And how ever-higher prices of new homes at the margins reset existing home prices ever-higher; Refusal of Crown & Councils to borrow for infrastructure just pumps up DCs and all house prices
I subscribe to this podcast and find it really good. But the thing that annoys me is that Bernard always starts it off saying this is my daily podcast. As a subscriber I typically only see two podcasts a week from Bernard. So really it’s a weekly podcast. Just a small thing but it’s a bit annoying.Or am I somehow missing out on a bunch of podcasts that I’ve paid to see and didn’t. Just wondering.
Fair point re his default to daily! He is going to try to verbally edit himself ;-) He usually averages around 5 podcasts a week if you include the weekly Hoon, but you are right it's been a little less lately due to elderly parent dramas and now we are travelling. Glad you are enjoying the content.
I find homeowners to be a little more balanced than you do Bernard. (We) don't just have knee jerk responses to favour anything that pushes up the price of housing. If we hear that development contributions are going to take a leap, for example, a homeowner doesn't automatically get a glint in their eye. Quite the opposite I'd say.
I don’t think people conciously understand that connection between marginal cost and the price of the full stock. But they do keep voting to not increase Govt borrowing for infrastructure, while also voting for high population growth. They are compliant in the magical thinking
The core of this issue is most people don't understand how Govt fiscal mechanics work. They assume Govt debt is like a mortgage – that THEY are on the hook for. But Govt doesn’t borrow to fund spending (it's new $$). Bonds are a monetary tool used by the RBNZ to manage interest rates. It’s not a cost to taxpayers. Crack that knowledge open to the public, and views might start to shift.
Spot on Trastan! That is what they(home owners) base their vote on. House hold economics applied to macro economics is ✌️common sense✌️... it's also wrong.
Oh boy Bernard you have just described my life over the last 60 years. Got a group built house in Titahi Bay, using a State Advances loan of $12,000ish over 30 years and not more than 30% of my income at 3.5% pa.
I also worked for the MoW for 22+ years.
After many house moves including an interest rate of 17% in 1987ish, we now have a property worth $1.1million.
I'm not proud of that because of the impact as you describe on people who are renting and will never have the means to own their home.
Thanks Michal. Should we recreate the MoW? I’d love to know more about what it did and where all those people went. Any good histories or articles or research you know of?
You describe the genesis of the problem in very clear terms. Short-termism + ideology + a narrow government focus on privileged segments of society vs "we're all in this together."
This neoliberal trickle-down propaganda has been absolutely corrosive since its inception. It's little more than a whitewashed rationale for unmitigated greed.
It was the 1984 Labour Government that started the decline in Government infrastructure support and the neoliberal agenda that has led to the big gap between rich and poor. National carried it on enthusiastically. Both parties have failed badly, leading to today's bad situation
However, while not in full agreement with Labour response to finding Muldoon had spent & spent including the super fund which he put into consolidated fund & used to spend more. Basically the cupboard was empty when Labour came to power.
I sometimes get stuck on Muldoon history & its consequences. I agree with your economics to bring NZ society into equality & fair play. Not being an economist not sure what would achieve this in a low bureaucratic way.
GST 10% - 1st ($5000+) of earningst taxfree - government build the infrastructure by borrowing.
yes, the disastrous Douglas and his cronies the lawyers Lange, de Cleene, Prebble, etc.
de Cleene was often very entertaining and he did publicly admit that after they introduced/started GST they (the so-called Labour government) were awash with money (it might have been savage dog Prebble). and Lange did finally rein in disastrous Douglas (but horrible/terrible damage to New Zealand society had already been inflicted).
With all due respect @bernardhickey, this piece underscores yet another example of our ongoing need to feed the insatiable beast of the private bank-centric money system—an arrangement that keeps our councils and country trapped in ever-deepening debt spirals, all in the name of "fiscal responsibility."
The real scandal here isn’t the $72k DC charges—it’s the fact we’re still pretending that private or offshore borrowing is the only way to fund essential infrastructure. It's not. What’s needed is the courage to break the iron grip of this system by invoking our sovereign credit powers—yes, the ones already sitting unused in Part 6, Section 47(2) of the Public Finance Act.
