Archive for February, 2009

Roughan on Super Fund

February 28th, 2009 at 11:04 am by David Farrar

John Roughan writes:

If your income is down in the recession and you are taking on debt to maintain the family’s living standard, would you borrow a bit more to put into a superannuation fund?

Nor would I. Nor would John Key, Bill English, Phil Goff, Jim Anderton or Peter Dunne, I suspect.


Goff, smelling fear, declared Labour opposed to suspension and called on the Government to make its position clear. Anderton called it “raiding the piggy bank”. Dunne, minister of tax collecting, declared it “a very bad idea”.

All of them know it would be sensible.

Yes I refuse to believe Phil Goff is that stupid. He knows it is the sensible thing to do, and why Cullen designed the scheme to allow a contributions suspension. But he is getting a bit desperate with his ratings, so punted for stupidity, even though he knows better.

Deficit adds to the debt loaded on future taxpayers, unless inflation erodes its value in the meantime. Either way, its a thankless legacy.

To increase public debt by a billion dollars and put that money in a superannuation fund risks presenting our tax-paying children with costs that could exceed the fund’s earnings on that sum.

And to date the Fund has generated less money, than if it had been in risk free Government bonds.

Roughan also has a go at tax cuts, saying it is unfair to cut taxes in a deficit. He forgets (or omits) that you can also cut spending to reduce the deficit, and longer term a low tax eonomy will have better economic growth than a higher tax one.

The problem is not the rate of tax. It is that NZ is not producing enough income to generate that tax. And you won’t generate more income by increasing tax rates. You’ll destroy it.

Labour back to being anti tax cuts

February 28th, 2009 at 10:41 am by David Farrar

The Herald reports:

Labour leader Phil Goff has offered his party’s support to the Government should it change its stance on tax cuts.

Well that’s a good reason not to change. But nice to see Labour is back to its tax and spend policies.

Armstrong on public sector restructuring

February 28th, 2009 at 10:37 am by David Farrar

John Armstrong looks at what National is doing:

You won’t hear National saying as much. But the minority Government has quietly begun what in the end might be the biggest shake-up of the core public service since the 1980s.

It has taken a while for this to sink in to those in Wellington.

The latest upheaval will be less visible than National’s previous attempts to pare back the State – deliberately so in order to blunt attacks from Labour and the public sector unions.

It is less driven by ideology and more by John Key’s view that public services are always comparatively high-cost operations and therefore should not be immune from being made to re-invent themselves as selling smarter, better services.

Indeed, the Government should not be immune from the same restraint the rest of the country is.

The Jobs Summit

February 28th, 2009 at 10:22 am by David Farrar

John Key will be pleased, I suspect, with the Jobs Summit. It appears to have indeed avoided being just a talkfest, and some actual initiatives have come forward for consideration.

What I also found interesting was the reports of how it engendered a sense of responsibility in participants that they all have a role to play. You had the Reserve Bank Governor and Treasury Secretary not just there to give speeches, but also actively working side by side in the sessions with participants.

The other interesting thing has been the almost unchallenged assumption that saving jobs is the foremost priority, as determined by John Key. So the Govt is willing to take on some more debt. The banks are willing to lend some more money, the unions (here at least) did not just press for pay increases, and the employers backed plans to reduce hours instead of jobs – despite the latter being a lot easier.

So what are the main ideas:

  • A nine day working fortnight, with the Government paying (but at leass than full wages) for training on the 10th day. Est to cost $320 million a year which is huge. However if it does keep up to 20,000 people in jobs, then you save a lot by not having to pay unemployment benefits and still collecting tax on their incomes.  Backed by Key, unions and employers
  • A $50 million cycleway from Cape Reinga to Bluff, employing 4,000 people (not sure for how long). Supported by Key as a tourism measure and Greens for obvious reasons. Not one of the formal top 20.
  • A multi-million or billion equity investment fund, with the Government and banks, designed to let companies access capital to grow.
  • A $60 million private-public fund to boost Tourism

Fran O’Sullivan praises the Summit:

Pairing Air New Zealand chief executive Rob Fyfe and Council of Trade Unions president Helen Kelly as co-chairs for the critical employment session proved to be a masterstroke.

