The Kākā by Bernard Hickey

Mōrena. I’m back after a rest and aim to publish on weekdays from now until the end of this election year. I’m also back for this week’s Hoon at 5pm. Here’s the key news today in Aotearoa’s political economy around housing, climate and poverty.The Reserve Bank hiked the OCR by 25 basis points to 2.75% yesterday, as expected by the ‘wisdom of the crowds’ in financial markets and most economists. It said it had to hike to further suppress employment and wage growth in order to reduce inflation, even though that inflation was caused by the Iranian Revolutionary Guard Corps and Donald Trump, and rate hikes won’t change that fuel inflation one jot.The central bank kept its forecast track for the OCR broadly unchanged from its May forecast, which surprise many in markets who had expected the track to rise a bit. So the kiwi dollar fell more than half a cent to 58.4 USc and the two-year wholesale ‘swap’ interest rate fell around 10 basis points to 3.69%.But none of these things matter much in the long run, or even in the short run. This rate hike was unfair, unnecessary and counterproductive, in my view. It should force us to re-examine the framework under which our economy has been run for nearly 40 years, without success. We’ve had long enough to ‘suck it and see.’ We know now. It just sucks. (See more detail, analysis and charts below the fold, and in the video above)I’ve also just been interviewed on RNZ’s Morning Report. Here’s the link to the interview in full and embedded here:Elsewhere in the news this morning:* Over 200 jobs are at risk in Taranaki after Methanex announced its long-expected final decision to close its gas-to-methanol plant because the gas is running out;* Labour, the Greens and Opportunity parties jointly pledged last night to extend the living wage across all workers in the state sector if elected;* The edges of the Government’s ‘move-on’ orders are set to be softened as it emerged yesterday all parties want to change the bill to exclude 14-17-year-olds that are homeless; and,* There is now no realistic path to stop the climate by warming less than 1.5 degrees, according to a new UN Environment Programme (UNEP) report out overnight. (I’m opening up today’s email, podcast and video to everyone immediately given the public interest in yesterday’s decision. Thanks in advance to paying subscribers. I’ll do this as much as I can before the election.)An unfair, unnecessary & counterproductive rate hikeJust as our political economy crawls out from another winter of discontent and stagnation, the Reserve Bank has tightened monetary policy for the second time in two months. It may yet tighten for a third time 10 days before the election. It says it needs to further reduce its stimulus to the economy, event though is already being squeezed by the sinking lid of a Government trying to cut three percentage points of GDP from its spending. The RBNZ portrayed the hike as a little more pain now, rather than even more pain later. ‘This decision reduces the risk that the OCR needs to increase by more later. RBNZ But in my view, this hike will deepen the scars on a generation that grew up and joined the workforce during and after covid. Over a half of all 15-19-year olds in the workforce, 93,000 teenagers, are either out of a job or need more hours of work or jobs. Nearly a quarter of all 20-24-year olds are in the same under-utilised position. More than 4,000 fully unemployed and/or too-sick-to-work 18-19-year olds are about to have their benefits taken away and be forced to live at home. Real average hourly wages are falling. House prices are falling. It doesn’t feel like an economy that is heating up to the point where it’s generating too much inflation from wage increases and demand-drive price hikes. It feels like kicking an economy that’s already down.Yet the Reserve Bank has just done what 36-years of inflation-targeting independent central banking orthodoxy set it up for and directed it to do. Again, it has used its one blunt instrument, the Official Cash Rate (OCR), to squash employment and economic activity down in order to reduce its one blunt target, the annual inflation rate of the Consumer Price Index (CPI) , to somewhere between 1-3%, from its most-recently measured level of 4.1%. Job done.We know the orthodoxy well and are all well trained to accept it. The Reserve Bank Act (1989) made the central bank independent and responsible for managing the economy in the short(ish) run to keep inflation low and stable. Achieve this, the theory goes, and everything else will fall into a place of full(ish) employment and prosperity. Consumers will spend because their wages usually grow faster than prices. Investors will invest because they’re confident of making bigger profits in a growing economy. The employment and wage growth will look after itself. Job done.The other half of the orthodoxy, as is that all the Government needs to do is get out of the way, create free markets, run balanced budgets and reduce public borrowing over the longer run to enable low interest rates to do the work of encouraging private investment in businesses, technology, infrastructure and the rest. The theory is these private investors and households will make better, more efficient and ultimately more productive choices than the Government, in the long run. In theory, all this will allow the Government to be smaller and hand over tax cuts to households and businesses, who will then do an even better and bigger job of growing the economy. We all know what New Zealand’s major problems are. We don’t have enough healthy and affordable houses to rent and own. We don’t invest nearly enough in building, maintaining and staffing those houses and the hospitals, public transport and schools needed for us all to be healthy, employed and productive. And then we need to invest much, much more in technology, science, our businesses, infrastructure and training to increase our output per hour worked. Only then, will Aotearoa’s people be pulled out of a spiralling cost-of-living crisis by higher wages that can buy much more ample and relatively cheaper goods and services.We all know what that requires. More investment and employment in housing, hospitals, schools, buses, trains, infrastructure, new companies, bigger companies and more valuable and plentiful goods and services. We know what the long-term failure to do that has meant. We can feel it and see it everywhere, especially this winter. Hospital Emergency Departments have been overwhelmed. Record numbers of people are homeless. At least three froze to death in the open this year. This does not feel like an over-stimulated economy. It feels like an economy labouring under a failed framework designed for 1989, and which has clearly failed.Discouraging investment & spending that would create jobsInstead of supporting the investment, jobs growth and wage growth desperately needed by our political economy, the Reserve Bank has just sent another signal to consumers and businesses to invest and spend less. It even implored the banks yesterday to pass on the 50 basis points of rate hikes to savers as higher term deposit rates, which they have yet to do. It wants the rich to get richer and to save more, rather than spend to employ more the jobless youth. The way our monetary policy works is just not fair. It punishes the poor, the jobless, the young and the homeless, and it discourages the investment that would improve their situations in the long run. It is tightening policy in a pro-cyclical way in tandem with a fiscal policy tightening, when what we actually need is more jobs and investment.As the Reserve Bank itself said yesterday, and its charts below show, there is no domestic inflation problem and consumer and investment demand is flat on its back. The Reserve Bank forecasts a rebound in consumer spending and employment, based on the its view that interest rate levels are currently stimulative and that higher real house prices (from later next year) will boost consumer spending. But its own chart on page 38 (see below) shows its rebound forecasts has been consistently wrong for years.The ultimate painful irony is that this second rate hike, with two more projected to come in the next six months or so, will actually increase capital cost inflation that has worked its way into Consumer Price Index inflation in recent years through the increasing use of capital-user-pays charges by councils and the Government, along with regulated price increases in electricity and gas that are linked to capital cost.Charts of the day: In the RBNZ’s own wordsYet the RBNZ is (again) projecting a reboundCartoon of the day: Broken records & poodlesKa kite anōBernardPS: I’ve included fewer links elsewhere today to give space for the RBNZ decision. 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 curation of the day’s top news, analysis, commentary, charts and cartoons from around Aotearoa and elsewhere about our political economy on housing, climate and poverty. This is only published in full for paying subscribers.Firstly and briefly, here’s my summary and analysis of this morning’s top news:* This news should be on all the front pages and at the top of every new bulletin for days. Sadly, it hasn’t been, even though it has been reported by various publications. Editors made decisions to focus on other things. So here we go. Three people sleeping rough in Christchurch, Wellington and Auckland died while sleeping in the open during the freezing temperatures that swept the motu at the end of July and early August. Nicholas Jones collated the detail in a deep-dive report on homelessness for Stuff. One of the deaths has also been reported online by Geoff Sloan for the ODT. I recommend reading both reports in full to understand what it means being homeless in freezing temperatures in our three biggest and richest cities.* Excellent work from Rowan Quinn for RNZ from OIA documents uncovering the effects of hiring go-slows by Health NZ last year has erupted in a new storm over Government’s under-funding, by both major parties, of spending on health operations, infrastructure, maintenance and staffing over two years to keep the lid sinking on health spend and the size of Government overall. See more in Scoops of the day below.* House building has run faster than population growth for the last four years, but it’s clear a large chunk of it is not being used by families to live in as renters and owners. The Census revealed that 18% of new builds in the last five years are unoccupied and an excellent deep-dive by Tim Brown for RNZ this morning shows the effects of Airbnb on small towns such as Methven. Up to 30% of the town’s homes may be Airbnbs now, some housing 12 people at a time. See my Top Six Pick n’ Mix below.* A new poll shows consumers want the Government to act to lower power prices. See Chart of the day below.* Dairy lobbyists in the Waikato have won their battle to stop the Waikato Regional Council forcing them to get consents to keep farming. See Scoops of the day below.* The fallout from the slump in house sales is flowing into the retirement village development and financing sector, with one finance company specialising in the sector falling over because of a lack of unit sales. See Scoops of the day below.Join us as a paying subscriber to get my full daily curation of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s an introductory offer for the first year.I am opening this one up and sending it to all free and paying subscribers immediately due to the public interest of the news I’ve focused on today. Many thanks in advance to paying subscribers.My Top ‘Pick n’ Mix’ Six Today* Scoop by Ellen O’Dwyer for RNZ: Documents reveal Health NZ hiring crackdown* Deep-dive by Tess Brunton for RNZ: ‘Massive’ rise in people injecting black-market drugs, including teens* Deep-dive by Tim Brown for RNZ: Airbnb crisis or economic boom? Methven grapples with housing tensions ‘Average property values rose by almost 70 percent from 2018 to 2024, climbing from $380,000 to $640,000. 20% of the town’s homes are on Airbnb.’* Analysis by Shamubeel Eaqub on his Substack:Natural population growth slumps to 83 year low ‘Yet so many provinces have jobs, affordable housing and good quality of life’* Op-Ed by Graeme Edgeler for The Spinoff: Te Pāti Māori will be in risky territory if it tries to engineer an overhang ‘Exploitation of the overhang loophole has always been possible, but no party has tried it because of how voters are likely to react.’* Deep-dive by Bridget Tunnicliffe for RNZ: Former Silver Ferns’ captain on NZ exit - ’nobody has anything here’ ‘With her family to consider, Ekenasio said she had to work through some logistics with the Fever but knowing her husband and two children will move over to Perth sealed her decision. Ekenasio co-captained the Pulse this year, but the ANZ Premiership franchises are unable to offer any contracts to players at this point in time.’Top Six Scoops & Breaking News elsewhere today* Scoop by Thomas Mead for 1News: Govt targets power line companies as spending forecast hits $32 billion ‘Everyday consumers picking up the bill, according to a discussion document released by the Ministry of Business, Innovation and Employment.; Ministerial statement: Network efficiency needed for more affordable power, Govt says* Scoop by Charlotte Graham for The Waikato Times-$: Waikato farmers get reprieve as Government hits pause on PC1 Ministerial statement via Beehive: Certainty for Waikato and Manawatū-Whanganui farmers* Scoop by Matt Nippert for NZ Herald-$ The retirement village lender warning investors of a major haircut - and years-long wait Senior Trust Capital investors face 16% haircut after $15.2m in loan impairments* Scoop by Julia Gabel for NZ Herald: Christopher Luxon teasing ‘surprise’ retirement village policy* Investigation by Steve Kilgallon for Stuff: Sham charities, fake salaries alleged in $3.2m fraud probe – the biggest of its kind ‘The DIA alleges they were all involved in a complex scheme in which a series of “sham” charities were set up to apply for community grants from poker machines. Once those grants were obtained, large sums were diverted into personal accounts (with accounting notes such as ‘for website design’, ‘business cards’ and ‘banners and flags’) or paid out as salaries to people who did little or no work (most of the defendants deny the charges and none have been tried).’* Scoop by Harriet Laughton for The Post-$: Health NZ to spend as much as $100m on hospital securityChart of the Day: ‘Target the power companies’Front Page of the Day: Systemic failureCartoon of the Day: Cough, cough…Timeline-cleansing nature pic: DinnerPS: I update this post online later in the morning, including my full more detailed Picks n’ Mixes on housing, climate and poverty, a full chart pack and more cartoons. It is only available to paying subscribers, who are able to comment and use The Kākā’s chat room.The Updated BitFront Pages, Key Articles, Charts & CartoonsNewspaper front & key inside pages at 5amOnline news front pages at 5amChart Pack‘We’re waiting’Net 12% say they’re less likely to vote National after leadership voteOlder people living in povertyDemographics + Geography = DensityDocs of the Day* Science Media Centre: Climate liability bill passes final reading – Expert Reaction Lillian Hanley for RNZ: Legislation to end climate lawsuits passes third readingMy Detailed & Full Picks n’ MixesPolitics in Aotearoa* Stuff: Luxon tells cycleway city Wellington: ‘You kinda get what you deserve’. “what you’ve got is a whole bunch of bike lanes up Molesworth St that made it very difficult for me getting from my apartment into the parliamentary precinct.” Luxon hasn’t lived in that apartment since moving into Premier House as prime minister. Stuff Video: Luxon on Wellington cycleways, and why locals need to ‘fire up’.; Stuff Video: Is it ‘very difficult’ to cross Molesworth St as Luxon says? We check* RNZ: Luxon denies ’ridiculous’ accusation by Labour’s Hipkins ‘Christopher Luxon has labelled Labour’s Chris Hipkins “ridiculous” for accusing him of insulting his own National Party backbenchers as “no better than a bunch of Air New Zealand middle managers”. Hipkins made the claim on Tuesday afternoon during a fiery debate about the sacking of Chris Penk from Cabinet, telling MPs that Luxon had badmouthed his caucus colleagues to a group of businesspeople in Auckland.* Deep-dive by Isaac Davison for Stuff: Safe seats, political careers on the line as boundary changes, newcomers shake up election* Deep-dive by Joel MacManus for The Spinoff: National’s tax claims tripped up Labour, but misleading marketing comes with risks ‘Simeon Brown got the better of Chris Hipkins yesterday, but he’s walking a high wire claiming Labour wants to introduce 11 new taxes.’* Ethan Manera for NZ Herald-$: Revealed: Paul Eagle’s $100k payout after leaving Chathams CEO job in disgrace* Henry Cooke for The Post-$: Winston Peters says NZ First does not support ‘remigration’* Henry Cook for The Post-$: Labour emailed Upston about winter payment issue in June* Op-Ed by David Whitburn for The Post-$: Fast-track works. Delmore shows where it breaks* The Post-$: Editorial: Gaming MMP risks the system itself* Interview with Jessica Hammond by Hanna McCallum for Newsroom Pro-$: Opportunity surge: ‘It feels so much more like pushing on an open door now’* Sam Sachdeva for Newsroom Pro-$: Concerns as Public Service Commissioner given final say on health sector bargaining* Taiha Molyneux for RNZ: Political upheaval drives huge surge in Māori overseas enrolment ‘Electoral Commission figures show the number of overseas voters enrolled in Māori electorates rose from 6891 in 2023 to 11,511 by 1 July.’ For Māori living across the Tasman, voting was also about retaining a say in the future of a country they or their whānau may eventually return to, Nicole Orzecki said. “If I wanted to return to New Zealand, I can because I have a say in the shape of what the future looks like.”* RNZ: ‘Optics’ and ‘unfunded promises’ - Willis and Sepuloni debate tax* Interview with Grant Robertson by Mandy Te for Interest: Grant Robertson talks electoral cycle, superannuation, AI and universities* Deep-dive by Louis Collins for RNZ: Urgent debate or urgent farewell: MPs discuss Chris Penk* RNZ: Reviewer appointed to probe second Immigration IT project* Craig McCulloch for RNZ: Labour’s Netflix levy backflip: ‘Administrative oversight’* RNZ: NZ First leader Winston Peters stops short of support for Prime Minister Christopher Luxon* RNZ: National Party rule stopping Goldsmith from running in Penk’s safe seat* Column by Hayden Donnell for The Spinoff: How Paul Goldsmith can fit 11 ministerial roles into his schedule* Analysis by Anna Whyte for Interest: The seats to watch this election: One in three will be interesting to follow, says pollster David Farrar* Shayne Currie for NZ Herald-$: Former TVNZ political editor Maiki Sherman has a new role at another public broadcaster* Stewart Sowman Lund for The Post-$: Ex-political editor Maiki Sherman lands first role since quitting TVNZ* Stuff: Bomber Bradbury says he started ‘haemorrhaging blood and passed out’ after fall* Lucy Cooper for The Wairarapa Times Age-$: Wairarapa MP Mike Butterick cops backlash over ‘ute tax’ postsGeopolitics, Global Economy & Business* Deep-dive by Alexia Russell for RNZ/Newsroom’s The Detail: Espionage at scale - why businesses must beware* NZ Herald: Peters asks Russia for answers after missile warning foils Antarctic flight* Ainsley Thompson for Bloomberg-$ (gift): China Calls New Zealand a ‘Pawn’ After Espionage Accusation* David Chaston for Interest: How will the current bond market jitters affect us?* Reuters: US Treasury to double sizes of some debt buyback operations to at least $4 billion* Reuters: Global bonds rally on signs of support for US Treasury market* Reuters: Trump says no talks planned with Iran, Tehran says Strait of Hormuz still shut* Reuters: Trump pauses tariffs on Canadian imports, Carney says key work remains* Deep-dive by Ed Conway via his substack: The Radio, the Submarine and the Tariffs NZ Economy & Business* Tom Raynel for NZ Herald-$: Bank impersonation makes up 71% of Westpac business customer scam losses* Interview with Karen Silk by Gareth Vaughan for Interest: Payments networks ‘core economic infrastructure like roading, water & electricity,’ RBNZ says* Ella Somers for Interest: Mercury Energy targets residential power price hikes at or below CPI* RNZ: NZX appoints new chief executive* Jamie Gray for NZ Herald: ‘Build greater scale’: NZX’s new chief sets out his goal* NZ Herald: Trade Me CEO Anders Skoe steps down - who’s his replacement?* RNZ: Dairy prices rally at latest auction as El Niño looms* RNZ: Fletcher Building back in profit* RNZ: Te Papa chief executive quits* RNZ: Construction begins on country’s largest data centre* NZ Herald: What does NZ’s birthrate decline mean for our future workforce? NZ Herald Video: NZ’s baby shortage is becoming an economic problem* Op-Ed by Rod Snodgrass for NZ Herald-$: What if New Zealand chose energy abundance?* Liz McDonald for The Press-$: Mainland Capital still has eye for Christchurch despite $75m Auckland spend* Blayne Slabbert for The Press-$: Record year for Queenstown Airport as pressure grows on region’s creaking infrastructure* The Press-$: Christchurch lands record summer flight schedule with more than 200,000 extra seats* Liz McDonald for The Press-$: Diggers break ground at $130m Downtown precinct, with first shops to open by Christmas next year* Ian Llewellyn for BusinessDesk-$:Govt puts pressure on power networks ‘Ministers are putting pressure on electricity lines companies to improve efficiency.’* Will Johnston for The Taranaki Daily News-$: Ōakura butcher closing doors as mounting cost pressures biteHousing* Greg Ninness for Interest: High levels of unsold stock the main problem for the housing market over winter* Analysis by Jonathan Milne for Newsroom: Fletcher Building back in black but warns election nerves are stalling NZ house builds* Gareth Vaughan for Interest: ‘Independent economic umpire’ to assess councils’ role in urban land market competitiveness; Beehive statement: Achieving competitive urban land markets in new system* RNZ: Controversial development plan for Pegasus Golf Course declined fast-track approval* RNZ: Waimakariri mayor welcomes red light on Pegasus Golf Course fast-track plan* Jessica Hopkins for RNZ: Contentious development plan for seaside village seeks fast-track approval* Irra Lee for RNZ: Growing homelessness linked to tighter emergency housing rules, community leader says* Gareth Vaughan for Interest: ‘Potentially hundreds of millions of dollars worth of suspected fraudulent loans’* Ministerial statement: More than 820 homes through Flexible Fund* RNZ: Housing affordability improves after Covid price spikeTransport* NZ Herald: Why are we waiting? Will Auckland ever get another harbour crossing?* RNZ: Meola Reef harbour crossing: Mayor could use own fund to pay for study* RNZ: ’They signed up for this’: Luxon fires back at Peters over harbour crossing plan* Roeland van den Bergh for The Post-$: Trucking body says migrant drivers urgently needed to replace ageing workforce* Column by Rod Campbell for The Post-$: Why the big rush? Data centres aren’t the only thing we should be hitting pause on* Tom Pullar-Strecker for The Post-$: Merging 28 lines companies no guarantee of lower bills, MBIE suggestsInfrastructure, Water & Councils* Graham Skellern for NZ Herald: Nearly $193b of infrastructure projects lack confirmed funding* Julia Gabel for NZ Herald: ‘I’m furious’: Bishop blasts Fire and Emergency as National develops policy* RNZ: Chris Bishop softens comments criticising FENZ as ‘incompetent’* Ethan Manera for NZ Herald: ‘Abysmal management’: Luxon attacks Wellington water entity, Little hits back* Max Frethey for LDR/RNZ: ‘Little bit grumpy’: Rural residents shoulder water upgrade costs* Erin Johnson for RNZ: ‘It’s going to hurt’ - neighbour wants council to work with owner of cracked heritage building* Moana Ellis for LDR/RNZ: Ohakune water crisis exposes funding gap for critical infrastructure, says mayor* Justin Wong for LDR/RNZ: Confusion over responsibilities in Lower Hutt storm response* Column by Lianne Dalziel for Newsroom: Ngāi Tahu, not Govt, offers local councils an unexpected ‘head start’ on mergers* Tina Law for The Press-$: Unprecedented closures on the cards as Christchurch councillors are told to prepare for an extreme fire risk this summer* Tom Hunt for The Post-$: Secret Moa Point report includes potential ‘adverse’ findings against Wellington council* Andrew Ashton for The Waikato Times-$: Hamilton City leaders flip-flop on voting system, plan referendum* Liz McDonald for The Press-$: Queenstown Airport ordered to reveal plans for rival Frankton development* Tom Hunt for The Post-$: Delay Wellington public transport route for ‘never never’ tunnels? Airport says yesPoverty, Living Costs & Incomes* Deep-dive by Marty Sharpe for Stuff: The tragic life of Gavin Rose, who died in Napier’s city centre, aged 32* RNZ: ACT proposes ‘Working with Children’ card to ensure continual vetting* Lillian Hanley for RNZ: How much would it cost to fix the broken aged-care system?* Giles Dexter for RNZ: ’Appalling’: Luxon apologises as thousands caught in Winter Energy Payment error* Robin Martin for RNZ: Taranaki teens optimistic despite high youth unemployment and spectre of AI* RNZ Morning Report: No ‘silver bullet’ for cutting high power bills - Energy MinisterHealth* Luisa Girao for The Press-$: Hundreds seek after-hours care at new Rolleston clinic while wait times hit seven hours in Christchurch* Rowan Quinn for RNZ: Flu wards set up, elective surgery cancelled as hospital admissions surge* Lauren Crimp for RNZ: More will die in prison if mental health bed shortage continues - Ombudsman* Explainer by Emma Gleason for The Spinoff: New Zealand’s later-than-usual 2026 influenza spike. EDs are chocka* Explainer by Lucy Corry for RNZ: Hatching and scratching: What you need to know about scabies but were afraid to ask* 1News: Guidelines to let GPs diagnose endometriosis more easily”Surgery will remain available for those who need it, but it will no longer be the only route to a diagnosis,” says the Health Minister.* Column by Ian Powell for Newsroom: Simeon Brown health practitioners bill puts political whims ahead of public safety* Jazlyn Whales for NZ Herald-$: Eating disorders not solely psychological, landmark NZ-linked study finds* NZ Herald-$: Editorial: Dental care system for children needs fixing* Will Johnston for The Taranaki Daily News-$: Meth use surges in Taranaki as pipes stay on shelvesEducation* John Gerritsen for RNZ: Govt considers u-turn on climate change in school curriculum* Jessica Hopkins for RNZ: ’Never seen anything like this’: More than half of students off sick at Napier school* RNZ: School absences due to illness at highest level in three years* Mary Argue for RNZ: Principals urge cross-party support for initiative to end curriculum disruptionCrime & Justice* 1News: Kiwifruit labour company must pay $400k for exploiting migrant workersThe company, which supplied workers to kiwifruit orchards in the Bay of Plenty, withheld wages and holiday pay and made employees pay premiums.* RNZ: Second arrest after attempt to steal railway copper disrupts train travel in Wellington* 1News: Multiple memorial plaques stolen from central ChristchurchPolice appealed for public’s help in identifying a man after several plaques went missing in Christchurch last week.* Lillian Hanley for RNZ: ’Walking the line’ attack at youth justice residence probed* Tess Brunton for RNZ: Concerns about ’boys club’ culture among managers at Otago prison* RNZ: ’Parents were told that they were overreacting’: Kmart ordered to pay toddlers’ family over contaminated sand* Lucy Xia for RNZ: ‘I’m really appalled for what they’ve done’ - More parents continue fight over coloured sandClimate & Environment* Marty Sharpe for Stuff: ‘I cannot believe Chris Bishop said no’: Dead boy’s family in fight over forestry debris* Fox Meyer for Newsroom: How new fast-track has revived colossal salmon farm once rejected for ecological harm* Deep-dive by Paddy Gower for Stuff: ‘Violent virus’ wiping out rare baby penguins - expert predicts extinction within five years* RNZ: Gisborne slash clash: Mayor feels like ‘meat in the middle’* RNZ: ‘Ruined what was a fantastic place’: Arthur’s Pass campsite torn up by 4WD vehicles* RNZ: Gisborne District Council open to change over forestry management of slash, sediment* Katie Todd for RNZ: Datagrid pledges less water, generator use at Southland AI factory* Ministerial statement from Shane Jones via Beehive: Providing certainty for the marine sector ‘Councils will lose the ability to make rules for fishing and fishery resources already managed under the Fisheries Act in changes to legislation going through Parliament.’Solutions & Good News* Rachel Moore for RNZ: Hamilton’s first social supermarket officially opens* Tuwhenuaroa Natanahira for RNZ: ’Parliament acting at its best’: Nelson Tenths land dispute finally settled after 180 years* Philip Matthews for The Press-$: The Press investigative reporter Charlie Mitchell to be UC’s first ‘journalist in residence’cheersBernard 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 curation of the day’s top news, analysis, commentary, charts and cartoons from around Aotearoa and elsewhere about our political economy on housing, climate and poverty. This is only published in full for paying subscribers.Firstly and briefly, here’s my summary and analysis of this morning’s top news:* An analysis by the NZ Herald-$ of land sales data for a now-delayed highway in South Auckland shows over $131 million of the project’s budget was spent buying land to enable greenfields development at the fringes. See Chart of the Day below* Housing & Infrastructure Minister Chris Bishop has been forced into an embarrassing U-turn on infrastructure funding for fast-tracked developments after a protest letter from the Mayors of Auckland and Queenstown.* The back-track on the fast-track rules is symptomatic of the major driver of the biggest problem in New Zealand’s political economy: the cost of the next plot of land in greenfields developments is usually the marginal housing cost that translates into higher housing costs across the market. The massive costs of new water infrastructure are now increasingly being loaded into those land costs through development contributions paid by developers, which further inflates housing costs right across the market. Developers eyeing an opportunity to lower those costs jumped on the Fast-Track bandwagon* It didn’t use to be that way. Before the era of user-pays and a structural drive to small Government and low taxes from the late 1980s onwards, these infrastructure and land costs of the ‘marginal’ home were smeared across the entire population through the Government paying for it directly, and recouping the costs through higher taxes.* Also symptomatic of that structural drive to put a sinking lid on health costs in order to keep taxes low, New Zealand’s hospital system is now in the middle of a winter flu crisis. Also see Top Newspaper article of the day* The Opportunity Party got the jump again on other parties over the weekend, launching a policy to regulate lobbyists and stop large political donations. The extra focus came as the Talbot Mills/Enacta poll showed Opportunity over 5% and in the kingmaker position. See Chart Pack of the day below after updatePlease join us as a paying subscriber to get my full daily curation of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy.I have decided to open this one up to all immediately so the video above is available to all. It includes a backgrounder on why high development contributions are inflating all house prices. Many thanks in advance to paying subscribers. My Top ‘Pick n’ Mix’ Six Today* Deep-dive by Anna Rankin for Sunday Star Times-$: The cosy corporate club holding New Zealand’s economy back* Nona Pelletier for RNZ: Time to rein in power of big tech, Auckland professor says From Auckland Uni’s Susan Watson and her paper: Reining in Big Tech Corporations: Why Platform Governance Requires Structural Regulation* Scoop by Pokere Paewai for RNZ: Unreleased review of Waitangi Tribunal sitting with ministers* Interview with IAG CEO Phil Gibson by Ella Somers for Interest: ‘There comes a point where there’s no price you can charge that can cover the risk’ ‘IAG NZ warns it may have to withdraw insurance from NZ’s flood-prone areas in the future if the Government doesn’t speed up natural hazard risk reduction.’ ‘I absolutely don’t want insurance to become unaffordable,’ IAG NZ CEO says* Deep-dive by Marty Sharpe for Stuff: ‘I would live here, insured or not’: Their house is gone, but this family won’t give up their land* Column by Gareth Morgan for Newsroom: Who’s the fiscal blowhard, Mr Luxon? ‘National’s dirty big secret is that it has been $17 billion out on its 2023 promise to fix the Government’s books, writes Gareth Morgan.’Scoops elsewhere this morning* Hanna McCallum for Newsroom: Climate change omitted from new science and social science curriculums ‘A search of new school curriculum documents reveals no mention of greenhouse gases, fossil fuels or human induced climate change.’* Marty Sharpe for Stuff: ‘Goalposts have shifted;’ Dairy farmers face fines of up to $1 million for farm pollution* Amelia Wade for The Post-$: $106m and counting with no crossing to show for it: Spending on consultants on Auckland’s next harbour crossing revealed* Harriet Laughton for The Post-$: Government ignores advice to repay retirement village residents within nine months* Amy Ridout for The Post-$: ‘Your nemesis’: IRD staff mocked business owner in private messages* Sam Sachdeva for Newsroom Pro-$: UK pitches military tech role and navy frigate deal to NZ Op-Ed by Reuben Steff for Newsroom Pro-$: Navy frigate decision looms as Pacific security threats escalateChart or Map of the Day: $131m on land for a roadFront page or key newspaper article of the DayCartoon of the Day : Short Cut? Timeline-cleansing nature pic: RootedcheersBernardPS: I update this post online later in the morning, including my full more detailed Picks n’ Mixes on housing, climate and poverty, a full chart pack and more cartoons. It is only available to paying subscribers, who are able to comment and use The Kākā’s chat room. 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

