A guest post by David Schnauer- author of Uncomfortable Economics:

Compliments to Ashley Church for a well argued Post headed “Declining house prices are killing our economy”.    In this Post, I  put the opposing case. High and appreciating house prices have not been good for New Zealand. Instead they have done and continue to do this country major economic damage. 

  My book Uncomfortable Economics went on sale on 20 July.  It begins by describing the long term underperformance of the New Zealand economy.  From the 1950s when New Zealand was one of the most prosperous countries, we have drifted steadily down the ranks of world living standards. That relative decline continues-  voters in 2026 rank   NZ’s economy as their major concern. Unless our drift is arrested, New Zealand in another decade risks dropping out of first world status.  

Why has that longstanding underperformance occurred?  The central thesis in my book:  the New Zealand economy is seriously unbalanced. Kiwis have far too much of our wealth in property; and far too little of our wealth in NZ’s real economy.  My book argues New Zealand will only lift its economic performance and start keeping up with more prosperous nations, by moving its wealth away from housing and on to growing its commercial sector.   Some quotations from the book develop this central theme. 

After describing the fabulously wealthy Swiss commercial sector: 

Successful countries generate their economic success by having a

wealthy and successful commercial sector. Compare this with

New Zealand. Where is our wealth held? We don’t have even

one multinational company based in New Zealand….

Meanwhile, much of our commercial sector is owned from

offshore: our four main banks, our insurance companies,

breweries, one of our two supermarket chains, much of our

food manufacturing. Wealth generated by those overseas owned

businesses does not accrue to Kiwis; it gets sent out of the

country to the overseas owners. It is therefore no surprise our

economy has underperformed over the last 75 years……….

Then a comment on the limited contribution capital appreciation makes to the overall economy: 

In our North Shore legal practice, we saw countless clients

who had purchased their family home 25–40 years ago for, say,

$50,000. Their $35,000 initial mortgage had long been paid off

and their family had grown up and left home. Those clients were

now selling their home for $1 million, downsizing and buying

an Occupation Licence in a retirement village for $700,000.

The remaining $300,000 was put aside as their retirement nest

egg…..The problem for the country is that capital gains contribute

almost nothing to the economy and are not subject to tax in New

Zealand, so don’t add to the public revenue and do nothing to

lift New Zealand’s economic performance.

Businesses deliver much greater social benefit than houses

My wife  Tricia and I ran a law firm on the North Shore for 20 years.

 By the time of our retirement the firm had approximately $1 million

 Invested in it, aggregated across work in progress, book debts, office

equipment, office fit out and furniture, etc. The law firm used

total funds approximating the value of a North Shore house.

 It employed about a dozen people. Those employees back then

collectively earned, say, $1 million per annum, from which they paid

 income tax, ACC, KiwiSaver etc. The firm made profits from which

it paid income tax, GST, ACC, KiwiSaver, etc. I expect the firm and its

 employees in total paid several hundred thousand dollars to IRD each year.

My point should be obvious. A house creates jobs and income

for the building industry when it is first built but thereafter

contributes little to the country each year. On the other hand, a

sum of money equating to the worth of an average New Zealand

house, invested in a business, provides employment, tax revenue

for the Government and goods or services for its customers. A

sum invested in a business delivers far greater national benefit

than putting that same sum into housing.

Excessive house prices have done major damage not only to our economy, but also to  New Zealand society:

The housing boom has done major damage to New Zealand society.

 It has made two-income households common (with children raised in

crèches) to pay the enormous mortgages required to buy a house.

The Government, with already overspent budgets, has stepped

in with Family Support and other measures to help struggling

families and made its deficits worse. 

Exceptionally high house prices are driving major social disparity

 between Kiwis who can (almost always with family help) get onto

 the property ladder and those who can’t. Excessive house prices

 have diverted funds into housing that should have been going into the NZ

commercial sector, to drive our economic progress. Much of the

money the banks lend into the New Zealand housing market –

around one dollar in five – is borrowed from offshore, meaning

New Zealand has high private international debt. The list of

negative consequences of high house prices is a very long one.

