Kiwiblog

The EU had a reception at the Backbencher last night, so lots of MPs and journalists there to chat to.  The typical opening line from a National MP was “So about that B grade” while from Labour MPs it was “Unlike Annette we won’t use Farrar and respect in the same sentence unless there are some other words in between”

Phil Goff was there also, so I said I looked forward to him quoting me more often in future . Actually had an interesting chat generally on economic stuff, such as land tax. If Labour are bold they could consider proposing a land tax (tied to income tax reductions) for 2011. That could attract some support from economic reformers.

General consensus I got from pundits there was that there was definitely some good stuff in the Government’s work plan – in fact more detailed plans that most Governments announce in the PMs statement.

But what may trip the Government up is they misplayed the expectations game. Building the statement up as the “most important” one ever was a mistake, as was talking about it being a “step change”. Again, there is some good stuff there that certainly will help lift economic growth. But will the announcements alone close the gap with Australia? Of course not. But the rhetoric leading up to it, got expectations artificially high.

With the benefit of hindsight, it would have been better to have positioned the statement as a typical PMs statement – a general overview of the Government’s achievements and workplan, and then surprise the media and opposition when it turns out to have close to 30 specific initiatives in it.

As I said yesterday, I welcome the focus on growing the economic cake, not just how to split it up, and look forward to more details in the budget.

Reaction from others:

• John Armstrong – 4/10 for economic boldness
• Fran O’Sullivan – John Key deserves an A- for intent. But a mere D for the dreadful prime ministerial statement that buried a coherent economic agenda in a mass of confusion.
• Tax Working Group members seem happy
• NZ Herald editorial calls it a stutter not a step-change
• Bernard Hickey hits new levels of hyperbole
• Canterbury Employers call the package welcome but light
• Solid Energy is excited
• Colin Espiner gives it a pass, but with much more to do
• Tracy Watkins looks at the risks
• The Press editorial says it was lacking boldness
• The Dom Post editorial says it was a welcome focus on growth, not slogans

Bernard Hickey writes:

I’m beginning to lose faith in John Key’s willingness to truly reform this economy so his grandkids and my grandkids have an economic future that will keep them (and us) here.

I’ve listened for the last year to John Key’s comments about wanting to catch up with Australia by 2025 and about making changes to improve productivity and real wages so that we remain an attractive destination for our very mobile labour force. But will he actually do anything? Will he take some tough decisions and show some leadership?

All we’ve heard so far is what John Key won’t do. He won’t put up the retirement age from 65, despite everyone in officialdom saying the current threshold for entry into our universal pension scheme cannot be sustained. He won’t change the pension from its current 66% of the average way, again despite everyone saying it’s unsustainable. He won’t entertain even the idea of a capital gains tax.

The superannuation decision is just a political reality. Key promised before the election he would resign as both PM and an MP if he changed the age or floor for super. It is naive to keep lobbying on an issue after that. If he did what Bernard said, he would be finished in politics.

The capital gains tax is a more fair criticism. While Key has not ruled it out entirely, I think it is unhelpful he has been so dismissive of the possibility, while the tax working group does its stuff.

And now he won’t allow the cabinet to think about a flat tax, despite National saying in its election campaign that it aspired to flat (corporate/income/trust) tax rate of 30%.

Now here Bernard is being naughty. National did not in any way say it aspired to a flat tax. Even ACT did not campaign on a flat tax.

National said it aspired to a top tax rate of 30% for individuals, companies and trusts. And that is a laudable goal. But that is not a flat tax. Under the 30c tax rate you have a 15c tax rate and a 21c tax rate.

Maybe John Key is playing a clever long game where he plays everything down until the very moment he announces it, possibly before the next election. Or somehow he has left himself enough wiggle room to announce reforms that haven’t already been ruled out.

While disagreeing with Bernard on a couple of the specifics, I do think he has highlighted that the Government does have a real challenge ahead of it. The gap with Australia will not close without significant reforms, and the more reforms that get ruled out, the harder it is to be credible about closing that gap. Expectations are high for the 2010 budget.

Bill Ralston and/or Janet Wilson (not sure which one of them authored it) blogs:

Over on Kiwiblog Dave Farrar reports on an interesting idea from the redoubtable Herald columnist Fran O’Sullivan who talked at a recent Rural Women NZ conference about expanding NZ On Air funding to cover all media, not just broadcasting.

Fran has a good point. Why should what is effectively a government subsidy to ensure there will remain a New Zealand voice in the media be reserved solely for radio and television?

She argues that NZ On Air (or NZ On Media) funding should be made available to worthy local content whether it is broadcast, in print or on the internet. …

Currently NZOA funding is contestable, both public and private broadcasters can dip into it. What’s wrong with private sector publishers and bloggers having access to it also?

Back in the day, when Maurice Williamson was broadcasting minister, the whole idea of contestable NZOA funding was that it was needed for all broadcasters to provide NZ content because otherwise commercial pressure on the channels would mean cheaper imported foreign product would overwhelm locally produced material.

This effect is now being felt not just in broadcasting but all media. So, open up the fund!

Yep. NZ on Air used to be funded by the TV license fee. But ow it is funded out of general taxation, the rationale for broadcast only is weakened.

Frankly, it will eventually have to happen because of media convergence anyway.

Once that wonderful high speed broadband to the home rolls out and the broadcasters start pumping more TV programmes and video into your computer, what’s the difference between a TV channel and, say, a newspaper site like nzherald.co.nz or stuff.co.nz that screens news videos?

And the newspaper sites are putting up considerable video content.

If anyone doubts internet sites lack journalistic nous and quality check on interest.co.nz and Bernard Hickey’s recent great yarn about how this country’s biggest privately owned dairying operation (they own 22 farms) is allowing dozens of calves to starve to death on one of it’s farms in the central North Island.

