It’s that time of the week where I’m on site for the next hour (or two) trying to answer questions from paying subscribers about the news and issues in geo-politics, the global economy and Aotearoa political economy for the week that was to October 21, including:
What the hotter-than-expected inflation figures this week mean for mortgage rates and the Official Cash Rate;
What the demise of Liz Truss’ trickle-down economics package might mean for National’s plan for tax cuts;
Russia’s drone attacks on Ukraine that have destroyed 30% of its power infrastructure; and,
Wayne Brown’s orders to Auckland Transport to prioritise car drivers over public transport, walking and cycling.
Fill yer boots. I’m driving for the next half an hour or so so please pop your questions in. I’ll be able to answer full from 1pm to 2pm.
Ka kite ano
Bernard
PS: Here’s the link for today’s ‘hoon’ webinar for paying subscribers at 5pm with co-host Peter Bale.
The closing date for submissions is 11.59pm, Friday, 21 October 2022
***
I was about to put in my submission this morning but it was gazumped by this mornings announcement - single nationwide public transport payment system. If they can integrate it into Google Maps, it will be a success.
"The Government has announced a new payment system for public transport across Aotearoa, increasing options for paying for a trip."
UPDATE: SUBMISSIONS CLOSE AT MIDNIGHT! Oh, gosh. Right, sorry for the misinfo. I'm glad I did my minimalist submission last night while on the go - ended up voice transcribing it using my phone. The single payment system is exciting - Julie Fairly started nice thread on twitter collecting photos of people's collections of bus/transit cards.
Thanks Peter. :) Driving a hybrid through Wairarapa to Hawkes Bay. It is an issue though. Taking a really hard look at how to cut back on emissions, especially flying. Interesting idea on the behind-the-scenes work. You'd hope it was all public and goes through the select committee processes.
No reply needed - but I'm keen to hear from a China watcher today about the party congress and any early smoke signals from the CCP, especially to do with their likely geopolitical approach over the next five years. How worried should we be about their intentions towards Taiwan?
I expect others will be asking about Wayne Brown and what his likely impact may be. Are there more moderate voices on the new Auckland Council to restrain him?
Agree - there is so little coming out about the economic results (e.g. GDP doubled in 10 years) and economic changes talked about. From what I read it's full noise ahead until 2035 focusing o economic progress then a pivot towards a beautiful China.
Good point Anne. We'll try to get to the Congress. Sunday is the big reveal for the new leadership group under Xi. I see there's talk of a big cleanout.
Interesting item yesterday (It's a profit-price spiral, rather than a wage-price spiral) and I also read this article from Bill Mitchell - Banks gouging super profits, yield curve inversion – nothing good is out there (http://bilbo.economicoutlook.net/blog/?p=50630). I'd be interested to hear Steve Jurkovich respond (also listened to your interview with him). Love your work! Jeremy
Bernard, with the latest inflation figures and wholesale interest rate predictions from our banks, and continued or escalating uncertainty abroad, do you still reckon now is the time for 1st time buyers to go all-in on their first mortgage?
My personal view is interest rates are peaking and will be falling by this time next year because by then the current deflationary pressures in global supply chains will be flowing through and the likely recessions in Europe and China will be dragging down rates.
Thanks Michael. Quick caveat: this is not financial advice for anyone in particular. All I'd say to anyone anywhere remotely close to buying a home to live in and build a family life is they should buy as soon as possible if they're ready to nest. Home ownership always better for security and affordability. Sadly, it has also been much better in an investment sense, but that's not my focus. All about security, quality and affordability.
PCE's final report landed in Simon Upton's 5 year effort to understand what over $2B for environmental protection gets spent on every year, and whether there's accountability. Will he get traction on accountability? How?
Thanks - I hadn't seen that. I don't think Pagani's suggestion is realistic or really reflects Upton's report (which argues that Pagani's suggestion is useless unless enabled by both better tracking of funding to outputs and outcomes, which probably needs legislation). There's probably less there than I said on 8 minutes on Afternoons, but I'm genuinely interested in what Bernard and folks coming from a long-term political economy perspective think.
As a data point/anecdote, Taumata Arowai are consulting on environmental performance monitoring to set targets and standards for the three waters. IMHO it doesn't measure up as a means to ensuring better reporting or decision making
Multilateral development banks have been using sophisticated and effective design/monitoring frameworks for decades - consulting, setting, pursuing, monitoring, evaluating and reporting on a range of socio-economic and environmental investment outputs, outcomes and impacts as they go. Complete with SMART objectives, KPIs and objectively verifiable indicators.
Systems deliver what they are designed to do. If we don’t have useful data and performance accountability in environmental outcomes then that tells you about the focus of our government and organisations.
