Latest news with #CatherineMcGregor
The Spinoff
2 days ago
- Business
- The Spinoff
OCR cut promises a mild boost for still-stagnant property market
Economists saw it coming, banks moved early, and mortgage holders will feel the effects – but the OCR cut heralds only a housing bump at best, writes Catherine McGregor in today's extract from The Bulletin. Called it In a move that surprised no one but still carried significant implications, the Reserve Bank yesterday cut the Official Cash Rate (OCR) by 25 basis points to 3.25% – exactly what economists had widely predicted. The central bank's monetary policy statement (MPS) struck a delicate balance: acknowledging economic recovery while noting persistent global uncertainties, especially from heightened US tariffs. Inflation is now within the 1-3% target band, and core price pressures continue to ease. Though one monetary policy committee member argued for holding the rate at 3.5% while the impact of Trump's tariffs filtered through, five others voted to cut, citing 'significant spare capacity' in the economy. The OCR is now at its lowest point since October 2022, marking a 225-point drop in nine months. The RBNZ forecasts the OCR at 2.85% by the end of the year, implying at least one more cut, possibly two, before the year's end, writes the Herald's Liam Dann (paywalled). 'Yet, countering that, Hawkesby said the committee currently had no clear bias as to what its next move will be in July. As the RBNZ has stressed many times in the past, these rate tracks are not forecasts it expects people should count on.' The MPS contained the word 'uncertain' a whopping 164 times, Dann's colleague Jenée Tibshraeny reports (paywalled). Banks move fast, and mortgage relief is coming Some banks didn't wait for the official announcement. BNZ dropped mortgage rates on Tuesday, with Westpac, ANZ and ASB following soon after. Advertised special rates – for those with a below 80% LVR – are currently sitting between 4.95% and 4.99% for one and two-year terms, and 5.39-5.49% for six months. These shifts matter: nearly half of all mortgages are due to be refixed in the June and September quarters, according to the MPS. That means hundreds of thousands of households will soon find themselves with more discretionary income – a boost not only for household budgets but also, potentially, for the wider economy. Finance minister Nicola Willis hailed the cut as good news for 'local shops, local cafes' and hopeful first-home buyers alike. Buyers return, but don't expect fireworks Predictably, real estate agents were quick to herald the cut as the signal buyers had been waiting for. LJ Hooker's Campbell Dunoon told The Post (paywalled) it could 'bolster buyer sentiment', while Ray White economist Nerida Conisbee suggested lower borrowing costs would prompt renewed activity, especially for first-home buyers. But independent economist Tony Alexander remains unconvinced. His latest surveys show weak buyer urgency and ongoing sluggishness in auction attendance. 'It's still a buyer's market,' he writes in OneRoof, adding that while the OCR cut will help some buyers financially, its psychological effect is limited. 'For now, the housing outlook remains one of high supply of new and existing properties and buyers feeling no need at all to hurry and make a purchase.' Kelvin Davidson of Cotality (formerly CoreLogic) struck a similar note, forecasting only a 'subdued upturn' in 2025. While the Reserve Bank expects home values to climb 3.5% this year and 4.8% in 2026, the housing rebound, if it arrives, will be modest. With high listings and little FOMO in sight, most experts expect vendors will need to blink first. Landlords squeezed by poor returns For residential property investors, the pain isn't over. Even before this week's cut, data shows only marginal improvements in yields and cash flow, Greg Ninness of Interest reports. National rental yields have ticked up slightly this year thanks to falling property prices and modest rent increases, but they're still far from compelling. Once costs like rates, insurance and maintenance are factored in, many investment properties continue to run at a loss. That's left landlords caught between 'the rock of negative cash flow and the hard place of capital losses' if they were to sell, Ninness writes. Alexander adds that tenants in strong financial positions are staying put – they're getting good rental deals and see no urgency to buy. That's understandable, he says, but 'with few other buyers competing to acquire property currently, this remains a very good time to make a purchase' – if you're confident you'll still have a job in a year's time, of course.
