Quote of the week

28/01/2011

“New Zealand as a whole needs to save more, spend less and reduce its heavy reliance on foreign debt – and the Government is a crucial player in this,” Mr English says. “By playing its part in lifting national savings, this Government will help to keep interest rates low and build faster, ongoing economic growth.”

Bill English shows National realises what Labour doesn’t – government must be part of the solution and not continue to add to the problem.


Greed isn’t always the problem it can lead to solution

28/01/2011

Tim Worstall writing on food speculators finds that supply and demand work to prevent shortages.

We can see that, as a result of various bits of weather around the world, wheat is going to be in shorter supply than we had hoped some months back. If we all kept on consuming wheat as we had expected to some months back there’s a chance (a risk, a chance, not a certainty) that we’d run out before the next harvest(s) came in.

And we really would rather not face that medieval problem of the hungry time, when the barns are empty but the crop not yet ripe in the fields.

So, how would we avoid this? Well, the speculators are doing this for us. . .

Read the rest and reach the logical conclusion he does:

. . . Just point human greed at the problem and it gets solved.

There are those who disagree, I know, but what’s their solution? Bureaucrats?

Hat Tip: Quote Unquote


January 28 in history

28/01/2011

On January 28: 

1225 Saint Thomas Aquinas, was born (d. 1274). 

 

1457  King Henry VII, was born  (d. 1509). 

 

1521 The Diet of Worms began. 

1547 Henry VIII died. His nine year old son, Edward VI became King, and the first Protestant ruler of England. 

1573 – Articles of the Warsaw Confederation were signed, sanctioning freedom of religion in Poland.

 Original act of the Warsaw Confederation

1582  John Barclay, Scottish writer, was born (d. 1621). 

1624 Sir Thomas Warner founded the first British colony in the Caribbean, on the island of Saint Kitts

1706 John Baskerville, English printer, was born  (d. 1775). 

  

1724 The Russian Academy of Sciences was founded in St. Petersburg by Peter the Great, and implemented in the Senate decree. 

1754 Horace Walpole, in a letter to Horace Mann, coined the word serendipity

1813 Pride and Prejudice was first published in the United Kingdom.

PrideAndPrejudiceTitlePage.jpg

1820 – Russian expedition led by Fabian Gottlieb von Bellingshausen and Mikhail Petrovich discovered the Antarctic continent approaching the Antarctic coast. 

1827  French explorer Jules Sébastien César Dumont d’Urville sailed the Astrolabe through French Pass and into Admiralty Bay in the Marlborough Sounds. 

D'Urville sails through French Pass 

1833 Charles George ‘Chinese’ Gordon, British soldier and administrator, was born (d. 1885). 

Gordon Pasha as Governor of Sudan 

1841 Henry Morton Stanley, Welsh-born explorer and journalist, was born (d. 1904). 


 

1855 The first locomotive ran from the Atlantic to the Pacific on the Panama Railway. 

1855 William Seward Burroughs I, American inventor, was born (d. 1898). 

 Patent no. 388,116 on a “calculating machine”. 

1863 Ernst William Christmas, Australian painter, was born (d. 1918). 

 ‘Kilauea Caldera’, oil on canvas painting by Ernest William Christmas, 1863-1918 

 1864 Charles W. Nash, American automobile entrepreneur, co-founder Buick Company,  was born  (d. 1948). 

 1910 Buick Model 17 

1864 – Herbert Akroyd Stuart, English inventor of the hot bulb heavy oil engine, was born (d. 1927). 

  

1871 Franco-Prussian War: the Siege of Paris ended in French defeat and an armistice. 

1873 Colette, French writer, was born (d. 1954). 

 

1878 Yale Daily News became the first daily college newspaper in the United States. 

1887  Arthur Rubinstein, Polish pianist and conductor, was born (d. 1982).

1887  In a snowstorm at Fort Keogh, Montana, the world’s largest snowflakes were reported, being 15 inches (38 cm) wide and 8 inches (20 cm) thick.

1890  Robert Stroud,  American convict, the Birdman of Alcatraz, was born (d. 1963).

1896  Walter Arnold of East Peckham, Kent became the first person to be convicted of speeding. He was fined 1 shilling plus costs for speeding at 8 mph (13 km/h), thus exceeding the contemporary speed limit of 2 mph (3.2 km/h). 

1901 Wellington blacksmith, William Hardham, won the Victoria Cross – the only New Zealander to do so in the South African War. 

Hardham wins VC in South Africa 

1902The Carnegie Institution was founded in Washington, D.C. with a $10 million gift from Andrew Carnegie

1909 United States troops leave Cuba with the exception of Guantanamo Bay Naval Base after being there since the Spanish-American War. 

1912  Jackson Pollock, American painter, was born (d. 1956).

1915 An act of the U.S. Congress created the United States Coast Guard.

USCG S W.svg

1916 Louis D. Brandeis becomes the first Jew appointed to the United States Supreme Court. 

 

1917 Municipally owned streetcars began operating in the streets of San Francisco, California. 

1918  Harry Corbett, English puppeteer (Sooty), was born(d. 1989).

 

1921 A symbolic Tomb of the Unknown Soldier was installed beneath the Arc de Triomphe to honor the unknown dead of World War I.

Unknownsoldier paris.jpg

1922 Knickerbocker Storm, Washington D.C.’s biggest snowfall, causes the city’s greatest loss of life when the roof of the Knickerbocker Theater collapses. 

