Bill strikes a nerve

April 24th, 2016 at 2:00 pm by David Farrar

Trans-Tasman reports:

Finance Minister Bill English touched a raw nerve when he spoke of a cohort of individuals who are “pretty damned hopeless.” He was pilloried by the Opposition, and other commentators were quick to condemn the Govt for its failure to lift these unemployed out of their hopelessness. It’s an issue which divides NZ. Evidence came in the flood of emails to English’s office supporting what he said, more in a day than he had received all year.

That’s a lot of e-mails.

The Solution for Bill and open data

April 21st, 2016 at 2:00 pm by David Farrar

Politik reports:

Non-Government organisations joined public servants in a packed all day “hui” intended by Finance Minister Bill English to convince the Government agencies to start sharing the huge volumes of data they hold on New Zealanders.

Mr English wants the data shared so that social services can be directed more specifically towards at risk individuals and groups.

But public servants have been reluctant to share information – perhaps worried that the more they empower the non-Governmental groups, the more they are likely to take over social serviced delivery traditionally undertaken by state agencies.

Not just delivery, but analysis. Open up access to the crime and offending data, and you could well have some dedicated NGOs and charities discover patterns and links which will help with policies to lower reoffending.

But it was clear from a keynote speech from Finance Minister, Bill English, that he is finding pushback from the bureaucracy in supplying the data to the NGO’s.

“Access to data shouldn’t be the exclusive reserve of government – but that’s what it largely is because in many cases access is being decided ad hoc,” he said.

“Iwi, NGOs, and Pasifika – many of you here today – have told us getting information out of departments is not easy.

“It’s a negotiation. Agency by agency. Official by official.

“You’ve told us contracts are entered in to as if each negotiation was the first, with the each negotiation’s success dependent on who you are talking to.”

Mr English said that just saying “no” as an approach to data security had meant we have made only limited use of all the data the Government had gone to the trouble of collecting.

“Data has no value if it is not used,” he said.

“So let’s fix the system.

“Let’s reverse the presumption and make data sharing the norm rather than the exception by clarifying the rules.

“Because, actually, it’s your data.

“Specifically, the data we hold belongs to the people, and the whanau that you are working for and with.

“Some of you here today have spoken of data sovereignty.

“You, as citizens, and collectively as Iwi, Pasifika and NGOs acting on behalf of citizens, own the data held by public agencies.

“We agree with you.”

Great to hear Bill English say this and he has been the champion of open data. But as he notes there is bureaucratic resistance.

The key is indeed reversing the presumption, and here’s how it can be done.

Pass a law (statute or regulation) that says all datasets managed by crown entities and agencies must be made publicly available within five years, with two exceptions:

  • Any details that could identify individuals should be with-held
  • Agencies can apply to Cabinet for exemptions for specific datasets, to opt them out

The idea is to change open data from opt in for agencies to opt out.

Gilbert on English

March 15th, 2016 at 10:00 am by David Farrar

Jarrod Gilbert interviews Bill English:

Earlier in the day I attended the Institute of Public Administration New Zealand presentation where English had launched data that identified youth who are at-risk.

With his back as straight as a headmaster’s rod, he addressed the bureaucrats in a humming monotone. The thing most at risk in that particular room was consciousness.

But if the delivery was dull, the content was important. Using the new Integrated Data Infrastructure, which stores multi-government-agency information, Treasury had identified four risk factors linked to poor social outcomes: CYF reporting abuse or neglect; reliance on a benefit since birth; having a parent in prison or on a corrective sentence; and having a mother without formal qualifications.

For example, only 50 per cent of kids who experience all four factors will go on to gain school qualifications compared to 78 per cent who have no risks. Twenty per cent of children with all the risk factors will end up as a sole parent on a benefit, whereas just 2 per cent of luckier kids will.

One of the first targets were the families in and around gangs. English wanted to reach into these families in an effort to steer young people away from crime.

One of the reasons he was keen to target youth was because it has proved hard to fix adults. Since 2011, reoffending by released prisoners has reduced by 8 per cent, a long way off the target of 25 per cent that Corrections hoped to reach next year.

English finished his presentation. The first hand in the air belonged to one of those people who makes a series of statements and never asks a question.

She rambled on and then chided English for using the terms “at risk” and “broken” to describe families.

English was polite but unapologetic: “Some families are broken.”

And he is right.

Some are very very broken.

English has reached his political ceiling. He has no desire to have another shot at the leadership. He is as high up the ladder as he wishes to go. He doesn’t have to make a fuss to make his mark.

And more than that, the complex social policies he favours can be easily derailed by the passions and politics that surround debates on crime.

One reason the “lock ’em up” message became so successful was the ease with which it could be understood. To explain the approach favoured by English will require more than a news soundbite. The Government’s new direction has to be carefully managed.

At first blush, reaching into families and fixing them may sound a bit too Labour-like for many of the National Party faithful, but English makes it sound a conservative manifesto. “In a sense what you’re trying to do is make the basic unit more functional and less dependent on government and in the long run that’s how you get smaller government – I’m a fan of smaller government.”