Hickey’s story comes complete with a whistleblower, graphic video footage and a MAF investigation that oddly seems to have come to nothing in terms of the animals’ welfare. …

Hickey produced a scoop that was eagerly followed by TV ONE’s Close up and RNZ National’s Morning Report, the NZ Herald and others.

Perhaps the most interesting part is that Bernard Hickey has long been regarded with suspicion and resentment by some in the mainstream media, who curl their upper lip at what they see as his self-promotion and entrepreneurial approach to the news business.

Oh Bernard is a media whore of such excellence, he is the Princess Diana of media whores, and everyone else is at the Jade Goody level. Bernard appears on Tv several times a week, and never fails to get the magic words “interest.co.nz” into his dialogue at least twice. I swear he will have the domain name on the coffin at his funeral

Unlike some though, I don’t see this as a bad thing. I think it is great Bernard has abandoned safe employment within the traditional media, to work online only and turn it into a commercial success. He is in this to make money, and good on him for making sure he consistently gets the brand across. And it has allowed him to do investigations such as the Crafer one, which has been hugely beneficial.

I find it highly amusing that that avowed right wing capitalist has fully exposed the practices of NZ’s biggest farmer, rather than the environmental left movement. Not totally surpised, as people on the right can be very harsh on those who “let the side down”. That is one reason I hate “scummy employers” who are exploitative. They are the reason we get all these rules and regulations on the other 98% of employers.

This is the kind of investigative story that would merit NZ On Media funding.

A good example.

Bernard Hickey has an exclusive at interest.co.nz on the Crafers.

A video of starving calves is above.

I recommend people go read the story, which is pretty shocking. Extracts:

New Zealand’s biggest privately held dairying operation allowed dozens of calves on one of its massive farms on North Island’s central plateau to slowly dehydrate to death earlier this month, triggering a MAF investigation but no prosecution. …

Poor management and the pressures of massive debts obtained during rapid expansion meant this farm was so poorly managed that none of the staff trained the calves to drink milk, allowing them to die of dehydration in a muddy pen even though their trough was often full.

The Crafers have been prosecuted numerous times on various issues such as releasing effluent into waterways.

After interest.co.nz obtained the video, producer Bryan Spondre and I visited the farm where the calves had been kept to find out more. When we drove up next to the calf shed we were confronted by farm manager Sam Webb. He told us to: “Get the f**k off this property. You have no right to be here.”

Bryan started taking photographs of the shed and Sam Webb manhandled him back into our car before swearing abuse and grabbing at Bryan’s camera.

“I’ll take both of you bastards out,” he yelled.

Webb then punched Bryan through the open window of the car door. The punch was so hard it dislodged Bryan’s contact lens. We drove off and the picture published to the left shows Webb yelling at us as we left: “F**k off you c**ts.”

Where’s the picture of the black eye?

Go read the full story, and the questions Bernard has for MAF and Fonterra.

An excellent piece of investigative journalism.

Bernard Hickey blogs:

Here’s the problem: local government is growing at least five times faster than the rest of the economy. Those costs are being passed on directly to ratepayers in the form of rates, fees and fines that are growing at least four times faster than prices elsewhere in the economy.

The latest Local Authority Statistics released this week showed council spending nationwide rose 10 per cent to $6.21 billion in the year to June from the previous year.

Total revenues collected rose 6.8 per cent to $6.15 billion, which meant the collective council budget balance slumped into a deficit of $56 million. That will eventually be reflected in higher debt.

To put this growth in spending and rates into context, our economy contracted 1 per cent in the year to March in real terms and was flat in actual terms unadjusted for inflation. So how are all these revenues raised? General rates nationally rose 7.8 per cent to $3.33 billion in the year to June, while water rates rose 10.3 per cent to $263 million. Fees and fines rose 10 per cent to $376.6 million. Meanwhile the Consumer Price Index rose only 1.9 per cent in the year to June.

Generally rates should only increase in line with population growth and inflation in my opinion. When rates are growing faster than overall economic growth, the situation is not sustainable in the long term.

Bernard Hickey writes in the Herald:

Everyone is kicking the big four Australian-owned banks because, it’s assumed, they’re profiteering on interest rates at the expense of farmers, homeowners, and businesses.

The big four are padding their profits by not passing on rate cuts, the argument goes. The other assumption is that the only “good” bank is Kiwibank, which is sacrificing profits by cutting rates.

The trouble is the free kickers are wrong on both counts. Our analysis of bank general disclosure statements (GDSs) to the end of December shows the net interest margins earned by the big four fell fast in the second half of last year.

Banks actually sacrificed $396 million of profit from interest rates on total assets of $329.5 billion.

Surprisingly, the big fours’ bank fees also fell, in total and as a percentage of assets. The only reason bottom-line profits didn’t fall as much is banks stripped out around $250 million of costs in the second half of last year.

That’s an analysis I’ve not seen elsewhere. Margins are down, but costs also down.

Our analysis also shows Kiwibank had the highest net interest margin in the second half of last year, compared to the only other bank reporting a six-month figure, which was ASB.

It’s hard to compare with the other banks, which reported three-month figures, but Kiwibank was the only bank not to see a contraction in its margin in the second half. The only thing making its net profit look less buoyant than the big four is that its operating costs (salaries, rents, advertising) are more than double those of its big four competitors as a proportion of total assets.

Again fascinating analysis. Bernard explains:

The best way to understand what is happening to interest margins and bank profits is to look at their GDSs, which detail their net interest income, expenses, fee incomes, bad debt charges and, ultimately, net profit.

The key number is net interest income, which nets off all interest receipts and all interest payments. This effectively calculates the profit from interest on mortgages, credit cards, business loans and consumer loans, minus the cost of everything in the funding melting pot, including term deposits, long bonds, interbank funding locally and foreign short-term funding.

