Key and English on GST

February 11th, 2010 at 12:16 pm by David Farrar

John Armstrong writes:

No politician enjoys confessing to having broken a promise – especially one made during an election campaign when credibility is very much the issue.

The Prime Minister has now shown himself not to be exempt from that rule of thumb.

Having flagged a hike in GST in the Government’s economic statement on Tuesday, John Key was yesterday hammered by Labour for having categorically ruled out such a move in the lead-up to the last election.

“National is not going to raise GST. National wants to cut taxes – not raise taxes,” he told an impromptu press conference in the 2008 campaign, the video of which is receiving heavy play on the internet.

Key could not have been clearer. But his response yesterday was to argue he had been talking at the time in the context of fiscal forecasts which showed the country’s accounts sinking into deficit for the next decade. What he had been saying, he insisted, was National would not raise GST as a means of reducing the Budget deficit.

Key should be asking himself why he bothered to mount this defence. No sooner had he done so than Labour dug up quotes from Finance Minister Bill English seemingly similarly ruling out increasing GST after receiving Treasury advice shortly after the election to do so and then clearly reiterating that position in a speech two months later.

Given Key and English were almost certainly genuine in their holding that view at the time, it would surely have been more advisable for the Prime Minister to have been straight up and down yesterday and instead argued along the lines of “that was then and this is now”.

Rather than getting a ribbing from Phil Goff in Parliament, Key could have turned defence into attack, arguing that raising GST was now necessary to remedy what English describes as New Zealand’s “lopsided” economy – one suffering from too much consumption by debt-ridden households at the expense of much-needed savings and investment.

The question is whether Labour’s highlighting of this broken promise really matters all that much. It is not in the same league as cutting national superannuation or selling state assets after promising not to do so. At stake, however, is the Prime Minister’s credibility.

Key’s trust rating is extremely high, judging from polls scoring such attributes. Tax hikes are never popular, however. Key has to overcome public suspicion that any rise in GST will leave people worse off.

I understand a 2.5% rise in GST will probably lead to a one off inflation increase of 2.0%. In recent years our inflation rate has been around 3%, so I’m not sure how much people will notice.

I think they key will be the details in the May budget, as to the “compensation” through tax cuts, benefit adjustments and WFF support.

The label of a “broken promise” may be the bigger issue, even though there is a defence around the context of the statement.  There is probably a lesson there about being careful with pre-election statements – it is tempting to rule things out, but often wiser to be more subtle and say things like “That is not in our tax policy” rather than “We will not do that”.

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English on the economy

January 4th, 2010 at 11:51 am by David Farrar

Bill English writes:

As New Zealand emerges from recession, the Government’s focus has firmly shifted towards significantly lifting our economic performance. …

Making changes that help permanently lift our economic performance will be the overriding focus of the 2010 Budget.

The tradeable side of the economy – exports and those industries that face international competition – has been in recession for five years, with output now some 10 per cent below 2005 levels.

That’s a great line – the tradeable side of the economy has been in recession for five years!

By contrast, the public sector has grown rapidly, but with poor productivity. That has lowered the economy’s overall productivity. Unless we can turn this around and create the right environment for businesses to compete on the world stage, we will not achieve the sustained increase in incomes the Government aspires to.

The rhetoric is spot on. We await the policies in the budget.

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Herald on Govt’s first year

October 31st, 2009 at 9:12 am by David Farrar

This weekend it is the Herald’s turn to do a big feature on the Government’s first year in office. Multiple article to quote.

John Armstrong starts with what I think is the most important aspect:

The first Herald-DigiPoll survey since last year’s election shows close to 80 per cent of respondents rated the Government’s performance in dealing with the effect of the global recession on New Zealand as good, very good or excellent.

Barely 20 per cent rated the Government’s response to the recession as not good or poor.

And this is the major issue voters have focused on. Not use of urgency, not the Super City, not RWC broadcasting, not any of the numerous beltway issues. Not to say handling of those issues is not worthy of focus, but they are not critical to the average voter.

In another article, Armstrong reviews Key himself:

Key’s sheer ordinariness has fooled opponents into making first impression assumptions that there is little substance behind the confident, smiley face he presents to the world.

Key would not claim to be an intellectual. But he is very bright. Those who have worked closely with him speak of a capacity to absorb mountains of information and a laser-like capacity to focus on what needs to be done.

I would almost call Key a data sponge. He loves soaking up information from numerous sources, and reflecting on it. He is constantly thinking, and analysing.

He is anything but ordinary. The chief executive of New Zealand Incorporated is nothing short of a political phenomenon.

As one Beehive operative of long experience puts it, Key is rewriting the rules of New Zealand politics. That is a sweeping statement. But it goes some way to explaining why public support for National – confirmed in today’s Herald-DigiPoll survey – has climbed to unprecedented highs for a ruling party in its first year of government and, just as crucially, continues to remain at that level.

The challenge for the Government is to build its own brand to complement Key’s strong brand.

Key cites his Government’s fulfillment of manifesto commitments and steering the country through and (he hopes) out of economic recession as crucial in consolidating support for his party. Cabinet ministers readily acknowledge, however, that National’s post-election dream run is overwhelmingly down to Key’s strong rapport with voters – especially females who shunned National in the past.

It is rare for a centre-right party to do well with female voters.

Labour Party insiders grudgingly agree, but with a subtle twist in the language: National’s popularity rests on Key’s popularity. When the latter starts to fade, the former will quickly evaporate.

As I said above, I agree with them that the popularity is largely Key. But that may change over time, as other Ministers become better known. Also the other Ministers have generally been doing quite well in their portfolios – what is lacking is more a coherent all of Government brand.

Or so Labour prays. Labour, however, has made a bad habit of underestimating Key.

And they still are.

One of the principal ways he is seen to be rewriting the rules is by applying a “will it work” test to policy proposals rather than first asking whether they sit comfortably with National Party ideology. Key’s willingness to search for ideas outside conventional boundaries is in tune with an electorate less hung-up about ideology than in the 1980s and 1990s.

Key has centre-right values and instincts, but he sees them as a guide not a straitjacket.

This may irk some colleagues who see the vast gap between National and Labour in the polls as a rare chance for National to adopt a more radical and right-leaning prescription. …

Key seems to have no difficulty with either proposition. However, he is extremely wary of breaching National’s 2008 manifesto. He believes it is vital that voters feel confident they can trust National in government.

I’m one of those who want to see the Government be more bold, and indeed use that vast poll gap while we have it. But it isn’t about being more “right”, it is about fighting battles that are important to our future such as tax reform, the union stranglehold in education, state sector reform etc. But I agree any reform has to be consistent with the election manifesto. But there are plenty of areas where initiatives were not ruled in or out.

Dunne also noted that “references to what happened in the 1990s, let alone what side one was on during the Springbok Tour or, heaven forbid, the Vietnam War are utterly irrelevant to the values of this new generation, as Helen Clark found out dramatically last year, and Phil Goff is continuing to find out”.

The battles of yesterday.

Though Goff is an effective communicator, Key operates on another level. Unlike some politicians, he never talks down to people. He instead likes to disarm his audiences – no matter how big or small – by kicking off proceedings with a witty anecdote. More often than not, the joke is at his own expense. And deliberately so. The self-deprecation helps to break the ice.

A typical example was a recent meeting with youngsters at a riding school. Praising their ambition to represent New Zealand in show-jumping at the 2016 Olympics. Key turned to their proud parents, telling them “and you’ll be able to watch it all on Maori television”.

Heh. More seriously I recommend anyone who has not seen Key do a Q&A, should attend one of his meetings. He really engages with the audience, and as John A says, never talking down.

Yet, a year on from the election, it is still difficult to discern the direction in which the Government is going. Presumably it knows, because it is a very busy Government. It would be useful if it told the rest of us.

If Key has a major flaw, it is in not drawing the big picture often enough.

I agree. I don’t think it has mattered much this year, for it has been a crisis year – fighting the recession. But as that fades as an issue, people are going to want to hear more about closing (or at least slowing) the gao with Australia.

Key’s power is at its zenith. But how does he intend to use it? What legacy does he want to leave? The next 12 months will be true measure of his prime ministership, judged on what is done to get his promised “step change”in New Zealand’s economic growth.

I think the 2010 budget is very important, even more so that the 2011 budget.

Claire Trevett reports 78% of NZers back the series of cycleways.

Patrick Gower talks to Rodney Hide about working with John Key.

John Armstrong also reviews Bill English.

Claire Trevett talks to Tariana Turia:

Do you still have that level of trust in National?

