Kiwiblog

I agree with the sentiments expressed by BusinessNZ CEO Phil O’Reilly:

In business there is a wide range of opinion stretching across the spectrum, from zealous green through to emissions denial. The most common reaction has been concern about increased energy costs just as businesses start to recover from the recession.

Why not delay it, they say – especially since Australia is now pulling back from its earlier commitment to emissions trading. The answer is probably that delay wasn’t a feasible option.

New Zealand’s situation is very different from Australia’s. Australia has never had an emissions trading scheme, so delaying the introduction of one would have been relatively straightforward.

To delay it in New Zealand would mean introducing amending legislation under urgency and ramming it through Parliament without even going to select committee. This would be Labour’s wet dream – National breaking its election promise and doing an u-turn, and even worse forcing it through under urgency to over-turn previous legislation that had been the subject of three years or consultation and debate.

If National did this, they would be suffer much the same fate as Kevin Rudd just has (fallen behind in the polls for the first time ever), but arguably even more.

But New Zealand has been committed to it since the trading legislation passed in 2008 by the previous Labour-Greens Government.

The present Government came into power that same year, on an election promise to improve the scheme passed by Labour and the Greens. Their mandate wasn’t to dismantle or delay it but to improve it.

The failure of Copenhagen has happened since then, and we should respond to that failure. But scrapping the entire scheme is daft and would lead to higher Government debt.

Had the Government sought to dismantle or delay it we would have had a fourth parliamentary/select committee process in as many years, with even more divisive, rancorous debate.

With Labour committed to returning New Zealand to the previous draconian emissions scheme and the Greens unwilling to compromise on their climate change stance, the issue would have become a long-running, festering sore.

Labour’s scheme had less protection for trade exposed industries, and would see greater costs on businesses, despite their competitors not having them.

Taking the longer view, it’s hard to deny the certainty that the world is headed towards a price on carbon. Whether it’s by way of carbon taxes or emissions trading schemes and whether within two years or 20, the clear intent of Governments around the world is to restrain emissions using economic tools.

I agree a price on carbon is almost inevitable. Even if you do not believe the claimed indirect warming effects of carbon emissions (which there is debate about), even the direct warming effects (which there is almost no debate about) makes a price on carbon sensible.

Official figures show New Zealand is on track to meet our 2012 Kyoto target. In 2012 our gross emissions will be 23 per cent higher than in 1990, but this will be more than offset by forests planted since 1989, with many New Zealand foresters actively receiving tradeable carbon credits.

This is key. Forestry is already in the scheme. You can not simply scrap a scheme that has already started. Forest owners are owed hundreds of millions of dollars for their forests under the scheme.

The fact that we already had the legislation as far back as 2008 and the kinds of decisions made by other Governments over the last year have led to the situation where New Zealand is now a leader in taking action on emissions, rather than our desired position of fast follower.

And this is a concern. But the answer is not to scrap a scheme that has been in place since 2008. It is to use the 2011 review to decide whether to amend the rate at which businesses get exposed to the full cost of carbon, and when sectors such as agriculture enter the scheme.

We are scheduled to have a review of the scheme before the end of next year. Business NZ believes this review should be brought forward starting no later than the end of this year.

The review should cover issues like the cost impact on consumers and businesses, competitive disadvantage issues and the position of agriculture and other sectors within the scheme.

Positions need to be developed based on current economic and international considerations.

We should all keep in mind the fact that the world’s consumers are increasingly seeking low-carbon goods and services and our trading scheme is the vehicle for nudging our producers on to a profitable low-carbon path.

And we shouldn’t forget that taking action to reduce emissions and look after our environment is, in the long run, the right thing to do.

I think it would be useful to wait for the Mexico conference, and see if that is as unproductive as Copenhagen. If it is, then the review of the ETS should look towards slowing or delaying the impact of the ETS in trade exposed sectors especially.

Phil O’Reilly makes the point that our tourism is not just based on a clean and green brand. This is not to say one should not protect such a brand, but also not to get hysterical that some mining on 0.001% of DOC land will damage the brand. O’Reilly lists other reasons people visit here:

• The country is beautiful, and the people are friendly, open, down to earth, direct, hospitable and welcoming. New Zealand people are “authentic”. They say there is something vibrant about us.
• New Zealand is safe and pretty. It’s the least corrupt country in the world. The people are honest and trustworthy.
• Americans say the food is good, with no worries about food safety. Australians talk about flying over to have fun in Courtenay Place.

