Good morning and welcome to The Bulletin. In today’s edition: Property market set for scorching summer after Reserve Bank announcements, National makes big reshuffle, and Auckland Council facing much bigger deficit.
A big day for the Reserve Bank, with a range of announcements on monetary policy, with big implications for the housing market. First of all, the headline official cash rate will be kept at the record low of 0.25% – and as the NZ Herald reports, a new Funding for Lending (FLP) programme will be rolled out to banks. This is effectively what it sounds like – the Reserve Bank would “offer commercial banks a discounted retail rate which would lower their funding costs and enable them to cut mortgage rates further.” The expectation is that it would give banks an incentive to lend money to households and businesses, who would then use it to stimulate the economy.
On those two moves, one part of the economy is certainly likely to stay stimulated – the overheated housing market. That’s certainly the view from National, whose shadow treasurer Andrew Bayly put out a release saying there was little in the RBNZ announcement that would require such lending would go to productive investments, rather than just being parked up in property. In response, I’ll take a quote from journalist Bernard Hickey’s new (very good!) newsletter The Kākā, which noted:
The bank defended the lack of ‘strings’ attached to the lending, although it was clear in the MPS that bank lending since March had focused on housing lending, and had fallen for businesses. The Bank said the lack of business lending was more about a lack of demand than a lack of bank appetite.
Is the housing market spiralling out of control the Reserve Bank’s responsibility? Technically no, explains Stuff’s Thomas Coughlan. The RBNZ has a mandate to keep inflation at about the right level, and set monetary policy at a level that will support maximum sustainable employment. But it’s fair to say their moves have a huge impact on the housing market.
One other announcement means that we can probably expect an absolutely frantic summer of house-buying for those who already own property – Stuff reports loan to value restrictions are likely to be reintroduced next March, ahead of schedule. LVRs are about how much money can be borrowed against a deposit, and the dropping of them earlier this year has been pinpointed as a reason the housing market shot up this year, despite the wider economy being in trouble. Given there’s still a few months left, any property investor with a savvy and ruthless streak will be making the most of the current situation. Finance minister Grant Robertson is clearly concerned by this, and Interest reports he welcomed the move.
One other point worth noting about the Reserve Bank’s move on LVRs – it might be a sound move, but markets might get jittery as a result. As David Hargreaves writes on Interest, there was a clear steer when the changes were made earlier this year that they would last for at least a full year, which now won’t happen. You could argue that events have forced governor Adrian Orr’s hand, but at the same time it also arguably casts doubt on other medium term commitments from the RBNZ. The final lines of Hargreaves article are excellent, and capture the current sense of confusion and anxiety around monetary policy and the housing market:
If the open homes have been frenzied, heated affairs before now, what will they be like this weekend once everybody realises the LVR barrier is coming down again?
To be honest, given that it has done a u-turn anyway, and gone back on its word, I think the RBNZ might in this instance have been better to just simply clamp the LVRs on again straight away.
Maybe it didn’t want to look panicky – but given the circumstances of the timing of this announcement it looks panicky anyway.
National’s caucus reshuffle has provided some surprises, with the finance portfolio being split between two MPs, and two former leaders dropping down the rankings. Stuff has an analysis of who’s up and who’s down, and Justin Giovannetti has picked out 10 details of it all that jump out at him. On that finance split, Business Desk (paywalled) has drilled down into what it will mean to have both Andrew Bayly and Michael Woodhouse responsible for speaking on the topic, and the potential for confusion that creates. Meanwhile, commentator Liam Hehir has written about the elevation of Shane Reti to the deputy leadership, and argues that he could be an important voice of moderation within the party.
Auckland Council’s budget blowout is looking like it could hit a billion dollars, reports Radio NZ. Impacts on revenue from Covid-19 are likely to last longer than initially projected, meaning the Council will have to get by with less money, said mayor Phil Goff. The timing is pretty bad for new projects, with the new 10 year budget coming up for consultation next year. For example, I went out to Waiheke on Tuesday to see the rollout of some new electric buses, and one of the topics that came up in conversation was whether councillors could be convinced to bring them in for the whole city.
