Auckland Council ended its meeting yesterday without a decision on the annual budget.

The long-debated budget will attempt to close a $325 million deficit, exacerbated by a further $40 million in storm-related costs.

Councillors arrived in good cheer, cracking jokes about the lengthy session ahead of them, which included a debate over the council’s sale of its 18 percent stake in Auckland International Airport Ltd.

The mayor said the meeting would take as long as it needed to.

“This is a difficult process. It may take more time than expected, that’s fine,” Mayor Wayne Brown said. “We may have to come back next week, we’re not rushing this process.”

Three councillors declared a stake in the airport ahead of the meeting.

Airport shares declared
Just a few hours before, Albany Ward councillor Wayne Walker admitted to owning $3 million in shares through a trust. His neighbour at the table, Maurice Williamson, poked fun at Walker on his way into the chamber.

Chris Darby and Julie Fairey also declared airport shares in the days leading up to the meeting, prompting questions of whether they could vote on the sale.

All three said they had received advice from the auditor-general.

“In their view, my situation does not represent a conflict of interest,” Fairey said.

“Their advice was that I do not have a financial interest in the share sale,” Darby said.

“Same advice, and so I can participate in today’s decisions,” Walker said.

Backdown from the mayor
The mayor’s original budget proposal called for a full sale of the council’s 18 percent share in Auckland Airport. But during the meeting, he compromised.

Just three councillors — Andy Baker, Maurice Williamson and Desley Simpson — unambiguously declared their support for a full sale.

After hearing the positions of his fellow councillors, Brown offered a partial sale of 8 percent, meaning the council would hold onto a 10 percent stake.

“I’m now proposing that we sell 8.09 percent of our 18.09 percent shareholding,” Brown said as councillors returned from their lunch breaks.

“This means that we have to find another $32 million in operating savings or rates to balance the budget. I’m proposing we fill this gap with a general rates increase of 7.7 percent.”

The issue of selling the shares was contentious, leaving councillors divided. Manukau Ward’s Lotu Fuli opposed the sale, declaring the shares had value.

“This is a high-performing asset, it is an asset that we ought to keep,” she said. “And yes, we should consider our underperforming assets, but that’s a discussion to have at the long-term plan.”

Council would regret sale
Fuli said the council would regret letting go of the shares.

“Let’s not be rash, let’s not sell off these shares, $2.3 billion worth of shares, in order to plug a $325 million hole,” she said. “Let’s not make the mistake that past councils have made.”

Waitematā and Gulf Ward councillor Mike Lee agreed the shares had value.

“This is a real asset, folks,” he said. “This is an earning asset, just like the Ports of Auckland. Not only does it earn us money, but it earns us capital gains on our balance sheet. Any decent accountant will tell you that.”

North Shore Councillor Richard Hills said the months of debate around the budget had soured its culture.

“This has been the hardest six months of my career, it hasn’t been nice,” he said.

“It hasn’t just been about things you’ve said, mayor, there’s been a lot of other discussions around this table that I’ve been appalled at around staff, each other. It isn’t a nice place at the moment and I think the city knows that.”

He said the council needed to be careful about repeating the same mistakes next year.

“I want to work with the majority here, because we will break our staff and our city if we make them do this again next year,” he said. “I think we need to be really clear about that — we’ll do that again if we don’t make a hard decision today.”

Few in support
Albany Ward councillor Wayne Walker said the council needed to adjust its spending habits if it wanted to fix the issue.

“We’re not addressing the underlying financial issues, and that is that we are spending beyond our means. We’ve been doing it for successive years, and that has to stop,” he said.

“Fortunately, we have a mayor that’s committed to turning that around.”

He said there was time enough to make large decisions like selling the shares.

“We have a very, very good situation to go forward and not have to make decisions immediately in this long term plan that may be counter-productive.”

Some councillors, like Maurice Williamson, strongly favoured a full sale. He said the assets were not making enough money.

“I’m very much in favour of selling any asset that’s costing us more to keep than it’s returning to us. There’s a good old Tremeloes song, ‘Even The Bad Times Are Good’ — well, even the good times are bad.”

