Paying subscribers asked Bernard Hickey about the week’s news, including Auckland’s flood fallout; Hipkins’ ‘bonfire of the policies’; Labour catching National in more polls etc. Here's the discussion
What would happen if Treasury's budget bids were evaluated on the same basis as Treasury applied to the prescription funding? What value are they delivering in the next 12 months? I bet we could make some real savings...
Ha! Nice one. ‘Physician, heal thyself!’ You could argue that Treasury’s 20 years of advice to reduce investment and public spending has collectively reduced NZ’s productivity and true net worth by trillions of dollars.
I think the real question is, what if Treasury forecasts were subject to honest evaluation as to their accuracy and robustness, tending as they do to being generous to the incumbent government (of any brand)
“You’re annual salary review is based on the accuracy of the forecasts you have provided in the past. We will be putting a lien on your future earnings...”
How likely do you think it that Christchurch, Wellington and Auckland city councils will succeed in their opposition to the government's housing intensification programme?
Great question Paul. Last year I would have said not very likely at all because National and Labour seemed resolute of their ‘Townhouse Nation’ accord. But that was before the local election results, and also before the big backlash within National via conferences etc against Nicola Willis’ backing of it. My reading of Labour’s softly-softly approach is that it is preparing to ditch it. I think the Councils realise this and are pushing against an open door.
Thanks Glen. You’re right. The elephant in the room that needs slaying is the lack of taxation of capital gains, particularly on residential land, and very particularly on owner-occupied residential land. I don’t see much real prospect of either of the main parties grasping this nettle again. It wil have to come from from either Te Paati Maori or TOP. The Greens are irrelevant.
Totally appreciate all the work you do Bernard - great analysis always. Am struggling to know why you constantly call the Greens 'irrelevant'-just because they won't go with National? They are the only party that consistently calls for real climate change policy, transport policy for all and social policy that recognises the struggle for so many. Jan Logie's work to bring birth injuries in under ACC is life changing for many women and Marama Davidson's work on family violence is the most that has ever been done in what it our greatest shame. You have had Julie-Anne Gentner and Chloe on your hoon and they demonstrated a deep understanding of the issues. Why do you keep bagging them?
I think it's a two step process. Because the Greens, for all their good intentions, have said they'd never work with National, it means Labour *know* they will essentially agree to any treatment Labour decide to give (or not give) them. It means that if the Greens get a coalition agreement with Labour, they still just get walked over, on the big things, like land tax for example. Thus, Bernard calls them irrelevant because they *will not* be able to affect any substantial change on our NZ electorate, while they rule out working with anyone but Labour.
Is there a possibility that the Govt could direct Air NZ to stop price gouging to help reign in inflation? Or would that be tantamount to price fixing?
Isn't one of the dangers of Countdown and Pharmacy Warehouse absorbing the $5.00 prescription fee that we might end up with another duopoly. I can't see any altruism in waving the fee, i see it more as a strategy for market domination. Great writing though! It also shows how easy it is to fix things if you lose a bit of rigid thinking re. fiscal responsibility.
No question Bernard - just wanted to jump on and say thanks for your mahi this past week or so; you've covered some important stories with the kind of insight - and attitude - that I think we need.
The NIMBY response feels like an example of never waste a good crisis to push one’s own agenda. Do you feel the other side of the debate i.e. climate change mitigation and adaptation, are doing enough to leverage this to see effective change?
Thanks Alex. There has been some effective arguments in favour of densified developments that were well planned and coped better, such as Stonefields or Hobsonville. But the YIMBYs haven’t been as aggressive in fighting the NIMBYs as they have been overseas. I’d love to see a lot more energy and innovation in that fight.
I know it’s early days, but it seems like TOP is the only party offering actually progressive and abductive (inference from the best explanation etc) policy. Is it still strategically too dangerous to give them the party vote if avoiding a national-act coalition is your priority? Even if they only just break the 5% threshold, surely we want at least someone forcing discussion and analysis of these policy options into parliament and public discourse?
