Archive for July, 2005

More positive campaigning

July 31st, 2005 at 11:03 am by David Farrar

This is so lame it needs all the publicity it can get.

I think it is a tribute to the job Don Brash has done that he is attracting more personal attacks and abuse than anyone else in the last 30 years. There was never a demonise and must stop David Lange campaign, never a stop Bolger campaign, never a stop Moore or Clark campaign such as the campaign against Brash.

As for the retarded idiot who came up with George W Brash, I mean can’t they be more original? I do like the sheer vitriol that blinds people that they compare a guy who is probably one of the most intelligent people in NZ, with a PhD, and 30 years experience as a successful chief executive with Bush.

The other irony is that Bush has been the most electorally successful President in recent history. He came from a dead heat in 2000 to a huge victory in the 2002 mid-terms and then in 2004 not only was he re-elected but they picked up seats in the House and Senate which happens around once every hundred years.

Anyway go read the site and promote it. The more non-partisan NZers who see it, the better it will be for Brash.

UPDATE: The site has been taken down just a few hours later. See Aaron for details. A pity as I think it actually helped Don Brash.

UPDATE 2: Some good sleuths have traced a link between the company which is the registered owner of the smear Brash site and the Office of the Prime Minister. See the details in the comments thread.

Also worth looking at this post at Sir Humphrey’s which highlights how it is most unlikely Helen Clark was surprised at Mallard’s mud slinging attack on Don Brash, as she had used the same lines, albeit it more diplomatically, a few days before Mallard did.

No tag for this post.

The Great Morality Debate

July 31st, 2005 at 9:41 am by David Farrar

Just taken the SST Morality Test. I suspect my responses were very atypical, so will be interested to see overall results.

Calling the Whig

July 31st, 2005 at 8:25 am by David Farrar

I recall Blair (formerly the Whig) was a Hayley Westenra fan, so as a public service here’s an article on how she is still single Blair and hence available to be the next Whigette.

Speeding PM Court Case

July 31st, 2005 at 8:19 am by David Farrar

Five police officers and a civilian driver appear in court tomorrow in relation to the PM’s motorcade reaching 180 km/hr.

To my great disappointment the PM will not be appearing, so we won’t get to hear how one can be in a motorcase going at 180 km/hr, with lights flashing and sirens on, yet be unaware you may be over the speed limit.

However Jonathan Milne has penned his version of what would happen, if the PM did appear. I love the segment where he has Helen saying “By definition, I can not speed” 🙂

Reason #49 to change the Government

July 31st, 2005 at 8:08 am by David Farrar

Saturday’s reason:

Putting the top tax rate up to 39%

They claimed they did it, as they needed the extra money, but never dropped it back, even as the surplus reached billions and billions. And the numbers affected are now 22% of FT working NZers.

No tag for this post.

Welcome back John

July 30th, 2005 at 12:51 pm by David Farrar

Labour MP John Tamihere has been told not to talk the the main media, but Helen forgot to tell him not to talk to FHM Magazine (a very fine publication).

John helpfully clears up for us that women are not a loving, caring species and that he is sick of being deemed the perpetrator of the world’s problems simply because he is male.

He also shares his views that rockets are phallic-shaped so they can pierce the stratosphere and that is why you don’t have a rocket shaped like two big boobs, even if women were to design them.

What a happy caucus it must be to have John there.

The public are owed transparency

July 30th, 2005 at 7:26 am by David Farrar

As expected Trevor Mallard has attacked Westpac’s analysis as “extremist and scaremongering”. Never mind that every economist in NZ would disagree with Trevor that interest rates do not affect borrowing. I mean it is like saying wage rates do not affect employment. Mad!

Now Labour’s have said a definite costing is not possible because it is hard to predict what students will do. This is again simply not the case. The Government has a legion of staff whose job is to do exactly that – predict what students will do based on past actions. They are the experts who put together the excellent student loan annual report. They are required to project long-term borrowing, and if Labour implement this policy (if re-elected) they will publish their predictions.

