WFF ends at 18, costs don’t

28/07/2008

One of the problems with Welfare for Families is the deterrent to earning more because of the high marginal tax rate on increased earnings. This means that most of each extra dollar earned is cancelled out by a reduction in the WFF payment.

Another problem is that the welfare payment finishes when a child turns 18, but as anyone with a student in the family will tell you, the costs of parenting don’t stop on your offsprings’ 18th birthdays.

It’s very easy to adjust to an increased income, it’s much more difficult to become accustomed to a decrease, especially when the demands on the family purse are growing.

I’m not sure what the solution to this problem is – but I am sure that it’s not extending WFF to dependent offspring beyond the age of 18


What’s in it for Wrightson?

28/07/2008

Farmers may not be sure how much they will benefit if Silver Fern Farms accepts PGG Wrightson’s offer to take a 50% stake in the company and one of the reasons is questions over what’s in it for Craig Norgate and PGW.

In the past year, the Auckland businessman with his wealthy Dunedin backers Baird and Allan McConnon have, via the rural servicing company PGG Wrightson, invested in the ailing wool and velvet industries and this month caught everyone by surprise by adding the equally vulnerable meat industry to their portfolio.

Investment capital has been rare for these three sectors and the returns far from guaranteed, so why is Mr Norgate pouring in money and assets?It certainly is not philanthropy.

Publicly, his reasoning is that if sheep and beef farmers are doing well and are more viable, they will spend more with PGG Wrightson (PGG-W), a view which has some validity. But there is also a view that it would shore up PGG Wrightson, where its livestock and wool divisions in particular were losing market share in the face of stiff competition and declining volumes.

Livestock traders established after Pyne Gould Guinness merged with Wrightson have eroded PGG-W’s share of livestock broking, while the South Island rural retail co-operative CRT last year reported a 20% increase in revenue, which many believe came at the expense of PGG-W stores.

PGW’s loss of business to its competitors might be even worse if the grape vine is correct about the number of people who are showing their opposition to the proposed investment in SFF by taking their business elsewhere.

In the deal with Silver Fern Farms (SFF), PGG Wrightson would be responsible for procuring stock to the meat company’s requirements, a role stock firms have been largely locked out of in recent years as meat companies favoured their own stock drafters.

For that role, PGG-W would be paid a commission which would boost revenue but also potentially give it access to new clients.

But SFF has said PGW wouldn’t be commission agents – bound to get the best price for the vendor – they’d be procurement agents working for SFF.

The SFF deal would be not a money-making venture in its own right. PGG-Wrightson would share in half the profits, but Mr Norgate described those as “large enough to wipe your face”.

The main benefit would be growing equity and share price in PGG-W, but if successful it could turn around ailing industries which generate nearly $6 billion in exports.

There is a view that what is needed is someone from the outside. Equally, there were those who see Mr Norgate as an opportunist, picking up major agribusiness assets for a song.

The value of SFF as measured by the PGG-W offer has been contentious, with some shareholders feeling $220 million for a half share of a company with a $2 billion turn over was too little.

This view was on the back of widespread belief that the meat industry was about to enter a prosperous period on the back of food inflation and soaring demand for meat protein from new markets such as China.

Maybe it was too little, but the capital-starved and debt-laden company was hardly in the strongest of bargaining positions.

But one of the reasons for lack of capital is because SFF capped shareholding to retain equity amongst supplier shareholders. It is difficult to understand why it was inequitable for farmers to have a bigger share in their own company when SFF is now prepared to allow outside investors to take a 50% stake in it.

There is a view among observers that Mr Norgate was satisfying an ego, an ego that was dented when he was pushed from the top job at Fonterra.

But his is not an artificial ego but one, many said, that was firmly grounded by intelligence, vision, ability and the capacity of seeing the bigger picture and relating that to people from all walks of life.

If anyone can pull off the SFF deal, many said, it would be Mr Norgate.

The agribusiness sector is all about personal relationships and the approachability of Mr Norgate will be the key if he is to succeed. But, of more importance, he has to take and retain key staff with him, those who deal with farmers on a daily basis.

That is half of the equation, and the grapevine suggests that neither PGW nor SFF agents, the ones who work with farmers, are yet convinced about the merits of a merger. The other half of the equation is the 75% of SFF shareholders who have to vote for the proposal if it is to succeed and that is a very high hurdle.