Thanks Chris. It depends a lot on whether Raf Manji can win Ilam, and whether either National or Labour choose to ‘gift’ it to him. I‘ll try to keep up with the latest on that.
You wrote an excellent piece on disinformation being a threat to national security, I see this week in Rangiora Christopher Luxon public meeting sidetracked by anti-vaxx and other conspiracists. It will surely intensify.
How do you think this might shape the campaign this year? Will there be some places where leaders won't / can't go to?
Thanks Ben. You’re right. The anti-vaxxers are equal opportunity disrupters. It has already limited a lot of the freely available opportunities for face-to-face contact.
There is a second-tier financier whose offices are near me. They've been around for a while and don't have that high a profile; but having walked past their offices many times I recently got curious enough about them to take a look at their website. In light of your position on capital gains on property as the major source of wealth in NZ it was interesting to note that this second-tier financier's business model looked to be based on lending to people who banks won't lend to - or won't lend any more to - on the basis that the financier is so confident the capital value of the property it lends against will increase so that even if the client defaults and the property passes into the financier's hands, it will recoup all it has lent plus a bit more from selling the property in a mortgagee sale for a large capital gain. It has lent to several farmers on this basis who wanted to sub-divide their properties. Any thoughts on this?
Yep. The non-banks aren’t restrained by the LVR rules and can offer deals to those refused or ditched by the banks. They seem to be doing better, but it’s still small scale relative to the banks. There was a lot more activity pre-2008, from both the finance companies and the Australian entrants. A lot of them either went back home to Australia or collapsed. There’s not enough competition to really win a lot of market share.
Bernard, how widespread quiet, if not overt, acceptance and support would there be amongst the people I imagine you discuss your appraisals and great ideas with, be they other economics experts, journalists or politicians? What political trigger needs to be pulled to get some progress in NZ?
I’ve talked about them with MPs and Mayors and councillors. There is a lot of private agreement and encouragement. They cheer me on from a distance and hope I and others can ‘normalise’ these discussions. I see part of my role as widening the ‘Overton Window’ of publicly acceptable topics of debate. For so long, taxing land or wealth was seen as so impossible as to be not worth talking about. That might change. It will really need TOP or TPM to have a realistic chance of levering this sort of policy into a Government-forming negotiation. I think the unrealised irrelevance of the Greens is partly responsible for the lack of energy and momentum. A lot of those favouring a capital gains or wealth tax think they’re making a real and effective contribution by voting Green. But the Greens have no leverage so that effort is wasted.
The Greens will never go with National, so Labour can afford to ignore them. A pointless party. Just like ACT, which also says it will never go with Labour, so National can afford to ignore them too.
You say this often Bernard, but to me it misses the extent to which the Greens (& ACT) can bleed off their centrist partners' voters. If too many Labour voters go Green, for any of the many reasons they might, Labour looks weaker, which effectively means it becomes weaker. Labour can't ignore them but also can't risk giving them too much. On the flip side of this dynamic, the Greens can advance policy Labour won't risk floating, and Labour can parasitise it if it shows signs of being popular. It's soft power at best, but it's a long way from irrelevance.
I don't think National ignores ACT. I think it actually uses ACT as a cover for their most outrageous policies that they are too scared to claim as National's policie as they know that might cost them some of the more reasonable National voters.
The Greens will be relevant and able to push their policies if Labour will have to form a coalition with them. But that assumes that NZ First will not be the king maker & those who will be will be on the same page of the Greens.
The Roy Morgan poll came out on Monday and no one in the media commented on it. Is it normal for their polls to be ignored? I can understand 1 News/Newshub as they have their own polls. Media were covering Waitangi Day where NZ1st were prominent. But no one mentioned them getting 5% and having balance of power in the poll.
Great point Jem. We all should have. But a lot of people have wrongly written off Roy Morgan because they make the mistake of reading the commentary written from Australia, which is often laughably off the mark. But the numbers are just as useful as the rest.
