A cost blow out in Wellington and big rate rises for Auckland

All eyes are on the election but with the cost of repairing Wellington’s Town Hall now forecast at $250-$330m and Aucklanders warned of big rate rises, our cities might need some focus

Mōrena, and welcome to The Bulletin for Wednesday, October 4 by Anna Rawhiti-Connell. Presented in partnership with Z Energy.

In today’s edition: Goldman Sachs warns National’s proposed tax cuts could cause interest rates to remain higher for longer; Act and Te Pāti Māori within striking distance of more electorate seats; The Press debate is back on; but first, costs mount for Wellington and Auckland’s mayor fires a shot at National

Wellington and Auckland mayor want revenue sharing

Talk of local government reform seems to have slipped down the side of the couch following the release of the final report from the Future for Local Government review panel in June. The panel’s recommendation that “more money flow from central to local government” as people increasingly talk of “peak rates” must sound like a land of milk and honey to our councils right now. Tax revenue sharing, flowing from central to local government, is a point of agreement between Wellington mayor Tory Whanau and Auckland mayor Wayne Brown. “Rates and parking meters just aren’t enough to pay for the massive infrastructure projects councils are expected to handle,” says Brown.

Cost of repairing Wellington’s Town Hall now forecast at $250-$330 million

Yesterday, Wellingtonians found out that the cost of repairing Wellington’s Town Hall has blown out again, with projections now forecast at $250-$330 m, up from a previous estimated completion cost of $182m. I spoke to our Wellington editor, Joel MacManus, who attended the press conference about the blowout yesterday. He says mayor Tory Whanau is very clearly frustrated. “She wasn’t on council when the initial decision was made, but she made it clear today that she wouldn’t have supported the build if she knew it would have been this expensive,” he told me. “Unfortunately, with how much has already been spent, it would be a waste of money to stop now,” he said. As The Post reports this morning, the council is somewhat hamstrung. The historic building cannot be demolished because of its heritage listing, and its earthquake-strengthening deadline is next year. If the council paused the project it might have to take enforcement action against itself.

Mayor denies financial crisis

As the Herald Georgina Campbell reports (paywalled), Whanau started yesterday’s press conference by addressing claims made by councillor Diane Calvert that the council is facing a financial crisis. Whanau said it was “simply not true” that the city was facing a financial crisis and strong investment was still being planned for the city and that she wouldn’t propose removing or deeply cutting services unless that was something the community wanted. The Town Hall is the only building with issues. The Opera House and the Michael Fowler Centre have recently being deemed earthquake-prone and work on the central library has a $217m cost attached. 

Auckland mayor takes aim at National’s plan to scrap the regional fuel tax

Some might argue that it's farcical to be talking about tax cuts that might deliver some people $20 a week and GST off fruit and vegetables, while Wellington deals with an endless stream of large infrastructure challenges and Aucklanders might be dealing rate rises that total up to 20% by next year.  Five days ago, Aucklanders were warned that rates may rise by 13% and water bills by 20% next year. That follows a 7.7% increase this year. Yesterday, Wayne Brown took aim at National’s plan to scrap the regional fuel tax (RFT) and Labour’s Three Waters reforms. Scraping the RFT could create a $2b deficit in transport infrastructure funding, he says. That’s now being disputed by National. In a statement last night, the mayor said, “After the election, the Mayor looks forward to sitting down with the government, whomever that may be, and working out a plan that makes sense for Auckland.” It’s safe to say there will be a queue for those conversations, with the local government review concluding that “the series of compounding crises we are experiencing are unlikely to abate… all of these challenges are felt at place and will only intensify over the next 30 years.”

National’s proposed tax cuts may cause interest rates to remain higher for longer

There’s an official cash rate (OCR) announcement today, and most economists expect the Reserve Bank (RBNZ) to hold the rate at 5.5%, with a slight possibility they might lift it. The RBNZ has only changed the OCR once before an election in 2008 amid the Global Financial Crisis. A new NZIER survey for the September quarter was released yesterday and showed business confidence was improving slowly, staff were becoming easier to find, and while cost pressures are easing, softer demand is now the primary concern for businesses. As interest.co.nz’s David Hargreaves writes that’s given economists cause for cautious cheer as the RBNZ’s monetary tightening gains traction and increased migration reduces labour costs. They’re not bringing out the party poppers yet, with concern that the economy might not be slowing fast enough (usual note on the perversity of that as a layperson). OCR rate cuts may not arrive until 2025. This morning, the Herald’s Jenée Tibshraeny reports (paywalled) on a research note from analysts at Goldman Sachs that warns National’s proposed tax cuts risk exacerbating inflation and therefore causing interest rates to remain higher for longer. Yesterday The Post covered some debate among economists about whether foreign home buyers will push up house prices. This morning, the Herald reports that Auckland’s housing market downturn is probably over. On Monday, there were reports of a sluggish start to spring, with listings just slightly up on August.

