Low spending, lower interest rates

June 12, 2014

Quote of the day:

Reserve Bank Governor Graeme Wheeler can only show restraint on interest rate rises if New Zealanders show restraint of their own.

This is Rob Hoskings’ introduction to a column headlined: Want low interest rates? Keep lid on spending.

We all have a role to play in that through our own spending and saving and also what we expect of government.

National has made it quite clear it won’t be doing an election-year lolly scramble.

The return to surplus hasn’t been easy and it’s not going to blow the hard-won gains by profligacy.

Opposition parties try to give the impression they accept the wisdom of careful management of public funds. But their strong attacks on every single measure National has introduced to curb spending and their propensity for big-spending promises show they don’t really mean it.

They’re wringing their hands over the Reserve Bank’s small increase in interest rates from historic lows and today’s expected rise, while not resiling from the borrow and spend policies of the noughties which pushed interest rates into double figures and led New Zealand into recession before the rest of the world.

New Zealand has recovered well from the recession, but continued good economic health requires more of the prescription of increased savings and investment and restrained spending from all of us.


Politics Daily

June 3, 2014

New Zealand Politics Daily is taking  a break.

I don’t have the time or inclination to provide the same service of a reasonably comprehensive list of links to news stories and blog posts on issues of the day.

However, I’m willing to start with a few and invite anyone who has read anything I’ve missed to add a link to it in a comment.

I won’t pretend to be balanced – there will be more links to blogs of a bluer hue. Anyone who wants the red and green end of the spectrum better represented is welcome to leave links.

John Key in Samoa

BeehiveNZ to invest $1 million into Samoa’s tourism sector:

Prime Minister John Key has today announced New Zealand will invest $1 million to help boost Samoa’s tourism sector. . .

Tova O’Brien - Pacific voters warming to National:

With large sections of New Zealand’s Pacific Island community now gravitating towards National, the battle for the Pacific vote has gone offshore. . . .

Immigration

David Farrar @ Kiwiblog – So what will Labour cut?

is claiming that it will cut migrant numbers by somewhere between 20,000 and 35,000 to get net migration from 40,000 to somewhere between 5,000 and 20,000. . .

Pete George @ Your NZ – Cunliffe still vague on immigration:

Cunliffe was interviewed about immigration on Q & A on Sunday. . .

Housing

Hannah McLeod @ Southland times - State house sales reap $4m:

Millions of dollars from state housing sales in the south could be going towards new homes in Auckland. . .

Catherine Harris @ Stuff – ‘Holistic’ plan for housing sought:

New Zealand needs a wider discussion about housing affordability and the issues that surround it such as migration, say senior figures in local government. . .

RadioNZ – Fast-track housing plan for Taruanga:

Tauranga City Council wants special rules to speed up housing developments.

 Labour Party

Andrea Vance @  Stuff – Labour MPs not happy with Mana Internet:

Senior Labour Party MPs have used social media to attack the alliance struck between Mana and the Internet Party. . .

Inventory 2 @ Keeping Stock – White-anting in Labour? Surely not…:

Is David Cunliffe being white-anted again? You’d have to wonder after reading Andrea Vance’s story on Stuff: . . .

Cameron Slater @ Whale Oil – Things are falling apart in Labour:

When something happens that isn’t going the way a political party particularly wants, they need to get together, work out a strategy, and communicate that coherently. . . .

 Isaac Davison @ NZ Herald –   Labour looks at changing $10m-for-residency scheme:

Labour is looking “very closely” at changing the rules for foreign investors who can get residency in New Zealand by paying $10 million. . .

IMP

Chris Keall @ NBR – Laila Harre NBR interview part 2: Baboom offshoring jobs; getting paid; the UFB; how she rolls:

Chris Keall – Where’s all the Baboom development taking place? . . .

Cameron Slater @ whale Oil – Internet Mana Party “a joke from the far left” – Key:

Unlike our media, John Key is refusing to take the Internet Mana Party seriously. . .

Josie Pagani @ Pundit – Say no to the cup of Te:

No way should Labour do a ‘Cup of Te’ deal.

Labour should stand up for its own strong values. . .

Danyl Mclauchlan @ Dim Post – On the logic behind a strategic loss:

Rob Salmond makes fun of Bomber, which is something we can all enjoy. But I do think that Bomber’s theory that a faction within the Labour Party would prefer a National victory in 2014 if the alternative is a Labour/Greens/New Zeland First/Mana/Internet Party government is pretty plausible. . .

Q & A @ TVNZ –  Laila Harre   interviewed by Susan Wood:

SUSAN: Long time unionist and left wing politician Laila Harre is back, she’s been a member of Labour, New Labour, Alliance, and the Greens, and now she’s taking the helm of the Internet Party, she joins me now good morning. Most political parties are built on something positive, on a movement, on beliefs. How can the Internet Mana Party which is built on yes, wanting to change a government, but an almost pathological dislike of the Prime Minister work? How can it be a force for good? . . .

Carbon Tax

Andrew McMartin @ TV3 – Carbon tax means nothing without Labour – English:

The Green Party’s carbon tax policy “means nothing” without Labour support, Finance Minister Bill English says. . . .

Peter Cresswell @ Not PC – The Greens cutting taxes?

Let’s start with the good news. . .

Lindsay Mitchell – Support for the Greens carbon tax surprises:

The Taxpayer’s Union has come out in support of a carbon tax that is revenue neutral. On balance they find it preferable to the Emissions Trading Scheme.

I wonder why we need either. . . .

Mark Hubbard @ Life Behind the Iron Drape - Green Naivety: Carbon Tax:

Julie Anne Genter is a New Zealand Green MP, and promoting the NZ Green Party policy this election year of a carbon tax, including on agriculture – dairy, initially, with other livestock to follow presumably. . .

Election

Rob Hosking @ NBR – Election 2014 – The Minors’ Strike:

The Green party must be quite relieved its conference was this weekend . . .