Williamson warned other councillors against accepting more debt.

“There’s so much more coming down the pipe at us,” he said. “The CRL, god knows what’s coming, I’ve been told the final figure is going to be $7.25 [billion], we’re going to have to borrow debt to fund that, and that debt ratio is already near the ceiling.

“So please, please look at trying to bring that back down.”

Auckland Mayor’s revised proposals:

• Mayor Wayne Brown is now pushing for the sale of 8 percent of the council’s shareholding in Auckland Airport, instead of the full 18 percent of shares
• Brown has also proposed $4 million of reductions to local board funding, and $5 million of unallocated to chief executive, Jim Stabback
• An average general rates increase of 11 percent has been proposed, with adjustments that will result in an overall rates increase of 7.7 percent for average households
• Plans to establish a political working group on the council’s investments has been set out, which aims to oversee assets like the remaining council shares in Auckland airport, and make recommendations to the governing body on long-term investment in other funds

Even Brown’s deputy, Desley Simpson, cautioned members. She said the final form of the budget needed to be balanced.

“We’ve talked this through so much, and it’s going to be a hard task to balance a budget that is fair for Aucklanders and meets the needs and desires of all those around the table.”

Brown’s new proposal included the establishment of a working group to oversee council investments, as well as a $4 million reduction to local board funding.

Questions about the updated proposal brought the meeting to a close at 5pm, with no time left to debate or cast votes.

Mayor Brown said the council would reconvene at 10am today.

Article by AsiaPacificReport.nz

Tuesday’s boarding-house fire in Wellington was a tragedy of lost lives, and failure to supply safe housing and adequately resourced emergency services. But it was much more, and so far the socio-demographic revelations have barely been touched upon in mainstream media commentary.

Losers and Winners

Clearly the residents of the unfortunately named ‘Loafers Lodge’ were mostly single white adult males aged over 40; not a fashionable demographic in today’s public policy discourse. (Most likely a significant number of the lodge’s residents will have been Māori as well as Pakeha, though not to the extent that this could be presented as a Māori issue in the way that many of our other healthcare issues are being presented.) We note also that suicides are unacceptably high among this demographic, though – unlike youth suicide – rarely presented as an issue that deserves to be addressed by public policy.

While we cannot claim that all the residents of that lodge were marginalised or otherwise ‘cancelled’ men, we can say that many marginalised men – men regarded as ‘losers’ in the popular middle-class mind (though never called this, it’s not a politically correct term) – do and will end up reliant on boarding-houses of this type for accommodation.

(We note that the central proposition of contemporary liberalism – ‘equality of opportunity’ – pictures idealised life as a running race in which all 18-year-olds are on the starting line as equals. Outcomes thus depend on the life ‘choices’ that people make. In this liberal view, being a loser is a consequence of making ‘poor choices’ – such as choices to take drugs, be violent, commit crimes, loaf instead of work – than the choices made by the winners. This is a key reason why we purport to be so much more concerned by child poverty than adult poverty, because children have not yet participated in this adult race; unlike adults, children cannot be undeserving. Contemporary liberals also use words and phrases such as ‘colonisation’ and ‘historical slavery’ to exempt people of mainly but not only indigenous ethnicities from the consequences of making bad choices as adults. [Of course the liberal ‘bad-choice’ presupposition is nonsense. Life is not analogous to a running race; and all races have losers, bad choices or not.])

We need to fess up to the realities that life under all forms of economic liberalism is necessarily difficult for large minorities of our populations, and that many of the ‘survivors’ of life’s difficulties are neither young nor indigenous nor female nor trans. Many have histories as perpetrators or alleged perpetrators of crimes and abuse; others as victims of crimes and abuse. Some as both perpetrators and victims; as Barrack Obama said, “life is messy”. Do we simply pretend that such people do not exist because they are safely hidden away in places like Loafers Lodge? Have the righteous mentally euthanised them?

There was nothing in the 2023 ‘Wellbeing Budget’ for people like the residents of Loafers Lodge.

Post-Budget Commentary

There is a growing sense that the government, its officials, the wider elite, and the mainstream commentariat are living in an ‘alternative universe’. (While in Australia recently, I saw a commentator – on a commercial television station – refer to the ABC worldview as an “alternative universe”.)

