Archive for May, 2006

Dr Cullen’s surplus projections

May 31st, 2006 at 2:59 pm by David Farrar

I’ve blogged in the past how the Treasury projections of future surpluses have consistently been much less than the actual surpluses – the actual surplus often being twice as large as the projected surplus.

Now it’s a bit unfair to call this a Treasury problem I’ve decided. Why? Because Dr Cullen in recent years has been sticking huge numbers in as “provisions for future initiatives” and by use of this provision you can make the projected surplus be anything at all you want. With a stroke of the pen a $6 billion projected surplus can be reduced to $4.5 billion by allowing just an extra $500 million a year “provision”.

Let me explain. You are projecting for the next three years after the current one. Now the provisions work like this:

Year 1 $500 million
Year 2 = $500 million from Year 1 + additional $500 million = $1billion
Year 3 = $1 billion from Year 2 + additional $500 million = $1.5 billion

So by adding in an extra $500 million a year provision, you knock $1.5 billion off the Year Three surplus.

Now since 1997 it has been common practice to have this provision. It recognises that every year you may have demands for increased expenditure such as wage increases, or some new initiatives. Known initiatives will generally be included in the vote for that portfolio.

In the late 1990s, the average provision was around $600 million. And Dr Cullen for the first couple of years had sensible provisions of $470 million, $480 million, $550 million and $315 million etc etc.

But then in 2004 the provisions started growing like topsy, just at the same time as the surpluses were growing to a degree people weer calling for tax cuts.

In 2004, the provisions for the next three years was $978m, $926m and $1463m.

In 2005 they were $1249m, $1757m and $1845m.

And finally in 2006 they were $1416m, $1868m, and $1913 million.

Now these are cumulative, so year by year the provision is:

07/08 $1,416m
08/09 $3,284m
09/10 $5,197m

So that is almost $10b of “provisions”. And that number is not worked out by Treasury scientifically. It is not based on known demand. It is a policy decision by the Minister of Finance. He gets to decide what number to put in, and by doing so he can move the projected surpluses up or down by billions of dollars.

So when Dr Cullen refers to future surpluses showing tax cuts are unaffordable, remember that he has almost $10b of unallocated provisions in there, with no rationale for them being at that level.

No tag for this post.

Death of Professor Lloyd

May 31st, 2006 at 2:25 pm by David Farrar

The death of Professor David Lloyd brings back memories of what was called the Poisoned Professor trial.

Personally I don’t think there is too much of a mystery behind his “mystety illness” despite the trial result. I recall quipping at the time that Vicki Calder may have got off, but I bet you she won’t be getting any dates for a while 🙂

Mike Moore on Globalisation

May 31st, 2006 at 2:10 pm by David Farrar

A good speech by former WTO Head Mike Moore to La Trobe University. Some key points:

* growth of freedom and information was also helping consumers demand more from their governments and businesses.

* there has never been a period in the history of our species where we’ve seen freedoms and living standards rise so consistently for most people

*China has undergone huge advances in freedoms of ordinary citizens

* opponents of free trade were effectively arguing to keep the poorest nations of the world in poverty

* the $12 billion the Un wants to fight AIDS, equates to just 12 days of subsidies paid by rich nations to their protected farmers

* open markets means that cosy, crony capitalists with businesses purchasing privileges from politicians against the interests of workers and consumers, doesn’t work

Port Douglas

May 31st, 2006 at 9:48 am by David Farrar

I’m off to Port Douglas for a holiday at the end of June. Any suggestions for activities from people who have stayed there? I’ve been to Cairns before so have been to the rainforest (will probably visit it again) and some diving or snorkelling on the great barrier reef is mandatory of course.

Green co-leader

May 31st, 2006 at 9:09 am by David Farrar

Well we are in the last few days of the contest for co-leader of the Green Party, who has a Y chromosome. Incidentally do they test the candidates for eligibility or just take their word for it?

I watched the four candidates on Agenda, as Joe Hendren did.