And government spending as a percentage of GDP has fallen a fair bit under English. He hasn’t shrunk government, but he has restrained its growth so the economy is growing faster than the government. That’s how you shrink ir proportionally over time.

Trotter picks English as MP of the Year

December 22nd, 2015 at 9:17 am by David Farrar

Chris Totter writes:

What makes me reluctant to award the accolade of Politician of the Year to John Key, however, is his apparent lack of interest in the lives of the 50 per cent of New Zealanders who don’t vote for the National Party, and for whom John Key is not the preferred Prime Minister. Call me old-fashioned, but I believe that true political greatness is to be measured by what a politician (and government) does: not only for the lucky and the strong, but also for the weak and unfortunate.

Now, at this point you may be thinking that I’m about to bestow the accolade upon someone from the Opposition’s ranks. You would, however, be wrong. Because 2015 has not been a year in which anyone from the Opposition parties has offered the weak and the unfortunate very much at all – not even that most subversive of emotions — hope.

No, the politician I have in mind is the one who labours away in the engine-room of Key’s Government. The one who keeps the wheels of the economy turning, and international investors smiling.

Solid achievements, both, but I am more disposed towards him because, unlike his boss, he has been giving long and arduous thought to the plight of the weak and unfortunate among us. More than this, he has been thinking about them in a new and intellectually challenging fashion.

His approach has been called actuarial, because his calculations are all about the risk and the cost – both individually and collectively – of not making the weak stronger and their misfortunes less determinative; of not organising the right sort of state intervention at the right time.

For thinking about the half of the electorate who doesn’t vote for his party, my Politician of the Year for 2015 is Bill English.

High praise.

Who could replace English?

December 14th, 2015 at 2:00 pm by David Farrar

Rodney Hide writes:

Key put Collins back in Cabinet. He saw his previous leader Don Brash off and out of Parliament. He made National’s leader before Brash – Bill English – his number two.

And what a choice. English is the heart and brains of the Government. I consider him the best minister I’ve seen.

I agree.

There’s constant speculation on who might replace Key if National gets a fourth term. But just as important a question is who might replace English when he chooses to retire?

English is not just the Finance Minister of the Government, but effectively the Chief Operating Officer also. He is constantly looking at how to improve the performance of the public sector.

Herald picks English as MP of the Year

December 12th, 2015 at 4:00 pm by David Farrar

Audrey Young writes:

The title this year goes to his deputy and Minister of Finance, Bill English, for three reasons.

He delivered on the target of getting into surplus in 2014-15; he has increased social welfare benefits for families with children beyond CPI adjustments for the first time in 43 years; and he is the driving force of a major and logical change in the way the public sector funds the provision of social services – the social investment approach which at its essence means paying more for policies that work and are shown to work.

Since 2011, English’s Budgets were forecasting a surplus in 2014-15.

He set the goal not only for fiscal discipline within Government but in his own words, as “a symbol for responsibility” for voters.

The only Budget in which it was not forecast was this year’s in May when falling dairy prices and low inflation affected the tax take and forced an adjustment to a $684 million deficit.

Andrew Little’s description of it as “one of the biggest political deceptions of our lifetime” was perhaps one of the greatest political lessons in hyperbole that he could have had.

Yep. A smart politician thinks ahead and ponders what if they do make surplus after all.

But Bill English’s social investment project is his biggest achievement.

It sounds so logical that you’d think it had always been done that way – paying for what is proven to work.

But it hasn’t always been. It now provides a clear incentive for the public sector to find out with greater clarity what works and what doesn’t.

If it becomes embedded, it will be a lasting change for good in the lives of the least fortunate.

It may do more to help the truly disadvantaged and at risk, than any previous Government.

English on housing affordability

September 30th, 2015 at 12:00 pm by David Farrar

An insightful speech on the housing market by Bill English. Some extracts:

A strong focus of our policy is to make sure our markets work.

And over the last 30 years New Zealand has done a reasonable job of this.

Over the last seven years our labour market has been tested.

It has accommodated a significant recession in 2008, and a pickup in demand particularly in Christchurch following the earthquakes.

The labour market was able to respond quickly to those shifts in supply and demand conditions.

Today New Zealand’s proportion of the working-age population in employment is among the highest in the OECD.

Another area that is now working well is the energy market.

For a long time, New Zealand energy markets were over-regulated and poorly-regulated.

Extensive government ownership further stunted price signals.

For instance, water management in the hydro-electricity system was, compared to today, very poor. …

We’re shutting down excess capacity, and excess capital is being withdrawn and returned to the owners of that capital.

After years of litigation and legal contest over the rules, the energy market is now starting to work.

Which brings me to the housing market.

This is probably the largest market in New Zealand where the rules need to be reshaped.

The most evident indication of a problem is Auckland house prices.

I’m yet to find a housing market anywhere in the world where prices go up at over 20 per cent a year without stopping and then starting to come down again.

So why is the housing market important:

Over the last five years, the Auckland housing market has been the single biggest imbalance in our macro-economic system.

It takes around eight years for the housing market to respond to a shock to demand.