Labour refuse to get the policy costed by officials, and debt projections calculated. Claiming it is a Labour policy not a Government policy is absoloute spin and nonsense. When you are the Government, such distinctions are entirely voluntary.

I worked in the PM’s Office when National was in office in 1999. We looked at (and did) bringing forward by a year the introduction of interest write-offs so 50% of all payments (after inflation) would go towards principal. This was costed by officials, models were done, implementation timetables considered even though it was only announced a couple of months before an election and to take place after the election. It is entirely allowable for the Government to announce future policy, which of course is contingent on their re-election.

So people should be under no doubt. Helen Clark and Trevor Mallard can get their policy costed, and debt projections made in a split second. They merely have to ask their officials by declaring this a Giovernment policy.

The *only* reason for them not to do so, is so voters do not know the true costs.

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Reason #50 to change the Government

July 30th, 2005 at 6:39 am by David Farrar

Friday’s reason:

Race Based Council Seats

Labour passed legislation to allow local authorities to set up Maori-only seats. Hard to think of an act more likely to be divisive and flat out wrong. There may be historical reasons for Maori seats in Parliament, but to actually go out of your way to further entrench the notion that one should have Fiji style laws where you divide voters up by race, is quite repugnant.

No tag for this post.

InternetNZ AGM

July 30th, 2005 at 1:02 am by David Farrar

Had fun at the AGM as we got to trial the access grid at Victoria University. This is like video-conferencing on steroids. On the wall you have up to a dozen images projected from the other venues, from your own venue, and from various computers. The sound quality was variable but the video was first class.

I’ll later blog some photos so people can see what it was like.

Also got re-elected as Vice-President, in a contested election, which was nice. Means I get to still pretend in public I know something about that Net thingy.

Labour’s bribe could cost $1.1b a year

July 29th, 2005 at 4:19 pm by David Farrar

On the 27th I estimated that Labour’s student loan bribe could lead to student debt blowing out by $1.1b a year.

Of course I was attacked as partisan and scare-mongering. Mind you I don’t think their hearts were totally in it as some made comments saying hey the economics may be stuffed but at least it is good politics.

Now Westpac Bank has come out and said the proposal is a very bad policy, and by coincidence have also said it could add $1.1 billion a year to debt, and cost that much as expenditure annually. I await the apologies of course 🙂

Westpac have said they do not want to enter the political fray but that the policy is so bad, they implore Labour to drop it.

As I have said wanting to spend more money on tertiary education is not a bad thing, but Labour’s policy will send debt and costs skyrocketing. As Westpac point out it is not just free money, it is actually giving it away with an effective negative interest rate.

In the history of politics this bribe may go down as equally damaging to Muldoon’s 1975 superannuation pledge.

A no gaps day

July 29th, 2005 at 4:01 pm by David Farrar

0830 .nz Registry Services Board Meeting
1100 InternetNZ Legal & Regulatory Committee
1300 Lunch with INZ .nz Oversight Committee
1400 INZ Technical Committee
1500 NZRS Audit and Risk Committee
1615 INZ International Affairs Committee
1800 INZ AGM

So not much blogging today. Also out of Wellington for the weekend, so again may be light reading until Monday.

Cullen calls for less spin

July 29th, 2005 at 7:19 am by David Farrar

On Wednesday Dr Cullen called for more facts and less spin, and also called for an end to parties out-bidding each other in spending promises.

In other news George Bush called for more diplomacy and less wars.

Also Jacques Chirac called for an end to competing languages and called on French speakers to learn English.

On the same day Paris Hilton called for more chastity and less pre-marital sex.

And finally Winston Peters called for more immigration and less intolerance.

Labour in front in Herald Poll

July 29th, 2005 at 6:56 am by David Farrar

The NZ Herald poll shows Labour back in the lead by 6%. Some of this appears to be at the expense of the Greens whom would not make it back on this poll. Many younger Green voters may well be enticed to now vote Labour, and the Greens may well face oblivion if they lose too much support.

