Archive for May, 2009

Are the Progressives defunct?

May 31st, 2009 at 11:35 am by David Farrar

Whale Oil has called time of death on the Progressives. I think he is right. Why:

  1. Long-term Anderton/Progressive strategist John Pagani is Labour’s Mt Albert Campaign Manager, as confirmed on Q&A this morning
  2. Progressive Deputy Leader is pictured on Labour’s Mt Albert’s campaign website with a Labour rosette
  3. Anderton is effectively a Labour MP, as they have made him their Spokesperson on Agriculture.

Should Anderton still be treated as a party leader? His salary is set at $144,500 instead of $131,000 due to this status.

What other perks does Anderton get by being a party leader?

  1. Ability to have the taxpayer pay for his spouse to accompany him on overseas parliamentary travel
  2. An extra $100,000 of taxpayer funding ($164,320 instead of $64,320

One can argue that as the Progressive Party is not contesting the by-election, it is natural for them to support Labour. Having the Deputy Leader of one party wearing a rosette for anotehr is unprecedented.

Put it like this. If ACT did not contest a by-election, would you ever see the ACT Deputy Leader wearing a National rosette out campaigning for the National candidate? Of course not.

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Buy vs Rent

May 31st, 2009 at 11:00 am by David Farrar

The SST reports:

FOR THE first time in years, buying your first home is cheaper than renting. New figures released by interest.co.nz reveal affordability has tipped in favour of buying it now costs slightly less each week to pay the mortgage on a typical first home than to rent a similar property. …

The interest.co.nz figures show that in April it took 23.2% of the typical first-home buyer’s income to pay the mortgage on an entry-level house. Renting that same house would take a fraction more 23.3% of weekly take-home pay.

I’m going to start looking at property to buy in around nine months. I think prices will drop a wee bit further yet.

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Accountability for death of Halatau Naitoko

May 31st, 2009 at 9:55 am by David Farrar

No Right Turn has died of shock, upon finding he agrees with ACT MP David Garrett on how it is “incomprehensible” that the police officer who shot Naitoko is not facing charges.

Garrett says:

While not charging the officer concerned with manslaughter is probably justifiable, it seems incomprehensible that the officer is not facing charges under the Arms Act for failing to properly identify his target

The Herald on Sunday editorial also touches on this today.

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Obesity

May 31st, 2009 at 9:49 am by David Farrar

The Herald on Sunday quotes Professor John Birkbeck, an expert in human nutrition who has caused outrage:

The 76-year-old, who moved into semi-retirement this week after 50 years in his field, rejected the notion that some people will get fat regardless of their efforts to keep weight down.

While acknowledging that some may have a genetic propensity to obesity, he said: “You can’t get over-fat without eating more calories than you expend.

He is right, even though some of his examples are over the top:

Birkbeck caused further outrage by saying methods used to reduce obesity rates had failed.

“In a dictatorship, you say ‘everybody that comes back in a year’s time with a Body Mass Index (BMI) of more than 30 will be shot’ – and you’ll find hardly anyone has a BMI over 30.

“But you can’t do that in society, so what we have to do is find a way to cajole and coerce. And I don’t think they’ve done enough of that.”

But what interested me so much, wasn’t Birkbeck’s views, but that of the taxpayer funded Obesity Action Coalition:

Obesity Action Coalition director Leigh Sturgiss said the condition should be blamed on environment rather than the individual.

“While there is some aspect of people making choices for themselves, we do live in an environment that doesn’t promote healthy eating,” she said.

Thank God we have stopped taxpayer funding to this group. As someone overweight myself, I find it outrageous to have Leigh Sturgess saying it is society’s fault – rather than my own. Bullshit – it is nothing to do with society or the environment – and everything to do with personal choices.

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Norman & Boscawen reveal expenses

May 31st, 2009 at 9:12 am by David Farrar

Amazing what a by-election can do, as Russel Norman and John Boscawen have revealed some of their expenses:

The Green Party co-leader Russel Norman pays $340 a week to rent a house in the Wellington suburb of Hataitai. He lives there with his partner Katya Paquin, who is also employed full-time by the Greens in Parliament.

It is against the rules to hire your partner (or other family members) as your executive secretary or electorate agent, but it is okay to have them work for other MPs in the party, or in the Leader’s Office.