Scoop – Northland Leader Backs Kelvin Davis in Te Tai Tokerau:

Northland Kaumatua Rudy Taylor says Labour MP Kelvin Davis has the heart and the mana along with total support to win the seat of Te Tai Tokerau in the upcoming general election. . .

Scott Yorke @ Imperator Fish – How to win an election:

It’s all about the party vote. Electorate contests can be distracting, because in most cases they will be irrelevant to the result. A few electorate results will be critical, but only where they would allow a minor party to enter Parliament. . .

Scoop - iPredict Ltd 2014 Election Update #19: 30 May 2014:

Key Points:
• Internet Mana forecast to win 3 seats
• National expected to sneak in with minor parties’ support . . .

Christchurch

Beehive - Vodafone to anchor Innovation Precinct:

Canterbury Earthquake Recovery Minister Gerry Brownlee and Science and Innovation Minister Steven Joyce today released the spatial framework for the Christchurch Innovation Precinct and announced that Vodafone’s new South Island headquarters will anchor the precinct. . .

The Christchurch Innovation Precinct will bring together some of our most innovative people to help create an exciting and vibrant future for Christchurch. http://ntnl.org.nz/1oq447h

Education

Beehive – Budget 2014: $28.6m investment in ICT Grad Schools:

The Government will invest $28.6 million operating funding (including $11.8 million of contingencies) over the next four years in three Information and Communications Technology (ICT) Graduate Schools to help address significant high-level skills shortages in the rapidly growing ICT industry, Tertiary Education, Skills and Employment Minister Steven Joyce says. . . .

Beehive – $359m boost for student achievement moves forward:

Education Minister Hekia Parata has welcomed advice from sector leaders on the Government’s $359 million initiative to raise student achievement, saying it maintains momentum and strengthens the path forward. . .

Other

Trans Tasman – Trans Tasman Announces Government Department and Government Department CEO of The Year:

Trans Tasman’s 5th Annual Briefing Report – New Zealand Government Departments People and Policy, 2014 Edition , has announced its top performing Government Department of the Year and the best Government Department CEO. The pair is chosen by a 16 strong Independent Board of Advisers . .

Hamish Rutherford @ Reserve Bank governor named top chief executive:

A former top international banker, who stared down the Beehive with lending restrictions and official cash rates rises months from the election, is this year’s public sector chief executive of the year.  . .

Matthew Beveridge – Green Party AGM:

Queen’s Birthday Weekend was also the weekend the Green Party held their annual conference. As one would expect, there were a number of policy announcements, free doctors visits for up to 18 year olds and a change from the ETS to a Carbon Tax system. . .

Bob Jones @ NZ Herald - A message to screaming John Minto: Shut up:

If Parliament proposed a nationwide synchronisation of clocks and watches, then at a given date and time, invited everyone who’s had an absolute gutsful of the screaming skull, otherwise known as John Minto, to go outside and jump up and down for two minutes, imagine the reaction. . .

Lindsay Mitchell – More welfare changes on the way:

The government has announced a rewrite of the Social Security 1964 Act, which is a massive maze of dated legislation. . . .

Cameron Slater @ Whale Oil – Political porkies:

It seems the minor parties are able to get away with making stuff up, or flat out lying.

As a new service we will now start calling out these ratbags. . . .

David Farrar @ Kiwiblog – The new blockbuster:

It’s a poster of Dr No, you’ll have to pop over to see it.

Adam Bennett @ NZ Herald – Peters rubbishes claim he paid Harawira’s protest fine:

Current and former MPs and “ordinary people” banded together to pay the $632 fine Hone Harawira received last year for defying police at a 2012 Auckland housing protest. . 

Inventory 2 @ Keeping Stock – Pay your own fine Hone:

Hone Harawira is in trouble over trouble he was in last year. If that sounds confusing, hopefully the Herald will explain: . . .

NBR – Labour might revisit MMP’s ‘coat-tail’ provisions if elected — Cunliffe:

David Cunliffe says Labour may revisit MMP’s “coat-tail” provisions if elected . . .


Best years ahead of us

May 26, 2014

Rob Hosking makes some pertinent observations on the progressive fallacy of New Zealand’s political left.

One of the great paradoxes of New Zealand politics is that “progressives” are obsessed with the past and tradition; conservatives will breezily move on. . .

Those who believe, as a matter of faith and of self-identity, they are on the side of history tend to find it difficult to move on from lost battles.

It is not they who got it wrong, it is the voters.

Which leads, paradoxically, to New Zealand “progressives” obsession with the past: in particular, with rolling back what they call the “neoliberalism” of post-1984 New Zealand.

That is at the core of  Labour’s policy direction: it is still very much aimed at promising a better yesterday.

Government assistance for specific industries (wood processing), capital gains taxes, higher tax rates more generally, a de facto return to centralised wage fixing, intervening in the exchange rate, ministries for “social inclusion” and the like, compulsory saving … it is all about re-fighting old, lost, battles of the Norman Kirk/Bill Rowling 1972-75 government.

Which does not, somehow, seem all that progressive.

While Labour and its potential coalition partners are looking back to the past, peddling regressive policies and promising a better yesterday.

National is looking to a brighter future with progressive policies that will deliver a better tomorrow.

 

Join the campaign - ntnl.org.nz/1t0FGu4

Labour believes the best years are behind us and will try to take us backwards.

National believes the best years are in front of us and has the policies to take us forward.

Labour’s presenting pessimism.

National is providing optimism.

It’s our young that are our future and I see a very bright future ahead.


Labour no longer champion of poor

April 30, 2014

Labour once claimed to be the champion of the poor.

The monetary policy announced by its Finance spokesman David Parker yesterday is further proof that it has strayed far from that because it would hit the  poor hardest.

Labour’s plan to use New Zealanders’ retirement savings as a monetary policy tool would hit low and middle-income New Zealanders hardest, and not achieve what Labour thinks it would, Finance Minister Bill English says.

