Why Thatcher matters

Quote of the day:

. . .The reason Thatcher still matters is symbolic – symbolic but important. She ended an era of apologetic conservatism.

The accepted dynamic of democracies like the UK – and, yes, like NZ – was of two main political parties, with one the party of radicalism and change, and the other party being of consolidation and minimal change. In practice, because the party of change was always of socialist inclination, this meant an ever-Leftward policy shift towards a larger state and higher taxes.

Thatcher called this the “ratchet effect” and set her Govt towards turning the ratchet the other way. Her success was mixed, in the case of her own government. But in her wake came conservative governments with a more confident belief in values such as private enterprise, lower taxes and a smaller – well, in practice, a contained state.

This is why Thatcher still matters. Trans Tasman

 

Left don’t have monopoly on caring

The left like to think they have a monopoly on caring but Trans Tasman notes:

Although John Key’s popularity is down from its peak, it is still higher than any of his predecessors in modern times. Equally importantly his Ministers are engaging strongly with their constituencies, leaving few gaps for the Opposition to penetrate. The Govt has sustained a momentum over a range of issues, but more particularly in health, welfare, and law and order which has left no opportunity for the Opposition to identify a parallel universe where they are the party which “cares” for the downtrodden.

Voters generally accept that National is better qualified as economic managers. The party has always found it more difficult to convince them it is on the right track with social policy.

But this government is demonstrating that it has both a head and a heart.

It has increased spending on health and education with zero budgets, is focussed on reducing the long tail of educational failure, made in-roads into long-term benefit dependence, and reduced the number of prisoners and reoffending.

A government with both a head and a heart doesn’t just throw money at problems, it  addresses the causes.

It’s very difficult for an opposition to counter that.

Not intellect but real world experience

Trans Tasman observes:

The indication this week Labour would jettison one of its flagship items from the 2011 election campaign (the removal of GST on food and vegetables) underlines just how madcap the policy was in the constrained financial conditions in which the Govt has to operate. Until Labour’s younger brigade show they can compete intellectually, the Opposition will continue to trail in the polls.

You could well question the intelligence of anyone who thought that removing GST on fresh fruit and vegetables was good policy.

However, I don’t think Labour’s problem is lack of intelligence, it’s lack of real world experience.

So few of Labour’s caucus have business backgrounds, so many are former unionists or parliamentary staff.

That might have given them more than enough theories but it is no replacement for practical experience in private enterprise.

NZ not so sorry savers

New Zealanders have been accused of being poor savers for years, but are we really?

This exchange in parliament last week suggests otherwise:

David Bennett: How has household savings changed recently and what reports has he received on household wealth?

Hon BILL ENGLISH: I think, as we are familiar with, official measures show a significant improvement in the last 3 years, from dissaving of 7.1 percent of household income in 2007 to just positive household savings more recently. Alongside that, though, there is a maybe confusing report from the Reserve Bank, which has recently highlighted that in measuring household wealth its statistics exclude some important items. For instance, when it measures household wealth it does not include equity in farms. It does not include equity in shares in some businesses and commercial properties and forests, and nor does it include some types of foreign assets held by New Zealanders. It estimates that when these items are included, household net wealth is in fact $167 billion higher than it thought, or around 25 percent—that is, the Reserve Bank’s revision of the numbers indicates households may be 25 percent wealthier than they thought.

Trans Tasman offers further explanation:

. . .  The reworked figures put NZ not as an outlier among developed nations for its low rate of savings but more in the mainstream. For the best part of a generation it’s been part of the NZ economic story that Kiwis focus on housing as their main form of saving, but the revelation household wealth, following a re-estimation of non-housing assets , is more evenly balanced between property and other assets, will have implications for several major areas of Govt policy ranging from retirement to housing needs. As a result of the information from the RBNZ, Finance Minister Bill English has Treasury testing the figures and reviewing the implications.

This is encouraging, better savers have more security, more choices and are better able to look after themselves.

