NZ Politics Daily – 15 February 2024
Top “NZ Politics Daily” stories today
Below are some of the more interesting and insightful New Zealand politics items from the last 24 hours.
1) The disastrous state of New Zealand’s biggest construction company, Fletchers Building, is drawing attention to the role politics and politicians play in creating the circumstances in which much of the country’s industries and markets are dysfunctional and dominated by oligopolies. Auckland University Economics Professor Robert MacCulloch is particularly big on pointing out that the state has enabled Fletchers to turn into what it currently is, and is now calling for the Government to break it up – see his blogpost, Fletcher Building: is it the only Private Monopoly in the World that can't make a buck? It is time to break up NZ's most useless company
Here’s his key point: “National must prove it is pro-competition and pro-reducing-the-cost-of-living. So smash Fletcher Building into small bits and allow our building industry to function. It's not the low-paid workers in this country who are responsible for our appalling productivity growth. It is the bosses – the management – the CEOs and Directors of many of our largest companies - who are failing us due to their ineptitude.” But MacCulloch also draws attention to the Fletchers’ previous misuse of $68m of Wage Subsidy payouts, and its refusal to pay it back, as well as the company’s links to the NZ Initiative, which he describes as a “lobby group” that “is hugely influential with the new coalition” government.
2) Financial commentator Sam Stubbs – who has a big interest in the issue, as his KiwiSaver provider Simplicity invests in Fletchers – has written today about the incredulity of the company not being able to make a profit when it is so protected from competition – see: Fletcher Building resignations are too little, too late (paywalled)
Here’s his point about Fletchers’ oligopoly position: “When almost every building built in New Zealand relies on its products, and when it’s a major builder itself, Fletchers should be capable of setting and executing a strategic plan which benefits its shareholders. And it operates in a country where the selling price of houses is one of the highest in the world, and where housing affordability is the worst in the OECD. So as macabre as it is, Fletchers should have been minting profits from being the dominant player in an industry with huge margins. If nothing else, it should be what the big Aussie banks have been to finance — too expensive for consumers, but a profit machine nevertheless.”
3) BusinessDesk’s Rebecca Stevenson has also written today about Fletchers’ oligopoly position, putting forward more arguments for it to be broken up, or at least more tightly regulated by the Commerce Commission. She quotes Eden Bradfield of Blackbull Research, who is also calling for the Government to break up Fletchers: “I’m not sure what a new CEO will do and if that is the solution. Problems are structural, cultural and legacy and (especially) the oligopoly they have – a breakup could realign focus across divisions. Competition is healthy” – see: Fletcher the 'useless monopoly needs to be busted' (paywalled)
More intervention by the Commerce Commission to reinforce the Commerce Act should also occur, with Stevenson explaining: “The act prohibits restrictive trade practices, including cartel arrangements such as price fixing or restricting output, taking advantage of market power, and entering into arrangements that substantially lessen competition in a market.” For this reason, ComCom has already carried out market studies into the restrictive availability of building supplies and how manufacturers of Gib use mechanisms to prevent competition.
Stevenson also points out that the state has potentially played a role in creating these oligopoly conditions: “Critics say it has abused its dominant position, pointing to the 2022 plasterboard shortage, where it pulled back from supplying competitor retailers. Its company Winstone Wallboards is the only NZ manufacturer of plasterboard with its Gib product. Fletcher also manufactures cement (Golden Bay Cement), concrete (Firth) and insulation (Tasman Insulation). Those critics say it has also had favourable treatment from successive governments, winning large contracts and its Gib plasterboard product embedded in the building consenting process.”