1929 Acker Bilk, English jazz clarinetist, was born.

1933 – The name Pakistan was coined by Choudhary Rehmat Ali Khan and is accepted by the Indian Muslims who then thereby adopted it further for the Pakistan Movement seeking independence.1934 The first ski tow in the United States begins operation in Vermont.

1935 David Lodge, English author, was born.

1935 Iceland became the first Western country to legalize therapeutic abortion.

1936 Alan Alda, American actor, writer, and director, was born.

1938 The World Land Speed Record on a public road was broken by driver Rudolf Caracciola in the Mercedes-Benz W195 at a speed of 432.7 kilometres per hour (268.9 mph).

Caracciola sits on what appears to be the back of a vehicle. A young woman sits in front of him.

1943 Dick Taylor, English musician (The Rolling Stones and The Pretty Things), was born.

1944 Susan Howard, American actress, was born.

1955 Nicolas Sarkozy, President of France, was born.

1958The Lego company patented their design of Lego bricks.

The logo for Lego, and the Lego group.

1964 A U.S. Air Force jet training plane that strayed into East Germany  was shot down by Soviet fighters near Erfurt ; all 3 crew men are killed. 

1965  The current design of the Flag of Canada was chosen by an act of Parliament. 

See adjacent text.

1977 The first day of the Great Lakes Blizzard of 1977, which severely affected and crippled much of Upstate New York, but Buffalo, NY, Syracuse, NY, Watertown, NY, and surrounding areas were most affected, each area accumulating close to 10 feet of snow on this one day.

1980 USCGC Blackthorn (WLB-391) collided with the tanker Capricorn while leaving Tampa Florida and capsizes killing 23 Coast Guard crewmembers.

USCGC-Blackthorn-WLB-391.jpg

1980  – Nick Carter, American singer (Backstreet Boys), was born.

1981 Ronald Reagan lifted remaining domestic petroleum price and allocation controls in the United States helping to end the 1979 energy crisis and begin the 1980s oil glut.

1981 Elijah Wood, American actor, was born.

1982 US Army general James L. Dozier was rescued by Italian anti-terrorism forces from captivity by the Red Brigades. 

 

1985 Supergroup USA for Africa (United Support of Artists for Africa) records the hit single We Are the World, to help raise funds for Ethiopian famine relief.

1986 Space Shuttle Challenger broke apart after liftoff killing all seven astronauts on board. 

 

2002 TAME Flight 120, a Boeing 727-100 crashed in the Andes mountains in southern Colombia killing 92. 

Sourced from NZ History Online & Wikipedia


Botany selection tweets – Jami-Lee Ross wins

27/01/2011

Progress on National’s candidate selection for the Botany by-election is on Twitter.

It’s gone to the fourth ballot and is now between Maggie Barry and Jamie-Lee Ross.

Update: Jami-Lee Ross has won.


Word of the day

27/01/2011

Giddhom – the frantic galloping of cows when plagued by flies.


The Physiotherapist’s Piano

27/01/2011

This Tuesday’s poem is The Physiotherapist’s Piano by Jenny Powell.

Other Tuesday Poems linked in the sidebar include:

Robert Burn’s poem O, Wert Thou in the Cauld Blast chosen by Kathleen Jones who includes a link to a reading of the poem.

Liberty by Edward Thomas.

Growing is Forever by Karlie Markle – an audio visual celebration of nature.

Broken Arm by Emma Barnes.

The Picnic by Sarah Jane Barnett.

Blackberry Picking written and read by Seamus Heaney.

Will You Dance with Me by Renee Liang.

Haiku “spring rain” by Kobayashi Issa.

Poetry is Fun by Susan Landry.

I Saw A J0lly Hunter by Charles Causley.

Clarity by Mary McCallum.

There are more – if you click on the first link you can find the rest yourself.

Love in the Early Winter by Jenny Powell.


Thursday’s quiz

27/01/2011

1. What does a manometer measure?

2. It’s agneau in French, agnello in Italian, reme  in Maori and cordero in Spanish, what is it in English?

3. Who said: “I could not tread these perilous paths in safety, if I did not keep a saving sense of humour.”?

4. Who wrote The Number 1 Ladies Detective Agency?

5. What are warp and weft?


Learning from history

27/01/2011

Edmund Burke said,  “Those who don’t know history are doomed to repeat it.”

The National Party does know its history and has no intention of repeating the mistakes made by the then-Labour government (in which were current Labour leader Phil Goff and Act MP Roger Douglas) when it sold state assets in the 1980s.

The proposal to sell minority stakes in a few State owned Enterprises, announced by John Key yesterday,  is a very moderate response to the very real danger posed by New Zealand’s high level of debt.

The left are scaremongering that this will mean overseas ownership but it won’t.

The government will retain a majority share and New Zealanders will be first in the queue for shares.  Among them could be Kiwi Saver providers, the Superannuation Fund and Iwi with Treaty Settlements none of which were possible buyers a couple of decades ago.

Even if they then on-sold to foreigners, and it is most unlikely all of them would, the government would still have a majority holding.

Funny how the people who oppose overseas ownership of land, (which can’t be taken away and use of which is subject to domestic laws) and minority shares in businesses, don’t seem to mind being highly indebted to foreign banks.

You don’t have to know much about history to realise that poses a far greater danger to our economy and sovereignty than selling a minority share in a few assets.


Attributes of a good MP

27/01/2011

Trusty, loyal, helpful, friendly, courteous, kind.

Those are the virtues a Guide or Scout should possess. They’re a a good start for an MP too but the successful one needs much more than that.

