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Now here’s an idea John & Bill could copy from our Australian cousins:-This would be a perfect fit with the proposal to use the economic downturn to improve capacity and upskill our workforce so we can improve our ability to repay debt and move up OECD rankings.
JOINT MEDIA RELEASE WITH
THE PRIME MINISTER &
MINISTER FOR SMALL BUSINESS
SMALL BUSINESS AND GENERAL BUSINESS TAX BREAK
To support jobs and Australian businesses – especially small businesses – the Government will fund an investment tax break for all Australian businesses.
This temporary business tax break will help Australian businesses boost business investment, bolster economic activity and support Australian jobs.
Businesses in Australia – especially small businesses – are the engine of the Australian economy and deserve direct support during a global recession.
This $2.7 billion Business Tax Break is a key element of the Government’s $42 billion Nation Building and Jobs Plan to support up to 90,000 Australian jobs.
The Small Business and General Business Tax Break will mean;
• A small business that buys and installs a $2,000 computer before the end of June 2009 can claim an additional $600 deduction in its 2008-09 tax return.
• A business that buys and takes possession of a $60,000 backhoe by the end of June 2009 can claim an additional $18,000 deduction in its 2008-09 tax return.
Small businesses can claim an additional 30 per cent tax deduction for eligible assets costing $1,000 or more that they acquire from 13 December 2008 to 30 June 2009, and install by 30 June 2010.
For eligible assets costing $1,000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10 per cent deduction where they are installed by 31 December 2010.
To benefit from this tax break a small business must have a turnover of $2 million a year or less.
Other businesses can receive the same deductions for eligible assets greater than $10,000.
This will further boost business investment and confidence in the Australian economy in the face of the global recession.
Assets eligible for the allowance are new tangible depreciating assets and new expenditure on existing assets used in carrying on a business for which a deduction is available under the core provisions of Division 40 (Capital Allowances) in the Income Tax Assessment Act 1997.
More detailed information is attached. Treasury will also release draft legislation for public consultation.
CANBERRA
3 February 2009
expat — that is no ” ’sham’ criticism” from cactus kate. Two companies that we as kiwis should be proud
of are continuing to make it difficult to laud.
I have never been a fan of Monopoly Mark – with defference to ck for the monica – as monopoly businesses
are a doddle to perform. If he had competition he would fund FASTER from profits – no competition – go to your users.
Air NZ is a worry. When did you last hear a rave from someone who has just come off a long haul flight?
It seems Rob’s air host/hostesses are not singing from his song sheet.
Mention this to a member of the ‘domestic’ fleet and they look embarrassed.
I chair a relatively small Trust which provides assistance to the Children & Grandchildren of NZ Vietnam veterans. Our capital base is less the one million dollars. Our funds are managed in their entirety by the NZ Guardian Trust and are subject to independant audit.
When we were formed some 14 years ago we were afforded charitable status by the IRD who were clearly satisfied as to our bona fides.
We are now faced with an ever increasing cost impost in providing the Charities Commission with information. Last financial year that cost amounted to 3.55% of our total income.
Why do we need a Charities Commission? IRD should be perfectly capable of developing a risk based rolling programme of audits targetting those rogue charities set up to rip off the system.
The Charities Commission is the perfect example of a sledgehammer being employed to crack a wallnut … and a gold plated sledgehammer at that.
Who is the country’s most out of touch bureaucrat – Barry Matthews or Andy Knackstedt? I vote Knackstedt after his moronic comments on the radio this morning that “rental car companies in Europe have no trouble with toll roads”.
Yes, but as you pointed out dickbrain, in Europe they have full electronic monitoring systems whereas here in NZ we always seem to take the cheaparse option.
Whoever came up with the idea that standing in a queue for 10 minutes to save themselves five minutes on a toll road was a brilliant move should drown themselves now, because they’re wasting damn good oxygen. Unfortunately we continue to pay these dipshits to provide half-arsed solutions because most New Zealanders are fucken sheep who struggle to think past where their next government handout is coming from.
Knacksted is a gripper and has always been so. Just happens his tenure has coincided with the labour regime and therefore his father knows best patronising shit has been tolerated.
The guys a pr flunky overstepping the mark continuously.
“Whoever came up with the idea that standing in a queue for 10 minutes to save themselves five minutes on a toll road was a brilliant move should drown themselves now”
Couldn’t agree more. I drove back from Warkworth a while back and decided to avoid using the toll road, given the number of cars pulling off at Puhoi to pay the toll. The car in fornt pulled over to pay the toll, and I carried on up Johnstone’s Hill to Orewa. I got stuck behind a house bus, but I wasn’t too worried as I was in no hurry. I was on the motorway, approaching Oteha Valley Road when I noticed a car coming up outside me. It was the poor bugger who had pulled over in front of me to pay a toll to take a “short-cut” and he was only catching up with me now. I laughed as far as the harbour bridge.
