Goff and Tamihere Are Both Wrong. (But Bernard Hickey Is Right On The Money.)


NEITHER PHIL GOFF, nor John Tamihere, are telling Aucklanders the truth about their city, but Bernard Hickey has given it a pretty good shot. In a powerful and deeply insightful article, posted on the Newsroom website, Hickey not only explains why KiwiBuild failed, but why it could never have succeeded. In the process, he lays bare the fundamental failures of political and economic intelligence fuelling New Zealand’s conjoined national and local infrastructure crises. Goff and Tamihere are part of that intellectual failure, and that is why neither politician is giving Aucklanders meaningful answers to their most pressing questions.

Tamihere has proposed selling 49 percent of Watercare to either the Accident Compensation Corporation, or the Superannuation Fund, or both, and using the proceeds (estimated at around $5 billion) to fund Auckland’s urgent infrastructure needs. Goff, who, in his years as a member of the Fourth Labour Government, never once voted against the privatisation of state-owned monopolies, has come out as a staunch defender of the municipally-owned Watercare company. He is warning Aucklanders that Tamihere’s plan would increase the average Aucklander’s water bill by $200-400 per year – falling most heavily on the poorest Auckland families.

What does Hickey say about the funding of local government infrastructure?

“After the mid-1980s, the Government saw the private sector as the provider of housing and saw any infrastructure as a cost that needed to be borne by those building the new houses and local Government, not the wider taxpaying public. Even now, that thinking is infused through Treasury and into the minds of the current Labour leadership, going from Ardern through Finance Minister Grant Robertson to Twyford.”

In other words, the neoliberal principle of “user pays” has been extended well beyond its original target, the hapless individual consumer of government services, to encompass everyone: consumers, businesses, central and local government institutions; everyone. The contrast between the neoliberal approach and the nation-building approach, which, historically, has informed the policies of successive New Zealand governments, could hardly be starker.

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As Hickey makes clear:

“[N]neither the National or Labour-led governments of the last 35 years have seen it as their role to pay for [housing’s] underlying infrastructure. Their instincts have been to get others to pay for it, unlike during the golden eras of the 1930s, 40s, 50s, 60s and early 1970s when governments of both colours used the national balance sheet to build and subsidise that infrastructure through the Ministry of Works, State Advances Corp and various Group Building schemes and child benefit capitalisation policies.”

The alternative to state funding of infrastructure is, of course, to fund it by taking on massive amounts of private debt. On this issue, at least, Tamihere has some solid points to make. In his own colourful turn of phrase, Goff and the Auckland Council have “maxed-out the credit card”. If the City is to preserve its international credit rating of AA, then it simply cannot afford to take on any more debt. What’s more, the rest of the country cannot afford for Auckland to take on any more debt.

Hickey tells us why:

“The technical problem is the Auckland Council is almost at its debt-to-revenue limit ratio of 270 percent, which is the level specified by Standard and Poor’s for Auckland to keep its AA credit rating. This is important because taking on more debt would mean Auckland’s credit rating would be downgraded, which would increase the interest costs on existing debt and force up rates. But it would also breach the rules set by the Local Government Funding Agency [LGFA] about Auckland’s credit rating not falling more than one notch below the Government’s AA+ rating. That’s important because Auckland’s rating essentially sets the base for all local government borrowing through the LGFA. It means there is enormous political pressure locally and financial pressure from other councils (and the LGFA) for Auckland not to borrow much more. Councils beyond the Bombays and north of Orewa would scream blue murder if their interest bills went up because the Auckland Council decided to solve a funding problem the central Government won’t solve.”

Unable to take on any more debt, Tamihere knows that the only way for Goff to fund infrastructure development in Auckland is by increasing rates, raising user-charges, and/or adding another 5-10 cents to the price of a litre of petrol. Tamihere is far from convinced that Goff (or anyone else) is willing to risk a ratepayers’ revolt by leading Auckland up that particular garden path, hence his plan to access five billion desperately needed dollars for urgent infrastructure development by selling 49 percent of Watercare.