This is how the first Labour Government financed state housing in 1936—Treasury credit, not bank debt. It worked. And it can work again. The newly released New Zealand Economic Stabilisation and Public Wealth Restoration Bill from the Uniting People’s Credit Movement NZ lays out exactly how we can do this today, with all the modern safeguards needed.
Let’s stop mortgaging our future to enrich private lenders and start using the full power of our public institutions to build homes, infrastructure, and real economic security—for people, not profit.
The proposed state Treasury centric money supply model, detaching from the private bank management office it presently subordinates to, that the Uniting Peoples Credit Movement NZ is advancing, incorporates stringent safeguards to prevent inflation, drawing from historical lessons and modern precedents. Key measures include:
Strict Criteria & Automatic Triggers: Money issuance is tied to productive capacity (e.g., infrastructure, green energy) and halted if overshoot occurs.
Multi-Layer Oversight: Existing committees are reformed and new ones added, with transparency mandates from a not always for profit Public Credit money supply system imperative rather than an always for profit Private Bank credit money supply system imperative.
We propose recruiting highly thought of experts like Sri Mulyani (Indonesia’s Finance Minister, who successfully managed similar systems during COVID). Precedent: Indonesia’s "Burden Sharing" scheme (2020–2023) proved state-led monetary financing can be non-inflationary when disciplined and targeted—achieving 3.3% average inflation despite pandemic shocks, unlike New Zealand which had the same option available but chose not to take it, instead coming out with a massive increase of debilitating private bank debt.
We would reach out to eminent economists like Robert Hockett author of the paper The Finance Franchise, Adair Turner author of book Between Debt And The Devil, Michael Hudson author of book Killing The Host, David C Korten author of paper How To Liberate America From Wall Street.
Private banks have failed their own fiduciary standards, perpetuating debt-driven cycles. This model shifts control to public accountability, with checks private institutions lack. The risk of not acting—deepening wealth inequality and financial instability—far outweighs the risks of a carefully managed transition.
The bill is only 12 pages long, we believe it is very comprehensive in its safe guards against system destroying Debt Through Put Fraud, and can be read in full here:
There is a single issue I agree with our current government on, that's Councils need to get back to basics. Our local pool doubled in price since beginning the project, now that happens, it's how it's been. But, when it doubles and then they decide they will add in a third pool that's not cool - we are talking paying 10's of millions more for this project than originally consulted on. No consultation of price changes, no consultation over the 3rd pool. This is appalling behaviour from a body that spends other peoples money on behalf of those people. We now have coronation st houses going in by developers that cost $1m - this are 2 storey houses with no garage or garden for kids to run around in!!!
Somehow the people in Governments and Local Governments need to be able to be held accountable for really bad decisions they make, and not just being held accountable at the polls and election booth. There needs to be something at a personal level so they start taking well informed decisions in the best interest of people.
At a national level I'd point out that the changes made to smoke free, Casey Costello should be held responsible for the outcomes of that, followed by the cabinet members who voted for it. The other one is Simeon Brown, some personal responsibility for changing the age around bowel screening is his to hold. We know morals won't do it anymore, I doubt any of these people lose sleep at night over their decisions.
The things that enable urban growth – planning, consents, inspections, and coordination – are essential public infrastructure, esp if we want to maintain high regulatory standards in our housing and urban environments. Yet this supporting infrastructure is rarely treated that way. As we are seeing, councils and central Govt often treat it as overhead to be shifted onto developers, rather than as a foundational investment in the systems that make growth possible.
We want our cities to grow while routinely underfunding the very functions that make that growth possible, with both councils and Govt prioritising short-term optics over long-term investment.
Central Govt is a self-financing state – it shouldn’t rely on levies to patch over underinvestment. It should fund capacity first and assist councils. If we want affordable housing and functioning cities, we need to treat planning systems as real infrastructure – and pay for them like we mean it.
That’s why we need some form of Govt infrastructure growth fund to resource the support systems within councils that unlock housing and productivity.
- before Kainga Ora was gutted by a vindictive Minister Bishop it did do infrastructure upgrades as part of its larger area housing redevelopments eg Mt Roskill and flood mitigation measures
- of course the can't/won't borrow is a nonsense stance on the part of our currency-issuing central government
In my view, since everyone needs decent long-term housing (I could say shelter, but tents aren't decent long-term housing in NZ), but that not everyone can afford that at the lower end of the income continuum, it seems "obvious" to me that any housing market automatically incorporates a state of market failure. With that in mind, the state building copious amounts of housing, first as state housing, and then to sell them to low-income folks (and bring back state advances loans etc) seems a starting point for any solution.