Better domestic savings also reduce reliance on foreign savings for investment and growth.

Government’s role in encouraging savings include policies which encourage economic growth and discourage inflation.

The first helps lift incomes and the second protects the real value of wages and savings.

SOEs put govt blanace sheet at risk

Opponents to the partial sale of state assets complain about the loss of dividends, they forget about the costs.

Trans Tasman points out the risks of state ownership:

. . .there is a harsh reality to be faced, not only with Solid Energy (what’s a Govt trying to do in owning coal mines?) but with other state-owned entities whose profitability has shrunk: think of TVNZ, NZ Post, Kordia. Not surprisingly, Solid Energy’s troubles have thrown into relief how the Govt’s balance sheet, already structurally weak, can be pushed into dangerous territory by businesses where all the risks have to be shouldered by the taxpayer.

Opponents to the sales complain that the government will lose dividend income when up to 49% of shares in an SOE are sold.

They forget the risks and costs of ownership which ultimately fall on the taxpayer.

I’d rather have my taxes pay for core government responsibilities like defence, police, infrastructure, health and welfare than investment in areas best left to the private sector.

Herstory of Waitangi

Trans Tasman has suggests the history of the Treaty of Waitangi might be being re-written as a herstory:

There’s a generation of school kids growing up under the impression the Treaty of Waitangi was signed between Governor Hobson and Titewhai Harawira.

This is not so much an indictment on our school system: more on the way Harawira manages to plant herself at the epicentre of our annual national day.

It isn’t clear quite how this happened. True, she managed to make Helen Clark cry, and for some of us there’s always a hope Titewhai – who has become a sort of Kiwi version of a fierce Wodehousian aunt as imagined by one of the more bizarrely gothic Dutch painters – would have a similar impact one of Clark’s successors. There doesn’t seem much chance with the current lot.

If she were to try such a stunt today, John Key would either declare himself relaxed about it, or just have one of his memory lapses. Labour’s David Shearer probably would not notice, unless a staffer or his autocue told him about it. NZ First’s Winston Peters and Act’s John Banks would respond with inarticulate belligerence, and United Future’s Peter Dunne probably with a milder, if more articulate, form of same.

The only ones discombobulated would be Green co-leaders Russel Norman and Metiria Turei: they are more used to being part of protests than being on the receiving end of them.

So what does Waitangi Day, our national day, tell us about ourselves – you know, apart from the fact we are suckers for being bullied by stroppy old ladies?

Well, we’re still working on this treaty stuff, and we’re not very comfortable about the whole race issue. But also we’re not ignoring it and we’re kind of muddling our way through it all, if a little noisily and apologetically.

Apropos of understanding the history of the treaty, I have to confess that I went through school under the impression it ended the land wars.

It was only when I did a New Zealand history paper at university that I learned that wasn’t the case.

Govt holds ace

The Opposition keeps telling the government to meddle with the exchange rate.

Trans Tasman points out the difficulty of doing that without causing other problems:

. . . Interest rates are at their lowest level in nearly 40 years, easing financial pressure on those with mortgages. The Govt holds an ace up its sleeve in the exchange-rate debate.

To critics who call for policies to lower the exchange rate, it can say “how would you do it: cut interest rates or raise them?”

Cuts in interest rates would increase inflationary pressure and push up house prices. Higher interest rates would attract even more speculative currency inflows, and lift the exchange rate higher. . .

Neither higher house prices nor higher interest rates would do anything to help make housing more affordable.

Not models for stellar career

Understatement of the week:

. . . This will probably only encourage Tamihere, who has been coming over like a cross between former Act MP David Garrett and former National MP Bob Clarkson. These are not really models for a stellar political career.

It came from Trans Tasman which was pointing out the peculiar silence from Labour Party MPs who twisted themselves in knots trying not to criticise Tamihere’s boorish comments on women and gays.

