The Kākā by Bernard Hickey

TLDR: This week in the podcast of our weekly hoon webinar for paying subscribers, Peter Bale and myself talked with Auckland Central MP Chloe Swarbrick and Auckland City Councillor for the Albert-Eden-Puketāpapa ward, Julie Fairey, about Auckland’s floods, climate change and what might (and should) happen next. This week’s five big things The climate changed - Auckland’s heaviest ever downpour aft...

TLDR: Yesterday’s decision to extend again the Ukraine War fuel tax cut of 25c/litre was portrayed by the Labour Government as it focusing on ‘bread and butter’ issues to help those most stressed by ‘cost of living’ issues associated with high inflation, which sounds true on the face of it. The problem is the $2 billion of cash benefits the policy has now ballooned to are actually distributed most...

TLDR: Aotearoa’s Government effectively decided without debate in late 2021 when it created the $4.5 billion Climate Emergency Response Fund that it would be fiscally neutral, which means it does not increase the Government’s debt and does not ‘pay forward’ investment by today’s taxpayers to help future taxpayers deal with or reduce the pain of climate change. The fund essentially recycles revenue...

TLDR: The cleanup and the post-mortem have begun, even though the rain just keeps falling in Auckland after Aotearoa’s most expensive ever climate event. The most rain ever to fall in a day: * swamped our biggest city, killing four people, making dozens of homes uninhabitable, forcing hundreds to people into emergency shelters and causing (at least) hundreds of millions of dollars damage; * exposi...

TLDR: Chris Hipkins signalled in his first week as PM he was open to loosening migration settings and would ‘rein in’ unnecessary Government spending to focus on ‘bread and butter’ cost-of-living issues once he picks his full Cabinet next week. Also in our political economy, the global economy and geo-politics this week: * December quarter inflation was softer than the Reserve Bank (Te Pūtea Matua...

TLDR: New PM Chris Hipkins looks set to loosen migration settings to buy the Government a surge of cheap economic growth that keeps interest rates and inflation low and tries to restart house price growth, along with winning Labour re-election. Median voters love this kind of growth, as do businesses and Treasury. National and ACT really love it and we face a type of ‘race to the bottom’ competiti...

This is a free preview of a paid episode. To hear more, visit thekaka.substack.com TLDR: Quarterly inflation fell to its lowest level in 18 months in the December quarter and is set to fall further through this year as fuel costs and rents stabilise, and as fruit and vege prices fall with better weather. Some economists lowered their forecasts for the peak in the Official Cash Rate later this year...

TLDR: Jacinda Ardern shocked almost everyone by returning from a summer break this week and resigning as Prime Minister because she said had “nothing left in the tank.” Perhaps even more surprising, Deputy PM and Finance Minister Grant Robertson said he did not want the top job, having tried and failed twice to become Labour Leader in 2011 and 2014. Within 48 hours, the Labour Caucus settled on Ch...

TLDR: Apparently out of the finally blue skies of a summer break, Jacinda Ardern announced this afternoon she has decided to resign as Prime Minister , saying she just didn’t have enough energy left to keep going for a third term. I wrote and said publicly last year there was a non-negligible but real chance she would retire just before Christmas or early this year before the resumption of Parliam...

This is a free preview of a paid episode. To hear more, visit thekaka.substack.com TLDR: Another business confidence survey shows the Reserve Bank’s ‘cool your jets’ warning in late November that it wanted to engineer a recession did indeed shut down the ‘jets’ of businesses and investors. But initial signs over ‘summer’ from the tills of retailers and bar owners show consumers are yet to really c...

This is a free preview of a paid episode. To hear more, visit thekaka.substack.com TLDR: Any relaxation of Loan to Value Ratio (LVRs) restrictions next year in conjuction with the introduction of Debt to Income (DTIs) would further heighten tensions between an Adrian Orr-led Reserve Bank and any new National Government. That’s because DTI limits hit landlords harder than first home buyers and woul...

