October 18, 2024 • 44 mins
After a short hiatus, Thomas is back for a panel with Jason Walls and Jenee Tibshraeny. They discuss what the latest Government financial statements show about the state of ACC and the rest of the Government's books, as well as the improvements in the economy and who can take credit for it, the property market and the push to build more homes, and the renewed debate about Capital Gains Tax.
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Episode Transcript
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Speaker 1 (00:03):
Hello, and welcome to on the tiles, the New Zealand
Heralds politics podcast. I'm your host, Thomas Cocklin, the deputy
political editor of The Herald. We're back after a bit
of a hiatus. Welcome back, Thank you for sticking with us,
Thank you for coming back. Joining me today for a
panel is the New Zealand Herolds Wellington Business editor Janey
Tips Rainey, Hey, Thomas, afternoon and our news talks he'd
(00:24):
Beads Political editor Jason Walls newly married.
Speaker 2 (00:28):
Hello Thomas, not to you though.
Speaker 1 (00:32):
I try, but congratulations right, Janet. It's been very difficult
to get you on the podcast today because you've been
very busy on a story. Yes, would you like to
tell us about the audiobook version of your of your
ACC story.
Speaker 3 (00:48):
Yes. My nose has been buried in this issue for
a few days and I've just come back up for air,
so I'm sorry if I sound a little bit frazzled,
but I found something really interesting. I was looking through
the government's some financial statements for the year to June
and really noticed the impact that ACC's deficit had on
(01:08):
the Crown accounts, so that the books were nearly thirteen
billion dollars in deficit. It's the widest deficit since twenty
twenty when COVID came along, and I sort of basically
drilled downlooked through the fine print, the stars at the
bottom of the ifs and butts, and saw that a
large part of this is because of ACC, and specifically
because there's been a court case that has expanded ACC's coverage.
(01:34):
So basically, there's a rape survivor who took ACC to
court because ACC wouldn't pay her for her loss of
earnings because of childhood abuse that she suffered because she
didn't report that when she was a child. She only
reported as an adult. She thought that was unfair. She said, well,
(01:55):
how on earth was I supposed to report abuse as
a child? I shouldn't be penalized for that. Not fair?
So she takes a sec to court. Four years later,
she wins, and as a result of this court ruling
made in December, which no one really knew much about,
was sort of not much fanfare about it. As a
result of that, ACC reckons it'll need to pay about
(02:19):
one hundred thousand additional people will become eligible for cover
because of the interpretation of the law. One hundred thousand people.
It's put aside nearly three point six billion dollars to
pay people who as of today had been abused injured
(02:39):
as children. So I mean kind of a big deal.
Speaker 1 (02:44):
ACC has been making noises about sustainability and levy changes
as it does from time to time. It does this
all the time, always one thing levy increases. Is this
a significant driver of that?
Speaker 4 (02:53):
Do you think? Or is it?
Speaker 3 (02:55):
I think there are a number of factors. And ACC
gets its money from the government from and you know,
from its investments it makes. But without a doubt, increasing
its future liabilities by three point six billion dollars due
to one case is really significant.
Speaker 2 (03:14):
And that's what it is. It's forecasting it.
Speaker 5 (03:16):
Yeah, so that where did and I'm sorry to put
you on the spot here, where did they get one
hundred thousand people from?
Speaker 3 (03:21):
Yeah, well that's that's a good question. I sat down
with ACC CEO and depity this week for half an
hour and they were like, well, these are very like
high level estimates. I think actuaries have been busy, you know,
because you have to identify, well who who might have
been abused as a child and then who might have
(03:43):
not worked as an adult because of that abuse and
then of those people who hadn't reported it, so there
was a child. So it gets immensely complicated.
Speaker 2 (03:53):
There's a lot of asterisks in these numbers.
Speaker 3 (03:54):
There are a lot of asterisks, but either way, it's
the numbers of material. And you know, for victims, this
is a huge win. Amazing. I spoke to the woman
who brought forward this case, and I mean, she's had
an absolute hell of her time, but this is a
major win for her and the people she's advocating for.
(04:14):
But for ACC, this is immensely complex because you know,
think of the administrative situation. Now you need to ask
people to prove they haven't been working because of their
childhood trauma, the injuries they stuffed as a child. You
don't need a court conviction. You just have to convince
ACC of that. And how does ACC deal with that
(04:35):
without retraumatizing people? But then, you know, even the survivor said, well,
are people are going to take the mickey and try
to tell ACC they were abused just to get money?
Speaker 1 (04:47):
Six point was determined coverage And it's already a pretty
fraud system for some for some borderline cases. So yeah,
I can I can imagine ACC is that's going to
have a difficult time adjudicating those.
Speaker 5 (05:00):
And it's a tough one for the government as well,
because obviously they'll want to swing in behind this sort
of action to help people that genuinely need this help.
But as we were talking about earlier in the week,
I mean ACC's liability presents so much of a liability
on the government's box as a whole. I mean, given
the size of the deficit, you'd think three point six
billion dollars would make up quite a hefty chunk of
(05:22):
what we saw in the Crown accounts.
Speaker 3 (05:24):
Yeah, look, this all comes down to accounting and what's
included in that deficit and what isn't and so on
and so on, And I mean this is a future liability,
So three point six billion looking to the future. ACC
says that of the government's thirteen billion dollar deficit, actually
Treasury says this four billion of that is due to
(05:45):
accow So yeah, so I mean it's a pretty it's
a sizable contribution.
Speaker 5 (05:52):
Makes it a hard political one to attack as well,
because if your labor you can't exactly attack the government
for having this big budget deficit when this is the
reason why, or can you think.
Speaker 3 (06:04):
It's one of these things where like, no one's no
one's at fault. And I believe just looking at at
this case, it seems like the court has made a
common sense ruling. No one can really argue with it.
It's probably a real positive thing for for victims. But
it was quite interesting because I was sitting in this
meeting room at ACC with the CEO and the deputy
(06:24):
and they provided some of these numbers, and I was
just like, well, it's a big deal, right, and they
sort of just looked at each other and were like, yeah, yeah,
I think some some nervousness perhaps at a CC.
Speaker 1 (06:37):
Yes, yes, I can imagine. I can imagine when you
find the three points expellion dollar liability, it's quite a
big deal.
Speaker 4 (06:43):
Is that booked?
Speaker 1 (06:44):
Is that booked in the so that that is that
is count towards this year or is it a future
future cost spread out over multiple years.
Speaker 3 (06:51):
Yes, it's future costs spread over, but it's able. It
does so it's for people that they believe as of
today were injured in the past, asked, and that cost
will be three point six billion looking to the future.
But then as more people come forward, you know, unfortunately,
more people will be abused and then come forward as
(07:12):
adults that that will increase the scope of cover.
Speaker 5 (07:15):
So it's future, it's retrospective, but it's also looking to
the future as well in terms of that.
Speaker 2 (07:20):
So it's an ongoing liability as well.
Speaker 5 (07:23):
X yeah, good snooping, slooping, good goodcounting.
Speaker 4 (07:30):
We've got you on that payroll.
Speaker 2 (07:31):
Yeah.
Speaker 3 (07:33):
You know when I see those, you know, billions in brackets,
you know, billions more than forecast or expected, you, you
sort of have to go, what's going on there? And
I mean the other interesting thing here is they And
thanks for bearing with me listening to this, But a
SC hasn't made a big deal of this. It's sort
of gone under the radar, and I think they're trying
to get their ducks lined up, systems in place to
(07:54):
deal with it.
Speaker 4 (07:54):
Yeah, anything else in the crowd accounts? No, you cover
the crowd accounts.
Speaker 3 (08:00):
Oh well, what else has there been? I mean, there
has been a world outside of ACC over the past week, OOKA.
I think that.
Speaker 5 (08:11):
I usually do the I was on my honeymoon and
this one's on you.
Speaker 3 (08:18):
I was there. I was there. I mean, look, it's
it's it's deeper than expected. The debt is also continuing
to rise. Nicola Willis said she wanted to get it
below forty percent of GDP. It still hasn't turned a corner.
It's still going up and up, and it's because the
books are indeficit, which means we can't pay down our
(08:39):
COVID debt. We're just continuing to renew it, and we're
just renewing the debt taking out more debt. You know,
I thought she was pretty pragmatic about the situation. She
said that the books were sobering, and I think the
government really has committed to further cuts across the public sector.
(09:00):
Nicololis does sound like she is really keen to stick
to those really limited operating allowances.
Speaker 5 (09:06):
In future budgets. She just sounds like she wants to.
It's but doing it is actually a completely different thing.
Remember who else sounded like they wanted to stick to
operating allowance.
Speaker 3 (09:15):
I think the thing that she won't stick to is
reducing debt.
Speaker 2 (09:18):
Yes, it's an easy out, isn't it.
Speaker 5 (09:19):
Because she's made these really stringent commitments to the operating
allowance going forward, But she didn't actually mention the numerical
figure on dead You know, you have these percentage figure.
Speaker 2 (09:29):
It's easy to fudge that.
Speaker 1 (09:29):
I sort of wonder whether she'll she she made such
a big thing of Labor breaking its allowances every year,
I feel like she sort of has to do the
next one. She really has to hit the next one.
And then maybe in an election year, if Labour's doing
a capital gains text and promising you know, some tax
relief or a text which of some kind. I think
(09:51):
an election year, maybe she'll be convinced to spend a
bit more money, because it's just, you know, you can't really,
you can't really go into an election promising a tiny
operating allowance, more public service cuts and what have you,
while Labour's promising a text switch and more funding schools
and hospitals. It's just that's a really that's not a
great offering, I would say for a government seeking re election,
but I don't know, maybe wrong, but.
Speaker 2 (10:12):
We're a tough cell.
Speaker 5 (10:13):
It also paints a picture for a very gray, boring
budget next year, where she's trying to get all her
fiscal ducts in a row before splashing the cash.
Speaker 4 (10:22):
Next budget will be very, very dull.
Speaker 1 (10:24):
We've had hints of it being an aged care budget,
which is sort of a big issue that needs to
be that needs to be resolved, But there's also an issue.
I'm not sure that it's going to sway a lot
of photos. So you probably wouldn't want to have age
here in your election to your budget.
Speaker 2 (10:38):
Where are you hearing this?
Speaker 4 (10:39):
This news to me on the Great Vine?
Speaker 1 (10:42):
The Great Vine, I've also heard I've also heard aged here,
possibly twenty six many inquiry into it.
Speaker 4 (10:49):
At the moment.
Speaker 1 (10:49):
There are a number of different work streams underway. I
think Help Zealand is doing the work.
Speaker 2 (10:53):
So read Thomas Coglin's had a whiskey with Winston.
Speaker 1 (10:58):
No, it's yeah, that's but you know, well, actually you
know Tracy Martin former and Zealand firsteen Pshaar of the
Hekre Association, so that you go, but yes, I think that's.
Speaker 3 (11:07):
Where you should come for your breaking news.
Speaker 1 (11:09):
Well I always do well, but that's the whispers and
it's going to be very expensive. He's like, that's a
it's a it's a it's something we all need, it's
something we all want, but it's you know, you can't
really win an election on age care, I don't think.