Fairness and equity when it suits

Trans Tasman comments on the Electoral Commission’s recommendations on MMP:

The Commission had recommended the 5% threshold be cut to 4%, and abolition of the one-seat (or “coat-tail” rule). It said the one-seat rule’s effect had been to undermine the principles of fairness and equity and the primacy of the party vote in determining the overall composition of Parliament which underpin MMP. This is because it gives voters in some electorates more power than those in others. However it is hard to argue in favour of refined principles of fairness and equity so long as separate Maori seats are retained in the NZ electoral system.

Opposition MPs are keen to support the recommendation, though Labour didn’t regard the one-seat rule as a problem when it gave them the support of Peter Dunne and those he brought in on his coat tails.

Nor will they suggest there is no longer a need for Maori seats because in that case fairness and equity won’t suit them so well.

 

 

There is a plan

The Opposition, and others who disagree with National’s strategy keep saying the government doesn’t have a plan.

It does and Trans-Tasman recognises it:

. . . In plugging away on its business growth agenda the Govt is putting down policy markers which in aggregate will add up to substantial transformation in the economic climate. Its mantra there are no quick fixes is balanced by a range of measures aimed at steadily improving the environment in which business has to work. . .

We didn’t get into the economic doldrums overnight and we won’t get out of them quickly either.

But the government is slowly but surely changing economic direction away from tax and spend and debt-fuelled spending to one based on export-led growth, savings and investment.

More tax to encourage more?

Trans Tasman makes a pertinent observation:

OK, so the Govt wants us to smoke more, which is why it has hiked the tax on tobacco, right? And the whole Kyoto, putting a price on emissions thing: it’s to encourage people to put out more greenhouse gases, isn’t it?

No?

Well consider the position of Labour and the Greens and – as of this week – whoever writes NZ Herald editorials. Apparently, according to this logic, the way to get more houses is to tax them more. Confused? They are. . .

. . .You don’t – unless your grasp of economic incentives is really skew-whiff – increase the tax on something you want more of.

There might be valid reasons for a capital gains tax – though I’m not convinced the negatives outweigh the positives.

But whoever thinks it will increase the supply of houses needs to think again. It won’t.

Wai now?

Finance Minister Bill English and State Services Minister Tony Ryall have asked the Waitangi Tribunal for more information on its findings, recommendations and supporting reasoning in its inquiry into national fresh water and geothermal resources.

“The Government wants to consider the Tribunal’s recommendations and the reasons behind them as part of its decision on the Mighty River Power share offer this year,” they say.

“As we have said, we want to act in good faith and carefully consider the Tribunal’s recommendations.

“However, we appreciate the Tribunal’s interim direction on 30 July did not make substantive findings on any of the issues it identified. So we have today asked the Tribunal to provide its recommendations and reasoning by 24 August.

“To proceed with a Mighty River share offer in 2012, ministers would need to make decisions by the first week of September.

“We would do this on the basis of all the information available to us at that time, including the Waitangi Tribunal’s memorandum of 30 July.

“However, ministers would welcome the opportunity to consider the Tribunal’s detailed findings, its recommendations and its reasoning, which we do not have at this stage.”

Not all Maori are happy about the Maori Council’s decision to take the issue of water ownership to the Tribunal.

Trans Tasman writes:

Whatever motives the Maori Council had in taking the claim to the tribunal, the fact is the Maori Council in its own cognisance does not have any “rights” either to a global water resource, or a particular lake or river. Iwi or hapu may establish an “interest,” and there has been some push-back from iwi who believe the Maori Council claim could put their individual claims at risk.

Given this it’s easy to wonder if the Council is at least as much about delaying the asset sales as it is about claims to the water.

Otherwise why (or wai) now?

Contact Energy is a private company which uses the Clutha River and has been doing so for decades.

There are private and public water schemes the length and breadth of the country which take water for personal and commercial use, many of which have been doing so for more than 100 years.

None of these have been regarded as endangering any interest Maori might have in the rivers.

Why would the partial float of Mighty River Power be any different?