In part that is because changes to council plans can take years, in some cases over a decade.

Resource consents on a housing development regularly take 18 months, including pre-application times excluded from the official statistics.

When combined, those very real delays can exceed the length of the house price cycle.

The point is that when the supply of housing is relatively fixed, shocks to demand – like migration flows increasing sharply as they have recently – are absorbed through higher prices rather than the supply of more houses.

And the main cause:

This has been borne out by extensive studies in the United States following the Global Financial Crisis.

What they’ve found is that, across different markets subject to rules which vary by state, more-intense regulation of urban development is associated with higher house price volatility.

That is, the steepest price increases and the sharpest falls are in areas where regulation is strongest.

The effects of planning rules can extend to the macro-economy.

Cities are one of the extraordinary inventions of the human race.

Studies have shown that cities are an engine room of growth. Incomes in cities are higher than elsewhere. That is one explanation for high rates of urbanisation.

Research indicates that when planning rules prevent workers shifting to higher-productivity locations, then there is a cost in terms of foregone GDP.

It’s only relatively recently that economists and politicians have understood the scale of those effects.

So when we’re talking about something as apparently dry as the Auckland Unitary Plan, we’re talking about a set of rules that will have a major impact on the city, on current and future residents – but also on the wider economy.

So the unitary plan is important.

In my view, poor urban planning is one of the significant drivers of inequality.

Poor regulation of housing has the largest proportionate effect on the lowest quartile of housing costs and rents.

So when we’re having the debate about whether there is sufficient land available, we have to recognise that the people who lose the most from getting that decision wrong – and who stand the most to gain from fixing those decisions – are those on the lowest incomes.

Income inequality in New Zealand has been flat for 20 years, but the gap between incomes measured before housing costs and after housing costs is growing.

Housing costs are becoming a larger proportion of incomes – and that matters the most at the bottom end of incomes among people who have few choices.

So one of the best ways to tackle inequality is to free up land.

Planning is often seen a public good activity that must address the needs of those who are most-vulnerable and have the lowest income.

In fact there is a strong argument to say it does exactly the opposite.

Poor planning favours “insiders” – homeowners – on high incomes and who have relatively high wealth.

It is the old unexpected consequences.

Today we spend $2 billion each year on accommodation subsidies. 60 per cent of all rentals in New Zealand are subsidised by the Government.

The state owns around $21 billion worth of houses.

One house in every 16 in Auckland is a Housing New Zealand property.

Many of these are three bedroom houses on quarter-acre sections only a few kilometres from the CBD – a massive misuse of scarce land. And all at the taxpayer’s expense.

So these are the reasons why the Government pays attention to the housing market and issues stemming from poor planning.

Yet they protest when their highly subsidised quarter acre section is turned into more housing.

For those among you who are economists, I would go so far as to say that while the justification for planning is to deal with externalities, what has actually happened is that planning in New Zealand has become the externality.

It has become a welfare-reducing activity.

And as with other externalities, such as pollution, the Government has a role to intervene, working with councils to manage the externality.

This is a key sentence and indicates English is very serious about tackling the planning rules.

Recent studies have shown rules setting minimum floor space requirements and minimum balcony requirements add $50,000 to $100,000 to the cost of an apartment.

That’s in addition to costs associated with other rules, such as rules setting minimum ceiling heights.

Some progress has been made. A study examining minimum car parking requirements in Auckland showed the costs of that planning rule exceeded benefits by a factor of at least six.

That’s a rule that should never have been made. It has probably cost the economy millions of dollars.

Fortunately, now that we’re digging in to these issues, that rule has been mostly scrapped – and credit is due to Auckland Council for doing so.

So a start has been made, but much more to do.

Bill’s Budget Reply

June 4th, 2015 at 3:00 pm by David Farrar

Bill English’s right of reply in the Budget Debate is well worth watching as he eviscerates Labour.

This behind the scenes look at Budget Day may be of interest to some also.

The importance of data

May 30th, 2015 at 7:00 am by David Farrar

Stuff reports:

Collecting information about New Zealanders is important because too often Government delivers policy that makes politicians feel good, but doesn’t necessarily help anyone, Finance Minister Bill English says.

Speaking at the Identity Conference in Wellington on Monday, English said it was important to know “which people were where” across the country in order to tell what particular Government services were making a difference.

“The reason people hand over their PAYE at the end of the week or fortnight… is because they think we are making a difference to someone else’s life. Too often we haven’t.”

He said: “We’ve delivered policy to make us feel good… that made it look like we cared, but we never went back to see whether it made any difference, and actually, we couldn’t because often we didn’t know, and still don’t know who gets our service,” he said.

Good intentions are not enough. One can justify almost any programme and any level of spending based on good intentions. Data is what helps us decide if it is a good investment that actually achieves useful results.

“Take a child under 5 who is known to CYFS, where at least one parent in the household is on the benefit and where either of the parents has had contact with Corrections…we can pretty much forecast now that that child under 5 with those characteristics…by the age of 35 they’re five times more likely to be a beneficiary and seven times more likely to be in prison by age 21.”

