Archive for the ‘NZ Politics’ Category

Little’s options

November 20th, 2014 at 9:00 am by David Farrar

Andrew Little now have a the tough job of nominating a Deputy Leader and allocating portfolios. The deputy role is especially challenging as the three best candidates for the job all don’t want it, and the candidate that does want it is not supported by caucus. Let’s go through the options.

Deputy Leader

Little’s best bet would be Jacinda Ardern. The last four leaders have been from Auckland, and as Little is a Wellingtonian, then a Aucklander as deputy is desirable. Ardern is their most high profile Auckland MP and very popular with the activists. The problem is she really doesn’t want it and was basically Grant Robertson’s campaign manager. On the downside a Little/Ardern ticket means List MPs hold both leadership roles.

Grant Robertson is another option. He has probably the best skill set of the caucus to be deputy, as a good deputy helps manage the caucus and the leader’s office. But again he has done it before and is not that keen on it.

David Parker has ruled it out.

Nanaia Mahuta desperately wants it. But her nomination would go down very badly in caucus.

So Little has to convince either Jacinda or Grant to take it, go with Mahuta or go for a less likely option such as Phil Twyford.

His best bet is to convince Jacinda to step up.


David Parker has ruled it out.

Appointing David Cunliffe would antagonise caucus massively.

He could go to a next generation MP such as David Clark or Stuart Nash. They would both get eaten alive by Bill English initially but by 2017 could be experienced and credible. This should be about projecting a vibrant future Government in 2017.

Another option being canvassed is Grant Robertson. I think this would be a mistake. Grant is a skilled politician but he has never worked a day in his life (well post study) in the private sector. I don’t think he has credibility in the finance portfolio, and I think Labour would struggle to reconnect with business if he has the job. That’s not doubting his intelligence and ability to articulate the key issues.


Little should be bold and appoint Kelvin Davis as Education spokesperson and the next Minister. Hipkins has done a fine job for Labour in the area, but Davis is a star after beating Harawira, and has greater experience in the sector.


Annette King is easily the best performing Labour MP. However she will not be Health Minister in the next Labour Government, so she should mentor someone new into the role. I’d move Hipkins into health, as he has a good ability to work an issue, and find pressure points. Lees-Galloway is keen on this, but has less caucus support.

I expect King to retire in 2017, and Little to become the MP for Rongotai (where he lives). She has resisted him taking the seat for some time, but now he is leader, he won’t be challenged for it.

Shadow Leader of the House

Robertson is the obvious choice to continue. May need a Deputy if he does take Foreign.


Keep Parker on here.

Foreign Affairs

While Shearer is very credible here, I’d be tempted to put Robertson in here. He has a love for foreign policy and is a former diplomat.

Economic Development

Cunliffe an obvious choice. Clark and/or Nash could also play a role.

Maori Affairs

Mahuta by default

Social Development

Moroney has this currently. Not spectacular but solid so probably remain.

Front Bench

Robertson and Ardern are automatic as well as Little.

As he won with their support needs to have Mahuta and Cunliffe there, even though upset some.

Parker is looking to exit I’d say, so could keep him off, but for now probably need to retain him. So that is six.

For the other two or three I’d look at Hipkins, Twyford and Clark.


Labour in New Plymouth

November 19th, 2014 at 2:00 pm by David Farrar

It’s well known that Andrew Little hasn’t done well in New Plymouth as the candidate in 2011 and 2014. But how much has Labour lost support in this seat they used to hold? Here’s the change from 2008 to 2014.

  • Party vote – dropped from 31.4% in 2008 to 21.2% in 2014 – a 10.3 percentage point drop
  • Electorate vote – dropped from 47.9% in 2008 to 31.9% in 2014 – a 15.9 percentage point drop

By comparison Grant Robertson in Wellington Central increased his electorate vote from 42.2% in 2008 to 52.0% in 2014 – a 9.8 percentage point gain.

UPDATE: Russel Brown makes the point:

I’ll be brief (it’s 5am where I am and have to catch a plane) but the Labour’s leadership result and the means by which it was achieved both seem disastrous for the party and for the prospects of the centre-left.

Little didn’t win the support of the party or the caucus, he loses his electorate more badly every time he contests it, and he’s vowing to dump all the intellectual capital built up by David Parker. I can’t see any good thing about this.

Despite all that it is hard to win a 4th term. Little has a 40% chance or so of becoming Prime Minister, despite just four caucus votes for him.

Brown continues:

The result ends the leadership aspirations of Robertson, easily the best campaigner in the field, and pretty clearly lays waste to the coherent economic philosophy that Parker had been patiently building. I could be wrong, but for now I’m of the view that this result borders on tragedy for Labour.

