Fewer than 2000 births in this NZ region for first time in almost 50 years* Anneke Smith for RNZ: Promises to ban paywave surcharges ‘going nowhere’* Ethan Griffiths for NZ Herald: ‘Going nowhere’: Peters pours cold water on Govt’s card surcharge ban* Harriet Laughton for The Post-$: Health NZ’s budget improving but it will struggle to meet targets ‘A Cabinet paper shows that Health NZ is on track to balance its books but faces significant challenges in meeting this year’s health targets.’* RNZ: E-scooter injuries on the rise, young people most affectedClimate & Environment* Deep-dive by Charlie Mitchell for The Press-$: The pressure campaign that sank a phantom water tax. There was no water tax. ‘But through branding and a manufactured sense of urgency, a pressure campaign on the Government appeared to secure a victory.’* Deep-dive Andrea Vance for The Post-$: The great flush: Are new sewage laws reverting to 1930s standards? ‘Experts and watchdogs warn new rules could allow plants like Wellington’s Moa Point to scale back treatment, raising fears of a return to outdated sewage practices.’* Frances Chin for The Post-$: Homeowners pay hundreds to clean homes after storm ‘Business has doubled for a tradesman who specialises in cleaning the exterior of houses following last week’s storm and the Moa Point disaster.’* Sharon Bretkelly for RNZ/Newsroom’s The Detail: Barker’s of Geraldine in a jam over wasteCartoon: HonkKa 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

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I spoke with Salvation Army Social Policy & Parliamentary Unit Director Bonnie Robinson yesterday about the unit’s State of the Nation 2026 report, which showed a range of indicators of poverty worsening through 2024 and 2025. She challenged the Government to adopt specific policies to address rising levels housing un-affordability and homelessness, more food and electricity poverty, and the worst domestic violence figures since 2018.“I’m not an economist, but I like to say the rising tide lifts all boats, but you need a boat in the first place.”Robinson said housing remained a significant barrier to wellbeing for many, adding:“Yes, there’s been some increase in supply. Yes, there’s been a bit more social housing built, but that’s slowed and we still have those large numbers on the social housing register. “I like to say there’s no silver bullet in social wellbeing, but if there was, I think it would look like a warm, dry, affordable house because we know that if people have a warm, dry, secure, affordable house, then it’s a lot easier for people to deal with everything else that might be happening in their life. “If you don’t have housing it makes everything hard. It makes finding a job hard. It makes sending the kids to school hard. It makes making ends meet and providing healthy kai hard.“Although we’ve seen the supply of emergency housing grants basically plummet because the government was rightly concerned about people in motels etc, the difficulty is that has left some people without options, and what we are seeing is a rise in street homelessness.” The Salvation Army’s Bonnie Robinson‘The power poverty shows up in the food bank line’Robinson said incomes had barely grown over the last year, and not nearly enough to keep up with basic living costs such as housing, electricity and food.“You see the power poverty in the food bank line, because people will pay the power bill and then realise they don’t have enough money to buy food for the week.“We don’t get people presenting so much directly and saying: ‘I can’t pay my power bill.’ We more get people presenting at our centres saying: ‘I haven’t got enough money for food.’ “And when you sit down and talk to people, it’s the cost of their rent, and it’s the cost of power. And they’ve paid those bills because you have to, otherwise, you’re homeless or you sit in the dark. “But then there’s nothing left for other things. And people are paying 30% or 40% or perhaps more of their income on rent. It really doesn’t leave enough to fully cover all your other bills.” Bonnie Robinson.It’s great to be going for growth, but how are you going to make sure that actually gets to the people who have the greatest needRobinson said people on insufficient incomes needed higher, more reliable incomes.“At the Salvation Army, we are a provider of what’s called financial mentoring, which, used to be called budget advice. And a lot of people who come for budget advice, they’re actually pretty good managers.“Their income isn’t sufficient and it’s quite hard often to find those places where they could trim back or do something differently. So the research does suggest that those income transfers that are for most families reliable, that people know are coming and they can use that to meet their basic needs, is what many, many people need. “Some people need further wraparound support because their life is complex and paying them more money alone won’t resolve their issues. But for a lot of people, an income that is liveable, that they can rely on, that’s what they need. “So we need to look at how are we supporting our low income households and particularly our households with children, and is that sufficient to bring people out of hardship, out of material hardship, above the poverty line, where people can at least reliably know they will meet their basic needs?” Bonnie RobinsonSo what would you say to Cabinet?At what point do we say we’re just not going to accept this as a nation anymore, and we are going to do what it takes to shift the dial on child poverty. I asked Bonnie what she would say to Cabinet if she was given a chance to present the report to them. Here’s her response (bolding mine):“If I had the opportunity, I wouldn’t necessarily be telling them exactly what to do, but I’d be saying we need urgent action, particularly around child poverty, because we know that any time spent in poverty and material hardship as a child, even if your life later on takes a better trajectory, it can still lead to trauma, and it can mar your life for the rest of your life.“At what point do we say we’re just not going to accept this as a nation anymore, and we are going to do what it takes to shift the dial on child poverty.“Children can’t wait. They can’t wait for the recession to be over, or the economy to suddenly boom. They are affected now and that impact will have a lasting effect. “So we need to be doing what is it that we can do right now, that will really have an impact on those child poverty stats. Because if we don’t, we will see the cost of that in the future. We’ll see it in our health system. We’ll see it in our criminal justice system.” Bonnie Robinson.I asked Bonnie if the Government’s total focus on generating economic growth would reverse the deterioration in poverty, given its argument that ‘the rising tide lifts all boats.’“We see at our Salvation Army centres the people who don’t have a boat. And we know, obviously, it’s good to come out of recession, but how is that benefit going to be shared across everyone? “It looks from the data like even the little bits of improvement in the economy, those on the lowest incomes get the least share of that. People have had pay rises, but down the low end, it’s been quite small. “How are we going to improve the share of that going to actually lift the people who are at the low income end out of poverty? And sometimes that actually takes some deliberate decisions about how are we going to do that? “How are we going to make sure that happens? It doesn’t necessarily just automatically happen. And you we need to be really aware of the fact that people can, through no fault of their own, just get left behind. “So, yes, it’s great to be going for growth, but how are you going to make sure that actually gets to the people who have the greatest need.” Bonnie RobinsonChildren can’t wait. They can’t wait for the recession to be over, or the economy to suddenly boom. They are affected now, and that impact will have a lasting effect.The Chapter list:* 00:00 Introduction to the State of the Nation Report* 02:30 Trends in Social Wellbeing* 05:35 Child Poverty and Economic Impact* 07:56 Housing Crisis and Its Effects* 10:07 Food and Energy Poverty* 13:30 Policy Recommendations for Improvement* 17:20 Economic Growth vs. Social EquityKa kite anoBernard This is a public episode. 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I had a chat recently with economist Peter Redward about gold, the future of money, the US dollar and central bank independence. He writes an excellent substack on gold called About Gold.“China is emerging as a major factor here.”Here’s a couple of examples of his recent work that I’d recommend reading and subscribing to.We spoke about how:* Gold prices have surged due to stagnant production and increased demand.* Investment demand for gold is coming from both retail and institutional investors.* Chinese investors are increasingly buying gold-backed ETFs.* Central banks have significantly increased their gold holdings post-Ukraine invasion.* The relationship between gold prices and the dollar has changed dramatically.* Concerns about US fiscal policy are leading to a debasement trade.* The alignment of monetary policy with political agendas is becoming more pronounced.* Public investors are becoming more influential in market dynamics.* China’s economic growth poses a challenge to the US dollar’s dominance.* The future of the US dollar is uncertain amidst rising global competition.Here’s the various points in our conversation:* 00:00 The Surge in Gold Prices* 06:07 Demand Dynamics: Retail, Central Banks, and ETFs* 12:12 The Dollar’s Sustainability and Global Economic Factors* 17:51 The Future of the US Dollar and Global Power DynamicsCheersBernard 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

In recent weeks we’ve seen AA Insurance publicly acknowledge it has stopped writing new home insurance policies in Westport, Woodend in North Canterbury and in Blenheim to avoid taking on more flood and quake risk in those towns. The NZ Herald’s Front Page Editor Chelsea Daniels asked me to come on to her show to talk about what insurance retreat means for homeowners and why home buyers need to do their own research about flood risk and insurance risk, in the absence of a managed retreat organized and underwritten by central and local Government.“A mass delusion is not a solution.”We talked about how and why:* Insurers are retreating from high-risk areas due to climate change.* Homeowners face higher premiums and potential uninsurability.* Uninsurable towns become unbankable, affecting property values.* People often discover insurance issues at the last minute.* The government may need to step in as an insurer of last resort.* Buyers must conduct thorough research before purchasing homes.* Education on climate risks is crucial for potential homeowners.* Banks and insurers are lagging in risk assessment related to climate change.* The frequency of severe weather events is increasing due to climate change.* Responsibility lies with buyers to be informed and cautious.Here’s the various points in the conversation:* 00:00 The Impact of Climate Change on Insurance* 03:04 The Consequences of Uninsurability* 05:53 The Role of Government and Community* 09:06 The Future of Home Insurance* 11:58 Navigating the Housing Market* 15:08 The Responsibility of Buyers* 18:06 The Need for Education and Awareness* 20:59 The Role of Banks and Insurers* 24:03 Addressing Climate Change in Housing PolicyHere’s the resulting article on NZ Herald and the Youtube version is below.Ka kite anoBernard 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

Briefly in Aotearoa’s political economy on Tuesday, February 10:* The Lead: The Government announced last night it planned to levy each household $15-30 per year to pay for a $1 billion-plus LNG import terminal and reduce the risk of massive price spikes during a dry year, saying this would reduce future wholesale prices by up to five times as much, which it expected gentailers to pass on to consumers. Paying subscribers can see more detail below the paywall fold and hear more analysis in the podcast above.* The Sidebar: However, the Government chose not to compare this LNG import option against investing the same amount in solar panels and batteries to allow the hydro lakes to be used as storage, choosing instead to only compare LNG against new coal and diesel ‘peaker’ plants. It’s also choosing to pay for the LNG terminal through a type of hire-purchase ‘lease’ agreement that increases the $1 billion up-front cost to $2.7 billion over the 15-year life of the facility, even though it may never be used if there is no dry year. * Question for the minister: Why not choose to spend that $2.7 billion on grid-scale and residential solar panel and battery installations that would now create four Lake Benmores’ worth of storage and generation, which would be enough to power over 2.5 million homes? * Chart of the Day: Climate scientist James Hansen has predicted record high temperatures in 2026 and 2027 because of another El Niño, which he says indicates climate warming of two degrees celsius by the mid 2030s, a decade earlier than expected.* Scoop of the Day: Andrea Vance reports this morning for The Post-$ that the Public Service is paying out millions each year in settlements of bullying, harassment and discrimination complaints that allow agencies to keep the cases secret.* Today’s Deep-dive of the Day is from Amanda Gillies for RNZ/Newsroom’s The Detail on how Government policies scuppered a surge in imports of electric vehicles.Join us as a paying subscriber to get more analysis and detail below the paywall fold and in the podcast above. Paying subscribers can also comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.Why not spend $2.7b on solar & batteries instead?Being in Government is all about making choices, hopefully buying the most public good for the least public cost.Last night’s decision to go ahead with an LNG re-gasification plant in Taranaki was another case of ignoring the cheapest and best option in cost-of-living, current account deficit, energy resilience and climate emissions terms. The Government announced last night it had ordered a $1 billion-plus LNG import and re-gasification facility in Taranaki, paid for through an annual lease of up to $180 million per year, or $2.7 billion over the 15-year life of the facility.The Government said this cost to insure against a ‘dry year’ would be paid for by consumers through a $2-$4 per MW/hr electricity ‘levy,’ which equates to a cost per average household of about $15-30 per year. It said this would ‘save’ households around $50 per home per year because it expected the ‘insurance’ of having certain gas supplies would lower future wholesale power costs by around $10/MWhr, assuming power companies passed that on to consumers.But the decision didn’t include the option of using that $2.7 billion up-front to pay for grid-scale, residential and commercial solar panel and battery capacity that would allow the lakes to remain full in a dry year. That amount would buy the equivalent of 2 Gigawatts worth of generation and storage, which is the equivalent of about four Benmore Dams worth and enough to power 2.5 million households for a year.Instead, the LNG terminal may never be used but will have to be paid for annually, and the benefits in the counterfactual put forward by the Government in its fact sheet are dependent on lower wholesale prices (than would otherwise be the case) being passed on by gentailers to consumers.When is a levy a tax?The announcement was attacked from both the left and the right for being an unnecessary ‘tax’ that would increase living costs for households, while also keeping New Zealand reliant on foreign fossil fuels and paying out hundreds of millions per year in foreign currency for electricity production.PM Christopher Luxon was forced to defend the decision as a tax, shortly after Minister Simon Watts portrayed the decision as a move to lower power costs (than would otherwise be the case.