New PM Chris Hipkins is set to use a cabinet reshuffle this week and a series of policy tweaks to try to distance Labour from Jacinda Ardern and catch up to National, but he may struggle to convince voters that much has changed.
The Government had already started and previewed the migration and spending tweaks under Ardern. Many of the changes will be presentational and in tone, rather than substance, with Hipkins doing his best to highlight how different his 'boy from the Hutt' style of eating sausage roll birthday cakes and cycling to work is from Ardern's high-flying Grey Lynn smile and talk of co-goverance and nuclear free moments. He has emphasised his focus on 'bread and butter' issues and clearing the decks of unnecessary spending and catchphrases such as 'co-governance' and transformation.
He indicated in his first week in the job he was set to loosen migration settings to buy the Government a surge of cheap economic growth that keeps interest rates and inflation low and tries to restart house price growth, along with winning Labour re-election. Median voters love this kind of growth, as do businesses and Treasury.
For 20 years, both main parties have used this tactic of accidentally-on-purpose pulling the cheap migration lever to buy fast growth without the necessary infrastructure investment. In the end, it simply increases the ‘churn’ rate where young New Zealanders have to leave for Australia to be able to afford their own homes, and are replaced by temporary workers who see life here as preferable to life in China, India, the Philippines or South Africa.
At what point does the ‘churn’ rate become unacceptable to the median voters who decide election results? We’re not there yet, and won’t be until older home owners in the suburbs and provinces get sick of having to help their kids with deposits and/or have to watch their grandkids grow up in Australia via Whatsapp.
Australia’s imminent opening up of a fast pathway to ‘first-class’ Australian residency for New Zealand residents (including the recent arrivals) could be that moment of truth. It would be a moment when the ‘escape valve’ for the pressures in our political economy of residents emigrating starts blowing so loud that everyone hears it whistling. Right now, it can’t be heard over the immediate noise of calls from median voters for lower inflation, lower mortgage rates and higher house prices.
What happened in the first week
Hipkins was open in his first meeting on Thursday to calls from business leaders for an urgent opening of the low-wage migration tap, while he was also cautious about committing to another significant hike in the minimum wage.
Hipkins will decide in the coming days how his new Cabinet will fire up economic growth without high inflation and try to win a third term on October 14. He looks set to opt for the cheapest and fastest way to win back the confidence of small-to-medium business owners, which is to enable them to grow by adding cheap labour that resumes downward pressure on wages.
It is the simplest way in the short run to reassure median voters the Government is focused on what they and Treasury officials want: a faster return to Budget surplus through extra GST and income tax receipts from population and employment growth; the flow-on short-term benefits of lower Government debt to take pressure off interest rates and mortgage rates in particular; and, the resumption of a strangling of infrastructure spending to ensure the return of low mortgage rates and population growth combines with residential land shortages to generate another surge in untaxed and leveraged capital gains on land values.
The new PM, who said yesterday he agreed with businesses that the ‘rising tide of economic growth lifts all boats,’ looks set to opt for the usual bi-partisan approach of fueling nominal GDP and land price growth through high population growth that is not debated or agreed to by the public, not planned for or invested in by councils and infrastructure operators and, does not have the permission or endorsement by future voters
Hipkins used his first news conference to also talk about ‘reining-in’ non-essential spending, which could include delays in housing and public transport investment.
The churn economy
Choosing the low-wage, high nominal GDP growth, high population growth, low interest rate and low investment option is consistent with the approach of Governments of both the centre-left and centre-right in the last 20 years. It’s what median voters want, but the pressure on the disposable incomes and wellbeing measures of those in the renting class of families is showing through the ‘escape valves’ of surging health, housing subsidy and justice costs for the Government, along with an escalation in emigration by those locked out of home ownership.
It’s sustainable as long as the ‘churn’ rate of cheap migrants replacing exiting residents can be held high and those residents left here are comfortable commuting to and from Australia for family events and crises. A loosening of migration settings and a tightening of investment spending is the Government’s likely tactic for the next six months, largely because it fears median voters will prefer the even louder calls for a bigger use of the churn lever by the Opposition.
Hipkins' first meeting as PM was in in Auckland with a tightly-packed group of small and large business leaders in the Auckland Business Chamber (formerly known as the Chamber of Commerce). It was carefully choreographed and designed to send a signal that Hipkins went first to business leaders and was open to their suggestions. The first order of business for new PM Hipkins was meeting Bridges and the Auckland Business Chamber.
Hipkins and Auckland Business Chamber CEO Simon Bridges reported after the meeting that it had focused on calls for looser migration settings for lower-wage workers.
