Lief – happily, gladly; willing; desirous; dear; beloved; treasured, valued.
Mr Parker couldn’t answer a simple question today on how much KiwiSaver contributions would have to go up for wage and salary earners in order to stop a 1% rise in interest rates.
“Surely you must be able to answer that question. If you can’t, it’s not a policy, it’s not even an idea, it’s just a David Parker thought bubble.
“It’s simply not thought through,” Mr Joyce says.
Mr Joyce says a 1 per cent increase in KiwiSaver contributions is only likely to generate about $400 million of net new savings.
“My estimate is it would take roughly $2.5 billion in extra savings to keep the OCR 1 per cent lower. Labour would need to take another 6 per cent of people’s pay packets off them and put it into KiwiSaver to avoid a 1 per cent increase in interest rates. Given they already want people to save 9 per cent, that would whack it through to 15 per cent,” Mr Joyce says.
“But it’s not my estimate that’s important on this one, it’s David Parker’s. Where are his numbers? What are his calculations? All he’s done so far is mumble about how complicated it is.
Mr Joyce says Parker’s KiwiSaver interest rate jack-up idea would simply force all KiwiSavers to spend a lot less of their own money just to avoid putting up interest rates for other borrowers.
“Housing is less than half of New Zealanders’ debt. The rest is companies, credit card holders, farmers, councils, government agencies and so on. Effectively he’d be telling businesses and councils to carry on borrowing and spending regardless because wage and salary earners will do all the belt-tightening for them,” Mr Joyce says.
Let’s not forget central government spending which put so much pressure on interest rates last time Labour was in government.
“The strength of using interest rates to control inflation is that it affects all borrowers equally and encourages all savers equally. Under the Parker Plan, wage and salary earners would be completely squeezed and everyone else would continue on regardless. The Reserve Bank Governor would end up putting interest rates up anyway.
“And that’s not all. Respected economists have this week said that if this idea does anything it would increase bank profits, increase house prices faster, and force people to buy overpriced shares with their savings.
“New Zealanders know the New Zealand economy is currently one of the best performing in the western world. And it’s National’s consistent and sensible economic policies that are helping achieve that.”
David Farrar has worked out how much people’s take home pay would drop if they were compelled to save more:
. . . So what does that means if you are on say $60,000 a year. It means your take home pay will drop by $3,600 a year or a massive $70 a week to stop interest rates rising by 1%.
A drop of $70 a week would put considerable strain on most people’s budgets.
Now you may not even have a mortgage. Most people do not. Everyone who does not currently have a mortgage will have their take home pay slashed.
But what if you do have a mortgage. Say you have $300,000 owing on it. Let’s say the VSR means your interest rate is at 6% instead of 7%. What difference does that make to your weekly repayments? At 7% a $300,000 20 year mortgage costs you $536 a week. At 6% it is $495 a week so that saves you just $41 a week.
If you’re very wealthy, you’ll benefit from this policy. If your mortgage is say $1 million you’ll save $136 a week and your KiwiSaver contributions won’t increase as you’re self-employed.
If this policy worked, and there’s strong doubts about that, it would help wealthy people with mortgages and other loans at the expense of those without them.
It would make budgeting difficult for middle income wage earners and harder still for the poor.
It’s hard enough dealing with cost increases, having to cope with income decreases at the same time would be the last straw for many.
So says Tihoi, Lake Taupo, farmer Mike Barton, who with his wife Sharon this year won the top award in Waikato in the Ballance Agri-Nutrients awards contest.
They have taken a leadership role in dealing with Environment Waikato’s controversial Variation 5 that severely limits the amount of nitrogen a farm can leach. . .
Dr Alec Mackay, AgResearch, told farmers attending the field day to look at their properties as “assemblages of a diversity of landscape units,” rather than just one big farm. In the past, people have talked more about average numbers but McKay says this fails to address the reality that parts of a farm differ from each other and need to be treated or managed differently. Better to see a farm as smaller units and see what ‘contribution’ each makes to the business.
“There are opportunities to increase the profitability and performance of a farm by moving away from making average decisions on an average basis across the farm and going out and interrogating the land that makes up the farm. . .