Because Wellington is home, he is not entitled to claim expenses of up to $24,000 for accommodation in the capital.

Not doing a Bunkle/Hobbs – good.

Paquin sometimes accompanies Norman on out-of-town trips. Norman says the two ran up $15,828 in publicly-funded air travel in the first four months of this year.

That is a hell of a lot of flights – especially for a Wellington based MP. The vast majority of the travel will be to Green party events. Now I’m not saying this is bad – just that one should be upfront about recognising the benefits parties get from having MPs who can travel at no cost to the party.

There is potentially a small conflict over Paquin accompanying Norman. I have no problems with modest travel for spouses, but because Paquin is also a staffer it does raise some issues. You see normally if a staffer travels with an MP, the cost is charged to that party’s parliamentary budget, which is limited.

But if a spouse travels with an MP, that is a general cost to Parliament, and means the party’s parliamentary budget is not impacted.

Norman also spent $3794 on taxis and hire cars, but emphasised that he had not been claiming any taxi and accommodation expenses in the Mt Albert campaign.

That’s $250 a week on taxis – guess the buses do not come enough.

“When in Wellington, I generally catch the bus to work at Parliament. I often get a taxi home when the buses have stopped,”

At $250 a week, I’d say the taxis are more than just going home at night.

Norman says his travel expenses may be higher than many other MPs, because as co-leader of the Greens he is required to attend events and meetings around the country.

Yep, and many of these will be Green Party events. I don’t think it is practical to try and differentiate these from other events MPs travel to, but it is worth remembering that when the Greens call for further taxpayer funding of parties, that parties already receive considerable benefits from parliamentary funding.

Boscawen:

The Auckland-based MP pays $160 a night to stay in the Bolton St Hotel, three minutes’ walk from Parliament.

He ran up $3500 in hotel expenses in the first five months after the election. he expects to claim up to $6000 on Wellington accommodation expenses this financial year, which ends next month.

Sounds like John only comes to Wellington when the House is sitting.

Boscawen estimated his domestic air travel will have cost the taxpayer up to $13,000. That included regular travel between Auckland and Wellington, and two trips to Christchurch.

He was also claiming for two return trips to Wellington made by his partner Jane, one for the opening of Parliament and the other for his maiden speech. “She is entitled to have travelled far more frequently, but works five days a week,” he says.

Boscawen also flew business class to Vietnam and Japan last month as a member of the Speaker’s Tour, at an estimated public cost of $10,000.

Act MPs are opening an Auckland office, but Boscawen did not know how many items costing more than $500 he would buy. As for alcohol bought for Parliamentary business? “I do not drink alcohol,” he says.

No scandal there.

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General Debate 31 May 2009

May 31st, 2009 at 8:46 am by David Farrar
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If you’re a parent with sleeping problems

May 30th, 2009 at 8:26 pm by David Farrar

A friend of mine on Sunrise talking about how to cope with infants that won’t go to sleep.

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Turei wins co-leader election

May 30th, 2009 at 5:54 pm by David Farrar

As widely expected, Metiria Turei has been elected co-leader of the Greens.

The new team of Norman and Turei will certainly be younger then the previous leadership. Neither of them have much of an environmental background, but neither did Bradford.

I doubt this will affect their poll ratings much. The Greens are one of the few parties where the party’s brand is far more dominant than the leader’s brand. Having said that Fitzsimons and Donald both exuded a certain warmth that their sucessors have yet to demonstrate in public.

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Leadership Lengths

May 30th, 2009 at 11:14 am by David Farrar

Jeanette Fitzsimons steps down today after 14 years as Greens co-leader. That got me thinking about who had been the longest leaders of the various parties.

National – Sid Holland 17 years, Keith Holyoake 15 years, Jim Bolger 11 years, Rob Muldoon 10 years.

Labour  – Helen Clark 15 years, Harry Holland 14 years, Walter Nash 12 years, Peter Fraser 10 years.

