Newsroom Pro's 8 things at 8 am: More dead rats in capital outlook

In today's email we looked into how the new Government's unallocated capital spending is being eaten away by unexpected dead rats left by the departing Government.

1. More fiscal rats found

Finance Minister Grant Robertson's $10 billion pot of unallocated capital spending is being whittled away by projects the new Government is discovering were not budgeted for by the previous Government.

Prime Minister Jacinda Ardern gave more indications yesterday that the Half Yearly Update and Budget Policy Statement due on next Thursday will include more revelations of unbudgeted big capital costs.

Asked at yesterday's news conference if there were more capital surprises to be revealed, she said: "There's no doubt that every day in office brings a new surprise of things that I would have had an expectation that the past Government would have budgeted for, particularly where they may have announced something, but didn't."

"But we have commitments that we have made which we will be factoring in to both the next Budget and the Half Yearly Update, and as we work through them we're confident we can still maintain our Budget responsibility rules," she said.

Robertson has already indicated the new Government will stick to its plan to reduce net debt to GDP to 20 percent within five years of taking office. That plan involves extending borrowing for a couple of years beyond the previous Government's track, but the unallocated capital pot gave Robertson some leeway for infrastructure projects. That leeway is rapidly being whittled away, as is room for extra operational spending as the economy slows next year. Robertson has already asked ministers to go through spending line by line to reallocated where necessary to keep the Budget in surplus.

Ardern told the news conference she expected more detail about the size of the infrastructure deficit to be revealed in coming months, but was unsure about whether it would be in next Thursday's HYEFU.

2. Figurative nephews on the couch

Around Parliament, there’s no-one quite like Shane Jones. He explained to Shane Cowlishaw yesterday how he will plant a billion trees and spend a billion dollars, likely ruffling feathers along the way.

There’s a trademark chuckle from Shane Jones as he’s told of a journalist wondering whether the lazy nephews he’s referred to are his real nephews.

It turns out they are "figurative" nephews, but Jones says he did get a call from a genuine younger relative - to tell him he had got his terminology wrong during his Q+A interview: “Nephs, everyone calls them these days apparently”.

It was in the Q+A interview that Jones spoke of his desire to see young, unemployed youth, particularly Maori, working instead of sitting on the couch collecting the dole.

That caused a stir in the Government around the issue of sanctions, which Jacinda Ardern was keen to settle yesterday.

Ardern said that sanctions were already in place for people who refused job offers. She said the discussion at Cabinet would be around how those sanctions would apply to such a programme. She added that workers would need to be paid the minimum wage, and said there was little difference between Jones' proposals and Labour's own 'Ready for Work' programmes aimed at ensuring young unemployed people were either in work or training.

However, editorial writers approved of Jones' ideas. See links to them below.

See Shane's full interview on Newsroom Pro, where it was published first yesterday.

3. A bulk order of Chinese mayors

Newsroom's Foreign Affairs and Trade Editor Sam Sachdeva went to the New Zealand China Mayoral Forum in Wellington yesterday.

He found them talking up the benefits of increased collaboration with their Chinese counterparts, while steering clear of concerns about a soft power push from China.

The forum, created after Chinese President Xi Jinping’s 2013 visit to New Zealand, focused on tourism, education, and primary industries, with a particular emphasis on balancing economic development and the environment.

LGNZ president and Dunedin Mayor Dave Cull said one of the forum’s aims was to bring a “reasonably large number” of Chinese mayors together to meet mayors from across New Zealand.

“It is particularly difficult for small councils with limited resourcing, if they don’t have a sister city relationship or a friendship city relationship, which is one of the reasons to bring them all together, and if you like amortise the cost across the sector," Cull said.

“There’s always a bit of political pushback when a city or a district council wants to engage with China: they’ve got to spend money on airfares, accommodation, all that kind of thing, and if there’s not instant results people say, 'well what are you getting out of it?'”

See Sam's full report here on Newsroom Pro, where it was published yesterday.

4. Briefly in our political economy...

Please explain - Chief Ombudsman Peter Boshier has sent a letter to Jacinda Ardern to ask about the 38 page addendum document that Winston Peters said was connected to the official coalition agreement between New Zealand First and Labour.

Chai Chuah gone - Health Minister David Clark announced that Director General of Health Chai Chuah had resigned. He also announced the establishment of a new ministerial advisory group chaired by Sir Brian Roche to give independent advice on health investment and spending.

Harvey Norman went - In another sign of solid consumer spending linked to the housing market, Harvey N0rman's New Zealand operation increased pre-tax retail earnings by 16 percent in the last financial year to A$79.4 million on a 6.4 percent rise in retail sales to NZ$953 million. It opened new stores in areas with strong population and housing growth. "The success of the Westgate store is expected to grow as more residential development projects are undertaken in West Auckland," Chair Gerry Harvey said.