“He got it, and got it straight between the eyes. There's a real sense that this isn't just about skilled work. It's not just about rocket scientists or surgeons or anything like that. It's also workers at the bottom of the rung," Bridges said.
“If we're not competitive against in Australia or Canada or something, we're not really in the game. He got that message, and he was listening," he said.
Hipkins made clear he wanted to work closely with businesses.
“I think the relationship between business and government is a really important one. It is integral to the economy. We have shared interests here and making sure that we create a good well paid jobs for New Zealanders because that's how Kiwi families are going to be getting ahead," Hipkins said.
"We all want to see the economy continue to grow. The rising tide will lift all boats. And that's that's actually the spirit in the business community as well. So I think we've got a real interest in working together," he said.
He confirmed the Government was considering further loosening migration settings. There have been at least three rounds of loosening since mid-2022 under new Immigration and Workplace Relations Minister Michael Wood.
“We have always kept immigration on the table as an issue that we'll continue to reconsider as the pressure that we face as a country changes. We've had significant population growth in recent years, and that has created a set of pressures. We've had to catch up in terms of extra housing in terms of extra infrastructure and so on," Hipkins said.
"And so that has been one of the factors that we weighed when we've made decisions around immigration. We also acknowledged that there's a significant skilled labor shortage. There's a significant labor shortage that we're dealing with across the country," he said.
A short-lived tightening
Earlier last year the Government tried to restrict population growth by restricting migration growth in the hope of squaring the population growth-infrastructure deficit circle. That lasted about three months before the pressure from employers forced the various loosenings, including the reopening of the skilled migrant and parental residency categories; an historic increase in the Registered Seasonal Employer scheme quota; and, increases in backpacker and student work rights.
Another big decision in front of Cabinet in the next couple of weeks will be what the minimum wage will be increased to from April 1. Since 2017, the current Government has lifted the minimum wage by 39% or an average of 6.5% per year to $21.20/hour.
Employers and the Opposition have called for slower increases, arguing that would allow more people to be employed and avoid the wage increases being passed on as price increases in a new ‘wage-price spiral’. Recent research globally has shown such minimum wage increases have barely slowed jobs growth and have not been as big a factor in inflation as profit margin expansion.
Hipkins was cagey about whether the next increase in the minimum wage would be as fast as the ones seen since Labour’s election in 2017. Unions have called for an increase of 11.5% to the current living wage of $23.65/hour.
“We've got to acknowledge that our lowest paid workers, minimum wage workers, are really feeling the acute pressure from the rising cost of living. With all of these things, there's a balance to make sure that we're supporting people whose budgets are squeezed, to make sure that their incomes are rising so that they can keep up with the rising cost of living," Hipkins said.
233 Comments
I am a swinging voter. Voted for Labour for the first time last election as I thought it was the least worst option for the country long term. I was probably wrong.
This election I am weighing up what will be worse for NZ long term, another spurt of high immigration overwhelming our infrastructure and suppressing wages, or dividing the country along tribal lines. If Labour open the immigration tap (as the other lot promise to do) then it makes for an easier decision.
Ive seen it happen mostly in horticulture and viticulture.
Its one thing to have a few cottage industries doing bits and bobs, but when you can develop a critical mass it allows for a level of volume and infrastructure that is in another league - it's where eventually you can justify improved mechanisation and automation.
... easily achieved ... I'm currently in a small village in the Visayas ... I'll rustle up a couple million eager young Filippinas , well educated , keen as mustard for a life in the West ... ship them over Monday ? ... Zealandia will be a dream come true , compared to the Philipppines ...
You must know a different sort of people than me - most of the folks in my neighbourhood are not office workers, but labourers - both skilled and unskilled. It the industriousness of NZers in the manual labour-type jobs that makes them so sought after in Australia.
We've got no shortage of folks that get their hands dirty on a daily basis in this country. I think you are barking up the wrong tree there.
So if we had the oil we could be the new Qatar?
What about a simple population plan. Call it steady state: every time a Kiwi emigrates he can sell his 'permission to live in NZ' certificate to whichever foreigner offers most. Some regulations relating to the health and criminal record of the prospective new Kiwi. Logically the firms most desperate for a foreign skill will bid highest.
It is a bit of a flakey idea - it doesn't cover births and deaths and family sizes and demographic profile by age nor does it allow for Kiwis from remote locations being replaced by a highest bidder who ends up in Auckland. However weak the idea is where are better ones? Mine does have some merits: it minimises INZ's impossible task of identifying 'skill'; it helps planning investment in infrastructure and training if you know what the future population is going to be; it makes climate change targetting feasible; it kicks away the main cause of speculation in land.
Any Kiwi can return to NZ - that is a basic principle of international law and the right thing. They would owe the govt the amount their certificate was sold for. Obviously some returnees would never be able to repay just as many loans to beneficiaries are never repaid..