But it's something that people are going to have to
fund somehow. Yes, I and I agree debt is probably
going to be the one that should break, because it'd
(11:31):
be interesting to see with the corliss and dynamics go,
because you know, I wonder whether David Seymour is inclined
to as inclined to if National New Zealand first want
to spend a bit more in twenty twenty seven, sex
pardon me twenty twenty six, I would be interesting to
see where they'd lead them.
Speaker 5 (11:45):
Yeah, well, how much is the Treaty's referendum really worth
the National you know, Yeah, that's one hell of a
bargaining chip that they could throw out if it means
loosening a little bit seamore debt strings.
Speaker 4 (11:56):
Yeah, with the large operating allowance and of the referendum.
Speaker 3 (12:00):
I mean, I kind of wonder if they'll need to
because if all goes to plan with the Reserve Banks
interest rate cuts come the next election, interest rates will
be you know, at a much more palatable level at neutral.
If all goes to plan, I mean, they might have
to be cut more because the economy might be in
such a state that they need to keep being lowered.
(12:21):
But I feel like, you know, if that if that's
back at equilibrium, house price growth recovers, probably not too much,
but it recovers a little bit to make everyone with
a house upset about the value of the house feel better.
I feel like those are a fairly major back pocket
issues which will really help the government.
Speaker 1 (12:42):
I think that we're obviously, we've had a poll this week,
and this is big story of the poll is how
I'm happy the whole country feels. If you're listening to this,
you're probably also unhappy. Very great, but it's true like
it's a groom economic environment. But I do I do
to your points now. I think I do wonder whether
one thing that's missing from people's analysis of the current
(13:02):
sort of political climate is the extent to which and
I was speaking to an economist about this the other
day on a bus, the extent to which you know,
the the fact that the economies in the fridge is
sort of self induced. And it stands to reason that
that that once that that that monetary tightening is withdrawn
and we head into an environment of monetary easing, then
(13:25):
then it does actually stand to reason that that that
the the effects of that reverse as well.
Speaker 4 (13:30):
It's it's it's.
Speaker 1 (13:32):
I mean, some people say it's not quite as simple
as a's that, but some people that actually do say it
is quite as simple as that. You take the interest
the high interest rates away, you take you lower the
O c R and and stuff sort of magically comes
back to life.
Speaker 2 (13:42):
It's kind of the backbone of it. Right, You feel richer,
so you spend more.
Speaker 1 (13:45):
Yeah, and you are if you have a mortgage. A
third of households have a mortgage. And actually, and the
interesting thing with the census data is that home ownership
has actually increased for the first time in three years.
So actually there are more people who are more people
who are feeling the pinch at the moment now than
might have done, you know, seven years ago, and the
labor and and and and that also means that because
(14:07):
more people have a mortgage now than than did before,
there is a there's a large sort of majority voting
block there of people who own houses and people who
with or without a mortgage, who are probably going to
be feeling pretty good in twenty three six.
Speaker 3 (14:20):
Yeah, the beneficiaries of that, I think that the kind
of big caveat would be provided the economy doesn't continue
to seriously tank and unemployment doesn't continue to rise too much,
you know, because this there's this quite leg legged effect,
isn't there between when interest rates have shifted and then
(14:40):
how that sort of trickles through to the.
Speaker 1 (14:43):
I was looking at New Zealanders are such basic bitches,
frankly looking, I was looking at what you know, what
what what?
Speaker 4 (14:55):
What?
Speaker 1 (14:55):
What economic metrics trigger a reelection of an incumbent government,
And it's it's low interest rates and high house prices.
One thing voters do not care about. It's unemployment, right really, yeah, Dober,
the unemployment rate was in twenty twenty, it was pretty high,
this result from incumbent government in the m MP era,
you know.
Speaker 5 (15:16):
Small little asterisks on the unemployment rate was low twenty
is high as it hadn't come down yet.
Speaker 2 (15:22):
It was.
Speaker 1 (15:25):
Above five percent, right and likewise, and after the what
during the two thousand and eight nine, two thousand and
eight election, where obviously that was a GFC election, you know,
obviously the unemployment rate either was high then or was
going high then. But but but you know that that
that that election followed like an intense period of monetary
(15:45):
tightening that the highest locar that's ever existed. I think
retail interest rates were either eighteen percent or close to
ten percent changeable change of government, although I think house
prices continued to rise from a lot of that before
falling anyway, It's it's it's low low interest rates, and
and and and and and and increasing the high prosses
(16:05):
house prices are tend to be what what people look for.
I wonder whether the issue with unemployment is that unemployed
people either don't vote or or probably vote labor and
(16:28):
therefore you know that that they're voters locked in, They're
not they're not swing voters. Whereas you know, again you've
got this sort of two thirds of households live in
the home that they or you know, their household owns.
That is a very you know, that's that's that is
the voting block that you kind of need to win.
Speaker 5 (16:44):
Surely somebody has done some polling on unemployed voting habits.
Speaker 2 (16:49):
Yeah, yeah, yeah.
Speaker 3 (16:50):
I suppose it might also be the length of time
someone's unemployed. Like in Wellington, we're seeing you know, higher
paid people losing their jobs across the public sector, but
I'm not sure how long that's staying amployed for. Presumably
they are moving into other roles quickly enough, so maybe
you're not too much of an upset voter if you're
(17:13):
able to move into something else quickly.
Speaker 1 (17:14):
But no, I just want to move on to cp I. Jason,
you have been looking at the CPI with the HOWI
measure inflation.
Speaker 5 (17:23):
I have I probly printed out some notes and I'm
ready to bloody go. I've underlined some words. I am.
I yes, I can talk about this. I love a CPI.
I would say I studied as economics and journalisms of CPI.
Funny story, actually, when I was working for the National
Business Review, I was the CPI guy, and one of
(17:45):
it was back in the days when CPI really didn't matter.
It was the Graham Wheeler days, no one cared about economics.
And one of the worst stories that I ever did
that one of my editors just shook his head at, was.
Speaker 2 (17:54):
You know, you have the.
Speaker 5 (17:57):
Economist expectation of inflation. You know that inflation expectations. So
I'd always do stories of inflation expectations and they were fine.
But one day I was really scratching around for a
story and Inflation Expectations were out the next week, so
I pitched and did the story Economist expectations of Inflation expectations,
so it was a really inception view.
Speaker 2 (18:16):
There's just no one read. And now I just like, I.
Speaker 5 (18:19):
Remember the look on my editor's face when he was
reading and he smumbled something about the fact it was
a nothing story. And at the time I felt so hurt.
But look now as an editor, I'm like, that is
a nothing story.
Speaker 4 (18:29):
It's such a huge thing to do. It is.
Speaker 2 (18:31):
Yes, you'd never do it now though, no, no, no,
I've learned my Listen.
Speaker 1 (18:35):
So the government, I mean, the government is claiming victory.
As you know, everyone hates us government's was claim victory
for low CPI and and always always that it's not
their fault when it goes when it's high.
Speaker 4 (18:47):
One thing I guess.
Speaker 1 (18:48):
They can claim victory on is that this is the
CPI for the quarter of the text cuts. And clearly
we had had not really any sort of stimulus from
the text cuts, so fear play to Nikola Willis, I
would say, and Christopher likesom that the text cuts in
the round were not inflationary.
Speaker 5 (19:07):
But what I will note as well that A z
said the lower patrol prices play a key role in
the data, and also reflected the fact that New Zealand
is currently importing broader disinflation from the rest of the world,
So it looks like overseas is doing quite a bit
of the heavy lifting here and the government we're quick
to take credit for it.
Speaker 3 (19:24):
Well, yeah, the domestically driven inflation is still way up.
It's the imported inflation are largely due to fuel that's
pulled that number right down. I suppose from a political
perspective though, the government will be able to say, well,
what's you know where those domestic drivers coming from? And
it continues to be council rates. We all love to
beat up on local councils, are we Dorington Council?
Speaker 2 (19:49):
The revenge finally take that exactly.
Speaker 3 (19:53):
And insurance, which is the other one hard for government
to control. They can't control climate, and Sure's response to.
Speaker 4 (20:00):
That case Castella can't get anything right.
Speaker 3 (20:06):
Prices and prints, well that's the one. Yes, you know,
supply and demand. Government policy can affect rents.
Speaker 1 (20:15):
That is slightly embarrassing because prince were meant to remember
that the lands.
Speaker 2 (20:20):
They use is put down downward pressure.
Speaker 4 (20:22):
Which means they can still go up, but not much.
Speaker 5 (20:25):
It's the most nothing ill speaking of my nothing story,
that's such a nothing phrase downward pressure could mean anything,
but I.
Speaker 3 (20:31):
Mean it is true though, like when we do rints
go down. So yeah, So I guess that the landlords
would argue, well, they've had a tough time with I'm
not a landlord. I'm coming in to bet for the landlords.
Speaker 5 (20:43):
Briefly classic next she'll be batting for the banks.
Speaker 2 (20:48):
She will, she will. That was an awkward sailance.
Speaker 3 (20:50):
I'm not betting for anyone, but but the landlords will say,
I mean, period of high interest rates, the interest deductibility
rules as well really copected the cash flow and now
they can't get the capital gains because there are no
capital gains. So landholds are, you know, have had a
difficult few years, depending on on a yes on when
you when you bought the house. Recent property investors are
(21:10):
much lesse oft than.
Speaker 5 (21:11):
If anybody got into the game in the last three years.
I say they've probably been hit pretty hard. But long term,
I think they're doing all right.
Speaker 1 (21:19):
Yes, no, I wonder. I do wonder as well whether
we'll see some softening with migration At the moment's pretty
low and forecasts for Stato for some time, and obviously
we've got net migration or we're still in net migration,
but we still have large, large outflows to Australia.
Speaker 4 (21:36):
So whether that puts it downward pressure on.
Speaker 1 (21:38):
On that too, it'd be interesting to see how some
of these supply changes impact that. You know, who's gonna
who's going to build, who's going to build all these houses?
If if if if there's continued downward pressure on on
rents and house prices.
Speaker 5 (21:49):
So I had an idea about that. Actually, what about
if a government decided it was going to build, say
one hundred thousand homes and give it a name like
can we can we build.
Speaker 2 (21:58):
Or something like that.
Speaker 5 (22:00):
Do you get to one hundred thousand j QUI to
no listen, Let the let the analysts and forecasters deal
with that one.
Speaker 3 (22:05):
Well, I did think actually speaking of that, it was
interesting when this government came out and said that it
would provide an underwrite exactly. This was very similar to.
Speaker 4 (22:14):
Key we build, the que build resurrection.
Speaker 3 (22:16):
The key we build restriction, you know, to help developers
get financed. So if you're a developer and you want
to build, say twenty units, the bank doesn't want to
lend you the money because you can't guarantee to the
bank that you're going to sell the units because the
market's so quiet. You go to the government and they
provide you with an underwrite and they say, look, if
you don't sell x number of these houses, will buy
(22:38):
the houses from you. And then that means is the
developer you can go to the bank and say, look,
if these are houses, don't sell, the government will buy
some of them. And you know, the government will it's
an asset, I can sell it. That's that's the whole concept.