Simply looking at the bottom-line net profit numbers is misleading because they include all sorts of factors, including non-interest fee income, trading gains, cost reductions, bad debt charges and tax changes. It’s also best to compare apples with apples by measuring everything as a percentage of assets to make sure the numbers aren’t skewed by size.

It is nice to see business journalism that goes beyond someone reading a net profit amount and declaring it to be too high or too low!

Congrats to interest.co.nz. They made one million page impressions in March, which is hugely impressive. The site has become a must read for anyone who follows business and economics.

Also a few days ago they had an interesting story about how John Key’s interview in the Wall Street Journal helped ANZ National secure $1 billionf of finance:

Last week ANZ National CEO Graham Hodges went to the United States for a roadshow to promote this US$1 billion bond issue. Its success was no sure thing.

Time and again, Hodges says, investors told him Key’s interview in the Wall St Journal had reassured them, despite the uncertainty of a potential credit rating downgrade. Sometimes it’s a struggle to get foreign investors to look past the shorthand of credit ratings and the headlines of research notes. Key’s interview made them sit up and take notice.

Hodges said it seemed to strike a chord.

It turns out the interview was a crucial factor in the success of the bond issue, the first long term issue by a New Zealand bank since July last year. It is likely to set the tone for more.

Stuff like this you just never see in most other media.

A belated post about the great experience that was 2009 Kiwi Foo Camp.

The first question people have, is what does Foo stand for.  Foo stands for Friends of O’Reilly – that being Tim O’Reilly of O’Reilly Media.

Kiwi Foo Camp is a local version organised by Nat Torkington (and his wife) who works for O’Reilly. It is for “technology industry people and policy makers”.

This was the first one I had been invited to – they are invite only, and I was thrilled to be invited and pleasantly surprised by how many people I knew there – and even more pleased to meet dozens of new people.

There are a number of great things about Foo Camp. The first is that there are no stupid people there. Yes, I know that sounds a bit wanky, but what I mean is everyone there was interesting, and interested. It is a retreat for those who are intellectually curious. You get to have a range of discussions that are stimulating, and fascinating. You also learn how much you don’t know.

The second great things is there is no agenda. It is an un-conference. What do I mean by that? Well when we get there on Friday, we work out the agenda by ourselves. And no not by sitting in a big circle – more like a human Wiki.

There are six classrooms available and around twelve slots on Saturday and Sunday morning. So they have up on the wall the 72 session slots. And any attendee who wants to speak on a subject just writes on a large sticky what their topic is in a sentence, and sticks it in a slot. And eventually you have all 72 slots filled.

But even better, you can change things around. For example there was a session on fibre to the home and on copyright laws at the same time in different rooms. So I just unilaterally moved one session to another time. And other people could and did move sessions about so they could attend the ones they want. And whatever we end up with by end of Friday night is the agenda, so to speak.

There were sessions on everything from highly geekly programming stuff, to digital photography to surviving the recession to ideas for Bill English to grow the economy etc etc.

On Saturday evening we had a great debate with Russell Brown, Rod Oram, Bernard Hickey and others debating “Is New Zealand fucked?”. The debate itself was funny enough, but at the end every audience member could also get up and speak for 30 seconds on their view – but they had to start with “Fucked” or “Not Fucked”. Apart from the hilarity of hearing the F word around 300 times, there was also some great insights into NZ.

I observed a great game of Werewolf, with around 30 participants on Saturday Night. Next time I’ll join in, now I know the rules.

Kiwi Foo Camp wasn’t just a talkfest. It is also where key people came together to further the anti S92A “guilt by accusation” campaign. We had a great session brainstorming ideas (such as the Blackout), and also had a session on the long term issues around copyright law internationally and domestically. Kiwi Foo Camp made a real difference to stopping S92A having come into effect last month.

The Kiwi Foo mailing list sort of got hijacked after the event to co-ordinate the campaign, and at its peak there were 200+ messages a day – almost impossible to keep up – but worth it.

So all in all, a great experience was Kiwi Foo Camp. And big kudos to not just the organisers such as Nate, Jenine and Russell – but also the wonderful catering squad who fed us so well.

Other blogs coming out of Foo Camp are this post by Lawrence Millar (NZ Govt CIO), The Strategist and Artifical Code.

Bernard Hickey blogs that the provincial anniversary days should all be on the same day:

We should be bringing together all of these itsy, bitsy little provincial holidays into one national day so we can all have a day off. It would no doubt significantly improve productivity on all these itsy, bitsy days and ensure we all still get a day off.

We could call it National Provincial Day Off. After all, does anyone really care or know why today is Auckland Anniversary Day and last Monday was Wellington Anniversary Day?

I agree. The whole idea of public holidays is that most of the country is n holiday, so you can relax. Otherwise you’d abolish public holidays and just give everyone two week’s extra annual leave.

So having different holidays in each province is silly. Especially considering we no longer even have provinces!

The holiday should just be set for all of the country as the last Monday in January. It’s a good time for a break.

Bernard Hickey blogs at the excellent interest.co.nz on home affordability:

Plunging mortgage rates and another fall in house prices improved home loan affordability by a record amount in December to its best level in 4 years, the monthly Home Loan Affordability report from www.interest.co.nz shows. At current rates of improvement, housing is likely to be broadly affordable again for most home buyers towards the end of 2009.

In other words, back to sanity.

You can see the impact of both the fall in prices and of interest rates. And both should continue to fall. The tax cuts in October and again in APril will help also as they boost take-home pay.

40% is generally regarded as the maximum home owners should pay towards their accommodation. That’s probably unrealistic for many, but it would be good t get it below 50% anyway.

Poneke is in Brisbane and has discovered it has the buzz of prosperity:

On the surface, the prosperity can be seen in the world-class infrastructure of roads and electric rail lines that Auckland in particular has not been able to achieve despite decades of talk; the very high standard of housing, commercial buildings and public facilities; the wages that really are stunningly higher than at home; the many job vacancies in the papers even on the Saturday after Boxing Day. Australia has not had a single quarter of negative growth this year while we have had three (though the Aussies fret about it and fear recession might still happen). I could go on.

