Auckland Council’s attempts to ban or restrict open domestic fireplaces keep resurfacing, usually to be beaten back by public objection. It’s like driving a stake through the heart of Dracula – the Council keeps coming back. Their Regulatory and By-laws Committee is set to reconsider the ban tomorrow.
We’ve heard claims that domestic heating emissions contribute the most to a supposed 730 premature deaths caused each year by Auckland’s air pollution, and $727m in healthcare costs.
When you hear such claims, you have to wonder about their basis. The expression, lies, damned lies, and statistics, comes to mind.
How reliable are these estimates? No death certificates cite air quality as cause of death. How do we distinguish these influences, if really measurable, from all other forms of air pollution? Can we be sure that fireplaces in a coastal region like Auckland are a significant influence? And if we have estimates, how accurate, or uncertain, might they be?
Until recently, regardless of ones scepticism about all this, you had no way to assess the claims of those wishing to regulate the remaining open fires in Auckland out of existence.
But a few months ago 2014 Air Domain Report on New Zealand’s air quality was released by the Secretary for the Environment and the Government Statistician. And on 5 March, Parliament’s Commissioner for the Environment released a Commentary on this report.
The Commentary was extremely helpful.
The Commissioner observes that you need to decide what to worry about most, and what least. The air pollutant of most concern is particulate matter. The World Health Organisation (WHO) has four guidelines on airborne particles, for larger (PM10)) and finer (PM2.5) particulates, with guidelines for each for long-term and short-term exposure.
The most important of the WHO guidelines is for long-term finer particulate exposure, and the Commissioner notes the least important is short-term exposure to the larger particles.
But the guideline that for New Zealand’s standard for particulate matter is in fact the latter, the least important of them. We monitor the wrong thing.
The Commissioner recommends a shift to particulate regulation emphasising long-term PM2.5 exposures, observing this would sensibly widen council perspectives beyond home heating. Winter spikes are a short-term phenomenon.
Given the trends in New Zealand’s air pollution the Commissioner concludes that “it does not look like an important environmental issue”. Auckland is comfortably below WHO guidelines for both short and long-term exposure to large and small particulates. Particulate concentrations have been declining in Auckland through the past 50 years.
Good estimates of particulate sources come from a monitoring site in Takapuna, which is considered representative of Auckland air quality. Being coastal, 40% of PM10 and 33% of PM2.5 in Auckland comes from seaspray. European Air Quality Directives allow salt and soil particulates to be subtracted from monitoring results. Doing the same here would greatly reduce the concern about all this.
Auckland’s diesel vehicle emissions are a substantial source of particulates, with a consistently large influence year-round. Interestingly, the efficiency of petrol vehicles means they barely register.
The Commissioner also comments on October 2014’s proposed by-law to reduce PM10 levels from an average of two exceedances of the PM10 rule to one. The Commissioner concludes that complying with that rule would have no detectable effect on health outcomes. So why bother?
More generally, the Commissioner’s commentary showed considerable scepticism of health impact modelling, noting impacts cannot be observed directly and thus have to be estimated from epidemiological studies. The results’ degree of uncertainty should be reported, but hasn’t been. Comprehensive measurements are only available for PM10, but we know PM2.5 is more significant.
Furthermore, The Commissioner notes New Zealand’s mortality estimates are inconsistent with Australian studies for cities with similar PM10 measurements, which show much lower impacts.
In short, scepticism about health impacts is entirely warranted.
This brings us back to the Council obsession with eliminating the remaining domestic open fireplaces in Auckland.
Council could always consider strategies to reduce diesel emissions, but fireplaces? They just don’t matter anymore.
ACT Party Leader
MP for Epsom
It is Tight
The weekend’s election shows how crucial ACT and Epsom are to stable centre right government.
Don’t Cry for Me Aotearoa
Regions like Northland need resource development (see the excellent report From Red Tape to Green Gold by the New Zealand Initiative). The largest handbrake on this is the Resource Management Act. With Peter Dunne intransigent on RMA reform and ACT short one vote, RMA reform will now be decided by the Maori Party (which has two votes). We are optimistic because Maori have much to gain from using their natural resources, but in reality we may have just lost a decade to properly reform the Act.
National’s bridge bribe was a double clanger. Bad policy, bad politics. Successful election bribes, such as Helen Clark’s interest-free student loans, depend on the pork being covered in a crackling of pious virtue (e. g. “we’re doing it for our grandkids”). The bridge bribe was more of the canned spam variety.
Time for a Reformation?
National have two options when it comes to election bribes: get better or quit. We pray there are forces within National who have read the party’s (very good) founding constitution. They should apply internal pressure to end the neo-Muldoonism that made the bridge bribe reflexive.
