Long stories shortest: The IMF says a capital gains tax or land tax would improve real economic growth and fix the budget. GDP is set to be smaller by 2026 than it was in 2023. Compass is flying in school lunches from Australia. 53% of National voters say the new school lunch system isn’t working. One school is feeding the lunches to pigs, which ACT said happened under Labour. David Seymour attacked the journalist who pointed that out.
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Long stories short, my top six news items in Aotearoa’s political economy around housing, climate and poverty on Thursday, March 13 are:
The International Monetary Fund (IMF) has again recommended the Government reform the tax system to restart economic growth and reduce future budget deficits, saying a capital gains tax or land value tax would help incentivise productivity-enhancing investment. (See quotes of the day below)
The IMF also warned of the risk of another mortgage-fueled surge in the housing market. It also cautioned against a loosening of Reserve Bank capital rules that would unleash such a surge, as is being investigated by Finance Minister Nicola Willis. (See quotes of the day below)
David Seymour’s cut-price, nutrition-lite, small-portion, dangerously-hot, repetitive and unpopular1 school lunch programme has fallen further into disrepair. After the collapse of Libelle on Tuesday, Compass has started importing pre-cooked lunches from Australia.2
This news came as it emerged one school on the East Coast, Nuhaka, has started feeding discarded lunches to pigs3, which was something ACT alleged happened in the last programme, which it wanted axed completely. Seymour attacked 1News’ Benedict Collins for pointing out the irony of Compass making pig food. (See video of the day below)
The programme is now seen as performing badly by 53% of National voters and 65% of voters overall, including 60% who want the system reverted to its full Ka Ora Ka Ake state. as set up by the previous Labour Government.4
Retail spending and traffic movement data published yesterday showed economi activity bumping along at lower levels, struggling to recover from last year’s big recession. ANZ now sees just 1% GDP growth in calendar 2025, failing to recover the 2% fall in 2024. (See more below in charts of the day)
My Pick’ n’ Mix Six of scoops & deep-dives elsewhere
Poverty & health deep-dive: 'I can't survive on $55 a week': Benefit cut due to hospital stayIf a person spends more than 13 weeks in hospital, their benefit is automatically cut to $55 a week. 1News-Re: News’ Zoe Madden-Smith
Transport & heath deep-dive: Anger at speed limit changes: 'It affects so many people on the roads'A small Far North community is "angry and frustrated" it's been forced to once again fight a battle over speed limits it thought it had already won. Peter de Graaf via LDR-1News
Infrastructure news: ‘An unworkable position’: Court wildlife ruling hangs over investment summit. Corporate lawyers are issuing urgent advice to clients right across the economy - permits they thought they had to kill local fauna may be unlawful. The Post-$$$’s Luke Malpass
Politics news: NZTA commits to consultation on controversial Nelson speed limit increaseAfter weeks of uncertainty for residents about a speed limit increase through their suburb, NZTA has confirmed that the community will be consulted. 1News’ Jess Roden
Health news: Health NZ's proposed digital cuts: 'We are seeing the cracks widen' RNZ on a Health Informatics survey
Politics deep-dive: Fictional fiscal cliffs - misinterpreting budgets for political gain RNZ’s Phil Smith
Video of the day
Watch the Q&A between Benedict Collins & David Seymour (3:55)
Quotes of the day
‘Put in a CGT or land tax to actually grow sustainably’
“Tax policy can support a more growth-friendly fiscal consolidation, and reforms aimed at improving the tax mix can help increase the efficiency of the income tax system while reducing the cost of capital to incentivize investment and foster productivity growth. Options include a comprehensive capital gains tax, a land value tax, and judicious adjustments to the corporate income tax regime.” IMF in annual report on NZ.
‘And don’t just loosen capital rules to spark another house price boom’
“Given the chronic housing shortage, the already high household leverage, and the propensity in New Zealand for rapid housing credit growth, the RBNZ should monitor the effect of its easing and make full use of its macroprudential toolbox to control the emergence of risks.
“Government policies to strengthen banking competition will need to be carefully designed to preserve the primacy of financial stability. Encouraging stronger competition for deposits and loans can be achieved through measures including faster adoption of open banking, reducing regulatory barriers to entry, enhancing fee transparency, and making it easier to switch providers. The primary objective of prudential regulation should be to safeguard financial stability, calibrated to the risks and vulnerabilities faced by New Zealand.” IMF in annual report on NZ.
