High cost for virtue signalling

September 25, 2018

Government officials estimate the ban on offshore oil and gas exploration will cost $7.9 billion.

. . .Foregone revenue to New Zealand could be higher under high exploration, $14 .3 billion, or as low as $2.7 billion with low exploration.  . .

Even if it is “only” $2.7 billion foregone that is only part of the cost.

. . .The Petroleum Exploration and Production Association of New Zealand (PEPANZ) says it is time for a re-think on plans to end new offshore exploration.

“The Regulatory Impact Assessment (RIS) shows that ending new offshore permits is a disastrous policy for New Zealanders, likely to cost the Crown $7.9 billion in lost revenue and potentially up to $23.5 billion,” says PEPANZ CEO Cameron Madgwick.

“Importantly, this is only a part of the picture. Company profits could also reduce by billions which will cost jobs and investment into New Zealand, and the wider economic costs have not even been modelled.

“At the same time, it is considered more likely to increase greenhouse gas emissions than reduce them. It’s hard to think of a worse overall outcome.

“As well as the lost revenue it will mean higher energy prices for New Zealand homes and businesses, increasing the cost of living and destroying jobs. . .

That is a very high price for a policy that is at best virtue signalling and at worst will not only have a high economic cost, but a high environmental one too.

Good government would ensure there are viable and sustainable alternatives before a policy to knock off an industry and kill off a local supply of energy was announced.

Instead of which, we’ve been given blurt and hope – policy announced without any consideration of the costs and consequences.

That is not a credible way to run a country.

 


Micro matters not minor matters

September 11, 2018

BusinessNZ says the Employment Relations Amendment Bill is harmful and oppressive:

None of the provisions that most concern business have been removed by the select committee considering the Bill. . .

55% of submissions were against the Bill and thousands of emails sent to Parliamentarians by concerned businesses. EMA, Business Central, the Canterbury Employers’ Chamber of Commerce and Otago Southland Employers’ Association ran a high-profile campaign asking the Government to explain the reasoning for the Bill’s harmful provisions.

“Given current low levels of business confidence, especially among small business, it is unfortunate that the Government has neither listened nor explained its justification for the Bill.

Low business confidence is not political pique. It’s based on genuine concern about policy like this which will make it more difficult, and expensive, to run a business.

“Business cannot support this Bill and will be making our position clear as this Bill progresses through Parliament.

“BusinessNZ is also considering pursuing a claim to the International Labour Organisation or International Court of Justice on parts of the Bill which are contrary to international law.

“Business strongly objects to this Bill’s ability to harm employment relations, jobs and commercial value in New Zealand enterprises.”

The EMA is bitterly disappointed no heed was paid to concerns raised:

The EMA, along with its fellow regional associations, actively lobbied and campaigned for four key areas to be modified as it believed these will not deliver to the Government’s stated aims of a high wage and high performing economy, nor help businesses to be more productive. The joint Fix The Bill campaign resulted in at least 2254 emails being sent to Government MPs seeking clarification on how the changes will help their business succeed.

The four aspects of the Bill that were particularly worrying for business were:

– Employers with 20 employees or more will lose the right to include 90-day-trial periods in employment agreements. However, findings from a nationwide survey of employers found that the 90-day trial periods were useful for businesses of all sizes, to give prospective employees a chance.

A trial period is not just good for employers, it’s good for other employees. If a new worker isn’t up to scratch it impacts badly on workmates.

– Businesses will be forced to settle collective agreements, even if they don’t or can’t agree

And even if they can’t afford them.

– Allowing union representatives access to workplaces without permission

Any access, any time is not conducive to productivity.

– Not allowing businesses a choice to opt out of a multi-employer collective agreement (MECA)

This will not only means saddle businesses with agreements they can’t afford, it will stop a business offering staff better pay and conditions.

With more than 50% of New Zealand businesses employing fewer than 100 staff, the EMA is deeply worried the changes in the Bill combined with the raft of other legislation in the pipeline will unduly burden smaller operators.

Furthermore, despite rhetoric from Government that it is listening to business, this is a tangible example that ideology rather than solid public policy driving decisions and does not bode well for business going forward.

Throughout this process the EMA has been puzzled by how any of the proposed changes to the industrial relations framework will take the country forward in terms of the Government’s goal of developing a modern, nimble and high performing economy.

Taking industrial relations back to the 1970s will not take the country forward and it will harm rather than help the economy.

Steven Joyce writes:*

. . .Economic policy is in fact a three-legged stool, fiscal policy, monetary policy, and microeconomic policy. You can’t successfully operate an economy, especially a small one like New Zealand, without all three working together.

