99 days and the economy will still be a problem at the end of them
The clock started on National's first 100-day plan yesterday. Economists say a change of government will make very little difference to the country's fiscal outlook.
Mōrena, and welcome to The Bulletin for Tuesday, October 17, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: What happened to Labour in Auckland?; Christchurch mayor says council is in ‘deep shtuck’ financially; over 12 million litres of sewage still leaking into Auckland’s waterways; but first, the economic and cost of living challenges that existed on Friday still exist today for the incoming government
A country waits
The country is now suspended in limbo as we await the final count of special votes. The vacuum is being filled by attempts to get Christopher Luxon to spill on the negotiation process and speculation about what’s on the table for Act and what NZ First is up to. For the latest on that, the Herald’s Thomas Coughlan has you covered. Luxon maintains that the process will not play out via the media. In my humble opinion, all rumours and suggestions about what might be in play should be taken with a grain of salt. This morning, Duncan Greive makes the case for a fast negotiation process and doing a deal with Winston Peters before special votes are counted. National, Act and NZ First all say the government’s books are in dangerous territory. “Don’t tell us you’re concerned – show us. A short, sharp, sensible negotiation maximises your useful time in power, and gets whatever your planned fix is in motion faster,” he writes.
‘Same sized milkshake, different flavour’
Onto the state of the government’s books. In a typically dry fashion, one I always find reassuring amid the fervour, economists have weighed in on what the change of government might mean for the country’s fiscal outlook. The quote of the day award goes to ANZ senior economist Miles Workman. In explaining the “on paper” assessment of the differences between the outgoing and incoming governments, Workman heads a section in his research note, “Same sized milkshake, different flavour.” BNZ’s head of research Stephen Toplis noted National’s promise to get the books under control faster than the current government but said, “We doubt that the incoming government will find it particularly easy to achieve its fiscal objectives. The economic cycle will be unhelpful, we are not convinced revenue will be as easy to come by as assumed, and it will be difficult to cut fiscal expenditure as anticipated”.
Fuel prices likely to keep inflation rate high
In case you’re wondering where the first 100-day plan comes from, it can be traced back to the presidency of Franklin D. Roosevelt. A top aide to President Obama once called it a “Hallmark Holiday”—lots of attention but no significance. With 99 days to go on National’s first 100-day plan, today’s economic scene-setter is the consumer price index data. Stats NZ will report that later today. As Susan Edmunds reports for Stuff, fuel prices are the main factor in assessments from economists about where the rate of inflation would land. I drove past queues of cars and what looked like a few near-collisions at a petrol station over the weekend offering a 25c p/l discount. Gareth Kiernan, chief forecaster at Infometrics, said he expected inflation to be up 2.5% in the quarter, and 6.4% for the year. That is up from an annual rate of 6% in the June quarter.
Last inflation data release before November OCR decision
As Catherine noted yesterday, there is excitement among the property sector about the incoming government. For anyone with a bog-standard one home, one mortgage lifestyle, today’s inflation data is important. As Kiwibank’s senior economist Mary Jo Vergara notes (paywalled), it’s the last release before the Reserve Bank’s (RBNZ) decision about the official cash rate in November. “The RBNZ has adopted a data-dependent approach. And where next week’s print will land will be key in deciding their next move.” There is still debate about whether the central bank will lift or maintain the rate, but most economists agree it’s certainly not headed downward for a while and that a hike is still on the cards. ANZ economist Henry Russell says, “It’s going to take a solid body of evidence to draw the [Monetary Policy] Committee back to the hiking table, naturally. But we do think that evidence will accrue; the question is one of timing.”
A message from Spinoff editor Madeleine Chapman
Thanks to the generous support of Spinoff Members, we were able to cover this election more expansively than ever before with writers reporting from Dunedin, Christchurch, Wellington, New Plymouth, Wairarapa, Gisborne, Auckland and Northland. With the results in, we will continue to interrogate and report on those who lead this country with rigour, range and humour. If you value The Spinoff’s political coverage, now is a great time to join the thousands of people who support The Spinoff by becoming a member or making a donation.
- Madeleine Chapman, Spinoff editor
What happened to Labour in Auckland?
Labour looks to have lost seven Auckland electorates and now only holds six of the 21 electorates that comprise New Zealand’s largest city. A couple of seats remain in a holding pattern, waiting for special votes to be counted. Here are three pieces that I think weave a comprehensive story of what happened to Labour’s support in Auckland.