“This idea mixes up people’s own retirement savings – which require certainty over a long period – with the Government’s monetary policy, which the Reserve Bank reviews and can change every six weeks. The two are completely different and should stay that way.

“Labour’s approach will force people to save at least 9 per cent of their wages, plus more when the Government decides to up the contribution rate. This cut in take-home pay would hit hardest those low and middle-income families who are unable to save much, or who are focusing on paying their mortgages.

“Our current monetary policy settings are considered world-best practice. In the last few years we’ve come through a domestic recession and a global financial crisis and now have sustained economic growth, increasing wages and jobs and interest rates are just coming off 50-year lows.

“Labour’s ‘tool’ is a confusing solution looking for a problem. This is wishful thinking and there is no evidence it would actually work. Even if it did it would  require Kiwi families to accept a higher cost of living and higher compulsory savings at the same time, which would be a double squeeze on them.

“Labour has a recent history of over-spending in government. It should commit to spending less itself, rather than forcing householders to do the hard work for it.

“Low and middle-income earners would be paying the price for Labour’s lack of discipline,” Mr English says.

Compulsory savings isn’t going to appeal to people who have little or no spare money to save.

Compulsory savings with a variable rate which means you could be forced to save even more of the money you don’t have to spare will have even less appeal.

The idea behind the proposal is to give the Reserve bank and alternative tool to interest rates for fighting inflation.

No-one with borrowed money welcomes interest rate rises but at least most people have some control over how much they borrow and how quickly they repay it.

When interest rates go up they could choose to reduce their debt.

With compulsory savings they would have no choice about how much they pay, and no choice about reducing the amount they had to pay.

Increases in compulsory savings rate will hit everyone but interest rate rises affect  a relatively small number of people directly: *

Only  26% of single families and 55% of couples have mortgages.

Then there’s the impact on wages.

Labour’s compulsory scheme would require greater contributions from employers over time.

When working out what they can afford to pay staff it’s the total cost not where the money goes that matters so a greater contribution to KiwiSaver accounts will leave employers with less for wage increases.

Rob Hosking explains why Labour’s big tool won’t work:

. . . The  entire policy rests on the assumption a lower interest rate will also lead to a lower exchange rate. This is by no means a given. . .

The second issue is more political.

Forcing people to save more is not a costless move for them. Someone on an average income who suddenly has another chunk of their cashflow taken out of their weekly income is going to feel the pinch. . .

Forcing people to give up something is going to be fraught with political difficulty.

When it to implementation you can expect a wave of applications for exemptions, and this can be expected to lead to an administrative catscradle  and a political tangle. . .

BusinessNZ  chief executive Phil Oreilly has concerns about the workability of the policy:

. . . The proposed policy would ‘mix the targets’, he said. Instead of a sole focus on inflation, the Reserve Bank would also have to focus on achieving a positive balance of payments, stable economic growth and stable employment. This raises the risk of not achieving some or all targets.

“New Zealand’s external balance is a result of a number of factors, including over-consumption, over-regulation and inefficient government spending. It’s hard to see how the Reserve Bank can be particularly influential in changing these.”

Mr O’Reilly said there was potential for uncertainty and confusion from having different levers over interest rates and KiwiSaver rates.

“While the Reserve Bank would apparently retain control over its existing interest rate lever, it would probably need to go to the Government for the power to use the KiwiSaver savings lever each time it sought to do so. This would not only slow down the Reserve Bank’s decision-making ability, but would undoubtedly introduce politics into the decision making process. All of this would potentially add a great deal of political uncertainty to New Zealand’s macroeconomic settings.

 “New Zealand’s current Reserve Bank system is scrupulously apolitical. That is why other countries have followed our lead in monetary policy.

“Labour’s policy brings the risk of a future government politicising what has until now been an apolitical process.

“Can you imagine a future Government agreeing to a Reserve Bank recommendation to raise KiwiSaver rates three months before an election? “ Mr O’Reilly asked.

He said restricting immigration numbers as a way to reduce house prices could have negative consequences, potentially leading to wage inflation and constraints on firms unable to gain the skills they need.

“The policy announced today makes little mention of the key role played by other government policies in reducing house prices and making our economy more competitive. We note for example the recent Productivity Commission report on housing affordability which pointed to the key role played by land supply constriction in increasing house prices. ”

There would also be more uncertainty about incomes as a result of the proposed policy, he said.

“Income earners would be uncertain as to whether or not their KiwiSaver or their mortgage rates might rise, or both. This would have impact on private sector wage setting. . . “

So the policy won’t necessarily achieve it’s aim which is to reduce the exchange rate.

It would threaten the political neutrality of the Reserve Bank.

It would also leave people with less money to spend and it would leave them with no certainty over how much they would have.

Even the best budgeters are used to unexpected expenses but in the normal course of events we can all expect certainty over income.

With Labour’s proposed Variable Savings Rates, we won’t have any certainty.

It would be like being subject to possible changes in tax rates every six weeks and it’s the poorer people whom Labour used to champion who will be hurt most by that.

* Hat tip Lindsay Mitchell

 


Alt-country band rather than rock star

February 23, 2014

HSBC economist Paul Bloxham labelled our economy a rock-star one.

In the print edition of the NBR, (not on-line) Rob Hosking cautions points out the dangers in that:

New Zealand’s economic rock-star excesses of the 1970s led to a long and painful rehabilitation in the 1980s and 1990s.

New Zealand’s economy is in fact more of a good solid alt-country band – one whose members have been through rehab, kicked the worst of their nasty habits (though not all – see those household debt figures mentioned above) and which is now carving out a more mature, less over-the-top style.

It is one we should stick to.

New Zealand’s economy is growing again and it needs to keep doing so.

It’s the only way we can afford to repay debt and afford the first world goods, service and infrastructure, public and private, we want.

Falling off the responsible wagon will return us to the over-indulgence and excesses funded by over-taxing and spending which put New Zealand into recession long before the GFC.

The damage that would do would eventually require another long and painful rehabilitation and we don’t want to go back there.