Hope you have a nice long weekend, and something nice planned.
My question is one you might not feel comfortable to answer, and I completely understand if you feel reluctant to answer this fully. What are your thoughts on the media's treatment of Christopher Luxon and his policies? Interviews seem to ask briefly about how he will pay for tax-cuts while not reducing spend. We normally get some generic talking points from Luxon and then the interviewers move on - same as well for his 'five-point-plan' for reducing business costs. No one seems to ask if that means- is sick leave is going to get reduced back to five days? Is a public holiday on the way out?
I feel like there is not enough weight on Luxon - he can criticise the government, provide some generic talking points, and the interview moves on. Thank goodness for Kim Hill, she is incredible at really pushing on his talking points and lack of detail.
He kept repeating the same old tape recording when cornered by Suzie on Morning report RNZ. Kim as well. He's going to be "trussed" up like Mussolini over trickle down economics.
Thanks Rory. I've repeatedly requested an interview and tried to nail down some of the answers. National are running a 'low target' strategy and had better come up with some answers on the other side of the ledger soon enough for scrutiny. Luxon told Claire Trevett this week the detail wouldn't come until after the PREFU, just a month before the election. Meanwhile, I'll build up a bank of questions and keep prodding. I'd welcome any suggestions you have. Good point on public holidays and sick leave.
Despite your stated primary foci being Child Poverty, Housing and Climate Change, you seem to make a number of comments which disparage the Green Party and others that appear to support The Opportunities Party. This seems incongruous. Do you think it reasonable to ask that you openly declare a political preference if you actually have one?
Thanks Dara. I don't have a political preference at the moment because the election platforms are not complete yet. I do have a view though (until the Greens change their stance) that a vote for Green is actually just a vote for Labour policies, regardless of Green policies, because the Greens have pledged never to go with National, which means Labour doesn't have to give any concessions. The situation is different if the Greens have more votes than Labour....
As a Green Party member / donor / volunteer, I don’t see TOP and Greens as rivals, and will be volunteering for Raf in Ilam. I think the Teal movement in Australia shows us that there is space for a less-left environmental party
Thanks David. That would do the trick and be clearly better for those on lower incomes who spend (rather than save) their incomes. The other option is the Government paying rates and other consenting fees for councils and cutting its own fees temporarily. I'm not such a fan of reducing the fuel levies for climate reasons. I love the free public transport idea.
With NZ stuck in a profit-price spiral rather than a wage-price one are interest rate hikes going to work? What else is in the tool box that would cause less pain to the average Kiwi? Is it time for a windfall profit tax? Corporations and banks seem to be creaming it. Or perhaps demand return of Covid wage subsidies by firms that didn't end up needing it and were back in profit by the end of the fin year?
I would introduce a corporate financialisation levy. If a company has borrowed money AND pays a dividend then it is subject to a levy of, say, 5% over and above the standard corporate tax rate.
These companies are in effect borrowing money to pay a dividend rather, than using that dividend money to repay debt.
Thanks Sonya. Good question. The GST cut, council rates, consenting fees and government fees cut would be a good move. I think a windfall profit tax for those that took the wage subsidies would make sense to claw back the $20b.
He still has ethics and privileges investigations hanging over him. So not likely and they’re screening down to two candidates with 100 MPs backing to vote on apparently. No one will make much difference if Government can’t secure its authority over the Central Bank ever though really. Most politicians and our democracies are hogtied by them. I can’t see Keir Starmer taking them on AT ALL and Labour have no policies (much like here) anymore than Conservatives or National do here. Conservatives seem to have abandoned their mandate and policy from 2019 election and are all at sea as a consequence so it will be interesting to see if they can get back on track with that because they don’t have the social license to do anything but that. As usual they go to far without democratic consent or mandate. That was dumb.
No real reason that UK Labour would have published any extensive plans at this stage. Take a look at their recent conference proceedings though for clear policy signals and some quite shrewd thinking. Starmer has done a reasonable job of holding the Tory Scum to account and advocating for progressive policies.
Finally, Starmer and the Labour front bench have more expertise and integrity in their little toes than the entire Conservative cabinet (aka Revolving Door)
I fear that much like here we assume Labour are for women and the workers and are disappointed. So grown up policies and mandates are so important because of the power they can misuse and wield without being checked is enormous and both sides have done things against their own policies and mandates via election. Both here and there.
Presumably the 2741 full time equivalent extra nurses employed by DHB hospitals over the past 5 years are among the extra bureaucrats that Luxon doesn't like! On a more serious note, why doesn't Little (or in fact journalists) publicise the fact that DHB nurses have increased by 14% over that time. One more example of the government letting things happen and hoping that they'll get the kudos for is despite no one actually knowing.