That’s unfortunately what it’s boiling down to, the lesser of two evils and perhaps that happened last time too, if there was a sizeable switch to Labour in order to stymie the Greens from being in actual government. If that is so then that approach will undoubtedly reappear because the prospect of Labour, now breaking ranks & cracking apart, then cobbling together an actual coalition with the Greens & TMP in cabinet positions, hardly inspires confidence for a stable government either. Where it is different though this election is National are looking far more solid and credible and have now a viable coalition partner in ACT. So it would seem obvious that any such strategic voting that favoured Labour last time will now switch to National for exactly the same purpose and the rural sector will be at the forefront.
I'm a big fan of Prof McCullouch ... and as he opines , neither of Labour nor National is addressing the elephant in the room : Productivity ...
... we've flooded the nation with low skilled migrants , pushed house prices beyond affordability with cheap credit , and gifted ourselves a 39 % increase in the minimum wage just because it feels like the right thing to do ...
We're living in ga-ga land if we repeat this BS into the future ... we seriously need to open up to increased competion & innovation within education & healthcare for starters ...
There will be massive tax differences. Labour will target the lower end, probably tax free thresholds, while national will adjust the brackets which will mainly help the rich and remove all property taxes.
Nationals tax thresholds would be much better for me, but ultimately I can’t vote for the property tax removals and I can’t vote for Simeon Brown and his roads only “fixes” for Auckland.
Hope : Government’s strategic plans for population, infrastructure, education, trade, health, natural resources, crime, foreign relations and defence.
Expectation : Government’s short term tactics to stay in power until unmandated aspirational social engineering and logically threadbare climate policy can be resumed.
Hope : voters maintain the rage & anger against the worst government ever , and boot these sad sacks into the gutter on October 14 ...
Expectation : voters maintain the rage & anger against the worst government ever , and boot these sad sacks into the gutter on October 14 .
That's a bit of a cynical view of immigration.
Look at our aging demographics.
Top/old heavy. Working age can't support them. We haven't had enough babies and haven't for decades.
We desperately need workers in all industries.
12 hr waits at ED are unacceptable.
We can't fix our roads, just wack another speed limit zone.
We have our biggest city in ruins. Where's the workers to fix that?
Tradies are scarce and more and more expensive.
BRING THEM IN.
We have less babies because parents can't afford a high mortgage and babies.
Tradies are soon to be joining the dole queue. So I don't think it will be tradies coming into NZ. We already have 300 odd thousand unemployed (unemployable) that need to be put back to work. For their own good as well as that of the country.
As a mid 30’s professional who’s consciously decided not to have children I can categorically say the reason for my decision is extortionate mortgage and cost of living. There is no other reason. This is despite a six figure management position and no debt.
You can say it’s a phenomenon of urbanisation or more access to birth control but in my experience it’s a purely financial decision.
Correct. Numerous studies correlate declining birthrates with elevated educational outcomes for females. Many European countries are seeing net population decline, many of the females in our greater circle are highly educated, choosing to have one child, typically later in life.
They do note that as a somewhat negative element of NZs business culture; that once a business is founded and grown, owners either sell up or keep it at the level it's at, whereas in other markets they would go for as much expansion and growth as possible.
This is really occuring at almost every level of NZ though. We'd all rather piss off to the beach.
I would suggest keeping those "unemployables" on the dole would be far better economically than forcing them into a job when they don't want to work. Especially if the 90 day trial doesn't exist. A long process to sack them. Would feel sorry for any employers forced to pay $22 an hour for little output.
I agree that finance is not the complete solution. There are many reasons for declining birth rates with female education being the most significant but also availability of porn, poor diet, pollution, rapidly declining sperm rates, excessive social media replacing physical interaction, declining belief in religion, our low risk society, etc. But it is a move in the right direction. Our current system of benefits and taxation nudges families apart whereas universal child benefit paid to both active parents and would nudge families to stay together. All evidence indicates families are good for our well being. From the govt's point of view our children are our future and therefore our best investment.
I think the role finance plays in things is immaterial to the trends unfolding. We are making such a thing about housing it's obfuscating the rather severe and swift cultural changes occurring in our younger generations.
This is an economics forum so this sort of subject is sitting outside of most user's level of interest, but it certainly helps if issues can be framed more accurately than just overlapping pet concerns over every change we are facing.
It is material since I have 3 adult children and know what their issues they have had with producing more grandchildren. You may be right that it is insignificant. But I'd like to see a generous universal tried despite it obviously requiring a significant tax hike. Having a modern child is very expensive; a universal benefit reduces admin costs - compare the admin costs and fraud of NZ superannuation with other benefits.