Friday’s announcement that the operating deficit before gains and losses was $379 million higher than forecast shows there is no capacity for excess.

. . . “Given the large size of both the revenue and spending bases, overall we are still tracking reasonably close to forecast for the first six months of the financial year,” Mr English says. “And we remain on track to surplus in 2014/15. As we’ve said many times, this will require ongoing discipline and responsible fiscal and economic management. “New Zealand certainly doesn’t need irresponsible and expensive spending promises – which we’re already seeing from other political parties – more than a year before we’ve even posted a surplus.” . . .

What we need is more of what we’ve got – disciplined spending and policies which promote growth.


Another depositary for disenchanted left-leaning votes

January 16, 2014

The Internet Party hasn’t even been launched and it’s already getting headlines for all the wrong reasons - Whaleoil has a scoop revealing its strategy:

The strategy paper (below) reveals that Martyn Bradbury is working for Kim Dotcom and is charging him $8000 per month plus GST for political strategy, on top of a $5000 payment to allow him to upgrade his computer, cellphone and tablet devices. . .

Further, the strategy document, which Trotter so clearly expands upon, shows that Martyn Bradbury intends to stand in Auckland Central as the Internet Party candidate, and be paid for the privilege of doing so. His strategy document outlines the need to establish an office.

The media compromise:

However the subterfuge is deeper than that. Sources have revealed that Scoop Media’s General Manager Alistair Thompson is to be the Party Secretary and has already registered the domain names under the Scoop Media banner. Scoop Media is also the name server registrant for the domain name and also that of internetparty.co.nz . . .

Summary:

  • Martyn Bradbury to stand in Auckland Central
  • Martyn Bradbury on payroll for $8000 per month plus $5000 advance payment for technology upgrades
  • Graeme Edgeler produced a report, allegedly for $3000
  • Plans for so far unnamed candidate in Upper Harbour, reputedly a broadcaster.
  • Focus on Auckland Central and Upper Harbour
  • Plans to win at least 3 seats

If I was drawing up a long list of people to attract votes from the right in general and National in particular, Bradbury’s name wouldn’t be on it.

If he stands and gets any votes he’ll be getting them from the left.

This isn’t a party that is likely to threaten the right, it’s another depositary for disenchanted left-leaning votes.

It’s also one that can’t even get it’s launch right:

https://twitter.com/KimDotcom/status/423307834827100160

https://twitter.com/KimDotcom/status/423307985939492864

Presumably someone told Dotcom about that the party to launch his party would be considered treating which is an offence under electoral law.

The scoop though, is great for Whaleoil who has already  collected another scalp with it:

Journalist Alastair Thompson has resigned from internet-based news service Scoop this afternoon in the wake of claims he was to be Internet Party general-secretary and had registered a domain name.

Scoop’s controlling shareholder, Selwyn Pellett, confirmed he had not previously been aware of the extent of Thompson’s involvement with the party.

After the blog became public, Thompson tendered his resignation.

Pellett said that while he understood Thompson’s passion for internet freedom, there was a clear conflict of interest with his journalism. . . .

Cameron Slater is defending a judgement that he isn’t a journalist and therefore doesn’t have the protection journalists do in not revealing sources.

If publishing a scoop like this isn’t journalism, what is it?

Update: – tweet of the day on this issue:

https://twitter.com/robhosking/status/423290461747306496


Economic policy crucial for election

September 30, 2013

For all the sideshows and media circuses around particular policies, people and events, when it comes to elections what really matters most to most voters are the economy, education, health, welfare and security.

The ability to make significant progress in the last three depends on the first.

The economy really does matter most and, as Rob Hosking points out in the print edition of the NBR (not online), economic policy will be crucial in the election and that’s an area of tension for the opposition.

While attention has been on likely tensions between Labour and the Greens, there are also tensions within Labour – tensions between those who kind of get the importance of economic growth and those for whom it is more an academic exercise.

This group is never exactly anti-economic growth; they just view the policies required to produce that growth with a degree of disdain and, by and large, they would rather talk about climate change and taxing things more.

And Mr Parker is definitely from this wing of Labour.

With a preference for talking about climate change and taxing more, that wing has a lot in common with the Greens.

The phalanx of economic spokesperson-ships Mr Cunliffe announced on Monday is not, if labour were to form a government, just there to form a human shield around Beehive photocopiers so Russel Norman doesn’t go berserk with the currency.

It is also to balance out Labour’s own tensions.

A party with internal tensions over economic policy isn’t one best placed to run the economy.

Against this, National will have the known quantity of Mr English, who should be able to offer a return to surplus and, no doubt some election sweeteners (probably on savings and investment policy) and a track record of having got through the worst economic crisis since the 1930s in what is actually quite remarkably good shape.

That is going to be as important a match up as the John Key/David Cunliffe battle.

John Key and Bill English against Davids Cunliffe and Parker with Russel Norman wanting a major role too?

That’s sound economic policy that is working against a lurch to the left that has failed every time it’s been tried.


Greens’ bogus branding exercise

September 3, 2013

Rob Hosking describes the politicians’ initiated referendum as a bogus branding exercise for the Green Party.

If this is their brand it’s a bad one.

It says they’re a party that:

*  subverted the citizens’ initiated referendum process and turned it into a politicians’ one, funded by taxpayers.

* doesn’t care about wasting the $9 million, or more, it will cost for the referendum which will change nothing.

* is still focussed on debating an issue which was decided in the election nearly two years ago.

The Greens have been starved of publicity since the focus went on Labour and its leadership.

The referendum has got them back in the news, but this bogus branding exercise isn’t good news for them or the taxpayers who are funding it.

 

 


Word of the day

August 31, 2013

Fissiparous – tending to break up into parts or break away from a main body; tending to break into factions; factious; divisive tendencies in a political party; inclined to cause or undergo division into separate parts or groups; reproducing by biological fission.

Hat tip: Rob Hosking in dissection of the Labour Party and its three leadership aspirants in the print edition of the NBR.


