Roosting chorus: Nelson LIM fallout

Homeowners fear insurance cost blowout and capital slump after Nelson puts climate change notes on LIMs of 4,500 homes; Greens want Labour to relook at half-price bus and train tickets; IAG hit hard

TLDR: Good evening. Homeowners in now fear their insurance costs will jump and their house values will fall after the Nelson City Council put sea-level warning notes on the LIMs of 4,500 properties.

The Greens want Labour to have another look at their proposal for bigger subsidies for public transport, now that NZ First is not there to block it, which it did in the first term.

New Zealand’s biggest insurer, IAG (NZI, State, AMI, Lumley), looks to have suffered a big capital hit after losing an Australian court case that may force it to make A$1-2b of payouts on business interruption policies. IAG argued its policies excluded pandemics. An Australian court ruled otherwise. IAG launched a A$500m capital raise from investors this afternoon.

Bernard Hickey @bernardchickey

The pennies are dropping after Nelson sea-level change LIM shock for 4,500 properties. There will be a revolt...

stuff.co.nzNew flood modelling raises property price and insurance concernsHomeowners worry whether new coastal inundation hazards will reduce property prices, raise insurance premiums and stop them getting insurance.

Bernard Hickey @bernardchickey

Worth keeping an eye on this one. @IAGAust owns @iagnz, which is our largest general insurer with State, NZI, AMI and Lumley. Share trading halted after losing pandemic exclusion case that may cost it A$1-2b. It's now trying to raise A$500m in fresh equity via Goldman Sachs.

Financial Review @FinancialReview

Insurance Australia Group will halt trading following a surprise NSW Court of Appeal ruling that pandemic exclusions in business interruption policies are invalid. https://t.co/3gHnDzm7vo

Bernard Hickey @bernardchickey

Jobs and earnings staying surprisingly strong heading towards Christmas, given the year we've had. @Stats_NZ weekly figures show median weekly wages solid around $1,040 per person and employment also solid at 2.22m. stats.govt.nz/experimental/c…)

Bernard Hickey @bernardchickey

@BNZ pushing ahead despite the PM's warning last yr about the banks' social licenses & the @ReserveBankofNZ's warning on branch closures in July: Geoff Bascand: "Any reduction in the availability of cash & branch closures will impact certain pockets of society more than others."

Stuff.co.nz Business @NZStuffBusiness

BNZ to close 38 bank branches https://t.co/XfcWwpMj0J

In the global political economy today

America’s Covid-19 death toll hit 250k and Joe Biden warns it is set to hit 400k by January. Bitcoin is at a record high, possibly because China’s regulators have cracked down on bitcoin miners there, which is limiting supply of new bitcoin. Miners often set up mining data centres near coal-fired power stations in China. Global stock prices hit fresh record highs on hopes for more money printing and good vaccine news.

Reuters @Reuters

President-elect Joe Biden warned 400,000 Americans could die of COVID-19 by January, and pressured the General Services Administration to share key data with his transition team to help fight the pandemic as he prepares to take office reut.rs/3lIMtvy

Mayor Bill de Blasio @NYCMayor

New York City has reached the 3% testing positivity 7-day average threshold. Unfortunately, this means public school buildings will be closed as of tomorrow, Thursday Nov. 19, out an abundance of caution.   We must fight back the second wave of COVID-19.

Bernard Hickey @bernardchickey

A big deal in Australia today. NSW's regulator just stopped Crown's big new casino in Sydney from opening due to fears of money laundering via junket operators from China . Crown just stopped using all junket operators. What is @SkyCityGroup's practice? casino.org/news/crown-res…

Signs ‘o the times news

Bernard Hickey @bernardchickey

Why is charging for the vaccine even being considered? Bloomfield wants 95% coverage. 32% of NZers have less a month's worth of income in cash on hand for this stuff. And encourages free riders eyeing herd immunity >80% cover. Austerity economics again

thespinoff.co.nzNew Zealanders could be asked to pay for a Covid-19 vaccineDonald Trump has promised it’ll be free. So has Justin Trudeau. But the New Zealand government hasn’t yet decided whether we’ll have to pay for a Covid-19 vaccine. There’s a glimmer of hope in recent announcements from drugmakers Moderna and Pfizer that their vaccines are highly effective at preven

Bernard Hickey @bernardchickey

If Govt is serious, the infrastructure $$ will have to be massively more than is planned now. 'I would expect we will soon see a Govt infrastructure strategy for 2030-50 that aligns infrastructure to those climate change & societal priorities.' Bless...

nzherald.co.nzInfrastructure report: Westpac’s Andrew Bashford and Joanna Silver on climate change and infrastructure - NZ HeraldWestpac heads share their views on climate change and infrastructure.