I think it's massively material.
They have literally done studies and the number one factor holding most people back from having children is the cost of it.
Think about it - if your average person can barely afford to feed and house themselves why would they want to double their costs and halve their free time by having a child?
Expectation? I don't think they're crying into their pint glasses down at the pub about how life isn't fair because they can't find the time to start a family. I wouldn't call it an expectation, but a choice. Maybe they don't want kids, have you asked them?
Maybe you have this tired old preconceived notion that young people these days are full of unrealistic expectations and lack work ethic?
In Japan the issue is social expectations of stopping working - the financial incentives haven't worked. Horses for courses.
https://www.theguardian.com/world/2023/jan/24/japan-birthrate-populatio…
The government does not pay for every child's education, unless you are willing to see your child not achieve that is. Books, stationary, camps are not free, uniforms, buy them a laptop but does the amount of stationary go down, no. When I went to school I was provided with text books now I have to by them.
Then there is university which is is far from free. Or maybe your child needs a bit of extra help, that's thousands of dollars a year.
All for a severely decline numeracy an literacy rates.
Agree Singautim.
With genuine compassion for all, my experience in operating a private dental health clinic is high levels of elderly non-resident attempting fraud. If I had $20 for anytime an elderly non-resident wanted me to falsify WINZ documentation and/ or special category referral letter for them to obtain taxpayer funded care, I'd be a trillionaire!
I have much respect for David Seymour as a politically astute defender of democracy but if he supports workers parents arriving then man, make sure they have the resources to pay for private health care. No exceptions. Open one loophole and the costs to the state will mushroom.
NZ has seemingly insurmountable odds to ever right it's listing healthcare service!
Neither National nor Labour have done an outstanding job on that count. Honestly think the country will just slip further and further into broken category under both parties.
Agreed. I became a NZ resident in my fifties; when INZ asked me for proof of $200,000 (that was in 2003) I assumed it was my contribution to the health service paid for by Kiwis and my future Superannuation. I was stunned to discover all i needed was proof that I had the money and that I could keep it. Other countries have high charges for resident visas.
Bringing in people for medium/high wage jobs is great. We should be bringing in people to do these jobs.
Bringing people in for low wage jobs is a problem. These people need state support to be able to live - ie the govt is subsiding employers so they can have labour at a cheap price - and it suppresses wages for other people.
Labour is priced based on the scarcity of that labour. We tell people working on restaurants, supermarkets etc. that they should only be paid that much because there are lots of people who can do their job. The reason there are lots of people who can is any time there is scarcity we bring in more from overseas. Hardly fair.
The fact is there are some industries where that are essential - health, supermarkets, construction - we are going to need to bring in some low wage labour to keep these industries delivering. Then there are some industries that are discretionary - tourism, hospitality - these industries really only deliver for rich owners. Nobody would be worse off with less bars and restaurants, less hotels, etc. we would just need to pay more a prioritise.
We already have a high value industry! Its called AGRICULTURE! However our current bunch of muppets are doing their best to send it back to the stone age! Farmers are very fast adopters of new tech, provided it saves them time and/or adds to their bottom line. Despite what all the dreamers wish for New Zealand's real strength is our great climate that allows us to grow fantastic food! If it hadn't been for farming, fishing, horticulture and forestry over the last 3 years this country would be in an even worse place than it is now. Unfortunately no politician has the fore site to really take these industries to the next level!One of the worst statistical con jobs on politicians is the internet providers. They trot out stats on how much of the population has access to fast broadband. Outside any major town it's a joke! Access to super fast broadband would revolutionise farming but its just not happening.
Key earner? Strange how our economy seemed to handle Covid-19 as well or better than other developed countries with less tourism. If tourism was such a key earner you would expect the opposite. Isn't it mainly a low paid employer so produces little PAYE taxes and the owners may make fortunes but do they pay their taxes here of overseas?
We handled it better because we had less economic disruption to the overall economy via covid. Go check out the worst GDP performers for 2020-2021, mostly dominated by countries that got ravaged in that initial outbreak.
Hard to give away decent export dollars you don't have to invest much to earn.
Perhaps international tourism to NZ is most important to the economy in offsetting the amount of $ kiwis spend on travel abroad (which I think may be more than we get coming in from tourism). During the pandemic a lack of incoming tourist $ didn't have a massive impact on our overall economy cause we were saving as much $ from going out of the country via kiwi tourists. Now with borders open, inbound NZ tourism has a bigger role to play...
Is it a key earner though? If it’s staffed by a lot of low wage jobs, and those jobs pay relatively little tax, receive lots of assistance - accommodation supplement, WFF, etc - where is the earning part? All it does is fills owners pockets and puts pressure on infrastructure and housing. The case for tourism needs closer examination.
