In today's email we look into one way Phil Goff might plug the gap in Auckland Council's transport funding, and we report from Bill English's visit to Japan.
1. Pressure points galore
A key pressure point in the political economy right now is Auckland Council's transport funding deficit. It faces a gap of at least $4 billion of the next decade.
It can't bridge the gap without either a politically suicidal double digit rates increase, some new revenue source such as a regional fuel tax, or proceeds from asset sales.
The government continues to say 'talk to the hand' on the fuel tax idea and revenues from congestion charges remain a distant prospect and no solution to the immediate issue.
So asset sales appear to have risen up the to-do list, perhaps as a concession to ensure government cooperation for other funding sources via Wellington.
Newsroom Co-Editor Tim Murphy broke the story this week that Mayor Phil Goff is contemplating selling the Ports of Auckland operating company, but not the land.
This was done successfully in 2015 by the Victorian State Government when it sold the operating lease for the Port of Melbourne for A$9.7 billion.
One source this week told Tim either a sale of the operating company, or a part sale of the entire entity, could raise $500 million for the Council to use on other projects.
Yesterday Goff issued a statement that left his options open.
“I’ve had wide ranging discussions about Auckland’s port, but no specific proposal on the port’s ownership has been presented to me," Goff said.
“I’ve made no decisions about the port’s long term future as yet, but intend to make progress on this matter over the course of this term.”
Tim focused on the use of the phrase "no specific proposal has been presented to me," which left room open for general proposals to be discussed.
The intense pressure on Auckland's infrastructure funding landscape, both for transport and housing, will be a major source of debate in the election campaign.
The government will soon have to make decisions on its Housing Infrastructure Fund help for the Council, and in particular the use of Crown Fibre Holdings style hybrid debt/equity structures. We may hear more about this in the Budget next Thursday, and the funding debate is a live one if there is any change of government after September 23.
Labour's Auckland Issues spokesman Phil Twyford said a Labour government would oppose the sale of the Auckland port company as it wanted to create a national freight strategy that reviewed the future of the North Island ports.
"Any potential buyers of the Auckland port company need to factor that into their due diligence," Twyford said.
2. Positive TPP vibes in Tokyo
Our Foreign Affairs and Trade Editor Sam Sachdeva reports from Tokyo overnight that Prime Minister Bill English's discussions with Japan's Prime Minister Shinzo Abe went better than English expected.
Their apparent keenness to quickly come up with a TPP11 that did not change the text was an indicator of the positivity of the discussions, as Sam reports.
Speaking through a translator, Abe said the countries would continue to work closely together with the aim of “early realisation of TPP”.
For his part, English praised Abe’s leadership in reviving the deal, after Japan’s initial reluctance to carry on with a “TPP11” following the withdrawal of the United States under Donald Trump.
“At this time of international uncertainty, it’s more important than ever for outward-looking trading countries like New Zealand and Japan who state their principles clearly to demonstrate our commitment to international trade and regional economic integration.”
One sign of the determination to get the deal through is the reluctance to change the original text, with English saying renegotiations would undercut plans to have it in force by the first half of next year as originally intended.
“For those who want to see it actually happen early then there’s no question, as I put to him that there can’t be any more changes than some technical changes to allow for the implementation without the US.”
3. 'We are not immune'
The other major topic of discussion was around the North Korean threat, and it's not just a nuclear threat to Japan, South Korea and America.
New Zealand is also, in theory, at risk from the very longest range missiles that North Korea apparently wants to produce, but the more immediate threat is of cyber-attacks.
Sam reports from Tokyo overnight that English was more focused on the cyber-attacks than the direct missile threat.
“In New Zealand we always feel a bit safer because we’re so far away, out of the reach of missiles for instance, but cyber attacks can come from anywhere," English told reporters.
“Our longer term interest though is in a stable region where we conduct a lot of the trade which is the basis of our jobs and incomes at home, and we would stand alongside our long-term friends like Japan and the US, looking for a resolution to these tensions that does not involve conflict, because any conflict would be destabilising.”