Some even more unequal than others

August 28, 2013

Labour’s rules allowing affiliate unions to vote for its leader makes some members more equal than others.

Those who are both individual members of the party and a voting delegate of an affiliate union or a member of a union which will allow all its members a vote will get two votes.

Rob Hosking points out that a few members are even more unequal.

All MPs get two votes, one as a member of caucus and the second as a member of the party. But those who are members of affiliate union will get a third vote.

That is a perversion of democracy where all people are supposed to be equally equal.


Does Labour have a research unit?

July 30, 2013

Political parties get public funding for parliamentary support services.

That could and usually does include researchers.

They’re the people whose duties ought to include looking carefully at policy proposals.

Does Labour have a research unit and if so was the xenophobic policy barring all foreigners except Australians from buying houses examined by it?

If so why didn’t they see two large fish hooks spotted by a journalist and a lawyer?

Not long after the policy was announced for Rob Hosking pointed out the numbers of non-resident “foreigners” owning houses David Shearer was quoting included ex-pat New Zealanders.

Shortly after that Stephen Franks pointed out the policy almost certainly breached the Free Trade Agreement with China:

. . . Under Article 138 of the NZ China FTA (National Treatment)  all investments and activities associated with such investments made by investors of both parties must be treated, “with respect to management, conduct, operation, maintenance, use, enjoyment or disposal”  no less favourably than investments of its own investors. The list does not include “acquisition” or similar words.

So under that provision a Chinese house buyer must be treated the same as a New Zealander after acquiring residential property, but the protection does not extend to prospective buyers. Whew for Labour!

But wait – another Article (the most favoured nation clause) commits New Zealand not to pass law that discriminates against Chinese investors in comparison with other overseas investors (such as Australians).

Article 139 requires that investors of [China] be treated no less favourably than investors of any third country [Australia] “with respect to admission, expansion, management, conduct, operation, maintenance, use, enjoyment and disposal” of investments.

So Chinese would-be  investors do not get direct rights to insist on investor equality but they can’t be treated worse than Australians.

Labour has said Australians would still be allowed to buy residential property under their policy. This would breach Article 139. . .

. . . What would happen if Labour got the numbers to legislate such a policy irrespective of the FTA? Parliament can, after all, legislate contrary to international law.

There would be serious legal, economic and political ramifications. The Chinese government could invoke the dispute settlement procedures in the agreement.  NZ exporters may lose their benefits under the NZ China FTA. NZ’s international standing as a good treaty partner would suffer. . .

The FTA was signed by a Labour government , several members of which are still in the Labour caucus.

What did they have to say about the FTA and Labour’s xenophobic policy?

. . . Their Leader said this evening to NewsTalk ZB’s Susan Wood that his colleagues responsible for the China FTA tell him it was not meant to prevent NZ from barring investment it does not want.

If that was what they meant, it is not what they signed. . .

The sooo boring detail of deals that stitch us up may have eluded the politicians who actually signed them, but until they are properly understood Mr Shearer, stop digging.

Did his colleagues not understand what they signed, or did they understand but fail to explain the fine print to their leader?

Either way it reflects poorly on them.

It also raises questions about the party’s research unit. They’re the ones who are supposed to look at boring details.

Did anyone bother to run the policy past them?

If not why not?

And if so why did the researchers fail to spot the flaws uncovered so quickly by a journalist and a lawyer?

Could it be the research unit is as disillusioned and dysfunctional as the caucus?


Clark part of Auckland housing problem

July 29, 2013

The imbalance between supply and demand for houses in Auckland which is the biggest factor behind swiftly rising prices there didn’t happen overnight.

It has been building for more than a decade and local and central governments should have been addressing the issue years ago before it got this bad.

Who was leading the government for nearly a decade as the prices soared?

Oh yes, Helen Clark and she’s part of the problem of houses owned by foreigners.

Rob Hosking points out:

It’s a mark of how bogus the housing debate has become that Labour’s figures about foreign owners of New Zealand houses almost certainly include former leader Helen Clark and her four houses. . .

Labour says more than 11,000 foreigners own houses here they don’t live in.

. . . What Mr Shearer didn’t say is the figure comes from “non-resident” taxpayers who pay tax on houses they own in New Zealand.

Most of those are ex-pat Kiwis who are renting out property they own here while working overseas.

How could Labour put out a policy so badly researched?

This conversation on twitter explains it:

 

  1. Shearer’s ‘foreign investor’ figures are mostly expat Kiwis – people like Helen Clark & her four houses [PAID] http://www.nbr.co.nz/article/shearers-foreign-investor-figures-are-mostly-expat-nzers-rh-p-143493 …

     
  2. .@robhosking This is frustrating. It took you less than a day to find the holes – why aren’t Labour peer reviewing before policy release?

     
  3. @MeganCampbellNZ Own arse. Both hands. Lack of a GPS navigational device not to mention basic hand/eye co-ordination.

But it gets worse – Labour’s policy is not only based on faulty figures, it also contravenes the Free Trade Agreement with China that was negotiated by the last Labour government.

  1. Lemme get this right. Labour’s housing ban stops expat Kiwis from buying homes here but the FTA lets Chinese buy, along with Aussies? WTF?

     
  2. @BillyRalston very slightly rushed out policy, you reckon?

     
  3. @toby_etc I think someone in Shearer’s office had a brain bypass.

     
  4. @CactusKate2 @BillyRalston @toby_etc C’mon you can’t put this FAIL on the ‘office’. Good politicians ask questions &understand own policy

     
  5. @MeganCampbellNZ @CactusKate2 @BillyRalston @toby_etc EXACTLY. Blaming minions is what Aaron Gilmores of this world do, not would-be PMs.

Oh dear, faulty figures based on incomplete understanding and no idea about the FTA a Labour government negotiated – is anyone in Labour thinking?