Greens – Jeanette Fitzsimons 14 years, Rod Donald 10 years

ACT – Richard Prebble 8 years, Rodney Hide 5 years

Maori – Tariana Turia 5 years, Pita Sharples 5 years

NewLabour/Alliance/Progressive – Jim Anderton  – 19 years over 20 years (handed over to Lee for a year)

United/United Future – Peter Dunne – 13 years

NZ First – Winston Peters – 16 years

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Reading beyond the headlines

May 30th, 2009 at 10:54 am by David Farrar

The Herald has a story that opens:

The pension minus essential living costs equals a deficit of $129 a week for Papatoetoe superannuitants John and Marian Laurie.

Then later on we see:

They spend $120 a week on food, $30 on petrol, $40 on other personal needs and $150 a week paying off their credit card, which is the only way they have been able to cover their deficit.

Now it is quite misleading to include paying off the credit card as part of essential living costs. And I note that without the $150 a week towards that, then there is a $20 a week surplus.

My comments are in no way a criticism of the couple, who seem very reasonable – more a criticism of the story.

The couple also qualify for an accommodation supplement and a disability allowance, which bring their total income from Work and Income up to $633.50 a week.

This is an annual income from the taxpayer of $33,000 a year. An economy our size is never going to be able to offer much more than that to a retired couple – especially as the population ages.

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Bradford on Greens in 1990s

May 30th, 2009 at 10:33 am by David Farrar

Bryce Edwards has a very detailed and comprehensive post on Sue Bradford, one of the contenders for the Green co-leader without a penis position. I recommend people read the full post, but could not resist one quote from Bradford in the early 19902:

she found the Greens to be either ignorant of or hostile to worker and union issues. She describes two kinds of Green: hippie dropouts content to make pots, be creative and smoke dope; and those who are quite right wing, “who think it’s fine to send the unemployed out to work that is environmentally sound like cutting bush tracks” ‘ (Leget, 1993: p.68).

Heh.

The results of the election will be known later today. The market is strongly picking Turei.

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General Debate 30 May 2009

May 30th, 2009 at 10:27 am by David Farrar
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Q&A on Tax Cuts at NBR

May 29th, 2009 at 11:50 am by David Farrar

My column at NBR is a Q&A on tax cuts. An extract:

Bill English says the 2010 and 2011 tax cuts has been deferred. What does that mean?

It means they have been cancelled.

Are you sure?

Yes

So we won’t get them at some future point?

You may get tax cuts in the future, but when you do it will be a new package, not the package that was planned for 2010 and 2011.

Comments and feedback can be made at NBR.

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General Debate 29 May 2009

May 29th, 2009 at 9:19 am by David Farrar
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Not the Great Depression

May 29th, 2009 at 9:04 am by David Farrar

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This graph was e-mailed to me, originally shown on Andrew Sullivan’s blog. It does put things into perspective.  It is presumably about the US economy.

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Budget Reactions

May 29th, 2009 at 8:50 am by David Farrar

Audrey Young:

National’s first Budget has accomplished its mission of avoiding a costly credit-rating downgrade. …

Brian Fallow:

It may not be a black Budget but it is definitely a grey one.

It meets the first test of not doing any harm, in that it averts a credit rating downgrade.

Even if we had not had to worry about the rating agencies, the case for getting a grip on a scary projected debt and hauling it down was compelling for its own sake.

But it has come at a price. The Government has had to lock itself into a sort of fiscal chastity belt by slashing the allowance for future spending increases.

John Armstrong:

Tough, but fair. Tough enough to have satisfied, nay, perhaps even pleased the solemn-faced foreign financial gnomes from Moody’s and Standard & Poor’s. Yet not so tough as to scare the living daylights out of the average punter back home – at least not until he or she reads the fine print.

Fran O’Sullivan:

Finance Minister Bill English’s first Budget is not an economic game-changer but the first move in a Great Survivor exercise to get New Zealand’s creaky balance sheet into shape.

So far, English has succeeded. …

But nowhere is there any evidence (yet) of the bold growth-focused policies that must be developed if more companies are to be persuaded to build their international empires from New Zealand and more talented Kiwis are to be attracted to either stay or return here to build their careers.

