Herald on EU

June 6th, 2014 at 12:00 pm by David Farrar

The Herald editorial from Tuesday:

From time to time, national referendums have thrown a spanner in the European Union’s plans for closer ties between its members. But never has there been such a broad renunciation of that process as that delivered in the recent European Parliament elections. In an alarming number of the EU’s 28 member states, populist parties from the far right and far left triumphed over their mainstream opponents.

The impact was most notable in Britain, where the UK Independence Party topped the poll with 28 per cent of the vote, and France, where the anti-European National Front did likewise with 25 per cent support. Centrist pro-European parties will continue to be the dominant force in Brussels, but this is not an outcome that can be shrugged off.

It is clear that after 60 years, during which the EU and its forebears have, by and large, orchestrated peace and prosperity, many of its 500 million people have fallen out of love with the pan-Europe ideology.

They complain about the arrogance and expense of bureaucrats in Brussels who are intent on reducing the important of their national parliament. They regret replacing their national currencies with the euro, which, rather than making Europe more equal, has created instability. And those in the north decry an expansion that has saddled them with indebted nations in southern Europe. The EU has, says David Cameron, the British Prime Minister, become “too big, too bossy and too interfering”.

Especially the European courts over-riding national legislatures.

Others, however, believe the EU can be saved by reform.

The latter course can prevail if the European Parliament heeds the unmistakable lesson of this election and puts a brake on the drive towards ever closer union. It needs also to be less intrusive in the everyday affairs of its members. Equally, it must convince Europeans that it provides the framework to outperform other developed countries economically. The most convincing answer to the eurosceptics lies, as Germany’s Angela Merkel suggested, in “improving competitiveness on growth and creating jobs”. At some point, those countries using the euro must also embrace a more comprehensive fiscal union. If that is not done, a return to national currencies is the logical step.

You can’t have monetary union without fiscal union. Which is one reason Scotland won’t be able to keep the pound if they vote for independence – which is unlikely on the polls.

The economic tide is swinging in favour of the pro-Europeans. Much of the EU has been late to catch the global upswing, but even the weaker economies are starting to benefit. They will gain also from the tough measures taken over the past few years. Further, the conclusion of a successful free-trade pact with the United States would hammer home the message that union can deliver more wealth than individual endeavour.

A focus on free trade and freer economies is what the EU needs, not more regulations.

Oliver Hartwich also writes on the EU lack of democracy:

What is democracy? Well, usually democracy is when the people vote in an election and the winner then happens to form a government. It is as simple as that. And what is European Union democracy? It is when the people vote in an election and, regardless of the outcome, German chancellor Angela Merkel decides on the next president of the European Commission.

Oliver’s article is a fascinating analysis of the power games currently going on.

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Overstating our road toll

June 5th, 2014 at 3:00 pm by David Farrar

The Press editorial:

By just about any measure, New Zealand driving is worse than in any comparable developed country. When, 40 years ago, the carnage on the roads was much higher it was taken as the price to be paid for road travel. The losses suffered now, while tragic for individuals and families, are looked upon in the same way. They should not be. Just as 40 years ago a very large proportion of them were avoidable, so they are now. We should all be doing more to avoid them.

This is not true. We are near the middle of the OECD.

In 2011 18 OECD countries had a higher road toll per 100,000 population and 18 had a lower one. On 2013 data we would appear to be doing even better with 22 countries having a higher toll and 14 a lower toll.

This is not to say we don’t want to keep reducing the road toll. But an editorial which claims we are worse than any comparable developed country is quite simply wrong. The 2013 road toll was 5.7 per 100,000 population.

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Gower on the dirty deal

May 30th, 2014 at 10:00 am by David Farrar

Patrick Gower blogged:

The Hone-Dotcom-Laila political triangle is one of the dirtiest deals in New Zealand political history.

It is as dirty as National-Act in Epsom.

It is as dirty as the Key-Dunne deal in Ohariu.

Frankly, Lalia Harré made me feel sick today when she said “it’s time for New Zealanders to take back MMP”.

That’s because Laila Harré is wrecking MMP.

Hone Harawira is wrecking MMP.

And Kim Dotcom is wrecking MMP.

They are using Harawira’s seat and MMP’s “coat-tail” rule to get a back-door entry into Parliament.

It is a rort.

It is a grubby deal, made all the worse by the fact Harawira holds the Te Tai Tokerau seat – a Maori seat.

The Maori seats are special. They have a unique constitutional role which is to give the Tangata Whenua a place of their own in the New Zealand Parliament.

The Maori seats have been hard fought for.

Never, ever was it envisaged they would be used as a back-door entry for a German millionaire to get his proxy into Parliament.

His $4,000,000 proxy. We should refer to Laila as the four million dollar woman!

Gower is right to point out that this does weaken the case for retention of the Maori seats.

This will give those opposed to Maori seats ammunition to get rid of them.

A referendum on keeping MMP at the moment would be very interesting. Likewise on the Maori seats!

Sadly, the Internet Mana deal has diminished the mana of the Maori seats.

And even sadder too, this deal involves money.

Harawira wants Dotcom’s money.

Annette Sykes wants Dotcom’s money.

John Minto wants Dotcom’s money.

They are all willing to pervert the MMP system for the sake of money and it is a venal deal.

Don’t try and tell me Laila Harré cares deeply about the internet. She cares about getting into Parliament.

Her first press conference was about pretty much every leftwing issues there is, and almost silent on Internet issues except vague platitudes on the importance of the Internet – something that was dated even back in 1996 – when Harre entered Parliament initially.

I have a lot of respect for Harawira, Sykes and Minto. They have spent their lives fighting for what they believe in – for points of principle.

But that respect has been tarnished.

They are obsessed by power, obsessed by money and will trample over the rights of New Zealand voters to get it.

This Internet Mana deal is so wrong.

I feel sorry for all those who signed up to the Internet Party thinking it was about Internet issues. Instead it is merely a vehicle for Dotcom to fund the Mana Party into Parliament. They should be honest and cut out the middle man, and just have Dotcom give the money directly to Mana. Harre is not a candidate for the Internet Party. She is a candidate for Mana. I bet you there isn’t a single Mana Party policy she disagrees with, and she probably doesn’t even know what policies the Internet Party has.

The Press editorial is no less strong:

There can have been fewer link-ups in New Zealand politics more cynical and crassly opportunistic than the one just formed between Hone Harawira’s Mana Party and the Internet Party, masterminded and financed by the internet developer Kim Dotcom. There is not the shadow of any principle involved in it.

Before he arrived in New Zealand, Kim Dotcom’s public image was of a high-living, luxury-loving party animal. For all his technical skills, there is not the slightest evidence that either now or in the past he has had a serious political thought in his head.

It is almost certain his only contact with the poor and dispossessed whose interests Harawira purports to represent would have been as employees. Indeed he may be a little startled to find that he is financing the far-left Laila Harre, the newly announced leader of the Internet Party.

As for the internet issues the Internet Party is supposedly concerned about, if Harawira and Mana had any particular interest in them before Kim Dotcom and his money came on the scene they kept very quiet about them.

