Sharing Economy to be worth $335 Billion. Price Waterhouse Coopers project that the sharing economy, Uber, Air BnB, Chariot and the like, will be worth $335 billion worldwide by 2025. Long term surveys show people are becoming less trusting, while increasingly using sharing apps where trustworthiness is recorded over successive transactions. Technology is complimenting free market activity and reducing the need for government regulation. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11434321
Markets of Virtue
It is popular to decry market activity as cynical. Here is a simple experiment that shows how markets bring out the best in people. Go to TradeMe and view feedback on some traders’ profiles. People with a visible reputation rush to make good their misunderstandings and build goodwill. That’s the market in action. Now go to the comments section of a political blog. That’s politics.
The Case for Economic Growth
The New Zealand Initiative have published an excellent essay entitled “The Case for Economic Growth”. See here. Among their many well-made points, people subsisted on an average of 50c per day for 100,000 years until 1820 when capitalism came along. Today New Zealanders are around 200 times wealthier. They also present evidence that wealth makes us better environmental custodians, and even makes us smarter.
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US trends are often a useful guide to how technology will affect the NZ workplace. CareerCast rates 200 jobs on the basis of the work environment, stress levels and hiring outlook. The top jobs tend to use math and coding skills, have a demographic tail wind from the aging population (audiologists, optometrists), or first world problems (dental hygienist, dieticians). Way down at the bottom, number 199 and 200 were respectively lumberjacks and newspaper reporters. Make sure the kids do their math homework.
It’s not All Bad
The job outlook may not be great for journalists in traditional newspapers, but other US data shows rising demand for the skills of journalists, due to the surge in online sources of written news and commentary, as well as in related industries like public relations. Also, lumberjacks have apparently re-emerged in the hipster world, which covets “lumber-sexuals”. Big beards and plaid shirts!
Equipping our Kids with the Right Skills?
We should take seriously that NZ math and science performance fell sharply in the last 2012 global PISA survey. The most worrying aspect was the decline for Maori. We must equip our kids with the essential skills for the 21st century, so they can find meaningful jobs. That is why we need new education strategies, such as ACT’s Partnership Schools.
Capital Gains Taxes
Last week the Reserve Bank deputy-Governor recommended more capital gains taxes on housing which resulted in a brief flare-up debate. By the end of the week all that was left was a gentle smoulder, more smoke than heat. Free Press is relieved that the CGT is off the table for both major parties.
CGT Winners and Losers
A capital gains tax on housing would increase costs for landlords. The person renting would pay all or most of the new tax. Why? In the longer run, capital will only flow into rental housing if the return is adequate. Costs get passed on.
What about the Regions?
The last thing the regions need is another tax for Auckland’s sins. It would be a rerun of the debate over the Reserve Bank’s LVRs, an initiative made necessary by Auckland and paid for by everyone. Free Press wonders if the Wellington-based Reserve Bank has hatched a plot to make Aucklanders more unpopular than they already are.
Once More, With Feeling
It’s the Supply Side. From the Deputy Governor: “Urban planning rules are complex and often restrictive. Planning must take account of the Resource Management Act, Local Government Act and Land Transport Act.” He went on to quote the Productivity Commission estimate that the cost of planning regulatory requirements is between $32,000 and $60,000 per house in a subdivision, and $65,000-$110,000 for an apartment. That’s why regulatory reform matters. Free Press apologises for banging on about this, week after week, we’re getting tired of it, too, but regulatory reform is the only way to cure the disease, not the symptoms of a housing shortage.
The Real Culprits
The real reason for housing shortages is the zealous drive to intensify cities at all costs. Last week the New Zealand Planning Institute hosted its annual conference ‘back to the future,’ with the kind of zeal that would make real clergy blush. Headline speaker Charles Montgomery corrected Q+A’s Heather du Plessis Allen that he doesn’t ‘think’ that living closer together will make you happy, he knows.
The Greatest Challenge since WWII!
Attendees told Free Press that Green MP Julie Anne Genter spoke and compared the need for more compact cities with the challenges faced during World War II. We wonder if she’ll be using that speech on Saturday. When the troops returned they built lots and lots of… suburbs.
Take it Easy on Landlords
In politics it seems to be “landlords bad, house buyers good”; all very George Orwell. But we need plenty of landlords as well as owner-occupiers. People are mobile these days. The transactions costs in buying and selling houses are huge – agent commission, legal and accounting costs. Housing prices can be flat for many years, maintenance costs are high, people often over-capitalise, and people forget about the opportunity costs from alternate investments. If you wanted a leveraged investment you would have done far better in the share market in recent years than in Auckland property. People who have ended up with a leaky building are very aware of the old adage that housing is often a highly leveraged liability masquerading as an asset.