As an aside I think climate change is going to have a great effect on the price of houses. All those houses that are near the ocean will become uninsurable. And guess what, if the owners can’t get insurance they won’t be able to get a mortgage…. Now that will greatly affect the price of those houses….
I went to a lecture in Christchurch many years ago and the lecturer told us that many years ago the coast line was around the beginning of Riccarton Road… so if that was in the past then it can happen again. We are living in a fools paradise.
Development contributions don't prevent councils borrowing to fund infrastructure. They are (usually) a means of paying back the financed costs. Are you saying councils should be fully rate funding the cost of the infrastructure needed to support development? Wouldn't that also push up housing costs and rents?
NZ needs to get its shit together, the never ending stupidity of housing policy is just astounding.
And someone from that 1984 era just got a gong!! SMH
I subscribe to this podcast and find it really good. But the thing that annoys me is that Bernard always starts it off saying this is my daily podcast. As a subscriber I typically only see two podcasts a week from Bernard. So really it’s a weekly podcast. Just a small thing but it’s a bit annoying.Or am I somehow missing out on a bunch of podcasts that I’ve paid to see and didn’t. Just wondering.
True but still excellent content and well worth it. IMO
Fair point re his default to daily! He is going to try to verbally edit himself ;-) He usually averages around 5 podcasts a week if you include the weekly Hoon, but you are right it's been a little less lately due to elderly parent dramas and now we are travelling. Glad you are enjoying the content.
Thanks Edgar. Very fair point. On holiday at the moment so not as daily as it should. I’ll try harder and be clearer.
I find homeowners to be a little more balanced than you do Bernard. (We) don't just have knee jerk responses to favour anything that pushes up the price of housing. If we hear that development contributions are going to take a leap, for example, a homeowner doesn't automatically get a glint in their eye. Quite the opposite I'd say.
I don’t think people conciously understand that connection between marginal cost and the price of the full stock. But they do keep voting to not increase Govt borrowing for infrastructure, while also voting for high population growth. They are compliant in the magical thinking
The core of this issue is most people don't understand how Govt fiscal mechanics work. They assume Govt debt is like a mortgage – that THEY are on the hook for. But Govt doesn’t borrow to fund spending (it's new $$). Bonds are a monetary tool used by the RBNZ to manage interest rates. It’s not a cost to taxpayers. Crack that knowledge open to the public, and views might start to shift.
Spot on Trastan! That is what they(home owners) base their vote on. House hold economics applied to macro economics is ✌️common sense✌️... it's also wrong.
Oh boy Bernard you have just described my life over the last 60 years. Got a group built house in Titahi Bay, using a State Advances loan of $12,000ish over 30 years and not more than 30% of my income at 3.5% pa.
I also worked for the MoW for 22+ years.
After many house moves including an interest rate of 17% in 1987ish, we now have a property worth $1.1million.
I'm not proud of that because of the impact as you describe on people who are renting and will never have the means to own their home.
Thanks Michal. Should we recreate the MoW? I’d love to know more about what it did and where all those people went. Any good histories or articles or research you know of?
Recommended reading, Bernard.
Also, National Archives hold MOW records. A stunning collection / record / testiment to the power of civic duty.
https://www.artybees.co.nz/noonan-rosslyn-j/design-brief-history-public-works-department-ministry-works-1870-1970
https://andsbooks.ugent.be/books/andrew-leach-f-h-newman/index.html
https://aotearoabooks.co.nz/sweat-and-toil-the-building-of-new-zealand/
https://natlib.govt.nz/records/54996355
https://books.google.com/books/about/Opus_Works.html?id=Iq6QzgEACAAJ
And to public use of public credit. As Adam smith actually tells us to do.
Yet the weasels of the right commit multiple smithian heresies; doing the opposite of everything he - and the classicals - understood.
The sovereign invests in the nation.
Virtue and prudence is key.
Power without ethics cannot flourish
Hmm. How straight a bat do you think the 2024 books plays?
re: MoW - I love the idea of preapproved plans that are available for free. I hate the idea of a guaranteed purchase of all houses in a subdivision.