4) Later next week the Electoral Commission will release details of all the 2023 general election donations declared by candidates. But Newsroom’s Jonathan Milne has already been tracking down some of the money recently given by fisheries companies to NZ First candidates, and what they might be wanting in return for their largesse – see: Big donor’s ask: Minister reviews cameras on fishing boats
Here are the key details of the recent donations from Craig Boote, who is the chief executive of fishing company Westfleet: “He says he gave $10,000 to Shane Jones, $10,000 to National’s West Coast candidate Maureen Pugh, and as he recalls, $10,000 to the Act Party. The donations were split between two of his companies, Westfleet and Aimex Hydraulics. Westfleet is 50-50 owned by Boote and Sealord – which previously donated to NZ First.”
Shane Jones met this week with Boote and other fishing bosses for a dinner in Nelson, and Milne reports that the donor wants the Minister of Fisheries to get rid of cameras on fishing boats. Boote is reported saying: “I think they’ve gone overboard and invaded workers’ privacy… It’s going to be very, very difficult for us to recruit young men when they’re gonna get perved on 24/7.” In response, Jones is quoted: “I think the cameras were introduced under the last government without a true conception of the costs… I’m going to take options to Cabinet as to what is the future of the camera regime. What’s the value associated with it as a fisheries management issue and who’s going to pay for it?”
5) Major reform of corporate lobbying is needed according to today’s editorial in the Otago Daily Times. The newspaper calls on the new Minister of Justice Paul Goldsmith to bring in tougher rules: With concerns already swirling around the coalition government regarding the influence of Big Tobacco on its policies, Mr Goldsmith will need to take a bold stand. A mandatory code of conduct for lobbyists, a public register of lobbyists and their clients, and a stand-down period for ministers, MPs and senior public servants, would be a good start” – see: Lobbying plans unclear (paywalled)
The ODT is critical of a current Ministry of Justice draft on new rules for lobbyists, which appear to have been watered-down: “The draft also sounds weak on the controversial issue of the revolving door which means political insiders, whether they be MPs, ministers, or senior public servants, face no stand-down period when they move on from their taxpayer-funded roles to become lobbyists. In the last few years it has been hard to keep up with the number of ministers and former MPs from a variety of parties who have gone straight from Parliament to lobbying roles. The code recommends cool-off periods but ludicrously leaves it to the industry to decide how to implement them.”
And the newspaper calls on the new Speaker Gerry Brownlee to clarify what is going on with swipe card access to Parliament, given he has decided to remove transparency on who gets access, and there have been confusing and conflicting reports on whether lobbyists might have privileged access to decision-makers.
6) There is also a problem of transparency around how government departments spend their money and what they achieve. NBR political editor Brent Edwards writes today about how the Public Finance Act is at the centre of delivery problems for successive governments – because there is no real ability under the Act to work out whether billions spent on various public services are delivering on what it is supposed to do. Instead of promoting actual delivery, Edwards explains how the Budget process and the Public Finance Act incentivise government departments to build up their empires with more and more money to spend regardless of the efficiency of the spends – see: Growing consensus around measuring the effectiveness of spending (paywalled)
Edwards cites a number of politicians and officials – from Grant Robertson to Helen Clark to Simon Upton – complaining of increasing budgets for agencies without being able to see a return on their investment. For example, Simon Upton, the Parliamentary Commissioner for the Environment “warned it was hard to account for the more than $2b a year spent on the environment, with his office struggling to even work out how much money was actually being spent.” Similarly, Auditor-General John Ryan “used the example of the $225 million spent on the previous Government’s clean freshwater policy, saying Parliament’s environment select committee had to call in six government agency chief executives to talk about it. Each agency had done its own thing, and it was impossible to tell if the spending was effective because they had not come together and approached it as a single package.”
However, Edwards reports that “momentum seems to be shifting” and this week Finance Minister Nicola Willis told “Parliament’s finance and expenditure select committee that change was on her agenda.”