It’s Catching Vernon Small of the Dom Post says ACT’s call to index tax brackets to inflation is a ‘canny policy.’ The only real downside? “Let's face it, when it comes to vote-harvesting, drip fed tax cuts will never beat a multi-billion dollar election year tax package.” That people will keep their own money without having to wait for an election lottery is actually another reason to support the policy.
Defending John Campbell
Tribal politics has erupted from the inkling that Campbell Live might be cancelled. Rookie National MP Todd Barclay offended more people with one anti-Campbell Facebook post than some will manage in their entire career. Not to be outdone, Labour have issued a press release defending Campbell.
John’s Our Boy
Campbell thinks and even says he’s a leftie, but look at what he does: He fundraises for people in tough spots, most recently Vanuatu. He goes after shonky business practices, last year shaming the nation’s malls into getting rid of a particularly predatory and irritating sales company. He advocates for people getting a rough deal from government departments, such as the Immigration department. He does all of this without government help, while entertaining thousands and making an eye-watering salary. If you’re reading this John: www.act.org.nz/join.
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Adam Smith’s Boy, Too
The father of capitalism was a moral philosopher in a time of great poverty. He invented economics to explain ‘the nature and causes of wealth,’ but he died perfecting his favourite work, ‘The Theory of Moral Sentiments’ where he said, The great pleasure of conversation and society, besides, arises from a certain correspondence of sentiments and opinions… But this most delightful harmony cannot be obtained unless there is a free communication of sentiments and opinions. The Campbells of the world are essential to a free society.
Spiritual Son of Sir Roger
At 51, Campbell came of age under Rogernomics. Older lefties would spend their time calling on the government to ‘do something’ where Campbell uses argument, persuasion, and private fundraising. What’s more, he does it on New Zealand’s first privately owned TV channel, whose history is one of deregulation and foreign investment. The creative destruction that made his show may now end it, but not its spirit.
“This House Believes Internet Access is a Human Right”
David Seymour’s team convincingly negated the above moot in front of 200 high school students, who were assembled for a UN Youth camp last Friday. Free Press readers might have certain presumptions about such an audience, but they’d be wrong. Opponent Laila Harre completely misread them. Losing the debate, she started attacking David but the audience took to Twitter and told her to get some arguments instead of ad hominem. The times they are a-changing.
Bring Back Nandor
Wellington-based Green Party leadership contender Gareth Hughes was late to the debate due to flight delays. Were none of the 14 Green MPs available in Auckland? To his credit, Nandor would have taken the train (and flown at the same time). The Greens they have a-changed.
ACT is the last party to call for a new tax, but some of them should be better labelled. Bill English has admitted another billion dollars may need to be dropped into the ailing Kiwirail. ACT says let’s be up front about this: one billion dollars is the same as businesses paying an extra cent of company tax (currently 28 cents on the dollar) for the next four years. It would be more honest to say the company tax is now 27 cents, plus a one cent levy for Kiwirail. Let’s make it crystal clear that but for the rail bail, company tax could be reduced by a point. Transparency.
It’s Already a Crime
One News reports on an Indian student at Canterbury who likes to wear a Turban. Probably a good idea in Christchurch at this time of year, but he has had death threats after false accusations were made against him on Facebook. As David Seymour has pointed out, inciting violence is already a crime (Crimes Act 1961), and the police can easily find people on Facebook, but they didn’t bother until they were shamed by journalist Rachel Parkin. It is important to enforce the laws we have already before making new ones such as the proposed Harmful Digital Communications Bill.
Winnie and the Wailer
It’s said that in politics you should accuse your opponents of your own worst trespasses. New Zealand First MP Tracey Martin bizarrely attacked Hekia Parata for barracking in Parliament. David Seymour sits one along from Parata and reports she is one of the most dignified parliamentarians. MPs who sit near Martin, however, will need hearing aids before they retire.
More Private Greening
A fertiliser company has been sponsoring a series of regional awards through the New Zealand Farm Environment Trust. It’s for farmers who, among other things, manage run-off. According to the farmer versus environment mindset this shouldn’t happen, but ACT has long said that property owners make the best environmentalists. An example is the Bay of Plenty Supreme winners: “The mud soils are high in phosphate and to reduce phosphate loss John has constructed up to 200 detention dams throughout the farm, which slow the runoff and collect sediments.” The whole story of these farmers working with the land is a good read for those of us who think meat is made at Countdown: http://www.nzfeatrust.org.nz/vdb/document/315
Over the weekend, David Seymour used an interview on TVNZ’s Q+A to outline ACT’s relevance. Correspondence has poured in saying it is his best performance yet. It’s still online here.