Very decent of John, $60 milconsidering the anti-National ads that the CTU ran last year.

Well before the summit, Kelly and Fyfe had nutted out a range of policy ideas that are enticingly pragmatic.

One has to say also kudos to Kelly for her work.

Key’s decision to appoint Mark Weldon as summit chair also proved inspired, giving the talented NZX chief executive officer the opportunity to provoke other business leaders to be more creative in their thinking.

Weldon’s appointment was criticised by more than a few, but at the end of the day he delivered.

Colin Espiner blogs:

It’s been a very long day but I think a productive one.

I have to admit I was a bit of a cynic about the Jobs Summit. I’ve been to enough of these things to know that half the time they are a load of hot air, with competing egos and ideologies crowding out the room. At the time of the day some vague communique gets released and nothing ever happens.

Well, this summit was a little bit like that. But only a little. Whether it was the sense of impending crisis, whether it was the change of government, whether business and the unions are more prepared to listen to each other I don’t know, but I did get the feeling that for once, everyone seemed to be singing from the same page.

It is only a beginning. What will be interesting is how many of the ides get implemented in the Budget, or before.

General Debate 28 February 2009

February 28th, 2009 at 9:07 am by David Farrar

Surviving as a Small Business

February 27th, 2009 at 2:57 pm by David Farrar

Over at Public Address, there are guest posts and discussions on surviving the recession as a small business.

The first post is by Scoop’s Alastair Thompson and a second one by Xero’s Rod Drury. Xero are sponsoring the discussion about business survival strategies, and advertising its existence on this blog, and others.

We also had a discussion at Foo Camp (I’ll explain later what that is) about business surivival strategies, and it is fascinating how many good and practical ideas there might be out there. So if you have ideas, or are interested in the area, go on over to Public Address and join the conversation.

The cost of the credit crisis

February 27th, 2009 at 12:34 pm by David Farrar


This comes from Reserve Bank Governor Alan Bollard’s presentation to the PM’s Jobs Summit.

US$39 trillion is a lot of money. It is 390 times the size of the NZ economy.

This is why things are going to get a lot worse, and why local measures (no matter how worthy) will have little effect.

Blog Bits

February 27th, 2009 at 12:00 pm by David Farrar
  1. Liberty Scott reminds us of the truth about how the former Government stuffed up Air NZ.
  2. The Tailor of Panama Street discusses Australia’s bid for the UN Security Council and NZ’s bid for the UN Human Rights Council. I sincerely hope NZ fails to get elected – that would be a lesser embarrassment than actually being onto the Human Rights Council, which is behaving just as badly as its discredited predecessor.
  3. The Dim-Post lashes both the Republican response to Obama’s State of the Union speech, and also Labour’s response to the issue of contributions to the NZ Super Fund.
  4. Whale Oil examines Kordia’s new radio service, and labels it the equivalent of CDMA in a GSM world.
  5. No Right Turn blogs his submission on the Domestic Violence (Enhancing Safety) Bill. A pretty useful submission.
  6. Bryce Edwards has an in depth look at likely new Greens co-leader Metira Turei.
  7. Bill Ralston blogs that Labour may be heading for an iceberg in Mt Albert.
  8. Bernard Hickey blogs a speech he wants John Key to deliver.

Audrey’s Report Card

February 27th, 2009 at 11:00 am by David Farrar

I missed this yesterday – Audrey Young did a report card on the Cabinet. She hasn’t included Ministers outside Cabinet, which would have also been interesting. Her ratings are:

  1. John Key 9/10
  2. Bill English 7/10
  3. Gerry Brownlee 6/10
  4. Simon Power 8/10
  5. Tony Ryall 8/10
  6. Nick Smith 8/10
  7. Judith Collins 8/10
  8. Anne Tolley 7/10
  9. Chris Finlayson 7/10
  10. David Carter 5/10
  11. Murray McCully 7/10
  12. Tim Groser 7/10
  13. Wayne Mapp 5/10
  14. Steven Joyce 7/10
  15. Georgina te Heuheu 6/10
  16. Paula Bennett 7/10
  17. Phil Heatley 7/10
  18. Pansy Wong 5/10
  19. Jonathan Coleman 6/10
  20. Kate Wilkinson 6/10

So one Minister is on 9/10, four Ministers 8/10, eight Ministers on 7/10, four on 6/10 and three on 5/10.

