Small on Labour’s interest rate policy

March 20th, 2016 at 2:00 pm by David Farrar

Vernon Small sums it up well:

Labour? 

Well, It seems rough to criticise an Opposition, stranded around 30 per cent in the polls, for trying to make a splash. Yet while it wins full marks for backing the battlers and exploiting the bankers’ discomfort, its brain explosions quite simply took it over the edge.

Little is having these brain explosions on a reasonably regular basis now.

Soper on Little

March 17th, 2016 at 2:00 pm by David Farrar

Barry Soper writes:

It’s hard to know what’s come over Andrew Little this week but something certainly has. A couple of days ago he was leaving us in no doubt about what he’d do about banks sitting on their stacks of cash, refusing to take the Official Cash Rate lead from the Reserve Bank Guv and lowering their mortgage rates.

He’d pass a law forcing them to cut the rate as the Guv had done, although he didn’t say whether that same law would force them to raise it when the central banker did the same with the OCR.

Basically it was a world class brain fart.

But the outpouring of angst from Little was ammunition for the joker from the ninth floor. A smile as wide as Jack Nicholson’s in Batman creased John Key’s face as he contemplated the latest outpouring from Labour.

Key joyously professed to not knowing where he’s coming up with this staff.

One moment they come out against people with Chinese sounding names buying houses and now they don’t want people with the same sounding names making chicken chop suey, he crowed and we all cringed.

Little’s musing on immigration have backfired so badly he’s had to do an “explanation” on the Labour website. It is interesting you can’t find this response from the front page. Basically it is there so they can e-mail a link to it to those who complain. So publicly Andy is bashing the Chinese and Indian chefs, and privately he’s saying he has no problems with them.

Danyl McL points out:

Here’s what I love. Labour’s gone and done some research and found out that a bunch of persuadable voters want something done about immigration. And they’ve looked at the US and UK and seen what a successful issue it can be. So they’ve gone back to their office and thought about an angle and, somehow, stumbled upon the anti-immigration story that perfectly undermines all the logic of anti-immigration stories: that we shouldn’t bring ethnic migrants into the country to cook their own food because decent kiwis should do it.

There are almost certainly lots of people in the country that want the government to do something about ‘immigration’. But are there ten people in the whole country – outside of the Labour leaders’ office – who think we have too many skilled migrant cooks in our restaurants? It’s almost adorable the way they’ve tried to do something cynical, but executed it in a way that totally undermines their own attempt at divisiveness.

Dumb and dumber.

No Right Turn weighs in:

But of course Little is “reject[ing] any accusations of race-based policy”. Bullshit. This is about pandering to racists and those who fear anything “foreign”, the same demographic NZ First is chasing. Its disgusting and I expected better of them.

Fortunately, we have a principled, non-racist left-wing party to vote for. And people should do that, rather than vote for racist Labour.

Ouch.

UPDATE: It gets even better:

Winston Peters has accused Labour of “dog-whistling” on the immigration debate after Andrew Little’s comments on Chinese and Indian chefs.

Winston Peters accusing Labour of dog-whistling in immigration. This is ROTFL territory. The irony is just hilarious.

Labour toying with UBI

March 16th, 2016 at 11:00 am by David Farrar

Stuff reports:

The Labour Party is considering a universal basic income as part of its Future of Work project.

Leader Andrew Little confirmed his party was exploring the concept during a visit to Trevor Mallard’s Hutt South electorate last week.

Little said significant changes to the way New Zealanders worked were unavoidable.

“The possibility of higher structural unemployment is actually what’s driving us,” he said.

Pure universal basic income (UBI) systems, in theory, would give adults a regular income from the government regardless of their income or assets.

They would replace other forms of welfare, such as pensions, benefits and student allowances.

Although only trialled on small scale overseas, the idea is that a UBI would be set at a level which people could subsist on, but not at a high enough level to serve as a significant disincentive to work.

No country had a UBI because the numbers simply don’t add up. It has significant theoretical appeal, but if you ever try to implement one, it is only possible by a huge huge increase in tax.

So what you end up with is all New Zealanders being taxed way more, and then all New Zealanders getting some of that money back. It’s economically inefficient, discourages work and would result in NZ being a highly taxed country.

So Labour toying with it, is a sign that once again they are rushing to the far left, and would need a map to even know where the centre is.

