Kiwiblog

Stuff reports:

The only way the Government could create affordable homes was to build them and Labour had a plan to do just that, Shearer said.

This is like reading the old socialist manifestos about nationalising the means of production.

I’m not sure who is writing the words that David Shearer utters, but consider the mind set that the only way you can make something affordable is to have the Government do it.

Then consider where such a mind set ends up.

If only the Government can create affordable houses, why allow the private sector to build any houses at all? Who wants unaffordable houses?

I mean government monopolies have a great track record of affordability, don’t they?

Putting aside the lurch to the left, the economics is woeful also. Look at the four major factors in building a house.

1. Land
2. Consenting
3. Construction
4. Profit/Return on Capital

Labour is saying that only one of those four things matter. They are ignoring the factors that almost every expert group has said contribute to increasing house prices, and focusing on the one where they can demonise the private sector.

They also miss the point that it is not only about building new houses that are cheaper, but how to reduce houses prices overall. 95% of house buyers will be buying an existing house and section.

Freeing up land supply reduces the cost of land throughout an entire city. It will reduce inflationary pressures on pretty much all houses, except perhaps the most exclusive areas.

Building an extra 10,000 houses without freeing up more land, may (if you even accept their figures) means the lucky few who win the right to get one of those houses will benefit – but it will do nothing for the other 95% of home buyers.

The Herald reports:

The one thing alternative finance minister, Labour’s David Parker, won’t be criticising in tomorrow’s Budget is the Government’s confirmation that it is on track to return to surplus in 2014-15.

“I always thought it would; I’ve always said it should, and we would have too,” Mr Parker says.

That is unadulterated crap. Nothing Labour have done in the last five years suggests they would have done the same. Quite the opposite.

Labour left the incoming Government with not just a decade of deficits, but actually a permanent structural deficit. A deficit that would never have been plugged without policy changes. One so large that you could not just rely on economic growth and increased tax revenue to get back into surplus.

National has both frozen and cut spending. On every single occasion they have done so, Labour has attacked them for it. Labour has also consistently come up with massive new spending proposals such as extending paid parental leave and attacked the Government for not agreeing to it.

They also relentlessly criticised the Government what what they said was austerity measures, and said it was the wrong policy.

So to turn around now, and say “Oh yeah we would have got the Government back into surplus also” is just crap. They’ve spent years opposing every single spending cut and even explicitly saying that there is no rush to get back to surplus (I don’t regard six years as a rush!).

If you want an idea of what would have happened if Labour had been in power, just look at Labor in Australia.

Okay most of us know that when Labour was Government a deal was done with Sky City for 221 extra pokie machines in return for a $140 million convention centre. It seems that if you get a quango to negotiate the deal then it is a very good thing, but if a government department negotiates it is evil and bad.

But did you know Labour’s 2011 manifesto pledge a convention centre for Auckland? They said:

Business tourism is essential to NZ but we lack facilities to cater for large conferences.  If we want to be a true business tourism destination we need to have a world class conference centre and Auckland is the most practical place for it.”

Labour supports the concept of a world class Conference Centre and will work with Auckland Council in progressing such a project. “

So here’s my question? Is Labour going to announce that they will borrow $400 million to fund the convention centre directly? And will they pledge to have it Government owned and run, so that if it ever makes a loss then the taxpayer has to bail it out?

Also let us recall what Labour said about the existing convention centre, that also got funded by a gaming concession:

“The potential gains from this are widespread – not only for SKYCITY but for the Auckland city region, the tourism industry and the whole of New Zealand.”  

That was Tourism Minister Mark Burton at the opening of the SKYCITY Auckland Convention Centre on 3 August 2004.

So in summary:

• Labour had a quango do a similiar deal (but for a centre one quarter the size) in 2001
• They proudly opened the centre as a result of the deal in 2004
• They committed to a convention centre in 2011

So again, isn’t it time for them to front up and announce how they would pay for it?

In Parliament today:

Chris Hipkins: … but I am concerned about students’ safety from being in classrooms with unqualified, unregistered teachers …

Hon Nikki Kaye: Is the member saying that children in early childhood centres are unsafe? Is that what the member is saying? Is that what he’s saying to every single child in an early childhood centre.

CHRIS HIPKINS: Yes.

Go read the full transcript but Chris Hipkins clearly says he believes early childhood centres are unsafe because they also can have unregistered teachers.

Is there no end to the scaremongering?

What is especially appalling is to make such claims when we’ve just had the case in Northland of dozens of kids abused by a registered teacher.

Hipkins would have you believe that charter schools will be staffed with pedophiles who have been sacked from state schools. Nonsense. The law allows them to negotiate a proportion of their teachers to be unregistered with the Ministry of Education – if there is a good reason for doing so. There will be the odd exceptional person who can be of great value who may not be a registered teacher. I expect once charter schools are up and running, the number of unregistered teachers will be very low.

Also worth recalling that organisations such as Teach for America send tens of thousands of top graduates into schools in low income communities to help inspire and improve learning outcomes. Their graduates are basically all “unregistered” yet many studies have shown they achieve better results.

Anyway back to the main point – Labour is telling parents that their kids are unsafe at early childhood centres. What horrific deplorable scaremongering.