Northlanders Saw it First
Northlanders watched government hand out billions to Christchurch and Auckland, and tens of millions thrown like confetti on subsidies for sailors to play with billionaires and assistance for casinos to expand. Ten bridges? They must have thought, really?
Winston Peters is now set to be run out of three electorates in one career. David Seymour puts in hour after hour covering New Zealand’s (geographically) smallest electorate. It will be interesting to see just how dedicated the Force for the North will be in attending school fairs, electorate clinics, and all the other activities that a diligent electorate MP performs. Get your invites in early folks.
Plus ça Change
Mr Peters likes to blame the Reserve Bank Act for whatever seems to be the problem of the day. It’s a clever and opportunistic political pitch: hopelessly wrong, but monetary policy is complex enough that he gets away with it. Ridiculous assertions about monetary policy also used to work for Social Credit back in the ‘60s. Some things never change.
Opportunity for ACT
Centre right voters have an alternative party. ACT opposes all corporate welfare, middle class welfare, unsustainable superannuation, bracket creep, wanton government interventionism, and stifling land-use regulation. Like-minded voters are welcome home over the coming two years.
A Broken Selection Model
Free Press pointed out National’s candidate wasn’t exactly a young JFK. We are reminded of when Clem Simich was picked ahead of David Kirk. It is only through sheer determination that John Key avoided rejection by the Helensville electorate committee. How many of Hekia Parata, Steven Joyce, and Chris Finlayson would be in Parliament if they relied on a National electorate committee for selection?
That will be $300, Thanks
When candidates are nominated the Electoral Commission asks for $300 to prove they’re serious. If the candidate gets five per cent of the vote, this deposit is returned to the candidate. Willow-Jean Prime is likely the first Labour Candidate since 1916 to lose her deposit.
Andrew Little’s job is to build Labour, or so we thought. They didn’t just fail in Northland, they surrendered at the starting line. Mr Little has relinquished his claim to be the prime opposition leader. By extension, he cannot claim he would be a powerful Prime Minister. Centre and Right voters have received a clear message: the alternative to a National-ACT government is a Winston-Labour-Green one, almost in that order.
Labour Hypocrisy in Epsom
Last year Labour’s Epsom candidate tiresomely told voters he had come to Epsom to save democracy from strategic voting. We won’t have to listen to that next election. Then there’s the Greens. MP David Clendon, who lives in Kerikeri, could have handily flown a Green flag in Northland. Alas, the Greens didn't stand a candidate.
Proud of our Good Keen Man
Robin Grieve is the embodiment of ACT’s work ethic. Our good keen man in Northland has been everywhere, through the press, at public meetings, in the streets and on the doorstep. His team erected billboards from Mangonui to Wellsford. Unlike Labour and the Greens we are used to strategic voting so his votes do not reflect his efforts, but he did ACT proud.
Thanks to generous donors the campaign almost broke even. If you’d like to tribute the spirit Robin brought to the election you can do so here: http://www.act.org.nz/donate
On Thursday David Seymour attended the launch of a local ride-sharing app, Chariot. Smartphone technology is bringing about a transport revolution where ride-sharing, hailing, and paying get easier and easier. This technology tends to pop up from nowhere and interfere with politicians’ grand ideas of how people should get around. ACT will keep government modest about its grand plans. Let’s not fear unexpected innovation.
Stealth Taxes in the Spotlight
It’s been five long years since National’s tax cuts, and it feels like the taxman’s grip is tightening. There’s a reason: bracket creep. Inflation means our earnings go up on paper, pushing us into higher tax brackets whether we have any real increase in spending power or not. ACT Leader David Seymour has revealed research showing an extra $1036 has been taken per average household through bracket creep since 2010. We think that if the government wants to tax us more, it should do so openly. Indexing tax brackets to inflation would end stealth tax increases.
Charter Schools a US Success
Critics of Partnership Schools say charters are failing in the US. They point to a 2009 Stanford University study with ambiguous results. Since then, Stanford has updated its findings. Successful education techniques have proliferated. Effective schools have grown while ineffective ones have closed. Charters now outperform public schools across the board. Recent news from Massachusetts shows students are learning four times faster in charters than in public school students for reading, and six times faster for maths. And the biggest beneficiaries have been children living in poverty. Free Press is quietly confident that Partnership Schools will help address New Zealand’s educational inequality.
A Funny Thing about the Critics
For Partnership School critics, failure is doing no better on average than public schools. This means no better on measurable features of schools. They put no weight at all on other factors, like parental choice of education style, school culture, the standards set, and so forth. That speaks volumes.
Fireplaces and Emissions
A few months ago, a report on New Zealand’s air quality was released by the Secretary for the Environment and the Government Statistician. And on 5 March, Parliament’s Commissioner for the Environment released an informative commentary on this report. The paper is technical but, in summary, we seem to be applying the wrong air quality standard. Because Auckland is coastal, a major proportion of measured particulates come from sea spray, which is not a concern at all. The Auckland Council has a misplaced obsession with eliminating the remaining domestic open fireplaces in Auckland ‑ they would be better to focus on diesel vehicle emissions.