The average score is 6.8/10. For the frontbench it is 7.6/10 which is pretty good.

What I will find interesting is the trend over time – Ministers will be scored the next time Audrey does ratings.


February 27th, 2009 at 10:00 am by David Farrar

I like all Dilbert cartoons, but this one especially tickled me.

Cullen to swap sides

February 27th, 2009 at 9:00 am by David Farrar

Michael Cullen is set to swap sides. No, not from Labour to National, but from representing the Crown in Treaty negotiations to representing Tuwharetoa in Treaty negotiations.

This is almost the opposite to National’s Chris Finlayson. Chris used to be Ngai Tahu’s lawyer, and now of course is the current Treaty Negotiations Minister.

It is possible Cullen could end up negotiating with Finlayson on behalf of Tuwharetoa. For their sake I hope Chris has forgiven Cullen for personally vetoeing Chris getting the QC in 2005!

Optimistic New Zealanders

February 27th, 2009 at 8:19 am by David Farrar

Over at NBR in my weekly Dispatch from St Johnnysburg, I look at how NZ has a net positive +45% rating in the polls for country direction, while the United States (despite Obama being elected) still has a net negative -26% rating for country direction. Also the traditional best and worst play of the week.

Comments and feedback can be made over at NBR.

General Debate 27 February 2009

February 27th, 2009 at 7:53 am by David Farrar

Little confirmed as President

February 27th, 2009 at 7:47 am by David Farrar

The Herald reports Andrew Little is the only candidate for Labour Party President.

I think it is safe to assume that Labour will now run a smarter campaign in 2011, than in 2008 – and that Andrew will never be found in Melbourne trying to dig up dirt personally on John Key.

Andrew is remaining EPMU national secretary. If the EFA had not been abolished, it would have been interesting to see a third party headed up by a political party’s president. Almost worth a court case 🙂

Andrew will also have a sensitive juggling act. As Labour’s president he wants the Government to fail at things like oh the jobs summit. However as EPMU national secretary he wants the jobs summit to actually produce some good outcomes, that will help his members. Potential conflicts between the two jobs will no doubt be scrutinised. Of course, many people have conflicts between different roles – Andrew is not unique there. It is how you manage them.

I won’t be surprised if Andrew makes it into Parliament before the 2011 election, if there is a by-election in a Wellington seat.

The first 100 days

February 26th, 2009 at 4:06 pm by David Farrar


All 27 promises delivered on time – you can see the full list here. Of course this is just the beginning, or first actions. The real hard work is still to come.


February 26th, 2009 at 3:45 pm by David Farrar

Today’s Trans-Tasman looks at what is happening:

Key is sharp, incisive and confident, English supplies the intellectual grunt and the political know-how. Both in their different ways inspire others to work with them as a team. The opinion polls offer dismal reading for Opposition parties, with Labour crashing to 28% and the Greens to 6%. Only about half of those sampled were aware Phil Goff is now Labour leader, and only 13% Annette King is deputy leader. With Helen Clark actively planning an early departure from Parliament, and speculation Michael Cullen will leave in the next two months likely to be confirmed, Labour is threatened with an identity crisis.

To be fait to Goff, I suspect more than half of NZers know who he is. They just don’t know he is now the Labour Leader.

Part of Goff’s problem is he became Leader so quickly – at the time Key was putting his Government together. So his ascension got sant media coverage. If Clark has held off until around now, then Goff would probably have got extensive coverage of his rise to the leadership – exclusive TV interviews, magazine profiles, newspaper stories etc.

