Newsroom Pro's 8 things at 8: English jawbones RBNZ on LVRs and DTIs; Julie vs Jacinda over Barnaby and Chris

The history of the RBNZ's use of LVRs. Source: CoreLogic/Lynn Grieveson

In this email we wrap up yet another surprising day in Parliament.

1. Bill uses his jawbone

Prime Minister Bill English took the surprising decision yesterday to apply pressure to the Reserve Bank over its restrictions on lending, both the existing ones and the planned ones.

Just over five weeks before the election, English was asked just before National's caucus meeting what he thought of the Real Estate Institute's call on Friday for a relaxation of the Loan to Value Ratio restrictions.

Where in the past he has given the LVRs credit for slowing down house price inflation and refrained from criticising them, this time he said it was time the Reserve Bank started thinking about removing them.

He also said he saw no need for the introduction of debt to income ratios (DTIs) because it was "pretty obvious" that there had been a correction in the Auckland housing market.

"I think it is pretty clear that that policy, along with a number of others, has got prices flattening off. It takes a bit of pressure out of the market. The Reserve Bank makes those decisions according to their views about financial stability, so I would expect that they are doing work on what conditions would have to be met to remove them, but there is no indication yet that they are going to," English said.

Questioned again, English then revealed that he had indicated to the bank they needed to be planning for the removal of LVRs, saying a "good regulator" would be clear about what conditions needed to be met for the removal of a macroprudential measure that was intended to be temporary.

Here's the full set of quotes courtesy of Newsroom's Lynn Grieveson who was at the standup for journalists in Parliament.

"In my meetings with them I have said that I would expect that they would be thinking through what the conditions would be, but it’s their decision about how they deal with it," he said.

"If you bring something in as a temporary measure, then you should be clear about what’s involved in removing that measure.

"It’s just that they were always meant to be a temporary measure so they need to think about what conditions would be place to remove them – but I have to say there is no indication at the moment that they are going to remove them right now and the market, as you say, is flat and in some places falling.

"I don’t want to give the public the impression that politicians can decide to remove them. The Reserve Bank decides that, but they do need to think through the conditions that need to prevail so they can remove them," English said.

"It’s important that the people who put them in place have thought through the conditions under which they would remove the LVRs because, ideally, they are not a permanent feature of the market.

Asked if DTIs were now off the table, English said he saw no need for further macroprudential tools to be added to the Reserve Bank's toolkit.

"We don’t see the need for further tools. Those are been examined, and if there was a need for it we would be open to it, but we don’t see the need at the moment. No, we won’t be looking at it before the election."

2. 'What should I do boss?'

English's intervention has put the Reserve Bank in an awkward position, particularly during a leadership transition.

Just last week, outgoing Governor Graeme Wheeler said he was still worried about the Auckland housing market taking off again after the election.

The Reserve Bank is still consulting with the public on whether to introduce limits on DTIs to its toolkit, with submissions due by this Friday. The Reserve Bank is far from having backed off needing DTI limits and is not talking about relaxing the LVRs.

"We did see house price inflation start to fall quite significantly before the last election, and then it picked up afterwards, so that's always possible," Wheeler said at his last Monetary Policy Statement conference after being asked about the prospect of a post-election surge.

He later told MPs that it was not clear to him that house prices would not pick up again. He pointed to how house price inflation had fallen to around six percent ahead of the 2014 election.

"Then it took off again after the last election so we're cautious in that regard."

Wheeler pointed to the imbalances that still remained in the housing market, with new housing supply still lagging behind population growth in Auckland and net migration at record highs and rising.

The trouble for Wheeler and the Reserve Bank is that Wheeler finishes on September 27. His successor may see things differently, particularly if he is being selected by a re-elected National-led Government without Winston Peters in tow.

Wheeler's relative unpopularity with the ninth floor of the Beehive over the last five years has been due in part to his dogged pursuit of the LVRs despite the behind-the-scenes opposition of then Prime Minister John Key.

