The Greens jobs initiative

September 22nd, 2011 at 9:00 am by David Farrar

I’ve noticed that this election that the have billboards and slogans along the lines of “Vote Green to grow the ”. This is radically different slogan from their rhetoric of a few years ago when the would denounce economic growth as evil and actually argue against growing the economy.

I’m not convinced that their policies have changed, just that they have a better advertising agency. The so called policy to create 100,000 jobs  in fact has less substance than an anorexic Leptotyphlops carlae. Take their claim of 47,000 to 65,000 new jobs from renewable energy. They said:

The global market for renewable energy technology is forecast to reach an annual value of $590–$800 billion by 2015.6 If we can secure just 1% of this market, we can build a new $6–8 billion export industry here at home, creating 47,000–65,000 new cleantech, high-value jobs

Translation provided by a financial analyst:

So if the global market for green tech gets to an incredibly high number and if we could secure 1% of this incredibly high number and if those were highly-paid jobs and if they didn’t replace any other jobs in the economy then hurrah – we would have 65,000 jobs!

If the Greens were promoting a prospectus, you could get them jailed for securities fraud. But it doesn’t stop there. ACT candidate Stephen Whittington points out their massive mistake, which would have them fail NCEA Level 1 Maths. He explains:

I honestly cannot believe that the Greens have made such a simple mistake, in a document which is intended to set out how they will finance their plans to significantly increase Government expenditure.  

The Greens predict that increasing minimum wages will increase tax revenue by $519 million.  Even assuming that people don’t lose their jobs, which they will, increasing the minimum wage will reduce tax revenue.

Increased wages will increase the amount of PAYE collected by the Government.  But wages are also a deductible expense to businesses.  Given that the marginal personal income tax rate is lower than the corporate tax rate, increased minimum wages will decrease revenue from corporate income tax more than will be increased from PAYE, even assuming no increase in unemployment.

In the Green fantasy world, increasing the cost of Labour doesn’t decrease profits and hence taxes on profits. I am amazed they are not lobbying for the minimum wage to be immediately raised to $50/hour as this will cause employers to become more productive to be able to afford to pay the wages. No I am not kidding – this is what they actually argue.

Now in case you think it is only nasty right wingers using evil weapons such as mathematics and logic to attack the Greens policy, let’s look at the comments by Idiot/Savant at No Right Turn. He supports their policies but slams their advertising:

I’ve spent the morning reading through the Greens’ “Green jobs initiative” [PDF]. The short version is that the Greens are promising to “create 100,000 new green jobs through business incentives and government leadership”, specifically through increased investment, building a clean energy sector, and increased support for a green economy. But when you look at it, its not really about jobs at all; rather its about greening our economy, with jobs as a byproduct. Political marketing means that that byproduct is being highlighted, in a way which is at times outright deceitful.

He continues:

 The “big idea” in the policy is government support, through our energy SOEs, for a major new renewable energy industry:

“The clean energy sector is booming internationally. Currently, renewables supply only 15% of the world’s primary energy demands but its share is growing rapidly. The global renewable energy market grew by 6.8% in 2010 alone to reach a value of $389 billion. It is forecast to reach an annual value of $590–$800 billion by 2015. By securing just 1% of this market, we’d create a $6–8 billion new export industry here at home, creating 59,000–81,000 new jobs.”Which is a nice dream, and something we should aim for. Our economy is not very diverse (basically, we export butter and bungee jumping), and if it is to grow we need to start doing other things. Exporting wind turbines, geothermal technology, and smartmeters, and the technology, services and IP related to these is a good idea, and something that potentially fits well with what we already do. But a $6 – 8 billion export sector is enormous – bigger than meat; it would be our third-largest export industry after tourism and dairy. And that’s not something that’s going to happen overnight. Its a good idea, its something we need to do, and its something government needs to help with (after all, pretty obviously the market isn’t going to do it if left to itself), it will benefit New Zealand in the long run. But pitching it as an immediate job-creation plan, and implicitly suggesting we’ll have those jobs by 2015 (rather than in 20 years time) is deceitful and misleading.

I/S concludes:

This isn’t just wrong, it is a mistake. Quite apart from raising questions of the Greens’ honesty and integrity, one of their chief selling points, it undermines the policy itself. This is a perfectly good policy, and it can stand on its merits (hell, even MED agrees that we need active government intervention to build new export industries, up to and including direct investment in growth areas). Fudging things like this hands a gift to detractors, allowing them to dismiss it out of hand: “100,000 new jobs? Yeah, right”.

So, a good policy, but very disappointing marketing around it. Deceit is not the green way, and if you use it to sell your policies, then people will start treating you as liars, just like all the rest.

At the end of the day, the Greens are politicians seeking power. They’re just like all the other politicians – neither saints nor sinners. Just politicians.But politicians who can’t even do simple maths.

 

 

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82 Responses to “The Greens jobs initiative”

  1. KiwiGreg (3,211 comments) says:

    They do realise we buy almost all our geothermal technology from Israel right? New Zealand is not a world leader in this just because we produce geotherm power. Exporting wind turbines? What’s our competitive advantage in manufacturing those?

    I’m assuming they have looked at a map and realise we can’t actually export the energy.

    This is on top of all the other reasons why it’s horseshit.

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  2. Pete George (23,257 comments) says:

    DPF says:

    I’m not convinced that their policies have changed, just that they have a better advertising agency.

    Then quotes Idiot/Savant at No Right Turn.

    So, a good policy, but very disappointing marketing around it. Deceit is not the green way, and if you use it to sell your policies, then people will start treating you as liars, just like all the rest.

    I guess it depends on whether the deceit works as to whether it is a “better” advertising agency.

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  3. toad (3,672 comments) says:

    Steven Whittington is arguing from a false premise in claiming that the increased wage expenditure from increasing the minimum wage will result in reduced profits, and therefore a consequent reduction in the corporate tax take.