Charts of the day
Bumping along the bottom at 2013 levels
Stats NZ reported yesterday total card spending on retail and non-retail services was unchanged in February from January in seasonally adjusted terms, although spending in core retail industries rose 0.5%. Essentially, retail spending remains in deep, deep recession, as MusicalChairs pointed out with this real and per-capita chart showing retail spending effectively stalled at 2013 levels.
Leading indicator of demand still flat, but output today up
I always watch the ANZ Truckometer series measuring light and heavy traffic movements monthly as one of a series of leading indicators, including the monthly BusinessNZ-BNZ PMI & PSI surveys, the monthly ANZ and quarterly NZIER business confidence surveys, the monthly ANZ-Roy Morgan and monthly Westpac McDermott Miller consumer confidence surveys and the monthly REINZ data.
Retail sales remain mired at recessionary levels with renting workers and beneficiaries under intense cost-of-living pressures, mainly because rents, food and energy prices have risen faster than incomes over the last three years. There are glimmers of hope in some areas that interest rate cuts last year are beginning to flow through, but it’s slow and from a new lower base.
Here’s the latest from the Truckometer series with Sharon Zollner’s commentary on each. The consumer economy is flat on its back, while truck movements look better, possibly in part due to strong export volumes in dairy and meat this year.
“Light traffic (motorbikes, cars and vans) is generally a good indicator of the state of demand, as opposed to production. It typically provides a six-month lead on momentum in the economy – variation reflects discretionary spending on outings, movement of couriers and tradespeople etc. The trend in light traffic is flat, though it hasn’t dropped away in recent months as much as GDP has. In per capita terms, light traffic has flattened out after a sharp drop.” ANZ NZ Chief Economist Sharon Zollner on ANZ’s Truckometer survey for February.
“Heavy traffic data (mostly trucks) tends to provide a good steer on production GDP in real time, as it captures both goods production and freight associated with both wholesale and retail trade. The Heavy Traffic Index fell 0.2% in February, but this was after a sharp rise in January, and it is up 4.9% compared to a year ago (three-month average). The per capita Heavy Traffic Index has bounced back after a sharp fall in the middle of last year.” Sharon Zollner
Table of the day
Women (18-49) two to one in favour of Opposition vs Coalition Govt
The Roy Morgan poll taken monthly publishes a useful breakdown of the demographics of supporters for each of the parties, which has shown young women support Labour/Green/Te Pāti Māori (61.5%) at a rate of two to one vs support among young women for National/NZ First/ACT (30%).
Young men overwhelmingly (but to a lesser extent) support National/NZ First/Act (53.5%) vs Labour/Green/Te Pāti Māori (38%). Both old men and women support the Government.
The poll itself showed a gain for the centre-lift to the point it is now even again with the centre-right. Support for the Greens rose 4.5 percentage points to 15.5%, its highest level since February 2024.
Substack essentials
This eight-minute-long speech by French senator Claude Malhuret via
’s substack is a must-read. Malhuret is a former President of Medicins sans Frontiere and a former mayor of Vichy. Yes. That Vichy. They weight of history hangs heavy. Especially this:“This is not an illiberal drift, it is the beginning of the confiscation of democracy. Let us remember that it took only one month, three weeks and two days to bring down the Weimar Republic and its Constitution.
“I have faith in the strength of American democracy, and the country is already protesting. But in one month, Trump has done more harm to America than in four years of his last presidency. We were at war with a dictator, now we are fighting a dictator backed by a traitor. “ Claude Malhuret to France’s Senate on March 4.
This bit where he’s talking about fellow French parliamentarians arguing against building up Europe’s defences has an extra piquancy, given he was the mayor of Vichy.
“They say they want peace. What neither they nor Trump say is that their peace is capitulation, the peace of defeat, the replacement of “de Gaulle Zelensky” by a “Ukrainian Pétain” at Putin’s beck and call.” Claude Malhuret to France’s Senate on March 4.
Cartoon of the day
Timeline-cleansing nature pic of the day
Ka kite ano
Bernard
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