MacDoctor shares some first hand experience of emergency clinics:

An article in the Weekend Herald (not yet online) entitled “High cost stopping Kiwis visiting the doctor” tells us that over two thirds of New Zealanders over 20 have avoided visiting a doctor because of the cost. I didn’t need any research to tell me this is true, because these people pitch up to emergency departments throughout the country with the line, “I couldn’t afford to go to my GP”  or it’s alternative “I owe my GP too much money”. …

I view these two excuses with a great deal of cynicism. Many who use these lines are drunk or have nicotine stains on their fingers (or both). They drive up in expensive cars and sport MP3 players (many are genuine iPods). They typically arrive not long after the GPs have all closed for the evening, or over the weekend. These are the “milkers of the system”  - They know how to work the health system to their advantage and they use Emergency Departments like a GP clinic. …

I suspect most of the two thirds of New Zealanders who said that they do not go to a doctor because of cost, are really saying that they would rather spend their time and money on something other than their health. It has nothing to to with lack of access and much to do with lack of interest. Until we, as a society, start to see that health is important and worthy of investment, this problem will not go away, regardless of the amount of money governments may throw at it.

Hear hear. I think all bar the very poorest should pay something towards their healthcare.

Bernard Hickey recommends a Kim Hill interview with JJ Joseph – a man who used to beat his wife. It’s a very moving interview that shows people can turn their lives about.

And finally Lynn Prentice at The Standard manages to link Bernie Madoff’s ponzi scheme to National’s planned repeal of the EFA. The hilarious part is:

based on recent experience of their autocratic, arrogant, and undemocratic behavior in the house, we will probably see some opaque, badly written, and badly thought through legislation pushed through under urgency.

What does he call the EFA if not badly written and badly thought through? And he ignores of course that unlike Labour, National has said it will consult all parties over the replacement legislation. It was Labour that tried to use bipartisan electoral law to screw over its enemies.

Bernard Hickey has found some very disturbing problems with the deposit insurance scheme the Government has announced:

We now have a scheme that Rod Petricevic could (in theory) use to launch new government-guaranteed finance company to repurchase loans from the receivers for Bridgecorp. It could also be used by Doug Somers-Edgar to fire up the Money Managers empire again. Allan Hawkins could start raising money for his Budget Loans finance company and promise that it was backed by the government.

Not good. The problem with rushed solutions where the driving factor is being able to announce it in time for your political campaign launch, instead of have we got the policy right.

Every finance company wannabe will be licking their licks. They’ll be working on schemes and dreams about new developments or buying bankrupt holes in the ground as we speak. Just imgaine. They will be able to offer deposits at 10% with a government guarantee. If they’re quick enough they’ll be able to do their business before the two years runs out and leave an even bigger smoking hole in the ground for the government (ie the taxpayer) to clean up.

One hopes this would not happen, but often solutions cause worse problems than the one they were tring to solve.

The second big truck sized gap in the scheme explicitly rules out bank deposits in other banks as being covered by the scheme.

This effectively means inter-bank lending is not covered. Why is this important? Currently more than a third of New Zealand bank lending is funded from international wholesale markets, which means our banks have borrowed from other banks overseas.

The scheme announced in Australia yesterday does provide a government guarantee for these inter-bank loans.  There is now a big risk that foreign banks will see they can be guaranteed if they pull their money out of New Zealand banks and put them into Australian banks.

Hopefully others will look beyond the press release and look at the details of how it might work.

Bernard Hickey in the HoS calls for an end to being able to deduce investment property lossess off your personal income tax:

It is the elephant in the room of New Zealand politics. Everyone knows it, yet our leaders refuse to address it, partly because they and their generation benefited personally through the massive house price inflation it created.

I’m talking about the abuse of the tax system by property investors that has allowed them to establish various types of trusts and loss attributing qualifying companies (LAQCs) that make losses on investment rental properties to reduce their personal income tax bills.

This was among the major reasons for the property investment frenzy of the past six years that drove house prices to unaffordable levels and has now created the conditions for a bursting of that bubble.

It would be good to see some hard data on how much of the price increases can be credited to the tax treatment, and how much to land supply etc.

The Department of the Prime Minister and Cabinet wrote a report on house prices and affordability in March. It showed landlord numbers rose more than 100,000 to 300,000 in the decade to 2006. The report estimates the $149 billion of rental property generates a tax benefit of at least $700 million for property investors, with the potential for up to $1.8b of tax benefits.

The Reserve Bank has asked the politicians to consider ring- fencing these investment property losses to remove some of the hot air pumping up the housing bubble.

But there isn’t a politician addressing the issue seriously.

Well I doubt anyone wants to lose the 300,000 votes such a move would result in.

Could such a change be grandfathered in? That would be inequitable but possibly the only way politically to do it.

Lots to cover in brief. First the Australian political party leader who told off his 17 year old daughter on Facebook, exposing her drunken party photos to the world! Also wonderful is the conversation between two of Alexander Downer’s children on Facebook about why he was so pompous in a photo

Bernard Hickey complains (as I often have done) that we are paying $79 million into TVNZ6 and TVNZ7 yet they won’t make them available on Sky TV. He quotes former TVNZ Head of News Paul Norris in support – they have a reponsibility to make them widely available and could extend them with a flick of a switch to 700,000 households overnight.

Andrew Bolt has a fascinating exchange with an academic over the “stolen generation”. While there certainly is much in Australia’s past that was deplorable (as in NZ), it is apparent that certain portions of it such as the “stolen generation” have been over-hyped. He cites the example of one Aboriginal leader who claimed to be part of the “stolen” generation who was “taken from my family” but in fact was put up for adoption by her father who could not cope with five children.