Microeconomics is everything that operates at the firm level in the economy – all the regulations and policy settings that impact directly on businesses. These are things like employment law, immigration settings, competition law, resource allocation, innovation settings, tax policy and the government’s investment in infrastructure.

It is microeconomics that drives much of firms’ actual operating conditions. Along with interest rates and exchanges rates, it is access to capital, skilled people, resources, markets, the necessary infrastructure and importantly the consistency of those settings, that tell the owners of businesses that it is a good time to invest and grow their business.

If you start playing with those settings in an arbitrary way while ignoring the economic consequences of those changes, then firms will simply stop investing. They’ll either wait until there is more certainty, or not invest at all. . .

Microeconomic matters, including employment relations legislation, are not minor matters.

They have a huge influence on the business environment and economy.

Any changes which add to the complexities and risk of employing people will have the opposite affect from the government’s stated aim of developing a modern, nimble and high performing economy.

But this legislation shows that this aim comes a very poor second to Labour’s need to pay back unions for their financial and personal support.

The legislation will be good for unions but not the whose interests they purport to represent nor for the businesses which employ them.

* Hat tip: Kiwiblog


365 days of gratitude

August 6, 2018

Today is Farm Worker Appreciation Day.

We’re blessed with a team of top people whose dedication, enthusiasm and skills are essential elements in the success of our business.

Today and every day I appreciate them and am grateful for them.

 


Rural round-up

August 4, 2018

Property rights are being forgotten – Gerry Eckhoff:

William Pitt the elder (1708-78) got it right with a famous speech in which he said – in part – ”The poorest man in his cottage may bid defiance to the Crown. It may be frail. The roof may shake, the wind may enter, the rain and storm may enter but the king of England may not – nor all his forces dare cross the threshold of that ruined tenement”.

While Hunter Valley Station hardly qualifies as a ”ruined tenement”, the principle of security of tenure and the right to exclude the Crown and by association, the public, holds as true today as it did in the 18th century

And so the debate begins, yet again, 240-odd years later. There are those who seek access to every corner of this fair country but who choose to ignore the common courtesy of seeking permission of the owner. During the last tenure of the previous Labour government, Helen Clark sought to pass legislation to force a right of entry to all rural land which included freehold, Maori, and leasehold land, but especially pastoral lease land. . .

Kiwifruit Industry ‘New Zealand labour just not there’ – Kate Gutsell:

The kiwifruit industry is facing a shortfall of 7000 workers as it predicts it will double in value in the next ten years.

The industry body, Kiwifruit Growers Incorporated, has released a report which estimates the $2.1 billion industry will generate $4b of revenue by 2027.

Kiwifruit is already New Zealand’s largest horticulture export and the report is forecasting production will jump by 54 percent, from 123 million trays to 190 million by 2027. . .

Westland Milk to review ownership as it strives to boost returns – Tina Morrison:

(BusinessDesk) – Westland Milk Products, whose payments to its cooperative shareholders have lagged behind rivals, may change its ownership structure as it looks at ways to improve returns.

Hokitika-based Westland said today it has appointed Macquarie Capital and DG Advisory to consider potential capital and ownership options that will create a more sustainable capital structure and support a higher potential payout. All options will be explored in the process expected to run for several months, it said. . .

Economic outlook the sour note in farm confidence survey:

Pessimism about the economic outlook is a sour note among the otherwise generally positive indicators in the Federated Farmers July Farm Confidence Survey.

This is the 19th time the twice-yearly survey has been conducted and for the first time farmer optimism has increased in all areas except their continuing negative perceptions of the economy, Feds Vice-President Andrew Hoggard says. . .

Farmers worried as Government increases costs:

Agriculture Minister Damien O’Connor confirmed in Parliament’s Question Time today that farmers will face ‘additional costs’ under his Government, National’s Agriculture Spokesperson Nathan Guy says.

“Mr O’Connor has previously signalled a climate tax for farmers, slashed the Primary Growth Partnership fund and won’t fund any new water storage projects,” Mr Guy says. . .

The European Union rejected genome edited crops – Matt Ridley:

The European Court of Justice has just delivered a scientifically absurd ruling, in defiance of advice from its advocate general, but egged on by Jean-Claude Juncker’s allies. It will ensure that more pesticides are used in Britain, our farmers will be less competitive and researchers will leave for North America. Thanks a bunch, your honours. 

By saying that genome-edited crops must be treated to expensive and uncertain regulation, it has pandered to the views of a handful of misguided extremists, who no longer have popular support in this country. . . 

