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Government’s 100-day plan starts with ‘laser focus’ on cost of living, Luxon says

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The government is starting its 100-day plan with a laser focus on bringing down the cost of living and inflation, Prime Minister Christopher Luxon says.

Speaking at Monday’s post-Cabinet briefing, Luxon, accompanied by Finance Minister Nicola Willis, said they campaigned on alleviating the hurt felt by hard-working Kiwis struggling to make ends meet due to cost of living pressures.

“Luxuries are being cut, and in many cases so are necessities. It is difficult out there and many Kiwis are all feeling it…

“You will have seen that today that I announced an increase to the family tax credit and best start rates for new parents beginning 2024. The income tax act requires that Working for Families payments must be adjusted once inflation hits 5 percent.

“This is just one part of our wide-ranging plan to get New Zealand back on track, and we will be relentlessly focused on that in the next 100 days and further.”

Willis said the government’s mini-Budget would be released on 20 December alongside Treasury’s half-year economic and fiscal update.

“That mini-Budget document will reflect a number of time-critical decisions made by the incoming government including some already confirmed in our 100-day plan.

She said the timing of the mini-Budget was simply because the government did not have much time to pull it together.

It was “absolutely not” just politics, she said.

“Now that I am behind the curtain, I am seeing things that I didnt’ expect to see. Some of the fiscal risks that were updated in the pre-election update were referred to but I didn’t know the quantum of how big those risks were.

“Now that I know that information, I think it’s really material.”

Luxon said the government was focusing on the 100-day plan, but was also looking at longer term one-year and three-year plans.

The mini-Budget would also “outline a series of actions this government is taking to restore a culture of fiscal discipline”, Willis said.

“Both to guide the Budget 2024 process and to deliver ongoing fiscal sustainability in the years to come. All three parties in govenrment are resolute in their commitment to getting better value for taxpayers’ money, to bringing the government’s books back in order, and ensuring New Zealanders can keep more of what they earn.”

She said it would require a much more disciplined approach to spending decisions than the government had shown in recent years.

“I am concerned by the scale of the financial challenges left to us by the outgoing government. I am still receiving advice on both the number of those challenges, their size, and the options available to the incoming government.”

She said these came in two broad categories: Risks that were referred to in the pre-election update but the “true scale and urgency of which was not made clear” for reasons including commercial sensitivity.

“Some of these risks are now upon us and they are much larger than have been suggested.”

She said the second category was government programmes that were set to expire because the government chose to fund them only on a short-term basis.

“In some cases this practice is extremely disingenuous, this is because it makes the books look better in future years even though it is highly unlikely ministers genuinely intended to stop funding those programmes.”

After giving an example of Pharmac funding, Willis said: “Did they really intend to withdraw funding for listed medicines, and if not why didn’t they account for that in their pre-election update”.

She said she asked Treasury to provide advice on how often this had happened, and “the preliminary advice is that the sum is likely to approach many billions of dollars over the forecast period”.

“I will also have more to say about what amendments may be required to the public finance act. This is in order to ensure that future governments are more upfront about these choices.”

She pointed to legislation set to be introduced to the House next week to return the Reserve Bank to a single mandate, removing the requirement to consider effects on employment levels.

“History tells us that the best way to deliver strong, consistent growth in employment is by first delivering low and stable inflation.

“I know the Reserve Bank shares our absolute commitment to bringing inflation back down, even so the current dual mandate creates the risk of a future policy mistake.”

Willis said Treasury had highlighted that the single mandate could positively influence expectations for future rates of inflation.

“The decision in 2018 to introduce the dual mandate went against 30 years of success. Today, our government is making clear that on our watch inflation is enemy number one. Stable inflation is the prerequirsite on which maximum sustainable employment rests.”

She pointed to cuts to public spending, reduced costs on business, and unwinding regulation as other measures to tackle inflation.