I agree with the NZ Herald that Mike Ward is effectively out of the race. A nice guy, but no longer a leader.

Dave Clendon has handled himself okay, and if Nandor was not in the contest I suspect he would poll close to Russel Norman in a two way race. But with two “front-runners” he has never made the impact needed to be considered on his merits.

So that leaves Nandor and Russel. Now I’ll take a punt here and say that I think Nandor should be elected, but predict Russel will.

The reasons I think the Greens should go with Nandor, is that he is the safest option for them, and when on 5.3% you don’t want to risk losing 0.4%. Nandor has noticeably picked up his game since losing his seat, and then returning as Rod Donald’s replacement. He has the skills and resources that come from being an MP, and also for my money has the right strategy on emphasising the environmental brand over the social justice brand (where other parties compete).

This is not to say Russel Norman will do a bad job if elected. He seems very articulate and competent and importantly has good working relationships with other key players. However if he is made Leader he will struggle a bit with not being in Parliament, while one of the failed contenders is. He may get over-shadowed by Nandor even if he is elected Leader.

So why do I think Russel Norman is more likely than Nandor to win? Because the Greens are using STV (as they should) to elect the co-leader.

Nandor is well known after seven years as an MP to the Green party faithful who vote. They would have made a decision on whether to see him as leader or not and will rank him either first or last.

So I think Nandor will have the most votes on the first ballot, but unless he gets a majority, then Ward and Clendon will drop out and almost all of their votes will go to Norman, with Norman beating Nandor on the final ballot.

Now bear in mind I am not exactly a Green Party insider, so I may be totally wrong and they will declare Mike Ward leader by consensus!

I await the announcement with interest. Anyone know when it is due at the weekend?

No tag for this post.

England does not equal Britain

May 31st, 2006 at 8:45 am by David Farrar

Just like it annoys me when media use “web” instead of “Internet” it also annoys me when people refer to the United Kingdom as England.

In this NZPA story on Pitcairn Island, the lead paragraph says “The Privy Council will decide if England has legal jurisdiction over the remote islands.”

Umm no they won’t. Well not unless they are about to overturn the 1707 Act of Union between England and Scotland.

In 1790 when Pitcairn was settled by the Bounty crew, the country then in existence was the “United Kingdom of Great Britain”. In 1800 it became the United Kingdom of Great Britain and Ireland, and then in 1922 changed to be the United Kingdom of Great Britain and Northern Ireland.

Pedants may ask what about Wales? Well they were never merged/unified with England, they were conquered 🙂

Wales went from being a Kingdom to a Principality in 1284 through the Statute of Rhuddlan, and in 1535 the Laws in Wales Act 1535 annexed Wales to the legal system of England.

Anyway back to my main point, England does not exist as a sovereign country since 1707, well except in some sporting contests.

Tree Chopping

May 31st, 2006 at 8:17 am by David Farrar

Okay I don’t subscribe to the notion that you have an inviolable right to do whatever you want on your property. I’m comfortable with not being able to build a 100 foot high fence as it may block your neighbour’s views. I’m also comfortable that if you have an ancient native tree – you know 200 years old or so, that it may have heritage protection.

But prosecuting Alice Presley because she cut down an exotic tree on her own property seems like bureaucracy gone mad. Especially that said tree had been causing problems with the power lines.

But the problem is Auckland City Council have passed a bylaw that basically says any tree over eight metres tall belongs to them, and you need their permission to cut it down. Ridiculous.

New All Black Haka

May 31st, 2006 at 6:32 am by David Farrar

From Whale Oil. Heh.

Tana Hand bag.jpg

Must See Video

May 31st, 2006 at 6:20 am by David Farrar

Crikey has a video of a news anchor asking an officer in East Timor if he feels safe, with all the armed soldiers behind him. He replies yes he does, but not because of the soliders there as her stage manager placed them there, not him 🙂


The part Jordan left off

May 30th, 2006 at 9:04 pm by David Farrar

Jordan has a graph up comparing Real GDP between Australia and NZ from 1977 to 1998. He uses this to blame everything on the nasty right wing reforms and says the more sensible policies of the last few years have closed the gap.