Claire Trevett at NZ Herald reports:

Broadcaster Shane Taurima is considering a move into politics and has spoken to the Labour Party about running in the Ikaroa Rawhiti byelection next month.

Mr Taurima confirmed he had been approached about standing and was considering it, but was yet to make up his mind.

“It is a huge decision.” He is expected to raise it with his bosses at TVNZ this week.

He was promoted this year to head TVNZ’s Maori & Pacific Programming after working as a journalist and presenter on programmes including Te Karere, Marae and Q+A.

TVNZ seems to be a good recruiting pool for the Labour Party!

Graeme Edgeler at Public Address blogs:

If these count as donations (and both Labour, and the Electoral Commission appear to accept they do), then each of the sums above created a separate obligation of disclosure, with 10 working days allowed after each to declare it. The failure to do so within that time period, on each of the four occasions is (unless the Party Secretary has a “reasonable excuse”) a separate offence, carrying a maximum fine of $40,000.

So what about the reasonable excuse? Labour claims it was unsure whether or not a bequest counts as a donation. Edgeler points out:

So I do not consider this is as clear as others believe. However, despite my doubts, I have no sympathy for the Labour Party.

I simply cannot accept “confusion” as an explanation. Being confused about this means you received the money and thought about it whether it had to be disclosed, and just couldn’t make up your mind for certain either way. In a situation like this, if you think you may have a legal obligation to do something, and are confused, the thing you do is check. If the reason the two Labour Party Secretaries involved (Chris Flatt at the time of the first three payments, and Tim Barnett at the time of the last payment) didn’t declare these payments as donations was because they were “confused” about whether it was required then what they’ve realised that what they’re (not) doing may be an offence, but have chosen to run the risk.

I call bullshit on the claim they were confused. If you are confused, then you seek advice. Graeme’s advice would have been:

I am happy to provide you with a legal opinion if you really want, but why do you care? Just file a disclosure anyway, and save yourself some money. At the very least, just call up the Electoral Commission and ask. If they say you a bequest doesn’t count as a donation, then don’t file a return, but otherwise, what’s the harm? 

All Labour had to do was e-mail the Electoral Commission and ask them.

Newstalk ZB’s Felix Marwick apparently has confirmation that the Electoral Commission won’t be referring these matters to the Police, which has disappointed a number of people. There is nothing to stop individuals laying complaints with the police, and I suspect a number will, although it seems unlikely police will pursue charges.

Someone should complain to the Police, and if the Police don’t act, then a private prosecution sounds a good idea.

I don’t know the reasons for the Commission’s decision, but the view that it would be wrong to hold an individual responsible for whatever failure happened in this case (when it may have been someone else’s fault) may factor. This possibility shows, I think, one of the flaws in our electoral law. For something like this, there will often be no reason to sheet responsibility to an individual for a failure like this. The law should allow political parties to be charged directly, not sheet home responsibility only to party secretaries.

I agree, it should be Labour facing a fine, not their former or current general secretaries.

The Electoral Commission has published the 2012 donation returns from registered political parties. They appear to reveal a major breach of electoral law by the Labour Party.

Donations over $15,000 only have to be disclosed annually, but donations over $30,000 must be disclosed within 10 working days of receipt.

Labour’s return shows they received $430,259.33 from the estate of Brian Dalley (ironically a professional property investor who made his riches from capital gains) between April and July 2012. They were required to disclose this to the Electoral Commission within 10 working days, but the Commissions say they were only notified on 9 May 2013. Their disclosure is 12 months late.

Unless there is an incredibly good reason for this, I presume the Electoral Commission will ask the Police to prosecute Labour. Not only does their Leader forget a massive US bank account for four years, the party fails to disclose a $430,000 donation for 12 months.

Other donations declared are:

• ACT – John Boscawen $24,000
• Conservative – Colin Craig $1,618,600
• Social Credit – Murray Gouk estate $25,000
• Greens – various MPs totalling $233,487
• National – Chris Parkin $16,850
• National – James Crisp Ltd $17,850
• National – Roncon Pacific Hotel Mgmt $22,000
• National – Scholar Hotel $24,000
• National – Graeme Douglas $25,000
• National – Cyril Smith $29,950

Also of interest is the disclosure of the total amount of donations received under $15,000 in brackets.

For donations between $1,500 and $5,000 National received a total of $255,000 and Labour $27,000. However for d0nations between $5,000 and $15,000 National had $380,000 and Labour $240,000. So Labour gets most of its money from large donors while National receives a fair amount from moderate sized donors (below $5,000).

UPDATE: According to Felix Marwick of NewstalkZB, the Electoral Commission have decided to take no action. I’m staggered.

Can you imagine what would have happened if National failed to disclose a $430,000 donation from a property developer for 13 months. It would be the lead item on the TV news, with opposition parties demanding the PM front up over the issue.

We live in a country where almost no electoral law transgression has been prosecuted in the last 10 years. It’s outrageous.

This is incredible. They spent around $400,000 gathering signatures for their asset sales petition, and they failed to get enough valid signatures.

They needed 308,753 valid signatures but fell short by 16,500.

That is a massive fail and gross political incompetence. They didn’t have to submit the petition when they did. They could have carried on getting more signatures to make sure.