And he goes on:

People overseas find our countryside beautiful but they tend to mention our people more. And, interestingly, I’ve never heard anyone describe New Zealand in terms of “clean and green”. Yet we seem to have convinced ourselves that that’s how the world sees us.

We seem to have a view that any chink in our environment will badly compromise our clean, green image in the eyes of the world.

I don’t think people overseas do have such simplistic opinions. Most people are realists. They understand that an absolutely pristine environment is not achievable unless humans are somehow removed from the picture.

As some want.

The SST reports:

BUSINESS BOSS Phil O’Reilly is predicting 2010 will be a year of industrial strife and an “ugly” budget that will bump up the GST rate.

O’Reilly, the chief executive of Business NZ, said he expected “fireworks” from public sector unions as the government tightened the screws on spending, and Finance Minister Bill English has said total government spending cannot increase more than $1.1 billion in the May budget, a difficult task considering that public hospitals alone have been soaking up an extra $700 million a year in recent budgets. English has warned public servants such as teachers and nurses not to expect pay increases that are “out of line with realistic expectations”.

More than 50,000 primary and secondary teachers will negotiate a new pay deal with the government when their current agreement expires at the end of June.

“I think we will see quite a few sparks fly,” O’Reilly said. “Government departments are being told how much they can spend so you’re going to see an ugly budget from the perspective of government spending and that will impact people like the state sector unions, the teacher unions and so on. I wouldn’t be at all surprised if some of that was turned into industrial action.”

NZ Council of Trade Unions president Helen Kelly said O’Reilly was being “hysterical” but warned that public sector workers would not tolerate zero pay increases or cuts in services.

“We are ready for that kind of a year but we hope commonsense will prevail.

I am all for common sense. Common sense is that the economy has grown only 0.4% in the last six months, so pay increases greater than the rate of economic growth are not common sense. Likewise borrowing more money to fund pay increases is not common sense when you are borrowing $240 million every week just to pay for current salaries.

Thanks to the help of some volunteers going through dozens of set of annual accounts, Kiwiblog is able to present some original research on big money in politics. We have gone through the annual accounts of every union and business group we could find.

The findings may surpise some. The unions are far wealthier than the business groups.

There have been 256 unions registered in New Zealand. To make it easy we have only focused on those that are millionairres – have more than one million in equity.  There are 19 of these, including the NZCTU – their federation.

We looked at three financial indicators:

1. Income or Turnover – this gives you an idea of what they can do if they apply a percentage of their income to politics
2. Current Assets – basically cash in bank plus debtors etc
3. Net Equity – the total net assets of the union

The table is below:

So the top 19 unions have:

1. $73 million of income
2. $29 million in the bank or other current assets (note they may have current liabilities also)
3. $63 million in equity or net assets

Also as a minor note, five unions have yet to file their 2007 accounts.

Now compare this to the major business groups:

There are various small town chambers also but they have little money. The Business Roundtable is as unincorporated society and the Wellington Chamber of Commerce a company so their accounts are not public. But in each case I have checked my ballpark estimates with the organisations and they have confirmed they are in the right ballpark.

So we can see that the business groups have under half the income of the big unions. And the Business Roundtable has less turnover than some student associations. The CTU has a bigger budget than Business NZ.

So there is no doubt unions have far more income and money than business groups. So the next question is do they spend it on politics and elections?

If we look at the Electoral Commission’s register of third parties, we see not a single business group listed but 12 unions (including NZUSA) listed.  So they have the ability to spend $1,440,000 on direct election advertising.

But that is only part of it. The unions try to influence the elction in multiple ways. For example:

• Donations to political parties
• Direct election advertising
• Use of union vehicles for hoardings construction
• Allow staff to work on election campaigns as part of their day jobs, using union e-mail addresses
• Supplying staff to Labour’s factory to sort and fold over one million direct mail envelopes

The worth of the staff contribution especially can not be easily estimated but it is massive. readers have sent in several photos of union vehicles beign used by Labour candidate and union e-mail addresses being listed as campaign contacts for various electorates.

If even just 200 union staff (three per electorate) spent 160 hours on the campaign, that is equal to a million dollars equivalent wages.