With the toll road we have the absurd situation were half arsed technology is taking away most of the benefit. They should either have a barrier and big hopper where you throw in a coin or take the money off the social welfare budget to fund a free road.
“An electricity sector review that suggests sidelining many of the Electricity Commission’s functions is likely to be grabbed with both hands by the Government.”
I consider that the Government should grab it with one hand only. While the review does make good comments about the present electricity setup, it does blatantly address the self interests of its promotors (ie those who paid for it) Business New Zealand.
The aspect that grabbed my attention is:
“The energy minister should have clear powers to appoint an administrator “should supply fail to meet demand”. The administrator would direct who dispatched power and which users should be cut back, and set wholesale prices for when supply could not meet demand. Industry processes would also be better at designing efficient wholesale and retail market trading rules.”
Translated this means:
“We love the competitive market system when there is plenty of water in the lakes and spot prices go through the floor. However we hate it when there is a bit of a shortage and spot prices head for the sky. At that point we think the Government should ‘do something,’ and not let those rapacious power companies rip us off.”
The point is that, if a power company is going to invest capital to provide back-up capacity to cover lean years, the shareholders expect a return on their investment, and the return for that sort of investment comes from high spot prices when generation is tight. Fear of Government intervention at that point makes such investment too risky.
The other point is that they want an ‘administrator’ who will somehow mysteriously allocate electricity that is not available. Any such allocation process would be highly political – one which a government on the right of centre does not really want to get involved in. Presumably the ‘administrator’ could order punitive restrictions on domestic customers like hot water cuts (although I suspect the ‘base’ of customers with ‘controlled’ hot water is diminishing) and rolling blackouts. I think the power companies tread fairly cautiously with respect to domestic customers so as not to cause any more political antagonism than there is already (eg the recent Contact price increases were to my way of thinking a finely balanced exercise with regard to profitability, politics and customer mood).
The Ministers only need to look back to the North Island shortage in 1958 or so and the shortage in early 1970’s to realise just what a political hot potato this becomes. After both shortages pocesses were put in place to ensure wide consultation and development of a robust future power plan. Tis process probably was too robust (and hence costly) so became a prime target of Rogernomics.
There is no such thing as a competetive electricity market, it is in fact, anti-competetive.
I do not have to sign a contract to buy petrol from Shell and groceries from New World. I can decide today to buy petrol from Bp and groceries from Countdown, and then I can change my mind as many times as I like.
Unless, and until, I can decide at the point of flicking the switch who I want to buy electricity from, the market is not competetive,
MNIJ, I recently changed electricity suppliers and choose a better price and zero term commitment. When I’m free to drive into any of the supplier’s forecourts where I get the same price. The existence of a supply contract does not create an anti-competitive environment as you seem to be suggesting.
February 24th, 2009 at 9:20 am
“And while the rest of the world wring their hands China goes shopping for oil companies, French, Canadian, and Australian firms and anything else they can buy.”
You know what? The Chinese, who work for peanuts and make stuff so cheap and live so frugally, actually save money at a rate that puts us first-worlders to shame; they have spent the last decade lending us the money that we then use to buy the stuff they make. They still have a standard of living that is way below ours, and yet they are awash with cash with which to buy up the world. Their economy has been affected by the crisis: it is just going to grow in the low single digits for a while, while the profligate, borrow and spend first world, are going to have shrinking economies all the while that they refuse to part with all the luxuries to which they have become accustomed; and by that, the foremost thing I have in mind, is all the “free” stuff that nanny state gives us. We just have not worked out that all that free stuff is not left under our pillows by the tooth fairy; someone, somewhere, actually has had to work and pay for it.
“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.”
By the late Dr. Adrian Rogers, 1931- 2005, former Pastor Bellview Baptist Church, Memphis, Tennessee.
My Name Is Jack, I will believe we have a free market in electricity, when the people of a region can agree to allow a generation plant (hydro, nuclear, whatever) to be built in their region, and benefit from the prices promised to them by the constructers of the generation plant. What we have at the moment is a total disconnect between generation and the costs and benefits of providing it, and the final user.
I still gave you a positive karma point for your comment, though. I presume you were sincere, you do want a free market in electricity?
I am continually disappointed by the non-intellectual debates on the subject of “free market” reforms versus statism; virtually all the criticisms of any so called “free market” reforms, relate to the aspects that result from the free market being left out or disallowed from working. So your comment was perceptive; we do not have a free market in electricity, and the failings we experience are no reason to go back to a State monopoly rather than forward to a real free market.
Greenfly – I think the cartoon is spot on. I think that John is going to have to reallocate the Corrections portfolio in the near future as a damage control measure.
China is going to continue buying US bonds and with reserves and foreign assets of perhaps $2 trillion or more isn’t it a little ironic that the capitalist west is going to end up in hock to the communist east.