Australian government provides free house designs https://www.yourhome.gov.au/house-designs
Great link. Cheers Hamersley.
You describe the genesis of the problem in very clear terms. Short-termism + ideology + a narrow government focus on privileged segments of society vs "we're all in this together."
This neoliberal trickle-down propaganda has been absolutely corrosive since its inception. It's little more than a whitewashed rationale for unmitigated greed.
Thanks BH. Very succinct explanation of where we’ve come from to where we are, and how our housing market has relocated so much wealth!
It was the 1984 Labour Government that started the decline in Government infrastructure support and the neoliberal agenda that has led to the big gap between rich and poor. National carried it on enthusiastically. Both parties have failed badly, leading to today's bad situation
However, while not in full agreement with Labour response to finding Muldoon had spent & spent including the super fund which he put into consolidated fund & used to spend more. Basically the cupboard was empty when Labour came to power.
Great point. But it was completely full by 1999 and got fuller by 2007, and was again by 2017. Labour chose to follow the 30/30 mantra.
I sometimes get stuck on Muldoon history & its consequences. I agree with your economics to bring NZ society into equality & fair play. Not being an economist not sure what would achieve this in a low bureaucratic way.
GST 10% - 1st ($5000+) of earningst taxfree - government build the infrastructure by borrowing.
yes, the disastrous Douglas and his cronies the lawyers Lange, de Cleene, Prebble, etc.
de Cleene was often very entertaining and he did publicly admit that after they introduced/started GST they (the so-called Labour government) were awash with money (it might have been savage dog Prebble). and Lange did finally rein in disastrous Douglas (but horrible/terrible damage to New Zealand society had already been inflicted).
With all due respect @bernardhickey, this piece underscores yet another example of our ongoing need to feed the insatiable beast of the private bank-centric money system—an arrangement that keeps our councils and country trapped in ever-deepening debt spirals, all in the name of "fiscal responsibility."
The real scandal here isn’t the $72k DC charges—it’s the fact we’re still pretending that private or offshore borrowing is the only way to fund essential infrastructure. It's not. What’s needed is the courage to break the iron grip of this system by invoking our sovereign credit powers—yes, the ones already sitting unused in Part 6, Section 47(2) of the Public Finance Act.
This is how the first Labour Government financed state housing in 1936—Treasury credit, not bank debt. It worked. And it can work again. The newly released New Zealand Economic Stabilisation and Public Wealth Restoration Bill from the Uniting People’s Credit Movement NZ lays out exactly how we can do this today, with all the modern safeguards needed.
Let’s stop mortgaging our future to enrich private lenders and start using the full power of our public institutions to build homes, infrastructure, and real economic security—for people, not profit.
How would you stop it being inflationary?
Hi Bernard,
Thanks for your question, much appreciated.
The proposed state Treasury centric money supply model, detaching from the private bank management office it presently subordinates to, that the Uniting Peoples Credit Movement NZ is advancing, incorporates stringent safeguards to prevent inflation, drawing from historical lessons and modern precedents. Key measures include:
Strict Criteria & Automatic Triggers: Money issuance is tied to productive capacity (e.g., infrastructure, green energy) and halted if overshoot occurs.
Multi-Layer Oversight: Existing committees are reformed and new ones added, with transparency mandates from a not always for profit Public Credit money supply system imperative rather than an always for profit Private Bank credit money supply system imperative.
We propose recruiting highly thought of experts like Sri Mulyani (Indonesia’s Finance Minister, who successfully managed similar systems during COVID). Precedent: Indonesia’s "Burden Sharing" scheme (2020–2023) proved state-led monetary financing can be non-inflationary when disciplined and targeted—achieving 3.3% average inflation despite pandemic shocks, unlike New Zealand which had the same option available but chose not to take it, instead coming out with a massive increase of debilitating private bank debt.
We would reach out to eminent economists like Robert Hockett author of the paper The Finance Franchise, Adair Turner author of book Between Debt And The Devil, Michael Hudson author of book Killing The Host, David C Korten author of paper How To Liberate America From Wall Street.
Private banks have failed their own fiduciary standards, perpetuating debt-driven cycles. This model shifts control to public accountability, with checks private institutions lack. The risk of not acting—deepening wealth inequality and financial instability—far outweighs the risks of a carefully managed transition.