GDP contribution by the tourism sector per worker in 2019 was 33% lower than the rest of the economy. MBIE satellite account
In other words, for all the promise of export-led growth and recovery post-Covid, tourism is going to remain a drag on the NZ economy.
Why do we want to bring skilled wages down by bringing in immigrants but not unskilled wages? Wouldn’t that lead to a society where NZ kids have no encouragement to become skilled and NZers are running dairies and Ubers while relying on high skilled immigrants to do the hard stuff?
It is very easy to bring in unskilled - just open the immigration doors - don't underestimate the attractions of a welfare state for those who have to pay for schools and medicine. Judging by the many fine Kiwi computer programmers I met overseas before my first visit to NZ I was surprised to discover how the profession depended on immigrants. I suspect the same applies to nurses.
A healthy immigration policy does its best to avoid any area of work being dominated by recent immigrants. Other countries do it that way.
Maybe the kiwi programmers are overseas because our IT wages are being kept low by immigrants?
At the moment we have shortages of both skilled and unskilled labour. If we fill the holes in the skilled labour through cheaper immigrants but not the unskilled labour, then isn’t it logic that kiwis have to do those unskilled jobs? And aren’t they going to demand a premium, closing the gap between skilled and unskilled work? Some people call that fixing inequality, personally I think we want that gap to be as large as possible to encourage people to become skilled.
At the moment I would advise any young kiwi to forget uni and become a builder or plumber as you can get better money without the degree costs, but how will that work out for us long term.
They are being offered a fraction of what they could potentially earn overseas - you have just solved the case of the perpetual brain drain in NZ, and the need to bring more skilled workers who will eventually realise this isn't the utopia they were promised and leave.
This was over 30 years ago -Kiwi programmers working overseas were good because they were level headed and pragmatic but they were employed because they had good English and were cheaper than American, British (myself), Australian and Canadian programmers. So I'll agree with you low wages in NZ were driving some of them overseas.
We disagree about wage gap driving workers to become skilled. Computer programming is some kind of mental attribute - I met many people some dumb and some bright who just can't handle it. Covid lockdowns proved who is really needed in society: cleaners, shelf stackers, truck drivers - Yes; computer geaks - No.
I'd agree with you about avoiding Uni as a career move and not just financial - as a plumber or builder you have so much more variety and autonomy than you do as a graduate working in the civil service. If you really shine at your work you are rewarded but being more productive in a govt office gets you labeled as a trouble maker.
Software developer - that is a more modern and accurate way of describing what I used to be (computer programmer). It can be a well paid job because the difference in productivity between the poor, average and good is so big - if you can get the reputation of being good then decent employers fight for your services and pay accordingly.
I never found anything better but I'm singularly lacking in any other talent.
Bringing in skilled labour probably wouldn’t suppress high wages. They’d contribute demand to high quality goods and services.
And you can’t just change one part of the supply curve without affecting the whole thing. If high skilled people did suppress wages, it’d also pull down wages at the lower end.
Correct. Abundant higher skilled labour helps build high-value sectors pulling the entire economy up (aerospace engineers employed by RocketLab for example) and/or improves the fabric of NZ society (surgeons and experienced nurses).
Also, why do we forget these workers are what differentiate an advanced economy from developing ones? How long can NZ keep up a first-world lifestyle without the underlying advanced sectors.
So which "advanced" high populace economy isn't screaming for more essential workers? Which country is the ultimate growther utopia?Maybe you are just regurgitating a baseless growther meme?
"How long can NZ keep up a first-world lifestyle without the underlying advanced sectors." By selling our properties to wealthy foreigners and mowing their lawns, of course. Until we are packed in tighter than an Asian slum. Then I guess we can always go the sweat shop route, as the wealthy lifestylers bail.
This wider opening of borders isnt about "essential" workers, it's abput driving more economic activity by flooding NZ with cheap workers.
Before you argue essential, have a look at INZ stats, will you? Chefs, cafe managers and retail workers are still getting the highest number of visas on NZ.
1k nurses arriving in NZ this month won't help us catch up with the shortfall if 7k non-medicals also arrive alongside.
I think you misinterpreted me. I am totally against using immigration to deliberately grow population. The extra million people in NZ over the last 17 years have improved nothing, as evidenced by the whining about needing another million. And after that another million. Having mindless drones driving NZs future direction is as depressing as hell!
It depends how you measure. A typical immigrant chef will pay taxes, have a wife and they will have children. But the externalities measure this couple as immigrants but correctly the children are measured as being Kiwis. Similarly when that hard working couple reach retirement age having held Kwi citizenship for 30 years then they are recorded as Kiwis. So the data gets fudged.