It couldn’t have been much worse. Unemployment rose and real wages fell. Unemployment rose more than expected to an 11-year high in the June quarter, while real wage deflation of 2.1% in the quarter added to the pain for home-owning households and voters now facing higher interest rates and lower housing wealth barely three months to go before the election.Yet this increase in the number of unemployed to 171,000 people, including 94,500 young people and 69,300 who have been unemployed for more than six months, happened during a year when 111,000 new temporary work visas were issued to workers from overseas. It has also happened just before the Reserve Bank decided the labour market was so tight it was creating an inflation problem that needed higher interest rates to create more unemployment to fix.Unemployment rose more than expected to an 11-year high of 5.6% in the June quarter, while the under-utilisation rate rose to a 13-year high of 13.8%. Economists had expected around 5.4%. That unemployment rate was up from 5.4% in the March quarter (revised up from 5.3%), while the under-utilisation rate was up from 12.9%. The unemployment rate for 15-24-year olds who were Not in Education, Employment or Training (NEET) rose to 13.8% from 12.9%, with the number rising by 7,300 to 94,500.The overall number of fully unemployed people rose 8,000 to 171,000, with 69,300 of those unemployed for more than six months. Meanwhile, the number of under-utilised people rose by 31,000 to 440,000. Of those, 255,700 were aged 15-34, up 33,000 from a year ago. The underutilisation rate for 15 to 24-year-olds rose from 33.6% to 37.0% percent over the year. The number of underutilised people in the 15-24 age group increased by 21,500 annually, with the largest increase in underutilisation coming from unemployment (up 12,200 over the year).This came after the number of people employed rose 13,000 in the June quarter from the March quarter to 2.905 million, but that wasn’t enough to keep up with the growth in the labour force of 21,000. That was driven by a 16,000 rise in the working age population and a rise of 5,000 because the participation rate rose to 70.7% from 70.5%.Wages fell 2.1% after adjusting for inflation; Retail wages at 26-year lowWage growth was also weak and below the Consumer Price Inflation rate. The Labour Cost Index measure of annual wage growth was 2.0% in the June quarter, which was below the CPI inflation rate of 4.1%, meaning real wage deflation was 2.1% in the June quarter. Real wage deflation was greatest in those jobs where discretionary consumer spending was weakest.Average total hourly earnings in the retail sector were unchanged from a year earlier at $33.66 per hour. That was the lowest retail wage inflation since the September quarter of 2000, when average retail wages fell 0.3% from the same quarter a year ago.A Government has never been re-elected during a period when real house prices and real wages are falling at the same time. The Labour Force data for the September quarter will be published on November 4, three days before the election.Many thanksBernard 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

Almost half an entire generation of potential new voters are being disenfranchised in plain sight, with just 95 days to go until the General Election on November 7. More than 80% of new voters have already been disenfranchised in the election last year of ‘representatives’ in our largest, youngest and most ethnically diverse city: Auckland.The number of missing young voters is set to top a quarter of a million, which is more than voted in total for ACT and 50% more than voted in total for NZ First at the last election. It is almost 10 times the 1.08% margin over the 5% threshold that NZ First surpassed in 2023 when it got 6.08% of the vote and its eight seats in Parliament. The democratic deficit in this election is set to be worsened if, as the Electoral Commission projects, 55,000 people who try to enrol to vote on election day will be turned away under new election rules legislated by the Government. (See more analysis, charts and detail below, and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* PM Christopher Luxon apologised yesterday for his ‘parent-child’ comments about relations between the Government and small businesses to a business audience in Rotorua on Friday, saying at his weekly news conference last night: “I am sorry if my comments do not properly acknowledge the challenges that many small business owners are facing, and that I got that wrong.” * The Post-$ published an editorial this morning titled: ‘Luxon’s impotence makes him prime minister in name only,’ adding: ‘The prime minister’s failure to recommend to the Governor-General, Dame Cindy Kiro, that she dismiss his foreign minister demonstrates that Christopher Luxon now holds his job in a de jure sense only.’ Others commented on the apology too. See My Top Pick n’ Mix Six below* Almost a million notifications did not get sent to people eligible for cancer screening due to flaws in the national cervical cancer screening programme, RNZ reported last night from a Health NZ review released yesterday.* A senior figure in New Zealand First’s youth wing, Nicholas Newport (also known as Nicholas Wells), has been linked to a neo-Nazi group and online accounts that praised Adolf Hitler, Charlie Mitchell reported in a scoop yesterday for The Press-$. See Top Newspaper Article of the day below.* Dwelling consents fell 3.6% in seasonally adjusted terms in the month of June from May, after a 4.9% fall in the month of May from April, Stats NZ reported yesterday, as rising interest rates and the Government’s pullback from house building bear down on the sector. This follows a seasonally adjusted fall of 4.9% in May 2026. * Consents for non-residential construction fell 2.9% to $8.8 billion in the year to the end of June from the previous year. This is just above the sector’s 2020 Covid lockdown low and is the lowest in 11 years. It comes after the Government’s suspension of capital expenditure spending for hospital building, school building, roads and railways in early 2024. “This shrinking pipeline of work points towards further falls in work put in place during the second half of this year,” Infometrics Economist Gareth Kiernan noted. See Chart of the Day below.Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.A generation being disenfranchised in plain sightIt’s like watching a car crash in our political economy in slow motion, although it seems to have sped up this year.The collapse in enrolment among potential young voters in this election cycle is brutal, especially as previous research shows that voters that don’t vote at their first opportunity are much less likely to vote throughout their lives.The enrolment rate for voters aged 18-24 has fallen to 53% as of the end of June, sliding for a sixth consecutive election cycle from 70% at the end of June 2011, Lauren Crimp reported yesterday for RNZ from Electoral Commission data.Youth enrolment collapses to 53% from 70% in 2011Over 200k 18-24s missing from electoral roll as of July 31Over 70,000 young people missing from electoral roll in AucklandA preview of what that disenfranchisement looks like was evident in the turnout for the Auckland Council elections last year, and the resulting over-representation of older, white, locally-born men as councillors. Turnout overall fell to 29%, but was much worse for young voters and even worse than that for young Māori voters. It was most obvious in West Auckland and South Auckland, where the percentages of voters among young Māori voters fell under 15%.Turnout among young voters in Auckland election last year under 20%Auckland councillors more white, more NZ-born & older than populationDemocracy eroding in Parliament tooThe quality of any democracy is not just about the representation of the population, but the time and care taking in making (and unmaking) laws. The coalition Government has passed more bills in one term under urgency than any other Parliament since records were kept dating back to 2008, Irra Lee reported yesterday for RNZ from Parliamentary Library data.Govt uses urgency more aggressively than previous GovtsThis trend towards disenfranchising new generations of voters is consistent with a push from some activists to make it harder for younger, poorer and browner people to vote, and harder to count, through less comprehensive censuses.This is a live issue, with the Government shifting to an administrative census from a conventional household-by-household survey.My Top ‘Pick n’ Mix’ Six* Deep-dive by Kate Green for RNZ: Curing NZ’s health system: First halt the deterioration, primary care leader says* Explainer by Kate Newton for RNZ: Explainer: What is a data centre and why is everyone freaking out now?* Op-Ed by for Interest: Hyperscale data centres and flickering power ‘Earl Bardsley questions the appetite for ‘littering the landscape’ with windfarms and solar panels to maintain AI data centres established via contracts facing little public scrutiny.* The Post-$: Luxon’s impotence makes him prime minister in name only* Column for Newsroom: Anne Salmond: A tale of two leaders* Column for Newsroom: Gareth Morgan: What a waste of capital ‘The Baby Boomers of the big establishment parties know one economic path – housing investment and immigration. They need to make way for new generations.’Cartoon of the Day: Angry (& inaccurate) cupidTimeline-cleansing nature pic: GloriouscheersBernard 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