In summary :

New Zealand’s overpriced housing is the ultimate

result of this country’s wealth being significantly misallocated,

with far too much in property and far too little in our commercial

sector. This misallocation is doing major damage to the country,

both economically and socially. A radical change, weaning

New Zealand off its housing addiction, reducing house prices

and moving the assets freed up from the housing sector into

institutional saving and the corporate sector, is vital for our long-term

success as a country and as an economy. Indeed, I would

go so far as to say that the New Zealand economy will assuredly

continue its disappointing trajectory of the last 75 years, unless

and until such a rebalancing takes place. The reality facing New

Zealand in 2025 is that clear.

So, while you wrote an interesting Post, Ashley, I am sorry, but I must differ from you emphatically. Doesn’t it seem too good to be true, that Kiwis should seek to generate high living standards without hard work, and just by sitting back and benefiting from house price appreciation?  

Lower house prices do not just benefit first home buyers, as you suggest. They deliver economic gains which are far more fundamental and far more important than that.  Lower house prices are a critical part of rebalancing the whole NZ economy back onto our real economy.  It is that real economy which creates the incomes, jobs, goods and services and wealth which this country desperately needs, if it is to start climbing back up world GDP per capital rankings again. 

In the national interest, and in tandem with a strongly enhanced KiwiSaver scheme, Kiwis need to build their wealth in the future from hard work and from saving large KiwiSaver balances, not from house price appreciation.

 For the NZ economy materially to lift in performance going forward, house prices ideally need to decline a lot further over the next decade. 

RNZ reports:

The Green Party is campaigning on establishing a $2.4 billion trust dedicated to marae.

So they are proposing more money be given to maraes than we are spending on the new Dunedin Hospital which will have 251 beds and 22 operating theatres.

The Post reports:

The Holocaust will have a place in New Zealand’s secondary school curriculum from next year, in a move welcomed by educators but accompanied by concerns about the prescriptive nature of the curriculum.

The Ministry of Education’s revised year 0-10 social sciences curriculum, released on Wednesday, will be rolled out from 2027.

Students will learn about the Holocaust as part of the year 10 history curriculum, within a broader study of the world wars.

The inclusion comes after more than 500 submissions in support. One of these was from the Holocaust Centre of New Zealand, which has long pushed for the topic’s inclusion at secondary school.

I am one of those who put in a submission.

In a poll done by Curia in 2021, 53% of adults said they knew virtually nothing or just a little about the Holocaust. It was 65% for 31 to 45 year olds.

Only 39% of NZers knew that six million Jews were killed in the Holocaust. With women it was only 31% and only 22% of under 30s knew this.

Hopefully this change will stop any further generations of NZers knowing so little about the Holocaust.

The Opportunity Party policy is or was that any criminal offender aged under 25 should be sent to the Youth Court for a family group conference, rather than go to an adult court. They say this is because 24 year old brains are not fully developed, so they should not be held fully accountable for their crimes.

In 2023, TOP campaigned on lowering the voting age to 16.

By Lucy Rogers

Before I continue: in the comments section of my last post I was accused of presuming that the factions I am describing are intellectually dishonest without providing any evidence for this assertion. In fact, I had proven quite conclusively in a previous Kiwiblog post that intellectual dishonesty is at play, and re-provided the link to that post at the start of this series. However, I reprovide it yet again for good measure: https://www.kiwiblog.co.nz/2025/10/guest_post_stop_accusing_anti-israel_westerners_of_antisemitism_and_start_accusing_them_where_appropriate_of_intellectual_dishonesty.html

I have never alleged that every person who disagrees with me on the Israel/ Palestine conflict (or for that matter other issues) is intellectually dishonest. I provided specific referenced examples of intellectual dishonesty which nobody has been able to refute, because there is no refutation available, and then sought to explain them. I have met two Westerners at the anti-Israel protests whom I consider to be intellectually honest, and a significant number of Muslims who have legitimate grievances with Israel in good faith.

Anyway: if anyone can come up with a more succinct name for “people motivated primarily by hatred”, please say in the comments. But basically, although plenty of the other factions hate Israel, as I have been describing the hatred comes from some other external source: moral pride, intellectual arrogance, trauma, etc. The faction I am describing though are motivated primarily by hatred. The mentality is “I hate them, I don’t care about why I hate them, I don’t want to question why I hate them, I just hate them.”

