Kiwiblog

I don’t know if this ad is real or not – it was sent to me by e-mail. I don’t actually endorse destroying the sign, but do hope someone can drape a sheet over it or something so it is hidden without being daamaged.

Stuff reports:

Business NZ chief executive Phil O’Reilly said Labour’s policy was “the worst possible news” for young people on the dole.

“The very last thing you would want to do is make it harder to employ them. I just don’t understand where Phil Goff is coming from with this.

“He already knows the reason why there’s such high youth unemployment right now is we don’t have a youth minimum wage.”

Faced with such a steep rise in costs, businesses would probably lay off staff, Mr O’Reilly said.

Labour fundamentally do not seem to understand the difference between economic cycles.

If unemployment is low, and employers are struggling to find people to fill jobs, then yes one can increase the minimum wage with little impact on employment.

But when unemployment is relatively high, and many firms are still recovering from the recession, you can’t increase the minimum wage without a significant impact on employment.

They key thing is you need to get people into jobs first, and then once people are in jobs, then they are better placed to get wage increases.

A 15% increase in the minimum wage in one year would be the largest ever, and at a time when youth unemployment is at 27% or so. And they don’t see the correlation! How the hell will a 16 year old ever find a job if it is illegal for them to work for $14 an hour.

Headline at Stuff:

Apocalypse followers shocked as nothing happens

Says it all really.

Robert Fitzpatrick spent more than $140,000 of his savings on posters and advertisements warning of the May 21 Judgement Day.

As he stood in Times Square in New York, surrounded by onlookers, Fitzpatrick, 60, carried a bible and handed out leaflets as he waited for Judgement Day to begin.

When the hour, 6pm New Zealand time, came and went, he said: “I do not understand why …,” as his speech broke off and he looked at his watch.

I wonder if he is smart enough to even feel stupid?

Camping previously made a failed prediction Jesus Christ would return to Earth in 1994.

So why give him the time of day again?

Whale has an unusual guest poster at Gotcha – Labour MP Clare Curran.

I wonder if the deal is reciprocal, and this means Whale gets guest posting rights at Red Alert?

The speech is here.

First the bad:

Contact Energy was sold by National in 1999. Since then $1 billion in profits from it has gone out of the country to foreign investors. 

A meaningless figure unless you know what it sold for – which was $2.3b. That $2.3b may have al gone towards paying off foreign debt. Goff’s argument is stupid and misleading. He did the same in January:

“Foreign-owned Edison made a lot of money out of the sale of Contact,” Phil Goff said. “It sold its 51 per cent stake in Contact for nearly $1.7 billion in 2004 when the whole company was sold for $2.3 billion in 1999.

At least he mentioned the purchase price here, but again Labour forgets to mention the cost of capital or equity. If I was generous I would say it is because none of them have a business background and really do think money grows on trees.

Edison’s average return on their investment is a bit under 8% per annum. That might not even have covered the cost of their equity.

That $2.3b in 1999 is worth $5.8b in 2011, if you assume a 8% cost of equity. You can not compare prices a decade apart without including the cost of capital/equity.

John Key and Bill English promised in the election campaign they would not cut KiwiSaver.  

They lied. 

On Friday they passed legislation to do just that. 

Goff is flat out wrong here.In the 2008 election campaign National explictly promised they would cut KiwiSaver, and they got elected on that mandate, and implemented it.

And in 2011 they are again saying they will make changes to KiwiSaver, and giving people the chance to vote on them before they come into effect in 2012 and 2013. The total opposite of what Mr Goff did in Government which was to not give the public a vote on new policies.

I can’t today promise to restore KiwiSaver completely.

Which he would do if he really thought it was the wrong decision.

But I am telling our top earners today that they need to pay a little more  to help reduce our debt and get the economy growing. 

Those earning over $60,000 (those Labour deemed rich last time) now pay around 90% of net income tax. And Goff says this is not enough.

In our first year, Labour will increase the minimum wage to $15 an hour to ensure that people who work for a living get a fair living wage. 

And who is going to hire a 16 year old with no skills and no experience at $15 an hour? Wouldn’t it be better to allow a 16 year old to take a job at say $12 an hour and actually gain some experience so then in their next job they may earn a bit more?

There are now 77,000 young people under 25 who are unemployed. That’s one in four – one in three in the Māori and Pasifika community. 

And I plan to make it worse by pricing them out of the Labour market. Idiot.

We will introduce a R&D tax credit initially at 12.5%. That will cost an average of $160 million a year – $800 million over five years.

It is a good thing to have the country undertake more research and development. That is an important part of increasing productivity and economic growth.