7) The organisation formerly just known as The Salvation Army is now also going by the te reo name of Te Ope Whakaora, and today they released their annual State of the Nation report, Ngā Tukunga Iho (“The Things We Inherit”), which is a list of the social measures in which the country has gone forward and backward on – see Trent Doyle’s Unaffordable housing, wage inequality key issues facing NZ in State of the Nation 2024 report
8) The unaffordability of housing is a key issue, and this is also the focus of another new report showing that amongst homeowners, “On average, people spent about half (49 percent) of their household incomes on mortgage repayments in the final quarter of last year” – see Trent Doyle’s Housing affordability remains 'stretched' – CoreLogic data
9) For a very good analysis of just how broken the housing market is, see Susan Edmunds article, First-home buyers ‘are rich people’
The article challenges the notion of trickle-down-housing in which only expensive houses are built, but older ones become affordable to poorer people. Economist Shamubeel Eaqub is quoted explaining how this isn’t actually working, and even middle-income people are now locked out of ownership: “When we think about building out of the crisis which has been gathering pace for 30, 40 years, we have to ensure that a portion of the new homes we build are for rentals, or are retained for social housing and affordable housing. Otherwise what we’re telling people who don’t have the income and the wealth is sorry, you wait, live in misery for your generation.”
10) The new Government is still interested in tackling the housing crisis by allowing in foreign investment. Newshub’s political editor Jenna Lynch reports: “The Housing Minister's preferred option is now allowing foreign buyers to invest in not just large-scale build-to-rent housing, but any residential land, if they intend to develop even one house on it” – see: Leaked Cabinet paper reveals Government considering allowing potential influx of overseas landlords
11) Meanwhile, current landlords are to be given large tax cuts, some of which will be given in cash refunds because in legislating to allow landlords to deduct interest costs from their tax bills, the Government is making this retrospective – see Thomas Coughlan’s Government’s $3 billion landlord tax cut would be retrospective and trigger some refunds – IRD (paywalled)
12) Can social housing provision be made profitable? One group of social entrepreneurs thinks so, and have launched a new company, Bay of Plenty Housing Equity Fund, that they hope to list on the stock exchange, by building low-income housing. This is being promoted today by RNZ’s Sharon Brettkelly – see: The investment fund aiming to fix the housing crisis
Making money out of social housing is an innovative scheme, and so far, most of the funding is coming from the community and the state. For example, the article reports that Tauranga City Council, under the direction of Anne Tolley, has put $10m into the business. The business is now lobbying for investment via the state, targeting ACC, the SuperFund and KiwiSaver schemes.
13) The crisis at the Wellington City Council hits crunch point today, with the Labour-Green dominated council set to implement the most rightwing policies seen from a council in living memory. For an overview of possible asset sales and cutbacks on services, see Georgina Campbell’s Wellington City Council budget crunch: Libraries, swimming pools and fireworks under threat
14) Some councillors think that rather than cutting services, the “corporate welfare” deal that Tory Whanau has negotiated for the mega-business Reading Cinemas should be axed. Tom Hunt of the Post calculates that if the deal was stopped, the money would be “enough to fix 12,800 leaks” that are currently popping up all over the city, which the council can’t afford to properly deal with – see: Councillors join forces to stop $32m Reading cinema deal
15) The axing of the local government Three Waters programme this week, and the start of National’s new Local Water Done Well can be extremely confusing to follow, especially with its mix of race relations issues and huge amounts of investment needed. But political scientist Grant Duncan has done the best job in explaining it all – see his: 3 Waters: The Sequel
16) The foreign policy community in New Zealand is increasingly dominated by hawks, who want this country to be more closely aligned and participate with the military forces of the Five Eyes partners, particularly against China. And so, we are increasingly seeing the hawkish analysis of such commentators in the media about the need to spend more on defence and to join Aukus. One objector to this, Dan O'Brien, outlines a more dovish approach, saying that New Zealand’s main use in international affairs is actually found in its ability to be evenhanded and trustworthy by all sides of conflicts – see: Soft power is NZ’s greatest power
Dr Bryce Edwards
Political Analyst in Residence, Democracy Project, School of Government, Victoria University of Wellington
Cartoons today:
NZ Politics Daily – 15 February 2024
HOUSING
Jenna Lynch (Newshub): Leaked Cabinet paper reveals Government considering allowing potential influx of overseas landlords
RNZ: Overseas investment for build-to-rent homes being mulled, leaked Cabinet paper shows
Thomas Coughlan (Herald): Government’s $3 billion landlord tax cut would be retrospective and trigger some refunds - IRD (paywalled)
Susan Edmunds (Stuff): First-home buyers ‘are rich people’
Trent Doyle (Newshub): Housing affordability remains 'stretched' - CoreLogic data
Greg Ninness (Interest): Increasing signs that last year's housing market slump will continue into this year
Susan Edmunds (Stuff): By the numbers: What’s happening to house prices?