PM Christopher Luxon told struggling small business leaders in Rotorua on Friday to take responsibility for their own businesses, saying it wasn’t his or the Government’s role to stimulate the economy. The comments comparing business leaders to whiny kids wanting handouts from the ‘adults’ in Government haven’t gone down well, prompting the Editor of The Post-$, Matthew Hooton, to describe Luxon’s comments as “corporate gibberish” and “inauthentic”, suggesting there was still time for National MPs change their leader. (See more analysis, charts and detail below, and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* New Zealand First has proposed the introduction of a ‘Kiwi Kids Grant’ of $5,000 per child per year for the first three years up to three children, in order to raise the birth rate above the replacement rate. It would cost $400 million in the first three years and be tax-free and not means-tested. Labour, ACT and National said such policies hadn’t worked overseas.* ACT has proposed giving teachers the legal power to remove ‘seriously or persistently disruptive students’ from the classroom. ACT candidate Paul Henry said when announcing the policy: “Let’s be honest, there are a lot of little s***s in classrooms, and we need to address that if we’re going to lift education standards. He added that New Zealand couldn’t invest extra in education as other rich countries such as Finland had, because “obviously, we are not a rich country. We’re a poor country at the moment, and so we need to address that.”Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.PM tells ‘children’ to stop asking for Govt helpIt was an innocuous enough and fair enough question to Christopher Luxon at a business breakfast event in Rotorua on Friday that has unleashed another round of accusations that the former CEO is out of touch for voters, and businesses in particular.Rotorua Business Chamber CEO Melanie Short told Luxon about the results of a survey of 82 business leaders in Rotorua in April and May that found a sharp fall in confidence since October linked to rising costs and a lack of demand. The survey also showed businesses wanted more public investment in infrastructure and business development.Short then asked: “We do not want to pass them on because we’re also getting less customers through the door. So, it’s a matter of time - how long can we hang on?”Luxon responded with these comments (bolding mine):“I think that’s a negative view, to be honest. Like we’re entrepreneurs and business people, and I get it. You know, if you’re not retooling and radically disrupting your business, you ain’t doing the job.“You know, you have to disrupt yourself aggressively before you get disrupted by global events, and if you keep thinking you want the same business model, the same customer mix, the same margin structure, you know you’ve got to be retooling and refinancing and rehoming, and that’s just the reality of business people all around the world.“So, my job is to make sure I’m setting up the conditions for you to be able to go create that growth. And I think some of the subtext and assumption in your question is that...I think in New Zealand I’ll be honest with you as a business person who was... I sat in Illinois for six years in Chicago, and the last person I wanted to ever talk to as a CEO was the government. I didn’t sit there in Chicago saying I wonder what the government thinks and I wonder what they’re doing to help me for my business? Can I get some grant money to do something? No, no, I’m a business person.“I’m building a kick-ass company that actually has commercially superior returns, great customer experience, and awesome internal culture. That is the job of what makes a great company, not a good one, a great one. And so that was my mentality.“Come home to New Zealand, and there’s a parent-child mentality. I have literally sat in boardrooms across New Zealand, and the conversation goes: ‘I wonder what the government’s going to do? I wonder what the government’s going to think?’“Who cares what the government thinks or does? Our job is to be adult, adult, adult. The business leaders, the political leaders, and the community leaders working together, doing things differently. I set up the operating system. You go out there and smack it and go create the road, and the community leaders see the pain, the hurt, the need, and the frustration, and the three actors do different things but complementary things to deal with the challenges and the opportunities.“So I still think there’s a little bit of.... okay, so in this chamber, how many of you are actually using Claude or Claude code? Okay great. How many sessions has the chamber run to help you understand that? Is that your number one focus right here, right now? Because that is going to disrupt your businesses, and it’s a huge opportunity for you to do exceptionally well off the back of it.“So how do we collectively lift our SME literacy on something like AI as a result? So I’m just pushing back to say my job is to set the conditions up. We’re getting spending under control. We’re getting inflation back into the band. We’re at 2.9 percent, strip out the fuel pieces. We’ve got growth coming in. And that creates opportunity.” Christopher Luxon talking to the Rotorua Business Chamber.‘Businesses don’t want an insulting lecture’Labour Finance Spokeswoman Barbara Edmonds said Luxon had insulted businesses with a patronising lecture.“Rotorua businesses told Christopher Luxon confidence is free-falling, customers are disappearing, and costs keep rising. They are telling him his Government’s choices aren’t working. His response was to call them negative and tell them to grow up.“Christopher Luxon promised to fix the economy and now he says, ‘who cares what the Government will think or do?’ New Zealand businesses care very much what the government thinks and does, because his government’s choices affect whether they keep their doors open.” Barbara EdmondsThe Post-$, which is edited by former National political staffer and lobbyist Matthew Hooton, also questioned the tone of Luxon’s comments and suggested it was not too late for National MPs to change their leader. The Post-$ also challenged Luxon’s characterisation of his own roles at Unilever and Air NZ.“For many, Mr Luxon’s analysis of New Zealand business culture will read more like the gibberish of corporate bureaucrats than the language of the entrepreneur and businessman he described himself to be.“Few companies are more at risk of being accused of being a child to the government parent than a national airline. Moreover, Mr Luxon did not just talk to the New Zealand government as chief executive, as he should have, but chaired Dame Jacinda Ardern’s Prime Minister’s Business Advisory Council.“Admittedly these are small points, but they suggest an inauthenticity about the Prime Minister that voters perhaps intuitively sense and reject.“A number of credible polls and important economic data are expected in the next fortnight. If, having considered that information, National MPs are certain Mr Luxon is the best of their number to beat Mr Hipkins, then their judgment must be respected. This month is their last chance to assure themselves of that again.” Editorial for The Post-$‘I did not plan to cause offence’Luxon told NewstalkZB’s Mike Hosking and RNZ Morning Report’s John Campbell in interviews this morning that he had not planned to cause offence and was he was disappointed with the reporting from The Rotorua Post-$ from the comments. The PM’s office yesterday issued a full transcript of his comments, saying the initial report mischaracterised his views.Asked by Hosking if his comments had been misreported or if he over-spoke, Luxon said it could have been “either or”, adding that “there was certainly no intent to cause offence”:“We’re trying to work with, enable and empower business. So, you know, that was my simple, you know, message in that room.“I said up front, I’m a great admirer of business people because they’ve led through difficult times, they’ve got a lot of people to lead. I’ve been in that situation as a business leader myself.”In my view, Luxon has again displayed his lack of understanding of how New Zealand’s economy currently works and how Government spending is often a crucial catalyst for household and business spending and investment.In previous recoveries from economic crises, the Government has pulled back on its own spending as a share of GDP, confident that households and businesses would be able and willing to step forward in place of the Government to borrow and invest. But that is not happening this time around because banks have done no net new lending to businesses since Covid, and rental property investors don’t want to invest in a housing market that is falling in value and when rents are falling. Both sources of spending and investment are also in no mood to borrow to spend and invest when their disposable incomes are falling and their main source of wealth is contracting.Charts of the day: How we’ve done it for 30 yearsEditorial of the Day: Time to change PM? My Top Pick n’ Mix Six* Cycling lanes interview with Amsterdam University social scientist Marco te Brömmelstroet by Jack Tame for TVNZ’s Q+A: ‘Kids have a right to wobble’: Dutch expert on NZ’s car-first cities. Amsterdam University social scientist Marco te Brömmelstroet argued the way streets in cities are designed comes down to trade-offs. Full YouTube Video* 1News: Outgoing Children’s Commissioner: ‘I have been a fair and balanced critic’Claire Achmad’s role as the independent children’s advocate ended on Friday — despite her wanting to stay on. Full Interview with Claire Achmad by Jack Tame for Q+A via YouTube* Deep-dive by Marika Hill for LDR/RNZ: Divided, united or undecided? The push to create super councils* Investigation by Tony Wall for Stuff: ‘Sick to my stomach’: Victim’s sensitive claim details sent to abuser’s family home* Op-Ed by Connor Sharp for SST-$: Northern expressway poor use of public money* Susan Botting for NZ Herald: Alarm over plan to truck Auckland housing development’s wastewater northCartoon of the Day: Comprehension testcheers.BernardPS: I update this post online later in the morning for paying subscribers, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons below the paywall fold. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. 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

New Zealanders were more concerned than ever about the cost of living, health care, the economy, housing costs and unemployment in early July, according to the latest Ipsos Monitor survey of over 1,000 potential voters that was released this morning.The survey found more voters thought Labour would manage the economy, health care, the cost of living, housing costs and unemployment better than National. This is only the second time in the survey’s history since 2018 that Labour has beaten National on the economy, having briefly been ahead in October last year.The survey also found confidence in the Government (right track/wrong track) fell to its second lowest level ever in the survey’s eight0-year history, just above its record-low in October of last year. (See more analysis, charts and detail below, and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* Christchurch Hospital’s Emergency Department is in crisis this morning. An ED doctor said yesterday the hospital plans to pitch a tent outside as corridors fill up with patients in beds, with some already being angled in corridors in order to fit more in.* In my view, this case again highlights the dangers of ongoing under-investment and skimping on staff and maintenance to keep pressing the size of Government down under 30% of GDP in an aging, fast-growing and less healthy population. The population of Greater Christchurch has grown by 150,000 to 577,000 in the last decade, which was faster than projected or invested for. (See charts of the day below)* New Zealand First has revealed it plans to sell the retail arms of the Government-controlled gentailers, Meridian, Mercury and Genesis, to the private sector to fund extra generation by their wholesale arms, Tom Pullar-Strecker reports this morning for The Post-$.* ANZ’s Business Outlook survey through the month of July found an improvement in confidence about the economy and business’ own outlooks from June, but stagnant experienced activity, a contraction in hiring and a worsening outlook as the month went on and fuel prices rose ever higher.Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.National sags again on economy in Ipsos pollIt is turning into a long winter of discontent for the Government, across all the measures that drive voter support for the Coalition overall, and National in particular.Today’s Ipsos NZ poll results show voters even grumpier about the economy, the hospital system and unemployment than they were in October last year, when for the first time Labour was judged better on the economy than National.Here’s the key charts to tell the story:My Top Pick n’ Mix Six* Deep-dive by Amanda Gillies for RNZ/Newsroom’s The Detail: Deaths, delays and a health system under extraordinary pressure* Scoop by Sammy Carter for RNZ: Missed rent cases jump the Tenancy Tribunal queue - but is it favouring landlords?* Scoop by Nicholas Jones for Stuff: Top surgeon quit NZ for Australia after twice falling asleep at the wheel* Scoop by Glenn McConnell, Jenna Lynch & Emma Ricketts for Stuff: Revealed: Military choppers and bulletproof car on call to protect Seymour and Luxon on Waitangi Day; Stuff: The five times Luxon caught the air force express to the Beehive; Stuff: An Air Force chopper had to be flown up from Ohakea to take PM from Auckland to Hamilton* Interview with Quilae Wong by Mandy Te & Anna Whyte for Interest: Opportunity Party leader Qiulae Wong talks coalition dealbreakers & more* Explainer by Susan Edmunds for RNZ: How Consumer NZ wants to fix the electricity marketCharts of the day: Christchurch population above forecastsChristchurch city population and forecastSelwyn and Waimakariri districts population and forecastsFront Page of the Day: Labour beating NationalCartoon of the Day: A special water fountaincheers.BernardPS: I update this post online later in the morning for paying subscribers, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons below the paywall fold. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. 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

It’s as if we’re trying to make them emigrate and we don’t want them to have our grand-kids. The Government has revealed it expects to take away the benefits of up to 4,700 teenagers without jobs, arguing their parents should look after them. This includes 2,733 who are too sick to work, of whom 69% are living with mental health challenges and some who are being treated for cancer.This comes as the National-led Coalition is cutting benefits in order to compress Government spending below 30% of GDP and bend public debt down towards 30% of GDP: the 30/30 rule both National and Labour have adhered to for decades, believing it keeps the economy healthy. It comes just after the Reserve Bank started hiking interest rates again, believing it has to make more young people unemployed to reduce inflation caused by a war in the Middle East and the Government itself.In effect, a generation of school leavers and graduates scarred by Covid and the worst jobs market in history for students, are being punished again by both the fiscal and monetary policies of the Government, which has collectively decided the sacrifices necessary for the greater good of the economy over the long term should be borne by those who were unlucky enough to emerge into the workforce in the last five years and are now unemployed and mentally ill. (See more analysis, charts and detail below, and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* PM Christopher Luxon is defending spending $20,000 on a helicopter ride from Auckland to Hamilton, Stuff reports this morning. * National Party donor Bayleys made $2.5 million in commissions from the sale of Kāinga Ora homes, Stuff’s Isaac Davison reports this morning.* Finance Minister Nicola Willis has denied NZ First Leader Winston Peters’ claim he wanted to keep the Reserve Bank’s dual employment and inflation mandate in coalition-forming talks in 2023, The Post-$’s Henry Cooke reports this morning.* Christchurch’s Emergency Department (ED) is often running at 300% capacity in ‘Code Red’ situations, with patients being treated in corridors, a doctor told Ben Tomsett in his report for NZ Herald; Meanwhile Amber Allott reports for The Press-$ this morning that the Nurses Union has lost an employment court fight to rule Health NZ is operating Christchurch’s hospitals with ‘unsafe staffing levels’.* Xero reports this morning its June quarter survey of small business customers found their strongest sales growth overall for nearly four years, but that jobs growth was weak, with an uneven recovery evident in strong rural sales and weak hospitality and retail sales. Jobs fell in Auckland, Northland, Bay of Plenty and Wellington, but rose in Canterbury, Xero reported. Meanwhile, Retail NZ’s June quarter survey found a slight improvement in retailers’ confidence.Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.How NZ punishes its stressed & jobless youthJust imagine you are in your late teens and have been unemployed for three years. Your benefit is not enough to live on after paying the rent and buying food and fuel that costs 30-70% more than when you first started looking for work. Perhaps the stress of not having enough money for food and not having a job or much social contact has worsened your mental health. Or you have cancer.And then the Reserve Bank puts up interest rates in a deliberate move to reduce employment and increase unemployment, in order to reduce inflation you had nothing to do with. It says curing this inflation is the most important thing and the resulting scarring of your employment life is unfortunate. And to top it off, the Minster of Social Development Louise Upston says she plans to take away your jobless benefit and force your parents to support you again. Even if you can’t work because you are too mentally unwell to work. Or have cancer.How would you feel?Would you feel the Government has got your back? Would you feel New Zealand is a great place to start your life and maybe even start a family?Maybe not.That’s the situation 4,700 teenagers on the jobless benefit face, including 2,733 who are on the jobseeker support (health condition, injury, or disability DCI) benefit, of whom 1,885 suffer from mental illness. Here’s the exchange in Parliamentary Question time yesterday where Upston was asked by Green MP Ricardo Menéndez March how many were subject to the new policy of removing their benefits.Ricardo Menéndez March: Does she expect that stripping people of their income support would likely improve or worsen someone’s mental health?Hon LOUISE UPSTON: Well, we’ve been very clear about our expectations that we want to see 18- or 19-year-olds in education, training, or preparing for work and that in the first instance, support should come from their families.Ricardo Menéndez March: Is she aware that people who are on jobseeker health condition, injury, or disability are, by definition, unable to work full time or have had to stop working full time because of that very same health condition, injury, or disability, and, if so, why is she making the assumption that they would be able to easily transition into study or employment?Hon LOUISE UPSTON: Well, the point of this is that 18- or 19-year-olds in some of the circumstances that the member suggests—we believe, on this side of the House, they should be the responsibility of their parents. If somebody is experiencing challenging health conditions, I would totally expect that their families are there to support them.Ricardo Menéndez March: What would she say to the cancer patients who are receiving jobseeker health and disability who are at risk of losing their benefits due to her reforms?Hon LOUISE UPSTON: Well, it doesn’t change the fundamental point. We believe that we don’t want 18- or 19-year-olds trapped on welfare, we don’t want them stuck on a benefit for another 20 years of their life; we want them to be supported by their family in the first instances and preferably in education, training, or in work.Ricardo Menéndez March: So is a cancer patient or someone with a psychiatric or psychological condition deemed to be trapped in welfare—according to her—if they simply need support to get better or access treatment?Hon LOUISE UPSTON: The policy that the member is referring to is specifically for 18- and 19-year-olds. Absolutely, if somebody is going through cancer treatment, that is an incredibly challenging time, but, actually, we do believe during that period of time, their parents, their families should be there to support them. I’d be really worried if they weren’t. We do have a parental assistance gap test for that very reason, but 18- and 19-year-olds should be supported by their family and when they are well enough, when they have capacity, they should be in training, education, or work.There are currently 108,600 15-24-year-olds Not in Education, Employment or Training (NEET) in the March quarter, representing 15.9% of the New Zealanders of that age and 14.4% of those available for work. That’s the highest youth unemployment rate since the December quarter of 2009: the depths of the Global Financial Crisis. This is happening at the same time as over 300,000 people with temporary work visas or student visas with work rights are in New Zealand.The scarring of a generationIt is even worse for students, as Student Job Search CEO Louise Saviker was reported as saying this week:“This is being driven by quite a significant convergence of issues that we don’t think has been seen in the history of student working over the last, say, 50 years. Certainly in our data.“The issues are relating to the economic environment, the employment market, the tertiary settings which are becoming more expensive every year for students to study. And then the cost of living for students as well.“Application rates are definitely the highest we’ve ever seen in Student Job Search’s data records over 40 years.“What that tells me is that students are really motivated, really committed and exceptionally committed. We hear from students every day who have applied for more than 50, sometimes even a hundred jobs.” Student Job Search CEO Louise Saviker quoted via RNZMy Top Pick n’ Mix Six* Investigation by Nicholas Jones for Stuff: Born at 25 weeks and clapped out of hospital 122 days later: Why Ada’s surgeon fears others may die* Deep-dive by Felix Walton & Ellen O’Dwyer for RNZ: Empty Kainga Ora houses ’left to rot’ after housing project stopped* Deep-dive by Anna Sargent for RNZ: ’Failures across services’: How a 90-year-old was locked up 16 hours a day* Scoop by Kate Green for RNZ: Man reviewing own CT scan finds aneurysm missed by two doctors* Deep-dive by Anya Fielding for RNZ: City mission raises alarm as rough sleepers battle below-freezing temperatures* Deep-dive by Hayden Donnell for The Spinoff: How an anti-rates lobby group tried to influence a breakaway council budget ‘Wayne Brown is accusing a group of councillors of secretly pushing the agenda of the Auckland Ratepayers’ Alliance. They strongly deny the claim.’Front page of the Day: AstroturfedCartoon of the Day: Head in hot sandTimeline-cleansing nature pic: On firecheers.BernardPS: I update this post online later in the morning for paying subscribers, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons below the paywall fold. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. 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