The Real Outcome of Northland
You’ve heard it before, but a point worth repeating from Q+A: By refusing to compete in the heartland provincial seat of Northland, Labour’s Andrew Little ceased being the prime opposition leader. Winston Peters destroyed Bolger and Clark in their respective third terms. Little would have to accommodate a strong Winston in his first term. ACT is as relevant as ever to voters who want a stable coalition on the right.
A Costless Poverty Measure
Among David’s points: ACT has the soundest poverty policy, making housing affordable by fixing the regulatory framework. The Listener recently suggested child poverty would be more than halved (from 285,000 to 130,000) if only housing returned to affordable levels. Surely the poverty lobby should be on board here?
It’s the Land…
A major attraction to New Zealand is abundant land (it’s no coincidence that the Kiwi Dream is a place of one’s own) but now you’re not allowed to build on much of it. Overwhelming international evidence tells us that overbearing land use planning strangles the housing supply, pushes up prices, and fuels speculation. This evidence comes from North America where tax and monetary policies are similar nation-wide but land use planning varies by State and City. You don’t build a $150,000 house on a $500,000 section, so the poor get cut out when land is scarce. You also don’t mass produce housing if there’s no pipeline of land to put it on, so those who can’t afford bespoke homes lose again.
An Intellectual Wasteland
The greatest disappointment of the program came from Grant Duncan, a little-known Massey University academic on the pundits’ panel. Rather than considering, let alone refuting, the arguments above, he described ACT’s concern for poverty as a ‘joke’. His contribution to the world of ideas didn’t improve throughout the session, consisting of petty ad hominem attacks. He referred to ACT as a lapdog and Epsom voters as sheep. His argument against ACT was not about policy but polling. So much for politics as the contest of ideas. Free Press wonders if Mr Duncan was having an off day, or if his performance reflects the standard at Massey? If so, should Massey students ask for their money back?
Also covered in the interview is ACT’s call for a referendum on superannuation. If New Zealand can appoint an expert committee to generate options for changing the flag, then vote on them in two referenda, why not do the same for the critical issues of fiscal sustainability and intergenerational fairness?
Watch this Space
David has written to and is talking to nearly all leaders about the Super Referendum idea. The reception has been cordial so far – more to come.
Dr Cullen Strikes Back
We know Labour’s fiscal blowout sunk the tradable sector of the economy from 2005 on, and forced New Zealand into recession before the great financial crisis. But, as a thought experiment, could Helen Clark have won a fourth term if Michael Cullen had cut taxes instead of spending more in her third term?
Here we go Again
As David revealed in parliament, the stealth tax increase of bracket creep has cost the average Kiwi family $1036 since 2010. This year it will cost them another $431. Things are starting to sound familiar.
A Clark II Prime Minister
The final point from the interview was: After seven years of National, is this as good as it gets? Centre-right voters accept that after earthquakes, a global financial crisis, and an attempted coup by Kim Dotcom, we’re damned lucky to have the government we have. But John Key has effectively declared a truce on Clark’s policies. What about housing, super, and tax? Are we merely holding our ground when in power and going backwards when out?
ACT goes to Tanzania
The world now has two ACT parties. The Alliance for Change and Transparency (ACT-Tanzania) party was officially launched in Dar es Salaam earlier last week. They adhere to principles of “patriotism, democracy, freedom of thought and action, dignity, equality, integrity, transparency and accountability”; and believe in “self-reliance, hard work, sincerity and professionalism towards bringing positive change in the country”.
Monetary Policy Confuses Everybody
Bill English said the outlook for interest rates depends on "whether you think zero inflation is permanent or temporary, and it's a bit hard to tell right now. The question of whether it's permanent or temporary: that's exactly the challenge the Reserve Bank Governor has got.” Actually, it’s simpler than that: the Reserve Bank’s job is to keep inflation within the 1-3% target band, regardless of whether global inflation is high or low. So the medium term inflation path should be determined so long as the Bank does its job. What’s hard to judge is just how long near-zero, or even negative, nominal and real yields will persist in the major industrialised countries.
But it Confuses NZ First the Most
Winston has always been good at making complicated issues seem simple, perhaps a little too good. He’s claimed that high interest rates are both crippling the economy and creating a consumption boom. So high interest rates discourage spending and investment and encourage spending and investment. Welcome to Planet Winston.
Apparently every MP receives a generous box, perhaps $100 worth, of Easter treats from the Food and Grocery Council. What is the purpose of these big boxes? Surely no MP would be influenced by Easter eggs, even an inexplicably large number of them, but then why go to such an effort? For the record David sent his straight back.
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