I am astonished no-one else has asked, but why are all the media apparently using a 20 year old picture of Sue Bradford in their coverage of the “race” for Green co-leadership. The person who is actually standing looks altogether different.
China is going to continue buying US bonds and with reserves and foreign assets of perhaps $2 trillion or more isn’t it a little ironic that the capitalist west is going to end up in hock to the communist east.
Too late – we were hooked into the hock ages ago.
And is it a sure thing that China will continue buying US bonds?
The primary reason why China continues to prop up the US$ is so that the US and other countries who rely on the US$ for trading purposes, continue to consume China’s exports.
A leader in last week’s Economist considered the prospect of the newly emergent middle classes in China, India, Brazil etc being faced with a return to poverty. History suggests that major social instability could ensue. China, in particular, will do everything within its power to avert social unrest.
I’m not an expert, and I’m only pondering here. But I wonder how soon before China realises that it does not have to depend on Western nations to buy its commodities, because it has an enormous untapped market at home? It doesn’t have to reduce production at all, if it simply allows its middle class to grow and whets its appetite for consumption.
Same goes for India and Brazil.
Of course, were this to happen, it may end the cosy co-dependency between developed and developing countries. Why would China continue to lend money to the US if it no longer needs its business? And once the credit really dries up, today’s so-called “developed” nations may be in for a very rude awakening.
On the plus side, if my scenario were to play out the developing nations would become rapidly more democratic.
Feb. 20 (Bloomberg) — A glitch in satellite sensors caused scientists to underestimate the extent of Arctic sea ice by 500,000 square kilometers (193,000 square miles), a California- size area, the U.S. National Snow and Ice Data Center said. http://www.bloomberg.com/apps/news?pid=20601110&sid=aIe9swvOqwIY
1. That is a dangerous mistake for shipping
2. The Polar bears are now safe.
“China is going to continue buying US bonds and with reserves and foreign assets of perhaps $2 trillion or more isn’t it a little ironic that the capitalist west is going to end up in hock to the communist east.”
Cha, I prefer to describe China as a post-communist economy where the State has been as low as 17% of GDP in recent years. That is what the bloated socialist welfarist nations with their States at 35%-50% of the economy are going to end up in hock to.
I also look on it as China reverting to its ancient, Confucian roots, along with a rapid taking on of Christianity; that is what post-christian, liberal secular multiculti moral relativist nations are going to end up in hock to.
Or look on China as having strong ethics of work, thrift, and personal responsibility. That is what the “everyone’s a victim now” West is going to end up in hock to.
If China hadn’t had its disastrous Communist interlude; imagine it being Japan times ten. They’d already own the world; Japan probably owns 10% of it as it is.
Just days ago, the Obama administration announced plans to spend another $775 billion to $1 trillion on bailing out the troubled U.S. economy.
That brings the total bailout package up to $8.5 trillion (including the $700 billion Wall Street bailout… $600 billion to Fannie and Freddie… $168 billion in stimulus checks… the list goes on).
To put this into perspective, that is more than the U.S. spent on:
• the New Deal – $500 billion
• the invasion of Iraq – $597 billion
• the entire lifetime budget of NASA – $851 billion
In fact, it’s more than all of these combined… and that includes throwing in:
• the $256 billion they spent on the S&L bailouts of the 1980s
• the $217 billion that was spent on the Louisiana Purchase; and
• the $454 billion that was spent on the Korean War!
When the financial crisis exploded early last year, investors worldwide began rushing for the exits. EVERYONE wanted to exchange their stocks, funds and commodities for cold hard cash.
And it wasn’t just individual investors. Hedge funds, hit by redemption demands from investors, were forced to liquidate their positions in exchange for cash (to the tune of $400 billion).
In a single 30-day span, investors yanked $127 billion from U.S. stock and bond mutual funds, seeking the “safety” of Treasuries and cash.
But the rush to cash didn’t stop there. Even with yields sinking below the S&P 500, the demand for Treasuries soared… all helping to drive the greenback up 21% in just five months.
All this has created what could be the biggest bubble in the financial world today… the bubble in the U.S. dollar! It’s a disaster just waiting to happen… waiting for that “tipping point” event to set off the fireworks.
The Fed is expanding the U.S. monetary base by more than $11 billion a day since September, to nearly $1.5 trillion. That’s an increase of 79.02% since October of 2007. On an annualised basis, the “run rate” – the increase of dollars in circulation – is soaring by 369.92% per year! Unprecedented in history!
That $8.5 TRILLION in bailout cash is about to flood into the global economy. And when that happens the “Bailout Bombshell” will finally torpedo the dollar… wiping out TRILLIONS in American wealth all at once.
Bottom line: Anyone holding U.S. dollars – in cash, in money markets, in Treasuries – is in the “blast radius.”
