Greens don’t even know their own joint policy

April 18th, 2013 at 11:25 pm by David Farrar

pointed out today:

Labour and the Greens have jumped the shark with a half-baked Soviet Union-style “plan” for electricity in New Zealand, Economic Development Minister Steven Joyce says.

“This is truly wacky and desperate stuff obviously made up in the last minute in the Koru Lounge between comrades Norman and Shearer,” Mr Joyce says.

“Their crazy idea to have both a single national purchaser of electricity and to exempt Government-owned companies from both company tax and dividends would effectively demolish private investment in the electricity industry overnight. It would also raise real questions as to why any individual or company would want to invest in businesses in New Zealand.

I never thought we’d see parties in NZ advocating socialist nationalisation policies from decades ago. Stuck in a time warp.

Anyway responded:

Minister Joyce’s release on the Greens and Labour’s electricity announcement is full of basic inaccuracies: he says that NZ Power would exempt electricity companies from corporate tax and dividends, which is completely false and not backed by anything in the discussion document.

So is Russel correct that Joyce has it wrong? Let’s look at the press release from no less than David Shearer:

The Crown will forgo dividends and tax revenue from the power companies.

I say game and set to Joyce.

Bad enough to have a mad Soviet style policy. Even worse to not even knowing what is in it, when you are auditioning to be Finance Minister for a Labour-Greens-Mana Government.

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48 Responses to “Greens don’t even know their own joint policy”

  1. Mighty_Kites (81 comments) says:

    Hidden due to low comment rating. Click here to see.

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  2. burt (7,793 comments) says:

    And the supports of Labour and the Greens hate Muldoon’s failed policies of the past … Why … Because he did them under a blue flag and blue flags = bad policy … That’s how fucking stupid they really are… It’s only the colour of the party logo that differentiates good from bad policy for them.

    Idiots – so scary that these muppets might one day run ruin this country.

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  3. pete (428 comments) says:

    The plan will reduce power company profits, which means they’ll pay less in taxes and dividends to the government. This would be obvious to you if you weren’t in such a hurry to put out misleading disinformation.

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  4. burt (7,793 comments) says:

    Furthermore pete, every time the government needed a little more money ( perhaps to print lovely plastic cards with pictures of dear leader) they would simply crank a few dollars onto every power bill each month. If people think monopolies are good simply because they are state owned then their faith in the government having their best interests at heart is a sign of how economically illiterate they really are… No wonder they support leftist ideology …

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  5. TimG_Oz (915 comments) says:

    I’m surprised, I thought the Green’s Joint policy was pretty clear – they smoke them.

    Bada Boosh!!

    Sorry, someone had to do it….

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  6. SPC (5,334 comments) says:

    pete is right, it is a misrepresentation by Joyce that is being reinforced by this post.

    The statement only says there will be reduced revenue to government as a result – and Joyce is wrong to presume anything more than this as Norman pointed out.

    Apart from lower company tax from lower power company profits and also lower dividends, there is also lower GST revenue on lower power bills.

    The 5000 jobs created will generate income tax and lower power price for business means higher company profits and taxes – consumer will have more money to spend on other things (increased GST here).

    Lower cost to business and more money in the pockets of consumers are usually goals of the National Party.

    Now National wants a higher price for power so those who own these companies get greater income.

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  7. labrator (1,745 comments) says:

    You talk about misinformation and then go on to repeat, verbatim “The 5000 jobs created…” as if it’s fact. The only jobs governments create are bad ones. It’s not the government’s job to create jobs, only the conditions in which private enterprise can create jobs.

    Lower cost to business and more money in the pockets of consumers are usually goals of the National Party.

    There is exactly no evidence this will happen. Once you politicise anything to do with money you can sit back and watch the greedy lever pullers start pulling their levers to start funding whatever they feel like running next. Central rail loop in Auckland? Your power prices went up a little but don’t worry, with the Green’s progressive pricing, only naughty businesses and “rich pricks” will feel it.