Sames goes for the Internet Party Leader.

The ultimate composition of the next New Zealand government may wind up in the hands of a fringe collaboration bankrolled by a German fugitive from American justice. New Zealand politics should be better than that, surely.

The Dom Post editorial notes:

Harre’s arrival sharpens a dilemma for Labour. If its Te Tai Tokerau candidate Kelvin Davis defeats Harawira, it could cut Internet-Mana’s throat and waste a lot of votes for the Left bloc. The best strategy might be for Labour to go softly on Harawira without actually cutting an Epsom-style deal with him. This would require a U-turn, even if it is done in semi-secret.

I understand there is a huge shit fight in Labour over this. Kelvin Davis thinks that he can win the seat as Hone cuddling up to German multi-millionaires will go down like cold sick with many Te Tai Tokerau constituents. If Davis is allowed to run an aggressive campaign for the seat, he could win it.

But Cunliffe and McCarten don’t want to win it. They need Mana-Dotcom in Parliament. So they’ve decided that they will unofficially not campaign to win the seat. This makes Davis the sacrificial lamb who would love to the MP for Te Tai Tokerau, not a List MP.

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Dom Post on marriage of convenience

May 28th, 2014 at 12:00 pm by David Farrar

The Dom Post editorial:

So the Maori radical and the German squillionaire have spawned their odd little party. No surprise there. The deal suits both partners. The Internet Party now has a chance of getting into Parliament whereas before it had none. And Mana wins a chance of finding more supporters among the geeks and the worshippers of Kim Dotcom.

Radicals like Mana’s John Minto reject Sue Bradford’s charge that they have sold out to the wealthy German. Bradford, staunch and true to her ideals as usual, has predictably stormed out. But, in a sense, Minto is right. He has not abandoned his support for progressive taxes and soaking the rich. He has not had to swallow a dead rat.

What is glossed over is how can you stand up for low paid workers, when you effectively merge with a party controlled by a guy who is accused of not even paying the minimum wage to his staff.

The only question now is: will this political oddity, bred on the wrong side of the bed, have any appeal to the voters? Its best hope is to win about 2 per cent of the party vote – double what Mana got last time – and bring the still-unnamed leader of the Internet Party in on the list. If Annette Sykes won Waiariki, that would be a big dollop of cream on the cake.

Actually if Sykes won Waiariki, then the Internet Mana Party would have one fewer List MP and the Internet Party leader may not get in.

Maybe the geeks and the radical Maori and Pakeha can persuade enough voters to back their odd little band. It’s also perfectly possible that Harawira will lose his seat to Labour and Sykes will fail in Waiariki. That would sink the Internet Party, which will certainly not pass the 5 per cent barrier by itself. The whole strange experiment could easily collapse.

I suspect Labour will quietly tell Kelvin Davis not too campaign too hard so Harawira retains his seat.

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Editorials on polls

May 27th, 2014 at 2:00 pm by David Farrar

The Press editorial:

Political opinion polls come so thick and fast during an election year it is tempting to pass over them with indifference.

The results of two announced at the weekend, though, were so contrary to conventional political wisdom that they demanded attention. …

A well-received Budget took the heat off last week, but the consensus was that the first opinion polls taken while those events were still fresh in voters’ minds would punish the Government.

The outcome was quite different – not only were National and the Prime Minister up and Labour, its leader David Cunliffe and most Opposition parties down, National would, if the results were translated into votes at the election, win sufficient seats not to need a support party. 

The well-received Budget may explain part of it. One of the polls found that even two-thirds of those who identified themselves as Labour supporters backed it.

But another part of the explanation for the poll results may be that what transfixes those in the Wellington political bubble can often be less than earth-shattering in the wider world where most voters live.

I think that is right.  I think Labour especially suffers from Wellingtonitis because so few of its MPs come from provincial areas. The test is what the mums are talking about at the school gates or what the chatter is in the smoko rooms. Almost none of them were talking Oravida.

The Herald editorial:

So much for Oravida, Judith Collins, Maurice Williamson. National’s troubles of the past two months have evaporated in two separate public opinion polls taken since the Budget. Colmar Brunton, for TVNZ, and Reid Research for TV3, both find more than half of their sample intending to vote National. This must be devastating for Labour, whose sustained barrage on Ms Collins in Parliament over the past two months does not appear to have moved any votes.

They have moved votes. From Labour to National.

Four months out from the election, Labour is the party in trouble. It ought to be polling well above 30 per cent by this stage to have much hope of success in September. If its result is not 10 or more points higher at the election, it must be doubted it could lead a credible government.

David Cunliffe said his aim is to poll higher than National – at a minimum get into the 40s. 116 days to go.

Labour leader David Cunliffe said of the latest polls, it is “still fairly early days” and they would “bounce right back again”. It is very late in the day. Most voters make up their minds well before the election campaign begins, though it is true that campaigns restore voters’ usual loyalties. Labour is likely to do better than 30 per cent, National will almost certainly fall short of 50 per cent.

But right now the prospects for Labour could hardly look worse. It has fired its best shots in the past two months and the voters are unmoved. The economy is growing, the Prime Minister is popular and so far there is no prevailing mood for change.

But as both editorial say, Labour might make it through a Labour-Greens-NZ First-Mana-Dotcom alliance.

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Editorials on Immigration

May 23rd, 2014 at 9:00 am by David Farrar

The Dom Post editorial:

Immigrants are easy prey for political vultures. Demagogues can win votes by using foreigners as scapegoats, as has happened repeatedly in New Zealand’s history. So the argument about the effect of immigration on housing could easily turn poisonous. It’s important not to let that happen.

The Budget’s big surprise was the revelation of a turn in the usual tide of migration. The outward flow has turned into a net inward movement, mainly because fewer Kiwis are moving to Australia. Now there is concern that the inflow will push up house prices.

Panic measures will not help with this problem, as Labour seemed to realise soon after pledging a cut in net immigration. Asked exactly how big the cut would be, Labour faltered and fudged.

It was almost comical. David Cunliffe said they’d reduce it from 40,000 net to under 15,000. Phil Twyford went further and said it would be 5,000. Then Cunliffe claimed he’d never said what he said and said Twyford had it wrong.

Immigration flows cannot be turned off and on like a tap. The present trans-Tasman inflow could quite quickly reverse as the rebuilding of Christchurch reduces, our growth rate falls, and Australia’s economy rebounds. Big cuts in immigrant numbers would then exacerbate the renewed outward flow.

The country is entitled to control immigration and there might be room for some temporary reduction in immigrants. 

Maybe Labour will campaign on reducing the quota numbers for the Pacific Islands, around South Auckland.

Winston Peters’ anti-Asian campaigns in the 1996 and 2002 elections also caused unnecessary alarm. There is always a receptive audience for this kind of trouble-making, especially among the older, the frightened, and the bewildered.

All the loose talk about the “Asian invasion” and the predictions of racial trouble turned out to be hollow. Auckland now has a large Asian population, but there has been no bloodshed, no ethnic violence, no outbreaks of hatred. New Zealand has shown that it is on the whole a tolerant and welcoming society which copes well with change.