Now let’s look at the three periods in turn – pre 1984, 1985 – 1999 and 2000 onwards.

Jordan shows a similar GDP growth up to 1984. So does this mean he thinks Muldoon was right? Does he hanker for the days of the state setting wages, prices, rents and interest rates? The days of import controls and subsidies?

Then we have 1984 – 1999. It always amuses me as people try to treat this as one period with one Government. There were in fact two, arguably three Governments in that time with very different policies.

Yes from 1984 to 1990 GDP slipped relative to Australia. Well Labour was in power then and sure they did some things right, they also did a fair bit wrong. Then National came into office in late 1990 and by 1992 you see the GDP growth start up and looking much the same rate as Australia. Kept this up until 1996 when we got hit by the Asian crisis and Winston.

But anyway that isn’t even the main thing I wanted to touch on. I was intrigued by why the graph stopped in 1998. Jordan says he hasn’t had time to update it. Well it took me a few minutes but below we see Real GDP, seasonally adjusted, from March 2000 to December 2005. They both start from a base of 100 in March 2000.


Oh yes one can see how well Dr Cullen is closing that gap. Now remember Jordan said “The more sensible policies since have led us to slightly catch up in terms of growth – particularly over the past five years.”

Yeah Right.

UPDATE: The Australian line looks to be based on nominal, not real, GDP which makes the current graph invalid. It was meant to be real GDP but somehow grabbed the wrong data series. WIll do an updated post later with the corrected figures.

No tag for this post.

$50 Xtra refunds?

May 30th, 2006 at 8:13 pm by David Farrar

Bruce Simpson suggests that Telecom are obliged to refund $50, not $3.25 for their recent Xtra outage. He quotes from their standard terms and conditions:

“If you are still without a Telecom service because of a fault in any of these things more than 24 hours after you tell us about the fault, or if we miss an arranged visit, call us on 120. You can choose either a credit to your Telecom account of one month’s worth of your Telecom residential line rental or $50 worth of PhoneCards”

Does Xtra count as a Telecom service?

New Helengrad definition

May 30th, 2006 at 11:17 am by David Farrar

adj : showing lack of loyalty to the Labour Party

No tag for this post.

New Kiwi Blog

May 30th, 2006 at 10:04 am by David Farrar

Ana Samways and partner Steven Shaw have launched a new blog – Spare Room.

There is some great content on there. The video of TV bloopers such as the news anchor asking the weathergirl if she is “warm and wet as well” – hilarious.

Also personal stuff such as ten reasons Ana’s OE stunk.

They have three seperate rooms you can browse or subscribe to – the Spare Room homepage (humour, opinion and ex-pat contributions), The Lounge (covering the likes of film, TV and music) and CoolFinder (a catalogue of art/design/fashion/gadgets we think are both cool and affordable).

I also enjoy the self-deprecating humour where Ana tells how she was once enthusiastically described to her brother overseas as a

Sensible NZers

May 30th, 2006 at 7:10 am by David Farrar

63% of NZers don’t believe Michael Cullen, when he says tax cuts are unaffordable. This is pleasing, even though the figure should be 95% as all but the most partisan pundits say it is obvious you can afford tax cuts with a $9 billion surplus.

Our beloved PM of course disagrees and attacks the polling company. Now it is true Colmar Brunton does tend to have National 2% or so more favourable than other polls, but when you have 63% stating a view, that can’t be explained away by such variances.

The Dom Post gets one thing wrong in its story. They claim:

The poll also debunked National claims that thousands would flood across the Tasman after tax cuts in Australia. Only 17 per cent said they were considering shifting.

The last time I checked 17% of four million is around 680,000.

A Principled Act

May 29th, 2006 at 4:50 pm by David Farrar

National shows it is fully ready to make right the accidental election broadcasting over-spending, which has left broadcasters out of pocket. Leader Don Brash has submitted a bill to amend the Broadcasting Act which will allow the Electoral Commission to pay the $110,000 to the five broadcasters and in turn be paid by National.