    Given that the primary duty of company directors is to maximise the return to shareholders, large or very large corporates (which employ about 60% of FTE positions and have the highest employment rates for minimum wage positions) are far more likely to meet the increased wage bill by improved productivity (which is likely to follow wage increases in any case, given that better paid workers are likely to be more productive), reduced wage relativities, reduction in non-wage expenditure, or upwards adjustment in prices (which will consequently increase the GST take).

    The DoL’s Minimum Wage Review 2010 affirms that (sorry, can’t find copy online):

    82. New Zealand research confirms that firms respond in a number of ways to minimum wage increases. The most common response was to reduce wage relativities across their staff. Other responses included reducing the number of hours offered to staff, tightening employment policy, not replacing workers who resign, attempting to increase productivity, attempting to reduce costs, raising process where possible, reducing profits and business closure. More generally, firms’ responses were based on supply and demand variables. The sectors most affected by minimum wage increases (the retail and hospitality sectors) has more scope to increase prices, as they supply non-tradeable products to the domestic market.

    83. Research from overseas suggests that increases in the minimum wage may have a small negative impact on profitability, but finds no evidence of this increasing probability of firm closure.

    There issue as far as reduced profitability and therefore reduced corporate tax take from increasing the minimum wage is likely to be largely confined almost solely to SMEs. But given the small proportion of corporate tax paid by SMEs, this is unlikely to be particularly significant, and is in any case is mitigated by the transitional subsidies targeted to SMEs to assist them through the transition to higher minimum wages that are part of the Green package.

    [DPF: Toad you are in fucking fantasy land. Have you ever managed a business? Do you think a company just increases productivity on a whim?

    If it was that easy, then they would do so regardless of any wage increases.

    Again, according to your fantasy, then increasing the minimum wage to $50 an hour will make firms the most productive in the world]

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  4. decanker (222 comments) says:

    KiwiGreg, however, Ormat is ripe for disruption, particularly through collaboration with the Chinese. Ormat have good technology, but they will stitch up every Geothermal project they are involved in by claiming “right” to the resource as part of any deal.

    A cheaper technology provider with better capacity to scale that is interested only in providing technology through simple build, operate, transfer models can win a lot of business over Ormat. We do have the geothermal expertise in NZ, but as kiwis we often fail to recognise opportunities to seriously commercialise scalable ideas outside of NZ.

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  5. Murray (8,841 comments) says:

    Plucking primises of rainbow pooping unicorns for all out of you ass like Phil Goff now taod.

    Well why not, its workign so WELL for him isn’t. Lied to the media yet today at all?

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  6. Pete George (23,257 comments) says:

    Given that the primary duty of company directors is to maximise the return to shareholders

    No it’s not. Then primary duty is to run a successful business that amongst other things enables them to provide a good return to shareholders. There are many motives in business, but it seems just one motive in Green political spinning.

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  7. Scott Chris (5,958 comments) says:

    Greens Initiative 2

    “The global market for renewable energy technology is forecast to reach an annual value of $590–$800 billion by 2015″

    Rather than picking holes, I thought I’d choose this idea as being a reasonable, if hopeful initiative. New Zealand’s brand image relies on our somewhat tarnished ‘clean green’ marketing thrust, so an policy such as this could enhance that.

    Alternative energy technology is comparatively labour intensive, so will provide some jobs, as well as improve our balance of trade, with less reliance on imported oil. Whether we could export the technology is moot.

    I can’t see the point in keeping the energy companies in public ownership though, provided the incentives necessary for them to generate alternative energy are emplaced.

    Energy prices will go up though. That is the hard sell aspect of this policy

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  8. rimu (51 comments) says:

    It’s not “Vote Green to grow the economy”, it’s “For a richer New Zealand, Vote Green“. You can be rich in many non-material ways.

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  9. Lance (2,550 comments) says:

    The renewable energy sector is in major decline at the moment as Govt’s are reducing subsidies to balance the books and demand is steeply dropping away. Companies which have rushed into this headlong without a sane foundation are hurting badly.
    The worst aspect of this is that good well run companies are squeezed out by the ‘fly-by-nighters jumping in for the easy money and you are only left with sub standard practitioners.
    Governments are poor at picking winners and good at screwing up industries when they intervene.

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  10. Elaycee (4,331 comments) says:

    This a complete crock of shit and unless you are ideologically myopic, you can see through the gaps and identify the problems.

    The Gweens (and the slippery toad) have demonstrated again a complete lack of economic nous – if I have (non salaried) staff all on the minimum wage and there is suddenly a Law in place that says I have to pay them all an additional $50 / $100 per week extra, then unless I can recover the additional costs by either increasing my commodity prices / increasing productivity to offset the increased costs / trimming costs elsewhere in the business, then the margin (my profit) will decrease. And decreased profits means less company tax to be paid. At a lesser rate than the PAYE rate. Doh.

    And yet this outfit would have us believe that they are fit to be part of a future Government?

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  11. anonymouse (707 comments) says:

    Exporting wind turbines,

    Just how did the party’s “Green Futures Super Trust” investment in Windflow Technology go……

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  12. Pete George (23,257 comments) says:

    Is “by securing just 1% of this market” an expert prediction of what’s possible, or fanciful number plucking? Our overall share of world markets would be much less than that.

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  13. dime (9,634 comments) says:

    “improved productivity (which is likely to follow wage increases in any case, given that better paid workers are likely to be more productive), reduced wage relativities, reduction in non-wage expenditure, or upwards adjustment in prices (which will consequently increase the GST take).”

    BAHAHAHAAHAHAHAAHAHAHA

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  14. david (2,550 comments) says:

    Anyone happen to know what has happened to Windflow Technologies Ltd, a company that has absorbed a significant proportion of the Green Party Superannuation Scheme in past times (particularly about the time when Jeanette Fitzsimmons was actively campaigning against Project Aqua – no conflict of interest there eh?)?