Wheeler will not be there to push back against any re-elected National Government. His deputy Grant Spencer, who is seen as a conservative and no huge champion of such LVR and DTI restrictions, will hold the fort for six months from September 27 until a new Governor is appointed, probably in early 2018.

Candidates vying for the job will need to listen to English's jawboning and may be vulnerable to a change of direction away from LVRs and DTIs. The board recommends candidates for Governor, but it will also be listening closely to English's signals.

Any newcomer will know that Wheeler's forceful introduction of three rounds of restrictions was at least partly responsible for his being a one term Governor. There is a risk that a new Governor loses his or her nerve, or perhaps has a different fundamental view on LVRs and DTIs than Wheeler.

English's jawboning has at least created an early potential conflict with a theoretically independent central bank

It was noticeable later in the day when I asked English if he was concerned a relaxation of the restrictions would spark another boom in Auckland, he said that that risk was the Reserve Bank's concern.

A careful reading of his quotes above allow room for the Reserve Bank to push back and for English to accept that without looking as if he as been rebuffed. But it does create the impression of the new boss clearly outlining to potential candidates that he'd like to see the back of the restrictions.

See Lynn Grieveson's full story on English's comments, as it was first published on Newsroom Pro.

Also, see my comment piece on Newsroom Pro about how Bill English just lit the fuse for another boom in Auckland house prices if National is re-elected in its current form and the Reserve Bank loses its nerve (on both interest rates and LVRs).

3. Jacinda open to first term CGT

One potential reason behind English's ramping up of his pro-home owner rhetoric was to prepare the ground for a full-on attack on Labour's revisiting of the idea of a Capital Gains Tax in its first term.

Labour's finance spokesman and Jacinda's right hand man, Grant Robertson, opened the way on Saturday morning on The Nation when he would not rule out a CGT in the first term. He said a Labour Government would listen to whatever its Tax Working Group said early in its first term. Previous leader Andrew Little had ruled out a CGT in the first term.

Ardern repeated that line when questioned at yesterday's pre-caucus news conference.

"We have made it very clear we are not campaigning on a capital gains tax and we do not believe in a capital gains tax or anything similar applying to a family home - but at the same time we have also acknowledged that we don’t think there is fairness in our taxation system," Ardern said.

"We have proposed a review, which we hope to hold in Government, which we will hold in Government. I am not pre-empting what that review will find," she said.

"We do not think that assets are treated fairly relative to other forms of taxation in New Zealand. The fact that someone can go out and work a 40 hour week and pay tax on that, and someone can own multiple homes, flick them off for capital gain and is often not treated in that same fair manner is something that needs to be addressed. And most countries have. New Zealand sits on its own in that regard. But I am not going to pre-determine what that working group will find.

"But I am maintaining our right and ability to act on the findings and do the right thing when we are in Government."

National Campaign Manager Steven Joyce leapt on the admission.

"The Labour Party is once again being shifty on tax, and needs to come clean with voters on its policy on capital gains tax and land tax before the election," he said on Tuesday."

This is a preview of the sort of debate we're likely to see in the next five weeks. David Cunliffe was undone by John Key's challenges over a CGT. Expect English to focus just as hard on the issue with Ardern.

4. Julie vs Jacinda over Barnaby vs Chris

And we thought the last couple of weeks of political action were crazy.

Then Australia's Deputy Prime Minister, Barnaby Joyce, announced he may have to resign and bring down Malcolm Turnbull's Liberal-National Government because he was accidentally in breach of the constitution that bans New Zealand citizens (and other non-Australians) from being in Parliament.

But there's more. It turned out that Labour MP Chris Hipkins accidentally asked a written Parliamentary question about whether a child born in Australia to New Zealand father was a New Zealand citizen after a casual chat with an Australian Labor party staffer (who is also a New Zealander).