NZ Herald:

The budget Bill English delivered yesterday was a difficult one not for the reason he gives, the global recession, but because the outlook in recent weeks has brightened a little. …

Mr English said the Budget’s aims were to “cushion the immediate impact [of recession] on New Zealanders and enhance future growth”. But he has gone mainly for the cushions. Growth-enhancing measures are modest by comparison with the deficits he projects for the next nine years and the debt that he will allow to rise to levels last seen in the mid-1990s. …

The recession has shown Labour’s spending levels to be unsustainable, and the more since Labour and National have indulged in a round of tax cuts. Hard decisions on welfare entitlements for the well-off, interest-free tertiary loans, free childcare and the like – decisions Mr Key and Mr English were proud to avoid yesterday – will probably have to be made. Maybe next year.

Nine years of deficits is simply too long. The world economy will surely have recovered in half that time. The Government needs to be looking beyond its cushions. The country needs to be awake and well geared for the first signs of recovery.

Claire Trevett:

When Mr English was done, Labour leader Phil Goff stood. It took only two minutes of wrath before his face went a florid red and a vein in his forehead started popping. …

Prime Minister John Key was having none of that. He had a new nickname for Mr Goff – “whack it on the bill Phil” – and for Labour, “the credit card Opposition”.

“Whack it on the bill Phil would have seen us run up a quarter of a trillion of dollars of debt by 2023.”

Benedikte Jensen:

The Government had a real opportunity with this Budget to show some political courage and make the hard decisions that would set a clear course towards higher productivity and a stronger society.

Instead, the Government has delivered a Budget that works on cost control across the board, without the more deep-seated changes in spending priorities needed to invest behind growth, and invest in people to avoid a social deficit.

I’m in meetings for the next six hours, so reactions from Stuff/Fairfax later in the day.

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Electoral Act Infringement Outcomes

May 29th, 2009 at 7:00 am by David Farrar

The Police have responded to my OIA request for the outcomes of the electoral complaints and referrals. I have uploaded the spreadsheet – ero-case-outcomes-as-at-28-may-2009.

There are a number of categories, I have grouped them by:

Proceeding

This mean the case has not been closed, or at least not notified to the affected parties.

  1. 9 candidates not filed expense retruns on time (7 now have)
  2. Labour for several advertisements being distributed on polling day in Blenheim and Taranaki
  3. Rodney Hide’s yellow jacket
  4. Nicholas Keesing for distributing election material on polling day
  5. NewstalkZB for prohibited election programmes with Winston Peters and Shane Jones
  6. Shane Jones for an election advertisement without a promoter statement

The Police have said they will update me when these are resolved. Nos 3 and 4 will be very interesting. 5 could also be a precedent about MPs on talkback during the regulated period.

Prosecuted

  1. Family Party for late filing (twice) of donation returns when donation exceeded $20,000
  2. Two cases of double voting
  3. NZ First banners in Tauranga with no promoter statement

No 3 I am of course very interested in. Also to some degree with No 1.

Warning Given

  1. National Ohariu Candidate for display of ribbons on election day
  2. Toroa Radio for a prohibited election programme for the Alliance
  3. 41 cases of double voting
  4. Te Runanga O Kirikiriroa Trust for an advertisement supporting a party not approved by that party
  5. Nicky Wagner for an advertisement not authorised and no promoter statement
  6. ACT for a Hunua flyer not authorised and no promoter statement
  7. Cobb & Co Paraparaumu for an election advertisement supporting a party not approved by that party
  8. Dog registered to vote
  9. Labour boolet at Waikato University with no promoter statement

These all look reasonable sensible to deal with by warning.

No offence

  1. Six cases of apparent double voting
  2. Jim Anderton’s e-newsletter, as it had a promoter statement on website where people subscribed to it
  3. NZ First donation return for 2007 as Party Secretary took reasonable steps
  4. Social Credit for late 2007 donation return as they had a reasonable excuse
  5. EMA Northern for exceeding spending limit of third party ads – not an offence as Police found it was an issue ad, not an election ad
  6. A phone survey which may have been an election advert – isolated and no promoter known
  7. Jim Anderton ad in Southern Express as Police accept advert published in his Ministerial role
  8. Voter enrolled in two electorates – turned out to be two people with same name

No 2, No 5 and No 7 are interesting as in this case the Police have reached a different conclusion to the Electoral Commission. And of course a Judge (if it ever went to court) could have reached a different conclusion also. Now the EFA is toast, we’ll never know where the fine line between an issue ad and a election ad is to be drawn.