English calls these children the “billion dollar kids” and says the more the state knows about them, “we may be able to change the course of that life”.

“If we can’t know that much about them it’s almost certain that we can’t change the course of their life.”

The fact there are 20,000 children in New Zealand with parents in prison proves “we haven’t been making much impact with what we know,” he said.

Data by itself won’t solve these problems. But they at least give you a fighting chance.

To be more effective we need to get the data out of government agencies, and into the public. There are many NGOs and companies that would happily spend time crunching data to try and identify correlations, trends etc. I’d love to see all the justice sector databases (less identifying details) made public – offender, sentencing, corrections etc.

English wants to have the geeks more involved in policy

February 20th, 2015 at 1:00 pm by David Farrar

Stuff reports:

Public sector mandarins will have to change their ways by giving geeks a bigger seat at the policy table, Deputy Prime Minister Bill English has warned.

Ministers wanted more “facts” and agencies should start referring to people as “customers” not clients, he said. …

English said the structure of government was going to change much more over the next 10 years than it had over the past 30.

“The use of other words like ‘clients’ hasn’t brought about in the past the kind of culture shift that we need,” he said.

English was speaking in Wellington at an annual homage to technocracy, a conference organised by United States firm SAS Institute, a leading provider of software tools to crunch “big data”.

Data and data analytics should be an intrinsic part of policy-making but that was not how the public service was organised, he said.

“We are making a lot of policy with people who know nothing about customers. We are organised with the sociology graduates ‘over here’ and the geeks down the corridor somewhere.” 

Departments didn’t bring technical people who understood their data to meetings unless ministers specifically requested it, he said. 

“That will change. Policy without using these tools won’t mean much to us because our policies are pretty pragmatic. They are focused on getting better results for customers.”

Very much agree data should be a big part of decision making. The analysis of data should occur in both the public and private sectors. An important part of this is to have the Government continue to make its internal data available outside of Government.

Caption Contest

December 16th, 2014 at 4:00 pm by David Farrar

IMG_4396

Captions below. As always go for funny, not nasty.

Engage respectfully, without personal attacks

May 15th, 2014 at 4:35 pm by David Farrar

The Green Party boast their values are intrinsic to who they are, and how it makes them different from other parties.

One value is:

Engage respectfully, without personal attacks

Green Party List MP Jan Logie tweeted this earlier today:

BnpUnrwCUAA381I

Hat Tip: Jessica Williams

The tweet speaks for itself. what you might expect from a demented activist, but not an MP. If Logie was an electorate MP, I have no doubt she would never make such a tweet – she’d lose her seat.

Anyway the next time Green MPs goe on about their values, and how they “engage respectfully”, just recall this tweet.

Exports, jobs and wages

May 11th, 2014 at 9:00 am by David Farrar

Stuff reports:

New Zealand’s exports hit $50 billion for the first time ever, Finance Minister Bill English revealed in Queenstown today. …

In the hard data department, 84,000 new jobs were created last year. Government spending had also lost a chunk of its importance to the nation’s Gross Domestic Product, meaning private sector earning was on the rise.

”In 2008 government spending was 35 per cent of our GDP,” he said.

”Now that has dropped to 30 per cent, and we want that to be dropping to 26 per cent and 25 per cent in the next six and seven years.”

It would be great to get spending to 25% of GDP. There is a wealth of data showing that economies grow faster if the Government isn’t spending and taxing too high a proportion of the economy.

In the prediction department English weighed in with two sure to prick up voters’ ears: firstly that the average income would rise by $7,500 to $62,000 in the next four years, and that economic growth would increase by 10 per cent in the next three years.

Both sound good.

”In 2008 there were 4,300 people under 20 on a single parent benefit, and figures show each one of those people usually remains on a benefit for 20 years, which equates to about $350,000.

“On the left they might say ‘it’s not your fault’ and give them another $20 per week just to show they care. Today there are 2,800 sole parents under 20 on a benefit. We are dealing with those young people on a case by case basis, and want to say it is not a hopeless situation if you are a parent at 17 – but we want people to have aspirations and be a government that is there to help them achieve.”

That figure that being on a sole parent benefit at under 20 normally means you stay on it for 20 years is shocking. I think the welfare work being done is the most important.

English says Labour can win

May 5th, 2014 at 10:00 am by David Farrar

The Herald reports:

Labour could still win power at the next election, National deputy leader and Finance Minister Bill English said in a speech warning against complacency.

“The Opposition can be divided, it can have many leaders and co-leaders, it can have no vision, very little policy, be disorganised but under MMP it can win and we need to remember that every single day.”

Labour and Greens and NZ First and Mana and Dotcom. Your alternative Government.

He said National would need to win the highest vote any incumbent Government had ever won – it was re-elected for a second term in 2011 with 47.31 per cent of the vote.

47% may not be enough is what he is saying.

He also told delegates to make no assumptions about who was a potential voter, pointing to a large representation at the conference from south Auckland.

Good to see.