This faction are by far the most radical, and they are thankfully a small minority at the anti-Israel protests. There are four people I can think of who are this extreme, although there are others who probably qualify but who are less overt about it. There is a Muslim woman and her two adult daughters who should probably be on some sort of watchlist, and then there is a Westerner who is on the far left, whom I shall call Mr O.

One of the three Muslim women in question (whom I shall call Ms D) has screamed in my face “I LOVE HAMAS!”, vehemently given me the finger on dozens of occasions, engaged in minor assaults like stamping on my foot repeatedly, torn up my signs repeatedly, told me to kill myself repeatedly, and told me when I was holding a sign about Hamas raping Israelis on October 7 that Hamas wouldn’t rape me because they “don’t touch scum”. (The police despite being offered footage of her tearing up my signs refused to do anything.) Her sister told me once that it’s OK to commit suicide bombings in Israel in civilian areas because IDF service is mandatory anyway.

Mr O knows that Hamas committed unspeakable atrocities on October 7 but does not care. In his view, the world falls into a simplistic moral binary where Israel is the oppressor and the Palestinians are the oppressed, which means that literally anything is justified in the name of “resistance”. He had an exchange with a member of NZ Against Hamas on Facebook in which the NZAH member said that Hamas was a terrorist organisation and Mr O replied that “a settler colonial terrorist genocidal ideological defining other groups as terrorists is just laughable.” He also said that Israelis do not get to decide the ways that the oppressed resist them.

In Mr O’s view there are good guys and there are bad guys, and if “resistance” involves physically ripping apart civilians while they are still alive and then having sex with pieces of their corpses and uploading footage onto victims’ own Facebook pages then that’s fine. (By the way, the Civil Commission report recently found that Hamas did exactly that on October 7 2023.) It’s for that reason that I don’t think “ideological reasons” are an adequate explanation for the hatred that this faction have: if it had anything to do with right and wrong then October 7 obscenities would give them pause.

I have never once in the two and a half years I have been attending these protests responded to the other side by responding to insults with insults or with any sign of aggression whatsoever, out of a deep-seated ideological commitment to loving my enemies stemming from my Anglican faith. I have dialogued with large numbers of them without raising my voice, and agreed with them on a lot of things. Also, I have never once carried the Israeli flag. As a result, I get on amicably with a fair number of people at these protests, and am friends with some of them on Facebook. They tend to conclude that I am misguided and need educating. Unlike the hate faction, they appreciate gestures like occasionally holding signs criticising Israel or saying that Palestinian lives have infinite value. That is because hate is not their primary motivation.

But the hate faction know that I do not hate them and do not care. I can respond with the peace gesture to being given the finger on an infinite number of occasions and they will still hate me. The world is black and white: I am on the other side, I deserve to die, and nothing will ever change that. That is the hate faction’s distinctive.

The Post reports:

A review into Labour’s top cop candidate, Superintendent Rakesh Naidoo, has cleared him of any breach of policy or confidentiality.

The review’s findings were released a day after an Official Information Act response showed that Naidoo had informed his supervisor about his potential candidacy two weeks before it happened, earlier than had been suggested in comments made by the Police Commissioner Richard Chambers and Police Minister Mark Mitchell, who were furious when the candidacy was revealed.

The original reporting was that Police were only told 2 to 3 days before the announcement, but it is significant that he did tell his boss he was considering it a couple of weeks before that.

You certainly can argue he still didn’t meet the test of the earliest possible opportunity, but regardless two weeks is considerably different to two days.

“Police is satisfied that Superintendent Naidoo complied with Police policy regarding informing Police of his intention to stand as a candidate for the New Zealand Labour Party, although it would have been prudent for Police to have been advised of the discussions at an earlier stage to support Superintendent Naidoo to manage any potential or perceived conflicts of interest and maintain political neutrality,” Anderson said.

That seems like a fair conclusion.

The Herald reports:

A stoush has erupted between North Shore sister schools after a surprise bid by the junior high to cater for older students blindsided its senior counterpart, which says it is “disappointed” by the move.