I expect this bill could be introduced with unanimous leave of the House and passed through all stages under urgency.

It will also no doubt serve as the starkest of comparisons for ethical behaviour compared to Labour who over-spent by $418,000, broke their word to the Chief Electoral Officer, and refues to acknowlegde any wrongdoing whatsoever.

Draft Submission on Size of Parliament Bill

May 29th, 2006 at 1:06 pm by David Farrar

Like No Right Turn, I’m planning to put in a submission against the bill to reduce the size of Parliament to 120 MPs.

My current draft is below. Feedback is welcome from people on it.

Justice and Electoral Committee

Electoral (Reduction in Number of Members of Parliament) Amendment Bill>

David Farrar

1. This submission respectfully asks the Justice and Electoral Committee Secretariat to recommend to the House that the Electoral (Reduction in Number of Members of Parliament) Amendment Bill not proceed.

2. I would like to appear before the Committee to speak to my submission.

3. I only represent myself in this matter.

4. For over 10 years I have been professionally involved in electoral issues, including the Electoral Act, electoral boundaries, electoral administration, and analysis of election results. I consider myself highly knowledgeable on electoral systems, and specifically the New Zealand electoral system.

5. The major reason I oppose this Bill is because reducing the size of the House of Representatives to 100 MPs, as outlined in the Bill, will over time break the MMP electoral system.

6. Other reasons for opposition are
a. The size of the House is small amongst countries of our population size.
b. It would allow the Executive to dominate the House more easily.
c. It would reduce the number of MPs available for Ministerial roles.
d. A compromise to reduce the probability of overhang may see the size of Electorates increase.
e. Parties would have fewer List MPs, and this would lead to a less diverse Parliament.
f. The Royal Commission on the Electoral System recommended a House size of 120, preferably as much as 140.
g. Expected Cost Savings would be relatively small.

7. Overhang

8. The number of electorates is basically governed by the relative populations of the South and North Islands. The Maori option also has some effect but the general rule is that if the North Island population grows faster than the South Island population, then the number of electorates will increase after every census.

9. The number of seats grew, due to this uneven population growth, from 80 in 1966 to 99 in 1993.

10. Under MMP the number of electorate seats increased from 65 in 1996 to 67 in 1999 and 69 in 2002.

11. The number of electorates is recalculated after each five-yearly census. Using the medium growth assumptions of Stats NZ, I project the following number of electorates in the next 20 years:
2006: 71
2011: 73
2016: 74
2021: 76
2026: 77

12. If however the South Island followed a low growth path and the North Island a high growth path then the no of seats would be:
2006: 73
2011: 78
2016: 82
2021: 86
2026: 90

13. I think this clearly demonstrates that any reduction to 100 MPs, as proposed in the Bill, would be unsustainable as there will not be enough List MPs to allocate to parties to prevent over-hang.

14. In the 2002 election Labour got 41.3% of the vote, which in a 100 MP house meant they should have 43 seats. However they won 45 electorate seats so in 2002 they would have had an overhand of two MPs.

15. We have already seen over-hang for the first time in the 2005 election with the Maori Party having one more seat than its share of the vote would normally entitle it to. Over-hang is generally seen as undesirable as it makes The House less proportional, and proportionality was a major rationale of MMP.

16. Size of the House compared to overseas Parliaments

17. Some people assert that the size of the House making up the NZ Parliament is large compared to other countries. I have gathered data from all 30 OECD countries, and the eight countries expected to join the OECD in 2007.

18. The results are set out in the table below:

house size.JPG

19. The size of the NZ Parliament, per 100,000 residents is ranked 17th out of 38, or just about dead centre.

20. In absolute terms the size of Parliament at 120 is 30th= out of 38. Our population is also ranked 30th out of 38.

21. However even this simple comparison is somewhat unfair to NZ. Because very large countries always have a very low MP to population ratio, and very small countries a relatively high ratio. This reflects that there is a maximum and minimum size for a Parliament, for it to be an effective law maker.