One can debate the size and pace of immigration. These are legitimate topics. But as I pointed out several days ago the number of residency visas is actually lower today than in 2008. The big change is fewer Kiwis are leaving NZ, and more Kiwis and Aussies are deciding to live here rather than in Australia.

The Herald editorial:

In theory, Labour’s policy of managing immigration seems eminently sensible. The party would, said David Cunliffe, aim for “a steady, predictable, moderate flow that’s at a level that addresses skill shortages”. In reality, however, such an approach is impractical. New Zealand has had enough experience with stop-go immigration policies to know that while it might be easy to turn off the tap, it can be extremely difficult to return the flow to the desired level. …

Labour says that threat could be defused by restricting the annual migrant intake to between 5000 and 15,000. It did not dwell on how that would affect the external perception of a policy that could no longer be said to be stable, sage or welcoming.

To reduce net migration to that level, you would need to abolish all residential visas and almost all work visas. Christchurch construction would of course come to a halt.

Additionally, Labour’s policy is based on a false premise. The latest net migration statistics reflect not so much a flood of immigrants as far fewer people being lured across the Tasman, in particular, and an increasing number of New Zealanders returning from Australia. 

I’m glad the leader writes read my blog :-)

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Herald against tax cuts

May 22nd, 2014 at 10:00 am by David Farrar

The Herald editorial yesterday:

Six weeks ago, the Prime Minister was in no mood to offer encouragement to those who thought tax cuts might be in the offing. The Budget would have no plans for such a move, he told the North Harbour Club, while seeking also to dampen expectations of anything significant in the future. It was exactly the right thing to say. Now, however, John Key is singing a different tune. He is talking about tax cuts as a choice, and they are sufficiently in his mind to to have warranted a mention in last week’s Budget.

It stated: “Operating allowances from Budget 2015 will be $1.5 billion a year, growing at 2 per cent for budgets thereafter. This is a moderate increase that will provide the Government with options around investment in public services and modest tax reductions.” In effect, the growing economy is providing the Government with a bit more freedom. But this does not mean that, for the next term of government at least, they should be at the top of the priority list. Of far greater importance is the need to get debt back to under 20 per cent of gross domestic product.

The Government can do both, and it should do both.

As the editorial notes, any tax cuts would come out of the $1.5 billion operating allowance. So the surplus projections already take into account any tax cuts. It is basically a choice of whether the $1.5 billion goes just on extra spending, or a mixture of extra spending and tax cuts.

People say they want higher after tax incomes. The Government can not directly set incomes. That is between employers and employees. But they can set tax rates. The one sure way to boost after tax incomes for hard working New Zealanders is to give them a tax cut.

There is little to indicate that most people feel they are owed tax cuts. New Zealanders are aware that, while the country has emerged from the global recession in relatively good shape, there are more important priorities.

I disagree. Extra spending benefits the small group of NZers that it goes on. Tax cuts can benefit all working New Zealanders.

The surplus projections take into account the $1.5 billion operating allowances. Now a balanced Government might say let’s spent half on extra spending and half on tax cuts. That would not impact the projected surplus at all.

After three years, that would be $2.25 billion of annual tax cuts and $2.25 billion of annual extra spending. Here’s what you could do with $2.25 billion of tax cuts based on Treasury estimates.

  • Reduce the bottom tax rate (up to $14,000 income) from 10.5% to 4%
  • Reduce the 2nd bottom tax rate ($14k to $48k) from 17.5% to 13%
  • Reduce the third rate ($48k to $70k) from 30% to 26% and the second rates from 17.5% to 14%
  • Increase the upper threshold for the bottom rate of 10.5% from $14,000 to $29,000
  • Increase the upper threshold for the second rate of 17.5% from $48,000 to 67,000
  • Have the bottom 10.5% rate apply to $22,000 (from $14,000), the second rate of 17.5% apply to $56,000 (from $48,000) and the third rate of $30% apply to $78,000 (from $70,000)

The Herald is effectively saying that 100% of the operating allowance should go on extra spending. That should be just as unacceptable as having 100% of the operating allowance going on tax cuts.  What I want is political parties to deliver both extra spending and tax cuts.

The debate should be about what the mixture is, but not about whether there should be a mixture. ACT might say it should be 80% tax cuts and 20% spending. Labour might say 75% spending and 25% tax cuts. National might be 50/50. But I have no time for those who say there should be no tax cuts at all, once they are clearly affordable.

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Herald on journalists and politics

May 14th, 2014 at 2:00 pm by David Farrar

The Herald editorial:

But if these misuses of company property had not occurred, Taurima’s position would still have been untenable. He not only joined the Labour Party while working in news and current affairs, he made an unsuccessful bid to be Labour’s candidate in the Ikaroa-Rawhiti byelection last year. Strangely, after missing the selection, he was able to return to his position at TVNZ. There, his continuing Labour activities reached a level that, the report says, “would plainly be deeply embarrassing to TVNZ if it came to light”.

He must have known that would be so. It is elementary to journalists that joining a political party is not an option unless they plan to make their career in the party’s publications. Those who want to be credible reporters of news and politics for a mass audience cannot belong to a party. If they did, they would have to declare their affiliation, and their audience would rightly question the reliability of everything they reported.

The Public Service Association seems not to understand this. It thinks a recommendation to ban reporters, content producers and editors from political activity is a draconian and unnecessary breach of their rights as citizens. It believes the State Services Commission guidelines for public servants are sufficient for the state broadcaster and that TVNZ will set “a dangerous precedent for other public servants”.

Public servants serve the Government of the day. They can belong to a political party and take part in its activities after hours because the primary audience for their professional work is ministers and other politicians understand their code. State-owned media such as TVNZ and Maori Television are different. Their primary audience must know their reporters, producers and editors are not a member of any party in their spare time.

I thought the PSA position was appalling. They should be defending neutrality – but they were effectively arguing that political journalists for state television should be able to be party activists.

The Herald does not allow its editorial staff to participate in community or political activities that could compromise their work. This means not only membership of political parties but taking part in public campaigns that they could have to cover. Preserving this distance from politics is not an onerous restriction for those whose credibility is paramount. They have the privilege of observing, reporting and commenting on public affairs. Once they cross the line to partisan participation, there is no coming back.

Well stated.

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Sense from The Press

May 12th, 2014 at 12:00 pm by David Farrar

The Press editorial:

There was something both a little overwrought and naive about the attempt last week to drum up a fuss about the fact that some people had paid large sums to attend functions at which they would have the opportunity to meet and talk to politicians. All political parties put strenuous effort into raising money to keep themselves going and those efforts reach a peak in the period leading up to an election. To try to convert perfectly legitimate fundraising into something more sinister shows a view of the rough trade of politics that is touching but wildly unrealistic.