Auckland Convention Centre
It’s no secret that ACT doesn’t like the convention centre deal. The government shouldn’t be involved in what amounts to crony capitalism. But that doesn’t mean that just because New Zealand First rocks up with a private member’s bill to cancel the deal, breaking existing contracts with all manner of unforeseeable consequences, that we would support them. The public rightly dislikes the sense of a tail wagging the dog. We respect the proportionality of Parliament. The convention centre deal was made in the previous term of government, and would have to change dramatically before a Party with just one MP could justify torpedoing it at this stage.
We are under no illusion that ACT might pick up another seat this weekend! Our focus is building our profile for 2017. It looks like a close race in Northland, even though the self-styled force for the north looks to be degrading even faster than Cyclone Pam as it reached New Zealand. Loyal ACT supporters have indicated that, in order to preserve ACT’s leverage in Parliament and in the hope of getting some job-creating RMA reform, they will probably give their vote to the National candidate this time round. We have no problem with that – we will be after their vote in 2017.
A Good Keen Man
Robin Grieve continues to get rave reviews around Northland. He has the best one-liners of any candidate. Free Press followed him around Mangawhai on Sunday where he pointed out that shooting oneself in the foot would not send much of a message. We understand loyal ACT voters may vote strategically for the National candidate, but Robin’s campaign shows ACT is strong.
Resource Management or Revenue Gathering?
Radio New Zealand reports on an Ashburton farmer fined $10,000 for removing thorny Matagouri bushes from his land without council permission. Matagouri is hardly threatened and is considered a nuisance by many farmers. Why this madness? Perhaps it is because, by applying the Resource Management Act in this way, the local council has generated revenue from this minor slip-up. Is it any wonder council bureaucrats rarely voice support for RMA reform?
When Richard Prebble stepped down as ACT leader, four out of eight caucus members stood to replace him. Chris Trotter said at the time this was symbolic of ACT’s hyper individualism and disunity. Three out of six male Green MPs now think they would be the best co-leader, with another challenger from outside caucus.
Green Party X Factor
Last week the Reserve Bank delivered its March 2015 Monetary Policy Statement, leaving the cash rate (the OCR) at 3.5%. It was big news. During The Nation’s panel on TV3 over the weekend, one of the Green Party co-leadership candidates was asked what the OCR was. He hazarded a guess of 7.8%. Oh well, maybe this level of complacency about the central bank shows the Bank is doing a good job.
Independent Central Banks are Important
You really notice central banks when the politicians take them over. Remember Zimbabwe’s hyper-inflation? Eventually the locals started using US and South African currency. The Reserve Bank of Zimbabwe (RBZ) is now buying back and cancelling the old currency, as it establishes a new currency pegged to the US dollar. According to its recent monetary policy statement the RBZ will be demonetizing old banknotes at a rate of Z$35 quadrillion to US$1. The highest denomination note ever printed by the RBZ is the $100 trillion note, now worth US$0.03.
More Green X Factor
Part of the job description for an MP, you would think, is keeping up with the general macro trends in New Zealand – and this is all the more important for those who fancy themselves leadership material. On The Nation’s panel one MP was asked the growth rate of the economy, answering 0.25%. A miserable quarter of a percent! Trying to talk the economy down maybe? A guess of around 3% would have been reasonable. Another Green MP took a stab at the inflation rate, suggesting 2%, rather than the recent actual annual rate of 0.8%. There were other amusing moments from The Nation’s panel we could mention – but we don’t do bullying on our show.
One of the finest tweets during The Nation's panel performance was this from @kominsens: “When it comes to stats and measurement the Greens will use the 500 year old Kauri formula”. Who needs accuracy when some numbers just sound good?
The Real Problem
Free Press recently saw the real difficulty that the Greens have, up close. When the Finance and Expenditure Select Committee interrogated Transpower representatives, nearly all committee members took part in a sophisticated discussion about the future of the industry. Once upon a time the Green member might have been the only one talking about solar panels, smart meters, distributed generation, electric cars, and so on but these are now mainstream issues. If anything the Green member who, like her colleagues, is elected by an efficient campaigning machine more than personal merit, was a slouch in the discussion. Without a clear and uniting raison d’etre, it is every man for himself. Free Press predicts a turbulent term and further decline in the Greens’ vote share.
The latest ERO reports on Partnership Schools have been published… and they are excellent. Critics of the schools put huge resources into making sure the media highlight every minor problem when in reality these schools are doing wonderful things for students who need this education choice. Free Press won’t let the positive stories fall through the cracks. Let’s celebrate these brave education innovators.