Yes. What I’ve enjoyed the most is our ability to be upfront with one another and be straightforward on issues. I have never found that they’ve said one thing to me in a meeting and done another.

I recall what John Tamihere said about how Cullen used to treat coalition partners!

Have there been difficult choices?

When you can see value in what is being proposed but there’s always downsides to it. We’ve had to think really carefully about ACC, the Emissions Trading Scheme, and adult education courses.

For example with the ETS, it’s been difficult to try to balance the interests of iwi – whose major focus is forestry, fishing and farming – when on the other hand we’ve got really poor communities who are going to have to pay and they’re not the ones causing the problems.

There are very few policies that don’t involve balancing the trade-offs.

Jon Johannsson talks leadership:

I believe we are watching an unusual prime ministership take shape. Key’s skillset is vastly different from what we’ve seen before. We’d possibly have to go all the way back to the entrepreneurial Julius Vogel in the 1870s to find an apt comparison. Vogel put in vital and much-needed infrastructure to connect New Zealanders with each other and then with the rest of the world. Vogel’s legacy is a hugely significant one in our politics. If Key could affect a 21st century equivalent – meaning nothing short of major structural transformation to better position New Zealand during its transition to an information-age economy – his future legacy would be assured.

And Key has pushed hard on infrastructure. But the structural transformation is not there – however stuff like the fibre to the home initiative may be part of that.

Key has also grasped that our politics is going through a non-ideological phase, which explains why much of the criticism of his Government’s performance has come from ideologues on either side of the spectrum. His acceptance of much of Labour’s policy inheritance reinforces this judgment. Keeping its promises, which National has largely done, thereby establishing long-term trust with the electorate, has given Key the prerequisite platform needed for greater freedom of action in the future.

Absolutely. You have to earn trust, to then have greater freedom of action.

But to return to where I began, Key’s larger context; his political vision has been quite parsimonious in my view. There is no overarching narrative that tells us where Key intends taking us or what policy mix will best maximise our future progress and choices.

Transforming education (surely the best incubator for our future economic prosperity), leading our democracy (think: the electoral referendum, the Treaty, republicanism), and how to best protect water, our most valuable strategic resource, are being managed, not led, in an entirely ad-hoc fashion.

I think this is fair criticism.

Finally John Roughan:

The most impressive member of the Cabinet is a complete newcomer, Steven Joyce.

He is doing the infrastructure projects, notably the duplicate broadband network, as well as those in his primary portfolio, transport.

He’s done the little things, like the car cellphone ban on which the previous government dithered for years, and the big things like the Waterview connection, which I thought was wrong but he put me right.

I remarked to the Dominion Post for their review that I thought John Key’s best decision was probably appointing Steven Joyce to such critical portfolios. The fibre rollout was Key’s signature initiative, and speeding up infrastructure investment also a iconic issue for Key. And Steven indeed is no ditherer.

Of course I still think he is wrong on the cellphone ban!

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New official TVNZ t-shirt

October 28th, 2009 at 9:21 pm by David Farrar


Damien Christie from TVNZ7 models the new official t-shirt for Television New Zealand :-)

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Auditor-General on English

October 28th, 2009 at 4:23 pm by David Farrar

Am reading full report. The summary says:

The current parliamentary system is designed to establish whether a member of Parliament (MP) maintains a current residence (other than a holiday home) outside Wellington rather than to decide where an MP “lives” in an everyday sense. Traditionally, that residence was in the MP’s electorate.

Yes, this is the essence of it.

Mr English correctly completed the declarations he was required to as an MP, and provided other information on his accommodation arrangements, in order to claim Wellington accommodation costs.


For at least 15 years, the parliamentary rules for claiming accommodation costs have specifically provided for MPs to claim their costs when they buy or rent a property in Wellington. This has enabled a range of practices to arise, including renting from family trusts. The administrative system now includes protections such as a market evaluation of rent and a cap on the total that can be claimed to manage the associated risks. The fact that Mr English was being reimbursed for the cost of renting a house owned by his family trust was not exceptional.

So there is now no doubt that Bill retained eligibility for Wellington accommodation assistance over the years 2000 – 2008.

There is an issue over the Ministerial assistance:

Ministerial Services asked Mr English to sign a declaration that he did not have a pecuniary interest in the family trust. He did so, and attached a copy of the advice he had received about what amounted to a beneficial interest in a trust for the purposes of Standing Orders. Having received that declaration, Ministerial Services got a market evaluation of the rent, took over the existing rental agreement, and provided the house as a ministerial residence.

In our view, the advice that Mr English relied on to make his declaration was not applicable to this situation and was based on too narrow a test for the Ministerial Services’ situation. We consider that Mr English does have an indirect financial interest in the trust.

This issue arose because of Ministerial Services’ evolving practice of renting properties for Ministers combined with the parliamentary rules that enable MPs to rent from family trusts or similar. The two systems do not fit well together.

At Mr English’s request, the rental agreement between Ministerial Services and the trust has now ended. Mr English has reimbursed the rent and other costs that had been paid.

What this basically says is the advice that the house could be leased as a Ministerial House was not correct. This means however that he would still be eligible for the normal parliamentary level assistance of $24,000 a year – however he has confirmed he will not be taking up any assistance.

This reinforces my position that it is much better if MPs do not directly on indirectly own the house they get assistance for. If Bill had moved into Vogel House, or Bolton Street, these issues would haver have occurred I suspect.

The Prime Minister has announced that a new policy is being implemented under which Ministerial Services will no longer provide accommodation directly for Ministers. Instead, Ministerial Services will simply provide a fixed level of financial assistance to Ministers, who will make their own accommodation arrangements. This approach will mean that the question of whether a Minister has a personal financial interest in a property will no longer be relevant, and may help to smooth the interface between the parliamentary and ministerial accommodation entitlements systems.

The news system does sort out any conflict of interest issues.

UPDATE: The full report has more details on the trust issue, and where the advice came from:

He sought advice from the Registrar of the Pecuniary Interests of Members of Parliament on what amounted to a pecuniary interest in a family trust. The Registrar responded with advice that discussed generally what is a beneficial interest in a trust for the purposes of the Standing Orders requirements. …

The Registrar’s advice was based on the definition in Standing Orders of when a beneficial interest in a trust should be declared for the Register of the Pecuniary Interests of Members of Parliament. We have concluded that this was not the right test to apply in this situation, as it is a narrow definition of pecuniary interest for a particular purpose. In general, it is usual to regard an interest held by a spouse or close family member (such as a dependent child) as creating an indirect financial interest. In our view, Mr English has an indirect financial interest in his family trust, because of his relationship with the likely beneficiaries.

So he sought advice from the Registrar for Pecuniary Interests, but that advice was not applicable to the accommodation issue.

The result was that the Crown was renting a property for Mr English from a trust in which he had an interest, and the arrangement was explicitly based on a view that he did not have an interest. Clearly, this was unfortunate. We emphasise that the Minister’s declaration was based on advice. However, in our view, the advice was not directly relevant to this situation. We consider that Ministerial Services should have raised this with the Minister.

Again this is my point about both Bill’s situation, and the Greens Super Fund. Even an indirect relationship is undesirable.

This issue illustrates the different starting points of the two accommodation entitlement systems and that they do not fit well together. Having an interest in a property is not a barrier in the parliamentary system, and protections are in place to manage the risks created by the conflict of interest. The issue has only arisen in the ministerial system because Ministerial Services has moved to rent properties rather than own them and has worked to tailor the housing support it provides to the needs of individual Ministers, including sometimes taking over existing rental arrangements.

The upshot is that the owning the home through your trust was okay for parliamentary rules, but not for Ministerial rules. This really shows why the the two systems need to be streamlined.

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The TVNZ7 promo ads

October 28th, 2009 at 11:00 am by David Farrar

When I first saw the promo ad involving Bill English for a series of programmes on TVNZ7, I thought it was actually a promo ad for Bill himself :-)

So I am not surprised Labour are upset:

Labour is crying foul over a TVNZ promotional advertisement in which Finance Minister Bill English appears as the poster boy for a series of programmes on the economy. …

The aim is to draw attention to a series of economy-focused programmes on Freeview Channel TVNZ 7 next month.

Labour’s finance spokesman David Cunliffe has questioned whether it is appropriate for the state broadcaster to use one of its shareholding ministers in what amounted to a party political broadcast. It also raised questions of editorial balance.

“It is not OK to give the Minister of Finance 135 minutes of free air time, completely coiffed and scripted, with no balancing comment.”

Even though they are advertisements, I can see Labour’s point. I doubt Nats would have enjoyed a couple of hours of ads with Michael Cullen.

