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


15 years fomenting happy mischief

July 27, 2018

Kiwiblog marks 15 years of David Farrar’s fomenting happy mischief * today.

To maintain both the quantity and quality of posts every day for so long is no small achievement.

David has a readership that would be the envy of many professional pundits and media outlets.

His blog is one of relatively few that is consistently well reasoned and reasonable.

He is partisan but will give credit and criticism where it’s due regardless of political hue.

His was the first blog I ever read, it’s one I read every day and I look forward to the next 15 years and beyond of essential reading.

* Fomenting happy mischief was adopted by David as a slogan after a letter to the NZ Herald by Peter Davis, husband of then-PM Helen Clark, accused the paper of doing that.

 


365 days of gratitude

April 22, 2018

It’s 10 years today since I started blogging.

My introduction to blogs came through reading Kiwiblog which introduced me to other blogs, including No Minister, Lindsay MitchellNot PC, Whale Oil, and the sadly gone but not forgotten Cactus Kate and Keeping Stock.

Reading led to commenting and that led to the thought I could start my own blog. I happened to mention that thought to a friend who is much more computer savvy than I am, she said it would be easy and thanks to WordPress, it was.

Once I started blogging I found other blogs and different news sites which, for a while supplanted books.

A trip to Argentina for a couple of weddings when I had no internet access for several days at a time persuaded me that less blogging would be more healthy and I cut back on computer time.

Every now and then I contemplate giving up altogether and perhaps I will one day.

But not yet.

I still enjoy the writing and, whether or not I agree with them, the contribution from those who leave comments.

Without them this would be a very one-sided conversation. With them there’s variety and for that, and the people who provide it, I’m grateful.

 

 

 


Zero chance of zero carbon

December 20, 2017

Federated Farmers Climate Change spokesperson Andrew Hoggard  says it’s impossible to get methane emissions from a cow down to zero:

“It’s a biological system, it’s not going to happen. I guess the key thing is we’ve got to remember the global context her and that New Zealand’s food producers here are one of the most efficient in the world at producing food for the least amount of carbon.”

 

Hoggard was responding to news the government is aiming to get New Zealand’s net carbon emissions down to zero by 2050.

That doesn’t mean animal emissions would have to get to zero. In theory it could be achieved by off-setting those emissions but David Farrar points out at Kiwiblog:

 The reality is that achieving zero net emissions will be incredibly costly and painful. It will involve massive trade offs.

New Zealand’s emissions from farming are unusually high for the developed world because we produce so much food.

Most of that food is exported. Other countries will have much lower emissions from farm animals but they eat the food we produce and if we produce less of it other less efficient farmers will produce more.

Emissions here would reduce but global emissions would rise.

What those calling for a reduction in stock, especially cattle, also forget is that the food we produce and export is what largely pays for the goods and services which we need to retain first world status.

Cue, this cartoon by Tom Scott from 2008:


When you’re lying you’re losing

May 30, 2017

Labour was blindsided by the support other Opposition Parties – the Greens and New Zealand First – have given to national’s Budget.

That is no excuse for lying about the details Andrew Little said:

“National’s Single Child Tax will see a family with one child lose as much as $830 a year in Working For Families payments.

“Whenever you’re putting these packages together, there’s always a complexity about it. But I’d be surprised if they understood there’s 20,000 odd single-child families that will now be worse off – but that’s the reality. ” 

No it’s not.

Getting something more, even if it is less than someone else is not losing.

[Finance Minister Steven] Joyce said those families still saw an overall gain, and Labour was failing to see the bigger picture. 

“The abatement changes mean they don’t get as much from the Working for Families part of the package, but they gain more from other parts of the package, in particular the tax changes. They may also in some cases gain from the Accommodation Supplement Changes.

“It’s important to note that these people are already receiving Working for Families so currently get more than couples with no children who don’t get anything from Working for Families. They continue to get more until the Working For Families is fully abated,” he said. 

“One of the aims of the Family Incomes package is to focus Working for Families on lower income families and that middle income families are less dependent on Working for Families and keep more of what they earn through the tax system. This is an example of that occurring.” . . 

It is better and more efficient to allow people to keep more of what they earn than take more in tax, churn it through a bureaucracy and give some back.

Over at Kiwiblog, David Farrar points out that Labour is also lying about health expenditure:

. . . Now let’s look at what at what Vote Health has done between 2008 and Budget 2017.