NZ 3 – Wales 0

28/07/2008

Ah well, we didn’t win the rugby in Sydney, but our shearers had a 3-0 whitewash in a test series in Wales.

The team, comprising Golden Shears and New Zealand championships winner and runner-up John Kirkpatrick, of Napier, and Paul Avery, of Toko, near Stratford, won the final test by just a point in a close and exciting 20-sheep duel at the Corwen Shears, in north Wales at the weekend.

They had scored a 10-point win the opening test at Lampeter the previous weekend, and a one-point win in the second test at the Royal Welsh Show on Thursday.

Avery, who won both the Golden Shears and New Zealand titles in 2007 before bowing to Kirkpatrick in this year’s event, completed a remarkable series of individual wins on tour by claiming the Corwen Shears open title, with Kirkpatrick second and King Country icon David Fagan third.

Shearing is often overlooked as a sport, but there is no doubting the fitness and skill of the competitors nor the excitement of a close match. Although I didn’t really appreciate this until I read the commentary of a Golden Shears final in Witi Ihimaera’s novel, Bulibasha.


Winners & losers in donations saga

28/07/2008

Gordon Campbell sorts out the winenrs and losers in the NZ First donations saga:

At half time in the Winston Peters latest scandal – which seems to involve several money trails complex enough to merit inclusion in the Winebox – likely winners are beginning to emerge. And the main beneficiary is undoubtedly….the much reviled Electoral Finance Act. If New Zealand First’s shenanigans don’t make a convincing case for cleaning up the system by which political donations were formerly made in New Zealand, then nothing will. Unfortunately, most of the nanny state mileage has already been wrung out of the EFA – but at least the Act may now be spared further pounding during the election campaign.

Most opponents of the EFA accepted there were problems with the old system which needed to be addressed. But replacing an Act with flaws with a flawed Act created more problems than it solved.

Will the whole affair end up hurting Peters? It depends in which capacity. Peters has two levels of concern : seeing NZF get over 5 % nationwide, and winning back his seat in Tauranga. I think this affair will hurt him in Tauranga by making him look even more like the old, tainted goods that he was already portrayed as by Simon Bridges, the young National candidate and former Crown prosecutor standing against him. It is less clear the affair will hurt his party’s chances of getting over the 5 % MMP threshold in the election.

How so ? Peters will spin the criticism over the donations in exactly the same way that he spins the criticisms he gets over racism. Normally, around this point in the election cycle, Peters plays his triennial race card, and will attack ‘Asian’ migration – lumping together in the process Asians of all nationalities, brown people and Arabs into the same suspect category.

The donations affair has the same media dynamic. Conveniently for Peters, the media handling of his race gambit habitually assumes that Winston’s supporters are a bunch of rednecks, waiting only for the master manipulator to throw the switch. In fact, it is the response to this criticism that lifts New Zealand First’s boat, not the racism per se. What unites NZF supporters is their tribal dislike of Peters’ opponents, who are legion, and who include the big corporates and media commentariat. The trigger that fires up NZF’s poll ratings is the sense of persecution that these voters hold in common, rather than a shared belief system.

In previous decades, they used to call this the Citizens for Rowling syndrome. It entails an elite holding forth, unaware of how much it is disliked by the people that it aims to influence and enlighten. Rob Muldoon, Peters avowed mentor, would play those kind of critiques like a violin.

Peters is equally adept at fiddling though he’s striking more than a few wrong notes with this piece.

As the race tightens, the prospect is that a National-led government may become beholden to Peters once again, jeopardising any revolutionary centre-right agenda. John Key can probably take care of his enemies – but what is he telling the boardrooms about how he proposes to handle his budding friend from Tauranga, post election? This week, Key is telling the public is that he will wait for the election result. Thereby, National will be able to blame the public for landing him with the necessity of making an arrangement with Peters. In fact, both major parties can claim a reluctance to deal with Peters in future, but invoke democracy as the rationale for doing so. Neat.

So at half time and in a Graham Henry sense, who are the winners and losers?

Winners. for the reasons stated : New Zealand First, the Electoral Finance Act, and Winston Peters as party leader. Rodney Hide, who gets to play the indignant touch judge, in a situation where neither Helen Clark nor John Key can afford to complain directly to the ref. National, who were just starting to get stick for not releasing any substantive policy, when this affair obligingly swept everything else off the political agenda.