Once again thanks to the Police for the OIA response. It is disappointing that not all cases are yet resolved, but as I understand it the officers on the electoral team has been seconded to other jobs at various times.  This is one reason I still prefer that the electoral agencies can directly refer to court, rather than go through a spcialist agency, and also the Police. The Police will always struggle to treat electoral offences as a priority against other crimes.

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A Maori City Councillor writes

May 28th, 2009 at 7:50 pm by David Farrar

toaletter

It would be very interesting to know if the sucess rate in Auckland for Maori candidates differs greatly from non-Maori candidates.

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NZ off negative outlook

May 28th, 2009 at 5:20 pm by David Farrar

Well that was quick. The worst case scenario was NZ get a credit downgrade which would just put $600 million a year down the drain. The middle scenario was we remain on negative outlook, and the best case scenario was we get taken off negative outlook, which S&P has just done according to NZPA:

International credit rating agency Standard and Poor’s has cast a favourable verdict on the budget, upgrading New Zealand’s outlook from negative to stable. …

S&P said today that the budget delivered a “sound” outlook.

“The change in the outlook on the foreign currency rating reflects our view that the measures announced in today’s budget will support stabilisation in the government’s fiscal position over the medium term,” S&P credit analyst Kyran Curry said.

Fiscal deficits were offset against the deferral of personal income-tax cuts and savings measures associated with public sector reforms and service delivery, he said.

“The Government estimates that additional debt required to fund the deficits to be 38.7 percent (of GDP) by 2013. The successful delivery of this strategy — returning the operating position to surpluses over the cycle and maintaining low debt — is consistent with maintaining the `AA+’ foreign currency rating on New Zealand.”

A credit downgrade would not only have cost taxpayers $600 million a year more – it would also have cost most NZ businesses more with their financing – which would have an impact on employment.

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The 2009 Budget

May 28th, 2009 at 2:03 pm by David Farrar

First of all kudos to Bill English and Treasury for getting rid of the old rolling embargo that was in place for previous budgets. This meant you could not blog a specific item until the Minister of Finance read it out in his speech. It made blogging and reporting very hard as it was not always clear whether the part you wanted to cover was even in the budget speech, let alone when.

So now it just a simple 2 pm embargo which means I can just hit publish at 2 pm, which I have done.

Deficits and Debt

The fiscal parameters inherited by Labour meant gross debt was tracking to reach 48% of GDP by 2013, and 70% of GDP, or $227 billion by 2023 – equal to $180,000 of debt for every household of four. There was a very significant structural deficit. This is because the economy will have $50 billion less output over next three years than forecast in the 2008 budget.

The status quo would have meant future generations would face either massively higher taxes, or cuts in health and welfare spending as more and more money would be spent on debt servicing. Debt servicing would have increased to $14 billion a year – more than current Vote Health.

The measures outlined in the 2009 budget are forecast to have gross debt peak at 43% of GDP in 2016/17 and then decline to 37% by 2023 – almost half the 70% on existing parameters.

The projected deficit for this upcoming year is still a very large $7.7 billion and next year looks to be $9.3 billion, before gradually reducing. So the Government is borrowing a lot of money to help keep people’s incomes and jobs steady.

Labour budgeted for $1.75 billion a year of new spending initiatives. National is reducing this to $1.45 billion for this year and $1.1 billion in out years. This is pretty reasonable – in the late 1990s it was only $600 million a year. However it will pose some real challenges in around 2011/12. For the next two years expectations will be lowered due to the global recession. People are accepting zero wage increases etc, and lobby groups know now is not the time to ask for lots more money.

But in two to three years, with the recession behind us, there may be a lot of pressure for new spending beyond the $1.1 billion. Inflation and population growth alone can take up a fair bit of that. We will still be running large deficits, but the economy will be growing and the Government will come under real pressure.

Spending Initiatives (generally all over four years)

  • $323 million for home insulation – grants of up to $1,800 for most households and up to $3,000 for community service card holders
  • $3 billion for Vote Health, being $2.1b for DHB services, $70 million for 800 more health professionals, $130 million for maternity services and $245 million for 20 new elective surgery theatres
  • $1 billion in new spending including $523 million on new schools and school upgrades
  • $900 million for Justice including 600 more police for $183 million, 246 more probation officers at $256 million and 1,000 more prison beds at $385 million

There is lots of little stuff also, but the Government has targeted most of the extra spending in a few key areas.