But Goff’s problem goes beyond the initial lack of profile. His problem is his own supporters are not talking about him.

The front page of The Standard does not mention him once. In fact there is only one post in the Phil Goff category.  Niw this is not any criticism of The Standard, just a reflection of the reality that Goff is not connecting with anyone at the moment.

Personally though, if I was Goff, I wouldn’t even try to build up profile at this stage. The next few months are still Government honeymoon. He should concentrate on getting around the country talking to key groups, starting to think about the direction he wants to take Labour in, and then start selling that in the second half of the year.

I’m partly to blame

February 26th, 2009 at 2:00 pm by David Farrar

Adam Smith (who is a must read blog) blogs a letter to the editor, pointing out a problem with s92A:


So is this true? Is John Key regarded as an ISP by this legislation, and he also will need a policy to disconnect users if s92A comes into force?

Sadly yes, and in one sense I am partly to blame. But not really – more the incompetence of the former Minister.

The original Copyright (New Technologies and Performers’ Rights) Amendment Bill defined an ISP as

‘‘Internet service provider means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing

But the problem is that the exemption from liability for ISPs for material that their users may upload needed a wider definition. It needed to include hosting providers, and even blogs.

So InternetNZ in its submission, said the definition should be expanded to include hosting. We also said that s92A should be deleted. So we (I was part fo the INZ team) got that definition into the bill.

The Commerce Committee admirably did both things. They added this onto the definition of an ISP:

hosts material on websites or other electronic retrieval systems that can be accessed by a user

They also deleted s92A saying:

We recommend that new section 92A (clause 53) be deleted as the standard terms and conditions of agreements between an Internet service provider and its customers usually allow for the termination of accounts of people using the services for illegal activity. Moreover, new section 92C already requires an Internet service provider to delete infringing material or prevent access to it as soon as possible after becoming aware of it.

So the law at that point made sense. No S92A, and an ISP was defined as any person hosting material, in order to qualify for protection from liability if copyright infringing material is placed on their site by others.

But then came along the Minister, who did an SOP. Judith Tizard stuck back in a new form of s92A, specifying:

An Internet service provider must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the account with that Internet service provider of a repeat infringer.

The Minister and her officials fucked up big time. They stuck in a clause that was reliant on a definition that was no longer appropriate.

So we have a law that now defines even the Prime Minister (as he hosts a website where people can leave comments) as an ISP. And this would have been okay if it was only for the purposes of protecting the PM from liability for any infringing material placed on his website by users. But thaks to Judith the Prime Minister (and every MP who has a website that allows user comments) has to now have a policy that provide for termination of users who are repeat copyright infringers.

Imagine how much money the legal profession is going to make writing such policies for almost every business in New Zealand.

Getting the rights holders and the TCF to agree on a code of practice is a great solution to the problem of people losing their accounts on the basis of mere allegation. And I am hopeful we will get a good result there.

However the code of practice will not be a solution to the fact that the law is an incompetently written law, that is confusing and costly.

Key Details

February 26th, 2009 at 1:00 pm by David Farrar

The Herald reports:

VANCOUVER, British Columbia – The Chinese-Canadian film star in a racy scandal over photos that showed him in bed with eight of China’s best-known actresses and singers testified against the person accused of accessing his private laptop, which held the images.

They don’t make clear whether or not he was bedding all eight at the same time, or sequentially. It is an impressive achievement either way, but there is a key difference!

Pankhurst retiring as Dom Post editor

February 26th, 2009 at 12:00 pm by David Farrar

The Dom Post reports its editor, Tim Pankhurst, is retiring:

Mr Pankhurst, 54, has been editor of The Dominion Post since shortly after its founding in 2002.

He previously edited The Evening Post, The Press and the Waikato Times.

His 14-year tenure running those four titles made him New Zealand’s longest-serving daily editor.

The Fairfax Media CEO said:

“His work on stories such as the Louise Nicholas investigation and The Dominion Post’s work last year on funding questions around NZ First have had a significant impact on New Zealand society. They are among the most significant newspaper investigations of the past 20 years and are testament to Tim’s skill and courage as an editor.