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  8. dishy (224 comments) says:

    The MMP chickens are coming home to roost. The high price of power is as nothing compared to the high price of pandering to the fringe parties, whose policies are so unpopular that they secure the parties’ minority status. This power idea is filthy, and ill-becomes a Labour party with any pride. Shearer should be intelligent enough to find a more dignified way of making a living.

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  9. Jim (395 comments) says:

    I was quite surprised when I thought about this and realised I spent the best part of the last decade in a country with a mad Soviet style regulated electricity tarrif set by an “Energy Market Authority”. It was kinda weird waiting for the govt to set the price of the next few months electricity based on oil futures.

    They have been thinking of going for market prices for consumers since about 2000, but no change yet afaict. Still thinking.

    Heh, now I’m moved to yet another country with govt-regulated power prices with rates that increase the more electricity you consume (600kWh costs 10 times as much as 100kWh). Fun!

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  10. Graeme Edgeler (3,262 comments) says:

    “forgo” does not equal “exempt”.

    pete at 11:20 is right.

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  11. Sir Cullen's Sidekick (784 comments) says:

    Guys National is history. Check out the latest Roy Morgan poll:

    Today’s New Zealand Roy Morgan Poll shows a substantial fall in support for Prime Minister John Key’s National Party to 40.5% (down 3.5% since March 11-24, 2013). Support for Key’s Coalition partners shows the Maori Party 2% (down 0.5%), ACT NZ 0.5% (unchanged) and United Future 0.5% (down 0.5%).

    Support for Labour is 35.5% (up 1%); Greens are 13.5% (up 0.5%), New Zealand First 5% (up 2%), Mana Party 0.5% (unchanged), Conservative Party of NZ 1.5% (up 0.5%) and Others 0.5% (up 0.5%).

    If a National Election were held today this New Zealand Roy Morgan Poll shows that the Labour Party with minor party support would win an Election if held now.

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  12. expat (4,048 comments) says:

    Shearer was espousing the pedigree of the price setting model by holding up Texas as poster boy of this approach…

    http://www.businessweek.com/ap/2012-10-26/texas-electric-prices-cap-to-double-over-3-years

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  13. sparky (235 comments) says:

    Just another lot craziness by the Looney Labour/Greens. God help NZ, if they get into Government. Sir Cullen’s Side Kick, there is long way to go to the next election. If people are Stupid enough to vote for Looney’s, then they deserve to suffer.

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  14. Bogusnews (441 comments) says:

    It is not a misrepresentation. The quote is entirely accurate, Shearer said they would “forgo dividends and tax revenue from the power companies.” He did not say they would get less because power would come down. He said they wouldn’t get it full stop.

    Two things about this p#ss me off:

    First, what a bunch of bloody hypocrites Labour are. They were the ones who sent power prices through the roof. But trust us, we’ll bring them down now. Would have to be a great Tui’s ad wouldn’t it.

    Second, this is so similar to Micky Mouse Cullens ham fisted control over the air port, calling it a “strategic asset” without even defining what that meant. It ruined the share investments of thousands of people, but Labour didn’t care as long as it improved their day to day political advantage. This time, the caring and sharing socialists want to ruin a public asset and peoples investment in it again. What low lifes.

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  15. tas (590 comments) says:

    The very last point of Labour’s policy says

    This policy will create 5,000 jobs and boost the economy by $450 million.

    How the hell do they figure that? My first thought is that they are planning a new ministry to run NZ Power with 5000 staff and a $450 million budget.

    Given the timing, this policy is clearly meant to sabotage the MRP float. Power company share prices dropped by 4%. Presumably Labour and the Greens think they can knock maybe $100 million off the MRP sale price and score political points. It’s shocking that they are willing to sabotage govt finances and the NZ economy to get back in power.

    This policy is stupid on many levels. Introducing the electricity market reduced power prices. Trying to decouple supply and demand by fixing prices will only lead to a mismatch. Such a policy will have one of two outcomes: power shortages or government subsidies.