“This is not a tax, it’s a levy. It is a levy to fund a key piece of infrastructure.“There are a series of things that we have to do to make sure that we have the supply in place, so that we get the low year risk down, so that we can keep stabilised prices for the consumer.” PM Christopher LuxonOpposition Leader Chris Hipkins described the levy as a ‘gas tax’ and ‘another kick for households’ cost of living.“Power bills are likely to continue to keep going up. $1 billion would buy you a hell of a lot of solar panels and batteries, which would save households a significant amount of money,” Labour Leader Chris Hipkins to reporters.The Taxpayers Union also described the levy as a tax.“You don’t make electricity bills cheaper by taxing them. Dancing on the head of a pin over what is a tax and what is a levy is a Labour Party talking point. Luxon should spare us the spin and abandon this folly.” Taxpayers’ Union spokesman James Ross via statement.‘Choosing a fuel that costs twice as much’Renewable energy campaigners also criticized the decision, including 350 Aotearoa co-director Alva Feldmeir and Rewiring Aotearoa CEO Mike Casey. Feldmeir said LNG-generated electricity was double the price of new renewable electricity, and embedded the risk of New Zealand importing international gas price shocks, such as the one that doubled gas prices after Russia’s invasion of Ukraine.“Essentially, what they’re doing now is putting a new tax on every New Zealander’s power bill to subsidise an expensive sunset industry.“This is a political choice this government is making. They’d rather kowtow to the fossil fuel and the gas lobbies and keep us hooked on gas for longer, than explore how we’re going to get off it, and how we’re going to make some tough decisions in the next few months and years.” 350 Aotearoa co-director Alva Feldmeir via a statementCasey said the Government couldn’t create cheap electricity with expensive fuel.“The Government is basically forcing New Zealanders to invest in an LNG terminal and hoping prices might go down eventually. You cannot make cheap electricity with expensive fuels and LNG is one of the most expensive fuels there is. We don’t like burning Indonesian coal. So why replace it with expensive Australian gas? This decision just locks us into another expensive overseas dependency.” Rewiring Aotearoa CEO Mike Casey via a statementChart of the day: Ready for 2 degrees C warmer by 2040?Climate scientist says 2 degrees of warming likely 10 years earlierPicks n’ MixesScoops & News breaking this morning* Tom Pullar-Strecker for The Post-$: Electricity Authority staff breached guidelines accepting dinners from Meridian’ The watchdog says it has reimbursed the power firm and reminded staff of their obligations under its gifts and koha guidelines.’* Thomas Coughlan for NZ Herald-$: Trade Minister standing by India FTA claims as others point out contradictions* Tony Wall for Stuff: Bank sells pensioner’s home, demands he leaveNews elsewhere in the last 24 hoursPolitics & the economy* Danyl McLauchlan for The Listener-$ (gift): There are pathways to government for Labour but will it be in any shape to govern?* Column by Joel Maxwell for Stuff: He’s shaping up as kingmaker again, but I think Peters and NZ First have never been weaker* Analysis by Nik Dirga for RNZ: How fake NZ news pages are swamping Facebook with AI slopHousing, infrastructure & councils* Bernard Orsman for NZ Herald: ‘Reasonable investment certainty’: Industry urges clarity on Auckland housing rules* Deep-dive by Shanti Mathias for The Spinoff: Is 2026 the year New Zealand councils crack down on Airbnb operators?* Jonathan Milne for Newsroom Pro-$: Cash-strapped Clutha resorts to a little Think Big* Column by Hayden Donnell for The Spinoff: ‘Let’s not screw up our train system just as it’s getting good’Poverty, health, living costs, incomes & education* Nicholas Jones for Stuff: Why public access to a life-changing cancer treatment is ‘on a knife edge’ ‘A game-changing cancer treatment could be available in the NZ health system as early as next year, experts say - but only if health officials approve special support.’* Deep-dive by Venetia Sherson for The Spinoff: NZ emergency rooms: No place for old men (or women)* Kim Baker Wilson for RNZ: ‘Cascade of errors’: Man died after St John ambulance delays, coroner finds* Dr Andrew Dickson via his substack: Lucky vs. Unlucky: The Election-Year Question New Zealand Refuses to Ask ‘We have built a system where a child’s quality of life depends on a lawyer’s ability to prove the impossible. It’s time to move from a cause-based system to a needs-based one.’* Dr Bex via her substack: A radically different approach is needed to address material deprivation and grinding poverty ‘Substantial increases in income and/or direct supports for households with disabled people are needed to address the higher levels of material deprivation experienced by these households.’* RNZ’s Nine to Noon: Call to levy services to keep financial mentor sector viable* Op-Ed by Hinemoa Elder for The Post-$: NZ’s meth crisis is growing — and we’re underfunding the fix Climate & environment* NZ Herald: Could your home become uninsurable, unbankable and worthless?* Bloomberg-$ (gift): Climate Risk Threatens Credit Ratings for Dozens of Countries* AP: Olympic town warms up as climate change puts Winter Games on thin iceCartoon of the Day: A tragedy of our horizonKa kite ano, Bernard This is a public episode. 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Briefly in Aotearoa’s political economy on Tuesday, February 3:* The Lead: Just when the Government is hoping voters will feel the ‘green shoots’ of an economic recovery ahead of the November 7 election, the headlines are instead showing another surge in company liquidations and cost of living pressures. Paying subscribers can see more detail below the paywall fold and hear more analysis in the podcast above.* The Sidebar: The liquidations are linked in part to the IRD’s crackdown on overdue tax debts and Covid loans. Four years of falling-to-flat house prices have also proven the death knell for many ‘zombie’ small businesses dependent on home equity withdrawals to get through the rough years.* News elsewhere: Auckland Transport CEO Dean Kimpton has resigned after three years without a replacement and DOC’s Director General Penny Nelson has decided not to seek reappointment.* Chart Pack of the Day: Stats NZ’s Housing Living Costs Indices published yesterday showed the poorest 20% of households, beneficiaries and pensioners experienced significantly higher inflation in the last year than the Consumer Price Index inflation measure of 3.1% reported last month, and higher than the 0.8% experienced by the richest 20%, who benefited from lower mortgage costs. * Scoop of the Day: Kate Newton reports for RNZ that Woodend in North Canterbury has become the second town that AA Insurance is withdrawing from after Westport, although this time it is for earthquake risk rather than climate-change-drive flood risk.* Today’s Deep-dive of the Day is from Amy Williams at RNZ about an Auckland Council plan to change one of its flood buyout policies to avoid having to buy out 13 homes for $14 million that were damaged in the 2023 floods.Join us as a paying subscriber to get more analysis and detail below the paywall fold and in the podcast above. Paying subscribers can also comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.IRD crackdown lifts liquidations to 16-year high PM Christopher Luxon’s key question to himself, his party and voters at large in his State of the Nation speech last month was whether the economic recovery he claims responsibility for would happen fast enough and broadly enough for most voters to ‘feel it’ by the election on November 7.The green shoots evident in business and consumer confidence surveys and building consents have yet to generate employment growth, while retail spending remains moribund at best, by most measures. But the Government is also having to contend with the lagged effects of the last two years of recessionary quarters, a delayed crackdown on Covid and other tax debts by IRD, along with the inevitable closure of ‘zombie’ small businesses kept alive for decades by equity withdrawal from ever-rising residential land values, given they have yet to bounce from their 2022 lows that remain 10-20% below their peaks.These lagged effects are coming home to roost now through the liquidation and mortgagee sales figures. Credit ratings firm Centrix detailed a rise in liquidations to a 16-year high in calendar 2025 in its January report published this morning.“Rising liquidations underscore ongoing financial strain across parts of the economy, as well as the IR’s ongoing crackdown on outstanding debts. Company failures are now at their highest level since 2010, with hospitality, retail trade, transport and construction seeing significant increases.” Centrix Chief Operating Officer Monika Lacey in Centrix’s January Credit Indicator ReportLacey pointed out business liquidations increased unevenly, with the sharpest rises in hospitality (+50%), retail trade (+34%) and transport (+27%). Companies in construction (+13%), manufacturing (+12%) and property/rental (+17%) also recorded higher liquidations, despite a decline in credit defaults and an improvement in average credit scores.New restaurant closuresThe drumbeat of business closure news continues to lead newspapers and television and radio bulletins too. That includes the closure of renowned Petone restaurant, Soprano, and Newtown’s Rice Bowl Burger Bar, along with BBQ specialist The Smoking Que in Christchurch in items published today in The Post and The Press.IRD’s data shows a rise in tax debt to nearly $9 billion by the middle of last year from under $4 billion in 2020.Chart pack of the day: Inflation hits some harder than othersPoorest feel inflation of 3.7%, while richest feel 0.8%Poorest spend three times more on power than rich, as a share of incomeRent inflation higher than housing costs overall for 12 of last 16 yearsPicks n’ Mixes of the best of the rest elsewhereScoops & Deep-dives* Tom Hunt for The Post-$: GST oversight blows $56m hole in council budget* Ben Leahy for NZ Herald-$: Govt intervenes at two Auckland schools in one zone* Column by David Farrar for The Post-$: Time for New Zealand to become the seventh state of Australia* Op-Ed by James Bush for The Post-$: Why I’m farewelling my NZ life (again)* Op-Ed by AUT’s Mark Kirby for The Conversation: NZ’s $2.5 billion shoddy building bill: how to fix the ‘build now, fix later’ culture. Politics & the economy* Thomas Coughlan for NZ Herald-$: Wellington jobs fall by nearly 10,000 since election ‘Willis ducks blame for jobs crisis in Wellington.’* Brodie Stone for Northern Advocate: Fears of disconnect as NZ Post pulls servicesHousing, infrastructure & councils* Tom Pullar Strecker for The Post-$: Public backlash likely if roads tolled without clear benefit, AA says* Kelvin Davidson for One Roof: Bank switching goes ballistic* Susan Edmunds for RNZ: Who’s paying the price for cash back offers?* Liz McDonald for The Press-$: Wolfbrook spends $42m on land for luxury homes* Blayne Slabbert for The Press-$: Christchurch eyes bigger airport stake* Tom Eley for NZ Herald: ‘A lifeline’: Push to keep Te Huia train rolling* Explainer by RNZ: What to know about the entity replacing Wellington WaterPoverty, health, living costs, incomes & education* Joanne Naish for The Post-$: Patients reject telehealth in favour of seeing own GP* Harriet Laughton for The Post-$: Nurses say big jump in assaults due to under-staffing & patient frustration* Anne Gibson for NZ Herald-$: ‘Thousands of families suffering from overheating’ – what’s changed?Climate & environment* RNZ: Auckland Council starts flood research project* Julie Jacobson for The Post-$: Dangers of shallow, fast-moving floods highlighted* Op-Ed by Matt Halliday for The Post-$: Where did all the petrol ads go?* Louisa Steyl for The Southland Times-$: Storm damage fuels calls to reform tree regulations near power linesCartoon of the Day: Stuck in the mudKa kite ano, Bernard This is a public episode. 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Briefly in Aotearoa’s political economy on Tuesday, January 20:* The Lead: PM Christopher Luxon unveiled a new election slogan in his State of the Nation set-piece speech yesterday, as expected, and doubled down on the Government’s strategy of running tight budgets and letting the economy do the work of getting it re-elected. It didn’t work in 2024 and 2025, but he hopes better economic signals in recent weeks will mean voters ‘can feel it’ by the election, which may be just 290 days away, on November 7. * The Sidebar: The problem for Luxon is his Government is relying on a 1990s and mid-2000s strategy of businesses and households stepping forward to spend their savings and borrow more to invest and spend in shops, car dealerships and in the housing market. Back then, the private sector replaced the Government’s stimulus because spenders were younger and less-indebted, interest rates were cut by more, and businesses used to borrow from banks to expand. Neither have done that since 2019. Hear and see more detail and analysis below and in the podcast above.* Elsewhere in the news: Luxon confirmed the Government was back-tracking on Housing, Infrastructure and RMA Reform Minister Chris Bishop’s ambitions for densification to generate capacity for an extra two million homes in Auckland, while Finance Minister Nicola Willis said she’d spoken to Reserve Bank Governor Anna Breman to say Breman should have rung her and MFAT at 3am for advice on whether to sign a joint central bankers’ letter backing Fed independence.* In the Scoop of the Day: Jared Savage reports for NZ Herald-$ that the price of meth has fallen 55% in inflation-adjusted terms to a record low over the last eight years, citing a Massey University survey.* In the Chart Pack of the Day: The Government’s claims the economy’s recovery was blocked last year by a tariff shock to the global economy were not borne out the IMF’s latest forecasts overnight showing an improving global outlook, although it’s clear many economies are struggling with K-shaped recoveries where poorer workers and renters are feeling real wage cuts and aren’t benefiting from massive asset value inflation.