This poll leaves the Maori Party and NZ First as kingmakers. Joy. A Labour/Maori Party Government would result in a 12 – 15 year spell in Opposition after one term I suspect.

UPDATE: NBR also has a 6% lead for Labour.

Reason #51 to change the Government

July 29th, 2005 at 6:46 am by David Farrar

This is yesterday’s reason:

Removing choice from workplace accident insurance

Allowing employers to choose to gain workplace accident insurance from companies other than ACC had been a great win/win. It gave employers real incentives to make their workplaces safer, and hence have cheaper premiums. In the short period of time the competition was allowed, premiums dropped massively, and accident rates also fell massively.

Labour re instituted a state monopoly, and to no surprise premiums have increased, with those for self-employed especially going up by 40%.

No tag for this post.

Anti-Spam Legislation

July 28th, 2005 at 11:17 pm by David Farrar

The Government has introduced into Parliament their proposed anti-spam legislation. The bill can be viewed here.

My comments are captured in the press release below:


InternetNZ is delighted the Government has finally introduced proposed anti-spam legislation.

“We have been advocating such legislation since 2003, and congratulate Minister David Cunliffe on this latest step to an anti-spam law” said InternetNZ Acting President David Farrar.

“Anti-spam legislation by itself does not stop spam. However it is a necessary and vital part of the overall fight against spam, by allowing action to be taken against spammers. Education, technical solutions, and international co-operation are also necessary. The good thing about the legislation is it will allow New Zealand to more effectively co-operate with international authorities against overseas based spammers”.

“We urge all parties to support the legislation at the first reading. We are almost the only country in the OECD without legislation, and its lack has hampered our ability to contribute to stopping overseas spammers. The lack of a law has also allowed some New Zealanders to spam, by hiring people based overseas to do so on their behalf”.

“While we support the bill’s introduction, we do have a concern over the proposed enforcement mechanism. We do not believe it is practical for complaints to go via NZ Internet Providers, as in 99% of cases they can do nothing to assist. We will be strongly submitting to the Select Committee that this provision, if not changed, will place an unfair cost on ISPs who already bear a huge cost due to spam”.

“InternetNZ looks forward to the bill being referred to a select committee and detailed consideration of the bill later this year. We may have further comments upon completing a detailed analysis of the bill’s provisions”
concluded David Farrar.

TV3 Poll

July 28th, 2005 at 10:13 pm by David Farrar

The TV3 Poll shows National and Labour nexk and neck. Frankly I am amazed it does not show Labour in the lead after the last couple of weeks.

Mallard’s accusations about the US funding and writing policies for National were made up, but nevertheless mud tends to stick, which is why he did it. I honestly expected TV3 (which is normally the worst poll for National) to show Labour leading.

I tend to try and stay away from predicting polls, but all I will say is I expect the lead to change at least a couple of times between now and election day. I would be very surprised if either party took a big lead and never lost it. The final weeks may well prove crucial.

Think about this

July 28th, 2005 at 9:55 pm by David Farrar

The median loan balance is only $15,000. If one starts off on $45,000 and your salary goes up 5% a year, Labour’s calculator says at present you would pay the loan off in five years nine months (if no voluntary repayments) and under their policy it would be paid off in four years eight months.

What this means is that the 10% extra deduction off your income (over the threshold of around $17k) would not occur for that 13 month period in around five years time.

The lifetime saving to you is around $4,000 Labour predicts. It will actually be less than that, but we’ll ignore how a dollar tommorow is worth less in today’s dollars.

Now you may want to reflect the lifetime cost of Labour’s increase in the top tax rate to 39%. You’ll start paying it after six years, when you are probably 28, based on 5% annual income increases.

By the time you are 35 the 6% extra tax on over $60,000 has cost you $5,700.

By the time you are 40, the 6% extra tax in over $60,000 income has cost you $17,000.

And in theory by the time you retire at 65, that extra 6% may have cost you $250,000.