Of course we don’t know the total amount of money spent by unions on electioneering. Perhaps any successor to the Electoral Finance Act should force unions (and other bodies that get involved in election campaigns) to disclose their total involvement. That would be a step towards transparency you could argue.

Now this is not unique to New Zealand. In the last Australian election, the uniosn spent over $10 million campaigning to help the Labor Party. The total spending by business groups was $32,000. So unions outspent business groups in Australia by 300 to 1.

The purpose of this article is not to advocate that unions should not be able to spend their money campaigning. Far from it. It is to reinforce two points:

1. Unions have significantly more money than business groups
2. Unions get engaged in election campaigns at multiple level, in a very partisan way, while business groups tend to just publish manifestos, push policies and organise seminars and forums

I actually think NZ needs a pro-business, pro-market, low-tax lobby group to match the unions in terms of involvement in campaigns. A NZ version of the Americans for Tax Reform or UK Taxpayers Alliance. It wouldn’t be a thinktank (NZBR and CIS do wonderful jobs there) but an aggressive lobby group that would aim to lower taxes, keep government spending under control and support policies good for taxpayers.

Without such a group, the big money spending in elections will continue to be dominated by unions.

John Key is the final speaker of the day. Some key points:

• If the fundamentals of the economy do not change, we will not become wealthier
• Cullen has worried too much about savings and not enough on growth
• Ongoing programme of personal tax cuts.
• Irish economy driven by world class education system, low company tax and good infrastructure
• No radical changes to monetary policy
• Domestic inflation too high due to capacity constraints
• Will have some local government reform but not second guess Royal Commission on Auckland.
• Size of the state does matter – 10,000 more core bureaucrats – but not just about numbers but efficiency.
• Are taking a hard look at role of Electricity Commission – do we need a bunch of engineers second guessing Transpower?
• 90 day probation period is not a right to fire clause but a right to hire clause. Is timid compared to many other countries.
• Most Chinese are more capitalist than anyone else we know
• At danger of becoming a giant educational facility for Australia

The conference is now ending. Yay. Seven stories isn’t a bad output if I say so myself.

This is on workplace issues. Panelists:

• Trevor Mallard (Lab)
• Sue Bradford (Greens)
• Kate Wilkinson (National)
• Peter Brown (NZ First)

Questions

1. What changes to KiwiSaver and why?
2. What changes to ACC and why?
3. Will you allow grievance free probationary periods?
4. Will you remove the union monopoly on on collective bargaining?
5. Will you change the “relevant daily pay” provisions of the Holidays Act

Kate Wilkinson

1. No policy released. Key has indicated some modest changes to be announced in due course. Against Labour’s KiwiSaver amendment passed this morning that makes total remuneration packages illegal
2. Will investigate opening the work account to competition so incentives are there for good safety practices, and allow employers to insure for a higher stand of cover. Also will have an independent disputes tribunal for ACC to be fair to claimants
3. Yes a 90 day trial period for businesses with less than 20 employees.
4. Yes will allow a collective agreement with no union. Making employees form an incorporated society just to negotiate a collective contract is cumbersome.
5. The Holidays Act is like the blackboard scribblings in A Beautiful Mind. Will appoint business and union reps to a working group to review the Act, esp for relevant daily pay definition. Not to reduce rights but make law more clear.
6. General comment – important to be fair to all parties – no major changes but some improvements

Peter Brown

1. Want to make KiwiSaver compulsory
2. Do not support competition to ACC. Does support an independent disputes tribunal.
3. Missed
4. Passionate about allowing employees to do a collective contract without forming a union, but NZ First does not have policy.
5. Thinks law has settled down but willing to be persuaded otherwise.

Sue Bradford

1. Support Government, think it is great.
2. Oppose any moves to competition. Want more emphasis on equitable compensation regardless of how someone is impaired.
3. No.
4. No.
5. No.

Trevor Mallard

1. Missed but I guess no major changes
2. Against
3. Current Act has probationary periods (but grievances still possible)
4. Against
5. Missed

What was interesting is that every speaker against Trevor just spoke to policies and issues while Trevor sounded like he was blogging at The Standard and was referring to Crosby/Textor and the like.

