Archive for February, 2009

Chavez set to rule for life

Tuesday, February 17th, 2009 at 10:00 am

Like most “revolutionaries”, Hugo Chavez is looking set to rule Venezuela for life, after he managed to get voters to abolish term limits.  They had earlier rejected doing so, so he simply tried again until he could win.

Of course he had some advantages:

But opponents said the results were skewed by Chavez’ use of state resources to get out the vote, through a battery of state-run news media, pressure on two million public employees and frequent speeches which all television stations are required to air.

I wonder how long it will be until elections get replaced by referendums on whether he remains in office – ie no opposition parties.

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Why is National taking the heat for a problem they did not cause?

Tuesday, February 17th, 2009 at 8:30 am

If I was a National MP, I would be wondering why my Government is taking flak for a stupid law (S92A of the Copyright Act), condemned by almost every ICT group in NZ, and many business groups, when the law was passed by the former Government.

This is just stupid politics. Sure you don’t mind taking flak for your own decisions, but why would you use up very scarce goodwill on defending what Judith Tizard did?

Yes National did vote for the law at committee of the whole stage (after voting against it at select committee stage), but like Peter Dunne has done, you can say that you were misled as to what the clause would do, and now you know you no longer support it.

Some MPs may be thinking the law can safely come into force on 28 February, because the Telecommunications Carriers Forum has put together a code of practice that protects users and businesses from the worst excesses of the law.

What they may not realise is that first of all the code is still a draft and won’t be finalised by 28 February, but more importantly some of the major right holder groups (the US movie and music lobbies) have not accepted the draft code. In fact they have proposed an alternate code for a key section – one that would give them the sole power to decide if someone has infringed repeatedly and should be terminated. Their code proposes they be prosecutor, judge and jury.

Until there is final agreement on how the law should be implemented, it would be dangerous to let it come into force. You see even if the ISPs agree on a code and say this is how we interpret the law, the rights holders can disagree and sue an ISP for not terminating customers on their say so. And this is what is actually happening in Australia.

So at a minimum, S92A should be delayed until there is full agreement on how the law is interpreted between ISPs and rights holders.

Ideally it would never be implemented. Even if the TCF Code is adopted to give certainty to all parties, it is going to impose massive compliance costs on business, namely:

  • Every ISP in New Zealand (that signs the code) will have to follow a 33 page code of practice to determine how to respond to complaints re copyright.
  • Every ISP will need to change both their business practices, but also their CRM systems to cope with this law – this will cost bigger ISPs hundreds of thousands of dollars to implement.
  • Every business in NZ will be in breach of the law unless they themselves adopt a policy of how they will enforce the law with their staff and/or users.
  • The rights holders have not indicated that they will agree to pay anything to reimburse ISPs for acting as their police force. Their “detection bots”  could churn out tends of thousands of notices a month – all imposing significant variable costs on ISPs.

We’re in a recession, with a Government that says it wants to lower the regulatory burden on businesses, yet seems unbothered with this unfunded compliance cost.This is a test of walking the walk, not just talking the talk.

Cabinet can still delay S92A coming into force on the 28th, if they so resolve at Monday’s Cabinet Meeting. I hope they do so. They will have overwhelming support if they do.

I have a guest column on the issue of S92A at Muriel Newman’s Centre for Political Research, for those who want more information on this issue.

It is interesting the breadth of opposition to this law. Many ACT supporters are aghast at the cost to business, the addition of another badly defined regulation. While many Greens and Labour supporters on the left are aghast at the threat to freedom of speech, and innocence until proven guilty.

Internet users who wish to protest the Guilt upon Accusation law can join the great NZ Internet Blackout. Already thousands of people have turned their facebook photos, their blogs, their twitter accounts black as a sign of opposition to this law. The above site has instructions on how to do this easily.

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General Debate 17 February 2009

Tuesday, February 17th, 2009 at 8:00 am
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Privately Managed Prisons

Tuesday, February 17th, 2009 at 7:45 am

National is delivering on its promise to allow the private sector to compete against the Corrections Department, for the running of new prisons.

The Maori Party are very supportive, saying Maori interests may put together a bid.