* Today’s Deep-dive of the Day is Katie Todd’s latest in her series for RNZ: ‘Gold Rush: Who's Cashing In on Queenstown?,’ which looks at how a quarter of Queenstown’s homes are ‘ghost houses,’ and are hollowing out its economy, with workers unable to afford to both live and work in the boom town.Join us as a paying subscriber to get more analysis and detail below the paywall fold and in the podcast above. Paying subscribers can also comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.Luxon has faith the economy will save his GovtI went to the new-car-smelling International Convention Centre in Auckland yesterday for the first big event held there: Christopher Luxon’s Election-Year State of the Nation Address. My apologies to those who dialed in to my live analysis on Substack, which had no sound. Won’t be doing that again. For those wanting that analysis with sound, I’ve done that in the podcast above.As I wrote yesterday, his main message was that National was “fixing the basics and building the future,” but it was clear from his speech and the news conference afterwards, where I asked a few questions, that the Government’s strategy is to plough on with its tight budgets and cross its fingers and hope that households and businesses starting borrowing up a storm to spend, invest and employ make everyone feel better. That’s the strategy adopted by both flavours of Government over the last 35 years. It worked in the early 1990s, the early 2000s and the early 2010s because it was much easier to grow Aotearoa’s economy with a young and not-so-indebted population benefiting from sharp falls in interest rates. That strategy didn’t work in 2024 and 2025 to fire up the economy, but Luxon is hoping is does this year, and in time for many more voters to feel it before he has to ask for re-election. Here’s the key sections from his speech:"I have to tell you, I feel more confident than ever that the recovery has now arrived and Kiwis can look forward to a year which is brighter than the last few."“There were calls at the time (early in 2025) for a big fiscal stimulus and to open the immigration gates and pump up house prices. As I spoke about last year, we can’t risk repeating the sugar-rush economics of the past.“New Zealand simply has to get its finances in order if it is to achieve a long-term improvement in its economic prospects. That’s why there will be more savings in this year’s Budget and no room for extravagant election promises.”“Let’s be straight up with each other. Any party that wants to ramp up spending is being economically irresponsible. Because the only way to spend more money is to borrow it or to raise taxes.” Christopher Luxon in his SOTN speech .Later, he was challenged by event host Auckland Chamber of Commerce CEO Simon Bridges for reassurance on the economic recovery. Here’s Luxon’s key comments (bolding mine):“When you’re doing a turnaround job though, you’ve actually got to take action and you’ve got to get things implemented and you’ve got to get them executed so that people can feel the difference and actually see the difference.“We’re starting to see some leading statistics and results improving. Now we need to see people feel it in their personal lives and more of them across the whole of the country as we go through the beginning part of the year and I think that is coming.” Luxon in the ‘fireside chat’ with Simon Bridges after the speech.Here’s the full speech, fireside chat and news conference, where I asked questions about what ‘feeling it’ would look like (he didn’t say), whether Anna Breman had been ‘outside her lane’ (he wouldn’t say) and why he was scaling back plans to add housing when he had said he wanted to avoid going back to ‘sugar rush’ housing-led recoveries (he said some things that didn’t address the question).Chart Pack of the Day: It’s not the Trump tariff shockNo, you can’t blame NZ’s slow economy on global shocks……but we’re not alone in having a K-shaped economic recovery.Cartoon of the Day: No stars from the star fishTimeline-cleansing nature pic of the Day: Bee breakfastKa kite ano,Bernard This is a public episode. 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Briefly in the news from Aotearoa’s political economy on Wednesday, December 17:* Treasury published its Half Yearly Economic and Financial Update (HYEFU) report yesterday, lowering its GDP growth forecast, raising its unemployment forecast, reducing the Government’s tax revenue forecasts and delaying its forecast for a return to surplus by another year to 2029/30.* Finance Minister Nicola Willis pledged the Government would stick to its strategy of restraining Government spending growth to crunch the size of core Crown spending below 30% of GDP from almost 33% now, in order to cut borrowing. She hopes this reduces mortgage rates to grow the economy faster.* That strategy depends on households and businesses stepping up to borrow, spend and invest to offset the Government withdrawal, as they did through similar fiscal tightenings in the early 1990s, the early 2000s and the early 2010s. * But those expansions were mostly driven by households taking on more debt to spend and invest in residential land. That was possible because household debt was much lower then than today, banks were still shifting from mostly business lending to mostly mortgage lending, and mortgage rates dropped substantially each time. * Household debt to disposable income rose from under 50% of disposable income in 1989 when mortgage rates averaged around 15%, to a peak of 179% in 2009 after mortgage rates fell to 5.5%. * Another surge in lending came as interest rates sagged towards 5% before LVR controls in 2013 and higher bank capital requirements stopped the rise in indebtedness. There was another bounce back in household-debt-to-disposable-income of 175% in 2022 as mortgage rates fell as low as 3%, but the rise in mortgage rates to around 7.5% by late 2023 stopped any further rise.* In my view, the Government’s strategy isn’t working because households simply can’t take on much more debt, banks don’t have much spare capital to generate lending at double-digit rates, and landlords can’t borrow quickly in the face of falling rents and DTI limits.* The end result is a grinding periods of intermittment contractions and small expansions, driven by falling real wages for most households and weakened spending appetites from the rest as they feel the effects of shrivelling household net worth. It is an attritional balance sheet recessions and slow debt deflationary spiral.* Willis amplified the pressure on any households and businesses dependent on incomes from the Government yesterday, saying the need to contain spending growth was even more intense and she had written to ministers to ask for more spending cut ideas ahead of Budget 2026.* This was evident in Marine Lourens’ report for The Post-$ today that Health NZ had been told to find a further $510 million in savings in the coming year.* This ongoing pressure on consumer spending appetites and housing market activity, with Worldline reporting yesterday that retail sales were down 0.3% in the first 14 days of December from the same period a year ago, and REINZ reporting house prices fell 0.3% in November from October, having fallen 0.2% the previous month. Quotes of the day 2025 v 2024: ‘This time is different’“At some stage, of course, we’re going to get some upward surprises in the forecasts. I very much look forward to that day, and those upward revisions will help us reduce the deficit further.” Finance Minister Nicola Willis speaking to reporters yesterday (December 16, 2025) while releasing the 2025 HYEFU. Via BusinessDesk-$“At some stage, we’re going to get some upward surprises in the forecasts. I very much look forward to that day,” Finance Minister Nicola Willis speaking to reporters on December 18, 2024 while releasing the 2024 HYEFU. Via NZ Herald-$Chart pack of the DayMy Picks n’ Mixes of links elsewhere todayScoops, deep-dives, Op-Eds & columns* Deep-dive by Cecile Meier for BusinessDesk-$: School lunch wastes millions despite savings* Glenn McConnell for Stuff: Why it will soon cost more for disabled people to travel* Deep-dive by Damien Venuto for Stuff: It’s the hardest time in 30 years to find a job. * Deep-dive by Colleen Hawkes for Stuff: Home of the future? NZ’s first on-site 3D-printed house completed* Joel MacManus for The Spinoff: Billionaire NZME director funding defamation lawsuit against TVNZ, court told* Hayden Donnell for The Spinoff: Judge finds widespread voter fraud ‘infected’ the Papatoetoe local board electionSubstack posts* Connor Sharp for Greater Auckland:What’s in the RoNS files? * Dr Bex: Disabled? You get to stay home* Martien Lubberink: Big Banks, Farmers, and Capital Requirements: 2025 Season Finale?Cartoon: We’re right, right? Right.Timeline-cleansing nature picKa kite anōBernard 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

Briefly in the news from Aotearoa’s political economy on Tuesday, December 16:* New Reserve Bank Governor Anna Breman pivoted away yesterday from a tacit approval of higher wholesale interest rates to outright opposition, but not in time to stop the largest bank, ANZ, from increasing its fixed mortgage rates by 20-30 basis points. (Interest)* Breman said in a statement issued at 3pm she would do media interviews yesterday and today that commented on market interest rates, saying: “Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR.”* Breman went on to tell 1News last night that: “My perspective is that if we see a lot of tightening, we have to be very vigilant because we don’t want that tightening to reduce the growth that we’re starting to see happening right now.”* Wholesale interest rates fell about 10 basis points and the NZ dollar fell as much as half a cent after the statement from Breman.* Her comments came after Kiwibank Chief Economist Jarrod Kerr wrote in note published on Saturday the Reserve Bank had made a ‘mis-step’ by allowing markets to price in rate hikes next year, when the RBNZ’s own forecast from November 26 suggested no rate hike until early 2027.* I spoke with Jarrod last night about the pivot in the video above.* Elsewhere, the BusinessNZ-BNZ (PSI) survey of activity in the services sector in November found a further contraction of the biggest part of the economy that employs the most people, including a worsening of downturns in new orders, sales and employment. * In Quote of the Day below, BusinessNZ CEO Katherine Rich said the result “put to bed any immediate hope that the sector was heading somewhere towards expansion.” * The Chart of the Day below shows the combined PMI/PSI surveys of manufacturing and services were consistent with economic growth in early 2026 of around zero.Quote of the day: ‘Can’t see the growth yet…’“The November result put to bed any immediate hope that the sector was heading somewhere towards expansion. All five sub-index values were in contraction, with Activity/Sales (45.8) experiencing the greatest level of contraction for the current month. While New Orders/Business (49.3) still hovered just below the no change mark, Employment (46.4) also took a dip from October.“Despite a stronger level of contraction during November, the proportion of negative comments for November (52.9%) was lower than October (54.1%) and September (58.0%). Negative comments received show the services sector overwhelmingly citing the weak economic environment, including low consumer confidence, high living costs, inflation, interest rates, and reduced spending, as the main factors affecting recent activity.” BusinessNZ CEO Katherine Rich in the PSI release.Chart of the Day: Inconsistent with ‘growth, growth, growth’My Picks n’ Mixes of links elsewhere todayScoops, deep-dives, Op-Eds & columns* Deep-dive by Lucy Xia for RNZ: Homelessness in Auckland more than doubles in a year* Jamie Ensor for NZ Herald-$: Foreign buyers ban change passed at night under urgency – so what could be the impact on house prices?* OneRoof: ‘When? What?’ - NZ’s top agents surprised as foreign buyer ban quietly reversed* Deep-dive via RNZ Nine to Noon: Nearly 5000 children with rotten teeth waiting in pain for surgery* Deep-dive via Russell Palmer for RNZ: Infrastructure Commission calls for government business cases, budget submissions to be public* Investigation by Jeff Horwitz & Engen Tham for Reuters: Meta tolerates rampant ad fraud from China to safeguard billions in revenue* Investigation by Fox Meyer for Newsroom: Who Benefits: How monopoly money bought NZ’s gambling sceneSubstack posts* Max Rashbrooke for Good IDEAs: How IDEA is already sparking change on welfare-to-work policy* Paul Krugman: MAGA, the Broligarchs and the Media* Lina Khan: On Zohran Mamdani, Corporate Welfare & the FTC | The Weekly Show with Jon StewartCartoon: A dose of saltsTimeline-cleansing nature picKa kite anōBernard 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

Briefly in the news from Aotearoa’s political economy in the week to Saturday, December 13:* National Finance Minister Nicola Willis and former National Finance Minister Ruth Richardson sparred over where and how to debate whether Willis is ‘fudging’ the Budget and ‘failing’ to cut spending enough to slash debt even more.* Richardson wants the debate hosted on NewstalkZB, while Willis first suggested it be moderated by Juggernaut podcast creator Toby Manhire from The Spinoff, and then by economist and National Party adviser Cameron Bagrie.* In my view, Toby should moderate a debate broadcast on NewstalkZB and/or any other platform, as long as he could challenge Willis and Richardson about alternatives to austerity, the track record of austerity since 1991, and the assumptions still underpinning their views on public debt.* In my view, this way this debate is framed is frozen in time in 1991, stuck with the now-wrong assumptions that New Zealand faces being locked out of global markets, that the New Zealand Super Fund does not exist, and that austerity will work to grow the economy again because households can borrow much more to pick up the slack left in the economy as the Government contracts as a share of GDP. (Hear more in the Soliloquy above)* This week in politics, two new polls showed the governing coalition parties had just enough support to win a second term if an election was held now, largely because support for Te Pāti Māori and Green slumped in the respective polls. (See more below in Chart Packs)* Elsewhere in politics, the Government proposed two new bills to replace the RMA next year, two years after the National-led coalition repealed the two bills enacted by Labour to replace the RMA, after six years of consultation and deliberation. Also, the Government legislated under urgency and without consultation to cut methane reduction targets.* This week in the economy, a few more small green shoots poked through, including data showing stronger-than-expected retail spending through credit and debit cards in November and a survey showing slightly increased expansion in manufacturing activity in November. (See more below in Chart Packs)* However, there was also data showing a contraction in manufacturing volumes (excluding meat and dairy) in the September quarter and a slight fall in truck and car movements in November, as measured by ANZ’s Truckometer series. (See more below in Chart Packs)* Economists are forecasting Stats NZ will publish GDP data next Thursday showing a GDP rise in the September quarter from the June quarter of about 0.9%, just enough to offset set the 0.9% contraction reported in the June quarter.* But the recovery faces a new headwind as both Westpac and The Co-operative Bank increased their longer-term fixed mortgage rates by around 30 basis points, following a 60 basis point rise in 30-60 basis point rise in one to two year wholesale ‘swap’ rates in the last six weeks. (See more below in Chart Packs)Join us as a paying subscriber to get more analysis and detail in the Saturday Soliloquy podcast above and in detail & charts below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.Politics Chart Pack of the weekEconomics Chart Pack of the weekMy Pick & Mix of links elsewhere this week* Marty Sharpe for Stuff: ‘Likely to cause injury or death:’ Boarding house used by vulnerable people deemed dangerous* Kate Newton for RNZ: The day the climate consensus died* Op-Ed by Bill McKay for The Conversation: Faster, cheaper … but better? The devil in the RMA reform detail* Deep-dive by Kirsty Johnson for RNZ: ‘Rock and a hard place’: Inside the forced move from gas* Op-Ed by Auckland Uni’s Tim Welch for The Conversation: Higher speeds lower productivity: what the data shows crash delays really cost Auckland* Mike Dolan for Reuters: Fade the Fed, global rates are heading higherCartoons of the weekTimeline-cleansing nature pic: Ka kite anoBernard 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