Will take more than want

January 22nd, 2014 at 3:00 pm by David Farrar

The Herald reports:

Finance Minister Bill English says he wants Google, Apple and Starbucks and other multinationals to pay more tax and hopes the issue will be raised at economic talks this week.

One can want them to do many things, but they’re not going to. Of course they will locate their tax base in a country with a lower company tax rate.

The minister said this morning that getting corporates to pay their fair share of tax required international collaboration.

“We’re very keen to see them pay more tax. The tricky bit is that it requires combined international action,” he told Radio New Zealand’s Morning Report.

“A whole range of countries are going to need to agree on tax rules for companies like Google and Apple and Starbucks and any number of corporates that you can think of.

Yep there is no unilateral solution. But even multinational co-operation has its limits. It takes just one country not to agree, and that is the country where those companies will be established for tax purposes. It will be good if they can get agreement.

Although Google and other companies had local offices in New Zealand, their tax bills were believed to be out of proportion with their reported sales in this country.

That’s because tax is paid on profits, not sales. ‘ll use a good example.

The latest APN financial statement has revenue of $461 million. Their tax was $652,000. Their tax as a percentage of sales was 0.14%. This is clearly out of proportion to their sales, and APN should immediately pay a fairer proportion.

How about a fair “living tax” of 5% on sales? This would mean APN pays tax of $23 million instead of $652,0000 and Fairfax would pay A$100 million instead of zero. Isn’t this the logical outcome of repeated reporting by APN and Fairfax of other companies’ tax bills in relation to their sales instead of their profits?

Gower’s Politician of the Year

December 20th, 2013 at 7:00 am by David Farrar

Patrick Gower writes:

English has had his hands on the purse-strings for five years now, and as expected, he signed off the year with the National Government on track to a sliver of a $86 million surplus in 2014/15 but growing to billions in the years after that.

In layman’s terms that means English is going to balance the country’s books – as National has promised.

By way of comparison, English’s Australian counterpart Joe Hockey opened his books too, and it was a shocker – $133 billion worth of deficits.

What a comparison.

English is an excellent economic communicator – his ability to talk “kitchen table economics” will be a real weapon for National in election year.

Key is 52, English is 51 – the prime of their lives in some senses. They are not going to hand over power lightly.

So English is “Bitter Bill” no more – it’s been “Raging Bill” this year.

Much is made of the fact that John Key is the totem pole that holds up the centre-right. The theory goes: take Key out – and take down National.

But that now applies to English too.

The political reality is that to take down National, the Opposition will have to knock out English too.

And that’s what makes Bill English Politician of the Year.

English vs Parker. I know who my money is on.

Patrick also rounds up the year in politics here.

NZ 4th for open data

November 12th, 2013 at 9:00 am by David Farrar

The Open Data Institute has ranked NZ 4th best in the world for open data in its 2013 report. The top countries are:

  1. UK
  2. US
  3. Sweden
  4. NZ
  5. Denmark/Norway

NZ scored 82/100 for readiness, 65 for implementation and 90 for impact. The comments on NZ are:

The OGD initiative in New Zealand is part of a wider Open and Transparent Government Agenda, initially driven by the ‘Open Government Information and Data Re-use Working Group’ established in 2009, and later by the 2011 ‘Declaration on Open and Transparent Government’ approved by the Cabinet in August 2011. This declaration mandates public service departments, notably with the explicit inclusion of the New Zealand Intelligence Service, to “commit to releasing high value public data actively for re-use…in accordance with the NZGOAL Review and Release process”. NZGOAL is the New Zealand Government Open Access and Licensing Framework, based on the Creative Commons framework.

The New Zealand Government has put considerable effort into monitoring progress towards open government and open data, with Agencies asked to regularly report to Ministers on their progress, case studies collated on re-uses of open data, and an annual reporting process on adoption of the Declaration on Open and Transparent Government. New Zealand was one of the few countries in the Barometer where a significant emphasis on environmental impacts of open data could be observed, with a wide range of environmental datasets made available and seeing re-use, particularly in supporting coordination around extreme weather and geological events.

Bill English has commented:

“This is a real coup for New Zealand.  The Barometer is the first survey of global trends which ranks 77 countries on how they release their public data and the benefits those initiatives have for citizens and the economy,” says Mr English. 

“This is proof we are lifting the performance of the public sector through transparency and shared information. New Zealand was commended for its Declaration on Open and Transparent Government, its release of open data, in particular, maps, land ownership and census data and for regular reporting to Ministers.”

“The open government data work aligns with the Government’s better public service targets that New Zealand businesses have a one-stop online shop for all government support and can complete their transactions with the Government easily in a digital environment,” says Mr Tremain.

Bill deserves much credit for this. He has pushed open data from the very top, backed up with a lot of enthusiasm from many in the public service, and the wider community.

Key and English on Q+A

November 11th, 2013 at 12:00 pm by David Farrar

A Q+A interview with John Key and Bill English:

CORIN Do you ever have any big disagreements though on direction in terms of whether you’re going far enough to the right or whether you should be pushing harder on something?