The previous privately managed prison, had a Maori General Manager and local Iwi were full of praise for how inclusive the prison management was, compared to other prisons.

Labour’s law and order spokesman Clayton Cosgrove said running prisons was core government business and National’s move was based on “pure ideology”.

No the ideology was Labour that changed the law to force the previous private manager out, despite the fact they had been a stunning success.

It is the role of the state to set policy and standards for prisons. Absolutely. But the state does not have to deliver every service it is responsible for. In fact often it is better they do not. Governments tend to be quite good at policy. But not so good at actually running things.

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A model for boot camps?

Tuesday, February 17th, 2009 at 7:10 am

The Herald looks at a South Auckland programme:

While the Government is not revealing the exact details of a “boot camp”, an Auckland programme run partly along paramilitary lines gives an insight to what offenders could face.

Counties Manukau programme Male Youth New Directions (MYND) attempts to turn around the lives of South Auckland’s worst youth offenders.

The boys are typically Maori or Pacific Islanders, with convictions for crimes from burglary and tagging to wounding with intent to injure and grievous bodily harm.

Offenders aged 14 to 17 undergo a 20-week discipline and mentoring programme, which includes an intense 10-day army-like camp, or “away phase”, in which they are stripped of their belongings and gang identities and have their hair trimmed.

But Labour say these are bad, and don’t work?

Since the programme’s inception seven years ago, there has been a 58 per cent reduction in total offending from graduates and a 71 per cent drop in serious crimes. Mr Boxer says the military component is only a foundation for ongoing development of individuals.

That sounds promising.

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Fisher & Paykel

Tuesday, February 17th, 2009 at 7:06 am

The Herald reports:

Prime Minister John Key has not ruled out assisting New Zealand whiteware maker Fisher & Paykel Appliances, which has announced plans to find a cornerstone investor to help dig it out of a mountain of debt. …

Yesterday, Mr Key said he had phoned chief executive John Bongard to discuss the company’s situation and while Bongard had not asked for support, Key said he would keep in touch.

“They are an iconic New Zealand company, employing 1600 people. I’ve made it clear I’ll be staying in contact.”

Key said the Government did not want to become a primary banker, but it was not ruling out the option of helping Fisher & Paykel.

“Governments around the world have taken that course and we reserve the right to do so.”

Governments around the world have invaded Italy also, but that doesn’t mean we should.

No problems with the Govt making it easier for F&P to get an investor. I wish the Govt would make it easier for all companies to get investors.

But if the Government starts picking particular companies to “bail out” or leand money to, then they’ll find the queue for such assistance will get very long. Plus the moral hazard of having an implicit Government guarantee will make it more likely those companies will make bad decisions.

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Two random cool things

Monday, February 16th, 2009 at 8:57 pm

Watching Letterman from last week, and they had on pilot Chesley “Sully” Sullenberger and co-pilot Jeff Skiles, from Flight 1549. It wasn’t unexpected but very cool to see the massive standing ovation they got from the studio audience. Was a fascinating interview too, as they talked about those few minutes. Skiles has a very good sense of humour.

Totally unrelated to that is great service tonight from Hell Pizza. One of their delivery cars got a puncture and arrived 15 minutes later than notified when booked online. There were several things they did that was really good:

  1. They phoned me to let me know it would be late
  2. The phone call was before the scheduled delivery time, not after it
  3. They explained why there was a delay
  4. The delivery person also apologised
  5. The gave me a voucher for a free double pizza and free delivery by way of apology (which is worth more than my original order of just a snack pizza)

I didn’t expect anything at all. A 15 minute delay isn’t much, and I was just grateful for the heads up. But their excellent regard for customer service certainly means they’ll remain the preferred brand.

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International Items

Monday, February 16th, 2009 at 6:30 pm

A few interesting stories internationally

  1. News.com.au reports that the man accussed of starting one of the Victorian fires was a volunteer member of a country fire brigade, whose members cheated death fighting the bushfire. Sadly this is not a big surprise.
  2. Saudia Arabia appoints its first female Minister. Of course they still can’t vote!
  3. A major Australian ISP compares the Australian Government’s plan to filter the Internet, to China’s filter.
  4. News of the World reveals that the (then)12 year old boy who fathered a daughter with a (then) 14 year old may not be the father as the other also was sharing her bed with a (then) 14 year old, and up to six other boys!
  5. See this video below of a passenger going hysterical because she missed her flight. Details in this story.

