Newsroom Pro's 8 things at 8 am

Labour has homwork to do to come up with its own package in response to last week's Budget. Photo: Lynn Grieveson

In today's email we see how much homework Labour has to do following the Budget, we check out the latest statistics on dwelling consents and find out about the Government's review of KiwiRail.

1. Labour's Budget homework

In another sign the Government's family incomes package has backed Labour into a corner and painted its agreement with the Greens as fragile, Labour Leader Andrew Little was challenged repeatedly yesterday on whether he would unravel the package in Government.

Little would not say whether Labour would reverse the tax threshold changes or the changes to the Accommodation Supplement and Working for Families.

He told reporters before Labour's Caucus meeting that Labour would spend the next few weeks formulating its own package in response, now it had the Budget figures on available revenues.

"We said before the Budget that every pledge, every promise we've made, we can fund out of existing tax revenue," Little said.

"That landscape has changed. We now have to go back and have a look," he said.

He was repeatedly asked whether he ruled out tax increases or reversals in the tax threshold changes.

"We need to do the homework first, which is why I'm reluctant to be drawn on any kind of detail you want to throw at me. We've got to go away and do the work," he said.

Little was also challenged on the divisions within the Opposition on Thursday night in the votes on the Budget. Labour voted against the Budget, while the Greens and New Zealand First voted for the family incomes package.

He was asked if the Labour-Green memorandum of understanding on fiscal responsibility should have applied in a joint response on Budget night. Little said the first Labour knew of the Greens vote for the Government was when it happened in Parliament.

"That's just what happens when you get two parties, no matter how well we cooperate and collaborate on some things, we still have differences and different approaches," he said.

He said the two parties had lined up to oppose the Budget in their public comments, but not their votes.

"Peoples positions and views are pretty clear. How you vote in Parliament tactically is a different matter," he said.

Little also said Labour would release its migration policy on June 12.

He has previously said Labour would cut net migration by "tens of thousands," but has not detailed how that would be done, other than to say skilled migrants would be preferred.

"What we have right now is a level of immigration that our country simply cannot absorb and cannot cope with, so we need a bit of a breather and a catch-up to make sure we're building the houses, we're getting the schools sorted out and the traffic sorted out, because right now those are major threats to our ability to grow better productivity gains than we are at the moment," he said.

2. Weaker supply response

Auckland's housing supply response isn't keeping up with demand, according to the latest dwelling consent figures published by Statistics New Zealand.

There were 10,266 dwellings consented in Auckland in the year to April, as reported by Statistics New Zealand. This was up 9.3 percent from the previous year and the most for an April year since 2005. However, this remains well below the 14,000 a year estimated by the Auckland Unitary Plan Independent Hearings Panel as needed to be built every year in Auckland for the next 30 years to keep up with population growth.

Dwellings consented have also not turned into dwellings built in the last year, with Auckland Council recording just 7,200 new homes completed in the calendar 2016 year through its measure of Code Compliance Certificates (CCCs).

The trend measure for Auckland dwelling consents in April fell again to 767 and has been falling since it hit a peak of 886 in September last year.

"The demand backdrop is clear, with a housing shortage (at least in Auckland) and strong population growth requiring ongoing lifts in housing supply," ANZ economist Philip Borkin said.

"However, that supply response is being challenged by capacity and capital constraints in the construction industry," he said.

There were 2,106 dwellings consented nationwide in the month of April, which was down 10.8 percent on the number consented in April 2016.

Statistics New Zealand cited the timing of Easter this year, given Councils don't issue consent on public holidays.

Other economists also cited the close proximity of ANZAC Day and Easter as a factor in the slowdown, that could be reversed in May and future months.

"At face value, a fall in building consents is disappointing as we are looking for a meaningful recovery following the trend decline seen in the second half of 2016," ASB economist Jane Turner said.

"We must patiently wait for May’s data to confirm if building consent demand is still recovering from its H2 2016 lull," she said.

Building and Construction Minister Nick Smith told me before parliament's question time he was encouraged by the increase in consents during the last year.

He said he continued to view the consents figure as the most accurate in the long run, rather than the CCC figures produced by Auckland Council. He pointed to delays between consents and occupation, and that CCCs also did not count multiple unit dwellings accurately.

3. A review of KiwiRail

Transport Minister Simon Bridges used his comments to reporters before National's caucus meeting to highlight a review announced in Budget documents of KiwiRail's long term future.