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  16. burt (7,793 comments) says:

    tas

    It will create 5,000 jobs – remember the railways use to employ 22,000 people and train fares were about the same as airline prices. The extra ‘sheltereder’ workshop aspects of a monolithic state owned monopoly will allow it to be used as a vehicle to hide unemployment for electoral popularity – increasing power prices OR soaking up tax payers money. Just like the good old days… And that’s what leftist ideology preys on … Nostalgia… Emotion… Stupidity and thoughtlessness of the sheeple who think the government is doing all this stuff for them rather than for their own popularity to stay holding the levers of power.

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  17. Mags (38 comments) says:

    Duncan Garner had Shearer on RadioLive last night, Shearer could not complete a sentence in trying to explain this and I could not follow what he was trying to say. A couple of questions that would be good to have answered:
    1. How will adding another layer of beauracracy lower prices?
    2. Where will the money come from to invest in new generation capacity? Especially if the “super profits”??? are removed
    3. What new generation sources are the Greens proposing? They are against hydro (don’t dam the rivers) they are against fringe sources like tidal (don’t damage the marine environment) solar has a problem with cost, storage and generation at night, wind is erratic and needs spinning reserve, geothermal has high maintenance costs due to the corrosive operating environment, so what’s left?

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  18. toms (301 comments) says:

    There is near hysteria from the right on this policy. That is because they are all still completely intellectual slaves to the quasi-religion of neo-liberalism, and any deviation from the that mental straightjacket is treated with all the fury reserved for a heresy. Well, this proposed Labour/Green model works well elsewhere and it will lower electricity prices for ordinary New Zealanders.

    Just as importantly, this new policy represents a real break with the failed policies of Rogernomics that have dominated our politics since 1984. For that reason, it is an intellectual earthquake – something that the hysterical reaction from DPF demonstrates far better than any words can.

    Oh and this post is a nice attempt to wedge Labour from the Greens Mr. Farrar, but it is clumsy and obvious and you’ll need to try harder.

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  19. kowtow (7,583 comments) says:

    DPF said
    “I never thought we’d see parties in NZ advocating socialist nationalisation policies from decades ago”

    and I never thought a National party member would implement far left socialist equality policies either.(redefining marriage)

    This blog was singing the praises of the Greens less than 24 hours ago,now they’ve been returned to the pariah bin.

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  20. Dirty Rat (383 comments) says:

    Ummm, nice piece of misinterpretation for political points there David, Exempting would require legislative changes, forgoing only a decision at Board level, big difference.

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  21. Mobile Michael (410 comments) says:

    Labour and the Greens are so opposed to asset sales they would sabotage their own election chances to disrupt them.

    Dirty Rat – no board can choose to not pay taxes, unless you think taxes are voluntary.

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  22. Morgy (169 comments) says:

    Bullshit Toms. It’s not hysteria but anger. Yet again these muppets offer a knee jerk policy of which the sound bites will resonate with their core constituents but the truth is its about the MRP float et al. If they are seriously suggesting the wholesale rate will be regulated (fixed) by ensuring the purchase price of power will incorporate the cost of generation and a fair margin, where will the investment come from? Surely when investment will be needed, the generators will increase their costs to cover it. Lab/Greens can’t control that now can they? So the obvious outcome will be that the company which invests will increase their wholesale cost and we are back at the beginning again. Fucken dumb.

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  23. metcalph (1,359 comments) says:

    Exempting would require legislative changes, forgoing only a decision at Board level, big difference.

    So a board can legally decide to forgo paying its taxes? Because the policy required forgoing dividends and tax revenue.

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  24. Liberty (233 comments) says:

    The Coalition of loses want the return of Helengrad.
    This time they want to complete the job with its poverty and destitution.
    /www.youtube.com/watch?v=7Is6pTurM9U

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  25. peterwn (3,144 comments) says:

    Sounds like a Socialist Unity Party / Social Credit Party coalition policy. The Socialist Unity Party was a pro-USSR party founded by (among others) Helen Kelly’s daddy.

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  26. dishy (224 comments) says:

    So toms, please tell us: where else does “this proposed Labour/Green model” work well? You’ll get extra points if the places concerned are Western democracies. And remember, the merits of a proposed model itself should not be assessed without considering all the implications of switching from the existing model (e.g. loss of investor confidence – which has already happened).