The common assertion that on balance immigrants are good for the economy ignores any negativity caused by rapid population growth (roads, sewers, teachers, doctors, etc). If it was that simple then we could swap say 1 million inhabitants with another country and both countries would benefit from immigration's positive externalities.
Hipkins brief to the party comms experts: "What do I say to the populace in order to get another term? "
Comms team: "What do you stand for Prime Minister? Your core values, you aspirations for New Zealand?"
Hipkins: "What do I say to get another term, stop wasting my time and answer the question!?"
Oh I do soooo hope the democratic majority never forget the last 5 years!
Is it really though? Let’s say you lived in a small town with a whole heap of old people, there were not enough working age people to do all the work needed, and not enough people paying tax to maintain the place. Then some young folk moved in from the next town over, did all of the work required, and paid some much needed tax. Zero sum game?
Where are all those immigrants going to live? In tents, cars, freedom camping?
We just had a weather event in which a couple of thousand houses have become un liveable. And it will take a year or more to get these fixed.
And inflation is running high, the new lot will need resources and more fight for the resources and results in more inflation.
As i understand they need cheaper working class people from overseas, probably due to lobbying by the industry who do not want to pay market rate to employees and keep the modern day slavery alive. Here I was thinking labour government is pro worker. All lies and eye wash.
That’s the whole point of the policy. If the property was bought for yield with the added bonus of any potential capital gain then it really shouldn’t be an issue for the investor. It’s buyers that bought for speculation only that are going to be in trouble. Nothing is stopping you from selling the property then buying a new build which is exempt from the rule. Or just hold out till October until the specuvester party will get in and reverse all the good work done to rid NZ of its unhealthy obsession with property speculation.
TOP's policy is to restore interest deductibility - here's the full package;
- Introduce a land value tax of 0.75% - a small annual tax paid on the value of urban residential land.*
- Remove the current Bright Line Test and allow tax deductibility of interest for landlords, which is replaced by the land value tax.
- Require a deposit of 100% of the value of an existing home when purchased for investment purposes.
- Return the GST on new residential builds back to the local councils to fund further infrastructure development.
- Establish a $3 billion development fund for Community Housing Associations with the goal of clearing the public housing waiting list within its first 3 years of operation.
- Support more urban densification for central cities and transit nodes. Councils will be required to demonstrate that they have enough land zoned for new residential housing in line with the NPS-UD and MDRS.
https://www.top.org.nz/affordable-housing-policy
Solid observations. Rinse & repeat with another under whelming career politician. Until the way we govern changes we'll keep getting the same play book. Mandate 20 plus year plans on core strategies of infrastructure, housing, banking regulation, immigration, health, education & soicial welfare with some room for self correction at each election & maybe we'll make progress. Restructure the RB to deliver longer term solutions vs short term knee jerk plays & politically correct posturing.There is no vision for nz just a bias towards short term tricks to swing the economy & this weird idealism.
Being an immigrant who has lived in NZ since Helen Clark, I see the most short-sighted thing NZ ever does is its immigration management.
Having one of the oldest populations with a low birth rate, NZ needs more skilled younger people to keep the economy sustainable, particularly from Asia and the Pacific. It's a no brainer. One can sing the "degrowth" song all day long, but it will take time to happen.
But the band-aid approach to managing immigration really screws up ordinary people, kiwis and new immigrants. "Chinese sounding names" is a good example of mixing National's greed with Labour's sinophobic politics at the time. And it really shows how the major political parties don't give an F.
Three's one fly in the ointment for any Party that takes the reins at the next election, and possibly before - the RBNZ.
The RBNZ doesn't have to worry about the immigration mix, just the economy. And if immigration is ramped up, so too will demand - for everything, and that will spur Inflation; the very thing that they are determined to stamp out. Boosting the number won't affect the unemployment rate, as an increasing number of retirees will compensate for that. As this article suggest, it's just churn; just delaying and magnifying the inevitable.
So increase immigration if we chose, but we shouldn't be surprised if the OCR has a good correlation to the increasing migrant numbers.
OCR at 8.5% anyone?
And if immigration is ramped up, so too will demand - for everything, and that will spur Inflation; the very thing that they are determined to stamp out.
Just a quickie to test that theory out, what was our inflation doing in the decade pre covid, with higher immigration?
How does that compare to inflation in the low immigration period of the last couple years?
It was being artificially engineered by lunatic low interest rates. The OCR should never have progressively got down to 0.25%, but it did after decades of trying the same old thing (the last excuse being 2008), and now see the consequences. Consequences that the RBNZ and the other Central Banks should not to repeat.
As I'll repeat - ramp up immigration, by all means, and watch the OCR rise in tandem.