The politics of this is quite clever, because, by the time ACC and/or the Superfund take the necessary steps to secure their standard rate-of-return from Watercare by taking it out of everybody’s water bill – Goff is quite right about that – Tamihere may have earned himself enough public good-will to be re-elected Mayor in 2022. (Assuming, of course, that this partial privatisation policy enables him to beat Goff in October 2019.) Five billion dollars builds a lot of infrastructure, so, who knows, Tamihere’s use of Peter’s central government funds, to pay for Paul’s local government needs, might just work. “The Mayor who rebuilt Auckland without plunging us all into deeper debt!” – has a rather nice political ring to it.

In the long run, however, Tamihere’s gambit can only be a bust. Liquidating and then spending Auckland’s capital assets can only end up dragging the city to the same point Goff has already reached. Namely, facing the politically unpalatable reality of requiring people to give up an increasing proportion of their income to the Council and/or its commercial arms. While the New Zealand political class – and that includes you, Jacinda Ardern, Grant Robertson and James Shaw – remains incapable of thinking outside the neoliberal box, New Zealand’s crumbling infrastructure, not to mention the many large-scale public works projects that will be required to meet the challenges of the future, cannot be addressed.

Goff and Tamihere would be better advised to jointly demand, as the leading mayoral candidates, that the State once again steps up to the plate of nation-building. In a country whose entire population is smaller than that of a medium-sized global city, there never has been, and still isn’t, any other viable alternative to turning the state into New Zealand’s angel investor.



  1. This kind of traditional or habitual focus on expanding and upgrading urban infrastructure, laying down the next subdivision etc, is exactly what’s destroying our planet. This is nest-prep instinct driven breeding pattern nonsense and we need to address it.

    Over in the other column there we’ve got Liz Gordon wanting a one child policy. That’s ironic isn’t it? Nobody is talking about a pause in new urban developments even though they’re now encroaching on high quality crop lands…

    What about the proposition that dense urban areas should be phased out, and we should reduce our ecological footprint, and perhaps redistribute more evenly around the place.

    My view is, continued instinctive or habitual perpetual growth economic behaviour as per the current orthodoxy is an existential threat. I am not saying this article was “bad thinking”. I think there may be an argument it’s old thinking.

  2. Chris
    As I commented on an earlier blog on this:

    When I was a National MP – Bolger regime – in Opposition we said NO to privatising Strategic Assets. Strategic Assets might broadly be define as, Monopoly providers/assets.

    When we became Government, we did privatise e.g. Government Print. After all, printing houses are hardly a – monopoly facility.

    We also privatised Rail.

    If we had confined this process to the rail business i.e. what runs on the railway tracks, that would have been consistent with our Opposition position of, OK to sell non monopoly or non strategic assets. After all, anyone can go buy a train and carriages and run a business of freight or passenger service.

    But, we sold the railway lines too! Fay Richwhite were involved as I recall but that’s another story.

    The outcome of selling the railway trains and carriage AND the railway lines to the same blokes, was in breach of our Opposition stance. We sold a strategic monopoly asset! The railway corridor.

    This deal also totally defeated the theory of competition (on the railway lines) providing the consumer with choice and better prices.

    When Mike Cullen arrived, he had to buy back the railway lines National had sold. (Not that Mike was particularly astute in what happened after he bought back the monopoly railway corridor.)

    I am a supporter of private sector business. But I was and still am, a supporter of the State retaining strategic assets.

    In my view, given the water reservoir resources, water supply for Auckland is a monopoly and therefore a strategic asset.

    Those who don’t read history risk making the same mistakes.

  3. Take a look at a proper city, the City of New York with its 8.6 million inhabitants using 1200km2 is a lot larger than Auckland with it’s 2 million inhabitants using 1100km2. So of course, that’s also a good example why it doesn’t make much sense to use figures which are based on arbitrary administrative personalities for such comparisons.