The ruckus was manufactured out of the publicising of the entirely unsurprising fact that the National Party has been running events which donors pay to attend and socialise with Government ministers. It became even sillier with the reporting of a perfectly ordinary Wellington event organised by a prominent National Party fundraiser that gathered (and properly reported) $45,000 for the party. It was suggested that the fact that Prime Minister John Key was there with his chief of staff somehow turned his presence into an official appearance and amounted to using his office to support the party.

That was probably the most farcical aspect of the Green inspired hysteria (which is designed to get compulsory taxpayer funding of political parties). The PM has two parliamentary offices – the Office of the PM and the Office of the National Party Parliamentary Leader. The chief of staff heads up both, and to say this his attendance at a fundraiser means it is an official appearance is farcical.

This is nonsense. Using high-ranking politicians and ministers as bait at fundraising events is practised by all political parties. As the Prime Minister and others have pointed out, the Labour Party at its last conference in Christchurch offered one-on-one meetings with its MPs for a hefty fee. It is perfectly legitimate and dubbing it “cash for access” and calling it a scam does not make it any less so.

Yet the Greens are silent on Labour selling one on one meetings with MPs. I don’t have a problem with them doing so, but the hypocrisy is massive – they decry MPs attending fundraising breakfasts and lunches – yet say it is fine for their own MPs to be pimped out for one on one meetings in return for a fee.

It is not as though there is anything exclusive in the practice. New Zealand members of Parliament, including ministers, are extraordinarily accessible and open to meeting anyone. Those who pay money to meet politicians are doing so not because the encounter bestows any particular benefit on them but because they are showing support for those of a like-minded political disposition.

Exactly. There isn’t a democracy in the world where politicians don’t attend fundraising functions.

There is, moreover, nothing wrong with ministers having general discussions about political issues at such gatherings. In fact, the more views politicians and ministers hear before they frame policy the better. Even if an individual is able to bend a minister’s ear about some policy or other, the policy must still make it through the meatgrinder of the political process where a thousand other voices are added to the outcome.

“Cash for access” is very far from “cash for favours”, of which New Zealand is blessedly free. New Zealand politicians are undeniably the least corrupt in the world and to suggest scams where none exist is mudslinging for no useful purpose.

The purpose is to get taxpayer funding of political parties, so parties no longer have to worry about relying on their own supporters.

To keep things above board, though, it is important that there is as much openness about what goes on as possible. Some donors to political parties, while willing to part with their cash to support their party of choice, come over all bashful about having their support publicly known. And both major parties unfortunately have been willing to indulge them in their shyness. Parties must declare the gifts they have received, but even after two rewrites of electoral finance law in the last decade it is still possible for an individual to gift up to $15,000 without revealing his or her identity.

I thought the previous limit of $10,000 was about right. Labour incidentally voted for the level to go up to $15,000. But still put that in perspective – $15,000 is less than 1% of the cost of a major party’s election campaign. It may be quite a lot of money to an individual, but it isn’t a lot of money to a major party.

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Herald on revealing CVs

March 11th, 2014 at 2:00 pm by David Farrar

The Herald editorial:

The law is not always an ass but it can produce an absurdity. The decision of the Human Rights Review Tribunal to make a company disclose to a failed job applicant the CVs and reference checks of others going for a job is an example.

The aggrieved party complained to the tribunal that he was discriminated against on the basis of age. He wants to see the credentials of others who applied or succeeded in the process. Under the court system’s rules of “discovery”, which the tribunal adopts, all information pertinent to an action needs to be handed over from the defendant to the plaintiff. The tribunal has dismissed an application from the company involved, Alpine Energy, to block that discovery under a section of the Evidence Act which covers confidentiality.

So Alpine and its recruitment agency must give the man the information it has on the successful candidate and those who contested and lost. This would include not only names, applications and CVs (although the tribunal and the failed job-seeker have agreed it need not include addresses and contact details) but also reference and perhaps security checks.

A pretty appalling decision. You apply in confidence for a job. Revealing that you applied could endanger your current job. Also very unappealing forcing a company to justify why it didn’t employ someone. Employment decisions are often somewhat subjective – how well they interviewed, whether or not they would fit into the team culture, whether their CV had typos in it etc.

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The Press on Labour

March 4th, 2014 at 1:00 pm by David Farrar

The Press editorial:

Labour leader David Cunliffe perhaps scored one or two electoral points last week when he visited – in her damaged home – an 85-year-old widow who told him she had been “pushed from pillar to post” in her dealings with EQC. …

Unfortunately, it was no substitute for a cohesive and well-articulated earthquake recovery policy from Labour, which continues to look lacklustre when it comes to explaining how it would handle the rebuild.

Cunliffe followed up his photo opportunity with a pledge to set up, if elected to Government, a $2 million fund to help individuals bring test cases against EQC and insurance companies, to “clarify the law, remove blockages and help get things moving”.

There is an immediate perception problem with the amount, which seems almost insignificant given the scale of the problem.

While Cunliffe talks of millions, the Government in election year is bound to keep repeating its mantra that it is funding $15 billion of a $40b rebuild.

Cunliffe’s rhetoric almost invites critique. If elected to Government, it would be better for Labour to clarify the law itself, even if that involves seeking its own declaratory judgments from the courts, rather than relying on citizens bringing test cases.

Paying people to take EQC and insurance companies to court might also create blockages, rather than remove them, at least in the cases of those who become involved in litigation.

It seems to be one of their more stupid policies. We’ll pay people to take our own insurance company to court.

And, given the length of time such cases take to be heard and adjudicated, then potentially appealed, it is hard to imagine how this scheme will help to get things moving to any significant degree.

A great way to delay things. Will they fund cases all the way to the Supreme Court?

It would be inviting them, in some cases, to sue EQC, a government department. What Cunliffe is saying, essentially, is that “if elected to govern, we will give you some money so that you can take our own officials to court, so that they can have a better idea of how they should be handling your case file”.

This is not what electors are looking for in a credible opposition party campaigning in election year.

It sounds like a policy a 22 year old staffer dreamt up the day before the visit. The key word in the editorial is credible. The policy is not credible, and neither is the party promoting it.

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Views on McCarten

February 28th, 2014 at 10:00 am by David Farrar

Chris Trotter writes:

The New Zealand Left suddenly finds itself in the position of the dog who caught the car. For years, slagging off the Labour Party as a bunch of neoliberal sell-outs has been one of the Left’s favourite pub and parlour games. But now, with one of this country’s most effective left-wing campaigners just one door down from the Leader of the Labour Opposition, the Left, like the bewildered pooch for whom the fun was always in the chase, has finally got what it wanted and must decide what to do with it.

Yes, it is a huge victory for the far left.

If Cunliffe and McCarten are allowed to fail, the Right of the Labour Party and their fellow travellers in the broader labour movement (all the people who worked so hard to prevent Cunliffe rising to the leadership) will say:

 “Well, you got your wish. You elected a leader pledged to take Labour to the Left. And just look what happened. Middle New Zealand ran screaming into the arms of John Key and Labour ended up with a Party Vote even more pitiful than National’s in 2002! So don’t you dare try peddling that ‘If we build a left-wing Labour Party they will come’ line ever again! You did – and they didn’t.”
 