Now it is not as simple as that, because the threshold for paying the 39% tax rate should move by inflation. Even allowing for 2% inflation adjustments to the $60,000 level, one still ends up $87,000 worst off over your woking life if you think the increase of the top tax rate from 33% to 39% was a good trade-off for getting your student loan paid off a couple of years earlier.

What is the moral of the story? There is no such thing as a free lunch.

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Farewell Richard Prebble

July 28th, 2005 at 9:10 pm by David Farrar

Richard Prebble gave an amazing and emotional valedictory speech at 5 pm today.

His stories of stealing furniture from Ministers as backbenchers in 1975 had everyone in hysterics.

His tribute to the genius of David Lange was especially touching, with Lange’s current illness.

And talking about the death of Bill Prebble after the battle of Crete was incredibly moving.

The NZ Herald has the full text of his speech up. It will go down as one of the great valedictories, as seen by the extended standing ovation he got from the packed public gallery.

The gallery, and the function at ACT afterwards, had almost every prominent ‘rightist’ in attendance. I joked that one bomb could have set the right back a generation 🙂

Was a nice opportunity to catch up with many old friends, and be part of a proper farewell to a great MP.

No tag for this post.

Blogs & Parliament

July 28th, 2005 at 8:55 pm by David Farrar

Last night, Jordan Carter and I were the invited speakers to a forum in Parliament organised by the New Zealand chapter of the Australasian Study of Parliament Group. The topic we had been asked to shgare our views on was Blogs and Parliament.

There was a good turnout, one of their larger recent ones, with around 40 people there, and a younger demographic than normal.

Rod Donald chaired the session and introduced us. Rod complained that everytime I say something nice about him on my blog, it causes him problems with his colleagues. So I just have to say he did a very good job as the chair 🙂

Jordan has blogged it from his view, and Keith Ng has suggested Jordan and I do joint gigs more often as we had very contrasting styles.

In case anyone is interested, a copy of the powerpoint I did is attached.


July 28th, 2005 at 8:41 pm by David Farrar

Tracey Barnett writes in the NZ Herald about the unfortunate rise of anti-americanism in NZ.

This got me thinking more about Trevor Mallard’s incredible allegations that Don Brash was basically in the pay of the United States and having policy dictated to them. It is not unusual in politics around the world for a politician to try and smear their opponent by claiming they are controlled by the US. But the countries where these sort of allegations are made are normally Zimbabwe and Iran, not first world countries. I don’t think one can under-estimate how much damage Mallard’s stunt will have done to our relationship with the US.

Now on National Radio on Tuesday, Matthew Hooton provocatively pointed out on Nine to Noon that the left’s anti-Americanism sounds more and more like anti-semitism in Germany in the 1930s. Accusations of secretly controlling and bankrolling people formed the basis of anti-semitism.

The article linked above by an American saying Aucklanders refuse to talk to her at parties and say things like:

“You’re not American, I hope?”

“Yes, in fact, I am.”

“That’s too bad.”

Now Matthew may have been provocative but one can imagine the exchange in Germany 1930s:

“You’re not a Jew, I hope?”

“Yes, in fact, I am.”

“That’s too bad.”

Shame on Trevor Mallard for his part in fostering anti-americanism. His target may have been Don Brash but the damage he has caused goes far wider.

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Borrowing Motivations

July 28th, 2005 at 8:18 pm by David Farrar

To my disbelief Traveor Mallard is trying to argue that having no interest on loans will not significantly affect the proportions who take them up. This is so ridicolous I do not know how he can say it with a straight face. Almost every known model of economics places huge reliance on the rate of interest as influencing behaviour with regards to investment.

I am hearing rumours that Michael Cullen fought totally against this policy, because he knows it is going to blow borrowing out. The fact it has not been checked by a single government agency suggests the decision making on this was incredibly rushed.

Investing more money into tertiary education is not a bad thing, but this policy is arguably the very worst way to go about it. Labour Party member, self-described socialist and former AUSA Office Stef criticises the policy as ir-responsible, and she is right.