Cases of the most egregious migrant exploitation are now emerging in dribs and drabs through decisions by the Employment Relations Authority, indicating a tip of iceberg that should shame the nation and endanger our exports to countries that monitor the use of slave labour. But it doesn’t, and hasn’t. Yet.This week, the ERA ruled the owner of Four Square Martina in Thames, Jaswinder Singh, had to pay $44,000 in penalties after he charged two workers from India $60,000 each for jobs at the supermarket in the Foodstuffs North Island Co-operative. The workers were repaid their $60,000 each after the Labour Inspectorate got involved. Each worker will receive $1,000 of the penalties. Foodstuffs has said Four Square Martina is no longer part of the Co-operative, but it’s not clear if it has been ‘de-bannered’ from using the Four Square signage because of the abuse. Singh is still running the store.This case is the latest showing the endemic abuse and the small fines and sanctions being applied. The fines fit into the ‘Business as Usual’ and as a ‘Cost of Doing Business’ category. (See more analysis, charts and detail below, and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* Immigration Minister Erica Stanford has announced unspecified changes to the Recognised Seasonal Employer (RSE) scheme for temporary fruit pickers from the Pacific that she said would ‘simplify’ the scheme. * HortNZ said yesterday it was confident of doubling annual exports to $20 billion as it welcomed the changes, which Immigration NZ announced would include an employer accreditation scheme that would allow accredited employers to not have to prove they had tried to find local workers.* Employment grew by 14,327 or 0.6% in June from a year ago, which was less than the 54,000 growth in the working age population over the last year. That means the unemployment rate is expected to rise to 5.5% in the June quarter from 5.3% in the March quarter. The data is due next week.* NZ First Leader Winston Peters said he had to accept the current Government’s removal of full employment from the Reserve Bank’s dual mandate as a ‘dead rat’ because both National and ACT wanted to return to the single inflation mandate. He told Henry Cooke at The Post-$ yesterday he wanted to bring the bring back the full employment mandate in any future governing arrangement and Labour has said it is already considering a return to a dual mandate.Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.‘Kia ora! Welcome to your job. It’ll cost you $60k’New Zealand believes it is squeaky clean when it comes to forced labour. So much so, that just last week, Trade Minster Todd McClay, was indignant in protesting against Donald Trump’s new 12.5% tariff aimed at countries that accepted imports from countries where forced labour was used. He said:“I strongly reject that there is any support at all in the New Zealand system for forced labour. We're not involved in it. It doesn't happen through our trade. It doesn't exist in New Zealand.” Trade Minister Todd McClay quoted by RNZ on July 24.It doesn’t exist in New Zealand? Minister McClay should have a look through the last couple of years of ERA rulings involving migrant workers and have a chat to the Government’s own Labour Inspectorate. Those rulings and the Inspectorate’s releases are a cavalcade of examples of unpaid wages, sick leave not granted, premiums charged for jobs, beatings, slum-like accommodation and routine ignorance of employment laws and rights.So how did we get here? And why are we kidding ourselves?One of the ‘bits tacked on’ to New Zealand’s low investment, low wage and resource-extractive economy over the last 20 years has been the endemic use and exploitation of migrants tied to their employers by temporary work visas and seasonal work visas. It has helped enable economic growth without investment or wage growth, and allowed businesses to use spare cash to buy and leverage land for tax-free capital gains — which is the real game. This temporary migrant industrial complex has also disguised relative declines in workers’ purchasing power because consumers found taxis, food delivery, convenience stores, services stations, shops, cafes and liquor stores were cheaper than they otherwise would otherwise have been the case. Entry level jobs in services jobs for young, locally educated workers have become harder to get, with lower real weekly wages and poorer work conditions. 300,000 work visas granted, while 108,600 young NZers unemployedThere were 108,600 15-24-year-olds Not in Education, Employment or Training (NEET) in the March quarter, representing 15.9% of the New Zealanders of that age. Yet, New Zealand also approved temporary work visas for 194,079 migrants in the year to the end of March, along with a further 85,575 visas with work rights for foreign students and 17,175 visas for RSE workers. There were 78,165 work visas granted last year for temporary workers aged 20-29, MBIE data shows.The way these temporary migrants are treated is appalling, and little is being done to fix it or question whether this system of temporary work visas tied to individual employers is a sustainable or even moral way to operate. New Zealanders and many overseas believe our business culture is honest, incorruptible and gives everyone a fair go. Buyers of our exports have not put us on the lists of ‘bad’ countries that use slave labour or operate exploitative factories. However, even a cursory glance at the ERA rulings shows how awfully we treat these temporary workers, many of whom are forced to leave after their three-year visa ends, especially if the Government becomes worried they may start costing our health system too much. The Four Square Marina case is just the latest, adding to the December 2025 case of Four Square Tauhara in Taupō, where two workers were charged $10,000 each for their jobs and were not paid for 710 hours work. Here’s the details of the Thames case, as relayed by the Labour Inspectorate:ERA Member Helen van Druten ordered the company, A Dharni Enterprises Ltd, trading as Four Square Martina, to pay a penalty of $32,000 and Jaswinder Singh, the sole director, a penalty of $12,000. The workers will each receive $1,000 of the penalty paid by the company.“Effectively, A Dharni Enterprises Ltd used the premiums to pay the employees’ own wages,” Ms van Druten said.She found the arrangement provided A Dharni Enterprises Ltd with a financial advantage, freeing up company money that would otherwise be used to pay those wages.Ms van Druten said the workers were particularly vulnerable because their visas were tied to their employer and they were new to New Zealand. The new Accredited Employer Work Visa scheme set up under Labour was the tool used in this case. Agents in India were involved too.The 2 workers, who each paid $60,000 to secure their jobs, had family ties to the business owner Mr Singh and entered New Zealand on Accredited Employer Work Visas (AEWV) in July and August 2023. The money was paid in India in 7 instalments.They only worked for the business briefly before leaving because Mr Singh felt they had misrepresented their English ability during the recruitment process.The Labour Inspectorate investigation was complex because inspectors needed to contact witnesses in India, where the premium payments were made, establish the role of intermediaries who facilitated the payments, and demonstrate a link between the payments and the workers’ employment.Earlier this month, the ERA and the Labour Inspectorate reported on the case of a kiwifruit picking contractor who systematically underpaid workers. The case involved a wage “banking” arrangement that resulted in workers not receiving all of their lawful entitlements, as well as failures to keep accurate employment records and correctly calculate leave entitlements. Workers with contracts guaranteeing them minimum hours were routinely required to work unpaid hours to offset time they had previously been paid for but not worked.The total amount of arrears owed to the four workers was $61,312, which the company agreed to pay prior to the ERA hearing.It’s clear New Zealand is debasing its reputation in exchange for cheaper stuff and avoiding investment in systems and training of local workers. The biggest issue is the use of temporary work visas, which are supported by NZ First as a way to allow to migration without admitting it’s migration, using the assumption that migrants that leave within three years don’t need to be counted as requiring the infrastructure in health, transport and housing for the extra resident population.The Greens have called for the visas to be disconnected from specific employers, removing a lot of the power currently wielded by such employers. Labour, National and NZ First have opposed this shift.My Top Pick n’ Mix Six* Interview with Claire Achmad by Lyric Waiwiri-Smith for The Spinoff: Children’s commissioner on her early exit: ‘I have a lot more left to give’ * Scoop by Alice Peacock for Newsroom: Stats NZ plan to crack down on dodgers risks corrupting data* Scoop by Fox Meyer for Newsroom Pro-$: Labour vows to keep billions in conservation costs off councils if elected* Ethan Griffiths for NewstalkZB: Migrant super bill tops $1b despite tighter rules* Deep-dive for Reuters: China muscle-flex is iron ore miners’ call to arms* NZ Herald Video: Should the Government extend fuel support as prices dip below $3? ‘Bernard Hickey unpacks whether the fuel support should continue.’Front page of the Day: Winston’s ‘dead rat’Cartoon of the Day: DementedTimeline-cleansing nature pic: Dark & stormy daycheers. BernardPS: I update this post online later in the morning for paying subscribers, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons below the paywall fold. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. 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

To emphasise both the risk and the opportunity for New Zealand’s political economy, the price of Brent crude hit US$100 a barrel again on Friday, which is likely to push petrol prices back towards $3.50/litre. But New Zealand’s uptake of EVs, home solar, home batteries and grid-scale solar and batteries is lagging far behind most other countries, who have incentives and national strategies to electrify fast.Aotearoa Inc has an opportunity to import panels and batteries cheaply from China’s massive factories, just as India, Pakistan, much of Africa and the likes of Australia and Uruguay have done. But the opportunity won’t last forever as the growing competitive and security tensions between the US and European-led trade blocs increasingly block imports from China, and pressures others to do the same. There’s also a risk China’s exports to New Zealand are restricted in the event of a wider conflict. The window may close quicker than many think. (See more analysis, charts and detail below and in the video above.)Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* In election policies announced yesterday, National promised to extend paid parental leave to 30 weeks from 26 weeks, if re-elected, while ACT promised a higher share of health spending on Pharmac. The Greens called for a one year pause on consents for new AI data centres. * An Emergency Department doctor at Christchurch Hospital has told The Press-$’s Joanne Naish in a report published this morning that patients were regularly treated in corridors, waiting rooms and ambulance bays, with the situation deteriorating to the point of “substandard dangerous medicine.”* Another big employer of builders is about to go bust. John Anthony reports for BusinessDesk-$ this morning that IRD has applied to liquidate NZ Build Group, which has 250 staff.Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s an introductory offer of 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.Why NZ should electrify everything ASAPNew Zealand’s cost of living, its inflation rate, mortgage rates, its trade deficit, its emissions profile and its prospects for deindustrialisation are now being held hostage by the whims of some unnamed people in the Iranian Revolutionary Guard Corp, and one very well known person in the White House.Last week the IRGC widened the conflict over the Strait of Hormuz to include the Red Sea by encouraging Houthis in Yemen to attack Saudi Arabian oil tankers trying to get oil out of the Red Sea. This came after the US attacked Iran for nine days straight, breaking a ceasefire that had dragged oil prices down below US$70 barrel by mid-July. Those prices jumped to US$102/barrel on Friday, although the US paused its strikes on Friday night and a fragile ceasefire resumed over the weekend. However, with the underlying conflict unresolved, oil prices remain near US$90/barrel today and increasing margins for refining fuel in Singapore are set to drive petrol prices here back towards their NZ$3.50/litre levels reached in March and April. By June, New Zealand’s monthly bill for fossil fuel imports hit $1.5 billion per month, double its level from a year earlier.But it doesn’t have to be that way.Other countries have pursued strategies for at least a decade to wean themselves off fossil fuel imports of oil, petrol, diesel and gas. Many have ramped that up since the spike in prices in 2022 when Russia invaded Ukraine and again when the latest conflict erupted around the Strait of Hormuz. Pakistan and India have launched war-style campaigns of solar panel and battery importation from China to reduce their reliance on oil and gas from the Middle East. Australia has subsidised solar panels for decades and has ramped that up with home battery subsidies in the last year, increasing the solar share of power production last year to 19.6%.Australian panels and batteries are now generating so much power in daylight hours that earlier this month the Government announced eligible households in New South Wales, South Australia and Southeast Queensland would get three hours of free power during the middle of the day every day, even if they don’t own solar. That battery installations have also transformed the market, allowing the solar-generated power to lower electricity prices in the early evenings by reducing the need to burn gas.Uruguay, population 3.5 million, is another less-well-known example of a country that took a strategic decision to wean itself off fossil fuels by shifting to EVs and ramping up renewable generation for electricity, including through solar. New Zealand, meanwhile, is a laggard in both EV adoption and the adoption of home solar panels and batteries, and grid-scale solar and batteries.This window of opportunity may start closingChina’s ability to manufacture EVs, panels and batteries at enormous scale and speed has rapidly reduced prices, but has also caused a backlash that has been amplified by the growing strategic and military competition between China, the United States and Europe. The United States has already slapped tariffs and sanctions on imports of Chinese panels and electrical equipment, aiming to boost its own industry and avoid reliance on China’s technology, which the US fears could be weaponised in a conflict.The European Union is also cracking down on China’s imports. This withdraw of US and European demand for China’s output will create extra downward pressure on costs, at least for a period. The danger for New Zealand is if either or both the US and European Union pressure New Zealand to also stop importing from China, or there is a conflict in the South China Sea which physically blocks imports. The beauty of a fast and large surge of electrification in New Zealand is that the panels and batteries are then permanently and repeatedly generating electricity here year after year, regardless of whether new equipment can be imported.But a slow electrification creates the risk of being locked out of the ability to keep electrifying.The Best of the RestMy Top Pick n’ Mix Six* Deep-dive by Mary Argue for RNZ: How will we live as storms get worse? One region’s story* Deep-dive by Emily Simpson for 1News: ‘I can see the appeal of leaving NZ, and I know exactly which way I’ll vote’ ‘In the latest in our State of the Nation series, a 30-something parent and operations manager shares her views about the current direction of Aotearoa.’* Deep-dive by Matthew Theunissen for RNZ: ‘There isn’t anything’: Students face harsh job market* Scoop by Kate Green for RNZ: Patient fell trying to kill cockroaches at Auckland Hospital, fleas hit wards* Column by Max Rashbrooke for The Post-$: The blindness and blame that make NZ a not-so-great country to raise children* Column by Simon Wilson for his Substack Hopetown : Housing, Fonterra, cement: the crisis of predatory delay ‘The tactic that holds back the progress we know we need’Front page of the Day: RNZCartoon of the Day: Ready. Fire. Aim.Timeline-cleansing nature pic: Morena.Anything I’ve missed?cheersBernardPS: I update this post online later in the morning, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. Check back in here later this morning to see the full lists and chart pack. 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’s focus on deficit and public debt reduction isn’t working to grow the economy this time around because households are too indebted and businesses are too worried to step up and power that growth by investing and spending. The National-led coalition’s fear of public debt is misplaced and its strategy of repressing the size of Government and relying on the rest of the economy to grow can’t work without another housing boom, which no one is predicting or say they want. Instead, New Zealand’s economy is stuck in a self-reinforcing stagnation, frozen in a fog of fear of job losses, house price falls and shrinking public services. The only balance sheet strong enough and accessible enough to break the investment deadlock is the Government’s. The trouble is National’s fear of borrowing to invest in ramping up productivity is infecting the rest of the economy.US President Franklin Delano Roosevelt identified something axiomatic about how economies work when he said in his 1933 inaugural address at the pit of a depression that: “The only thing we have to fear is...fear itself — nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance.”In my view, the Government’s irrational fear of public debt has paralysed our political economy. I detail below and in the video/podcast above why that fear is unjustified and why public investment is needed this time around. That’s because in previous recoveries, households and businesses were much less indebted, were able to borrow from banks more easily, and there was much more confidence investment would pay off through another house price boom.Elsewhere in the news around Aotearoa’s political economy of housing, climate and poverty this morning:* The Climate Commission has warned the Government it would need to double Aotearoa’s rate of emissions reduction to meet its legislated targets. PM Christopher Luxon said he still thought New Zealand would achieve net zero by 2050, and may even do it a few years earlier;* New Zealand First is considering an election policy to help first home buyers by having the Government jointly buy their homes with a Crown guarantee to lower mortgage costs. Ella Somers reported for Interest yesterday from an interview with Shane Jones that: “Within defined areas, if you wanted to facilitate New Zealand families owning a home, then the Crown would own the home with you. And to lessen the burden of the full acquisition cost, qualifying households would become joint owners with the Crown, which over time would either sell down its equity or wait until the house was actually sold, and the Crown would take out the portion of the value of the property at the point of disposal.”;* In local economic and poverty news: Kiwibank published its third annual State of Savings Index survey by Talbot Mills this morning, showing 40% of New Zealanders had borrowed to cover living costs and 32% were not able to cope with an unexpected bill of $500;* In global economic news: Oil prices rose over US$95/barrel overnight after Iranian allies in Yemen forced four Saudi oil tankers to turn back from transiting out of the Red Sea through the Bab el Mandeb Strait, and Donald Trump threatened to bomb Iranian power plants;* In solutions news: the Public Health Communications Centre has proposed a nationwide universal vaccination programme to prevent RSV and free up room in hospitals; and,* In today’s scoops: Joanne Naish reports this morning for The Press-$ that Christchurch Hospital’s Emergency Department is bursting at the seams, while Michael Morrah reports for NZ Herald on the case of a patient who suffered a spinal fracture as nurses warn of unsafe staffing levels.Join us as a paying subscriber to get my full daily selection of the news, analysis, commentary, links, charts, front pages and cartoons below, and to support this work I do sorting the signal from the noise in our political economy. Here’s an introductory offer of 50% off for the first year.FYI to all paying and free subscribers, I have decided to open this up immediately. Thanks in advance to paying subscribers for their permission.The only thing NZ has to fear is the fear of (Govt) debt itselfFor a PM who professes confidence about the country’s future and is eager for ‘growth, growth, growth’, Christopher Luxon is remarkably fearful about using the tools at his disposal to generate that growth.The National-led Government’s entire strategy is focused on budget deficit and public debt reduction, which Luxon says will repair a ‘budget hole’ and reduce inflation and mortgage rates, in order to boost growth and jobs. But none of that is happening. Government debt is growing by $450 million a week, inflation is 4.1%, mortgage rates are rising, income per capita has fallen 2.7% in the last three years and unemployment is much higher than Treasury expected.In my view, the strategy isn’t working because the National-led Coalition’s ‘North Star’ of crunching down the size of Government to under 30% of GDP with a sinking lid on new spending can only work to grow the economy when households and businesses and farmers borrow more to invest and spend at the same time. They aren’t, and they can’t, because households already have too much debt and the Reserve Bank won’t let banks increase lending to them fast enough to offset a contracting Government. Also, those who could afford to borrow — landlords, farmers and businesses — aren’t confident enough to borrow and banks aren’t interested enough to lend to them because the housing market is depressed and so is consumer spending.New Zealand’s economy was never in the public debt spiral pointed to by Luxon and isn’t now. But it is now in a self-reinforcing confidence and spending stagnation, which has fed on itself for most of the last two years. It has been worsened by the latest energy price shock, but that’s not the main problem. Luxon believes all he needs to do is hold back the Government and businesses and households will step forward with higher export earnings, consumption and investment. He and Treasury think that because that worked in the past when Governments repressed spending after crisis responses in the early 1990s after Ruth Richardson’s budget cuts, the early 2000s after the Dotcom bubble burst, the late 2000s after the GFC, and then after the Christchurch quakes in the early 2010s. The trouble is those recoveries relied on house price and mortgage lending booms, influxes of foreign capital after the quakes, along with little bits of help from higher tourism and farming exports. Those rebounds happened without Reserve Bank lending restrictions, before households were full up with debt, were turbo-charged by housing booms, and happened at a time when banks lent to farmers and businesses. There has been no net new lending to (non property) businesses and farmers since Covid. Luxon believes we have a real economy that can export and invest its way to growth. Actually, we’re still a housing market with bits tacked on. Luxon, Treasury, and the rest of the economy are waking up to the truth our economy doesn’t work without housing booms. He may argue we just need more time and get luckier by avoiding more Trump-triggered trade and energy hiccups. But serious growth from exports simply isn’t enough in a mathematical sense. Our export sector is now worth just 25% of GDP, down from 35% of GDP 25 years ago. Growing our economy substantially through exports alone would require imports to be flat, which is not possible with higher fuel prices, and for the export growth to be multiple times higher than is possible or being seen. Our economy is based on domestic services and construction, all of which are either Government-run or depend on Government investment in infrastructure before growth begins. No, PM, we don’t have a public debt problem or a ‘fiscal hole’Luxon restated his Government’s strategy succinctly and pithily in an interview last week with the Financial Times, arguing against the ‘sugar rush economics’ of the Jacinda Ardern era and that the country’s finances were “in bad shape” when he was elected in 2023. “We’ve had to make the tough decision and say, look, we’re coming off the sugar-rush economics that’s caused so much pain and suffering,” he said, arguing that Labour had abandoned fiscal discipline during the pandemic. Luxon blamed higher spending under Ardern for driving up inflation, necessitating rapid interest rate rises that tipped the country into recession. Labour has argued that inflation — which rose as high as 7.3 per cent — was a reflection of global economic trends. “What we learnt through their Covid response was that actually just getting the cash bazooka out and firing cash around might have given a lot of short-term gain, but it created a lot of long-term pain.“It’s been a tough and challenging time as we’ve had to dig ourselves out of that hole and repair, but [New Zealanders] understand that the financial discipline and having the adults in the room running the show has been actually very good to set New Zealand up for the long term.”It’s worth challenging Luxon’s comments about fiscal holes. The OECD’s survey in May showed its measure of New Zealand Central Government net debt was 13.6% of GDP in 2024, while its Gross measure was 57%. That compares with US net public debt of 96% and UK net public debt of 74%.That net debt figure also doesn’t take into account the Government’s assets, or its very liquid New Zealand Superannuation Fund. The Government’s net equity position was $187 billion or 40.2% of GDP at the end of May. That’s also more than 110% of the Government’s annual revenues.The Government’s net interest expense after receiving interest on assets and dividends on assets was $2.6 billion in the 11 months to the end of May, which represents just 1.7% of total Government revenues. So when Luxon says the Government’s finances were in a mess, that would be like a renting family saying it couldn’t afford to borrow to buy a house because its rent costs 1.7% of its income and it ‘only’ had equity worth 110% of its annual income. Instead, Luxon is saying he’d prefer households borrow more to spend and invest, even though households collectively have mortgages worth 160% of their disposable income and their interest costs are worth 8% of disposable income. In context, that means the household sector is at least four times more indebted than the Government, relative to income, and household interest costs are at least four times higher than the Government’s.New Zealand does not have a public debt or interest problem. It has a household debt and interest problem. Relying on households to grow the economy is a fools errand.My Top Pick n’ Mix Six* Interview with Abuse in Care survivor Keith Wiffin by Lyric Waiwiri-Smith for The Spinoff:’Two years on from the inquiry, I’m despondent’ ‘I don’t see meaningful compensation ever being made with this government, but that doesn’t mean to say that it can’t happen in the future.’* Scoop by Andrea Vance for The Post-$: The mystery of the missing Navy journal that criticises Trump and ‘irresponsible’ US* Deep-dive by Chelsea Daniels and Katie Bradford for NZ Herald Front Page: Who will really end up paying for fast-tracked projects?; NZ Herald Video: Is the Fast-track Act delivering growth or creating problems?* Deep-dive by Hayden Donnell for The Spinoff: After six years of housing delay, a call for more housing delay. ‘At Auckland Council, compromise only really comes from one side of the housing debate.’* Analysis by BNZ’s Mike Jones for Newsroom: Housing supply tipped to curb house price gains through 2027* Deep-dive by Rachel Pannett for BusinessDesk-$: Who’s really using Seymour’s red tape tipline ‘Seymour promised to “smoke out” any lobbyists, but big businesses have used it. Sector-specific requests account for some 17% of submissions to tip line.’Front page of the Day: A climate responseCartoon of the Day: Matua padsTimeline-cleansing nature pic: Off for a swimAnything I’ve missed?cheersBernardPS: I update this post online later in the morning, including more detailed Picks n’ Mixes on housing, climate and poverty, a chart pack and more cartoons. It is only available to paying subscribers, who are also enabled to comment and use The Kākā’s chat room. Check back in here later this morning to see the full lists and chart pack. 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