The bill is only 12 pages long, we believe it is very comprehensive in its safe guards against system destroying Debt Through Put Fraud, and can be read in full here:
https://www.facebook.com/groups/peoplescredit.nz (In "Featured Posts" tab)
I would like nothing more than you to read it in full Bernard and give your feedback as to if there is anything you think it has overlooked.
There is a single issue I agree with our current government on, that's Councils need to get back to basics. Our local pool doubled in price since beginning the project, now that happens, it's how it's been. But, when it doubles and then they decide they will add in a third pool that's not cool - we are talking paying 10's of millions more for this project than originally consulted on. No consultation of price changes, no consultation over the 3rd pool. This is appalling behaviour from a body that spends other peoples money on behalf of those people. We now have coronation st houses going in by developers that cost $1m - this are 2 storey houses with no garage or garden for kids to run around in!!!
Somehow the people in Governments and Local Governments need to be able to be held accountable for really bad decisions they make, and not just being held accountable at the polls and election booth. There needs to be something at a personal level so they start taking well informed decisions in the best interest of people.
At a national level I'd point out that the changes made to smoke free, Casey Costello should be held responsible for the outcomes of that, followed by the cabinet members who voted for it. The other one is Simeon Brown, some personal responsibility for changing the age around bowel screening is his to hold. We know morals won't do it anymore, I doubt any of these people lose sleep at night over their decisions.
Thanks Annie. Which pool and council?
Upper Hutt City Council and its called H20 Xtream.
The things that enable urban growth – planning, consents, inspections, and coordination – are essential public infrastructure, esp if we want to maintain high regulatory standards in our housing and urban environments. Yet this supporting infrastructure is rarely treated that way. As we are seeing, councils and central Govt often treat it as overhead to be shifted onto developers, rather than as a foundational investment in the systems that make growth possible.
We want our cities to grow while routinely underfunding the very functions that make that growth possible, with both councils and Govt prioritising short-term optics over long-term investment.
Central Govt is a self-financing state – it shouldn’t rely on levies to patch over underinvestment. It should fund capacity first and assist councils. If we want affordable housing and functioning cities, we need to treat planning systems as real infrastructure – and pay for them like we mean it.
That’s why we need some form of Govt infrastructure growth fund to resource the support systems within councils that unlock housing and productivity.
Expanding on Bernard's comments
- Kaye Saville-Smith gives more on the support for low value housing pre- and post- 1991 - https://www.buildingbetter.nz/wp-content/uploads/2023/08/Saville-Smith_2018_following_the_money.pdf
- Australia offers free house designs - an example of what we could do here (but currently don't) https://www.yourhome.gov.au/house-designs
- before Kainga Ora was gutted by a vindictive Minister Bishop it did do infrastructure upgrades as part of its larger area housing redevelopments eg Mt Roskill and flood mitigation measures
- of course the can't/won't borrow is a nonsense stance on the part of our currency-issuing central government
Fantastic link Andrew. Thanks!
We used those house designs for inspiration when planning our build. They are great!
In my view, since everyone needs decent long-term housing (I could say shelter, but tents aren't decent long-term housing in NZ), but that not everyone can afford that at the lower end of the income continuum, it seems "obvious" to me that any housing market automatically incorporates a state of market failure. With that in mind, the state building copious amounts of housing, first as state housing, and then to sell them to low-income folks (and bring back state advances loans etc) seems a starting point for any solution.
As an aside I think climate change is going to have a great effect on the price of houses. All those houses that are near the ocean will become uninsurable. And guess what, if the owners can’t get insurance they won’t be able to get a mortgage…. Now that will greatly affect the price of those houses….
I went to a lecture in Christchurch many years ago and the lecturer told us that many years ago the coast line was around the beginning of Riccarton Road… so if that was in the past then it can happen again. We are living in a fools paradise.
Can already see it with houses for sale (looking in central Auckland suburbs) properties caught by the flood map are going for absolute bargains
Development contributions don't prevent councils borrowing to fund infrastructure. They are (usually) a means of paying back the financed costs. Are you saying councils should be fully rate funding the cost of the infrastructure needed to support development? Wouldn't that also push up housing costs and rents?