Bernard Hickey @bernardchickey

Wellington's rental housing market today. A 'room' in a balcony for $130/week, living with 7 others.

facebook.comElla DenchSummer sublet, cosy, sunny room for rent! Move in as soon as possible until mid February next year. Renting for $130 a week! Free parking on the property Flat is located in Newtown, 5minutes to...

Sam Sachdeva @SamSachdevaNZ

Hooray - love this trash city with its terrible weather, shitty infrastructure and increasingly unaffordable housing market

RNZ News @rnz_news

Sewage spill on Wellington central street https://t.co/6ceA7SEk0h

Threads worth pulling on

Thomas Coughlan @coughlthom

The end of an era: the last story in the "NZ First blocks things" genre (at least until 2023). This year, NZ First blocked a decision to proceed with the Green Transport Card, which would have heavily subsidised public transport. 1/

stuff.co.nzNZ First axed cheap bus fares last term, now Greens want Labour to pick up policyA Green Party scheme to give cheaper public transport fares to people on low incomes was axed by NZ First - now the Greens want Labour to pick it up.

Sergio Vasquez (Serhio Basque) @SBasqe

@bernardchickey The insurance industry has this covered (maps for flood, coastal erosion, coastal inundation, landslide, earthquake etc.) They know what they won't insure in the future. It will just mean that insurers will control what you buy irrespective of what the LIM says.

Rush Doshi @RushDoshi

Beijing sent a list of 14 grievances to Australia supposedly justifying its economic coercion against it. The list is revealing. It shows the PRC holds countries responsible for their free *civil societies* & serves as a template for illiberal order-building. Some thoughts: 1/

The Sydney Morning Herald @smh

Beijing has issued an extraordinary attack on the Australian government, accusing it of "poisoning bilateral relations" in a deliberately leaked document that threatens to escalate tensions between the two countries https://t.co/Yz0oLDLg0i

Longer reads or listens worthy of your time

Bernard Hickey @bernardchickey

Had a proper full listen this AM. Excellent from @coughlthom and @emiledonovan on issues of moral hazard and the ugly politics of poor people paying to build sea walls for rich coastal property owners, or to buy their mansions and compensate them.

rnz.co.nzA coastal property dilemma that everyone pays for<p>Dealing with the political and financial repercussions of sea level rises is going to make political decisions over Covid look easy. There are billions of taxpayer dollars at stake in property bailouts. </p>

Bernard Hickey @bernardchickey

Excellent piece from @petergnz on @businessdesk_nz $$$ A cautionary tale for anyone in politics or our bureaucracies who think they could or should 'crack down' on benefit fraud with some fancy data mining/mapping and a juicy bit of AI. businessdesk.co.nz/article/techno…

Peter Griffin @petergnz

Australia is paying the price of an ill-conceived mix of policy and technology. The AU$1.2 billion robo debt lawsuit settlement is a reminder of the fragility of trust in government... on @businessdesk_nz today... https://t.co/vEx7f2gTl3

Useful reports

The IIF’s Global Debt Monitor report shows developed markets’ overall debt jumped to 432% of GDP in the third quarter, from a ratio of about 380% at the end of 2019. Emerging market debt-to-GDP hit nearly 250% in the third quarter, with China reaching 335%, and for the year the ratio is expected to reach about 365% of global GDP.

CoreLogic released its inaugural first home buyer report today, showing first homers are buying 25% of properties, which is a record high since it started collecting data in 2005, but…

“Access to KiwiSaver for their deposit (or at least part of it) and a willingness to compromise on the location or type of property (and hence its cost) have been factors behind the strong market share for FHBs lately. In this post-COVID phase, returning kiwis and would-be OE’ers have probably made a contribution to strong FHB demand as well.” Corelogic

Coming up

Tomorrow - Tauranga City Council will decide whether to ask for a Crown manager or observer after a damning report this week on its culture.

Sat Nov 21 - National Party AGM due to vote on re-election of President Peter Goodfellow. He has confirmed he will run again.

Mon Nov 23 - Stats NZ releases Retail trade survey for Sept quarter

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

Dec 1 - Landlords must include a Healthy Homes statement with any renewed tenancy agreement after this date. Landlords have until July 2024 to comply with new rules on heating, insulation and dampness.

Weds Dec 9 - Parliament rises for the year.

Mon Dec 21 - Tesla joins the S&P 500

Ngā Mihi

Bernard

PS: Great thanks to

PS: Thanks to Marc for today’s Kākā pic.

PPS Some fun things

IFLScience @IFLScience

For 15 years, Sweden thought they were hearing Russian submarines invading their territory. They regularly investigated, sending subs, boats, and helicopters at great expense, only to come up empty-handed. Upon investigation by a biologist, it turned out to be herring farts.

Dust-to-Digital @dusttodigital

Bass Tong performing recently in Nantes, France. He refers to his style of music as “acoustic techno,” which he produces using an instrument he named the Pipe Drum. It is made from PVC tubes and is played with flip-flops. His kit also includes a cajón, a hi-hat, and a snare drum.