    Is this just another get-rich-quick attempt by a bunch of economic illiterates posing as environmentally aware Socialists?

    Sucker bait.

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  15. East Wellington Superhero (1,151 comments) says:

    The acid test is this: Who would you want to manage your mortgage? Bill English or Russell Normal. It’s a no brainer.

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  16. david (2,550 comments) says:

    Snap – anonymouse!

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  17. adze (1,974 comments) says:

    I used to be a big supporter of the notion that NZ pick winners in “green tech” and biotech industries, until I saw Prof. Paul Callaghan’s Chancellor’s speech a few days ago… worth relinking here: http://vimeo.com/29126569

    Basically his argument is that NZ is not well placed to compete in large scale export industries (with dairy a notable exception – though even there we have reached our productive limit), instead we do best in diverse niche high tech enterprises. These also tend to be green in that they don’t tend to pollute or occupy much land.

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  18. jag (54 comments) says:

    “Other responses included reducing the number of hours offered to staff, tightening employment policy, not replacing workers who resign”

    So basically most of the other responses involved offering less work… wow, raising the minimum wage should be in every jobs initiative!

    “exporting wind turbines”
    If one statement could encapsulate completely the economic illiteracy/naivety of the greens this would be it. Heard of Seimens? Vestas? You really believe we can compete with them? Guess what, we’ve got a company trying to operate in that market, Windflow technologies, and if you haven’t noticed (well it wouldn’t surprise me if you haven’t) they’re not exactly a run away success. How long would it take the Greens to turn them into a genuine global engineering juggernaut? More to the point, how much by the way of government grant money would be pissed away trying to pick winners and subsidise an unsustainable idea?
    Hey why not put another 100,000 jobs down that we could generate *if*we captured 1% of the smartphone/tablet computing/mobile music market? I don’t think that’s very competitive either.

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  19. DarrenG (14 comments) says:

    The Greens have timed their announcement very nicely.
    Just days after reports on how many green jobs the Americans received for their billions of expenditure as well as the crony socialism from Obama over the Solyndra company.
    It adds to the spanish, Scottish and other reports that ‘green jobs’ cost several real jobs.
    So the Greens plan to create 100,000 Green Jobs.
    Then that is 300,000 or more real jobs down the pan if NZ follows international reality.

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  20. East Wellington Superhero (1,151 comments) says:

    @david

    Exactly. Windflow is an example of political interference that causes financial failure. Mighty River Power (SOE) was an investor in Windflow and this SOE has lost its money.

    The media needs to highlight the damage that pie-in-the-sky green ideas can cause.

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  21. Elaycee (4,331 comments) says:

    Another pearl courtesy of toad: “….transitional subsidies targeted to SMEs to assist them through the transition to higher minimum wages that are part of the Green package…..”

    So the Gweens propose that, in order to lessen the impact of increased wages, I’ll get a hand out from the Government in the form of a subsidy? Of course….. what a great idea….. that’ll work…. Pffttt.

    Jesus wept. NZ doesn’t deserve lunacy on this scale…

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  22. Scott Chris (5,958 comments) says:

    PG – “Is “by securing just 1% of this market” an expert prediction of what’s possible, or fanciful number plucking?”

    Yes, fanciful number plucking. China is likely to dominate the manufacturing side of green technology, just as they do so with polychrystaline solar panels, which drove the USA’s Solyndra (manufacturers of cylindrical panels of CIGS thin-film solar cells) bust, with the resultant political fallout for Obama.

    Thing is, thin film panels are a superior product and *should* be cheaper to manufacture, but China’s ability to manufacture *cheaper per watt panels* killed the US firm.

    So, yes, the Greens are kidding themselves about exporting the manufactured product itself.

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  23. decanker (222 comments) says:

    Wow, what a prevailing attitude of “do you realise how small we are? do you realise there’s this other company out there? do you realise we’re completely fucking useless down here?”

    Full of ambition, this place. Don’t recall Sir Ed saying Everest is way the fuck of there in some other country and it’s really fucking huge, fuck it, I’ll just go for Mt Eden.

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  24. Elaycee (4,331 comments) says:

    Oops – at 0945 my fingers were out of sync with my laptop.. “At a lesser rate than the PAYE rate” is not correct. The converse applies.

    I need a coffee… in a Gween fwee zone.

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  25. Manolo (13,514 comments) says:

    This so-called “plan” is final proof the Luddites are deluded and live on a different planet. The notion that jobs will be generated out of thin air (no pun intended) is absurd and deserves the strongest condemnation.

    Norman has discredited himself and his mob even more with crap like this.

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  26. toad (3,672 comments) says:

    @Elaycee 9:45 am

    Your key phrase is:

    …unless I can recover the additional costs by either increasing my commodity prices / increasing productivity to offset the increased costs / trimming costs elsewhere in the business, then the margin (my profit) will decrease.

    The evidence is that with modest increases in the minimum wage, the vast majority of businesses can do one or more of those things, so their profits don’t decrease.

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  27. East Wellington Superhero (1,151 comments) says:

    @david. Sorry, didn’t properly read your message. Windflow is competing on a global market which is very tough, and ruthless (WTL is trying to sell in a global downturn where there’s a glut of wind turbines on the market – though granted, this is a different issue that whether they can do it in a normal market). Windflow relies on massive investment and taxpayers should be the ATM for a lottery. As is the problem with many NZers trying to export overseas, instead of selling the IP and making some money, they try to retain ownership (out of pride often) and cannot leverage themselves overseas, and don’t succeed.

    Windflow seeks $2.4m, eyes second Scotland project
    Gavin Evans on Wednesday, 14 September 2011 – 08:16

    Windflow Technology will ask shareholders for up to another $2.4 million to keep the business operating while it pursues projects in Scotland and works to license its turbine for manufacture in other markets.