Losers: Winston Peters, as Tauranga candidate, for the reasons stated. Also : the New Zealand Herald, and the Dominion-Post. Both newspapers railed against the EFA, and – with a straight face – have now railed against the kind of arrangements practiced by NZF ( and in all likelihood, by other political parties who were laundering anonymous donations via trusts) that made the EFA, or legislation akin to it, essential. And oh, the public.

And oh, the truth which gets buried deeper by the day.


More bad policy that’s good politics

28/07/2008

Colin Espiner sums up why National had to swallow the dead rat of Welfare for Families:

Has Key had an ideological change of heart? Unlikely. I suspect his deputy Bill English and National’s Treasury secondee have been wrestling with the numbers and concluded that it’s just too hard to unpick the scheme and replace it with tax cuts that favour the upper end of the income scale without chucking out the whole model and starting again.

And this wasn’t an option, given the current state of household budgets and rising costs. Going into an election campaign promising to take money off people, even if it was being replaced with a tax cut, was never going to be a good look. Key has decided, once again, that it’s better to swallow the short-term embarrassment of another me-too National policy than suffer a hit in the polls.

Yes, it’s opportunistic, pragmatic, realpolitik. It may make the purer bluebloods within National gnash their teeth and shake their heads. After all, isn’t WFF exactly the kind of anti-aspirational, low productivity handout that the party has always railed against?

Yes, but just like interest free student loans, bad policy is sometimes good politics and too many people are getting money from WFF to risk the electoral backlash from ditching it.


Nine to Noon on NZ First

28/07/2008

Kathryn Ryan interviewed former NZ First staffer Rex Widerstrom, Sir Bob Jones and Wayne Peters over allegations about donations to NZ First on Nine to Noon this morning.

Widerstrom said he remembers at least one conversation in which Winston Peters discussed money going in to the Spencer Trust. Sir Bob was quite clear that he was giving money to NZ First and said a journalist told him that party insiders said money given to the party had not got to it.

Wayne Peters had the same difficulty giving straight answers as his brother. Perhaps

Ryan then discussed the issues with Matthew Hooton and Laila Harre.

Harre summed it up: “The more opportunites Winston Peters has to respond to the issues and allegations the more questions that arise.”

And the more questions arise the muddier the answers become.


Alliance releases list

28/07/2008

The Alliance must still be in existance because it has released its party list.

Co-leadersKay Murray and Andrew McKenzie have the top two palces. Murray, who is also Dunedin South candidate, is a programme manager for people with disabilities. McKenzie, who is standing in Port Hills, is a barrister specialising in employment law. 

Other top ten candidates include Victor Billot, communications officer for the Maritime Union, at number 3, Alliance Party president Paul Piesse at number 4, secondary teacher Richard Wallis at number 5, postgraduate student Sarah Campbell at number 6, truck driver Bob van Ruyssevelt at number 7, University of Otago emeritus professor of Politics Jim Flynn at number 8, union organizer and postgraduate student Sarita Divis at number 9, and merchandiser Amy Tubman at number 10.

Other candidates include Wellington publisher and branding expert Jack Yan (number 12), Alliance disabilities spokesperson Chris Ford (number 22), and a young New Zealander working in the mining industry in Pilbara, Western Australia, Justin Wilson (number 23).

This is the remnants of the party which got 7.74% of the party vote and 10 MPs in 1999. But the Greens pulled out then Jim Anderton left to form whatever the party what is now the Progressive Party, leaving Laila Harre to lead the Alliance until it was defeated at the 2002 election.

We’re pretty far apart on the political spectrum, but I admire the dedication of these volunteers who are prepared to stand for what they believe in when they have no hope of getting into parliament to implement it.


Dunne throwing stones in the glasshouse

28/07/2008

Checkpoint reports that Rodney Hide and Peter Dunne say National won’t be able to afford substantial tax cuts if it leads the next government.

Their comments come in the wake of National’s decision to leave Welfare for Families unchanged.

Act has always advocated lower government spending so Hide is standing on firm ground when he criticises National. But Dunne leads the party which created the great tax-wasting Families Commission so he’s throwing stones while forgetting he’s living in a glasshouse.


Two board nominations for National list

28/07/2008

National Party President Judy Kirk has announced that the party board has nominated Melissa Lee and Steven Joyce as two of the five list-only nominations permitted by the constitution.

Lee is the host of Asia Downunder and a director of the Asia-Pacific Producers Network.

Joyce is chief executive of Jasons Travel Media and National’s campaign chair. He was the party’s general manager and campaign manager at the last election. He co-founded and was CEO of what is now Radioworks.

