Why bother with voters?

August 2, 2015

This headline should cause disquiet in anyone who cares for democracy: Peters: NZ First will decide 2017 election.

New Zealand First leader Winston Peters says he will be more powerful than ever by the next election and will decide the next government. . . .

Why bother with voters?

If he won’t give us the courtesy of explaining his intentions before the election and does what he’s done in the past, leaving us voting blind, why bother with an election?

He wants to be king maker but he’ still not willing or able to give a straight answer to a straight question.

. . .  You said you’d resign if you don’t get tens of thousands of new members? “Yeah, precisely. There’d be no sense going on.” That’s a commitment from you. Tens of thousands or you’re gone? “Yes”. Could we narrow that down – more than 10,000 or you’ll resign? “No, I said if we don’t increase our membership… Why don’t you ask a straight question?” But we did… “Well maybe I didn’t hear properly…stop your humbug.”

This old leopard won’t change his spots and he’s dreaming if he thinks he can increase his membership to that extent.

As a member of National, the only party in New Zealand which has tens of thousands of members, I know what it takes to attract and retain members.

If Labour with nation-wide electorate structures and unions helping can’t do it, Peters and his party which never stands in more than a handful of seats won’t have a chance.


So many shades of stupid

July 30, 2015

Andrew Little’s latest desperate ploy for publicity merely demonstrates so many shades of stupid.

. . . Labour leader Andrew Little has described God Defend New Zealand as “a dirge” and claims many Kiwis prefer to sing along to the Australian anthem. A dirge can mean a mournful song or a lament for the dead. . .

I will concede that the anthem is sometimes dirge-like and have blogged on that.

But that is only when it’s played that way.

If played at a decent tempo it is rousing as an anthem should be.

But to claim that many of us prefer to sing Advance Australia Fair?

As anthems go, it’s a good one but if many of the Kiwis he mixes with prefer to sing along to the Aussie anthem than our own it suggests he’s in touch with a sad subset of people and out of touch with the majority.

The stupidest thing about this outburst, though is the timing when he’s doing the best to sabotage the flag-change process in spite of being on record saying he not only favours a change he supports the referendum process for it.

Here’s Labour’s official policy from 2014:

Labour will: review the design of the New Zealand flag involving flag design experts and with full public consultation and involvement.

We believe that the time has come for a change and it is right for the issue to be put to the public.

And in case that isn’t clear enough, here’s his personal views from last October:

Q: Should NZ change its flag: What’s your personal opinion? Should there be a referendum? If you want the flag changed, what’s your favourite design?

A: Yes, my personal opinion is we should have something more relevant to an independent, small Asia/Pacific nation. I think a referendum is a suitable way to deal with an issue that can be very polarising. . .

Had Labour, perish the thought, got into government then not gone ahead with the consultation and referendum it would stand accused of breaking an election promise.

Going back on the commitment to change for petty political purposes and thereby politicising the process when the government has done all it can to involve other parties is at least as bad.

Given Little’s precarious position, when he’s failed to gain traction for himself and his party and he’s now even less popular than Winston Peters, he should be very careful about making funereal references.

Ask not for whom the dirge plays, it could be playing for his political ambition.

And to those who say the flag issue is merely bread and circuses to distract the masses, you have a very low opinion of the ability most of us to care and do something about more than one thing at a time.

 


Do we have consensus on tax?

July 20, 2015

Labour finally answered the calls to show us some policy last week with an announcement on proposed changes to provisional tax:

The bad news for Labour was that it wasn’t its own fresh policy it was reheated National Party policy:

Acting Minister of Finance Steven Joyce has congratulated Labour Party Leader Andrew Little on finally announcing his first “new” policy after eight months in the job, although unfortunately for Labour it’s a cut and paste of a previous Government announcement.

“Labour announced today it was launching a discussion document on changes to provisional tax for businesses. However it seems to have overlooked that the Government launched its own discussion document containing almost identical proposals back in March,” says Mr Joyce. “These in turn were based on National Party policy at the last election.”

The Government has already consulted on proposed changes to provisional tax including a business PAYE, changes to use-of-money interest and penalties, increased use of tax pooling and the use of tax accounts. A Green Paper was launched on 31 March this year and submissions closed on 29 May.

“Feedback on the Green Paper’s suggestions has generally been supportive, and provisional tax was the part most commented on. As we’ve said previously, the changes will require new technology to be implemented, which will be developed as part of the IRD’s Business Transformation project,” says Mr Joyce.

“Quite why Labour has started its own consultation is beyond me.