Tell your story by entering the Ballance Farm Environment Awards:

Farmers and growers are being encouraged to enter the Ballance Farm Environment Awards for 2018/19. The awards are organised by the New Zealand Farm Environment Trust, a charity set up to promote sustainable farming and growing.

The Chair of the Trust is Joannne van Polanen, who farms in Mid-Canterbury. Joanne says “There’s a lot of discussion about the need for the primary sector to tell our stories. The awards provide an opportunity for farmers and growers to share the positive actions they are involved in with their local community and a wider audience.” . . 

Pact Group launch first rPET bottles for NZ milk producer:

Pact Group subsidiary Alto Packaging has announced the launch of the new 750ml and 1.5litre milk bottles made from 100% recycled plastic polyethylene terephthalate (rPET) for Lewis Road.

Malcolm Bundey Managing Director and CEO of Pact Group says “Pact is proud to have designed and manufactured these bottles. We are excited to be in partnership with Lewis Road and part of their journey to become New Zealand’s first milk producer to switch to using entirely recycled materials for these two products.” . . 


Where are the willing workers ?

July 24, 2018

Dairying has revitalised North Otago.

It gives better cash flow than traditional sheep and beef farming, and needs more and younger workers.

However, in spite of pay rates well above what young people with few if any qualifications could expect elsewhere, it is difficult to recruit and retain blood staff.

When the local market can’t supply willing workers, farmers and sharemilkers turn to immigrants.

Getting short-term staff isn’t hard. There are plenty of young people touring on visas which allow them to take up temporary work and most of them work well.

But getting good staff for longer term work is hard and this isn’t a problem confined to New Zealand as the tweet below shows.

 

The problem isn’t confined to farming either.

Employers in hospitality have similar problems and visitors from overseas told us they rarely had locals serving them when they ate out.

In spite of all these employers needing staff, the number of people on benefits increased in June for the first time since 2010, and the number of those being sanctioned fell.

It looks like the willing workers are coming from other countries and the unwilling ones are Finding it easier to get and retain benefits.


So bad so soon

June 19, 2018

How did it get so bad so soon?
It’s a mess of ministers
acting like goons.
My goodness how the
mess has grewn.
How did it get so bad so soon?

With apologies to Dr Seuss, how did it get so bad so soon?

Audrey Young writes that Jacinda Ardern will forgive Winston Peters for anything, even the unforgivable.

A National MP joked this week that the Opposition didn’t want things to get so bad under Jacinda Ardern’s maternity leave that the country was desperate for her return – they just wanted a medium level of dysfunction.

That threshold was almost reached this week even before the big event, and things got worse as the week wore on.

Ardern’s faith in Winston Peters being able to manage the inevitable bush fires that will flare when she is away must be seriously undermined given that he and his party have caused many of them.

A series of accidental and deliberate mishaps has raised questions about a series of important issues including basic coalition management, ministerial conventions, the application of the “No Surprises” policy, and when a minister is not a minister. .  .

Stacey Kirk calls it a three ring circus with one ringmaster at the centre .

Consensus government in action, or a bloody awful mess? 

It’s difficult to characterise the past week as anything but the latter and Prime Minister Jacinda Ardern may be worried about whether she’ll have a Government to come back to when she returns from maternity leave. . .

Patrick Gower wants the old Kelvin Davis back.

Patrick Gower on The AM Show. Credits: Video – The AM Show; Image – Newshub.

Kelvin Davis is a “wounded man walking” who better watch out, says Newshub national correspondent Patrick Gower.

The Corrections Minister on Wednesday announced plans for a new prison, but appeared to be unaware how many of its inmates would be double-bunked.

Corrections boss Ray Smith interjected after Mr Davis froze, confirming Newshub’s suggestion it would be around half.

“I get nervous before interviews,” was Mr Davis’ explanation, when asked about it on The AM Show. . . 

Duncan Garner describes government MPs as misfit kids.

. . .It’s taken them three minutes to look as shabby, arrogant and as broken-down as a third-term government suffering rampant hubris and pleading to be put out of its misery.  . .

Sue Bradford thinks the Greens are in mortal danger.

The Green’s water bottling decision exposes potentially fatal flaws and complacency at the heart of Green Parliamentary operations 

The Green parliamentary wing seem to be clueless about the mortal danger they face following news this week that their own minister, Eugenie Sage, has signed off on the sale and expansion of a water bottling plant at Otakiri Springs. . . 

Hamish Rutherford writes with Winston Peters in charge everything could be up for grabs.