So this is what the previous government.
Speaker 1 (22:52):
Did, exactly the same, apart from the income cap and
the price cap.
Speaker 4 (22:56):
Exactly the same.
Speaker 1 (22:58):
And then and then I think began words built on
the So actually there was a non Q build on
the right that labor head as well, so.
Speaker 3 (23:04):
They sort of did use that model, but took away
the KI build brand and took away some of the
rules around QI build. And but I did a story
on this. Actually with the previous government there was a
developer that used that underwright that otherwise seemed to be
doing okay. So I guess that people will say, well,
(23:24):
it's kind of corporate welfare. Should that's the criticism. But
then on the other hand, it's it's like, well, it's
not necessarily costing the government anything because if they have
to buy the house, they have an asset, they can
use it, they can sell it. It's just using the
Crown's balance sheet.
Speaker 1 (23:42):
I do it is this is going to be the
challenge as we sort of ramp up the supply response
because we sort of had We've seen it in Auckland
with the unitary Plan and some of the NDIA sort
of stuff coming through. But the replacement value of housing
is very expensive still. It's costs a lot of money
to build a house. We haven't really seeing the effects
of the building building supplies reforms. We still have quite
(24:04):
a noncompetitive and bulcanized construction sector. So it still costs
a lot to build a new home. And obviously there's
not much confidence in the property at the moment. So
you know, where are these hundreds of thousands of people
going to come from who are going to shout out
a lot of money to a risky property investment, knowing
(24:26):
full well that full well that there's a risk that
that property will will you know, lose a fear bit
of money. That's and this is I suppose what this
policy responds to, but it is that you know, that's
sort of consumed going forward as the kind of confidence.
Speaker 3 (24:39):
Interest rates Thomas interest rates, such as low interestrates.
Speaker 1 (24:43):
Yes, it's true, I suppose it is a good time
to buy at the bottom of the market. But you know,
you sort of there's the catch twenty two of the
New Zealand property market is that excessive confidence in the
property market is sort of completely you know, destroyed the
aspirations of a whole generation of New Zealanders. But but
but but not enough confidence in the property market will
will kind of cause the sector to collapse and make
(25:05):
the problem even worse.
Speaker 3 (25:06):
So well, I mean that's where people who support this
government underwright situation would say, well that that type of
policy was we should have had that over the past
couple of years when interest rates rose and the property
market went cold, like have a counter cyclic, I think,
so you provide the support to prevent the builders and
(25:26):
developers from rushing off to Australia and at a time
there's little confidence, and then you don't have that type
of support when the market's hot. So the previous government
had that type of thing going when the market was hot.
Speaker 2 (25:39):
Use it because everybody was buying. That's a good point
but then you have.
Speaker 3 (25:42):
Other people who say, look, actually this is all too complex.
Your government can't shouldn't dip in and out. It doesn't
really work, and you know, just be temporary.
Speaker 1 (25:50):
But he isn't sort of saying how temporary and yeah,
when you know it's a classic government thing and no
one ever says things are. But I remember to your
point when when when we introduced there one, I think
someone might have been Megan Woods, it might have even
been just under a doing walking into the house with
that chart of building consents that showed it, you know,
not the number of new consents granted plummeting during the
(26:10):
GFC and then taking many many years to get back
to its sort of Helen clark a peak, mainly because
you know, as with everything in New Zealand, when the
construction sector collapses, everyone moves to Australia and then they don't.
They just don't come home. It took the construction sector
years to build up that workforce again, and you know
it took a couple of years to lose it during
(26:32):
the GFC. Tragic any more thoughts on this, Well.
Speaker 3 (26:37):
I mean not to relitigate the past, but it kind
of comes down as well at that time to the
misdiagnosis of like the impact of interest rates and inflation
and so on and so on, because I don't think
they realized they rolled out these policies and didn't realize
that the extent to which the Reserve Bank was stimulating
demand and how the outsized impact that would have on
the economy, on the property market.
Speaker 1 (27:00):
You think a capital gains text is unpatriotic, Okay, Christopher Lax,
It's quite funny. In this building we've sort of been
talking about nothing but capital gains Textas I feel for
my entire time working here, it's really long on the tooth.
Speaker 2 (27:15):
For like something that hasn't happened.
Speaker 5 (27:17):
It's a long time to be talking about it, and
it will continue for the next four hundred years as well.
Speaker 1 (27:21):
It does make you think they're almost written into like
a secret court clause of the Treaty of White Hanging
Article four. You know there shall never be as.
Speaker 2 (27:31):
Right.
Speaker 3 (27:31):
Actually, you can just ask you guys, what you think
the mood of the boardroom. What's up with these chief
executives and business of people coming out saying they like
a capital gains text.
Speaker 4 (27:41):
It is interesting, isn't it. It's a real.
Speaker 1 (27:44):
I do wonder whether the government's found itself on the
back foot slightly. You know, we're sort of.
Speaker 5 (27:49):
There was the poll last night or this week as well,
true that showed that as well.
Speaker 1 (27:52):
Wonder if it's because there are no capital gains two
texts at the moment. Wonder whether that's I'd love to
see long running tecking of polling, like and you know,
like twenty twenty, when everyone's becoming like an instant gazillion,
the people like capital gains tax my ass, you know,
oh yeah, and now and now there are no capital
gains to speak off. People are thinking, well, you know.
Speaker 2 (28:11):
We're looking at it at our place.
Speaker 5 (28:12):
If I was to lose maybe ten or twenty thousand
dollars and I would be the happiest man on planet
Earth right now. So a capital gains tax is the
furthest thing from my eyes.
Speaker 1 (28:23):
I remember, it's interesting watching Australia. I was I was
traveling last week and that the Australian is having this
torture debate about negative gearing. But we said about obviously
we're brought back an aspect of negative gearing with the
intibility you can offset your your interest costs against the
rental income, but later got rid of a large part
(28:43):
of negative gearing here and no one's who ever thought
about bringing it back. You used to be able to
offset your rental losses against your other income, and so
you have a whole lot of people like leave renching
up and reducing their text pills to basically nothing.
Speaker 3 (28:55):
How good, Yeah, we should let that one just labor.
Speaker 1 (29:01):
Yeah, it's a sort of an incredible thing that that
sort of it was an incredible thing that one could do,
and it sort of seems to have not really it
didn't generate much controversy here like it is in Australia.
Speaker 3 (29:15):
I mean it sort of comes down to politics again
because the concept of negative gearing or ring fencing, or
rental losses or interest deductibility, those are just complicated words
that confusing topics or terms that aren't going to win
the hearts and lines of voters. Whereas you say capital
gains tax, which I guess is also a confusing term,
(29:36):
but people know what that is and that gets the
voters going. Like I always thought it was interesting under
the previous government what they did for property investors was
quite heavy handed with interest deductibility and extending the bright
line test to ten years. You know that that actually
was quite heavy handed for property investors, but people were
sort of okay with it. But then you talk about
a capital gains tax, which would have a lower rate
(29:59):
of tax that you'd have to pay than the bright
line test at ten years, and and then he run's
up and arms and thinks that would destroy the property market.
So it was.
Speaker 1 (30:13):
I mean that the interested actability thing was faced and
within days I suppose, because you know, you don't you
don't want people sort of splurging on property, and I mean,
they had to change it quickly because you wouldn't want
people bringing on property ahead of the implementation date. But
still it's not you know, when you think about about
how fragile and New Zealand housing market welppiness resilient in
(30:33):
many ways, but how you know, you don't really want
to tinker too much with it because it's such an
important thing that literally houses people. It's quite incredible that
they the extent to which any government felt comfortable to
legislate like that and make an entire asset class semi
unviable for large numbers of residential landlords, which you know,
(30:57):
could create its own problems. Like it's sort of it's
quite a beheaded approach if they had done so.
Speaker 3 (31:02):
Well yeah that time, just thinking back to twenty yeah,
early twenty twenty one, Yeah, I mean it just kind
of angers me because the levers that policy that everyone
pulled were so drastic and dramatic, you know, in terms
of like slashing interest rates, removing lvrs, housing market takes off.
(31:23):
Government refuses to do anything because there's an election coming up.
They win the next election, then they like throw everything
at it, policies that the experts think weren't the best
types of policies. You know. It's just like all these
massive movements. So I really hope that over the next
little bit things that calm down a bit.
Speaker 1 (31:40):
So I do think Labour's first it'll be interesting when
the first history of that government has written. I think
that that first year after that, that landslide election, you know,
you campaign that a lot of stuff that they clearly
were working on but didn't campaign on because they wanted
to win that majority, which I think is I don't
think that's very good. I think if you've got policy
and the works, you should, Yeah, you are it to
(32:01):
people to campaign in it. But controversial stuff like the
Muori Awards legislation, which they basically didn't campaign on getting
to parliament. It's one of the first things they do.
They do it quite yeah, and you know, it's it's significant.
It's not to say that the policy is a bad idea,
but if you're going to do it, you've got to.
Speaker 4 (32:16):
You should probably take it to an election. Yeah. And
I mean just like and the same attructor ability.
Speaker 3 (32:21):
Yeah, and I think that Labour's still being punished for
that because people lost trust.
Speaker 2 (32:27):
Yeah.
Speaker 1 (32:27):
Yeah, I mean that first of six months was the
mul Awards, the new three wards legislation came out. They
clearly had a good idea of what they wanted to
do about that didn't tell anyone. And then there's these
property changes. I mean they could they won the election
within a month. I think that'd written to that, that
leader to Adrian or saying, you know, FOC's the housing
market pretty please? And you think, well, where was that
with that sort of August September of twenty twenty one.
Speaker 4 (32:49):
It was really Yeah, it.
Speaker 1 (32:51):
Was a very you know, I think it's interesting. I
don't think many voters would would be able to perhaps
articulate it, but there's possibly a sense, a sense that
they wanted the party wanted to have its cake and
eat it too, when that massive majority whilst keeping any
contentious things that they wanted to do sort of under wraps.
Speaker 4 (33:07):
Yeah.
Speaker 5 (33:07):
And on the other side of the ledger you had
the National Party that they were not at full strength,
shall we say, and there weren't really at a position
where they were prosecuting those things so the public could
find them out.
Speaker 2 (33:16):
They're busy with other Judith Collins.
Speaker 4 (33:18):
Comes the National Party's fiscals of twenty twenty.
Speaker 1 (33:21):
Wow, much has been written and we need to finish
on public service cuts. The Public Service Commission has published
data to for the year to June thirty. I've delegated
that to you, Jason, I've printed it. You have, so
a game of two halves?
Speaker 5 (33:40):
Good rugby reference there, mate, Yes, listeners.
Speaker 4 (33:46):
Will would Will Will Will Will.
Speaker 1 (33:48):
Know that I actually watched the game of rugby recently,
and I also watch people play golf.
Speaker 2 (33:52):
Why would listeners not that?