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Phone Missing

Monday, February 16th, 2009 at 5:23 pm

In a fit of stupidity I have left my phone somewhere and will be phoneless until I can either recover it tomorrow morning, or until I get a replacement.

So do not call or text my mobile in the next day or two if you want to contact me. Either e-mail me or phone my home line if you know it.

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Councils lending money for commercial projects

Monday, February 16th, 2009 at 5:00 pm

Alf Grumble MP highlights some disturbing decisions at the Hutt City Council:

Hutt city councillors last week gave approval in principle to a secret deal to help finance a $22 million apartment tower.

Councillors met last Tuesday behind closed doors to discuss an application by Merge Property Group for a loan for Twelve Daly, the 12-storey complex first unveiled in July 2007.

The Hutt News understands that councillors agreed to the request by a majority of one.

We have banks for commercial property loans, not Councils.

The solution to stop this happening again seems to be to shoot one of the Councillors that voted for this.

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HoS highlights Sir Keith Park campaign

Monday, February 16th, 2009 at 4:00 pm

Good to see Herald on Sunday highlighting the campaign for a memorial in London to Sir Keith Park.

I blogged on the campaign a few weeks ago.

You can help the campaign, through their campaign site.

Sir Keith helped make the world a better place, leading the defence of London during the Battle of Britain. If they had failed, well we might all have even funnier accents than we currently do :-)

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Jack Vowles on 2008 election

Monday, February 16th, 2009 at 3:00 pm

Jack Vowles used to publish the wonderful NZ Election Study after each election, which all serious students of politics devour. He’s gone overseas now, but Bryce Edwards has found his personal study of the 2008 election.

It is only six pages, but a very good summary.

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Things Economists agree on

Monday, February 16th, 2009 at 2:00 pm

Paul Walker quotes Greg Mankiw with this list of things most economists agree on:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
  2. Tariffs and import quotas usually reduce general economic welfare. (93%)
  3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
  4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
  5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
  6. The United States should eliminate agricultural subsidies. (85%)
  7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
  8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
  9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
  10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
  11. A large federal budget deficit has an adverse effect on the economy. (83%)
  12. A minimum wage increases unemployment among young and unskilled workers. (79%)
  13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
  14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

You want a better economy, with more wealth and jobs? Then take note of the above.

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Fisking Tracey Barnett

Monday, February 16th, 2009 at 1:00 pm

Tracey Barnett in her ODT column (also carried earlier in the Herald) says:

And of course, there was the comfort in knowing that a gobsmacking 98% of Bush appointees were regulating the very same industries they used to represent as lobbyists.

That seemed massively high to me. Just from my knowledge of the Cabinet that seemed wrong. So I went to Harper’s Index, which Tracey was quoting:

Minimum number of Bush appointees who have regulated industries they used to represent as lobbyists: 98

Anyone else see the difference? One is a percentage and one is an absolute number.

The total number of presidential appointees is 3,000 so 98/3,000 is a less impressive 3%.

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Political Trivia Quiz of the Day

Monday, February 16th, 2009 at 12:00 pm

How many MPs have there been for the Mt Albert seat since 1947?

Note the seat includes the brief (one term) period it was called Owairaka.

(more…)

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ACT’s Three Strikes law

Monday, February 16th, 2009 at 11:00 am

NZPA reports:

The ACT Party’s “three strikes and you’re out” sentencing policy is in a bill the Government intends introducing to Parliament on Thursday.

ACT campaigned on the policy and it is a condition of its support agreement with National that the Government will support it through its first reading so it goes to a parliamentary committee for public submissions.

I suspect it will attract a lot of submissions!

Mr Hide said a “strike offence” was defined in the legislation as the most serious violent and sexual offences, including murder, attempted murder, grievous bodily harm, serious firearms offences, rape and a range of sexual offences on children and young people.