Farmers and environmentalists alike are touting the benefits of planned aerial bovine tuberculosis (TB) control operations this winter in Waipunga near the Taupo to Napier highway. Dennis Ward, of Ngatapu Station, fits into both groups and is also a keen recreational hunter.
“When you look at the practicalities of 1080 in improving the quality of life of our native species, it’s a no brainer. People don’t appreciate that possums, stoats, ferrets and rats do more to decimate our native bird populations than anything else,” said Mr Ward.
He said scientific research has shown the positive effects of 1080 on native birds and forests. “The evidence has convinced me that it is the best method for use, particularly in rugged terrain like the Waipunga area, where ground control is impractical.” . . .
Associate Primary Industries Minister Jo Goodhew has visited the wind ravaged West Coast today to experience first-hand the impact on local communities.
“The severe winds on last Thursday have affected the indigenous and plantation forests, as well as the wider agriculture sector from Karamea to Haast,” says Ms Goodhew.
During the storm the strongest gust recorded was 130km/hr at Westport, although the level of damage suggests the winds were even stronger in some areas. The Insurance Council of New Zealand is still assessing the damage.
“In true West Coast style the community has rallied around and demonstrated extraordinary resilience,” says Mrs Goodhew. . .
Wool price focus welcome – Cara Jeffery:
MERINO wool has been their lifelong passion on the land but Rick and Pam Martin know their enthusiasm for fine wools can only stretch so far if something isn’t done soon to improve prices.
The Martins run 1700 breeders and 900 Merino wethers on their property “Burnbank”, at Borambola near Wagga Wagga, and say any ideas that could improve the current situation for woolgrowers should be explored.
Their comments come after it was revealed last week that Australian Wool Innovation (AWI) chairman Wally Merriman had floated an idea with the AWI board to regulate the supply of wool into the auction markets to help stabilise price fluctuations in the market. . . .
The winners will be announced at a sold-out black tie event attended by 650 people at Auckland’s Sky City Hotel on May 9. About $170,000 in prizes are up for grabs in the New Zealand Sharemilker/Equity Farmer of the Year, New Zealand Farm Manager of the Year and New Zealand Dairy Trainee of the Year competitions.
Judging started on Monday (April 28) for the 11 sharemilker/equity farmer and 11 farm manager regional finalists. A team of three judges – a farmer, banker and farm adviser – spend two hours on each finalist’s farm to critique the finalist and their farm business. The task takes the sharemilker/equity farmer judges from Winton, in Southland, to Whataroa, on the West Coast, and to Ohaewai, in Northland. The last of the regional finalists, the Auckland/Hauraki representatives, are judged on Tuesday (May 7). . .
Leading maize, lucerne, forage sorghum, and inoculant producer Pioneer® Brand Products has generously agreed to an annual sponsorship arrangement with Lincoln University to assist with projects aimed at ensuring a sustainable farming future for New Zealand.
The objective behind the sponsorship aligns well with the commitment of both organisations to continually look for ways to increase farm profitability without compromising environmental quality.
This year’s sponsorship will support work investigating the use of plants in an agricultural setting – such as around paddock borders and riparian zones – to reduce the build-up of nitrates in the soil. . .
There are days I drop words of comfort on myself like falling rain & remember it is enough to be taken care of by myself.
Clicking the link above will take you to Story People where you can sing up for an email delivering a daily dose of whimsy like this, and buy books, sculptures and more.
The Mountain Scene called National’s Clutha Southland candidate clueless because he couldn’t answer 10 questions.
MOUNTAIN SCENE: Name the Queenstown knight who owns a controlling interest in NZ Ski.
TODD BARCLAY: “Ah, it’s not Sir Eion Edgar, is it?” (WRONG)
MS: Who owns Millbrook Resort?
BARCLAY: “No, I’m not sure.”
MS: Name Queenstown Lakes District Council’s boss.
BARCLAY: “I don’t know the answer to that question – but I will find out. There are about eight or nine local bodies in the electorate and I don’t know who everybody is yet.”
MS: What’s the name of Lake Wakatipu’s famed steamship?
BARCLAY: “The Earnslaw.” (CORRECT)
MS: Who owns Shotover Jet?
