My Sunday Pick ’n’ Mix for Sept 17

Some reflections on the week, a few curious bits and bobs to chew on and a couple of fun things, including a cartoon and video. Especially for paying subscribers. Thanks for your support.

Sep 16, 2023

TL;DR: Here’s a few things that I stumbled on over the week that made me stop and think, or just have a chuckle. Hope you enjoy them on a Sunday. They’re especially for paying subscribers, although if there’s plenty of support from paying subscribers, I can open it up for wider reading and sharing. Just hit like or comment below. I’ll open it up after 50 likes. Update: Plenty of likes so I’ve opened it up now.

I’ve included The Kākā Project Lens on these items because it’s therapeutic for me to think of solutions and support others already out there beyond the political party manifestos.

It’s always, always about housing

Amid all the noise of the election campaign, little facts and details sometimes slip by. Like this piece from Lloyd Burr at Newshub on Friday night about how there were 7,554 people living in emergency housing of motels, caravans and relocatables in July, including 3,576 children. But the most painful fact was that from October 2020 the Government started requiring people living in emergency accommodation to pay 25% of their income in rent as an ‘Emergency Housing Contribution.’ Many will be on benefits.

And now there is a $60 million debt owed on these rents, with only $17 million paid over that time. Here’s how Labour, ACT and the Greens interpreted this:

"Everybody makes a contribution towards their accommodation costs. (What about debt repayments?) Look, that's a process we work through. We have a debt-to-government process,” Labour Leader Chris Hipkins.

"Continuing to house people that don't pay their bills while others languish on waitlists with nowhere else to go, that's a failure in values on behalf of this Government," ACT leader David Seymour.

"When people aren't even able to afford enough kai to put on the table, they can't meet the cost of emergency housing contributions which is why we need to get rid of them." Green Party Social Development spokesperson Ricardo Menéndez March.

The Kaka Project lens

Over 250,000 or over 66% of people on benefits have a debt to MSD for over-payments, benefit advances and emergency assistance grants. There is an average of around $4,000 per beneficiary and debt to MSD now totals over $1 billion. Overall, there is $3.5 billion owed to MSD, IRD and Justice by low-income households in the form of over-payments for Working For Families, Child Support and fines. Here’s a Cabinet paper from October 2022 with detail and (redacted) progress in trying to reduce the debt, as recommended by the 2019 Welfare Expert Advisory Group (WEAG).

The Child Poverty Action Group has called on MSD to stop collections on these debts. The Greens want the debt wiped. Three years after the WEAG report, the debt is higher and more damaging than ever.

The Kākā Project view - These problems are all about unaffordable housing and low incomes. Reducing housing and transport costs for those in the lowest income quintile to less than 40% of disposable income reduces the chances of getting into debt. That means massive building of affordable homes by Government, NGOs, Build-to-Rent funds and everyone else. Meanwhile, these debts should be wiped and not built up again.

I’d also propose the phase out of accommodation supplements, working for families payments and other MSD payments in favour of a simple Universal Basic Income of 66% of the median wage for all residents under 30, to match the UBI for those over the age of 65.1

Big oil’s tobacco moment? Here’s hoping.

This week the WSJ-free reported on previously-undisclosed documents from within Exxon Mobil showing how it worked to downplay the effects of fossil-fuel induced climate change and any policies to stop or reverse it. The revelations are eerily familiar for those who watched how Big Tobacco was eventually bought to its knees by lawsuits alleging the producers of cigarettes knew about the damage of their products, but kept producing anyway, as well as lobbying to block the evidence and subsequent actions.

The article is particularly revealing about long-time ExxonMobil CEO Rex Tillerson. Remember him? He became President Donald Trump’s Secretary of State.

Here’s a couple of excerpts (bolding mine):

One of the lawsuits is from Hawaii’s Maui County, where wildfires killed more than 100 people in August. The lawsuit, filed in 2020, alleged the island faced increased climate-related risks, including more dangerous wildfires, caused by fossil-fuel companies. Some of the lawsuits may go to trial as soon as next year.
“I know how this information looks—when taken out of context, it seems bad,” Exxon CEO Darren Woods said in response to the Journal’s inquiry about the documents. “But having worked with some of these colleagues earlier in my career, I have the benefit of knowing they are people of good intent. None of these old emails and notes matter though. All that does is that we’re building an entire business dedicated to reducing emissions—both our own and others—and spending billions of dollars on solutions that have a real, sustainable impact.”
A study published earlier this year in the journal Science determined Exxon’s climate modelers had predicted warming temperatures with precision since the 1970s, in line with the scientific consensus. The study was funded, in part, by a grant from the Rockefeller Family Fund.
In the summer of 1988, NASA scientist James Hansen issued what’s now seen as a seminal warning on climate change when he testified before Congress that Earth was warming dangerously and humans were causing it.
Frank Sprow, then Exxon’s head of corporate research, sent a memo to colleagues a few months later articulating what would become a central pillar of Exxon’s strategy.
“If a worldwide consensus emerges that action is needed to mitigate against Greenhouse gas effects, substantial negative impacts on Exxon could occur,” wrote Sprow. “Any additional R&D efforts within Corporate Research on Greenhouse should have two primary purposes: 1. Protect the value of our resources (oil, gas, coal). 2. Preserve Exxon’s business options.” WSJ-free article.