While I think the policy is probably too inflexible, I do have to say I don’t think anyone should be allowed out after they have committed multiple homicides or rapes. But when you extend that to include GBH, firearms offences then the risk of a sentence that is disproportionate to the offence increases.

Under its provisions, on the first strike an offender will receive a warning from the sentencing judge.

On the second conviction, the result will be a jail term with no eligibility for parole and the offender will receive a second warning pointing out the consequences of a further conviction.

On the third strike the offender will received mandatory life imprisonment with a minimum non-parole period of 25 years.

I wonder if an alternative might be that on the third strike you receive the maximum sentence for that offence? That way you don’t have someone going away for life, merely for a firearms offence where no one was harmed?

Mr Hide said it would not mean an immediate rise in the prison population because it was expected to take more than a decade for any offender to reach the three strikes limit.

“The intention is that, as the number of `two strikers’ increases, violent offenders will modify their behaviour after realising they are a single violent or sexual offence away from a 25 years-to-life prison sentence,” Mr Hide said.

I would be most interested to read any research on how effective this has been in countries or states that have implemented a similar policy.

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Edwards on the axed electoral review

Monday, February 16th, 2009 at 10:00 am

Academic Bryce Edwards has a very well researched post on the axed Labour/Greens electoral review. Edwards is no National supporter, having worked for the hard left Alliance for several years – which makes his research and conclusions all the more powerful. I urge people to read the post in full, as it is too long to do justice here – plus he has many apt cartoons to illustrate it. But some key points:

This blog post examines what was behind the review, and why the exercise was always going to be more about window dressing than democracy. Although expert panels and citizens’ forums are not without merit, when compared to similar exercises carried out elsewhere, the planned Labour-Green model for New Zealand was designed to be incredibly weak and undemocratic. What’s more the process by which it was brought about was just as poor as the one that produced the EFA.

Labour and the Greens called its a citizens’ forum – but as you will see it was merely a means to an end – more taxpayer funding.

The Greens strategy on political finance reform entirely backfired in 2007, and the party has had to face up to the public derision – especially because the Greens were complicit in such an appalling and anti-democratic process. For the Greens their advocacy of the review was a cynical attempt to avoid apologizing for the damage done. But worse, the whole Citizens’ Forum was actually also quite a con.

And they still hold out the EFA to be better that its predeccesor!

Second, rather than having any teeth or real power, the review was designed to be purely advisory. For example, the Citizens’ Forum was merely given the task to produce a report for the Expert Panel to read. Such a report ‘may’ then have helped inform the report that the Expert Panel was going to write. And even then, this final report was also merely advisory, and the terms of reference stated that the Minister was then able to choose to accept any elements of it or reject it entirely. (And as we saw with other expert advice tendered to Labour and Greens – such as the Human Rights Commission, Law Commission on the EFA – if it’s not ‘the right advice’ it can be easily brushed aside.)

This part is quite crucial, and I did not even realise it until I read Bryce’s post. The Citizens’ Forum had no power. The main power lay with the hand picked Expert Panel.

Compare this to the British Columbia example where a citizens’ forum was established to look at the voting system. In this case, the established rules of the citizen forum said that ‘If the Assembly recommended a system different from the current system, its recommendation would be placed on the ballot at the next provincial election as a referendum item’ (Snider, 2008). The widely-referred to Ontario citizens’ forum had similar powers.

The Greens kept referring to the Canadian experiences, but as Bryce has detailed what the tried to implement in NZ was a sham with no actual powers at all – it was just political cover.

Essentially, the Citizens’ Forum was to have no role in making recommendations to either the public or the Government. Instead, any outcomes from the Citizens’ Forum would be filtered through the Expert Panel. The official terms of reference made it very clear that it was the Expert Panel body that was to come up with the proposals and options for any change, then educate the Citizens’ Forum on these, and then merely ‘consider the report of the Citizens’ Forum’ while making their own decisions.

I’m kicking myself for not realising how the Greens and Labour had structured this. The lesson for the future is to ignore any names or terms they use, and look at the fine print.