Briefly in Aotearoa’s political economy around housing, poverty and climate on Friday Thursday, December 5:* Treasury released Crown Accounts for the first four months of the financial year yesterday that showed the Budget deficit was $704 million worse than forecast in May at $4.94 billion, largely due to lower than forecast tax revenues because of this year’s economic contraction.* However, the Government’s cash needs were $802 million lower than forecast because of lower-than-forecast capital expenditure.* Under instructions to raise as much cash as possible, the IRD quietly announced a proposal last night to start taxing company loans over the value of $50,000 to shareholders as dividends after a year. The loans by 119,000 companies, about 16% of all of New Zealand’s companies, are to 165,000 shareholders and were worth $29 billion at the end of March 2024. It has yet to be approved by Cabinet and would apply to loans made from yesterday.* The Government yesterday rejected all of the Climate Commission’s advice on meeting its 2050 targets. (See links below and in Friday’s Early Bird)* Commerce Commission Chair John Small has declared the electricity system a market failure. (See links below and in Friday’s Early Bird)* Transport Minister Chris Bishop has suggested their may be less need for the Government’s $56 billion Roads of National Significance (RONS) programme if congestion charging reduces demand for more motorways. (See links below and in Friday’s Early Bird)Join us as a paying subscriber to get more analysis and detail in the podcast above and below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.The Lead: IRD to dig out more tax from SMEsThe Government is now in spiral of having to crack down on overdue and unpaid taxes from small businesses in order to make up the lost tax revenues from budget cuts to capital expenditure on construction and infrastructure. The irony and unintended consequence is the very act of clawing back more tax from small business owners is it often pushes them into liquidation and the owners into bankruptcy, in part because the usual pool of ever-rising equity in those small business owners’ homes hasn’t risen in the last two years.This spiralling pressure on the Government to get more revenue to make up for slower than expected income tax and GST revenues was evident in yesterday’s Crown Accounts, which showed lower than forecast tax revenues widened the Budget Deficit for the first four months of the current financial year to June 30, 2026 by $704 million more than expected to $4.94 billion. It’s also $1 billion higher than a year ago.Despite that, the Government’s cash deficit and borrowing requirement was $802 million less than expected because of delays to capital expenditure. This also adds to the downward spiral in revenues as more construction firms are liquidated, thanks to less Government work than expected. Here’s Treasury’s explanation:“The core Crown residual cash deficit of $3.7 billion was $0.8 billion smaller than forecast, mainly due to lower than forecast net core Crown capital cash outflows ($2.2 billion), offset in part by higher than forecast net core Crown operating cash outflows ($1.3 billion). The lower than forecast net core Crown capital outflows was owing to lower than forecast net advances and net purchase of investments with othe government agencies.” Treasury in the Crown Accounts for the four months to the end of October.IRD tips over small firms and finds unpaid loans to shareholdersThe other irony, perhaps, is that it is tax collection arm of the Government, IRD, that is often the one tipping these companies over.Now the IRD has seen an opportunity to raise more funds, in part because many of these companies being liquidated are owed billions by their owner-operators, who have ‘lent’ money from their companies to themselves, partly, the IRD says, because it might reduce their tax bills. That was clear in the IRD’s proposal last night to start taxing those loans to shareholders as a dividend if they’re not repaid within a year and are over $50,000. This may seem an obscure thing, but the numbers are currently huge. The IRD has said the new tax treatment would only apply from yesterday, if agreed by Cabinet, but as of March 31, 2024, there was $29 billion owed to 119,000 companies, 16% of all New Zealand’s companies, by 165,000 shareholders.Here’s the IRD explanation (bolding mine):“When a shareholder borrows a large amount from their company and does not promptly pay it back, they can pay less tax compared to shareholders in other companies who receive taxable dividends or taxpayers who earn income as sole traders, partners or salaries. This is because when shareholders receive dividends and other payments from their companies, the funds are fully taxed at the shareholder’s marginal rate (up to 39%). In contrast, when a shareholder receives funds from their company in the form of a loan, the company will often only be required to pay a small amount of tax on the loan interest each year.“In addition, Inland Revenue is concerned the current rules often fail to collect tax on the funds left in the hands of the shareholder when a company is wound up. This is because the rules do not provide a clear date for when income arises on outstanding loans when the lending company is removed from the Companies Register.“Inland Revenue is concerned that the way shareholder loans are taxed, together with the differences in tax rates, means that the current tax system provides an unintended tax advantage when companies lend funds to shareholders, compared with paying taxable dividends.” IRD consultation paper.IRD is also worried that size and number of these loans has been rising faster than taxable income, and the tax base generally. It points out Australia, the UK and Canada don’t leave these loans lightly taxed.“We are concerned that the high value of shareholder loans suggests that our current rules relating to shareholder loans are less effective than rules in other jurisdictions at requiring the loan be repaid within a certain period of time or before the company goes out of existence. This can result in the tax advantage becoming a permanent advantage for the shareholder if the loan is never repaid. “Inland Revenue data also shows that over a six-year period from 1 April 2019 to early 2025 nearly 15% of all companies removed from the Companies Register were owed money by their shareholders at the time they were removed. In aggregate, those companies were owed over $2 billion by their shareholders.” IRD consultation paperIRD argues the new rules would encourage repayment and ensure IRD gets more in liquidation situation.“We expect that, if implemented, the measures in this issues paper would encourage the timely repayment of shareholder loans and reduce the use of long-term company loans to shareholders. This is expected to increase the funds available to a company to invest in its business. “It may also reduce the likelihood of a liquidation and could potentially increase the amount that can be used to pay Inland Revenue and other creditors if a liquidation occurs.” IRD consultation paperIRD doesn’t say how much extra it could raise, but a conservative estimate would be in the hundreds of millions. Regardless, if approved by Cabinet, it will add extra cashflow pressure on SMEs, a constituency the Government may not want to alienate.The Daily Chart PackIn the political economy: IRD sees an opportunity……in the much faster growth of loans than taxable income....…especially by landlords, real estate agents and farmers.In the economy…building work improved a bit, but is still down on 2023…which has lifted liquidations to a 14-year-high, triggered mostly by IRD.My Pick n’ Mix of links elsewhere* Tom Pullar-Strecker for The Post-$: Return to surplus at risk unless operating allowance is cut – ANZ ‘Treasury accounts show continued deterioration in “Obegal” balance from the Budget forecast, ahead of Half Year Economic and Fiscal Update.’* Sam Smith for Stuff: A generational split emerges within National on house prices* Op-Ed by Vic Uni Political Science lecturer Luke Oldfield for The Post-$: How Chris Bishop is trying to turn the Kiwi dream into a support base. ‘The promise of property ownership will be a necessary plank in how any government is to win elections in the years to come.’* Op-Ed by Phil Goff for NZ Herald-$: Why a rates cap isn’t the answer for local Government ‘The CRL deal left Aucklanders paying billions in costs other Kiwis don’t face.’* Sharon Bretkelly for RNZ/Newsroom’s The Detail: Finish line in sight for the City Rail Link ‘The opening has been pushed back again, the price is extraordinary, but Auckland’s City Rail Link is expected to deliver the region the wow factor.’See more in today’s Early Bird post.Cartoon: Tell them they’re dreamin’Timeline-cleansing nature pic:Ka kite anoBernard This is a public episode. 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Briefly in Aotearoa’s political economy around housing, poverty and climate on Wednesday, December 3:* The Government has effectively reneged on New Zealand’s Paris Agreement commitment to halve our climate emissions by 2030 from 2005 levels, or buy emissions credits offshore.* Until now, the Government has left the impression it might spend billions on credits offshore if its first choice of reducing domestic emissions failed, albeit without enough certainty for Treasury to specify a contingent liability in the Crown Accounts. The suspicion was always that the Government would renege, which the Treasury knew or assumed, due to its decision on the liability.* Yesterday Finance Minister Nicola Willis ruled out buying credits offshore, which are now needed given the Government has rolled back a range of emissions reductions policies over the last two years.* Meanwhile, Standard & Poors warned the Government last night that its rates cap on councils could cause credit rating downgrades, which would make it harder and more expensive for councils to borrow to fund the infrastructure the Government wants built.Join us as a paying subscriber to get more analysis and detail in the podcast above and below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.Willis reneges on Paris climate deal in plain sightFinance Minister Nicola Willis yesterday effectively reneged on New Zealand’s commitments under the Paris agreement to cut our climate emissions by 50% from 2005 levels by 2030, telling MPs and reporters in Parliament yesterday that the Government simply would not pay.She just came out and said it: ‘No, New Zealand wouldn’t pay to buy the billions of dollars worth of overseas emissions credits now needed.’There have been hints and prevarications that New Zealand would renege on the deal from various lower ranked ministers, including Trade Minister Todd McClay and Deputy PM and ACT Leader David Seymour. But there had never been an unequivocal rejection of the need to buy credits overseas. Climate Change Minister Simon Watts has always been careful to say he didn’t want to buy credits, but hoped another way could be found, including further reducing domestic emissions.That internally inconsistent message ended yesterday.Speaking to reporters in Parliament, Willis said former climate minister James Shaw signed New Zealand up to an “extravagant” Nationally Determined Contribution (NDC). She was then asked if New Zealand would buy credits offshore.“Look, the Prime Minister, me, the climate change minister, have said again and again that we do not think it’s in New Zealanders’ best interest to send checks for billions of dollars offshore. New Zealanders who are struggling to put food on the table are not going to thank us for having a performative awards ceremony after we write billion-dollar cheques to other countries to meet a Paris target that James Shaw set. No, that’s not our priority.” Nicola Willis speaking to reporters via NewsroomThe exchange came after Green Co-Leader Chloe Swarbrick challenged Willis and Treasury in the committee hearing on why Treasury had not accounted for the emissions credits as a likely liability in the Crown Accounts.‘The maths do not maths’Swarbrick told RNZ afterwards it was “wishful thinking” that New Zealand could remain committed to Paris without buying carbon credits.“We are potentially on the hook for tens of billions of dollars, and all [Willis] can say is we’re not going to to send those tens of billions of dollars offshore, which then begs the question of how we’re going to meet our [commitment] as the government is domestically shredding climate action here at home.“The maths do not maths. You cannot have it both ways.” Chloe Swarbrick via RNZThe Daily Chart Pack: In the economy, OECD sees NZ GDP growth at the bottom of the pack……with unemployment still at 5.0% in election year……with growth much slower than Treasury’s May Budget forecasts.In politics, the Roy Morgan poll sees the Govt improving……but the right track/wrong track rating still lags consumer confidence.My Pick n’ Mix of links elsewhere* Deep-dive by Farah Hancock for RNZ: How many of the government’s 9 key targets has it achieved?* Deep-dive by Toby Manhire for The Spinoff: Juggernaut 2: The seven generations fight. ‘The unlikely story of a landmark decade in Treaty settlements.’