It’s almost universally accepted in the public discourse that we should take Moral Responsibility for our actions. But there seems to be little political capital out there or interest in the public discourse demanding we take Epistemic Responsibility (for justifying the beliefs that inform our actions), which seems to be a much more important concept, given it precedes Moral Responsibility. How do we fix this? The idea that we are ‘free’ to think what we want seems dangerous when actions like ‘public speech’ is often not considered to be an action at all. Where is the balance between our positive-right to do something (or say something) vs our negative-right to be free from the consequences of other peoples positive-rights? It all seems very messed up and solipsistic out there. How do we convince people they should also take responsibility for the consequences of what they believe, not just the actions those beliefs inform?
I fail to understand why the Labour govt is afraid of offending either Federated farmers or the farming community in general. True farming does provide much of this nation's income, but they might
have voted for Jacinda in 2020 but they won't again. A disinterested observer will think that Labour is still trying to get the farmer's vote over matters such as RMA reforms. I believe that if a political party is sure they're on the right track, just go and do it, particularly if those potentially offended won't vote their way anyway.
Farmers themselves aren’t very relevant from a political point of view because there’s only around 20,000 or so and they’re mostly rusted-on National voters anyway. The bigger issue for Labour is the noise it generates in provincial towns and cities, where there are plenty of median voters.
What would happen if Treasury's budget bids were evaluated on the same basis as Treasury applied to the prescription funding? What value are they delivering in the next 12 months? I bet we could make some real savings...
Ha! Nice one. ‘Physician, heal thyself!’ You could argue that Treasury’s 20 years of advice to reduce investment and public spending has collectively reduced NZ’s productivity and true net worth by trillions of dollars.
I think the real question is, what if Treasury forecasts were subject to honest evaluation as to their accuracy and robustness, tending as they do to being generous to the incumbent government (of any brand)
“You’re annual salary review is based on the accuracy of the forecasts you have provided in the past. We will be putting a lien on your future earnings...”
Welcome to the private sector 'we overpaid you based on forecast you didn't hit, so we are clawing it back'
How likely do you think it that Christchurch, Wellington and Auckland city councils will succeed in their opposition to the government's housing intensification programme?
Great question Paul. Last year I would have said not very likely at all because National and Labour seemed resolute of their ‘Townhouse Nation’ accord. But that was before the local election results, and also before the big backlash within National via conferences etc against Nicola Willis’ backing of it. My reading of Labour’s softly-softly approach is that it is preparing to ditch it. I think the Councils realise this and are pushing against an open door.
Where do you think we really are with a significant shift in tax policy? It’s clear we are stuffed till someone electable shows some courage on this.
Thanks Glen. You’re right. The elephant in the room that needs slaying is the lack of taxation of capital gains, particularly on residential land, and very particularly on owner-occupied residential land. I don’t see much real prospect of either of the main parties grasping this nettle again. It wil have to come from from either Te Paati Maori or TOP. The Greens are irrelevant.
Totally appreciate all the work you do Bernard - great analysis always. Am struggling to know why you constantly call the Greens 'irrelevant'-just because they won't go with National? They are the only party that consistently calls for real climate change policy, transport policy for all and social policy that recognises the struggle for so many. Jan Logie's work to bring birth injuries in under ACC is life changing for many women and Marama Davidson's work on family violence is the most that has ever been done in what it our greatest shame. You have had Julie-Anne Gentner and Chloe on your hoon and they demonstrated a deep understanding of the issues. Why do you keep bagging them?
I think it's a two step process. Because the Greens, for all their good intentions, have said they'd never work with National, it means Labour *know* they will essentially agree to any treatment Labour decide to give (or not give) them. It means that if the Greens get a coalition agreement with Labour, they still just get walked over, on the big things, like land tax for example. Thus, Bernard calls them irrelevant because they *will not* be able to affect any substantial change on our NZ electorate, while they rule out working with anyone but Labour.
Is there a possibility that the Govt could direct Air NZ to stop price gouging to help reign in inflation? Or would that be tantamount to price fixing?
Excellent question. The Government should. yes it would be price fixing, but so would AIR NZ’s current margin expansion exercise.