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We should be able to act outside the UN

November 19th, 2014 at 1:00 pm by David Farrar

The ODT reports:

Prime Minister John Key says major companies such as Fonterra have been asked not to exploit the gap left by other countries’ trade sanctions on Russia because to do so would be a “terrible look” for New Zealand.

This raises the question why we haven’t imposed trade sanctions ourselves. It seems the answer is that we haven’t changed the law from from Labour had it, which was we can only impose sanctions if the UN agrees to them.

The problem is that Russia of course has a veto at the UN, so this means we allow our foreign policy to be subservient to their veto at the UN.

In most cases we would want to only do sanctions when the UN agrees to them. But as an independent country we should have the ability to impose them, even when there is no UN vote.

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Will Little retain Labour’s gender quota policy

November 19th, 2014 at 12:00 pm by David Farrar

Labour approved at the last election 40 a rule that they have a gender quota for their list to try and ensure that in 2014 at least 45% of their caucus is female and for 2017 at least 50% is female.

They failed to correctly implement it, as in fact their proportion of woman from 43% to 38% this election. But think what would have happened if they had correctly implemented it. Instead of having 12 female MPs out of 32, they should have had 15. So what would this have meant on the list.

To comply Labour should have no male List MPs, which means no David Parker, Clayton Cosgrove and Andrew Little. They would be replaced by Maryan Street, Moana Mackey and Priyanca Radhakrishnan.

The key take out is that under Labour’s policy, Andrew Little should not be an MP. He is only there because they mis-calculated how much support they would get.

So does Andrew Little support retaining the gender quota, even though it means he should not have retained his list position?

This is a great example of how Labour has introduced barmy rules, but it seems no one is prepared to stand up and challenge them.

Labour have a rule which if correctly implemented would have seen their new leader not retain his seat in Parliament. Rational people would say “hey maybe we should reexamine that rule”.

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A new parliamentary prayer?

November 19th, 2014 at 6:42 am by David Farrar

Stuff reports:

Parliament’s Speaker David Carter has proposed a new prayer to be read at the opening of the parliamentary day.

He is asking MPs for their feedback on the prayer which could replace the existing one adopted in 1962.

I personally don’t think Parliament as an institution should have a prayer. Religious belief is a personal decision, not an institutional one. MPs who wish to offer a prayer should be able to do so as they see fit, but my preference would be that there be no official prayer led off by the Speaker as this jars with being a secular country.

The existing prayer is:

Almighty God,

Humbly acknowledging our need for Thy guidance in all things, and laying aside all private and personal interests, we beseech Thee to grant that we may conduct the affairs of this House and of our country to the glory of Thy holy name, the maintenance of true religion and justice, the honour of the Queen, and the public welfare, peace, and tranquillity of New Zealand, through Jesus Christ our Lord. Amen.

The proposed new prayer is:

E te Atua Kaha Rawa (Almighty God)

Ka whakamanawa taua hunga katoa kua riro atu i mua i a tatau – moe mai okioki (We honour those who have gone before us – rest, slumber on.) We recognise the mana whenua, Te Ati Aawa, the kaitiaki of this region, Te Upoko-o-Te-Ika-a-Maui.

We acknowledge the need for guidance and lay aside all private and personal interests so that we may conduct the affairs of this House for the maintenance of justice, the honour of the Queen and the public welfare, peace, and tranquillity of New Zealand.

Amine (Amen).

The proposed new prayer is superior in that it is no longer explicitly a Christian prayer. If there is to be a prayer, it should be a prayer all MPs with religious beliefs are comfortable with participating in.

But on the downside, I don’t think a prayer to God is the appropriate forum to talk about recognising the local Iwi. Also this is the Parliament of New Zealand, not the Parliament of Wellington, so the reference is inappropriate.

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What if the unions didn’t decide?

November 18th, 2014 at 5:02 pm by David Farrar

Someone asked me what would the result of the Labour leadership election if the unions bosses didn’t have 20% of the vote. This is pretty easy to calculate as you weight the caucus and the members 50% each. If the union bosses (barely 100 bosses vote in five of the six unions) did not get 20%, the results would have been:

  1. Round 1 – Robertson 41.0%, Parker 22.2%, Little 20.7%, Mahuta 16.2%
  2. Round 2 – Robertson 42.4%, Little 34.2%, Parker 23.4%
  3. Round 3 – Robertson 55.7%, Little 44.3%

So without the unions Little would have been third on first preferences and easily lost to Robertson in the third round.


Little had only four other Labour MPs vote for him!

November 18th, 2014 at 1:52 pm by David Farrar

Andrew Little has been elected leader, but with the support of only four of his colleagues. That’s half the support David Cunliffe managed!