4. Is it enough?
This is a question being asked regularly these days whenever the government makes its pre-Budget announcements for funding on housing, education and health.
The intense pressure from population growth in Auckland running at close to 50,000 a year and a housing shortage of 40,000 is touching everything the Government is doing.
And that was clear in the debate yesterday over the latest funding announcement for teacher training by new Education Minister Nikki Kaye.
Newsroom's National Affairs Editor Shane Cowlishaw goes under the hood to look at the announcements and found teachers and the Opposition arguing the government's response was inadequate, particularly because of the problems with housing costs in Auckland.
The primary teacher union, NZEI, said unless pay levels and affordable housing were addressed the teacher shortage problem was here to stay, while head of the secondary teacher’s union PPTA, Jack Boyle, said the announcement was nothing but a “drop in the ocean."
5. Finally, a response
Almost two years after it was released, the government has formally responded to the Productivity Commission's inquiry into social services.
The Commission's report and the response are effectively a companion piece to the government's social investment approach, which faces some strong headwinds with data privacy issues and sometimes poor relations with the community groups needed to carry it out. Alfred Ngaro's threatening comments and the resulting swift rebuke from English emphasised those tensions.
Most of the Commission's recommendations were agreed, but the ones around the devolution of powers to district health boards and social boards were largely brushed aside, along with the creation of a new office to manage the reforms.
"Given the extent of change already happening across the social system, particularly the establishment of the Ministry for Vulnerable Children, Oranga Tamariki, the government is not considering the specific models suggested by the Productivity Commission at this time," the government wrote in response to the devolution recommendation.
It also rejected the recommendations for an arbitrator on disputes over pricing between the government and NGOs and for the creation of a ministerial committee for social services reform and a transition office to manage outsourcing of social service contracts.
6. Numbers of the day
0.1 percent - The rise in MBIE's index of job advertisements in April from March. That is down from average monthly growth of 0.8 percent since April 2015. Annual growth was 11.7 percent. The fastest growth in job ads were in construction, hospitality and tourism, with growth in semi-skilled and unskilled occupations the fastest.
0.8 percent - The rise in producer input prices in the March quarter from the December, as reported by Statistics New Zealand. Annual growth in input prices was 4.2 percent.
1.3 percent - The rise in wholemilk powder prices in yesterday's fortnightly auction on Globaldairytrade. Prices have risen 19 percent since early March, reinforcing expectations Fonterra will next week announce its first payout forecast for 2017/18 of around $6.70/kg. That would be up from $6/kg in 2016/17.
370 - The number of jobs expected to be lost after Silver Fern Farms told workers at its Fairton plant near Ashburton yesterday that it proposed to close the plant because of falling sheep numbers. Winston Peters blamed the arrival of new Chinese ownership of half of Silver Fern Farms.
7. Quotes of the day
Labour Leader Andrew Little on the government's house building plans:
"National plans just one new ‘affordable’ house a day while Auckland’s population is growing by over 100 a day. This is a recipe for higher house prices and rents, lower home ownership, more overcrowding, and more profits for speculators."
That one-a-day measure of the number of affordable homes in the government's Crown building programme uses the 20 percent lower bound of the 20 to 50 percent range for affordable housing used by Amy Adams on Wednesday.
Republican Senator Susan Collins after the various shocks from the White House this week:
"Can we have a crisis-free day? That’s all I’m asking."
"The presidency now has kinglike qualities, and we have a child upon the throne."
8. One fun thing
The drama around Donald Trump's firing of James Comey and his disclosure of sensitive intelligence to Russia's foreign minister is proving a rich vein for comedians and satirists to mine.
"Trump must shift the focus, pronto. Shooting someone on Fifth Ave is now his best alternative. Trumpkins will swoon: he kept his promise!"
And Mat Johnson on Twitter on reports Trump was ranting and swearing in the White House overnight:
"give him his phone give him his phone give him his phone give him his phone give him his phone give him his phone give him his phone"