I agree, that his backing of staff such as Phil Kitchin, has been the newspaper at its finest. In the reporting of Donna Awatere-Huata, Lousie Nicholas and of course Winston, the Dom Post has had to endure masses of legal threats, but refused to back down.

Pankurst has a new job CEO of the Newspaper Publishers’ Association:

In his new role – which he will take up in mid-April – he will represent the newspaper industry, and manage the New Zealand Press Association (NZPA) and the National Advertising Bureau (NAB).

I have to say this is aa good move. Pankhurst has been one of the braver media people when it comes to issues of free speech. His publishing of the Danish Mohammed cartoons had even the PM trying to heavy him. And he even managed to get away with publishing details of the Urewera 17 case.

Wind farm declined due to spiritual values

February 26th, 2009 at 11:27 am by David Farrar

Sigh. The Dom Post reports:

An application to build a wind farm near Napier has been declined for the second time by the Environment Court because the site is spiritually significant to Maori.

The Hawke’s Bay-based powerline company Unison applied to add 34 turbines to 15 already approved for a site on Te Waka Range near Te Pohue, on the Napier-Taupo Road. …

Unison was poor at consultation and appeared to have approached iwi as an afterthought. “We’re not opposed to wind farms, we understand the need for renewable energy,” she said. “But not on this site. This is our sacred mountain. We are duty-bound to protect it.”

I don’t think any mountain is sacred. I can understand the decision if the turbines were planned for say a burial place.

I can accept arguments over a mountain’s conservation or scenic values. I wouldn’t back wind turbines on Mt Cook for example. But arguments about a mountain’s spirtual values have no place in court.

RIP Ivan Cameron

February 26th, 2009 at 9:53 am by David Farrar

I am incredibly saddened to read of the death of David Cameron’s six year old son, Ivan. You just can not imagine how awful it must be to have to cope with such a loss, and in public.

More on Super Fund

February 26th, 2009 at 9:47 am by David Farrar

The Herald canvasses the parties on whether there should be a freeze on contributions:

Should the Government suspend contributions to the NZ Super Fund?
* National: Won’t rule it out.
* Labour: No
* Greens: Yes
* Maori Party: No policy
* Act: Yes
* United Future: No
* Progressives: No

The best argument for common sense comes from Russel Norman:

But Greens co-leader Russel Norman said last night that in the present context, New Zealand should suspend its contributions.

“We are borrowing in order to invest in pretty uncertain financial markets at a time when the Government’s fiscal position is rapidly deteriorating and it’s really worried about its gross debt level.

The scond stupidest statement is from Phil Goff:

Labour leader Phil Goff strongly opposes any suspension of contributions of about $2 billion a year.

“The pensions of tomorrow need to be protected today.”

So Phil thinks borrowing today, which will need to be repaid tomorrow, will protect he pensions of tomorrow. That has to win some prize for stupidity.

Then we have Jim:

Progressives leader Jim Anderton said that “raiding the piggy bank today means there is less in the piggy bank when it is needed”.

Jim thinks you can fill up a piggy bank by borrowing money for it. This is like telling your child that even though they did not have any left over pocket money, they should go borrow some money, and stick that borrowed money in a piggy bank, so they will think they have saved some money.

UPDATE: Whale calls Labour’s borrow to save plan as their “Blue Chip” plan for our future. That’s a good way to look at it. I mean think if a finance company did what Goff and Anderton did, and said we will secure your future by borrowing money you don’t have, to save money for you. The SFO would be talking to those directors in very quick time!

Herald on Spending

February 26th, 2009 at 9:31 am by David Farrar

The Herald editorial says:

Now, as Mr English admitted this week: “We have ended up with the worst of all worlds.” We have Labour’s level of public expenditure and we are about to get National’s level of taxation.