Christopher LuxonPhoto: RNZ / Samuel Rillstone

 

VIA RNZ

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Air NZ sorry for charging tourists $13,000 to change flight after terminal diagnosis

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Air New Zealand has admitted it made a mistake when it tried to charge two US tourists $13,000 to change their flights after one of them received a grave medical diagnosis.

Todd and Patricia Kerekes flew business class from New York to Auckland in January. The return tickets cost $37,500.

They intended to stay until April, but six weeks into their visit Patricia was diagnosed with cancer of the gallbladder. Their surgeon advised them to head home immediately, so Todd contacted Air NZ to have their flights moved up.

“Right away on the first call I told them my wife was gravely ill, and we were on holiday and we needed to go back home,” the 60-year-old told Checkpoint.

“And it was a whole series of long pauses, and I couldn’t tell whether they were conferring with co-workers or working at it on the computer, or what it was. But I would go through a whole series of 15- to 30-minute hold periods, and sometimes the people would come back and basically tell me something I didn’t want to hear, like it was gonna cost me NZ$13,000 to change my flight.”

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Housing Minister Chris Bishop sets ‘long-term’ price target of three to five times household incomes

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The new housing minister has set a target of having homes costing just three to five times household incomes – well below what they are now in most of New Zealand.

But Chris Bishop does not want too quick a fix to the country’s housing affordability crisis – saying a crash “tomorrow” would “cause enormous economic and financial instability to people”.

“What I want is for house prices to moderate over time, so that in 10 to 20 years’ time, we have essentially gone a long way towards solving our housing affordability problem,” he told Checkpoint on Tuesday.

Earlier in the day he outlined the first steps in his plan, saying most of the country’s biggest cities will be flooded with land for residential development.

In a speech delivered to Wellington’s Chamber of Commerce, Bishop confirmed councils will have to earmark 30 years’ worth of land for housing development.

They will be able to opt out of housing density rules that allow homes up to three stories high on most residential sites without the need for a consent – a bi-partisan rule that National signed up to in opposition. Instead, councils will be able to choose exactly where high density housing goes.

He also promised to make it easier to build granny flats or dwellings less than 60 square metres.

In his speech, Bishop said the status quo was costing the country the equivalent of 15 Transmission Gully motorways every four years “just on helping people to be housed”.

“The taxpayer subsidises rents for people in social housing, we pay for emergency housing grants, we pay for transitional housing, we help people with their bond payments and so it goes. A failure to reform housing has made it extremely expensive for government.”

And in a briefing to Cabinet, Bishop said housing affordability was arguably the single most pressing economic and social issue.

Speaking to Checkpoint, Bishop said New Zealand was not short of land, but rules “make it very difficult to use that land”.

“What we’re saying is we need to go out at the edge of our cities and we also need to go up inside our cities.”

Inside existing limits, Bishop said the coalition government would keep Labour’s policy of allowing up to six storeys “within walkable catchment areas of rapid transit stops”, and give councils more discretion over what areas had to allow up to three storeys.

Asked how councils would be prevented from pushing most of the intensification to certain suburbs and leaving others alone, he said: “There are natural limits on the intensification that would take place in suburbs. There are infrastructure limits, for example.

“But also, you know, over time suburbs will change and the nature of our cities will change. I mean, if you think about the Auckland CBD now, compared to say 50 years ago, it is much more dense, many more people live in apartments, they live in tower blocks in the CBD. The same is true to some extent of Wellington.

“But you know, the Wellington of today will look very different to the Wellington of 30 years’ time. Change will be gradual. It is not going to happen immediately, change will happen over many, many years.

“But what I am saying and what the government is saying is that we need more houses. We have an affordability problem in New Zealand and have done so for 30 years because we have designed a planning system that has made it very difficult to build more housing, and it is a social and economic problem we’ve simply got to grapple with.”

Pressed on how much he would like to see house prices drop, Bishop cited the internationally popular metric of prices to household incomes.