MPs require intelligence, confidence, common sense, diligence, flexibility, humility, versatility, energy, patience, perseverance, stamina versatility, vision and wisdom.

They must be adaptable, compassionate, decisive, dependable, fair, honest, honourable, innovative, open, polite, reasonable, tolerant and tough. They need the ability to find solutions to difficult problems and stressful situations without becoming emotionally involved and the strength to say “no” when they can’t help.

The position requires MPs to work with all sorts of people regardless of their abilities, backgrounds and views without fear or favour.

MPs need to learn how to not take personal attacks personally. A well developed sense of humour, including the ability to laugh at themselves, is essential.

They must be able to admit mistakes and apologise for them.

They need the support of family and friends who will lift them up when they’re knocked back and keep the grounded  if they start getting carried away with their own importance.

They need to be articulate, enthusiastic and persuasive. They require the ability to read quickly, understand complex and sometimes contradictory information and to sort what’s important and right from what’s not.

 MPs need to know what they believe in. They must be sure about what they will tolerate and what they won’t; what they stand for and what they stand against.

They must support the philosophy and principles of the party for which they are standing and not be like  Marilyn Waring who told Chris Laidlaw she stood for the National Party so she could get into parliament, not because she believed in it.

Supporting the philosophy and principles of the party doesn’t mean they’ll agree with every policy. They must be able to accept the need to promote policies they might not agree with and choose very carefully the rare occasions when they will not be able to do that.

Tonight 60 members of the National Party will be choosing one of five nominees who will be the candidate for Botany.

They are:  Maggie Barry, Aaron Bhatnagar, Darron Gedge, Jami-lee Ross and Edward Saafi.

I don’t know any of them well enough to have a view on who will be the best candidate.

The list of attributes isn’t exhaustive and none of the five will have all the ones I’ve mentioned. But I hope s/he has most of them because the man or woman who wins the selection will almost certainly be the next MP for the electorate.


January 27 in history

27/01/2011

On January 27:

1186 Henry VI, the son and heir of the Holy Roman Emperor Frederick I, married Constance of Sicily.

1343 Pope Clement VI issued the Bull Unigenitus.

Clemens VI.gif

1606  Gunpowder Plot: The trial of Guy Fawkes and other conspirators began, ending with their execution on January 31.

1695 Mustafa II became the Ottoman sultan on the death of Ahmed II. Mustafa rules until his abdication in 1703.

II Mustafa.jpg

1756 Wolfgang Amadeus Mozart, Austrian composer was born  (d. 1791).

1785 The University of Georgia was founded, the first public university in the United States.

1825 The U.S. Congress approved Indian Territory clearing the way for forced relocation of the Eastern Indians on the “Trail of Tears“.

 
1832  Lewis Carroll, English author, was born (d. 1898).
 
tinted monochrome 3/4-length photo portrait of seated Dodgson holding a book
 
1888 The National Geographic Society was founded in Washington, D.C..

Logo of the National Geographic Society

1908 William Randolph Hearst, Jr., American newspaper magnate, was born (d. 1993).

 

1921 Donna Reed, American actress, was born (d. 1986).

1933  Mohamed Al-Fayed, Egyptian billionaire businessman, was born.

1939 First flight of the Lockheed P-38 Lightning.

 

1941 Beatrice Tinsley, New Zealand astronomer and cosmologist , was born  (d. 1981).

1944  Nick Mason, English drummer (Pink Floyd),was born.

1944 The 900-day Siege of Leningrad was lifted.

Blokada Leningrad diorama.jpg I

1945 – World War II: The Red Army liberated the Auschwitz-Birkenau concentration camp in Poland.

1951 Brian Downey, Irish musician (Thin Lizzy), was born.

  1951 Nuclear testing at the Nevada Test Site began with a one-kiloton bomb dropped on Frenchman Flat.

November 1951 nuclear test at Nevada Test Site.jpg

1962 Peter Snell broke the world mile record  on grass at Cook’s Garden, Wanganui, in a time of 3 mins 53.4 secs.

Peter Snell breaks world mile record

 1967 Apollo 1Astronauts Gus Grissom, Edward White and Roger Chaffee were killed in a fire during a test of the spacecraft at the Kennedy Space Centre.

Apollo 1 patch.png

1967 – More than 60 nations signed the Outer Space Treaty banning nuclear weapons in space.

1968 Mike Patton, American singer (Faith No More), was born.

1973 Paris Peace Accords officially ended the Vietnam War. Colonel William Nolde was killed in action becoming the conflict’s last recorded American combat casualty.

 Signing the peace accords.

1974 The Brisbane River flooded causing the largest flood to affect Brisbane City in the 20th Century.

1979 Daniel Vettori, New Zealand cricketer, was born.

Daniel Vettori, Dunedin, NZ, 2009.jpg

1981 Tony Woodcock, New Zealand rugby union player, was born.

 1983 Pilot shaft of the Seikan Tunnel, the world’s longest sub-aqueous tunnel (53.85 km) between the Japanese islands of Honshū and Hokkaidō, broke through.

1984 Pop singer Michael Jackson suffered second and third degree burn on his scalp during the filming of a Pepsi commercial in the Shrine Auditorium.

1996 Colonel Ibrahim Baré Maïnassara deposed the first democratically elected president of Niger, Mahamane Ousmane, in a military coup.

1996 Germany first observed International Holocaust Remembrance Day.

2006 Western Union discontinued its Telegram and Commercial Messaging services.

Western Union logo

Sourced from NZ History Online & Wikipedia


Word of the day

26/01/2011

Refocillate – to restore, refresh, revive.