Lindsay Perigo writes a moving account of his last face to face meal with Anna Woolf, who is dying of brain cancer. Even just reading his account makes the eyes water – I can’t imagine how hard it is for those who are close to Anna, let alone Anna herself.

The Telegraph points out that if Michael Phelps was a country, he would be coming 5th on the Olympic medal table – ahead of Italy, Russia, Australian and Great Britain.

Frog Blog joins Nick Smith on wondering why DOC is spending so much money on a new corporate brand, when it has just laid off 60 workers to save money.

Liberty Scott exposes Sue Kedgley’s scaremongering over cellphone towers. Good God, this debate was settled over a decade ago in terms of science. I’d be more inclined to take Sue’s campaign against the towers seriously if she’d give up her cellphone.

Lindsay Mitchell covers the launch of a second Maori based party. The Hapu Party is led by David Rankin, and three policies to date:

1. To have Maori eligible for the pension at age 56, because of the lower life-expectancy of Maori
2. To introduce a flat rate 18% personal tax and GST rate.
3. To immediately allocate all treaty settlement money directly to hapu and marae

They have me with policy No 2. Policy No 3 is between Iwi and Hapu to resolve in my opinion, and Policy No 1 has no chance. Worryingly for the Maori Party, Rankin also talks of financial irregularities with a Maori Party MP and a SFO complaint.

Bernard Hickey takes a close look at public sector wages:

He finds that average wage in the public sector has increased a staggering 9% (hence high inflation and high interest rates) compared to 4.6% for all sectors.  He also finds the gap between public and private sectors wages has grown from $4 and hour to $8 an hour.

Bernard Hickey (and his teenage daughter!) review the $11.4 million Mission-On website.

Now let’s look at the performance. Sparc kindly provided me with some statistics on traffic for Mission-On, which was built on contract by a private company called Click Suite. It generated 39,132 unique browser sessions in June and has registered 15,000 kids in the four months since it launched. Sparc is targeting 30,000 by June next year. Sparc pointed out that Click Suite had told them this compared quite well with www.cleo.co.nz, www.247girl.co.nz, C4TV.co.nz and Kidspot.co.nz.

At this point I will mention that the official Neilsen Net Ratings for this blog in a month (and Neilsen are very conservative with their stats) are around four times their 39,132. In fact I get more than that in a week. And alas no $11 million of taxpayer funding.

I registered for the website as myself and tried to play a few games to get a feel for it. It’s the worst kind of patronising tosh I have seen in a long time. “It’s choice,” the website says of itself. It has one game called a “Creative Hip Hop Challenge”. One thing I do know about successful websites is they have to be driven by the users and not appear out of touch or preachy or just plain dumb. This is all three.

Ouch.

It’s also all built in Adobe (formerly Macromedia’s) Flash. Anyone trying to build a website that is picked up by Google and the other bots so people can find it knows that Flash is the dumbest way to do that. Adobe is only now giving Flash the ability to attract search engines. Flash is fantastic for making good-looking websites that make their owners look good in the eyes of their bosses. But they are websites that aren’t either popular or profitable. Flash sites are typically built by advertising, marketing or design agencies (like Clicksuite), who make advertisement or brochure sites.

But that is okay – the taxpayer will then be asked to spend money promoting the site.

So I asked my 14-year-old daughter what she thought of it. She had seen an ad for it on the side of a bus, but hadn’t visited. I asked her to check it out. She did what everyone does now. She typed the words “Mission On” into Google to find it. It came up at number 8 in the natural search rankings. Any web professional knows this is a disaster. I suspect it ranks so poorly because it is made in Flash and its search optimisation is woeful. It is also poorly ranked because few other sites have to linked to it, which is an ominous sign. My daughter eventually found it.

We are in fact already paying for adverts for it.

“Oh My God,” she yelped. “It’s all in Flash. I just never use Flash sites. You can’t navigate them, they’re usually just so crap. My browser is set to block these yucky pop-ups. No. No. No,” she said before shooing me out the door. I’m a very lucky father to have a daughter who knows so much more about web usability than I do.

Heh.

PS. One tip for Sparc. It needs to buy the Google ad word for MissionOn to create a sponsored link. It costs about 25 cents per click. Well worth the money. So good in fact that I’ve bought the MissionOn adword for Google and will link to this story once it’s published.

Now that is just evil. Very very evil. I love it.

One of the signs of third termitis is the automatic defence of the status quo. The Government and associated left blogs have rushed to defend SPARC, and claim thereis no need to change anything.

I was intrigued by National’s sports policy as it appeared to be meticiously well researched and referenced. What that suggests to me is that sporting insiders have been helping write the policy because of the level of knowledge.

Since the policy was released, I’ve chatted to a few people in the sports administration arena, and to a person they are critical of SPARC and its growing bureaucracy. Now a smart third term Government would be hestitant about rushing in to defend it, when so many people are unhappy.

Bernard Hickey has done an interesting analysis. National revealed 55% of SPRAC staff earn over $100K a year. He wondered how that compares with other government agencies. Now Bernard could have chosen a lightweight agency such as Youth Affairs to compare to, but he chose the Reserve Bank – can’t get much more critical than that. What does he find:

The Reserve Bank of New Zealand’s annual report shows that it has 221 staff and that 71 or 32% of those are paid more than NZ$100,000. Over 55% of Sparc staff are paid over the NZ$100,000 threshold. There are 25 staff at the RBNZ who are paid more than NZ$150,000 or 11% of staff.

That compares with Sparc’s 16% of staff who are paid more than NZ$150,000. The total remuneration cost for the RBNZ in 2006/07 was NZ$21.8 million or an average of NZ$96,642 per staff member. That’s 24% less than the average for Sparc of NZ$129,411.