However a tax credit is a fairly blunt tool. It can often lead to companies just trying to gain the tax credit, without actually doing innovative research and development. The tax credit can become the goal, rather than a catalyst.

I welcome the $180m/yr on R&D but am not convinced an across the board tax credit will be that effective in lifting our R&D.

In another example of poor economic choices, National left every New Zealander having to pay for their transport and electricity emissions,

Goff is wrong again. National is subsidising the transport and electricity emissions so that consumers only pay half the cost of their emissions. Labour’s policy has been to remove that subsidy which will see power prices increase 3% and petrol prices by 3c/. They don’t mention this very loudly when complaining about the cost of living, as it undermines their rhetoric.

but exempted farming from paying for their agricultural emissions. That is not fair.

Having the taxpayer meet the cost simply means that the pollution goes on for longer.

The exemption removes the incentive to agriculture to move more quickly to reduce global warming gasses which account for 48% of New Zealand’s greenhouse gas emissions. 

Labour is proposing to restore the entry date of 2013 for agriculture to come into the Emissions Trading Scheme. This means farmers will pay for just 10 per cent of their 2005 agricultural emissions, plus any growth since then.

We don’t believe this is asking too much. Agriculture is important but all sectors need to pay their fair share. 

This is a rather stupid decision. Until there is some scientific breakthough on reducing methane emissions from cows, bringing agriculture early into the ETS will merely make NZ farmers uncompetive with their competitors, and lead to a drop in exports.

It is not about whether a sector is important or not. It is about whether a sector has external competitors. This is basic economics again.

Rob O’Neill in the SST reports:

In his “Trust Busting” paper, Molloy cited a series of cases that he said “raise disturbing questions of systemic integrity”.

He complained about New Zealand’s “one judge fits all” approach to law, where the legal profession fails to insist counsel should not argue cases in areas where they have no competence, and parliament fails to insist judges sit on cases only where they have acknowledged expertise.

“Parliament continues to fail to organise the High Court into divisions dealing with crime, family law, equity [trusts and fiduciary matters] and other general litigation,” Molloy said.

He compared the approach to having a gynaecologist performing brain surgery, or electrical engineers designing viaducts. That judges are allocated “like cabs off a rank”, he said, is “deplorable”.

Molloy said counsel would be in breach of their duty of care and exposed to claims of negligence were they to litigate in areas beyond their expertise. Yet judges often sit on cases they should not.

I’ve heard this complaint several times – that Judges are all meant to be generalists, rather than make the best use of their specialist skills.

I wonder what the rationale for the status quo is?

Andrea Vance in the SST reports:

POLICE MINISTER Judith Collins has pledged to support a call for laws to prevent girls under 16 having abortions without their parents being told.

Collins said she would support a private member’s bill requiring parents to be involved before a termination could take place.

She could not introduce it herself, because ministers can only introduce legislation related to their own portfolios, but her stand comes after the Sunday Star-Times revealed a mother’s anger that a school counsellor arranged an abortion for her teenage daughter.

While in opposition in 2004, Collins proposed the Care of Children Act be amended to make parental notification mandatory for girls under 16. The act allows a female of any age to consent to an abortion. Collins proposed that if a girl objected to parental notification, a doctor would contact the district court to arrange an appointment for the girl to see a judge in chambers within 24 hours.

I’m not a fan of changing the law, but if you were to do so, it is important to have a procedure where notification does not occur – especially vital in cases of incest.

I would hope that any child who has an abortion does tell their parents, as how can the parents be there to support them if unaware. But as I said, I am not sure it is a good idea to make notification a legal necessity – it could lead to a pregnant teen trying to do a back street abortion. 

In 2009, 3950 girls aged 11 to 19 had abortions.

That isn’t a very useful number. The relevant number is how many aged under 16 had abortions. The stats don’t tell us for under 16, but in 2009 only 79 abortions were done for those aged under 15. That’s 79 too many, but it is also far from a tidal wave. In fact the number of abortions (all ages) has been declining for the last two years.

UPDATE: Family First have supplied me more detailed stats, and n 2009 there 299 abortions on under 16 year olds.

Jonathan Marshall reports in the SST:

A LISTENING device has been discovered during sweeps for bugs at government ministers’ homes.

The searches, by Government Communication Security Bureau staff, were done amid fears surveillance devices have been planted ahead of the November election.

Government sources told the Sunday Star-Times that ministerial homes and offices have been swept, sometimes secretly, and at least one listening device found.

The partner of one senior minister told the Star-Times that GCSB officials used high-tech equipment to scan their home for bugs. Nothing suspicious was found but the agents confirmed other recent searches had been positive, but gave no further details.