Lower spending, less debt, more growth

26/01/2011

Building a brighter future or returning to the failed policies of the past – these are the clear choices voters have been offered.

In contrast to Phil Goff’s promises for increased spending and borrowing, John Key is offering lower spending, less borrowing and a faster return to surpluses.

This year is about building a brighter future for New Zealanders and their families.

That is only possible if we lift the country’s economic performance, and by doing so deliver the jobs, higher incomes and better living standards New Zealanders aspire to and deserve.

That means making responsible decisions now, as the economy picks up, to increase national savings and reduce the country’s debt.

He’s trusting us to understand the need for short term restraint to give long term gains.

. . regardless of what unfolds, it is important to look through the quarter-to-quarter economic figures and focus on the longer-term challenge.

That challenge is to build a lasting recovery based on savings, exports and productive investment.

New Zealand has been through a recession and a global financial crisis. We have a chance, now the economy is gathering steam again, to build a solid platform for future growth.

If we get this right the possibilities are exciting.

Our trade is rapidly shifting towards Asia, which is growing much faster than our traditional markets in Europe and the United States.

New Zealand is a food-producing country and world demand for food is rising. Global prices for dairy, forestry, meat and other commodities are high.

We have a genuine competitive advantage in agriculture and other primary sectors. We have world-class firms engaged in high-tech manufacturing, software, film and other industries.

These are great opportunities for New Zealand.

But as a country we have to reach out and grasp those opportunities or we risk missing the boat.

The way for New Zealand to get ahead is to sell more to the rest of the world.

That means making some changes.

And why do we need changes?

Growth over the last decade was built on all the wrong things – debt, consumption, and government spending.

People borrowed heavily to buy houses and farms, property prices soared and New Zealanders felt wealthier as a result. They spent a lot on consumer goods, which led to a bubble of economic activity.

The Labour Government thought this bubble, and the tax revenue it generated, would go on forever and spent up large on permanent new spending programmes. The Government’s spending increased by more than 50 per cent in just six years.

High government and private sector consumption generated inflationary pressures, pushing up interest rates and discouraging productive investment.

High interest rates in turn led to an over-valued exchange rate which smothered the internationally-competitive sectors of the economy, like agriculture, horticulture and manufacturing.

Our exporters found it hard to sell their products at competitive prices overseas because of the high value of the dollar.

The internationally-competitive sectors of the economy actually went into recession in 2004, and experienced a 10 per cent drop in output over the next five years.

In contrast, the domestically-focused side of the economy grew strongly. Since 2004, almost 60 per cent of new jobs have been in heavily government-dominated sectors.

As a country we imported far more than we exported, leaving a gaping balance of payments deficit that persisted for year after year.

All this could never be a solid basis for growth.

Those are the  failed polices of the noughties. They didn’t work when the global economy was booming, they definitely won’t work now it’s not.

By the time the National-led Government came into office at the end of 2008 the economy was deep in recession, and inflation was the highest it had been in 18 years.

The Government’s books had been left in a mess, with Treasury projecting no end to budget deficits and government debt spiralling out of control.

As an incoming government, we moved quickly to steady the ship, help the economy through the recession and set a credible path back to surplus.

Even so, when we tally up everything the Government is spending this year, we still need to borrow $300 million a week on average to pay the bills.

In the worst of the recession, running a budget deficit was the right thing to do, as it gave much-needed support to the economy.

Now, as the economy recovers, borrowing $300 million a week is unaffordable and is holding the economy back.

It is crowding out our internationally-competitive sectors of the economy, keeping the exchange rate high, and tying up resources that could be better used elsewhere in the economy.

And this borrowing will, of course, have to be repaid in future years, with interest.

Annual interest payments on our debt will, in four years time, cost more than spending on the Police, defence and early childhood education combined.

Rising government debt adds to New Zealand’s total indebtedness to the rest of the world.

Through decades of under-saving, over-spending and over-borrowing, the public and private sectors have together built up a net foreign debt equivalent to 85 per cent of GDP.

That makes us heavily reliant on overseas lenders who can at any time decide that we are just too much of a risk. And if we can’t raise money overseas, or can only do so at a high price, we face the risk of a protracted recession, with a significant loss of jobs and a fall in the value of everyone’s homes, businesses and farms.

To put it in context, the only other developed countries with a foreign debt the size of ours are Greece, Portugal, Spain and Ireland.

That is very uneasy company indeed. And it is precisely the difficulties those countries are in that has led to Standard and Poor’s putting New Zealand on negative outlook.

So as the economy picks up, it is crucially important that our growth is not based, as it was in the 2000s, on debt, consumption and government spending but instead is built on the solid foundation of savings, exports and productive investment.

He then looks at what National has been achieved so far:

. . .  we undertook the biggest reforms of the tax system in 25 years to increase the incentives to work hard, save and invest; and to remove distortions and clamp down on loopholes. Importantly, we designed these tax changes so that they won’t result in extra government borrowing across the forecast period.

We hauled back new budget spending allowances and reduced the size of the bureaucracy.

We invested in much-needed infrastructure, to unblock the arteries of the economy.

We have progressed an ambitious free trade agenda.

And we introduced a number of regulatory changes to make it easier to do business.

But structural change in the economy does not happen overnight. It is a bit like turning a super-tanker around.

New Zealand’s economic imbalances have built up over several decades, so it will take more than a year or two to fix them.

It will take a number of years and considerable effort.

The 2009 Budget concentrated on getting through the recession as well as possible, last year’s concentrated on tax reforms and this year’s will focus on savings and investment.