Speaker 5 (33:53):
Did you look like a live chan of you watching
sports and you played golf without me?
Speaker 4 (33:58):
No? No, I watched other peo at you're winning. I've
watched them.
Speaker 5 (34:01):
Oh of course, yes, No, that was right, I was
out getting the photos. I wasn't actually able to Yeah, yeah, yeah,
I had to drink in my hand.
Speaker 4 (34:07):
It was really nice.
Speaker 2 (34:07):
Oh good, I'm glad you enjoyed that. Did you have
partaking the golf balls?
Speaker 4 (34:11):
You know?
Speaker 2 (34:11):
Sorry? Now welcome to Jason's Wedding Podcast.
Speaker 3 (34:14):
Yeah, no, I wasn't. I don't think I was like
well dressed partaking the golf really, but I did look
at it and think they looked quite fun.
Speaker 2 (34:20):
Yeah.
Speaker 4 (34:21):
That was my reason too. I didn't want to split
my trousers.
Speaker 2 (34:23):
Yeah, you guys just look too damn good. I get it,
I get it. Okay.
Speaker 5 (34:38):
Public service cuts interesting. So the numbers we have here
is then in the year to thirty June twenty twenty four,
the public service workforce increased by four hundred and twenty
one full time equivalent rolls or zero point seven percent,
to sixty three thousand, five hundred and thirty seven and
they say it was largely due to budget decisions, work programs,
and priorities of the previous government. Although full time equivalents
(35:01):
have increased over the year, they have decreased by three
point three percentage points or roughly two thousand, one hundred
and sixty two since December twenty twenty three.
Speaker 2 (35:11):
So it's interesting to steal.
Speaker 5 (35:12):
Your game of two halves analogy because since year and year,
the last couple of months of the last government, it
is up by zero point seven percent, but measured against
December decreased by three point three percent.
Speaker 2 (35:25):
So what happened in those last couple of months.
Speaker 4 (35:28):
Well, it's interesting.
Speaker 1 (35:29):
I mean I think that the it's I mean, the
figure show and a lot I think, which is one
the extent to which there was a bit of a
hiring venge at the end of last year, I don't think.
And obviously obviously there's been a net game when you
when you add the two habs together. But I think
(35:50):
that the figures slightly don't tell well, they don't tell
the full picture because they only go to the end
of the fiscal year, and I think at the end
of June, the end of June this year, And so
when you think about how long it takes to restructure
an organization, I think there will be many people covered
in the current round of cuts whose jobs are not
telling towards that statistic. So I think we'll probably have
(36:12):
a better idea of what the true extent of the
cuts are, you know, by the end of this year,
and because last year they published a six months of
the update, so I think you'll have a better idea
idea then, And it'll be interesting then because you know,
the figure that's been banded around is like six thousand
jobs roughly, but a lot of those jobs are sort
of vacancies that are opened that out and being filled,
(36:33):
you know, So we don't really get a sense of
what the scale of these cuts are, but it will.
But I think that by the end of the year,
it'll be interesting to see whether whether, like the public
service growth has plateaued.
Speaker 3 (36:46):
Well, So at the end of June it was two
thousand people smaller than in January and then at the
beginning of January, and it will keep shrinking.
Speaker 4 (36:59):
Yeah or not.
Speaker 1 (37:01):
Yeah, I suppose it will shrink, but it's still larger
than a year ago, but smaller than generary yeah. Yeah,
And I imagine it'll be interesting to see how I mean,
no one really knows. It's sort of a game because
so many of those those six thousand roles are vacant,
vacancies that aren't being filled. No one actually knows the
extent to which you know, these cuts are not growing
(37:23):
in line with previous levels of growth or actual you know,
I mean they are the public services shrinking, but it's
not shrinking by the number that that is popularly sort
of bandied about.
Speaker 3 (37:37):
So and in some agencies like the Reserve Bank, which
I'm not sure for included in those figures, actually expanded
their staff considerably as it's taken on new roles and
responsibilities outlined in legislation.
Speaker 4 (37:54):
Takes a lot of people to respond to your oias.
Speaker 5 (37:56):
Do they Yeah, and then even more to extend them
for another twenty days. It's hard work over there.
Speaker 1 (38:02):
But it's you know, that's i and interesting as well
to see the consultant spend decrease. And I think so
labor can take a bit of credit for that. So
they started that sort that getting on top of that,
and the current government certainly just certainly taking the extra
the contract or a consultant spin.
Speaker 3 (38:19):
So yeah, and again hard to see to understand the
real impact of this until the future, Like you know,
we're not going to know the impact of this thing
being cattle, that thing being cut, and whether it was
good or bad thing until stuff either does or doesn't
get done in the future, and we go, oh, why
was no one looking at monitoring that issue all that?
Speaker 5 (38:41):
Yeah, and you can guarantee those stories are going to
be coming out pretty quick because that if I with
the opposition right now, that's where I'd be focusing a
lot of attention on.
Speaker 1 (38:48):
It'll be interesting. I mean, you know you've read about this, Jane.
I've about this as well.
Speaker 4 (38:52):
Jason. I'm not sure if you have.
Speaker 2 (38:53):
But tell me what it is and then I'll to know.
Speaker 1 (38:56):
This is this round of cuts and budget twenty twenty five,
Like we've got no idea about how big that will
be in dollar terms and how many roles will be
on the line.
Speaker 4 (39:03):
Like Wells has said that you know that the sort of.
Speaker 1 (39:05):
Savings exercise will continue, but but obviously you know no
knows what this what the scale that it will be.
I would I would imagine it would it would involve
fewer job losses than this time around.
Speaker 4 (39:16):
We're pretty hard to do that again.
Speaker 5 (39:18):
I think they really broke the back of it, or
they think they did the first time around. And to
send send that signal as well, so you'll hope that
some of the public saff employers would have been hearing
that signal and so they wouldn't have to be as.
Speaker 3 (39:29):
Many cuts sales.
Speaker 4 (39:31):
Sales, Yes I would.
Speaker 3 (39:32):
I wondered that they could turn to st sales to.
Speaker 2 (39:35):
The government of course government, Yes, yes I would.
Speaker 1 (39:37):
I already think again on the tiles we've been I
feel we will to will tootor collective horns.
Speaker 4 (39:45):
We don't think the other I don't we do.
Speaker 1 (39:48):
It hasn't been covered so much outside the Herald Stable,
but I think that when you look go through those
treasury as which we were slightly exists with. Sorry Treasury,
but thank you. There's a a lot of work coming.
You can see that the sheer volume of paper being
generated on these purpose statements for the soees and the
work being done.
Speaker 4 (40:08):
What's you know, like you.
Speaker 2 (40:09):
Reckon that they're leating the foundations?
Speaker 3 (40:11):
Well, well, the government and the Treasury are requiring state
owned enterprises to write statements saying, well, exactly why do
we own this asset? Like what is the point? What
are we achieving by owning this? And they say, well,
the point of this exercise is not to figure out
what we sell or get rid of. Are they saying
(40:33):
this is just good business practice or it's just good practice?
Speaker 4 (40:35):
Right?
Speaker 3 (40:36):
Your personal investment portfolio it's a good idea to assess
the situation every so often, but for definite if there's
any if it comes back and there's a certain enterprise
that makes no sense for us text she own it,
what's the point of the government owning it? You can
see that it could be laying the foundations for a
case to be made for let's get rid of it.
Speaker 1 (40:56):
There's always an unredacted line, like a conspicuously unredacted line
in those oas which says the purpose of the purpose
statements has not to sell the.
Speaker 4 (41:03):
Access, which is clearly just there. This is a flag to.
Speaker 2 (41:06):
Nicola Willis wrote that herself.
Speaker 1 (41:08):
Yeah, but obviously you know that might not be the purpose,
but that but they certainly they will certainly help make
the case for any privatizations with the government to do so.
The model I think could be used as this Temasek idea.
It's a Singapore, Singaporean company where they rolled all their
soees into it and allowed the company to actively manage the.
Speaker 4 (41:28):
Portfolio of soe.
Speaker 1 (41:29):
So you roll you know, q Rail, the government, Shie
Holding in New Zealand, Cordia Television New Zealand, whatever, and
the company can actively manage that portfolio, selling down and
buying other assets as it sees fit.
Speaker 4 (41:43):
Shane Jones is really keen to it.
Speaker 1 (41:45):
He went over there when he was last in government
with Labor to have a chat to Temasek about how
it worked.
Speaker 4 (41:49):
Whinston Peters is really really keen.
Speaker 1 (41:51):
And Treasury has been advising Treasury since the nineteen nineties
has been advising government.
Speaker 4 (41:55):
So this is a good idea.
Speaker 3 (41:56):
So what's the main benefit from.
Speaker 1 (41:58):
That, Well, it's it's sort of done on a super
fun style double double what I call double line double double,
the double separation. So so currently you know that there,
I mean Treasury for instance, has has been trying to
get rid of I think KB rail for a while,
but the government is sentimentally attached to it and sees
(42:19):
sees social I mean was some people at Treasure. They've
been trying to do that for a while and then
and the government doesn't really see there hasn't seen I
wi with them on that. There actually was a dispute
with and Treasury about that, because there is a social
benefit to having rail because it keeps trusts off the roads,
but there isn't really an economic benefit as far as
Treasury sees it to owning this big rail asset. When
(42:40):
taken in the round, I think that some of the
some of the parts of key Rail make money, but
on the whole it absorbs more money than it it
loses money. So that the the idea would be, well, look,
if you put kb rail, using as an example, into
this entity, then this entity can buy or sell it
most because it can sell it should it see fit
and ministers have no say over that.
Speaker 4 (43:02):
So it's the board decides.
Speaker 1 (43:04):
It's it's a portfolio approach where you where the entity itself,
the holding company makes choices about how to manage that portfolio, so.
Speaker 3 (43:14):
That financial decisions, not politically driven decisions.
Speaker 1 (43:18):
Yes, and that's where it gets to your to the
purpose statements where it's with the purpose statements link up
because there are purposes for the government for why these
entities are owned by the government. So key Rail, the
government you know, is very keen on transport connections and
taking trucks off rail, off off the sorry roads and
onto rail, so there's a sort of purpose there. There's
a policy reason for owning that company. TV and Z
(43:38):
as well. There's a policy reason for owning TV and
Z which is to provide a kind of SEEMI, you know,
commercial but semi public public broadcasting to New Zealanders. You know,
it's not the government doesn't own TVNZ because it wants
to make a whole lot of money from TV. So
that's that's that's where the purpose statements fit into the
temisse idea. And interestingly, the New Zealand First Conference at
the weekend, the country that Singapore that when Si Peters
(43:59):
was talking a lot of out in terms of these
this one hundred million dollars investment fund of Singapore one
of was one of them. The other the other one
was Taiwan, which he controversially called a country.
Speaker 4 (44:09):
Jason, you need to go, I do.
Speaker 2 (44:10):
Yeah, I'm afraid.
Speaker 1 (44:11):
All right, Well, it's been a pleasure. That was a
very long on the tiles. Thank you very much for
joining us. Thank you for joining us on the titles
to Jason Older, blend the lights going off, we have
to run time, okay, thank you for that. This was
on the Tiles for another week. Ethan Sills is a producer.