This does not surprise me greatly. Probably the same people who rummage through rubbish and covertly record conversations at cocktail parties.

Annette King said:

After the 2011 Election, a Labour-led Government will have a Minister for children.

It still astounds me that in New Zealand we have a Minister for Race horses; a Minister for the Rugby World Cup; a Minister for Senior Citizens but no Minister for the most vulnerable in our community, our Kids.

Labour will establish a Ministry for Children. Its job will be to make sure children are a priority, not just in theory, but in practice.

If the lack of a Minister for Children amazes Annette, why didn’t she call for one sometime in the last 30 years she has been an MP? How about when she was Minister of Youth Affairs in 1989?

And I agree it is silly we have a Minister for race horses. But I was not a member of the Cabinet which massively increased funding for race horses, against official advice, to placate Winston – whose major secret funders happen to all own race horses.

Heather Roy notes:

“New Zealand already has a small army of Ministers and departments to deal with child welfare; the Ministry of Social Development, the Children’s Commissioner, the Families Commission and the Ministry of Youth Development, and yet too many of our vulnerable children are still subject to terrible abuse and poverty.

I have no doubt that Annette is absolutely sincere in wanting to reduce child abuse and the like. But I am very cynical about the notion that another Ministry is the answer.

The Labour website proudly proclaims that Labour has no plan and no visions. Thanks for clearing that up.

The Dom Post reports:

At a share price of $1.13 the Government has lost about $125m on its $1 billion investment.

But this was more than compensated for by $450m in dividends the airline has paid it over the past 10 years, which means taxpayers are still $325m ahead.

No we’re not. The cost of capital has been over-looked.

The Government borrows at around 6%. So if it had not sunk $1 billion into Air NZ, it would have $60 million less interest a year. And then if you compound the interest, the actual cost of the investment in Air NZ is $1.79 billion.

The current value is $875m plus $450m in divideds, which is 1.33b. So the Government is down around $460 million.

One may have a viewpoint that a loss was acceptable to keep Air NZ solvent (mind you if Cullen and Anderton had not blocked sale to Singapore Air a bailout would not have been needed), but you shouldn’t declare that the Government is $325m ahead, by ignoring cost of capital.

NZPA report:

An allowance for veterans with gallantry decorations has been increased nearly threefold, from $10.49 to $30 a week.

The allowance is paid to just over 100 veterans who receive a war disablement pension and have a gallantry decoration, such as the Victoria Cross or the Military Medal.

The increase takes effect from June 9.

There are not many 200% increases I would approve of.

Dave Burgess at the Dom Post reports:

A Wellywood sign to celebrate the capital’s film industry will be built along the hillside next to the Miramar Cutting.

The Hollywood-style sign will be 3.5 metres high and 28m wide. It is understood to cost several hundred thousand dollars and is intended to be ready for the Rugby World Cup in September.

Veteran Wellington film director Geoff Murphy could barely stop laughing when told yesterday that the idea would proceed.

“We had a film industry well before this Wellywood bullshit was going on. I think it’s f …ing stupid. It is copying a foreign, bullshit glamour idea and it’s the pits of what people can aspire to.”

It is all those things and more. I hate it. It is pathethic and wannabe. I don’t know anyone in Wellington who wants it. The airport company should concentrate on safer runways and not spend passengers money on such stuidities.

Have they not listened to the tens of thousands who said no? Can they cite anyone in favour who is not a member of their “creative” team?

It will be interesting if they can get the sign insured. They may need to build 30 metre high walls around it, to keep it safe.

It’s so embarrassing to almost make me want to move to Auckland.

You can join the Facebook group against.

Or even better send an e-mail to the Airport, and tell them your views directly.

The Dom Post reports:

Vodafone has slashed the price customers pay to check email and surf the web on its mobiles and smartphones when visiting Australia by 80 per cent.

The price cut, from $5 a megabyte to $1/Mb, undercuts the rates offered by Telecom and 2degrees. It came a week after 2degrees dropped its “casual” data roaming rate from $30/Mb to $2.50/Mb.

Telecom now has the most expensive rate, at $8/Mb, but all three mobile operators offer 100Mb of data roaming in Australia for $100.

Good to see prices going down. At $1/Mb I’ll actualy leave data turned on.

AP reports:

Randy “Macho Man” Savage, the professional wrestler known for his raspy voice and the sunglasses and bandanas he wore in the ring and the young woman named Miss Elizabeth who often accompanied him, died in a car crash Friday in Florida. He was 58.

He was one of the great baddies.