Stuart Donovan (Spinoff): Wellington’s housing panel is out of step with the economic evidence
Sharon Brettkelly (RNZ): The Detail: The investment fund aiming to fix the housing crisis
Catherine Hubbard (Nelson Mail): Iwi’s aspirations for ancestral land come head-to-head with environmental concerns
WELFARE
Thomas Coughlan (Herald): Officials warn up to 13,000 children will be pushed into poverty as a result of benefit changes
Amelia Wade (Newshub): Government warned benefit changes could see 7000 more children in poverty
Bridie Witton (Stuff): More homelessness, ‘living in cars’ expected, child poverty advocates warn
RNZ: Opposition cries foul after benefits debate closed down
RNZ: Government pushing benefit indexation through under urgency
Hanna McCallum (Post): Calls for overhaul of relationship rules in welfare system
SALVATION ARMY’S STATE OF THE NATION REPORT, COST OF LIVING
Trent Doyle (Newshub): Unaffordable housing, wage inequality key issues facing NZ in State of the Nation 2024 report
Brent Edwards (NBR): Warning for parties not to engage in simplistic solutions (paywalled)
David Hargreaves (Herald): Stats NZ says food prices rose 0.9% in January, while rents for new tenancies shot up 2.5%, and tobacco prices increased 6.4% - but airfares went into reverse
RNZ: Some home owners let insurance policies lapse in face of high cost
GOVERNMENT, LOBBYING, TREATY
Jonathan Milne (Newsroom): Big donor’s ask: Minister reviews cameras on fishing boats
ODT Editorial: Lobbying plans unclear (paywalled)
Ben Thomas (Post): Luxon’s challenge: how to get the taniwha to pull its heads in
Brent Edwards (NBR): Growing consensus around measuring the effectiveness of spending (paywalled)
Anna Whyte (Post): Willis eyeing 17% cut to ‘consultant merry-go-round’ (paywalled)
Katie Scotcher (RNZ): Pay cuts not on table in review of public service spending - Willis
Adam Gifford (Whakaata Māori): Te Tiriti vulnerable, Human Rights Commission tells UN
Jamie Ensor (Newshub): Winston Peters challenged over 'lies' claim against James Shaw
THREE WATERS
Grant Duncan: 3 Waters: The Sequel
Tuku Morgan (Herald): Three Waters repeal will cost ratepayers in years to come
Stuff: Parliament passes Three Waters programme under urgency
Ian Llewellyn (BusinessDesk): Three Waters reforms go down the drain (paywalled)
Hamish MacLean (ODT): Ministers tell ORC to stop work on plan
Oliver Lewis (BusinessDesk): 'Significant' impacts if Watercare can't access Herne Bay park (paywalled)
Ryan Anderson (Stuff): Leak loses an estimated 300k litres as Wellington Water battles torrent of new leaks
Nicholas Boyack (Post): Wellington city open to working with plumbers to fix leaks (paywalled)
TRANSPORT, COOK STRAIT FERRIES
RNZ: Auckland Mayor Wayne Brown says government's 'electioneering' will have consequences
Dan Brunskill (Interest): Simeon Brown supports localism, but not for Auckland
Melania Watson (Newshub): Wayne Brown releases nine-point plan to fix Auckland train problems after meeting with KiwiRail, AT, Auckland One Rail
RNZ: Meeting over Auckland train delays and cancellations 'went surprisingly well', mayor says
RNZ: Another day of cancellations and delays hits Auckland trains
Vaimoana Mase (Herald): Auckland trains explainer: What is causing the heat issues on the tracks?