The Jetsons are Coming
We predict that technology will blur the line between public and private transport. This week Uber have launched Uber Pool in East Los Angeles. Up to four people going to similar places at similar times can share an Uber car by tapping their destination on their smart phone. Is this a taxi service or a bus? Google is also working on driverless car projects that would do the same thing, only without an Uber-like driver. Projects such as the City Rail Loop that have a long payoff but are unable to adapt to change are becoming harder and harder to justify.
The Renter Generation
Bernard Hickey wrote an interesting piece in this weekend’s Herald on Sunday. In it he identifies housing, tertiary education, and fiscal costs as issues that younger New Zealanders should be looking to have addressed politically, and even named ACT Leader David Seymour as someone who could address these issues. David shares many of Hickey’s concerns – see this speech from ACT’s conference way back in 2010. We agree with the general thrust of Hickey’s argument, but note that younger generations don’t want to be the cooped up generation, stuck in small, high-density apartments, and note that access to tertiary education is substantially higher than 30 years ago (and if it is free, then you will be paying for it with higher taxes on graduation).
Credit Where Credit’s Due
On Sunday Leader of the Opposition Andrew Little said New Zealanders are paying too much in ACC levies. Good on him – he’s right. But having played politics with ACC over their past three terms in government, Labour shouldn’t be surprised that National is doing a little (very little actually) of the same. ACC is a government agency – of course it’s a political football. Politicians will set the levies for political reasons. The solution is for ACC to be forced to compete with other insurers, meaning prices will adjust according to market conditions, rather than according to the whims of revenue-hungry Ministers.
How the Northland By-election Could End in Court
There has never before been a situation where a list MP has won a by-election, and thus become a constituency MP. The Electoral Act is not clear on what happens in this situation. The courts may have to interpret electoral law in an unprecedented situation. We could expect a legal challenge. Ironically, if Rt Hon. Winston Peters did win in Northland, the Māori Party and United Future are likely to have a substantial increase in political leverage. Who knows what is going through the minds of voters, but our guess is that most who might be considering voting for Peters are not intending to increase the power of the Māori Party. To understand this, we need to consider some possible outcomes.
Scenario 1: National Wins (Nat 60 ACT 1 =61/121)
National winning is still the most likely scenario. It is predicted at 55 per cent by iPredict. Betting markets draw on deeper insights than polls taken before the National candidate was known. National is mobilising formidable resources for the by-election, but the voters have to like the candidate.
Scenario 2: ACT Wins (Nat 59 ACT 2 =61/121)
National’s candidate is not exactly a young John F Kennedy. We hope we are wrong and that the candidate’s steady improvement throughout the debate on TV3’s The Nation is indicative. Perhaps the Prime Minister will have to endorse Robin Grieve, an experienced campaigner, as the only candidate who can save the right. Stranger things have happened.
Scenario 3: Labour Wins (Nat 59 ACT 1 UF 1 Mao 2 =63/121)
Willow-Jean Prime is competent and knows how to deliver a political message. Very long odds, but David Seymour, who went to primary school in Whangarei, would love to hear that Northland accent in parliament, Mishta Schpeaker. This scenario means National require either the Maori Party, or both United Future and ACT, to pass legislation – a big win for the Maori Party and UF.
Scenario 4: Peters resigns before election day and wins (Nat 59 ACT 1 UF 1 Mao 2 =63/121)
Under this scenario the Speaker must declare a vacancy and whomever is next on the NZ First list gets the strangest 2½ years of their life. Peters’ return to parliament depends entirely on Northland. Again National will need the Maori Party, or both UF and ACT to pass legislation. The Prime Minister might eventually have to consider a snap election, as sensible policy change is blocked. This is the best outcome by far for the opposition, and gives Peters a dilemma: If he thinks he’s going to win, he should resign now to maximise the gains. If not, he should withdraw and give Prime a clear run for the same outcome.
Scenario 5: Peters resigns before election day and loses (Nat 60 ACT 1 =61/121)
Peters is out of parliament, replaced by whoever is next on the list. The NZ First caucus star in a reality TV series, Game of Crones. National can get on with policy reform, with ACT support.
Scenario 6: Peters wins on election night and resigns before return of the writ
This scenario is more interesting. Peters could resign after the election result is clear, but before the return of the writ, forcing the speaker to declare a vacancy. Not doing so would be a big call for the speaker. At this point he would not be legally elected for Northland and his resignation would be only as a list MP. How would the electoral commission respond? There are two sub scenarios:
Scenario 6a: (Nat 59 ACT 1, UF 1, Mao 2 =63/121)
The Commission mechanically replaces Peters with the next NZF list MP, then appoints Peters the MP for Northland upon the return of the writ. The outcome would be the same as scenario 4. This would change the proportionality of Parliament, which is supposed to be set by the party vote at the general election, but the Electoral Act says nothing about the proportionality needing to be maintained in such situations, and there are good reasons for this on a practical basis (especially for Parties that had less than 5% at the previous election). In this scenario retiring list MPs are replaced off their party list.
