TL;DR: The five things that mattered in Aotearoa’s political economy that we wrote and spoke about via The Kākā and elsewhere for paying subscribers in the last week included:
* The new Government is reviewing migration settings that produced 2.8% population growth last year and is looking at a longer-term strategy of matching population growth to the ‘absorbtive capacity’ of Aotearoa-NZ’s infrastructure. See more in Monday’s email.
* Prime Minister Christopher Luxon adopted the language of Ruth Richardson before her 1991 ‘Mother of All Budgets’ in arguing for benefit sanctions to bolster the Government finances, which he said were in such a mess that there was a risk of losing the confidence of creditors. Luxon said it was time New Zealanders had a ‘grown-up conversation’ about the ‘brutal facts of our reality’ and he would not shy away from taking ‘hard decisions’. But the evidence shows Aotearoa-NZ’s financial position is nowhere near as troubling as it faced in 1991 and even if it were, the really ‘hard decisions’ would be to follow the advice of the financial grown-ups of the world — the IMF, the OECD and the World Bank — which is to tax capital gains, focus on much faster reductions in climate emissions and to avoid pointless austerity that widens inequality and would scar another generation, See more in Tuesday’s email.
* Ratings agency Standard & Poor’s downgraded the outlooks for the debt issued by 15 councils, immediately increasing borrowing costs and forcing rates increases that will further inflate living costs and keep pressure on the Reserve Bank to keep mortgage rates high. S&P blamed the new Government’s decision to repeal Three Waters and the resulting uncertainty about how councils would pay to repair and expand infrastructure needed to cope with 1.5-2% per year population growth enabled over the last 20 years by both parties running the Beehive. See more in Wednesday’s email.
* Stats NZ reported the number of children living in material hardship rose by 23,400 to 143,700 (12.% of all kids) in the year to the end of June. The percentage of Maori kids living in poverty was 21.5%, little changed in statistical terms from the previous year. See more in Friday’s email.
* Flying in the face of comments from a ratings agency and a mountain of demand for a new long-term sovereign bond issued yesterday, Finance Minister Nicola Willis again characterised the Government’s finances as too fragile to borrow in its own right to solve Aotearoa-NZ’s infrastructure deficits. But the ‘grown-ups’ in financial markets and in ratings agencies are saying the exact opposite. S&P Global Director of Sovereign and Public Finance Ratings, Anthony Walker, told me in an interview the Crown’s AAA rating was not fragile and the Crown had 30% of GDP ($120 billion) of borrowing capacity before it would be downgraded.
What we talked about on ‘The Hoon’ on Thursday night
In this week’s podcast above of the weekly ‘Hoon’ webinar for paying subscribers at 5pm on Thursday night:
* 5:00 pm - 5:05 pm - Bernard Hickey and Peter Bale opened the show with a discussion about the week’s local news, in particular the retirement of Grant Robertson and the tragic passing of Efeso Collins.
* 5:05 pm - 5:20 pm - Bernard and Peter talked with David Farrier from Webworm with David Farrier about his new Big Worm Farm fund for investigative journalism. Details here
* 5:20 pm to 5:30 pm - Bernard, Peter and The Kākā’s climate correspondent Cathrine Dyer talked about the significance of the loss of FSC certification for log exports by Earnslaw because of slash damage in 2018 (1News) and a study that found global support for climate action being ‘systematically under-estimated’ Carbonbrief.
* 5.25 pm - 5.45 pm - Peter, Bernard, and Robert Patman talked about the latest developments in Ukraine and the Middle East.
* 5.45 pm -6 pm - Peter, and Bernard spoke with CTU Economist Craig Renney about the Government treating its finances like household finances, next week’s rate hike(?) chances and this week’s child poverty stats.
The Hoon’s podcast version above was produced by Simon Josey.
This is a sampler for all free subscribers. Thanks to the support of paying subscribers here, I’m able to spread the work from my public interest journalism here about housing affordability, climate change and poverty reduction around in other public venues. I’d love you to join the community supporting and contributing to this work with your ideas, feedback and comments. We have a couple of special offers on at the moment.
Other places I appeared this week
I talked with S&P Global Government Ratings Director Anthony Walker for When The Facts Change via The Spinoff about downgrades to the ratings outlooks for 15 councils and the political economy of borrowing from the Crown’s balance sheet to fix our infrastructure deficit.
We also produce this 5 in 5 with ANZ daily podcast and Substack for ANZ Institutional in Australia, which you can sign up to via Spotify and Apple and Youtube for free.
Ka kite ano
Bernard
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