I don't have that info Steve. I asked and got the Health Dept figures for the last 5 years, as the nursing unions actively (as they should) give the impression that we have lower nurse numbers. In fact public hospitals have employed increasing numbers every year.
Has not Auckland transport & all NZ Governments always prioritised road transport over everything else?
Compare repair of the Rail network upgrade to the replacement of the Newmarket Viaduct.
"The entire project has been carried out while keeping the motorway open at all times, and while mitigating noise, dust and any other inconvenience to the city’s commuters and businesses."
Indeed. But the rhetoric in recent years was slightly different, and many hope the actions might match the rhetoric. This sort of 'guidance' doesn't help.
It's up in the air. Michael Wood said three weeks ago it was unlikely to be extended when it comes up for renewal at the end of January, but then a week later said it was was likely to be renewed. It all depends on the polls, the NZ dollar and the oil price. If oil goes up over US$100 and NZ$ stays down around 55 USc then I think it's likely to stay, especially if Labour remains in the polling dumps.
I know that publishing on Substack has been working very well for you, but is there anything Substack could do better or add to make the platform better for you?
Fantastic suggestions David. I'm constantly amazed by the ease of publishing and the new tweaks and tools that Substack come up with. You and they are way ahead of me. I'm doing my best to keep up with all the new and briliant stuff.
Hi Bernard, how is it looking for team transitory? China doubling down on Zero Covid makes it unlikely they'll be producing stuff anytime soon? Are we going to be able to escape a recession?
Thanks Ben. You're the first to ask about my membership of Team Transitory after the nasty CPI figures on Tuesday. I thought someone would have jumped earlier. I'm still in Team Transitory. The early signs that producer price inputs are falling are there, along with falling rents in the US and here. It might happen slower than we'd hope, but it will happen, especially now it looks like the Fed is going to run the economy into a brick wall to show how macho it is on inflation. If it puts the Fed Funds rate over 5% then a recession is likely.
Your thoughts on the civil disobedience actions this week of Restore Passenger Rail? Like me they must have had a gutsful of submissions, petitions and protesting outside Parliament to little effect. I'm more suburban mum than radical activist but emissions continue ever upwards, everyone is keen on climate action as long as it doesn't affect them and time frankly is running out to ensure a liveable planet for our kids. Do you have any suggestions other than throwing a couple of packets of super glue in my trolley and sticking myself to something inconvenient?
As a suburban mum, if you were taking your son or daughter to an important appointment and Restore Passenger Rail were blocking the road how would you feel?
Honestly David, short of missing a life threatening organ donation that would save my child from certain death, I would be ok with sitting in traffic for a couple of hours. The planet is in serious peril and I'm genuinely not sure what else is left in the toolbox for the average person. I have done literally everything I can think of, I pivoted to work on climate policy hoping to make a difference (but public sector inertia just ground me down), I stopped flying, I mostly buy secondhand, I replaced gas in our house with electricity, I ride a bike, ration my trips in our EV, volunteer with our school road patrol to encourage parents to let their kids walk to school, we eat vegetarian, I write to politicians, have appeared before select committee and joined the School Strikes for Climate. Every single day I think about the dreadful future awaiting us all and feel completely powerless to stop it. What is it going to take to bend emissions downward? Is being stuck in your car on the way to somewhere important the worst possible fate?
I've not done a fraction of what you have done/are doing Sonya, but i too feel defeated. We seem swamped by too many humans who cannot see two inches in front of their noses and throw their energy out without engaging their brain. Then we add Putin. I don't know what to do either. A friend who is a long time activist also feels hopeless. It's seems so grim.
I get that David. But nothing changes without activism. The pain and inconvenience of failing to keep warming <1.5 degrees C will make the alternative seem minor.
Thanks Sonya. I don't have a problem with the civil disobedience on passenger rail. I'm a fan of the urban activism we're seeing, including the likes of pop-up cycleways, blocking car parks etc. But my main aim now is to report the heck out of things and ask as many embarrassing questions as possible. I welcome your help looking for the best questions.
I still think the RBNZ's 20% peak-to-trough fall is about right. We're about half way there nationally and almost there in Auckland and Wellington, which are down 15-20% already, depending on the suburbs. It depends on how high the banks push fixed mortgage rates. The 'specials' will probably go over 6% and that is going to stress that forecast. If actual special rates get to 7% then all best are off. My view though is that they won't go much over 6% for long. Rates should be falling by later next year.