The proposal could reshape the long-standing two-school model between Albany Senior High School and Albany Junior High School, with the Ministry of Education now considering an application.

Albany Junior High submitted the bid last week to extend its cohort up until Year 13. It currently only serves students in Years 7 to 10. 

Students then typically attend Albany Senior High, whose principal told the Heraldthe school remained “committed” to the current structure and was not told about the junior school’s bid until Friday.

Both Albany Junior High and Senior High are well regarded schools. They have high academic achievement, good ERO reports. So why would Albany Junior High upset the status quo?

To me the answer is about what is best for all kids, not just 80% of even 90% of kids.

As I understand it Albany Junior is a more traditional school, and Albany Senior more liberal. Now again both schools do very well, and most students manage the transition well. But some students probably don’t. Any transition can be challenging, let alone one between two quite different schools.

For the same reason I think any primary school that stops at Year 6 should be able to expand to Year 8, without needing Ministry permission. The Ministry seems to think it is more important to prevent a possible empty classroom at an intermediate school, than have students and parents able to decide whether an extra transition is in their best interest.

The Albany Senior Principal, Claire Amos (who I regard well) has written on this issue:

One of the most unhelpful habits we have in education is our tendency to turn false binaries into structures.

Traditional or progressive. Knowledge or skills. Academic or vocational. Teacher-led or student-centred. Rigour or wellbeing. Structure or agency. Explicit teaching or inquiry. And eventually, one kind of school or another.

I have been thinking a lot about pluralism lately. Not pluralism as simply having lots of different schools to choose from, but pluralism as the idea that our public education system should be capable of holding difference within it. Because our young people are different.

They have different strengths, different interests, different aspirations, different cultures, different identities, different learning needs and different ideas about what success might look like.

The answer to that diversity shouldn’t be to keep designing different schools for different imagined categories of children.

The answer should be to design every school well enough to meet them all.

That doesn’t mean every school should look the same. Quite the opposite. Schools should absolutely reflect their communities, their histories, their learners and their context. But I am increasingly uncomfortable with the idea that within one local community we might need an “academic” school over here, a “progressive” school over there, perhaps a “traditional” school down the road and a “trades” school somewhere else – that isn’t pluralism, that, my friends, is a freakin’ sorting hat.

I think this is an example of perfect being the enemy of good. Yes in an ideal world it would be nice if every single school is NZ was right for every single type of student. But quite simply, that is a detached from reality.

Almost every parent goes through a huge amount of time and effort to work out what school will be best for their kids. It is the biggest or second biggest factor in choosing a house location (which means only wealthier families get this option). It is why some kids get sent to integrated or private schools. It is why you get out of zone applications. It is why parents and kids go to multiple open days.

For example, single sex schools and co-ed schools are both great types of schools. Again 80% or even 90% of kids might prosper in either. But some kids are better suited to one, than another. They should not be denied that choice.

Claire writes:

Every school should be THE school for:

• Rainbow students.
• Neurodiverse students.
• Athletes.
• Artists.
• Scientists.
• Entrepreneurs.
• Introverts.
• Extroverts.
• Young people who want certainty and young people who want possibility.

That is what a public school should be. Not a school for a particular kind of kid. An effective school capable of responding to all kinds of kids.

Again this is a commendable aspiration, but it is not reality. And do you force thousands of kids into a school that isn’t great for them, as a sacrifice to an ideal that will probably never be met?

I can 100% understand Albany Senior High being upset by the Albany Junior application. I think it would have been courteous to have discussed it with them in advance. I think it is important to note that both schools are well regarded high performing schools.

But if Albany Junior High thinks it will be beneficial to some of their students to have the option to remain at their school until Year 13 instead of Year 10, I think they should be able to. Just as I think all primary schools should be able to choose to go to year 8 instead of Year 6. The focus has to be on what will be best for students, not what will be best for schools.

The BSA upheld the complaint against Sean Plunket and The Platform. This is part of what Plunket said that they said can’t be uttered on air:

[Reading]        ‘It will also allow us to better align our engagement with Māori communities and our operational work leading to a greater reach and impact.’ 

Plunket:          Does that mean you’ll put out more fires more efficiently, or not? 