See you back next week for more on the tiles.
Speaker 4 (44:25):
My babe,
Hello, and welcome to on the tiles, the New Zealand
Heralds politics podcast. I'm your host, Thomas Cocklin, the deputy
political editor of The Herald. We're back after a bit
of a hiatus. Welcome back, Thank you for sticking with us,
Thank you for coming back. Joining me today for a
panel is the New Zealand Herolds Wellington Business editor Janey
Tips Rainey, Hey, Thomas, afternoon and our news talks he'd
(00:24):
Beads Political editor Jason Walls newly married.
Speaker 2 (00:28):
Hello Thomas, not to you though.
Speaker 1 (00:32):
I try, but congratulations right, Janet. It's been very difficult
to get you on the podcast today because you've been
very busy on a story. Yes, would you like to
tell us about the audiobook version of your of your
ACC story.
Speaker 3 (00:48):
Yes. My nose has been buried in this issue for
a few days and I've just come back up for air,
so I'm sorry if I sound a little bit frazzled,
but I found something really interesting. I was looking through
the government's some financial statements for the year to June
and really noticed the impact that ACC's deficit had on
(01:08):
the Crown accounts, so that the books were nearly thirteen
billion dollars in deficit. It's the widest deficit since twenty
twenty when COVID came along, and I sort of basically
drilled downlooked through the fine print, the stars at the
bottom of the ifs and butts, and saw that a
large part of this is because of ACC, and specifically
because there's been a court case that has expanded ACC's coverage.
(01:34):
So basically, there's a rape survivor who took ACC to
court because ACC wouldn't pay her for her loss of
earnings because of childhood abuse that she suffered because she
didn't report that when she was a child. She only
reported as an adult. She thought that was unfair. She said, well,
(01:55):
how on earth was I supposed to report abuse as
a child? I shouldn't be penalized for that. Not fair?
So she takes a sec to court. Four years later,
she wins, and as a result of this court ruling
made in December, which no one really knew much about,
was sort of not much fanfare about it. As a
result of that, ACC reckons it'll need to pay about
(02:19):
one hundred thousand additional people will become eligible for cover
because of the interpretation of the law. One hundred thousand people.
It's put aside nearly three point six billion dollars to
pay people who as of today had been abused injured
(02:39):
as children. So I mean kind of a big deal.
Speaker 1 (02:44):
ACC has been making noises about sustainability and levy changes
as it does from time to time. It does this
all the time, always one thing levy increases. Is this
a significant driver of that?
Speaker 4 (02:53):
Do you think? Or is it?
Speaker 3 (02:55):
I think there are a number of factors. And ACC
gets its money from the government from and you know,
from its investments it makes. But without a doubt, increasing
its future liabilities by three point six billion dollars due
to one case is really significant.
Speaker 2 (03:14):
And that's what it is. It's forecasting it.
Speaker 5 (03:16):
Yeah, so that where did and I'm sorry to put
you on the spot here, where did they get one
hundred thousand people from?
Speaker 3 (03:21):
Yeah, well that's that's a good question. I sat down
with ACC CEO and depity this week for half an
hour and they were like, well, these are very like
high level estimates. I think actuaries have been busy, you know,
because you have to identify, well who who might have
been abused as a child and then who might have
(03:43):
not worked as an adult because of that abuse and
then of those people who hadn't reported it, so there
was a child. So it gets immensely complicated.
Speaker 2 (03:53):
There's a lot of asterisks in these numbers.
Speaker 3 (03:54):
There are a lot of asterisks, but either way, it's
the numbers of material. And you know, for victims, this
is a huge win. Amazing. I spoke to the woman
who brought forward this case, and I mean, she's had
an absolute hell of her time, but this is a
major win for her and the people she's advocating for.
(04:14):
But for ACC, this is immensely complex because you know,
think of the administrative situation. Now you need to ask
people to prove they haven't been working because of their
childhood trauma, the injuries they stuffed as a child. You
don't need a court conviction. You just have to convince
ACC of that. And how does ACC deal with that
(04:35):
without retraumatizing people? But then, you know, even the survivor said, well,
are people are going to take the mickey and try
to tell ACC they were abused just to get money?
Speaker 1 (04:47):
Six point was determined coverage And it's already a pretty
fraud system for some for some borderline cases. So yeah,
I can I can imagine ACC is that's going to
have a difficult time adjudicating those.
Speaker 5 (05:00):
And it's a tough one for the government as well,
because obviously they'll want to swing in behind this sort
of action to help people that genuinely need this help.
But as we were talking about earlier in the week,
I mean ACC's liability presents so much of a liability
on the government's box as a whole. I mean, given
the size of the deficit, you'd think three point six
billion dollars would make up quite a hefty chunk of
(05:22):
what we saw in the Crown accounts.
Speaker 3 (05:24):
Yeah, look, this all comes down to accounting and what's
included in that deficit and what isn't and so on
and so on, And I mean this is a future liability,
So three point six billion looking to the future. ACC
says that of the government's thirteen billion dollar deficit, actually
Treasury says this four billion of that is due to
(05:45):
accow So yeah, so I mean it's a pretty it's
a sizable contribution.
Speaker 5 (05:52):
Makes it a hard political one to attack as well,
because if your labor you can't exactly attack the government
for having this big budget deficit when this is the
reason why, or can you think.
Speaker 3 (06:04):
It's one of these things where like, no one's no
one's at fault. And I believe just looking at at
this case, it seems like the court has made a
common sense ruling. No one can really argue with it.
It's probably a real positive thing for for victims. But
it was quite interesting because I was sitting in this
meeting room at ACC with the CEO and the deputy
(06:24):
and they provided some of these numbers, and I was
just like, well, it's a big deal, right, and they
sort of just looked at each other and were like, yeah, yeah,
I think some some nervousness perhaps at a CC.
Speaker 1 (06:37):
Yes, yes, I can imagine. I can imagine when you
find the three points expellion dollar liability, it's quite a
big deal.
Speaker 4 (06:43):
Is that booked?
Speaker 1 (06:44):
Is that booked in the so that that is that
is count towards this year or is it a future
future cost spread out over multiple years.
Speaker 3 (06:51):
Yes, it's future costs spread over, but it's able. It
does so it's for people that they believe as of
today were injured in the past, asked, and that cost
will be three point six billion looking to the future.
But then as more people come forward, you know, unfortunately,
more people will be abused and then come forward as
(07:12):
adults that that will increase the scope of cover.
Speaker 5 (07:15):
So it's future, it's retrospective, but it's also looking to
the future as well in terms of that.
Speaker 2 (07:20):
So it's an ongoing liability as well.
Speaker 5 (07:23):
X yeah, good snooping, slooping, good goodcounting.
Speaker 4 (07:30):
We've got you on that payroll.
Speaker 2 (07:31):
Yeah.
Speaker 3 (07:33):
You know when I see those, you know, billions in brackets,
you know, billions more than forecast or expected, you, you
sort of have to go, what's going on there? And
I mean the other interesting thing here is they And
thanks for bearing with me listening to this, But a
SC hasn't made a big deal of this. It's sort
of gone under the radar, and I think they're trying
to get their ducks lined up, systems in place to
(07:54):
deal with it.
Speaker 4 (07:54):
Yeah, anything else in the crowd accounts? No, you cover
the crowd accounts.
Speaker 3 (08:00):
Oh well, what else has there been? I mean, there
has been a world outside of ACC over the past week, OOKA.
I think that.
Speaker 5 (08:11):
I usually do the I was on my honeymoon and
this one's on you.
Speaker 3 (08:18):
I was there. I was there. I mean, look, it's
it's it's deeper than expected. The debt is also continuing
to rise. Nicola Willis said she wanted to get it
below forty percent of GDP. It still hasn't turned a corner.
It's still going up and up, and it's because the
books are indeficit, which means we can't pay down our
(08:39):
COVID debt. We're just continuing to renew it, and we're
just renewing the debt taking out more debt. You know,
I thought she was pretty pragmatic about the situation. She
said that the books were sobering, and I think the
government really has committed to further cuts across the public sector.
(09:00):
Nicololis does sound like she is really keen to stick
to those really limited operating allowances.
Speaker 5 (09:06):
In future budgets. She just sounds like she wants to.
It's but doing it is actually a completely different thing.
Remember who else sounded like they wanted to stick to
operating allowance.
Speaker 3 (09:15):
I think the thing that she won't stick to is
reducing debt.
Speaker 2 (09:18):
Yes, it's an easy out, isn't it.
Speaker 5 (09:19):
Because she's made these really stringent commitments to the operating
allowance going forward, But she didn't actually mention the numerical
figure on dead You know, you have these percentage figure.
Speaker 2 (09:29):
It's easy to fudge that.
Speaker 1 (09:29):
I sort of wonder whether she'll she she made such
a big thing of Labor breaking its allowances every year,
I feel like she sort of has to do the
next one. She really has to hit the next one.
And then maybe in an election year, if Labour's doing
a capital gains text and promising you know, some tax
relief or a text which of some kind. I think
(09:51):
an election year, maybe she'll be convinced to spend a
bit more money, because it's just, you know, you can't really,
you can't really go into an election promising a tiny
operating allowance, more public service cuts and what have you,
while Labour's promising a text switch and more funding schools
and hospitals. It's just that's a really that's not a
great offering, I would say for a government seeking re election,
but I don't know, maybe wrong, but.
Speaker 2 (10:12):
We're a tough cell.
Speaker 5 (10:13):
It also paints a picture for a very gray, boring
budget next year, where she's trying to get all her
fiscal ducts in a row before splashing the cash.
Speaker 4 (10:22):
Next budget will be very, very dull.
Speaker 1 (10:24):
We've had hints of it being an aged care budget,
which is sort of a big issue that needs to
be that needs to be resolved, But there's also an issue.
I'm not sure that it's going to sway a lot
of photos. So you probably wouldn't want to have age
here in your election to your budget.
Speaker 2 (10:38):
Where are you hearing this?
Speaker 4 (10:39):
This news to me on the Great Vine?
Speaker 1 (10:42):
The Great Vine, I've also heard I've also heard aged here,
possibly twenty six many inquiry into it.
Speaker 4 (10:49):
At the moment.
Speaker 1 (10:49):
There are a number of different work streams underway. I
think Help Zealand is doing the work.
Speaker 2 (10:53):
So read Thomas Coglin's had a whiskey with Winston.
Speaker 1 (10:58):
No, it's yeah, that's but you know, well, actually you
know Tracy Martin former and Zealand firsteen Pshaar of the
Hekre Association, so that you go, but yes, I think that's.
Speaker 3 (11:07):
Where you should come for your breaking news.
Speaker 1 (11:09):
Well I always do well, but that's the whispers and
it's going to be very expensive. He's like, that's a
it's a it's a it's something we all need, it's
something we all want, but it's you know, you can't
really win an election on age care, I don't think.
