Roosting chorus: Housing boom unleashes RBNZ debate

National wants Robertson to direct RBNZ to tie cheap loans to banks to business and new house build lending, not just loans to landlords to buy existing homes; Ardern hints at first home buyer help

TLDR: Good evening. The housing boom unleashed a debate today about how the Government might stop the Reserve Bank from pouring cheap printed money into the housing market. PM Jacinda Ardern was defensive of the Government’s softly-softly approach to the central bank and the problem, but suggested again the Government could provide more help for first home buyer deposits.

Elsewhere, Tauranga City Council is in chaos with talk of bringing in a Commissioner to help untangle a deeply divided Council struggling with growth and the need to borrow heavily. New South Wales proposed replacing its stamp duties with a land tax in its Budget today.

In our political economy today

Bernard Hickey @bernardchickey

A debate over monetary policy just exploded with National wanting the Govt to 'immediately rein in' the money printing & housing price inflation, & Michael Cullen calling for direct @ReserveBankofNZ lending to Govt for infrastructure. Here's what I think:

thekaka.substack.comFirst scratch: National wants RBNZ to attach strings to FLP so banks lend to businessesBayly says Govt must tell Governor Orr “to stop throwing more and more printed money at our overpriced housing market”; Cullen wants direct financing of Govt infrastructure spending

otherby otherguy @two_otherguys

@bernardchickey @bpolitics Jacinda Ardern won't stage Reserve Bank intervention as Government loses control of house prices

stuff.co.nzJacinda Ardern won’t stage Reserve Bank intervention as Government loses grip on house pricesHouse prices are continuing to rise way out of step, but the Government won’t tell the Reserve Bank to take its foot off the pedal.

Bernard Hickey @bernardchickey

Good points from @cameronbagrie on the need for the @ReserveBankofNZ to look at imposing limits on Debt to Income ratios (DTIs), as well as Loan to Value Ratios (LVRs)

newshub.co.nzEconomist urges Reserve Bank to try another way of cooling the housing marketCameron Bagrie wants the Reserve Bank to restrict lending to investors who have racked up lots of debt.

In the global political economy today

Bernard Hickey @bernardchickey

And we thought Covid-19 was the main problem to solve during the (non) transition to Biden. Some think the messy transition from Clinton/Gore to Bush Jr meant US Govt wasn't watching rise of Al Qaeda close enough in late 2000, early 2001...then 9/11

axios.comScoop: Trump plans last-minute China crackdownTrump will try to make it politically untenable for the Biden administration to change course as China acts aggressively from India to Hong Kong to Taiwan.

Bernard Hickey @bernardchickey

And......Sweden resorts to its toughest virus restrictions yet after a spike in new cases. Hopefully that's the end of that debate. bloomberg.com/news/articles/… via @bpolitics

bloomberg.comBloomberg - Are you a robot?

Bernard Hickey @bernardchickey

Interesting tax switch. New South Wales has proposed removing stamp duty and replacing it with a land tax.

smh.com.auHow NSW’s proposed property tax would workNSW Treasurer Dominic Perrottet wants to phase out stamp duty, a tax first introduced 150 years ago, and replace it with a new property tax.

Chart of the day

Paul Barkle from Infometrics points out that New Zealand’s population has grown 1.9% or 94,200 to 5.101m in the year to September, which slower than 2.3% in the year to June. This is due to net migration in the September quarter of 1,600, down from 22,000 in the same quarter a year ago. Barkle sees migration continuing to slow for another year or two before a vaccine/s allows the borders to open again.

What I found interesting was the spurt of population growth just before Covid-19. The Labour-NZ First Government was not as anti-migration as it presented itself before the 2017 election.

“Without these new migrants coming into the country, growth in the working age population has all but come to a standstill. Therefore, migration and population growth are unlikely to be the answer to firms’ skills shortages in the near term.” Paul Barkle

Signs ‘o the times news

Bernard Hickey @bernardchickey

There's enormous pressure on the growth councils of Auckland, Hamilton, Tauranga, Queenstown and Christchurch. Govt unleashed fastest pop'n growth in developed world since 2000, & raised water quality rules, but gave Councils no extra infrastructure help

stuff.co.nzReview team recommends Crown Manager be appointed for Tauranga City CouncilA review team wants Tauranga City Council to ask Minister of Local government Nanaia Mahuta to appoint a Crown Manager to sort councillor dysfunction.

Bernard Hickey @bernardchickey

This is what happens when an entire system of Govt is primed for 30 yrs to restrain health/education/welfare cost growth & keep the size of Govt around 30% of GDP, partly due to looming weight of escalating NZ Super costs. We pay for Austerity in the end

rnz.co.nzAuckland children living in pain as dental system struggles to keep upThousands of Auckland children, many in serious pain, are waiting up to eight months for dental treatment and the situation is set to get worse.

Bernard Hickey @bernardchickey

Just imagine if this much had been spent on news subscriptions or advertising, to in turn pay for 75 journos in the Bay of Plenty...

rnz.co.nzMore than $7 million spent on communications and PR by Bay of Plenty councils, district health boards last yearBay of Plenty local government organisations shelled out more than $7.4 million on communications and public relations last year - with Tauranga City Council spending just over $2.6m.

Longer reads worth your time

Bernard Hickey @bernardchickey

A useful contribution to a growing debate. Interesting ideas to reinvent and recreate the Ministry of Works and State Advances Corporation. And to move LVR rules to Parliament from @ReserveBankofNZ From @JCarnabyKing @jen_m_mcarthur @jaackiepaul and @maxdnharris

Jordan King @JCarnabyKing

We talk about the need for the state to remake the housing system, including Reserve Bank reform, in our recent @PolicyAuckland paper: Transformative Housing Policy for Aotearoa New Zealand https://t.co/MDWXKYeW57

Bernard Hickey @bernardchickey

Will Trump Burn the Evidence? A fascinating history lesson on US Presidential archives, and the lack of them. newyorker.com/magazine/2020/… via @NewYorker

newyorker.comWill Trump Burn the Evidence?Jill Lepore on how the President could endanger the official records of one of the most consequential periods in American history.

Bernard Hickey @bernardchickey

Should we join 'The Quad' of democracies in the Asia Pacific pushing back against China? Includes India, Australia, Japan and the US. bloomberg.com/news/articles/… via @bpolitics

bloomberg.comBloomberg - Are you a robot?

Useful reports

Te Puni Kōkiri has released a report showing 10,000 Māori businesses existed in New Zealand, eight times previous estimates.

Coming up…

Wednesday Nov 18 - PM Jacinda Ardern gives speech at Infrastructure NZ conference in Auckand

Sat Nov 21 - National Party AGM due to vote on re-election of President Peter Goodfellow.

Weds Nov 25 - 2pm - Reserve Bank to publish six monthly Financial Stability Report (FSR) . Expected to warn of re-imposition of high LVR lending limits from May 1, 2021.

Weds Nov 25 - Opening of Parliament for 53rd term, including swearing in of new MPs

Thurs Nov 26 - Speech from the throne in Parliament outlining Government’s agenda

Weds Dec 9 - Parliament rises for the year.Tuesday: Labour caucus

Ngā mihi

Bernard

PS: Thanks to Sean Gillespie’s wonderful Instagram feed for today’s Kākā pic.

PPS: A fun thing and a sobering thing

David Farrier @davidfarrier

meanwhile, in new zealand: nelson’s only veterinarian taxidermist - “either way you get your pet back”

Carl Quintanilla @carlquintanilla

Animated graphic of COVID-19’s spread across America so far this year. (via @RexChapman @FirenzeMike)