Hat Tip: Whale Oil

My column at nzherald.co.nz welcomes Labour’s reported new approach to focus on how to grow the economy more, rather than oppose all spending cuts. An extract:

Even more pleasing Labour have said that they wish to focus on measures to lift New Zealand’s economic game. This is excellent. This is what the debate between the parties should be about – how to increase the size of the cake, rather than how to slice the cake up.

It was quite tough doing four seperate columns on the Budget, as each had to be quite different to the other. One was for Kiwiblog and one for Stuff.co.nz. Plus a print column for Dominion Post and a column today for nzherald.co.nz.

Danyl at Dim-Post has blogged on Singapore. His argument is:

Singapore is the darling of free-market, right-wing parties. Which is strange, because Singapore is the world’s ultimate nanny-state: not just culturally in the sense that the government controls the media and all forms of entertainment, but in the sense that it’s essentially a massive socialist state in which the government micro-manages the whole economy.

Danyl gives four examples which I want to discuss and partially rebut. Danyl is correct that Singapore is no libertarian pure capitalist society. But neither do I think it is a massiviely socialist state.

The right likes Singapore because they enjoy a low corporate tax rate. It’s currently at 17%. Pretty low. In New Zealand it’s 28%. But in Singapore the government owns the Ports of Singapore, the busiest port in the world, which is the key income earner for the entire economy. Our economy could be ‘like Singapore’ if we nationalised Fonterra and all of our dairy farms, because this would provide a revenue stream comparable to that of Singapore’s port. Then we could have a really low corporate tax rate and finance the government through the revenue from its capital assets, like they do.

Danyl way over-states the importance of the port to the Government’s books. The port has a Net Profit After Tax of S$1.2b – around 2% of total Government revenue, and 0.5% of GDP.

Even Temasek Holdings overall has a mere $4.6b NPAT. Have a look at the NZ SOEs combined NPAT and they are not an order of magnitude different.

Danyl has a point that the Government has a diverse revenue base, beyond taxation. But he overlooks how massively low the tax rates are. he mentions the 17% corporate tax rate but neglected to mention that personal tax rates are even lower. If you earn S$100,000 your tax is only $5,650, so under 6%. Yes 6%!! I’d effing allow the Government to own a couple of ports if it meant my tax rate was 6%.

Singapore also has low income taxes. But Singapore ALSO has a compulsory savings scheme in which you pay 20% of your income into a private savings account, and your employers are compelled to pay 15%. This pays for your healthcare and retirement. It’s not a tax in the technical sense in that you don’t pay it to the government – but you can classify it as such for net income purposes, and if you do then taxation in Singapore is higher than it is for the majority of New Zealanders.

Danyl misses the point entirely here. The money you have to pay into a compulsory savings scheme remains your money!! This is not the Government taking money off you to spend on everyone else. This is forcing you to save to pay for your own health costs, retirements costs etc. This is absolutely what many on the right want. The difference in incentives is absolutely everything. Having 35% of my salary go into my private savings is not at all a disincentive to working. It is the opposite – the more I work and earn the more I get to have to cover my health and retirement costs.

Next right-wing canard: there’s no welfare in Singapore, therefore unemployment is very low. Welfare in Singapore is pretty basic. And unemployment IS low. There are a few reasons for this: the state pays employers a retention bonus not to lay people off. And if someone does lose their job they go into a mandatory job-placement and re-training scheme. And if overall unemployment increases then the government launches a new development and soaks up the jobless. There isn’t a lot of free-market magic operating in there – it’s all intensive micro-management by the state.

Again Danyl misses the point here. It is about culture. It is shameful to rely on others before your own family. THe retention bonus not to lay people off was a temporary thing, and the level of state invovlement is not that major. Danyl overlooks that in NZ we had 200,000+ people on welfare even when unemployment was the lowest in the world. I’d take the Singapore system over the NZ system anyday.

There’s a lot of other non-free market aspects to Singapore’s economy – like the fact that almost all business and residential property is owned by the state, either directly or via its sovereign wealth fund, or that you have to pay the state about $16,000 for a permit to buy a car, and then a daily congestion tax to use it.

Here Danyl is on stronger ground. The permit to buy a car is bizarre. The congestion tax though is just sensible user pays. But the overall point is that the Singapore Government is not a pure free market Government. Absolutely.

But let me tell you I’d take their economic “bad” with their economic “good” anyday. And if we did, we’d be a lot better off.

Stuff has a Budget Quiz. I got 13.15 after correctly guessing Bill English’s tie colour.

A macro shot this morning of one of our smaller native longhorn beetles.

Click for higher res image

Hope everyone has a good Friday.

Seemed to be hard work here making it to the end of the week… coffee consumption is on the rise

No words are needed.