I’m as right wing as most but I think we need to recognise that while free markets are “economically efficient” they are also very unsentimental things that can cause a lot of pain and dislocation. And electricity is one (critical) service where we can do without that pain and dislocation. For example, among other things, in a true free market:
* The price of electricity would need to float, so all domestic users would be exposed to the spot prices. Fine if the lakes are full. But I wonder what the advocates of the free market will say when their electricity costs more than $1.00 a unit in a dry winter?
* Rational suppliers in a free market would ensure there was an overall shortage of electricity, and would only provide it to those prepared to pay a premium price.
Fundamentally the price of electricity is driven by the price of fuels, which in turn is driven by the availability of fuels. So until we get access to a lot more water and gas and coal at cheap prices then electricity is going to seem expensive to a lot of people.
That’s not to say we shouldn’t tweak the industry structure a bit. Personally I think we need a degree of coordination across the sector, synching the long-term investment in generation and transmission. And that probably involves some economically & environmentally inefficient decisions to ensure security of supply (like putting a big coal-fired plant in Southland … since there’s no thermal baseload currently available in the South Island).
And we certainly should take a close look at the shonky thinking that “We have to put prices up now in order to justify the **next** power plant we might build in a few years time”.
bharmer said “I am astonished no-one else has asked, but why are all the media apparently using a 20 year old picture of Sue Bradford in their coverage of the “race” for Green co-leadership. The person who is actually standing looks altogether different.”
Electricity has an awful lot of areas that mean it’s not a free market – the bulk of generation is owned by the government (in theory us) they are the price setter
You cannot change your lines company – there are rules that the lines companies have to follow to value their assets that then let them charge more – they spend a lot of time trying to work out how to price their assets up – some of the approaches used are dubious at best
I love the “We have to put prices up now in order to justify the **next** power plant we might build in a few years time” approach – it just shows how not a free market we have – particularly as they still have to pay the government a dividend – a commercial company takes a loan (or pays out of cashflow) – justifies it on the return over 50 years (for a power station) and off they go. I would quite like to charge my customers extra now so as I can buy an extra xxxx in the future for them, of course.
Electricity prices relationship to fuel prices is interesting as we have the bulk of our electricity generated by renewable means. So why aren’t the prices then related to the cost of the asset (return on build $, maintenance etc or replacement cost) that does the renewable generation?
The point the report makes around the Electricity Commission not being suited to address competitive issues seems quite accurate considering the above. I agree that the EC is part of the problem we have with power in this country but I don’t agree with Transpower being the solution for investment decisions. They haven’t shown a good history here.
I’m not sure if you followed a thread we had going a couple of weeks ago, but here’s another link to a rather wry but sobering video where Glenn Beck parodies Al Gore’s An Inconvenient Truth to explain just how worthless the US dollar currently is: http://www.youtube.com/watch?v=lNS8IY_Td14
Good start to the day eh OECD – the only problem is that there are now two list places available if Twyford gets the Mt Albert seat, and #2 on the list is …….. Judith Tizard
You would think nine years as a PM would put Clark on the short list of candidates for any position.
Not as PM of NZ.
If you served in a real nation in three four year terms you would be taken considerably more seriously.
Clark is no Margaret Thatcher, which the UN has exposed. By normal peoples standards, she is on the dole queue applying for a job as the police check is being scrutinised. fortunately for her, former employees police records won’t count against her.
February 24th, 2009 at 8:59 am
Now here’s an idea John & Bill could copy from our Australian cousins:-This would be a perfect fit with the proposal to use the economic downturn to improve capacity and upskill our workforce so we can improve our ability to repay debt and move up OECD rankings.
JOINT MEDIA RELEASE WITH
THE PRIME MINISTER &
MINISTER FOR SMALL BUSINESS
SMALL BUSINESS AND GENERAL BUSINESS TAX BREAK
To support jobs and Australian businesses – especially small businesses – the Government will fund an investment tax break for all Australian businesses.
This temporary business tax break will help Australian businesses boost business investment, bolster economic activity and support Australian jobs.
Businesses in Australia – especially small businesses – are the engine of the Australian economy and deserve direct support during a global recession.
This $2.7 billion Business Tax Break is a key element of the Government’s $42 billion Nation Building and Jobs Plan to support up to 90,000 Australian jobs.
The Small Business and General Business Tax Break will mean;
• A small business that buys and installs a $2,000 computer before the end of June 2009 can claim an additional $600 deduction in its 2008-09 tax return.
• A business that buys and takes possession of a $60,000 backhoe by the end of June 2009 can claim an additional $18,000 deduction in its 2008-09 tax return.
Small businesses can claim an additional 30 per cent tax deduction for eligible assets costing $1,000 or more that they acquire from 13 December 2008 to 30 June 2009, and install by 30 June 2010.
For eligible assets costing $1,000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10 per cent deduction where they are installed by 31 December 2010.
To benefit from this tax break a small business must have a turnover of $2 million a year or less.
Other businesses can receive the same deductions for eligible assets greater than $10,000.