Unions rule not OK

The Labour Party has agreed to constitutional changes which give unions even more power over it:

. . . Labour will adopt a similar approach to its international counterparts of an “electoral college” in which the MPs, party members and unions all get to vote.

For NZ Labour, that split will give 40 per cent of the vote to MPs, 40 per cent to members and 20 per cent to the trade union affiliates. . .

Trans Tasman points out:

. . . Labour and the teacher unions are largely the same body (and the change in the party’s way of voting for a leader announced this week, expanding it to members and to unions, is going to make Labour more, not less, beholden to the country’s school teachers).

How can a party with so little regard for true democracy in its own organisation expect to govern democratically?

Union rule and a constitution which makes some members more equal than others might be okay in the Labour Party but it is not okay for the country.

How close does Labour want to get to Greens?

Trans-Tasman asks an interesting question: how cosy will Labour and the Greens remain?

Labour’s relationship with the Greens is one of the most intriguing elements in the current Parliament. The assumption on the Left has been they are close allies certain to form the next Govt. But when it comes to the point, how far will Labour go in accepting Greens’ fundamental credo the interests of the environment rate ahead of economic development? Taking a cue from the debate now raging in Aust. . .  In NSW last week general secretary Sam Dastyari launched a scathing attack on the Greens, labelling them as “extremists, not unlike One Nation” and said he will move a resolution at the NSW Labor conference urging the party to consider giving preferences to the Greens last at the Federal election.

Julia Gillard agreed with Dastyari’s stance, saying she stands by a controversial speech she gave in April last year in which she said the Greens do not value family or work. In NZ, former PM Helen Clark steadfastly refused to include the Greens within her Cabinet during her 9 years in office. The difficulty for Labour now is whether its new leadership team has the political “smarts” Clark displayed in keeping the Greens at bay while she pursued unalloyed Labour goals.

Commentators keep pointing out that National doesn’t have many coalition partners. Labour has a potential one in the Green Party, but would they want to share the government benches with them?

MMP is designed to prevent one party getting a majority. It also puts the power in the middle which leaves Labour with a conundrum. The Green Party will take votes from its left but it could just as well scare voters from the centre who have genuine concern for the environment but not as a sugar coating for extreme left economic and social policies.

Greenwash or hogwash?

When I blogged on the release of Pure Advantage’s Green Race Report a couple do days ago I raised the problem of greenwash.

Trans Tasman has given the report a closer reading than I did and has found a little of what might be described as hogwash.

Yet another report from a Green lobby group has berated NZ’s environmental performance.The Pure Advantage group’s “Green Race Report” criticises NZ’s environmental record and argues NZ urgently needs to improve it in order to protect the “clean, green image which benefits the sale of much of what NZ produces and exports.” It follows the recent World WildLife Fund report which was said to be a “wake-up” call to NZ before the Rio+Earth summit on June 20 marking the 20th anniversary of the Rio One summit.

Like the earlier report, the latest contains a fair bit of claptrap. It claims NZ’s per capita carbon emissions are the fifth worst in the OECD, without mentioning most of the emissions come from cows which produce more than a fifth of NZ’s export earnings. It says NZ has a falling share of the energy mix coming from renewable energy, without saying NZ produces 70% of its energy from renewable sources, a much higher level than most other countries.It also says: “Perhaps worst of all, NZ’s native biodiversity is coming under increasing strain as 77% of NZ’s threatened species look set to decline” – a claim debunked by science authority Bob Brockie, who says the NZ Conservation Dept has worked wonders in protecting our plants and animals.

This selected use of facts does the cause no favours especially when among those who echoed the criticism in the report are those who oppose attempts by power companies to develop more generation from renewable sources.

Doing what we can to safeguard and enhance the environment is sensible in its own right.

There are also opportunities for businesses and the country if we do so, but let’s get our facts clear before we start.

Neither greenwash nor hogwash will help.