The water cooler version of this whirlwind economic news summary:

• OCR likely to stay the same today but could be higher for longer

• Election uncertainty is probably applying a handbrake to a property market that looks like it’s starting to recover

• None of this will be joyful news to those trying to buy their first home

Polling shows Te Pāti Māori and Act within striking distance of claiming new electorate seats

During a Whaakata Māori debate last night, Te Pāti Māori candidate for Hauraki-Waikato, Hana-Rāwhiti Maipi-Clarke described this week as the “hardest week of my life” as police investigate after her home was vandalised and a threatening letter was left behind. Curia polling shows Maipi-Clarke is just four points behind the incumbent, Labour’s Nanaia Mahuta, who has held the Hauraki-Waikato seat since 2002 (it was the Tainui electorate and was renamed ahead of the 2008 election). Mahuta is on 36%, and Maipi-Clarke is on 32%, while 14% are undecided. The gap between Mahuta and Maipi-Clarke is within the margin of error (4.4%). Mahuta needs to win the seat to return to parliament as she’s not standing on Labour’s list. If elected, Maipi-Clarke would become New Zealand’s youngest MP in 170 years. She may get there without a win as she’s ranked number 4 on Te Pāti Māori’s list but that depends on how the chips fall across other electorates. Labour and Te Pāti Māori are also tied for the party vote in the electorate, both on 26% .

In the Auckland seat of Tamaki, the gap between Act’s Brooke van Velden and National’s Simon O’Connor is also within the margin of error. In a Curia poll for the Taxpayers’ Union released last night, O’Connor is on 40% among decided voters, while van Velden is on 38%.

Click and Collect

• Tap water may soon be drinkable for thousands in Queenstown

• Sanitarium confirms Weet-Bix will be back at The Warehouse

• I don’t usually cover fashion week news in The Bulletin, but I did enjoy this slight dig at fashion-writing tropes from Viv Groskop at The Guardian: “Pamela Anderson has rocked up at shows ‘makeup-free at 56’. Andie MacDowell, 65, and Dame Helen Mirren, 78, ‘sported natural grey hair’ (ie, they turned up while possessing hair) on the runway for L’Oréal.” They do look glorious.

Click and Elect

• The Press debate lives! Leaders of NZ First, the Greens, Act and Te Pāti Māori have accepted an invitation to participate in a rescheduled debate on October 10. No Hipkins or Luxon though.

• A National party promise to decouple benefit increases from wages will see over 350,000 miss out on payments worth more than $50 a week by the end of the decade - Thomas Coughlan in the Herald (paywalled)

• More than 50,000 people cast ballot on first day of advance voting. We’re tracking how numbers compare to past elections.

• Experts call out Winston Peters over climate change claims

• Duncan Greive catalogues the lowlights of a pre-election debate about media where half the parties didn’t even show up

• ACT announces policy that includes requiring Medsafe to approve any drug or medical device that has been approved by two comparable overseas regulatory bodies, within one week

Right now on The Spinoff

Nadine Anne Hura pens a layperson's guide to the climate change policies on offer this election. Toby Manhire reports from Napier where the race to win the seat is playing out in the shadow of Stuart and Gabrielle. A junior analyst in Wellington saves money by making his own mead in this week's instalment of the Cost of Being. Actor Mike Minogue reviews the new Israel Adesanya documentary. Freya Sawbridge argues that gambling with repeat Covid infections makes Long Covid more likely. Haimoana Gray has some preemptive advice for politicians who might need to accept loss.

Sporting snippets

• Hawke’s Bay won’t be stripped of the Ranfurly Shield but may face sanctions

• All Blacks squad for final Rugby World Cup pool match against Uruguay named

Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.

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