This will further boost business investment and confidence in the Australian economy in the face of the global recession.
Assets eligible for the allowance are new tangible depreciating assets and new expenditure on existing assets used in carrying on a business for which a deduction is available under the core provisions of Division 40 (Capital Allowances) in the Income Tax Assessment Act 1997.
More detailed information is attached. Treasury will also release draft legislation for public consultation.
CANBERRA
3 February 2009
February 24th, 2009 at 8:59 am
Is Cactus Kate seeking company feedback via ’sham’ criticism?
- NZX
- Air NZ
Discuss.
February 24th, 2009 at 9:20 am
And while the rest of the world wring their hands China goes shopping for oil companies, French, Canadian, and Australian firms and anything else they can buy.
February 24th, 2009 at 9:48 am
expat — that is no ” ’sham’ criticism” from cactus kate. Two companies that we as kiwis should be proud
of are continuing to make it difficult to laud.
I have never been a fan of Monopoly Mark – with defference to ck for the monica – as monopoly businesses
are a doddle to perform. If he had competition he would fund FASTER from profits – no competition – go to your users.
Air NZ is a worry. When did you last hear a rave from someone who has just come off a long haul flight?
It seems Rob’s air host/hostesses are not singing from his song sheet.
Mention this to a member of the ‘domestic’ fleet and they look embarrassed.
February 24th, 2009 at 9:55 am
Last time I flew Aer NuZulaund in business it was great (as you can get doing 24hrs straight on a flying bus).
Was just wondering, havent heard any follow up on those topics.
The NZX has some problems.
February 24th, 2009 at 9:57 am
I chair a relatively small Trust which provides assistance to the Children & Grandchildren of NZ Vietnam veterans. Our capital base is less the one million dollars. Our funds are managed in their entirety by the NZ Guardian Trust and are subject to independant audit.
When we were formed some 14 years ago we were afforded charitable status by the IRD who were clearly satisfied as to our bona fides.
We are now faced with an ever increasing cost impost in providing the Charities Commission with information. Last financial year that cost amounted to 3.55% of our total income.
Why do we need a Charities Commission? IRD should be perfectly capable of developing a risk based rolling programme of audits targetting those rogue charities set up to rip off the system.
The Charities Commission is the perfect example of a sledgehammer being employed to crack a wallnut … and a gold plated sledgehammer at that.
February 24th, 2009 at 10:02 am
Who is the country’s most out of touch bureaucrat – Barry Matthews or Andy Knackstedt? I vote Knackstedt after his moronic comments on the radio this morning that “rental car companies in Europe have no trouble with toll roads”.
Yes, but as you pointed out dickbrain, in Europe they have full electronic monitoring systems whereas here in NZ we always seem to take the cheaparse option.
Whoever came up with the idea that standing in a queue for 10 minutes to save themselves five minutes on a toll road was a brilliant move should drown themselves now, because they’re wasting damn good oxygen. Unfortunately we continue to pay these dipshits to provide half-arsed solutions because most New Zealanders are fucken sheep who struggle to think past where their next government handout is coming from.
February 24th, 2009 at 10:09 am
No one should drive on toll roads. We do not need them and should not accept them. The only way to prevent their spread is to refuse to use them.
How long before we go down the Oz route where toll roads are in private hands and public roads are closed to force motorists on to the toll road?
Roads are national infrastructure and should be funded as such.
February 24th, 2009 at 10:18 am
Knacksted is a gripper and has always been so. Just happens his tenure has coincided with the labour regime and therefore his father knows best patronising shit has been tolerated.
The guys a pr flunky overstepping the mark continuously.
February 24th, 2009 at 10:48 am
“Whoever came up with the idea that standing in a queue for 10 minutes to save themselves five minutes on a toll road was a brilliant move should drown themselves now”
Couldn’t agree more. I drove back from Warkworth a while back and decided to avoid using the toll road, given the number of cars pulling off at Puhoi to pay the toll. The car in fornt pulled over to pay the toll, and I carried on up Johnstone’s Hill to Orewa. I got stuck behind a house bus, but I wasn’t too worried as I was in no hurry. I was on the motorway, approaching Oteha Valley Road when I noticed a car coming up outside me. It was the poor bugger who had pulled over in front of me to pay a toll to take a “short-cut” and he was only catching up with me now. I laughed as far as the harbour bridge.
February 24th, 2009 at 11:23 am
With the toll road we have the absurd situation were half arsed technology is taking away most of the benefit. They should either have a barrier and big hopper where you throw in a coin or take the money off the social welfare budget to fund a free road.
February 24th, 2009 at 11:41 am
See:
http://www.stuff.co.nz/4857368a13.html
“An electricity sector review that suggests sidelining many of the Electricity Commission’s functions is likely to be grabbed with both hands by the Government.”