Over the last year or so, New Zealand households, businesses and farms have begun to save more, spend less and borrow less as a proportion of their incomes.

This is an encouraging change of behaviour but needs to be cemented in for the long term. And government needs to stop pushing the other way.

It sounds oxymoronic but we’ll gain more from a government that spends less.

The Savings Working Group is due to present its report to the Government in a few weeks. We will consider this very carefully, including ideas around tax, KiwiSaver, and investment products.

The Government has already made tax changes that are pro-savings. We remain conscious, however, that effective tax rates on some forms of savings remain very high.

The Government is also interested in ideas that increase participation in KiwiSaver and raise national savings, but which don’t result in an ongoing and unaffordable fiscal cost, which again would have to be borrowed.

And in terms of investment opportunities, the Government is interested in the Working Group’s thoughts on how to expand the range of investment opportunities available to New Zealand savers.

It would be better for both investors and the economy as a whole if people had the confidence to save more and invest in a wider range of assets, not just in property.

These are all areas where the Government may be able to influence the level or allocation of private sector savings.

But a point which has been made to us very clearly, by the Savings Working Group and others, is that the government is itself a crucial part of the national savings equation.

The government simply has to get its finances in order if New Zealand is to achieve a long-term improvement in its economic prospects.

Therefore I am announcing today that the Government intends to borrow less in the future than is currently forecast.

That is going to involve action on two fronts – on the operating side and on the capital side of the Government’s spending.

This is very welcome news and will come from a tighter fiscal policy. Spending will increase but more slowly than forecast and the government books will return to surplus in 2014/15, a year earlier than predicted.

In particular, the Government is determined to reduce the costs of running its own business. That process has started, but the public sector is still a long way from being a lean and efficient organisation.

National will also look at longer term savings.

Crucially, this year there will be no room at all for extravagant election promises.

We are going to campaign on being responsible managers of the economy, who make the right decisions to build a platform for future growth.

Any party that wants to ramp up spending is being economically irresponsible.

The only way to spend more money is to borrow it or to raise taxes. Borrowing more would lift our debt to dangerous levels, while raising taxes would snuff out the recovery and send even more Kiwis overseas.

Which part of this does Labour not understand?

But if the government isn’t borrowing and taxing what can it do?

As a country we have to fund more of our own future.

So we need to look at where we can change the mix of assets we own – identifying where new assets are most needed and where we have more money invested than we absolutely need to.

The greatest scope to change the mix of assets lies with the government’s portfolio of commercial assets.

In particular, the sort of mixed-ownership model under which Air New Zealand operates – where the government owns most of the company but there is a minority of outside equity – gives the best of both worlds.

Under this model, the government has a controlling stake in what is a crucial piece of transport infrastructure and guarantees that it will be majority New Zealand owned. But by not owning 100 percent of the airline, the government also has capital free to invest in other assets.

This model could be extended to more of the government’s commercial assets.

As well as freeing up capital, there are three other potential benefits of a mixed ownership model.

The first is that it broadens the pool of investments for New Zealand savers, either directly themselves, or through investment funds such as KiwiSaver.

New, quality listings on the stock exchange would give “mum and dad” investors the option of putting their savings into large and proven companies, rather than relying, as is so often the case, on property investments.

The second is that the company reaps the benefits of sharper commercial disciplines, more transparency and greater external oversight.

Under the mixed ownership model Air New Zealand has been a creative and innovative company and a model corporate citizen. It has also offered some very competitive prices for air travel.

I am convinced that Air New Zealand would not be run as well, nor provide as good a service to customers, if it was owned 100 percent by the government.

And the third potential benefit is the opportunity for the companies involved to obtain more capital to grow further, without depending entirely on a cash-strapped government to support them.

For all these reasons, the Government has asked Treasury for advice on the merits and viability of extending the mixed ownership model to four other state-owned companies – Mighty River Power, Meridian, Genesis and Solid Energy.

In each case, the government would retain majority ownership and control, and the freed-up capital would be used to purchase other public assets, thereby reducing the government’s need to borrow.

The Government has also asked Treasury for advice on the merits and viability of reducing the government’s shareholding in Air New Zealand, again while retaining a majority stake.

The left will paint this as a radical wholesale sell off of state assets but it is a very moderate policy:

Only the companies I have just mentioned will be considered for a mixed ownership model. But the Government will continue to look for commercial arrangements in other areas where private involvement can help drive performance, in the way we have been doing with public-private partnerships, for example.

I can see a strong appetite from New Zealand investors for participation in a mixed ownership model. Between KiwiSaver, other managed funds, iwi, mum and dad investors and the government’s own investment arms – including the Super Fund – there is a very substantial capacity to invest in quality New Zealand assets.

We would envisage these groups being at the front of the queue in any offering, and taking the majority of any stake that was offered.

A lack of domestic investment opportunities is one of the weaknesses of our economy which will be addressed by this policy.

Ownership by New Zealand investors would of course be on top of the government’s majority stake, which is held on behalf of all New Zealanders. That majority stake would always ensure New Zealand control for the benefit of New Zealanders.

As far as possible, without compromising commercial sensitivities, the Government will publicly release the advice we receive from Treasury.

We have always been clear that if there was to be any change to our policy on state-owned assets in any way, we would seek the support of New Zealanders at an election, and that is exactly what we will do.

Our final policy will be decided prior to this year’s election, and we will seek a mandate from the electorate before proceeding with any change.