I was Otago electorate chair when Joyce was leading the party’s constitutional review and when he became general manager. I enjoyed his dry sense of humour which will be an asset for an MP and his experience of working with volunteers will also be very helpful.

Two sitting MPs – Georgina te Heuheu and David Carter, have already been nominated for list-only places.


Size doesn’t really matter, Bob

28/07/2008

Waitakere mayor Bob Harvey says support for a small-town politician’s bid to for the presidency of Local Government New Zealand is “brainless”.

The Sunday Star Times (not on line) says that Hastings mayor Lawrence Yule is running against Wellington mayor Kerry Prendergast. Yule’s bid is supported by the Auckland Regional Council and Environment Canterbury which Harvey labelled misguided.

“It’s a brainless stand as the largest urban authority in New Zealand to not think through what the job entails and I’m surprised and amazed at their decision. Local government will be in serious trouble if they don’t come to their sense and realise that the job is beyond the mayor of a small rural district.”

I wouldn’t call a population of 77,500 small and given the district includes the city of Hastings I’d say it’s more provincial than rural. But of course I’m biased because I live in the Waitaki District which has only 20,000 people and no cities.

However, all that’s beside the point.

What matters is not the size of the local bodies the candidates for the position represent but whether or not they have the skills for the job. I have no idea which of the two would be a better president but I take exception to Harvey’s presumption that the job is “too big for the mayor of a small rural district”.

Harvey might not realise this, but there is intelligent life in the provinces.


Paycation beats staycation

28/07/2008

National’s proposal to allow workers to trade their fourth weeks holiday for cash has attracted criticism from the usual suspects.

But our holdiay provision is generous – four weeks leave plus 11 statutory days which add up to another couple of working weeks away from work. 

That means a business employing five people has someone on holiday for more than half a year. Some businesses shut down completely so everyone has their holidays together, but that’s not possible for most. Some end up needing another person to cover those on holiday and if that’s not possible or practical other staff have to carry the load when workmates are on leave.

Another point critics of National’s policy don’t take into account is that not everyone wants all that time off. Time away from work is important for mental and physical helath, but four weeks holidays plus the 11 stat days is more than some people want or can afford.

Some people actually like going to work – a director of an agrcultural supply company told me that one of their long-serving employees was owed more than a year in holdiays and in spite of persuasion from the CEO he didn’t want to use them.

And some people don’t want a fourth week because it’s expensive – they live from pay day to pay day and can’t afford to leave home for a holiday so they’re forced to stay at home. There’s nothing wrong with holidaying at home by choice but if you do it from financial necessity it’s not so much a vacation as a staycation.

These people will benefit if National’s proposal is enacted because they’ll get an extra week’s pay – so they’ll have a paycation.

No-one will be forced to take the money rather than the holiday – the whole point of this policy is choice. Those who want a break can still have it and those who don’t can take the money- there is nothing for workers to fear in that.


Stats confirm agriculture still important

28/07/2008

NZIER economist Chris Nixon was speaking to the converted when he explained the importance of agriculture at the AGMARDT breakfast during the National Bank Young Farmer Contest.

He said that although agriculture contributes only about 5% of GDP at the farm gate that is only part of the story.

Agriculture has a major impact on downstream and upstream activities. The impact of these industries suggests that roughly 20% of GDP is directly affected by on-farm agricultural activity. These include businesses that service the farming community (downstream) and those that turn farm produce into consumer products – transport and logistics, processing, and marketing activities.

Furthermore, agriculture has a major impact on exports. Land and sea based exports are roughly 42% of exports.

 

The importance of agriculture to our economy is confirmed by a Statistics New Zealand report prepared for Fontera which showed dairy products accounted for 27% of exports earnings for the year to May and all but 2% of that was from Fonterra.

Fonterra is the world’s largest dairy exporter, fifth largest dairy company globally and trades in 140 countries. Chairman Henry van der Heyden said much of the increase had been driven by record commodity prices.

“If we hadn’t had the drought, which saw our milk production drop by around 4 per cent, the figure could have been even higher,” he said.

World economic growth and demand from emerging markets – along with reduced supply, drought in Australia and biofuel production driving up the costs of feedstock – helped drive up dairy commodity prices.

The ANZ Commodity Price Index for dairy products hit 291.9 in November, having risen for 15 consecutive months from 127.6 in August 2006. The dairy index has since fallen in all but one month to reach 256.7 in June.