Scenario 6b: (Nat 59 ACT 1 UF 1 =61/120)
But the Commission might decide to hold over the appointment of a new NZF MP until return of the writ, when one is entering anyway. The size of the NZF caucus does not change. Thus Parliament would have 120 members. This scenario would likely also end up in court (remember how Peters won Hunua). Now National would need the support of ACT and UF, or just the Maori Party, to govern. That would be the end of substantive RMA reform.
Scenario 7: Peters loses and resigns after return of the writ
Peters is out of parliament and replaced by another list MP. Game of Crones without a leader – comedy central. Highly unlikely but who knows, maybe a loss in the by-election will put Peters off politics?
The Take Out
A Peters victory in Northland could lead to a court case, and will empower the Maori Party and, to a lesser extent, Peter Dunne.
In my recent ACT Party conference speech I called for a referendum on options for the future of New Zealand Superannuation, with a view to ensuring we have a fiscally sustainable structure which can accommodate our lengthening life expectancy and the demographic reality of a rising proportion of retired-to-working-age people.
The objective is to ensure that the New Zealand Superannuation scheme is fair across the generations, and sustainable for future governments.
This issue has long been a political football. It is too hot an issue for politicians to handle. My idea is to take it away from politicians of any particular party – including ACT.
I have called for a referendum process akin to that being used for deciding on a new flag – ie establish a group to identify options, and put those options to the public to determine by referendum. One option would be ‘no change’.
A parliamentary committee representing all parties would appoint a non-parliamentary expert group. Their task would be to consult with the public and establish some options on how the New Zealand Super scheme might gradually evolve over time so as to ensure it remains fair and sustainable.
An editorial in the Dominion Post (26 February) was supportive of the idea:
“A referendum could help break the logjam of pension politics and allow the country to finally deal with a serious problem. Everybody knows that we can't keep dodging this issue, even if the politicians insist on doing so.”
An NBR editorial (23 February) noted that making changes now “will hurt a lot less than having to undertake the fiscal and political equivalent of an enforced naked roll in an entire bed of nettles, sometime in the 2020s.”
That observation nicely makes the point that changes planned for New Zealand Super today, if any, are about preparing for the decades ahead, particularly those around mid-century. The need for change is only going to become more apparent with each census – why not stake out a plan now so that future generations aren’t caught unawares?
Because opponents of change typically seek to muddy the waters around this issue, one obvious point must be made: a gradual lift in the age of eligibility would not affect those now retired, nor those close to retirement.
I was disappointed to see a report in the Oamaru Mail, where Grey Power President Terry King, came out strongly opposing the idea of a referendum, describing it as “a cheap publicity stunt”, and asserting, contrary to all evidence, that there is “no justification, financial or otherwise, to increase the age of eligibility”.
This is a sad response, and wildly out of line with the reality of the situation.
I have a simple message for Grey Power.
This is about the New Zealand we leave for the generations ahead.
This is about your grandchildren, not about those currently retired.
Robin Grieve, an orchardist and health and safety consultant, is the only Northland by-election candidate who’s supporting himself in the private sector. “A council bureaucrat, a career politician, a district councillor, and a self-employed businessman walk into a bar…”
National isn’t taking advice on the tough issues. Last Wednesday in Parliament a National back bencher was asking Hon Anne Tolley soft pedal questions so she could hold forth on the generosity of national super. Ms Tolley was revelling until ACT Leader David Seymour asked: had she seen any Treasury reports on the scheme’s sustainability? No. The Minister for Social Development, the biggest spender in the Government, had not read a vital Treasury report.
The Treasury’s Long-term Fiscal Outlook predicts the cost of NZ Super will rise from 4.4 per cent of all economic output today, to 7.9 per cent by 2060. Small beer? It is the compounding effect that should worry taxpayers. The government’s on track to be indebted by 198 per cent of GDP by then. Even the Dom Post is (reluctantly) endorsing ACT’s plan (more on this later).
Not Giving Up
Making Superannuation sustainable is too important to ignore. David Seymour has written to all parliamentary leaders asking them to support ACT’s initiative of having a public consultation and referendum on Super. They should all be on board. Today’s swing voters may appreciate Prime Minister John Key’s pledge to maintain the status quo, but historians will not be so kind. Labour want to help, but dropped their policy of raising the age after losing the election. Hon Peter Dunne wants to explore variable rates for people who take Super earlier or later. The Maori party know, or should know, that the Maori population are younger and it is young Maori taxpayers who are in the gun if things don’t change. The Greens are always talking about sustainability, what about fiscal sustainability? We still hope to appeal to Winston Peters’ affinity for referenda.
