Wayne Brown's #Auxit moment
Aotearoa finds its Trumpy Brexiteer; Brown pulls Auckland out of LGNZ with his casting vote; Child poverty stagnates; Rent stress worsens more than mortgage stress; RBNZ's profit-inflation warning
TL;DR: Auckland Mayor Wayne Brown has become our version of Donald Trump and Boris Johnson, except without any of the insatiable appetite for media appearances. He has mastered their impulsive crash-or-crash-through styles of ‘policy making’ and could poison the well for National on October 14 if he (and National) are not careful.
Yesterday’s decision to pull Auckland Council out of LGNZ was not only ludicrous, counter-productive and self-defeating ($640,000 of savings are wiped out by $1 million of savings forgone by Auckland because of leaving LGNZ). It also wasn’t supported by Auckland’s boards and sent a collective middle finger to everyone south of the Bombay Hills. Those north of Orewa already know Brown as the Far North Mayor they ejected angrily after six years in 2013. Sadly, Auckland’s voters didn’t appear to notice he had form.
The news in our political economy this morning
Our Donald Trump/Boris Johnson does it again - Auckland Mayor Wayne Brown just had his Trump moment by pulling Auckland Council out of Local Government New Zealand (LGNZ) with his casting vote yesterday. Call it #auxit with the x prounced 'sh'. National may well have a 'Wayne Brown' problem to solve by the election. The crash or crash-through approach and all the nasty shocks might spook Aucklanders worried about what a change to National nationally might mean.
Let’s do this? - Child poverty stats out yesterday showed no real improvement in 2021/22 vs 2020/21. There's still nearly 120,000 kids or 10% living in material hardship. It's 18% for Maori and 26% for Pasifika. It hasn't improved much since 2016. Labour's new child poverty minister Jan Tinetti said she was encouraged it hadn't gotten worse. Hardly 'let's do this' energy. This is all because Labour (and National) haven't improved housing costs because they both haven't (and won't) invest enough in local public transport and water infrastructure to cope with 1.5% population growth (which they both accidentally on purpose keep engineering without permission or planning).
Rent stress worse than mortgage stress - Household living cost stats out yesterday show renters in Aotearoa are still doing it tougher than owners with mortgages. Over a quarter of renters pay more than 40% of their disposable income in rent. It's just under 20% for those with mortgages. Rents have nearly doubled in the last 15 years while mortgages rose by less than half. And rents actually rose faster (5.0%) in the last year than mortgages did (4.6%). Renters also report higher rates of mould and cold
Watch your Ps and Ws (profits and wages) - Reserve Bank Chief Economist Paul Conway warned firms and workers in a speech late yesterday they needed to avoid embedding higher inflation into their wage demands and their profit margins. The profit margin line was a slightly stronger and interesting one that previous comments. And he said a mild recession is still on its way and necessary to get inflation down. Also, he said we should also realise Covid and the floods made us poorer, and the RBNZ can't fix that.
“If businesses and workers try to push their real profit margins and real wages to where they would have been if not for the pandemic, the war, and storms, then the more likely it is that high inflationary pressures persist into the future.” Paul Conway in a speech.
Quote of the day
Read it and weep
“They (LGNZ) need us more than we need them. By staying on our own we force them (Ministers of the Crown) to come and see us.” Wayne Brown.
Chart of the day
ANZ's Truckometer data suggests another fall in GDP is possible in the just-ending March quarter, which would technically create a recession.
I welcome your suggestions for things I've missed in the comments. I'm loving the action here this week.
A version of this went up on Chat for paying subscribers at 6 am. I’ll send it more directly via email in future, but with much better formatting.
Cartoons of the day
Substack of the day
Profundities, curiosities, spookies and feel-goods
A fun thing
PS: I'm all on for the AMA at midday and the Hoon at 5pm with Peter. I welcome your suggestions for guests today too.
We can safely assume Wayne Brown will not be careful.
By the way, Brown withdrew the Far North District Council from LGNZ in 2008 along with then-Mayor Stan Semenoff’s Whangarei District Council, soon after then
Whangarei Whanganui Mayor Michael Laws did the same for his council. Both returned to LGNZ within a few years after the departure of said Mayors.