But it's something that people are going to have to
fund somehow. Yes, I and I agree debt is probably
going to be the one that should break, because it'd
(11:31):
be interesting to see with the corliss and dynamics go,
because you know, I wonder whether David Seymour is inclined
to as inclined to if National New Zealand first want
to spend a bit more in twenty twenty seven, sex
pardon me twenty twenty six, I would be interesting to
see where they'd lead them.
Speaker 5 (11:45):
Yeah, well, how much is the Treaty's referendum really worth
the National you know, Yeah, that's one hell of a
bargaining chip that they could throw out if it means
loosening a little bit seamore debt strings.
Speaker 4 (11:56):
Yeah, with the large operating allowance and of the referendum.
Speaker 3 (12:00):
I mean, I kind of wonder if they'll need to
because if all goes to plan with the Reserve Banks
interest rate cuts come the next election, interest rates will
be you know, at a much more palatable level at neutral.
If all goes to plan, I mean, they might have
to be cut more because the economy might be in
such a state that they need to keep being lowered.
(12:21):
But I feel like, you know, if that if that's
back at equilibrium, house price growth recovers, probably not too much,
but it recovers a little bit to make everyone with
a house upset about the value of the house feel better.
I feel like those are a fairly major back pocket
issues which will really help the government.
Speaker 1 (12:42):
I think that we're obviously, we've had a poll this week,
and this is big story of the poll is how
I'm happy the whole country feels. If you're listening to this,
you're probably also unhappy. Very great, but it's true like
it's a groom economic environment. But I do I do
to your points now. I think I do wonder whether
one thing that's missing from people's analysis of the current
(13:02):
sort of political climate is the extent to which and
I was speaking to an economist about this the other
day on a bus, the extent to which you know,
the the fact that the economies in the fridge is
sort of self induced. And it stands to reason that
that that once that that that monetary tightening is withdrawn
and we head into an environment of monetary easing, then
(13:25):
then it does actually stand to reason that that that
the the effects of that reverse as well.
Speaker 4 (13:30):
It's it's it's.
Speaker 1 (13:32):
I mean, some people say it's not quite as simple
as a's that, but some people that actually do say it
is quite as simple as that. You take the interest
the high interest rates away, you take you lower the
O c R and and stuff sort of magically comes
back to life.
Speaker 2 (13:42):
It's kind of the backbone of it. Right, You feel richer,
so you spend more.
Speaker 1 (13:45):
Yeah, and you are if you have a mortgage. A
third of households have a mortgage. And actually, and the
interesting thing with the census data is that home ownership
has actually increased for the first time in three years.
So actually there are more people who are more people
who are feeling the pinch at the moment now than
might have done, you know, seven years ago, and the
labor and and and and that also means that because
(14:07):
more people have a mortgage now than than did before,
there is a there's a large sort of majority voting
block there of people who own houses and people who
with or without a mortgage, who are probably going to
be feeling pretty good in twenty three six.
Speaker 3 (14:20):
Yeah, the beneficiaries of that, I think that the kind
of big caveat would be provided the economy doesn't continue
to seriously tank and unemployment doesn't continue to rise too much,
you know, because this there's this quite leg legged effect,
isn't there between when interest rates have shifted and then
(14:40):
how that sort of trickles through to the.
Speaker 1 (14:43):
I was looking at New Zealanders are such basic bitches,
frankly looking, I was looking at what you know, what
what what?
Speaker 4 (14:55):
What?
Speaker 1 (14:55):
What economic metrics trigger a reelection of an incumbent government,
And it's it's low interest rates and high house prices.
One thing voters do not care about. It's unemployment, right really, yeah, Dober,
the unemployment rate was in twenty twenty, it was pretty high,
this result from incumbent government in the m MP era,
you know.
Speaker 5 (15:16):
Small little asterisks on the unemployment rate was low twenty
is high as it hadn't come down yet.
Speaker 2 (15:22):
It was.
Speaker 1 (15:25):
Above five percent, right and likewise, and after the what
during the two thousand and eight nine, two thousand and
eight election, where obviously that was a GFC election, you know,
obviously the unemployment rate either was high then or was
going high then. But but but you know that that
that that election followed like an intense period of monetary
(15:45):
tightening that the highest locar that's ever existed. I think
retail interest rates were either eighteen percent or close to
ten percent changeable change of government, although I think house
prices continued to rise from a lot of that before
falling anyway, It's it's it's low low interest rates, and
and and and and and and increasing the high prosses
(16:05):
house prices are tend to be what what people look for.
I wonder whether the issue with unemployment is that unemployed
people either don't vote or or probably vote labor and
(16:28):
therefore you know that that they're voters locked in, They're
not they're not swing voters. Whereas you know, again you've
got this sort of two thirds of households live in
the home that they or you know, their household owns.
That is a very you know, that's that's that is
the voting block that you kind of need to win.
Speaker 5 (16:44):
Surely somebody has done some polling on unemployed voting habits.
Speaker 2 (16:49):
Yeah, yeah, yeah.
Speaker 3 (16:50):
I suppose it might also be the length of time
someone's unemployed. Like in Wellington, we're seeing you know, higher
paid people losing their jobs across the public sector, but
I'm not sure how long that's staying amployed for. Presumably
they are moving into other roles quickly enough, so maybe
you're not too much of an upset voter if you're
(17:13):
able to move into something else quickly.
Speaker 1 (17:14):
But no, I just want to move on to cp I. Jason,
you have been looking at the CPI with the HOWI
measure inflation.
Speaker 5 (17:23):
I have I probly printed out some notes and I'm
ready to bloody go. I've underlined some words. I am.
I yes, I can talk about this. I love a CPI.
I would say I studied as economics and journalisms of CPI.
Funny story, actually, when I was working for the National
Business Review, I was the CPI guy, and one of
(17:45):
it was back in the days when CPI really didn't matter.
It was the Graham Wheeler days, no one cared about economics.
And one of the worst stories that I ever did
that one of my editors just shook his head at, was.
Speaker 2 (17:54):
You know, you have the.
Speaker 5 (17:57):
Economist expectation of inflation. You know that inflation expectations. So
I'd always do stories of inflation expectations and they were fine.
But one day I was really scratching around for a
story and Inflation Expectations were out the next week, so
I pitched and did the story Economist expectations of Inflation expectations,
so it was a really inception view.
Speaker 2 (18:16):
There's just no one read. And now I just like, I.
Speaker 5 (18:19):
Remember the look on my editor's face when he was
reading and he smumbled something about the fact it was
a nothing story. And at the time I felt so hurt.
But look now as an editor, I'm like, that is
a nothing story.
Speaker 4 (18:29):
It's such a huge thing to do. It is.
Speaker 2 (18:31):
Yes, you'd never do it now though, no, no, no,
I've learned my Listen.
Speaker 1 (18:35):
So the government, I mean, the government is claiming victory.
As you know, everyone hates us government's was claim victory
for low CPI and and always always that it's not
their fault when it goes when it's high.
Speaker 4 (18:47):
One thing I guess.
Speaker 1 (18:48):
They can claim victory on is that this is the
CPI for the quarter of the text cuts. And clearly
we had had not really any sort of stimulus from
the text cuts, so fear play to Nikola Willis, I
would say, and Christopher likesom that the text cuts in
the round were not inflationary.
Speaker 5 (19:07):
But what I will note as well that A z
said the lower patrol prices play a key role in
the data, and also reflected the fact that New Zealand
is currently importing broader disinflation from the rest of the world,
So it looks like overseas is doing quite a bit
of the heavy lifting here and the government we're quick
to take credit for it.
Speaker 3 (19:24):
Well, yeah, the domestically driven inflation is still way up.
It's the imported inflation are largely due to fuel that's
pulled that number right down. I suppose from a political
perspective though, the government will be able to say, well,
what's you know where those domestic drivers coming from? And
it continues to be council rates. We all love to
beat up on local councils, are we Dorington Council?
Speaker 2 (19:49):
The revenge finally take that exactly.
Speaker 3 (19:53):
And insurance, which is the other one hard for government
to control. They can't control climate, and Sure's response to.
Speaker 4 (20:00):
That case Castella can't get anything right.
Speaker 3 (20:06):
Prices and prints, well that's the one. Yes, you know,
supply and demand. Government policy can affect rents.
Speaker 1 (20:15):
That is slightly embarrassing because prince were meant to remember
that the lands.
Speaker 2 (20:20):
They use is put down downward pressure.
Speaker 4 (20:22):
Which means they can still go up, but not much.
Speaker 5 (20:25):
It's the most nothing ill speaking of my nothing story,
that's such a nothing phrase downward pressure could mean anything,
but I.
Speaker 3 (20:31):
Mean it is true though, like when we do rints
go down. So yeah, So I guess that the landlords
would argue, well, they've had a tough time with I'm
not a landlord. I'm coming in to bet for the landlords.
Speaker 5 (20:43):
Briefly classic next she'll be batting for the banks.
Speaker 2 (20:48):
She will, she will. That was an awkward sailance.
Speaker 3 (20:50):
I'm not betting for anyone, but but the landlords will say,
I mean, period of high interest rates, the interest deductibility
rules as well really copected the cash flow and now
they can't get the capital gains because there are no
capital gains. So landholds are, you know, have had a
difficult few years, depending on on a yes on when
you when you bought the house. Recent property investors are
(21:10):
much lesse oft than.
Speaker 5 (21:11):
If anybody got into the game in the last three years.
I say they've probably been hit pretty hard. But long term,
I think they're doing all right.
Speaker 1 (21:19):
Yes, no, I wonder. I do wonder as well whether
we'll see some softening with migration At the moment's pretty
low and forecasts for Stato for some time, and obviously
we've got net migration or we're still in net migration,
but we still have large, large outflows to Australia.
Speaker 4 (21:36):
So whether that puts it downward pressure on.
Speaker 1 (21:38):
On that too, it'd be interesting to see how some
of these supply changes impact that. You know, who's gonna
who's going to build, who's going to build all these houses?
If if if if there's continued downward pressure on on
rents and house prices.
Speaker 5 (21:49):
So I had an idea about that. Actually, what about
if a government decided it was going to build, say
one hundred thousand homes and give it a name like
can we can we build.
Speaker 2 (21:58):
Or something like that.
Speaker 5 (22:00):
Do you get to one hundred thousand j QUI to
no listen, Let the let the analysts and forecasters deal
with that one.
Speaker 3 (22:05):
Well, I did think actually speaking of that, it was
interesting when this government came out and said that it
would provide an underwrite exactly. This was very similar to.
Speaker 4 (22:14):
Key we build, the que build resurrection.
Speaker 3 (22:16):
The key we build restriction, you know, to help developers
get financed. So if you're a developer and you want
to build, say twenty units, the bank doesn't want to
lend you the money because you can't guarantee to the
bank that you're going to sell the units because the
market's so quiet. You go to the government and they
provide you with an underwrite and they say, look, if
you don't sell x number of these houses, will buy
(22:38):
the houses from you. And then that means is the
developer you can go to the bank and say, look,
if these are houses, don't sell, the government will buy
some of them. And you know, the government will it's
an asset, I can sell it. That's that's the whole concept.
So this is what the previous government.