It depends on where the Inflation is 'hidden'.
Usually when we're talking about inflation it's at the consumer level - you yourself referred to the inflation of everything.
If you're just wanting to talk about housing asset inflation then might as well not mince words.
Simplistic! If it wasn't for the US "Shale boom" energy prices would have swamped the world in a tidal wave of inflation. Or rather stagflation! A "shale boom" which incidentally created a net loss for investors. Remember 2008? The end of normal?
https://oilprice.com/Energy/Energy-General/US-Shale-Has-Lost-300-Billion-In-15-Years.html
I don't really like debating gold or oil too much with people because there's usually a fair smattering of sources even less credible than the main stream media.
But it looks like shales going to turn a $120 billion profit this year.
Fuel is part of the CPI for sure though.
"But it looks like shales going to turn a $120 billion profit this year." Kind of extra special circumstances at the moment.
Comment from Financial Times 16-1-23 “The aggressive growth era of US shale is over,” says Scott Sheffield, chief executive of Pioneer Natural Resources, the country’s biggest shale producer. “The shale model definitely is no longer a swing producer.”
Oil companies are making enormous profits at the moment. It has a lot to do with much reduced expenditure on developing future supply, which in turn has a lot to do with the lack of drilling opportunities and the expensive nature of any discoveries that are made. Selling down inventory, with geopolitical help from the Kremlin, is like a goldrush for shareholders.
It depends which of the two parts of inflation you want to compare. Domestic inflation is certainly possitive correlated with the amount of immigration. Look at the work done by kiwibank's Mary Jo Vergara. Imported inflation has an negative correlation with the amount of immigration because as a nation you have more buying power overseas. In that specific decade you mention imported inflation was between -1.5% and 0%. Domestic inflation was between 2% and 4%. The reason New Zealand had always had a significant domestic inflation is that we have poorly functioning internal markets like our electricity market, supermarket duopoly, RMA, imported transportfuels .................
Often the immigrants see it the most clearly where as the old guard of nz are there to preserve the status quo, which for the past 40 years has been tax induced asset inflation as a cover for low wages & shit infrastructure. The kiwi fruit mantra has & for now is buy as much property as possible. The bullshit stories about interest rates tanking peoples dreams is an outcome of the ponzie scheme we've propagated. Such bullshit, half of kiwis patting themselves on the back for accumulating wealth for taking a shit every day & paying a small mortgage & calling it life nouse & the new half buying into that deal & now are about to get screwed.
Why do the skilled younger people have to come from Asia and the Pacific? NZ could import 100,000 Ukrainians tomorrow if it wanted, hard working and skilled.
Do you prefer Asian and Pacific migrants because you are Chinese and are comfortable working with Pacific peoples? I can accept an argument for immigrants from Asia because it makes exporting by individuals in NZ to Asia easier but I don't see that this makes it a no-brainer. We could try for more immigrants from Latin America and Eastern Europe to develop new export markets in those areas as well.
It's not my preference but what the number says, NL. Since NZ changed to the merit based immigration system in the 1980s, there's been a constant increase in Asian immigrants over the decades, and that trend hasn't changed. Pacific immigrants, on the other hand, fills the gap in some labor-intense sectors such as logistics. Immigration is a business and NZ is an APAC country, I guess it influences your perspective customers.
Speaking of my preference, I don't really have one. I work in ICT management and my employer is in the logistics sector. My job allows me to work with all sorts of ethnicities. People in NZ are great once they know each other beyond stereotypes and prejudices. : )
Well done Chippy, you absolute champion! Open the gates up wide. Let more people in at the same time that the RBNZ is engineering a recession. Decrease the the job security of all those millenials who bought houses in 2021, in fact cause a decent chunk of them to lose their jobs when they are replaced by incoming talent who will work for less. Flood the market with mortgagee sales, so that the good old Gen-X property investors have some decent bargains to boost their portfolios. The immigrants can't afford to buy houses, so they will be tenants, excellent. You would almost think that Chippy was a Gen-X real estate investor.
Bang on the old farts created it but gen x were the last beneficiaries. I'm one & my mates are mostly setup for life as a result of buying property at 2004 prices. They claim working hard & being conservative, which is true but the new wealth created is a mirrage for them as their kids will suck it up but still many times better off than the next gens.
And what do we think the Inflationary impact of this year's Annual Adjustment to the Aged Pension will be?
7.2%? Or more to reflect the basket that is actually important to retirees - food etc?
Whatever it is it will have a material impact on The Figures, both statistically and financially for the country, as the cost of servicing the entitlement continues to rise.
Can't we see that importing more people just exacerbates this trend in the longer term?