“Submissions are now closed but the Government would be happy to accept a late submission from the Labour Party in support of the proposal,” Mr Joyce says. “We also appreciate its implied endorsement of the Business Transformation process that will make these policy changes possible.”

A link to  the March announcement can be found HERE.

A link to the Government’s Green Paper, Making Tax Simpler, can be found HERE.

A link to the National Party’s 2014 election policy on this issue can be found HERE.

Act supports the ideas in the green paper which the government released in March, last week New Zealand First also mooted a similar strategy and the Green Party is also open to the proposed changes.

The good news for all of us is that this could mean there is consensus on provisional tax which is very unpopular with businesses for good reason.

They have to pay on expected income without the benefit of a crystal ball that can give them an accurate forecast of their futures costs and income.

A reasonably accurate estimate is difficult enough for any business, it is particularly taxing in farming where there are so many variables and a lot of income is lumpy.

Dairy farmers get monthly payments for their milk but last year the pay out was far higher than expected, this year it is much lower.

Cropping, sheep and beef farmers and many horticulturists get most of their income in a very few payments a very few times a year. Estimating what they are likely to produce, how much that will cost and what they’ll be paid for it months in advance with any deegree of accuracy is next to impossible.

The changes proposed by the IRD which now seem to have support across the political spectrum would simplify the tax system.

Simpler taxes are less expensive to comply with and administer. That reduces costs for businesses which is good for them and the people they employ, service and supply.


What about privacy?

July 17, 2015

Reporters from 3 News visited some of the people with Chinese-sounding names used by Labour to attack offshore buyers :

Of the 10 homes visited:

  • Three were owned by NZ citizens
  • One by a couple applying for permanent residency
  • One was a renter who didn’t know her landlord
  • One woman didn’t speak English
  • The rest – no one answered.

My grasp of stats isn’t great but I don’t think any reliable conclusions on Labour’s assertions can be garnered from this small sample.

Regardless of that, what about the privacy of the data and the people identified from it?

If I was one of the people on the list I’d be laying a complaint with the privacy commissioner.

I might also be talking to whichever is the appropriate body for dealing with complaints about the media behaviour.

 


Racism risks trade backlash

July 16, 2015

BNZ economist Tony Alexander joins the discussion on Auckland housing and the part played by foreign buyers:

. . . So we remain in the dark about the extent to which Auckland’s housing market is truly being driven by offshore buying. But as emphasised previously, there are three key points which I shall keep repeating regarding Auckland housing and house price pressures.

1. The fundamental cause of rising prices in Auckland is a shortage of supply and until that gets addressed prices will stay highly elevated and perhaps keep rising out to late-2017 this cycle.

No matter what tinkering is done to reduce demand by restricting foreign buyers won’t change the fact that there is a shortage of supply.

2. Whatever the true magnitude of Chinese buying has been these past few years it will get much greater. Chinese families are growing wealthier, so naturally they will seek offshore assets. Chinese people wish to get assets off the mainland and this week’s massive intervention in sharemarkets by the Beijing authorities illustrates why people have high distrust of the environment on the mainland in which they would hold assets. And Chinese authorities have yet to relax hefty restrictions on people getting their funds offshore. When they do, well then you will see something entirely new hit the world’s residential property markets.

3. We should as soon as possible adopt Australia’s rules restricting foreign buying of anything other than new housing unless resident for 12 months.

But here is the fourth point which to date I have not emphasised but now will do. Adopting Australia’s rules as they stand won’t be the panacea many are hoping for. In Australia’s case people have been able to get around the restrictions quite easily. The regime is now being enforced more rigorously, but that does not necessarily alter what is being seen as a huge problem – something which people in Hong Kong have been seeing more and more of in recent years.

Many Chinese who buy properties never, or rarely, occupy them. They sit empty. This applies even to newly built apartments sold to Chinese buyers. Chinese simply want an asset away from any control by the CCP. There was an article on this in The Australian newspaper this weekend, page 6.

What this means is the following. As Auckland very slowly goes vertical in areas like New Lynn, developers will find they can very easily get offshore financing for their projects and hefty sales off the plan to Chinese investors (we Kiwis prefer to touch and feel before buying). These investors may never occupy or even rent out their investment. Thus while on the face of it the Aussie rule that a foreigner may only buy a newly built house or apartment sounds like a grand idea, it could leave the housing supply situation unchanged from a no-rule regime.

Thus, were we to adopt the Aussie regime we would need to add in an extra clause along the lines of apartments having to be made available for rent, actually rented, or something like that.