“In housing markets that we consider to be affordable, a house price to income ratio of between three and five is considered affordable. That’s not the case in most of our major cities right now.”

Current data shows that multiple nationwide is currently 6.6. In Auckland it is 8.1, Wellington 6.14, Christchurch 5.84, Hamilton 6.57 and Dunedin 5.7. In Queenstown-Lakes, the multiple is almost 15.

“Over time as you moderate house prices and incomes grow, [three to five] is what we would like to see things get to, but as I say, that is not going to happen immediately and it is not going to even happen in the next two to three or four years. This is something that has to happen in the medium- to long-term.

“And unless we do that, house prices will continue to go up and people will continue to be locked out of the housing market.

“I want house prices to be affordable, and a house price to income ratio of seven, eight, nine, 10, 11, 12, in some cases 13 to one in some parts of New Zealand is not affordable, entrenching inequality and poverty in our cities.”

He refused to give an exact timeframe, saying that would be making the same mistake the Labour-led government did in claiming it could build 100,000 houses in 10 years.

“Land markets and the economy is much more complicated than that. What I am saying to you is that we have [an] extensive and comprehensive work programme based on evidence to make housing more affordable in the medium- to long-term.”

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Everton punishment reduced to six points

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Everton have had their points deduction for a breach of the Premier League’s profitability and sustainability rules reduced to six points from 10 after an appeal, the club and the Premier League said on Monday.

Everton were docked points with immediate effect in November after being found to have breached profitability and sustainability rules (PSR) relating to losses.

“An independent Appeal Board has concluded that the sanction for Everton FC’s breach of the Premier League’s Profitability and Sustainability Rules (PSRs), for the period ending Season 2021/22, will be an immediate six-point deduction,” the Premier League said in a statement.

The original points deduction meant Everton dropped from 14th in the standings into the relegation zone with four points. The club filed an appeal against the initial deduction, which they labelled “wholly disproportionate and unjust”.

“Everton can confirm an Appeal Board has concluded that the points deduction imposed by an independent Premier League Commission in November be reduced from 10 points to six points, with immediate effect,” a club statement said.

The sanction was appealed on nine grounds, each of which related to the sanction, rather then the breach and two of those nine grounds were upheld by the Appeal Board.

Everton admitted to a breach of PSR for the period ending with the 2021-22 season, with their total losses for that period amounting to 124.5 million pounds according to an independent commission.

According to the Premier League’s Financial Fair Play regulations, clubs are permitted to lose a maximum of $216 million over a three-year period.

The Merseyside club recorded four straight wins after their deduction to climb up to 16th, but have been dragged back into the relegation battle following a run of nine league games without a victory.

The reduction means Everton move up to 15th in the standings with 25 points, five points above the relegation zone.

The club say they are still considering the wider implications of the decision and will make no further comment at this time.

Everton were then charged once again by the Premier League in January for a separate PSR breach, along with Nottingham Forest.

Everton players celebrate

Everton players celebrate Photo: PHOTOSPORT

Both clubs were referred to the chair of the Judicial Panel, the Premier League said, who will appoint an independent commission to determine the appropriate sanction, which may include a further deduction for the Sean Dyche-led club.

A second points penalty would increase risk of relegation and add to the uncertainty over the future of Everton, who are currently in the midst of protracted takeover talks with U.S. investment fund 777 Partners and also hoping to move to a new stadium ahead of the 2025-26 season.

BACKGROUND ON OTHER CLUBS

Last year, Manchester City were referred to an independent commission over more than 100 alleged breaches of finance rules since the club were acquired by the Abu Dhabi-based City Football Group in 2008.

No verdict has been reached in that case. Premier League CEO Richard Masters said last month that a date had been set for a hearing. City have denied any wrongdoing.

Clubs in England’s top flight have been docked points before.

Middlesbrough had three points deducted in 1997 when they failed to fulfil a fixture, while Portsmouth received a nine-point penalty in 2010 when the financially-troubled club entered administration.

-Reuters

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