Around 25% of their signatures were found to be invalid. That is a massively higher proportion than other petitions have had, and makes you wonder about their tactics. Did they sign up children? The Clerk has stated there were also duplicate signatures.

But surely they were intelligent enough to determine for themselves how many signatures were probably invalid, to work out how many they needed to collect. Both parties have access to an electronic electoral roll so they could have done exactly what the Electoral Commission did – take a sample of a few thousand names and check how many are on the roll.

Now the law provides that they can resubmit their petition with more signatures in the next two months, so if they persist, they can still qualify. But it means they have lost any moral claim that the Government shouldn’t proceed until the referendum – because they have failed (for now) to qualify.

It also means that the referendum may now occur after all the energy companies have been sold – making it even more of a farce.

It is bad enough they have wasted over $200,000 of taxpayer funding on trying to by signatures for their petition, and failed. Even worse to use more taxpayer money to gather the extra signatures and waste millions of dollars on a pointless referendum which may not even be held until a few months before the general election. They should instead go into the election with very clear policies on whether they wil buy back the shares or not and let the public decide at the ballot box.

I’m still staggered for now that despite spending $400,000 and having the entire memberships of the Labour and Green parties, and most unions, they proved unable to get enough valid signatures.  You could understand it if they were close to the deadline to submit – but they were not. They made a tactical decision to submit early for political posturing, and have ended up with egg on their face.

UPDATE: They claimed to have 400,000 signatures but got 292,250 valid ones. That means 107,750 were invalid which is a massive 26.9%. Maybe they should have put their paid petition gatherers on performance pay!

Su’a WIlliam Sio says:

The call by the Pacific community for allocated seats on local councils is a result of the frustration of being left out of decision making says Labour’s Local Government and Pacific Island Affairs spokesperson Su’a William Sio.

“Given the Pacific community wants a stake in decisions that affect its families, communities and kids it is obvious there is a need for a discussion on how we ensure our minority groups are represented properly.

Does that mean Labour will change the law to give allow Pacific Islanders guaranteed seats on Councils, as they did for Maori?

“An active, participative democracy allows for full inclusion and I support a discussion to explore how current systems can be improved to ensure Pacific representation isn’t left by the wayside.

“Pacific, Maori and Asian communities are the youngest and fastest growing populations in New Zealand. Their voices matter and our governance structures shouldn’t mute their contributions,” Su’a William Sio said.

It seems obvious that Sio thinks there should be Pacific seats on Councils. Does Labour? Is this something they want to do, but don’t want to announce?

Wil that be followed by guaranteed Asian seats on Council? Will all seats be race based in future? Because that is the logical end point of race based seats.

I fully understand the historical background to the parliamentary Maori seats, and why many in Maoridom see great value in them. I don’t support “taking them away” without the consent of Maori, as that is a pretty hostile thing to do.

But I hate the precedent they set of race based seats being acceptable. And we saw Labour extend this to local government by allowing Councils to create race based seats for Maori. And it is inevitable that so long as you have race based seats for Maori, then of course other ethnic communities will aspire to having them also, such as Pacific Islanders. Of course you can argue the status of Maori is different as tangata whenua, but nevertheless the existence of the seats means they do create a precedent.

If you have seats for Pacific Islanders, how could you argue against seats for Asians?

I’m proud of the fact that Asian New Zealanders have been elected Mayors in Dunedin and Gisborne. It was no big thing, they just happened to be Asian. That is how it should be.

I’m all for improving the diversity of both Parliament and Councils, but not through race based seats or quotas. I also support recognising the unique interests of Iwi in local issues such as resource use, but I don’t think Maori roll seats are the way to do that.

The history of politics in not just New Zealand, but in most countries is that oppositions veer towards the centre. That is where votes are to be won.

Labour has embarked on a policy programme that can only be called radical. They are campaigning to get rid of current monetary policy and interfere in the exchange rate. They are proposing nationalisation of the energy generation sector. They are promising to pay beneficiary families the same at working families for child support (despite the extra costs of working). Their policy programme is resembling what the Greens have been pushing for the last decade, rather than what Clark and Cullen did in Government.

So why have they headed hard left? Matthew Hooton explains in NBR:

The most famous theory in political science is the median voter model.

Developed in 1929 by Stanford economics professor Harold Hotelling, it provides strategic guidance to politicians, anticipates their policy positions and predicts election results.

Broadly, it suggests that, in any two-candidate election, both are best to adopt policy to please the median, middle-of-the-road voter, and that the candidate closest to the median will win.

Indeed.

In politics, the model’s predictive power is proven not just by vast screeds of algebra by microeconomists, game theorists and political scientists, but – unlike much social-science theory – by real-world observation.

Even with apparent exceptions, like Baroness Thatcher’s three election wins, she was indeed closer to the median than failed prime minister Lord Callaghan in 1979, Soviet appeaser Michael Foot in 1983, and even Lord Kinnock in 1987.

UK Labour finally won power when they abandoned the very socialist policies that NZ Labour is now embracing.

So why the lurch to the left?

Do the maths again, but assume three major players, and you get a different result.  Suddenly, there is an incentive to differentiate and diverge. …

Similarly, in politics, the model suggests that, in three-party systems, parties will no longer all cuddle up to the median voter but some will offer more radical policy choices.  It’s argued, as with consumer markets, that this leads to a more lively democracy.