Speaker 1 (22:52):
Did, exactly the same, apart from the income cap and
the price cap.
Speaker 4 (22:56):
Exactly the same.
Speaker 1 (22:58):
And then and then I think began words built on
the So actually there was a non Q build on
the right that labor head as well, so.
Speaker 3 (23:04):
They sort of did use that model, but took away
the KI build brand and took away some of the
rules around QI build. And but I did a story
on this. Actually with the previous government there was a
developer that used that underwright that otherwise seemed to be
doing okay. So I guess that people will say, well,
(23:24):
it's kind of corporate welfare. Should that's the criticism. But
then on the other hand, it's it's like, well, it's
not necessarily costing the government anything because if they have
to buy the house, they have an asset, they can
use it, they can sell it. It's just using the
Crown's balance sheet.
Speaker 1 (23:42):
I do it is this is going to be the
challenge as we sort of ramp up the supply response
because we sort of had We've seen it in Auckland
with the unitary Plan and some of the NDIA sort
of stuff coming through. But the replacement value of housing
is very expensive still. It's costs a lot of money
to build a house. We haven't really seeing the effects
of the building building supplies reforms. We still have quite
(24:04):
a noncompetitive and bulcanized construction sector. So it still costs
a lot to build a new home. And obviously there's
not much confidence in the property at the moment. So
you know, where are these hundreds of thousands of people
going to come from who are going to shout out
a lot of money to a risky property investment, knowing
(24:26):
full well that full well that there's a risk that
that property will will you know, lose a fear bit
of money. That's and this is I suppose what this
policy responds to, but it is that you know, that's
sort of consumed going forward as the kind of confidence.
Speaker 3 (24:39):
Interest rates Thomas interest rates, such as low interestrates.
Speaker 1 (24:43):
Yes, it's true, I suppose it is a good time
to buy at the bottom of the market. But you know,
you sort of there's the catch twenty two of the
New Zealand property market is that excessive confidence in the
property market is sort of completely you know, destroyed the
aspirations of a whole generation of New Zealanders. But but
but but not enough confidence in the property market will
will kind of cause the sector to collapse and make
(25:05):
the problem even worse.
Speaker 3 (25:06):
So well, I mean that's where people who support this
government underwright situation would say, well that that type of
policy was we should have had that over the past
couple of years when interest rates rose and the property
market went cold, like have a counter cyclic, I think,
so you provide the support to prevent the builders and
(25:26):
developers from rushing off to Australia and at a time
there's little confidence, and then you don't have that type
of support when the market's hot. So the previous government
had that type of thing going when the market was hot.
Speaker 2 (25:39):
Use it because everybody was buying. That's a good point
but then you have.
Speaker 3 (25:42):
Other people who say, look, actually this is all too complex.
Your government can't shouldn't dip in and out. It doesn't
really work, and you know, just be temporary.
Speaker 1 (25:50):
But he isn't sort of saying how temporary and yeah,
when you know it's a classic government thing and no
one ever says things are. But I remember to your
point when when when we introduced there one, I think
someone might have been Megan Woods, it might have even
been just under a doing walking into the house with
that chart of building consents that showed it, you know,
not the number of new consents granted plummeting during the
(26:10):
GFC and then taking many many years to get back
to its sort of Helen clark a peak, mainly because
you know, as with everything in New Zealand, when the
construction sector collapses, everyone moves to Australia and then they don't.
They just don't come home. It took the construction sector
years to build up that workforce again, and you know
it took a couple of years to lose it during
(26:32):
the GFC. Tragic any more thoughts on this, Well.
Speaker 3 (26:37):
I mean not to relitigate the past, but it kind
of comes down as well at that time to the
misdiagnosis of like the impact of interest rates and inflation
and so on and so on, because I don't think
they realized they rolled out these policies and didn't realize
that the extent to which the Reserve Bank was stimulating
demand and how the outsized impact that would have on
the economy, on the property market.
Speaker 1 (27:00):
You think a capital gains text is unpatriotic, Okay, Christopher Lax,
It's quite funny. In this building we've sort of been
talking about nothing but capital gains Textas I feel for
my entire time working here, it's really long on the tooth.
Speaker 2 (27:15):
For like something that hasn't happened.
Speaker 5 (27:17):
It's a long time to be talking about it, and
it will continue for the next four hundred years as well.
Speaker 1 (27:21):
It does make you think they're almost written into like
a secret court clause of the Treaty of White Hanging
Article four. You know there shall never be as.
Speaker 2 (27:31):
Right.
Speaker 3 (27:31):
Actually, you can just ask you guys, what you think
the mood of the boardroom. What's up with these chief
executives and business of people coming out saying they like
a capital gains text.
Speaker 4 (27:41):
It is interesting, isn't it. It's a real.
Speaker 1 (27:44):
I do wonder whether the government's found itself on the
back foot slightly. You know, we're sort of.
Speaker 5 (27:49):
There was the poll last night or this week as well,
true that showed that as well.
Speaker 1 (27:52):
Wonder if it's because there are no capital gains two
texts at the moment. Wonder whether that's I'd love to
see long running tecking of polling, like and you know,
like twenty twenty, when everyone's becoming like an instant gazillion,
the people like capital gains tax my ass, you know,
oh yeah, and now and now there are no capital
gains to speak off. People are thinking, well, you know.
Speaker 2 (28:11):
We're looking at it at our place.
Speaker 5 (28:12):
If I was to lose maybe ten or twenty thousand
dollars and I would be the happiest man on planet
Earth right now. So a capital gains tax is the
furthest thing from my eyes.
Speaker 1 (28:23):
I remember, it's interesting watching Australia. I was I was
traveling last week and that the Australian is having this
torture debate about negative gearing. But we said about obviously
we're brought back an aspect of negative gearing with the
intibility you can offset your your interest costs against the
rental income, but later got rid of a large part
(28:43):
of negative gearing here and no one's who ever thought
about bringing it back. You used to be able to
offset your rental losses against your other income, and so
you have a whole lot of people like leave renching
up and reducing their text pills to basically nothing.
Speaker 3 (28:55):
How good, Yeah, we should let that one just labor.
Speaker 1 (29:01):
Yeah, it's a sort of an incredible thing that that
sort of it was an incredible thing that one could do,
and it sort of seems to have not really it
didn't generate much controversy here like it is in Australia.
Speaker 3 (29:15):
I mean it sort of comes down to politics again
because the concept of negative gearing or ring fencing, or
rental losses or interest deductibility, those are just complicated words
that confusing topics or terms that aren't going to win
the hearts and lines of voters. Whereas you say capital
gains tax, which I guess is also a confusing term,
(29:36):
but people know what that is and that gets the
voters going. Like I always thought it was interesting under
the previous government what they did for property investors was
quite heavy handed with interest deductibility and extending the bright
line test to ten years. You know that that actually
was quite heavy handed for property investors, but people were
sort of okay with it. But then you talk about
a capital gains tax, which would have a lower rate
(29:59):
of tax that you'd have to pay than the bright
line test at ten years, and and then he run's
up and arms and thinks that would destroy the property market.
So it was.
Speaker 1 (30:13):
I mean that the interested actability thing was faced and
within days I suppose, because you know, you don't you
don't want people sort of splurging on property, and I mean,
they had to change it quickly because you wouldn't want
people bringing on property ahead of the implementation date. But
still it's not you know, when you think about about
how fragile and New Zealand housing market welppiness resilient in
(30:33):
many ways, but how you know, you don't really want
to tinker too much with it because it's such an
important thing that literally houses people. It's quite incredible that
they the extent to which any government felt comfortable to
legislate like that and make an entire asset class semi
unviable for large numbers of residential landlords, which you know,
(30:57):
could create its own problems. Like it's sort of it's
quite a beheaded approach if they had done so.
Speaker 3 (31:02):
Well yeah that time, just thinking back to twenty yeah,
early twenty twenty one, Yeah, I mean it just kind
of angers me because the levers that policy that everyone
pulled were so drastic and dramatic, you know, in terms
of like slashing interest rates, removing lvrs, housing market takes off.
(31:23):
Government refuses to do anything because there's an election coming up.
They win the next election, then they like throw everything
at it, policies that the experts think weren't the best
types of policies. You know. It's just like all these
massive movements. So I really hope that over the next
little bit things that calm down a bit.
Speaker 1 (31:40):
So I do think Labour's first it'll be interesting when
the first history of that government has written. I think
that that first year after that, that landslide election, you know,
you campaign that a lot of stuff that they clearly
were working on but didn't campaign on because they wanted
to win that majority, which I think is I don't
think that's very good. I think if you've got policy
and the works, you should, Yeah, you are it to
(32:01):
people to campaign in it. But controversial stuff like the
Muori Awards legislation, which they basically didn't campaign on getting
to parliament. It's one of the first things they do.
They do it quite yeah, and you know, it's it's significant.
It's not to say that the policy is a bad idea,
but if you're going to do it, you've got to.
Speaker 4 (32:16):
You should probably take it to an election. Yeah. And
I mean just like and the same attructor ability.
Speaker 3 (32:21):
Yeah, and I think that Labour's still being punished for
that because people lost trust.
Speaker 2 (32:27):
Yeah.
Speaker 1 (32:27):
Yeah, I mean that first of six months was the
mul Awards, the new three wards legislation came out. They
clearly had a good idea of what they wanted to
do about that didn't tell anyone. And then there's these
property changes. I mean they could they won the election
within a month. I think that'd written to that, that
leader to Adrian or saying, you know, FOC's the housing
market pretty please? And you think, well, where was that
with that sort of August September of twenty twenty one.
Speaker 4 (32:49):
It was really Yeah, it.
Speaker 1 (32:51):
Was a very you know, I think it's interesting. I
don't think many voters would would be able to perhaps
articulate it, but there's possibly a sense, a sense that
they wanted the party wanted to have its cake and
eat it too, when that massive majority whilst keeping any
contentious things that they wanted to do sort of under wraps.
Speaker 4 (33:07):
Yeah.
Speaker 5 (33:07):
And on the other side of the ledger you had
the National Party that they were not at full strength,
shall we say, and there weren't really at a position
where they were prosecuting those things so the public could
find them out.
Speaker 2 (33:16):
They're busy with other Judith Collins.
Speaker 4 (33:18):
Comes the National Party's fiscals of twenty twenty.
Speaker 1 (33:21):
Wow, much has been written and we need to finish
on public service cuts. The Public Service Commission has published
data to for the year to June thirty. I've delegated
that to you, Jason, I've printed it. You have, so
a game of two halves?
Speaker 5 (33:40):
Good rugby reference there, mate, Yes, listeners.
Speaker 4 (33:46):
Will would Will Will Will Will.
Speaker 1 (33:48):
Know that I actually watched the game of rugby recently,
and I also watch people play golf.
Speaker 2 (33:52):
Why would listeners not that?
Speaker 5 (33:53):
Did you look like a live chan of you watching
sports and you played golf without me?
Speaker 4 (33:58):
No? No, I watched other peo at you're winning. I've
watched them.