    • Where does NYC get its energy from, what resources was it built of? Got it? FOSSIL fuels and finite resources.

    • Ross you are alluding to an ongoing process that the neo liberal agenda has swept under the carpet and out of the debate since 1984. That is the tendency of free markets toward monopoly and oligarchy. In effect big players go from having to compete to stifling competition, they then set prices and clip the ticket. The consumer is held captive.

      There’s a long history of government interventions such as the US anti trust laws breaking up the Bell monopoly of US telecoms, or the British nationalisation of the railways. What happened in 1984 was that the concept that government was needed to intervene in behalf of the citizen got thrown off the table.

      Since then we have seen huge corporate growth and concentration of ownership, the rentier owner class enriched whilst the underclass has expanded and been impoverished. It’s no coincidence.

      If we want good infrastructure we need government on behalf of the people to use it’s power to prevent capital aggregation and monopoly practices. That means nationalisation or extreme regulation of monopolies like banks, electricity etc.

  4. Step 1. Stop profligate spend
    Step 2. Increase the number of rate payers via land reform
    Step 3. Increase rates to reflect the cost of running Auckland and the poor decisions made by electors.


    Just let Auckland go to the dogs, move.

  5. As we all (should) know, a sovereign state cannot “max out the credit card” – see the many articles worldwide debunking the myth of the Swabian Hausfrau. However, users of the fiat currency, including Local Government bodies certainly can. As you rightly say, Labour must ditch its neoliberal faith and step in to assist Auckland Council. Indeed it should be using its proper fiscal capability to step in to better help get us rid of so many our social disasters.

  6. Perhaps stop the fraudsters for a start to save money rather than privatisation!

    $368,000+ over 50 dishonesty crimes before ports of Auckland noticed… you just know the problem is wide spread in Auckland council through the COO’s… the management is asleep at the wheel – and people of poor character who surprisingly start to steal with the culture there!

    The investigation cost the Ports of Auckland $72,241, while legal fees to the end of March 2017 had reached $117,631, court documents show.

    The total cost for legal fees, however, is now understood to be somewhat higher to account for Vuniduvu’s prosecution after her initial trial was aborted last September.

    Lover of Ports of Auckland fraudster jailed for ‘joint enterprise’ to steal $368k of ratepayers’ money


  7. So it would seem that promises of 1000 houses now , and 100 000 soon were made without any reference to financing them. What can I say?

    D J S

    • @ David the fraudster above seem to be desirable for a house in NZ than people who are born in NZ or already living here.

      Then we have to pay hundreds of thousands for new arrivals jail stays and justice costs and the social costs of their crimes.

  8. I seem to remember that Bernard Hickey wrote an article suggesting that the NZ Reserve Bank creates interest free loans to build national infrastructure. That seemed a good idea, so what happened to it?

  9. And even Chris T. is wrong, Auckland is so stuffed, so is NZ Inc, we have no money and resources to even address climate change issues, people in NZ live in a fantasy land, ignoring mostly that we have lived well beyond our means for decades now.

  10. One major problem in NZ is the entitlement driven middle class, many property owners, who want it both ways, but who never want to sacrifice anything for those at the bottom.

    They keep clinging to property investment for themselves and for rental income in their older days. They are happy with endless immigration to keep the gravy train going, they are happy with the debt scenario, they want it all to keep their lifestyles, which are honestly totally unsustainable 2 to 3 car households with quarter acre sections.

    Teachers scream for higher salaries, kindergarten teachers want the same, so want principals, all to keep their gravy train alive.

    At the other end, poverty remains, noting is improving, we are divided as per usual, by entitlement thinkers wanting their share (I invested in expensive studies, I worked hard all my life, blabla), and by others getting no voice, i.e. those on benefits and those on starvation wages and in precarious employment.

    Get real, bring in laws that curtail what the property obsessed and lifestyle demanding middle class want, and disown the bastards, and then start from scratch, all else is a waste of time, as you end up trying to appease all the parties in not reconcilable positions.