Full results are here.

Here’s how it went each round


  • Round 1 – Robertson 14, Parker 7, Mahuta 6, Little 5
  • Round 2 – Robertson 14, Parker 7, Little 11
  • Round 3 – Robertson 18, Little 14


  • Round 1 – Robertson 38%, Parker 22%, Mahuta 14%, Little 26%
  • Round 2 – Robertson 41%, Parker 25%, Little 34%
  • Round 3 – Robertson 55%, Little 45%


  • Round 1 – Robertson 19%, Parker 7%, Mahuta 10%, Little 64%
  • Round 2 – Robertson 20%, Parker 9%, Little 71%
  • Round 3 – Robertson 24%, Little 76%

Overall Little beat Robertson by 50.5% to 49.5%. This is a disaster of a result for Labour. Not in terms of Andrew winning, but the way the votes split. The takeouts are:

  1. The new leader was the first choice of only four of his colleagues!!
  2. The new leader wasn’t the preferred choice of the members, barely beating David Parker
  3. The new leader is only there because of the bloc union vote
  4. More Labour MPs thought Nanaia Mahuta would be a better leader than Andrew Little
  5. If only two (or at the most three) faceless EPMU delegates had voted Robertson instead of Little, then Robertson would have been leader

Andrew has the personal ability to do well, but this result makes it much harder for him. To only have four of your colleagues vote for you makes the job of convincing the public to vote for you much harder.


  • Grant Robertson has said he will never seek the leadership again. However his statement is not a Shermanesque one which leaves wriggle room in future. I think his statement is premature. If he had lost the members vote it would be justified, but Grant was the popular choice of both the members and caucus and if Little fails, he is the logical sucessor.
  • David Parker has said he will refuse the Deputy and Finance portfolios. He says no plans to leave Parliament but I predict he will be gone by 2016.
  • Little will either make Cunliffe Finance spokesperson (which will make him even less popular with his colleagues) or go to Nash or Clark in the next generation
  • Names being bandied for deputy are Mahuta, Sepuloni, Robertson and Ardern
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Is it time for a unique identifier?

November 18th, 2014 at 12:00 pm by David Farrar

The Herald reports:

Yesterday Prime Minister John Key told reporters a wide-ranging inquiry would be launched into the matter.

He said there were many unanswered questions around the incident including “quite delicate issues around data-sharing”.

The inquiry would cover whether someone who was incarcerated for a serious crime, like Smith, should be able to be on short-term release without electronic tracking, he said.

I wonder if it is time for us to follow other countries and have a unique identifier for every resident and citizen. That way one can have 100% confidence when checking the passport application against the prisoner database that someone is eligible or ineligible.

There are risks with a unique identifier. you don’t want the IRD staffer able to access your online health records for example, and a unique identifier can increase risks of unauthorised access. But I think it is worth debating if the pros outweigh the cons.

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Brownlee fined $2,000

November 18th, 2014 at 11:05 am by David Farrar

The Herald reports:

Cabinet Minister Gerry Brownlee has been fined $2000 over an airport security breach.

Two parliamentary aides who were with Mr Brownlee at the time were given formal warnings.

The Civil Aviation Authority launched an inquiry following an incident at Christchurch Airport before the election, when the then Transport Minister and two of his staff deliberately bypassed airport security in order to catch a flight.

Civil Aviation Authority director Graeme Harris said today: “The subjects of this investigation are now fully aware of the importance of abiding by airport security rules, and the consequences of breaching these. ]

“The publicity surrounding the incident should also act as a warning to the travelling public that any airport security breaches are taken very seriously by the CAA.”

This is a good outcome. It shows that Ministers are not above the law.

If there had been no penalty for the incident, there would be potential ongoing resentment over the perception that Ministers can bypass security checks. But a fairly significant fine will satisfy most people that this is not the case.

Having been fined, it would not probably be tenable for Brownlee to have continued as Transport Minister. But as this portfolio went to Bridges after the election anyway, the issue is not now at an end I’d say.

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The benefits of a broad base and low rate

November 18th, 2014 at 9:00 am by David Farrar

Geordie Hooft writes in The Press:

Over 90 per cent of tax revenue is collected from personal income tax, company tax, and GST. Due to the broad application of GST, New Zealand’s GST collections are around 10 per cent of GDP – the highest in the OECD, even though we have the sixth-lowest rate.

Similarly, the amount of tax collected from individuals as a percentage of GDP is the sixth highest in the OECD, even though we have the seventh lowest top personal tax rate (currently 33 per cent).

