Kiwiblog

The NZ Herald is scathing, labelling Labour’s move as smacking of desperation and “political bribery at its most base“.

They also label the approach as highly flawed saying it “will surely increase borrowing and encourage students to pay off loans at the minimum rate“.

The Dominion Post says:

The public is also entitled to be cynical about the timing. Suddenly, after telling the public there is no money for tax cuts, Labour has found the cash for a big-ticket item. Suddenly, after doing little while in government about a problem which had been growing for years, Labour has found the political will to address it.

And the Press:

If the beginning of this election campaign is any indication, such restraint looks like being thrown to the wind. Having sworn blind that there is no money to spare, particularly not for tax cuts (it’s all been spent, the Finance Minister, Michael Cullen, keeps telling us) suddenly a hitherto unnoticed $1.9 billion is available to be doled out. The student loan proposal will barely touch it, so presumably we will see more dipping into that particular cookie jar before long.

Clint has a London underground passenger notice.

Keith Ng makes the very insightful point that Labour’s announced loan changes will mean “it’s no longer a loan, it’s more like a universal allowance on one end and a 10% graduate tax on the other, with how much you take affecting how much you pay”.

This is very much correct. And it is something people may want to reflect on also. I’ll do something in more detail on this, but people may want to reflect for now how the proposed changes will affect them in the next few years. If you were projected to pay off your loan in 11 years, and now it will be paid off in nine years, what it means is this:

For the next nine years, you will not be one cent better off. You will pay the exact same amount as you do now, as compulsory repayments. It is only after nine years that your repayments will stop early and you will have a 10% drop in your effective tax rate (on income above $17K) two years earlier than otherwise would be the case.

And think about how much money you may be earning in nine years time, and whether a 10% tax drop for two years is better than say a permament 5% tax drop? Yes I am going to do some interesting calculations on this.

[Deleted para on National's tax rebates being paid annually, as Jordan has pointed out they are just credited against loan balance also]

The Press has given me a promotion, or maybe a demotion.

“Bugger, bugger, bugger. This may well be bad public policy, but try telling the students that. This one issue may well now cost National the next election,” wrote Mara on National candidate David Farrar’s blog site.

Readers will recall how the forest owners were very upset with the Government as they confiscated without compensation the carbon credits generated by them under Kyoto.

This is partly why the projections turned out to be a billion dollar error.

Now the Kyoto Forestry Association had announced it was going to fund a $2 million advertising campaign on the issue of the confiscation.

But today they have said they have had “confidential discussions” with Ministers and are suspending their campaign.

I smell another u-turn.

Leaky Homes

The problem didn’t start under the Government, but at every step of the way their performance has been hugely unsatisfactory.

Minister George Hawkins totally ignored warnings from industry experts. He displayed such incompetence that Cullen had to step in, and finally the issue was totally removed from him.

Helen Clark denied there was a problem and said people were scare mongering and said the issue was a media beat-up on an issue of no substance.

Then their resolution service was set up so badly that it is looking to take 20 years to get through the backlog and each resolution is costing on average $108,000 (not compensation, just the cost of the bureaucracy to make a decision).

This week we have heard the leaky homes resolution service is putting on parties for their staff. That may get media attention, but is not the real scandal. The scandal is how badly George Hawkins fumbled this issue.

Well not to me, but to the blog which was created on 27 July 2003 with this initial post.

Thanks to Gordon fron NZ Pundit for inspiring me to get started, and for being the site host.

Well not quite. David Slack in his latest blog links to his celebrity magazine cover generator.

Fill in a gender and name, and you get the cover.

Lynley Hood has a copy of Labour’s late 80s anti-national strategy, and sees it being repeated today.

Fran O’Sullivan also has a good piece on Labour’s “big lie” strategy.

Finally someone has found a 100 effective method to stop spam.

Mosnews.com: Russia

The NZ Herald has got itself a copy of Nationals’ December 2004 board minutes.

Luckily for National the minutes are quite mundane, but there will be considerable angst over how they got out. A deliberate leak is almost unthinkable, so my presumption is a copy was carelessly left somewhere.

I’ve gone to some official stats to try and estimate how much student debt will blow out by, due to Labour’s policy pledge. These come from the 2004 annual report on the student loan scheme.

In 2003 156,250 students borrowed $987 million, an average of $6,300 each. Only 60% of eligible students borrowed, and as more part-time students are now eligible the projected rate was 55%.

Now as one would have to be clinically insane not to borrow interest free money, the borrowing rate could go up to 100%. Allowing for 10% clinical insanity, I’ll assume 90% borrowing rate which means an extra 99,500 people will borrow. Let’s say 100,000 more.

So each year 100,000 more borrowers at the average of $6,300 is an extra $630 million a year borrowed.

Now in 2003 there were also 428,000 students enrolled at tertiary level, so this is still quite conservative predicting only 255,000 borrowers.

Of the $2.3b repaid since the scheme began, $1.2b has been compulsory repayments and $1.1b voluntary. Last year $200 million was voluntarily repaid.

Finally we also have that the average amount borrowed was $6,300, and now there will be no incentive to borrow less than the maximum which looks to be for an average student $9,000 to cover fees, materials and allowance. But again I will be conservative and say only an extra $1,000 will be borrowed per student, so this increase borrowing each year by $250 million.

Therefore we have a conservative scenario of an extra $880 million a year borrowed and $200 million a year of less payments. This is extra student debt of $1.1b a year. Against this you have $300 million a year of less interest so I think a conservative prediction is an extra $800 million a year of student debt.