Isn't one of the dangers of Countdown and Pharmacy Warehouse absorbing the $5.00 prescription fee that we might end up with another duopoly. I can't see any altruism in waving the fee, i see it more as a strategy for market domination. Great writing though! It also shows how easy it is to fix things if you lose a bit of rigid thinking re. fiscal responsibility.
You are right. Best solution is just to remove the fee. Cheers
No question Bernard - just wanted to jump on and say thanks for your mahi this past week or so; you've covered some important stories with the kind of insight - and attitude - that I think we need.
Tim. Many thanks. Much appreciate. An interesting few days.
The NIMBY response feels like an example of never waste a good crisis to push one’s own agenda. Do you feel the other side of the debate i.e. climate change mitigation and adaptation, are doing enough to leverage this to see effective change?
Thanks Alex. There has been some effective arguments in favour of densified developments that were well planned and coped better, such as Stonefields or Hobsonville. But the YIMBYs haven’t been as aggressive in fighting the NIMBYs as they have been overseas. I’d love to see a lot more energy and innovation in that fight.
I know it’s early days, but it seems like TOP is the only party offering actually progressive and abductive (inference from the best explanation etc) policy. Is it still strategically too dangerous to give them the party vote if avoiding a national-act coalition is your priority? Even if they only just break the 5% threshold, surely we want at least someone forcing discussion and analysis of these policy options into parliament and public discourse?
Thanks Chris. It depends a lot on whether Raf Manji can win Ilam, and whether either National or Labour choose to ‘gift’ it to him. I‘ll try to keep up with the latest on that.
I'm backing Raf to take Ilam and throwing a tick at TOP, so over the purple reign
You wrote an excellent piece on disinformation being a threat to national security, I see this week in Rangiora Christopher Luxon public meeting sidetracked by anti-vaxx and other conspiracists. It will surely intensify.
How do you think this might shape the campaign this year? Will there be some places where leaders won't / can't go to?
Thanks! Ben
Thanks Ben. You’re right. The anti-vaxxers are equal opportunity disrupters. It has already limited a lot of the freely available opportunities for face-to-face contact.
There is a second-tier financier whose offices are near me. They've been around for a while and don't have that high a profile; but having walked past their offices many times I recently got curious enough about them to take a look at their website. In light of your position on capital gains on property as the major source of wealth in NZ it was interesting to note that this second-tier financier's business model looked to be based on lending to people who banks won't lend to - or won't lend any more to - on the basis that the financier is so confident the capital value of the property it lends against will increase so that even if the client defaults and the property passes into the financier's hands, it will recoup all it has lent plus a bit more from selling the property in a mortgagee sale for a large capital gain. It has lent to several farmers on this basis who wanted to sub-divide their properties. Any thoughts on this?
Yep. The non-banks aren’t restrained by the LVR rules and can offer deals to those refused or ditched by the banks. They seem to be doing better, but it’s still small scale relative to the banks. There was a lot more activity pre-2008, from both the finance companies and the Australian entrants. A lot of them either went back home to Australia or collapsed. There’s not enough competition to really win a lot of market share.
Bernard, how widespread quiet, if not overt, acceptance and support would there be amongst the people I imagine you discuss your appraisals and great ideas with, be they other economics experts, journalists or politicians? What political trigger needs to be pulled to get some progress in NZ?
I’ve talked about them with MPs and Mayors and councillors. There is a lot of private agreement and encouragement. They cheer me on from a distance and hope I and others can ‘normalise’ these discussions. I see part of my role as widening the ‘Overton Window’ of publicly acceptable topics of debate. For so long, taxing land or wealth was seen as so impossible as to be not worth talking about. That might change. It will really need TOP or TPM to have a realistic chance of levering this sort of policy into a Government-forming negotiation. I think the unrealised irrelevance of the Greens is partly responsible for the lack of energy and momentum. A lot of those favouring a capital gains or wealth tax think they’re making a real and effective contribution by voting Green. But the Greens have no leverage so that effort is wasted.