Some of my taxes certainly have gone towards super. Someone else's super. That's the system put in by politicians of old, and doubled down on by Muldoon. On top of that I have also had some of my taxes go into the Superannuation investment fund to be used to pay for some of my own pension. Plus I have paid tax on interest received on my own savings when really thats not even keeping up with yet another tax that is inflation.
Sad. Here we go again. GDP per capita down. Too much pressure on all infrastructure and the environment. More bribery, rip-offs etc. Lower wages in those sectors in which most new immigrants will work. Can we really offer these new low wage immigrants a decent life in one of the most expensive countries in the world? What we need is huge investment in the productive sector. With the ideas mentioned in this article we are unfortunately doomed to repeat past mistakes.
"Choosing the low-wage, high nominal GDP growth, high population growth, low interest rate and low investment option is consistent with the approach of Governments of both the centre-left and centre-right in the last 20 years. It’s what median voters want" Want? Point out the choice please, before making an unsubstantiated claim like that! You just blew my unenthusiastic vote Hipkins! I'll sit the next one out.
Well young Kiwis, there it is again. The immigration fueled low wage high property price ponzie is about to be stoked into an inferno again. Both parties will do this so the is absolutely no hope that you will ever be able to afford a decent home in your life time in NZ. Your only hope is to leave NZ and give up any hope of ever returning.
You have to ask who elected them? Who gets to vote? Who is he there to serve?
He is not there to serve employers. Employers get no vote and should have no say.
The whole political system has forgotten who it is there to serve and has been hijacked by vested interested opposed to the interests of the public.
Even from the employers perspective, these measures are counter productive long term.
At the end of the day it is the employers who have to pay for these stupid housing costs through wages or taxes. The money cannot come from anywhere else. Even if either the worker or government borrow, it still must be paid back from the income from the productive sector.
Employers as a group would be far better off not screaming for more cheap immigrant labor, who only add to infrastructure and housing demand. The costs of this ultimately come from their pockets. Instead they should concentrate on increasing the productive out put from our existing population and lobbying the government for cheaper housing. That is only going to hit the pockets of the property investors not the productive sector employers.
An example of an intelligent approach to these issues is the owners of Sleepyhead, the Turner brothers, project to relocate their factory out of expensive and infrastructure challenged Auckland, build new facilities in the countryside and build sound affordable homes for their staff. I imagine that this will significantly lower their costs, eliminate staff loyalty and turnover problems and the longevity of employment will greatly increase staff skills and productivity.
The National party are not really a business party. They are a party that is really only there to support non productive fixed asset investors. Labor are really no better.
As an employer I would like housing to be cheaper to build so we have more of it and food cheaper to buy so we can eat well. Closing ourselves off from the world isn't the answer, removing the chokepoints and monopolies is. Some of our best and brightest will always leave and there needs to be an offset.
The present set up is chasing our best young people overseas. Do we really do well bringing in hospitality workers and low wage laborers? Are they ever going to contribute the $100,000s to our economy for the housing, infrastructure and services that they consume. No. Not a show. It is all going to come out of yours and your fellow employers pockets. Wake up!
The fact is that they do not and we need to get back to the basics of our democratic system. Otherwise we are heading for a catastrophic collapse of democracy and a decent into anarchy. What you are proposing is a system where employment enterprises get to vote. How would that work? A million dollars turnover per vote? An alt right movements dream. Unheard of in any country as far as I know. Unfortunately however this is what is happening by stealth.
If there are less employers, there is more labor available, so the situation self corrects to an equilibrium point at the highest wage rates that the available labor can support. i.e. the highest economic output for the people available. There is absolutely no point sustaining low value businesses by importing low value, low wage workers. They are just a drain on our economy for very little return.
The Nats taking climate change seriously (but the Ute tax must go!). Note that we need to adapt to it not try and prevent it.
Luxon said the event should be a message to anyone not taking climate change seriously.
“Climate change is real. We have seen increasingly extreme weather events, we can point to the facts and the data. And it’s important that as we think about the future that we actually learn to adapt to it. And we actually make sure we’ve got the infrastructure support.”
Economically, New Zealand is in one of the best positions of the OECD. Massive GDP growth over the last 2 years, coupled with record wage growth, record low unemployment and a balancing of house prices. This is the first time in my lifetime that the economy has been stacked in the favour of the working class.
If Hipkins goes down the route of opening up migration settings we risk losing all that, returning to the status quo of, as Bernard notes, the economic mantra of the last 20 years. That's a failed economic approach because we fail to keep infrastructure up to speed every time. Long term it makes our country poorer.
This is the chance to set a new economic direction where workers are at the heart of economic policy. I hope the Government makes the most of this opportunity ... but I fear they won't.
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