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  27. Manolo (13,327 comments) says:

    GayKiwiBlog’s theme: “The Luddites are good when promoting gay marriage, bad when supporting Labour.

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  28. RRM (9,427 comments) says:

    Have you had your compulsory bum sex yet manolo? :-)

    If not why not?

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  29. Paulus (2,493 comments) says:

    Show us the money Shearer/Wuzzle- get it from Capital Gains Tax – yea

    Green really conned Labour’s ignorance – that’s smart.

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  30. WineOh (541 comments) says:

    I haven’t gone into the fine detail of the plan, probably because none really exists at this stage.

    But the big thing that strikes me is the immediate about turn from Labour regarding power company profits. In one breath they say we can’t sell NZ assets because of the income that we will lose from dividends. Then in the next breath they say they want to nationalise a core part of the market, and forgo any dividends from the sector?? Which is it???

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  31. MikeG (391 comments) says:

    from stuff.co.nz:

    But industry consultant and longtime critic of the current regulatory model, Bryan Leyland, believes the system could potentially work without derailing the state-owned-asset process.
    He said a single-buyer system would wipe out windfall profits for the power firms. But, by locking in prices for the long term and removing volatility, it would create stable returns model that would support the partial listing of Mighty River Power, Genesis Energy and Meridian Energy.
    “Electricity would become a boring business,” Leyland said. “Any business that provides something that’s so essential to the welfare of the country should be a boring business.”

    Sounds like quite a good scheme to me.

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  32. Kea (11,878 comments) says:

    This model has been proven to work in the glorious workers paradise of The Democratic [sic] People’s Republic of Korea.

    It is this type of central government planning that has made the DPRK the success it is today and the envy of the world.

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  33. flipper (3,537 comments) says:

    I quote from above:

    “It is not a misrepresentation.
    “The quote is entirely accurate, Shearer said they would “forgo dividends and tax revenue from the power companies.”
    “He did not say they would get less because power would come down. He said they wouldn’t get it full stop.”
    GE et al …. get off the grass :)

    What is it about “forgo dividends and tax revenue from the power companies.” that you do not understand?

    Whatever else they may have done, the red melons and labour have ensured that they have given Key et al sufficient ammunition to paint them into a failed 1970s Soviet style coalition.

    We all know why, apart from Reagan/Thatcher and Star Wars, the Sovs collapsed – their economy was shit because they lied to themselves. Along with printing roubles and Zimbabwe trillion $ notes, this is a return to Soviet style of economic management.

    Peters will be easily picked off with an extension to gold card benefits …. “10% OFF your power bill, irrespective of the supplier.: :)

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  34. RRM (9,427 comments) says:

    Kowtow – it’s almost like DPF is interested in the merits of policies and ideas, instead of being a mindless cheerleader of the X Team or the Y Team.

    It’s confusing I know, but one day it will all make sense to you ;-)

    Maybe.

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  35. Dirty Rat (383 comments) says:

    Mobile Michael (150) Says:
    April 19th, 2013 at 7:48 am
    Labour and the Greens are so opposed to asset sales they would sabotage their own election chances to disrupt them.

    Dirty Rat – no board can choose to not pay taxes, unless you think taxes are voluntary.

    Its the Dividend part of Farrars logic which is whacked….The board can choose not to pay Dividends, or even better Issue A & B Shares where both have voting rights but only one class entitled to Dividends.

    Again , a big difference either way from making them exempt…which is the line you are choosing…..or the believe everything DPF says as gospel

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  36. wreck1080 (3,725 comments) says:

    My power prices have sky rocketed in a few short years.

    Something is broken, allowing power companies to continually hoist their prices so high.

    This is not a competitive market as it was expected to result in lowering power costs but it never has.

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  37. RRM (9,427 comments) says:

    And yeah, way to go greens with this policy! Power companies don’t offer quite shit enough service yet. The last time they fucked up my power bill I only had to wait 45 minutes on hold before I got through to the Indian.