22. If the US wanted a ratio equal to NZ, it would need a Congress of 9,000 representatives and Senators. Likewise for Iceland to have the same ratio as NZ, it would have a Parliament of only nine MPs.

23. Therefore the best comparison for NZ, is to look at countries of a similar population. Now of the seven countries with a smaller population than NZ, none of them have a lower MP to population ratio..

24. If we take countries with a population of between four million and ten million, we find NZ has the smallest Parliament and is ranked 9th out of 11 for ratio of MPs to population.

25. Therefore I conclude that overall NZ has a small Parliament relative to countries of our size

26. It is also worth noting that NZ is one of the few countries with no provincial or state governments. This puts NZ in an even more favourable position.

27. Executive domination of the House

28. One of the good features of MMP has been the increased role for and importance of the House. The days of not having the House meet for six months, and then just rubber stamping legislation are long gone.

29. The Executive in recent years has tended to number 26 (currently 29). In a 120 member House 61 votes are needed to pass legislation. If Cabinet decides on an issue, all Ministers are obliged to support it at the Government Caucus meeting. Reducing the House by 20 members will make it almost inevitable that the Executive will form a majority of the Government Caucus.

30. No of MPs available for the Executive

31. The size of the Executive, has grown significantly over the years. It is currently 29 which is an all time record. A century ago it was only seven.

32. A new Government has to fill the Executive roles, two or three of the four Speakerships, and perhaps eight to ten of the 18 Select Committee Chairmanships. This is a total of around 40 roles.

33. Even with a 120 MP House, a new Government often will have only around 40

No tag for this post.

ACT on Campus lookalikes

May 29th, 2006 at 8:22 am by David Farrar

Generation XY has noticed how smiliar some ACT on Campus people look to celebrities.

They see Gavin Middleton as Wayne Knight who played Newman on Seinfeld.

Mike Collins as as Ed O’Neill, better known as Al Bundy.

Clint Heine as Paul Giamatti from Cinderella Man.

And finally, pictured below. Helen Simpson as the teen heart-throb Mischa Barton from The O.C. Good detective work!


Hypocritical Greens

May 29th, 2006 at 8:05 am by David Farrar

Once upon a time the Greens were known as a party of principle. They would say if they thought something was wrong, regardless of party. They would refuse to vote for urgency motions without good reason etc.

Now after months and months of saying nothing at all about Labour’s deliberate $450,000 overspending, they suddenly jump up and down to protest on behalf of broadcasters that National’s GST error is unfair.

Since National voluntarily disclosed the mistake, it has been known that it was the broadcasters left out of pocket. National in fact tried to pay them, but this would further breach the Act, so for the Greens months later to suddenly demand they pay the broadcasters back is bizarre.

What should have happened of course, is for the Police to charge National over the GST error. Because while it was a genuine error, it did result in an advantage of $112,500 (around 1/4 of the Labour over-spend). However with the Police determined not to charge Labour for a much more serious offence, they could hardly then charge National. The correct decision would have been to charge both.

I find it hilarious the Greens are also demanding that National deduct the $112,500 off its 2008 election budget. I now await them also demanding that Labour deduct $420,000 off its 2008 budget. Their failure to do so, indicates the rank hypocrisy at work here.

No tag for this post.

Less bangs for the buck

May 29th, 2006 at 6:24 am by David Farrar

In the current broadband debate there has been many comments on whether NZ broadband packages compare favourably with other OECD countries, but a real lack of hard data.

To help correct this, InternetNZ last month commissioned Wairua Research to do a study. In early May they examined 2586 broadband packages from 388 ISPs over 26 OECD countries.

As reported in the Dominion Post, New Zealand offerings on average rank 22nd out of the 26 countries. And before the changes made in April, we would have been last.

On price alone, NZ now ranks quite well. But on performance issues such as speeds and data caps we are well behind overseas countries. We also have far less variety of offerings than many countries.