National was careful to say before the election it would not sell any assets in its first term and if that policy changed it would form part of the next election manifesto.

 It kept the promise about not selling assets and is now clearly offering voters the opportunity to accept, or reject, partial sales in the next term.

But let me be clear – we will only proceed with a mixed ownership model if it meets the following tests:

  • the Government would have to maintain a majority controlling stake by owning more than 50 per cent of the company;
  • New Zealand investors would have to be at the front of the queue for shareholdings, and we would have to be confident of widespread and substantial New Zealand share ownership;
  • the companies involved would have to present good opportunities for investors;
  • the capital freed up would have to be used on behalf of taxpayers to fund new public assets and thereby reduce the pressure on the Government to borrow; and
  • the Government would have to be satisfied that industry-specific regulations adequately protected New Zealand consumers.

In particular, I want to stress that the Government is interested in what works, not in following any particular ideology.

What works rather than ideology, that’s another refreshing contrast to the Opposition.

I want to finish by emphasising the importance of getting the New Zealand economy back on a solid and durable growth path.

We got off that path in the mid-2000s, and doing so has proven very harmful.

Getting back on the growth path again means playing to our true strengths – allowing our export industries to start expanding again, and not tying up resources in less-efficient, domestically-focused government sectors.

Increasing national savings is key to supporting this shift.

That is why the theme of this year’s Budget is going to be savings and investment.

We recognise that New Zealand’s high level of foreign debt is our biggest vulnerability.

We have asked the Savings Working Group to consider policy options to increase national savings.

But the Government is already committed to playing its part. We have to increase our own savings and reduce public sector debt.

That is why the Government is going to reduce growth in its spending, get back to surplus faster than previously indicated and look to better allocate its assets across competing uses.

This is leading by example.

Many National supporters were disappointed by the constraints the party put on what it could do this term because of promises made before the last election.

But it was important to show the electorate it could be trusted and it’s done that.

Now it’s time to ask voters to trust it again and in doing so is trusting voters to recognise there is no money for extravagant promises.

A Q&A on the asset sale policy follows this media release.


Teaching self control better than imposing restrictions

26/01/2011

Principals want restrictions on junk food sold near schools.

This is would be a desperate step which wouldn’t work.

Removing some temptation teaches the children nothing, what they need is to learn how to resist it.

That is backed up by a University of Otago study that shows self-controlled children become healthier, wealthier adults.

Young children’s self-control skills – such as conscientiousness, self-discipline and perseverance – predict their health, wealth and criminal history in later life regardless of social background or IQ, the Multidisciplinary Study shows.

The study led by Professors Avshalom Caspi, Terrie Moffitt and Richie Poulton is published in the US-based journal the Proceedings of the National Academy of Science, and offers evidence that even small improvements in self-control for children can yield reductions in costs of healthcare, welfare dependency and crime to a nation.

Professor Moffitt says the research indicates that low self-control makes children vulnerable to ‘snares’ that could have life-long impacts.

Poor diet and lack of exercise aren’t going to be solved by imposing restrictions on dairies and fast-food outlets when most of the responsibility for what children eat and do lies at home.

What do they eat for breakfast, what are they given to eat at school, what do they have when they get home , how active are they and where do they get the money to spend on junk food?

Children who have a reasonable diet and enough exercise most of the time won’t get fat on the occasional treat.

Learning to eat properly and make healthy choices is one aspect of self control and the study shows that has many benefits:

The results suggest all children – even those who already have above average self-control – could reap later rewards from universal interventions design to improve such skills.

“This is a highly uplifting message,” Ms Moffitt says. “Not only could the most vulnerable children have a better chance at a happy and healthy life; there is the potential for across-the-board benefits in personal, social and economic well-being.”

Ms Moffitt says the challenge now is to develop interventions specifically focuses on improving self-control skills that can be offered on a universal basis to young people.

I have sympathy for principals who have to deal with the behavioural and health problems in pupils who don’t eat balanced diets.

But this study shows the solution is in teaching self-control to individuals rather than imposing restrictions on businesses and their customers. 

A large part of the solution to the problem of childhood obesity isn’t restrictions on what’s sold but self-restraint over what’s eaten.

P.S.

Jim Mora interviewed Professor Richie Poulton on the self-control study and he was also interviewed on Close Up.


Another Green retiring

26/01/2011

Green Party MP Keith Locke has announced he’ll be retiring from parliament at the election.

Two of the party’s MPs – Jeanette Fitzsimons and Sue Bradford  already stepped down during this term and Sue Sue Kedgely has also announced she won’t be standing again.

That’s a lot of renewal for a wee party.


Goff fails talkback test

26/01/2011

When the Leader of the Opposition makes a speech outlining a major policy initiative in election year you’d expect it to generate discussion on talkback radio.

In spite of efforts by host Kerre Woodham to get responses to the speech Phil Goff delivered yesterday there were few takers on Newstalk ZB last night.

Between 8 and 10pm most callers talked about the suggestion junk food sales near school should be limited and almost all of the few who did discuss Goff’s speech weren’t impressed by his policies.


Tax-free income threshold too costly for little benefit

26/01/2011

Who said a tax-free threshold on income “. . .  would have only a minimal benefit for a very small number of low income earners.”?

None other than then-Finance Minister Michael Cullen before delivering his 2008 Budget:

His initial preference had been for a tax-free income threshold.

“This would have seen, for example, the first $9500 of income not attract income tax,” Dr Cullen said.

On the surface this had appeared to be an appealing idea.

“However, it became clear that it would have only a minimal benefit for a very small number of low income earners.”