Conor Knell (Post): Trains cancelled ahead of Round The Bays (paywalled)
Denise Piper (Herald): Weather damage continues to keep Northland’s rail line closed indefinitely
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Georgina Campbell and Thomas Coughlan (Herald): KiwiRail visited South Korean shipyard after Government scuppered ferries (paywalled)
RNZ: KiwiRail in talks to cancel contracts for new Interislander ferries
Michael Daly (Stuff): KiwiRail moves to end contract for two new Cook Strait ferries
1News: KiwiRail in talks to can deal for mega Interislander ferries
Georgina Campbell (Herald): Cook Strait ferry fury and Auckland rail rage as KiwiRail fronts select committee
Oliver Lewis (BusinessDesk): KiwiRail taps McKinsey to help prep 'transformation blueprint’ (paywalled)
Gianina Schwanecke (Post): KiwiRail set to end Hyundai deal after ferry project canned (paywalled)
FOREIGN AFFAIRS, TRADE
Gordon Campbell: On five of Luxon’s Gaza absurdities
Dan O’Brien (Newsroom): Soft power is NZ’s greatest power
RNZ: NZ Foreign Minister urges Israel not to begin Rafah ground offensive
RNZ: NZ dairy industry estimates $120m in losses from Canada breaching trade obligations
LOCAL GOVERNMENT
Tom Hunt (Post): Councillors join forces to stop $32m Reading cinema deal (paywalled)
RNZ: Wellington City Council services face the axe: What you need to know
Georgina Campbell (Herald): Wellington City Council budget crunch: Libraries, swimming pools and fireworks under threat
Julie Jacobson (Post): Buried in the fine print… (paywalled)
Julie Jacobson (Post): Pool plans upset parents (paywalled)
Justin Wong (Post): Kāpiti Coast council boss gets $50k pay rise (paywalled)
Ani Ngawhika (ODT): Treaty survey criticism ‘wilful ignorance’
EXTREME WEATHER
Nadine Roberts (Stuff): Cyclone Gabrielle: The stories of the 11 lives lost
1News: One year on from Cyclone Gabrielle: Ceremonies held across motu
Tina Wickliffe (Whakaata Māori): A year after Cyclone Gabrielle, Te Tai Rāwhiti still has lots of ‘broken things – deputy mayor
Kate Green (RNZ): Hastings families pay tribute to those killed in Cyclone Gabrielle
RNZ: Cyclone Gabrielle: Helicopter pilot recalls emotions, panic during rescue operation
Garth Bray (1News): Do you have enough insurance cover if a natural disaster strikes?