* NZ Herald: Cost-of-living pressures driving more middle and high income earners to seek financial help* Bernard Orsman & Tom Rose for NZ Herald: Funding squeeze: Rates cap row puts CRL and ferries in the firing line* Ellen O’Dwyer for RNZ: Critics launch campaign against second Mt Vic tunnel* Deep-dive by Nick Carey for Reuters: China floods the world with gasoline cars it can’t sell at home. * Scoop by Derek Cheng for NZ Herald-$: Government ponders overturning court ruling, saving billions in veterans’ support paymentsCartoon: Seymour’s Kitchen Rule: ‘Eat your greens…’Timeline-cleansing nature pic:Ka kite anoBernard This is a public episode. 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Briefly in Aotearoa’s political economy around housing, poverty and climate on Tuesday, December 2:* The Government has announced plans to specify council rates increases in a range of 2-4% from mid-2029, which is a higher range and later than some councils expected. That would outlaw zero rates increases and tie rates to a range between Consumer Price Inflation and GDP growth.* However, the rates controls don’t cover water charges, other fines and fees, and do not exclude spending on roads, rail and bridges, which councils had hoped for.* Auckland Mayor Wayne Brown, who has just confirmed a 7.9% rate hike, said the rates cap wouldn’t work. He said much of the increase was related to demands by the Government and a rates cap would just handicap those investments, such as the City Rail Link (CRL). Brown said: If they want a rates cap, we’ll end up with a CRL with no trains or drivers.”* In my view, most of the rates increases are caused by the Government withdrawing or delaying capital grants for water networks and roads, the Government’s own project spending forcing matching council spending, climate-change-related spending, including $600 million alone to buy out land redzoned by the Auckland Anniversary and Gabrielle floods, a decade of capital spending on infrastructure maintenance and renewal of an average of 76% of depreciation, and higher interest rates caused by the Reserve Bank’s tighter monetary policy.* Potential solutions to this breakdown in financial relations include the Government providing capital grants and regular funding help, including the Government paying rates on Crown land, the Government rebating GST on rates and construction materials used in a council area, and the Government rebating GST from tourism spending in council areas.Join us as a paying subscriber to get more analysis and detail in the podcast above and below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.Govt hits councils for rate hikes caused by GovtUnintended consequences and surprisingly negative feedback loops beckon for the Government if it actually proceeds with its 2-4% rates restrictions announced yesterday. The move seems to be politically appealing in the short run, but may frustrate the Government’s own hopes for growth in the long run, as well as reflect badly on the Government’s own investment restrictions since its late 2023 election.The performance of PM Christopher Luxon and Local Government Minister Simon Watts yesterday hit all the click-baiting hot buttons of an electorate angry about price increases.“Rates are taking up more of household bills, and some communities have faced double-digit increases year after year. This is unsustainable and is only adding to the cost of living for many Kiwis.“Ratepayers deserve councils that live within their means, focus on the basics and are accountable to their community. The Government’s decision to introduce a cap on rates will support that ambition and protect local government’s social license for the long term.” Simon Watts in a statement. However, a closer examination of the rates and fee increases measured by Stats NZ and cited by the Reserve Bank in its Monetary Policy Statement (Figure 2.14 on page 16) last week showed the prominent role of the Government itself in first causing the inflation, and then adding to it.Why councils put up ratesWatts and Luxon framed the rates guide as a response to councils ‘over-spending’ on ‘nice-to-haves,’ with Luxon calling on councils to “stop the dumb stuff.”But the increased council spending and resulting rates increases have been caused mostly by factors out of their control, and have followed long periods of not spending enough on maintenance and renewal of existing infrastructure.Those outside factors included:* the Government withdrawing or delaying capital grants for water networks and roads in early 2024;* the Government’s own project spending forcing matching council spending on both capital investment and operational spending, with the City Rail Link being the primary example;* climate-change-related spending, including $600 million alone to buy out land redzoned by the Auckland Anniversary and Gabrielle floods;* a decade of capital spending on infrastructure maintenance and renewal at an average of 76% of depreciation and 81% of budgeted spending; and,* higher interest rates caused by the Reserve Bank’s tighter monetary policy.‘You’ll kill off the growth you want’Auckland Mayor Wayne Brown was scathing about the plan.“How else does the government think we’re going to pay for what Auckland needs and for things like the City Rail Link - which were the result of decisions made by previous governments and councils?“I’m an advocate for getting value for money for Aucklanders. That means knowing the problem we’re fixing before we fix it. Putting a cap on rates isn’t going to solve anything. It will just defer it for a couple of years then ratepayers will be paying even more.“The main reason rates will go up next year is because we have to pay for the City Rail Link - a project the government is jointly responsible for. If they want a rates cap, we’ll end up with a CRL with no trains or drivers.” Wayne Brown via RNZInfrastructure New Zealand CEO Nick Leggett was worried the rates cap would handicap infrastructure spending.“Any form of rate capping must not come at the expense of building desperately needed new infrastructure and maintaining the crucial assets local governments already own.The Government’s proposed rate capping policy risks weakening councils at a time when the country urgently needs stronger, better-resourced local government to maintain and build the infrastructure communities rely on.“This is a blow to the infrastructure sector already under immense stress.“How are councils going to pay for new infrastructure or fix what they’ve already got when their primary funding tool is being restricted without any credible alternatives being offered?” Infrastructure NZ CEO Nick Leggett via a statement.The Daily Chart Pack: The seasonal rise in consumer demand for loans is kicking in……but business credit demand remains at 2023 levels……partly because company liquidations are at a 14-year high.57% feel locked out of home-ownership & 46% have given up……while 66% of GenZ buyers got deposit from family, Lotto or inheritanceMy Pick n’ Mix of links elsewherePaying subscribers can find the full Picks ‘n Mixes online only here:* Rachel Graham for RNZ: Mouldy school lunches: ‘Evidence that some had eaten some of this putrid stuff’* Thomas Manch for BusinessDesk-$: Infrastructure Com not let in on RONS* Phil Pennington for RNZ: Infrastructure Com wants phased approach to RONS* Mihingarangi Forbes for Mata/RNZ: How police lost two houses, and an iwi’s trust* Column by Duncan Greive for The Spinoff: The signs all point to the end of NZ’s property obsession. ‘Millennials and gen Z are investing in shares, while politicians are looking to nudge capital away from housing and into business.’* Op-Ed for the PHCC: Reconsidering our low-risk alcohol advice: The dark influence of the alcohol industry My curated ‘Picks ‘n Mixes’ of links to news, analysis, commentary and cartoons elsewhere are available in full only online below to paying subscribers in the ‘Early Bird’ as it has too many links to email the full version.Cartoon: Dear Santa…Timeline-cleansing nature pic: Merry (early) ChristmasKa kite anoBernard This is a public episode. 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Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Wednesday, November 26:* RMA Reform, Housing and Infrastructure Minister Chris Bishop announced plans last night to abolish regional councils to “simplify how we plan our cities and regions and make it far easier to build the future New Zealanders deserve.”* But in my view, it’s another attempt to try to squeeze out cost savings to pay for new and existing infrastructure for ongoing strong population growth, when the real problem is a self-imposed limit on using the Crown’s balance sheet to do it, while also pursuing strong population growth to juice GDP and house prices.* Bishop described the reforms as the biggest since 1989, but they’re actually another attempt to make the 1989 reforms work. Those reforms were based around restricting the size of Government and it’s gross debt to 30% of GDP.* That self-imposed and now-unnecessary restriction may have allowed proper maintenance of infrastructure without population growth in the first decade after 1989, but it hasn’t worked for the last 20 years because population growth driven by migration has been closer to 1.5-2%.* The United States may unwittingly be about to spark a debate within New Zealand about the unstated-but-very-real bipartisan strategy of using temporary-worker-led migration to pump up economic growth and house prices without having to take on much more public debt to pay for infrastructure. * 1News’ Logan Church reported last night the Trump Administration has directed the US Embassy in Wellington to collect evidence of “migrant-related crimes and human rights abuses facilitated by people of a migration background,” warning New Zealand “not to accept the globalised migration narrative”.* In my view, this might spark a much-needed debate on how to match up our true infrastructure and investment ambitions with our population ‘strategy’. I’d prefer a high population growth strategy, but that would also require a larger Government balance sheet and a land tax.* Elsewhere in the news, the UK, the EU and Pacific nations backed a roadmap away from fossil fuels at COP30, but New Zealand didn’t sign up, Marc Daalder reports for Newsroom-Pro-$ this morningJoin us as a paying subscriber to get more analysis and detail in the podcast above and below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.More magical thinking to extend the 1989 reforms1989 was the fulcrum upon which Aotearoa turned, and not necessarily for the better. Even now, we measure any change against that starting point.It is effectively year zero in our political economy because it’s the year the Public Finance Act 1989 and the Reserve Bank of New Zealand Act 1989 passed into legislation. It was the year more than 850 local authorities were amalgamated into 86 city, district and regional councils under then-Labour Minister of Local Government Michael Bassett, thanks to the Local Government Amendment Act 1989. And it was the year the Resource Management bill was introduced into Parliament by then-Labour Prime Minister and Minister for the Environment Geoffrey Palmer. These four acts are the foundation of our governmental, economic and budgetary frameworks that have underpinned everything ever since. Along with the Employment Contracts Act 1991, they form the settlement of the 1984-1991 reforms that ended the post-war era of high taxes, high investment, big Government and tight Government control of prices, wages, imports, exports and foreign exchange. I would describe these four legislative milestones of 1989 as the four horsemen of our political and economic apocalypse. But it wasn’t obvious at the time they would ride together in a way that would leave us with:* a $100 billion infrastructure deficit and no clear way to fund the extra $100 billion needed to cope with just 0.5% population growth in the next 30 years;* the most expensive housing to rent or buy in the developed world (still);* worsening public health;* an exodus of 200 New Zealanders a day to live and work elsewhere, including in Australia; where,* real wages rose 30% above New Zealand’s in the wake of the 1989 reforms. These reforms to deregulate trade, foreign exchange, capital movements, wages and prices at the same time as slashing income taxes and consolidating local government may well have worked, if a key assumption made at the time had turned out to be true.Four horseman assumed 0.5% population growthThe 1989 reforms were predicated on the idea that New Zealand had stopped growing its population quickly through migration and a falling birth rate meant it had plenty of infrastructure to accommodate growth. At most, politicians and planners expected population growth of 0.5% per annum over the next 40 years and that our population would be 3.9 million by 2021. Instead, the average growth rate since 1989 was 1.2% and our population is now 1.4 million more than the architects of 1989 expected. Population growth between 2002 and 2006 averaged 1.5%, thanks to fast migration of temporary workers who often ended up with permanent residency. Excluding the Covid travel restriction years, our population grew an average of 1.8% per annum in the 10 years to 2024, again, thanks to fast migration of temporary workers, many of whom got permanent residency if they were here during Covid. This influx was generated, allowed and shaped by both National-led and Labour-led Governments, including the 2005-08 and 2017-20 terms, when the avowedly anti-migration party New Zealand First was in Government with Labour. Population growth averaged 1.6% in NZ First’s first term with Labour and 1.7% in its second term.Instead, we accidentally on purpose grew the population 1.5% to 2.0%This would have been sustainable if the Government had continued to tax, borrow and invest as it had during the 50 years to 1989, but that was not allowed under the combination of the RBNZ Act, the Public Finance Act, the Local Government Amendent Act and the Resource Management Act. Whether by design or coincidence, these four horseman of our apocalyspe worked perfectly to stop the proper maintenance and renewal of existing infrastructure, and the expansion of water, electricity, roading and public transport networks to cope with the extra 1.4 million people. A gnarly and wicked combined effectHere’s how it worked:* the Reserve Bank Act 1989 gave the bank independence and a single inflation target of (eventually) around 2%, which it achieved by applying very high interest rates between 1989 and 2009, and then again from 2022 to 2025;* those high interest rates made borrowing for infrastructure relatively more expensive than in the decades before 1989 for both the private sector and Government itself, and forced planners to assume very high interest rates in their cost-benefit calculations, which made most large and long-term projects uneconomic;* the Public Finance Act 1989 specified the reduction of Government debt to ‘prudent’ levels by the Government running balanced budgets over the long run, which effectively precluded using borrowing to pay for infrastructure for population growth;* Treasury, Labour and National interpreted that “prudent” word to mean the size of Government should always trend back towards or stay under 30% of GDP and gross Government debt should be in or below the 20-30% of GDP range;* the Local Government Amendment