“We’re seeing continued investment from farmers and in our processing capacity. That’s a huge boost, particularly for regions like Southland with a lot of new jobs and benefits flowing through,” van der Heyden said.

“It’s great that dairying is able to make such a positive and timely contribution to the New Zealand economy at a time when the broader economy is facing increasing pressure.”

It is indeed, although the best may still be ahead of us. Nixon said it takes roughly 18 months for export performance to filter through to the domestic economy so the impact of the good prices farmers are getting now won’t show up beyond the farm gate until the end of next year.


June quarter trade deficit up

28/07/2008

The seasonally adjusted trade deficit  increased to $1.9 billion for the three months to June, up from $861 million in the March quarter.

Statistics NZ says this is similar to the deficit in the June quarter last year.

Major contributers to the deficit were siginificant increase in imports of one-off capital goods (particularly oil-related) and petroleum and products, combined with a large seasonally adjusted drop in dairy exports.

The seasonally adjusted value of merchandise imports rose 8.5 percent in the June 2008 quarter (to $12.1 billion) following a flat March quarter. One-off capital imports (an oil platform, oil production vessel, and two large aircraft) were the largest contributors to this increase, added to by the highest ever quarterly value of petroleum and products imports.

The seasonally adjusted value of merchandise exports was down 0.5 percent in the June 2008 quarter (to $10.3 billion) following a 2.4 percent decrease in the March quarter. Although lower, June 2008 still has the third highest quarterly exports value on record. The latest small decrease in total exports comes despite increases in most commodity groups and is primarily the result of a large drop in dairy product exports, following on from the recent drought. Crude oil showed the most significant increase, up 56.6 percent (largely due to price rises).

In the month of June 2008, merchandise imports were valued at $3.8 billion, the highest value for a June month, up 16.9 percent from June 2007. This increase was led by crude oil with the price of crude up substantially since June 2007.

Merchandise exports were valued at $3.6 billion in June 2008, up 30.9 percent from June 2007. This is the largest percentage increase from the same month of the previous year since January 2001. The increase in exports was dominated by crude oil and milk powder, butter and cheese.  


You can fool some of the people

28/07/2008

This survey which asks do you believe Winston Peters? isn’t scientific, which is a good thing because 14.9% or respondents said yes.

It’s a self-selecting on-line survey which began on Friday – 74.3% said no and the rest were don’t knows.


Two types of women three types of blokes

28/07/2008

I thought the world could be divided into two types – those who can learn from other people’s mistakes and the other people. But if Oswald Bastable  is right perhaps my categories only apply to women because he’s found three categories for men:

There are three kinds of men: The ones that learn by reading. The few who learn by observation. The rest of them have to pee on the electric fence and find out for themselves.”

Ouch.

Hat tip: Oswald Bastable.


Banks to Shadbolt – keep hands off Auckland

28/07/2008

Tim Shadbolt says that if Auckland becomes a super city it would need a celebrity to lead it but John Banks isn’t impressed.

When pigs could fly and muttonbirds took up roost in Auckland would be the day Tim Shadbolt became mayor of New Zealand’s biggest city, Auckland Mayor John Banks said.

 The Sunday Star Times reported yesterday that Mr Shadbolt was regularly pressured to be Auckland’s mayor and he was not ruling it out. But the statement was met with a defiant retort from Mr Banks.

“I think the chances of Mr Shadbolt becoming the mayor of a super city in Auckland are about as much chance as pigs flying — and I love pigs,” Mr Banks said.

“And the problem also for Mayor Shadbolt is here in Auckland it’s not cold enough for muttonbirds.” Mr Shadbolt was ideally suited to the polar region of the country and not so well suited to the fifth best city in the world, Mr Banks said.

The second-time-around Auckland mayor said he had been elected back because he was the one to promote and execute a move to the city becoming a super city.

Auckland finds out in December whether its seven city and district councils and one regional council will be rejigged — potentially into a single local authority or an amalgamation of several existing councils — when the Royal Commission of Inquiry into Auckland Governance releases its recommendations.

Mr Shadbolt said Mr Bank’s comments were born out of insecurities.

“I used to find his comments insulting but now I’ve sort of acclimatised and know they’re born out of insecurities.”

Whether Auckland needs Tim is a moot point, but why would he want to leave Invercargill which is growing on the back of the rural upturn for Auckland which is facing recession?


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