TLDR: Aotearoa’s peak union body, the CTU , has proposed an Inflation and Incomes Act that takes a new approach to reducing inflation of rent, food and energy while also increasing disposable incomes of workers. Inspired by US President Joe Biden’s Inflation Reduction Act, which is based on clean energy and infrastructure investments to reduce energy costs and emissions, the Inflation and Incomes...

TLDR: 2022 was the year two global supply shocks — covid-driven worker shortages and the Ukraine war’s hit to gas and oil supplies — put a blowtorch under inflation already simmering because of plenty of Government spending and monetary stimulus to combat covid in 2020 and 2021. That led to an aggressive response from independent inflation-targeting central banks trying to win back their inflation...

TLDR: This year the long effects of covid and Russia’s invasion of Ukraine generated global labour and energy supply shocks that fired up already-hot demand-led inflation from 2020 and 2021. That forced central banks to slam on the interest rate brakes, which is forecast to create recessions next year, just as inflation comes off the boil. In Aotearoa, the Labour Government’s popularity cratered a...

TLDR: A Labour Government behind in the polls and facing complaints from businesses and landowners about high inflation and rising interest rates has just done what both flavours of politicians have done for 20 years when the pressure goes on: pulled the migration lever hard to juice growth in a low-inflationary way without building the infrastructure first. It’s our version of Groundhog Day in Ao...

TLDR: This week in Aotearoa’s political economy and in geopolitics: * the first tranche of Three Waters legislation was finally passed into law amid a welter of controversy and confusion over a clause to entrench public ownership; * two new opinion polls showed National and ACT are in pole position to win next year’s election outright; * PM Jacinda Ardern confirmed she would reshuffle her Cabinet...

TLDR: Councils wanting to encourage the funding of affordable new housing should adopt the approach of the Queenstown Lakes District Council , which has been quietly requiring suburb developers to hand over some of their rezoning profits in the form of land or money to the district’s Community Housing trust to fund over 200 new homes. The use of this system, called inclusionary zoning or inclusion...

TLDR : My article and podcast yesterday suggesting Auckland Council sell its 13 golf courses for housing redevelopment instead of selling its Auckland International Airport stake generated quite a response and discussion. I opened it up to all and promoted it on Twitter after requests from paying subscribers. I’m opening this one up from the start. One common rebuttal was that turning golf courses...

TLDR: Auckland Mayor Wayne Brown wants to sell the council’s $2 billion stake in Auckland International Airport to cut interest costs by $88 million per year and try to fill a $295 million budget ‘black hole’. But he is ignoring the annual losses of over $160m a year to run the council’s 13 golf courses, which have a combined value of well over $2.9b. He also has made no case for emergency asset s...

TLDR: This week in our political economy and in the global economy: * the Retirement Commissioner called for changes to the Accommodation Supplement and for much more housing for the elderly because of an expected doubling of retirees struggling to pay their rent or mortgage from NZ Superannuation; Tuesday’s email * the Government offered concessions to farmers refusing to cooperate on emissions r...

TLDR: In a big week for our political economy: * Te Putea Matua (the Reserve Bank) decided to force the economy into a recession around next year’s election to bludgeon inflation down from 7% to 2%; * Governor Adrian Orr expressed regret in a statement to a Parliamentary Committee about the economic shocks and the higher-than-target inflation and admitted the bank’s actions had contributed to it;...

TLDR: This week’s tougher-than-expected moves by Te Pūtea Matua (the Reserve Bank) to engineer a recession next year to get inflation back under control has surprised a generation that became inured to low and stable inflation and interest rates. I spoke to Reserve Bank Chief Economist Paul Conway yesterday about why the bank is cracking down so hard, and whether it could have waited longer for in...

TLDR: Te Pūtea Matua (Reserve Bank) Governor Adrian Orr has just demonstrated his inflation-fighting resolve and political independence with a volley of monetary policy tightening and tough talk that will shock parts of the economy to a standstill. If Orr had put on a Grinch costume and told everyone to give up on Christmas it would fit perfectly with the bank’s actions, forecasts and comments yes...