Hat tip: Keeping Stock

P.S. – in case you think I’m guilty of Clark derangement syndrome.The post is to show Labour’s shortcomings – in government for not recognising and acting on the growing imbalance between supply and demand of houses and now for this ill-thought out policy –  not to comment on her investment decisions about which I have no criticism.


Their problems not necessarily ours

July 21, 2013

Visiting academic Robert Wade made the most of his opportunity on Q&A last week to opine about inequality in New Zealand.

He was alter forced to admit he’d been a bit sloppy and shouldn’t have included New Zealand in his view about the 1% ruling for the 1%.

He was wrong about growing inequality too. Brian Fallow writes:

The idea that New Zealand has become one of the most unequal societies in the developed world is just not supported by the data. . .

A standard measure of income inequality is a thing called the Gini coefficient; the higher it is, the greater the inequality.

Since the global financial crisis New Zealand’s has whipped around – it fell in the latest survey, reversing a jump in the one before – but the trend line through it is flat at a value of 33.

That is similar to the Gini scores of Australia, Canada and Japan, which ranged from 32 to 34, well below the United States’ 38 and a little above the OECD median of 31.

Another way of measuring income inequality is to look at the income of the top decile or 10 per cent of households (when ranked by income) and compare it with the bottom decile’s.

The average over the past four household economic surveys is that the top decile have received 8.5 times the income of the bottom one, after tax and transfers.

That puts us in the middle of the OECD rankings, and lower than Australia and Canada (8.9 times), Britain (10 times) and the United States (16 times).

The definition of income here is household disposable (or after-tax) cash income from all sources. So it includes transfer payments like New Zealand superannuation, Working for Families tax credits and welfare benefits.

The tax and transfer system dramatically reduces income inequality among the working age population compared with market incomes alone, reducing the Gini score by 22 per cent.

Again, this is similar to Australia (23 per cent) and not much worse than the OECD norm (25 per cent). . .

“For many OECD countries, lower income households tended to lose more, or gain less, than high income families,” the report says.

For New Zealand, however, there was a small gain for bottom-decile households of 1 to 3 per cent and a net fall, of around 8 per cent, for the top decile.

These facts don’t fit the narrative of a crisis of inequality which the left keep labouring.

There is poverty here but Rob Hosking points out that won’t be solved by importing solutions to other people’s problems .

Visiting academic Robert Wade brought in all the rhetoric about the “austerity” and “top one per cent” to these shores and imported them, holus bolus, into the New Zealand context.

Professor Wade later backtracked from his comments, but the important point is not a “sloppy” – to use his own description of his language – sermon from a British academic.

Rather, the important point is the way local “progressives”, as they like to call themselves, lap this stuff up. . . .

This goes further than the colonial cringe – it’s a kind of colonial S&M. Oh please humiliate us, the local anti-colonist progressives plead to their lofty offshore masters. Tell us how bad we are. Beat us, hurt us, and make us feel cheap.

Bring in all that guff about austerity measures, the top 1% of the country holding most of the wealth and making all the decisions and we’ll all just pretend we’ve got the same issues as the US or the UK.

It would not matter – apart from perhaps being a fascinating if rather hilarious study in group psychology – if it were not the fact this group then advocate importing their favourite solutions from their colonial, tenured masters northern hemisphere academia.

Fortuitously, the same week Professor Wade was titillating his local progressive followers with how dire New Zealand is the latest figures on inequality here came out.

And New Zealand is pretty well OK. Inequality isn’t growing – in fact, it has shrunk a bit in recent years – and the top 1% here get 8% of all taxable income – comparable with Sweden, Norway, France and Australia, and much lower than the UK (14%) and the US (17%). . .

So our colonised progressive movement is rather off the beam on this one and it is probably why the left in New Zealand is just not connecting with voters at present.

If you want to get elected you need to demonstrate you understand the concerns of the people you want to elect you, and that you have solutions to deal with those concerns.

Pretending the issues here are the same as the UK or the US, and getting academics in to pontificate about the solutions to deal with those other countries’ problems, is perhaps not the best way to go about this.

Nor does it seem particularly progressive.

That the left has to import other countries’ problems and solutions shows things aren’t nearly as bad here as they’re trying to paint them.

If they were they’d have plenty of local examples, supported by facts and figures and wouldn’t have to rely on those from foreign academics who have little knowledge of how things work here.


Friday’s answers

June 21, 2013

Thursday’s questions were provided by Andrei and Rob:

(1) Who wrote “All happy families resemble one another, each unhappy family is unhappy in its own way”.

And what book is this quote taken from?

(2) The ubiquitous “Wedding March” by Mendelssohn was part of his Op 61 written as incidental music – what was this written for?

(3) It is novia in Spanish, sposa in Italian, mariée in French and Невеста (nevesta) in Russian.

What is it in English?

(4) Who wrote the musical “Kiss Me, Kate” and what earlier work does it reference and mirror?

(5) The author of the quotation in the first question also wrote
“What counts in making a happy marriage is not so much how compatible you are but how you deal with incompatibility.”

Agree/disagree – do you have your own recipe for marital bliss?

1. What is a ‘brass monkey’ and why are its appendages used as a temperature gauge?

2. What is an ‘oodle’ and where and how did the plural of this word become a term for a lot of things?

3. What is a ‘great wadge’ of something and is this a measurable amount?

4. For the agriculturally minded (and completely unseasonably): hay turner, hay tedder or hay rake?

5. June 22 1982: what did Robert Muldoon do?

(nb: I only know the answer to one of these questions)

They both win an electronic sticky date pudding for stumping us all.

They can be collected by leaving the answers below.


Green’s not for growth

May 3, 2013

The Green party is soliciting funds for its election campaign with an email that says:

 . . . National’s policies of more mining, weakening environmental protections, poor economic management and growing inequality are not the recipe for a fair society and a better future.

 In contrast to National, we have the ideas to deliver a richer New Zealand. . .

Green is supposed to be the colour of growth but these Greens are really reds promoting the policies that have failed in the past.