JOHN I’d say no. One of the big advantages is that we’re both central-right, so I think we’re smart enough to work out that if we want an enduring policy, then we need to make change that we can take the public with us. And over the course of the five years, we’ve demonstrated that. So if you look at the Business Growth Agenda, you know, that’s our economic framework. That is 366 individual changes that we’re making. None of them we would, in isolation, argue is going to turn the dial, but in totality, they are turning the dial significantly in favour of NZ being a higher-growth, competitive economy.

CORIN Do both of you want to stay on right through next term if you win?

JOHN Yep.

I think there is no issue that they want a third term. I’m not sure if they get a third term, that the PM would seek a fourth term.

CORIN You two don’t have a Brown-Blair agreement when it comes to potential succession?

JOHN No. And the truth is that we’ve got a broad caucus, and there’s lots of people you could point to that actually could come through, depending on the timing. I think there’s a range of people, both on the front bench and people who are emerging.

CORIN Could I pick you up on that? So we’ve got Steven Joyce and Judith Collins. They’re both frontrunners. Have you got any preferences?

JOHN Uh, well, a) it probably almost certainly wouldn’t be our choice. If you’re talking about the leader, it wouldn’t be my choice, because I wouldn’t be part of the caucus. The caucus would be making that decision, and if they were doing a coup, then they wouldn’t be coming to consult me on it, so we’re not too worried about that.

I like how the PM just talks openly about the reality that incumbent leaders normally don’t get a say in their successors. However that does change if the leader leaves on their own timetable.

CORIN Prime Minister, what about you? If you didn’t get across the line, is that it for politics for you?

JOHN Well, I don’t have a plan B. In other words, what happens if we lose the election? I’m totally focused on winning the election. But I’ve been reasonably upfront with people, saying that, you know, eventually, if you lose an election, generally there’s a change of leader. If there’s a change of leader, I don’t think it’s actually healthy to get in the way of the next leader. And most prime ministers that have lost elections haven’t stayed around long, long-term. But in the end, I hope we win, and I hope we get to stay there, because it’s very much unfinished business.

I don’t think anyone expects the PM would stay around if he lost the election.

CORIN The election next year; are we looking at a November election, essentially?

JOHN Uh, not guaranteed. I mean, we’re certainly picking an election at the back end of the year. There’s no reason to go early, but we’ll just need to think about that window of when it would make perfect sense. There are issues that we have to consider. Australia hosting the G20 at the end of the year, bits and pieces like that. So we’ll just sort of think that through, but, look, it’s in that window, I think, of sort of September to November roughly, but we’ll make an announcement sometime next year.

The G20 is mid November so that might discourage a November election. However we do not normally attend the G20. Maybe we will get a special invite as Australia is hosting it?

The John and Bill team

November 7th, 2013 at 1:00 pm by David Farrar

Two interesting articles in the Herald. The first:

Prime Minister John Key has admitted he had to be persuaded to back off his bid to press the Reserve Bank into exempting first-home buyers from the banks’ new rules on loan-to-value ratios (LVRs) by Finance Minister Bill English.

Mr Key went into bat very publicly for an exemption for first-home buyers in June, during the bank’s consultation period on LVRs, which limit low-deposit or no-deposit mortgages by retail banks.

At the time he said he didn’t want the LVR to work for a “bunch of rich people and lock out a whole lot of first-home buyers.”

But in a joint interview with Mr English this week – marking five years in power for the National-led Government – he indicated that Mr English thought taking on the independent bank would be more trouble than it was worth.

“So I took a step back from that and said ‘yeah, okay, well fine’. That’s the way it goes.”

There is a line between advocating and directing. It is important the Reserve Bank is independent. Sadly Labour proposes ending that independence.

Mr Key also admitted he had been very reluctant at first to raise GST in 2010 but was persuaded fairly quickly about its merits.

“I’d be the first to admit I was a bit nervous about raising GST thinking can you actually politically sell all of that,” he said.

“Actually after we did all the modelling and we worked on it together, we were absolutely convinced it was fair and would actually work and it would deliver the sort of policy outcomes we wanted. And actually it’s definitely delivering results for the economy.”

The pair said they did not have arguments or rows.

Mr Key said the measure of any decent relationship was that you worked your way through all sorts of issues and respected each other’s views.

They are a hugely effective team.

Mr English made much of what he described as Mr Key’s instinctive ability to communicate with the public and maintain its support, and knowing how to set boundaries in terms of policy constraints.

They cited the example of state tenants’ entitlements.

Mr Key said successive Ministers of Housing and Housing officials had wanted the income that any state tenant received from boarders to be received to be counted as income in terms of calculating entitlements.

“But my view is well that would be seen as a step too far for large families or families that are trying really hard to make ends meet.

“And in the end if they are prepared to go the extra mile of having someone live in their home and cook them a meal, they are just good New Zealanders trying to get ahead.

“It’s like the carparking [dumped fringe benefit tax] issue.

“In the perfection of the IRD officials, we should have carried on with putting an FBT on those carparks – but that’s how you lose the public,” he said.

Mr Key also indicated that he had put constraints on labour market reforms.