Don’t you think you’ve over egged the pudding re Nats v Cons and are focusing on the wrong lessons? Isn’t the lesson to learn that unless you’re the United States running deficits and borrowing money for day to day spending whilst promising deep tax cuts is fantasy stuff. Nats haven’t come close to that.
Willis has been clear no borrowing for day to day spending, only big beautiful motorways.
Act have provided a fully costed budget that would have returned to surplus next year on their forecasts.
Whether Grant Robertson/Nicola or David are finance minister they will be racing back towards a surplus asap.
Thanks Julian. It's worth having a look at the size of their tax cuts. Once they get in, the collection will be closer to to $5b than $1b. That will require major spending cuts. I think it's irresponsible and a cheap shot for National to propose tax cuts without an offsetting strategy for budget balancing. It's also being done without any thought to the distributional effects, which is something Key and English spent a lot of time doing.
How is Luxon's initial analysis without a supporting data of the NZ Govt's situation different from this quotation today in The NZ Inititive:
"Truss’ starting point was not crazy. Her diagnosis was that the UK government had become too big, too expensive, and too complex. To unlock its potential for economic growth, the UK needed a change of direction. Her analysis, however, led her to an incorrect and, frankly, bizarre conclusion. Without any corresponding spending cuts, it consisted of massive tax cuts. The resulting fiscal hole was so large that it triggered a strong reaction in the financial markets. As a result, British government debt yields soared, the pound plummeted, and the Bank of England had to take emergency measures to calm the market." Perhaps his plan has been mitigated by the new suplus the Govt has revealed but at the end of the day its not much diffrent from the neo liberal view expressed in by Trusses supporters: Viz: https://twitter.com/ByDonkeys/status/1582303415576715265?utm_source=substack&utm_medium=email
Its robbing Peter to pay Paul, John. Primary health care DHB pay differentials mean they leave our doctors surgery for the DHB and get a pay increase. That's partly why we can't get an appointment at a GP without waiting 1-2 weeks.
My own health centre (in Auckland) refused to see patients for 2 years during Covid, but relied on telephone consultations. Not a lot of use if you had complex health problems. No wonder EDs were full!
Wayne and Jacinda were all smiles in todays Herald. Apparently they must have agreed not to slander each other a la John Key and Len Brown. For example it is pretty obvious that Wayne must have instructed his puppeter Mathew Hooten to go easy on Jacinda in his Weekley opinion piece!
Is this a model to help shield recent FHB/owner occupiers from pain of the (necessary; desirable) correction in NZ housing prices - whilst limiting banking super-profits and/or property investors' leverage?
Thanks Gwani. That's aimed mostly at established home owners and would involve the sort of price controls that wouldn't be good in the long run. There are other ways to skin this cat. Some sort of windfall tax would be good.
Sorry for the delay in starting. I'm driving with Lynn to the central Hawkes Bay for the long weekend and have now found some good broadband and some lunch to sit down with an answer these questions. I'll be doing the hoon from Otane this afternoon.
Bus? Presumably, he should be on the train that doesn't yet exist. Just a reminder - it's the last day for submissions on Parliament's train inquiry. https://www.parliament.nz/en/pb/sc/make-a-submission/document/53SCTI_SCF_INQ_125787/inquiry-into-the-future-of-inter-regional-passenger-rail
Too late. submissions closed Midday today.
*** EDIT I was wrong
The closing date for submissions is 11.59pm, Friday, 21 October 2022
***
I was about to put in my submission this morning but it was gazumped by this mornings announcement - single nationwide public transport payment system. If they can integrate it into Google Maps, it will be a success.
"The Government has announced a new payment system for public transport across Aotearoa, increasing options for paying for a trip."
https://www.1news.co.nz/2022/10/21/new-system-to-let-kiwis-pay-for-train-bus-via-phone-credit-card/
UPDATE: SUBMISSIONS CLOSE AT MIDNIGHT! Oh, gosh. Right, sorry for the misinfo. I'm glad I did my minimalist submission last night while on the go - ended up voice transcribing it using my phone. The single payment system is exciting - Julie Fairly started nice thread on twitter collecting photos of people's collections of bus/transit cards.
Thanks David. Here's more detail on that. https://www.beehive.govt.nz/release/one-stop-ticketing-solution-public-transport
Not quite too late I think! It closes at midnight (11:59pm) today - so you can still submit for the rest of the day :)
Oh - much better, thanks!
If anyone is wanting to do a submission today, here's a compilation of all the resources we've found for getting it written! https://docs.google.com/document/d/1XeJiUPkopkeHBlK-bVH-WoCTOC3RtzPmgiSC-Mdv1Ts/edit?usp=sharing
Thanks Troy!
