More praise for Bill

August 30, 2013

Scott Sumner at the Money Illusion on a recent trip to Australia:

. . .  I was particularly impressed with the talk given by the representative from the New Zealand government (Bill English) but will admit to knowing little about that place, other than that their people live in Hobbit-style dwellings. . .

About which, Matt Nolan opines:

. . . Whether you agree with the policies of the National party, or the specific things that Bill English has pushed through as Finance Minister, you have to admit that he has done an incredibly good job over the past five years – during an incredibly difficult time.

 This is not the first time I’ve heard people overseas sing Bill English’s praises (it is probably in double-digits now) – over here we have a Finance Minister who understands the issues, and tries to communicate them clearly.

Sure it makes it easier for me to say good things about Bill English since he doesn’t seem to be directly involved with any of National’s policies I’ve strongly disagreed with (this has been more the social welfare area) – but even if my prior beliefs were different, the fact that English has been transparent and straight up when discussing issues, and the fact he seems to strongly work to understand and work with broad expert advice about fiscal issues from around the world, tells me he has done an excellent job.

Often Finance Ministers are judged solely on the luck they faced given their time in change, so lets be honest here and admit that during a tough time Bill English and his team have done a good job.  I know this post will be particularly unpopular with a section of the readers here, but it has to be said!

I’m completely apolitical – but having a Finance Minister that doesn’t make the role about themselves, and who gives an honest appraisal of the trade-offs faced from the broad thrust of government fiscal policy, is exactly the sort of person you want. . .

It’s good to know it’s not just those of us with a blue bias who admire Bill and what he’s managed to do in very trying times.

The Auckland conundrum

November 9, 2012

If house prices are high in Auckland because more people want to live there.

And more people want to live there because that’s where the jobs are.

How do you explain the latest Household Labour Force Survey which shows higher unemployment there?

Matt Nolan says other factors are also involved in house prices.

And Lindsay Mitchell thinks that the unexpected rise in the number of job seekers could be not so much about people losing jobs but more about people becoming available for and seeking work.

If that’s the case it would show that expecting people on benefits who could work to do so is already having an impact.

However, the real measure of success will be when they find and keep the jobs.

If some of those jobs weren’t in Auckland then that might take some of the pressure of house prices too.

Wages beat inflation

February 7, 2012

Good employment news from Statistics New Zealand:

Salary and wage rates, which include overtime, increased 2.0 percent in the year to the December 2011 quarter, Statistics New Zealand said today. This rise follows a 2.0 percent increase in the year to the September 2011 quarter.

After the 2008/09 recession, annual wage rate growth in the labour cost index (LCI) dropped to a low of 1.5 percent in the year to the March 2010 quarter. Since then, the proportion of surveyed pay rates showing annual rises has grown – from 43 percent in the year to the March 2010 quarter to 56 percent in the year to the March 2011 quarter. This remained relatively stable during 2011 – including 57 percent in the year to the December 2011 quarter.

Salary and wage rates for the private sector increased 2.0 percent in the year to the December 2011 quarter. Annual growth remained steady throughout 2011. Public sector rates increased 1.8 percent in the year to the December 2011 quarter. This increase includes a 2.3 percent rise in the local government sector, the highest annual increase since a 2.5 percent rise in the year to the December 2009 quarter.

The Quarterly Employment Survey (QES), also released today, showed a rise in employment and total paid hours. For the December 2011 quarter, the seasonally adjusted number of full-time equivalent employees rose 0.6 percent, while seasonally adjusted filled jobs rose 0.5 percent. Seasonally adjusted total weekly paid hours rose 0.6 percent for the same period.

Average hourly earnings for ordinary time (ie excluding overtime) rose 2.8 percent for the December 2011 year, after rising 3.2 percent for the September 2011 year.

These aren’t big increases but given the uncertain global financial outlook it is encouraging.

Mat Nolan at the Visible Hand in Economics points out that the wage increase was higher than inflation and – who’s surprised? – people who made a fuss about wages growing more slowly than prices aren’t, or at least haven’t yet, celebrated  the positive reversal.

Stats Dept is squeaky clean UPDATED

November 9, 2011

Labour’s building and construction spokesperson Phil Twyford didn’t like the message so he attacked the messenger:

If any government department must be squeaky clean in terms of political neutrality at all times, it should be Statistics New Zealand, says Labour’s Building and Construction spokesperson Phil Twyford. . .

“There was a large slump in consents in September this year compared to September last year —- seasonally adjusted figures fell 17 per cent, including apartments, and fell 14 per cent when apartments are excluded — but the headline on the Statistics NZ press release read: Trends for new home approvals continue to rise.

Talk about spin!” Phil Twyford said. “Stats NZ’s enthusiasm could perhaps be excused in less partisan times, but during an election period when National is patting itself on the back for doing as good a job as anyone could in terms of keeping the economy ticking over, it is impossible not to see a lack of neutrality in the department’s media release. . .