The Spinoff
3 days ago
- Business
- The Spinoff
Why messing with NZ Super remains political dynamite
Universal super at 65 is increasingly unsustainable, but any attempt to change it will attract fierce political blowback. What's a government to do, wonders Catherine McGregor in today's extract from The Bulletin. No cuts to super – but everything else is on the table Last week's budget delivered a raft of cost-cutting measures, from halving the KiwiSaver member tax credit to tightening access to the Best Start payment. But superannuation was conspicuously untouched – a move that came as no surprise, given NZ First's long-standing defence of the universal pension. High-income earners who can no longer access the KiwiSaver contribution remain fully entitled to super, a benefit projected to cost nearly $25 billion this year and rise to over $45 billion by 2037. Critics have pounced on the apparent double standard, reports RNZ's Susan Edmunds. As economist Shamubeel Eaqub put it: 'It's incoherent … incentives for Kiwis to save for their future [are] means-tested, but New Zealand Super, which is universal welfare for older people, is untouched.' National's slow path to raising the age While ruling out means-testing, both prime minister Christopher Luxon and finance minister Nicola Willis have reiterated National's plan to raise the super age – eventually. The party's policy is to keep the current entitlement age of 65 until 2044, after which it will rise gradually to 67. No one born before 1979 would be affected. In the NZ Herald (paywalled), Fran O'Sullivan argues that such a distant target is little more than political theatre. She contrasts Luxon's timidity on the issue with former National PM Jim Bolger, who methodically raised the age from 60 to 65 over a nine-year period. O'Sullivan notes that Bolger 'managed to convince New Zealanders that a gradual increase … was plain commonsense' at a time when life expectancy was increasing. By contrast, today's leaders seem content to avoid political pain, she writes, even as super becomes an increasingly heavy burden on the budget. One millennial's wail of despair The idea of delaying retirement might make sense on paper – but it's enough to send some younger New Zealanders into an existential tailspin. Writing in The Spinoff this morning, Hayden Donnell delivers a howl of generational frustration: 'Millennials have spent their formative years selling kidneys to pay rent on a draughty villa and getting bullied by gen Z for admittedly being huge losers. They'll spend the next 20 helping fund their parents' generation's Mediterranean cruises. Surely after that they can have a break? I guess not.' Donnell's broader point is that policies like lifting the super age hit those with lower life expectancies and more physically demanding jobs hardest. And while life expectancy has barely moved in recent years – and is even declining in some countries – the financial squeeze on younger generations is intensifying, just as the likelihood of a guaranteed super at 65 starts to fade. Or, in other words: 'Come on man how much shit can people under the age of 40 have shovelled onto them from a great height god damn it christ on a bike argh argh argh no.' 'You can touch anything else. Do not touch my pension' Two of New Zealand's most prominent right-leaning commentators have also weighed in – and their take is not encouraging for National. In his Mike's Minute, Mike Hosking warned that voters' emotional attachment to super far outweighs any argument of fiscal prudence. 'For many, superannuation is untouchable. It's a lifetime's worth of work. 'I paid my taxes' they say, even though that line isn't actually real because we spent your taxes years ago and then borrowed a bit more to keep the lights on.' Hosking's Newstalk ZB colleague Heather du Plessis-Allan was even more emphatic: 'Don't touch my pension. You can touch anything else. Do not touch my pension.' Despite advocating for cuts to almost every other form of welfare, she drew a hard line at super, arguing that she and millions like her had earned it through years of tax contributions. 'So, good luck to Chris Luxon getting this one across the line,' she wrote. With opposition like that from his own ideological camp, Luxon may find that even floating the idea of reform is as far as it goes.
The Spinoff
4 days ago
- Politics
- The Spinoff
Can parliamentary urgency and public accountability peacefully coexist?
The coalition has been setting records with the amount of bills passed under urgency. Now a 'people's select committee' wants to hear from submitters shut out of the process, writes Catherine McGregor in today's extract from The Bulletin. Late-night bill passed under urgency After a punishing budget week, the last place most MPs wanted to find themselves in the early hours of Saturday morning was still in the debating chamber. But there they were, locked in a drawn-out battle over accommodation subsidies, reports RNZ's Soumya Bhamidipati. After the Social Assistance Legislation Amendment Bill was called around 11.30pm, opposition MPs filed dozens of amendments in a failed attempt to slow the legislation, which tightens the rules on how boarders are counted when calculating the accommodation supplement. The bill passed under urgency – an increasingly common tactic for the coalition. The government set a record in its first 100 days for the most bills passed under urgency in the MMP era, a pace that's continued with controversial measures like the pay equity law change earlier this month. That, too, bypassed the select committee process, prompting critics to accuse the government of undermining public accountability in the name of speed. What is urgency – and why is it so easy to use? Urgency allows parliament to fast-track legislation, sometimes skipping key stages like select committee scrutiny. While often used for budget-related bills or emergencies, there are few formal checks on its application. A minister (usually leader of the House Chris Bishop) simply moves a motion to commence urgency, and the government's MPs pass the motion with a majority vote. While urgency is extremely useful for the government, it has plenty of downsides. 'Passing legislation more quickly risks the legal equivalent of the old 'marry in haste, repent at leisure maxim,'' writes The Spinoff's Shanti Mathias. 