You don’t get to implement much policy in Opposition. You fight the good fight on issues worth it such as the GST tax trade-off and the partial asset sales, but why take a hit on relatively minor issues such as FBT on car parks. No one will thank you in 20 years time for that one.

A second article looks at the John and Bill team:

The lingering question is how this pairing has avoided the pitfalls which have seen governments paralysed when the two pockets of power have stopped trusting one another and started undermining one another.

Told, the Herald wants to focus on their partnership before and after National was returned to power in 2008, Key turns and looks at English and exclaims “Okay, love” and laughs. English replies in typically droll fashion: “As a loyal deputy, I can assure you, it is not a partnership.” He means not that sort of partnership.

The humour, however, has an edge which leaves the listener wondering just how well the two men actually get along.

Very well, because they both understand which job they have, and Bill is not seeking a promotion (and in fact has ruled out ever standing for the leadership).

English’s tentacles certainly extend way beyond the confines of his finance portfolio. He was the one pushing hard for meaningful welfare reform. He has basically overseen the big changes in the housing of the poor. He keeps a watching brief on the public service and its adoption of new methods of delivering services. Given the almost-universal involvement of the Treasury in any reform, however, it is par for the course that the finance minister is involved.

Bill is constantly thinking about how to improve the performance of the Government as a whole. He has dozens of little pet projects on the go at any times ranging from championing open data to some funds for small local councils to do anti-truancy measures.

Bill on John:

• “(John) has more ideas than we know how to handle. My framework is a bit more conventional so I spend a lot of time just dealing with issues in a reasonably predictable way but the PM is always stretching the boundaries.”

• “He’s endlessly capable of everything, I assure you – catching fish, cooking pasta, making up policy, being friends with the Queen. There is nothing this man can’t do.”

John on Bill:

• “They are quite complementary skills. I do a lot of going around the country opening things and cutting ribbons and being the kind of face of the party that’s interacting with the public. And Bill is doing a lot of the long term thinking, heavy-lifting and policy design, all the things that involve ministers … I’m kind of the retail face.”

I wonder how David Cunliffe and Russel Norman or David Parker will work together, if they become Government.

English goes list only, Heatley retires

November 2nd, 2013 at 10:00 am by David Farrar

Stuff reports:

Bill English is to step down as the Clutha-Southland MP next year after 24 years representing the electorate, but has no plans to retire from politics.

The deputy prime minister and finance minister, Mr English will remain in politics, and instead seek nomination for the National Party list at the 2014 election.

Mr English, who lives in Wellington, said representing the large Clutha-Southland electorate had required considerable travel and time away from his family, particularly after he became a minister.

With four of his six children having left home, he wanted to strike a better balance between family life and political commitments.

I note Michael Cullen went list only in 1999. Being Minister of Finance means an insanely busy workload, and balancing ministerial duties, electorate duties and family life would not be easy.

Phil Heatley announced his retirement this week also. Phil’s a legendary campaigner, and what was once an almost marginal seat has become rock safe thanks to his efforts. A damn nice guy, with a great sense of humour. I recall being excited in 1999 when we got an intake that included Simon Power, Katherine Rich and Phil Heatley (and others). A bit sad that they’ll all be gone by the next election but 15 years isn’t a bad spell.

The plus side is that National is showing how to renew itself while still in Government. This is quite critical. There’s going to be quite a few new National MPs in 2014. I hope the party organisation is working hard to make sure we get top quality candidates standing for both electorates and list.

The tax system has got more, not less, progressive

October 23rd, 2013 at 7:00 am by David Farrar

Bill English has stated:

Lower income households are paying a smaller proportion of net income tax than they did in 2008, indicating that the tax system has become more progressive since the Government’s tax changes in 2010, Finance Minister Bill English says.

“This should contribute to improvements in income equality in New Zealand, contrary to the Opposition’s completely false claims that lower income households were disadvantaged by the tax changes,” he says.

If you repeat a lie often enough, people may believe it.

  • Households earning less than $60,000 a year, which total around half of all households, are generally expected to pay less in percentage terms towards total net tax in 2013/14 than they were paying in 2008/09.
  • Conversely, households earning more than $150,000 a year – that is, the top 12 per cent of households by income – are generally expected to pay more of the total net tax than they were paying in 2008/09.
  • And only 6 per cent of individual taxpayers earn over $100,000 a year, yet they pay 37 per cent of total income tax. This has increased from the 2010/11 tax year, when those taxpayers paid 29 per cent of total income tax.

Despite this, Labour persist with their rich prick envy tax insisting that those on higher incomes must pay 39% income tax as well as 15% GST!

Using data from the Household Economic Survey, the Treasury earlier this year estimated that this year households earning over $150,000 a year – the top 12 per cent of households by income – will pay 46 per cent of income tax.

But when benefit payments, Working for Families, paid parental leave and accommodation support are taken into account, these 12 per cent of households are expected to pay 76 per cent of the net income tax. And that is before New Zealand Superannuation payments are counted.

12% of taxpayers are funding 76% of the net income tax take, and Labour says this is not enough! What do they want? 90%? 95%? 100%?