Statistics New Zealand’s chief executive, Geoff Bascand, understandably took exception to this slur on the department’s neutrality:

As Government Statistician, I am fiercely protective of my statutory independence in the production and release of statistics.

Statistics New Zealand takes its responsibility seriously to explain and present statistics in a meaningful and accurate way.

Phil Twyford MP has questioned our choice to highlight the trend series of statistics in our 31 October release of Building Consents Issued: September 2011.

In this case, volatility over the past months meant that in our judgement, the trend series provided the most useful indicator of movements in building activity.

We also reported the seasonally adjusted series within the first paragraph of our media statement and our more detailed information release included the actual monthly number of building consents.

Statistics New Zealand has an obligation to release objective statistics. We will continue to do this at all times.

Phil needs to take a chill pill if a headline in a media release is sufficient to raise his ire.

If he was more interested in the truth than creating his own headlines he would have contacted Mr Bascand before making the serious accusation that the department was breaching public service neutrality.

The department is squeaky clean, its accuser is just squeaking.


He’s not just wrong on the neutrality, he’s wrong on the stats.

Matt at The Visible Hand In Economics and Alex Tarrant at both point out Twford has misunderstood the data.

Higher costs is the point – updated

May 27, 2010

Complaints that the ETS will impose higher costs on us seem to have missed the point – that’s what it’s supposed to do.

Imposing higher costs on activities which cause emissions is designed to provide an incentive to change behaviour which will lead to reduced emissions.

Matt Nolan at The Visible Hand in Economics puts it simply:

 Even if you don’t believe in global warming, we have a liability that is based on carbon emissions.  As a nation, either people who produce the carbon pay for it – or everyone pays for it through higher taxes.

So here in lies the question – do we want higher prices for carbon goods or lower incomes because of higher taxes?  Given that the liability is a function of the amount of carbon we produce, it follows that pricing carbon on the basis of this will lead to the “best” solution – no matter what political party you support.

If the cost of something rises, it doesn’t follow that consumers’ costs will increase by the same amount.

If the price of fuel and power go up, we have a choice about paying the increase or using less. Saving fuel and power will save money. 

Using less energy and using what we do use more efficiently makes economic and environmental sense whether or not you think the climate is changing.


Scrubone gets it and Kiwiblog’s post on Matt’s post has generated lots of comments.

Inflation is theft

November 20, 2009

Some things are too important for politicis – monetary policy is one of them.

But Phil Goff has turned his back on 20 years of concensus with his announcement that fighting inflation is no longer the most important priority.

“Our Reserve Bank policy targets are not well designed to produce a stable and competitive exchange rate, nor to keep interest rates as low as possible,” Mr Goff said in a speech to Federated Farmers in Wellington.

The battle against inflation was no longer the most important priority — growth and wealth creation were equally vital, Mr Goff said. . .

He might have remembered that you can’t have real growth and wealth creation with inflation if he’d read Eric Roy’s post on the National Party MP’s new blog:

In the mid eighties . . . I had just purchased an additional block next door.  The budgeted $40K surplus I calculated disappeared to a $90K deficit as interest rates soared to, in my case, 23.5% . . .

Those interest rates were driven in large part by soaring inflation.

Inflation is theft.

It erodes the real value of investment, adds to the cost of doing business and makes exports more expensive. Just look at Zimbawe.

Goff spent nine years in a government which undertook several reviews on monetary policy. He could have changed it then but did nothing, now he’s decided from opposition, where he can’t do anything, that he wants to something.

Not just one thing, but four: he wants a stable and competitive exchange rate; reduced interest rates for businesses and home owners; continued priorities of price stability and low inflation; and to guard against expectations of price rises.

Matt Nolan at the Visible Hand in economics explains the flaws in that wish-list:

So, with goal 1 they want to reduce the flexibility of NZ$ prices, which will lead to higher unemployment and a worse allocation of resources.  Furthermore, they want to keep the dollar low which implies subsidising exporters to the cost of households in the short-term.

With 2 they want to punish savers.

And with 3 and 4 they want to contradict themselves – as by limiting price flexibility and holding the exchange rate and interest rates down they WILL drive an increase in inflation expectations, dump price stability, and remove any chance of a low inflation environment.

 He has related posts here,  here and here.

Offestting Behaviour seconds that.

BK Drinkwater says reads Nolan’s posts and weep for the integrity of the Labour Party, who are leveraging public ignorance of economics to embark on a feckless campaign of populist short-termism.

Kiwiblog says if inflation gets out of control we all get poorer.

Not PC doesn’t want tinkering he wants abolition.

Federated Farmers president Don Nicolson says government spending is the root of the monetary policy problem.

Macdoctor counters some fiscal ignorance.


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