This situation was clearly quite some distance from what the Greens’ Metiria Turei presented it as, when she said in Parliament that the Expert Panel ‘would do a great deal of work preparing information and support systems for the Citizens’ Assembly’.

Much of the Government’s propaganda also tried to obscure the neutered nature of the Citizens’ Forum. The Labour blog ‘08 Wire’ attempted to sell the exercise by incorrectly describing the subservience around the wrong way: ‘the expert panel’s role is basically to do a lot of the (very important) donkey work for the Citizens’ Forum, while the Citizens’ Forum makes all the big decisions’.

But the terms of reference were very clear, and Panel Chair Assoc Prof Andrew Geddis was very unambiguous, saying that the Expert Panel would set the work programme for the Citizens’ Forum. And the Minister, Annette King said the Expert Panel and Citizens’ Forum would only provide an independent, non-political ‘perspective’ on the reform options.

And if either of these groups came up with anything disagreeable, well the public would never get a vote on them.

My concern about the Citizens’ Assembly is that it may be an expensive piece of window dressing, yet another one of those carefully guided sham consultations with the great unwashed public to simply avoid the charge that the public haven’t been consulted.

Indeed, it was to allow Labour and Greens to vote themselves increased taxpayer funding, and claim the public have been consulted on it.

Clearly, since 2005 the Labour and Green parties have taken the vital issue of political finance and electoral law and tried to politicize it for partisan advantage. By arrogantly assuming that they possessed the moral high ground, these parties claimed the right to change the electoral rules. This is fine – essentially it’s ‘victor’s law’ – the baubles of power. But they shouldn’t have turned around and pretended otherwise. And they shouldn’t have pretended that this is a basis on which to build enduring and robust policy and law.

Labour at least appear to have recognised the danger of continuing down this road.

It was therefore not surprising that the Greens tried to fast track the review process to start and be set up before the election, so that National wouldn’t be able to influence it. It was reported that ‘Russel Norman said the party wanted the [Citizens’ Forum] assembly running before the election so it was harder to derail if there was a change of government’ (Trevett, 5 June 2008).

Oh yes, can’t let an election change anything.

In appointing the so-called Expert Panel, the Government and Greens showed that they learnt nothing from the awful EFA process. Obviously, the question of ‘Who gets to appoint the independent panel and set the terms of reference’ would be vital, yet it was stitched up behind closed doors. There were no calls for nominations from the public, and no discussions with other political parties (although the Greens had a strong backroom role in determining who to appoint).

I made this point at the time – it was vital all parties be consulted over the composition of the panel. But again – all done in a private deal.

There should be no doubt that the selection of Associate Professor Andrew Geddis as the chair of the Expert Panel was a very sensible one. Geddis is the number one expert in electoral law. But there also shouldn’t be any doubt that they chose someone with a bias in favour of direct state funding – Geddis had often written supportively of state funding.

Indeed. You would be stupid not to have Geddis on the panel, as he is an expert in this area. But the panel should have been balanced with one or more people who are more sceptical of state funding.

In fact one of the biggest cons of the sham process was the fine print in the terms of reference, which specifically excluded the Citizens’ Forum from examining the current parliamentary funding of political parties. This is, of course, exactly the area of political finance in New Zealand that is most obscured, most influential on the parties, and most negative for the party system. Yet it is precisely this area that Labour and the Greens don’t want the public (or even the experts) sticking their noses into.

Indeed. The advantages of being an incumbent party is huge. Only the ACT Party has managed (since MMP) to enter Parliament without already having an incumbent MP or MPs.

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Family Party breaks the EFA

Monday, February 16th, 2009 at 9:14 am

The Family Party appear to have broken the Electoral Finance Act.

on 7 January 2009 they disclosed that two donors had donated $36,000 and $39,775 – Elias Kanaris and Paul Adams.

The disclosure was meant to be made within 10 working days of the amount donated exceeding $20,000 over 12 months.

Kanaris should have been disclosed by 4 December 2008. And Adams by 24 October 2008.

They had better have a very good excuse for why they didn’t file on time. I suspect they will simply claim they were unaware of the new requirements.

The Party Secretary is Anne Williamson. Assuming she is also their finanical agent, she may be facing a fine.