Take their plan to bring down the exchange rate. Prime Minister John Key says currency intervention and printing money won’t work:

. . . “It didn’t work very well for Argentina, or Venezuela or Zimbabwe and it could never be done in New Zealand at the sort of magnitude we’ve seen in the United States,” said Key.

As for the New Zealand dollar versus its United States counterpart, Key used a seesaw analogy.

“It’s a bit like being a seesaw and if I weigh 85 kilos and you weigh 170 kilos, I’m going to go up when you sit on the seesaw and you’re going to go down. And that’s really the situation we’ve got at the moment.”

“We kind of weigh 85 kilos and the United States weights 850 tonnes. Right up to this point it (the US) has been very unwell. It has got everything from aids to bird flu. It has really been pretty unwell so the market’s just massively adjusting what they’re doing.”

When people say the Reserve Bank should be printing money, Key said you wouldn’t do that with base rates – the Official Cash Rate – at 2.5%.

“All you do is cut interest rates for a start off. The second thing was even if you printed money, it’s never going to work. I think they’ve printed US$5.5 trillion in the US. I mean it’s massive. So what would we print? NZ$50 billion or something? It wouldn’t make an iota of difference.”

“So my view would be I know we want to get the exchange rate down and I know it’s hurting a lot of companies. But it’s a cycle you’re going to have to ride through and all the Government can do is control the things that are in our control. So get out there and reform the Resource Management Act, make sure we don’t spend too much money, make sure we keep pressure off interest rates, manage the place well,” Key said. . . .

The reds want to increase the burden of government, their policies will lead to higher interest rates and they haven’t a clue about good economic management.

. . . Furthermore, he said intervention in the currency markets never works.

Here Key cited an example from his previous career at Merrill Lynch, where at one time he was head of global foreign exchange. One of Merrill Lynch’s biggest clients was the Bank of Japan, which used to intervene in the currency markets through Merrill Lynch.

“To tell you how bad it got, one night we were sitting there and the Bank of Japan rang up and the US$-yen was about 90 or something and they didn’t want it to go down lower. And the guy said to me ‘I want you to start buying dollars at 90′. And I said ‘how many do you want me to buy’, and he said ‘well, I’m going out for three hours so I’ll give you a yell when I get home.’ And I said ‘yeah, but how many do you want me to buy?’ And he said ‘I’m going out for three hours, don’t you understand the conversation?’

“I bought US$4.5 billion in three hours. He said ‘where is it (the US dollar-yen exchange rate)’ and I said ‘it’s 90, you bought US$4.5 billion. And he said ‘ah, well I’m off to bed now give me a ring in the morning’,” said Key.

“It never worked, it just never worked. I don’t know how much money they lost on intervention but it was massive.” . . .

Who do you believe – someone who has worked in international finance and has managed the country through the global financial crisis or people who want to print money and whose power policy would have a chilling effect on on private investment? Rob Hosking writes:

. . . There is something essentially frivolous about anyone who would cheerfully rip up the value of some of the country’s largest firms, and the value of the investment in those firms, simply for a political positioning exercise.

This is why the exchange caught by TV3 between Green energy spokesman Gareth Hughes and party spin zambuck Clint Smith was so telling.

For those who missed it, Mr Hughes was asked if the party was pleased at the reaction: Mr Hughes paused, turned to Mr Smith and asked “Hey, Clint – are we pleased?”

It was telling that he even had to ask.

But the almost palpable glee coming out of the Green and Labour camps at the destructive impact of their policy is highly revealing. 

It underlines – not for the first time – the problem with the makeup of both parties. They are dominated at the MP and the staff level by the sub-genus homo politicus.

That is, they are full of people who have done nothing in their lives apart from politics. All parties have a complement of this group, but with Labour and the Greens the group has reached critical mass.

This group has been involved in politics at university, moved from there to various political/union offices and then into parliament. 

There is little real world experience and everything is viewed through a very narrow prism of political advantage.

It’s the sort of attitude which means the value destruction seen this week can be just laughed off.

There will, unless we are careful, be more such frivolous policies to come.

I would use a far stronger word than frivolous and the business community certainly isn’t taking it lightly.

In an open letter to LabourGreen they say the policy would harm jobs, growth and investment, causing interest rates to rise, reducing KiwiSaver retirement savings and making people less well off.

. . .Business shares your concerns about constantly rising power prices and their impact on our global competitiveness. Businesses and consumers work hard every day to minimise their spending on electricity in order to stay in business and

to make their household budgets stretch further.
However, we do not think that electricity policies based on subsidies and greater state control are the right answers. Such policies have been tried in the past and have been shown to be incapable of meeting the challenges of a modern economy
with a complex, real-time electricity market.
 
Putting aside the sheer complexity of their implementation, policies that protect businesses from the full costs of the inputs they use ultimately dull the incentive to innovate and make them less, not more internationally competitive. Reducing retail
prices below the full marginal cost of production encourages households to use more than they should.
Of particular concern with the policies announced is their chilling effect on investment across the entire economy.
 
We are especially concerned at investment analyst reports noting the potential for $1.4 billion of shareholder value to be wiped off the books of the private power companies. A similar amount, if not more, will come off the value of the public power companies.
 
 
Capital destruction on such a scale will severely undermine business confidence.
It sends signals to investors, on whom the New Zealand economy relies, that their wealth and the benefits it provides are not welcome.
 
Investment plans and job creation opportunities are foregone.
 
Rather than remote and intangible, this dampening of investment intentions will have a direct and real economic impact on those of all walks of life who seek to accumulate wealth by working hard to save, invest and grow. It causes interest rates
to rise, depletes retirement savings held in KiwiSaver accounts and means that other economic opportunities such as first homes are foregone and new business ventures as savings are unexpectedly reduced.
 
Individuals are less well-off as a result.
 
With the good of all New Zealanders in mind we ask you to withdraw these damaging policies. We offer to work with you in increasing public understanding of the operation of the electricity market and in ensuring consumers, both small and large,
have better choice from one of the increasingly competitive electricity markets in the world.
 