Some on the left moan that our top tax rate is only 33% and demand the rich be punished more. But unlike most countries we have very few exemptions, and the broad base means that actually wealthy individuals are paying just as much tax if not more than many richer people overseas.


Peters against public having a say

November 18th, 2014 at 7:06 am by David Farrar

The Herald reports:

New Zealand First is boycotting a committee which will decide how the public votes on the national flag, saying the referendum was an expensive exercise which took attention away from greater priorities.

Peters has spent 20 years advocating referendums, yet when it is on an issue he personally disagrees with, he is against the public being able to have a say.

“A change of flag might need to be considered but now is not the time. Poverty and housing are at crisis level, it’s no time for a government to be raising a distraction,” Mr Peters said.

The public and the Government are quite capable of dealing with more than one issue at a time. Also poverty is not at crisis level. Peters is using that as an excuse to deny the public a say – because he disagrees. National had a clear election commitment to hold a referendum if re-elected, and they were. They first referendum will be next year and it will all be wrapped up in early 2016 – well before the next election.

The first referendum in late 2015 will ask New Zealanders to vote on a range of alternative flags chosen by the Flag Consideration Panel.

A second referendum in April 2016 will be a run-off between the most popular alternative flag and the current national flag.

It will be fascinating to see which flags make it through to the first referendum.

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How the Labour MPs may vote

November 17th, 2014 at 3:57 pm by David Farrar

Have had a number of discussions over the last few days with various Labour people on the leadership. Everyone expects Little will win, but will it be on the first ballot, and how will the members, unions and caucus vote.

Below if my best estimate of where the Labour MPs loyalties lie. However this may not be reflected in the actual vote. With a Little victory highly likely, some Labour MPs may vote tactically and give Little their first preference to minimise any stories on him being elected with little Caucus support.

The preferences appear to be:

Andrew Little

  1. Lees-Galloway
  2. Sepuloni
  3. Cunliffe
  4. Little
  5. Moroney
  6. Rurawhe

David Parker

  1. Davis
  2. Henare
  3. Nash
  4. Curran
  5. O’Connor
  6. Parker
  7. Shearer
  8. Tirikatene

Grant Robertson

  1. Ardern
  2. Clark
  3. Faafoi
  4. Hipkins
  5. Woods
  6. Cosgrove
  7. Robertson
  8. Twyford
  9. Dyson
  10. Goff
  11. Mallard
  12. King

Nanaia Mahuta

  1. Wall
  2. Mahuta
  3. Salesa
  4. Whaitiri
  5. Sio
  6. Williams
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Sutton quits

November 17th, 2014 at 2:37 pm by David Farrar

Stuff reports:

Roger Sutton has resigned as chief executive of the Canterbury Earthquake Recovery Authority (CERA).

He had been under investigation for the last seven weeks after a complaint of sexual harassment from a senior staff member.

The allegation accused him of making inappropriate jokes and comments, and giving her an unwelcome hug.

A report provided to the State Services Commissioner Iain Rennie did not establish conduct which would have led to Sutton being dismissed and Rennie said he would not have asked him to stand down. 

“However, Mr Sutton offered his resignation and this was accepted,” Rennie said in a statement today.

A sad end to Sutton’s role at CERA. He was universally praised as the perfect person for the job when he was appointed. While he has obviously had some detractors during his tenure, he still remained very well respected.

We don’t know the details of the allegations, and are unlikely to know them. But it seems they are at the inappropriate humour side of things, rather than deliberate harassment. The SSC said that he would not have been sacked for them.

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Assessing the Labour Leadership Candidates