It’s just not working.We’ve known this for a long time, but we felt it being seared into the body of our political economy all over again yesterday. The Reserve Bank tightened monetary policy to slow economic activity again. It wasn’t a mistake. It hiked the key interest rate in order to reduce jobs and wages growth, as well as investment. All because it has one blunt tool, the Official Cash Rate, and one target, to keep inflation around 2%.This way of running our economy isn’t a bug. It’s a feature. The RBNZ acted yesterday as it was directed to do by the latest version of the Reserve Bank Act (1989). It decided that hurting consumers and workers more in the short term was necessary to ensure they weren’t hurt in the long run by higher inflation. It believes it has no choice but to increase unemployment in order to reduce inflation. It was burning the village again to save the village.Our primary macroeconomic manager did this at the same time as the Government is also tightening fiscal policy to slow activity. All because it believes it has one aim, to reduce deficits and borrowing to get the size of Government back under 30% of GDP and to get public debt back around 30% of GDP. All because it believes, without evidence, the world’s bond markets might punish New Zealand by not lending to our Government in the event of a crisis. Even though our Government actually has more assets than debts, and a net worth of over 30% of GDP, more than most other countries.Our Government — and this has been a bipartisan approach for decades — did this because it interprets the Public Finance Act (1989) as meaning it should almost always put a sinking lid on spending, not raise taxes, and tirelessly strive to reduce deficits and borrowing. Gallingly, both tightenings are happening at a time when:* 20.3% of young women and 14.4% of young people overall are unemployed;* a million people, 20% of the population, have so little money after paying for their rent, power, fuel and insurance that they need donations of food to stay alive; and,* there is an ongoing and desperate need for investment in hospitals, schools, roads, railways, water pipes and, especially, the skills and health of our youngest and oldest.We are saving for a rainy day, even though we’re in the middle of our second 1-in-100-year flood in a year. And we are putting up the cost of building rain shelters at the same time.A scarred generation being scarred even deeperYesterday’s hike was especially galling because it demonstrated that this way we run our economy deliberately puts more young people out of work for longer, in order to solve an inflation problem that was created overseas and/or is administered by Governments and monopolists. Our poor and young people are being punished for the sins and accidents of people overseas and rich people here. They are being punished repeatedly, and in a way that scars them for a lifetime. I spoke about this in my questions to the Reserve Bank Governor in the news conference yesterday, which are included in the video above.It’s most painful for those who graduated into the workforce in the last decade or so. They graduated from school and university into a jobs market where hundreds are applying for single low-level jobs every day. If they could get a job, their real wages have fallen more since 2021 than any other country in the developed world. NZ real wages down most in OECD in 2026 & since 2021From those wages, they’ve had to repay student loans and hope to save for a home. If they were lucky (or unlucky) enough to buy one in 2021 or 2022, their deposits will have been wiped out by real house price falls of more than 30 percent in two of our three biggest cities — caused largely by first money printing and high interest rates.This generation face being told they’ll probably be forced to put even more of their money aside into a savings fund they won’t be able to access unless they are in complete poverty or reach the retirement age, which will probably have been pushed back by the voters and politicians who will have already retired by then.Our two pillars of economic policy just don’t workFor the last 40 years, New Zealand has made a collective decision to manage our economy and society with a strict delineation and delegation of the levers of power between directly-elected politicians, who run fiscal policy by taxing, borrowing and spending, and an appointed Governor, who changes interest rates to speed up or slow down the economy, all with a single aim of keeping inflation around 2%.It has meant the Government believes someone else (the Reserve Bank) is responsible for short-term economic growth and inflation in the long term. Bizarrely, this has actually incentivized governments of both flavors, and both central and local governments, to load more and of the capital costs for infrastructure onto consumers through user pays and fees. The Reserve Bank pointed out yesterday that administered prices had been rising at a rate of 7-9% per year in recent years, making up 0.7 to 0.8 percentage points of the 3.9% inflation rate in the first quarter of this year.They believe they can achieve their PFA targets and let the RBNZ achieve the inflation target separately. This happens by the Reserve Bank effectively bearing down on the parts of the economy it can influence through interest rates directly, including construction, consumer spending and business investment, and indirectly, through the currency, which can shift export receipts and the costs of imports. It means that these sectors are suppressed, while the Government and monopolies can get on with their own business. This change in relative prices has effectively crunched our export sector well below 30% of GDP over the last 30 years. That’s your problem. Not mine.For the Reserve Bank, it has regularly pointed out it can’t change the underlying tax settings and policies that drive productivity and investment in the longer run. Governments of both flavours have chosen to ignore those gentle pleadings towards taxing capital gains and improving productivity, largely because the Reserve Bank was able to deliver very low interest rates for most of the last 20 years, thanks to imported deflation from the factories of China and, for much of the last 20 years, cheaper energy.Meanwhile, productivity has stagnated here even more than overseas and generations of investors and bankers have come to focus their investments on land, rather than actual businesses and productivity-enhancing technology, skills and businesses. By separating the levers of power and splitting responsibilities, neither have achieved progress in the long run. And the poor generations in the middle have paid the price, especially the ones that happened to be unlucky enough graduate into recessions. We’ve known forever that monetary policy is not just blunt, but shifts wealth from the poor to the rich, and from workers to asset owners. When interest rates are raised, those in debt paid more to those with savings in banks. When interest rates fall, those with assets are made wealthier by rises in the value of those assets. The rules and targets in our economic machinery and the separation of the responsibilities for achieving those targets just haven’t worked. We should look to repeal both the RBNZ and the PFA Acts of 1989 and replace them with a new operating system for the economy that prioritises investing in the future of our kids, rather than using a higher unemployment rate to try to bludgeon a variable down that is determined by those overseas and by those who don’t have to pay the price. We need to get rid of the slavish focus on 2%, 30% and 30% rules, and focus instead on getting all our young people into work. CheersBernardPS: I have opened this one up to the public immediately and in full. Last week, I asked paying subscribers if I should do this for all these articles until the election on November 7. They agreed I should. I’ve also restarted the 50%-off introductory discount for the first year of subscription, which we had for the first three years of The Kākā, after existing paying subscribers agreed. It will stay on until the end of the year. 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

Aotearoa’s decades-long housing crisis is now deep into another winter of discontent.Last week’s events show the Government’s cuts to state house building and emergency housing in motels through 2024 have come home to roost even harder in 2026 than seen in the winter of discontent in 2016, when Te Puea Memorial Marae in Māngere opened its doors to Auckland’s homeless in the absence of Government action. It became an election issue the next year.Add in this years ‘moving on’ orders going through Parliament that will criminalize rough sleepers as young as 14 years old, and effective cuts to rent subsidies for Kāinga Ora tenants and Accommodation Supplement recipients, and 2026 is shaping up as New Zealand’s housing crisis annus horribilis.Just in the last week, we’ve learned:* Staff at MSD were threatened in late 2024 with the sack unless they kicked people out of motels to meet the Government’s target of cutting the numbers of people housed in motels by 75% by 2030. * MSD achieved the target five years early, but only by by failing to find and offer other places to live for around 30% of the 4,000 people forced to leave the motels, with just 20% of those moving out of transitional housing going into permanent home;* Those missing 1,000 or so homeless people were not tracked, and homeless shelters and food banks are reporting hundreds more people are now living on the streets, especially in Auckland;* The Auckland City Mission has called on the Government to fund at least 200 new homes for many hundreds more people sleeping on the streets in Auckland with nowhere to go after the Mission closes each night at 5pm;* Prime Minister Christopher Luxon admitted after being asked for the seventh time in a news conference that he did not know homeless people in Auckland had nowhere to go after 5pm, but he said he was comfortable homeless people were being offered enough help; but,* MSD admitted it rejected 30% of applications for emergency housing because applicants were deemed not eligible, with the criteria of ‘caused their own homelessness’ used as the main reason for rejection; and,* HUD reported in its Homelessness Insights report for the March quarter that Health NZ had recorded 1,037 people using hospitals last year were homeless, vs 790 in 2023, and Corrections reported 532 ex-inmates were homeless last year, vs 430 a year earlier. Health NZ also recorded 1,631 mental health patients were homeless last year.(See more detail in the Chart Pack, along with my full interview above from last week with Auckland City Mission CEO Helen Robinson).Elsewhere in the news today:* Newsroom has published the results of a three-year investigation into diagnoses of unexplained injury diagnoses from Auckland’s Starship Hospital. (See more below in my Picks n’ Mixes of scoops and deep-dives)* Paula Penfold details her investigation for Stuff of a new ACC policy denying income support to sufferers of child abuse because it happened before they became income earners. (See more below in my Picks n’ Mixes of Scoops and Deep-dives)* Infrastructure Minister and Hutt South MP Chris Bishop acknowledges in a deep-dive by Jim Kayes for Stuff that Hutt Hospital is run down and leaky, but says it’s not the worst hospital in New Zealand.* The Post-$ leads this morning with expectations of a rate hike by the Reserve Bank of New Zealand on Wednesday.* NZ First Leader Winston Peters is campaigning to deny voting rights to non-citizens, while National says it wants to do seven more trade deals in the next five years.(Usually, I put a paywall in at this point in the email and the podcast and video above is only available to paying subscribers, but I wanted to make sure this was available to all immediately today so have opened it immediately. The Kākā covers Aotearoa’s political economy around housing, poverty and climate. Subscribe to support more of this work being done in the public interest and being made available to the public.) (I am considering removing the paywall on The Kākā’s entire archive and all emails and articles produced between today and the election on November 7. I am also considering offering half-price annual subscriptions to new subscribers until the end of 2026. I did this in 2022 and at the ends of 2023 and 2024, but not 2025. But I first want to ask permission of existing paying subscribers, almost all of whom now pay the full price for The Kākā and have come to expect it will not be available to all. I have created two polls for paying subscribers to ask for that permission over the next week. Non-paying subscribers cannot vote. I’ll proceed if over 50% of voting paying subscribers say yes to both questions.)Chart Pack of the DayWhy people say they’re homelessHospitalisations of homeless people rising since late 20237% of youth homeless, including garages and carsRejection of Housing Special Needs grants more than triplesMy Picks n’ MixesMy Top Pick n’ Mix Six* Investigation by Bonnie Summer for Newsroom: What is going on at Starship’s child protection unit? ‘For decades, a small group of specialists at Starship Hospital’s child protection unit have played a central role in some of NZ’s most serious physical child abuse cases. What happens if those findings are wrong?.’* Deep-dive Laura Walters for Newsroom: Health NZ’s silence on child abuse misdiagnoses ‘Newsroom Investigates has spent almost three years trying to get answers from Health NZ and ministers on what now appears to be serious issue with the misdiagnosis of non-accidental injury in infants.’* Deep-dive by Cass Mason for Newsroom: ‘If we think it’s abuse, it’s abuse’ ‘For decades, NZ juries have heard that unexplained rib fractures in infants are highly indicative of abuse. But a Dunedin court hears the science underpinning these diagnoses is facing growing global scrutiny.’* Comment by anonymous for Newsroom: Clinging to hope when your world is kicked out from under you ‘What began as a grandmother’s fight to help her daughter get back custody of her twins has become a case of medical negligence and broken systems.’* Investigation by Paula Penfold for Stuff: How one woman’s eight-year fight raises questions about ACC’s ‘abhorrent’ new approach to weekly compensation* Deep-dive Jim Kayes for Stuff: Bad, but not the worst. Chris Bishop says other hospitals in worse shape than leaky HuttScoops elsewhere this morning* Jimmy Ellingham for RNZ: Health NZ apologises over paused bowel cancer procedures - but what next?* Marty Sharpe for Stuff: Seymour ‘implores’ Gisborne council to go easy on forestry companies* Stuff: Airport said it’d fixed driver double charging issue. A Solving stuff investigation reveals it hadn’t* Column by Rob Stock for SST-$: Compulsory KiwiSaver has a property loophole banks will exploit* John Anthony for BusinessDesk-$: Air NZ and Air India preparing JV application, CEO says* Deep-dive by Amelia Wade for SST-$: The Google files: Inside the lobbying that stalled New Zealand’s media lawMy full Picks n’ Mixes, plus front pages and Cartoons are available earlier to paying subscribers online, who are also able to comment and enter The Kākā’s chat room.Timeline Cleansing Nature Pic: Best puddle ever.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

The New Zealand Council of Christian Social Services (NZ CCSS) published a report this morning showing measures of the number of people in Aotearoa who are hungry and living in poverty has risen over the last year to their worst-ever levels. One in six households are living in income poverty after housing costs, just over one in ten have to go without essential items regularly, and one in three households experienced food insecurity in the last year. (See more detail and charts below, along with a full interview above with NZ CCSS CEO Alicia Sudden).Elsewhere in the news today:* The Government has executed another handbrake turn under pressure from New Zealand First, delaying the start date for its widely-opposed and already-passed Health and Safety law rewrite until well after the election (See more below in my Picks n’ Mixes of scoops and deep-dives);* Work on designing and consenting the Northwest Busway project has halted after a dispute between NZTA and Auckland Council over the fast-tracking of approvals for the $4.9 billion project to transform public transport in West Auckland, Thomas Manch reports for BusinessDesk-$ this morning; and,* A conflict of interest controversy has engulfed National MP for Waimakariri and Associate Health Minister Matt Doocey over his cousin’s 850-section development in North Canterbury. The project was rejected twice by the local council, but is now being fast-tracked under legislation Doocey voted for without declaring his family’s interests, Stuff’s Nadine Roberts reports this morning.(Usually, I put a paywall in at this point in the email and the podcast and video above is only available to paying subscribers, but I wanted to make sure this was available to all immediately today so have opened it immediately. The Kākā covers Aotearoa’s political economy around housing, poverty and climate. Subscribe to support more of this work being done in the public interest and being made available to the public.) (I am considering removing the paywall on The Kākā’s entire archive and all emails and articles produced between today and the election on November 7. I am also considering offering half-price annual subscriptions to new subscribers until the end of 2026. I did this in 2022 and at the ends of 2023 and 2024, but not 2025. But I first want to ask permission of existing paying subscribers, almost all of whom now pay the full price for The Kākā and have come to expect it will not be available to all. I have created two polls for paying subscribers to ask for that permission over the next week. Non-paying subscribers cannot vote. I’ll proceed if over 50% of voting paying subscribers say yes to both questions.)Half a million New Zealanders now living in povertyThe New Zealand Council of Christian Social Services (NZ CCSS), which represents over 100 non-Government social services organizations, has called for major structural change and the passing of a Poverty Reduction Act after publishing a major new report documenting a worsening of poverty and hunger across the Motu.“Social service providers report increasing demand for support with the cost of living, including a rise in demand for financial mentor support and provision of food parcels and housing support. “The New Zealand Council of Christian Social Services calls for structural change to recognise and reduce the levels of poverty in Aotearoa. The introduction of a Poverty Reduction Act would help to identify and track cohorts who are experiencing high levels of poverty in Aotearoa, while changes to the welfare and housing systems would help to free New Zealanders from poverty and ensure that no one is left behind.” NZ CCSS CEO Alicia Sudden wrote in the foreword to the 85-page report titled: Kua Mahue | Left Behind Poverty in Aotearoa in 2026.The report details how:* 10.2% of New Zealanders experience income poverty;* 16.5% of New Zealanders experience income poverty, after housing costs are paid;* 9.1% experience material hardship, which is defined as going without essential items such as shoes, food or not being able to visit the doctor or dentist;* Almost half of benefit recipients with children reported they were in material hardship;* 47% of beneficiaries without children reported being in income poverty;* 473,000 people overall were estimated to be living in hardship in 2025;* Over 900,000 people were given food parcels in the year to June 2025;* One in three households reported food insecurity in the past 12 months;* More than half of New Zealand’s lowest-earning 10% are spending more than 40% of their disposable income on private rentals, which is the highest in the OECD;* The decline rate for applications for special needs grants for food has more than doubled to 7% since mid-2023; and,* The decline rate for applications for special needs grants for housing have sextupled to 30% since mid-2023, while the number of applications has collapsed from over 8,000 per month in mid-2023 to just over 1,000 by the end of 2025.There is much more detail in the report and in my interview above with Alicia Sudden.Chart Pack of the DayMy Picks n’ MixesScoops* Craig McCulloch for RNZ: Govt pushes back date of health and safety shake-up* Nadine Roberts for Stuff: Death threat, conflict claims and an 850-home subdivision: The row engulfing Matt Doocey* Kate Green for RNZ: Rapid review to be carried out after patient dies in Waikato Hospital ED waiting room* Justin Wong for LDR/RNZ: ACT candidate resigns after Chinese political group link revealedDeep-dives* Mary Argue for RNZ: In with the bulldozers, out with the gravel - flood-hit farmers want change in river management* Phil Pennington for RNZ: The police back-office holding back the front line* Reuben Smith for 1News: Severe specialist doctor shortage at Palmerston North Hospital. The hospital’s last gastroenterologist resigned two weeks ago.* Interview with Combined Building Suppliers Cooperative Carl Taylor with Kathryn Ryan for RNZ’s Nine to Noon: Builders fear new home warranty rules will price them out of market* Anna Whyte for Interest: Treasury’s internal issues pile up* Shannon Pitman for RNZ: Former Whangārei Coin Saver owner Snehal Patel accused of blackmail and migrant exploitationCartoon of the Day: We get it.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