Act 1989 reforms also specified councils couldn’t run operating deficits or build up debt much, which meant they tried to block or stop the funding of new water networks and other infrastructure to enable expansion, along with systematically investing less in capital than they booked in depreciation; and,* the Resource Management Act gave councils the perfect tool to block development and avoid running deficits or building up debt, because it allowed them to block development on environmental grounds through three separate layers of governance.A quest for the magical ‘solution’ to unlock the growth restraintsEver since, and particularly since 2000, politicians, voters, ratepayers, developers, economists and Uncle Tom Cobbly have blamed councils and the RMA for the growth blockages. The ever-present assumption was that growth could be found without the need for more central Government borrowing and investment, if only:* councils could be stopped ‘wasting money’ on unnecessary bureaucracies and ‘nice-to-haves’ such as convention centres, special event incentives and public transport;* councils could amalgamate into an ever-smaller number of ever-larger councils to ‘reduce duplication’ and ‘achieve efficiencies;* councils would encourage and allow the private sector to fund and/or own the buses/water networks/electricity networks/road networks et al through privatisation and/or Public Private Partnerships (PPPs); and,* the RMA could be tweaked or rewritten to remove the ‘excuses’ for councils either outright rejecting new developments.The RMA was amended dozens of times (2009, 2013, 2017) before being replaced in 2023, and then replaced again this year. The assumption was always that just a few more tweaks would remove the blockages. The unchallenged assumptions were that:* population growth of 0.5% was going to happen;* or that population growth of 1.5% could happen; or,* infrastructure maintenance and investment to match population growth was possible with a Government limited to 30% of GDP per year and debt of 20-30% of GDP.So here we go again…Chris Bishop’s announcements last night fit perfectly into this pattern of magical thinking to make 1.5% population growth fit into a Government limited to 30% of GDP per year and debt of 20-30% of GDP.In my view, removing one layer of local Government won’t change the underlying drivers of the RBNZ Act, the Public Finance Act and the amended Resource Management and Local Government Acts.Councils are still being forced by their balanced budget mandates, along with a soon-to-be introduced rates cap, to avoid investing in infrastructure for growth, while the economics and politics of privatisation and PPPs mean fast and large infrastructure funding from off the Government’s balance sheet is impossible.How it could be done differentlyThere are a few solutions that might work, including:* limiting population growth to 0.5% per annum by restricting issuance of temporary and permanent work and residency visas, including for students and tourists;* replacing the Public Finance Act with one focused on ensuring investment to cater for 1.5% population growth on average;* replacing the Reserve Bank Act to focus on encouraging investment in businesses and infrastructure to create jobs, real wage growth and gross national disposable income growth per capital; and,* introducing the tax on land and/or wealth tax that was designed to complete the full suite of reforms in 1989 to match up with the RBNZ, PFA, RMA and LGA Acts.Then-Labour Finance Minister David Caygill proposed a Capital Gains Tax in December 1989 to complete the suite of reforms that included nearly-flat income taxes, a Goods and Services Tax (GST) and the removal of tax incentives for pension savings. Accidentally on purpose, the failure to introduce the CGT, in combination with:* the PFA/LGA/RMA restrictions on infrastructure investment for new housing;* an unstated-but-real-and-bipartisan policy of using population growth to juice total GDP; * an unforseen loosening of lending restrictions for mortgages by banks freed up by the Banking (Prudential Supervision) Act 1989; and,* a once-in-100-years fall in mortgage rates from an average of 15.5% in 1989 to as low as 3% in early 2021; led to:* house price to income ratios rising from around two to around 10; and,* rental affordability worsening to the worst in the OECD.A land levy would pay for NZ-as-climate-haven to grow to 19.1mIn my view, a 0.5% per annum levy on the value of all residential-zoned land, with multiples for homes and land not occupied at all, or not by the owner (ie 1.0% for rentals & holiday homes and 1.5% for un-built-on land-banked land, would fix that 1989-sized hole in our economic framework. It would also fund the necessary infrastructure and operational spending at local and central Government level to cope with 1.5% to 2.0% population growth for the next 50-80 years, by allowing us to build enough water networks for the warm, healthy homes needed to make housing affordable.By the way, if we continue with the 1.5%-2.0% population growth rate we’ve had over most of the last 20 years, New Zealand’s population would be 19.1 million by 2100. By then, with no change in global emissions policies, the planet could warm by as much as 4.4 degrees above pre-industrial levels.In my view, we are likely to be have to become, or choose to become a climate haven because Aotearoa-New Zealand is the only country in the world that is far enough away from another country to not be reachable in a rubber dinghy or small boat.The Daily Chart Pack: The RBNZ sees growth of 0.6% & 0.4% in Q3 & Q4……which is seen slow enough to encourage a 25 bps OCR cut todayMy Pick n’ Mix of links elsewherePaying subscribers can find the full Picks ‘n Mixes online only here:* Marc Daalder for Newsroom Pro-$: Govt backtracks on commitment to fossil fuel phase-out ‘Australia, the UK, the EU and Pacific nations backed a roadmap away from fossil fuels at COP30, but NZ didn’t sign up.’* Column by Joel MacManus for The Spinoff: New Zealand has a boomer problem. ‘We have too many boomers and not enough young workers to fund their retirements. National thinks its new KiwiSaver policy could be the answer. ‘* Deep-dive by Isaac Davison for Stuff: Duty lawyer drought in wine country: Why this town is relying on help from afar. ‘Lawyers are driving more than four hours and even flying between islands to fill vacancies at the short-staffed Blenheim District Court.’* Deep-dive by Chelsea Daniels & Matt Nippert for NZ Herald: How a Pacific flag ended up at the centre of a global oil-smuggling row* Deep-dive via WSJ-$ (gift link): Robots and AI Are Already Remaking the Chinese EconomyCartoon: Corolla on its ownTimeline-cleansing nature pic: Nosey parker.Ka kite anoBernard 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

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Wednesday, November 19:* An extra 1,967 people have been put in prison since late 2023, increasing the total population by September 30 to a record-high 10,860, which PM Christopher Luxon said yesterday was “a good thing” and he wasn’t worried about the cost, saying: “We make no apologies about that. The cost will be what the cost will be.” (RNZ)* Luxon also acknowledged yesterday the Government would fail to achieve its already-extended target of recruiting an extra 500 Police officers to reach a total of 10,711 by November 27 (next Thursday), describing it as a “stretch target” and adding: “It’s taking longer than we had hoped for. It’ll be what it will be.” (RNZ)* Luxon said a year ago of the target: “We’re going to do it. Judge me by the results when we get there.”* One reason for the failure to hit the target is that 212 officers had resigned and moved to Australia to become officers there, including between 50-60 who went to Northern Territory, where Police pay a housing allowance of $32,000 a year, on top of a starting salary of A$140,000. (1News)* Meanwhile, the day after it emerged Housing Minister Chris Bishop had moved funds from Kāinga Ora’s cancelled house-building programme to build a bridge in his Lower Hutt electorate, NZ Herald-$ reported this morning that 402 of the 642 applications for emergency housing in Auckland in August were declined.* The Government is now spending $1.9 billion a year housing nearly 11,000 prisoners (an average of $173,000 per prisoner per year) and has signed off on plans to spend billions more to build another 2,190 prison beds in the next four years. * Also since its formation in late November 2023, the Coalition Government has cancelled plans to build another 3,500 Kāinga Ora homes and has removed 2,500 people from emergency housing in motels, some of whom it does not know where they ended up. Charities helping the homeless say many have ended up sleeping in doorways, tents and under motorway bridges, including over 600 in Auckland.* Many of the rough sleepers have gone to Hospital A&E departments over winter with ailments picked up living in the open, forcing the Government to spend hundreds of millions more on pre-fabricated A&E beds, and some have ended up in prison at a cost of almost $500 per night.* But businesses want even more people churning through the country. BusinessNZ called this morning for an extra 250,000 workers by 2045, suggesting average net migration be increased to 125,000 per year to reach a total population of 10 million by 2060, almost double the current population of 5.3 million, which it said “would require a policy and infrastructure shift.”Join us as a paying subscriber to get more analysis and detail in the podcast above and below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism. If paying subscribers ask in the comments below and ‘like’ the article more than 100 times, I will open it up for full public reading, listening and sharing later today.Churning & burning to imprison more & house lessThe numbers are remorseless and confronting, let alone the political commentary around them.The Government has increased the prison population by 1,967 to a record-high 10,860 since its formation in late November. It is now spending over $1.9 billion a year housing them and plans to add another 2,189 beds over the next four years.PM Christopher Luxon was asked about the record-high number of prisoners and the failure to recruit the 500 extra Police officers yesterday.“Absolutely, that’s a good thing. Yep, good thing.“I understand the financial implication of restoring law and order in New Zealand, but we make no apologies about that. The cost will be what the cost will be.” PM Christopher LuxonTo investigate, arrest and accuse them of crimes, the Police are spending $3 billion a year and the Government has a target to increase the number of officers by 500 to 10,071 by next Thursday. Treasury said the target was now unlikely to be achieved until September of next year.Housing shortage a big reason for exodus of officers to AustraliaOne reason it will fail to meet the target is churn of almost 40% of that recruitment number to Australia. 1News reported last night 212 officers had resigned and emigrated to to Australia to become officers there, including 50-60 who went to Northern Territory. Police confirmed there had been 670 vetting requests from Australian Police for New Zealand officers in the last two years.“We’ve been ramping up our recruitment, probably post Covid significantly. So we have been going to other other states, and New Zealand a number of cases. I think this is probably the fourth time in the last two or so years.” Northern Territory Police Acting Superintendent Serge BoumaBouma said housing was a major draw for New Zealand officers.“One of the big, big ticket items that we offer to every single sworn police officer is housing, housing support.” (If officers do not take a department-leased home) “we will supplement your income at I think currently, it’s just shy of $32,000 a year over and above your normal income as a tax allowance.” “A new constable would be on about $140,000 Australian (before allowances, penalties and overtime) BoumaPolice Commissioner Richard Chambers said he hoped some would come home, noting there had been enquiries from 16 of the 212 about coming home. The Daily Chart Pack: Churning, burning & sleeping roughIn politics, NZ’s prison population hits a record high……while the number of rejected bids for housing support rises.My Pick n’ Mix of links elsewhere* Investigation by Kirsty Johnson for RNZ: How the fuel of ‘last resort’ became New Zealand’s first choice* Investigation by Farah Hancock for RNZ: Luxon’s broken promise on feral cats* Deep-dive Daniela Maoate-Cox for The House via RNZ: How a ‘loophole’ resulted in 11-day submission period on fast-track amendments law* Sue Teodoro for Stuff: ‘If towns can’t grow, the region can’t grow’ ‘Builder laments development woes“The number one issue for me is the uncertainty,” Greytown-based master builder and construction company owner Paul Southey says in relation to current development restrictions.’* Libby Kirkby-McLeod for RNZ: Refuge organisations shocked at increase in women needing to escape abuse* Anne Gibson for NZ Herald-$: Retiree kept waiting for $515k, Metlifecare cites housing market for unsold apartmentCartoons: The winner grins and the apple rotsTimeline-cleansing nature pic: ‘Well, hello…’Ka kite anoBernard 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