Be in no doubt that this will happen – just as it did in the years after the British Labour Party’s crushing defeat in the general election of 1983. The Labour Right called Labour’s socialist manifesto “the longest suicide note in history” and the long-march towards Blairism and the re-writing of Clause Four began.
Not sure comparison to Michael Foot are helpful to Labour.
The Dom Post:

So the dinosaurs are back. Richard Prebble returns to run ACT’s election campaign. Matt McCarten returns to become Labour leader David Cunliffe’s chief of staff. The ironies are multiple. These two were the chief brawlers in the brutal and byzantine ruckus within Labour over Auckland Central in the 1980s.

A generation later the two will once again be on opposite sides of the political war. 

Not opposite sides. Prebble is campaign manager for ACT, not National. McCarten is chief of staff for Labour.

Mr McCarten is a similarly divisive figure, and already his old comrade Mr Anderton has said he won’t work for Labour this year, apparently because of Mr McCarten. Labour is billing Mr McCarten’s return as a symbolic healing of the rifts in the Left-wing family, but clearly the rifts do not heal easily.

What was interesting is that Cunliffe said he was sure Jim would still be supporting Labour, and then Jim said he won’t be while McCarten is there. What is surprising isn’t Anderton’s views, but that no one spoke to him in advance and hence Cunliffe said something that was contradicted an hour later.

The Herald:

But that presumes Labour’s existing voter base also favours a move to policies aimed at attracting the lost tribes of the left. There is a risk surely that some working, non-unionised, moderate social democrats will see a Labour Party raising taxes, advancing union interests, expanding the state and redirecting wealth to support beneficiaries and the poor as altogether less appealing.

Most non voters are proportionally under 30. I’m not sure a return to 1970s policies will be appealing to them.

Labour’s result in 2011 was its worst for generations. Its poll rating now, under Mr Cunliffe, has not increased much at all from its early-30s standings under David Shearer, despite promising expanded paid parental leave and a baby bonus for all those earning up to $150,000 a year. 

In August 2013 when Shearer was Leader, Labour’s average poll rating was 32.4%. In February 2014 their average poll rating is 32.2%.

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A fail for the press editorial

February 27th, 2014 at 12:00 pm by David Farrar

The Press says:

Cynics would say that the latest rise was an easy move for the Government to make. When the minimum wage rises by 50c, the Inland Revenue Department gets nearly 9c extra for every hour worked by a minimum- wage earner as the income tax liability increases. For workers with children, the Government’s Working for Families liability will decrease at the same time. All of this money will be funded by employers directly, and indirectly by the consumers who use the goods and services that those employers provide.

A number of people make this mistake. Putting up the minimum wage decreases the tax take for the Government. They have ignored the fact companies pay tax, and at a higher rate than individuals on the minimum wage.

A full time minimum wage of $13.75 an hour is $28,679 a year. Going to $14.25 an hour is $29,721. An increase of $1,042.

Tax on the former is $4,039 and the latter is $4,221. So an increase in tax of $189.

However the employer pays tax at 28%. Their profit will drop by $1,042 and hence the tax they pay drops by $292. That means a net reduction in tax to the Government of $103.

So a rather big fail for The Press editorial.

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Editorials on “gentlemen’s agreement”

February 26th, 2014 at 3:00 pm by David Farrar

The Press editorial:

Dunedin Mayor Dave Cull is defending the agreement under which former Dunedin North MP Pete Hodgson was paid by Cull’s council to lobby the Government to retain the core functions of AgResearch at Invermay. Hodgson was paid $3400 for duties which included advocating on the council’s behalf, contributing to a letter to Economic Development Minister Steven Joyce and writing a 10-page report for the board of AgResearch.

The council says that Cull was its main point of contact with Hodgson, but it could not locate a single email, contract or any other document relating to the agreement. Cull said: “I could describe it as a gentleman’s way of doing business in the south.” …

In matters involving public money, it is absolutely essential that the principles of transparency and accountability are upheld. There are sometimes good commercial reasons for withholding some information, but they don’t apply here. Cull has done Dunedin ratepayers a disservice with this handshake deal and his cavalier attempt to explain it.

Also an editorial in the Southland Times:

Could you smell the port and stale cigar smoke on Dunedin Mayor Dave Cull’s breath as he defended the “gentleman’s agreement” under which his council paid former MP Pete Hodgson for lobbying?

Mr Hodgson was paid $3400 for his work helping the council advocate that Invermay retain its core Ag Research functions. He was plausibly the best person for the job. But it was done on a handshake with nary a contract – and all that tedious accountability that goes with it – in sight. …

Mr Hodgson says the fact that nothing was written up “would probably reflect their trust in me”.

As far as the public is concerned, what this should reflect is the untrustworthiness of all involved.

A council, a mayor and a former minister of the Crown should collectively and individually know full well that this was dodgy and then some.

The Taxpayers’ Union, while acknowledging that it isn’t an eye-watering amount, detects that the council isn’t applying the most basic internal controls.

It is the principle, not the amount. But when it involves public money with one politician awarding it to another politician, you need to be absolutely transparent.

The good news is that while there was no contract, there was at least an invoice. The Taxpayers Union is pleased with this, but asking the question who then authorised the payment. The Mayor keeps insisting it had nothing much to do with him, while the Council says he was the primary point of contact. So who signed it off?

The ODT reports:

Chief executive Dr Sue Bidrose said yesterday invoices should have been included in the OIA response, but the staff member writing the response ”was simply answering the question ‘was there a contract?’ and the answer seems to have been no”.

It was also a ”mistake” not to write a contract for Mr Hodgson’s services, she said.

”It appears that there have been more than one of these mistakes and it appears that there is a small number of managers who were not aware [of council policy].”

The council did not use ”gentlemen’s agreements” and had reiterated to staff all employment transactions, no matter how small, should be covered by contracts.

Good to see.

As readers will know, I helped found the Taxpayers’ Union. On a modest budget and limited resources we’ve already made a lot of impact with both local and central government in attacking wasteful or sloppy spending, including the $19 million spent by ACC which by their own accounting was at best returning 14 cents in the dollar.  You can join the union for just $5, subscribe to newsletters for free, and/or donate to help keep us going. The board members are all volunteers. As we head into election year expect more of a focus not just on wasteful spending, but making the case for taxes to be reduced as the crown accounts head back into surplus.

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Housing Warrant of Fitness

February 24th, 2014 at 12:00 pm by David Farrar

The Herald editorial says:

At a first glance, Housing Minister Nick Smith’s announcement of a warrant-of-fitness scheme on state homes seemed like a step forward that was as significant as it was welcome.  …

On closer examination, however, there was much less reason for applause. The final words of Dr Smith’s announcement made it clear that the Government had not decided to apply the warrant of fitness to the private rental market or other social housing providers. Urgency on this issue is clearly not high on its agenda.

I think urgency and haste could backfire.

Dr Smith excused this inactivity on the basis that the Government should get its own housing stock in order first, and that the trial of 500 of its homes would show how a warrant of fitness could work. But there is little reason new rules for all rental housing could not be readily introduced.