Thanks Peter. :) Driving a hybrid through Wairarapa to Hawkes Bay. It is an issue though. Taking a really hard look at how to cut back on emissions, especially flying. Interesting idea on the behind-the-scenes work. You'd hope it was all public and goes through the select committee processes.
No reply needed - but I'm keen to hear from a China watcher today about the party congress and any early smoke signals from the CCP, especially to do with their likely geopolitical approach over the next five years. How worried should we be about their intentions towards Taiwan?
I expect others will be asking about Wayne Brown and what his likely impact may be. Are there more moderate voices on the new Auckland Council to restrain him?
Agree - there is so little coming out about the economic results (e.g. GDP doubled in 10 years) and economic changes talked about. From what I read it's full noise ahead until 2035 focusing o economic progress then a pivot towards a beautiful China.
China has a population problem. https://www.foreignaffairs.com/articles/china/2022-05-03/chinas-doomed-fight-against-demographic-decline
Good point Anne. We'll try to get to the Congress. Sunday is the big reveal for the new leadership group under Xi. I see there's talk of a big cleanout.
Interesting item yesterday (It's a profit-price spiral, rather than a wage-price spiral) and I also read this article from Bill Mitchell - Banks gouging super profits, yield curve inversion – nothing good is out there (http://bilbo.economicoutlook.net/blog/?p=50630). I'd be interested to hear Steve Jurkovich respond (also listened to your interview with him). Love your work! Jeremy
an excellent link Jeremy. most of what is stated about US banks is equally applicable to the oz banks operating in NZ.
Thanks Jeremy. Bill doing good work. Kiwibank's profits quite a bit lower than the big four.
What an interesting few weeks it's been!
Bernard, with the latest inflation figures and wholesale interest rate predictions from our banks, and continued or escalating uncertainty abroad, do you still reckon now is the time for 1st time buyers to go all-in on their first mortgage?
One advantage of buying asap would be locking in an interest rate for a couple of years before they increase again.
True but what if they start dropping as soon as some think they will?
My personal view is interest rates are peaking and will be falling by this time next year because by then the current deflationary pressures in global supply chains will be flowing through and the likely recessions in Europe and China will be dragging down rates.
Thanks Michael. Quick caveat: this is not financial advice for anyone in particular. All I'd say to anyone anywhere remotely close to buying a home to live in and build a family life is they should buy as soon as possible if they're ready to nest. Home ownership always better for security and affordability. Sadly, it has also been much better in an investment sense, but that's not my focus. All about security, quality and affordability.
I so totally agree Bernard. Can be a struggle but worth it.
Are bankers loosing control of their fiat currencies? 10% inflation in the UK - Yikes.
PCE's final report landed in Simon Upton's 5 year effort to understand what over $2B for environmental protection gets spent on every year, and whether there's accountability. Will he get traction on accountability? How?
Here one view https://www.stuff.co.nz/opinion/130232924/josie-pagani-gibberish-words-in-the-public-sector-cover-up-lack-of-accountability
Thanks - I hadn't seen that. I don't think Pagani's suggestion is realistic or really reflects Upton's report (which argues that Pagani's suggestion is useless unless enabled by both better tracking of funding to outputs and outcomes, which probably needs legislation). There's probably less there than I said on 8 minutes on Afternoons, but I'm genuinely interested in what Bernard and folks coming from a long-term political economy perspective think.
As a data point/anecdote, Taumata Arowai are consulting on environmental performance monitoring to set targets and standards for the three waters. IMHO it doesn't measure up as a means to ensuring better reporting or decision making
Multilateral development banks have been using sophisticated and effective design/monitoring frameworks for decades - consulting, setting, pursuing, monitoring, evaluating and reporting on a range of socio-economic and environmental investment outputs, outcomes and impacts as they go. Complete with SMART objectives, KPIs and objectively verifiable indicators.
Systems deliver what they are designed to do. If we don’t have useful data and performance accountability in environmental outcomes then that tells you about the focus of our government and organisations.
Thanks. I've interviewed Simon Upton on this and hope to put it up later today.
Hi Bernard
Hope you have a nice long weekend, and something nice planned.
My question is one you might not feel comfortable to answer, and I completely understand if you feel reluctant to answer this fully. What are your thoughts on the media's treatment of Christopher Luxon and his policies? Interviews seem to ask briefly about how he will pay for tax-cuts while not reducing spend. We normally get some generic talking points from Luxon and then the interviewers move on - same as well for his 'five-point-plan' for reducing business costs. No one seems to ask if that means- is sick leave is going to get reduced back to five days? Is a public holiday on the way out?
I feel like there is not enough weight on Luxon - he can criticise the government, provide some generic talking points, and the interview moves on. Thank goodness for Kim Hill, she is incredible at really pushing on his talking points and lack of detail.
