Best places to be born

September 3, 2014

Where is it best to be born?

A QUARTER of a century ago, The World in 1988 light-heartedly ranked 50 countries according to where would be the best place to be born. Then, America came top (see chart on left). Now the Economist Intelligence Unit has more earnestly calculated where would be best to be born in 2013. Its quality-of-life index links the results of subjective life-satisfaction surveys—how happy people say they are—to objective determinants of the quality of life across countries. Being rich helps more than anything else, but it is not all that counts—things like crime and trust in public institutions matter too. In all, the index takes 11 indicators into account. Some are fixed, such as geography; others change only very slowly over time (demography, social and cultural characteristics). . .

New Zealand is 7th.

Being rich isn’t all that counts but it helps more than most.

This is why National puts such strong emphasis on the economy – not as an end in itself but as the means to better economic, social and environmental outcomes for New Zealand and New Zealanders.

 


Of course it’s the economy

September 3, 2014

The latest Roy Morgan poll identifies economic issues as the most important in New Zealand:

 Just three weeks before NZ heads to a National Election, Economic issues (41%, down 3% since May 2014) are still clearly the most important problems facing New Zealand however the biggest problems facing the World today are War & Terrorism issues (35%, up a huge 15% since May) now ahead of Economic Issues for the first time ever according to the latest Roy Morgan Research conducted in July and August 2014.

New Zealand views on Problems facing New Zealand
When asked about the most important problem facing New Zealand, 41% of New Zealanders mention some kind of Economic issue. This is down 3% since May 2014 but still well ahead of Social issues (24%, up 3%), Government/ Public policy/ Human rights issues (19%, up 1%) and Environmental issues (6%, down 2%). . . .

Of course it’s the economy and economic issues that matter.

Only if the economy is growing can we afford the first world social services and infrastructure we need and the only way to make funding for these sustainable is with sustainable economic growth.

National’s policies are sustainable, Labour/Green/New Zealand First/ Internet Mana ones aren’t.

 

 


Keep the team that’s working

September 2, 2014

The choice for New Zealanders in this election is to keep the team that’s working or change it for one that won’t:

The National Party has launched a new phase in its election campaign with new television commercials and election billboards highlighting the clear choice facing New Zealand voters.

“On air now is a short 15 second television commercial highlighting the stark difference between the opposition’s spending promises and our own strong economic management,” says National’s Campaign Chair Steven Joyce.

“The simple truth is that to date Labour and the Greens have released reckless spending commitments that total up to $28 billion, and that’s before they add in Dotcom’s party.

“Labour alone has committed to a staggering $18.4 billion, a figure the Greens want independently audited.

“Even in opposition, Labour, the Greens and their mates can’t agree on basic policy, like what the top personal tax rate should be.”

“In contrast, our plan will keep growing the economy and delivering the benefits of that growth to all New Zealanders – like 150,000 more jobs by 2018, free doctors’ visits and prescriptions for children under 13, 18 weeks paid parental leave, Kiwisaver HomeStart grants for first home buyers and no new taxes,” says Steven Joyce. . .

The choice is clear – a strong and stable team with a proven record continuing to steer New Zealand in the right direction or the left at best taking us nowhere good and at worst taking us backwards.

 

 

 

 

 


Stay on track or stall

September 1, 2014

Finance Minister Bill English (from 15:30ish)

. . . exporters have done a fantastic job. they’ve had a high dollar, they’ve had their export markets, US, UK, Europe in massive recession and still they’ve done well. . .

. . . the last thing they want is the whole shebang tipped upside down by politicians setting interest rates, higher income tax, capital gains tax,  carbon tax and . . .  the government taking over the energy and the housing markets. . . .

Labour and the Greens will add new taxes, put on capital gains tax, carbon tax and put up income tax to pay for a lot more wasteful spending.

Our focus is on building confidence, because a new job and higher pay come from businesses who are investing and the good news is they are really starting to get some momentum and the last thing we want is to stall that momentum. . .

. . . First we spend a lot less and we don’t raise new taxes. Secondly the quality of our spending is much better specified because we’re spending for results. . . ours is focussed on getting results kids learning, more elective surgery . . . they are just throwing money at the problems.

The choice for voters is staying on track with National or stalling under a government led by Labour.

It’s a choice between National which respects other people’s money and the need to spend it wisely and Labour and its mismatched mates who want to take more of other people’s money and spend it in the mistaken belief that the quantity of the spend is better than the quality.

It’s a choice between continuing to go forwards or stalling and going backwards.


What matters

August 31, 2014

Trans Tasman on what matters to voters:

The vital factor for NZers as they come to vote are issues which impact on their lives: the trajectory of the economy, jobs, living standards, inflation, house prices, education and health services. Voters’ assessments on the credibility, competency and leadership of the parties weigh equally heavily. And a primary concern is stability of the Govt to be elected under the MMP system. . .

Anyone who understands the issues, the policies, the parties has a clear choice.

A stable, National-led government will continue with the policies which are working in these important areas; a weak unstable Labour-led government propped up by the Green, New Zealand First and Internet Mana parties won’t.