    We need to squeeze those dirty, dirty capitalist BASTARDS even harder!

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  38. hannity (151 comments) says:

    Wineho,
    Pehaps you should look at Labours/Greens plan more closely.

    The potential profits / dividends, stay in the pockets of the power consumers, to spend elsewhere in the economy right from the get go.

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  39. toad (3,669 comments) says:

    @Kea 8:49 am

    It is actually similar to the policy in South Korea, and in many other relatively successful economies around the world.

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  40. kowtow (7,583 comments) says:

    RRM

    The National Party are, to use terms in vogue on this very post , Lenin’s useful idiots,they have carried a far left policy to legislation ,very possibly against the wishes of the electorate.But we’ll never know as there wasn’t a referendum.

    Now this blog is making fun of other soviet style tactics /policies. I’m just pointing that out.

    Don’t you worry,it all makes sense to me.And I know the likes of you and the left don’t like the fact there is opposition ,but that’s OK too.

    Power to the people,hahahaha.geddit?

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  41. wreck1080 (3,725 comments) says:

    The rabid dogs on the right are actually behaving a little like they accuse the greens — following doctrine without even considering the details and figures of what is being proposed using an open mind.

    Free market is not the best in ALL circumstances. This is unfathomable to some.

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  42. WineOh (541 comments) says:

    Hi Hannity,
    My understanding of the plan for NZ Power is to create a new entity (one presumes funded by either tax dollars or revenue from power prices). It doesn’t fundamentally change the cost of infrastructure for transmission – currently owned and operated by another government entity Transpower, it doesn’t change the supply infrastructure – which is 94% supplied by 4 major entities that own the hydro dams, gas plants etc, it adds an artificial price control on the retail end, and politicises electricity pricing.

    So a fixed price is paid to generators that the government “negotiates” (dictates) to the generators. “Lower” power prices to the consumer results in an increase in demand, which puts more pressure on electricity generation, who can’t invest in additional generation because of lack of earnings (dictated by the government) and results in a decay of the entire generation infrastructure due to under-investment. It also impacts on the wider national and international appetite to invest in NZ, if you have a government that decides it can step in an nationalise any entire industry on a political will. How many phone/power/gas/construction/etc businesses will spend the millions/billions to set up new business?

    But perhaps the fundamental reason I don’t believe the proposed scheme is that I have yet to see a system where adding another 5000 jobs of bureaucracy actually generates cost savings to the end consumer. Someone always pays, and it always ends up being you and me.

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  43. Cunningham (811 comments) says:

    Labour and tjhe communists have been crying about the partial sales because:

    a) they will reduce the profit to the government.
    b) power prices will rise.

    In light of this rediculious policy, why not sell the lot? Surely if their master plan is going to work it will remove the above argument so the government should therefore remove all ownership of the power companies? This whole policy makes me sick. I was young when I bought contact shares and I saved up for them with money I earned. They want to undermine that. Also they say that the money will go to people who will spend it. Aren’t we supposed to be saving? This policy has more holes then swiss cheese.

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  44. tas (590 comments) says:

    WineOh:

    In one breath they say we can’t sell NZ assets because of the income that we will lose from dividends. Then in the next breath they say they want to nationalise a core part of the market, and forgo any dividends from the sector?? Which is it???

    Maybe they’re thinking “If we can’t have the profits, no one can.”

    MikeG:

    from stuff.co.nz
    But industry consultant and longtime critic of the current regulatory model, Bryan Leyland, believes the system could potentially work without derailing the state-owned-asset process.
    He said a single-buyer system would wipe out windfall profits for the power firms. But, by locking in prices for the long term and removing volatility, it would create stable returns model that would support the partial listing of Mighty River Power, Genesis Energy and Meridian Energy.
    “Electricity would become a boring business,” Leyland said. “Any business that provides something that’s so essential to the welfare of the country should be a boring business.”

    Sounds like quite a good scheme to me.

    If Labour’s proposal sets a fair and stable power price, then that reasoning would make sense. But Labour will doubtlessly set the price very low. And if politicians control the price, it is unlikely to be stable.