He kept repeating the same old tape recording when cornered by Suzie on Morning report RNZ. Kim as well. He's going to be "trussed" up like Mussolini over trickle down economics.
Thanks Rory. I've repeatedly requested an interview and tried to nail down some of the answers. National are running a 'low target' strategy and had better come up with some answers on the other side of the ledger soon enough for scrutiny. Luxon told Claire Trevett this week the detail wouldn't come until after the PREFU, just a month before the election. Meanwhile, I'll build up a bank of questions and keep prodding. I'd welcome any suggestions you have. Good point on public holidays and sick leave.
Despite your stated primary foci being Child Poverty, Housing and Climate Change, you seem to make a number of comments which disparage the Green Party and others that appear to support The Opportunities Party. This seems incongruous. Do you think it reasonable to ask that you openly declare a political preference if you actually have one?
Thanks Dara. I don't have a political preference at the moment because the election platforms are not complete yet. I do have a view though (until the Greens change their stance) that a vote for Green is actually just a vote for Labour policies, regardless of Green policies, because the Greens have pledged never to go with National, which means Labour doesn't have to give any concessions. The situation is different if the Greens have more votes than Labour....
As a Green Party member / donor / volunteer, I don’t see TOP and Greens as rivals, and will be volunteering for Raf in Ilam. I think the Teal movement in Australia shows us that there is space for a less-left environmental party
Is there anything the NZ Labour Government could do relatively quickly to head off any inflationary wage/price cycle in NZ?
For example reducing GST back to 10% for even temporarily before Christmas?
Thanks David. That would do the trick and be clearly better for those on lower incomes who spend (rather than save) their incomes. The other option is the Government paying rates and other consenting fees for councils and cutting its own fees temporarily. I'm not such a fan of reducing the fuel levies for climate reasons. I love the free public transport idea.
With NZ stuck in a profit-price spiral rather than a wage-price one are interest rate hikes going to work? What else is in the tool box that would cause less pain to the average Kiwi? Is it time for a windfall profit tax? Corporations and banks seem to be creaming it. Or perhaps demand return of Covid wage subsidies by firms that didn't end up needing it and were back in profit by the end of the fin year?
Hi Sonya
I would introduce a corporate financialisation levy. If a company has borrowed money AND pays a dividend then it is subject to a levy of, say, 5% over and above the standard corporate tax rate.
These companies are in effect borrowing money to pay a dividend rather, than using that dividend money to repay debt.
Yep. I'm also not a fan of the borrowing for share buy backs tactic.
Thanks Sonya. Good question. The GST cut, council rates, consenting fees and government fees cut would be a good move. I think a windfall profit tax for those that took the wage subsidies would make sense to claw back the $20b.
A chance we see The Return of the BoJo?
Yep. God help us all.
He still has ethics and privileges investigations hanging over him. So not likely and they’re screening down to two candidates with 100 MPs backing to vote on apparently. No one will make much difference if Government can’t secure its authority over the Central Bank ever though really. Most politicians and our democracies are hogtied by them. I can’t see Keir Starmer taking them on AT ALL and Labour have no policies (much like here) anymore than Conservatives or National do here. Conservatives seem to have abandoned their mandate and policy from 2019 election and are all at sea as a consequence so it will be interesting to see if they can get back on track with that because they don’t have the social license to do anything but that. As usual they go to far without democratic consent or mandate. That was dumb.
No real reason that UK Labour would have published any extensive plans at this stage. Take a look at their recent conference proceedings though for clear policy signals and some quite shrewd thinking. Starmer has done a reasonable job of holding the Tory Scum to account and advocating for progressive policies.
Finally, Starmer and the Labour front bench have more expertise and integrity in their little toes than the entire Conservative cabinet (aka Revolving Door)
I fear that much like here we assume Labour are for women and the workers and are disappointed. So grown up policies and mandates are so important because of the power they can misuse and wield without being checked is enormous and both sides have done things against their own policies and mandates via election. Both here and there.
Presumably the 2741 full time equivalent extra nurses employed by DHB hospitals over the past 5 years are among the extra bureaucrats that Luxon doesn't like! On a more serious note, why doesn't Little (or in fact journalists) publicise the fact that DHB nurses have increased by 14% over that time. One more example of the government letting things happen and hoping that they'll get the kudos for is despite no one actually knowing.
5 years is a long time. How many are leaving in the last six months?
I don't have that info Steve. I asked and got the Health Dept figures for the last 5 years, as the nursing unions actively (as they should) give the impression that we have lower nurse numbers. In fact public hospitals have employed increasing numbers every year.
