But maybe that's not true because the market would just say buy as much land as you want and regulate it.

Sure.

So New Zealand has had some of the world's least affordable housing.

If you go back a decade, Auckland was at or near the top of the league tables.

If you like leave out like Hong Kong, Auckland was right up there.

It was always in the top 10. things have become a lot more affordable.

And what changed was zoning that started allowing a lot more housing.

Capital gains tax?

Good on

you, Eric.

Well, sure.

Everyone faces different costs for all kinds of things.

If you're in a spot where it's really expensive to service the road and you're having to bear the cost of that, well, councils in those spots often face decisions around whether do we maintain a really good seal on this road or do we let it revert to gravel or shingle because it's too expensive to maintain that tight seal.

We can always make those kinds of decisions in places where it's more expensive to provide the services.

Pretending that those differences don't exist, It's a little bit risky.

You reckon?

Yes.

So remember that we have industrial allocations for sectors where we worry that if we didn't provide ETS credits for a New Zealand company, the emissions would just happen overseas instead because we'd be importing from there, or other countries would be buying foreign-made products rather than New Zealand products, and that's a problem for global warming if the emissions shift to a place where the emissions are even worse than they are here.

Now, it looks like New Zealand cement is actually more carbon efficient than the cement being made in Japan, which is where we'd be importing from, the alternative, or at least on average, that's where it lar- largely comes from.

If the plant here shut down, there'd be more global reliance on the Japanese cement, and we'd be relying on that.

Global emissions would go up.

If we were doing industrial allocations properly, then this wouldn't be an issue.

Uh, w- they would be allocated credits sufficient to, um, for the [laughs] for it not to b- not to be competing with, um, unpriced alternatives, or we'd be adjusting a bo- a border charge for importing-

Yeah.

Yes.

So remember that we have industrial allocations for sectors where we worry that if we didn't provide ETS credits for a New Zealand company, the emissions would just happen overseas instead because we'd be importing from there, or other countries would be buying foreign-made products rather than New Zealand products, and that's a problem for global warming if the emissions shift to a place where the emissions are even worse than they are here.

Now, it looks like New Zealand cement is actually more carbon efficient than the cement being made in Japan, which is where we'd be importing from, the alternative, or at least on average, that's where it lar- largely comes from.

If the plant here shut down, there'd be more global reliance on the Japanese cement, and we'd be relying on that.

Global emissions would go up.

If we were doing industrial allocations properly, then this wouldn't be an issue.

Uh, we...

Yeah.

But why is the idea so prominent at the moment?

Well, it comes in waves, and you're right.

So there had been prior Treasury work looking at the case for one.

There had been prior waves looking at it.

There's been a wave internationally picking these things up, recognizing that parliaments need a little bit more help sometimes in holding the executive to account.

One of the problems that New Zealand has is, while Treasury can be very good, they are... a servant of the Minister of Finance of the day.

So that gives them a bit of a conflicted role when dealing with matters for Parliament.

So other than sort of holding the executive to account over their finances and their forecasting, there's the idea of having a parliamentary budget office or an independent budget office costing policy promises by opposition parties.

But why is the idea so prominent at the moment?

Well, it comes in waves, and you're right.

So there had been prior Treasury work looking at the case for one.

There had been prior waves looking at it.

There's been a wave internationally picking these things up, recognizing that parliaments need a little bit more help sometimes in holding the executive to account.

One of the problems that New Zealand has is, while Treasury can be very good, they are... a servant of the Minister of Finance of the day.

So that gives them a bit of a conflicted role when dealing with matters for Parliament.

So other than sort of holding the executive to account over their finances and their forecasting, there's the idea of having a parliamentary budget office or an independent budget office costing policy promises by opposition parties.

So on paper as an idea, you and I having a cup of coffee jawboning versus the real world, is it practical or not?

Yep.

There are places that do this.

It's not, uh, it's not unique, but it is something that New Zealand should be progressing.

We are too small to be stupid in this space.

Uh, we need to enable innovation in new ways.

We sh- ought to be going a little bit further.

Mm.

So on paper as an idea, you and I having a cup of coffee jawboning versus the real world, is it practical or not?

Yep, there are places that do this.