The Kākā Project lens

We obviously need to stop burning oil and gas as fast as possible as part of a just transition to gross zero emissions from housing and transport by 2050, and to halve them by 2030. A true emergency response, in my view, would include:

stopping imports of petrol and diesel cars and utes from a set date, such as 2030;
offering incentives for people to replace their cars and utes with electric vehicles, buggies, bikes and scooters, potentially involving some sort of voucher-for-electric vehicle scheme to hand in clunkers;
reconfiguring main urban roads urgently to replace road-side car parks with cycle, scooter and walkways, as well as rapidly upscaling electric bus fleets to increase bus route frequency and coverage at low cost ($1 tickets);
state-subsidised charger networks throughout towns, cities and rural areas that provide $1 charges for cars etc, fueled by state-funded solar panels and batteries on roofs and carparks surrounding those charging stations;
state-funded rollouts of roof-top panels and batteries for any household, farm or business who wants them, with surplus electricity sold back into the grid by the panels’ owners (either Government or individuals) at current wholesale prices;
the state building up electric rail networks to shift freight and long-haul passenger traffic out of trucks and planes, again with low and subsidised rates for freight companies and passengers; and,
moving the funding of road repairs and public transport to a weight and fuel-burning levy system that front-loads the costs onto heavier petrol and diesel vehicles and subsidises light electric vehicles, with the eventual aim of paying for roads and public transport subsidies through road-user and congestion charges.

I welcome push-backs, additions, pros, cons, perverse consequences and alternatives from subscribers in the comments.

A new hole in National’s Budget plans?

Jenna Lynch from Newshub reported on Friday night that OIA documents showed the removal of the interest deductibility policy by National could cost $350 million more than the $2.113 billion estimated over four years by National. Marc Daalder reported earlier on Friday via Newsroom from OIA documents written in November 2022 that the interest deductibility move was raising $110 million a year more than expected, suggesting a hole of as much as $440 million a year.

Oops. Another Budget hole.

The Kākā Project lens

The Kākā Project’s fundamental aim and policy is a 0.5% annual tax on the value of residential zoned land, with multiples for un-occupied land and houses2, to fund housing, water, transport, health and education infrastructure to drive the cost of housing down to 30% of disposable income for the bottom quintile of earners by 2050, along with infrastructure and public housing investment to drive the cost of transport down to 10% of disposable income by then. The other core aim is to halve gross transport and housing emissions by 2030 and remove them completely by 2050.

So in this situation, the various fudges and kluges designed to get around the no-go area of taxing capital gains or wealth would be dropped and replaced by the residential value land tax. So that would include:

removing the interest deductibility policy, which really messes with the purity of taxation settings;
reinstating depreciation as a valid expense for both residential and commercial property owners;
removing the ‘bright line’ test for capital gains for rental property owners, given they’ll already be paying the broad-based and low-rate residential land value tax and not having a capital gains tax is a good thing to encourage business value creation;
removing all council consenting fees and development contributions for new homes and other infrastructure projects;
replacing the current benefit, accommodation supplement, Working For Families and NZ Superannuation systems with a simple UBI for all those under the age of 30 and over the age of 653;
making all education (including pre-school) publicly funded, along with all healthcare and dental care;
bringing in a progressive income tax system that exempts all individual income below $35,000 and ramps up to 50% for those earning more than four times the median wage; and,
reducing GST to 10%, while keeping it on all current items, and bringing in financial products such as mortgages and life insurance.

‘Give me your spreadsheets Nicola!’

National’s Finance Spokesperson Nicola Willis was interviewed by Ryan Bridge on Newshub’s AM show on Friday about her refusal to release the modelling under National’s foreign buyers’ tax.

When asked if Willis would commit to release the costings, and if not, if she was scared, she told AM "I don't think what New Zealanders want from National is Excel spreadsheets."
Willis said she's never known a political party to release spreadsheets and she "won't be the one who starts".

Please send me the spreadsheets Nicola. I love spreadsheets.