When might we see the adoption of some form of restriction on foreign home buying in New Zealand? Maybe within two or three years. About three years ago I recommended that we adopt the Australian regime. That was/is not because I feel Chinese buying is currently the big buying force people believe it is, but because the buying will grow and the eventual popular backlash against such buying and introduction of legislation in that heated environment would risk a backlash. The Chinese leadership may feel we were targeting them and getting above our station. Trade retaliation would be likely.

That is still the position I hold and the earlier we adopt Australia’s rules with the extra twist noted above, the better for everyone, including exporters to China wanting good access for many years who may feel nothing needs to be done on foreign home buying. You are the ones most at risk should this situation turn bad in 5, 10, 15, or 20 years time.

If there needs to be restrictions on foreign non-resident buyers they must apply to all foreign non-resident buyers.

Over at Kiwiblog, David Farrar points out that Labour’s policy of treating Australians more favourably than Chinese would contravene the free trade deal which that party signed when it was last in government.

Even if it didn’t, putting higher hurdles in the way of those from one or more countries while applying less restrictive rules to others is discriminatory and could lead to tit for tat repercussions which would endanger trade.

That would impact on the whole country when the housing problem is essentially Auckland’s and the solution to it lies not in restricting demand but increasing the supply.

 

 


Wasted opportunity

July 15, 2015

In the debate on Labour’s dodgy numbers on the impact of Chinese purchasers on Auckland’s housing market the root cause of the problem has not got the attention it should.

Eric Crampton focuses on that and points out the wasted opportunity:

. . . If Auckland zoning were sane, all of that capital could be helping to build new subdivisions, new apartment buildings, new townhouses, new mid-rises – new housing. There would likely be less of that capital, as expected price increases would be lower, but the capital would be giving us new housing.

Instead, it’s bidding up house prices. That’s not a particular problem, but big price fluctuations that could come from it are a bigger problem than having too much housing built. In the worst case, if the capital were directed to new building and then the flood dried up, the cost of housing would fall – there would be more housing available at lower cost. Just imagine: Auckland would have low rents and a low cost of living with plentiful housing. If “oh nos! They built too much housing with their own money and they lost a pile of their money and now we get to live cheaply!” is somehow a worst case.

What would it take to fix it? Open up zoning to allow new building under very rapid consenting – again, both up and out. To get substantial new greenfield development in the suburbs, you’ll have to ease up on the Overseas Investment Act at the same time so foreign investors can buy tracts of land to put up housing.

Bit depressing that the knee-jerk reaction is to put controls on foreign investment here rather than to fix the darned rules that prevent its being used more productively.

The problem isn’t who is buying houses nor where they come from.

It’s that the demand for Auckland property is greater than the supply.

Restrictions on development are the main cause of that and more overseas investment rather than adding to the shortage could, if allowed, help improve the supply.


What about the party workers?

June 4, 2015

Labour’s campaign review has been leaked:

This review was into what went wrong and reveals Labour is totally broke.

The review also warns that if Labour does not find some cash quickly “it will continue experience electoral failure and place the status of the party as a political institution of influence at risk”.

It says Labour’s campaign was “undoubtedly hindered by a lack of financial resources”. . .

The review found plenty of other problems, too.

Among them, it says the party’s campaign preparation was “inadequate”, “tension around the leadership and disunity within caucus seriously undermined Labour’s credibility” and there was also a “general lack of message discipline”.

The review, by 76-year-old former British labour MP, has taken over 8 months to find “the policies put forward at the election were often complex, difficult to understand”.

And as for proposed solutions?

Well, “Labour must commit to a vision of a united New Zealand, founded on the Treaty of Waitangi”.

And Labour will set up some more committees – an executive and a campaign committee. . .

The full review is here.

It states the obvious – the party is broke, disunited, has an undemocratic candidate selection process, had an unpopular leader and an abysmal campaign . . .

But what struck me is what isn’t there – there’s no emphasis on the importance of broad-based, engaged membership – the party workers..

The review talks about how National spent much more on its campaign but doesn’t draw the dots between National’s many members and its ability to raise money and gain votes.

National still has tens of thousands of members. It is they who mobilise to provide the people-power which still counts in winning party votes and electorates; it is they who have significant input into policy development and it’s they who provide the solid financial base on which supplementary fundraising builds.

Eight months after its shattering defeat at the polls and into its second term in opposition, the review fails to acknowledge the importance of members and leaves Labour no better equipped to win the next election than it was to fight the last one.


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