[Reading]        ‘Rather than keeping this work within one branch, this approach encourages the whole organisation to take shared responsibility for delivering on Rautaki Māori.’ 

Plunket:          Whatever that is. 

[Reading]         ‘I’m also proposing the creation of a Pou Ārahi Kaupapa Māori and Cultural Communities role to provide strategic and operational and cultural leadership, ensuring that te ao Māori perspectives, values and tikanga–’ 

Plunket:          Tikanga, which is just mumbo jumbo stuff. 

[Reading]         ‘…are ingrained in how we function.’ 

Plunket:          Will that help you put out more fires more efficiently, I wonder? 

[Reading]        ‘The role would help ensure our services, policies and programmes are culturally appropriate.’ 

Plunket:          I never realised a fire engine had to be culturally appropriate and effective for the many different cultures across Aotearoa New Zealand – well, it’s called New Zealand, not Aotearoa New Zealand. This doesn’t look to help any other culture but the Māori culture, does it, [FENZ Chief Executive]?

So Plunket was arguing that he wants FENZ to focus on how to most effectively put out fires, and this is now not allowed if you are a broadcaster!

Nate Silver has launched his prediction model for the US mid-terms.

In the House have forecasts an 87% probability the Democrats take the House, with an average outcome of 233 seats to 202.

In the Senate it is closer, but the Democrats slightly ahead with a 56% probability the Democrats gain control of the Senate by 51 seats to 49.

He has the Democrats winning Ohio, Texas, Michigan and Maine, with the odds for each being:

• Ohio 58%
• Taxes 60%
• Michigan 69%
• Maine 70%

Will be interesting to see how they change over time.

Ruth Richardson writes:

As inflation rears its ugly head again, New Zealand First proposes stripping the Reserve Bank of its sole mission to fight inflation. In an exercise in virtue signalling, employment is bolted on as a second mission. Labour’s Barbara Edmonds wants the same.

This is sheer monetary policy vandalism, flying in the face of all the evidence that there is no trade-off between price stability and employment. That monetary policy can permanently deliver employment growth is nothing more than a cruel hoax.

This is very well known. If monetary policy could lead to permamently higher employment, then we would have examples of countries where it has. There are none.

New Zealand should not have to re-learn the harsh lessons of the loss of monetary policy credibility. Successful inflation-fighting involves getting two things right.

First, the central bank must have a clear, singular inflation mandate. That’s what anchors inflation expectations. If markets and workers believe the bank might tolerate higher inflation to chase employment goals, inflation expectations build, making inflation itself harder to control. That’s a formula for making everyone worse off, employment included.

Confidence in a central bank preventing higher inflation is critical. We have seen what happens when you lose that.

A single mandate gives a clear yardstick: did inflation stay near target or not? With two goals, a central bank always has an excuse. If inflation is high, it can point to labour market weakness as the reason it didn’t tighten harder and vice versa. That ambiguity weakens accountability and lets the bank dodge the blame for missing either target.

Yes, a dual mandate reduces accountability.

The Herald reports:

Labour leader Chris Hipkins has ruled out a governing deal with New Zealand First. …

Winston has responded:

It is hilarious that it took 12 months for Hipkins to rule NZ First out, and then to announce it as somehow newsworthy. It’s like announcing he has just discovered if you throw a ball into the air, it will drop down.

Went to a talk at The Wellington Club about Sir Keith Park. For those who have not heard of him, we was the New Zealander who commanded the RAF No 11 Group during the Battle of Britain. He is credited with winning the Battle of Britain, and WWII would have turned out very differently if Germany had won the war for the skies, and then invaded.

The guest speaker played the below video,

https://www.youtube.com/watch?v=bsHQuhLg1KE

It’s a great watch. Well worth the time to get an idea of how significant he was, and how is was one of the great aviation commanders.

I was disappointed to hear that Auckland Airport has been asked numerous times to put up some sort of tribute to Keith Park at the airport (Park moved to Auckland after WWII and served on Auckland City Council for several terms). But they keep dragging their feet.