    If the power price is set too low (or even if there is just a risk of that), private investors won’t invest in new power plants. So to avoid power shortages the govt will have to step in and build new power plants (paid for by the taxpayer). (Solving the problem they created.)

    Price controls have been tried in many forms and many places (including NZ). They have failed without exception. It’s simple economics: If prices are going up, there is a root cause (e.g. lack of generation capacity). Fixing the prices without addressing the root cause invariably leads to disaster (power shortages).

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  45. Ed Snack (1,733 comments) says:

    Classic bait and switch, “cheaper power to consumers”, has to be balanced with “but we’ll make up the revenue (with the understood sub-text and then some) elsewhere by taxing you even harder. BUT, it’s not YOU dear voters who will, but that mythical but nasty sub-species known as “the rich” who will pay ! Believe I say, Believe !

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  46. Akld Commercial Lawyer (160 comments) says:

    I said yesterday that we actually deserve better than this.

    My view over night has not changed. I can overlook the tribal chanting from (mostly) the Greens that business = bad on a variety of issues. But this is a prime example of something that simply blurs even the most basic understanding of economics and is simply designed to appeal to the LCD factor.

    To suggest that a credible economic consultancy (as opposed to the cardigan-wearing fringe of the university fraternity who harbour a grudge towards those of their colleagues who made it in the real world) has run a ruler over it and supports it would undermine any vestige of credibility they might have too. The ‘gentailers’ and Transpower are in a bind because they cannot respond to politics – and besides they will be painted as greedies by the Greens.

    I spent a disappointing 20 mins going through the so-called supporting materials – and there is a fundamental flaw in almost every bullet point. This is not the forum for a detailed critique – and I only went through the exercise to ensure that I could encourage sensible debate around the breakfast table at home (and thereby encourage the teenagers in my household, who are in keeping with their generation – all much cleverer than I, to be economically literate).

    Even just the basis mistruths used to hide the most elemental of points that underpin a primary school-level understanding of the current generation system are fudged. Yes, the older hydro plants have a lower marginal cost of generation and the newer peak plants are more expensive. But look what happens if there is a return on that capital that is artificially pegged below any sort of benchmark such as WACC – it frightens away further investment. NZ has already been there, done that.

    Also, somehow, taxpayer investment is free or should demand much lower returns than “market” (a dirty word in the lexology).

    Those of us old enough to remember the last, troubled, days of the Muldoon era will recall that capital doesn’t sit still and finds work arounds when faced with below market returns. And as a nation that still depends on the savings of people in other countries with which to develop – how do this lot deal with the capital flight that will surely result?

    It is a while since I read anything by Espiner senior, but his article makes a number of telling blows.

    This is the sort of jam jar economics that I might expect from Winston – but not from a party that thinks that it might be sufficiently credible to earn the trust of the electorate. Cunliffe must have been bound and gagged and trussed up somewhere – because his experience both in the private sector and with telco sector would have pointed to the very obvious flaws here.

    Perhaps I was being unkind to Baldrick yesterday – at the end of the day it might be time to suggest that Labour needs a clean out and some credible, intelligent (and intellectually honest) people provide this country with a credible opposition. There is talk in Auckland of some likely candidates and whilst I am no fan of many of the current policies – any good government needs a credible opposition to keep them on top of their game. I cannot see anyone taking Shearer seriously after this.

    This country deserves better.

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  47. emmess (1,368 comments) says:

    It is actually similar to the policy in South Korea, and in many other relatively successful economies around the world.

    So Toad, if Labour and the Greens get in can we have the tax rates in South Korea?

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  48. kowtow (7,583 comments) says:

    enmess

    If Labour ,with the Greens pulling the strings, get in we’ll get more than Korean tax rates ,we’ll get North Korean economic policy!

    At the moment we get Labour /Green social policy (thanks to a gutless National Party) so the cycle will be completed with far left economic policy.

    It should bring the dollar down though but any private property will become even more endangered than it is now (which is quite considerable).

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