Business NZ CEO Phil O’Reilly reported on the results of their survey of members. Over 2,000 members responded – mainly small business:

1. Skills Shortage biggest issue – can not get skilled staff despite rising unemployment
2. Firms want to innovate but don’t feel well positioned to do so
3. Concerns about “environment” for business  – Holidays Act, ERA, ACC

Skills

• 72% say education system not meeting skills gap
• 94% say more work needed on apprenticeships and industry training. Need action not rhetoric
• 91% say all school leavers should achieve NCEA Level 1 for literacy and numeracy
• Not just student loans driving people overseas
• The underlying problem is competitiveness
• NZ economy not growing enough high-paying jobs so skilled Kiwis being sucked overseas

Innovation

• 89% say R&D tax credits will nit lift R&D spend. Pointed out many small business who responded do no R&D
• 54% say policies needed to improve access to venture capital
• 54% say government assistance should be through a contestable fund

Environment for Business

• 71% say the dismissals provision in ERA is below average
• 54% say ERA collective approach is wrong way – less than in past
• 89% do not want laws for work-life balance
• 61% want ACC opened up for competition

Open ACC to Competition (Bus 61% yes)

ACT – yes
Labour, NZF, Greens, UFNZ – No
National, Maori – will consider it

Flatter Taxes

National, ACT, UFNZ – Yes
Labour, Greens, Maori – No
NZF – no clear policy

Local Government stick to core business (Bus 64% yes)

ACT – yes
Labour, Greens, Maori – no
National, NZF, UFNZ – no clear answer

Support FTA with China (Bus 55% yes)

Labour, National, NZF, ACT – yes
NZF, Greens, Maori – no

Should NZ be international leader on climate change? (Bus 73% No)

Labour – yes
ACT, UF – No
National, NZF, Greens – unclear answer

The Infrastructure Forum had six questions:

1. How will you stop the risk of power blackouts?
2. Will you privatise power generation SOEs to get more competition and lower prices?
3. How will you get broadband into more homes and businesses?
4. What changes will you make to the RMA?
5. Do you support more protection for businesses at risk from the ETS?
6. Do you support carbon credit allocation based on carbon intensity

Gerry Brownlee

1. Energy Policy released details improvements to both security and supply. Planning for far more growth than Labour. Major consent decisions to be made within nine months
2. No SOE sales
3. Ran out of time
4. Referred to in 1
5. Not a yes/no answer but said credit allocation should be decided by a select committee process and a National ETS will do that. Gave a great example of how concrete plants in Europe will pay far less for carbon credits so just force industry offshore.
6. Ran out of time

David Parker

1. Record investment in energy under Labour. National did not invest in the 1990s
2. No
3. Broadband essential. $500 million fund next five years. WIll not favour incumbent.
4. Does not accept RMA is a barrier
5. Missed
6. Missed

Jeanette Fitzsimons

1. One can have security by over-building capacity so it is wasted every year but the peak year. Not efficient. Better to have a standby plant. Says we had a 1 in 60 dry year. Third way is make smart adjustments to demand to reduce at times of shortage and that is what is missing.
2. Will not sell SOEs. Rejects that it would lead to lower prices.
3. Supported LLU. Broadband key to reducing transport. But not support large state investment.
4. Most changes Gerry wants to RMA already done. Problem is implementation and no national guidelines.
5. Trade-exposed businesses are already highly protected. Some businesses may end up with surplus credits without reducing emissions.
6. No – an intensity basis will lead to continued emissions.

Rodney Hide

1. Does not think we can rule out all the power generation methods the Greens do. Need to reduce cost of capital by lowering taxes.
2. Yes would sell them. No sense in Govt owing competitive businesses. Ownign them locks up taxpayers money and limits companies ability to raise capital for investment it deems necessary.
3. Broadband important but regulation stopping its rollout. Need a stronger economy to be able to afford it. Against National’s policy in this area. Investment is slowing down due to uncertainity.
4. Private property rights need to be enhanced, The RMA damages these rights.

Peter Dunne

1. Rejects ideology. Needs security of supply. Say question is an alarmist straw man. Currently power is an un-cordinated jigsaw (so why are we paying $90 million a year to the Electricity Commission then). Agrees we have had over supply in past – supports smaller local plants but big hydro plants.
2. I think it was a no.
3. RMA needs national policy guidelines. DO not throw away RMA – streamline it and keep core principles.
4. Missed.
5. Do not support further protection to at risk businesses as we do not know enough about impact.
6. No does not support but is subject to how the Act works out. Reason they oppose bill is because so much is uncertain and is being rushed through purely for political gain. Wants it passed by 1 April 2009.