    The company, which developed the two-bladed Windflow 500 now in use at the Te Rere Hau wind farm near Ballance, has run out of orders and is down to its last $400,000. It is now planning a share purchase plan and other capital raising options to meet its maintenance and warranty obligations to NZ Windfarms at Te Rere Hau, keep its marketing going in the UK, while also formally looking at licensing options.

    “The directors assess that they require a total of $2.4 million from the SPP and/or new cash or commitments from other sources in order for Windflow to carry out the above course of action and remain solvent through until January 2012 when final payments from NZ Windfarms Ltd for the last 32 turbines are scheduled to commence,” the company says. “These scheduled payments from NZ Windfarms Ltd would then be expected to see the company through until June 2012.”

    Windflow plans to set the price for the share purchase plan today. The stock last traded at 50 cents in June.

    Windflow, 15 per cent-owned by Mighty River Power, has struggled after delays at Te Rere Hau held back revenue and teething problems with some of the early turbines increased warranty costs.

    Long Gully, Scotland

    Mighty River has put its Long Gully project in Wellington on hold and Windflow has since been working to sell its machines in the UK. It is yet to receive a firm order while the government there reviews its feed-in-tariffs for renewable energy projects.

    Those factors saw the company’s revenue fall to $10.15 million for the year ended June 30, down from $23.9 million a year earlier. Losses widened to $7.03 million, from $6.7 million.

    Windflow has 97 turbines erected at Te Rere Hau and is due to receive $2.8 million in final payments for them by June. Given the static New Zealand turbine market, Windflow has been looking at taking equity stakes in projects in Scotland to profit from the UK incentive scheme and promote its technology.

    It is negotiating a heads of agreement with North Fish Shetland to erect a turbine on the islands. North Fish intends to pay a “substantial deposit” to reserve the next Windflow machine while the parties confirm funding and planning permission.

    “The turbine installation is planned for the northern summer of 2012 and is intended to be jointly funded by Windflow and NFS, who will have the option to buy it within five years of commissioning.”

    Windflow also has an option to develop a three-turbine site on North Harris, in the Outer Hebrides.

    VG Energy

    The company to date has managed its UK sales efforts through an exclusive arrangement with VG Energy. It has now hired Bryan J Rendell Electrical Ltd. as its second reseller with a focus on the Orkney and Shetland Islands where the Windflow machines are well-suited due to the high local wind conditions.

    Windflow says any funds raised from the share offer will go to hiring specialists to conduct the formal licensing of its turbine manufacturing overseas, as well as the licensing of the company’s proprietary technology in its torque-limiting gearbox. It will continue to meet its maintenance and warranty obligations at Te Rere Hau and keep working in the UK where the subsidy review is expected to be completed by year-end.

    Windflow says it won’t issue the shares unless it will have sufficient funds, either from the purchase plan or other sources, to remain solvent. If not, the directors will return the cash and “take whatever action their duties require them to do.”

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  28. jag (54 comments) says:

    Toad:
    “reduced corporate tax take from increasing the minimum wage is likely to be largely confined almost solely to SMEs. But given the small proportion of corporate tax paid by SMEs, this is unlikely to be particularly significant”

    Please read this:
    http://www.itdweb.org/smeconference/documents/plenary/PIII-Pallot-Ronaldson%20NEW%20ZEALAND%20ppt%20ENG.pdf

    - 36% of total tax take is from SMEs
    - A nation predominantly made up of SME (90% of businesses)

    Got any more pearls of wisdom that you want to inflict upon NZ???

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  29. Scott Chris (5,958 comments) says:

    Adze – “Basically his argument is that NZ is not well placed to compete in large scale export industries”

    True. Nothing wrong with NZ companies using Chinese labour though IMO. Who the fuck wants a manufacturing job anyway? Do the same thing every day for 10 hours a day for 50 years. I’d rather be a cleaner.

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  30. gahi (11 comments) says:

    Thank you Elaycee. I’ve given my employees pay rises, but they don’t get any more productive. At least, in the current environment, they get to keep up with inflation at least and a little more. But it does eat into my profit. The Greens need to go into business instead of the cushy taxpayer jobs they have and then they’ll understand the flaws in their policy.

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  31. Griff (6,987 comments) says:

    The greens are intent on loading more and more cost on to us the consumers

    More for welfare higher wages for the low skilled higher cost of energy all these things destroy our competitiveness in the global world we compete in. Increasing the tax burden on the productive. Driving our brightest to go offshore. Draining the country of the people we need to retain to have a chance of competing in the real world.

    Subsidizing the green energy sector is a fantasist wet dream. We would be competing against Germany and the Scandinavian countries that already are trying to boost their green economy’s. Against them we have little hope of succeeding mostly due to economy’s of scale.

    The one manufacturing sector we do well in is marine Boat building and manufacturing marine related hard ware is the success story of manufacturing for NZ. We would be far better of spending to improve the competitive and research in this sector as it has already proven to be a winner in a market we can compete in.

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  32. Lance (2,550 comments) says:

    @decanker
    A very shallow interpretation of what is being said here.

    The message is this;
    Governments are piss poor at picking winning industries. Soooooooooooooooooooo
    Give all players, such as small high tech start ups, a (genuine) level playing field and create a business friendly environment for those businesses then you will have some of those businesses achieving superlative results with lots of jobs created as the world buys more of our clever little products.

    That is how the NZ economy will grow and grow more jobs

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  33. East Wellington Superhero (1,151 comments) says:

    @decanker

    It’s not that “we’re small therefore we can’t succeed”. It’s that “we’re small, and therefore have to use different strategies”. Simply throwing money down a well is not a strategy, not matter how much ambition you tart it up with. Gently lower the business tax rates and make this a place worth investing. That Russell Norman thinks govt can make complex global business decisions in monumentally laughable.