I must say, and largely for that reason, that I only followed the Budget and subsequent commentary in small doses. Two of those doses were particularly interesting, however, both on RNZ’s The Panel show (3:45pm to 5:00pm weekdays).

The first segment here The Pre-Panel with Mark Knoff-Thomas and Ruth Money (18 May 2023), featured political economist Susan St John, long associated with the Child Poverty Action Group. Among other things, she discussed the ways in which we increasingly entrench families in poverty traps, and how our political class has never shown much interest in addressing the issue of income traps and how they structure non-participation and under-participation in the labour force. Of course, poverty traps affect single adults as well, not just families.

The comment which ruffled most feathers was that by Mark Knoff-Thomas (CEO of Newmarket Business Association), who – recognising that on the ground New Zealand is in such a parlous state that he pretty much called us a ‘failed state’ – suggested, albeit rhetorically, that New Zealand’s problems would be best resolved by New Zealand becoming a state of Australia. While the initial reaction to the suggestion was shock and horror, later a surprising amount of feedback came into the show in support of Knoff-Thomas’s viewpoint. There is clearly a substantial audience deeply frustrated with the state of denial which characterises mainstream public policy discourse in these islands.

After 4pm, in The Panel with Mark Knoff-Thomas and Ruth Money (Part 1), we heard a ‘retired real estate agent’ (Kristina or Christina) put the blame for New Zealand’s housing crisis fairly and squarely on landlords. While here comments were slightly garbled – she said there were too many landlords while arguing that no landlord should have more than three properties – her meaning was clear, and she noted that too many policymakers had a vested interest in perpetuating the problem. Mark Knoff-Thomas obliquely dismissed her policy proposal as tantamount to communism. But again, listeners sent in huge amounts of feedback in support of her comments. At last, an uncensored comment got through about ‘landlords’ – aka ‘investors’ – gaming the system to their advantage but to the disadvantage of people in need of a place to call home.

My comments about these comments are that, to the rest of the world, Aotearoa is an exceptionally successful political state. (That’s largely because foreigners uncritically buy New Zealand’s story, broadcast to the world, of utopian exceptionalism.) Yet New Zealand is largely a failed nation state, though not necessarily one that should cede its sovereignty to a foreign neighbour. It’s hard to imagine anyone making similar claims of Finland or Norway, both with similar populations, population-to-land ratios, infrastructure challenges, and also facing inclement weather.

Re the housing issue, the solution is not a ‘capital-gains tax’. It’s to recognise that the private rental market is at the core of any capitalist society’s housing sector. The solution is to subsidise ‘good landlords’ while simultaneously taxing ‘bad landlords’ out of existence. Bad landlords are people who own ‘rentals’ which are not made available as other people’s homes. Typically these misnamed ‘rentals’ – in reality, houses played as financial assets held by speculator ‘investors’ – are functionally empty (often under disguise as ‘short-term rentals’) if not actually empty.

While housing poverty (along with personal debt, and the income traps that entrench underclass living – expressed particularly in the form of food insecurity, in practice as malnutrition and illness – as Susan St John emphasised [see also Anti-Poverty advocates ‘shocked’ by Budget, Morning Report, RNZ 19 May], and the infrastructure problems Knoff-Thomas was especially concerned about) are the central indications that New Zealand may be a failed state, different housing solutions are required for different people. Older marginalised single people are not necessarily best housed as sole-occupants of privately rented one-bedroom units. There is an important role for hostels and boarding houses, as there always has been. It’s up to the rest of us to ensure that these can be safe and companionable places in which to reside, and to ensure that there are enough subsidies to ensure that ‘losers’ as well as winners can be adequately housed.

New Zealand’s failure in one hyphenated word: ‘Top-Heavy’.

Recently on RNZ I heard a discussion about the failings in conservation, and of DOC (Department of Conservation). The pertinent comment to that discussion was that DOC is “top-heavy”; too much of the payroll goes to people who are not on the frontline of conservation.