I reckon a suitable tribute would be to name the entire airport after him. A private bill by an MP would do the job. It would be great to have every person flying into Auckland to be told they are flying into the Sir Keith Park Auckland International Airport, and many many more people would learn about of of New Zealand’s best sons.

My analysis of the electorate races this week, on my Patreon are:

• Invercargill
• Southland
• Taieri
• Dunedin
• Waitaki

Five down, 66 to go!

The summary to date is:

• Safe National: 2
• Likely National: 1
• Safe Labour: 2

This is almost beyond belief. We have a Green MP saying:

“Shoplifting is the most common charge for women. It’s not violence, it’s crimes of dishonesty and poverty. I can tell you that not one woman shoplifts because it’s fun, because they get a thrill of it. It is because they are desperate”

How stupid do you have to be to say that, after a Green MP on a $200,000 remuneration package gets charged and convicted of shoplifting massively expensive designer items?

(NB I do not endorse the term of abuse used, this is just the tweet that had the video)

Myself, and others, e.g. Duncan Garner, Derek Cheng, etc – have recently highlighted that 15% of students leave of education system – after at least 13,200 funded hours – with no formal qualification.

For 2025 LEAVERS that would be 10,496 young people.

Despite what people to the esteemed level of the current Minister of Education stating – NCEA is easy to understand and clearly defined.

To get NCEA Level 1:
– you pass the Literacy and Numeracy co-requisites (and earn 20 credits).
– you earn 60 credits in courses at Level 1, 2, or 3.

To get NCEA Level 2:
– you pass the Literacy and Numeracy co-requisites (and earn 20 credits) at Level 1.
– you earn 60 credits in courses at Level 2, or 3.

To get NCEA Level 3:
– you pass the Literacy and Numeracy co-requisites (and earn 20 credits) at Level 1.
– you earn 60 credits in courses at Level 3.

To get University Entrance:
you pass the Literacy and Numeracy co-requisites (and earn 20 credits) at Level 1.
– you earn 14 credits in 3 “accredited courses” and meet other basic literacy and numeracy requirements.

In turns out that the Ministry of Education has been fidging the numbers … SIGNIFICANTLY.

John Gerritson for RNZ has discovered this:

“The figure has been under-reported because since 2004 the Education Ministry has counted students half-way to a level two or three NCEA certificate as if they had a qualification, even if they didn’t.”

What it means is this … we were reporting that just over 10,000 young people (15%) were leaving our system with no formal qualifications and a very limited future. The true number is 19% (13,165) last year.

This is a significant scandal in two ways.

1. The statistics are deeply appalling.
2. The Ministry and Ministers have been complicit in hiding the true situation.

[email protected]

There have been numerous stories about forest fires in Europe, painting the current number as unprecedented. I never know how much faith to put in reporting, so I went looking for data. Here is the offical EU data.

The blue line is the average for 2012 – 2025, and the red line is 2026.

The Herald reports:

Labour will scrap National’s Investment Boost if elected – under a new plan focused on small businesses.

Investment Boost was the centrepiece of Budget 2025 and was widely promoted by the Government as an important means of attracting new investment to New Zealand. It applies to domestic and foreign investors.

National has described the move as a “$5 billion tax grab”, a reference to the rough amount Labour would have left over by ditching Investment Boost. Nicola Willis, National’s finance spokeswoman, accused Labour of ripping the money away from small businesses to fund other policies. 

“Scrapping National’s $6.6b Investment Boost to fund a $1.56b fig leaf means business owners lose the incentive to invest in genuinely transformative, productivity-enhancing equipment,” Willis said.

Investment Boost allowed businesses to deduct 20% of the cost of a new asset immediately. Labour is cancelling this, which means companies that invest in new assets will face higher tax bills and worse cashflow.

Chris Penk has been removed as a Minister, and is retiring from politics after the confidence vote in Christopher Luxon.

I have mixed feelings on this, which Ani O’Brien covers well. I think it was politically necessary and even essential that the Prime Minister send a clear signal to caucus that there must be no further ill discipline. It is ridiculous to have had to go through two confidence votes in election year. My long standing policy (which I have advocated to the party) is that in fact you should change the rules so leadership votes can not occur in election years.

But I am sad as Chris Penk is a very nice guy, who was an extremely able Minister.