Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Thursday, September 26:
Days after realising hundreds of thousands of tax-free gains on the sale of one of his rental properties, PM Christopher Luxon responded yesterday to ANZ CEO Antonia Watson’s comments in favour of a tax on realised capital gains on rental properties by accusing her of “wanting to take more money off New Zealanders” and suggested her bank could start by sending less profit back to Australia. Labour’s Kieran McAnulty said said Luxon’s comments were an attack “unbecoming of a leader” and showed he was “under a bit of pressure, that bloke, I reckon.” RNZ
In scoop of the day, the The Press-$$$’s Rachel Thomas reports from official documents with advice from Te Whatu Ora-Health NZ’s Chief Infrastructure Officer Jeremy Holman to ministers that its plans to cut spending on $3.2 billion worth of hospital rebuilds and upgrades meant they couldn’t cope with rising demand and meant some buildings would have to go into “reactive maintenance (run to fail)” mode.
In deep-dive of the day, The Post-$$$’s Nicholas Boyack looks into why independent commissioners have effectively blocked the building of 1,600 new homes in Upper Hutt by recommending an area known as the Silverstream Spur be rezoned from Residential to Natural Open Spaces.
In solutions news, Waka-Kotahi-NZTA is now introducing a "planning and investment evidence base programme," to "enable evidenced-based decision making,” the Ministry of Transport has advised Simeon Brown after telling him big investment decisions such as Brown’s $10 billion Northland Expressway were being made without business cases or evidence.
In quote of the day, Christopher Luxon tells Antonia Watson banks shouldn’t be telling the Government to take more money off homeowners.
In charts of the day, the world’s fastest growing large economy has record high homelessness and massively-stressed low-income workers, suggesting a rising tide doesn’t lift all, which is the current Government’s strategy here.
(There is more detail, analysis and links to documents below the paywall fold and in the podcast above for paying subscribers. If we get over 100 likes we’ll open it up for public reading, listening and sharing.)
1. PM accuses ANZ CEO of ‘wanting to take more off NZers’
Labour’s McAnulty says Luxon’s comments ‘unbecoming of a leader’
PM Christopher Luxon’s reaction yesterday to questions about ANZ CEO Antonia Watson’s comments in favour a Capital Gains Tax was to laugh and say this (video below):
“She is more than welcome to enter the political domain. As a former CEO, I understand what she's doing. The point I’d make is the big Australian banks make a lot of money off the New Zealand public, and I would just suggest to her that maybe taking more money off New Zealanders isn't the road forward."
"I love it that the CEO of a big bank from Australia wants to take more money off New Zealanders.
"You don't tax your way out of a recession. You grow your way out of a recession." Christopher Luxon speaking to reporters in Parliament yesterday via RNZ
Watson told RNZ earlier yesterday it was time for a capital gains tax on the realised capital gains beyond the family home. Luxon’s comments came days after confirmation he had sold one of his rental properties in Onehunga, realising hundreds of thousands of capital gains, without having to pay tax. Stuff reported on Sunday the two-bedroom brick and tile property was sold after being listed with a fixed price of $945,000, suggesting Luxon made a capital gain tax free of $295,000 on his 2015 purchase price of $650,000.
Labour’s Kieran McAnulty described Luxon’s comments as “unbecoming of a leader,” and said he hoped that Watson’s comments favouring a CGT, along with supportive comments by other business leaders and the outgoing Secretary of the Treasury, Caralee McLeish, meant the tax debate would become less divisive.
"The CEO of a company surely is capable of making their own mind up and expressing it without the prime minister having a crack.
"He's starting to show a bit of pressure, that bloke, I reckon." Labour spokesman Kieran McAnulty via RNZ.1
2. Scoop of the day: Govt eyes hospital build cuts
Health NZ’s Infrastructure boss warns Govt of ‘run to failure’ risk
The Press-$$$’s Rachel Thomas reports this morning Te Whatu Ora-Health NZ’s Chief Infrastructure Officer Jeremy Holman has told ministers now considering cutting the size of a hospital rebuild and upgrade programme costed at $3.2 billion that smaller buildings may mean some buildings couldn’t cope with rising demand and would have to go into “reactive maintenance (run to fail)” mode.
The news comes as hospital rebuilds and expansions for Dunedin, Nelson, Whangārei and Taranaki are being rescoped by new Commissioner Lester Levy after he was told to cut $1.4 billion immediately. There are 20 projects rated as ‘red’ and therefore under active consideration, with current costs of a total of $3.2 billion. Dunedin City Council has launched a campaign to stop the downgrading of its hospital build.
Thomas reported on advice from Holman to Ministers on the reconsideration of the $3.2 billion worth of ‘red’ projects.
The documents obtained by Thomas under the OIA showed Holman’s warning Health NZ had been “forced into a reactive mode,” which meant addressing risks without lifting capacity, which in turn was “inherently more dangerous” than a planned approach.
“The current in-flight portfolio only provides a 4% expansion of capacity,” Holman advised.
He told The Post there were no plans to change this, outside of health and safety requirements.
“Reactive maintenance (‘run to fail’) is a legitimate maintenance strategy for non-critical assets that do not directly support critical clinical function [and] will continue to be a part of our maintenance approach...”
3. Deep Dive of the day: 1,600 new homes blocked
Development in Upper Hutt blocked by hearings panel
The Post-$$$’s Nicholas Boyack reported yesterday on why independent commissioners have effectively blocked the building of 1,600 new homes in Upper Hutt by recommending an area known as the Silverstream Spur be rezoned from Residential to Natural Open Spaces.