I wonder if the writer of the editorial has ever been a landlord?

The trial includes a comprehensive 49-point checklist that means homes must be insulated and dry, safe and secure, and contain essential amenities such as bathroom and kitchen facilities. Each home will have to pass this checklist to get a warrant every three years. Any snags in this arrangement should quickly become apparent and be easily remedied. In only a matter of months, it should be possible to roll out the scheme to the private market. The Government, however, is unwilling to even signal that intention.

I think the person writing this has no idea about how demanding such a WOF would be. They think you can roll it out untested, and just makes any fixes as you go along. They think that one can suddenly have an army of house inspectors.

It could well be that there is merit in eventually rolling out the WOF scheme to private sector rental housing, but the history of Government is that of unforeseen consequences. If getting an WOF is too much of a hassle, or too costly to comply with, then it may lead to fewer houses being available to rent – which would push rental prices up for all tenants.

It is time to place some obligations on those offering homes for rent. Already, they benefit from tax breaks and untaxed capital gains. 

The Government has actually got rid of the tax breaks by eliminating the ability to claim depreciation on (most) investment properties. So I am unsure what this tax break is that the editorial refers to. And yes the capital gain is generally untaxed, but that is not derived from renting the property out.

I purchased a new apartment in 2011, and looked at keeping my old one and turning it into a rental investment property. I decided not to, as the potential return from renting it was so low after you account for rates, body corporate fees and maintenance, that it wouldn’t even cover the interest on the mortgage.

There are potentially benefits from a WOF scheme for rental housing, but the last thing you want is to have Government impose a mandatory new requirement on landlords without knowing how costly it would be, and how it might impact on supply and rental prices. Many things sound great on paper, but turn into disasters when they hit the real world.

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Dom Post on TVNZ

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

The Dom Post editorial:

State broadcasters are like Caesar’s wife: they have to be above sin and seen to be so. That is why Shane Taurima had no choice but to resign as head of TVNZ’s Maori and Pacific Unit. He had used the broadcaster’s buildings for a Labour Party meeting, and its email to organise a Labour meeting held elsewhere.

He broke the rules that require taxpayer-funded broadcasters to be politically neutral. State broadcasters must not use their position to promote the interests of any political party of whatever kind. Mr Taurima sought the Labour candidacy at the Ikaroa-Rawhiti by-election last year, but the actual party brand is irrelevant. He would also have had to resign if he had held an ACT party meeting at his workplace.

It is not clear which other TVNZ staff members were involved in the meeting or in other party activities. The company’s internal inquiry will find out and then TVNZ managers will have to decide what to do. Mr Taurima knew he could not defend himself and did the honourable thing. 

The honourable thing would be to not have done it in the first place. According to TVNZ management Taurima told them when he was rehired that he would not stand again.

Mr Kenrick said TVNZ had sought commitments from Mr Taurima after his tilt for Labour at the Ikaroa-Rawhiti candidacy before restoring him to his role heading the department. “The key focus was to get him to make an explicit choice between journalism and politics, and to make commitments around that. We relied in good faith on those commitments.”

Did he lie, or just a few weeks later change his mind and not bother to tell them?

Whether other sackings are called for is a matter of judgment.

The staff in that unit are all basically taxpayer funded, as it is not a commercial unit.

State broadcasters have a special duty to be politically even-handed. This does not mean, as some believe, that the journalists should have no views of their own. Every sentient human being has certain political beliefs or attitudes, and journalists are no different. But state journalists must be professional and not push any party’s barrow.

Mr Taurima insists that he has never allowed his personal politics to influence his work as a journalist, and it is interesting that the prime minister has not claimed any political bias at TVNZ. In fact he thinks they are fair.

The PM has been very nice, when he could put the boot in. For my 2c I don’t think Taurima’s interviews showed political bias. He pushed David Shearer hard when he interviewed him. The issue is his breach of ethical standards, not his previous interviewing.

Mr Taurima was allowed to return to the company after he failed to win candidacy, and this is a defensible decision. Again, the expectation was that Mr Taurima, once he had taken off his Labour Party hat and put on his broadcaster’s one, would act in a professional and politically neutral way.

However, it is now reported that in January he facilitated a Labour meeting – held on a marae and not on TVNZ property – on how to win the Maori vote. This meeting was also attended by Labour leader David Cunliffe. Mr Cunliffe says he strongly supports a politically neutral state broadcaster. Did he ask himself, then, why Mr Taurima was running this highly political meeting?

I’m amazed warning bells did not go off.

Will Taurima still seek the Labour nomination for Tamaki Makaurau? Will they select him?

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Dom Post on change not wanted

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

The Dom Post editorial:

John Key’s Government came into office in the midst of the global financial crisis. Nobody was expecting things to improve quickly. Most people expected them rather to get worse. Mr Key made no promises of instant gains.

On the other hand, his Government’s management of the economy was a moderate one and did not go for a hard dose of austerity. It reduced the deficit over two terms rather than bringing it back to nothing with a bump. The result was that our economic pain was relatively mild, at least compared with Britain and the United States.

The Key Government’s response to inheriting a structural deficit wasn’t to slash and burn with a frenzy of spending cuts. It was very moderate and middle of the road. Initially some infrastructure spending was accelerated to help soften the recession, and then new spending was slowed down. The extreme response came from Labour who went on the record opposing every single measure of fiscal restraint. They said a cap on public sector employees would be a disaster. They opposed saving money through efficiencies in back office functions.  I can’t think of a single act of fiscal restraint that they haven’t opposed.

Now the Government is signalling a less stringent approach to the budget, with increased spending in areas like paid parental leave. It recognises that the voters feel they have done their penance and a modest pay-off is in order. 

As we head back into surplus, we gain choices again. Deficits do not give you much choice. There are broadly three things you can “spend” a surplus on – debt reduction, extra spending and tax cuts.

A moderate balanced party will propose all three. I expect parties may disagree with each other about the exact proportions, but the extremists will only push those that fit with their ideology. Will Labour go against the 70% who don’t support tax increases and go into the election only promising tax increases, and not offering any tax cuts?

Labour leader David Cunliffe has not produced a big turnaround in the party’s fortunes, and time is running out.

National’s slogan this year will be some version of “Don’t put it all at risk”, and at present the signs are that it will work. There is not yet a deep-rooted feeling of economic dissatisfaction. There is not yet a widespread dislike of the Government. So the basic competing slogan – “it’s time for a change” – is not decisive.

Labour are promising to expand welfare payments to families earning up to $150,000 a year. Policies like that are what will put it at risk.

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NZ Herald on Sallies report

February 13th, 2014 at 1:00 pm by David Farrar

The Herald editorial:

The Salvation Army has earned high credibility in social work for the practical, non-political way that it goes about its mission. It deserves the same credit for social research on the strength of its annual state of the nation report. The latest, featured in the Herald yesterday, offers a more balanced snapshot of our society than we get from research that sets out to find something going wrong.