The release of the Labour/Green electricity policy suggests something like this is happening in New Zealand.

The Greens are now clearly established as a permanent third party, with the other small parties melting away.  Professor Hotelling and his academic heirs could have told us this would likely lead to something like the electricity policy, which has already wiped hundreds of millions from the Crown balance sheet, including the SOE portfolio and the ACC and Superannuation funds, and from KiwiSaver accounts.

This explains why Labour has adopted so many Green party policies.

It is no good Labour/Green saying the policy is not radical by arguing that something like it has been implemented elsewhere.  That would be like National saying a 15% flat tax is not radical in a New Zealand context by pointing to Hong Kong.

Exactly. As pointed out previously, the model they cite has generally been adopted in countries moving from a totally nationalised power industry to one with some competition. It has never been used in a country which already has 14 competitive generating companies.

Here’s a competition for readers. See if you can identify all the Labour Party policies that they have stolen from the Greens? Abolishing youth rates was Greens policy, and resisted by Labour initially. As was massive hikes in the minimum wage, and extending paid parental leave.

We also have their lurch to the left on monetary policy, and their nationalisation agenda and the extending Working for Families credits to beneficiary families.

What others ones are there?

A must read column on the Greens and Labour power policy is by Oliver Hartwich. He cuts through the rhetoric to focus on some key issues.

Leaving the emotive language aside, will the opposition’s plans actually work? Will they achieve the stated goals of providing secure and more affordable energy to New Zealanders? And what are the potential side effects?

Good questions.

It should be noted that the power proposals are not quite as outlandish as they may first appear. A number of Eastern European countries have also implemented single-buyer schemes where all wholesale electricity is purchased by a government authority before being sold on to distributors. However, in the Eastern European cases this market arrangement followed from a completely nationalised energy sector as a step towards liberalisation. In New Zealand’s case, however, it is a move in the opposite direction.

This is a important point. In assessing the desirability of a policy, you need to look at what the current arrangements are. A single seller policy may well be sensible when you are moving from a point of the Government owning all the generators. But less so when you have 14 different generator companies already operating.

If you were designing the NZ power market from scratch, I think you could have a reasonable debate about the pros and cons of a single buyer model. Personally I’d still be skeptical  but there are pros and cons. But we already have 14 companies who have invested in NZ power generation, and the impact on not just them, but also investor confidence more generally by unilaterally imposing a monopoly government buyer on them is huge and bad.

On the plus side, a single buyer can more easily match physical electricity generation to demand. Such schemes also allow governments to regulate markets effectively because they have direct control over both prices and capacity. After all, this is why the Greens and Labour are proposing their scheme.

 

But it is precisely this strict control by the government over the market that is the greatest disadvantage of the single-buyer model. The core problem, as with other centrally planned regimes, is that it decouples economic incentives from decision makers. This means that the proposed new Crown entity tasked with deciding on the right capacity for electricity generation does not itself bear the consequences of over- or underinvestment in the industry. This may in turn lead to an unprofitable energy sector – or to blackouts. Older New Zealanders may still remember the experience of electricity rationing when the state controlled the market in the 1970s. 

Despite some appealing theoretical advantages of a single-buyer model, ultimately the government could achieve far more by facilitating effective competition at the generation and distribution stages. Nationalising the wholesale market, on the other hand, is likely to create more problems than it might solve, beginning with decisions on capacity.

In any case, if the intention is to support low-income earners with their power bills, wholesale nationalisation is a sledgehammer to crack a nut. It would be much more straightforward to provide direct support to affected households instead of playing havoc with the structure of the market.

Rob Hosking at NBR writes:

Has any multi-billion dollar policy ever been made with such an air of frivolity as the Greens/Labour parties’ power plan?

The plan – which would involve interposing a government-run wholesaler into the market to set prices – shaved several hundred million dollars off the value of electricity market companies, taking investors in the New Zealand sharemarket by surprise, if not shock.

It has to be one of the most expensive branding exercises in this country’s history.

For that is all it is.

And one in which taxpayers pay the bill.

There is something essentially frivolous about anyone who would cheerfully rip up the value of some of the country’s largest firms, and the value of the investment in those firms, simply for a political positioning exercise.

This is why the exchange caught by TV3 between Green energy spokesman Gareth Hughes and party spin zambuck Clint Smith was so telling.

For those who missed it, Mr Hughes was asked if the party was pleased at the reaction: Mr Hughes paused, turned to Mr Smith and asked “Hey, Clint – are we pleased?”

It was telling that he even had to ask.

But the almost palpable glee coming out of the Green and Labour camps at the destructive impact of their policy is highly revealing. 

It’s like the little boy who pulls a few stones out of a dam, and giggles when the whole dam collapses.

It underlines – not for the first time – the problem with the makeup of both parties. They are dominated at the MP and the staff level by the sub-genus homo politicus.

That is, they are full of people who have done nothing in their lives apart from politics. All parties have a complement of this group, but with Labour and the Greens the group has reached critical mass.

This group has been involved in politics at university, moved from there to various political/union offices and then into parliament. 

There is little real world experience and everything is viewed through a very narrow prism of political advantage.

It’s the sort of attitude which means the value destruction seen this week can be just laughed off.

