The cost of living canary in the mine for the government
We have an OCR announcement and food and rent price data out this week. A note from Labour's pollsters suggests the mood of the nation is now beginning to properly reflect cost of living pain
Mōrena and welcome to The Bulletin for Wednesday, July 12, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: Hamilton to Auckland train banned from travelling north of Papakura; the beasts of Berhampore; 100 dogs for a 100th birthday; but first, the poll result that points to abstract economic data becoming real
Trying to work out how to see Te Kahui o Matariki and/or wading through economic data this week
Official pre-election period begins on Friday
On July 14, most of us will be enjoying our second Matariki public holiday as we celebrate the coming of the Māori new year. For our political parties, the date marks something else. This Friday is exactly three months until election day and the start of the official pre-election period. The regulated period for election advertising expenses begins and political candidates, parties and anyone else who publishes election advertising must limit their spending to the amounts prescribed in legislation. That makes today’s official cash rate (OCR) announcement and cost of living data from Stats NZ published this week, the last before parties begin to ramp up their campaigns and pitches to voters. A note in yesterday’s polling from Labour’s internal pollsters, Talbot Mills, frames the upcoming period as one defined by the Reserve Bank’s (RBNZ) actions to tame inflation and the flow on impact to the cost of living.
The centre-left no longer defying gravity
Yesterday's Talbot Mills poll has Labour at its lowest point in at least four years at 31% and National up one point at 36%. The commentary released with the poll will be ringing alarm bells for Labour.
“After a long period of very close results, we may now be seeing the long-expected breakout of the centre-right. The next few polls will tell. The centre-left had seemed to have been defying the political gravity of a generally negative mood; the acute political pressures stemming from cost of living rises and cascading ministerial scandals.”
As indicated by the prime minister’s comments overnight, the result may well reflect the ministerial messiness of the last couple of months but Hipkins himself frames these incidents as a distraction from the issues New Zealanders want the government focused on.
OCR likely to stay where it is
As indicated in May, the RBNZ believes the current OCR of 5.5% is peak OCR. Seven out of the eight members of the NZ Institute of Economic Research’s central bank “shadow board” agree. For now. The rate hiking cycle of the last two years has seen mortgage interest rates lift from figures in the low to mid-two percent range in 2021 to the sevens. BNZ joined all the main banks yesterday in lifting some of its rates. There is debate about why banks are lifting rates despite the signals from the RBNZ which the Herald’s Jenée Tibshraeny does a good job of explaining (paywalled). There is also debate about the impact of a large number of people yet to refix home loans at higher rates. Bernard Hickey has thoughts on that (potentially subscriber-only). He contrasts a report from Westpac economists suggesting mortgage servicing costs could rise by $900 a month throughout New Zealand and $1600 in Auckland, with data from the NZ Bankers Association about the size of the average mortgage and suggests the impact will be less of a bomb going off and more of a bang.
‘Still at the starting line for the real economic downturn’
With all the debate going on about rates and servicing costs, it’s still pretty safe to conclude that people are feeling squeezed. The cost of living remains the number one concern of New Zealanders according to the Ipsos Issues Monitor. Despite all the talk of home loans, we’re a nation of renters and rent has been steadily rising. This month’s food price index data won’t reflect any flow-on effects of the removal of the petrol tax cut this month but will no doubt reinforce what we all know when we go to buy food. Liam Dann writes that we’re still at the starting line for the real economic downturn (paywalled). ANZ’s Sharon Zollner says “We expect the “real recession [i.e. one that reflects the aggregation of individuals’ more cautious decision-making, and rising unemployment] to occur in the second half of the year.” When people start losing jobs, the abstract economic numbers we’ve been reporting for the last year start to become real. That’s when they start to have political ramifications. The note from Talbot Mills could be the canary in a mine for the government.
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Just when we thought we had some good news about trains in Auckland
On Monday, the Western Line returned to dual-line running after nearly three years of being reduced to a single track. Last night news broke that the Te Huia passenger train service that runs between Hamilton and Auckland has been temporarily banned from operating in Auckland following two incidents. Commuters will be back to taking buses from Papakura, as it was when the service first started. Waka Kotahi has issued a prohibition notice to KiwiRail, preventing the rail service from entering the Auckland metro area and terminating at The Strand in Parnell because of recent Signal Passed at Danger (SPAD) incidents. A SPAD A event is defined as an incident when the train driver has failed to obey a red signal and has entered a section of track where there is the potential for conflict with another rail service. Waka Kotahi’s Neil Cook said the Te Huia service had been banned from the Auckland area to maintain the safety of the rail network.
The beasts of Berhampore
I was fortunate to work with Emily Simpson when she was with us as a deputy editor. She did a lot of work on our Quarter Million series on the Royal Commission of Inquiry into Abuse in State Care and this morning, we publish a deeply researched feature written by Simpson herself as the latest instalment in that series. It chronicles the emotional, sexual and physical abuse at Berhampore Children’s Home in Wellington through the eyes of three siblings. Established with lofty Christian morals, Berhampore degenerated into a hellhole of abuse. Decades later, the survivors are still picking up the pieces. As with all the stories in this series, they are necessary reads but not easy reads so do take care.
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Click and Collect
Ombudsman rejects call to release text message about Kiri Allan
Discovery NZ, owners of Three report $34m loss
National MP Simeon Brown launches petition to raise speed limits on roads in his electorate
Featherston, New Zealand’s official ‘Booktown’, is consulting on cutting opening hours at three libraries
Click and Elect
The Te Tai Hauāuru electorate where Soraya Peke-Mason, Harete Hipango and Debbie Ngarewa-Packer are standing has the second-highest rate of voters swapping to the Māori roll. The cutoff date for changing rolls is July 13.
Invercargill MP Penny Simmonds has launched her election campaign by confirming the National party will let the Southern Institute of Technology make its own decision on whether to retain its zero fees scheme if elected
Current Act MP Damien Smith is leaving parliament and won’t stand in this year’s election
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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Charlotte Muru-Lanning reports on why a number of locally trained applicants for junior doctor roles aren’t being offered placements in New Zealand. A stay-at-home mum in suburban Auckland talks about her spending for The Cost of Being. Shanti Mathias interviews climate change commissioner James Renwick about his new book. Chris Schulz explains what the new HBO-Sky deal means.
Sporting snippets
Ministry of Social Development investigates double-dipping on Super Rugby wage subsidies (BusinessDesk, paywalled)
Former All Black Carl Hayman seriously injured in accident but is recovering well. Hayman’s memoir about rugby, dementia and the price of his success was published recently
The New York Times is disbanding its sports department and sports coverage will now come primarily from The Athletic, the sports website that the company bought last year
It’s not Friday but…
It’s Wednesday, a short week and there won’t be a Bulletin on Friday as it’s a public holiday. One can also only read so much about the economy and not feel glum. So here is the most delightful Washington Post feature (gift link so you can read) on Robert Moore who turned 100 on June 14 and wanted to pat 100s dogs to celebrate. Did he? Yes. Did I cry watching the video? Also, yes.
Is reducing safety on our roads, increasing traffic deaths and injuries, and increasing greenhouse gas emissions National Party policy, or just an independent initiative from Simeon Brown.