Greens, NZ First on Labour’s interest rates policy

March 16th, 2016 at 9:00 am by David Farrar

Conclusive proof of how barking mad Labour’s policy is to legislate interest rates.

  1. Even the Greens say it is a daft idea
  2. Winston claims they stole the policy off him

The only way it can get worse for them would be for Graham Capill to endorse it on the basis that Exodus 22:25 commands people not to charge interest.

Trotter on Labour not being trusted

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

Chris Trotter writes at The Daily Blog:

STEPHEN MILLS, from Labour’s pollsters, UMR Research, today confirmed that Labour’s support has slipped back to just 30 percent. He also informed RNZ’s listeners that Phil Goff is leading his nearest rival for the Auckland Mayoralty, Victoria Crone, by 33 percentage points. This is, of course, the same Phil Goff who, as Labour’s leader, failed to squeeze more than 27 percent of the Party Vote out of the New Zealand electorate.

It’s a grim parade of statistics for those of us hoping for a change of government at next year’s general election. And what it’s telling us is this: Labour isn’t trusted to govern. Phil Goff may be trusted to lead the country’s largest city – overwhelmingly trusted. But, Andrew Little is not trusted to lead the country.

This lack of trust is crippling. If it’s not addressed, and soon, it will produce yet another electoral defeat. Whether Labour can sustain a fourth rejection by the electorate – especially if it turns out to be worse than the 25 percent 2014 result – is highly debateable. A century-old party can only go on losing for so long before it simply fades away.

The last time a major party spend four terms in opposition was Labour from 1960 to 1972 – before most voters were born I suspect.

Red Alert euthanised

March 8th, 2016 at 7:00 am by David Farrar

The Herald reports:

After years as an internet wasteland, the Labour Party’s “Red Alert” blog site looks to have been quietly put out of its misery. Once lauded as the new way for MPs to interact with the public, it soon became a bit of an embarrassment, before being ignored. Now, it appears to be no more.

It started off very well, and I lauded it often. But it lost its way and started to score too many own goals. A pity it wasn’t done better as I like the idea of MPs blogging.

Labour flip flopping again

March 1st, 2016 at 1:00 pm by David Farrar

Stuff reports:

There has been only one confirmed road death in which the driver at fault had drunk enough alcohol to put them between the new and old drink-driving limits.

Labour transport spokeswoman Sue Moroney said the single death showed that lower-end drink-driving was not a high-risk area, and that a rise in the national road toll showed the Government’s road safety measures were not working.

As it happens I agree that drivers with between 50 and 80 blood alcohol are not a high risk. I’ve blogged many times that very few accidents occur with drivers at this level.

But the hypocrisy from Labour is laughable. They were the party demanding the limit drop from 80 to 50 and attacking the Government for not doing it more quickly. They even had a members bill in 2013 to do this.  As far as I can tell they have been demanding this since at least 2010. Here’s what Labour said in 2010:

“Professor Nutt believes we could reduce our road toll by two-thirds if we reduced the limit because it would alter patterns of driving.

So Labour have been the cheerleaders for reducing the limit, and now they’re saying that it isn’t a high-risk area.

Again they stand for nothing, but mindless criticism.

Labour want to ban pet free tenancies!

February 29th, 2016 at 4:00 pm by David Farrar

From the Hutt News:

Those living in rental properties needed more rights and greater security, Twyford said.

“Renters don’t have the right to have a pet, they don’t have the right to make basic alterations and they can be kicked out on the whim of the landlord within 90 days, no justification needed.

“That’s more than half our population living in those conditions. Is that any way to live? To raise a family?” He said tenants deserved greater rights and Labour would “have to change that”.

So Labour’s housing spokesperson is saying landlords should not be allowed to specify no pets for a property they own. Also he is saying that tenants should have the right to make alterations to the house they are renting, without permission from the actual home owner.

The greatest irony is the article is about providing more homes. This would in fact reduce greatly the number of homes available for rent. There are very valid reasons why some properties are not suitable for pets.

And allowing tenants to make alterations without any approval from the actual home owner – well why would you risk renting a property out?

Hooton on Labour’s free fees

February 29th, 2016 at 12:00 pm by David Farrar

Matthew Hooton writes in NBR:

The year’s first polls are disastrous for beleaguered Labour leader Andrew Little.

According to Roy Morgan, the Labour/Green bloc is stagnant on 41.5%.  Arguably worse is TVNZ’s Colmar Brunton poll which has the axis down 3% to 40%.  This is not quite the Brashian 17% boost Mr Little hoped when he rose outside Auckland University last month to announce Labour’s ‘free’ tertiary education policy.