There will, unless we are careful, be more such frivolous policies to come.

I think Rob Hosking is dead on with this analysis. You have a growing political class who view things through a unitary prism. If you have never ever worked in the private sector, why would you have any empathy for private businesses? And why would you care about such foreign concepts as cost of capital? Your academic background tells you the solution is just to print more money.

As far as I can tell only two out of Labour’s top 10 have ever had a significant job in the private (business) sector. Think about that.

NBR reports:

Labour Party deputy leader Grant Robertson has moved to try and reassure financial markets that its sudden lurch to favour central planning in the electricity industry is one-off.

In a statement attacking Economic Development Minister Steven Joyce, Mr Robertson says: “Labour makes no apology for stepping in to fix problems in the electricity sector. But this is not a signal that Labour is going to intervene elsewhere in the economy.

“As we said on the day we launched NZ Power, we have no plans to intervene in any other markets.”

How stupid do they take us for?

Labour has already indicated significant interventions in:

• Broadcasting
• Insurance
• Farming
• Forestry
• Building
• Land

They and the Greens often go on about food prices also, and the Greens have lots and lots of ideas about food regulation.

It would be easier to draw up a list of markets where Labour and Greens definitely will not intervene. It would be a very short list.

Stuff reports:

Three Labour MPs have met career criminal Arthur Taylor to discuss his court battle to overturn a prison smoking ban.

Justice spokesman Andrew Little, police and corrections spokesman Kris Faafoi and Darien Fenton, who holds the shadow labour portfolio, visited Paremoremo jail yesterday.

Taylor, 56, has racked up more than 130 convictions, including armed robbery, kidnapping and escaping from prison.

Mr Little said the MPs agreed to visit to discuss Taylor’s legal bid to reverse the smoking ban at the prison.

Three MPs? Why don’t they have the entire caucus meet with Taylor.

So now all it takes to get three Labour MPs to meet with you is:

• Armed robbery x 4
• Theft
• Fraud
• Burglary
• Escaping custody
• Attempting to pervert the course of justice
• Possession of various drugs
• Possessing firearms and ammunition
• Rceiving stolen property
• Conspired to sell methamphetamine

And his grievance is that he can not smoke in prison anymore.

I do hope Labour will soon release their policy on how Mr Taylor’s human rights have been breached, as soon as they have finished nationalising the electrcity industry.

Stuff reports:

Labour is defending the release of its plan to regulate power prices on the eve of the Government’s sell-off of power company assets.

Yesterday, Federated Farmers accused Labour and the Greens of trying to sabotage the sharefloat.

“There is suspicion this policy may be a tactical response to the Government’s asset sales programme,” Federated Farmers spokesman Anders Crofoot said.

However, Labour finance spokesman David Parker said if Labour had waited till after the shares in Mighty River Power and the other state-owned power companies had been sold it would have been criticised.

Of course it is sabotage. If it was not sabotage, they would have announced the policy months ago before the float document was released. To wait until the offer document is out in the marketplace is a calculated act of economic sabotage.

If their policy was to buy back MRP, then there might be a case for saying they had to wait to see the float details before announcing their policy. But there is nothing in the details of the MRP float that necessitated them waiting until after the float document was out, to announce their policy.

Here’s the good thing for investors. Their policy will probably see the share price set at the lower end of the range, however I don’t think it will ever be implemented which means that actually investors will get shares at a discount. Note this is not financial advice. So the real victim of the policy announcement will be taxpayers.

On the topic of the electricity policy, some must reads:

• An open letter from Seamus Hogan to David Shearer and Parker. He has 10 questions for them, including if they have even read the Wolak report they cite.
• A lengthy article by Lance Wiggs at NBR on the electricity industry and some more sensible alternatives to the Labour/Greens proposal.
• A column by Brian Gaynor on how the Labour/Greens policy would be a “major backward step for the economy” and saying “The best way to keep prices down is to ensure there is a competitive market rather than heavy-handed price regulation that is more reminiscent of the Muldoon era“
• A column by Liam Dann. Some extracts:

We’d all like lower power prices. It’s a clever election bribe. But if a government bludgeons down the returns available to international investors they simply won’t invest, they’ll go elsewhere.

New Zealand taxpayers in the future – my kids – will have to earn or borrow the money to pay for new power generation as the population grows.

 Capital is mobile.

If Labour wants to gain votes from swinging voters who still trust capitalism – rather than just appeasing those on the left that joined the Russel Norman party – then Shearer is going to have to do a very good job of convincing them that Labour is not a destroyer of wealth.

Shearer needs to distance himself from the gleeful schadenfreude of those who celebrated the $600 million value destruction suffered by Contact, Infratil and Trustpower in the day and a half after the new policy was announced.

As the policy was designed to sabotage the float of MRP, and destroy wealth, I can’t see any distancing.

He will need to communicate clearly how this policy ensures we have enough foreign capital investment to grow power supply as GDP grows. Presumably Labour still hopes it will grow. The Greens, remember, aren’t so wedded to GDP growth as a concept.

Despite Norman’s efforts to normalise the Greens by talking more about economics than core policy, this is still a party living in a hippie fantasy world. It is a party that “envisions an organic nation” in its policy on food production. Good luck with that. New Zealand owes its first-world status to a world-class, technologically-driven machine of a farming economy. We don’t put that on the tourist posters but let’s be realistic.