I consider that the Government should grab it with one hand only. While the review does make good comments about the present electricity setup, it does blatantly address the self interests of its promotors (ie those who paid for it) Business New Zealand.
The aspect that grabbed my attention is:
“The energy minister should have clear powers to appoint an administrator “should supply fail to meet demand”. The administrator would direct who dispatched power and which users should be cut back, and set wholesale prices for when supply could not meet demand. Industry processes would also be better at designing efficient wholesale and retail market trading rules.”
Translated this means:
“We love the competitive market system when there is plenty of water in the lakes and spot prices go through the floor. However we hate it when there is a bit of a shortage and spot prices head for the sky. At that point we think the Government should ‘do something,’ and not let those rapacious power companies rip us off.”
The point is that, if a power company is going to invest capital to provide back-up capacity to cover lean years, the shareholders expect a return on their investment, and the return for that sort of investment comes from high spot prices when generation is tight. Fear of Government intervention at that point makes such investment too risky.
The other point is that they want an ‘administrator’ who will somehow mysteriously allocate electricity that is not available. Any such allocation process would be highly political – one which a government on the right of centre does not really want to get involved in. Presumably the ‘administrator’ could order punitive restrictions on domestic customers like hot water cuts (although I suspect the ‘base’ of customers with ‘controlled’ hot water is diminishing) and rolling blackouts. I think the power companies tread fairly cautiously with respect to domestic customers so as not to cause any more political antagonism than there is already (eg the recent Contact price increases were to my way of thinking a finely balanced exercise with regard to profitability, politics and customer mood).
The Ministers only need to look back to the North Island shortage in 1958 or so and the shortage in early 1970’s to realise just what a political hot potato this becomes. After both shortages pocesses were put in place to ensure wide consultation and development of a robust future power plan. Tis process probably was too robust (and hence costly) so became a prime target of Rogernomics.
February 24th, 2009 at 11:57 am
There is no such thing as a competetive electricity market, it is in fact, anti-competetive.
I do not have to sign a contract to buy petrol from Shell and groceries from New World. I can decide today to buy petrol from Bp and groceries from Countdown, and then I can change my mind as many times as I like.
Unless, and until, I can decide at the point of flicking the switch who I want to buy electricity from, the market is not competetive,
February 24th, 2009 at 12:12 pm
A thread full of people slagging off Helen Clark. And a thread full of people slagging off the Greens.
Kiwiblog the way it used to be, this morning!
Anyone would think the left had won last year’s elections…
February 24th, 2009 at 12:15 pm
MNIJ, I recently changed electricity suppliers and choose a better price and zero term commitment. When I’m free to drive into any of the supplier’s forecourts where I get the same price. The existence of a supply contract does not create an anti-competitive environment as you seem to be suggesting.
February 24th, 2009 at 12:17 pm
cha (215) Vote: 1 0 Says:
February 24th, 2009 at 9:20 am
“And while the rest of the world wring their hands China goes shopping for oil companies, French, Canadian, and Australian firms and anything else they can buy.”
You know what? The Chinese, who work for peanuts and make stuff so cheap and live so frugally, actually save money at a rate that puts us first-worlders to shame; they have spent the last decade lending us the money that we then use to buy the stuff they make. They still have a standard of living that is way below ours, and yet they are awash with cash with which to buy up the world. Their economy has been affected by the crisis: it is just going to grow in the low single digits for a while, while the profligate, borrow and spend first world, are going to have shrinking economies all the while that they refuse to part with all the luxuries to which they have become accustomed; and by that, the foremost thing I have in mind, is all the “free” stuff that nanny state gives us. We just have not worked out that all that free stuff is not left under our pillows by the tooth fairy; someone, somewhere, actually has had to work and pay for it.
February 24th, 2009 at 12:19 pm
“You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it.”
By the late Dr. Adrian Rogers, 1931- 2005, former Pastor Bellview Baptist Church, Memphis, Tennessee.
February 24th, 2009 at 12:32 pm
My Name Is Jack, I will believe we have a free market in electricity, when the people of a region can agree to allow a generation plant (hydro, nuclear, whatever) to be built in their region, and benefit from the prices promised to them by the constructers of the generation plant. What we have at the moment is a total disconnect between generation and the costs and benefits of providing it, and the final user.
I still gave you a positive karma point for your comment, though. I presume you were sincere, you do want a free market in electricity?
I am continually disappointed by the non-intellectual debates on the subject of “free market” reforms versus statism; virtually all the criticisms of any so called “free market” reforms, relate to the aspects that result from the free market being left out or disallowed from working. So your comment was perceptive; we do not have a free market in electricity, and the failings we experience are no reason to go back to a State monopoly rather than forward to a real free market.
February 24th, 2009 at 1:11 pm
http://www.stuff.co.nz/768621a17217.html
funny!
February 24th, 2009 at 1:24 pm
Greenfly – I think the cartoon is spot on. I think that John is going to have to reallocate the Corrections portfolio in the near future as a damage control measure.