The policy was classic Revenge of the Nerds. Mr Little and his finance spokesman Grant Robertson began their careers as presidents of the New Zealand University Students’ Association in the 1980s and 1990s. Their belief has never been shaken that the taxpayer should pay all the expenses for school leavers to do arts degrees in political studies, philosophy and public policy as they did.

Almost every major spokesperson for Labour in this area is a former student union president.

This is only the start of Labour’s problems with the failed policy.  Right now, the party is making much of its so-called Future of Work Commission in which Mr Little and Mr Robertson are trying to decide what sort of jobs we’ll all have in 2035.

The initiative is similar to one by Social Credit in the 1970s when it worried about the impact of the computer and is utterly lampoonable. The idea that anyone – least of all a bunch of Labour luminaries – has any real insight into what economic and technological changes the market will deliver over two decades is self-evidently absurd.  For evidence, just re-read similar claptrap written about the 2010s ahead of the turn of the millennium.

In 1995 there was no commercial Internet industry. Any predictions in 1995 about future jobs would have been pretty out.

Finally, just remember the ‘problem’ the new policy is meant to solve. In data out this week, we learn the median student loan balance is $14,421. Half of students and former students owe less than this. It doesn’t really seem like an issue worth closing all your other fiscal options to address.

And the average extra income from a degree is $1.5 million so a damn good investment.

Hosking on Labour’s dreams

February 29th, 2016 at 9:00 am by David Farrar

Rob Hosking writes:

Actually that’s not entirely fair. When I say “tried” the no-nonsense, no crap approach is very much in keeping with Mr Little’s personality – far more so than silly talk about “dreams.”

Unfortunately the Labour leader did not stick to this approach.

It signals a deeper problem – one of many – within Labour. And this shows the party cannot stick to any one strategy for more than about 72 hours or so, maybe a few weeks at a time. When it doesn’t immediately reap results – that is, it doesn’t produce anything in the next batch of polls – the party seems to drop whatever it is doing and try something else.

At best, this shows a lack of clear long-term thinking. But it does seem to betoken something much more deeply problematic, and that is the party simply doesn’t know what it is there for any more.

They stand for unions I’d say.

It’s in favour of free trade until the government gets a free-trade deal. It’s in favour of a flag change until the government tries to reflect change.

And so on.

Opposition is good when you honestly think the Government is wrong, but in neither of these cases they do.

Social Credit did Future of Work in 1981!

February 18th, 2016 at 10:00 am by David Farrar

soccred

Labour have suddenly discovered that technology is changing jobs and are having a two year think about this.

Sadly they’re around 35 years too late. Social Credit in 1981 were even back then talking about the impact of technology on jobs!

Labour said restrict not ban

February 15th, 2016 at 9:00 am by David Farrar

Charles Finny facebooked:

Most interesting was an attempt by Labour MP and Trade Spokesperson David Clark to make the case that it was the Government’s fault that bi-partisanship on trade policy had broken down. His argument was that it was convention that Government would be familiar with Opposition policy and ensure that it would stay within the bounds of this policy when determining negotiating positions for FTA negotiations. He stated that Labour had a long standing policy of wanting the right to ban property speculators from abroad and that Labour had campaigned on this policy at the last election. He suggested that MFAT and Ministers must have known about the policy and were remiss not negotiating an outcome that accommodated it.

Now let me explain a little about how TPP was negotiated on services and investment. Essentially TPP has frozen the status quo, and in some cases some liberalisation of the status quo was negotiated. Some countries had policy that allows “bans” on foreign investment in urban real estate. New Zealand has not had such policy. Those TPP members did not actively advocate for this policy. The policy was already there and became “bound” as part of the outcome. “Binding” means that policy cannot become more restrictive than in the past. Policy can change but it can only do so in the liberalisation direction. (In days of old this was also known as “standstill and rollback”.)

Now while existing NZ policy was “bound” what is unusual is that New Zealand – quite late in the negotiation (post Andrew Little’s announcement of his conditions I believe) – negotiated the right to adopt discriminatory taxation policies. This was done to allow a future Government to “restrict” sales to foreigners through a stamp duty or other tax measure (I believe that a very high tax of this type can have the same impact as a “ban” for most investors but accept that it might not deter a super rich person – the exception but not the rule).