Something has to give. If National will not postpone tax cuts due in April, it must trim some of the programmes it has inherited. The most costly of them, interest-free student loans, free childcare, KiwiSaver subsidies and the upper reaches of the Working for Families grants, should be means-tested more tightly to avoid taxing people to provide benefits they could pay for themselves. None of these would be politically painless and one or two are policies John Key has promised not to touch.

But National needs to cut core public spending to match its tax cuts even as it considers borrowing a much larger amount to fund counter-recessionary spending.

This is just plain misleading. Is the editorial writer not aware that National already cut public spending to match its tax cuts? National primarily cut the KiwiSaver subsidies, to fund the tax cuts. This must be known to the editorial writer (Labour harped on about it non stop during the election), so why is it ignored?

And National’s policy, with the wisdom of hindsight, was 100% correct. Because the billions that were to go into KiwiSaver subsidies would have been locked up for decades. Instead they are adding to the fiscal stimulus so badly needed now.

To clarify what it is doing, its Budget needs to present the public with two accounts: one for the temporary relief it is borrowing, including the cost of capital for infrastructure, the other to bring core public spending into line with the permanent changes to income tax rates and thresholds.

National’s tax cuts have been paid for by reduced spending. That has already been done. The problem is not the level of tax rates, but the level of income earned, and hence the amount of tax collected.

Now I fully agree, we should restrain spending now – but only in ways that do not break election promises. And frankly I am getting sick of Herald articles and editorials continuously calling on National to break its election promises. Because I’m bloody sure there have been a lot of editorials in the past condemning parties that did break their election promises. There is a degree of moral hypocrisy at play here.

I agree interest free student loans is stupidity. However National made a promise not to start charging interest again, during this term of office anyway. I want National to keep all its promises, not just the ones I agree with.

Fallow on Broadband

February 26th, 2009 at 9:13 am by David Farrar

Brian Fallow makes some good points on broadband:

Going further than the current programme of laying fibre to the cabinet, taking fibre to the home is estimated to cost a further $6.2 billion, of which the Government is contemplating stumping up about a quarter.

Brian is quoting the Castalia report, which I covered on Saturday. That estimate is based on using telcos only to do fibre to the home. It has been estimated the cost drops by around $2 billion if you bring utility lines companies into the equation.

But we have something of a tradition of being penny-wise, pound foolish when it comes to infrastructure investment.

We are paying a stiff price for neglecting investment in the national grid.

Auckland would be a better-functioning city right now if it had gone for light rail when Sir Dove-Meyer Robinson advocated it and/or had completed its highway network.


Sceptics of the Government’s plans are on firmer ground perhaps when they question whether they would pay off in lifting the country’s unimpressive productivity levels. Surely fibre to the workplace is what counts there.

However the boundary between home and workplace is becoming fuzzier.

If the aim of this exercise is to deliver infrastructure that will be as important for the coming century as roads and power lines were for the last one, then part of that future-proofing should take account of carbon costs and the gains to be had if telecommunications can be substituted for transport.

When your home Internet connection means you can access the office LAN as quickly as if you were in the office, and when it means you can be video-conferenced to one or more colleagues more quickly that it would take to walk down a corridor, then you will have a significant exodus of people going from work to working from home.

Details about how it will be structured and intersect with existing players are on the non-existent side of scant at this stage but Communications Minister Stephen Joyce is promising more information within a matter of weeks.

“It is a plan to proceed over 10 years, to achieve a step change and do it faster than the market would otherwise do it,” he said.

“The argument is it provides a competitive advantage to New Zealand as a whole to get this infrastructure in ahead of some other countries.”

It is not too much of a simplification to say that, historically, the things which have really propelled the New Zealand economy forward have been technologies which overcome or mitigate the tyranny of distance, like refrigerated shipping in the 1880s or jet travel in the 1960s.

It is hard enough to achieve productivity gains through economies of scale or scope given our small size and remoteness.

We are the only OECD country that is both very remote and very small. To stay competitive we do need to be ahead of the pack when it comes to technologies that, as Steve Joyce said, mitigate the tyranny of distance.

General Debate 26 February 2009

February 26th, 2009 at 8:12 am by David Farrar