So we are paying our Reserve Bank staff 24% less than our sports funding agency staff. Now let us compare their importance starting with the RBNZ:

The RBNZ has the power to destroy or save the economy with its monetary policy and the power to regulate and/or save our banks. Every single bank note we have in our wallets is printed by and managed by this institution. Our payments system depends on it. …

Governor Bollard must front up to the public, politicians and his own board once every 6 weeks or so to explain what he’s going to do with the economy. He is regularly criticised by many commentators (including me) and will be held responsible for the economic life of the nation. The pressure is intense and the stakes are high.

If one of the big four banks were to fail on his watch (which I think is utterly unlikely), he and the bank would be responsible for a national disaster. It would cripple the economy for years. …

The Reserve Bank is an institution integral to the economic life of New Zealand and the Governor is one of the four or five most powerful people in the country. If he stuffs up we all pay.

Yep pretty critical indeed. And SPARC:

Sparc encourages us to take up sport and its CEO is a former international hockey player who once was the head of sales for New Zealand Post, a monopoly. Its success is measured by (I hope) how many of us regularly play sport and are therefore healthier, although Sparc’s Statement of Intent seems not to give any specifics on these or how it has performed recently. If the CEO of Sparc stuffs up it would be a one day story that maybe generates an independent inquiry that ends in a 50 page report that no one remembers.

A fair summary. So the conclusion:

Sparc is not more important than the Reserve Bank, its people should not be paid 24% more than people at the Reserve Bank and we should not be paying more than half of its staff NZ$100,000 to give away around NZ$71 million of public money.

Bernard also has a lot of good stuff on the $18 million SPARC is planning to spend on their websites, on how Trade Me and Staff websites have cost far less than this, and how the traffic to the SPARC sites appears to be so small it is unmeasurable.

There seems to be a very strong case for change.

I’ve just watched last night’s Close Up, after Bernard Hickey blogged about it.

If you did not view it, go watch it now. It is disgusting. They have spent three years fighting the Ministry of Education to get their drains unblocked etc. Finally they wrote to the Minister Chris Carter but he hasn’t even replied to them, so in desperation they went public:

They’ve had 25 meetings with the Ministry of Education over their property plan. You wonder why numbers at the Ministry of Education has increased so much – this is why. Let me quote Bernard:

The school’s poor principal, Diane McCallum, and the board had been jumping through bureaucratic hoops for three years trying to get a decision on fixing the decrepid school buildings. Tiaho School’s drains overflow when it rains, flooding the toilets and the playing fields with sewage. The students have to walk on duckboards to cross the playground. McCallum is worried that the students are afraid to go to the toilet because of the smell and therefore may struggle to learn.

The rain gets into the wires and sets off the fire alarm. The principal has to climb on a ladder and jam blu-tack into the alarm to stop it ringing when it rains so classes aren’t disrupted. The school wanted some money for some new buildings or to renovate the buildings. There had been 25 meetings with the ministry and 3 different building plans had been submitted. Consultants had visited at a cost of NZ$24,000. Letters had been exchanged. Formulas considered. Yet nothing happened.

Then the boiler broke last week. The Ministry of Education told the principal to buy a bunch of heaters because it wasn’t worth fixing the boiler. The school then spent NZ$4,000 on oil column heaters to warm up the school so the students wouldn’t be too cold. Then the caretaker turned them all on and the electrical system shorted out.

An apt summary of the background. And then the Ministry:

The Education Ministry’s National Property Manager Paul Burke first went through his bureaucratic routine of trying to explain why the school hadn’t quite jumped through all the hoops yet, despite three years of trying. He was trying to explain the shape of the hoops, the number of hoops, how round they were, what they were made of and the exact nature of the leaps required to jump said hoops. He wore a lovely suit with a beautiful tie. He seemed like a man who knew the rules very well.

I wanted to throw things at the television. Mike Hosking avoided throwing things. But he did quickly tear apart the Kafka-esque web the good bureaucrat was weaving. Why was it taking so long? Why couldn’t the drains be fixed? How many consultants does it take to change the lightbulbs at Tiaho school….and why?

I’m just amazed that we make schools jump through such hoops and have to get Wellington to approve a new boiler. Sounds like a case for bulk funding for me. Sure large exceptional items will always be an issue, but forcing a school to spend three years and 25 meetings justifying why they need the drains and sewers unblocked is madness.

Bernard Hickey has a blog post on how office rentals in Wellington have increased by 14% in the last year. This is around four times the rate of inflation and well above the rate of increase in Auckland. Why?

[Wellington] office vacancy rates are around historic lows. Encouragingly, vacancies are low across the board with the prime and secondary vacancy rate at 1.4% and 3.5%, although some low quality buildings are struggling to find new tenants after being vacated by large government occupiers.

Bernard explains this means they are going from $197 a square metre buildings into $330 a square metre ones.

This is not a one off either, rents have gone up a staggering 66% in the last five years. Why? Because of the massive growth in the public service.

There are few people who qualify better for the label rich prick, than Wellington commercial property owners. And one of them told me a few months ago that since Labour came to power he had made $400 million just in Wellington.  Yes $400 million. He said it was almost enough to make him vote Labour!

The sad thing is these massive profits have not just come from the taxpayer, but all business owners in Wellington are getting clobbered as rentals keep increasing.

I suspect there is also a flow on effect to the costs of residential tenancies in the inner city as property owners can convert from business to residential and vice versa.

For that long Sunday afternoon:

The NZ Book Council have a very cool website to encourage reading. They’ve done it as a Windows operating system.

Scrubone does a fisking of No Right Turn’s outrage at National over citizen juries. Also on that issue, Russel Norman at Frog Blog agrees with some of my suggestions around Citizen’s Juries – specifically the need for multi-partisan agreement not narrow agreement.

Paul Walker responds to Matt McCarten’s hysteria over the Business Roundtable.

Whale Oil likes his stats comparison with Kiwiblog. Obviously girls and guns work

Craig Foss looks at how Dr Cullen is financing his tax cuts – he is borrowing $6.4 billion and also selling $6.4 billion of financial assets breaking one of his four tests. This last one is particularly cunning as it allows him to claim gross debt remains on track. This si why net debt is the better indicator.

