The Kākā by Bernard Hickey
The Kākā Project
So much noise and so little signal
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So much noise and so little signal

Our 54th Parliament opened last week with our leaders shouting past each other into a void where the nation’s debate should be. They didn’t address our problems or suggest real solutions. Here's a few
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Transcript

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Parliament opened with pomp and ceremony, then it was back to politicians shouting at and past each other into the void. Photo: Office of the Clerk, NZ Parliament

TL;DR: It started with pomp, pageantry and a speech from the throne laying out the new National-ACT-NZ First Government’s plan to turn back much of the legislative clock to 2017 and beyond.

It ended with PM Christopher Luxon accusing former PM Chris Hipkins of being an arsonist and then Hipkins branding Luxon’s Government as having the most shambolic start in our political history. The first claim isn’t true and the second isn’t relevant. None of it mattered.

None of this noise from the gears grinding into action in our core institution of democracy and governance for the next three years had any signal. Our core problems were not addressed. Real solutions were not put forward. All our leaders did was proclaim and shout at each other and past each other into a void where the debate should be about fixing our housing affordability, climate change and poverty crises.

In The Kākā Project’s spirit of covering these issues and suggesting solutions, today’s edition steps back to detail these core problems and puts forward some solutions for debate, including:

  • a multi-party agreement of a infrastructure funding and building strategy to cater for an agreed population growth strategy to 2100 of 1.5-2% per year, the same rate as we’ve had for the last 20 years; and,

  • a multi-party agreement to create independent crown agencies to achieve affordable zero-carbon housing and transport (40% of disposable income) for all by 2040, with that population growth strategy.

We have opened this edition up fully and immediately to celebrate the arrival soon of ‘Gravy Day’ on the 21st of December, which will be our final publication day of the year. It’s also the day when this special 50% off offer for the first year for new subscribers expires. The podcast above was recorded last Thursday.

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So much noise and so little signal

Last week, the machinery of our new 54th Parliament and the new National-ACT-NZ First fired up to start detailing plans, repealing legislation and restarting Parliamentary debates.

Just as in the election campaign, the real issues weighing on both the present and future of Aotearoa-New Zealand were not addressed in any meaningful way that acknowledged by the scale of the problems and proposed real solutions, including that we have:

  • the least affordable rents in the OECD, with almost 60% of renters in the bottom quintile of income paying more than 40% of disposable income in rent;

  • stagnant productivity growth per hour worked that is at least 30% behind that of our nearest neighbour, which is also easiest outlet for frustrated young renters wanting to start families, as shown by record high migration of residents to Australia;

  • a $200 billion infrastructure deficit after 30 years of underinvestment and population growth of 1.5-2% when less than 0.5% population growth was forecast, let alone planned for; and,

  • we have barely started electrifying our transport and industrial sectors in a way that would allow us to meet the international commitments both main parties have signed up to and would lock our exporters out of global trade if we failed to meet them.

Those failures are enabled by parties, policies and voters in the median of the spectrum who agreed in a defacto way:

  • a (non) population and (non) infrastructure policy that simply assumes in a self-delusionary way without debate that the 1.5%-2% population growth rate of the last 20 years is only a short-term thing that will stop as soon as temporary labour gaps are filled by locals and the 230,000 people here on temporary work visas are sent home;

  • a tax system that does not tax capital gains, wealth or inheritances, especially the $600 billion of unarned capital gains from the value of residential land over the last 20 years, but does heavily tax wage and salary incomes, corporate profits, pension fund savings and consumption in a way that means our homes are worth 10 times our stock market and eight times our retirement savings (whereas Australia’s homes are worth four times its stocks and three times its savings, and US homes are worth the same as its stock market and twice its retirement savings);

  • a bi-partisan fiscal strategy that prioritises balanced budgets and low public debt and overall tax ratios to GDP of less than 30%, when other OECD peers have ratios closer to 50%; and,

  • a bi-partisan approach to climate policy that assumes in a self-delusionary way that the Government can meet its international committments by spending up to $24 billion on international carbon credits.

These policies mean:

  • there are nearly 8,000 people living in emergency housing of motels, caravans and relocatables, including nearly 4,000 children;

  • nearly 600,000 people are dependent on food banks in part or whole to have enough food for themselves and their children to eat;

  • over 250,000 or over 66% of people on benefits have a debt to MSD for over-payments, benefit advances and emergency assistance grants averaging $4,000 per beneficiary and debt of $3.5 billion owed to MSD, IRD and Justice; and,

  • nominal GDP growth is growing fast because the problems outlined above are masked by record-high net migration of temporary workers to suppress wage inflation and inflate rent and land price inflation in a way that generates ever-growing and tax-free gains on values of residential land.