Speaker 5 (34:01):
Oh of course, yes, No, that was right, I was
out getting the photos. I wasn't actually able to Yeah, yeah, yeah,
I had to drink in my hand.
Speaker 4 (34:07):
It was really nice.
Speaker 2 (34:07):
Oh good, I'm glad you enjoyed that. Did you have
partaking the golf balls?
Speaker 4 (34:11):
You know?
Speaker 2 (34:11):
Sorry? Now welcome to Jason's Wedding Podcast.
Speaker 3 (34:14):
Yeah, no, I wasn't. I don't think I was like
well dressed partaking the golf really, but I did look
at it and think they looked quite fun.
Speaker 2 (34:20):
Yeah.
Speaker 4 (34:21):
That was my reason too. I didn't want to split
my trousers.
Speaker 2 (34:23):
Yeah, you guys just look too damn good. I get it,
I get it. Okay.
Speaker 5 (34:38):
Public service cuts interesting. So the numbers we have here
is then in the year to thirty June twenty twenty four,
the public service workforce increased by four hundred and twenty
one full time equivalent rolls or zero point seven percent,
to sixty three thousand, five hundred and thirty seven and
they say it was largely due to budget decisions, work programs,
and priorities of the previous government. Although full time equivalents
(35:01):
have increased over the year, they have decreased by three
point three percentage points or roughly two thousand, one hundred
and sixty two since December twenty twenty three.
Speaker 2 (35:11):
So it's interesting to steal.
Speaker 5 (35:12):
Your game of two halves analogy because since year and year,
the last couple of months of the last government, it
is up by zero point seven percent, but measured against
December decreased by three point three percent.
Speaker 2 (35:25):
So what happened in those last couple of months.
Speaker 4 (35:28):
Well, it's interesting.
Speaker 1 (35:29):
I mean I think that the it's I mean, the
figure show and a lot I think, which is one
the extent to which there was a bit of a
hiring venge at the end of last year, I don't think.
And obviously obviously there's been a net game when you
when you add the two habs together. But I think
(35:50):
that the figures slightly don't tell well, they don't tell
the full picture because they only go to the end
of the fiscal year, and I think at the end
of June, the end of June this year, And so
when you think about how long it takes to restructure
an organization, I think there will be many people covered
in the current round of cuts whose jobs are not
telling towards that statistic. So I think we'll probably have
(36:12):
a better idea of what the true extent of the
cuts are, you know, by the end of this year,
and because last year they published a six months of
the update, so I think you'll have a better idea
idea then, And it'll be interesting then because you know,
the figure that's been banded around is like six thousand
jobs roughly, but a lot of those jobs are sort
of vacancies that are opened that out and being filled,
(36:33):
you know, So we don't really get a sense of
what the scale of these cuts are, but it will.
But I think that by the end of the year,
it'll be interesting to see whether whether, like the public
service growth has plateaued.
Speaker 3 (36:46):
Well, So at the end of June it was two
thousand people smaller than in January and then at the
beginning of January, and it will keep shrinking.
Speaker 4 (36:59):
Yeah or not.
Speaker 1 (37:01):
Yeah, I suppose it will shrink, but it's still larger
than a year ago, but smaller than generary yeah. Yeah,
And I imagine it'll be interesting to see how I mean,
no one really knows. It's sort of a game because
so many of those those six thousand roles are vacant,
vacancies that aren't being filled. No one actually knows the
extent to which you know, these cuts are not growing
(37:23):
in line with previous levels of growth or actual you know,
I mean they are the public services shrinking, but it's
not shrinking by the number that that is popularly sort
of bandied about.
Speaker 3 (37:37):
So and in some agencies like the Reserve Bank, which
I'm not sure for included in those figures, actually expanded
their staff considerably as it's taken on new roles and
responsibilities outlined in legislation.
Speaker 4 (37:54):
Takes a lot of people to respond to your oias.
Speaker 5 (37:56):
Do they Yeah, and then even more to extend them
for another twenty days. It's hard work over there.
Speaker 1 (38:02):
But it's you know, that's i and interesting as well
to see the consultant spend decrease. And I think so
labor can take a bit of credit for that. So
they started that sort that getting on top of that,
and the current government certainly just certainly taking the extra
the contract or a consultant spin.
Speaker 3 (38:19):
So yeah, and again hard to see to understand the
real impact of this until the future, Like you know,
we're not going to know the impact of this thing
being cattle, that thing being cut, and whether it was
good or bad thing until stuff either does or doesn't
get done in the future, and we go, oh, why
was no one looking at monitoring that issue all that?
Speaker 5 (38:41):
Yeah, and you can guarantee those stories are going to
be coming out pretty quick because that if I with
the opposition right now, that's where I'd be focusing a
lot of attention on.
Speaker 1 (38:48):
It'll be interesting. I mean, you know you've read about this, Jane.
I've about this as well.
Speaker 4 (38:52):
Jason. I'm not sure if you have.
Speaker 2 (38:53):
But tell me what it is and then I'll to know.
Speaker 1 (38:56):
This is this round of cuts and budget twenty twenty five,
Like we've got no idea about how big that will
be in dollar terms and how many roles will be
on the line.
Speaker 4 (39:03):
Like Wells has said that you know that the sort of.
Speaker 1 (39:05):
Savings exercise will continue, but but obviously you know no
knows what this what the scale that it will be.
I would I would imagine it would it would involve
fewer job losses than this time around.
Speaker 4 (39:16):
We're pretty hard to do that again.
Speaker 5 (39:18):
I think they really broke the back of it, or
they think they did the first time around. And to
send send that signal as well, so you'll hope that
some of the public saff employers would have been hearing
that signal and so they wouldn't have to be as.
Speaker 3 (39:29):
Many cuts sales.
Speaker 4 (39:31):
Sales, Yes I would.
Speaker 3 (39:32):
I wondered that they could turn to st sales to.
Speaker 2 (39:35):
The government of course government, Yes, yes I would.
Speaker 1 (39:37):
I already think again on the tiles we've been I
feel we will to will tootor collective horns.
Speaker 4 (39:45):
We don't think the other I don't we do.
Speaker 1 (39:48):
It hasn't been covered so much outside the Herald Stable,
but I think that when you look go through those
treasury as which we were slightly exists with. Sorry Treasury,
but thank you. There's a a lot of work coming.
You can see that the sheer volume of paper being
generated on these purpose statements for the soees and the
work being done.
Speaker 4 (40:08):
What's you know, like you.
Speaker 2 (40:09):
Reckon that they're leating the foundations?
Speaker 3 (40:11):
Well, well, the government and the Treasury are requiring state
owned enterprises to write statements saying, well, exactly why do
we own this asset? Like what is the point? What
are we achieving by owning this? And they say, well,
the point of this exercise is not to figure out
what we sell or get rid of. Are they saying
(40:33):
this is just good business practice or it's just good practice?
Speaker 4 (40:35):
Right?
Speaker 3 (40:36):
Your personal investment portfolio it's a good idea to assess
the situation every so often, but for definite if there's
any if it comes back and there's a certain enterprise
that makes no sense for us text she own it,
what's the point of the government owning it? You can
see that it could be laying the foundations for a
case to be made for let's get rid of it.
Speaker 1 (40:56):
There's always an unredacted line, like a conspicuously unredacted line
in those oas which says the purpose of the purpose
statements has not to sell the.
Speaker 4 (41:03):
Access, which is clearly just there. This is a flag to.
Speaker 2 (41:06):
Nicola Willis wrote that herself.
Speaker 1 (41:08):
Yeah, but obviously you know that might not be the purpose,
but that but they certainly they will certainly help make
the case for any privatizations with the government to do so.
The model I think could be used as this Temasek idea.
It's a Singapore, Singaporean company where they rolled all their
soees into it and allowed the company to actively manage the.
Speaker 4 (41:28):
Portfolio of soe.
Speaker 1 (41:29):
So you roll you know, q Rail, the government, Shie
Holding in New Zealand, Cordia Television New Zealand, whatever, and
the company can actively manage that portfolio, selling down and
buying other assets as it sees fit.
Speaker 4 (41:43):
Shane Jones is really keen to it.
Speaker 1 (41:45):
He went over there when he was last in government
with Labor to have a chat to Temasek about how
it worked.
Speaker 4 (41:49):
Whinston Peters is really really keen.
Speaker 1 (41:51):
And Treasury has been advising Treasury since the nineteen nineties
has been advising government.
Speaker 4 (41:55):
So this is a good idea.
Speaker 3 (41:56):
So what's the main benefit from.
Speaker 1 (41:58):
That, Well, it's it's sort of done on a super
fun style double double what I call double line double double,
the double separation. So so currently you know that there,
I mean Treasury for instance, has has been trying to
get rid of I think KB rail for a while,
but the government is sentimentally attached to it and sees
(42:19):
sees social I mean was some people at Treasure. They've
been trying to do that for a while and then
and the government doesn't really see there hasn't seen I
wi with them on that. There actually was a dispute
with and Treasury about that, because there is a social
benefit to having rail because it keeps trusts off the roads,
but there isn't really an economic benefit as far as
Treasury sees it to owning this big rail asset. When
(42:40):
taken in the round, I think that some of the
some of the parts of key Rail make money, but
on the whole it absorbs more money than it it
loses money. So that the the idea would be, well, look,
if you put kb rail, using as an example, into
this entity, then this entity can buy or sell it
most because it can sell it should it see fit
and ministers have no say over that.
Speaker 4 (43:02):
So it's the board decides.
Speaker 1 (43:04):
It's it's a portfolio approach where you where the entity itself,
the holding company makes choices about how to manage that portfolio, so.
Speaker 3 (43:14):
That financial decisions, not politically driven decisions.
Speaker 1 (43:18):
Yes, and that's where it gets to your to the
purpose statements where it's with the purpose statements link up
because there are purposes for the government for why these
entities are owned by the government. So key Rail, the
government you know, is very keen on transport connections and
taking trucks off rail, off off the sorry roads and
onto rail, so there's a sort of purpose there. There's
a policy reason for owning that company. TV and Z
(43:38):
as well. There's a policy reason for owning TV and
Z which is to provide a kind of SEEMI, you know,
commercial but semi public public broadcasting to New Zealanders. You know,
it's not the government doesn't own TVNZ because it wants
to make a whole lot of money from TV. So
that's that's that's where the purpose statements fit into the
temisse idea. And interestingly, the New Zealand First Conference at
the weekend, the country that Singapore that when Si Peters
(43:59):
was talking a lot of out in terms of these
this one hundred million dollars investment fund of Singapore one
of was one of them. The other the other one
was Taiwan, which he controversially called a country.
Speaker 4 (44:09):
Jason, you need to go, I do.
Speaker 2 (44:10):
Yeah, I'm afraid.
Speaker 1 (44:11):
All right, Well, it's been a pleasure. That was a
very long on the tiles. Thank you very much for
joining us. Thank you for joining us on the titles
to Jason Older, blend the lights going off, we have
to run time, okay, thank you for that. This was
on the Tiles for another week. Ethan Sills is a producer.
See you back next week for more on the tiles.
Speaker 4 (44:25):
My babe,
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