It has also been criticised by senior academics as bad policy.

No tag for this post.

Reading Comments

July 28th, 2005 at 8:04 pm by David Farrar

Up until a couple of weeks ago, I used to basically read every comment made on the blog. This is no longer possible with the volume of comments being too large to keep up with.

So if I do not respond to something you say in a comment, it may just be that I haven’t read it. If you really really need me to see something, e-mail me. I will still browse most comments but not all.

This also means that if anything is posted which is defamatory, in contempt of court, or infringes copyright, I may be unaware of it. Hence I have reducued liability under the law, until such time as I am made aware of it. So lawyers stay away.

Another scenario

July 28th, 2005 at 7:55 pm by David Farrar

And here is another scenario, using a slightly more complex spreadsheet. This allows for 2% income growth.

Labour say a $15,000 loan balance and annual salary of $27,000 growing by 2% per annum will take 40 years to repay.

The attached spreadsheet has it repaid in the 24th year. And once again note this is not even allowing for interest writeoffs. As half of all payments (after inflation is accounted for) go towards principal repayment, there would be interest writeoffs for the first half dozen or more years, but to keep it simple I am ignoring those.

No tag for this post.

More on student loan calculators

July 28th, 2005 at 7:44 pm by David Farrar

I’ve just recalculated the scenario of someone earning $34,300, whose income is $34,300, and constant, and has a $15,000 loan. The Labour calculator tells us it would take 25.5 years to repay their loan and have interest of $11,891.

Now Labour have said their calculator allows for the repayment threshold to go up by inflation. Now inflation is targetted to be between 0 and 3% so the midpoint is 1.5% which I have used to see how much it changes from the IRD scenario of 14 years.

My simple excel spreadsheet, which doesn’t even allow for the possibility of interest writeoffs, has the loan paid off in 16 years. So still a 10 year time difference.

Note I am providing my calculations so they can be audited. Hopefully Labour will do the same.

No tag for this post.

Labour’s Student Loan Calculator

July 28th, 2005 at 12:09 pm by David Farrar

I have been checking the output of Labour’s student loan calculator and my initial findings are that it appears to be seriously incorrect. I understand that the calculator has not been put together by Treasury, IRD or Ministry of Education, but by Labour Party staff. I call on Labour to release the formulas the calculator uses.

Here are examples of where it appears to be wildly wrong:

They claim that someone with a $15,000 loan balance who earns $34,300, and stays earning that much would take 25.5 years to repay their loan and have interest of $11,891. Plug it in and you will see.

If one goes to and plug in a $15,000 loan balance and $34,300 income it says it is paid off in 12 years 4 months and interest is $6,805 in today’s dollars.

So Labour’s calculator is claiming it will take 25 years instead of 12 under current policy. This is not a small error – this is almost electoral fraud. Now is a neutral site from the Retirement Commissioner so I trust their calculator more.

We can go to the IRD calculator also which will tell you the repayments on $34,300 income and $15,000 loan will be $1771.20 a year. Now even if one totally ignores the fact that you may get interest writeoff, a simple calculation of 7% interest on $15000 shows inital interest of $1050 in the first year vs repayments of $1,771 shows the loan paid off in 14 years approx, not 25.

Here is another example. Say a $15,000 loan balance and annual salary of $27,000 growing by 2% per annum. Labour’s calculator says it will take 40 years to repay and interest of $27,693.

The Retirement Commissioner says 18 years 7 months and interest of $10,417. I plugged in a salary today of $27,000 and income in five years of $29,800 based on 2% growth.

I am happy for someone to point out if my comparisons and calculations are wrong and that Labour’s calculator is more correct than the Retirement Commissioner’s and IRD’s. The best thing would be to get Treasury and IRD to verify Labour’s calculator. They should so so immediately.

UPDATE: Bill English and his staff have also been checking out the calculator and have found Labour’s calculator out by 30% to 50%. Unless Labour can provide proof that their sums are accurate, their credibility will be zero.