He also queried whether it was appropriate for Mr English to have agreed to do the promo, given the need for ministers to adhere to strict conflict-of-interest rules. …

A spokesman for Mr English said he was invited to do the promo. He was not paid and had not scripted it himself, but had seen it and some minor adjustments were made for accuracy.

“We exerted no influence over the process.”

Oh it is silly to suggest Bill has done anything wrong. Hell what politician would turn down 135 minutes of free TV time. It would be like turning dowm Christmas.

A TVNZ spokeswoman, Andi Brotherston, said it was not considering pulling the advertisement, which is due to run until November 21.

She said the creative unit at TVNZ chose Mr English partly because of the pun on his name in the series’ title “Plain English”.

The promo went through internal approval channels, which “are set up to consider all aspects of programmes”.

When asked if it conflicted with TVNZ’s own editorial protocol, she said there was a clear delineation between news and promotions at TVNZ and the promotion had “nothing to do with news and current affairs”.

“We are not within an election time frame, so there isn’t a requirement on us to give equal time to specific parties.

“The other thing is while other parties might think it’s an ad for Bill English, if we consider it from the viewers’ point of view, they see it as the Finance Minister.

“The series is about demystifying the economy. Viewers might see it differently and they’re the people we have in mind.

“Those people may not care about the other politicians and the time they have on television.”

Yes the average person won’t care. Having said that, I do have some sympathy for Labour’s concerns. At the minimum you wouldn’t want this to become a habit.

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English on GST

October 19th, 2009 at 9:00 am by David Farrar

The Dom Post reports:

Low-income earners would have to be compensated if GST was increased as a result of the current tax review, Finance Minister Bill English says. …

“Low-income earners, in particular, would have to be compensated for any increase in GST,” he said in a speech to chartered accountants in Auckland. “The tax working group will have to come up with some fairly compelling reasons to convince us of the overall benefits of further property-related taxes or an increase in GST.”

“We don’t want to go down the route of raising taxes,” he said. “The Government has a strong preference not to increase taxes to close the deficit. We prefer more efficient taxes over higher taxes.”

Most forms of income should be covered and, where possible, loopholes that allowed income to be sheltered from tax should be closed.

With one of the most mobile workforces among developed countries, New Zealand’s tax system must help attract and retain people, businesses and investment.

I of course agree that spending restraint should be used to close the deficit rather than higher taxes. But a more “efficient” tax system which contributes to higher economic growth is very desirable.

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Jake Quinn on Bill English

October 1st, 2009 at 12:00 pm by David Farrar

I’m surprised and impressed. Former Labour Press Secretary Jake Quinn has done a fair and balanced post on Bill English. He has just gone up hugely in my estimation.

It’s time to leave Bill English alone. Labour and the press gallery have had a good run with it. Bill’s been embarrassed, he’s paid some money back and the issue will always slightly affect his credibility as Finance Minister. But enough is enough.

Bill’s home in Dipton has been in his family for 120 years. It’s on English Rd. It’s full of his stuff and he is the local MP. Some time ago he decided to have his family reside in Wellington so they could be closer together – his kids go to school there and his wife practices medicine there – it’s an honourable thing to do for someone planning a life in politics.

Bill has to maintain two residences because he has two homes, two rates bills, and everything else that goes with it.

Exactly. The regime is meant to neither advantage or disadvantage MPs. It would be different if Bill had sold or rented out his Dipton home, but he has not – as he says it has been his family home for 120 years, and will continue to be so once he leaves Parliament.

MP’s need to be ultra careful and conservative when it comes to what benefits and kickbacks they receive. The public mood for lynchings is high, especially after the British MPs’ expenses scandal which led to numerous resignations.

Labour does need to be careful. For example a (very) senior Labour MP has his adult daughter live with him in Wellington. Does than mean he should lose his Wellington accommodation allowance? I don’t think so, but if you apply the standards Labour has applied to Bill, then maybe there are some double standards.

And again, if Labour and the media think it would be a bad thing if Bill had changed his trust arrangements to get a bigger taxpayer subsidy (something a QC has said did not happen), then where is the scruutiny over the practice of (at least) the Green MPs to have their superannuation fund purchase Welllington property on their behalf, as this increases what they can claim from the taxpayer from merely interest on a mortgage to full rent of up to $24,000 a year.

How much of a difference does this make. Well if the property has $150,000 on the mortgage and interest rates are 6%, the maximum you could claim off the taxpayer is $9,000. But by vesting the property in their superannuation fund, they can claim up to $24,000 in rent.

Now this is quite legal, but has escaped the same scrutiny.

Bill should have been more careful so deserves some of the criticism he has received. However, successive Speakers of the House, from both major parties, have signed off on his arrangements and the legal buck stops with them.

Indeed, Hunt, Wilson and Smith have all agreed he qualifies.

What’s more, his being in breach, if he is, is a technicality. He’s only in trouble because the allowance is called an ‘out of town MP’ allowance. If it was called the ‘MP’s who have a home in their electorate but choose to spend pretty much all of their time in Wellington’ allowance then there wouldn’t be an issue.

This has been the problem for Bill. Because the rules use the term “primary residence” he has been arguing Dipton is his primary residence, and the public have rejected the notion that the primary residence can possibly be a place you and your family don’t live in most of the time. It does not matter that under the rules, it can be – it fails the common meaning test.

At some stage in future the rule should probably be amended to just asking whether or not the MP resided outside of Wellington before they became an MP, and whether or not they still own a property outside Wellington, which is not rented out or used by others.

A very fair post by Jake. His co-blogger Jeremy Greenbrook-Held balances it up by doing the normal partisan rant. He hysterically demands Bill must resign or be sacked and also gets numerous facts wrong. Not even worth fisking it is so puerile.

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Bill pays back allowance

September 28th, 2009 at 4:21 pm by David Farrar

Bill English has just announced:

  1. He will not take up any housing allowance in future
  2. He has not received an allowance since 28 July while the situation was clarified
  3. He has reimbursed Ministerial Services for all of the housing allowances he has received since the election

Also he has a legal opinion from Stephen Kos QC that the changes to his family trust did not in any way affect his eligibility for the Ministerial housing allowance.

Bill has said:

“What I’m announcing today reflects a set of personal decisions I have made about my own situation. It is in no way setting a precedent for others although I make the point here that I believe Parliament does have to think how it can accommodate the families of long-term politicians.

“At all times my decisions have been driven by my desire to keep my family together and provide them with as much stability as possible. It’s now clear that the system has struggled to deal with my circumstances.

“This has been an unnecessary distraction. I now want to move on and focus on building our economy and ensuring that New Zealanders have jobs.

As I have said, the perception is often more powerful than the reality. I think it is clear Bill English had complied with the rules, but the perception is that he was rorting the system so he has done what is necessary to close the issue down.

I lok forward to the same level of scrutiny on the Greens renting of houses owned by their superannuation scheme to themselves, to maximise the taxpayer subsidy. They have done exactly what Mallard accused Bill of – using a trust or fund to maximise eligibility. If they owned the properties in their own names, they would only be eligible to claim the interest off any mortgage.

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Armstrong on English

September 26th, 2009 at 7:15 am by David Farrar

John Armstrong writes in the Weekend Herald:

The time has come for Bill “Double Dipton” English to end the charade.

It has been apparent for a while that it is no longer tenable for him to stipulate his primary place of residence as being in his Clutha-Southland electorate when his real home has long been in Wellington.

I’m a bit surprised by the timing of this, as the Auditor-General is now making inquiries and presumably in time will advise whether or not Bill English has followed the rules correctly.

His highly questionable claim to be an out-of-Wellington MP – a status which made him eligible for an accommodation allowance while in Opposition and which entitles him to taxpayer-funded ministerial accommodation now he is in Government – has become unsustainable in purely political terms.

Of course there is a wider perception issue that goes beyond the rules. But I’m wary of the precedent that gets set if you punish MPs for having a family, and even worse punish them because they chose *at their own expense* to have some of their family live in Wellington with them while they are an MP.

English’s predicament has in part come about because of public expectation that MPs should reside in their electorates. That many don’t will come as a shock to many people. Those who don’t live in their electorates thus feel they have to perpetuate a fiction that they do, especially in large rural seats like English’s which feel isolated from and neglected by Wellington.

I doubt there were many people in Clutha-Southland who were unaware that during most of the year, Bill is in Wellington and his family are also. It was never a secret.

But this is not a new issue, and in fact one that the Electoral Act has been quite explicit about since at least 1956. First we have s 72(6)(b):

The place where, for the purposes of this Act, a person resides shall not change by reason only of the fact that the person is absent from that place for any period because of his or her service or that of his or her spouse, civil union partner, or de facto partner as a member of Parliament

Now this is for the purposes of electoral enrolment, but it shows that long long ago it was recognised that MPs would be forced by their job to reside outside their normal home, and that it was undesirable for this temporary relocation to be deemed a change of primary residence.