Bridges announced on Budget day that $450 million of capital would be invested in KiwiRail over the next two years.

"The Government wants to put the rail network on a longer-term sustainable footing," he said on the day. "In the year ahead we will be conducting a wider review of KiwiRail’s operating structure and longer-term capital requirements."

Yesterday, Bridges said the Government would release the terms of reference for the review in the coming weeks and would not be drawn on the form of the review, other than to say the Government wanted KiwiRail to have a stable and viable future and that the Government had invested heavily in it in recent years.

Prime Minister Bill English later ruled out any sale of KiwiRail.

Mainfreight CEO Don Braid called again yesterday for better long term planning for the train and transport network. He told RNZ he understood KiwiRail had asked for more funding than the $450 million to invest in more locomotives and wagons.

"We have not reacted well enough as a country to the increase in population growth and the tourism numbers. Our infrastructure is poorly set up. The Government and the councils are only just coming to grips with what they need to do and we haven't forward planned enough at all," he said.

He pointed to the review only assuring KiwiRail's future for the next two years.

"We need to think further out than just two years. We would urge the Government to be thinking about 30 year plans and making investments in infrastructure early to get us through this next 30 year period," he said.

4. A big hospitality challenge

Along with the pressure on infrastructure, the population boom of the last four years driven by net migration has also sparked a debate about pressure on wages at the low end.

Newsroom's National Affairs Editor Shane Cowlishaw has taken a closer look at what's happening to wages in the hospitality sector, and whether the labour market can adjust to the tourism boom.

He talked to David Williamson, head of the hospitality department at AUT, who has just completed his PhD on the history of employment in New Zealand’s hotel sector.

Williamson found that hospitality sector wages had fallen from twice the minimum wage and 85 percent of the average wage in 1979 to and fallen to about 20 percent above the minimum wage and just 63 percent of the average wage since then.

“There’s lots of research that shows the more you rely on temporary migrant labour the more you suppress the wage rates because migrants are well known to work for cheaper rates and accept exploitation," Williamson told Shane.

“I think that labour is going to be a major constricting factor on that growth, while there are important issues around physical infrastructure I think our labour market has some major problems as well," he says.

“I was saying about a year ago I thought we were heading to crisis in the labour market and just pumping in cheap migrant labour was just masking that crisis.”

5. A fresh Green list

Newsroom's Sam Sachdeva covered the announcement yesterday by the Greens of its final list for the September 23 election and found the party had favoured youth over experience with its selection.

It also weighted its selection towards Auckland, which is set to be the key battleground in the election.

See Sam's full piece on Newsroom Pro, including who were the winners and losers.

6. People on the move

State Services Commissioner Peter Hughes announced the appointments of Renee Graham as CEO of the Ministry for Women and Mac Leauanae as the CEO of the Ministry for Pacific Peoples. Graham is currently a Policy Director at the Ministry of Education. Leauanae is currently the Chief Executive of the Pacific Cooperation Foundation.

The Hawkes Bay Regional Council announced that current Council GM for Strategic Development, James Palmer, had been appointed CEO with effect from June 19. Palmer, who previously worked as the deputy secretary for strategy at the Ministry for the Environment, replaces Andrew Newman, who resigned in February. Newman was an avowed supporter of the Ruataniwha Water Storage Scheme and had clashed with councillors, who are seen as split on the future of the scheme. The Council is due to consider the project again later today.

7. Numbers of the day

3 percent - The average GDP growth that NZIER expects over the next five years. It also saw in its quarterly predictions that inflation would average two percent over the medium term, and that the Reserve Bank will begin lifting the Official Cash Rate in mid 2018.

$6.50/kg - Synlait's forecast payout for the 2017/18 season, which equal's Fonterra's milk price forecast.

$32.9 million - The amount of fresh equity capital to be raised by Orion Health in a two-for-nine rights issue of shares after it posted a shock $34.2m loss because of poor sales of its healthcare software in the Middle East, Europe and Africa.

$99 per week - The rent being charged for the 'bedroom' being offered on TradeMe in a Toyota Estima mini-van in Sandringham in Auckland.

8. One fun thing

The tweet of the day yesterday had to go to this gem on Tiger Woods' latest photo:

Ed Cumming: All journalists vs their byline picture.

And the newspaper headline of the day went to the New York Post: "DUI of the Tiger."