Colin Espiner reviews the Reserve Bank MPS and the polls.

Bernard Hickey believes Alan Bollard has gone soft on inflation, as does the Westpac Chief Economist.

Tony Milne links to a CNN piece of possible Vice-Presidential candidates.

On the Republican side I think Minnesota Governor Tim Rawlenty would be a good pick. He is a popular Republican Governor in a Democrat leaning state. The convention is in Minnesota

Not PC has a very comprehensive round-up of the work done by Trevor Loudon on Barack Obama. He describes Obama as “Keith Locke with charisma”

Bernard Hickey has graphs of petrol pump prices, and how much goes to the producers, the local oil companies and the Government. The local company margin is currently close to 20c – a three year low.

Phil U at Whoar finds Jeremy Clarkson’s best and worst cars.

The worst is the Tata Nano and the best is the Nissan GT-R.

Bernard Hickey is strongly disapproving of the budget:

Talk about going out on a low note. …

The result of pulling all the levers in the wrong direction (tax cuts and spending increases) was the destruction of the budget surplus that Dr Cullen had spent the last eight years building up and protecting. Blown in one last desperate act. Dr Cullen and Ms Clark have now said they will fund the cash deficit after investments by running down the Reserve Bank’s reserves and issuing more bonds.

It is the equivalent of throwing it all on the roulette table.

Whatever happened to their mantra that they wouldn’t pay for tax cuts by running up debts? Their (quite powerful) argument that it wasn’t right for National to pay for tax cuts with debt is now dead as the proverbial. Their rebuttal that the debt is only paying for infrastructure is, strictly speaking, true, but debt wouldn’t have to be raised without the tax cuts. There’s no getting away from this. They are raiding the Reserve Bank’s cookie jar and borrowing from foreigners for an irresponsible spending and tax cutting budget.

The Labour line of not borrowing for tax cuts is dead and discredited.  Now as I have said, I actually do not have a problem with borrowing for capital investment so long as the operating surplus (OBEGAL) remains positive and large enough to cover the Cullen Fund and a buffer on top of that. But OBEGAL will not be high enough to even cover the Cullen Fund until 2016.

Also, their argument that only National will fund big tax cuts with big cuts in government spending is also dead. Buried in the budget is a line about unspecified spending cuts totalling NZ$1 billion over the next four years that Labour will have to find to help pay for the tax cuts. Dr Cullen flat out refused to answer my question in the lockup about what type of spending cuts they would be. The only answer he could have given is that he hasn’t dreamt them up yet. We can be sure he won’t enlighten us before the election.

Indeed, Labour is wailing in the House about how John Key will cut spending, and have cut $1.5 billion over three years themselves. They really have no shame.

Any of the last vestiges of Dr Cullen’s hard-won reputation for fiscal conservatism went down into that kitchen sink of pre-election goodies. This is a tragedy for a finance minister who could rightly say until today that he had been one of the most level-headed and careful of economic guardians in our history.

It really has been from Jekyll to Hyde.

Financial markets are greedy, reactive and selfish at the best of times. But they often cut to the nub of an announcement in a flash. Within minutes yesterday, they judged this budget as inflationary enough to make the Reserve Bank’s inflation-fighting task more difficult and therefore likely to delay interest rate cuts.

The New Zealand dollar surged over 78.5 US cents and wholesale interest rates rose sharply.

If Bollard cuts rates now, he’ll deserve to be sacked for repeatedly missing his target.

Here’s Helen Kevans from JP Morgan:

The significant loosening of fiscal policy via larger than expected income tax relief delivered in Budget 2008, and the significant increase in government spending, will leave little scope for the RBNZ to cut interest rates in coming months. Futures market pricing implies rate cuts could come as early as next month, but this now looks much less likely.

And here’s Khoon Goh, ANZ National’s senior economist and interest rate strategist:

This is the largest fiscal stimulus since the 1997 tax cuts. Even with the deteriorating economic outlook, such a sizable package will have the RBNZ on notice. Not enough for them to hike, but certainly enough for them to be wary of the potential reflationary role fiscal policy could play.

Any smidgen of satisfaction or hope from Cullen and Clark that this budget might be able to rise above our stagflationary morass was wiped out in an instant.

This rise in the currency and interest rates will hurt us all and almost immediately. This is another kick in the guts for exporters. Businesses relying on variable interest rates are likely to pay almost immediately, either in the form of higher interest rates or in interest rate cuts that now won’t eventuate.

And at the end of the day it is about growing the national income, not just how to spend it.

It all seems so pointless now. This Budget aimed to put between $12 and $28 a week of tax cuts into wage earners’ pay packets from October 1, a few weeks before the election. However, any taxpayer with a $200,000 mortgage who misses out on a 0.5% cut in interest rates will miss out on $19 a week in lower interest payments. About $40 billion of fixed rate mortgages will roll over between now and the election. The interest rates on those will be around 9.5%, up from around the 8% they fixed at two years ago. That’s nearly $60 a week in extra interest costs. Let’s not forget the $60 to $70 extra in food and petrol costs too for most families.

They giveth with one hand and taketh with the other.

Dr Cullen and Miss Clark have failed the central challenge of our times. We must throw the kitchen sink at beating inflation and turning around a slide into stagflation. Leaders take tough decisions in tough times and we respect them for it. The tax cuts should have been postponed and government spending should have been restrained. Any new spending should have been focused on infrastructure and productivity increases.

This Budget was collectively the most expedient, shortsighted and venal decision in nine years of this Labour government.

It will be their last.

No-one can accuse Bernard of mincing his words. But he is right to be concerned. This budget may give us stagflation for several years if we are not careful – high inflation, high interest rates and low economic growth.