There are major differences in policies too, not the least of which is tax:

Where Labour is talking of raising taxes, National is dropping broad hints it wants to lower taxes by revising tax thresholds to provide some relief for those on low and middle incomes.  . .

The PREFU supported the government’s claims that the books will be back in surplus.

There is no justification for increasing tax rates. If conditions allow, there could be a case for some reductions, if only to counter bracket creep.

The only justification for adding a new tax would be by taking away an existing one.

Labour and its left-wing cling-ons want to increase tax rates and introduce new ones as extras not replacements.

High tax and high spending under the last Labour-led government put New Zealand into recession long before the rest of the world. That they haven’t learned from that mistake shows they can’t be trusted with the public purse again.
In their last five years in government, Labour’s spending increased by 50%, pushing mortgage rates to 11%, causing inflation to exceed 5%, and putting the economy into recession well before the global financial crisis. Now they want to make the same mistakes all over again.

In stark contrast National has spent the last six years working for New Zealand with policies that are working for New Zealanders and this week announced more of its plan for the next three years:

We’re focused on the things that matter to New Zealanders. If you’ve missed any of our policy announcements this week, we’ve summed them up below. If you want more information on any of these announcements visit: www.national.org.nz/plan #Working4NZ


They haven’t learned a thing

August 30, 2014

Labour and the Green Party are trying to pretend they would be good economic managers.

The cost of their policies puts the lie to that:

David Cunliffe and Labour have actually increased their new spending promises for the next four years to $18.4 billion, despite putting some of their proposals such as New Zealand Power on the never-never, National Party Finance Spokesman Bill English says.

“David Cunliffe and David Parker have again been caught out under-costing their expensive promises,” Mr English says. “This is irresponsible and deceptive and confirms that under David Cunliffe, Labour is reverting to its failed spend and tax recipe of the past.

“We saw what happened the last time around – under Labour in 2008, floating mortgage rates reached almost 11 per cent, inflation exceeded 5 per cent and the economy went into recession well before the global financial crisis.”

Labour’s latest costings attempt, which it released on Monday, confirm its untried New Zealand Power proposal, which would give politicians control of the electricity industry and push up power prices, would be postponed until 1 January 2018.

And in another example of it attempting to dress up its numbers, Labour has also pushed back free GP visits for over 65s and other groups to 1 January 2017.

“So while David Cunliffe is going around New Zealand making expensive promises, he is quietly pushing some of them back beyond two elections because he knows they are unaffordable,” Mr English says.

“But he has again failed to hide Labour’s real spending agenda because he has not added in promises made over the last two weeks.

“Even using Labour’s own numbers, the cost of its promises over the next four years is now $17.3 billion – up from its claimed $16.4 billion when it first attempted to cost its policies.

“But when the real costs of its proposed R&D tax credit, compulsory KiwiSaver and New Zealand Power are included, the tally jumps to $18.4 billion – up from around $18 billion the last time around.

“As Labour’s numbers come under scrutiny, they keep changing them,” Mr English says. “David Cunliffe has tried to say he would spend less, but when you add it all up he is actually spending more.”

Labour Party Election 2014 Spending Announcements – as at 27 August 2014
Four year costings as per Labour documents unless noted

$m
27-Jan-14 Best Start Policy 614
27-Jan-14 Extended Paid Parental Leave 245
27-Jan-14 Maternity Policies 50
27-Jan-14 Early Childhood Education Announcements 352
19-Mar-14 Forestry Policy 28
14-Apr-14 Bowel Screening Programme 56
23-Apr-14 Veterans Pension Extension 37
23-Jun-14 Canterbury Policies 116
25-Jun-14 R & D Tax Credit* 1,079
25-Jun-14 Accelerated Depreciation 210
25-Jun-14 Universal KiwiSaver** 845
25-Jun-14 NZ Power*** 566
25-Jun-14 KiwiBuild 1,527
25-Jun-14 KiwiBuild Finance Costs 176
2-Jul-14 School Donation Policy 175
3-Jul-14 Family & Sexual Violence Policies 60
5-Jul-14 Digital Devices in Schools 120
5-Jul-14 Reading Recovery 140
5-Jul-14 Food in Schools 70
11-Jul-14 ICT policies 17
22-Jul-14 Regional Investment Fund 200
24-Jul-14 Digital and Connectivity Policy 21
30-Jul-14 Living wage for Public Sector 94
31-Jul-14 Centres of Vocational Excellence 40
4-Aug-14 Youth Employment Package 182
6-Aug-14 Primary Healthcare 150
8-Aug-14 ACC 40
10-Aug-14 Free Doctors’ Visits 540
18-Aug-14 Tertiary Education (incl ACE) 130
20-Aug-14 Aged Care 222
22-Aug-14 Welfare Policy 78
24-Aug-14 Immediate Funding of City Rail Link**** 800
25-Aug-14 Other Education Initiatives 45
25-Aug-14 Other Smaller Initiatives 80
25-Aug-14 Maintain Real Value of Spending in Public Services 9,000
25-Aug-14 Policy Soon to be Announced 289
Total Announced Spending Pledges 18,394

*Adjusted to reflect Treasury’s forecast costs of the previous R & D Tax credit
**Adjusted to include the average Kiwisaver tax credit paid to new Kiwisaver members
***Adjusted to remove the claimed fiscal offset for wider benefits in one part of the economy that ignores wider costs elsewhere
****Labour says it would reprioritise existing transport spend but most of first 4 yrs committed/contracted

Note: some costs differ from the original Labour releases as a result of fiscal tables released 25 August.