People don’t realise how extreme the Green policies are. Now Labour is buying into them, their joint policies are looking to be the an extremely radical policy change – at a time of huge global uncertainty.

Colin Espiner writes at Stuff:

Has Labour actually gone insane? As in stark, raving, Monster Loony Party mad?

I’m assuming the answer is yes, judging by today’s incredulity-creating announcement that, if elected next year, Labour will essentially nationalise the electricity industry.

This is the sort of policy UK Labour would have had under Michael Foot in the 1970s.

At a stroke, Labour is proposing to dismantle the electricity market, ruin Contact Energy and Mighty River Power and decimate the Government’s share float plans for both MRP and Meridian. 

Oh, and sell thousands of mum and dad investors down the Mighty River, since MRP’s share price would almost certainly plummet if the company was forced to retail only through a government department at whatever price it deemed to be fair. 

Not just MRP and Contact. Also TrustPower and Todd Energy. Every single generator of electricity would effectively become nationalised as they would only be allowed to sell electricity to the Government at whatever price the Government unilaterally sets.

I’m no fan of high power prices – and I don’t own any Contact or MRP shares – but what Labour is proposing is essentially nationalisation a la Brazil or Argentina. This is Third World, funny-money stuff. Goodness knows what the fi

nancial markets will make of it. And what message does it send to overseas investors? 

The impacts of this policy will be felt far beyond the electricity sector.

I’m tempted to see this as a last-ditch attempt to derail National’s plans to part-sell its electricity assets, but if that’s the case it’s going to seriously annoy a lot of investors who were poised to put funds into Mighty River Power. 

It’s extremely rare that I agree completely with Economic Development Minister Steven Joyce, but his comment today that the plan was “a return to the 1970s-style monopoly provision of electricity…Only North Korea and Venezuela did not think such ideas are nuts” is pretty much spot on.

I agree with Joyce that Labour is virtually sabotaging the economy. 

As does Business NZ, reported here.

Also the Herald editorial is scathing:

Earlier this week, a Herald editorial suggested people thinking of buying Mighty River Power shares had little to fear from David Shearer’s statement that the Labour Party planned to shake up the electricity market when next in power. That, however, was before it was known how far back in time Labour planned to travel and how errant its policy would be.

We need policies for the future, not attempts to turn the clock back.

This suggests nothing less than a return to central planning. It harks back to the situation that pertained before the electricity industry was transformed from a state monopoly into a market supplied by four main generating companies. Mr Shearer seems to be looking at that time through rose-tinted glasses, ignoring the inefficiencies and, most notably, the blackouts that were a feature.

Security of supply would become a real issue. Why would a generator invest in new generation capacity when the price for any power it produces will be unilaterally decided by a government department?

The most unfortunate aspect of Labour’s new policy is that it has identified the problem. “When markets are not truly competitive, excessive profits are extracted from consumers,” David Parker, the party’s energy spokesman, said yesterday. The most logical response, however, is not to return to a failed approach but to provide the setting for competition to flourish. Despite all the criticism of price rises, the market has succeeded to the extent that there has never been a power failure. It also has the framework that offers the best outcome for consumers.

The telecommunications market confirms as much. But making a market truly competitive generally requires a substantial amount of tinkering. Temporary government intervention may be required to facilitate the development of competition. But that is not Labour’s intention. In cahoots with the Greens, it proposes a move which, if implemented, would be every bit as damaging as some of the latter party’s monetary policy delusions.

More and more of the policies being put forward by Labour and Greens are 1970s policies.

Their monetary policy is to go back to pre 1980s reforms. Their welfare policies are to bring back universal child benefits such as we had in the 1970s also.

Kate Chapman reports:

Labour is promising to cut the average Kiwi power bill by up to $330 a year if elected to government next year.

It plans to do so by setting up a single buyer, NZ Power, to purchase all electricity generation at a fair price.

Announcing the plan today, leader David Shearer said it would create 5000 jobs.

The Crown would forgo dividends and tax revenue from the power companies at a cost of $60-$90 million a year.

“I’m not prepared to sit back while power companies cream super-profits at the expense of households and the economy,” Shearer said.

As a single wholesale buyer NZ Power will set electricity prices ensuring power companies get a fair prices but not super profits.

The sums here look as dodgy as with Kiwibuild. A cost of $90 million a year is meant to translate into $330 for 2 million households? That’s a 500% difference.

Secondly the history of NZ is that state monopolies do the worse for consumers and prices.

I await the policy to make it illegal to sell houses, except through the state. I mean houses are just as essential as electricity.

What this effectively means is that politicians will set the price of electricity. Remember when Muldoon decided what the interest rates will be? And the Government decided what rents you could charge, and price and wage freeze? All decided by politicians.

A monopoly crown buyer of all electricity will get to unilaterally set the price of electricity and MPs will decide who sits on it and effectively tell them what price they want electricity to be at.

UPDATE: Readers should be aware that this policy is a de facto nationalisation of the privately owned Todd Energy and Contact Energy. it is almost a confiscation without compensation of their assets. Because Labour and Greens are saying we will pass a law to make it illegal for you to sell power to anyone except the Government, and only at the price we unilaterally set.