We also have s72(10)(a):

In the case of a person who is appointed to be a member of the Executive Council, or who is the spouse, civil union partner, or de facto partner of any person so appointed, the following provisions shall apply notwithstanding anything to the contrary in this section, namely so long as he or she holds that office he or she shall be deemed to continue to reside at the place of residence in respect of which he or she was registered as an elector of an electoral district (in this subsection referred to as the original district), notwithstanding his or her absence therefrom at the seat of Government or otherwise, unless and until he or she duly applies for registration as an elector of another electoral district of which he or she is, apart from the provisions of this paragraph, qualified to be an elector.

This is why both Bill and Mary English (the media have incorrectly reported she is enrolled in Wellington – she is enrolled in Clutha-Southland) are residents of Clutha-Southland for electoral purposes.

Now the electoral district enrolment is not the only test for primary residence. The Auditor-General in 2001 laid out a series of factors. Now these are not black and white in that you must tick 11/11 or 9/11 to be deemed to live in Place A or Place B. Ultimately the Speaker decides on the totality of the factors. They are:

(a) the extent of the MP’s parliamentary duties, and the amount of non-parliamentary time available to the MP to return “home”;

It takes around ten hours return (five hours each way) to get from Parliament to Dipton. And in the last decade English has held senior roles in Government and Opposition with duties around the country. I doubt there is much dispute on this factor that he has little time to return to Dipton, even if his family had stayed there.

(b) the locations where the MP spends most of that nonparliamentary time;

During most of the year it is Wellington, but during the summer break it is Dipton, as I understand it.

(c) the locations where the MP’s current spouse or partner and family live, and where other dependent family members usually live (including where they spend most time, work, or attend school);

And this is clearly Wellington.

(d) the person in whose name (whether the MP, the MP’s spouse or partner, or some other individual or legal entity) each property is owned or rented, and the utilities (e.g., electricity, telephone) are supplied;

I’m not sure but think the Dipton property is in Bill’s name and the Wellington property in the name of the Endeavour Trust.

(e) the level of the MP’s financial commitment to meeting the financial outgoings on each residence, including property maintenance;

Same for both I guess.

(f) the type of accommodation available to the MP at each residence (e.g., boarding, flatting, or full occupation), and who else lives there (other than the MP’s family);

Both are fully available.

(g) the availability of each residence for use by the MP at any time (e.g., whether it is rented out in periods of absence);

As far as I know Dipton is not rented out, during periods of absence. This is a key factor in my eyes. The provision of accommodation in Wellington is designed so that an MP is no better or worse off. If you were renting out your electorate home, then you would be gaining money.

(h) the nature and extent of the MP’s ties to each local community in which he or she has a residence;

I have little doubt Bill will have stronger ties to Dipton than Karori.

(i) the residence where the MP intends or expects to live should he or she cease to be an MP;

Bill has said he will return to Dipton when he is no longer an MP.

(j) the residence where the MP and members of his or her family are registered for electoral purposes; and

Bill and Mary are registered in Clutha-Southland. The children of voting age are enrolled in Wellington Central – as required by law.

(k) for electorate MPs, the location of the electorate.

Which is Clutha-Southland.

Now as I said there is a degree of subjectivity involved, as it is not just a case of ticking all 11 boxes one way or another. You can reasonable argue the merits.

This is why I think it is absolutely correct the Auditor-General is investigating. This is not a bad thing. This is a desirable thing.

Now John Armstrong is right that there is a wider issue of perception, and political judgements have to be made with that in mind. But personally I think it would be desirable to wait for the Auditor-General to report back before rushing to any decisions.

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Auditor-general agrees to English investigation

September 25th, 2009 at 1:53 pm by David Farrar

The Dom-Post reports:

Deputy Prime Minister Bill English’s use of his taxpayer-funded accommodation allowance is to come under scrutiny from the auditor-general.

Following a complaint fro Progressive MP Jim Anderton to Auditor-General Lyn Provost about the finance minister claiming out-of-town accommodation expenses, the Office of the Auditor-General confirmed today it would make “preliminary inquiries”.

I’m delighted the Auditor-General has agreed to investigate. It is entirely appropriate she does so as questions of propriety have been raised.

I actually think the Auditor-General should have been asked to investigate much earlier on. In fact it would have been smart politics for Bill English himself to have asked them to investigate a month or so ago.

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Edwards on Key

August 21st, 2009 at 1:00 pm by David Farrar

Brian Edwards blogs on John Key:

Recently I bumped into Paul Henry having coffee with his daughter in trendy Herne Bay. He’s really very nice when you meet him in person off the box. Or maybe it was the civilising presence of his very nice daughter.

Anyway, we got to talking politics, as you do. He was enthusing about John Key whom he’d interviewed that morning. ‘The thing about him,’ he said, ‘is that he just answers the question. You ask him a question and he just answers it. ‘

I’d formed precisely the same impression watching Key on television. He seems natural, unaffected, nice. There’s no sense of the wheels going round in his head as he searches for a clever, stay-out-of-trouble answer. Nothing obviously  Machiavellian. No evident side. ‘He just answers the question.’

I’m tempted to joke that his comms staff have tried their best to train John up to not answer the question, but they’ve failed :-)

Sometimes I get a bit frustrated that John does answer pretty much anything media ask him. Hence we had the PMs views on the schoolboy rugby fight. I don’t really blame John for answering the questions, but do wish media would ask him more about policy issues and less about his view on schoolboy rugby fights.

I’m inclined to think that this is the real John Key, just as the niceness is the real John Key. I’m a Labour man from way back and I’m saying this – Key might just exemplify the core advice we give to all our clients: In your dealings with the media, be straightforward, tell the truth, admit your mistakes.

The John you see is the real John. Many media have commented to me that he hasn’t changed at all since becoming Prime Minister.

Trouble is, Key isn’t the government. If any one person is the government, it’s Bill English who doesn’t ‘just answer the question’. Ideologues never just answer the question. Ideologues always have a hidden agenda.

Edwards is correct that Bill doesn’t tend to just answer the question. Bill thinks carefully about his answers. He considers whether his answer is consistent with the past, and could it have ramifications for the future. Bill worries about consistency, precedents, ramifications etc. He sees pretty much every issue as complex (and they usually are)

Bill is not an ideologue. When he was Leader he pursued a very moderate agenda and when he was rolled by Don, the “ideologues” in Caucus were all very much in Don’s corner. And his record as a Minister was pretty much someone focused on what is practical, than the need for philosophical consistency.

This is why the Key-English partnership works pretty well. Neither of them are strongly ideological and Key’s spontaneity works well in the leadership role and Bill’s caution is well suited for a Finance Minister.

Key’s role isn’t unlike what David Lange’s role was – to be the palatable face of the government’s free-market agenda. His role is to be nice, just as Lange’s role was to be the lovable raconteur, the engaging comic, the avuncular Methodist defender of the welfare state. Nice, warm, not scary.

Key is and Lange was the frontman. Whether Lange knew it when he was first chosen as leader is open to question. I doubt that Key is so naïve.

I can see the picture that Brian is trying to draw, but I think the comparison fails. Yes John Key is the warm face of National. He is far more popular than National itself is. But he is not just a smiling frontman who leaves everything to his Ministers.

In fact his style has been more like Helen Clark’s. He intervens often in portfolios, sorting out issues when they begin to threaten the Government. He sorted out the S92A fisaco after no Minister wanted to touch it. He has over-riden his Defence Minister a couple of times. He got his cycleway of course. He also was intimately involved in big packages such as the Youth Opportunities.

I’d even venture an opinion that he may be even more hands on than Helen Clark. Clark would use Michael Cullen a lot to sort out the real thorny issues. So far Key has been doing most of it himself. He is also probably more engaged with coalition management than his predecessors.

So, as the Government slowly but surely rips the heart out of the welfare state, rewarding the rich and punishing the poor, Key’s job as frontman is to be the ultimate populist PM. His numerous U-turns on policy are a reflection of that. If he had an embroidered sampler above the desk in his Beehive office, it would read IF THEY DON’T LIKE IT, CHANGE IT.

Heh that is not entirely off the mark. John will do unpopular things, but sparingly and on his terms. And as I have said before he does not see a compromise as a sign of weakness. He comes from a commercial background where a compromise is normal. It is how deals happen.