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  34. nasska (10,865 comments) says:

    I prefer Scott Chris’s (10.02am) crystal ball to that of the Greens. What in earth would make even a Green think that NZ could compete against China in manufacturing be it a teaspoon or a wind turbine? There’s little left to buy in NZ that’s locally made…we do not have economies of scale & even should a large manufacturing industry be developed in our back yard the unions would have it stuffed within months with calls for increased wages.

    Anyone attempting to manufacture anything new in NZ has a fiscal death wish.

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  35. Lance (2,550 comments) says:

    @Griff
    Sorry mate, you are falling into the trap of picking winners. The companies should stand for themselves but not be loaded with red tape and unfair taxes. Maybe a few R+D tax right offs would help.

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  36. East Wellington Superhero (1,151 comments) says:

    WOOPS MASSIVE TYPO!!!

    “Windflow relies on massive investment and taxpayers should be the ATM for a lottery”

    “Windflow relies on massive investment and taxpayers SHOULD NOT BE be the ATM for a lottery”

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  37. KiwiGreg (3,211 comments) says:

    Their ideas are of much the same value as replacing a front end loader with 10 guys with shovels (or a hundred guys with tea spoons) as job creation.

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  38. East Wellington Superhero (1,151 comments) says:

    For my 2 cents. National should steal all the Greens good “green” ambition, and let the remaining socialist/fascist husk blow away in wind.

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  39. Lance (2,550 comments) says:

    @nassaka
    Oddly enough it is more cost competitive for our company to manufacture here mainly because we are smaller scale and the Chinese quality is so bloody variable from passable to complete shit that you must be able to keep someone on site in China permanently to ensure the quality is maintained. Seriously, onsite rejecting crap all day long.

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  40. bhudson (4,736 comments) says:

    “…are far more likely to meet the increased wage bill by improved productivity (which is likely to follow wage increases in any case, given that better paid workers are likely to be more productive), reduced wage relativities, reduction in non-wage expenditure, or upwards adjustment in prices (which will consequently increase the GST take).”

    toad, I think this reinforces the naivety of Green economic thinking:

    1. There is no evidence to suggest that paying current minimum wage workers more will result in them lifting productivity themselves. The table in the DoL document refers to productivity gains the employer creates. Employer-initiated productivity gains will from one or more of:

    i) introducing technology/automation to reduce human intervention (reducing headcount requirements)
    ii) requiring more work from the same (or smaller) pool of labour
    iii) by reducing staff (possibly through a hire freeze and ‘shrinking lid’ approach, or through retrenchment euphemistically terms as ‘improved productivity’ rather than redundancy)

    2. Reduced wage relativities = paying everyone the same and not rewarding better performing or more capable with higher wages/salaries. Which is a negative for those performers/capable staff (and also removes a potential aspirational goal for those on the lower wage rate.)

    Using your theory, toad, that higher wages equal more productivity, then suppressing wages for the high performers must therefore demotivate them and lead to a reduction in productivity – which also equals a reduction in business performance and profits, which also reduces the total tax payable.

    Reduced wage relativities is not a means to stimulate economic growth. It might be very effective in suppressing it however.

    3. Reduction in non-wage expenditure:

    i) cost cutting measures in the workers environment – e.g. removal of the free tea, coffee and bikkies (happened in a number of large firms post GFC), removal of subsidised wellness measures (health checks, company sports team sponsorship, insurances)
    ii) reduction in investment – resulting poorer company performance in the future as competition (domestic and foreign) overtake their position

    4. Prices vs profit…

    toad, the Greens need to demonstrate some consistency here! Russel Norman in particular is constantly claiming that Green’s initiatives (such as clean water charge for farmers) will not impact prices – that businesses will absorb the additional costs within their current profits. Is he correct toad, or will prices rise as businesses pass on their increased costs? I think your party needs to understand and articulate its position on this.

    If businesses absorb the increased costs as Russel Norman believes, then Steven Whittington’s argument holds true – we will see a reduction in govt revenue as companies pay less tax due to reduced profits.

    If prices rise, then it is naive in the extreme to assume that will lead to greater govt revenues via GST. toad, as prices rise people will actively consume less – they will move to cheaper substitutes (if available) or, if they have no alternative, they will use less of a particular good or service. This will also act contrary to the Green’s claim that govt revenues will rise to the amount claimed.

    Incidentally, on the product substitution side, your policy will encourage more imports at the expense of NZ produced (and more expensive) goods. People will purchase imports over local goods and this will also encourage more businesses to take their manufacturing offshore, at the expense of local jobs (which will also have a double negative on govt performance – a reduction in revenue while paying more in benefits.)

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  41. East Wellington Superhero (1,151 comments) says:

    Fonterra has just announced record financial results for the 2011 financial year, saying big exports and contributions from its overseas businesses will mean more than $10 billion flowing into the New Zealand economy.

    Fuck yeah!!!

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  42. Scott Chris (5,958 comments) says:

    Toad

    I wish the Greens would focus on environmental issues, and leave the left wing policy to a socialist party of some sort. Can you explain to me what the connection is between environmentalism and socialism?

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  43. decanker (222 comments) says:

    @Lance, what NZ companies lack is access to capital to scale. And often the know-how to scale. Our capital market is pretty dysfunctional and as far as I’m concerned has too many players intent on merely feathering their own nest (the 3B’s) rather than having the ambition to see their investments become global entities. The govt, like other small nations throughout the world, is well-placed to support direct investment and provide diplomatic leadership — key to enabling NZ businesses to scale via partnerships with the likes of China.

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  44. East Wellington Superhero (1,151 comments) says:

    And before people start bitching about dairy pollution, please remember that making windturbines, solar panels, etc etc, also causes pollution.

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  45. nasska (10,865 comments) says:

    Lance

    There was quite a good article on that in the Dom/Post a while back. Basically it pointed out the quality control problems with the Chinese manufacturing any article in particular the way that short cuts would creep into any process. I still reckon that even if ‘green technology’ took off in NZ that the actual manufacturing would end up sourced to a third world country.

    Jobs may be created but it is doubtful that many of them would be in NZ.