Peter Dunne arrived late for the minor party leader’s forum (it wasn’t his fault – he was given wrong time) towards the end of the question time. Sean Plunket said that what he proposes is we now have Peters speak to us, and then go to lunch.

Rodney Hide pipes up “Or we could all go to lunch, and then have Peter start speaking”. It was very very funny.

Three minor “leaders”

1. Rodney Hide, ACT
2. Russel Norman, Greens
3. Derek Fox, Maori Party

Russel Norman

Environment movement needs to move beyond treating humans as a virus infecting the planet. Not about just doing less bad, but more good. Business sector is key part of this.

Need to transition to a sustainable economy. I then drifted off as various enviromental and resources issues were outlined. I do find the Q&A sessions much more useful than just plenary speeches.

Rodney Hide

Talked of Sir Roger’s goal to beat Australia by 2020 – and not just in the rugby or the netball. Says he loved it. Much more inspiring than some OECD average.

Said that he wanted Sir Roger around cabinet table as if he could convince a Labour Cabinet the merits of free market policies, sh should be able to do the same with a National Cabinet

Repeated Douglas on holding govt spending to inflation and population will allow a personal and company tax rate of 20%.

Derek Fox

I’ve got bored with the leaders and am working on some further Winston stuff, so no summary of Derek. Generally not a useful content compared to the Q&A which I thought worked very well.

We have five Finance Spokespersons after Winston pulled out. They are:

1. Bill English, National
2. Dr Michael Cullen, Labour
3. Russel Norman, Greens
4. Peter Dunne, United Future
5. Sir Roger Douglas, ACT

Each was asked three questions:

1. Will you cut company and personal tax and by how much and when?
2. Will you have a cap on government spending as a percentage of GDP?
3. Will you include labour and environmental restrictions in free trade agreements

Bill English

1. Yes we will lower tax rates. Details soon. Important to do so to put cash in pockets, but more importantly incentives to work, save and invest. Also want a more efficient tax system.
2. No as GDP goes up and down. Focus on quality of spending not a set target. Expect PREFU will show Crown is in deficit. So period of restraint needed. Govt spending excluding welfare growing at 8% per annum. Can’t carry on at that rate so will slow growth down, but will still grow in absolute terms.
3. Not desired, but US Congress turning protectionist and they may demand them so we may need to be flexible. Generally supportive of Govt work on FTAs.
4. Generally comment: no more cheap credit – growth will come from earning it and need to lift productivity.

Personally I think a target for expenditure as a percentage of GDP would be a very good thing.

Sir Roger Douglas

1. Could reduce personal and corporate tax to under 20%, maybe even 16%. Also could lower GST to 10%.
2. Need to say yes to this, so one can say yes to Q1 (he answered in reverse order). Says Govt expenditure should be held at rate of inflation of 2.5% and population growth of 1%. So an annual 3.6% increase only. Sounds good to me!! Any increase over 3.6% should be met with savings elsewhere. If we hold expenditure to 3.6%, each household will pay $13,000 less in annual taxes in 10 years time. Govt expenditure has increased under Labour by $17 billion, after taking inflation and population growth into account. That is $220 a week per household. What did you get for that $220 a week? Could you have spent it better yourself? No equity or fairness without efficiency in expenditure. Thinks expenditure of 25% of GDP is a good target.
3. Support free trade agreements without these restrictions

I have to say Sir Roger was brillant. He may get some very serious support for ACT if enough people hear him. Very smart to not talk about slashing expenditure but just propose keep spending to inflation and population growth. Families can relate to that.

Peter Dunne

1. Would cut personal taxes on April 2010 to 10% for income to $12K, 20% to $38K, above $38K at 30%. Supports income splitting. And align business and trust rates at 30%. Should do regular tax reviews, rather than wait 12 years between tax cuts (hear hear).
2. No set cap. GDP not sole measure of wealth of economy. Does have concern over current level of spending but more concerned about quality and direction of spending. Proposes merging some DHB functions centrally such as equipment purchasing. A spending cut may lead to a service cut – $50 million into IRD so it can answer phones quicker as an example.
3. Supports FTAs. Don’t need specific standards on environment and labour, as they are dealt with in the wider business environment. We are most trade dependent nation in the world.