The nonsense about ripping the heart out of the welfare state is Brian getting tribal. The Government is spending more money than ever on the welfare state. I wish it would take an axe to parts of WFF, but it won’t.

Despite all his protestations, I’m willing to lay odds that that will be the fate of the misnamed Anti-Smacking legislation. They really hate that.

People should read very carefully what he has and has not said. The reaction to the outcome will be very interesting.

The comments on the blog post are p very interesting, including one from David Lange’s widow – Margaret Pope who makes the case that Lange wasn’t just the smiling frontman that people now describe him as.

It is one of the things I love about blogs is that it allows people with direct relevance to a discussion, such as Margaret Pope on Lange, to easily add their contribution.

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Guest Poster – Tara te Heke

August 9th, 2009 at 8:13 am by Tara te Heke

Kia ora koutou

When David asked me to write a few posts while he was away I was surprised. I’ve only known DPF a few years and it was trusting of him.

What? A Maori solo mum of 3 children, write of thousands of you angry white middle aged male computer geekoids on Kiwiblog? But you know, needs must and I have a tonne of time on my hands because Paula Bennett said so.

Anyway I have promised to put on my best Bill English and write to you whiteys about some Maaaaori issues and first up being a solo Mum.

So what’s it like? Pretty choice actually. In between rorting the taxpayer of heaps of dollars, raising my kiddies without their father and surviving without any trips to Ozzie or even struggling sometimes to get a ride into town when the car has blown up it’s really awesome.

Like when I left school at 16 I went to work in the local freezing works. It was seductively a great job as I was earning more pingers than anyone I knew and even more than University graduates. At 19 I found the man of my dreams there. Big, strong and brown. To start with it was like a fairytale. Then he got angry easily and gave me the bash. Often. I thought if I gave him some children it would be better, that he would grow up and be a great Dad.

I had the first one at 20 when is topped working. My man had a good job and we were getting by okay. I didn’t have to work, in fact he liked it that way as it made him feel like the hunter gatherer, the provider. Just me and the baby. Our little team. But the worst happened and he lost his job. Man that was hard. He hated going to welfare so I would have to go. He got depressed and angry again. And took it all out on me. I’d get the bash for anything. Like the time I cooked dinner and the roast spuds got a little burnt and he enraged and chucked them all over me. The pan smashing my head and I ended up the next day in A&E when my best friend T came to deal with me and wouldn’t accept that I’d walked into the door.

This continued another few months and in that time the sex was brutal. Drunk sex. Not Once were Warriors sex or anything but sex to punish me for spending time with bubs and not him. I got pregnant again and then my heart sank as I found out I was having twins.

My mother was at least helping as the same had happened to her, but she knew something was wrong with me. I knew that twins would mean now 3 times the work, 3 times less income left and more violence when my man worked out he was more useless and couldn’t afford to keep us together without help from welfare. Mum had to help my sister as well. And our brother who has a handicap and can’t work so gets a sickness benefit.

When my Man started to bash up the little ones I knew I had to leave. To get out and not go back. It was my fault if I didn’t and I had all the power. I had 3 kids and went to welfare, sitting in the office and crying. I was a number but they were okay, there was worse than me in the waiting room.

Then I got angry. What made it worse was I knew he was getting away with it. I had three kiddies to feed and he had none now. He could divorce our family and pay nothing, have no responsibility and do it all again. He would find another woman and repeat it all on her.

So when you all get down on solo Mums you have to remember there are solo Dads as well. We haven’t left them by choice, none of my friends have, most of us have had to leave like me with the violence, friends of mine who have been cheated on and had to leave, and some others whose men have just walked out and never bothered to come home, let alone send a cheque.

There are some awesome Dads out there who spend every last cent they have on their kids. They take the time to look after them and be a part of their lives. But they are few and far between. I haven’t been blessed meeting one. My man is a deadbeat.

Still no job, hooked up with a girl I went to school with. I only hope she’s not getting the bash like I did. Other than that, she’s welcome to him.

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National Conference wrapup

August 4th, 2009 at 12:37 pm by David Farrar

I’m old enough to have attended the last victory (won Government) conference for National. It was in 1991 and was also in Christchurch. Both saw a new Government nine months or so into office, and both coping with a nasty recession.

However in 1991, the conference was not just attended by the party faithful, but there were around 8,000 protesters, close to 1,000 Police (they cancelled leave for every police officer in the entire South Island), and bomb squad sniffer dogs. While the 2009 National Conference did not attract even a sole protester despite National now being in Government. I can’t ever recall a conference by National in Government that didn’t attract protests before.

And in spring of 1901, National was at 22% in the polls – 20% behind Labour. As we head into spring 2009, National is at 56% – 25% ahead of Labour. A remarkable contrast.

So the conference was obviously a buoyant one, with delegates and MPs in good heart. It was at the Christchurch Convention Centre, and here is the view from the Crowne Plaza next door.

DPF 004

The PM’s speech was of course the highlight, and it was very good planning he used it to announce a timely and major initiative. In Government, people like a speech of substance, not just bashing the other side. In fact John did not mention the Opposition once during his speech.

Bill English gave a very sober and insightful speech on the realities of the economy and the challenges ahead. And I thought Simon Power’s speech on all the justice initiatives was first class. Also was good to see the Young Nats President Alex Mitchell use his speech not just to fellate the party, as Young Nats sometimes do, but demand action on voluntary membership of student associations and warn against any moves to increase the alcohol purchase age from 18 to 20.

What didn’t work so well was the Ministerial forums. Maybe I’m just getting old and cynical, but hearing five minute brag sessions from Ministers about what they are doing turns me off. I’d rather have less Ministers with more time to talk policy in detail, than giving each Minister five minutes and time for only a couple of questions. I did enjoy joking that anyone who wanted to ask Paula Bennett a question should be obliged to first state their IRD number :-)

Even more than that, what I personally would have preferred is a Ministerial Q&A session – say for 90 minutes. I know this was meant to be the victory conference, so maybe they may do it next year. But I think giving delegates the chance to ask questions of any and all Ministers is a good look, and gives delegates more of a chance for interaction.

Then we had the Board and Presidential elections. I’ve known the five people elected to the Board for pretty much a decade or more. They are all good people, who will do a diligent job on the Board. There are not any of them that I would not want on the Board as they bring a good mixture of skills, experience and geography.

But having said that, I am disappointed Wira Gardiner did not get on. As I had a role in the vote count, I thought it was inappropriate to “take sides” before the vote, but I do not share any of the reservations that Whale Oil had towards Wira. I’ve known Wira since his first wife was a candidate and he has been involved for at least two decades, including service as a Vice-President of the Party.

His record of achievement speaks for itself, in that he is now formally Sir Wira. Both Labour and National Governments have used him as a trouble shooter to sort out dysfunctional agencies. Someone with that governance experience would have been well placed to contribute to the Party’s Board. Plus there were also some obvious advantages in terms of relationships with the Maori Party – but that is a secondary consideration to me. Merit is what I value.

So why did Wira not get elected? Well there was a variety of reasons. Hekia, his wife, being an MP was one of them – but not really the major factor in my opinion. The main reason is that Wira was touted as a potential President, despite not being a current Board member. And it seemed there was a reasonable chance of Wira becoming President if he did get elected. By no means certain, but a reasonable chance.

What this meant, is those who did not want Wira to be President, followed Whale Oil’s advice and ranked him lowly to keep him off the Board. I have no doubt he would have been elected if he ruled out standing for President. Now I was not a delegate myself, so didn’t have to think about who I would leave off the Board if Wira got on. As I said, they are all good people – but there were only five vacancies.

Peter’s election as President was not a surprise. One press gallery journalist had quite a laugh on Sunday morning when they saw on my laptop I already had written a story announcing Peter’s election as President, and was just waiting for the official announcement to click the publish button.

I believe the number one objective for the President is to raise the money the party needs to function, and win elections. Peter’s business background should do him well in that regard and again respectivelly disagreeing with Whale, I expect Peter will remain President through until the 2011 election at least. Of course it will be up to delegates at the 2010 conference to make that decision on re-election to the Board.

Also have to mention the well deserved awarding of the Sir George Chapman trophy for service to the party went to our own blogging Homepaddock – Ele Ludemann. I won’t even mention how she was alseep in her room when they awarded her the prize :-)


This is a hazy photo of the screen, but had to share this photo of Tauranga MP Simon Bridges forming part of the conference dinner entertainment, Simon took it all in good humour as the entertainers put him into a number of poses.

The conference saw Judy Kirk retire as President also after just under seven years in the job. This makes her the third equal longest serving President. Sir Alex McKenzie did 11 years, Sir George Chapman nine years and Sir Wilfred Sim and Ned Holt both also did seven years. I was counting votes during the farewell to Judy, but understand it was warmly given and received.