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Wednesday, November 12:* A fresh debate has blown up around whether the Government should sell state assets to fund investment in hospitals, roads and schools. Proponents describe this as ‘asset recycling’ and frame it as simply making the most efficient use of the Government’s balance sheet.* PM Christopher Luxon even went as far as to say on Monday evening that the Government had a “lazy balance sheet,” which is a corporate term to describe a company that isn’t using its balance sheet, both its assets and debt, as aggressively as it should to maximise shareholder equity. Interest* Luxon was referring to the asset side of the balance sheet, as the Treasury was last Friday in its once-every-four-years Investment Statement. But both he and the Treasury are ignoring the other side of the balance sheet, debt, which is something corporate investors don’t do.* In my view, Luxon and the Treasury are right to view the Government’s balance sheet as lazy, but for debt, not assets. New Zealand’s Government has a positive net worth after including assets and the NZ Super Fund of 43.6% of GDP, largely because the Government hasn’t used debt to invest to keep up with population growth and maintain existing infrastructure.* The Government and Aotearoa would get a much better ‘return on equity’ by using leverage to build up its assets and the wellbeing of its people.Join us as a paying subscriber to get more analysis and detail in the podcast above and below the paywall fold, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also enable me to do this journalism.Yes, PM, NZ does have a lazy balance sheet The debate about asset sales has broken out again after Treasury suggested ‘asset recycling’ in its once-every-four-years investment statement last Friday. PM Christopher Luxon was asked on Monday and again yesterday if a second-term National Government would ‘recycle assets’ to ‘optimise the Government’s asset mix.’ He agreed, but wasn’t specific about what could be sold or how the money could be reinvested.Luxon said he wanted to optimise the Crown’s balance sheet and overall fiscal performance, as Interest’s Dan Brunskill reported late on Monday. He said that didn’t necessarily mean selling assets to reduce debt, it could also mean encouraging commercial entities to deliver stronger returns.“As a former business guy, you just don’t want lazy balance sheets.“You want to optimize your profit and loss statement, that’s strongly connected to your balance sheet, and you want to be … actually maximising your balance sheet really effectively.” Luxon quoted by Dan Brunskill via Interest.In my view, New Zealand’s Government has a balance sheet that it should use to invest in infrastructure and people to improve productivity and wellbeing. That’s because over the last 20 to 30 years, we haven’t done that in a way that keeps up with population growth. However, the political debate is very much focused on the idea that we can’t borrow to do that and that if the government needs to invest in things, it needs to sell things first. This is the idea described as asset recycling. It’s a framing and a phrase that’s used by those who are keen on asset sales and want to present it as a simple swap, ie ‘we sell this asset that we no longer need and then we invest it in hospitals or roads or schools.’But this framing does ignores the other side of the balance sheet: debt.The Prime Minister, a former CEO of Air New Zealand, likes to present or frame his job and the government as similar to a business, often using business language to describe it. However, one of the ways that businesses and investors often talk about balance sheets of companies when there is an opportunity to improve its performance is to talk about the company having a ‘lazy balance sheet.’ When businesses talk about lazy balance sheets, they often talk about a business which doesn’t have enough debt, which has not geared up its balance sheet to increase return on equity. If you have borrowed money to invest in an asset and your equity rises in value, then you get a much faster rise in equity if you have used it to buy or create that asset. So fund managers in businesses that have very solid cash flows will often suggest management borrow to either buy assets or return capital to shareholders. The risks are that a company borrows too much and goes bankrupt if its cash flow dries up. That’s less of an issue for a government, as it has the power to tax. Also, the size of the Crown’s balance sheet is so large, that it can absorb shocks. NZ’s balance sheet is very lazy, but on the debt side, not on the asset sideNew Zealand’s net debt is in fact not only low, it’s non-existent. That’s because New Zealand has a lot of assets on the other side of the balance sheet, in particular New Zealand Superfund, but also enormous amounts of land and other buildings and various businesses that mean New Zealand is actually in a net equity position with net worth of 43.6% of GDP. But that’s not how it’s usually described.You will have heard the government and the Treasury talk about New Zealand’s net core Crown debt being in a dangerously high position and that we need to stop spending and try to repay debt. But that’s actually not true, as the chart below shows.The New Zealand Government’s debt is actually incredibly low, relative to other countries and relative to the Government’s assets. Also, net interest costs are around 1% of Government’s income. If you were a homeowner and you went to your bank and said you were worried about high debt because your interest costs were 1% of your disposable income, the bank would say not to worry too much and that you should borrow to ensure you have a warm, dry home and that your kids are growing up safely. And that’s the case where we are with the government’s balance sheet.So in my view, the government is right to think about the government having a lazy balance sheet, but not in an asset sense, in a debt sense. Chart of the day: New Zealand’s lazy balance sheet My short Pick n’ Mix of links elsewherePolitics and the Economy* Thomas Coughlan & Jamie Ensor for NZ Herald: Ex-Police Commissioner Coster on leave from new job after damning report* Giles Dexter for RNZ: Congestion charging legislation passes third reading* Craig McCulloch for RNZ: ‘He’s been here 50 years’: Luxon brushes off Peters’ asset sales attack* Ric Stevens for Open Justice via RNZ: Hawke’s Bay director jailed 14 years for exploiting, raping workers* Russell Palmer for RNZ: Labour ‘absolutely’ comfortable if Te Pāti Māori does not return to Parliament* RNZ Morning Report: ‘Tawdry, silly argument’: Peters lays into asset salesHousing, Climate & Poverty* Laura Walters for Newsroom Pro-$: Survivors say Crown apology proves ‘hollow’ 12 months on ‘A year on from the PM’s apology to those abused in state care, survivors say they are still waiting for proper redress, accountability and closure.’* Greg Ninness for Interest: Housing values flat overall but notable declines in Auckland, Whangarei and Tauranga, QV says ‘QV says Auckland housing values have posted some significant declines with the biggest falls in the city’s central and southern districts’* David Hargreaves for Interest: Some soothing news for the RBNZ ahead of OCR decision - inflation expectations muted ‘RBNZ survey shows expectations of the future level of inflation have barely changed and remain ‘anchored’ near 2% despite the rise in actual annual inflation to 3%’* Greg Ninness for Interest: Rental figures are good news for tenants but landlords won’t be happy ‘Latest rental data suggests strong supply of rental housing is pushing down rents’* Column by Joel MacManus for The Spinoff: The government’s homelessness ‘ban’ may not be as ridiculous as it sounds. ‘The only cure for homelessness is homes, but responsible policing plays an important role in manage the symptoms.’* Pokere Paewai for RNZ: Human rights complaint filed over treatment of MāoriCartoon: The past and the futureTimeline-cleansing nature pic: Cirque de TuiKa kite anoBernard 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

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Friday, November 7:* Despite pledges the Government is ramping up capital spending to reduce infrastructure deficits and spark economic growth, Treasury yesterday published accounts for the first three months of the financial year showing the Government’s capital investment spending rose 1.6% to $918 million in the first quarter from a year ago, growth which is less than half the CPI inflation rate. * The capital investments in the September quarter were at least $267 million less than forecast in the May Budget and were less than half the depreciation recorded in the accounts for the quarter of $2.101 billion.* The accounts also showed Government spending on wages fell 1.6% to $9.95 billion in the quarter from a year ago. Public sector wages grew 2.4% in the quarter from a year ago and household living costs grew 2.4%, which amplified the effect on wider consumer spending of public sector job cuts. * The cost of building and servicing the PPP debt on Wellington’s Transmission Gully motorway has blown out to $3.75 billion over the next 25 years, including $1.25 billion to build it and $2.5 billion to service the debt over 25 years, and that’s before an extra $32 million per year from this year to maintain the road. It would mean the motorway cost $139 million per km to build and a non-inflation-adjusted $132 million per year $5 million per km per year or to run. The Post-$* Troy Bowker, a Wellington businessman who has accused most New Zealand media outlets of left-wing bias and helped lead a nearly-successful takeover of NZME by activists wanting less left wing content in the NZ Herald, has bought the building in Petone containing Stuff’s printing plant for The Post and many other newspapers in the bottom half of the North Island. * The lease is up for renewal next year with a potential one-year extension to 2027, raising the possibility Bowker either buys and publishes The Post, which is again reportedly up for sale, or shuts it down by refusing to extend the lease, given the high costs of removing and re-housing the printing plant. NZ Herald-$* Today’s top must read, in my view is Amy Williams’ deep-dive on homelessness in Auckland for RNZ this morning. Homeless becoming more desperate, court worker saysJoin us as a paying subscriber to get more analysis and detail in the podcast above, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also allow me to do this journalism. I am opening this one immediately to all, mainly so the young & homeless who can’t afford it can read it. Thanks to subscribers in advance.A miserly & investment-lite GovernmentThe Government continues to argue it is investing heavily in infrastructure to grow the economy and is not using short-term financial management, but the Crown Accounts for the first three months of the current financial year show a different story.The bottom line most focused on from yesterday’s figures was the budget deficit being $496 million worse than expected at $3.955 billion, thanks to weaker tax revenues from a stuttering economy, shell-shocked consumer spending and job losses. But the cash bottom line deficit of $1.362 billion was $1.639 billion better-than expected. That meant the Government’s net core Crown Debt of $184.673 billion was up $2.5 billion, but was around $5.2 billion less than expected, after revaluations.That appears not to compute, until you look more closely at the capital spending line, which was $918 million for the quarter, which was $287 million less than forecast. Total capital committments for future years were $15.53 billion, down from $16.865 billion a year earlier. A wider number for capital committments for the year also fell, as Treasury pointed out:“The lower than forecast net core Crown capital outflows was owing to lower than forecast net purchase of investments ($1.6 billion). This largely reflects capital funding from the core Crown into Crown entities and SOEs which are mainly used for the purchase of property, plant and equipment.” Treasury commentary on page 3 of the Crown Accounts for the September quarter.A simpler measure, as detailed below, showed capital spending of $918 million, less than half the depreciation noted in the accounts.The Government has argued it can’t afford to keep growing spending or ramp up capital spending dramatically because Government debt and interest costs were too high.However, the accounts show net interest costs of just $628 million after the receipts from interest and dividends, which is barely 1.5% of total revenues. Would you worry about your debt to the extent to restrict spending on life-saving equipment and staffing because your mortgage costs had risen to 1.5% of your disposable income? Chart of the Day: A generational issueMy short Pick n’ Mix of links elsewhereA few subscribers asked for me to continue the Picks n’ Mixes, even in limited form. Politics and the Economy* Deep-dive by Amy Williams for RNZ: Homeless becoming more desperate, court worker says* RNZ: Govt pays $6.3m for Michelin restaurant reviewers to tour NZ* Deep-dive by David Williams for Newsroom: Who Benefits: The rise and rise of the Free Speech Union ‘A free speech advocacy group looks ahead but struggles to shake off the label of a dark money think tank’* Laura Walters for Newsroom: Officials warn school board changes breach Treaty ‘In a political flip-flop, Education Minister Erica Stanford has decided to remove the Treaty of Waitangi obligations on school boards without consulting Māori’* Susan Edmunds for RNZ: $50 an hour, 12% superannuation: Australian recruiters target jobseekers* Gareth Vaughan for Interest: BNZ says lower interest rates enabling customers to pay down loans fasterHousing, Climate & Poverty* Tova O’Brien for Stuff: Wellington depression recovery centre to close after no funding reprieve. ‘Accidental meeting invite from Health NZ gave false hope but no reprieve for Wellington mental health service’* Deep-dive by Maddy Croad for The Press-$: ‘Abandoned and betrayed’: Disabled community still hurting a year after funding cuts. ‘Ruth Jones says many Kiwis are still struggling to recover mentally, financially and physically - unable to get funding for basics like carers or incontinence pads.’* Investigation by Jonathan Milne for Newsroom: Govt answers fishing chief’s billion dollar question on climate disclosures ‘There are a handful of corporates that stand to benefit from Commerce Minister Scott Simpson’s unexpected call to dramatically loosen climate reporting requirements; some are political donors’* Column by Marc Daalder for Newsroom Pro-$: Govt’s climate strategy: Let it burn ‘Since the election, the Government has pursued policies that boost climate pollution – even if they cost more or jeopardise NZ’s reputation. We lay out the long list of retreats on climate action.’* Column by Barbara Fountain for Newsroom: Stop telling health professionals to get back in their box ‘By trying to silence health professionals, the Govt risks smothering advocacy, equity and reform’* Deep-dive by Nikki Mandow for Newsroom: When everyone lived in an affordable homeCartoons: Cliff diving economicsTimeline-cleansing nature picKa kite anoBernard 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