The full report is available as a pdf (250k) – around 60 pages.

I’ve also included INZ’s press release after the break.

Tana’s handbag

May 29th, 2006 at 5:55 am by David Farrar

Well this is a new disciplinary tactic for the All Blacks. When Chris Masoe got uppity in a bar, Tana grabbed a woman’s handbag and whacked him around the head with it to clam him down.

If anyone managed to get photos of that, they would be priceless.

One News Poll

May 28th, 2006 at 9:15 pm by David Farrar

One News had a Colmar Brunton poll tonight. I missed it and their website is unresponsive but I am informed results are approx:

National 47% (+2)
Labour 38% (-4)
Green 5% (-2)
NZ First 4% (+2)
Maori 3% (+1)

The 9% gap might be seen as optimistic as other polls tend to be less favourable to National, but the key thing is the trend, and this shows the gap growing 6% since the last poll at the end of March.

This makes sense with the negative reaction to the budget. Once upon a time budgets were meant to help, not harm, the Government!

An election based on those results, and with no change in electorate seats would see:

National 61
Labour 49
Green 6
Maori 4
United 1
Progressive 1

Total 123

A National-ACT or National-United Government would have a majority 62/123 seats.

Casual Sex Fridays

May 28th, 2006 at 4:06 pm by David Farrar

Most people have worked at a firm which has Casual Fridays. Well have a look at the video of this firm which has introduced “Casual Sex Fridays”.

Now’s thats a company which cares!

You need to apply for the $3 credit

May 28th, 2006 at 2:39 pm by David Farrar

Most people know about the Xtra outages which lasted for three to four days. They have said there will be a 4 day credit, which is equal to around $3.50 for most Xtra users.

Now a friend has just shown me the e-mail from Xtra which says you have to fill in an online form and apply for the refund!!!

Now time is money, and people will not want to spend ten minutes finding their phone bill, and copying over the exact account holder name, the account number, plus phone and e-mail just to get back less than $4.

Surely Telecom could just apply the refund to all broadband accounts, or even as a compromise allow people to apply for it with just their username and password (which you don’t need to look up generally).

This is just going to offend more of their own customers I suspect.

A peaceful Sunday

May 28th, 2006 at 12:18 pm by David Farrar

Spent some of this morning helping construct sandcastles at Scorching Bay. Mu Uncle and Aunt are visiting from Australia so we went to brunch at Chocolate Fish Cafe with my brother sis-in-law and my niece Sabine who is now 2 1/2.

Somehow Sabine got to build the sandcastle, my brother got to dig the moat while my job was to fill the bucket up with water. This required me to go up to the sea, hold the bucket down, and as the tide comes in let it fill the bucket up right until the point where I am about to get soaked, and then I jump backwards. Luckily I managed this with only the odd damp toe.

My apartment block has a power outage from 10 am to 1 pm, so I’m now sitting in Starbucks with a very large coffee, and the laptop finishing some reports and blogging. I love wireless Internet!

Was going to see The Davinci Code this afternoon but all sold out. Never mind – I am enjoying a relatively quiet Sunday.

Maia defends Infanticide

May 28th, 2006 at 7:53 am by David Farrar

Maia defends Infanticide, saying:

But if a woman feels like she has no other choice but to wrap her baby up in a rubbish bag, I’m still on her side and will not judge her. I think the mother is more important than a new-born baby.

I’m staggered by such a view. Because this is not talking about the life of the mother (she has sucessfully given birth) vs the life of the child. Maia is saying it is more important that a mother can decide not to be a mother, than the life of the child.

I wonder whether she even has time limits for up until what age one can kill your baby? One week, one month, one year?

At the end of the day it all seems to be part of a world-view where no woman can ever be judged to do anything wrong, because she is oppressed. Every allegation of rape must be taken as correct, every bad thing done by a woman is not the fault of the woman, but of society. Obviously a world-view which is not my own.

If people comment on this issue, I would ask them to be restrained with their language.