The first is Madeleine Chapman’s excellent analysis of the Pacific vote. While Labour has held South Auckland seats, in some instances, the number of votes for Labour candidates has halved on 2020 totals. That is a story of turnout, where as Chapman writes, “Sometimes a vote for change looks like not voting at all.”
The second is the Herald’s Simon Wilson on the changing face of Auckland (paywalled). Wilson concentrates on Mt Roskill, New Lynn, Te Atatū and Mt Albert. “All those electorates have large immigrant populations under pressure from fast-rising house prices and likely to be disgusted at Labour’s approach to crime. And in all of them, National put up a new New Zealander against Labour’s Pākehā incumbent,” he writes.
The third is Duncan Greive’s piece, where he argues the former Labour government underestimated the impact of the final, Auckland-specific lockdown on Aucklanders “at least, until Saturday”.
Christchurch city council considering shutting libraries
Hefty rate rises in Auckland, denial of a financial crisis in Wellington and now Christchurch mayor Phil Mauger has told The Press that the council is “in shit creek financially”. As Tina Law reports, Mauger says there are going to be some “seriously unhappy people”, but the council will have to make some hard decisions. Mauger said he did not know the full details but that council debt had risen to about $2b. He says some smaller libraries might have to close “for a while”. Swimming pools might have their hours reduced, new water mains might not be put in, roading work might be delayed and cycleways could be on the chopping block. Councillors are meeting today to hear the full extent of cuts proposed by council staff at a private briefing.
Click and Collect
Up to 13 million litres of sewage is still overflowing into Auckland’s waterways each day after part of the sewer line collapsed
Auckland Museum apologises for light display in support of Israel
Gore residents launch another petition calling for Stephen Parry to go. Parry has already resigned as CEO of Gore District Council and is currently interim CEO but a group of residents want him gone. Again. Now.
Influential data journalism: the most common dog names based on our election day dogs at polling booths special
I like this “Should I worry about…?” series from The Guardian, perhaps because the headline is a question and not the definitive and often unjustifiably alarming “You should worry about…”
Duncan Greive makes the case for an ultrafast three-way coalition, ahead of the special votes tally landing. Helen White tells Stewart Sowman-Lund that her tiny majority in Mount Albert is because the Green Party split the vote. Tommy de Silva has a guide to the new New Zealand First MPs. Emma Pearl remembers her great uncle Roald Dahl. Alex Casey with the breaking news that a local woman has arms. Sam Brooks rounds up everything coming to streaming services this week.
Sporting snippets
Scene set for All Blacks to face Springboks in Rugby World Cup final
It is only 19 years since Afghanistan’s first official cricket fixture and yesterday they beat England at the Cricket World Cup. Here’s a magnimous reaction from The Telegraph.
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Whether or not the 100-Day Clock for the new New Zealand government starts now or after 3 November, here are some predictions of things that will happen in the next three years:
- New Zealand will continue its slide down the international Human Development Index, from placed 4 (before the National Party's 'Mother of All Budgets') to 14 now.
- The reason for this continued slide - as to now - will be our growing Gini Co-efficient, reflected by the widening gap between rich and poor
- New Zealand's grotesquely-unfair tax system will continue, where the very richest people pay a much smaller tax relative to their income compared to working people on modest wages.
- The call for a more progressive tax system will become louder and wider.
- New Zealand will lose its current ranking as the least-corrupt country in the world.
- House prices will increase. For young people, housing will not become more accessible or more affordable.
- The promised 'downward pressure' on landlords regarding the cost of rentals, will not happen. Landlords will not reduce rents.
- Put simply, all of the above means the rich will get (much) richer; the poor will get screwed.
- Emissions of greenhouse gasses will start trending upwards again.
- The environmental health of our fresh-water and marine ecosystems will continue to decline.
- Government departmental cost-cutting will affect the Department of Conservation most severely.
- Left to local government, the decline and breakdowns in our water-supply infrastructure will continue.
- Extreme weather events will continue to happen. There will not be adequate budget to respond properly to them.
Good luck to all of us!
Just a technical thing: I often click links to spinoff articles here and the app either delivers me to the home page or to the last thing I read, instead of the specific article I'm trying to get to. Would love a fix for the convenience!