So over a 15 year period, the total amount of student debt is likely to increase by $12 billion. And this excludes any upsurge in enrolments in wananga type courses due to the interest free money on offer to enrol.

Now this is just my unofficial calculations but the official ones when released after the election (would be a good idea for someone to try and PQ or OIA them beforehand) I am sure will also show a massive increase. When Labour did interest free loans while studying I predicted it would increase long-term debt projections, and indeed the official projections almost doubled. This will have at least as large an effect.

So people should be very aware of the huge distortions in incentives this policy will have. The incentive is to borrow the maximum and to never ever repay more than the minimum.

People should also read Kiwi Pundit on how Labour’s calculator is somewhat misleading.

Labour has announced it will scrap all interest payment on student loans. This will be popular in some areas, but I suggets people look very carefully about the motivations it now gives people:

1) You will be insane if as a student you do not take out a student loan. 100% of students will take loans out.

2) You will also be insane if you do not borrow the maximum amount. Even to stick it in the bank. Students are not stupid and like interest free money.

3) Likewise one would be insane to ever make a voluntary repayment. Given a choice of repaying a student loan or paying off a mortgage or even sticking money in a bank, there will be zero incentive to make voluntary repayments.

So what will be the overall effect of the policy? Total student debt is going to explode. It will be easier for some individual students, but overall student debt will have no limits on haw fast it will grow.

This is a prime example of something which looks attractive, but in fact is extremely bad public policy.

Rodney Hide makes an excellent point on his blog. The official surplus projection for 2008/09 is $5.3b. But this includes an allowance for extra spending of $1.9b per year cumulative. This means on current expenditure one in fact is looking to have an $11b+ surplus in 2008/09.

Now it is sensible to have some allowance for additional spending initiatives but there is nothing magical about $1.9b/year cumulative. It used to be $600m a year.

TV3 have announced they will only have the six top polling leaders take part in their leader’s debate.

Frog suggests a less arbitary method of determining who is invited and excluded, and I tend to agree. Exlcuding a party which may only be 0.2% less than another party is silly, and TV3 should reconsider.

Back on the 21st I blogged my version of Labour’s pledge card.

Then Whale Oil did graphical versions of the seven pledges on 22 July.

And finally Dave Gee has taken Whale Oil’s work and done one big combined pledge card.

The combined one I’m featuring below as it is nice and easy to e-mail around etc.

St Molesworth:Top 10 election slogans rejected by Labour:

1. Just tax it.

2. I liked the flight so much I nationalised the company.

3. Tax! Cackle! Pop!

4. You’ve never had it so Smarmy.

5. Do the crime, do a little time, get back into cabinet.

6. Tough on success and the causes of success.

7. Not everyday people.

8. Have a break, go on the dole.

9. Absolutely, positively, desperate to stay in Wellington.

10. Taxpayer funded advertising: millions;extra spending in the budget:
billions; state funded media: priceless.

UPDATE: Whale Oil has a version with comments from Mike Williams.

I’ve decided to do a daily reason as to why people should vote to change the Government. With 53 days to go, we start with Reason #53.

Violent Crime

Under Labour the level of recorded violent crime has increased by 13.96% – an extra 5,541 violent crimes a year.

When Labour took office, violent crime had been falling. And during the previous five years (to compare identicial time periods) it had increased by only 0.01%.

The Dominion Post Editorial on Trevor Mallard is fairly damning. It reminds people that he has a history of making allegations he cannot substantiate.

They point out that Mallard’s lies over the United States will most definitely damage the relationship with them, and “yet again Labour is unable to distinguish between the national interest and the Labour Party’s political interests”.

NZ Herald has a summary of what each Leader and party needs to do, to be successful. A pretty good analysis in my opinion.

It is very timely that National announces its RMA Policy on the day Genesis Energy is in court appealing a court ruling that restricted their water rights from the Whanganui Rover on the basis it would interfere with the “life force” of the river.

This is pretty close to state sponsored voodooism when beliefs in mystical life forces of rivers are given weight in law.

As Owen McShane has pointed out the court case has huge implications for future energy supplies. If the precedent stands that one’s use of a river is limited due to its life-force, then investment in hydopower will dry up pretty quickly.

Especially when you consider nuclear power is not an option, coal is a bad thing with Kyoto, and wind power suffers from NIMBY everywhere.

Oh and also useful to remember that the 75 year old Western Springs Speedway was halted because Marian Hobbs funded the objectors with legal aid.

I’m starting to get a bit sick of the grandstanding over the Zimbabwe tour. The ICC has made it very clear that the Government has to pass legislation to stop the tour. The PM’s motion in Parliament will do nothing except get publicity for her.

I also wonder if the Herald is quoting directly from the ninth floor when they assert “Helen Clark’s decision for the motion to be in the Prime Minister’s name lends it strength.” It’s a very subjective statement to make, and one that sounds like it did not come from the reporter. However it is not credited to anyone.

Centrebet is now accepting bets on the outcome of the NZ election. They have a good history with their odds so I am pleased to see National at $1.75 and Labour at $1.90.

Hat Tip: NZ Pundit

Okay I have returned, avoided all news of Harry Potter for the last week, and now picked up my copy and read it in one sitting.

I now have some questions (spoilers below) :

UPDATE: Fans may want to read this very long interview with J K Rowling. Her most detailed one ever.
(more…)

Someone is selling on Trade Me a Don Brash roleplay kit. Heh.