November 17th, 2014 at 1:16 pm by David Farrar
Little Mahuta Parker Robertson
Internal Attributes
Unite the caucus Well placed to do so, as few enemies. Cunliffe endorsement did not help him though Would unite the caucus, but against her, not with her Well respected. Would be given a fair go Would have very loyal support from majority of caucus, but resentment from a few
Establish competent Leader’s Office Would recruit mainly from unions which has problems Very unlikely. Has little personal networks, so would leave to his deputy Robertson has huge networks and would attract a very talented staff
Satisfy the activists Most likely to be given support from the activist base Has gone down well with some activists Unlikely to motivate many Would have huge loyalty from many, but also huge resentment from Auckland ones especially
Attract donors Little had a constructive relationship as EPMU head with many businesses and could do okay here. Unlikely to attract any outside Maori organisations Very credible with business and would rebuild finances Unlikely to attract donors unless Cullen and Palmer agree to become party fundraisers for him
Manage the parliamentary team Little has not made a big impression in Parliament, but did well in growing and managing EPMU Unknown Has been a competent deputy who does much of this for the leader Robertson is hugely experienced and would by far be the best parliamentary team leader
Develop and stick to a political strategic plan Little shows signs of this with his campaigning on removing issues that distracted core voters Unknown Generally good at focusing on important issues Robertson tends to forget the bigger issues of the economy, and go after the scandal of the day.
External Attributes
Media appeal Reasonable relationships with journalists No strong relationships with journalists Rather boring Robertson is very close to many in gallery and would get favourable coverage
Match Key in House Little has been solid in the House but never spectacular Did not perform well when on front bench A solid performer in the House but unlikely to bother Key The only Labour MP who can cause trouble for Key
Likeability Rather dour Rather sour Bland Projects likeability – someone you want to spend time with
Hold own in debates Little is a competent debater Unknown, as has rarely been on TV, but did well last time she was on Won’t get a knock out, but won’t stuff up Formidable and tricky
Have economic credibility Little does have some economic credibility from his EPMY days. He was a welcome change from the old style unionists who only striked, and often struck sensible deals with employers Unlikely Mahuta will be seen to have economic credibility Parker has strong economic credibility Robertson’s employment record has been purely public sector which makes economic credibility challenging for him
Appeal to Waitakere Man Little is from provincial NZ, and EPMU work kept him in touch – but proposals like reverse burden of proof in rape go down like cold sick Mahuta could do quite well here – she is down to earth and relatable Too nerdy Too Wellington
Appeal to Maori Little has no special appeal here Mahuta is effectively a Tainui Princess, and well connected and respected No special appeal No special appeal.
Appeal to Pasifika EPMU background can help Mahuta has significant support here No special appeal Sexual orientation is an issue for some
Appeal to unionised workers Little well ahead. No special appeal Wants to increase their retirement age – not popular with union workers Robertson struggles here.
Appeal to urban liberals Little is effectively an urban liberal, but hides it well, so should retain support from them Unlikely to appeal to urban liberals Parker has some appeal Robertson is King of the urban liberals
Appeal to Auckland Little has little profile in Auckland. Would need Ardern as his Deputy if he wins. Unlikely to appeal to Aucklanders Parker has built up some respect in Auckland Robertson seen as alien to Auckland, hence why he named Ardern as his preferred Deputy
Lift Labour to 30% so they lose less badly Little should safely be able to get Labour back to 30% Hard to see Labour becoming more popular with Mahuta as Leader Hard to see Parker doing better than Goff Robertson should safely be able to get Labour back to 30%
Lift Labour to 35% so they can win if Winston will let them Difficult to see Little attracting an extra 10% of the vote Will not happen Will not happen Robertson has an interesting back story (his father etc), very good communications ability and an association with Clark which could bring some former Labour voters back. Make take more than one term but could get Labour back to mid 30s
Lift Labour to 40% so there can be a Labour/Green Government No No No No

So this is my honest opinion of the four candidates. They all have some strengths, and none of them look like they have the potential to be a game changer (Shearer and Cunliffe had the potential to be, they just didn’t manage to do it).

If I was a Labour Party member and wanted to maximise the chances of winning at the next election I’d rank Grant Robertson first. Also even if he doesn’t win, he has the best skill set to rebuild the party organisation team and parliamentary team so they are less dysfunctional – and this would help the leader after him.

My second preference would be Andrew Little. Andrew was hugely impressive as EMPU General Secretary and a pretty good Labour Party President also. However he hasn’t been a star in Parliament. He may rise to the occasion, if given the leadership (which seems likely), but his record in New Plymouth shows his electoral appeal may be limited.

Prior to them both entering Parliament, I had said that Robertson and Little are potential future leaders.

The third preference would be David Parker. He’s a better Deputy than Leader though.

The last preference would be Nanaia Mahuta. I have nothing personal against her, but when she has had front bench opportunities such as being Education Spokesperson, she doesn’t seem to have been highly effective. I suspect her candidacy is more about becoming Deputy Leader.

I expect Andrew Little will be the winner tomorrow. It will be interesting to see if he gets 50% on the first ballot, and if not, how the preferences flow.

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Zero hour contracts

November 17th, 2014 at 11:00 am by David Farrar

3 News reports:

There’s a call to ban “zero hour” contracts following evidence their use in New Zealand is spreading.

The contracts don’t guarantee any hours of work and employees have to be ready to come in when they’re called.

Unions say employers have started following their overseas counterparts.

“McDonalds, KFC, Pizza Hut, Starbucks, Burger King, Wendy’s – all of the contracts have no minimum hours,” Unite Union’s Mike Treen said on Radio New Zealand today.

“People can be, and are, rostered anywhere from three to 40 hours a week, or sometimes 60 hours a week.”