    Kill the frickin BOURGEOISIE, thanks. Class war is called for, most Kiwis shit themselves to even raise such a possibility.


    • It aint the middle class driving immigration, it is the government and business braying for more cheap workers. Saw the other day some business complaining they could not get people to plant 100 seedlings for $30… that’s a lot of back breaking work for $30! Maybe the justice should be sentencing criminals to plant trees… we seem to have plenty of criminals in NZ so expand that workforce don’t bring more people in who need housing and transport and later welfare! Use existing people in their million dollar penthouses under house arrest, https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11835412 if they want to be tight with labour costs.

      • I see many middle class citizens happily living with cheap immigrant labour, serving them in supermarkets, in restaurants, catering for their elderly and looking after their health in hospitals, fixing their cars in garages, connecting broadband fibre to their homes, and the list can go on.

        Besides of business having its interests, the middle class is to a large degree right there in the mix.

        Stop immigration and it will become apparent how few locals will do those low paid and often difficult and hard jobs in long shifts.

        Labour costs would go up and customers and so would immediately complain about prices rises and added costs.

        • In NZ if you complain about cheap migrant labour the woke & power interests go crazy and claim it is racist.

          So the middle classes are just taught to ignore the issue, because if you complain you are racist if you do nothing the new discourse seems to be you are happily living with cheap labour…

          A focus on blaming the middle class is great for power interests as keeps the status quo….

          Also labour costs need to go up in NZ because you can’t live on the current labour costs… the reason the Ponzi works on such low wages is that migrant workers bring the money with them to survive on, and once getting residency the taxpayer subsidises their welfare, with housing, WFF, health, education, transport etc… all paid for by the taxpayer… so in NZ our taxes can’t keep pace with so many new people as our taxes are not paying for improved health and education but paying more employment subsidies for cheap labour for exploitative employers and super and gold cards for aged relatives who never worked here on family visas who can get the pension and free health care.

          This is on top of the welfare and social costs of having so many local people under or unemployed and less and less decent jobs available for youth.

          A person on minimum wages with 2 kids apparently costs the government on average approx $5000 per year to keep them afloat, if a worker is on the living wage with 2 kids they only generate $7 p/w in taxes. So we have to find a way to keep 2 adults and 2 children with free education and health care and super on $7 or 40% of the workforce needing $5000 per year to keep them afloat? Note that is the working people – before you work out beneficiaries who can’t get work or it’s not worth working any more because of the low wage culture here…

          Not possible which is why health care and education per person is declining and the government and councils have to keep borrowing more money and selling assets.

          Is having an extra cafe’s and liquor shops on every corner worth dropping the standard of living in NZ and to decline further with this bizarre strategy?

          Then there is the costs of workers who can’t do a good job or growing corruption and crime in NZ.

          • Ever heard of the gentry and gentrification? That is what most middle class people aspire, ‘moving up’. A class obsessed with belonging to the ‘good’ or ‘better’ class.

    • “One major problem in NZ is the entitlement driven middle class, many property owners, who want it both ways, but who never want to sacrifice anything for those at the bottom.”

      Hence why National is still in the high 30s/low 40s percentages in opinion polls

      Entitled property-owning middle class baby boomers will not willingly given up their vast unearned paper wealth

      • All is not well in that sector, MJOLNIR

        One of the many reasons there are not enough houses is the lack of quality in construction and our government’s interest in not regulating construction appropriately and letting the lowest common denominator build here and rip off more and more people, as well as allowing so many overseas people to build and buy property here (and just get in and out with next to nothing come back) which drives ponzi’s even more.



        There are so many ripped off by these shoddy construction projects or grossly unfair ongoing fees. Not only the poor owners who paid for defective apartments and then get caught in limbo (not everyone has the money to pay for remedial work) but also the ratepayers and people living in Auckland who has yet another near new building not fit for purpose, creating safety issues by falling apart, that requires hundreds of builders to fix them up causing more shortages and less and less local people who will buy apartments in prime locations!