Ganesh R Ahirao published a proposal today for a new Government to pass an Economic Governance Act within 100 days of the November 7 election. It would put ‘Being a good ancestor’ at the heart of Government & supplant the current primacy of the Public Finance Act & the RBNZ’s inflation target.I spoke to Ganesh today about what an Economic Governance Act would aim to achieve and what’s wrong with the 35-year-old framework making deficit and debt reduction the Government’s main task, and enabling an independent Reserve Bank to dominate macro-economic policy through a single inflation target. The full video is available for all.Here’s the full detail in his substack post today. I’d recommend a read, and/or a watch/listen of/to our chat above.cheersBernard 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

Labour Leader Chris Hipkins gave a stirring speech over the weekend ahead of the election in 137 days time, pledging a warm home, secure jobs and accessible healthcare for all. He even declared ‘Neoliberal, trickle-down economics is a hoax.’ But he remains wedded to neoliberalism’s guide rails in New Zealand - the 30:30 rule limiting the size of Government and public debt to a third of GDP. Without disavowing this bipartisan compact to always put a sinking lid back on the size of Government as soon as a crisis is over, Hipkins’ rhetoric is empty and performative. (See more below and in the video and podcast above.)Elsewhere in the news this morning:* Prime Minister Christopher Luxon admitted last night he was unaware Auckland doesn’t have a night shelter open after 5pm, but he said he was comfortable with his Government’s housing, despite record-high homelessness; * A blood cancer specialist is migrating because he says a lack of specialists is making it too dangerous to work here; and, * Nurses at the Hutt Hospital are in despair over leaks and building problems after decades of underinvestment in new facilities and maintenance, thanks to the 30:30 rule. (See more below in my Picks n’ Mixes)Hipkins’ pitch is empty & performative, for nowLabour Leader and former PM Chris Hipkins was successful on Sunday in firing up Labour’s troops before the election on November 7, clearly identifying the frustrations of voters after years of real wage deflation and an exodus to Australia for a better life.Here’s a sampler from his speech to Labour’s Congress in Wellington, which drew the calculated calls, responses and standing ovations (highlighting mine):Are we ready? The fight is on! In just 137 days, we go to the polls and we choose our future.We can choose better jobs, affordable healthcare, and household bills you can finally pay - a government that backs you to build your future here.Or we can choose more of the same: more broken promises, more cuts, higher costs.Hipkins went on to articulate the hopelessness many feel was leading to the young leaving:We’re not going to accept higher costs and lower wages. We’re not going to watch more and more of our friends and neighbours packing up and leave.Because Kiwis have been doing the right things for years and getting the wrong results. That isn’t a problem with how hard they’re working. It’s a problem with the system.Neoliberal, trickle down economics is a hoax. Smaller government just for the sake of it doesn’t give people more choices and more freedom, it takes those things away.He then went on to describe an aspiration for a different economy and results for workers:Our next Labour Government will lead New Zealand to become a magnet for talent, enterprise and innovation.A country where the brightest minds want to live, where entrepreneurs want to build, where creators want to create, and where working people share in the rewards of success.Not because we compete by lowering standards, but because we lead by raising them.We’ll be a nation that backs its people, investing in skills, research, clean technology and high-value industries, so that ideas born here, grow here, and jobs created here stay here.And then the wrap-up:The Kiwi Dream has always been simple and powerful: if you work hard, you can build a decent life. A warm home. A secure job. Good schools for your kids. Healthcare when you need it.Under Labour, that dream won’t be reserved for a few, it will be delivered for everyone. It comes down to this. Your job. Your health. Your home.Not promises we can’t keep, but a practical, funded plan, ready to start the day after the election.I won’t pretend we can fix it all straight away. We’ll focus on what matters most, and we’ll deliver it.Easing the pressure you’re feeling right now, while we build a stronger economy that lifts everyone over time.How can you promise those things with the same Budget policy?Those are all fine things to say, but could only be meaningfully achieved with fundamental changes in the tax incentives for saving and investment, along with a much more muscular approach to using the Crown’s balance sheet to achieve those aims.In my view, none of those can be achieved with the Budget Policy principles both Labour and National have agreed to in the years since the Public Finance Act was passed in 1989, which include “reducing and maintaining debt to prudent levels, and once those levels have been reached, running operating surpluses on average.”Treasury has interpreted that to mean the Government must always try to get net debt down to around 20-40% of GDP, with a current cap of 50%, and to use the sinking lid of slower Government spending growth than nominal GDP growth to reduce the size of Government to 30% of GDP. That’s its definition of ‘reducing debt to prudent levels.’This 30:30 has been the main tool of neoliberalism embedded in legislation, alongside the Reserve Bank Act (1989) and the State Sector Act (1989). For the last 35 years, Labour and National have both agreed to the 30:30 rule or a version of it with functionally similar numbers, after definitional shifts. The Green Party even signed up to it before the 2017 election, although it has since dropped its adherence.No signs of dropping adherence to those fiscal rulesHipkins did not specify Labour’s fiscal or Budget strategy in the speech, and Labour has been tightlipped about when it would release it. But one indication was given during the news conference after the speech (video below from 8 mins on), where he was asked where Labour would find the money to pay for pay equity deals. He said Labour would use the same $2.4 billion per year operating allowance used by National, which is itself one of the outputs allowed under the 30:30 rules, given Treasury’s economic forecasts.Labour’s Finance Spokeswoman Barbara Edmonds also agreed to the same debt targets as National, in an interview with Tom Pullar-Strecker from The Post-$ in May last year.Labour finance spokesperson Barbara Edmonds has confirmed in the run-up to Thursday’s Budget the party supports the existing cap on government debt recommended by the Treasury.She also affirmed that achieving an operating (Obegal) surplus by the end of the Treasury’s forecast period, which currently terminates in the year ending June 2029, remained the appropriate goal.Edmonds said Labour had agreed with the 50% cap when last in power and said it would continue to do so “unless Treasury gives us advice otherwise when we come into government”.“It’s based on a number of pieces of advice. We clearly need to make sure we have fiscal headroom for ‘shocks’.” Finance Spokeswoman Barbara Edmonds in an interview with Tom Pullar-Strecker from The Post-$Unless there is a massive about face from Labour in the coming weeks, it is in exactly the same position with exactly the same fiscal strategy as National. That would mean no room for extra state house building, little room for substantial pay equity upgrades, little room for increasing operational and capital spending on health, and little room for electrification.Hipkins risks falling into the same ‘Third Way’ trap of UK Labour PM Keir Starmer, of promising many good things, but ultimately deciding pleasing the bond markets is more important. My Picks n’ MixesToday’s Top Six Scoops and Breaking News* Ethan Griffiths for NZ Herald: Three MPs rack up $20k in domestic travel bills in three months* Giles Dexter for RNZ: National abandons 2023 campaign policy to allow KiwiSaver for rental bonds* Chelsea Daniels for NZ Herald’s The Front Page: Luxon raises coalition doubts as Labour and Act unveil election priorities* Stuff: ‘I’d be so embarrassed’: Shane Jones should pay back limo bill, says David Seymour* 1News: ‘Health system is dangerous for Māori’ says Dr Lance O’Sullivan* RNZ: Most households see an average 8% increase in power prices this winterToday’s Top Six Deep-dives* Ethan Manera for NZ Herald-$: Inside Andrew Little’s inner circle: The former Beehive staffers now running the mayor’s office* Explainer for RNZ: What is the Opportunity Party and what are its policies?* Analysis by BNZ Chief Economist Mike Jones for Newsroom: House prices have been flat for three years. Here’s what the numbers tell us.* Ron Bousso for Reuters: Hormuz oil exodus sets stage for chaotic rebalancing act* Column by Joel Maxwell for Stuff: An unprecedented attack: 24 ways this Government has targeted Māori* Op-Ed for The Conversation: As communities face more frequent hazard warnings, we need better systems to avoid ‘emergency fatigue’Cartoon of the day: Wrong trackKa 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

This morning I highlight another case where the 30-30 rule adhered to by both National and Labour means infrastructure growth can’t keep up with population growth. In essence, despite the claim over the years by MPs, Mayors and councillors, growth doesn’t pay for growth.Elsewhere in the news this morning: more MPs are exposed for taking accommodation allowances for living in Wellington, and there’s a striking case of how staffing and infrastructure shortages are crippling the health system. (See more below in my Picks n’ Mixes)Where growth isn’t paying for growthToday I wanted to focus on the idea that growth pays for growth. You may have heard this phrase used, particularly in council meetings and around the discussion of how we deal with the growth of our population and in particular the growth of housing. A home can’t be built until there are water networks underneath it, and they’re expensive. You have to build not only the pipes and the interconnectors to the rest of the network, but you often need to build brand new sewage treatment plants. And as we’ve seen, particularly in Wellington and in Christchurch, these things don’t often work and need to be maintained regularly and upgraded.Before 1990, a lot of these networks were funded by councils and by the government through debt. This is plain old government debt. The government or a council would borrow overseas or locally and service the debt from taxes and rates.That means a developer wouldn’t necessarily have to pay a huge development charge to connect to that network. And the networks grew as fast as the population grew, particularly through the 40s, 50s, and 60s. You could argue it was easier then because there was more easily available space on the edges of cities and people were comfortable living in standalone houses on reasonably large sections, and it was easier to jump in the car and commute away. That’s obviously more difficult now and certainly more expensive. And since the 1990s, governments and councils have argued that it shouldn’t be the taxpayer that pays for growth, it should be whoever buys that marginal new house. And often that is restricted because every time a developer has to pay a larger charge, that makes it more difficult to build a new house or build a new subdivision. The numbers get much larger, particularly when you start talking about large-scale subdivisions. The upfront costs are very high, and various attempts to try to create financial vehicles just haven’t worked. I wanted to focus on a particular story that came out in The Press in Christchurch on Saturday, which illustrates this problem and shows how growth doesn’t pay for growth within the current system of the 30-30 rule, which restricts government borrowing to no more than around 30 percent of GDP and restricts central government spending to no more than around 30 percent of GDP. You can’t build all this extra water infrastructure for all these extra people and maintain it unless you’re able to allow the state to have a higher share of GDP.I wanted to point you to what’s going on on the fringes of Christchurch particularly in the Selwyn District Council and around the area of Hallswell. Increasingly, those sections are getting quite small, and the houses are taking up a larger chunk of them. And that’s because buyers want as much land as they possibly can, but can only afford a certain amount. And that really packs in a lot of people into a small space, which of course means you have to really beef up your order networks. Christchurch sprawlsSo you can see that how Christchurch has sprawled out. This is partly because of the earthquake. There was a real drive to develop new suburbs, build new houses to replace the ones that were broken, if you like. And Christchurch has increasingly seen its ability to build lots of new houses fast as a competitive advantage to pulling people into the the region. And that certainly helped. It helped because it was it was it was helped by the government effectively paying for the and underwriting the redevelopment of water networks across Christchurch after the earthquake.That broke the normal 30-30 rules and of course the effective suspension of the Resource Management Act in many of those areas. But it’s meant there’s been very strong growth in the number of houses. It means now the growth isn’t paying for that growth.Mike Blackburn, a consultant who deals with the building sector in Christchurch, is quoted in Th Press on Saturday as hearing from builders that they are being told by the Selwyn District Council and Selwyn Water that there’s now no more space for new developments in and around Christchurch because they don’t have the water network and treatment.He’s spoken to 15 builders that have confirmed the same thing. They’ve been told by Selwyn Water that there are capacity restrictions, particularly in the east of the district. Selwyn District Council’s executive director for planning and building, Robert Love says that Selwyn’s growth has been among the fastest in the country. This has put enormous pressure on infrastructure. And that as he points out is in large part because the government has intervened to force councils to open up areas/They’ve been fast track tracking, but the government isn’t providing additional funding for the extra investment. So the 30-30 rule, is stopping these new houses from being built. Government won’t share fruits of growthThe larger problem, of course, is that the government benefits from the extra population growth through income and GST receipts, but doesn’t pass that on to councils. But councils are the ones who have to pay at least half of the infrastructure costs for population growth but aren’t given the funding for it and are restricted in their growth of debt.That’s because the local government funding agency is owned by the Crown Government. And so, in effect, that 30-30 rule applies not just to the government but to councils. My Picks n’ MixesToday’s Top Six Scoops and Breaking News* Chris Knox for NZ Herald-$: MP Housing Perks: See how the number of MPs claiming the full allowance has skyrocketed* Michael Morrah for NZ Herald: ‘Standing room only’: Nurse describes worst day in 18 years at Waikato ED* Andrea Vance for The Post-$: Climate activist Mike Smith takes Government to court over bid to halt landmark lawsuit* Tom Pullar-Strecker for The Post-$: Deadline on future of Clean Vehicle Standard looks set to quietly come and go* Tom Hunt for The Post-$: ‘Withered on the vine’: New water entity spends as promised users’ group fades* Kate Newton for RNZ: The big switch: Electrifying NZ homes could save billionsToday’s Top Six Deep-dives* Jack Tame for Q+A: ‘Perverse incentive’: MSD staff metrics include emergency housing grantsSome staff receive regular grading on eleven measures, including the number of people in their region who receive emergency housing grants.* Emily Simpson for 1News: ‘The cost of living in NZ is so high, we can’t afford children’House and food prices led a Wellington woman and her American husband to make some tough decisions.* Q+A: Labour ‘won’t’ work with ACT, but NZ First ‘highly unlikely’ – McAnultyWinston Peters has previously been emphatic that the door is shut from his side.* Mildred Armah for Stuff: ‘It’s gonna be a death sentence’: The 16-year-old New Zealand says is too sick to stay* Isaac Davison for Stuff: What is TOP? A left-wing party in disguise, pure hype, or something else?* Janika Ter Allen for Stuff: Will Labour cancel ‘tax breaks for landlords’? Here’s what it could mean for rents and house pricesCartoon of the day: ‘You, sunshine’Ka 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

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey and Peter Bale talking with regular guest Robert Patman from Dunedin about geopolitics, the economy, climate change and politics.This edition also included discussions with special guests:* Author Jonathan Lyons, PhD, who publishes the Signal to Noise: History. Philosophy. Commentary. substack, about the history of Iran; and,* Alliance Party Leader Victor Billot on the party’s history, re-registration and policies.This week:* Bernard and Peter talked about the climate in Europe, social housing policy in New Zealand.* Then Bernard and Peter talked with Robert and Jonathan about the Iran conflict.* Bernard and Peter then talked with Victor about the Alliance Party.* Victor read a poem written especially for The Hoon at the end. The skateboarding dog story was about Larry the Cat from 10 Downing Street, who has outlived six British Prime Ministers.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. Peter Bale will be back next week.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. 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