'The public has less chance to be informed about the law, there is reduced transparency, and legislation might simply be less good – imprecise wording or unintended effects can slip through.' The most contentious use of urgency is passing a bill into law, but that's not its only application. The Regulatory Standards Bill is an example: because of the budget, the House was still sitting under urgency when it passed its first reading on Friday. The controversial bill, which has attracted more than 22,000 submissions, will now be put before the Finance and Expenditure Committee, where there will be a chance for public feedback. A committee of the people steps in In response to the pay equity legislation being pushed through without public input, former National MP Dame Marilyn Waring has convened a 'people's select committee' to gather evidence the government did not. The hastily assembled group of former MPs from across the political spectrum will hear public submissions starting on August 11, RNZ's Russell Palmer reports. Waring said the hearings would be an 'evidence-gathering mission' with a 'really sound report' at the end. 'The government says that it wants to progress pay equity claims, the opposition is saying that it will rescind this and again address the legislation. So we're doing them all a good turn.' While the initiative lacks any formal powers, groups whose pay equity claims were halted by the new law are being invited to share their experiences. Asked to respond, minister Brooke van Velden said there'd be no changes to the law, but 'members of the public, including former MPs, are welcome to hold their own meetings'. A broader reckoning on accountability The controversy is feeding into a wider conversation about how parliament functions. As Politik's Richard Harman writes (paywalled), the select committee on David Seymour's four-year term bill has unexpectedly turned into a mini-referendum on parliamentary accountability. While a number of submitters have used the opportunity to call for a reinstatement of a second chamber of the House, others have taken aim at how select committees themselves operate. Among them was Sir Geoffrey Palmer, who said the current system is encouraging 'sloppy lawmaking' driven by overworked MPs and overloaded agendas. Regardless of whether the bill passes, the process has surfaced 'widespread disillusionment with the failure of select committees to scrutinise legislation,' Harman observed – a feeling only sharpened by the coalition's aggressive use of urgency over the course of its term so far.
The Spinoff
5 days ago
- Business
- The Spinoff
Budget 2025: A fiscal ‘time bomb' and a ‘disrespectful' blue dress
As the post-budget sales pitch ramps up, Investment Boost is put under the microscopic – while one fashion headline sparks an unlikely political sideshow, writes Catherine McGregor in today's extract from The Bulletin. The politics of regional neglect? The deluge of post-Budget commentary has hardly let up, and for two of New Zealand's largest and most politically sensitive regions – Auckland and the South Island – the reaction has been especially pointed. Business leaders in Auckland are cautiously optimistic, the Sunday Star-Times' Stewart Sowman-Lund reports (paywalled). Former National leader turned Business Chamber CEO Simon Bridges called it 'a real shot in the arm' while mayor Wayne Brown said he welcomed the investment in developing innovation, technology, and science and encouraging foreign investment. Greens' co-leader and Auckland Central MP Chlöe Swarbrick was less enthused. She said the budget would make the city 'demonstrably worse', citing the budget's lack of funding for climate resilience and addressing poverty. With little in the budget expressly for the South Island, mainlanders are still waiting for the government's words on regional empowerment to become action, independent economist Benje Patterson told The Press's Blayne Slabbert (paywalled). The government is 'continuing to kick the can down the road' on its fiscal promises to the South Island, he said. Patterson also questioned the long-term value of Investment Boost, an untargeted incentive likely to fund a lot of 'tax-efficient ute upgrades'. A good idea, with a gaping hole The Investment Boost tax break has emerged as one of the most debated measures of Budget 2025. On paper, it's simple: allow businesses to deduct 20% of new asset costs upfront to incentivise growth. But as Newsroom's Jonathan Milne reports, the scheme contains a potentially explosive flaw: there's no cap on either eligibility or cost. Unlike similar programmes overseas, New Zealand's version doesn't have a narrowly defined set of depreciable assets. Instead, Milne's colleague Marc Daalder writes, it offers 'massive, uncapped tax cuts for billion-dollar oil rigs, fast-tracked coal mines and glittering skyscrapers' – meaning just a few large-scale developments could send the cost spiralling well beyond Treasury's $6.6 billion estimate. The finance minister has said the policy will deliver the 'confidence injection' business needs – and Daalder agrees. 'It's hard to imagine a policy that could inject more confidence for the big end of town than an uncapped opportunity for everyone from multinationals to commercial property developers and [Shane] Jones' beloved mining sector.' Labour's fiscal headache While National and its partners defend the budget's restraint, Labour finds itself facing a challenge of a different kind: how to mount a credible alternative. As Thomas Coughlan writes in the Herald (paywalled), Labour's fiscal strategy appears muddled, with no clear consensus on spending, debt or taxation. The issue of pay equity funding illustrates the problem: Labour has criticised the government's decision to scrap the $13 billion contingency, but offered no roadmap to restore it. As Coughlan observes, if Labour plans to reinstate pay equity, it needs to explain how – especially when even its 2023 wealth tax wouldn't fully cover the cost. 'Who'd have thought that after a Budget as stern and severe as this, one that leaves so many victims, so many targets, that it might actually be Labour that comes off in the more vulnerable political position?' Chris Bishop to the Herald: 'be better' Among all the talk of budget winners and losers, one story has spiralled well beyond policy: Nicola Willis' dress. It all started when the Herald interviewed a local designer who said the finance minister's choice to wear a British label on Budget Day showed 'total disrespect' to the local fashion industry. The story attracted swift backlash, including from fellow National ministers. Chris Bishop called it 'sexist' and noted no one asked what he or other male MPs were wearing. Tying the article to Andrea Vance's controversial pay equity column, Bishop said 'we don't need gendered abuse of MPs by journalists like Stuff dished out two weeks ago, and we don't need articles commenting on what female MPs wear on Budget Day.' Willis herself dismissed the criticism, saying she wore a mix of overseas and local fashion brands and the media's focus should be on policy, not clothing.