Think about that, and the precedent it is setting.

This is a policy out of the 1970s and some sort of socialist nirvana state.

Imagine you set up a business, and one day the Government came along and said we are going to make it illegal for you to sell your product or service any more – to anyone but us. And you get no say in what the price will be – we will unilaterally determine that.

This is akin to theft from the shareholders (and if you are in KiwiSaver you are probably an indirect shareholder) of Todd Energy and Contact Energy.

Stats NZ released Q1 2013 inflation data today. The CPI went up 0.4%, and only 0.2% if you exclude the increased excise tax on tobacco. This brings the annual inflation rate to 0.9% which is good.

I had a look at the electricity component of the CPI and power prices went up only 0.15% in the last quarter.

National has now been in Government for 17 quarters. The total increase in electricity prices over those 17 quarters has been 16.4%.

During the last 17 quarters of Labour, electricity prices increased 33.1%.

The moral of the story is it is very easy to promise things. But I think you need to judge those promises against their record.

Stuff reports:

Labour and the Greens will unveil their policies to cut power prices on Thursday.

The announcement follows criticism of Labour leader David Shearer after he said the party would make changes, but did not say what they would be.

Shearer said on Sunday that Labour would make changes to the electricity sector if it was successful in the 2014 general election.

He said he was announcing the plan because it was only fair to those considering buying shares in Mighty River Power.

Or, they are trying desperately to scare people off. The more relevent information they should be disclosing is whether they will purchase back the shares, if they win Government.

“The reason we’re doing this is because we both share the same ambition to bring down electricity prices,” Shearer said.

Really? I hope media ask Labour about how their proposed changes to the Emissions Trading Scheme will double the impact of the ETS on power prices.

Also look at all these Green party policies that would push the price of power up:

• Development of a fully renewable electricity generation system – that will push costs up as renewables tend to cost more.
  
• Encourage the development of emerging renewable technologies by setting Feed In Tariffs whereby they will be paid a higher rate per kWh generated for the first few years; – ie force consumers to pay more for electricity
• The Green Party does not favour further large hydro plants – ie no economies of scale
• The Green Party believes that the best way to reduce emissions from mining and burning coal is to leave the coal in the ground
• Phase out fossil fuels, starting with coal
• Making all new deep sea drilling within territorial waters, the EEZ and the continental shelf for fossil fuels a prohibited activity

Now if you think these policies will lead to cheaper electricity, I have a bridge for sale you can buy.

I can’t find data for New Zealand on costs of various sources, but this US graph illustrates pretty well.

Now nuclear is not an option for NZ. The Greens want coal banned. They also want no more large hydro projects. They want NZ to be 100% renewables. And both Labour and Greens want to double the impact of the ETS on power prices.

The idea of cheaper power prices under a Labour/Green Government is as plausible as Palmerston North becoming a tourist mecca.

I am a fan of renewable energy, but decisions on using it need to be based on it being cost effective. Blanket bans and prohibitions on coal and large scale hydro will inevitably lead to much higher power prices.

A few years ago the SOE Kordia purchased the ISP Orcon. I wasn’t sure it was a great idea for a government owned enterprise to be purchasing private companies in an incredibly competitive market. However SOEs are meant to make decisions for commercial reasons, and presumably Kordia saw it as adding value to their business.

Yesterday Kordia sold Orcon. Just as their purchase as a matter for the board, so was the sale. Neither require or gain shareholder approval. Ministers would have been informed, but are not needed to consent.

But Clare Curran has put out a release suggesting that Orcon is a strategic asset and that somehow it is all the Government’s fault. Very bizarre. Her release says:

The sale of the state-owned Telco Orcon is shrouded in mystery and appears to be yet another example of short-term thinking by this Government, says Labour’s Communications and IT spokesperson Clare Curran.

It worries me when MPs do not realise that there is in fact no Government decision involved. Does Labour think Ministers should run SOEs directly and decide for them what assets they purchase or sell? Why have boards of directors?

Ministers would be consulted on decisions like this, but are not the decision makers.

“The bottom line is the Government should have decided whether Orcon is now a strategic asset and if it is an important means to drive uptake of ultrafast broadband.

The suggestion that Orcon is a strategic asset is staggering, and shows that I think some in Labour regard everything as a strategic asset. Orcon has around 5% market share and if Labour think you can consider Orcon as a strategic asset, then I can only assume they believe the Government should purchase Chorus, Telecom, Vodafone, 2 Degrees, Inspire Net and well just about every company in New Zealand.

Then on this new definition of strategic asset, they should buy both Foodstuffs and Progressive because what is more strategic than food? But wait if a 5% market share is also now strategic, they better buy up the 4 squares also!

Now you might say Labour have not said Orcon is a strategic asset, just that it might be. Well I think such distinctions are meaningless when a company is so clearly a million miles away from being a strategic asset.

If I was attacking the decision to sell Orcon, I’d focus on whether Kordia has actually made a profit or a loss on the purchase. Did Kordia lose taxpayer money by buying an ISP?

The Dom Post editorial:

There are good reasons to be cynical about Labour leader David Shearer’s vague promise to rein in power prices if he becomes prime minister next year.

It’s like King Canute claiming he can stop the tide – except King Canute knew he couldn’t.