Localism

October 3rd, 2013 at 3:00 pm by David Farrar

Brian Fallow writes in NZ Herald:

Local Government New Zealand and the New Zealand Initiative are calling for more public services to be provided by local government and funded by local taxes.

At least they would like to see a debate about whether the split between the responsibilities of central and local government is optimal.

NZ Initiative executive director Oliver Hartwich said New Zealand was an outlier among developed countries in having so small a share – 11 per cent – of total government spending undertaken at the local level.

The OECD average for spending by levels of government below central government was 30 per cent, he said, and only Greece and Ireland were more centralised.

We are unusual in having only two tiers of Government – central and local – no provinces or states. Now that I advocate that.

Local Government NZ chief executive Malcolm Alexander said a greater devolution of real authority to local government might encourage greater participation by the public, pointing to reports that in the local body elections now under way only 10 per cent of eligible voters in Auckland have voted so far.

The Swiss Ambassador spoke at an event last night on this topic. She mentioned that in Switzerland all powers started with the cantons etc and over time they decided what to hand upwards to the Federal Government, such as currency and military. In NZ all power rests with central Govt and local government is a creation of central government.

While attracted to the idea of local income taxes, Hartwich stressed that he was talking about re-allocating tax between central and local government, not an overall increase.

Absolutely. I have some attraction to the idea of taxes rather than rates to fund local government. Rates increases are only paid by home owners and businesses (directly) and any increases are often hidden by the fact your house’s value may have changed. I suspect it would be harder for a local Council to increase a local tax rate than it is to increase rates.

Hartwich has a paper on localism here.

Bill English also spoke last night and made some great points on the resilience of local communities and how locals care far more about local outcomes than officials in Wellington, and spoke about some of the pilots around the Waikato where some local initiatives are achieving great things.

The Press on English

September 6th, 2013 at 9:00 am by David Farrar

The Press editorial:

But perhaps it should not have been because widespread respect for English, following his steady, careful performance as minister of finance through the worst financial crisis of the past 80 years, has been growing. A complimentary remark by a respected American economist on English’s performance at a conference in Sydney recently, was not untypical and it prompted a highly regarded New Zealand economist, Matt Nolan, to comment: “This is not the first time I’ve heard people overseas sing Bill English’s praises [it is probably in double-digits now] . . . we have a finance minister who understands the issues and tries to communicate them clearly.”

English came to office with an economy that had already been in recession for almost a year, when the global financial crisis hit. He had a measure of luck – there was no housing bust and although there were nervous moments, the New Zealand banking system did not buckle. But English responded to the crisis pragmatically and skilfully, avoiding severe retrenchment but focusing determinedly on reducing government debt and balancing the budget. Contrary to opposition propaganda, the government did not bring with it any dogma or hidden agenda.

A shock could, of course, upset things. The balance of payments deficit and overseas debt continue to be relatively high and to cause concern. But English’s overarching goal of getting the Government’s books in order, which looked hopelessly remote five years ago, now seems achievable, if only by a whisker, next year.

No surprise that I agree. Bill English has had the most challenging circumstances of any Finance Minister, and done very well. On top of that he is pushing a micro-reform agenda across Government that is making a difference.

While David Shearer was ultimately brought down as leader of the Labour Party by his woeful public communication, the role of weak, ill-thought-out policy in his downfall has probably been underestimated.

It is a factor the three contenders for the Labour leadership – Grant Robertson, David Cunliffe and Shane Jones – do not seem to have cottoned on to. In the beauty-contest meetings held so far, they appear mostly to have been diverted by essentially trivial issues such as the so-called “man-ban” or by seeing how far they can go in outbidding each other in implausible left-wingery.

The Labour leadership contenders have, in some areas, moved to the left of the Greens. That takes some doing!

Capital Gains Tax

July 25th, 2013 at 2:00 pm by David Farrar

The Herald reports:

A capital gains tax on property makes little sense unless it also applies to the family home, says Finance Minister Bill English.

Speaking at today’s Mood of the Boardroom event in Auckland, English told the country’s top business leaders the government was maintaining its “clear position” on the capital gains tax debate.

“We’re not supporting the extension of the current capital gains tax,” he said.

“The overseas experts who tell us we need it all say that it should be comprehensive on all capital gains. And if you don’t do the whole thing then it probably doesn’t make much difference.”

I broadly agree with this. My position on Capital Gains Tax is this:

  1. We should have a comprehensive capital gains tax (many capital gains are already taxed, but not “incidental” ones)
  2. There should be no exemptions, including the family home. To do so will just encourage tax avoidence by giving each family member a home etc.
  3. Other tax rates (income and company rates) must drop by at least as much as the extra revenue a CGT would generate for the Government.

You need to do all three together, to get a broad based low rate tax regime – which is what is best for economic growth. What you shouldn’t do is bring in an exemption riddled CGT and use it as a way to screw taxpayers over for more money to fund extra spending – which appears to be Labour’s policy.

Parliament Today

December 5th, 2012 at 4:30 pm by David Farrar

Bill talks on the Green Party photocopier!