This might help. https://www.publicservice.govt.nz/research-and-data/workforce-data-public-sector-composition/workforce-data-workforce-size/
There's some fresh data here that came out yesterday. Lots of different ways to slice and dice it. https://www.publicservice.govt.nz/research-and-data/workforce-data-public-sector-composition/workforce-data-workforce-size/
Has not Auckland transport & all NZ Governments always prioritised road transport over everything else?
Compare repair of the Rail network upgrade to the replacement of the Newmarket Viaduct.
"The entire project has been carried out while keeping the motorway open at all times, and while mitigating noise, dust and any other inconvenience to the city’s commuters and businesses."
https://www.worldhighways.com/feature/more-newmarket-viaduct-replacement
Indeed. But the rhetoric in recent years was slightly different, and many hope the actions might match the rhetoric. This sort of 'guidance' doesn't help.
Did you catch https://www.youtube.com/watch?v=m4MahOuEdVw ?
How Can We Fix Inflation? With Economist Steve Hanke | The Problem With Jon Stewart Podcast
So are we just doomed?
Thanks Michael. I'll have a look to see if I can include it as a pick for the weekend.
Any comments & comparisons between the recent performance and attitudes of the UK Conservative party and NZ National Party?
https://pbs.twimg.com/media/FfAk0INVsAAMzDe?format=png
Ha! That is such a good cartoon from Rod. He is a genius and a fantastic artist to boot.
Thank you for this opportunity Bernard.
Do you know what the current plan is for removing or extending the governments petrol price subsidy?
It's up in the air. Michael Wood said three weeks ago it was unlikely to be extended when it comes up for renewal at the end of January, but then a week later said it was was likely to be renewed. It all depends on the polls, the NZ dollar and the oil price. If oil goes up over US$100 and NZ$ stays down around 55 USc then I think it's likely to stay, especially if Labour remains in the polling dumps.
I know that publishing on Substack has been working very well for you, but is there anything Substack could do better or add to make the platform better for you?
https://on.substack.com/p/office-hours-56/comment/9869501
Fantastic suggestions David. I'm constantly amazed by the ease of publishing and the new tweaks and tools that Substack come up with. You and they are way ahead of me. I'm doing my best to keep up with all the new and briliant stuff.
Hi Bernard, how is it looking for team transitory? China doubling down on Zero Covid makes it unlikely they'll be producing stuff anytime soon? Are we going to be able to escape a recession?
Has there ever been a time in history where interest rates have been raised 400 basis points in 15 months
and not caused a hard landing?
Great point. Not since Volcker unleashed hell in 1979. Good chart here. https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
Thanks Ben. You're the first to ask about my membership of Team Transitory after the nasty CPI figures on Tuesday. I thought someone would have jumped earlier. I'm still in Team Transitory. The early signs that producer price inputs are falling are there, along with falling rents in the US and here. It might happen slower than we'd hope, but it will happen, especially now it looks like the Fed is going to run the economy into a brick wall to show how macho it is on inflation. If it puts the Fed Funds rate over 5% then a recession is likely.
Your thoughts on the civil disobedience actions this week of Restore Passenger Rail? Like me they must have had a gutsful of submissions, petitions and protesting outside Parliament to little effect. I'm more suburban mum than radical activist but emissions continue ever upwards, everyone is keen on climate action as long as it doesn't affect them and time frankly is running out to ensure a liveable planet for our kids. Do you have any suggestions other than throwing a couple of packets of super glue in my trolley and sticking myself to something inconvenient?
As a suburban mum, if you were taking your son or daughter to an important appointment and Restore Passenger Rail were blocking the road how would you feel?
Honestly David, short of missing a life threatening organ donation that would save my child from certain death, I would be ok with sitting in traffic for a couple of hours. The planet is in serious peril and I'm genuinely not sure what else is left in the toolbox for the average person. I have done literally everything I can think of, I pivoted to work on climate policy hoping to make a difference (but public sector inertia just ground me down), I stopped flying, I mostly buy secondhand, I replaced gas in our house with electricity, I ride a bike, ration my trips in our EV, volunteer with our school road patrol to encourage parents to let their kids walk to school, we eat vegetarian, I write to politicians, have appeared before select committee and joined the School Strikes for Climate. Every single day I think about the dreadful future awaiting us all and feel completely powerless to stop it. What is it going to take to bend emissions downward? Is being stuck in your car on the way to somewhere important the worst possible fate?
I've not done a fraction of what you have done/are doing Sonya, but i too feel defeated. We seem swamped by too many humans who cannot see two inches in front of their noses and throw their energy out without engaging their brain. Then we add Putin. I don't know what to do either. A friend who is a long time activist also feels hopeless. It's seems so grim.