 

MRP “highly attractive investment”

While the Green Party is wasting money attemtping to get enough support for a Citizan’s  an MPs’ Initiated Referendum, and Labour is threatening to hold up legislation for the Mixed Ownership Model for state assets, Trans Tasman says:

Mighty River Power Looks Even More Attractive. State-owned Mighty River Power expects electricity from its latest geothermal project to be lower-cost than normally assumed for new geothermal power stations, and well below the assumed cost of new wind farms. MRP, soon to be partially privatised, says it expects the $466m Ngatamariki plant with an installed generating capacity of 82MW to produce electricity with a real longrun marginal cost less than market estimates of $80 to $85MWh. Most wind projects are assumed to require paybacks of around $100MWh. The project remains within budget and on track for commissioning in mid-2013. MRP’s success with geothermal power enhances its competitiveness in the local market and is also strengthening its international operations, both in the US and in Chile, making it a highly attractive investment proposition.

Why doesn’t the left want to allow superannuation funds, community trusts, Iwi, other groups and individuals to invest in this business?

Don’t tell me we already own it. We  don’t, the state owns it on our behalf but that is very different from having a private shareholding.

Selling a minority share of the company frees up public money for other investment, and provides a much safer investment for people than finance companies.

The loss of dividend revenue to the government will be factored into the sale price.

If some shares are bought by people or organizations from overseas that’s  welcome inwards investment and they, like all other shareholders will pay tax on any dividends.

The left are painting the sale as a loss when the state, taxpayers, shareholders and the company have much to gain from it.

It’s not all bad news

Continuing gloom on the global economic front is concerning, but closer to home Trans Tasman points out some better news:

NZers haven’t had much to celebrate in the way of economic news lately, but this week there was some cheer on hand. The deficit in the Crown accounts for the 10 months to April was $1.4bn lower than forecast, largely as a result of higher-than-expected tax, and lower-than-expected core Crown expenses. It suggests the Govt is on track for the $8.5bn deficit signalled in the Budget last month, rather than the $10bn-$12bn deficit which was on the cards as recently as February.

Higher than expected tax indicates businesses doing better which, combined with lower government spending, is an important ingredient in our economic recovery.

Tax and spend won’t work this time

One of the difficulties facing Labour is how to criticise the government’s Presbyterian approach to spending without looking profligate.

As Trans Tasman says:

The difficulty for Labour in railing against the “austerity” of the present Govt is it cannot claim fiscal responsibility if it wants to spend its way back to a new golden age.

The government has set itself a tough goal – getting back into surplus by 2014/15.

No-one is pretending that will be easy. Nor is anyone with any sense thinking that having done that the government elected in 2014 - whatever hue it might be – will have much opportunity for increased spending for some time.

Tax and spend worked for Labour through the noughties, it won’t work this time.

Provinces not buying Labour’s profligacy

Quote of the day:

Any political analyst who has taken soundings in the provinces in recent times will have noted how irrelevant Labour appears to have made itself in the life of provincial NZ. It happens to be a phenomenon not limited to NZ, as attested by the crushing defeat of Labor in Queensland and the failure of the UK Labour Party to regain its ascendancy. Labour, wherever it may be, remains associated with fiscal profligacy. Voters see a conflict between the need for budgetary stringency and fulfilling the ideals of social justice which Labour stands for. At present, in the wake of the global financial crisis, the pendulum has swung in favour of budgetary rectitude. Trans Tasman

Past profligacy, and the inability to convince people they’ve learned how stupid that is, isn’t the only reason Labour isn’t making any headway in the provinces.

What policies it has are aimed at urban voters. The party shows no sign of moving away from  the anti-farmer sentiments its politicians espoused in the last parliamentary term and has yet to dispaly any enthusiasm for policies which encourage productivity.

Context

Quote of the day:

Apparently there is a context in which making Molotov cocktails, working off IRA training manuals, and sending messages about “killing white Mother ****rs” is all harmless and above board. TransTasman