The number of people attending must be a record for a non election year. Around 700 people attended and there were 574 voting delegates. I saw many people there who hadn’t been to a conference for quite a few years.

It will be interesting to see what the mood is like in twelve months time at the 2010 conference.

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More on Expenses

August 2nd, 2009 at 12:04 pm by David Farrar

So many stories and issues to respond to. First we have:

The Green Party has renewed its call for travel allowances for former MPs to be cut. …

Act MP Sir Roger Douglas, who took his wife on an overseas holiday, put 90 per cent of the air fares on taxpayers. …

Present and former MPs elected before 1999 receive a 60 per cent discount on travel after nine years of service, after 12 years they get 75 per cent and after 15 they get 90 per cent off.

There is no compelling public policy rationale to have subsidised for former MPs. A case could be made for former PMs and GGs (as they get so many speaking offers and charity requests) but there is none for former MPs as a group.

Hence it was a good move that in 1999, Parliament changed the rules and that any MPs elected from 1999 onwards do not qualify for the subsidy.

Despite the popularity of such a move though, I do not support the Greens position which is to apply the change retrospectively to those elected before 1999. The subsidy was part of the terms and conditions they got elected to Parliament on. Now sure removing the subsidy from them would be hugely popular, but it sets a precedent that it is okay to change the rules retrospectively on other issues.

I do think it was politically unwise of Sir Roger to use the perk, once he was back in Parliament. When you are a former MP you don’t have to worry about what the public think, but having re-entered Parliament you do. In fact if he had not re-entered Parliament we would not even know of the trip.

There is a fairly strong case that now MPs expenses get broken down to each MP, so should the subsidies for former MPs. Either way though, as the subsidies have now been stopped for future MPs, the cost of this perk will only reduce over time.

The Press editorial welcomes the new transparency and says generally most expenses are justified. The do say:

It was revealed that Key had run up $172,000 using Crown cars. The Prime Minister’s astonishment at this figure, itself another positive feature of opening the books, and the overall cost of the limousines should cause a rethink of whether they are the most cost-effective way for ministers to travel. Key’s own high car cost is influenced by the reality that, for security reasons, he must travel with two cars, although even this is more modest than the lengthy motorcades of other world leaders. But it might be a better use of resources for more junior ministers to use taxis more often.

Actually it would probably cost taxpayers more if they did this. It all comes down to the difference between fixed and marginal costs. VIP Transport has a number of cars and drivers available. If a Ministers needs to use them, the marginal cost is minimal – petrol and wear & tear. Definitely cheaper than the $2.50/km a taxi charges.

However the DIA have a book keeping charge of $90 per hour or so, for use of VIP Transport, to reflect the capital costs of the cars and the staff drivers.

The problem is that demand for transport by Ministers is uneven. During the working day there may be little use, while Monday morning and Thursday evening there could be 20 cars in use all at once.

So there is no cost saving in using a taxi when a VIP car is sitting in the Beehive basement with a driver being paid regardless of whether he is driving or not. That will cost the taxpayer more money.

To reduce the costs, you would have to reduce the number of cars and drivers in the fleet, and that would mean a decision that some Ministers would not be able to access VIP Transport at times of high demand. And maybe that is what will happen one day, but it will also mean that those Ministers will not be able to have secure conversations while being transported, and in my experience many Ministers do spend most of their trips returning calls on the phone or discussing issues with staff. No easy answer here.

Talking of VIP Transport, Whale Oil has blogged about the mystery of Darren Hughes seen using Ministerial BMWs recently.

Now we have the story around Bill English’s accommodation, which a witty sub-editor captioned “An English Man’s Home is Our Castle”.  Before I talk about this seriously, I should mention that as Bill was being interviewed by the Herald about this, I was with a group of media and press secretaries an we noted Bill was doing his normal arm gestures. I decided to translate these and started a running commentary “And the swimming pool is going to go here, and over here will be the tennis court, and up here the golf putting range and finally we plan to replace the road with a moat. Heh.

Bill, as Deputy Prime Minister, would in fact normally live in Vogel House – currently valued at $4.7 million on Woburn Road. But the Governor-General is squatting there at the moment. If it were not for that, this issue would not even have arisen.

Here is how I see it. Bill is the MP for Clutha-Southland. He has a home on his farm in Dipton. At some stage after he became an MP (I can’t recall when), Bill’s wife and six kids moved to Wellington so they had more time together as a family.This does not make him a Wellington based MP. In fact the law is explicit on this – s72(6)(b) of the Electoral Act states the place of residence shall not change because a person “is absent from that place for any period because of his or her service or that of his or her spouse, civil union partner, or de facto partner as a member of Parliament”.

The backbench MPs Wellington accommodation expense limit of $460 a week is designed to allow an MP to have a small apartment in Wellington, or stay three nights a week in a hotel room. It does not cover having a family home in Wellington, let alone one for a family of eight. So Bill and Mary have been paying rent and/or mortgage costs on having a Wellington home on top of their Dipton home (and yes they do still spend time there).

Now as I said the MPs Welington expense limit of $460 a week is not meant to cover an MP living in Wellington. It is to give them a place to sleep during the week when the House is sitting.

Ministers are different. Many, if not most, Ministers are required effectively to be in Wellington most of the year, and unless they like getting divorced, their families often move to Wellington also. That is why they get Ministerial Houses.

MPs spend three days a week in Wellington around 30 weeks a year (and select committees sometimes on top). Ministers spend close to five days a week, 46 weeks a year. Again that is why they get Ministerial Houses.

Now Ministerial Services owns some properties, and rents others. John Key has, I believe, introduced a rent cap of $700 a week for renting properties for Ministers. AFAIK there was no cap previously.

Now ideally Bill English should rent out the home he owns, in Wellington (for which he paid most of the cost) and move into a Ministerial Services provided home. As I said, he would normally be offered Vogel House (valued at four times his current residence).  This would avoid any hint of him being seen to gain money from being a Minister by having Ministerial Services rent a property he owns back to him.

But his explanation of why he did not want to move house again is pretty good. Having previously rented, they had moved house four times in the last two years and so they decided to purchase it (through their family trust) and he isn’t keen on putting the family through another move.

Bill actually could make more money if he moved into a Ministerial Services home, and rented his Wellington property out as it is quite possible he could rent it for more than $700 a week. Seven bedroom properties tend to cost a lot. So he is not financially benefiting from staying put.

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Bill having fun

July 24th, 2009 at 10:16 am by David Farrar

I suspect Bill English enjoyed yesterday. It is always a bad sign for an Opposition when Governments are looking forward to question time and complaining it is only three days a week. From Hansard:

Hon BILL ENGLISH: The Prime Minister has a great deal more confidence in the Minister than a certain Charles Chauvel had in a former Minister when, as president of the Labour Youth Council in 1988, he told the then employment Minister, Phil Goff, to “take action or resign”. Charles Chauvel is probably feeling the same way today.

Some Researcher or staffer earned his pay yesterday.

Chris Tremain: Has the Prime Minister seen any reports of an employment Minister dealing with rising unemployment during a recession?

Hon BILL ENGLISH: Yes, he has seen a report that states: “It takes more than hot air, more than rhetoric, and more than using the backs of unemployed people to make political points. … I despair at the gamesmanship of politicians trying to get votes from the problem of unemployment”. That was said by Annette King in this House.

This is the problem you have when both the Leader and Deputy Leader were Ministers in not just the last Government, but also the one a decade before that.

Moana Mackey: How can the Prime Minister have confidence in a Minister responsible for cutting the training incentive allowance, and does he agree with Christine of Gisborne, a solo mother of four who now cannot do the nursing qualification that would enable her to move off the domestic purposes benefit and into paid work, when she says: “The Government has been sitting there telling us to upskill, get into jobs, not run up debt, to ride out the recession, and then they go and take away the assistance that some people need to enable this to happen.”?

Hon BILL ENGLISH: What we have learnt from the activities of the Labour Party over the last month is that we have to be pretty careful about believing whether Christine of Gisborne even exists, and also whether she is on the domestic purposes benefit, whether she owns three investment houses, and whether all the information she has given to the Labour Party about her situation has been truthfully represented here.

Once bitten, twice shy. Everyone is going to be very wary of any “example” put forward by Labour.

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National’s Northern Regional Conference

June 7th, 2009 at 12:17 pm by David Farrar

National had it’s Northern Regional Conference at the weekend. The Northern Region is the current powerhouse of the National Party. A few years ago there was only a handful of Auckland MPs, and few were seen as heavyweights.