        In $20k apartment case, the leasehold and ongoing building issues is a rip off which means another prime location is tainted by greed. (Also the hideous design and noise from 24 hr ports of Auckland and 24 bars on the waterfront works best with those hard of hearing to live there).

        The faulty construction has mean’t that many Kiwis are now too nervous to buy an apartment in the CBD because rip offs by developers, body corporates and leaseholds are ok in NZ, anything goes here to make profit and leave the problems to others… Still they keep building more and more with higher and higher price tags. They are not aimed at Kiwis to buy them but overseas folks which is why apartments are exempt in the new foreign ownership rules.

        The government is allowing the Ponzi to continue… and local can’t afford to live in the CBD.

  11. Heaven forbid that infrastructure is funded with funny money.The sky will fall.

    I sincerely believe that neither Adern nor Robertson nor Twyford would actually understand what Bernard Hickey is saying. It’s a shame though that until now Bernard has been rather backward in declaring his support of Government funded works.

    • I agree, Brigid, (see my comment above) but when you talk like that readers think you are advocating funny money and Hyper inflation. If Reserve Bank money worked once (and it did) it can work again.

    • I don’t believe Bernard has ever been backward in this. He has always advocated on this, the problem being that both Key and English never understood Bernards high intellect.

  12. If this Govt. gets a second term, the political priority has to be to influence it to renounce Roger ’n’ Ruth or indeed little of significance will change for the better in NZ. Reforms are needed, and welcomed by low paid workers, but amount to tinkering if an austere fiscal cap is retained.

    For instance the housing crisis could be solved with a massive State (Public/Social if you must) house and apartment build including trades training and imports of flat pack dwellings–if local suppliers want to remain pirates and won’t lower prices.

    Neo liberal psychology runs deep in the populace too after 30 years. A number of those flattened in the 80s by the Rogernomics wrecking ball, are coming up to “pension” age now and I hope most of them get it, and have some respite for a few years, albeit on a tight budget for all the crap they have endured.

  13. … ” Goff and Tamihere would be better advised to jointly demand, as the leading mayoral candidates, that the State once again steps up to the plate of nation-building. In a country whose entire population is smaller than that of a medium-sized global city, there never has been, and still isn’t, any other viable alternative to turning the state into New Zealand’s angel investor ”…


    Great stuff.

    The neo liberal virus runs deep in this country.

    None moreso than Phil Goff ,… one of the original neo lib crowd. As for Tamihere? … what an upturn for the books ! Literally !

    I have often said that NZ is only the size of many overseas middle sized city’s , – and they only need a council to see to their affairs ,- yet the level of incompetence , rorting , corporate and political plundering that goes on in this small population country with the landmass of Japan or England/Scotland is staggering.

    The day this neo liberal generation either dies off, gets voted out , or are displaced in their positions of influence or a combination of all three and are replaced by a new generation of Keynesionist’s is the day this country will prosper once more.

    Until then , – expect more of this sort of tripe from both the Goff’s and ( sadly ) the Tamihere’s of this world