Today in the news from Aotearoa and elsewhere about our political economy around housing, climate and poverty:* Tax Minister Simon Watts says he doesn’t have a view about the fairness of global tech giants arranging their finances so they don’t have to pay $600 million per year in taxes in New Zealand, Jenée Tibshraeny reports this morning for the front page of the Weekend NZ Herald-$ (See more below in Today’s Top Six Pick n’ Mix & in Front Pages in the Early Bird.)* The Government’s over-arching aim to reduce state spending to below 30% of GDP is behind the lack of funding for about 80 new abuse-in-care claims coming through each year. Julia Gabel had the scoop for NZ Herald last night. (See more below in Today’s Top Six Pick n’ Mix.)* That same sinking lid policy, which is framed as being focused on squeezing more value from the same money by reducing back office staff rather than front office staff, is responsible for Oranga Tamariki being short of 180 social workers, which in turn means they’re not turning up to crucial regular meeting with whanau, Police and others, as Phil Pennington reported last night for RNZ. (See more below in Today’s Top Six and Poverty Picks n’ Mixes.)* Consumer confidence is closely inversely correlated with CPI inflation and petrol price inflation. Consumer confidence is also correlated with confidence in any Government, as expressed in polling on questions about whether the country is on the right track or wrong track. That polling is often a leading indicator of support for the main governing party. (See more below in Chart Pack of the Day.)(This email and the video above is a sampler for all free subscribers. A much more detailed version went earlier as the Early Bird to paying subscribers, who also have access to a live recording of my Dawn Chorus video above. Please join us as a paying subscriber to support my work and get much more detail in the Early Bird posts and below the paywall fold)My Picks n’ MixesToday’s Top Six* Scoop by Jenée Tibshraeny for NZ Herald-$ (front page lead): ‘I don’t have a view’: Revenue minister deflects fairness query on big tech firms’ tax ‘According to a “conservative” estimate by Tax Justice Aotearoa, New Zealand missed out on more than $600 million of tax revenue from eight of the biggest tech companies over the past five years.’* Scoop by Julia Gabel for NZ Herald: Abuse in care: Officials estimate up to 80 new claims a year under expanded redress system ‘Officials predict up to 80 additional abuse in care claims for redress could be lodged each year as the Government expands the state system to include more contemporary claims of abuse. Advice prepared for the minister in charge of the scheme, Erica Stanford, and obtained by the Herald under the Official Information Act, includes warnings from officials to ensure the right level of funding is provided for these additional claims. Stanford’s office said funding decisions were still being considered by ministers. Officials, in their advice to her, said extending the system would require reallocating existing Crown Response Funding as the Finance Minister Nicola Willis did not invite a bid for additional money in the latest Budget. The Ministry of Health and Health NZ also did not have funding available from baseline for these additional claims.’* Reportage by Torika Tokalau for LDR/RNZ: Church’s plan for low-cost cafe to feed hundreds shunned by locals* Deep-dive by Phil Pennington for RNZ: ‘A risk to life’: Social workers called out for no-shows on keeping kids safe ‘Oranga Tamariki’s new CEO said earlier this month it was 180 social workers short and staff shortages were hampering efforts to hit targets responding to urgent concerns over children.’* Op-Ed by Otago Uni Associate Professor Bernardette Jones for The Waikato Times-$: The health system failed an 11-year-old child at every step, and two reports fall short of saying why ‘What neither report does is ask whether this child’s status, as Māori, as disabled, as autistic and as non-verbal, shaped what was done to her, and neither analyses the obligations owed under Te Tiriti o Waitangi or under the United Nations conventions on the rights of the child, of persons with disabilities, and of indigenous peoples. The statutory iwi Māori partnership board for the region, Te Tiratū, was not consulted in the inquiry at all.’* Op-Ed by AUT’s Sarah Maessen, Bridget Dicker & Heather Hutchinson for The Conversation: Time is critical when someone’s heart stops – portable defibrillators could save more lives ‘More lives could be saved if community responders were equipped with portable automated external defibrillators (AEDs) to get treatment to patients sooner.’Scoops & Breaking News this morning* Scoop by Hanna McCallum for Newsroom Pro-$: Australian firm advises Stanford on ‘winning hearts and minds’ of NZ teachers* RNZ: National election policy announcement expected as party gathers for AGM‘National leader Christopher Luxon is expected to announce an election policy, which RNZ understands will be in the economic space.’* Investigation by Katie Harris for NZ Herald-$: ‘Culture of fear’: Leaders quit, probe at hockey association over alleged staff conduct* Reuters: Lebanon ceasefire agreed after US-Iran talks in Switzerland scrapped* Reuters: Iran’s Revolutionary Guards set up covert Iraqi cells to attack Gulf neighborsThank you to all paying subscribers who tuned 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 free preview of a paid episode. To hear more, visit thekaka.substack.comHere’s this morning’s top news from around Aotearoa and elsewhere about our political economy around housing, climate and poverty.* The Lead: New Zealand’s most prominent lobbyist and former National Party staffer, Matthew Hooton, has been named to edit the Capital’s daily newspaper and New Zealand’s longest-running Sunday newspaper. * The Sidebar: Hooton was a prominent back-room figure in Nicky Hager’s books about political influence and skulduggery on the right of politics, Hollow Men and Dirty Politics. Hooton now says ‘with a glint in his eye’ he wants to take the opportunity to ‘make a difference’ in solving the country’s ‘entrenched, fiscal, poverty, race relations, climate and infrastructure crises’ by broadening and sharpening the editorial focus of The Post-$ & The Sunday Star Times.* The Bottom Line: New Zealand also has an entrenched problem of revolving doors and opaque connections between the sources of power outside Parliament and the Beehive, and those working inside it and its ministries. Hooton’s appointment, albeit spectacular and unexpected, is the latest in a long list of figures in one role jumping the species barriers without any guardrails or speed limits, including Cabinet ministers in both Labour and National Governments going almost immediately into key roles in the private and public sectors. * Chart of the Day: The ratio of houses for sale to houses sold in any one month has blown out from two-to-one in the middle of the Covid housing boom to nine-to-one in May, when both sales volumes and prices fell again in REINZ data published yesterday.* Scoop: Health Minister Simeon Brown has sacked the Medical Council’s top leaders over what he described as their ‘political direction’ around Treaty issues, Andrea Vance reports this morning for The Post-$. It’s also now in Stuff (See more below in Today’s Top Six and Scoops)(Paying subscribers can see more below the fold and in the Dawn Chorus video and podcast above, along with getting the Early Bird email with the morning’s scoops, front pages, key articles and cartoons.)“ ‘I hope it unsettles a few,’ he says with a glint in his eye”I have always enjoyed talking on occasion with Matthew Hooton and regularly read his columns, although I take them with a few more grains of salt than I take with other political columnists, often because they’re already much spicier. He’s an enthusiastic type who loves the stories and the players in New Zealand political economy as much as any other tragic politico, and he’ll often surprise you with a fact or perspective that adds to the wider picture.But he is not a journalist or editor with an ingrained reluctance to favour one side over another, nor someone who is wary of using their own power in case it hurts people. I’ve also been on the other side of some in his circle of politics’ instincts to ‘win,’ and to do whatever it takes for his side to win. Anyone who has read his emails and quotes divulged in Nicky Hager’s books Hollow Men and Dirty Politics will know what I mean, although I also sense he has changed and matured from those days. So when I read yesterday he had been appointed the Editor in Chief of The Post and the Sunday Star Times, I was gobsmacked. He’s never worked as a journalist or editor, has never run a large team of journalists and editors, never run a publishing business, and is not universally popular or trusted in many places in politics and the media. It’s what I call the Koru Lounge society of New Zealand.But more importantly, Hooton embodies a particularly New Zealand problem in our political economy: a vagueness and opacity around how power is obtained, who has it and how it is used. It’s what I call the Koru Lounge society of New Zealand. It is a network of connections and tribes that appoint each other to boards, award contracts and do deals behind closed doors, often when the door should be much more open.Hooton is not unusual in jumping from one part of the governing apparatus to another. He’s been a National Party staffer. A corporate PR employee (for Fonterra). A PR agency owner. A representative for another country in New Zealand (Mongolia) and a connector between other players in this gossamer web of how things actually get done in New Zealand.He’s not the first political player to jump sides in recent years, without the sort of stand-down periods or registers required in other countries. Other big species-barrier jumps in recent years include:* Kris Faafoi’s move from being a Labour Cabinet Minister into the top job at the Insurance Council; * John Key’s leap from being PM to being a director at Air NZ and director of ANZ Group;* Judith Collins’ move from being a National Cabinet Minister to being President of the Law Commission; and,* Don Brash’s jump from being Reserve Bank Governor to National Party leader and then ACT Leader.This sort of ‘celebrity’ editor appointment has happened overseas, but not in a market with newspapers in monopoly positions in their cities. That non-partisan nature of editors of New Zealand newspapers has been a common thread through the history of our media, especially since the newspaper industry settled into two groups that carved the country up into a series of regional monopolies. Hooton himself was enthusiastic yesterday about being offered the role by Stuff owner Sinead Boucher, and already eyeing up the prospects to reset the agenda. Here’s Hooton quoted in Stuff by Lloyd Burr:“It’s an opportunity you can’t turn down and it’s an opportunity to make a difference. New Zealand has major entrenched problems that have been emerging over at least 20 years which the political and business classes have struggled to develop a coherent solution for.”How does he reckon his new role will go down with those political and business classes?“I’d hope that the powerful institutions of New Zealand - whether that’s the government, the opposition, union bosses, business leaders, sports administrators, or arts administrators - are a little unsettled by the appointment,” he says with a glint in his eye.He told Lloyd he didn’t plan any radical changes for The Post:“There will be some changes and we will move fast,” Hooton says. “But I suspect they’re going to be ones that the existing team and the existing readers would say ‘Yes, that’s that’s the way to go’.“This isn’t some turnaround or fix it job. This is an acceleration job,” he says. “We’re not going to take a position on certain things, but we’ll have broader, more rigorous, and challenging content”.He did describe his areas of interest though, where change was needed.“We have six crises. We have a productivity crisis, a fiscal crisis, a crisis of entrenched poverty, a race relations crisis that’s growing, a climate crisis, and an infrastructure crisis. They are in many ways all linked, and they all need to be resolved,” he says.So what does Nicky Hager think?I reached out to Nicky to see what he thought of Matthew’s appointment. He was surprised, but could see logic of what he described as a bold appointment.“I think he’s one of the more interesting people in politics,” Nicky said.“There’s a chance he could do something interesting there, or a chance it could all blow up,” he said.Nicky made a point of saying Matthew was not a racist, when some others in his circles on the right of politics were. He also saw Matthew as different to the likes of Cam Slater, a key protagonist in Dirty Politics, and as having changed over the years.For more detail on Hooton’s involvement in Dirty Politics and The Hollow Men, here’s Adam Dudding’s piece from 2014 in Stuff and a Hager Op-Ed in The Spinoff from 2017.My Picks n’ MixesToday’s Top Six

The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night featured co-hosts Bernard Hickey talking with regular guest Cathrine Dyer from Wellington about geopolitics, the economy, climate change and politics.This edition also included discussions with special guests:* BusinessDesk-$ podcaster and Listener tech columnist Peter Griffin on SpaceX’s float and what it means for RocketLab; and,* Former NZ Herald-$ columnist and former Metro, Cuisine & Consumer magazine Editor Simon Wilson on Auckland Council’s housing de-intensification vote and Labour’s $20 fare cap policy this week. Simon has just launched his substack; Hopetown by Simon Wilson. I highly recommend subscribing.This week:* Bernard and Peter began the show with their three news items of the week, including Peter pointing to the Maggie Haberman & Jonathan Swann scoop in the New York Times-$ (gift link) about Donald Trump’s Epstein files mess and Bernard pointing to the self-firing of CBS’ 60 Minutes host Scott Palley.* Bernard, Peter and Cathrine talked about Treasury’s advice to the Government that it might have to buy up to $6.5 billion worth of climate emissions credits on onshore markets or from other Governments because New Zealand is on track to miss its Paris Accord commitments, which are now hard-coded into our trade agreements with the EU and UK.* Then Bernard and Peter talked with Simon and Peter about SpaceX, RocketLab, Auckland housing and Labour’s new transport policy.* Peter finished with Donald Trump’s ‘I Love Inflation’ quote as the ‘skateboarding dog’ item.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. Peter Bale will be back next week.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. 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

Here’s the key news in Aotearoa’s political economy over the last day or so around housing, climate and poverty, along with analysis and detail in the video and podcast above, and in the PDF of the presentation attached below, for paying subscribers:* The Lead: Watercare published new maps this morning detailing where new housing can’t be built in and around Auckland because of staged investment plans, soon after hiking its development contributions and network connection charges. The maps, fees and charges impose the ultimate limits on real housing capacity in Aotearoa’s fastest-growing city, above and beyond the district plans fought over between the Beehive and councils. * The Sidebar: These maps and fees set the marginal cost of new housing and control the supply of housing coming onto the market, effectively setting a floor that elevate under prices right across the market. They are the mechanism setting the economic growth rate of New Zealand Inc and determine both who pays for infrastructure and who captures the land valuation upgrades from development.* The Bottom Line: The shift to front-loading the capital costs of new development onto the marginal buyer of homes, rather than spreading it across existing taxpayers and ratepayers, has massively increased the marginal cost of new housing over the last 30 years, which in effect has increased the cost of all new houses. This shift in infrastructure funding onto future generations has delivered a $1 trillion windfall capital gain that was not taxed into the laps of landowners. The ongoing lack of value capture rates also means the private beneficiaries of land up-zoning don’t pay for the capital costs that enable that new development.* The Quote of the day is from Auckland Mayor Wayne Brown, who engaged in some light trolling this week when suggesting the location for some high-rise apartments in the Epsom electorate: “Just next door to where Mr Seymour lives would be a really good one. I’m thinking of a 10-storey building there.”* The Scoops of the day are from Kate Newton at RNZ, who reported this morning on how official advice that the Government’s plan for an LNG import terminal was ‘low value’ was redacted, and that Treasury had estimated it could cost up to $6.5 billion to pay for the overseas carbon credits New Zealand needs to honour its Paris Agreement commitments.* The Chart du Jour shows how Watercare is expecting to increase its capital expenditure by around 60% in the next five years to over $1.6 billion a year, with more than half of that funded from profits and infrastructure growth charges front-loaded into the prices of new homes, rather than through debt paid for by all of Auckland’s residents. (See chart below and in the video above.)Paying subscribers get the full Picks n’ Mixes below and access to Substack Live Chorus sessions, along with the PDF of the presentation used in the Substack Live attached below. If we get more than 100 likes I’ll open it up for the public.NZ Inc’s growth limit and windfall capital gains in map formIt is the chart that shows the scene of an intergenerational wealth crime.This map is arguably the most important tool for understanding how fast New Zealand can grow, who is about to make massive (tax-free) windfall capital gains on land values, and why New Zealand housing will remain among the most expensive in the world. In effect, it explains why a collective decision to shift capital investment costs for new public water, transport and power networks to new generations of home buyers, rather than spread it across all taxpayers and network users, has unleashed over $1 trillion worth of tax-free capital gains onto the generations that owned residential land since 1990.It is the chart that shows the scene of an intergenerational wealth crime. The lines on the map are in effect the chalk outlines of the body of the New Zealand economy’s productive potential.Too much sprawl and not enough densificationStepping back, it’s worth explaining how this map came to be and what it shows. The red and orange bits are the places Watercare has determined, sensibly, that are too expensive to provide drinking, waste and storm water networks for. It means those landowners can’t expect zoning upgrades any time soon that would deliver spectacular capital gains.The dark green areas are also limited. Surprisingly, the ‘hole in the donut’ of the 10km radius around the CBD is listed as for limited development, in part because of the restrictions imposed on development in the Auckland Unitary Plan and the soon-to-be-passed Plan Change 120. Ideally, most housing development would be in intense apartment developments closest to the CBD, and in particular the City Rail Link stations and key bus routes. The lines on the map are in effect the chalk outlines of the body of the New Zealand economy’s productive potential.Yet, as this chart showed in the Plan Change 120 debates earlier this week, barely 25% of Auckland’s new housing capacity is expected to be within that 10 km radius because of the limits on multi-story developments in the leafy suburbs of Ponsonby, Grey Lynn, Herne Bay, Mt Eden, Epsom, Parnell and Remuera. Development has instead been forced outside the ‘donut’ into places such as Avondale, Onehunga, Glen Innes and the Te Atatu Peninsular. Landbankers and Landlords have captured NZ Inc.Developers and land owners pore over these maps to work out where they can capture the windfall gains in land values, which are still not taxed from a capital gains point of view or a value capture rating point of view. Landbankers and Landlords have captured NZ Inc. They are aided and abetted by owner-occupiers who don’t like to be taxed to pay for new infrastructure, but are happy to benefit from land value appreciation caused by restricting investment and pumping up the population.How could it be done differently?There used to be another way water infrastructure was funded and rolled out, which allowed new housing (and therefore all housing) to be cheaper. Existing landowners paid high income taxes to pay for the interest costs on the public debt taken on to fund the new suburbs and motorways and schools and hospitals funded by councils and the Government. That changed in the reforms of the late 1980s, which took the view that either there wouldn’t be new population growth to build new infrastructure and housing for, or the costs should be borne by new residents (ie someone else). It was the ultimate choice of a selfish generation who engineered a wealth windfall double whammy: low taxes because they didn’t pay for new infrastructure, and high land price appreciation because the high cost of new infrastructure inflated the marginal cost of each new home, which translated into higher housing costs.I’d recommend the interview below and Katie’s deep-dive for more information on how Watercare funds, plans and limits the growth of Auckland. To be clear, I’m not suggesting Watercare is doing anything wrong in its own right. It is working within the frameworks set by the last 30 years-worth of politicians and voters who have accidentally-on-purpose engineered the wealth transfer, and who now don’t know how to reverse it without damaging the untaxed capital gains they’re now relying on to fund their retirements and their childrens’ deposits.Chart du Jour: Profits and charges to fund the investmentToday’s Top Six Pick ‘n Mix* Scoop by Michael Morrah for NZ Herald: Watch: Inside the ‘chronically full’ neonatal ward where babies fight for life* Deep-dive by Katie Bradford for NZ Herald: Why some Auckland suburbs are now ‘closely monitored’ for development* Scoops by Kate Newton for RNZ: Officials redacted advice showing ‘low need’ for LNG imports; Government facing up to $5 billion bill over carbon credits, Treasury reveals* Scoop by Jenee Tibshraeny for NZ Herald-$: NZ’s largest insurer exposes new customers to bluntest risk-based pricing* Hayden Donnell for The Spinoff: A battle over the bare minimum at Auckland Council* Op-Ed by Rosie Gallen on her substack: Emergency housing and the politics of disappearance. Fewer motels, but where did the insecurity go?Scoops & Breaking News* Alice Peacock for Newsroom Pro-$: Minister pushes Netflix and Disney for financial data as Govt mulls regulation* Sam Sachdeva for Newsroom Pro-$: Govt asks US court to toss out seafood ban* Fox Meyer for Newsroom Pro-$: First critical minerals project applies for fast-track* Lillian Hanley for RNZ: Govt floats using $450m fund on public transport* Fran O’Sullivan for NZ Herald-$: Super Fund overtakes ANZ as biggest taxpayer* Tom Rose for NZ Herald: ‘Highly unusual’: Pensioners lose hundreds of dollars in overcharging error at Woolworths* Isaac Davison for Stuff: NZ Super was told off for its ‘unlawful’ rules when investing in Airbnb. Activists are now targeting another company* Tom Pullar-Strecker for The Post-$: National MP doubts power retailers’ hardship programmes reach struggling customers* AP: Trump threatens more strikes on Iran* Reuters: Iran threatens to stop World Cup games if faced with unauthorised flagsThe Rest of the Picks n’ MixesTimeline-cleansing nature pic: Ka kite anōBernardPS: Here’s the presentation I used above in PDF form.Download 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 key news in Aotearoa’s political economy over the last day or so around housing, climate and poverty, along with analysis and detail in the video and podcast above, and in the PDF of the presentation attached below, for paying subscribers:* The Lead: Auckland Council opted last night to recommend its two least intense housing supply plans for local boards to consider, which its economists advised would mean Auckland’s house price inflation would be 4-6% higher and its economy would be $3.9 billion smaller than if they had chosen two other plans that allowed up to an extra 600,000 homes to be built.* The Sidebar: Politicians and the voters they serve are simply responding to the taxation and investment settings in our political economy that benefit the largest number of voters, given landowners vote at much higher rates in local elections than renters. Those settings (no capital gains tax and the 30/30 fiscal rule) mean the safest and highest returning investment after leverage and tax for any household is in leveraged residential land. These settings also mean both central Government and councils restrict infrastructure investment and maintenance to repress state spending and debt below the arbitrary level of 30% of GDP, while also encouraging strong population growth from migration to boost GDP and taxes. * The Bottom Line: The combination of underinvestment in infrastructure and housing in combination with high population growth helps reinforce the ‘success’ of these settings, amplifying spirals ever higher for land values and ever lower for productivity growth. Little will change without those tax and fiscal settings changing, in my view.* The Quote of the day is from Auckland Councillor Shane Henderson, who argued in the meeting last night for the plan to add the most housing: “I don’t understand why we have these conversations all the time and we don’t see enabling housing as an opportunity, as a chance for more economic activity, for diverse beautiful neighbourhoods that more people can enjoy.”* The Scoop of the day is via Charlie Mitchell for The Press-$ about how Children’s Minister Karen Chhour expensed $16,686 for parking at Auckland Airport over nearly nine months.* The Chart du Jour shows how the two plans chosen by the Auckland Council last night will see around 75% of new housing built more than 10km away from the city centre. (See below and in the video above)Paying subscribers get the full Picks n’ Mixes below and access to Substack Live Chorus sessions, along with the PDF of the presentation used in the Substack Live attached below. If we get more than 100 likes I’ll open it up for the public.Landlord Nation wins again in latest Auckland housing voteLast month New York’s new Mayor Zohran Mamdani cited the extra housing supply enabled by Auckland’s 2016 Unitary Plan as one of the shining lights his city should emulate when trying to use a supply shock to improve housing affordability. After last night’s decision, he may not want to include Auckland on his shining light list. The Auckland Council decided against recommending two options for housing densification that would have increased the city’s housing capacity by as much as 600,000 to 2.0 million. Instead, they chose the two least intensive options that are likely to limit supply to around 1.4 to 1.6 million. This was after the Government decided earlier this year to slash its original Plan Change 120 capacity from 2.0 million to 1.4 million.It could have been worse. Putting forward two options, including a slightly more intense one, allows the possibility of one with a slightly higher capacity than 1.5 million, albeit still with most new housing only possible outside a 10km radius of the CBD. (See chart of the day below)Here’s the four options: the Council chose to present options A and B to local boards. This came after the council was advised Option or Scenario D would generate lower house prices and up to an extra $3.9 billion in economic value from more homes and productivity.How did this happen?It’s another win for Landlord Nation and reinforces the powers in a political economy dominated by the twin incentives of a lack of a capital gains tax and fiscal rules that push constantly for less public investment and maintenance in infrastructure, combined with ever-higher population growth.Chart du jour: Choosing sprawl in a mapToday’s Top Six Pick ‘n Mix* Scoop by Charlie Mitchell for The Press-$: What one minister’s airport parking bill reveals about MP spending* Scoop by Joel MacManus for The Spinoff: Government spending $300k per year on unused limos for former PMs* Deep-dive by Glenn McConnell for Stuff: ‘Mayhem’: Police and social workers raise alarm about government cuts hitting kids* Deep-dive by Mandy Te for Interest: IAG NZ advocates 15-year roadmap to reduce NZ’s natural hazard risk* Op-Ed by Te Pāti Māori for Stuff: Te Pati Maori: Whānau are navigating a fuel and cost of living crisis in addition to a public health system that requires urgent transformation* Column by Henry Cooke for The Post-$: Becoming a politician could ruin your life, but it does pay wellScoops & Breaking News* Justin Hu for RNZ: Bid to strip Auckland housing plan to bare minimum defeated* Andrew Bevin for Newsroom Pro-$: Freightways warns new levies ‘significantly distort’ courier market to favour NZ Post* Lillian Hanley for RNZ: ‘Constitutionally abhorrent’: Expert reveals his advice to govt on climate law change* Reuters: Trump says Iran downed Apache helicopter, US must reactThe Rest of the Picks n’ MixesTimeline-cleansing nature pic: Rustic charmKa kite anōBernardPS: Here’s the presentation I used above in PDF form.Download 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 evening I spoke with I spoke with Victoria Coleman about the Disability Support Services Bill, which will gazump a court ruling that parents working as carers are full-time employees of the Government.Victoria works full time as a carer for her son, who has autism, Down Syndrome and two rare bowell disorders. She is campaigning against the Bill and has launched a petition against the bill.“It will wipe out 40 families’ court cases. They are extinguishing live court cases They have used that as a smokescreen for an almighty power grab. So they’ve gone, we’ve got this massive fiscal risk, let’s wipe that out, but let’s also grab all the power we can get over these vulnerable people.” Victoria ColemanThank you to everyone who tuned 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