The use of zero hour contracts when the employer’s hours of operation are well known in advance seems pretty scummy. If you know your opening hours you should be able to guarantee a minimum number of hours to staff.

NZ First says they must be outlawed.

Industrial relations spokesman Clayton Mitchell says the contracts are “a dreadful British experiment” that New Zealand doesn’t need.

“These contracts are despicable and cruel, and designed to put workers at the beck and call of their employer,” he said.

Banning them however would be very stupid and undesirable. Not all employers are the same. Some employers do not have fixed hours of operation. They only have work for their staff, when they have clients who have work for them to do. If you ban zero hour contracts for all employers, then you would potentially bankrupt some employers who would be having to pay staff to turn up and do nothing.

Treating all employers as the same is stupid and inflexible. McDonalds is not the same as a call centre, for example. The solution to the zero hour contracts at McDonalds is now a law change, but negotiations with McDonalds.


Easton on superannuation age of eligibility

November 17th, 2014 at 10:00 am by David Farrar

Brian Easton writes at Pundit:

I support raising the age of eligibility for NZS but not, primarily, for reasons of fiscal sustainability. Rather it needs to be increased for equity reasons. Longevity is increasing. When the Old Aged Pension was introduced in 1898, life expectancy at the age of 65 was 13 years; today it is 20 years, and it will continue to rise. It is a matter of equity that as the age of longevity rises, the age of eligibility for NZS should rise too. Here is how I would do it with five integrated steps.

1. We should set out a target age of eligibility based on life expectation. I suggest we choose the age as that where life expectancy is 17 years (similar to the 1938 level for 65). In current terms that would set an age of eligibility of 69.That target age would rise with increased longevity.

I like the idea of having a method to change the age over time, as life expectancy increases, without needing to change the law every few years.

However life expectancy seems to be growing at the rate of three years per decade. Or in other words life expectancy has increased by six years in the last 20 years. That would mean that the age of eligibility would constantly be increasing at three to four months per year.

2. However, the actual age of eligibility would be raised by only 3 months every year until it reached the target age. So it would take 12 years to reach 69, and the full adjustment would only affect those born after 1958 if we started next March (2015).

A sensible way to do it, but by the time we got to 2027, then life expectancy would have increased another four years and the age would need to keep increasing until age 73. Is there a limit at which we stop?

3. We need to recognise that there are people who cannot be expected to work in the years before the current age of eligibility, and who will have insufficient savings. They should get an early retirement benefit. Except for its name – reflecting a different status – it would be very similar to the Invalids Benefit.

That’s an excellent idea.

4. We need to strengthen private provision for retirement by making KiwiSaver compulsory and increasing its contributions. A compulsory contribution is much like a tax; but the beneficiary is solely the individual taxpayer. (This sort of approach may be a way we can get around – to some extent – the deadlock over raising income tax rates for structural macroeconomic purposes.)

I’m not convinced compulsion is a good idea, as it may force some people into a particular form of savinsg, which is not ideal for them. Paying the mortgage off or investing in a business can be the best decision for some people.

5. Any fiscal savings we gain from the raising the age of eligibility should be channelled into better provision for residential and domiciliary care for the very old. If we dont, we may under-provide for them or cost-shift provision onto their children – privatise it.

If KiwiSaver was made compulsory, I think the level of NZ superannuation (specifically the link to the average wage) needs to be looked at. When KiwiSaver was first introduced the calculations were that someone on the average wage would end up with a higher level of income in retirement from KiwiSaver and NZ Superannuation, then while working. That implies to me a level of over-taxation as people should have higher incomes while working (with associated costs of working) than while retired.

We should have a first principles approach to defining what level of retirement income is desirable, and then if KiwiSaver is compulsory, have NZ Superannuation set at the level between the desired level of retirement income, and what people will get from KiwiSaver.

I’d do that be ringfencing the current NZ Super scheme for those currently retired or near retirement, and designing a new scheme for future retirees.

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The lack of male teachers

November 17th, 2014 at 9:00 am by David Farrar

The Herald reports:

Students are now less likely to have a male teacher, with many going through their early education years without ever encountering a male role model.

Ministry of Education figures show fewer than one-in-five primary school teachers are male.

Principals want more research on what is putting men off the profession, but fear pay and high-profile sexual abuse cases are to blame.

The Ministry of Education is “very conscious” of the gender imbalance, but says with no shortage of teachers there are no recruitment drives aimed at men.

“Evidence tells us that the most important factor in lifting achievement is the quality of teaching, not the gender of the teacher,” said Dr Graham Stoop, the ministry’s head of student achievement.