Credit Where It’s Due
The NBR is crediting the Taxpayers’ Union with blowing the lid off corporate welfare. Normally think-tank like organisations do lead debate on such issues, but the party of ideas raised the issue months before the T.U. We also remain the ones who can influence it in parliament. The original and best call for ending corporate welfare is here: http://www.act.org.nz/files/AlternativeACTBudget_v3_0.pdf
Breathtaking Resignation Letter
After 13 years heading the Intergovernmental Panel on Climate Change, Rajura Pachauri has resigned saying his work was not only as a ‘mission’ but as ‘his religion, his dharma.’ We like missions and religious freedom as much as the next person, but shouldn’t the IPCC be a place of science? For the record, Free Press subscribes to Matt Riddley’s ‘luke warmer’ school of thought on climate change, which goes like this: “we started with an open mind but the hockey stick, climate-gate, and flat 21st century temperatures all made us a tad sceptical. The problem is real but it’s the size that matters and it’s nowhere near as bad as the alarmists make out.”
No Case for Fireplace Bans
Speaking of science. Last week we were briefed by the Parliamentary Commissioner for the environment. She is respectable on most environmental issues. As it turns out levels of PM25, very small particles that cause the most health damage, are not problematic in Auckland. There is no health case for banning fires on a narrow isthmus where 40 per cent of PM25 is salt. It probably won’t make much difference but we’ll ask anyway: what was Auckland Council thinking?
Military training assistance to Iraq
David Seymour spoke in parliament in favour of playing our part in Iraq. You can watch his speech here or read it here. We think of the Kiwi effort as a tiny contribution to nation building, the sort of thing the so-called progressive left used to support – and obviously will again, when they return to power. So Labour is playing this for the politics, which is shameful.
The PM was in full-on Churchill mode in supporting Iraqi nation building. Unfortunately he has gone all Neville Chamberlain on ensuring a viable long-term structure for NZ Super. The NZ First Leader, with the advantage of his first name, probably wins on Churchillian style but his substance was cut-and-run Chamberlin too. What would the WWII generation think of that?
Dom Post Love In
A sure sign of ACT’s revival is the love-hate attention paid to us by the increasingly erratic Dominion Post. Two editorials, several letters to the editor, a cartoon, and half a dozen news stories on ACT last week alone. Even when they agree with us the tone is teenage snark, but the times, they are-a-changing.
The Winterless North
ACT’s good keen man in Northland is already campaigning. At the Northland Field Days this weekend he was well received by those worried that National is forgetting Northland. He’s giving a month of his time and needs your support for billboards, letters, and advertising. You can donate to Robin’s campaign here: www.act.org.nz/donate
Labour MP Stuart Nash recently called for a parliamentary enquiry into petrol prices. National MPs in the finance and expenditure select committee voted against such an enquiry. They were right to do so.
Inquiries can be expensive and often politically motivated. Inquiries should only be initiated on solid evidence, not on a politician’s hunch. Too often they are motivated by opportunistic grandstanding.
For a start you need some evidence that there is a problem. The evidence offered was weak, citing MBIE weekly oil price monitoring data – namely the time series data on the “importer margin”.
What is the “importer margin”? Most people will assume it somehow represents profit margins.
But it does not. It represents the amount available to retailers to cover domestic transportation, distribution and retailing costs, and profit margins. If all those elements other than profit margins had been stable, which of course they have not, then there may be an issue to consider a little further.
So, the data simply does not connect with the issue that is claimed to be a problem. No wonder the FEC rejected the idea of an inquiry.
More broadly, the last inquiry into the industry in 2008 found the New Zealand domestic petrol market is fundamentally competitive and that retail petrol prices are not fast to rise and slow to fall. Subsequent NZIER studies in 2011 and 2013 also found no asymmetry in adjustment of prices in New Zealand petrol prices.
Here are some points to consider on this, and other, inquiries.
- Inquiries should be initiated on solid theoretical and empirical evidence, and not on a politician’s hunch after looking at a graph of aggregate data that does not even mean what the label suggests.
- New Zealand politicians have a track record of calling for populist inquiries (e.g. milk and supermarkets) that find nothing.
- In 2008, the AA called for an inquiry into fuel prices. The MED inquiry found that the domestic petrol market is fundamentally competitive and that retail petrol prices are not fast to rise and slow to fall.
- Inquiries/investigations are not costless. Indeed, they can be very expensive. For example, the 2009 Commerce Commission electricity investigation cost millions ($3.5m).
- The Commerce Commission can initiate a part 2 investigation or part 4 inquiry, if it thinks one is required.
- The illegal exercise of market power is very difficult to detect using empirical data and the results are very easy to dispute. For example, the ‘Wolak’ electricity price investigation was widely criticized and theoretically it was never going to be able to say whether firms were illegally exercising market power.