Some commentators have speculated that this could be deliberate. That Labour know they will probably lose in 2008, but that they can reduce National to a one term Government if they leave them a stagflating economy, as people always blame the Government in power. Bill English will have his work cut out repairing the damage.

Bernard Hickey reacts to news that a Hong Kong company is buying the Wellington electricity network by blogging that the Government has a choice between hypocrisy or stupidity.

The government now has to choose between blocking the deal, which would be stupid and dangerous, or approving the deal, which would expose the government’s recent comments on foreign ownership of strategic assets as politically motivated and opportunistic hypocrisy. I suspect it will choose hypocrisy and hope no one notices.

Indeed, they appear to be doing so. They have this magical invisible list of strategic assets which they won’t let anyone else see. And whether or not an asset is strategic or not seems to be pure political whim.

But let us look at the difference between Auckland Airport and the Wellington power lines:

1. Electricity is arguably the most vital utility
2. Every Wellingtonians uses electricity everyday, while relatively few Aucklanders use the airport every day
3. While inconvenient there are other airports Aucklanders could use, while Wellingtonians have no other option for getting electricity to their homes.
4. There are alternatives to air travel such as car, bus, train and boat. There is no real alternative to electricity

So how on Earth you must wonder does a Government deem a Canadian pension fund buying a 24.9% voting stake in Auckland Airport an evil evil takeover which must be stopped at all cost, yet having the richest man in Hong Kong buy 100% of Wellington’s electricity network not even worth a pause for consideration?

Is this the same Prime Minister who declared at her Congress that asset sales were a defining issue? WHat has happened to the lofty rhetoric in just two weeks?

Now please don’t think I against the sale. I think foreign investment is good and necessary in New Zealand. Without it we would be a lot poorer than we are. I would not stop either deal. But the Government’s hypocrisy is massive.

Bernard looks at the issue further:

Just a few weeks ago two junior ministers in the government decided to block a deal to sell a significant stake in Auckland Airport to a Canadian pension fund. They did so after Finance Minister Michael Cullen shifted the goalposts near the end of the bidding process by saying the Overseas Investment Office should consider blocking foreign acquisitions of strategic assets on sensitive land. This cost Auckland Airport shareholders dearly and damaged New Zealand’s reputation as a reliable place for foreign fund managers to invest. It was a blatantly opportunistic, political decision with little rhyme or reason apart from it helped Labour in the polls, marginally.

So the question now is: Do Michael Cullen and Helen Clark believe that Wellington’s power network is a strategic asset on sensitive land?

The availability of power to the nation’s capital sounds strategic. Would the Beehive work without power? What about the Ministries of Defence, Foreign Affairs, Agriculture (Biosecurity), Education and Health? Sounds important and strategic to me. What about the Reserve Bank of New Zealand and Treasury? Don’t they manage our financial system and wouldn’t they be our crisis managers in a financial crisis? Then there’s a mere trifle of around a tenth of the population needing that network to keep working and living.

Bernard also points out the proposed buyer has connections to the Chinese military, and there have been official warnings in the US about him. So the question again is:

But will our government judge a man who was considered by the US government to be a security threat as safer than bunch of Canadian pension fund managers to run a network supplying power to the heart of the nation? Looks like they will. …

This just shows the naked hypocrisy of the Auckland Airport decision. If Auckland Airport is a strategic asset on sensitive land then surely Vector’s Wellington power network is too. If so, the government should reject this latest deal.

Having said that, I think the government should choose hypocrisy over stupidity. We need the money and we can’t afford to damage our reputation as a safe place for international investment any more than it already has been.

I agree hypocrisy is preferable over stupidity in this case, but people should be in doubt the total lack of consistency in the two cases, and that Auckland Airport was merely about polls, not what is good for New Zealand or even a honest belief for or against foreign investment. I can respect people who honestly believe foreign investment is bad. The trouble with Helen and Michael is they know it is good (otherwise would block this deal), but when down in the polls revert to xenophobia to ramp up hysteria against foreigners investing in NZ.

Bernard Hickey blogs that home affordability got worse in March – to an all time low in the Fairfax Media home loan affordability series.

The median house price increased slightly in March, and interest rates crept up another 10 basis points to produce the worse ever result:

The proportion of median take home pay required to service the mortgage on a median house rose to 83.1% in March from 80.2% in February and surpassed the record 83.0% seen in November last year when house prices hit their peak.

This is also worse than the 77.8% seen in March last year and almost double the 44.2% seen in March 2003 when housing was seen as only just affordable. Most bankers believe anything more than 40% of after tax pay is unaffordable.

In Wellington it is even dimmer. One would need to spend 90.7% of your take home pay to service a mortgage on the median house. In Auckland 96.8%.

Nationally one needs an after tax income of $1,421.76 a week to have only 40% of your take-home pay go on the mortgage. That is $2,100.95 gross a week or $109,549.50 annually.

So if you earn less than $110,000 a year you can’t afford the median house unless you devote more than 40% of your net income to the mortgage.

No Right Turn blogs that he believes the NZ First advertisements do breach the Electoral Finance Act as “a reasonable person would regard it as an encouragement to vote for NZ First”. I agree. As Idiot/Savant says it is not a survey, it lays out policy and encourages approval of it.

Poneke has more on the BBC story on climate change which got modified. The reporter denied he did it under pressure, but an activist has blogged she successfully pressured him to change it.

The visible hand in economics looks at fixed vs floating exchange rates.

The DAFT Party has a solution for China over Tibet. It is to rename China to Tibet, and declare they are all Tibetians. The PRC Government should see the sense of this now they are running a market economy – you replace a tarnished brand with a more positive brand!

Bernard Hickey has video and a blog post on Alan Bollard’s speech suggesting we are talking ourselves into a recession. Bernard says we’re not, and if we do have a recession, it is because we deserve it! Them’s fighting words! It’s a lengthy excellent post with many graphs.