But that doesn’t mean the gender is insignificant. There is a wide and growing disparity between the achievements levels of boys and girls at school. Girls on average are doing significantly better. It should be a priority to close this gap by improving the outcomes for male students, and I would not dismiss the possibility that the lack of male teachers is a significant factor.

9% more female students achieve NCEA Level 1 in Year 11, 8% more achieve NCEA Level 2 and 13% more achieve NCEA Level 3. These gender gaps are larger than the gaps between decile 4 to 7 schools and decile 8 to 10 schools.


Is $13,300 a good investment for a degree?

November 17th, 2014 at 7:00 am by David Farrar

Stuff reports:

For the rest, student debt – or “deferred tax liability” as one financial adviser likes to see it – has become a fact of life with over $14.3 billion now owed to the state.

But the ubiquity of student loans does not lessen their impact on individuals. Indeed, the sums borrowed continue to rise. The average amount borrowed by students in the 2012 year was just under $8000, up more than $520 from two years earlier. It probably would have been more if not for the fees “stabilisation” enforced on tertiary education providers by the Government.

The average loan at the end of June was over $19,000 – though the median was just over $13,300. At that rate, average balances of $20,000 or more appear likely to become the norm.

It’s a large debt overhang to start a working life with, though, in theory, a quality education should more than pay for itself in higher earnings.

So the median debt is $13,300. Does the extra earning cover that cost?

Well if you do not get a post-school qualification your median weekly income from wages is $729 a week (Stats NZ June 2014) which is $38,012 a year.

If you do not get a degree your median weekly income from wages is $1,055 a week (Stats NZ June 2014 for a bachelors) which is $55,011 a year.

That’s a difference of $16,999 a year. Over say a 40 year working life post study that is around $680,000 before tax in extra income. For a median student loan balance of $13,000 or so that’s a superb investment for most people.

It’s very had to argue that hard working truck drivers and builders should pay more in taxes, so accountant and lawyers leave university with less of a student loan.


An FTA with (South) Korea

November 16th, 2014 at 12:00 pm by David Farrar

The Herald reports:

After five years of negotations, Korea and New Zealand are set to sign on a free trade agreement this afternoon.

Prime Minister John Key advised the deal was done soon after arriving into Brisbane for the G20 this afternoon. It is a landmark deal for Mr Key as the first bilateral free trade agreement under his watch as Prime Minister.

He will meet with Korea’s President Park Geun-hye before making the announcement. However, he said it would still be a challenge to get it through Korea’s Parliament, which has baulked over free trade agreements in the past.

Mr Key said that was because it involved agriculture which was a politically sensitive issue. However, the agreement was similar to those Korea had signed with Australia, Canada and the United States.

Mr Key said it was “a good deal” and would see tariffs imposed on New Zealand exporters drop by about $65 million in its first year with further drops until tariffs in most areas phased completely over a decade. Mr Key said there were some areas which were of little relevance to New Zealand and other sectors where it would have been impossible to budge Korea further

“I think those sectors might, at the margins, be slightly disappointed but overall people will be pretty happy.”

“Korea is a big market, there is $4 billion in two way trade. We pay about $225 – $250 million in tariffs each year. I think there will be a lot of New Zealand businesses quite happy with it on Saturday night.”

Good to see another FTA agreed. Reducing tariffs benefits both countries involved.

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Auckland Pacific Labour ranks Robertson last

November 15th, 2014 at 12:00 pm by David Farrar

Auckland Pacific Labour have said:

The Auckland Pacific Sector of the New Zealand Labour Party met last night to discuss and rank the Labour leadership candidates. After much debate and discussion it was carried by a unanimous vote that the leadership candidates be ranked in the following order:

#1 – Nanaia MAHUTA
#2 – Andrew LITTLE
#3 – David PARKER
#4 – Grant ROBERTSON

Rating Robertson last is ridiculous. But fair to say that it looks very difficult for him to win.

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Greens still complaining Key revealed the truth

November 15th, 2014 at 11:09 am by David Farrar

The Greens whine:

New documents released to the Green Party show that Prime Minister John Key used New Zealand’s intelligence services for the National Party’s political ends a few days out from the 2014 election, the Green Party said today.

Documents released to the Green Party under the Official Information Act show that Prime Minister John Key pressured the Government Communications Security Bureau (GCSB) into releasing previously classified documents just days out from the election.

“The Prime Minister has arrogantly used the GCSB in order to assist the National Party’s elections chances,” Green Party Co-leader Dr Russel Norman said today.

“John Key knew that investigative journalist Glenn Greenwald and NSA whistleblower Edward Snowden were going to provide information damaging to his Government.

“In order to counter this damage John Key made certain that the GCSB declassified and released documents in an effort to provide damage control to both himself and the National Party.