That question didn't force the revelation of Joyce's New Zealand-ness, but it did unleash an extraordinary attack by Australia's Foreign Minister Julie Bishop on the New Zealand and Australian Labour/Labor parties. Bishop said she would struggle to trust Ardern if she was elected Prime Minister.

So Ardern then launched her own broadside back at Bishop via twitter and a statement, describing Bishop's comments as "disappointing, false and regrettable." The new Labour (not Labor) then registered her disappointment in person with the Australian High Commissioner and held a news conference, in which she made clear she was unhappy Hipkins had unwittingly gotten involved.

It's all so bizarre that you couldn't make this stuff up. But we wrote it up anyway.

Here's Newsroom's Sam Sachdeva with a full account of yesterday's dramas, as published first on Newsroom Pro.

5. 'Tell me what is going on here'

Newsroom's investigation into a big surge in parental uplift orders by Police after changes to the Family Court's systems has prompted Justice and Courts Minister Amy Adams to investigate.

Newsroom's Shane Cowlishaw reported yesterday on Adams' comments.

Adams told Shane that she had asked officials to prepare a report on the significant increase in the number of urgent, without-notice warrants applied for and determine what was driving the increase.

“I’ve been quite concerned about the very sudden and noticeable spike in the number of without notice applications post the changes," she said.

“We saw it going from about 70 percent on notice, 30 percent off notice, or without notice, to almost a reversal and it’s very, very starkly at the same time the reforms come in, so clearly led by the reforms as opposed to any particular underlying changes in the conditions of the parties coming to court.”

See Shane's report in full here on Newsroom Pro.

6. What the Maori Party wants

Newsroom's Sam Sachdeva has interviewed Maori Party co-leaders Marama Fox and Te Ururoa Flavell about their ambitions for their party and what they might do in any coalition negotiations after September 23.

Sam reports Fox has had enough.

“I’ve run out of patience: it was kill them with kindness all the time before, and it was smile and nod, smile and nod, put your points across and smile and nod.

“Now I just go, well you know what - boom” - she snaps her fingers - “and ba-boom boom boom boom boom, and amen, see you later, thank you very much.”

She’s tired of pandering to people, tired of having the same old arguments about the Treaty, land rights, water rights.

“They think that they’re telling me this argument for the first time ever, that this is novel...but I have heard this argument my entire life, from every sphere of life, and so then I lay out what I think and people think that I’m being abrupt and cut people off.”

She seemed remarkably complementary of Labour's new leadership.

Fox described the election of Jacinda Ardern as the best tactical move Labour has made in nine years of opposition.

See Sam's interview with Fox and Flavell in full here on Newsroom Pro, where it was published first yesterday.

7. Numbers of the day:

Down 0.6 percent - Wholemilk powder prices fell 0.6 percent to US$3,143/tonne in Globaldairytrade's fortnightly auction overnight.

193 cows euthanised - MPI reported late yesterday it had prosecuted Invercargill's Castlerock Dairies Ltd and two of its managers over the shocking treatment of cattle that led to the euthanising of 193 cows and treatment of 761 other cows. They were fined almost $60,000. A vet quoted by MPI described the case as the worst he had ever seen.

8. One fun thing

It's hard to go past the jokefest about Barnaby Joyce on the various social and other medias.

Buzzfeed Politics reported this exchange in the Australian Parliament yesterday: "If the Foreign Minister won't work with the New Zealanders, how will she work with the Deputy Prime Minister?" Tony Burke.

Emma Espiner: "This election has taken out a Labour leader, a Green co-leader and our entire relationship with Australia. We've still got five weeks to go."

Damien: "Ahh yes, we're going to take over your country one MP at a time. You'll be given gay marriage & fibre to the home."

Mark di Stefano: "Uhlmann smashes Bishop for accusing Labor of dealing with a "foreign power": "With all due respect, New Zealand is neither of those things."

(Eds: That's enough)