The Kākā Project’s Briefing to Incoming Ministers

This is the briefing that no one inside the ministries will write or deliver to the newly sworn-in coalition Government in the coming days because the election debates and the winning parties’ manifestos either didn’t talk about the issues it addresses, or ruled out the best solutions.

Fair enough. The officials are no doubt nervous before a job-slashing mini budget on December 20, but we have nothing to lose by saying the quiet things out loud. The Kākā Project is all about addressing the big and awkward problems and suggesting solutions that might work in the long run for all, even if they are difficult for those protecting their versions of the status quo right now. Luckily, I’m unelectable and unappointable. So here goes…

Before they launch into a frenzy of repealing and dealing, PM-elect Christopher Luxon and his deputies David Seymour and Winston Peters should stop, take some deep breaths and address the biggest problems in front of Aotearoa for the long term.

They are:

  • an investment-lite, infrastructure-lite and housing-lite economy that is growing its population much faster than it can handle without busting a few gaskets and throwing off thousands more New Zealanders to live and work in Australia every month;

  • a housing market and set of infrastructure funding, tax rules and assumed property rights that make our housing costs the most expensive and stressful in the world for both renters and potential first-home-buyers without their own Banks of Mum and Dad; and,

  • an accidentally-on-purpose population-non-policy that is completely out-of-whack with the current combination of tax policies, NZ Super and health entitlement assumptions and Government debt policies that are are seen as untouchable and therefore undebateable by National and Labour.

The coalition should take a fresh look at their own manifestos and look at doing the following;

  • agreeing a population growth strategy and infrastructure funding plan that distributes the benefits of high population growth (1.5-2% per year) much more clearly and fairly to local councils to fund their shares of water, transport and housing infrastructure;

  • reducing housing and transport costs for those in the lowest income quintile to less than 40% of disposable income, reducing the chances of them getting into debt and allowing the removal of $4 billion a year of subsidies for housing;

  • that means massive building of affordable homes by Government, NGOs, Build-to-Rent funds and everyone else; and

  • meanwhile, MSD debts should be wiped and not built up again.

I’d also propose:

  • the eventual 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, once housing and transport is affordable at no more than 40% of disposable income; and,

  • stopping 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-funded building up of 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.

The Kākā Project’s big idea to change incentives and pay for the changes

The Kākā Project’s main idea is a 0.5% annual tax on the value of residential zoned land, with multiples for unoccupied land and houses, 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 65;

  • making all education (including preschool) 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;

  • allowing the non-taxation of retirement savings while in their funds, but taxing income normally on the way into and out of the funds, as is the case often overseas; and,

  • reducing GST to 10%, while keeping it on all current items, and bringing in financial products such as mortgages, bank fees and life insurance.

I welcome feedback, challenges, suggestions for improvements, unintended consequences and problems in the comments below. Only paying subscribers can comment.


Poll of the day for paying subscribers to The Kākā

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Quote of the day

On Casey Costello being given responsibility for anti-smoking

“Unbelievable! Having a pro-tobacco health minister in charge of tobacco control. She is more of an anti-health minister by opposing SF (smoke-free) laws and wanting to allow oral tobacco in NZ! She chaired the taxpayers union which receives tobacco $$. How much did Act and NZ First get?” Public Health academic and activist Boyd Swinburn on the appointment of NZ First MP Casey Costello as Associate Minister of Health being delegated responsibility for anti-smoking efforts.


Comment of the day in The Kākā community

‘They f**ked around, and now they’re finding out’

“As Chris Slane highlights in his cartoon, this is a feature not a bug. Inflation doesn't affect everyone the same way: For the wealthy and powerful, it gives them cover to hide all manner of sins of tax obstruction, lobbying and, of course, price rises; high interest rises protect the wealth of those who can afford to live outside of debt.

“Our naive insistence on "change" at all costs has walked us right into this idiocy, and the best defence the centre voters seem to have for their vote now is "Give them a chance - Labour were no better!"... Protests like yesterday's are so important to ensure this new government understands its leash is far shorter than the centrists who fell for their slimy mistruths seem prepared to give them.“ Tim in yesterday’s Chorus


Timeline-cleansing nature pic of the day

Eddie Clark via BlueSky: “Man, pretty special. Kaka parent feeding its young (who's looking almost old enough to be taking care of that itself!). Suburban Karori. Minutes from my front door.”

Ka kite ano

Bernard

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The Kākā Project
Examinations of policy proposals in Election 2023 that look beyond political parties in Parliament in Aotearoa and include suggestions by The Kākā's writers and subscribers.