It's not, uh, it's not unique, but it is something that New Zealand should be progressing.

We are too small to be stupid in this space.

Uh, we need to enable innovation in new ways.

We sh- ought to be going a little bit further.

It'd be great to also be recognizing products that are regulated overseas as being good enough for here.

Mm.

So what are the countercurrents that are going to arise in our politics once these things actually start being built? How do politicians react to those? How do builders react to those?

Okay, so I don't know any of the Portland politics.

Of course, no, I don't ask you about that, but I'm hoping for more.

I'll say what happened here.

Exactly, that's my goal.

And you can extrapolate from here to whatever you think might happen in Portland.

Yes, exactly.

transaction costs and getting paying permission.

Are they worth it?

They're at least addressing what seems to be a real problem.

So if you already have a mortgage, you're probably fine if you need solar.

You can talk to your bank about getting a top-up.

It's basically the same as any other home improvement you might get.

And a lot of them will give you a 0% or a fairly concessionary rate to keep you around for the rest of your mortgage on a longer term.

If you don't already have a mortgage, you could have some difficulty because it's really expensive to initiate a mortgage.

How do we know what's good and what's not good?

So in essence, anyone who owns land would be funding this basic income for everybody under this policy?

Pretty much.

There are a narrow set of exclusions on the land that would be taxed, but that would be about it.

A higher rate on urban land and a lower rate on rural land.

The amounts are fairly substantial, so the numbers sound small, like a 1.75% annual charge on the value of unimproved land.

So if you've got your council rating bill, it'll probably tell you right now the capital value and then just the land value.

an unimproved land value would be a little bit below the land value that a ratings statement would tell you.

Looking at this citizen's income in and of itself, what evidence is there about whether this is beneficial or not, whether it improves outcomes for people?

So why is it only plasma that's ever taken? There's not really many countries that will play for whole blood, is there?

Well, plasma is in shortage in any country that doesn't allow compensation for donors winds up having shortages of plasma.

New Zealand had bucked that trend until about 2014, 2015.

Since then, we've been reliant on increasing proportions of immunoglobulin, which is the product made from plasma, is one of the products made from blood plasma, the most prominent one.

We have been importing increasing amounts of that.

We used to be self-sufficient.

Now we're not.

Yeah.

So why is it only plasma that's ever taken? The, it's never, it's never re- There's not really many countries that will pay f- for whole blood, is there?

Well, plasma is in shortage, and any, any country that doesn't allow compensation for donors winds up having shortages of plasma.

New Zealand had bucked that trend until about 20, uh, 14, 2015.

Since then, we've been reliant on increasing proportions of, uh, immunoglob- globulin, which is the product made from plasma, is one of the products made from blood plasma, the most prominent one.

Uh, we have been importing increasing amounts of that.

We used to be self-sufficient.

Now we're not.

Hmm.

And the New Zealand Initiative's chief economist, Eric Crampton, says it has to be dealt with.

Treasury has been increasingly emphatic that failure to attend to the rising cost of super is going to cause cost blowouts through the 2030s and 2040s.

Minister Willis was clear that we are already at the start of that, and there are substantial effects.

There are obvious ways to start dealing with it.

An easy one is to change the method of indexation, so rather than increasing superannuation every year with average wage increases, you could increase it with price level increases, which would make sure that, uh, older households are able to afford the same bundle of goods.

They just might not keep up with the standard of living of younger workers.

That's one way of making it more affordable.

And yet you think that rests on quite optimistic assumptions.

But it requires a few lucky breaks, you could put it that way.

So among those lucky breaks...

First, Treasury had noted that if the Straits of Hormuz don't reopen and oil stays at a high price level, then potential GDP goes down by about a point.

So everything gets measured against that basis.

So we would be in trouble if that fails to happen.

It's... not a long shot that things come right.

And what's it like in the budget now?

It also lists diesel.

We're not used to looking at, well, here's a month and a half, and then nobody can drive around.

More importantly, groceries can't get from warehouses to the grocery shelves.

That could be very bad.

Unlike Australia, who's already cut fuel taxes.

If you do that, then the government has to say, "Hey everybody, we know that the price is now lower, but please, please use less of it, even though the price is lower." Letting prices rise really encourages people to cut back on demand.