Now lets get back to Labour Party policy and what Labour campaigned on at the last election. The policy states “Labour will not support provisions in trade agreements that limit the government’s right to provide, fund, or regulate public services, such as health or education. Trade agreements should not prohibit the government from RESTRICTING sale of land and infrastructure or regulating the sale of state assets.”

TPP is fully consistent with this policy. TPP allows a future Government to “restrict” land sales to foreigners and also fits with the other elements of this policy.

And if you search for transcripts for what Andrew little said in the middle of the year about his pre-conditions for Labour support for TPP, he also uses the term “restrict”.

This concept of ban is more recent, and I don’t think you should expect negotiators to know the policy was really about allowing a “ban” when all official comment was referring to “restrict”.

So the TPP has fully complied with Labour’s five bottom lines. They’ve just tried to find an excuse to oppose it to appease their union overlords.

Labour’s latest TPPA position – they’ll renegotiate it!

February 12th, 2016 at 10:00 am by David Farrar

Stuff reports:

The Labour Party won’t pull out of the Trans Pacific Partnership Agreement if it wins power, but would back itself to win changes on aspects it doesn’t support, leader Andrew Little says.

Yeah sure you will. 11 other countries will re-open negotiations two years after it has been signed and ratified because Andrew Little wants them to.

The deal is the deal. It is not going to be changed.

Speaking to reporters on Tuesday, Little confirmed the party would not pull out of the TPPA if in Government.

However, it would fight “tooth and nail” to win changes on aspects of the deal it did not support, such as the prohibition on banning foreign property buyers.

The TPPA allows a de facto ban through stamp duty. This is hollow pretend anger.

While foreigners were currently allowed to make submissions on New Zealand legislation, Little said the TPPA would “elevate that process to an obligation” by requiring the Government to notify partners about potential law changes.

Oh shock horror – law changes have to be notified in the Official Gazette now. What an awful obligation.

This is complaining about trivia, and avoiding the substance.

Little did not say whether he would pull out of the TPPA if he failed to win changes, but said he would be confident of success.

Here’s a question for Andrew. What proportion of trade deals ever get renegotiated after they have been signed and ratified? Is it 50%? 10% 5% 1%? Under 1%? He’s dreaming.

“The comments now coming out of other countries, even Hillary Clinton now saying the thing needs to be tweaked, I’m confident that over time we can get some change.”

The changes Hillary Clinton wants are not ones that would benefit NZ. Plus her rhetoric is just that. She doesn’t actually mean it.

Key on Labour

February 11th, 2016 at 2:00 pm by David Farrar

Some extracts from the exchange in Parliament on Tuesday:

Last week we were greeted with a new unemployment rate here in New Zealand: a dramatic fall to 5.3 percent. That is a very strong performance. We have the third-highest employment rate in the OECD , we have very strong results of growth for young people, and, of course, wages are rising faster than inflation. That was greeted with absolute joy by New Zealanders, with one exception—one exception. It was a great annoyance to the Labour Party and, in particular, to Grant Robertson, the doom merchant when it comes to employment. Grant Robertson is worried about a robot taking his job. A cynic could say: “Too late, one already did.”—the job he wanted

Heh.

Well, when we think “TPP”, we think Trans-Pacific Partnership; they think “two-position party”—that is what “TPP” says to them. This is because when it comes to David Shearer, he rightfully said to the New Zealand Herald—before he got a good spanking from the leader—“I’ll be voting for it. There’s no change there. Nothing’s changed my mind and the international interest analysis—fantastic.” Phil Goff, he is definitely voting for it, because it is, to quote Phil, the same as the China free-trade agreement taken under Labour. Helen Clark, she is a tremendous supporter of the Trans-Pacific Partnership agreement. In fact, every Labour leader in the last 20 years supports the agreement except the current one.

Unsure if Cunliffe does or doesn’t. The Cunliffe who was a Minister in the Clark Government would, but the Cunliffe who was Opposition Leader may not.