February 24th, 2009 at 1:38 pm
#PhilBest
China is going to continue buying US bonds and with reserves and foreign assets of perhaps $2 trillion or more isn’t it a little ironic that the capitalist west is going to end up in hock to the communist east.
February 24th, 2009 at 2:21 pm
I am astonished no-one else has asked, but why are all the media apparently using a 20 year old picture of Sue Bradford in their coverage of the “race” for Green co-leadership. The person who is actually standing looks altogether different.
February 24th, 2009 at 2:34 pm
oliver driver gave john key a ‘brisk’ interview this morning..
..here is how it went..
http://whoar.co.nz/2009/oliver-driver-interviews-john-keyhe-gets-one-tickone-crossand-a-jurys-out/
phil(whoar.co.nz)
February 24th, 2009 at 2:44 pm
Cha @1.38pm
Too late – we were hooked into the hock ages ago.
And is it a sure thing that China will continue buying US bonds?
The primary reason why China continues to prop up the US$ is so that the US and other countries who rely on the US$ for trading purposes, continue to consume China’s exports.
A leader in last week’s Economist considered the prospect of the newly emergent middle classes in China, India, Brazil etc being faced with a return to poverty. History suggests that major social instability could ensue. China, in particular, will do everything within its power to avert social unrest.
I’m not an expert, and I’m only pondering here. But I wonder how soon before China realises that it does not have to depend on Western nations to buy its commodities, because it has an enormous untapped market at home? It doesn’t have to reduce production at all, if it simply allows its middle class to grow and whets its appetite for consumption.
Same goes for India and Brazil.
Of course, were this to happen, it may end the cosy co-dependency between developed and developing countries. Why would China continue to lend money to the US if it no longer needs its business? And once the credit really dries up, today’s so-called “developed” nations may be in for a very rude awakening.
On the plus side, if my scenario were to play out the developing nations would become rapidly more democratic.
February 24th, 2009 at 3:00 pm
Love this story:
Feb. 20 (Bloomberg) — A glitch in satellite sensors caused scientists to underestimate the extent of Arctic sea ice by 500,000 square kilometers (193,000 square miles), a California- size area, the U.S. National Snow and Ice Data Center said. http://www.bloomberg.com/apps/news?pid=20601110&sid=aIe9swvOqwIY
1. That is a dangerous mistake for shipping
2. The Polar bears are now safe.
February 24th, 2009 at 4:34 pm
cha (216) Vote: 1 0 Says:
February 24th, 2009 at 1:38 pm
#PhilBest
“China is going to continue buying US bonds and with reserves and foreign assets of perhaps $2 trillion or more isn’t it a little ironic that the capitalist west is going to end up in hock to the communist east.”
Cha, I prefer to describe China as a post-communist economy where the State has been as low as 17% of GDP in recent years. That is what the bloated socialist welfarist nations with their States at 35%-50% of the economy are going to end up in hock to.
I also look on it as China reverting to its ancient, Confucian roots, along with a rapid taking on of Christianity; that is what post-christian, liberal secular multiculti moral relativist nations are going to end up in hock to.
Or look on China as having strong ethics of work, thrift, and personal responsibility. That is what the “everyone’s a victim now” West is going to end up in hock to.
If China hadn’t had its disastrous Communist interlude; imagine it being Japan times ten. They’d already own the world; Japan probably owns 10% of it as it is.
February 24th, 2009 at 4:36 pm
Just days ago, the Obama administration announced plans to spend another $775 billion to $1 trillion on bailing out the troubled U.S. economy.
That brings the total bailout package up to $8.5 trillion (including the $700 billion Wall Street bailout… $600 billion to Fannie and Freddie… $168 billion in stimulus checks… the list goes on).
To put this into perspective, that is more than the U.S. spent on:
• the New Deal – $500 billion
• the invasion of Iraq – $597 billion
• the entire lifetime budget of NASA – $851 billion
In fact, it’s more than all of these combined… and that includes throwing in:
• the $256 billion they spent on the S&L bailouts of the 1980s
• the $217 billion that was spent on the Louisiana Purchase; and
• the $454 billion that was spent on the Korean War!
When the financial crisis exploded early last year, investors worldwide began rushing for the exits. EVERYONE wanted to exchange their stocks, funds and commodities for cold hard cash.
And it wasn’t just individual investors. Hedge funds, hit by redemption demands from investors, were forced to liquidate their positions in exchange for cash (to the tune of $400 billion).
In a single 30-day span, investors yanked $127 billion from U.S. stock and bond mutual funds, seeking the “safety” of Treasuries and cash.
But the rush to cash didn’t stop there. Even with yields sinking below the S&P 500, the demand for Treasuries soared… all helping to drive the greenback up 21% in just five months.