Dunne did well also. Some nice specifics.

Dr Russel Norman

1. Wants a transition to a sustainable economy. More ecological taxes and reduce taxes on income. Incentive then to reduce scarce resource use and pollution. Wants incentives to use less water. Supports ring fencing of losses on investment propoerties. Not supporting a decrease in overall tax – just how it is made up.
2. Does not have a policy for a cap on spending. It is about efficiency.
3. Does support standards, but notes usually just involves consultative committees.
4. General comment on need to prepare economy for higher oil prices. No other party has policy around this.

Dr Michael Cullen

1. Lowered company rate to 30% and legislated for three rounds of personal tax cuts. Also increased depreciation rates and R&D tax credits.
2. No. Spending at he moment same as 99/00 as percentage of GDP. Goes up and down. A cap is artificial.
3. Yes will try and include these standards as agrees with Bill needed for US Congress
4. General comment on the need to lift exports from 30% of GDP. New tertiary funding policy is essential. Backed Clark up on how our bottom 30% of school leavers are very poor. Middle and top are both very good. More rail needed plus more roads. Also roll-out of broadband is important. Higher savings needed and our capital markets are very weak. Sustainability also important.

All five spoke well and knew their stuff. I do have to say I think Sir Roger was by far the best – both his level of detail, his forceful arguments and the actual policy. I would put Peter Dunne second best.

I don’t think Bill English came across that well. Not due to him (Bill was very much on top of the arguments), but because he could not give any details of the tax policy yet (which I think would have been popular). Would have been good though if National had decided to release some sort of business policy today, so there is something new. Maybe that will come in a later session?

Regulatory Responsibility Act

A question on whether they would support a Regulatory responsibility Act.

English says there is support for defining the principles of good regulation, and using the bureaucracy to fight the bureaucracy so regulations can not proceed without ticking all the boxes which justify the regulation. Also said very keen to reform RMA. Bottom line is would support some sort of RRA.

Douglas supports a Minister of Regulatory Reform and an RRA.

Dunne says ironic to use legislation to fight against legislative regulations. Thinsk local govt sector is more of a problem.

Missed what Norman said.

Cullen says will make process too bureaucratic.

Company Tax Rate

EMA Northern advocated cut company tax rate to 20% as lead to more investment and eventually more tax paid over ten years.  Cullen attacks dodgy modeling of EMA. Says we have had lower company tax rate for most of last 20 years than Australia.  English says 20% rate would be fantastic but priority for now is reducing personal tax rates. If we drop company tax rate to 20% without personl rates going down, many more people will alter their tax affairs to take advantage.

EMA’s Thompson replied that when company tax rate has been cut in the past, the level of company tax has still risen.

Infrastructure

Cullen made good point that not all infrastructure contributes to economic growth – new planes for Air Force for example. But roads do.

Dunne strong support of PPPs and infrastructure bonds.

English – planning debt 2% of GDP higher than Labour but still one of lowest in developed world. Govt is running cash deficits also. National’s infrastructure plan is a prudent investment. Also thinks Govt manages assets badly, and there is room for improvement. PPPs not just about money, but about getting private sector skills around risk and management. Bill much better on this stuff. Lots of people commented at the tea break that they thought not enough detail on the earlier stuff, but very strong on infrastructure.

I will be at the Business NZ Conference for most of the day. Both Clark and Key are speaking, as well as various Finance Spokespersons. Winston had accepted, but pulled out last night due to other issues needing his attention

First up is Helen Clark. Some key points:

• Affirmed that Business NZ is apolitical and that she has enjoyed a constructive relationship with it.
• Said NZ has had the longest run of consecutive economic growth since WWII. Unemployment law, crown finances exceptionally good shape.
• Expects RBNZ to keep lowering cash rate, and dollar has lowered a bit. Some evidence food prices may ease.
• Near full employment has masked some unpleasant truths.
• Half of existing workforce not have skills to function adequately in future. Our school system keeps failing too many.
• School Plus leads to an education age of 18. More details to come in election campaign
• We do not have a future as a high volume low cost exporter. Can not compete on volume or costs with emerging economies
• Fast Forward is about changing our agricultural sector, so they are in a niche
• Importance of sustainability. Consumers increasingly making ethical decisions about what to buy.
• Have to be part of the solution, not part of the problem, hence ETS.