Bryce Davies (Herald): Stop playing ‘whack-a-mole’ with natural hazards (paywalled)
ENVIRONMENT
Eloise Gibson (RNZ): Environmental groups say government's plans breach free trade agreement
Robin Martin (RNZ): Fast-track consents plan won't derail fight over seabed mining - iwi
Roger Partridge (Herald): Supreme Court surprise in climate change case (paywalled)
HEALTH, EMERGENCY CALLOUTS
Ruth Hill (RNZ): Advocates warn more resources needed if police pull back from mental heath callouts
Adam Pearse (Herald): Health bosses seeking solution as police look to change emergency response model
Isaac Davison (Herald): GP at Health Minister Dr Shane Reti’s old clinic more than $100,000 in the red, urges him to fix funding quickly (paywalled)
Matthew Scott (Newsroom): Council looks to remove vapes from Auckland storefront
RNZ: Covid variant JN.1 becomes dominant strain: 'It's pretty easy to spread this little bug around'
Rachel Thomas (Post): Funding questions remain as NZ’s first depression recovery centre opens (paywalled)
EDUCATION
Tom Pearce (Herald): Government plans for standardised assessments degrade education achievement in schools (paywalled)
Brett Kerr-Laurie (Post): ‘Failed’ charter schools cost $125m, unions warn (paywalled)
Claire Trevett (Herald): School attendance: David Seymour takes on truancy crackdown, proposes more use of fines for parents (paywalled)
Gianina Schwanecke (Post): Fewer than half of Year 8 students meeting maths expectations, ERO finds (paywalled)
Mike Hosking (Newstalk ZB): The wheels are finally turning for a new med school
Robert MacCulloch: A Waikato Medical School is a Good Idea - Smash Auckland and Otago Universities Medical School Duopoly
FLETCHER BUILDING
Rebecca Stevenson (BusinessDesk): Fletcher the 'useless monopoly needs to be busted’ (paywalled)
Sam Stubbs (Post): Fletcher Building resignations are too little, too late (paywalled)
Susan Edmunds (Stuff): What went wrong for Fletcher Building?
Katie Bradford (1News): It is a very bad day for Fletchers
Anne Gibson (Herald): Fletcher Building chief Ross Taylor: Why convention centre cost him his job (paywalled)
Roeland van den Bergh (Post): Life and times of Fletcher Building (paywalled)
BUSINESS, EMPLOYMENT
RNZ: Construction costs: Building consent reform will bring 'clarity and consistency' - Chris Penk
Cameron Smith (Herald): Flexibility, mental health more important to workers than career progression — research (paywalled)
RNZ: Supermarket conduct not up to scratch after mouse found in deli - MPI
Gareth Vaughan (Interest): Proposed Business Growth Fund through which government & banks would make equity investments in SMEs no closer after change of government
Dita De Boni (NBR): Manufacturers should work smarter: Westpac (paywalled)
BANKS
Rob Stock (Post): Banking failure claims aired by Māori and fintechs (paywalled)
Gareth Vaughan (Interest): Falling net interest margin and rising costs push ASB half-year profit lower
Jonathan Mitchell and Lachlan Colquhoun (NBR): ASB profit falls as home, business, and rural lending dips (paywalled)
Susan Edmunds (Stuff): ASB profit drops 12%, loan margins squeezed
1News: Major bank announces half-year profit down 12%
Rob Stock (Post): ASB half-year profit falls $96m as bank ramps up fraud defence (paywalled)
Jenée Tibshraeny (Herald): ASB chief executive Vittoria Shortt warns interest rate watchers to ‘be prepared for any eventuality’ (paywalled)
OTHER
Brent Edwards (NBR): Inland Revenue working with taxpayers to meet their obligations (paywalled)
John MacDonald (Newstalk ZB): NZ Super shouldn't be beer money for those who don't need it
Rayssa Almeida (RNZ): Manawatū Prison fails to adequately address mental health needs - inspector
William Hewett and Grace Thomas (Newshub): New women's refuge opens in Auckland on Valentine's Day to raise awareness of family violence
Loveni S Enari (Spinoff): Returning to a different New Zealand after 32 years away
Gill Bonnett (RNZ): Capacity to deal with expected peak in visa applications, Immigration NZ says
Greg Ninness (Interest): A total of 20,202 people arrived in New Zealand on work visas in January and another 11,790 on student visas
Steven Cowan: Sean Plunket and The Platform: Faux resistance
RNZ: Improving economic outlook drives up KiwiSaver value over breaks $100 billion
Tom Day (1News): Upset as swastika displayed outside Canterbury auto shop
Spinoff: ‘Read anywhere and everywhere’: Debbie Ngarewa-Packer on the books she loves