Today no less than 12 Ministers come from the Northern Region, plus the Speaker (who had people non stop congratulating him on having made Question Time more meaningful – which is interesting as it is National Ministers he is forcing to answer questions). It has probably been a long time since Auckland was so forcefully represented in a National Government

As expected people were in good spirits, being the first conference in Government since 1999. The Richard Worth scandal wasn’t distracting people from the business, even though it was a source of considerable black humour from some people.

The main speech was of course from John Key. No big revelations in it, but there were two things I found significant. He talked about hard drugs, and especially P, quite passionately and said that it was arguably the most corrosive thing in NZ. I think there is going to be a very significant all of Government focus on P, led by him.

The other item of significance was he basically said that community bards in the Super City will be bulk funded and have their own budgets to spend. Also John Carter said that their powers will not be left to the new Auckland Council but be defined in statute, so it sounds like they are going to be quite souped up.

John got a lot of laughs when he revealed he had paid $20 for a raffle ticket with the prize being lunch with Bill English. He said that if he won, he would give Bill a season pass for the new cycleway.

John and Bill have a very effective double act, where rather than pretend there has not been a disagreement between them at some stage, they openly acknowledge they were saying different things, and then joke about it at every opportunity. It is a very very effective way of taking the sting out of it, and also sending a strong message that while they may disagree at times, they have a strong personal rapport and are comfortable hassling each other in a very Kiwi sense of humour way.

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Quoting Bill English

June 4th, 2009 at 1:31 pm by David Farrar

NZPA has a story (not onlne yet) quoting Bill English taking questions at a post budget speech.

He is talking about how he wants to make it easier for graduates, especially overseas, to pay off their loan. His exact words:

For example, he said it was extremely difficult for students to get information about and repay loans, especially when they were overseas.

He said graduates were computer literate and handled banking on-line so should be able to make payments to their loans the same way.

“If you are overseas with a student loan it’s very hard to even find the IRD’s phone number anywhere,” Mr English said.

“For any other service you just go on your laptop and they’ve got their pirated movies, and they’ve got their music downloads and they’ve got their email from mum.

“It’s all there — so why aren’t their student loans there? Then they’d repay them.”

So Bill is saying it should be as easy to pay off your student loan, as it is to pirate music and movies :-)

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The Blue Baron and Snoopy

June 4th, 2009 at 11:39 am by David Farrar


There was a good crowd at the Backbencher last night for the unveilign of the new puppets. John and Bill were cast as the Blue Baron and Snoopy. Was very disturbing as John kept ticking Bill’s stomach (the puppet that is).

Also had Pita Sharples in a waka, and Roger Douglas as Rodney Hide’s puppet master.

John Key joked that he could have done with the machine gun in the plane at around 8 am yesterday. Bill joked about wanting to know about which National MPs had been seen in the Backbencher after Boycie revealed this is where Clark, Wilson and co plotted against Mike Moore.

And as the Dom Post reports, Rodney said:

“The great thing about having Roger Douglas in our caucus is that you get plenty of advice,” Mr Hide said last night.

“The advice is never contradictory because it hasn’t changed in 20 years.”

Afterwards around 60 of us went upstairs to hear about Obama’s first 100 days from a visiting US expert. Thanks to the US Embassy and State Department for helping make it happen. People seemed to enjoy it, and we had a good turnout of MPs.

After that we had Backbenches which was fun also. A good Wednesday night.

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The 2009 Budget

May 28th, 2009 at 2:03 pm by David Farrar

First of all kudos to Bill English and Treasury for getting rid of the old rolling embargo that was in place for previous budgets. This meant you could not blog a specific item until the Minister of Finance read it out in his speech. It made blogging and reporting very hard as it was not always clear whether the part you wanted to cover was even in the budget speech, let alone when.

So now it just a simple 2 pm embargo which means I can just hit publish at 2 pm, which I have done.

Deficits and Debt

The fiscal parameters inherited by Labour meant gross debt was tracking to reach 48% of GDP by 2013, and 70% of GDP, or $227 billion by 2023 – equal to $180,000 of debt for every household of four. There was a very significant structural deficit. This is because the economy will have $50 billion less output over next three years than forecast in the 2008 budget.

The status quo would have meant future generations would face either massively higher taxes, or cuts in health and welfare spending as more and more money would be spent on debt servicing. Debt servicing would have increased to $14 billion a year – more than current Vote Health.

The measures outlined in the 2009 budget are forecast to have gross debt peak at 43% of GDP in 2016/17 and then decline to 37% by 2023 – almost half the 70% on existing parameters.

The projected deficit for this upcoming year is still a very large $7.7 billion and next year looks to be $9.3 billion, before gradually reducing. So the Government is borrowing a lot of money to help keep people’s incomes and jobs steady.

Labour budgeted for $1.75 billion a year of new spending initiatives. National is reducing this to $1.45 billion for this year and $1.1 billion in out years. This is pretty reasonable – in the late 1990s it was only $600 million a year. However it will pose some real challenges in around 2011/12. For the next two years expectations will be lowered due to the global recession. People are accepting zero wage increases etc, and lobby groups know now is not the time to ask for lots more money.

But in two to three years, with the recession behind us, there may be a lot of pressure for new spending beyond the $1.1 billion. Inflation and population growth alone can take up a fair bit of that. We will still be running large deficits, but the economy will be growing and the Government will come under real pressure.

Spending Initiatives (generally all over four years)

  • $323 million for home insulation – grants of up to $1,800 for most households and up to $3,000 for community service card holders
  • $3 billion for Vote Health, being $2.1b for DHB services, $70 million for 800 more health professionals, $130 million for maternity services and $245 million for 20 new elective surgery theatres
  • $1 billion in new spending including $523 million on new schools and school upgrades
  • $900 million for Justice including 600 more police for $183 million, 246 more probation officers at $256 million and 1,000 more prison beds at $385 million

There is lots of little stuff also, but the Government has targeted most of the extra spending in a few key areas.


Unemployment is forecast to peak at 8% in September 2010. I hope so, but suspect it may push 10% as I think the US and Europe are more stuffed than people realise.

The Government has committed $7.5 billion of infrastructure investment over the next five years through toad building, state house building and refurbishments, new and improved schools and broadband rollout. On top of that 600 more police, 246 more probation workers and 800 new training placing for health professionals.

Labour’s planned infrastructure/capital spend was $900 million a year – it has increased to $1.5 billion a year. Labour will claim more should be done for jobs, but in reality National is spending more on infrastructure projects than Labour would have. And the long term solution to jobs is having a competitive robust economy.


The line by line reviews have identified $2 billion of savings (around $500 million a year) that is being reinvested in frontline services. This means that that the $1.45 billion increase in operating spending will fund $1.9 billion of new initiatives.

As an example the Government has cut funding for adult community education hobby courses by $54 million, and increased special education funding by $51 million. Sounds like a good reprioritisation to me.

Also reducing support function expenditure at the Ministry of Education by $18 million to help fund a $36 million literacy and numeracy initiative.

Tax Cuts

Yes they are gone. The official Government line is deferred, but to no particular date, so I say they are cancelled. When tax cuts are budgeted again in the future, it will be a new package I suspect, not just reinstate the planned 2010 and 2011 tax cuts.

English said that it is highly unlikely tax cuts would be reinstated before the next election. He was asked if he would deliver tax cuts before the books were back into surplus (which is not until 2017), and he said the main thing they would look at is if the economy was growing strongly enough.

The deficits for the next two years, even without the tax cuts, is a combined $17 billion. They are a victim of timing partly. I did ask the Minister what their rationale was for deciding to break a tax cut promise rather than a spending promise such as interest free student loans, especially as he originally opposed interest free student loans but always campaigned for tax cuts. English responded that people feel insecure in a recession, and they made a decision not to cut any current entitlements to help confidence and security.

Several from the “right” congratulated me on my question, as no one else really pushed back much on the tax cuts vs spending issue. I was however amused to be berated by Miss Ten, who was attending as an analyst, for trying to get interest put back on her rather large student loan.

The $900 annual cost of the future tax cuts is around 20% of the total tax cut package. The Oct 2008 and April 2009 tax cuts are worth around $4 billion a year of foregone revenue and were very well timed in terms of fiscal stimulus. So at least we got $4 billion of the $5 billion!

In my words the main reason why they are gone is that they had not yet occurred. It is far less painful to cancel future spending or tax cuts, than to cancel existing spending or hike existing tax rates. Yes people get annoyed when they don’t get something promised, but they get more annoyed if you actually take away something they already have.