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  46. adze (1,974 comments) says:

    Scott Chris, although nothing wrong with using automation. Even a low wage worker can’t always compete with robots.

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  47. Griff (6,987 comments) says:

    Lance

    I qualified that with IF because I agree with you.
    Marine is an sector that has done well in spite of rather than because of the government. Remember piggy’s tax in the 1980s on boats and caravans. It gutted the industry over night.

    Also the market for marine is not only based on cost. like wine it is driven to some extent on quality. Because it is discretionary spending. unlike energy which is solely cost based.

    The RMA is a major problem for green energy in New Zealand. ACT’s policy of restructuring the RMA would have more impact for less cost than the Green dreams.

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  48. Scott Chris (5,958 comments) says:

    Lance – “Oddly enough it is more cost competitive for our company to manufacture here mainly because we are smaller scale”

    My father’s company specializes in short runs of certain manufactured goods. That is his company’s niche. Problem is, volume demand is limited as capital investment in labour saving plant and machinery is just not economic. In other words, productivity gains have virtually reached a threshold, and the company has shrunk in recent years owing to the high dollar and the GFC.

    So I don’t hold out much hope for the manufacturing industry in this country, apart from adding value to our primary produce.

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  49. Lance (2,550 comments) says:

    @decanker
    Don’t disagree entirely but from someone in this space I know there are far too many dreamers who talk their ideas up and the ideas (products) are not worth a tin of shit either because technically they are ill conceived or no one actually wants to buy it. In the mean time they are adept at accessing grants left right and center leaving nothing left for the real innovators with a waiting market.

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  50. decanker (222 comments) says:

    @Lance, totally agree with you actually. That says to me the grant system is broken as there’s not enough focus on the commercialisation and profitability of the ideas. Simple questions don’t get hard answers — have you sold this widget to anyone yet? was it a family member? who else will buy it?

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  51. berend (1,673 comments) says:

    DPF: At the end of the day, the Greens are politicians seeking power. They’re just like all the other politicians – neither saints nor sinners. Just politicians.But politicians who can’t even do simple maths.

    We’re lucky then with John Key, he can do simple math, adding to the National debt in heretofore unbelievable numbers.

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  52. Scott Chris (5,958 comments) says:

    adze – “nothing wrong with using automation”

    I agree, but America, with it’s vast resources of capital for automated manufacturing and one of the richest domestic markets in the world is still losing out to the Chinese in terms of relative competitiveness, possibly owing to cheaper compliance costs.

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  53. Lance (2,550 comments) says:

    @Griff
    I hear what you are saying. From my point of view we are actually doing quite well in renewable energy smart controllers. This was despite the NZ government. The Labour / Greens thought they would be clever and ‘help’ the industry with LOTS and LOTS and LOTS of new regulations. This fucked the industry, compliance conditions no other sector begins to approach. EECA is a swear word around here.
    NZ is therefore dead but people in other countries like our stuff and we are doing quite well.
    So it doesn’t look like a ‘hot’ industry (in reality as opposed to the hype) but it is for us.

    That is why I think any offering should be merit based

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  54. side show bob (3,660 comments) says:

    Is the Melon manifesto, ideas, policy’s based on ” Alice In Wonderland ” or do I do a huge disservice to Alice in wonderland?

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  55. KiwiGreg (3,211 comments) says:

    @ Scott Chris – you would be surpised how much manufacturing in the US is still very manual. That said the US is very competitive in certain areas. Their current currency devaluation strategy is aimed in part at making them more competitive.

    You can manufacture to a good quality in China, you just need to manage it carefully.

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  56. Elaycee (4,331 comments) says:

    toad says: “The evidence is that with modest increases in the minimum wage, the vast majority of businesses can do one or more of those things, so their profits don’t decrease.”

    Evidence? From where? It just doesn’t happen like that in the real world.

    Firstly, any increase that costs an extra (say) $60 per employee per week, cannot be termed ‘modest’. In a business with, say 20 staff on such a wage, the increase represents an increase in costs of $1,200 per week or (in real terms) around $60,000 per year (plus insurances etc). To maintain existing profitability, it means I have to increase my prices to cover the extra $1200 costs per week + a margin, or prune $1,200 a week from somewhere else in the business just to tread water. In this day and age, many businesses would try to protect themselves from (materials) price increases by having a fixed price in place with suppliers, so there is little chance of savings to be made on that particular expense line. As the single biggest cost in any SME will be labour and if wages go up by (say) $60 per week, the math (based on the 20 employee example above) says I have to drop 2 employees in order to maintain my current wage bill. And dropping 2 FTEs will impact on my productivity rather than improve it.

    So another option to consider would be to increase prices. However, we live in a highly competitive environment and price increases can trigger an element of circularity – the public has to be able to afford to buy the product – regularly! Pricing is sensitive in all market sectors and if increasing the prices was the logical answer to increasing revenues and maintaining profitability, then we wouldn’t see the ‘Zealandia example’ that was on Kiwiblog yesterday. In their case, they have driven people away from their ‘product’ because their price increases have made them unaffordable for many families.

    toad, in the real world, potential business efficiencies are part of normal management and are reviewed often. Your suggestion that business owners can somehow wave a magic wand and costs can be pruned or prices can be increased without any impact on the business, just doesn’t float.

    In fact, it would sink like a stone.

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  57. tas (596 comments) says:

    Not that it matters, but $500 million is the estimated increase in total national wages due to a $15/hour minimum wage. The direct (i.e. ignoring that someone has to pay for those wages) increase in tax take will be about 20% of that. That’s further proof that they don’t understand taxation.

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  58. Kimble (4,405 comments) says:

    Given that the primary duty of company directors is to maximise the return to shareholders, large or very large corporates … are far more likely to meet the increased wage bill by improved productivity, …

    Why wouldnt they have increased productivity already? If they were maximising the return to shareholders, wouldnt that mean they were already squeezing as much profit as they could out of the business? The only way your comment makes sense, is if you think the ‘company directors’ are not fulfilling their duty, but would once you make your law changes.