Up to 90 per cent of those earning below $18,000 were on temporary low income – students and youths – or supported by benefits or superannuation.

Dr Cullen said it would deliver less assistance to low income workers than the $3.7 billion cost in the third year warranted, and he “would be unable to provide meaningful relief for those further up the income scale”.

If the costs outweighed the benefits of a tax-free threshold of $9,500 in 2008 how can the benefits of the lower threshold proposed by Labour leader Phil Goff justify the costs now?

Dr Cullen also rejected calls for removing GST on food and petrol saying it would make the tax system inefficient and any gains would be quickly wiped out.

Goff was a senior member of the same Cabinet in which Cullen served.

Even if his duties as Trade Minister took him overseas when Budgets were being set, Goff must have known about options and justifications for choices.

If removing GST on all food and petrol wasn’t a good idea in the last Labour government, tinkering at the edges of that policy by taking GST off fresh fruit and vegetables wouldn’t achieve enough to jsutify the costs in the next one.


January 26 in history

26/01/2011

On January 26:

340  King Edward III of England was declared King of France.

1500  Vicente Yáñez Pinzón became the first European to set foot on Brazil.

1531  Lisbon was hit by an earthquake–thousands died.

1564 The Council of Trent issued its conclusions in the Tridentinum, establishing a distinction between Roman Catholicism and Protestantism.

1565 Battle of Talikota, between the Vijayanagara Empire and the Islamic sultanates of the Deccan, led to the subjugation, and eventual destruction of the last Hindu kingdom in India, and the consolidation of Islamic rule over much of the Indian subcontinent.

1589  Job was elected as Patriarch of Moscow and All Russia.

1699  Treaty of Carlowitz was signed.

 Poland after the Treaty of Karlowitz
1700 A magnitude 9 Cascadia Earthquake took place off the west coast of the North America.

1714 Jean-Baptiste Pigalle, French sculptor, was born (d. 1785).

1722 Alexander Carlyle, Scottish church leader, was born  (d. 1805).

1736 Stanislaus I of Poland abdicated his throne.

1788 The British First Fleet, led by Arthur Phillip, sailed into Port Jackson (Sydney Harbour) to establish Sydney, the first permanent European settlement on the continent.

ArthurPhilip.jpg

1808 Rum Rebellion, the only successful (albeit short-lived) armed takeover of the government in Australia.

The arrest of Bligh propaganda cartoon from around 1810.jpgA contemporary propaganda cartoon of Bligh’s arrest produced to show Bligh as being a coward[1]

1813 Juan Pablo Duarte, Dominican Republic’s founding father, was born  (d. 1876).

1838 Tennessee enacted the first prohibition law in the United States.

1841 The United Kingdom formally occupied Hong Kong.

1844 Governor Fitzroy arrived to investigate the Wairau incident

Governor FitzRoy arrives to investigate Wairau incident
 

1855 Point No Point Treaty was signed in Washington Territory.

1857 Trinley Gyatso, Tibetan, The 12th Dalai Lama, was born .

12thDalai Lama.jpg

1880 Douglas MacArthur, American general, was born (d. 1964).

MacArthur Manila.jpg

1885 Troops loyal to The Mahdi conquered Khartoum.

1892 Bessie Coleman, American pioneer aviator, was born  (d. 1926).

1904  Seán MacBride, Irish statesman, Nobel Prize Laureate, was born  (d. 1988).

1905 The Cullinan Diamond was found at the Premier Mine near Pretoria.

 Glass copies of the nine diamonds cut from the Cullinan

1905 Maria von Trapp, Austrian-born singer, was born  (d. 1987).

1907 The Short Magazine Lee-Enfield Mk III was officially introduced into British Military Service, and remains the oldest military rifle still in official use.

SMLE Mk III.jpg

1908  Stéphane Grappelli, French jazz violinist, was born  (d. 1997).

1911 Glenn H. Curtiss flew the first successful American seaplane.

1911 – Richard Strauss‘s opera Der Rosenkavalier debuted at the Dresden State Opera.

1913 Jimmy Van Heusen, American songwriter, was born  (d. 1990).

1918 Nicolae Ceauşescu, Romanian dictator, was born (d. 1989).

1920 Former Ford Motor Company executive Henry Leland launchedthe Lincoln Motor Company which he later sold to his former employer.

1922 Michael Bentine, British comedian and founding member of The Goons, was born  (d. 1996).

1924 St.Petersburg was renamed Leningrad.

1925  Paul Newman, American actor, philanthropist, race car driver and race team owner, was born  (d. 2008).

1930 The Indian National Congress declared 26 January as Independence Day or as the day for Poorna Swaraj (Complete Independence) which occurred 20 years later.

1934 The Apollo Theater reopened in Harlem.

1934 – German-Polish Non-Aggression Pact was signed.

1939 Spanish Civil War: Troops loyal to nationalist General Francisco Franco and aided by Italy took Barcelona.

The El Campesino directing Republican soldiers at Villanueva de la Canada.jpg

1942 World War II: The first United States forces arrived in Europe landing in Northern Ireland.

1945  Jacqueline du Pré, English cellist, was born  (d. 1987).

1950 The Constitution of India came into force, forming a republic. Rajendra Prasad was sworn in as its first President. 

1952  Black Saturday in Egypt: rioters burnt Cairo’s central business district, targeting British and upper-class Egyptian businesses.