The Sallies’ report suggests a great deal is going right. Educational disparities are narrowing. Gaps between passing rates from rich and poor schools, and Maori and non-Maori, are not as wide as they used to be. A higher proportion of Maori and Pacific children are enrolled in pre-school education. More school leavers are working or getting a qualification.

Fewer teenage girls are getting pregnant. While the number giving birth has been falling for many years, more recently the number having abortions has been falling too.

That is good news, as is the decline in infant mortality, especially for Maori. We were even drinking and gambling a little less.

Employment is increasing, not only among the young (up 9.4 per cent for those aged 15-24 last year), but the proportion of the over-65 population who are working has leaped from 15 per cent to 21 per cent in the past five years. That means more than a fifth of national superannuitants with super gold cards have not retired. Most of them will be in the 65-70 age bracket and could support themselves if the qualifying age for superannuation was raised.

All but a few hard core opponents have to concede that overall most things are heading in the right direction. And yes of course the age of eligibility should increase.

Incomes rose 2.6 per cent on average last year while the cost of living rose 1.6 per cent. Employees, with an average rise of 3.1 per cent, did better than the self-employed. 

All good.

The report shows that affording a house in Auckland and Christchurch has become even harder than it was at the height of the last boom. The median Auckland house price now exceeds 10 years of the average gross weekly wage. Household debt is rising again as economic growth gathers pace. The average household owes $121,200, giving a ratio of debt to earnings not quite as bad as five years ago but still nearly 150 per cent of the average household’s annual income.

Housing costs and some other adverse trends leave plenty of problems for social policy but it is important to acknowledge progress too.

Yep, overall a pretty fair and balanced report.

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NZ Herald on Buy Australia

February 10th, 2014 at 10:00 am by David Farrar

The Herald editorial:

A buy-Australian campaign in two Australian supermarket chains is a sobering lesson for the Green Party and anyone else in New Zealand who advocates the same thing here. The unfairness to suppliers from this country is exactly the effect a buy-New Zealand campaign has in other countries, though the scale of our market diminishes the impact on most of them and increases the damage to us.

Exactly. Its hypocritical to relentlessly claim we should only purchase from NZ suppliers, and then complain when Australian supermarkets promote Australian food over NZ food.

The best thing we can do is to focus on quality of product and price, not country of origin.

Ultimately the best response of excluded suppliers is to make their products doubly attractive and competitive on the same market. Quality, taste, price and brand reputations can trump the country of origin in consumers’ decisions. But it takes a sustained marketing effort, preferably before a threat of this sort comes along.

You can’t take export markets for granted.

The campaign will pass, of course. As soon as the supermarkets sense consumers going elsewhere for familiar items they no longer stock, the non-Australian brands will be quietly restored. But the lessons should not be forgotten when we are urged to buy on country-of-origin labels. Compulsory labelling is a fine principle of consumer information but if the labels are used for an exclusive purpose, fair competitors somewhere will suffer.

Also correct me if I am wrong, but the Australian supermarkets have not banned any NZ food. They have made a decision to only use Australian sourced food for their in-house brands. There is a considerable difference.

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Herald on baby bribe

January 31st, 2014 at 2:00 pm by David Farrar

The NZ Herald editorial:

David Cunliffe delivered one indisputably accurate comment during his State of the Nation address this week. “We need,” he said, “to put our resources where they will do the most good.” The Labour Party leader was referring to the requirement of any government to focus on children, but his comment was appropriate for any spending of taxpayer money. Why, then, does he propose paying families earning up to $150,000 a sum of $60 a week for each newborn baby until the child’s first birthday? Clearly, most people earning anywhere near the top of that range and many middle-income earners have no need for such money. Government resources would, therefore, be being put where they do the least good.

It’s an attempt to buy votes, but one that I think will fail. Most families that are better off would rather receive tax cuts than welfare. Better to pay less tax in the first place, than to be over-taxed and then have the Government hand back to you some of your own tax money as welfare.

 

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Dom Post on Ratana

January 27th, 2014 at 3:00 pm by David Farrar

The Dom Post editorial:

The only question now is: how many seats will the Maori Party lose this year? The party has lost the main reason for its being, which was the repeal Labour’s foreshore and seabed legislation. It has not really found another central cause to replace it. It is losing its two most distinguished politicians, Dr Sharples and Tariana Turia. And it has suffered the slow suffocation that all small parties suffer when they get into bed with a larger one.

The Maori Party may well lose one or even two electorate seats, but it is worth reflecting that if they lost two, then their party vote last time was high enough that they would have gained a list seat.

As the Maori middle class grows, it will produce more National supporters. At present, National’s share of the Maori vote remains small, of course, but it will rise, just as the Black Republican vote in the United States has increased. 

National picks up more support from Maori on the general roll than the Maori roll, but only post-election polls pick this up. In terms of the Maori seats, the records are:

  • 1996 – 6.1%
  • 1999 – 5.7%
  • 2002 – 4.2%
  • 2005 – 4.3%
  • 2008 – 7.4%
  • 2011 – 8.6%

So very modest increases.  But much better than the US where in fact black Republican vote has been declining (except for 2004).

And already we have seen a notable rise in the number of National Maori MPs in the general seats – a trend which might have been encouraged by the link between National and the Maori Party.

National’s 9th Maori MP is sworn in this week – Jo Hayes. The breakdown of Maori MPs by type of seat is interesting.

  • Maori Seats – 7 – Labour 3, Maori Party 3, Mana 1
  • List Seats – 12 – National 5, Greens 3, Labour 2, NZ First 2
  • General Seats – 6 – National 4, Labour 2

It is MMP, however, which has had the most dramatic effect on Maori representation in parliament. The share of MPs of Maori descent in the house is now greater than the proportion of Maori in the wider population. This increase is wholly good, because it means the Maori voice is better heard in the national marae. 

The proportion is now 20.7% of Parliament are Maori. This compares to Maori being 14.1% of the overall population and just 11.3% of the adult population. So that is a very significant over-representation.

Some argue that we no longer need the Maori seats as a result, and indeed the Royal Commission which recommended MMP also believed the Maori seats would not be needed.

This may indeed be true, but it may be better to put off abolition until a majority of Maori approve it. 

I agree abolition should only happen by consent, but surely it is time to start that conversation, and even have a referendum among Maori on whether they wish to retain the Maori seats, bearing in mind how over-represented Maori MPs now are in Parliament.

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The Press on education reforms

January 25th, 2014 at 2:00 pm by David Farrar

The Press editorial:

Prime Minister John Key, in his first big speech of the year, yesterday chose to focus on a subject that has traditionally been a political minefield and one on which the Government has come a cropper in the past. In choosing to unveil some radical new measures, and substantial new spending, with the aim of raising standards and bringing about what he called “a step change in achievement” in schools, Key also went into territory that Labour has regarded itself as having an ascendancy.

But first reaction from teachers, professional bodies and the teacher unions welcoming the proposals – something that must be unique for a National Party policy – indicates that they will likely be accepted and may be smoothly put into practice. They appear to be a serious-minded attempt to to bring about better performance from teachers and schools, one of the most important issues for the performance of the economy and the long-term good of society generally.