    Thats magical thinking.

    … reduced wage relativities…

    This just means pay other people in the company less. I suppose you think that is fair because those guys dont really deserve the amount that are getting. But in a competitive market, who would be the guys with the most flexible wages? Not the guys at the top. Not the stars. It would be the lower skilled people. The less productive people. The people just above the minimum wage.

    Your desired response to an increase in the minimum wage, would likely result in more people earning the minimum wage.

    … reduction in non-wage expenditure…

    So spend less on capital? Well, you just finish saying that employers would increase productivity, so it cant be that. It must be that they will reduce spending on non-labour, non-capital things. It cant be the perks that the top guys enjoy, for the same reasons mentioned above. So it would be those little things that the lower paid workers appreciate. In effect you would be arguing for a change in the structure of remuneration of minumum wage workers.

    … … , or upwards adjustment in prices.

    If ‘company directors’ could increase prices, they would have already, right? The only way they could increase prices is if the structure of the companies workforce was the same across the industry (ie. they all have the same proportion of minimum wage workers). But what if they are in an industry that does not contain homogeneous firms? The firms paying low wages can compete on price. Increase the minimum wage, you take away their advantage. What happens to their employees?

    Even if the firms are homogeneous. They are competing with other industries for scarce dollars. If the cost of the product produce by the entire industry increases, people will move to alternatives. What happens to the workers in that industry?

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  59. davidp (3,555 comments) says:

    A 2006 estimate had the global pornography market worth around $100bn annually. If NZ could capture just 20% of this market then we’d have a $20billion industry. The jobs would all pay more than minimum wage and would have low impact on the environment. So what is holding NZ back? Firstly, the government refuses to subsidise pornographers as we transition from an agricultural economy to a clean green pornography economy. Secondly, we need to increase the quality of NZ woman. Pornography consumers aren’t going to buy our product when our women look like Sue Bradford, Catherine Delahunty, and your average hairy-armpitted Green Party supporter. I think the government needs to institute a quality improvement program that will include haircuts, showers, and lessons on how to smile.

    I think the Greens need to promote this clean green industry as an election plank. This time I’d be careful not to use a child on the election posters tho, since that is likely to lead to arrest.

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  60. Manolo (13,514 comments) says:

    Is the Melon manifesto, ideas, policy’s based on ” Alice In Wonderland ” or do I do a huge disservice to Alice in wonderland?

    The latter, of course.

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  61. davidp (3,555 comments) says:

    Apparently the global beer market is due to reach $540bn in 2012. If NZ could capture 10 percent of this market then we’d have a $54billion industry which would create 500,000-800,000 high paying jobs. A Green government should promise to subsidise beer rather than taxing it. NZ could be the world’s first clean green beer economy. And imagine the tourism benefits of all that cheap beer and pornography.

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  62. Elaycee (4,331 comments) says:

    gahi (5) Says: September 22nd, 2011 at 10:13 am…. “The Greens need to go into business instead of the cushy taxpayer jobs they have and then they’ll understand the flaws in their policy”.

    Exactly. :)

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  63. davidp (3,555 comments) says:

    The global fast food industry is worth over $100bn a year. If NZ could secure 30 percent of this market then we’d have a $30bn industry that would complement the beer and pornography industries and provide 40,000-70,000 jobs. Obviously a lot of fast food jobs now earn only the minimum wage. Doubling the minimum wage would force fast food outlets to become more productive and this would magically increase both income and corporate taxes. Clearly there are productivity increases that are just sitting around ignored by business owners because the government hasn’t forced the business owners to implement them. So how do we encourage people to buy NZ fast food? The answer is organic vege burgers that are certified GE-free. The Greens need an election poster featuring a particularly fat child and a slogan like THINK OF THE CHILDREN.

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  64. James Shaw (1 comment) says:

    “If the Greens were promoting a prospectus, you could get them jailed for securities fraud.”

    David, the meltdown of our finance houses was in part because they were able to promote dodgy prospectuses, free from overly burdensome regulation.

    Just sayin’.

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  65. KevinH (1,147 comments) says:

    Fishing, Farming and Forestry are what we do well in this little country, and that’s where we need to focus our energy. We just need to get better at it, take care of the enviroment along the way, and continue building on our expertise. Growth and jobs will come as we continue to produce high quality protein products, that is the edge we have on our competitors.

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  66. tas (596 comments) says:

    Toad, your causality is backwards.

    Paying people more doesn’t make them more productive. However, making them more productive leads to them getting paid more.

    However you spin it, someone has to pay for higher minimum wages; you can’t produce wealth by fiat. Those paying for the wages are going to be in higher tax brackets than those receiving them. It is simple math.

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  67. hj (6,671 comments) says:

    The Greens are a popular, modern, successful party

    Green ideas have come of age.
    ….,.
    Note the bill board: the young Maori represents the kaitiaki role of the indigenous (by a few hundred years) Maori. The white family is allowed to use the river.

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  68. Manolo (13,514 comments) says:

    ..you can’t produce wealth by fiat

    Yes, you can. A green fiat like the one elucidated by the genius Norman, future winner of the Nobel of Economics prize, will generate the thousands and thousands of jobs promised. His edicts are legendary.

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  69. KiwiGreg (3,211 comments) says:

    @ kimble “Your desired response to an increase in the minimum wage, would likely result in more people earning the minimum wage.”

    You shouldn’t assume that this isn’t part of their (unstated) agenda. Equality of income is inherently a good thing in their world even (especially?) if it’s an equally low income.

    “But what if they are in an industry that does not contain homogeneous firms?”

    Then you should nationalise the industry so that you can eliminate wasteful competition (I have actually heard them make this argument)>

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  70. KiwiGreg (3,211 comments) says:

    “Fishing, Farming and Forestry are what we do well in this little country” – yeah keep everyone as peasants, that’s the answer. That’s certainly what all the other sucessful countries do.