Here’s the key news in Aotearoa’s political economy over the last day or so around housing, climate and poverty, along with analysis and detail in the video and podcast above, and in the PDF of the presentation attached below, for paying subscribers:* The Lead: The Government has convinced the nation that a scary ghost story about public debt from the days of Rob Muldoon and Ruth Richardson is still real, even though the Government’s assets are now worth far more than its debt. That debt is also not vulnerable anymore to the exchange rate and interest rate risks that made it so risky in 1980s and early 1990s. That’s because the debt is issued at fixed interest rates in New Zealand dollars, often to local fund managers and banks. It used to be in foreign currencies on floating rates.* The Sidebar: Auckland Council is expected to debate a range of housing intensification options later today in response to the Government’s latest downsized ‘Plan Change 120.’ Earlier this year, Housing Minister Chris Bishop slashed planned housing expansion to 1.4 million from an initial 2.0 million after a backlash from National MPs in Auckland’s suburbs who feared the extra supply would reduce land value appreciation. Councillors are expected to opt for the least ambitious proposal, which Council Economist Gary Blick has estimated would produce the least economic gains from productivity ($700 million) and reduce house price inflation by only 1-2%. The most economically ambitious but least politically popular option for capacity of 2 million homes would generate $3.9 billion of gains and reduce house price inflation by 5-8%, Blick has advised the Council.* The Quote of the day is from Donald Trump to the FT-$’s Ed Luce, about how Benjamin Netanyahu will have to accept any deal the US negotiates with Iran: “He won’t have any choice. I call the shots. I call all the shots. He doesn’t call the shots.” Shortly after his comments, Netanyahu launched retaliatory strikes on Iran, which had itself retaliated against Israel’s resumed strikes on Beirut.* The Scoop of the day is via Andrea Vance for The Post-$ on how PM Christopher Luxon’s office found receipts for Briscoe’s purchases in the private emails of its staffers, but not the briefing sent by Fonterra and Z Energy to the gmail account of the PM’s then-Chief Policy Advisor Matt Burgess.* The Deep-dive of the Day article is an interview with Val Adams by Michael Morrah for NZ Herald about the number of children suffering from illness because they lived in damp and cold housing, or are just plain homeless.* The Chart du Jour shows how Singapore has a gross debt to GDP ratio more than three times higher than New Zealand, but, like New Zealand, it also has massive publicly owned assets in the form of sovereign wealth funds. Unlike Singapore, which built its economy and society on a massive stock of easily available and affordable public housing, New Zealand is now reducing public funding for housing at a time 33,000 children and 57,000 women are homeless, arguing its debt is more of a threat than homelessness and the misery (and public health, justice and education costs) it produces. (See below and in the video above)Paying subscribers get the full Picks n’ Mixes below and access to Substack Live Chorus sessions, along with the PDF of the presentation used in the Substack Live attached below. If we get more than 100 likes I’ll open it up for the public.Why are National (& Labour) so afraid of an old ghost story?The Government is betting its political future and the nation’s economic future on a story that seems intuitively right to many households and has gone unchallenged in our public debate.The story is that New Zealand’s public finances are in deep trouble again and that the Government has no choice but to ‘cut its cloth to fit’ and ‘tighten its belt’ to avoid the wrath of ‘bond market vigilantes’ deciding that our debt is too high and we can’t pay our bills. These investors would, in theory, sell New Zealand Government bonds, pushing up interest rates for everyone and wrecking the economy. The slightly less scary version is that New Zealand needs to have a much bigger ‘buffer’ of ‘rainy day’ funds in the form of low Government debt just in case we have an earthquake or bad storm. This story depends on the idea that we are small and a long way from the centre of capital so we ‘naturally’ are more vulnerable to a bond market revolt.Versions of this story are now so ingrained in the collective psyche of Treasury officials, politicians from both National and Labour, and the media, that the latest telling of the story to argue for job and welfare cuts has been largely accepted. Without any challenge. The Post-$ and The Press-$ accept it, as does The NZ Herald-$, 1News and RNZ. ‘There is no alternative’Luxon and Finance Minister Nicola Willis have repeatedly argued they inherited a ‘set of books in a mess’ and, like any family or business, have had to ‘clean up the mess,’ through spending restraint. They pointed at the end of 2023 to Government Gross Debt rising by over $100 billion to $220 billion is six years, and that the interest bill had risen to $8 billion a year — more than it cost for Police and Corrections. This sounds unsustainable and bad, with no alternative to spending cuts.Surely, they argued, any household or business would make ‘tough decisions’ to ‘balance the books’ urgently to avoid being cut off by the bank? This has been an easy story to tell New Zealanders because we have been told for so long that we’ve been here before under Rob Muldoon in the wake of big Budget deficits and borrowing to fund Think Big in the early 1980s and in 1990 when BNZ was collapsing and needed rescues from the Government and National Australia Bank. The suggestion is the books are again in just the same sort of ‘mess’ and voters and opinion-makers in media and the bureaucracies have found it easy to take the short cut to believing this same ghost story. On both the left and the right. Foundational for the ‘Third Way’The most famous anecdote from the Clinton-Blair-Clark ‘Third Way’ era comes from Bill Clinton’s election-winning campaign advisor James Carville, who said after bond investors sold bonds and forced up interest rates that:“I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter, but now I want to come back as the bond market. You can intimidate everybody.” Carville in 1993 to the Wall Street Journal.It represented a shibboleth of modern politics: that no matter what voters or politicians wanted, the bond markets would always decide based on what they believed was financially sustainable because these ‘bond vigilantes’ were the most powerful force in the political universe. If they ‘voted’ against a Budget they could force up interest rates that would soon turn into higher mortgage rates, an economic downturn and inevitably the end of a Government.Liz Truss, the lettuce and the UK ‘gilt’ market revoltThe latest example of the ghost story turned real that story tellers point to is the bond market revolt that effectively ended Liz Truss term as UK PM in the last week of September 2022 after just 45 days in the job. The story goes that Truss proposed a debt-funded tax cut, which was rejected by bond investors, who pushed up interest rates sharply. Her political supporters then jumped ship, apparently proving again the potency of the bond vigilantes. Aside from the murky role of the Bank of England in not intervening immediately to stabilize the market when most other central banks would have, Truss’ situation was quite different to New Zealand’s in 2026. Britain’s Government debt-to-GDP ratio at the time was 102% of GDP and Britain does not have a sovereign wealth fund. New Zealand’s Gross Debt to GDP is barely 40% of GDP and, most importantly, it has total assets of $611 billion, as well as total liabilities of $426 billion. That means the Government has a current net worth of $185 billion and it is forecast to rise to $207 billion by the middle of 2030.Would you leave kids homeless when you were worth $207 billion?It’s astonishing that the asset side of the equation is ignored in the debate, especially when any household-type analysis would definitely include the assets. It would also focus on the affordability of the interest costs. The full story is also not being told on interest costs. The oft-cited $9 billion figure is also a gross figure that doesn’t take into account either interest receipts the Government gets or the dividends it receives each year from state owned enterprises and others.For example, the Government reported in its Crown Accounts last week that interest costs were $8.5 billion in the 10 months to the end of April this year, while interest receipts and dividends were $6.2 billion. That means the net interest costs of $2.3 billion represent barely 2% of the Government’s revenues over the same period.Would you leave your kids homeless with interest costs of 2% of income?Just imagine telling your neighbour that your debt was so worrying that you were prepared to leave your kids homeless and sick living in a garages. And then telling the neighbour when they asked how bad the debt was saying that it cost 2% of your wages to service. Would you be embarrassed to say that?Especially when you had the special power to tax everyone on the street in the event something went wrong. And you also had the power to invent money if something went wrong. And that you had a fixed rate mortgage in your own currency that meant if interest rates went up suddenly and the New Zealand dollar fell because of a crisis that your interest costs would not change a cent. How would you look your neighbour in the eye and say you were quite happy for your kids to catch pneumonia and end up in A&E because your interest costs might rise to 2.2% of your income if you chose to build a house instead?That’s what our Government is doing and everyone seems relaxed about it. Or at least simply accepts it as a fact of life. It’s not. It’s a choice. And a brutal one at that with the costs being paid by those who can least afford it, with the damage likely to last generations and ultimately cost the taxpayer much more in health, education, lost production, court and prison costs. Chart du jour: OMG! Singapore must be broke? No. Today’s Top Six Pick ‘n Mix* Scoop: Andrea Vance for The Post-$: PMO found Briscoes return email, missed climate lobbying brief* Investigation: Farah Hancock for RNZ: $44,630 fee for ‘yo-yo’ KiwiRail director with 10 conflicts* Reportage: Luka Hill for RNZ: High schools students pick up jobs to pay family bills* Interview with Val Adams by Michael Morrah for NZ Herald: ‘It makes me sad’: Dame Val Adams questions why NZ kids still suffer in damp, mouldy homes* Deep-dive: Bloomberg-$: The Top 1% Reap Most From Tax Loophole Costing $48 Billion* Column of the day: Emily Writes - Parents fined $30 a day for having unwell, dying, or disabled kidsScoops & Breaking News* Alice Peacock for Newsroom Pro-$: Middle East conflict will ‘likely disrupt’ NZ’s supply of medicines* Dileepa Fonseka & Sapeer Mayron for BusinessDesk-$: Business Survey: ‘No one’s waiting for green shoots anymore’* Reuters: Iran and Israel say they have halted strikes, but leave door open to resume* Reuters: Yemen’s Iran-backed Houthis threaten Israeli shipping in the Red SeaThe Rest of the Picks n’ MixesTimeline-cleansing nature pic: A splash of colorKa kite anōBernardPS: Here’s the presentation I used above in PDF form.Download 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 key news in Aotearoa’s political economy over the last day or so around housing, climate and poverty, along with analysis and detail in the video and podcast above, and in the PDF of the presentation attached below, for paying subscribers:* Households slammed by rampant electricity, fuel and government charges inflation are being forced to cut back on discretionary spending on going out, shoes, clothes and holidays, which is reflected in the latest card spending data for May.* Over half of the kids living in New Zealand’s poorest households are homeless, according to a new report this morning from the Coalition to end Women’s Homelessness.* The Quote of the day is the video above and presentation below is from a pregnant homeless woman on why she won’t disclose her pregnancy, quoted in the report.* The Scoop of the day is that $2.5 million a year is being paid to MPs for Wellington housing, as reported by Charlie Mitchell for The Press.(link below)* The Deep-dive of the day is about a five-year-old living in a cold garage in Auckland, as reported by Michael Morrah for NZ Herald (link below).* The Chart du jour shows a slump in Singapore petrol, diesel and jetful stocks in recent weeks.Paying subscribers get the full Picks n’ Mixes below and access to Substack Live Chorus sessions, along with the PDF of the presentation used in the Substack Live attached below. If we get more than 100 likes I’ll open it up for the public.Why shops & bars are closing despite a spending ‘recovery’Card spending bounced back slightly in May, but it’s not flowing through any spending recovery into shops, pubs and cafes because consumers are having to spend their repressed real wages on ‘essentials’ such as fuel, electricity, food and insurance where inflation has been higher than other goods and services.This chart from ANZ’s most recent card spending figures show the nominal growth in spending via cards on retail and everything else in the blue and the red is the real spending. Apart from fast food, which may be a substitute for groceries, discretionary spending has been weak for most of the last three years.We are back to the levels we were at just before COVID and for the last three to four years we’ve seen stagnating spending in real terms in non-grocery retail, hospitality, clothing, shoes and domestic holidays, despite real wages growth in most of that period. We have had some periods, 2023 and again this year, when we’ve seen real wage deflation. But wages have been growing at around 2 to 3%. We’ve had occasional spikes, but you’d think there’d still be some more spending. And we are, in theory, going into recovery. The oil shock out of the Strait of Hormuz is playing a role, but that is really just for a couple of months. I’m talking about a secular three to four year long recession in our retail, hospitality, and other discretionary spending. It’s down to fast growth in essentials inflation.Hospitality has edged up slightly, but again, it’s been very flat for the last three or four years, with spending in bars down by more.Its the items that aren’t discretionary that are hurting the most, including electricity, fuel, food and Government fees and charges.Today’s Top Six Pick ‘n Mix* Deep-dive by Michael Morrah for NZ Herald: Cold Auckland garage leaves disabled five-year-old at risk this winter* Deep-dive by Amelia Wade for The Post-$: More than 33,000 children are homeless in Aotearoa. Most are invisible in the data* Scoop by Andrea Vance for SST-$: The slash backlash: How forestry giants just softened post-Gabrielle environmental rules* Scoop by Charlie Mitchell for The Press-$: Rules permit speaker Gerry Brownlee to claim $237,000 for staying in his Wellington townhouse* Deep-dive by Lloyd Burr for Stuff: The Health of Nation: results are in, how do you compare? Nearly half have a long-term health condition, and for a quarter of them, it regularly impacts their daily lives. Stress, burnout, physical exhaustion and chronic pain is widespread, while fatigue and sleep problems are an issue for a large chunk of our population. A quarter claim their health is worse now than it was a year ago, with common health concerns including fitness and general wellbeing, weight management, aging, and mental health.’* Column by Hayden Donnell for The Spinoff: Austerity is for poor people, not politicians ‘Belt-tightening, as it turns out, is location-specific. It affects you if you’re in a state house. It doesn’t if you’re in the house of representatives.’Scoops & Breaking News* Thomas Coughlan for NZ Herald-$: Revealed: Labour fumes as Govt ‘secretly’ spends $1b from next year’s Budget* Marc Daalder for Newsroom Pro-$: Govt finds more Warmer Kiwi Homes savings as energy hardship spikes* Andrea Vance for The Post-$: Whistleblower complaint triggered integrity probe into Mt Messenger highway project* Sam Sachdeva for Newsroom Pro-$: ‘Slur on my reputation’: The spat behind housing boss exit* Jenna Lynch for Stuff: Off the transplant list and too sick to go on: ACT MP with kidney disease to step out of politics* Emma Gleason for The Spinoff: No one knows how many vape shops there are in New Zealand ‘They’re supposed to be highly regulated. So why can’t authorities provide a reliable figure?’* Harriet Laughton for The Post-$: Funding shake‑up puts strain on support for sexual‑abuse survivors* Reuters: Israel strikes Beirut despite truce, Iranian lawmker threatens to retaliate* AP: Israel strikes Beirut’s southern suburbs days after US-supported ceasefire dealThe Rest of the Picks n’ MixesCartoon of the day: Fairness, MPs & housingTimeline-cleansing nature pic: CarefulKa kite anōBernardPS: Here’s the presentation I used above in PDF form.Download 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

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

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

Finance Minister has unveiled a ‘sugar-free’ and ‘tough love’ Budget that achieves a surplus by 2028/29, a year earlier than previously forecast in December, thanks to Treasury forecasting a short energy shock that allows GDP growth to average 2.7% over the next four years. Thank you Cheese (Ashley Cheeseman), Kath, Suzanne Jansson-Bush, Steve Robinson, 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

The Reserve Bank of New Zealand decided this afternoon to hold the Official Cash Rate (OCR), but it was a much closer run thing than everyone expected and the central bank has changed its forecasts to seeing three OCR hikes by the end the year. Most economists now expect three hikes in a row on July 8, September 2 and October 28, just in time for the OCR to be 3.0% by the election on November 7.For the first time, the Reserve Bank detailed how each of the six members of the Monetary Policy Committee (MPC) voted, including that the three outside members, Prasanna Gai, Carl Hansen and Hayley Gourley, voted for a 25 basis point hike to 2.5%. The three Reserve Bank members, Governor Anna Breman, Assistant Governor Karen Silk and Chief Economist Paul Conway all voted to hold. Breman then used her casting vote as chair of the committee to ultimately hold. Usually, the MPC has seven members, but has yet to appoint a Deputy Governor. In the presentation above, I went through the details of the Monetary Policy Statement, the following news conference (seen below) and the key details.I also talked about my questions and the answers in the news conference on:* whether the Phillips Curve was still operating (21:14); * what the Governor would say to unemployed youth about the scarring effect of four years of high unemployment (38:32);* what the effects on inflation have been of higher inflation on regulated prices; and,* whether the Reserve Bank’s lowering of its house price inflation forecast would generate a negative wealth effect.Thank you Ian Dunn, Tanya Wintringham, AK, and many others for tuning into my live video! Join me for my next live video in the app.Here’s the PDF of the presentation I used above.CheersBernard 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

I spoke with disability advocates Blake Forbes and Nick Ruane this morning about the ongoing review of the Total Mobility subsidies provided by the Government for taxi services for disabled people. The full video is above.They met Transport Minister Chris Bishop this week to talk about the review, which is running headlong into a July 1 deadline to start a revised scheme with a lower subsidy (65% rather than 75%) and tougher eligibility criteria, designed to reduce the number of trips pensioners in Auckland are taking.It’s designed to try to cap the size of Government at 30% of GDP, despite increased costs of ageing and the growing incidence of health issues.Nick has written regularly about the review, as has Paul Singh here.Thank you Susan St John, Paul Singh, Sarah Melville, Rosemary Hipkins, Virginia McMillan, and many others for tuning into my live video with Nick Ruane and Blake Forbes! 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 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. 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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