The Spinoff
20-05-2025
- Business
- The Spinoff
Housing market in holding pattern as budget day looms
With a number of policies already in place, the government looks set to give housing short shrift on Thursday – though speculation continues about an end to the foreign buyer ban, writes Catherine McGregor in today's extract from The Bulletin. Budget unlikely to deliver new housing spend With Budget 2025 set to be unveiled tomorrow, economists are warning not to expect a major new push on housing. 'They are already looking at the housing market in lots of other ways,' said Kelvin Davidson, chief economist at Cotality (formerly CoreLogic), pointing to a suite of supply-side initiatives such as the Going for Housing Growth programme, self-certification for builders and RMA reform. In the meantime, the housing market remains relatively subdued – a cooling that has opened up opportunities for first-home buyers. Speaking to OneRoof's Catherine Masters, Brad Olsen of Infometrics noted that tight fiscal settings mean any additional housing spend would likely be 'tinkering around the sides'. Davidson echoed the sentiment: 'The market's functioning OK.' Foreign buyer ban in the spotlight While housing may be absent from the budget's main stage, speculation continues to swirl around one politically charged topic: the potential lifting of New Zealand's foreign buyer ban. Introduced in 2018 under Labour, the ban prevents most overseas buyers from purchasing residential property, with exceptions only for Australians and Singaporeans. Now, agents in the luxury market are hoping budget day brings a change, with some even claiming they've heard from politicians that a reversal is imminent, OneRoof's Masters reports – though Act's David Seymour said 'there is no decision I'm aware of'. Still, pressure is mounting, particularly with the surge in applications under the revamped golden visa programme. US publication Bloomberg News (paywalled) quotes one agent reporting a 'tremendous amount of pent up demand' from wealthy Americans eyeing New Zealand as a haven. Many of them are already paying premium prices – up to $30,000 a week – to rent luxury properties here, reports RNZ's Rachel Helyer Donaldson. The surge in high-end rentals is the result of an emerging 'try-before-you-buy' strategy among clients awaiting clarity on the foreign buyer rules, an agent said. Renters told they have power – but do they? Outside of the luxury enclaves, the current rental market is described by many as a 'renter's market', with national rental listings at a 10-year high and landlords reportedly offering incentives such as a free week's rent or grocery vouchers. But the idea that tenants have their pick of great properties is far from the full story, writes Gabi Lardies in The Spinoff this morning. Tenants 'are in no position of power at all', said Angela Maynard of the Tenants Protection Association, citing the reinstatement of 90-day no-cause evictions as a major rollback of renter rights. Laura Drew of Community Law Wellington added that while rent increases may be slowing, poor-quality housing and a power imbalance remain entrenched. The term 'renter's market', she suggested, offers little comfort to those stuck in unsafe housing or locked into unaffordable fixed-term leases. Market hamstrung by planning and code constraints, says developer Even as the government touts its deregulatory reforms, many in the building sector argue that core structural issues remain unaddressed. The most high-profile critic is Ockham Residential co-founder Mark Todd, who just gave a fascinating interview to OneRoof's Diana Clement about why our planning rules continue to stifle the development of high-quality, high-density housing in New Zealand. It's not the RMA holding things back, but the Building Code, Todd argued. The code is 'an absolute regulation clusterfuck', he said – but most property developers like it that way. 'The Building Code as it is suits them, because they have no interest in building quality compact cities – they're in thrall to sprawl – and making the RMA a false bogeyman suits them too.'