So when you look at Andrew Little’s positions—and I will grant you he has had more positions than the Labour Party has had leader in the last 5 years—he says he hates the Trans-Pacific Partnership agreement. He got asked a pretty simple question by Mark Sainsbury: “Will you withdraw New Zealand from the TPP?” Do you know what his answer was? It was: “We won’t.” He is going to kick up bobsy-die , but no, no, he will not. So then they asked him: “Will you vote against it?” A pretty simple question. He went: “Yeah, well, we already said—aah—if there—yeah—er—aah—if this legislation—aah. We don’t get to vote on TPP,” he said. What about pulling out? That apparently is incredibly difficult to do, even though the text, of which he has read 500 of 6,000 pages, says you can just do it by simply putting in notification for 6 months. When he was asked “Why won’t you pull out of TPP?”_—this was my particular favourite for the summer—he said: “Because we are the free-trade party.” Yeah, right. “We are the free-trade party.”

They once were a party of free trade. No longer.

So what he thinks is the problem is that other people, other corporations, other Governments can come to New Zealand and they can put a submission in against our law. That is apparently the problem. Here is a little technical issue. The first issue is, quite right, they can do that. In fact, anybody is free to come to New Zealand and put in a submission at our select committees. It is called open and transparent Government. But what did Andrew Little do at the end of last year? I know. He rushed off to Australia to go to put a submission in against its legislation and last night he was telling me to give David Cameron a ring, so I could put in a submission about their legislation.

Wonderful skewering of the hypocrisy from Labour. They are saying it is awful other Governments can put in submissions on our laws, yet he is himself demanding the NZ Government do the same.

The last issue is theoretically we can be sued under the provisions of investor-State. Well, do not accept my word for how difficult that is. Let me quote this for you, from Phil Goff who said, and quite rightly so because he actually understands what he is talking about when it comes to this area: “The barrier to get investor-State dispute is very high, and the chance is very unlikely.” We have had investor-State in this country for 30 years. Forget about a case being won. There has not been a case taken in 30 years.

Quoting Goff – I love it.

Now that’s a Labour deficit

February 10th, 2016 at 4:00 pm by David Farrar

labrot

Whale Oil has a copy of the Rotorua Labour accounts.

It shows:

  • $770 income for the entire year!
  • $10,542 of expenses
  • So expenses are 13 times their income!
  • Debt of $2,946 from the 2014 election

This is in a seat Labour used to hold. Now they can’t even raise $1,000.

ODT also against Labour’s free fees policy

February 10th, 2016 at 2:00 pm by David Farrar

The ODT editorial:

It is, in the end, the middle classes who are most likely to take up tertiary education in its various forms, just as they have gained from the costly interest-free student loans.

While the policy is to cover post-school education, including apprenticeships, it is not the poor and disadvantaged who will be the primary beneficiaries.

Former prime minister Helen Clark basically bribed the electorate with its own money on the student loans and family support payments.

Now comes another transfer to help, largely, the relatively well off.

It is taking $1.2 billion a year from all New Zealanders and giving it to the people who will be the highest earning in society.

There must also be doubts about the price tag being limited to $1.2billion.

For a start, it is clear extra spending on free fees will have to be matched by extra institutional funding for increased demand.

And the extra demand will be way way more than 15%.

It is also true the current system of part-payment – the Government still pays the majority share of most courses – focuses the mind.

Not only are students likely to give more consideration to the value of their courses to them, but it also means more accountability from teachers.

Students paying for studies have proved much less likely to put up with second-rate teaching or second-rate programmes.

You don’t value things as much when they are “free”. This policy will see a significant decline in quality.

How is free tertiary education going in Scotland?

February 8th, 2016 at 9:00 am by David Farrar

Labour’s huge $1.2 billion+ bribe of free tertiary education for all has been done before. By the SNP in Scotland.

This is fortunate for us, as we can compare how students in Scotland fare compared to students in England, which has fees.

Tim Wigmore in the New Statesman writes:

If you are a disadvantaged young person today, your chances of going to university are far worse if you are born in Scotland than south of the River Tweed. The poorest fifth of Scots are 3.5 times less likely to go to university through Ucas than the top fifth; the difference is only 2.5 times in England. Based on this measure, Scotland has by far the greatest level of educational inequality in the UK.

So Scotland with free fees does worse than England in terms of getting poor families to university:

Because of the absence of tuition fees, universities themselves also lack money to invest in bursary and outreach programmes, further handicapping disadvantaged students. English institutions spend over three times as much on financial help for poor students, according to a 2013 study from the University of Edinburgh. English universities also no longer have a cap on the number of students they can take; the cap on the number of Scottish students that Scottish universities can take hurts all students but disproportionately affects the most disadvantaged.

The same could well occur here. Presumably the Government will ban universities from charging fees, which means they will entirely control the income streams for universities.

