The six key news items from Aotearoa’s political economy around housing, climate and poverty in the week to Saturday, May 17 were:
Labour committed to the same Government debt and surplus targets as National.
The Greens proposed an alternative budget with $88 billion of new wealth and income taxes to improve publicly-funded incomes, health and housing.
The last major independent electricity retailer was shut and taken over by the most dominant of the big four gentailers that control an uncompetitive market.
Stats NZ reported record-high emigration of young families at a rate of a plane-load a day, including 15 babies and toddlers who will grow up overseas.
Nicola Willis stopped contributing to the NZ Super Fund and said the fund would start helping to pay the $20 billion-and-rising cost of NZ Super by 2028.
Retail spending figures showed the economy remained mired in a consumption recession in April, with real per-capita spending now back down at 2013 levels.
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The six big things in the week to Saturday, May 17
Labour commits to same debt & surplus targets as National
Finance Spokesperson Barbara Edmonds committed Labour to the same Government net debt cap of 50% of GDP and the same aspiration of returning the budget to surplus by 2028/29 as National. In my view, this will severe limit the ability of any future Labour-led government to fix the unmeasured infrastructure, housing, health, transport and emissions deficits that a generation of young families are emigrating to avoid. Tom Pullar-Strecker had the scoop in this morning’s Post-$.
Here’s the key details in Tom’s report (bolding mine):
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.
That fiscal measure includes the deficit at ACC, which stood at $7.2 billion at the end of June, and which Finance Minister Nicola Willis has excluded from the coalition government’s new ‘headline’ deficit measure, which the Government has dubbed “ObegalX”.
“Clearly, the Government has put in ObegalX, because it returns to surplus a year earlier. But we still use Obegal now, so that would be the measure that I would continue to use for us as we put together our fiscal plan,” Edmonds said.
But Edmonds’ statements mean Labour is supporting staying within the same fiscal envelope that the coalition government has as its bottom line, and with a potentially tougher target for bringing the government’s books back into balance, given its approach to accounting for ACC’s deficit.
She labelled its approach “balanced fiscal responsibility”.
Treasury’s advice is that core Crown debt should not exceed more than 50% of GDP in normal economic times, in order to ensure governments could still borrow money and not risk default in the wake of a major crisis, such as a large natural disaster. Treasury Secretary Iain Rennie noted last month that debt was “not too far off” that cap.
Edmonds said Labour had agreed with the 50% cap when last in power and said it would continue to do so “unless Treasury gives us advice otherwise when we come into government”.
“It's based on a number of pieces of advice. We clearly need to make sure we have fiscal headroom for ‘shocks’,” Edmonds said. By Tom Pullar-Strecker in The Post-$
Green version of Budget would redistribute $88b of wealth
Green Co-Leader Chloe Swarbrick proposed an alternative Budget that would impose new wealth taxes and higher corporate and personal income tax rates to raise an extra $88 billion over the next four years to pay for a range of income guarantees, publicly funded dental care and prescriptions, family payment top-ups, state house building and solar panel grants. See more detail in Thursday’s Chorus.
Biggest independent exits uncompetitive electricity market
Z Energy, which is now owned by Australian oil importer, refiner and distributor Ampol, shut Aotearoa’s last major independent electricity retailer, Flick Electric, and sold its 41,000 customers to the biggest gentailer, the 51%-state owned and NZX-listed Meridian Energy, in the latest sign the electricity market is not competitive. Hear more about this in the discussion Peter and I had with Octopus Energy NZ COO Margaret Cooney in The Hoon sent yesterday.
Young working families emigrating at a rate of 191 per day
Stats NZ reported emigration of New Zealand citizens almost doubled to a record-high 70,016 in the last five years to the end of March, including 5,673 babies and toddlers leaving at a rate that would fill an A320 each and every day of the year. See more in Friday’s Chorus.
Willis ends contributions to NZ Super Fund
Finance Minister Nicola Willis announced the Government was diverting its Treasury-modeled contribution to the New Zealand Superannuation Fund (NZSF) for 2025/26 of $61 million to the NZSF’s Elevate venture capital fund and that the NZSF fund would start sending money back to the Government to help pay for NZ Superannuation, now costing over $20 billion a year, three years earlier than previously expected in 2027/28. The new forecasts imply the contributions have ended. There is more analysis in the soliloquy podcast above.
Retail recession sucks retail spending back to 2013 levels
Retail spending with cards fell 0.9% in April from a year ago, meaning retail spending adjusted for inflation and population fell again and is back at the same levels as those reported in 2013. See more in chart of the week below.
The best of the rest this week
My ‘Pick ‘n’ Mix Six’
Politics & health scoop by Phil Pennington for RNZ: Warnings about surgery outsourcing blanked out by minister's office
Health deep-dive by Anusha Bradley for RNZ: Health NZ to outsource thousands of cases to private hospitals
Political donations investigation by Farah Hancock for RNZ: Ministers make decisions on fast-track projects despite donations
Infrastructure & housing deep-dive by Luka Forman for RNZ: Demand increasing for land unaffected by water infrastructure constraints
Infrastructure funding & councils deep-dive by Jonathan Milne for Newsroom: Mayors adamant ratepayers won’t pick up tab for big fast-track projects
Climate & electricity scoop by Marc Daalder for Newsroom: Govt mulled, then scratched, home solar incentive
This is my selection of links to the best scoops, deep-dives, explainers and features published this week elsewhere.
Quote of the week: A four letter word with three dots
“Turns out you can have it all. So long as you’re prepared to be a c... to the women who birth your kids, school your offspring and wipe the arse of your elderly parents while you stand on their shoulders to earn your six-figure, taxpayer-funded pay packet.” Sunday Star Times-$ columnist Andrea Vance, who last night won the Voyager Political Journalist of the year award. The girl-math budget that will cut deep, especially for women.
Number of the week: Butter costs $14.84/kg
Stats NZ reported butter prices increased 65.3% in the year to April, with the average price of a 500 gram pack of butter being $7.42 in April. ANZ has forecast farmers will receive a record-high milk payout of $10/kg milk solids this season and next season.
Chart of the week: A retail recession that just won’t end
Video of the week: The problem with everything
Podcast of the week: I interviewed Chris Hipkins
Cartoon of the week: Going down
Timeline-cleansing nature pic
Ka kite ano
Bernard
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