BARCLAY: “No, I don’t know.”
MS: Name our local mayor.
BARCLAY: “Geddes, is it? I’m not sure, I’m sorry.” (WRONG)
MS: Name Queenstown’s two closest skifields.
BARCLAY: “Coronet Peak and The Remarkables.” (CORRECT)
MS: Who owns Queenstown’s two casinos?
BARCLAY: “SkyCity.” (CORRECT)
MS: Where’s Queenstown’s Hilton Hotel?
BARCLAY: “Just beside the Kawarau [Falls] Bridge.” (CORRECT)
MS: How many lanes does that bridge have?
BARCLAY: “One.” (CORRECT)
The correct answers are: 1 Sir John Davies, 2 Japan’s Ishii family, 3 Adam Feeley, 4 Earnslaw, 5 Ngai Tahu Tourism, 6 Vanessa van Uden, 7 Coronet Peak and The Remarkables, 8 SkyCity, 9 Kawarau Falls, 10 One
I should have got the first answer but it wouldn’t have been on the tip of my tongue and I wouldn’t have had a clue about the second.
I’m a ratepayer in the Queenstown Lakes District and heard the CE speak at a conference last year but wouldn’t have recalled his name instantly.
I’d have got the fourth right but although I knew the answer to the fifth it wouldn’t have instantly come to mind.
I’d have got the next two and knew the Casino owner but again might not have got it without a bit of thought.
I would have got the last two.
It’s fair enough to question a candidate’s background but calling him clueless because a couple of days after he’d been selected he didn’t know the answers to 10 very local questions shows the paper is clueless about the electorate.
Clutha Southland covers an area of 38,247 square kilometres. Within its boundaries are at least parts of Queenstown Lakes District, Clutha, Gore, and Southland District Councils and Otago and Southland Regional Councils. There might be small areas of Invercargill and Dunedin City Councils in it too.
Queenstown would have the biggest concentration of people in the electorate but far more of the 50,000 or so of the Clutha Southland constituents live in places like Gore, Lawrence, Milton, Balclutha, Lumsden, Riversdale, Te Anau, Winton. . .
A candidate from Queenstown would have known far less about these places than Barclay did about Queenstown.
Queenstown is an important part of the electorate and the country which is shown by the attention it gets.
It would have far more visits from the Prime Minister and other ministers than any other part of the electorate. Even the sitting MP Bill English probably goes there more than any other single place in the electorate because he’ll often fly in and out of there even if he’s going to other parts of the electorate.
But important as it is, it’s a small part of a very big electorate.
To put its area of into perspective, it’s more than 1,600 times bigger than Epsom, the country’s smallest on existing boundaries, which covers just 23 square kilometres.
The question to be asked of Barclay isn’t how much he knows about any one part of the country’s largest general electorate now, but how hard he’ll work and quickly he’ll learn about it all and get to grip with its diverse communities and their issues.
He convinced a majority of delegates that the answer to that is very when they voted for him last week. His challenge now is to prove it to the public he’s seeking to serve.
That task would be a little less difficult if he wasn’t being unfairly criticised by a paper which appears to be clueless about the electorate in which it’s based.
Unions don’t usually try to be balanced.
They are almost always anti National polices and pro Labour ones. Their silence on Labour’s monetary policy therefore speaks volumes.
Federated Farmers which isn’t politically aligned tries to be more balanced. Take its response to that policy:
It’s headlined Federated Farmers keen on Labour’s monetary policy and starts:
“We may be swimming against the tide but there are elements in Labour’s Monetary Policy which has some merit,” says Bruce Wills, Federated Farmers President.
“Of course we are talking high-level and the devil will be in the detail, but I wish to first caution any party from assuming inflation has gone the way of Rinderpest. The moment you lose focus on inflation it will be back faster than a rat up a drainpipe.
“Giving the Reserve Bank the means to adjust universal KiwiSaver savings rates, as an alternative to raising interest rates, does genuinely strike us as innovative.
“We’re certainly not so quick to rush to judgement on such a policy as if it works, it could potentially boost savings while relieving pressure on both the Official Cash Rate and the Kiwi dollar.