Few things could make a bigger difference to inequality than improving the performance of the tail of those in the education system. No amount of law passing or minimum wage hikes is going to make life particularly good for a kid who leaves school unable to read or write.

It is now widely recognised that school achievement is more strongly related to good teaching than to almost any other factor, including, within certain limits, class sizes. Recent studies have also been able to measure the effect of good teaching on the outcomes for pupils’ lives. A good teacher, the studies have shown, makes a measurable impact on pupils’ incomes (according to one American study up to $250,000 over a lifetime) and also produces better, happier citizens.

Recognising this, the changes announced yesterday aim to improve teaching with significant financial incentives and opportunities for the best principals to supervise more schools and improve their results, and for the best teachers to stay longer in the classroom, rather than move on to management, and to pass their skills to their colleagues. Collaboration across schools so the best practices get spread more widely will be encouraged.

One of the reforms will provide for up to 20 so-called “change principals” to earn an additional $50,000 a year for up to five years running schools that are struggling. This idea of trying to attract the best people to such schools to try to turn them around is obviously far better than allowing them to hobble along producing poor results and sometimes eventually falling over and having to be rescued anyway.

Our tolerance for poor results should be low.

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The Press on Mayoral accessibility

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

The Press editorial:

With the announcement this week of the appointment of a press secretary for Mayor Lianne Dalziel, along with a number of other appointments, the make-up of the mayor’s office is now complete. The mayor had earlier announced the appointment of a chief of staff to run the office. The mayor will have nine people working directly for her, more than twice the four that the former mayor, Bob Parker, had.

It would be interesting to compare the size of the various Mayoral offices to the sizes of their Councils.

In addition to a chief of staff and a press secretary, the mayor now has a senior adviser, a community adviser, a visits and ceremonials co-ordinator, two information officers and two executive assistants (one of them shared with the chief of staff). It must be hoped this staff will be committed to ensuring robust performance from the mayor’s office. It must also be hoped they will be committed to the greatest possible transparency and openness about the mayor’s work.

The mayor’s community adviser is Nicola Shirlaw, who was Dalziel’s campaign manager for the council election. That political connection is of no great significance by itself but the mayor must take care not to allow her office to become highly politicised or excessively inward-looking.

Of course it will be politicised. The job of the Mayor’s office is to get the Mayor re-elected. There’s nothing wrong with that per se. A Mayor who is doing a good job is more likely to be re-elected, so part of what the Mayoral office does is help the Mayor perform well. But they also of course promote the Mayor and try and get favourable coverage.

The office must also not become a barrier between the mayor and the media and public. Parker was commendably available to the media – replying with remarkable diligence and promptness to emails, texts and phone calls, even at the height of his political travails when there was little benefit to him from doing so. Dalziel is proving to be less accessible.

I didn’t know that about Parker. Good on him.

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NZ Herald on boat building contract

January 16th, 2014 at 1:00 pm by David Farrar

The Herald editorial:

The local boat-building industry says it is outraged that it was not awarded a government contract to build a ferry which will link the New Zealand territory of Tokelau to Samoa. On almost every level, its anger is odd.

The 43-metre vessel will be built in Bangladesh for $8 million. According to this country’s Marine Industry Association, the cheapest price for building it here would have been $14 million to $15 million. Awarding the contract to a New Zealand company would, therefore, have involved what amounts to a substantial handout to that boat-builder. In such circumstances, it is puzzling that the local industry feels even the slightest bit annoyed.

Yet Labour is also outraged that taxpayers did not pay three times as much for the boat.

Clearly, the Government was mindful of the pluses that would come from building the ferry locally. It indicated there was some room for manoeuvre by telling a Nelson boat-builder that its quote would need to be in the region of $9.5 million to $10 million. But the lowest bid from a New Zealand company, according to the Government, was about $23 million. That is almost three times the price of building the ferry in Bangladesh. For all the talk of the gains from buying New Zealand-made and of a new Government procurement policy that aims to create more incentives for local manufacturers, this was simply too wide a gap.

You go local when the prices are close to each other, not when one is three times the other.

Other criticisms of the awarding of the contract are similarly misplaced. Chief among these is the perception that any ferry built in Bangladesh will not be up to the task of making the often dangerous voyage across the Pacific. This disregards the fact that Bangladesh has a long tradition of boat-building. While best known more recently for breaking up ships, it has now become a major constructor of small ocean-going vessels as Asia’s traditional builders, such as South Korea and China, focus on larger container ships and tankers.

Western Marine Shipyard, which will construct the Tokelau ferry, is one of its most successful ship-builders.

I think the editorial is right that there was an inherent belief by some people that a Bangladeshi company can’t possibly be any good.

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A newspaper that pays no tax complains about tax avoidance!

January 16th, 2014 at 11:00 am by David Farrar

The Dom Post editorial:

Taxes are what we pay for a civilised society, according to the great American Supreme Court judge Oliver Wendell Holmes.

If that is so, then aggressive tax avoidance is an offence against civilisation.

I’d love to know what the Dom Post defines as aggressive tax avoidance. I presume it means tax avoidance done by other companies, but not by ourselves.

Google, for instance, whose slogan used to be “Don’t be evil”, in 2012 paid a mere $165,000 in tax in New Zealand. Amazon paid $1.6m tax on sales of $46.5m. And Apple paid $2.5m on sales of $571m. Does anyone think these companies are paying their fair share?

I’ve got a much better example. Fairfax Australia (owns the Dom Post) paid no tax at all last year on revenue of A$2.01 billion. That’s outrageous I’m sure the Dom Post agrees, and I look forward to them joining with the NZ Herald to campaign on their owners paying more tax. The fact it means they may have to sack a few editorial staff to afford their increased tax bills I’m sure is not what is preventing them from not being total hypocrites.

Or maybe the Dom Post will say you can’t compare them to Google and Apple because tax is paid on profits, not revenue. Well yes they are, so why the hell did the editorial not mention that actual profits made by Google and Apple in New Zealand? They made a conscious decision not to tell their readers that essential piece of information.

For the record I’m all for the IRD taking court action against tax avoidance that is artificial, as defined in the Tax Act. They do this on a regular basis. For example, they are battling APN (NZ Herald) for $48 million.

Some will argue that companies are entitled to minimise their taxes. Tax avoidance, after all, is legal, unlike tax evasion. Some even say that companies owe their loyalty only to shareholders, not the taxpayer, the government or their fellow citizens.

This is plainly wrong. Taxes provide the schools, hospitals, infrastructure and social services on which we all depend. Corporations benefit directly from state-funded education, research, roads, courts and public health programmes. So they should contribute to “the cost of civilisation”.

I agree people should pay their taxes. Fairfax has paid no income tax in the last year. This means they are not contributing to the cost of civilisation. According to their editorial it doesn’t matter what their taxable profit is, as that may have been minimised by accountants. Amazon paid tax equal to 3% of their revenue. As the Dom Post seems to think you should pay tax on revenue, I think Fairfax should pay A$60 million immediately as their contribution to the cost of civilisation.

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