Jobs

Unemployment is forecast to peak at 8% in September 2010. I hope so, but suspect it may push 10% as I think the US and Europe are more stuffed than people realise.

The Government has committed $7.5 billion of infrastructure investment over the next five years through toad building, state house building and refurbishments, new and improved schools and broadband rollout. On top of that 600 more police, 246 more probation workers and 800 new training placing for health professionals.

Labour’s planned infrastructure/capital spend was $900 million a year – it has increased to $1.5 billion a year. Labour will claim more should be done for jobs, but in reality National is spending more on infrastructure projects than Labour would have. And the long term solution to jobs is having a competitive robust economy.

Reprioritisations

The line by line reviews have identified $2 billion of savings (around $500 million a year) that is being reinvested in frontline services. This means that that the $1.45 billion increase in operating spending will fund $1.9 billion of new initiatives.

As an example the Government has cut funding for adult community education hobby courses by $54 million, and increased special education funding by $51 million. Sounds like a good reprioritisation to me.

Also reducing support function expenditure at the Ministry of Education by $18 million to help fund a $36 million literacy and numeracy initiative.

Tax Cuts

Yes they are gone. The official Government line is deferred, but to no particular date, so I say they are cancelled. When tax cuts are budgeted again in the future, it will be a new package I suspect, not just reinstate the planned 2010 and 2011 tax cuts.

English said that it is highly unlikely tax cuts would be reinstated before the next election. He was asked if he would deliver tax cuts before the books were back into surplus (which is not until 2017), and he said the main thing they would look at is if the economy was growing strongly enough.

The deficits for the next two years, even without the tax cuts, is a combined $17 billion. They are a victim of timing partly. I did ask the Minister what their rationale was for deciding to break a tax cut promise rather than a spending promise such as interest free student loans, especially as he originally opposed interest free student loans but always campaigned for tax cuts. English responded that people feel insecure in a recession, and they made a decision not to cut any current entitlements to help confidence and security.

Several from the “right” congratulated me on my question, as no one else really pushed back much on the tax cuts vs spending issue. I was however amused to be berated by Miss Ten, who was attending as an analyst, for trying to get interest put back on her rather large student loan.

The $900 annual cost of the future tax cuts is around 20% of the total tax cut package. The Oct 2008 and April 2009 tax cuts are worth around $4 billion a year of foregone revenue and were very well timed in terms of fiscal stimulus. So at least we got $4 billion of the $5 billion!

In my words the main reason why they are gone is that they had not yet occurred. It is far less painful to cancel future spending or tax cuts, than to cancel existing spending or hike existing tax rates. Yes people get annoyed when they don’t get something promised, but they get more annoyed if you actually take away something they already have.

National did “pay” for the 2010 and 2011 tax cuts by reducing KiwiSaver subsidies by over $1 billion to compensate. The problem is that the fiscal position has changed so much since PREFU that anything not yet nailed down had to be sacrificed.

The problem for the Government is that while fiscally cancelling the tax cuts was the right thing to do, it makes their long-term closing the gap with Australia objective much harder. A low tax economy (with less tax churn) will generally grow faster than a higher tax economy (there is 40 years of OECD data to back this up).

The Government says it has a medium-term goal of a top company, trust and personal tax rate of 30%. I asked the Minister if he could define the medium-term and he said they were having problem even defining the short-term!

NZ Super Fund

As everyone expected, and as Dr Cullen himself said would be sensible when he set the Fund up, the automatic contributions are being suspended until there are surpluses again. The fund was explicitly set up to be funded out of surpluses. It was never intended to borrow for the contributions. So when you hear Goff and Cunliffe squeal about this, remember they are wrong.

The automatic contributions are likely to be suspended for 11 years, and this will prevent $19.5 billion of extra debt (plus interest). Once automatic contributions resume, they will be higher due to the Fund’s formula – $2.5 billion instead of $2.2 billion.

The Government is still going to make a voluntary contribution of $250 million this year. They seem to be tagging it for investment within NZ and to supplement the supply of capital to local businesses. This is very smart politically, but very dumb in an economic sense. However it was an election policy so no surprise.