5. Briefly in the global political economy...

A long and brutal stalemate in Yemen may have broken overnight with the death of Ali Abdullah Saleh after he switched sides for the second time in a battle for control between Iranian-backed Houthi rebels and a Saudi-backed coalition. The New York Times reported Saleh's death was likely to add to escalating tensions between Iran and Saudi Arabia.

US Senator Lindsey Graham said overnight North Korea was pushing the United States closer to war and he recommended the partners and children of US military personnel in South Korea should be removed for their safety. "I think it’s now time to start moving American dependents out of South Korea," he said. (Reuters)

Meanwhile, US and South Korean forces went ahead with large-scale joint aerial drills yesterday that were seen as trials for a strike on nuclear facilities and which Russia and China and asked to be called off. North Korea said the drills would push the Korean peninsula to “the brink of nuclear war." (Reuters)

6. Coming up...

Foreign Minister Winston Peters is scheduled to be the key note speaker at the 45th anniversary Victoria University and Confucius Institute conference on Zealand’s Relationship with China at 9.15 am this morning at Victoria University.

Education Minister Chris Hipkins is scheduled to release details of the Government's fees-free policy this evening.

Prime Minister Jacinda Ardern said she would be interviewed by former US President Al Gore about climate change at an event in Auckland tonight.

Parliament resumes at 2 pm today as it continues on its final run of sitting before rising on December 21. Prime Minister Jacinda Ardern said the Government would introduce cross-party approved legislation to Parliament this week to fast-track the resource consenting for the reinstatement of the Christchurch Cathedral.

Ardern told her post-cabinet news conference that lags in drafting legislation meant this would be the only legislation introduced to the house this week. There would be a flurry in the final two weeks of the year to enact the Government's 100 day plan, which she said was still on track. Many of the actions for that plan involved excecutive rather than legislative action, she said.

Statistics New Zealand is scheduled to publish figures on the value of building work put in place in the September quarter today at 10.45 am. It is a key component of full GDP figures due on December 21

Reserve Bank Governor Grant Spencer is scheduled to release a speech titled “Low inflation and its implications for monetary policy” at 1.15 pm this afternoon. It is likely to be the Reserve Bank's last substantive comment on monetary policy this year, with the next Official Cash Rate decision not scheduled until the February 8 release of the February Monetary Policy Statement.

Prices on the GlobalDairyTrade auction on Wednesday morning are expected to bounce after four consecutive fortnightly auctions with falls. Fears of a drought are weighing on the production outlook, but boosting the outlook for prices.

Victoria University is scheduled to hold its post-election conference on Wednesday in Parliament. The conference will be opened by the Prime Minister, who will be introduced by the Speaker of the House of Representatives. The conference will bring together the leaders of all political parties represented in Parliament. They will talk about what worked and what didn’t, and look at the election outcome. The party leaders will be joined by journalists, independent commentators and academics, each of them discussing features of the 2017 New Zealand election – the campaign and its consequences.

Auckland Council, Auckland Transport, Watercare and Panuku Development Auckland are scheduled to release a report on Wednesday afternoon with the results of research they co-commissioned by the National Institute of Water and Atmospheric Research (NIWA) on implications for Auckland of the climate change projections developed through the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report.

The report incorporates information on a range of climate variables for 2040, 2090 and 2110, including changes to temperature and precipitation; changes to evaporation, soil moisture and drought; changes to pressure, wind and storms; oceanic changes and sea level rise.

The Government is scheduled to release its Briefings to Incoming Ministers (BIMs) on Thursday.

7. A couple of fun things

One of my favourite follows on Twitter is Darth Putin KGB. This is not a real person...

Here's a couple of favourites from overnight:

"There should be a sign on No. 10 Downing Street that says ‘You Brexit, you own it’."

"The West right now: - The UK is negotiating a free trade deal so it can leave a free trade bloc. - The US is actually debating if accepting help from a dictatorship to win an election is a crime. What a time to be alive. vvp."

And this video of an Australian Liberal MP proposing to his partner during the Marriage Equality debate should bring a smile to anyone's face.

And I swear this is not a joke. "Lamborghini unveils its first SUV, the Urus. Base price is $200,000." It weighs 2.2 tonnes and can accelerate from 0 to 62 mph in 3.6 seconds... It generates 290g/C02 per kilometre. It looks better than the double cab ute Lamborghini produced in 1986, which was called the LM002.

8. This morning's links summary

This is available in the subscriber email