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Thursday, November 6:* Charities are scrambling in response to signs the Government is planning a ‘move on’ law to push hundreds of homeless out of city centres, despite only adding two (repeat TWO) new Housing First places out of a planned 300. (RNZ)* PM Christopher Luxon told Parliament Aucklanders wanted the CBD ‘sorted’ before opening the new International Convention Centre and City Rail Link stations, adding: “Visitors are coming into Auckland. We need to make sure it’s a good presentation.” (RNZ)* Auckland City Missioner Helen Robinson said an enforcement approach was not effective, saying: “All it simply does is either delay or literally move the person, and therefore all the needs associated with that person down the road - both literally and metaphorically. The answer here is more homes and more support.” (RNZ)* A former Climate Commissioner and climate change academics described Climate Change Minister Simon Watts’ late-night changes to the Emissions Trading Scheme (ETS) and proposed changes to the Zero Carbon Act showed it wasn’t serious about reducing emissions and was gutting the act and the bipartisan consensus that created it piece by piece. (Science Media Centre)* The carbon price in ETS markets immediately fell 20% to NZ$41.50/tonne yesterday morning, before recovering somewhat to close down around 10% at NZ$47, which compares with NZ$166/tonne in European markets last night. * The changes disconnect the ETS from the Paris Agreement and end the need for the Government to receive advice from the Climate Commission.Join us as a paying subscriber to get more analysis and detail in the podcast above, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also allow me to do this journalism. I am opening this one immediately to all, mainly so the young & homeless who can’t afford it can read it. Thanks to subscribers in advance.Government may outlaw homeless from CBDsCharities helping the hundreds of people sleeping out in the open in city centres scrambled yesterday to publicise signs from within Government it is planning to legislate to allow councils to ‘move on’ homeless people from city centres to make them more attractive to tourists, conference-goers and shoppers.Representatives from Auckland City Mission, Visionwest, Lifewise, Kāhui Tū Kaha, Te Matapihi, Community Housing Aotearoa and Housing First Auckland told RNZ yesterday morning they believed the government was taking an urgent, “move on” approach to homelessness. This followed a meeting with Minister for Auckland Simeon Brown and after National MP Ryan Hamilton put a members’ bill in the ballot titled Policing (Direction to Move On) Amendment Bill. It would give Police the power to ‘move on’ people in a specified area they deemed a ‘public nuisance’ for 24 hours. It is backed by Police Minister Mark Mitchell.Auckland City Missioner Helen Robinson said any enforcement approach would be “totally and utterly ineffective”.“People who are rough sleeping are human beings, and any kind of enforcement approach is not only not good, but it’s also ineffective.“All it simply does is either delay or literally move the person, and therefore all the needs associated with that person down the road - both literally and metaphorically. The answer here is more homes and more support.” Auckland City Missioner Helen Robinson via RNZIn September the government funded an additional 300 social homes through Housing First, but only two houses have been delivered.‘We need to clean it up to make it look good for the visitors’Asked during Parliamentary question time yesterday about the plans by Labour Housing Spokesman Kieran McAnulty, Housing Minister Chris Bishop initially denied legislative change was planned, but said the Government was doing work.“The Government is considering a range of different things in relation to the CBD. It is 8 percent of the country’s economy; it is of national significance; and, with the City Rail Link opening next year, the International Convention Centre opening, and an increased push for tourism—for example, from cruise ships—the Government, as well as Auckland Council, is of the view that we can make the CBD a more desirable place for everyone to be than it currently is.” Chris Bishop (Question #9 Hansard) Luxon did acknowledge the work being done on the “move on” proposals.“Aucklanders want the CBD sorted. Visitors coming into Auckland, you know, we need to make sure it’s a good presentation. And yes, move on orders would be one of the things that you’d want to be considering.“But obviously, when you consider them, you’ve got to make sure that you’ve got the right support structures in place to support people as well. So I’m sure that’ll be part of the conversation.” Luxon via RNZBishop said he was not aware of the “move on” bill, while Mitchell said a decision on whether the Government pulled the private member’s bill from the ballot to become a Government bill was up to Justice Minister Paul Goldsmith and the Cabinet.‘Hysteria is not helping’Green Party Co Leader and Auckland Central MP Chloe Swarbrick said she had written to Mitchell asking him to visit the Auckland CBD to examine the homelessness issue.“They have intentionally chosen to make more people homeless. We are left with a situation where many of my constituents in the city centre, and particularly a number of city centre businesses, have noticed that fact.“Where are we moving these people to? My experience, as the local MP in Auckland Central over the last five years, where police have been brought in to move people along is that it doesn’t actually resolve the problem.“It merely moves the problem along to another place and pops up in another part of the city. I would just ask that everybody who has an interest and a stake in Auckland city centre calms down. Hysteria is not helping.” Swarbrick via RNZ‘Criminalising whānau for sleeping on the streets’Housing advocates in Auckland, including Kick Back co-founder Aaron Hendry, criticised the “move on” legisation as criminalising the act of sleeping rough, which had been worsened by Government measures.“If the Government goes ahead with this ban, what they will be doing is criminalizing whānau for sleeping on the streets as a result of the political decisions they themselves have made to deny people shelter.“Our whānau experiencing homelessness are not the problem, the problem is that we have human beings who are forced to sleep outside because they have been denied access to their most basic human right to housing.“Homelessness is a direct consequences of the political choices our political leaders have made over decades, political choices which have seen housing commodified, and the financial interests of investors and landlords elevated over our people’s most basic human need to access a safe and stable home.” Kick Back co-founder Aaron Hendry in a statement.Chart of the Day: Reinsurance costs quintuple in 15 yearsMy Pick n’ Mix of links elsewhereA few subscribers asked for me to continue the Picks n’ Mixes, even in limited form. Politics and the Economy* Deep-dive Cushla Norman for 1News: Ditching NZ for Oz: Kiwis at departure gate reveal why they’re leaving. ‘This year was meant to be the one when New Zealand closed the income gap with Australia and stemmed the exodus. Instead, more Kiwis than ever are leaving for a better life.’* Susan Edmonds for RNZ: People manipulating KiwiSaver hardship withdrawal system - providers* Phil Pennington for RNZ: FENZ aims to save millions: ‘We can’t keep doing everything for everybody’* RNZ: Nailing rogue salons: Fears over money laundering, trafficking* RNZ: Inquiry finds Carl Bates followed rules in declaring property interests* Liu Chen for RNZ: Minister accused of ‘driving a wedge’ between migrants and localsHousing, Climate & Poverty* Phil Pennington for RNZ: Company researching forestry road safety after trucker’s death* Layla Bayley-McDowall for RNZ: Diluting history curriculum risks ‘leaving our past to chance’ - Academic* Good news via Ruth Hill for RNZ: Nearly 60 midwives trained to deliver pregnancy vaccination programme* Pokere Paewai for RNZ: Crown breached Treaty principles with te reo policies - Waitangi Tribunal* Good news via Samantha Gee for RNZ: New dialysis unit to save patients hours of travel* Susan Edmunds for RNZ: Should we be paying $3 per km to fly domestic?Cartoons: Double happy? The bonfire on Guy Fawkes night.Timeline-cleansing nature picKa kite anoBernard 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

Briefly in the news in Aotearoa’s political economy around housing, poverty and climate on Wednesday, November 4:* Labour force data due later today is expected to show a slight rise in the unemployment rate to a nine-year-high of 5.3%, with a 0.1% rise in jobs not enough to soak up extra people entering the labour force. * But the small rise disguises an emerging jobs and health catastrophe for young people who have entered the workforce in the last decade since the start of mass usage of smart phones, the Covid pandemic and heavy job losses since late 2023.* Stuff’s Bridie Witton reports from official data this morning that almost 90,000 people are now on a jobseeker or supported living benefits because of mental health issues, up by 35,000 over the last decade, including 9,000 during the 2020 and 2021 Covid lockdown periods, and a total of 23,000 since March 2020.* The damage to a generation’s health and work prospects for life has been compounded by a collapse in employment of young people since early-2023, including the loss of over 80,000 jobs in the 15 to 35 age groups.* In housing news, Kāinga Ora has sold 171 sections in South Auckland to a developer for a profit, David Fisher reports for The NZ Herald-$, while the Government is waiting for house prices to rise to sell 35 built-but-unoccupied townhouses it had to buy off a Kapiti developer because of an underwrite from 2023, Amy Ridout reports for Stuff.* Meanwhile, less than a year after the beginning of the Government’s Fast Track Approvals regime, RMA Reform, Infrastructure and Housing Minister Chris Bishop and Resources Minister Shane Jones have gone back to Parliament with rewrites of the law to accelerate the approvals process by another six months. * The changes give more powers to the two ministers to set national standards and over-rule the Environmental Protection Authority (EPA), along with removing the need to consult more widely and curtailing appeal rights.* The Environmental Defence Society said the changes, which will themselves be fast-tracked through Parliament, were a further assault on the environment and democracy.* BusinessDesk-$’s Pattrick Smellie and Dileepa Fonseka reported this morning EPA CEO Allan Freeth resigned abruptly yesterday after 10 years in the job in connection with the fast track accleration, quoting Jones as saying Freeth had “definitely missed the memo” about speeding up approvals, and: “I have no doubt that the EPA will improve now that the CEO is going.”* In climate news, Climate Change Minister Simon Watts last night announced changes to the Emissions Trading Scheme (ETS) and a raft of fast rewrites of the Climate Change Response Act, with details late last night in this MoE release, including stripping the Climate Commission of the right to advise the Government on Emissions Reduction Plans (ERPs). * Climate Change and ETS consultant Christina Hood wrote on LinkedIn the changes were ‘short-sighted, terrible and making a mockery of the ERP process.’Join us as a paying subscriber to get more analysis and detail in the podcast above, and be able to comment below and join The Kākā community in webinars and our chat room. Paying subscribers also allow me to do this journalism. I am opening this one immediately to all, mainly so the young who can’t afford it can read it. Thanks to subscribers in advance.The even-deeper scarring of a generationEconomists often refer coldly to the ‘scarring’ effect of recessions on those who happen to be unlucky enough to be coming into the workforce at the same time as jobs are being shed and output is contracting. Without jobs and income, this ‘unlucky’ generation will experience lower incomes, worse wellbeing and more social problems over their entire lifetimes, than those who arrived into the jobs market before and after them.We are seeing this again with the loss of at least 150,000 net jobs overall since mid-2023, including the loss of 80,000 jobs in the 15-35 age groups. Perhaps ironically, those aged over 35 have gained around 110,000 jobs over that same period, including around 30,000 over 65s who got new jobs and started receiving NZ Superannuation at the same time those under 35 started living on a benefit. (See the charts below)But the generation coming into the labour market since 2015 have had it doubly or even triply tough because they have had to deal with a worsening of mental health in their generation since the advent of widespread and hours-per-day use of smart phones, which initial studies show damaged the mental health of the youngest and heaviest users the most. This generation were also hit hard during Covid.Bridie Witton has written an excellent deep-dive this morning on Stuff, titled: Why nearly 90,000 Kiwis aren’t working and subtitled: ‘A growing number of Kiwis are on welfare because of mental health issues, marking a major shift for a system once designed for and focused on physical illness and unemployment.’She makes the point this generation also faces a Government determined to hit its own target of kicking 50,000 off benefits, starting with making 18 and 19 year olds stay at home and be supported by their parents, if those parents earn over $65,000 per year.Bridie has gotten hold of MSD data via the Official Information Act showing there were almost 23,000 more people on health-related benefits as of June this year who cited psychological or psychiatric conditions than in March 2020.The change has been years in the making. But what began as a slow climb through the 2010s was accelerated by the Covid-19 pandemic, then supercharged by the cost-of-living crisis.Lockdowns, isolation and economic uncertainty helped push thousands out of work. Now, as the economic shocks linger and everyday costs grow, a larger number of New Zealanders have dropped out of the workforce than during the pandemic. As many as 86,232 New Zealanders now receive Jobseeker Support and Supported Living Payments because mental health conditions prevent them from working. That’s up from 51,345 in 2015 — a 68% increase in a decade.The sharpest increase came in the year to June, when another 6500 people were added to the Jobseeker–Health mental health category. The Supported Living Payment, designed for people with long-term or permanent incapacity, has also continued to grow steadily, up by more than 4300 since 2022. Bridie Witton for StuffUnemployment amoung teenagers has averaged around 25% over the last 15 years, about ten percentage points higher than in the first decade of the century.Chart of the Day: A jobspocalypse for the youngMy Pick n’ Mix of links elsewhereA few subscribers asked for me to continue the Picks n’ Mixes, even in limited form. Politics and the Economy* Thomas Manch for The Post-$: Finance Minister Nicola Willis has doubled local government lender liquidity facility, in anticipation of rising council debt levels.* Henry Cooke for The Post-$: Rawiri Waititi says kicking out ‘rogue’ MPs not yet considered* Tova O’Brien for Stuff: Where to from here in the great Te Pāti Māori cluster fudge?* Deep-dive by Mary Argue & Paris Ibell for RNZ: Retirement village residents descend on Parliament* Deep-dive by Emma Gleason for The Spinoff: Unpacking the ‘hostile takeover’ bid for Kelston Boys’ High SchoolCan you really just take over a school?* Column by Joel Maxwell for Stuff: I was asked if I had a SuperGold card. It was funny - then it wasn’t. Joel Maxwell argues that given Māori people die on average seven to eight years earlier than non-Māori, the SuperGold card should lower the age of eligibility for them.Housing, Climate & Poverty* Deep-dive by Alexia Russell for RNZ/Newsroom’s The Detail: Behind the $54 billion bill for nicer highways* RNZ: Another $32 million to be spent fixing Transmission Gully ‘NZTA’s Mark Owen told Morning Report the builder never applied the final chip seal layer so it was not as waterproof as it should be.’* Greg Ninness for Interest: Barfoot & Thompson’s sales volumes dipped in October with price signals mixed* Deep-dive by Joel MacManus for The Spinoff: What new population data reveals about why some cities are growing and others aren’t.* Susan Edmunds for RNZ: Emergency housing grants fall by $20m in a year* OneRoof: NZ bank offers ‘crazy’ home loan rates of 3.99% - lowest in four yearsCartoon: Riding for a fallTimeline-cleansing nature picKa kite anoBernard 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