National did “pay” for the 2010 and 2011 tax cuts by reducing KiwiSaver subsidies by over $1 billion to compensate. The problem is that the fiscal position has changed so much since PREFU that anything not yet nailed down had to be sacrificed.

The problem for the Government is that while fiscally cancelling the tax cuts was the right thing to do, it makes their long-term closing the gap with Australia objective much harder. A low tax economy (with less tax churn) will generally grow faster than a higher tax economy (there is 40 years of OECD data to back this up).

The Government says it has a medium-term goal of a top company, trust and personal tax rate of 30%. I asked the Minister if he could define the medium-term and he said they were having problem even defining the short-term!

NZ Super Fund

As everyone expected, and as Dr Cullen himself said would be sensible when he set the Fund up, the automatic contributions are being suspended until there are surpluses again. The fund was explicitly set up to be funded out of surpluses. It was never intended to borrow for the contributions. So when you hear Goff and Cunliffe squeal about this, remember they are wrong.

The automatic contributions are likely to be suspended for 11 years, and this will prevent $19.5 billion of extra debt (plus interest). Once automatic contributions resume, they will be higher due to the Fund’s formula – $2.5 billion instead of $2.2 billion.

The Government is still going to make a voluntary contribution of $250 million this year. They seem to be tagging it for investment within NZ and to supplement the supply of capital to local businesses. This is very smart politically, but very dumb in an economic sense. However it was an election policy so no surprise.


There’s not much one can argue should be done differently. I would almost say the budget wrote itself, as the structural deficit and debt projections had to be dealt to. This budget knocks $100 billion off the long-term debt projection.

It is quite a canny mixture of ingredients:

  • An increase in infrastructure spending
  • Focusing new spending on core areas of health, education & law & order
  • Plowing savings back into new frontline spending, so one is not cutting overall spending in a recession.
  • Reducing future spending and future tax cuts to bring the deficit into surplus and cap debt.
  • Suspending Super Fund contributions so you don’t borrow $20 billion to “save”

It is pretty orthodox, and as I said probably almost wrote itself. It isn’t a budget for closing the gap with Australia, or seriously rejigging the economy. It’s the budget you have to have first, before you can get to grips with some of the other stuff. I can over-state how much of a disaster it would be I financing costs on debt were allowed to grow to greater than current Vote Health.

The politics around the Budget will be interesting. You could almost see the Greens abstain on it – after all it cancels tax cuts and gives a huge amount to home insulations etc. Labour will not be able to propose a constructive alternative (they will of course scare monger). The consensus amongst most media in the lockup seems to be that there wasn’t much else the Government could have done.

It also sets up an interesting election in 2011. The books will still be significantly in deficit, and National will not be offering tax cuts in all probability. So what will Labour promise to do differently? If they promise extra spending, then they can be branded as irresponsible and increasing debt. If they promise tax increases, then that won’t be very popular either.

Labour’s entire 2008 election campaign was based on how you can’t trust John Key, that he is not a centrist – but secretly a hard line right winger (like me :-) who wants to sell everything and slash spending and taxes. Their worst nightmare continues to play out – that John Key is exactly what he campaigned on – a centrist.

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The unauthenticated Budget week diaries of John Key and Bill English

May 28th, 2009 at 8:17 am by David Farrar

Claire Trevett takes the piss, even so slightly.

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Grey Power on Ministers

May 8th, 2009 at 3:00 pm by David Farrar

Even I was laughing yesterday as Annette King was reading out some frank observations from Grey Power on initial Ministerial meetings, wth Bill English trying to sugarcoat them. Claire Trevett reports:

The post-mortem by president Les Howard on the March visit has handed King a wonderful arsenal.

She first reads out his rendition of bumping into ACC Minister Nick Smith, who had not responded to their requests to meet.

“His face reddened, and with his head down the moment the lift arrived at the ground floor he took to his heels and was last seen hurrying away in the distance.”

Heh, and even better:

King, obligingly, shares their verdict of that hard-won meeting as one that “left a sour taste in our mouths as we felt we had received the old-fashioned ‘brush-off’.”

It went on, saying Bennett needed to “shape up to her obligations”, before ending, “It appears she thinks a loud laugh will solve all questions put to her and this meeting was a complete waste of her time. Well, it certainly was a waste of ours.”


However Claire goes on to report on teh quotes that Annette did not read out:

Had English read the full report, he would have had a happier time. Grey Power described him as “very pleasant”, and Senior Citizens Minister John Carter as “one who can be trusted to get things done, rather than just talk about what needs to be done”.


But the real killer English needed to take the wind out of King’s sails came in their verdict of the PM: “I found John Key much easier to talk to than the previous Prime Minister”.

Heh that would have been a wonderful rejoinder, if Bill had it at the time.

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Purchase Advisors

May 1st, 2009 at 10:21 am by David Farrar

I had to laugh at this story in the Herald that has, of all people, Grant Robertson and Chris Hipkins complaining about Ministerial purchase advisors.

Grant and Chris were both highly partisan ministerial staffers for a number of Labour Ministers, including the PM. Now nothing wrong with that – I was once upon a time also. But not the people I would then choose to act outraged over Ministerial purchase advisors.

The purchase advisors are not even that political. And they are not new – I recall some in the 1990s. What they are about, is every year the Minister signs a huge purchase agreement with their Department. The Departments authors and writes it. It is a bloody good idea for the Minister to have an independent advisor who can look for feather bedding etc. These people probably save the taxpayer huge amounts of money. They are not generally full-time staffers (like Robertson and Hipkins were) but they are contracted to do a specific job. They don’t even have an office in the Beehive.

Bill explains well the good these people do:

Mr English said the purchase advisers were experienced in the public sector and been most helpful to new ministers in showing them how the system worked – “which levers to pull, what the tricks are, and what the bureaucratic jargon means”.

“We did need some objective advice because the public service had been used to getting whatever it wanted and big increases in spending every year,” he said. “The benefits would be shown through in the Budget where he had been able to make significant savings. We have had to make a pretty sudden change to respond to the economic conditions and the ministers and the purchase advisers have done a very good job.”

I suspect each advisor pays for his or her salary 20 times over. Of course Labour would hate that – they are finding and cutting the waste they left behind.

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Is he trying to be funny?

April 29th, 2009 at 10:36 am by David Farrar

NewstalkZB reports:

Mr Goff says the person who should be most grateful for the legacy left by Michael Cullen is the current Finance Minister Bill English.

Oh yes, Bill gets up every morning I am sure and says to Mary “Boy am I glad Michael Cullen left me a structural $10 billion a year deficit”.

He gets in to work and tells his staff “Think how boring our job would be if Dr Cullen had not increased spending by $4.5 billion a year in his last budget”.

At Cabinet every week Bill reminds his colleagues of how good a legacy Dr Cullen left them, as he screws them departmental budgets down.

Goff should do stand up comedy if he really said that with a straight face.

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No borrow and hope

April 23rd, 2009 at 7:57 am by David Farrar

Bill English has sent out his strongest signal that the future tax cuts will not be implemented. I’m going to cover the details of this at a later stage – for now want to look at the overall fiscal situation.

The Herald reports:

Mr English said without a change to the present spending track, preliminary Budget forecasts showed recurring operating deficits of more than $10 billion a year indefinitely.

“Most worrying of all, debt would continue climbing, with no sign of levelling off.”

At the predicted 2023 level, Crown gross debt would equate to about $30,000 for every New Zealander and it would force the Government to pay an extra $8 billion a year in interest costs than forecast in the October pre-election update, Mr English said.

This simply can not be allowed to happen. Every dollar extra in interest costs is a dollar less for health, education, Police etc.

Mr English said his Budget would allow for more spending than Labour’s last year.

But the rate of growth of Government spending in recent years could not be sustained, he said in a speech to business executives in Auckland yesterday.

Core Crown expenditure this year was expected to be $63.5 billion – up $21.6 billion or 51 per cent in the past five years.

He contrasted that to estimates that the economy had grown by just 23 per cent in the same time, and tax revenue by 24 per cent.

Cullen massively increased spending on the assumption that the economy would never falter. They intrdouced interest free student loans, KiwiSaver, Working for Families – and now there is not enough money to pay for them.

The responsible thing to do with a growing economy, is to have every year modest incraeses in spending, modest tax cuts and significant surpluses. Peter Costello did this. But for nine years we had massive increases in spending.

Labour leader Phil Goff said last night that Mr English was “softening the public up” to breach the basic promise National made in the election campaign last year – that people would be better off through tax cuts.

He said National had misled the electorate.

Labour would by now have not only cancelled their tax cuts (I will touch on this at a later stage) but would be copying UK Labour and actually hiking taxes in a recession with a new top tax rate of 50%.

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