“This is a Prime Minister who was using the security services for political purposes.

The Greens have so lost the plot on this.

Are they really saying that when someone makes a false claim based on partial information, the Government should not respond and prove they are wrong?

This just shows how unsuited to Government the Greens are. They seem to be on the side of the foreign journalists and opposed to the Government revealing that they had it wrong.

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Germany backs EU and NZ free trade agreement

November 15th, 2014 at 9:00 am by David Farrar

The Herald reports:

German Chancellor Angela Merkel says she will back a New Zealand push for a free trade agreement with the European Union – words that will be music to Prime Minister John Key’s ears.

Speaking to media during her visit to Auckland today, Dr Merkel said Germany would champion New Zealand’s cause.

“I think we should also come out in favour of a free trade agreement between the EU and New Zealand. New Zealand has such agreements with China and other areas of the world.

“As a member of the European Union, Germany is very much championing, despite the great distance that separates us, to foster our trade relationships, to bring forward trade with the European Union.”

She said she was impressed by New Zealand’s growth, saying it was because the country was open minded and encouraged free trade.

Mr Key said Germany was already a critical trade partner and two-trade was now larger than with the United Kingdom. However, there was scope to do more and he had spoken about NZ’s aspirations for a free trade agreement with the EU.

Interesting that Germany is now a bigger trading partner than the UK.

An FTA with the EU would be great as they are highly protectionist. But it would require consent of all EU countries and I can’t see France agreeing.

Two way trade with the EU is around $12 billion a year.

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IRD says reduce company tax

November 14th, 2014 at 3:00 pm by David Farrar

Stuff reports:

Inland Revenue has warned the Government may have to consider cutting the company tax rate next year if Australia drops its rate.

In a briefing to Revenue Minister Todd McClay, the tax department said New Zealand’s aging population could result in pressure to raise taxes to pay for health and pensions.

But it said the Government would need to take into account developments in other countries when considering company tax, which was cut from 30 per cent to 28 per cent in 2011, undercutting Australia’s 30 per cent rate.

“Tax changes in Australia should continue to be monitored as they can have important implications for New Zealand,” Inland Revenue said. “A particular focus will be Australia’s White Paper due out at the end of 2015.

“If, for example, there were a substantial reduction in the Australian company tax rate, the question of whether New Zealand should follow suit would arise,” it said.

Many people complain about companies shifting to countries with low tax rates. There is little one can do to stop this, except to ensure our own tax rates are competitive.

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What is the Chief Censor up to?

November 14th, 2014 at 2:02 pm by David Farrar

InternetNZ have said:

InternetNZ is surprised and bemused by recent comments from the Chief Censor that he is considering “prosecuting” Slingshot over its GlobalMode service that enabled Internet users to access sites that were otherwise blocked in New Zealand.

Whether Slingshot’s global mode does or does not breach copyright is a civil issue, not an issue for the Chief Censor.

Yes some people may use it to access material not classified for NZ, just as millions of NZers use You Tube to view videos not classified for NZ.

InternetNZ does not believe that an Internet Service Provider is responsible for what its customers do on the Internet and that to suggest otherwise creates a bizarre world where Internet providers are held up to a different standard to other utility suppliers.

InternetNZ CEO Jordan Carter says that CallPlus has every right to provide this service. “The courts have not decided that the service is illegal,” he says. Comments from the Censor would seem to single out ISPs for special treatment, and that isn’t good for the Internet or for Internet users.

 “I don’t recall the Censor making similar claims when NZ Post started YouShop, enabling customers to order items that were unavailable in NZ and have them delivered to a phoney address in the United States.

The Chief Censor is at risk of massively over-stepping his role. His role is not to act to protect the commercial business models of NZ distributors. It is not his role to promote regional geo-blocking.

If the Chief Censor does try to prosecute Slingshot, then I’ll happily donate to their legal fees.

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Southern DHB funding

November 14th, 2014 at 12:00 pm by David Farrar

Stuff reports:

King believed the problems stemmed from underfunding, saying it had been six years since the board’s funding formula was altered. “I think the chronic problems are coming back to being underfunded by the Government. They [the health board] are trying to do what they can and it’s leading to what I think is a dangerous situation for the patients.”

The funding formula needed to take into account factors such as the huge area the health board covered, its ageing population and the high rates of bowel cancer in the south, King said.

“The formula isn’t taking account of these things, they need to review the formula.”

So is the Southern DHB under-funded compared to when Labour was Government?

In 2008 the Otago and Southland DHBs had a combined income of $741 million.

In 2013 the Southern DHB had income of $850 million – a 15% increase. This is a greater increase than inflation of 11% during this time.