No questions, which is a pity. Next we have the Finance Spokepersons.

A very solid speech. One does have to ask why it has taken so long to conclude the school system is failing!

It has been interesting to see the various posts and press releases on National’s Fibre proposal. I’ll try and cover most of them:

Phil at Whoar labels it as “what could well be an election winning policy.

Bomber at Tumeke calls it a “Bloody good idea”. Heh shouldn’t that be damn good idea

Mike at Morphyoss says:

“good on you National for releasing a good policy that will massively benefit New Zealand should they win the election. Now it is up to Labour to respond, remember fibre is extremely important to our economy and it is important that labour do something about that or they will lose the election”

David Slack at Public Address is unimpressed with some of the arguments against:

Here’s my response to the snide folk who have been saying: faster downloading for your YouTube and your porn and your pirated movies. I spend thousands on hosting in the USA because no-one here can set me up with a fast enough server and a big enough data allowance. That money could be being spent here. Ask Rod Drury what it could mean for the Software As A Service businesses he’s involved in.

It’s becoming trite to say it, but it’s nonetheless true: internet infrastructure is as important to us as roads, railways and refrigerated ships. Why not have it in abundance, rather than relatively scarce and expensive? Let a thousand e-commerce sites bloom!

Business NZ says

National’s plan to speed up provision of broadband to most premises is welcome, says Business NZ.

Chief Executive Phil O’Reilly says a public-private partnership is a logical way to spread the cost of such a huge undertaking.

“The challenge would be in working out just how the partnership would operate to ensure as many investors as possible could contribute, and in finding an appropriate regulatory regime.”

The EPMU is also reasonably supportive:

The Engineering, Printing and Manufacturing Union says John Key’s policy of rolling out fibre optic cable to 75% of New Zealand homes is a step in the right direction, but is concerned the task may be impossible given the current skills shortage.

“We really want to see this sort of project happen as any investment that will increase productivity in New Zealand is good for our members but until we see details on wages and training around this it’s hard to see how fibre roll-out will be possible.”

In terms of the issues the EPMU raises about skills and capacity, I don’t think it will be a major barrier (but certainly is a factor). When InternetNZ met with David Skilling of the NZ Institute last week to discuss his fibre proposal, one of the issues we raised was whether there was enough capacity to physically get fibre laid out by 2018 (note National is proposing 2014 as a target). Off memory Skilling indicated that they had talked to two separate engineering firms and their advice was there was enough people and and capacity to do it within 10 years, and even within five years if you really pushed it.

Now that is second or third hand so it doesn’t mean there may not be issues, but it does show some work has already been done looking at the capacity issue. One reason it is important is if supply can not meet the demand, prices could go up significantly. This has been an issue in the roading sector.

Jordan Carter is also pleased:

I am pleased that with John Key’s policy proposal, launched yesterday at a Chamber of Commerce lunch in Wellington, the debate about New Zealand’s broadband future has shifted from “whether” to do fibre to the home, to “how and how soon” to do it.

Professionally speaking, I am pleased there is now a political commitment from one major party to putting money into this. I am looking forward to assessing the various plans that come forward, and I’m sure that InternetNZ will be looking to persuade all parties to invest in this critical infrastructure.

As a Labour person I am quite sure the Nats’ proposal can be bettered, and that Labour will do so. David Cunliffe’s comments have critiqued what the Nats have proposed – the specifics of it, such as they are – but he has not criticised the goal. That’s good, because it is important for New Zealand to get on with it.

As Jordan says, the ball is in Labour’s court. A win-win will be as many parties as possible commited to the goal.

Final point, I ended up next to Williamson at the launch lunch. His zeal for this is impressive, given his record in government. It’s nice to see a genuine change of view and broad, cross-party acknowledgement of the importance of this kind of technology.

I was at the same table, and it is generous of Jordan to note Maurice’s enthusiastic advocacy of this proposal. Some have suggested he would have problems with it, but far from that – he has helped John Key with a fair bit of the research going into this.