Summary

There’s not much one can argue should be done differently. I would almost say the budget wrote itself, as the structural deficit and debt projections had to be dealt to. This budget knocks $100 billion off the long-term debt projection.

It is quite a canny mixture of ingredients:

  • An increase in infrastructure spending
  • Focusing new spending on core areas of health, education & law & order
  • Plowing savings back into new frontline spending, so one is not cutting overall spending in a recession.
  • Reducing future spending and future tax cuts to bring the deficit into surplus and cap debt.
  • Suspending Super Fund contributions so you don’t borrow $20 billion to “save”

It is pretty orthodox, and as I said probably almost wrote itself. It isn’t a budget for closing the gap with Australia, or seriously rejigging the economy. It’s the budget you have to have first, before you can get to grips with some of the other stuff. I can over-state how much of a disaster it would be I financing costs on debt were allowed to grow to greater than current Vote Health.

The politics around the Budget will be interesting. You could almost see the Greens abstain on it – after all it cancels tax cuts and gives a huge amount to home insulations etc. Labour will not be able to propose a constructive alternative (they will of course scare monger). The consensus amongst most media in the lockup seems to be that there wasn’t much else the Government could have done.

It also sets up an interesting election in 2011. The books will still be significantly in deficit, and National will not be offering tax cuts in all probability. So what will Labour promise to do differently? If they promise extra spending, then they can be branded as irresponsible and increasing debt. If they promise tax increases, then that won’t be very popular either.

Labour’s entire 2008 election campaign was based on how you can’t trust John Key, that he is not a centrist – but secretly a hard line right winger (like me :-) who wants to sell everything and slash spending and taxes. Their worst nightmare continues to play out – that John Key is exactly what he campaigned on – a centrist.

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Edwards on MPs and Mt Albert

May 28th, 2009 at 1:30 pm by David Farrar

Bryce Edwards has an excellent post highlighting the huge advantage parliamentary parties have – specifically with the Mt Albert by-election:

Therefore it has to be asked, are all the non-Auckland MPs that are currently flooding into the Mt Albert electorate, doing so via taxpayer funding? Is the Green candidate, and Wellington-based MP, Russel Norman really paying his own way to Auckland and finding his own accommodation during his campaigning?

Good questions.

In Mt Albert there are currently a large number of MPs flooding into the electorate to campaign on behalf of their respective candidates. So far, many of these have been non-Auckland MPs, and therefore likely to be using Parliamentary Service funds to be there.

The one particular non-Auckland MP that appears to have been there the most has been Wellington-based MP Russel Norman – in fact Norman is the only non-Auckland MP running in the electorate. While there is nothing particularly wrong with carpetbagging per se – a ‘term is sometimes used derisively to refer to a politician who runs for public office in an area in which he or she is not originally from and/or has only lived for a very short time’ – most people would in fact have a problem with such carpetbagging being funded by taxpayers. It is therefore Norman that should be the most upfront about who’s paying his way.

There’s another reason that Russel Norman should be called to account for his election spending. More than any other politician – other than perhaps Winston Peters – Norman has been the most populist campaigner on issues of ‘money in politics’. He probably pushed harder than any other for the Electoral Finance Act – even though it proved to be a spectacular ‘own goal’ – and has continued to be the most sanctimonious MP (since Peters) about transparency. He’s probably made more allegations against other MPs and parties than anyone (again, except Winston Peters).

Thus this stone-thrower needs to show that he doesn’t also live in a glass house. Therefore Norman should declare whether he has used any taxpayer funds on his campaign, including travel expenses and accommodation claims for his many, many trips to Mt Albert since Helen Clark announced her departure from Parliament. Anything less than this would make his various campaigns against ‘corruption’ seem rather hollow.

Will the Greens practice what they preach?

Likewise, the other parliamentary parties need to be more upfront about their use of backdoor state funding and MP expenses in their campaigns. Labour needs to show that it has learnt its lessons over the EFA and its pledge card. What about Trevor Mallard, who was recently blogging about his experience on the campaign trail? There seem to be a lot of non-Auckland MPs in Mt Albert recently. Unless they are paying their own way, or legitimately and genuinely in Auckland on other business, their use of tax-payer funding to campaign could be classified as ‘corrupt’. And National and the other parties should also declare how they are paying to send MPs into the electorate to campaign.