. . . These are extraordinary times. Suddenly, with a Government already battling to keep business confidence up, with a story that the economy keeps on rocking, it seems as if everything is up for grabs.

We are now being handed lessons that have been coming since Peters walked into the Beehive theatrette on October 20 and announced he was forming a Government with the Left.

A Government so broad that the issues on which there is division become so amplified that they could almost appear to outnumber ones where there is consensus.

Where previous coalitions since the creation of MMP managed to keep together because the centre of power was so obvious, the timing of Peters’ action will be further unsettling. . . 

Health Minister David Clark has been accused of trying to gag a health board chair.

A leaked voicemail message appears to show Health Minister David Clark attempting to gag top health officials over the woeful state of Middlemore Hospital buildings. 

Clark has rejected the accusation, which has stemmed from audio of him telling former Counties Manukau District Health Board chair Rabin Rabindran it was “not helping” that the DHB kept commenting publicly.  

Emails suggest he also attempted to shut down the DHB from answering any questions along the lines of who knew what, and when, about the dilapidated state of Middlemore buildings. . . 

Peter Dunne asks is the coalition starting to unravel?

Almost 20 years ago, New Zealand’s first MMP Coalition Government collapsed. It was not a dramatic implosion on a major point of principle, but was provoked by a comparatively minor issue – a proposal to sell the Government’s shares in Wellington Airport – and came after a series of disagreements between the Coalition partners on various aspects of policy.

There has been speculation this week in the wake of New Zealand First’s hanging out to dry of the Justice Minister over the proposed repeal of the “three strikes” law that the same process might be starting all over again. While it is far too soon to draw conclusive parallels, the 1998 experience does set out some road marks to watch out for. . . 

Michael Reddell writes on how the government is consulting on slashing productivity growth.

 . .  I have never before heard of a government consulting on a proposal to cut the size of the (per capita) economy by anything from 10 to 22 per cent.  And, even on their numbers, those estimates could be an understatement. . . .

Quite breathtaking really.   We will give up –  well, actually, take from New Zealanders –  up to a quarter of what would have been their 2050 incomes, and in doing so we will know those losses will be concentrated disproportionately on people at the bottom.   Sure, they talk about compensation measures . . 

But the operative word there is could.  The track record of governments –  of any stripe –  compensating losers from any structural reforms is pretty weak, and it becomes even less likely when the policy being proposed involves the whole economy being a lot smaller than otherwise, so that there is less for everyone to go around.  The political economy of potential large scale redistribution just does not look particularly attractive or plausible (and higher taxes to do such redistribution would have their own productivity and competitiveness costs). . . 

And the Dominion Post lists mis-steps and mistakes and concludes:

. . .Some of this has been simply amateurish.

Such things are often a sign of a government that has outlived its mandate and begun to implode around the core of its own perceived importance. In its tiredness it can trip over the most obvious hurdles.

This Government is barely nine months old. It needs to find its feet, and quickly.

Has there ever been a government that has attracted this sort of criticism just a few months after gaining power?

How did this government get so bad so soon?


Rather go hungry than go to work

May 9, 2018

The Ministry of Social Development has today declared a seasonal labour shortage across the Bay of Plenty, where an additional 1,200 people are needed to pick and pack an extra 20 million trays of kiwifruit this season.

This allows foreigners on tourist visas to apply for a variation which allow them to work.

The seasonally adjusted unemployment rate is 4.4% .

Some of those people must be in the Bay of Plenty and able to work so why aren’t they?

Kiwifruit company Apata employs more than 1000 people and will harvest and store about 10 percent of the region’s kiwifruit this year.

Managing director Stuart Weston told Morning Report about 60 percent of his staff were locals, with the rest made up of workers from the Pacific and backpackers.

He said he did not think raising the pay rate would attract more local labour.

“We think that we’ve really reached the very limits of what’s available ready and willing to work, irrespective of the money.

“And that’s evidenced by the fact that already [Work and Income New Zealand] have a system of stand down if people choose not to work in our sheds and inexplicably people will choose to go hungry rather than work in a packhouse.” 

He said the agency had been working hard to attract people to the industry but it had been having “decreasing levels of success”.

“We’re sending vans to Murupara, Tokaroa, Whakatāne and Rotorua – we’re just trying to reach out further and further to capture people who wish to work,” Mr Weston said.

Working with kiwifruit was hard work, and people who have been on an unemployment benefit struggled to cope with full-time work and could be unreliable, he said.

We visited a pack house earlier this year.

Our host told a similar story of going to great lengths to get locals to work including transport to and from work and a creche for workers’ children.

But if people prefer going hungry to work, what more can employers do?


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