1955  Eddie Van Halen, Dutch musician (Van Halen), was born.

1957 Bubble wrap was invented by Alfred Fielding and Marc Chavannes.

Bubble Wrap Logo

1958 Japanese  ferry Nankai Maru capsised off southern Awaji Island, 167 killed.

1958 Ellen DeGeneres, American actress and comedian, was born.

Ellen DeGeneres (2004).jpg

1961 Janet G. Travell  becamethe first woman to be appointed physician to the president (Kennedy).

1962  Ranger 3 was launched to study the moon.

Ranger 3

1965  Hindi became the official language of India.

1978  The Great Blizzard of 1978, a rare severe blizzard with the lowest non-tropical atmospheric pressure ever recorded in the US, struck the Ohio – Great Lakes region with heavy snow and winds up to 100 mph (161 km/h).

1980 – Israel and Egypt established diplomatic relations.

1984 Floods devestated Southland.

Floods devastate Southland
 

1988  Andrew Lloyd Webber‘s The Phantom of the Opera had its first performance on Broadway at the Majestic Theatre.

1991  Mohamed Siad Barre was removed from power in Somalia, ending centralized government, and was succeeded by Ali Mahdi.

1992  Boris Yeltsin announced that Russia would stop targeting United States cities with nuclear weapons.

1998 Lewinsky scandal: On American television, U.S. President Bill Clinton denied having had “sexual relations” with former White House intern Monica Lewinsky.

2001 An earthquake in Gujarat, India, killed more than 20,000.

2004 President Hamid Karzai signed the new constitution of Afghanistan.

2004 – A decomposing  whale exploded in Tainan, Taiwan.

2005 – Glendale train crash: Two trains derailled killing 11 and injuring 200 in Glendale, California.

DC200501261006439933.jpg
 

Word of the day

25/01/2011

Slangevar – cheers, good health.

Hat tip: Gravedodger


Goff prescribes more of what made us sick

25/01/2011

Labour leader Phil Goff is promising to make the first $5,000 income tax free if Labour wins power.

At least that’s the line with which he’s attempting to tempt voters.

But it pays to read the fine print:

It would introduce an across the board ‘tax free zone’ so earners paid no tax on up to their first $5000 earnings, at an estimated cost of $1.3 billion.

Although likely to be initially introduced at a lower level, Labour would look to increase that zone to reach $5000 during its first term in government.

The operative words are  on up to their first $5,000 and  likely to be initially introduced a a lower level, Labour would look to increase that zone to reach $5,000 . . .

On up to. . .   likely . . .  would look to . . . means this isn’t a set-in-concrete-we-will-definitely pledge it’s an we’d-like-to-with-ifs-and-buts-and-maybes-goal-we’re-aiming-at apology for policy.

It’s also very, very expensive. Proposals to increase in the top tax rate and put more effort into countering tax evasion will go nowhere near covering the cost:

Labour’s so-called state of the nation speech today is an irresponsible and very expensive recipe for a huge amount of extra borrowing, Finance Minister Bill English says.

“Labour has clearly learned nothing from the failed policies of its previous term, when New Zealand’s net liabilities to the rest of the world soared to more than $170 billion and we ran the highest balance of payments deficit in the developed world,” Mr English says.

“When the incoming National Government took office, we faced an economy deep in recession before the rest of the world and Treasury forecasts of never-ending deficits and ever-increasing Government debt.

“Phil Goff has today confirmed he wants to jump back on the conveyer belt of more debt and higher taxes. His recipe will do nothing to help lift New Zealand’s national savings – it will do precisely the opposite. In fact, it will discourage savings and encourage property speculation.”

By Labour’s own calculations, making the first $5000 of income tax-free for all taxpayers plus taking GST of fresh fruit and vegetables would cost more than $1.5 billion a year – with much of the benefit going to high income earners.

On the hand, increasing the top personal tax rate on incomes above, say, $120,000 and ring-fencing property losses would raise only $440 million.

“And that’s the shortfall from just two of Labour’s promises. They also want to restore research and development tax credits (annual cost $330 million); introduce paid parental leave to 18 weeks ($50 million); increase Working for Families for under twos (unknown cost) and not take dividends from State-owned power companies $700 million).

“It’s telling that Phil Goff would not spell out precisely where all this money will come from. It’s now abundantly clear that he will have to borrow it and increase taxes – and New Zealand can’t afford it.

“I’m sure New Zealanders will be interested to know that despite all the rhetoric, Labour still stands for more debt and higher taxes. By contrast, this Government stands for responsible management of the economy.”

 Goff’s prescription is for more of  the same medicine which made the economy sick.

It didn’t work when the rest of the world was economically healthy, it will do even more harm now it’s ailing.


Should we verb?

25/01/2011

The use and misuse of language occupied my discussion with Jim Mora on Critical Mass today.

 To verb or not to verb? That was the question posed by Anthony Gardner in you’ve been verbed.

It introduced me to the verb to handbag – to hit with a handbag; attack verbally or subject to criticism – which is attributed to Margaret Thatcher.

Michael Holroyd writes in The Guardian that the war against cliché has failed.

He concludes:

 So I try to quell my indignation, lower my blood pressure and keep a lookout for developments of language that are precise, witty, useful and have aesthetic value. Have you noticed any lately?

I haven’t.

Ben Yagoda writes about the elements of clunk in the Chronicle of Higher Education.

I was amused to read him lamenting the influence of Britishisms when so often those of us more accustomed to British English lament the way Americanisms have infected our spelling and grammar – the missing u  in favour and labour; the missing l in jewellery and travelled and my pet hate gotten when if it’s really necessary – and often it isn’t – got is all that’s required.


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