I recommend people read the full post – it has mounds of historical infoformation also.

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Dim-Post on Obesity

May 28th, 2009 at 12:00 pm by David Farrar

Danyl cracks up and talks to himself:

Left Wing Danyl: Corporations that sell high-fat and high sugar products are getting rich by selling people slow acting poisons. And they’re deliberately marketing these toxic food substitutes at children! Shouldn’t we at least pass laws to protect minors from these products? After all, we don’t let them buy cigerettes or alcohol.

Libertarian Danyl: Well that’s your answer to everything isn’t it? Just pass another law, take away a little bit more of our freedom, expand the power of the state. Charge people more taxes so you can furthur limit their choices. People should be free to eat whatever kind of food they want. We have enough problems with the nanny state in this country without politicians telling us what we can and can’t eat for dinner.

Economist Danyl: Hang on a minute there – I agree that people should be allowed to choose what foods to eat – but you have to admit that products like soft drinks and potato chips have massive negative externalities. They contribute to chronic illness like diabetes and heart disease and those have a cost to the public health system that other people end up paying for through their taxes.

Libertarian Danyl: Tax is theft!

Left Wing Danyl: Tax is the price you pay for living in a civilised society.

Libertarian Danyl: Civilised? Ha! To quote Ron Paul . . .

Moderate Danyl: Oh shut up, idiot. So Economist Danyl, are you saying there should be an excise on junk food?

Economist Danyl: Why not? That’s what we do with other products that have negative externalities, like tobacco and alcohol.

Left Wing Danyl: The problem there is that obesity is closely correlated with poverty. A tax on junk food would be a highly regressive tax.

Economist Danyl: Then poor people will act like rational maximisers and respond to the changing conditions of the market by switching to cheaper, healthier options.

Sarcastic Danyl: Right, the way they have with tobacco?

A really good post.

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Oswald

May 28th, 2009 at 11:00 am by David Farrar

Two good posts worth highlighting from Oswald Bastable:

He blogs on the Martinborough vigilantees and how the media reported a shot was fired between night patrol members and local youths:

Now they don’t bother to mention that this was 30 young thugs against 2 ‘vigilantes’.

This is in a town that has ONE policeman, with the nearest backup at least 15 minutes away. Backup that could deal with a mob of thirty is 45 minutes away- asuming they are not already tied up.

We owe these ‘vigilantes’ a debt of gratitude- they are actually dealing with a problem the police can’t/won’t touch.

Now I don’t necessairly agree with him on the night patrol, but the national media failed to report the very pertinent fact that it was 30 against two. Without blogs, we would not know this.

I also like his take on North Korea, based on Team America.

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$250 an hour

May 28th, 2009 at 10:00 am by David Farrar

Labour are trying to make out that paying $250 an hour to a former Treasury Secretary is “appalling”.

What world do they live in? Have they ever hired a lawyer? A junior to intermediate lawyer costs $250 an hour. Partners are around $400 and hour and the top partenrs and QCs are up at $600 to $900 an hour.

And we are talking about a former Secretary of the Treasury. Someone like that would normally be costing well over $500 an hour. This is a man who has risen to the very top of his profession, and he is only charging the Government the same rate as a mid level lawyer does.

Also Labour miss the big picture – all focused on inputs. For the $45,000 maximum Graham Scott was paid, the question that should be asked is how much money he has saved? Okay to be fair to Labour they are against the Government actually being more efficient and saving money – but those of us who pay taxes generally do like such things.

I would be amazed if Scott has not identified savings of at least $4.5 million. It may in fact be ten times that. So the return on his $45,000 is somewhere between 100:1 and 1000:1.

And Labour are campaigning against this.

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Budget Lockup

May 28th, 2009 at 8:44 am by David Farrar

I’m in the Budget lockup from 10 am to 2 pm, so hope to have some initial posts by 3 pm (there is a rolling embargo which means you can only blog certain stuff as Bill gets to it in his speech).

Until I post further, feel free to use this thread for budget related discussions.

Any posts which appear between 10 am and 2 pm are time delayed from this morning.

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