The Wellington City Council has voted to give the go-ahead for the heavily contested Shelly Bay redevelopment, reports Stuff. The vote is seen as a blow for mayor Andy Foster, and film mogul Peter Jackson, who both heavily opposed it. Councillors thrashed the issue out yesterday after a public consultation, which reading through the story sounds like it was fraught and tense. The redevelopment is still subject to two legal challenges currently before the courts.
Māori Party MPs asked the PM for a meeting about how they can work with the incoming government, reports Newsroom’s Jonathan Milne. They say it was wrong to not hold talks before the special votes were finalised, which resulted in co-leader Debbie Ngarewa-Packer coming in off the list. Meanwhile, the party is calling for recounts in two electorates, on the grounds that some people were allegedly denied the ability to vote on the Māori roll in polling booths – the Whanganui Chronicle’s Ethan Griffiths has an excellent story outlining the implications of the move.
A lot of controversy has been swirling around a deliberately provocative art show involving the heavy use of swastikas at Auckland’s Mercy Pictures. If, like me, you’ve only vaguely dipped into the controversy, this by Amal Samaha is an excellent piece to bring you up to speed. It gets into the details of how the art show came to be, but also looks at a wider irony-drenched culture of the art world, and how that can give people with fascist sympathies an opportunity to seed their messages with plausible deniability.
A new complainant has come forward against former Christchurch creche worker Peter Ellis, who died while trying to have his convictions overturned, reports Martin Van Beynen for Stuff. Ellis always maintained his innocence, despite being convicted on sex charges against seven children. The new complaint refers to an alleged incident that took place before Ellis began working at the Christchurch Civic Creche – the credibility of the evidence has been questioned by Ellis’ lawyer. The Supreme Court is currently hearing an appeal against the convictions.
A correction and apology: I make a fair few spelling mistakes, but yesterday I misspelled the name of my colleague Alice Webb-Liddall. So to Alice, and more importantly Alice’s mother who wrote in to register her strong disapproval, my humble apologies.
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Right now on The Spinoff: Jihee Junn reports on why sharemarkets shot up in the wake of the recent Covid-19 vaccine news. Jonathan Cotton writes about the 500,000 native trees that have gone into the ground as part of the Trees that Count programme. Russell Brown writes about Unilever trying to eliminate carbon from its cleaning products. Brisbane chef Te Tangaroa Turnbull reviews Monique Fiso’s cookbook Hiakai. And we’re announcing a brand new upcoming podcast called Coming Home, about the people in the New Zealand diaspora who have decided to settle down here again.
For a feature today, a look at the misuse of the Official Information Act by a government department. Stuff’s Nikki Macdonald has detailed the attempts by journalists at her organisation to get at data around immunisation rates, which over the course of several years was not provided on various grounds. Then all of a sudden, the Herald asked for the same data, and it was provided. Here’s an excerpt:
But when New Zealand Herald data editor Chris Knox asked, one week after Duff, the information magically became available. Even then, some data was withheld despite top ministry staff admitting there was no legal basis to do so.
You’re thinking this must be about some terrible screw-up the Health Ministry was trying to bury, right? Not so. It’s about four journalists trying to do something worthwhile – to identify areas of New Zealand with low vaccination rates, and to investigate the reasons behind that.
The ministry’s internal communications surrounding the four separate requests – released only after I complained to the Ombudsman – suggest whether or not you get information depends on who you are, and whether you know the right technical password to switch on the data fountain. Both of which are at odds with the Official Information Act’s founding principle – that information should be made available unless there’s good reason to withhold it.
West Indian cricketers have had training privileges revoked after “repeatedly breaking managed isolation rules”, reports Stuff. The incidents happened within the hotel, and involved some mingling being caught on CCTV. While their standard isolation period is going to come to an end soon, it could theoretically be extended if there are concerns. At the moment, the team is scheduled to travel to Queenstown on Friday for warmup matches, ahead of the series proper starting at the end of November.
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