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The battle for Mt Albert

Monday, February 16th, 2009 at 9:00 am

The Dom Post on Saturday looked at the battle for Mt Albert within Labour:

Party sources say the leading contender to replace her is newly elected list MP Phil Twyford, who unsuccessfully contested the North Shore electorate last year.

Ha I have been saying that for months.

Two women are also bidding for the job: Auckland City Eden-Albert councillor Glenda Fryer and deposed cabinet minister Judith Tizard.

I’d be amazed if either of them were selected.

Under the Electoral Act the vacant list seat would be filled by the next unelected person on Labour’s list former Corrections minister Damien O’Connor, who lost his West Coast seat. He famously submitted his resignation to Miss Clark last year in a text message from Hong Kong Airport. She did not accept it.

Mr O’Connor could not be contacted, but if he turns down the invitation the next person on the list is Miss Tizard.

Yes Judith could be back either way, as Cullen retiring and Twyford winning Mt Albert would bring two people in on the list – O’Connor and Tizard.

I understand Labour sources are fairly relaxed about O’Connor coming back in. He didn’t do great as a Minister but has rural appeal, which they need.

Labour’s nighmare is the block of five after O’Connor. They are:

  1. Judith Tizard
  2. Mark Burton
  3. Mahara Okeroa
  4. Martin Gallagher
  5. Dave Hereora

So the rejuvenation caused by Cullen or Clark going would be to bring back in an MP who lose their seat, and who has no chance of ever making Cabinet agin – or to bring in (Hereora) an MP who was so invisible that he made Larry Sutherland look like a dynamic high profile MP.

The next on the list after Heroera is Louisa Wall. I rate Wall pretty highly – she’s smart, good on policy, and articulate. She did not make many friends in Labour though, hence her low list ranking. However after her is Lesley Soper, whom no one in Labour wants back, so I understand their aim is to get Wall in to replace Cullen or Clark (whomever goes second).

But to get Wall in, they have to convince not one, but five former MPs to stand aside. As the Greens found out with Mike Ward this can be easier said than done.

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No overseas baubles for Winston

Monday, February 16th, 2009 at 8:58 am

Inventory2 at Keeping Stock blogs:

We’ve just watched John Key on Breakfast ruling out any government support for Winston Peters if he seeks a plumb job overseas a la Helen Clark.

Good show. Key’s rationale is that he couldn’t trust Peters last year, and nothing has changed. It’s not rockety science, but it’s nice to see it articulated in plain English.

It is no surprise at all, but I agree nice to have on the record.

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General Debate 16 February 2009

Monday, February 16th, 2009 at 7:46 am
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Tapu Misa on Emery sentence

Monday, February 16th, 2009 at 6:30 am

Tapu Misa writes on the Bruce Emery sentence:

The jury convicted him of manslaughter because they couldn’t be sure that he intended to kill Pihema. I would probably have given Emery the benefit of the doubt, too. But was his sentence of 4 years 3 months too light?

The decision is being criticised from both sides. Some people are saying Emery should not go to jail at all. Others are saying the sentence is too light. This suggests to me it is about right.

I think manslaughter was definitely the correct verdict. Is the sentence too light?

Well as far as I can tell the average is 71 months and Emery got 51 months. It isn’t surprising he got less than the average as he was a first time offender. I suppose you could argue for an extra year or so, but by the time you take into account parole and home detention, it is only going to change his actual prison time by a few months.

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Kerr on Fiscal Stimulus

Monday, February 16th, 2009 at 5:59 am

Roger Kerr makes some excellent points in his NZ Herald op ed:

The Government is being urged to increase its spending to “stimulate” economic activity.

What seems to be overlooked is that the huge rises in core Crown spending in recent years – some $25 billion since 2000 – saw New Zealand “lead the world” into recession.

A very timely point. And that going into recession a year before most other countries has greatly affected our options.

Hundreds of economists in the United States are saying the Obama Administration’s so-called “stimulus” package is reckless.

The imperative now is to switch resources into the internationally trading sector so as to increase exports and cut imports. By marking down our exchange rate, the rest of the world is telling us that is what we have to do.