In fact I joked to one person, that Maurice was now so enthusiastic about this type of intervention, it was a bit like how a smoker who gives up smoking becomes the most passionate anti-smoker

Also somewhat amusing was that a fellow guest at our table (not knowing Jordan’s political background I think) stated his view that Labour had done an awful job in this area. Now the last thing one wants is a big political debate over lunch, so Jordan was being very tactful with his response. I actually interjected into the conversation and praised most of what Labour and David Cunliffe has done in this area, and said the work they had done to date built a good base, but this was really about taking a big step up from that base.

Anyway I found it amusing to be defending Labour’s record in this area, in front of National’s IT/Comms spokesperson. I must say though I was disappointed with Cunliffe’s response to the policy, but I suppose he didn’t have much choice unless he could convince Michael Cullen to lend him a quick $1.5 billion

Finally on the luke-warm but positive side we have Russell Brown at Public Address:

National’s new $1.5 billion broadband spending proposal — it’s a bit soon to be calling it a “plan” — is nothing if not ambitious: 75% of homes with fibre connectivity in by 2014 is not a goal that has been envisaged as realistic before.

It is ambitious.

The initial step is a doubled of the Broadband Challenge Fund to $48 million, and there’s a very welcome commitment to “open access” (whether that means dark fibre or open access on the operator’s terms isn’t clear). There’s no indication as to whether National is talking about a monolithic FibreCo-style operator, or multiple providers whose interconnection is subject to regulation.

They are critical details, and that is why it is not planned any actual digging and laying will start until 2010. One has to get the structure and policy right and you really need time to do that. However while those details are being worked out there are things one can do in the very short-term which will make the task easier – such as ensuring duct or fibe is laid every time a current road is dug up. Some firm guidance (or instructions!) to local government can help reduce the cost a lot, as can environmental regulations.

What benefits would this massive investment bring over new DSL technologies via the existing residential copper network? For a start, it would work as advertised: 24Mbit/s DSL is more a theory than a reality for most users (although Telecom’s programme to bring the fibre closer via cabinetisation will help) and it’s extremely asymmetric — much fast down than back up. The problem of long cable runs basically disappears when you install fibre. You’d be doing it eventually anyway: when the existing copper expires, there’s no point in replacing it with more copper.

Absolutely. Fibre to the Home is inevitable. It is just a matter of timing – do we want to wait until 2040 and be last in the OECD, or try and secure some advantages by being early, to counteract our geographical disadvantage.

Russell also points some credit my way for “tireless advocacy”. While obviously I am an advocate, and have been for some time, I don’t think anyone should doubt this came about because of John Key’s personal belief and commitment to this infrastructure investment. I understand he has spent scores of hours in talks and discussions on the issue, and probably knows the ins and outs better than most industry specialists now.

Two others who are influential and helped make it happen were Maurice WIlliamson and Bill English. Jordan Carter has already noted Maurice’s passion for this plan. Bill has had a bit of stick for his comments a year ago which were sceptical of crown investment. The role of the Shadow Minister of Finance is to be sceptical and hard nosed on colleagues spending ambitions. I wouldn’t quite say his or her initial response should always be no, but hey it’s a reasonable negotiating position to start from

I am not Bill’s spokesperson (for which we are both grateful ) but I think people will find he is fully behind the initiative (in fact I understand all of Caucus is quite wildly enthusiastic about it) and his job is to help make it happen as Minister of Finance. If anyone thinks there is some violent behind the scenes struggle about this policy, I think they will be sadly disappointed.

Now of course not everyone has been positive, and for those who want a libertarian critique I refer you to Liberty Scott who labels it as Think Big Mark II and argues in favour of leaving it to the market.

Also against is NZ First (they just whine about Telecom) and Kiwiblogblog which claims it will be wasteful government spending as we will never need home Internet speeds faster than Telecom’s ADSL2+ rollout.

Sounds to me a bit like the infamous “640K ought to be enough for anybody” statement in 1981, attributed to (and denied by) Bill Gates. I am very confident they will be wrong by similar levels of magnitude!

UPDATE: The Standard has also come out against it.

I think it is has been extremely enlightening that basically all the left wing blogs where the authors use their real names have been supportive of the policy, while the left wing blogs where the authors are anonymous are against. I’ll leave it to others to draw conclusions on whether this is a coincidence or not, and what this may indicate about who the authors are.

UPDATE2: I missed a couple of comments. No Right Turn labels the policy as good at first glance. And since I wrote the blog post, Dancer at The Standard has labelled the policy as a good thing.