Yours sincerely,
 
 Phil O’Reilly Chief Executive BusinessNZ
 
Ken Shirley Chief Executive Officer Road Transport Forum
 
Catherine Beard Executive Director Manufacturing NZ
 
Ralph Matthes Executive Director Major Electricity Users Group
Chris Baker Chief Executive Straterra

John Scandrett Chief Executive Officer Otago Southland  Employers’ Association

Raewyn Bleakley Chief Executive  Business Central–Wellington

Kim Campbell Chief Executive EMA

Peter Townsend Chief Executive CECC

Michael Barnett Director  New Zealand Chambers of Commerce

These people represent people who employ people, the ones who need certainty and confidence to make investment that creates jobs, earn export income and pay taxes.

These are people who work in the real world.

They know there’s nothing funny about bad policy that would take the country backwards, cost jobs and make us all poorer.

They know that Green isn’t for growth and it doesn’t mean go.

Green economic policy is bright red and it will mean stop to economic growth and job creation.


Own vision beats government’s

January 28, 2013

Quote of the day:

Individuals in a free and open society should not need politicians to articulate visions on their behalf.

What kind of shrivelled and gutless soul needs a government to set out a vision for them?

The only vision any government should require is fostering a society where each of us can pursue our own visions. That is the only vision worthy of its name.

All the rest is just politicians’ windbaggery and ego-boosting, which is funded, of course, by taxpayers . . . 

These wise words came from Rob Hosking in the print edition of the NBR.

They were written before David Shearer made his threat to run a more hands-on government but serve as a warning against state interference in matters best left to the people.


Ignorant or shameless?

January 14, 2013

Supporters of David Cunliffe criticise David Shearer for erring towards the centre rather than the left.

That says more about their place on the political spectrum than Shearer’s, but how different are the policies of the two men anyway?

Rob Hosking  says they’re not:

Nothing in Labour leader David Shearer’s Sunday speech was at odds with anything economic development spokesman David Cunliffe has been saying, not only this year but before the election, before his demotion from the finance spokesmanship. . .

But there is a problem:

. . . It should be stated that all these policies or goals are not bad in themselves. Some are highly desirable.

It is just they do not hang together as a coherent programme. Economically, they are contradictory and they will cause more problems than they solve.

And this is the first difference between the two. Mr Cunliffe is economically qualified enough to know they are incoherent and will strain against each other. Mr Shearer has no such knowledge and probably believes what he is saying. . .

What’s worse – a party leader who is ignorant of economics doesn’t understand economics or one who wants to be leader and pretends ignorance?

. . . As noted, Mr Cunliffe is economically savvy enough to know all this, and is shameless enough to peddle it to people who do not know any better. It is one of the ironies of all this that many of those who do not know any better are in the Labour Party and include its current leader. . .

Many of those who don’t know any better support the party too.

The only other reason they could favour policies which would increase spending, taxation, and welfare for people in greed rather than need is putting their short term interests before the longer term interests of the country.


Has the screech been silenced?

December 27, 2012

Rob Hosking writes it’s all in the numbers for 2013 and starts with the Labour Party:

Start the year with the calculus involved in Labour’s new electoral college: from February any leadership change will be determined by 40% of caucus vote, 40% membership vote and 20% union vote.

This need not be destabilising over the medium to long term but it will almost definitely be so in the short term. Any new voting system takes a while for people to adjust to, and the first round or two inevitably suffer from that instinctive human desire to test the limits of any new toy. This ‘what’s this button do?’ syndrome is as prevalent among political operatives as it is among children and computer users and there are inevitable scabs on knees and viruses as a result. For reference in the political sphere, examine closely New Zealand’s first MMP election in 1996, and the first few leadership changes in UK Conservative and Labour parties after they gave their members greater voting powers.

If Labour’s members were content with their caucus and leadership this would not matter so much. But Labour members so manifestly are unhappy: the 2012 conference was a screech of rage aimed at its MP. . .

Has that screech of rage been silenced or is it still fomenting?


Conspiracy theory

November 26, 2012

Finding it difficult to believe just how stupid the Labour Party constitutional changes and leadership debacle are?

What if it’s a deliberate ploy to take attention away from its policies?

Fortunately at least one journalist is on to them.

Rob Hosking writes in the NBR (not online) about former Labour Prime Minister Norman Kirk’s avoidance of economic matters and continues:

Mr Shearer appears to be similarly uncomfortable with economic issues. The focus of his speech was the symbolism of the era; what has been called “candyfloss liberalism” . . .

Labour’s new housing policy . . .  is pure 1970s feel good socialism with little regard to economic realities.

Housing will be made affordable by government fiat, by way of a national policy statement under the Resource Management Act. Implicitly, the policy requires price control either on house sales or on the building and construction industry. . .

In short, Mr Shearer presented himself as a political leader with Kirk’s wilful blindness of economic issues and Rowling’s charisma. . .

Few if any in Labour can be enjoying the attention the party’s internal strife is getting.

But they’d be even more unhappy if attention shifted from that to the economic stupidity of their policies.


Who would do better?

November 14, 2012

Richard Long ends his parting shot in Dominion Post by telling Labour to take it easy on David Shearer.

. . . He’s got what the public relations people describe as the ideal “legend” to make an outstanding Labour leader. He’s also doing better than Helen Clark in Opposition: her polling was in margin-of-error territory. Give the man a break.

What he hasn’t got is traction with the public nor any significant runs on the board against the government.

But Rob Hosking points out no-one else in his caucus has done much either.

. . . And while Mr Shearer’s performance has been somewhat ill-starred, look at the rest of the caucus.

Few have managed any substantial hits on the government. . .

. . . It can be argued Mr Shearer should be judged by the same standard he set his MPs, and by that standard there is no doubt too many opportunities have gone begging.

On the eve of Labour’s annual conference later this week, the party’s question is whether any of the alternatives could do any better.

On recent performance the answer to that question would be no.

 

 

 


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