Dawn chorus: 'Striking a balance' in favour of home owners

TLDR and TLDL: Grant Robertson has revealed he has nudged the operating and capital allowances in the Budget due next Thursday slightly higher, but has again emphasised the need to keep a lid on debt and to ‘strike a balance’ between debt reduction from the mid-2020s, and delivering on the Government’s child poverty, housing and climate change.

I went to Robertson’s speech in Auckland yesterday and was part of the ‘stand-up’ news conference held shortly after. I’ve included our questions and answers in the audio above. I asked why he was prioritising debt reduction from already low levels over reducing child poverty, why he was calling for pay restraint when there were skill shortages and a low inflation problem, and how the Government could use the public sector to achieve its longer term aims with that pay restraint.

In essence, the Government has chosen to keep longer term interest rates slightly lower than they otherwise would be, which will keep mortgages rate low, instead of spending immediately to increase benefits and reduce child poverty immediately.

A headache for the RBNZ too

This fiscal restraint also creates problems for the Reserve Bank. It is running out of Government bonds to buy because the Government is not borrowing as much, which will force the Reserve Bank to look at taking the Official Cash Rate negative so it can lend more directly to banks at low or negative interest rates.

The Government is choosing to keep interest rates low instead of reducing child poverty, knowing that will put extra upward pressure on house prices. This is the perverse outcome of focusing on debt reduction in the interests of emphasising Labour’s ‘responsible’ approach.

The strategy is working though to improve business perceptions and target the median voter, who is likely to be a home owner and small business owner. The gap between business perceptions about the wider economy and own activity has narrowed in recent months to Key-English Government levels of 2016-17.

---

Briefly elsewhere in our political economy

Stuff.co.nz Politics @NZStuffPolitics

Government in damage control over public sector pay freeze ahead of meeting with union

dlvr.itGovernment in damage control over public sector pay freeze ahead of meeting with unionAhead of a meeting with a union threatening to strike, Jacinda Ardern and Grant Robertson have sought to downplay the severity of the freeze.

Stuff.co.nz Politics @NZStuffPolitics

Government announces more MIQ spaces for important 'skilled and critical' workers

dlvr.itGovernment announces more MIQ spaces for important ‘skilled and critical’ workersGovernment announces it will be using spare capacity in it MIQ system to bring in more RSE and other workers per fornight.

Duncan Greive @duncangreive

I have TVNZ CEO Kevin Kenrick on The Fold this week and he revealed that ad-free paid TVNZ OD subs are coming. This is me on the promise and complexities of that enormous decision

thespinoff.co.nzTVNZ is all in online – and planning an ad-free Netflix-style subscription serviceThe state broadcaster is not waiting for the merger to imagine its future, reports Duncan Greive after a wide-ranging interview with TVNZ CEO Kevin Kenrick. TVNZ is planning a major reimagining of its TVNZ OnDemand platform that will ultimately lead it into a post-linear TV future, CEO Kevin Kenr

RNZ @radionz

Canterbury Regional Council is being accused of creating a monster that it can no longer control when it comes to degraded water quality in the region.

rnz.co.nzNitrates in Selwyn River up 50% in 22 months, Federation of Freshwater Anglers saysCanterbury Regional Council is being accused of creating a monster that it can no longer control when it comes to degraded water quality in the region.

BusinessDesk_NZ @businessdesk_nz

In a statement this morning, the directors of the Ormiston Rise companies said they and the project’s financing partners had “lost faith in construction progress on the project”, writes @pjsmellie.

businessdesk.co.nzProgress dispute at heart of Ormiston receivershipLast Friday’s receivership of the 700-home Ormiston Rise subdivision was triggered by a breakdown in relations between its funders and contractors, but early signs point to the development being resurrected in coming weeks.In a statement this morning, the directors of the Ormiston Rise compani…

Maiki Sherman @MaikiSherman

Bloody stoked to be entrusted with the role of Chair for the NZ Parliamentary Press Gallery. Helping pave the way for young Māori in all spaces and places - we out here doing it! ❤️ #nzpol

Thomas Coughlan @coughlthom

New press gallery exec. Chair: @MaikiSherman deputy: @Jasonwalls92 treasurer: @henrycooke.

In the global political economy

Reuters @Reuters

BioNTech said that it and U.S. partner Pfizer have committed to delivering 1.8 billion doses of their COVID-19 vaccine this year, up from 1.4 billion doses announced in March reut.rs/2Q7Fu4I

Benjamin Clark @ben_clark56

My latest in @crikey_news on why Albo needs to quit worrying about 'cautious spending'. Economists and the public have moved on from fears of a 'budget blow out'; now it's time for Labor to move on too.

crikey.com.auRead the room, Albo: no one really cares about the deficitAnthony Albanese’s frugal rhetoric ignores the ALP’s great successes in public service spending and leaves it languishing behind progressive parties around the world.

Samantha Dick @samanthadick00

I interviewed millennials and a dating expert to find out why many Australians are delaying marriage until their 30s @TheNewDailyAu

thenewdaily.com.auMarriage and millennials: Australia’s young generation aren’t tying the knotTravel opportunities, dating apps and a loss of faith in religion may explain why many Australians want to delay marriage until their 30s.

Stephen Smiley @StephenSmiley

What's the Valneva COVID-19 vaccine, the French shot that's supposed to be 'variant-proof'?

abc.net.auA vaccine from France is said to be ‘variant proof’ — here’s what we know about itIt sounds too good to be true: a vaccine that can protect against future coronavirus variants. But governments around the world are keen to learn more about the Valneva jab, writes Adam Taylor.

David Crowe @CroweDM

Universities are shutting down their Confucius Institutes to work with the federal veto on foreign deals. University of Sydney, RMIT part of this, writes @LisaVisentin

theage.com.auChina-backed Confucius Institutes face closure under veto lawsThe University of Sydney is among at least four universities to have registered their Confucius Institute contracts under the Commonwealth’s new foreign veto scheme.

CNN Business @CNNBusiness

44 attorneys general have signed a letter addressed to Facebook CEO Mark Zuckerberg, urging him to scrap plans for an Instagram intended for younger users, citing mental health and privacy concerns

cnn.itMore than 40 attorneys general urge Facebook to stop plans for an Instagram for kidsFacebook can continue to block former President Donald Trump but must review the penalty, the company’s independent Oversight Board ruled. CNN’s Donie O’Sullivan reports.

Charts of the day

Edward Miller @labourcartel

While incomes have only risen slightly more than inflation over the last decade, rents have risen at more than double that rate. Thanks for pulling this together @henrycooke

Tracy Alloway @tracyalloway

Iron ore prices soar 10% in just minutes of trading on Monday. bloomberg.com/news/articles/…

Some fun things

Newstalk ZB @NewstalkZB

Dazzling display: Sea glows blue at Auckland beach bit.ly/3o1Z5zK

Simon Bridges @simonjbridges

I’m excited to share with you about my new book, National Identity. An open, honest and at times intensely personal memoir about race, fatherhood, marriage, masculinity, fitting in, and the things that shape our national character. Out in bookstores 18 August.

The sun rose at 7:08 am this morning in Auckland. It will rise tomorrow at 7:09.