- An asymmetry in adjustment of prices is often used as evidence of anticompetitive behaviour. But NZIER studies in 2011 and 2013 found no asymmetry in adjustment of prices in New Zealand petrol prices.
- Even if an asymmetry in adjustment of prices was found it is not in itself evidence of market power – this price pattern (called ‘Rockets and feathers’ - prices often rise like rockets but fall like feathers) has been found across many industries – even extremely competitive ones. There are a number of economic theories to explain this.
- The “importer margin” data from MBIE obviously does not give a useful perspective on petrol company margins, in so much as these margins might reflect a public policy concern. Apart from not representing just the profit margin, the MBIE’s retail price data also doesn’t include supermarket fuel and loyalty card discounts, regional discounts (which can be 20 to 30c under the average national price) and other costs such as credit card interchange fees, distribution costs, advertising and rental costs. Exchange rate hedging adds yet another level of complexity to assessing the margins in this extremely complex industry.
In short, the evidentiary hurdle for an inquiry was not only not met, it didn’t even get off the ground.
ACT’s conference was attended by 230 people. Usually drawing a crowd is hardest after an election. This crowd was larger than last year’s. ACT Leader David Seymour’s speech has been widely reported as a new beginning for a new party. The tone of the conference and reporting of it heralds a new zeitgeist for ACT. Read David’s speech here: http://www.act.org.nz/posts/speech-our-classical-liberal-tribe
Become a Member
Many conference attendees joined ACT to get the attendance discount, but there is a much better reason to join ACT. Membership lists are secret but your number adds moral weight to our party. If you like what we’re doing, please add your weight today. www.act.org.nz/join
Let’s End the Mexican Stand Off
Treasury predicts that government debt will reach 200 per cent of GDP by 2060 on historical patterns (Greece is currently at 176 per cent). Much of this will be due to pension costs, and yet the political class is ducking the issue. Prime Minister John Key has not only refused to move, he has made a virtue of his inertia. For Labour, the superannuation entitlement age has become a victim of Andrew Little’s scorched-earth policy on policies. The others are silent. ACT’s policy is to raise the age to 67 over the next decade. We also advocate indexing the payment to inflation rather than wage growth, but we know that one party will not get its way on such a large issue.
Let’s Have a Referendum
New Zealand is having a referendum on changing its flag. If the flag is important, then long term fiscal sustainability must be very important. What’s interesting is that the flag process is perfect for superannuation reform. It involves appointing a non-political group of New Zealanders to consult the public and generate options, which are then put to a vote. The preferred option from the first vote then runs off against the status quo in a second public vote, perhaps run in conjunction with the next election.
Challenging the Leaders
David Seymour is writing to all parliamentary leaders asking them to support this initiative. Watch this space.
The Party of Selflessness
David Farrar’s speech was a conference highlight. He made a particularly interesting observation about ACT’s selflessness. Every other party tries to deliver goodies to their voters. ACT’s Partnership School policy, he says, primarily benefits people in South Auckland where ACT’s support is weaker than elsewhere. It may be that Mr Farrar’s polling has failed to pick up ACT’s South Auckland support, and that he underestimates our supporters’ sophistication – everybody benefits from living in an educated society. However, we take his point. Superannuation reform is about taking steps today that will pay off starting in a decade. ACT is a party that does what is right, and people support us for precisely that reason.
Last Monday we attended a citizenship ceremony at the Auckland Town Hall. 431 people from 57 different countries gave the most sincere vote of confidence in New Zealand. A highlight was when all 57 countries were read out to polite claps and cheers. When Australia was read out there was an awkward silence before the hall erupted from giggling into laughter and finally applause. Who says immigrants are not embracing the Kiwi way of life?
The winner of our conference's speech competition, chosen by audience vote, was a young man who explained the economic benefits of immigration. His point is backed up by this tweet:
While we generally regard Twitter as a dubious place to gather information, this really gained our attention. If even half of these are true it speaks volumes for the connection between immigration and innovation. Let’s hope many of those 431 new citizens become standout innovators too.
Confidence over Competence
Our view of Twitter is formed by people such as New Zealand First Deputy Leader Tracey Martin. In her own way she is an inspiration, never letting her competence hold back her confidence. Her criticism of Partnership Schools makes the Greens’ look thoughtful. We couldn’t help but notice that, nevertheless, she is now calling for school choice!
We are told by lines companies that electricity volumes have levelled off or fallen for the past four years. A first since World War II. It is due to smarter appliances, insulation, light bulbs and, we suspect, lower gas prices from the shale gas revolution. Lines companies are fixed cost businesses. As volumes fall, lines companies need to charge more per kWh to maintain their revenues. But then home generation becomes more attractive, accelerating the lines companies’ demise. They are up against it. Is it right for a government to pick winners in such unpredictable markets? Is it green? More generally, nobody likes chicken little when the world keeps getting better.