Here’s the key details (bolding mine):
In May, council chief executive Geoff Swainson wrote to the Government supporting Guildford Timber Company Ltd’s application to fast-track the project to build houses above a piece of land known as the Silverstream Spur.
The move blindsided councillors. A subsequent statement from Emma Holderness confirmed that her fellow councillors Dylan Bentley, Matt Carey, Tracey Ultra and Chris Carson were not aware of the council’s support for fast tracking until it was raised by a member of the public.
Independent commissioners have, however, dealt the project a blow by recommending the zoning change, making it significantly harder to get a road built.
Silver Stream Railway spokesperson Jason Durry is urging councillors to endorse the panel’s recommendation. There was clear community support for the land being rezoned for recreational use, he said.
Holderness said the issue was a complex one. She noted the panel had acknowledged that Upper Hutt was not short of long-term housing options, including the Trentham Racecourse and intensification along the rail corridor. The Post-$$$’s Nicholas Boyack
Why isn’t there ‘clear community support’ for more houses? There were 177 families registered in Upper Hutt as homeless in the June quarter. Upper Hutt’s house value to income multiple is 5.4 and Infometrics reports 37.9% of the average household income would be needed to service a 20 year mortgage on the average house value, with a 20% deposit at average 2-year fixed interest rates in 2024.
4. Solutions news: ‘Make decisions with evidence’
Ministry scathing of huge RONS dreamt up on backs of envelopes
Waka-Kotahi-NZTA is now introducing a "planning and investment evidence base programme," to "enable evidenced-based decision making,” the Ministry of Transport (MOT) has advised Simeon Brown after telling him big investment decisions such as Brown’s $10 billion Northland Expressway were being made without business cases or evidence, as RNZ’s Phil Pennngton reported yesterday (bolding mine):
The government has been warned that business cases for many projects - even large roading projects - have become so weak that they are disconnected from reality.
The Transport Ministry (MOT) has told the government that "investment decisions have become disconnected from the available revenue and market capacity," in proactively-released documents.
"There has been a breakdown in the relationship between business case developers, decision makers and funders."
The MOT is also beginning work on a 'Future of the Transport Investment System' plan. MOT's warning to Brown in November overshadowed subsequent planning for the RONs, when it said:
"Decisions are increasingly being made without business cases being completed and the project scope and cost being fully understood, meaning more cost increases, delays and ultimately an inability to deliver intended benefits."
The initial cost for RONs - estimated to complete 14 of the 17 highways - was $17.3 billion in the MOT papers, plus another $3b for the other three.
The latest estimates have been entirely blanked out of the newly-released documents.
"Initial cost estimates are increasingly unreliable indicators of final costs", MOT stated.
MOT has now adopted Treasury’s ‘Better Business Cases’ framework.
"Business cases will be targeted, and include only what is required.
"This work aims to create a significant improvement in the time and cost to develop business cases, as well as a more accurate cost estimation."
The agency is now introducing a "planning and investment evidence base programme" to make a change to "enabling evidenced-based decision making".
5. Quote of the day
‘You grow your way out of a recession,’ says cost cutter.
“You don't tax your way out of a recession. You grow your way out of a recession.” PM Christopher Luxon, who has tightened fiscal policy, cut infrastructure and services spending and increased inflation through various new fees and charges (taxes) since taking office.
6. Charts of the day: Growth doesn’t lift all boats
US economy growing fastest, but poorest more homeless & poor
The Kākā’s Journal of Record for Thursday, September 26
Wellbeing: Stats NZ reported the 2023 General Social Survey found NZers' sense of belonging declined since 2021, as well as their sense of safety after dark and their trust in key institutions such as the education and health systems, Parliament, media, courts, and the police. Trust in Parliament decreased the most, from 5.7 in 2021 to 4.9 in 2023. RNZ
Health & poverty: Health Minister Dr Shane Reti announced $4.85 million in funding towards researching the prevalence of Fetal Alcohol Spectrum Disorder (FASD) in NZ, training health professionals to recognise it, and promoting alcohol-free pregnancies. Reti said an estimated three to five children with FASD were born in NZ every day, extrapolating from overseas data.
Te Tiriti: Treaty Negotiations Minister Paul Goldsmith announced that legislation to revert the criteria for granting customary marine title to stricter 2011 conditions passed its first reading in Parliament. Under the changes, applicants will have to prove "exclusive use and occupation" of the marine area from 1840 to the present day. RNZ
Infrastructure: A new report from Te Waihanga-The Infrastructure Commission on NZ's long-term infrastructure needs estimated that almost 60% of NZ's annual infrastructure spend would need to go in future towards renewing or replacing existing infrastructure.
Electricity: The Electricity Authority's report into the June 2024 collapse of a Northland transmission tower found Transpower failed to respond to a senior engineer's concerns that maintenance crews were under-trained.
Fisheries: Oceans and Fisheries Minister Shane Jones proposed fishing boats who've verified their catch with onboard cameras can tip unwanted fish overboard rather than bring all their catch on shore. Jones also proposed to continue the rollout of onboard cameras to monitor fishing activity. RNZ
Cartoon of the day
Nanny state? Or Dominatrix state?
Timeline cleansing nature pic of the day
The first bloom of summer
Ka kite ano
Bernard
Share this post