  • Nominal Vote Health – increased by $4.85 billion a year from $11.92 billion to $16.77 billion – a 40.7% increase
  • Real Vote Health – increased by $3.00 billion a year from $13.77 billion to $16.77 billion – a 21.8% increase
  • Real Vote Health per capita – increased by $341 a year from $3,233 to $3,574 – a 10.5% increase

You can claim it is not enough. You can claim more is needed. You can claim growing elderly population needs more funding. But you cannot claim it has been cut. That is a lie. . . 

When you’re lying, you’re losing and Labour is.

If it can’t convince other Opposition parties to stay with it against the government, how will it convince voters to let it run the country?

 

 


Could be a silly precedent

September 13, 2016

Labour is clearly rattled by the latest One News Colmar Brunton political poll which put the party down three to 26% since June.

Leader Andrew Little called it a bogus poll and now the party has released its internal poll results.

 

The Roy Morgan poll a couple of months ago which showed National on 53% was off-trend but the latest One News poll is far closer to others than Labour’s.

Kiwiblog has the four most recent poll results for National and Labour:

Individual polls are probably only of interest to political tragics but others might take more interest in the trends which have National in the mid 40s and suggest the UMR poll is an outlier.

Labour could have set a silly precedent and dug a hole for itself by releasing its own poll.

The media will want to know what the party’s internal polling shows next time one of the public ones doesn’t fit the party’s narrative.

If Labour doesn’t release it the obvious conclusion will be that it isn’t favourable either.

Had it not lost its spin doctors, one of them might have warned the party of that.


Surplus challenges

May 16, 2016

The government is facing challenges, Finance Minister Bill English told the National Party’s Mainland conference at the weekend.

The prospect of economic growth is good but brings with it the challenge of dealing with ongoing surpluses.

The government books scraped into surplus last year but few would have been surprised if they slipped back into deficit given low dairy prices and the various problems facing many of our trading partners.

However, the government is now looking ahead to multi-billion dollar surpluses in the short to medium term which provides the challenge of how best to use that money.

The opposition and the usual other suspects who think the quantity of spending matters more than quality have been calling for increased spending in all sorts of areas. Over at Kiwiblog, David Farrar has calculated that meeting the demands would require a top tax rate of 100%.

But this government has a much better focus than the quantity of spending.As the Finance Minister saidWe measure spending by results rather than the level of spending.

Some issues do require more money now in order to reduce future costs and that is why the government has taken an investment approach to social spending with a whole-of-government approach.

At the conference, Justice Minister Amy Adams spoke about this and explained that getting better results in her portfolio didn’t require more money for it. What was needed was spending that addressed the drivers of crime – welfare dependency and poor education and health.

Few would argue with that, but increased surpluses don’t only give the government the ability to spend more, it also has room to take less.

Last week’s announcement that there won’t be tax cuts in this year’s budget disappointed some, but I think most people accept Prime Minister John Key’s view hat there are other priorities this year.

National had looked at around $1 billion for tax cuts in the Budget the year but it was discarded because it would have delivered $7 or $8 a week to many households, Key told Newstalk ZB.

He said the choice they were faced with in the short term was either a billion dollars worth of tax cuts which would deliver a small amount of money to New Zealanders, or spend the money on other things such as cancer drugs.

Labour was, rightly, pilloried for its chewing gum tax cut and this government wouldn’t get any thanks for offering something similar.

However, people won’t be so patient when there’s a prospect of on-going billion dollar surpluses which give the potential for meaningful cuts and the PM gives room for hope:

“Philosophically we believe in lower taxes and smaller government, and government’s definitely getting smaller,” he said.

“The point is if we’re going to have a tax programme – we’re not ruling that out in for 2017 or campaigning on it for a fourth term. But having probably a bigger one, to be blunt.”

When asked how much was needed for meaningful tax cut, Key responded: “$3 billion I reckon.”

He wouldn’t reveal the budget surplus forecast for next year, but it was nowhere near enough for that.

He said it was realistic to forecast the tax cuts without voters considering it a ploy to be re-elected. 

Tax thresholds would probably change because of the increase in wages, he explained.

“The average income is going up and we think in a few years time the average income will be say $68,000, well the top rate cuts in at $70,000. If you don’t adjust thresholds over time you get to a point where the average income earner is paying the top personal rate of tax. That can’t be right.” . . 

Bracket creep erodes the value of wage rises and needs to be addressed.

Tax cuts  also help retirees. Superannuation is linked to after-tax wages. When taxes drop, after-tax wages increase and so do superannuation payments.

A party conference mid-way through a government’s third term could have been subdued. Confidence that the government will rise to the challenges of growth, continue to focus on the quality of its spending and results helped contribute to a buoyant mood.

It’s far better to be dealing with the challenges of growth than those of recession facing many other countries.


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