All this has created what could be the biggest bubble in the financial world today… the bubble in the U.S. dollar! It’s a disaster just waiting to happen… waiting for that “tipping point” event to set off the fireworks.
The Fed is expanding the U.S. monetary base by more than $11 billion a day since September, to nearly $1.5 trillion. That’s an increase of 79.02% since October of 2007. On an annualised basis, the “run rate” – the increase of dollars in circulation – is soaring by 369.92% per year! Unprecedented in history!
That $8.5 TRILLION in bailout cash is about to flood into the global economy. And when that happens the “Bailout Bombshell” will finally torpedo the dollar… wiping out TRILLIONS in American wealth all at once.
Bottom line: Anyone holding U.S. dollars – in cash, in money markets, in Treasuries – is in the “blast radius.”
February 24th, 2009 at 4:53 pm
Re a free market in electricity.
I’m as right wing as most but I think we need to recognise that while free markets are “economically efficient” they are also very unsentimental things that can cause a lot of pain and dislocation. And electricity is one (critical) service where we can do without that pain and dislocation. For example, among other things, in a true free market:
* The price of electricity would need to float, so all domestic users would be exposed to the spot prices. Fine if the lakes are full. But I wonder what the advocates of the free market will say when their electricity costs more than $1.00 a unit in a dry winter?
* Rational suppliers in a free market would ensure there was an overall shortage of electricity, and would only provide it to those prepared to pay a premium price.
Fundamentally the price of electricity is driven by the price of fuels, which in turn is driven by the availability of fuels. So until we get access to a lot more water and gas and coal at cheap prices then electricity is going to seem expensive to a lot of people.
That’s not to say we shouldn’t tweak the industry structure a bit. Personally I think we need a degree of coordination across the sector, synching the long-term investment in generation and transmission. And that probably involves some economically & environmentally inefficient decisions to ensure security of supply (like putting a big coal-fired plant in Southland … since there’s no thermal baseload currently available in the South Island).
And we certainly should take a close look at the shonky thinking that “We have to put prices up now in order to justify the **next** power plant we might build in a few years time”.
February 24th, 2009 at 5:51 pm
bharmer said “I am astonished no-one else has asked, but why are all the media apparently using a 20 year old picture of Sue Bradford in their coverage of the “race” for Green co-leadership. The person who is actually standing looks altogether different.”
Ditto – so lets play “Spot the Difference”
http://keepingstock.blogspot.com/2009/02/camera-never-lies.html
February 24th, 2009 at 5:52 pm
Hi Virtualmark
Electricity has an awful lot of areas that mean it’s not a free market – the bulk of generation is owned by the government (in theory us) they are the price setter
You cannot change your lines company – there are rules that the lines companies have to follow to value their assets that then let them charge more – they spend a lot of time trying to work out how to price their assets up – some of the approaches used are dubious at best
I love the “We have to put prices up now in order to justify the **next** power plant we might build in a few years time” approach – it just shows how not a free market we have – particularly as they still have to pay the government a dividend – a commercial company takes a loan (or pays out of cashflow) – justifies it on the return over 50 years (for a power station) and off they go. I would quite like to charge my customers extra now so as I can buy an extra xxxx in the future for them, of course.
Electricity prices relationship to fuel prices is interesting as we have the bulk of our electricity generated by renewable means. So why aren’t the prices then related to the cost of the asset (return on build $, maintenance etc or replacement cost) that does the renewable generation?
The point the report makes around the Electricity Commission not being suited to address competitive issues seems quite accurate considering the above. I agree that the EC is part of the problem we have with power in this country but I don’t agree with Transpower being the solution for investment decisions. They haven’t shown a good history here.
February 24th, 2009 at 6:05 pm
@arkhad
I suspect that you are on the money, so to speak.
I’m not sure if you followed a thread we had going a couple of weeks ago, but here’s another link to a rather wry but sobering video where Glenn Beck parodies Al Gore’s An Inconvenient Truth to explain just how worthless the US dollar currently is:
http://www.youtube.com/watch?v=lNS8IY_Td14
February 24th, 2009 at 9:54 pm
That is great Portia, thanks – will send that link to a few people.
February 25th, 2009 at 7:33 am
Here’s some good news:
Cullen to quit
That should cheer New Zealand up.
February 25th, 2009 at 7:51 am
Good start to the day eh OECD – the only problem is that there are now two list places available if Twyford gets the Mt Albert seat, and #2 on the list is …….. Judith Tizard
February 25th, 2009 at 8:22 am
good. hes leaving hawkes bay.
February 25th, 2009 at 9:18 am
You would think nine years as a PM would put Clark on the short list of candidates for any position.
Not as PM of NZ.
If you served in a real nation in three four year terms you would be taken considerably more seriously.
Clark is no Margaret Thatcher, which the UN has exposed. By normal peoples standards, she is on the dole queue applying for a job as the police check is being scrutinised. fortunately for her, former employees police records won’t count against her.