I get that David. But nothing changes without activism. The pain and inconvenience of failing to keep warming <1.5 degrees C will make the alternative seem minor.
Important David! Important! What is more important than a livable planet for our kids??
That is what is keeping us mired in the mud is people's views on what is important.
Thanks Sonya. I don't have a problem with the civil disobedience on passenger rail. I'm a fan of the urban activism we're seeing, including the likes of pop-up cycleways, blocking car parks etc. But my main aim now is to report the heck out of things and ask as many embarrassing questions as possible. I welcome your help looking for the best questions.
Are house prices going to go down? Or are we at the bottom???
I still think the RBNZ's 20% peak-to-trough fall is about right. We're about half way there nationally and almost there in Auckland and Wellington, which are down 15-20% already, depending on the suburbs. It depends on how high the banks push fixed mortgage rates. The 'specials' will probably go over 6% and that is going to stress that forecast. If actual special rates get to 7% then all best are off. My view though is that they won't go much over 6% for long. Rates should be falling by later next year.
Don’t you think you’ve over egged the pudding re Nats v Cons and are focusing on the wrong lessons? Isn’t the lesson to learn that unless you’re the United States running deficits and borrowing money for day to day spending whilst promising deep tax cuts is fantasy stuff. Nats haven’t come close to that.
Willis has been clear no borrowing for day to day spending, only big beautiful motorways.
Act have provided a fully costed budget that would have returned to surplus next year on their forecasts.
Whether Grant Robertson/Nicola or David are finance minister they will be racing back towards a surplus asap.
Thanks Julian. It's worth having a look at the size of their tax cuts. Once they get in, the collection will be closer to to $5b than $1b. That will require major spending cuts. I think it's irresponsible and a cheap shot for National to propose tax cuts without an offsetting strategy for budget balancing. It's also being done without any thought to the distributional effects, which is something Key and English spent a lot of time doing.
How is Luxon's initial analysis without a supporting data of the NZ Govt's situation different from this quotation today in The NZ Inititive:
"Truss’ starting point was not crazy. Her diagnosis was that the UK government had become too big, too expensive, and too complex. To unlock its potential for economic growth, the UK needed a change of direction. Her analysis, however, led her to an incorrect and, frankly, bizarre conclusion. Without any corresponding spending cuts, it consisted of massive tax cuts. The resulting fiscal hole was so large that it triggered a strong reaction in the financial markets. As a result, British government debt yields soared, the pound plummeted, and the Bank of England had to take emergency measures to calm the market." Perhaps his plan has been mitigated by the new suplus the Govt has revealed but at the end of the day its not much diffrent from the neo liberal view expressed in by Trusses supporters: Viz: https://twitter.com/ByDonkeys/status/1582303415576715265?utm_source=substack&utm_medium=email
https://pbs.twimg.com/media/FfVUAENWYAE4vOQ?format=png
Ha!
Yep. It's fairly unreconstructed starve the beast logic.
Its robbing Peter to pay Paul, John. Primary health care DHB pay differentials mean they leave our doctors surgery for the DHB and get a pay increase. That's partly why we can't get an appointment at a GP without waiting 1-2 weeks.
My own health centre (in Auckland) refused to see patients for 2 years during Covid, but relied on telephone consultations. Not a lot of use if you had complex health problems. No wonder EDs were full!
Thanks Steve. So what's stopping primary care from raising wages? Govt grants?
Wayne and Jacinda were all smiles in todays Herald. Apparently they must have agreed not to slander each other a la John Key and Len Brown. For example it is pretty obvious that Wayne must have instructed his puppeter Mathew Hooten to go easy on Jacinda in his Weekley opinion piece!
We'll see how long that lasts.
Is this a model to help shield recent FHB/owner occupiers from pain of the (necessary; desirable) correction in NZ housing prices - whilst limiting banking super-profits and/or property investors' leverage?
https://www.reuters.com/world/europe/hungary-government-expands-scheme-that-caps-mortgage-rates-govt-decree-2022-10-15/
Thanks Gwani. That's aimed mostly at established home owners and would involve the sort of price controls that wouldn't be good in the long run. There are other ways to skin this cat. Some sort of windfall tax would be good.
Sorry for the delay in starting. I'm driving with Lynn to the central Hawkes Bay for the long weekend and have now found some good broadband and some lunch to sit down with an answer these questions. I'll be doing the hoon from Otane this afternoon.
In 2022 is it politically damaging for our PM to do a two day whirlwind trip to Antartica for a photo op in light of debate about emissions?
We'll soon find out. I doubt most voters would care that much, in part because they do plenty of their own flying.
Many thanks to you all. See you on the Hoon.