‘Top-heavy’ is a metaphor that applies well to the whole of New Zealand’s socio-economy. Too few people doing – indeed too few able to do – the work that keeps our society going. Like workers carrying an increasingly overladen sedan-chair, labour in New Zealand – actual labour, much of it foreign-sourced – must support two sets of beneficiaries: a burgeoning (albeit ‘progressive’) elite class and a trapped burgeoning underclass. The elite class represents the heavier load.

*******

Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand.

Young families are the clear target of Labour’s election-year Budget, but its flagship promise – cheaper childcare – will not kick in until next year.

The 2023 Budget — billed as a “no frills” affair — is set against a volatile economic backdrop with the government now forecast to return to surplus a year later than expected.

In a statement, Prime Minister Chris Hipkins said his first Budget would provide relief from the sharp cost of living without exacerbating inflation “as tax cuts would”.

“Budget 2023 isn’t fancy, nor should it be . . .  it’s a carefully calibrated package that deals with the here and now pressures, while also laying the foundation for real long-term benefits.”

‘Support for today’
The Budget extends cheaper childcare to parents of two-year-olds, giving them access to 20 hours a week of free early childhood education (ECE). That support currently kicks in for children from the age of three.

For eligible families, the extension could save them more than $130 a week in childcare costs for an extra year.

They will have to wait, however, until March next year — critically after the election — for the $1.2 billion package to come into effect.

Speaking during the lock-up at Parliament, Finance Minister Grant Robertson told RNZ the delay was primarily due to administrative reasons.

From July this year, public transport will be made free for all children under 13 and will remain half-price for passengers aged 13 to 24. That initiative is costed at about $327 million over four years.

The existing discount on bus, train and ferry fares will expire for most other people at the end of June, except for Community Service Card holders. As signalled, the accompanying fuel discount will finish at the same time.

Most prescription medicine will be made completely free from July, with the government scrapping the current $5 charge at a cost of about $619 million over four years.

‘Building for tomorrow’
The government has committed $71 billion of infrastructure spending over the next five years — that is money for building schools, hospitals, public housing, roads, etc. The spend is up about 60 percent from the $45 billion spent over the previous same period.

On top of that, another $6 billion has been set aside for a National Resilience Plan with an initial focus on future-proofing road, rail and other infrastructure wiped out by extreme weather.

Three new multi-institution research hubs will be set up in Wellington at a cost of $451 million. Each will focus on a different subject: Climate change, health, and technology.

A new 20 percent rebate will be made available for game development studios who spend at least $250,000 a year in New Zealand as an incentive to keep them from moving abroad. Individual studios will be eligible for up to $3 million a year in rebates.

Tax, tax, tax
As promised, the Budget does not include any major new taxes or tax cuts, but it does increase the trustee tax rate from 33 percent to 39 percent — in line with the top personal tax rate.

Revenue Minister David Parker said the discrepancy was currently allowing super-wealthy taxpayers to funnel their income through trusts to avoid paying their fair share of tax.

Both Inland Revenue and Treasury had recommended the change when Labour introduced the new top personal tax rate in 2021.

The trustee tax hike is estimated to raise about $350 million a year, beginning in April next year.

This article is republished under a community partnership agreement with RNZ.

Article by AsiaPacificReport.nz

The full extent of the cyclone damage is becoming clearer as transport, power and telecommunications connections are re-established.

“Ministers will finalise the distribution of this funding in the coming week, but this will include support to businesses to meet immediate costs and further assist with clean-up,” Robertson said today.

“We will coordinate the allocation of this funding with local business groups, iwi and local government in the affected regions.

“The government recognises the weather events are having an impact on people and businesses meeting their tax obligations, so we are taking a range of tax relief measures as well.”

Tens of millions of dollars have already been put into cyclone recovery and support, including into Mayoral Relief Funds, Civil Defence payments, and a package for NGOs and community support groups, he said.

“I want to be very clear, this is an interim package and more support will follow as we get a better picture of the scale, cost and needs in the wake of this disaster,” Hipkins said.

Rolling maul approach
“I would note that in responding to previous major disasters a rolling maul approach has had to be taken and this situation is no different.”

Article by AsiaPacificReport.nz