We have been open to the narrative that, in Andrew Little, Labour finally have a leader who can take it to John Key. Last week’s events put that in serious doubt. Little was shamed into paying a $950 bill to an NBR journalist who worked on his leadership campaign after the NBR reported it and Steven Joyce raised it in parliament. It raises so many questions: Why didn’t Mr Workers' Rights pay his employee? Why did Little have to hire an NBR journalist, like ACT hiring John Minto? Why didn’t he pay it before it got into the NBR? Why didn’t he pay after it became public instead of waiting four days until parliament resumed? Why was the leader of the opposition walking around parliament all alone where TV3 could ambush him for a humiliating interview on the topic? What is going on in Labour?
Freedom Isn’t Free
If everybody reading this letter contributed $1 per week to ACT, we would be the best funded party in New Zealand. We have had feedback suggesting Free Press alone is worth far more than that. If you would like to help ACT achieve its goal of returning to Parliament with five MPs in 2017, please consider starting or increasing your regular contribution with whatever you can afford.
Not Too Late
ACT’s conference is heavily subscribed. Thankfully the venue is a 1000 hectare sculpture park. It could fit 10 million people at one person per square metre. Tickets are still available.
This will be a new type of ACT conference. Tight blues band Monty and the Hawkes are the entertainment. The number of entries to the New Zealand the Way You Want It competition has overwhelmed judges trying to choose finalists. Competition to win $2000 in the audience-judged final will be hot. An all-star panel includes the founder of GrabOne. David Farrar will explain why his 2012 ACT obituary was wrong, and how to make it more wrong. Insiders say David Seymour’s speech will be the highlight.
Worried about the Wrong Subsidy
The Skycity situation is a mess. Critics have focused on the $130 million that Steven Joyce promises taxpayers won’t have to pay. They should be worried about the $402 million worth of gambling concessions that are being taken for granted. The real problem is this: If Skycity can make an extra $402 million without harming problem gamblers, why hasn’t National lifted gambling regulations nationwide? So many charities and sports clubs could use the money. On the other hand, if making an extra $402 million from gamblers will increase gambling harm, then we are asking some of the most vulnerable people in New Zealand to fund a convention centre. Which one is it?
Where’s the Cost Benefit Analysis?
ACT’s Regulatory Responsibility Bill would have gotten this question answered. It requires answers to questions such as who wins and who loses in a regulatory change be published before the legislation was voted on. Transparency around effects of relaxing gambling restrictions would be a perfect example of ACT’s bill in action. Now we’ll never know. ACT remains heavily committed to regulatory reform.
Taxpayer Funding Would be More Honest
If the government really could profit by investing in a convention centre, it would be better funded out of general revenues. Of course, it is not the role of government to make such commercial investments. The Russians first tried this approach 98 years ago and they are still recovering.
The Perils of Coalition Government
Despite vocal opposition, ACT was never going to vote down a government budget. That would be reneging on the agreement to vote for National Party budgets, potentially forcing an election. We don’t like the situation any more than you do, but we’re not going to force the David Seymour Memorial Snap Election of 2015 over a casino.
A Good Keen Man for Northland
Our Northand by-election candidate is Robin Grieve. He embodies ACT values, running his own business as a health and safety consultant for dangerous industries and growing avocados on his orchard. He is also an award winning speaker. We are very lucky to have such a sound New Zealander representing us for Northland. Anybody who has seen him speak knows that, if elected, he would immediately be one of the top 10 parliamentarians.
A Region Neglected
It may surprise readers in the economic boiler rooms of Auckland and Christchurch, but provincial New Zealand is hurting. Overregulation prevents mineral developments that could rejuvenate the regions. Northland roads are notorious while the National Government taxes Northlanders to fund rail loops and convention centres. Lower living costs should be a Northland advantage, but the government makes employers pay a minimum wage that is really set for Auckland. The area south of Whangarei is comparable to the Los Angeles basin for its development potential. It has expansive flat space, a sunny climate and beaches, yet it is only connected to New Zealand by a goat track. A century of infrastructure neglect has held this back.
King’s Dodgy Crystal Ball
Labour veteran Annette King has been using parliamentary time to speculate that Judith Collins will join ACT. There is no such negotiation. Does Annette King know something about ACT that ACT doesn't know? Surely her thoughts would be better spent on addressing Labour’s own machinations.
David Seymour’s opening speech to the 2015 parliament has been widely praised. He tackles Andrew Little’s call for racial separatism and makes the case for RMA reform and Partnership Schools. You can watch here.
Freedom Ain’t Free
The New Zealand government has an annual budget of $80 billion, assets of a quarter trillion, about 250,000 staff, an army, an air force, and a navy (sort of). This is what we are trying to take over. Please help level the playing field by bolstering ACT’s resources. You can donate here.