  14. I wasn’t going to but I am going to. You know how it is?
    I love Auckland. Despite being a Deep South, Southlander, I love Auckland. Mind you, I do like the bright lights of any big city. I was told I have a moth mentality. I’m attracted to bright lights.
    I think history will prove me correct in writing that Auckland has one terrible affliction. It’s a city managed by old crooks. It’s run by cheats, wankers and liars. While all you fabulous Auckland people do your urbane and awesome bit, Auckland’s deep, dark heart beat has the rhythm of crooked arseholes about it.
    The reason for that warrants closer examination.
    The reason Auckland has been poorly managed in terms of the way the public is catered to is simple. The steerage of Auckland has it’s head up the arseholes of the likes fay, richwhite, gibb, hart, chandler etc. They’ll just sell you out to bigger business so you can watch your property prices rise so sharply it’ll make your fucking ears ring. Because? What goes up? Must come down baby.
    The reason why that’s so dodgy is because they made off with money that wasn’t theirs to make off with. It was farmer money and mostly, certainly historically, from the Deep Dark South. It was Dunedin, in fact, that was once the largest city in AO/NZ. Ok, so that was years ago but the REASON Dunedin was the largest city in AO/NZ hasn’t changed a Hell of a lot. ( Gold. Yes, I know.)
    The reason Dunedin was the largest city in AO/NZ back in the day ( As is evident by its fabulous period houses and buildings. ) was because our farmers exported wool, meats, dairy and fruits etc to the world. You know any living human that doesn’t need to eat?
    It was Auckland Grifters who slid that lovely dosh into their own pocketses, aye Jonky?
    The mayoral election process is a farce and a scam. Below goff and tamahiri there’s a strata that wasn’t voted in and can’t be voted out. [They] took over, then took control, and NOTHING has changed.
    Dear old Auckland’s living the dream on a false economy sold to you by crooks and you poor Aucklanders are about to be woken up to a terrible realisation. You know how that is, right? You were sound asleep but then as you wake up, all dozy and snoozy, you remember that terrible thing that happened, or will happen, or there’s something dreadful you must deal with? You know that feeling? Well, get used to it.
    The only thing that might save Auckland, and AO/NZ itself in fact, is if we tank the banks and re nationalise what were once our assets and services. NOW! I see Mr Meurant above prefers to call [them] ‘ Monopolies’ , an indecent little label Mr Meurant. The word ‘monopoly’ implies, in this writer, other unfortunate titles like tyranny, autocracy, dictatorships, fascism and ‘state control’. They were all terms used during Herr roge douglas’s 5 foot one rise to totalitarianism back in the 1980’s. He used words like that to psychologically make neo liberalism invincible. Who can argue against ‘ personal freedom’ and ‘individuality’ and ‘free markets’. Unfortunately, it was wank then, and it’s wank now.
    So? You were in bolgers government? I’d a thought you might have wanted to keep that particular skeleton in some dungeon somewhere deep and dark?
    Neo liberals parasitised Labour who handed bent thus gutted bnz and its debts on to bolger so bolger/fay/richwhite scammed us Tax payers into bailing out the bnz to $300 million which they them bought THEN on-sold to the Australians? Is that your ‘other story’ @ Mr Meurant? If so, I’d be very, very interested in reading it.

  15. Another social housing partnership with Auckland council delivering excellent care… sarcasm. The new way to rip people off is to put in some ‘social’ third party to administer (normally with a fee) which pretty much leads to zero action from the third party.

    (Same with ACC using social health providers to do the checks and home help on patients. They take the money and half the time don’t provide the service, but the people are often too sick to do anything about it. )

    “Auckland Council is demanding an explanation from a social housing provider after an elderly man lay dead in his flat for five days before being found.”


  16. The other thing to realise is that NZ policy is allowing money laundering and encouraging foreign investment here which is driving up infrastructure issues for locals. Banks tend to be in the thick of it, just like the UK, and they turn a blind eye because they like the money bought to our economy.

    “Britain’s most famous money launderer is HSBC, thanks to its systematic cleansing of the earnings of the Latin American drug cartels over the second half of the last decade, for which it was fined $1.9bn by the US government in 2012. But that was a tiny operation compared to the Danske Bank scandal. If gathered together, the suspect funds moved through the bank’s Estonian outpost could buy HSBC, with more than enough left over to buy Danske Bank too.”


    The Panama papers showed that it was not just drug dealers using shell companies but politicians, Hollywood and big business – the issue is that money launderers might end up controlling more and more assets around the world and using the vast wealth to buy up and control formally legitimate companies including NZ’s privatised assets but through shell companies would anyone know what John Key, William Yan and ANZ actually own (we already see funny money dealings with Hisco being sold suspiciously under priced housing through another vehicle) and whether they pay the correct amount of taxes on it?


    William Yan AKA Bill Liu to keep NZ citizenship despite money laundering conviction


    Do we want the powerful to continue to control more and more strategic assets like water who just want it for profit?

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