It looks likely to drive the US Budget deficit to about 12 per cent of gross domestic product, create huge public debt, and necessitate big tax increases or spending cuts down the track.

And NZ is already facing a decade of deficits. And if these deficits remain, tax increases are also inevitable in NZ.

For a small, open economy like New Zealand further increases in Government spending would worsen the balance of payments rather than do much to increase output, even in the short term. Longer term they would raise future tax and debt burdens and risk a resurgence of stagflation.

High levels of Government spending, already projected to be 45 per cent of GDP on the OECD’s measure (which includes local government), contributed to the balance of payments problem by driving up domestic costs, making exporting and competing with imports less profitable, and dragging resources (of capital and labour) away from those activities.

The imperative now is to switch resources into the internationally trading sector so as to increase exports and cut imports. By marking down our exchange rate, the rest of the world is telling us that is what we have to do.

Yep.

Australia’s overall Government spending ratio is projected by the OECD to be 35 per cent in the coming year, compared with New Zealand’s 45 per cent ratio.

The Government needs to reduce the Government spending share of the economy over time to below Australia’s level – and more like the ratios in Hong Kong and Singapore which are below 20 per cent – to match Australia’s performance.

The Governments of those countries are able to ensure the provision of high-quality public goods and maintain strong social spending programmes with Government spending at far lower levels than NZ.

The benefits include lower taxes and levels of wages and other incomes that are now much higher than ours.

This is key. Reducing Government spending as a percentage of GDP does not mean you are spending less money. If you get higher GDP growth, then you can still maintain social spending. The trick is to have spending increase at a slower rate than GDP growth.

Beyond those exercises, the Business Roundtable strongly supports the proposed Taxpayer Rights Bill which would cap increases in spending at the rate of inflation plus population growth, unless taxpayers agree to higher increases in a referendum.

That’s a great idea. The same should apply to local Government!

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Drug Policy

Monday, February 16th, 2009 at 5:39 am

The Herald reports:

The Government has found itself in the embarrassing position of jointly financing a $165,000 conference on drug policy with one of the world’s leading advocates of decriminalising marijuana use.

Not sure this is an issue, as the funding does not appear to give any input into the agenda or speakers.

Billionaire currency speculator George Soros’ Open Society Institute has given $35,000 to this week’s symposium, which will be attended by Government ministers, police and a judge and will examine New Zealand’s drug laws.

Mr Soros is known for financing drug reform campaigns, and most recently backed a referendum in the American state of Massachusetts which decriminalised possession of small amounts of marijuana.

Soros needs something to do, now Bush is no longer in office. He spent almost NZ$50 million in 2004 trying to stop Busg get re-elected.

The Ministry of Health confirmed its funding of the symposium last week. This was after Mr Ryall told the ministry to review its involvement with all conferences, and leaned on it to cancel a conference of more than 300 health professionals that would have cost $123,000.

The spokeswoman said Mr Ryall – who was listed on a draft agenda to open the symposium – found out about the ministry’s sponsorship only late last week. She said it would now be opened by associate health minister Peter Dunne, who would be telling those attending “the Government absolutely does not support the decriminalisation of cannabis, and is committed to a strong enforcement of that law”.

Certain Government Departments seem to be having trouble understaning what a “no surprises” policy means.

Personally I think it is a good thing if a drug policy conference debates, ummm well drug policy. But there is a legitimate question about whether Government Departments should fund a conference considering such issues, when the Government is not seeking to change its policy.

Labour leader Phil Goff said he would be concerned if there was “any motivation” by conference organisers to legalise marijuana, which the Labour Party opposed.

That’s an interesting statement, and a sign I think of the Goff leadership. Labour under Clark made some moves towards de-criminalisation, but then ruled it out as part of agreements with United Future. Now they are not constrained by United Future, it is fascinating Goff unilaterally declares the Labour Party position. I suspect a secret poll of the Labour Caucus would find close to half, and maybe more than half, quite open to considering decriminalisation on its merits.

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General Debate 15 February 2009

Sunday, February 15th, 2009 at 4:54 pm

Better late than never!

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