Is this your reply to my question above? I can't see any real justification for your view of irrelevance?
The Greens will never go with National, so Labour can afford to ignore them. A pointless party. Just like ACT, which also says it will never go with Labour, so National can afford to ignore them too.
You say this often Bernard, but to me it misses the extent to which the Greens (& ACT) can bleed off their centrist partners' voters. If too many Labour voters go Green, for any of the many reasons they might, Labour looks weaker, which effectively means it becomes weaker. Labour can't ignore them but also can't risk giving them too much. On the flip side of this dynamic, the Greens can advance policy Labour won't risk floating, and Labour can parasitise it if it shows signs of being popular. It's soft power at best, but it's a long way from irrelevance.
I don't think National ignores ACT. I think it actually uses ACT as a cover for their most outrageous policies that they are too scared to claim as National's policie as they know that might cost them some of the more reasonable National voters.
The Greens will be relevant and able to push their policies if Labour will have to form a coalition with them. But that assumes that NZ First will not be the king maker & those who will be will be on the same page of the Greens.
Interesting perspective here on the background to unitary plan rules in Auckland https://www.linkedin.com/posts/ryan-bradley-34b82629_the-planning-profession-gets-the-blame-for-activity-7029514924565393408-P4UQ?utm_source=share&utm_medium=member_ios
Thanks Jonathan. That’s useful. All a function of the crazy refusal of both councils and the Government to properly fund development.
Thoughts on the governments increased spending on private consulting companies? Bryce Edward's had an interesting piece on it this morning.
Yes. Good piece. https://democracyproject.nz/2023/02/10/bryce-edwards-time-for-a-big-debate-about-govt-use-of-business-consultants/
I’m looking forward to reading ‘The Big Con’ too, which comes out in a couple of months. I’ll try to get an interview with one of the authors. https://www.penguinrandomhouse.com/books/710959/the-big-con-by-mariana-mazzucato-and-rosie-collington/
An interview would be great. Thanks for your work as always Bernard.
The Roy Morgan poll came out on Monday and no one in the media commented on it. Is it normal for their polls to be ignored? I can understand 1 News/Newshub as they have their own polls. Media were covering Waitangi Day where NZ1st were prominent. But no one mentioned them getting 5% and having balance of power in the poll.
Great point Jem. We all should have. But a lot of people have wrongly written off Roy Morgan because they make the mistake of reading the commentary written from Australia, which is often laughably off the mark. But the numbers are just as useful as the rest.
It’s almost universally accepted in the public discourse that we should take Moral Responsibility for our actions. But there seems to be little political capital out there or interest in the public discourse demanding we take Epistemic Responsibility (for justifying the beliefs that inform our actions), which seems to be a much more important concept, given it precedes Moral Responsibility. How do we fix this? The idea that we are ‘free’ to think what we want seems dangerous when actions like ‘public speech’ is often not considered to be an action at all. Where is the balance between our positive-right to do something (or say something) vs our negative-right to be free from the consequences of other peoples positive-rights? It all seems very messed up and solipsistic out there. How do we convince people they should also take responsibility for the consequences of what they believe, not just the actions those beliefs inform?
Hmmm. Thanks Chris. The key issue is the ability to use social media platforms to amplify those ugly views. Here’s the real problem. Section 230. https://www.cnet.com/news/politics/section-230-how-it-shields-facebook-and-why-congress-wants-changes/
I fail to understand why the Labour govt is afraid of offending either Federated farmers or the farming community in general. True farming does provide much of this nation's income, but they might
have voted for Jacinda in 2020 but they won't again. A disinterested observer will think that Labour is still trying to get the farmer's vote over matters such as RMA reforms. I believe that if a political party is sure they're on the right track, just go and do it, particularly if those potentially offended won't vote their way anyway.
Farmers themselves aren’t very relevant from a political point of view because there’s only around 20,000 or so and they’re mostly rusted-on National voters anyway. The bigger issue for Labour is the noise it generates in provincial towns and cities, where there are plenty of median voters.