Willis is trying to keep an open mind but he’s not quite as keen as the headline suggests:
“Whatever happens, it will need work to make sure it’s feasible, workable and equitable, given this policy could squeeze low and middle income earners.
Those low and middle income earners are the ones Labour is supposed to champion.
But Wills give Labour some credit:
“Federated Farmers is very happy to see that Labour will maintain the Reserve Bank’s independence and inflation target. We’re also pleased to see inflation in the non-tradable sector being fingered by Labour too.
Being fingered by one hand while promoting policies which would fuel inflation with the other, though.
The rest of the media release looks at other policies on which Feds definitely isn’t keen:
“Even when running a surplus, what remains unanswered in Labour’s ‘monetary policy needs mates’ equation, is the pressing need for fiscal prudence. If imprudent government spending takes off to deliver on political deals then it will kneecap monetary policy.
“We need the next government to truly cut its cloth because it is our money being spent.
“Federated Farmers is sceptical about a Capital Gains Tax. Aside from becoming just another tax, a CGT hasn’t dropped the price of houses in Britain or Australia, which, incidentally, are regularly advertised for sale in Asian newspapers.
“We also detect a hardening of Labour’s position on foreign investment in farmland, despite there being no research on whether it is a problem or not. We are equally concerned with the government’s laissez-faire attitude and wrote last year to Ministers requesting research.
“Before we go soft or hard on foreign investment, should we not first have the data?
“A mistake here will do untold economic damage affecting every kiwi because there are billions of reasons to get foreign investment policies right and each reason is called a dollar. Especially with our exports cracking the $50 billion barrier in the year to March.
“We are further worried that the NZ Power initiative could increase costs on businesses while a stringent Emissions Trading Scheme in tandem with Resource Rentals, will put a Sword of Damocles over the productive sector’s head.
“Aside from the political digs that could easily be returned with interest, there are certainly aspects we’d like to get more detail on from Labour,” Mr Wills concluded.
On balance the conclusion from this is that farmers have a lot more to fear from Labour whether or not the monetary policy would work which many doubt.
Among those is BNZ economist Tony Alexander:
. . . Labour would broaden the target of monetary policy to include trying to get the external accounts in balance over the economic cycle. That is fairly meaningless and can be ignored just as previous additions of words such as “avoiding unnecessary volatility in interest rates, the exchange rate and output…” had basically no impact on policy implementation.
More significantly Labour propose giving the Reserve Bank a new tool, specifically the ability to alter
contributions to Kiwisaver accounts as a means of influencing the pace of household spending growth, therefore economic growth and therefore inflation. They hope that use of this tool would mean less reliance upon interest rates and therefore less upward pressure on the exchange rate and perhaps even a small structural decline on the theory that a higher average level of contributions to Kiwisaver would lead to a reduced average level of interest rates.
There are many implications of Labour’s policy.
- Long tern Kiwisaver returns will be reduced as savers are forced to buy more shares when prices are high and fewer when they are low.
- Volatility in the sharemarket will rise.
- Investors will have extra incentive to purchase residential property, thus pushing house prices higher.
- Overseas debt will tend to be boosted.
- Bank profits will rise. . .
Reduced returns from Kiwisaver, increased share market volatility, more investment in property and higher overseas debt are big negatives and many will see higher bank profits as something which shouldn’t be encouraged either.
He goes on to say the policy could encourage more debt as well and adds:
. . . The policy as proposed by Labour is a valiant attempt to mitigate the impact on exporters of the monetary policy tightening cycle and they should not be criticised for trying to make a positive contribution to our economic growth in this way. But the policy is not backed by any research as to how it would work and how effective it would be, and if Labour were to defy the polls and hold power after September 20’s general election, implementation would likely be a long way off. The bastardisation of the generally popular Kiwisaver scheme also does not seem an optimal route to take. . .
In other words, on balance, the policy is a dog.
Sunday’s soapbox is yours to use as you will – within the bounds of decency and absence of defamation. You’re welcome to look back or forward, discuss issues of the moment, to pontificate, ponder or point us to something of interest, to educate, elucidate or entertain, amuse, bemuse or simply muse.