First, it will have escaped nobody’s attention that Labour had plenty of time to ease the burden of electricity costs for households and businesses during the nine years it was in government from 1999 to 2008. But instead of putting in place measures to achieve that, it presided over a nearly 70 per cent rise in prices and happily raked in more than $3 billion in dividends from the state-owned power companies.

And this was a time of record surpluses.

Clearly, Labour had no problem with families and small businesses being hit with unnecessarily inflated electricity bills when the cash was helping to fund its big spending policies. That only appears to have become a concern once it was turfed out of office.

Exactly.

Mr Shearer says the policy has arisen from the prospect of power prices soaring further once 49 per cent of Mighty River Power, Genesis and Meridian are sold into private hands. However, as the price gouging by the three companies between 2001 and 2007 showed, vesting full public ownership in a power company does not necessarily guarantee lower prices. Indeed, figures issued by Energy Minister Simon Bridges in February showed that, at that time, private companies were offering the lowest rates in 15 of the 21 regions on the Powerswitch website, which allows consumers to compare prices.

What matters is having choice and competition, not ownership.

It is difficult to escape the conclusion that Mr Shearer’s main aim in announcing the policy the day before the first shares in the part privatisation of MRP were offered to New Zealand retail investors was to dampen down interest in the sale. The woeful lack of detail only supports the view that it has been made up on the hoof and rushed out as a last-minute sabotage tactic.

Sabotage is a good word for it, but it was such a pitiful attempt at sabotage, with no details, that it was more like a damp fire-cracker.

David Shearer has said:

David Shearer is today signalling Labour’s intention to make changes to the electricity sector to stem the relentless rise in power bills and to ease future pressure on prices from foreign investors looking to boost profits at the expense of consumers.

“Over the past 15 years, the annual average household power bill has gone up by almost $770, even after inflation is taken out. Prices in New Zealand are rising faster than in our major competitor countries.

Indeed power prices have gone up a lot over 15 years. When Labour were last in office they took $3.1 billi on in dividends from state owned power companies – despite massive surpluses.

Also Labour seem to not be mentioning that their ETS policy is to double the impact on power prices of the ETS, which will push prices higher.

The history of electricity cost increases in NZ, according to Stats NZ is:

• 4th Labour Govt – 98.7% or 16.4% a year
• 4th National Govt – 47.5% or 5.3% a year
• 5th Labour Govt – 63.7% or 7.1% a year
• 5th National Govt – 16.2% or 4.1% a year

So the average increases since 2008 are historically low, and the two periods of massive increases both occurred under Labour Governments.

Radio NZ reports:

Budgeting services and opposition parties say struggling workers will be hit hard by increased costs that came into effect on 1 April.

Minimum KiwiSaver contributions rose from 2% to 3% …

The Labour and Green parties say some workers already struggling financially may choose to opt out of KiwiSaver rather than make the higher payments.

Again, such hypocrisy. Labour not only bitterly complained about National dropping the minimum contribution from 4% to 2%, they also have a policy of making KiwiSaver compulsory so struggling workers get no choice about contributing!

Would be nice if the media reported their policies, not just their releases!

“Eddie” at The Standard asserts there are three broad factions in the Labour caucus. S/he divides them up as:

The Right (nine MPs)
David Shearer (leader)
Phil Goff
Annette King
David Parker
Clayton Cosgrove
Shane Jones
Damien O’Connor
Kris Fa’afoi
Ross Robertson

The Left (14 MPs)
David Cunliffe (leader)
Nanaia Mahuta
Louisa Wall
Sue Moroney
Su’a William Sio
Lianne Dalziel
Parekura Horomia
Rajen Prasad
Rino Tirikatene
Carol Beaumont
Raymond Huo
Moana Mackey
Iain Lees-Galloway
Andrew Little

The Careerist Left (11 MPs)
Grant Robertson (leader)
Chris Hipkins
Jacinda Ardern
Phil Twyford
Clare Curran
Maryan Street
David Clark
Trevor Mallard
Darien Fenton
Megan Woods
Ruth Dyson

It is the last faction that Eddie says holds the balance of power. S/he notes:

Of the 11 MPs in the Careerist Left, 7 are former parliamentary staffers. This group has some good people but there’s a strong thread of personal advancement running through it, which is why they’ve brokered a deal with the Right. Robertson is wary of the ‘Left’ faction, because he doesn’t think he’ll do as well out of a deal with Cunliffe.

Seven former staffers – the new professional elite. Have any of them ever spent a day in the private sector generating wealth?

I think what we are looking at is a Cunliffe v Robertson battle for the leadership, if Labour do not win the next election. The left vs the careerist left. Who will win? No idea. Who will lose? New Zealand

The Herald reports:

Apple’s New Zealand division made sales of $571 million last year but paid only 0.4 per cent of that in tax.

Labour’s Revenue spokesman David Cunliffe said that’s akin to paying nothing at all, and letting a corporation get off “scott free” is something New Zealand taxpayers shouldn’t have to stomach.

That’s because you pay tax on profits not turnover.

Is Labour saying that they think companies should be taxed on turnovers, not profits? I hope they spell this out well in advance of the election!

Should be about as popular as saying it is a no brainer to tax purchases from overseas websites.