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  71. DJP6-25 (1,300 comments) says:

    Solyndra.

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  72. exile (34 comments) says:

    Here in Singapore, I watched 3 workmen (contract workers from India, paid $400-600 per month) and a supervisor spend two and a half days using an electric bathroom tile remover as a jackhammer in order to remove 2 metres of kerbing outside my office. Classic low wage/low productivity. Singapore jukes the productivity stats due to low corporate taxes attracting investment banks, but their low wage manufacturing sector has been devastated by cheaper neighbouring countries. Their service industry is a running joke amongst people who have lived here.

    Cheap workers who don’t give a shit, managed by lazy incompetent bosses obsessed with property and automobiles. It very much reminds me of home.

    NZ SME owners need to be incentivised away from loading their businesses up with personal mortgage debt and strongly pushed towards reinvesting profits back into their businesses to increase productivity. Increasing the minimum wage is crude, but it is a better idea than anybody else has had in the last 3 years.

    Forestry, fishing and agriculture are ultimately dead ends as they are currently managed. All are labour intensive for comparatively little return. Those that believe in the ‘high quality’ of NZ produce should travel more. NZ dairy products are the cheapest on the market in Europe and Asia. Why is NZ cheese retailing for $6/kg less than US cheese? Ask an Asian who makes the best butter and they will say Denmark and be willing to pay 40% more for it. Whatever we produce, we sell to the lowest bidder in bulk, rather than taking risks and adding value.

    Germany has the equivalent dollar value exports of China but with 6% of the population. High wage/high productivity economies are the model that we should be following. Imagine what we could do without the P.I.G.S. to weigh us down?

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  73. Scott Chris (5,958 comments) says:

    James Shaw – “free from overly burdensome regulation.”

    No, the problem was overly burdensome, poorly worded legislation. If your cabbage regulations run to 27,000 words (as they do in the EU), how the hell are you supposed to know what they mean?

    Just sayin’

    Stick to preventing habitat loss. That is your core business.

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  74. toad (3,672 comments) says:

    @tas 11:45 am

    Not that it matters, but $500 million is the estimated increase in total national wages due to a $15/hour minimum wage. The direct (i.e. ignoring that someone has to pay for those wages) increase in tax take will be about 20% of that.

    What you are forgetting is that people on low incomes spend everything they earn. So there is also an increased GST take arising from increasing the minimum wage, since the vast amount of their increased spending will be on goods and services that attract GST.

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  75. Manolo (13,514 comments) says:

    The Greens are a popular, modern, successful party

    Tantamount to stating that the KGB or the Inquisition were benign, tolerant organisations.

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  76. Kimble (4,405 comments) says:

    So there is also an increased GST take arising from increasing the minimum wage, since the vast amount of their increased spending will be on goods and services that attract GST.

    But you are taking money from people who would also have spent some of their income. So the net benefit gain in GST would be only a fraction of the 15% GST rate. Also, that money saved by the non-spenders would have been used to invest and generate other income on which tax is paid at a higher level, further reducing the GST ‘boost’.

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  77. side show bob (3,660 comments) says:

    —————————->>>>> :-) bet that went right overs Toads head Kimble

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  78. Kimble (4,405 comments) says:

    Actually now I think about it some more, additional GST wouldnt only reduce the tax lost by a very small amount.

    $500m in wage increase (dividend decrease)
    Two tax groups, one on 17.5% and another on 33%
    AT income for the two groups are $412.5m and $335m respectively
    17.5% spends all income, 33% spends only half
    Consumption would be $412.5m and $167.5m
    GST would be $62m and $25m

    So net GST gain would be $37m. Net income tax loss is $165m. Overall tax lost would be $128m. Still huge.

    With consumption at a more realistic 80% for people on 33%, the tax lost would be $143m.

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  79. WebWrat (516 comments) says:

    KiwiGreg (1,952) Says:
    September 22nd, 2011 at 2:13 pm

    “Fishing, Farming and Forestry are what we do well in this little country” – yeah keep everyone as peasants, that’s the answer. That’s certainly what all the other sucessful countries do.

    ………………….

    You don’t actually believe the fuckwittery of that statement do you?
    Have a good think about it.

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  80. wat dabney (3,716 comments) says:

    The mistake is to imagine that the Green proposals are intended to benefit anyone but the Green Party.

    Sure it will squander hundreds of millions of taxpayers’ earnings and will cost more jobs than it creates, but it’s not about that, it’s about the Greens being able to trumpet that they have what they call a “job creation policy” to show how much they care.

    Naming this tax-and-spend plan a “jobs initiative” is like calling something the “Patriot Act” or “No Child Left behind.” It’s not about how much it costs and the damage it does, it’s about sending a message to us, at our expense.

    Just like minimum wage legislation harms the young and the unskilled, It’s great politics for those seeking power.

    Just look at the shockingly expensive fiasco that is Obama’s similar “green jobs initiative. ” Do you really think anyone would copy that if they cared about the fucking results?

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  81. tas (596 comments) says:

    toad:

    GST applies to everyone and all consumption. (That’s the great thing about a comprehensive tax, which Labour doesn’t understand.) So if you say that this policy will increase the GST take, then you are implying that there will be a decrease in savings and investment. Again this is simple math: money is either spent or saved; ergo, increased spending means decreased saving.

    Is that what we want for the economy? No!

    Sorry toad, you can’t fudge the numbers so that the government gets more tax revenue without someone being taxed more.

    This is why government spending should be kept under control. The government are largely idiots who waste our money. The money will be better spent by those who earn it.

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  82. Bogusnews (454 comments) says:

    Unfortunately i’m not sure the greens really have much of an idea regarding jobs. It would be a great world if we could be totally environmentally conscious and have lots of jobs too but I don’t see how that works.

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