This is only the cost of its spending.

It doesn’t take into account the cost of poor economic management, higher and extra taxes, higher interest rates, a greater burden of government and all the other hand brakes a Labour/Green?New Zealand First.Internet Mana government would impose on the country.

Higher spending and higher taxes didn’t work for New Zealand under the last Labour-led government and it won’t work if voters are conned into trusting another one.

Hopefully voters have learned what works for New Zealand and New Zealanders because Labour and its mismatched mates haven’t.

 

In their last five years in government, Labour’s spending increased by 50%, pushing mortgage rates to 11%, causing inflation to exceed 5%, and putting the economy into recession well before the global financial crisis. Now they want to make the same mistakes all over again.


Grow garden not pie

August 28, 2014

Slicing or growing the pie is a popular metaphor in discussions on the economy.

Keith Hennessey has a better one. He likens the economy to a garden:

The most common metaphor for debates about growth and income distribution is that of the economy as a pie. Some focus their policy efforts on economic growth and efficiency: making the pie bigger. Others emphasize policies that increase equity and redistribute income: how shall we cut up the pie and distribute its slices, whatever its total size?

We learn early in introductory economics that there is a big tradeoff between these two goals of equality and efficiency. Higher marginal tax rates allow for more income redistribution but create disincentives to work, save and invest and thereby reduce economic growth. Policymakers try to optimize, but at the end of the day someone has to decide whether faster economic growth or increased equity is the higher priority. . .

A flower garden is a better metaphor for looking at economic growth and income distribution. A flower’s growth depends on the individual characteristics of that type of flower and that particular seed. It also depends on common factors shared with other flowers in the same garden (e.g., the local climate, pests, the skill and diligence of the gardener) as well as its particular advantages relative to other flowers (better sunlight, soil, and water in this part of the garden than that part over there).  Although there is some interdependence, the rapid growth of a sunflower at one end of the garden largely does not come at the expense of a struggling tulip at the other end. The sunflower may have advantages the tulip does not, even unfair ones, but the fast-growing sunflower is not “taking growth” from the slow-growing tulip.

Flowers will grow at different rates for a variety of different reasons. Policymakers should focus their energies on absolute growth rates rather than relative ones. It’s not a problem that some flowers are growing faster than normal, unless (a) that growth is indeed coming at the expense of other flowers, or (b) that more rapid growth is because the gardeners are neglecting the tulips to help the sunflowers grow faster.

The role of policy makers is to provide good law to ensure competition is fair and that businesses face their share of external costs, it isn’t to interfere in the market.

In the same way it makes more sense to think of economic growth as the sum of the unequal income growths of tens of millions of separate individuals, rather than as a single growing pie to be divided. Any particular individual’s income growth depends on his innate talent, education, and skills, his effort and diligence, and some degree of luck. It also depends on common factors such as the health of the local, regional, national, and world economies, as well as shared resources like transportation and communications infrastructures and a stable and predictable system of law, property rights, and government rules.

The principal economic challenges are to maximize the growth potential of the entire economy/garden and to maximize the opportunities for those individuals/flowers struggling to succeed/grow. And just as a gardener should spend more time tending to the parts of his garden that are struggling, policymakers should devote greater effort to maximizing opportunities for those at the bottom of the income distribution to improve their lot. In the long run this means things like improving elementary and secondary education, expanding free trade, and reducing the growth burden of regulations, government spending, and debt. In the short run it means getting the incentives right so that those on means-tested government assistance don’t face exorbitant marginal effective tax rates from poorly designed income phase-outs.

Benefits should be to support those who need it while they need it, not a disincentive to people who can help themselves to do so.

The flower garden metaphor has one final advantage over the pie metaphor. A pie does not exist without a baker, whereas flowers grow naturally. The growth comes from the flowers, facilitated but not created by a good gardener. In the same way policymakers and elected officials neither “create jobs,” nor “increase economic growth.” Smart policymakers create the conditions under which private firms create jobs and in which millions of individuals combine their separate efforts to create economic growth. The origins of economic growth are in the private sector, not the public.

In an area of economic policy as complex as this, a good metaphor matters and can influence policy. Policymakers should create the conditions under which the whole economy can grow as rapidly as possible, and should devote particular effort to maximizing the potential for those most struggling to succeed. Let’s not fight about dividing up the pie, but instead work to help the whole flower garden, and all the flowers in it, to blossom.

 The garden is a healthier, more attractive and natural  metaphor than the pie and provides a much better picture of good economic management.

The election gives us a choice between the National gardeners who respect the ability of businesses and individuals and understand the conditions which will help them flourish and the Labour/Green/NZ First/Internet Mana who don’t.

Hat tip: AE Ideas


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