In an age of austerity, cutting school funding has partly paid for protecting free university education. Spending on schools in Scotland fell by five per cent in real terms from 2010 to 2013 while, in England, it rose in real terms between 2010 and 2015.

This is the opportunity cost I talked about. Rather than invest more money into improving teacher quality, they are just doing middle class welfare.

Nicola Sturgeon is fond of saying that university debt would have meant she couldn’t go to university. This is not only disingenuous – students only have to repay their fees when they are earning over £21,000 – but also ignores that students in Scotland today still leave university with an average debt of £21,000, more than those in Northern Ireland or Wales, which both have tuition fees. When far less generous bursaries from universities are taken into account, many disadvantaged Scottish students will actually graduate with higher debt than equivalent students in England. Perhaps this is why even Scots are becoming sceptical about this middle-class hand-out by stealth: only a quarter of Scots believe that no students should contribute towards their tuition fees.

A student will be around $500,000 better off by going to university. It is not unreasonable they should pay a small portion of the costs of that education, rather than tax everyone for 100% of it.

Education Directions on free tertiary fees

February 6th, 2016 at 11:00 am by David Farrar

An interesting analysis of Labour’s “free” tertiary fees policy by Education Directions Dave Guerin – a leading education policy strategist:

  • The policy is quite thin beyond the headline figures. Costings and assumptions have not been provided, so it is hard to test the figures.
  • Making something free normally leads to rationing, and “homeopathy for pets” has been suggested as an area to be curtailed. However, Andrew Little has said that Labour expects a 15% increase in participation (that’s not in the papers released by Labour), so there will be overall growth.
  • If a TEO has fewer sources of income, it becomes more dependent upon the remaining ones. By reducing student fee income, this policy would increase the importance of government funding for TEOs. Such government funding is often constrained due to wider budgetary reasons. Any participation growth would probably be offset by lower income/students, and slower income growth.
  • Apprentices may get less benefit out of this than others, because their fees are generally lower and employers often pay a share of them. Officials will also be cautious about replacing employers’ funds with government funds.
  • The entitlement is defined as years of education rather than EFTS – that would disadvantage part-time learners, and we suspect it might change to an EFTS allowance in time (but Labour is talking to the general public, so would have avoided jargon at this stage).
  • The policy is not targeted, so it will pay the fees of people who are willing to pay fees right now (ie every current fee-paying student). While Labour says that it cares about increasing participation, their policy has the main effect of transferring funds to people who would be students anyway. If you wanted to boost participation amongst people deterred by current fees, you would use more targeted scholarships along with bridging programmes.
  • The policy is affordable, if it is prioritised over other things. Since most students pay their fees with student loans, and around 40% of the value of student loans are written off due to interest-free loans and other factors, Labour only really needs to find about 60% of the costs of fees for its policy (plus their 15% projected growth in student numbers). Labour will have to make a convincing case about its overall budgetary plans closer to the next election.
  • Labour’s stated reasons for the policy (access, retraining, and high debt) aren’t very robust, but the core reason seems to be that senior Labour politicians believe that this is the right thing to do, and that it will earn votes.

So my summary of the above is:

  • Policy does not provide details to back the costing
  • It is likely to lead to course restrictions in some areas
  • Tertiary institutes likely to end up with less funding per student
  • The policy is not targeted and will mainly pay the fees of people already willing and able to pay them
  • The rationale for the policy overall is not very robust – more to do with votes than solving a problem

Herald critical of Labour’s bribe

February 5th, 2016 at 9:00 am by David Farrar

The Herald editorial:

A universal entitlement to three years’ free tertiary education has overwhelming public appeal. Whether it is in the public interest is another question. The policy is expensive: $1.2 billion when fully implemented.

That is a considerable lump of public spending. As always when something of this magnitude is proposed, we should not look at its merits in isolation. Governments do not have infinite budgets and there is a limit to the taxation an economy can provide and remain healthy.

Labour needs to be asked, is this the most worthwhile use of $1.2 billion Is it even the most worthy use of funds allocated to education?

Many professionals (outside the tertiary sector at least) would say raising funding of pre-school education is more socially urgent and productive than relieving school-leavers of an obligation to contribute to the cost of their qualifications.

Most of the $1.2 billion will go to wealthy families who planned to go to university anyway.

University student associations have complained about course fees and loans to cover them since they were introduced. But many thousands of graduates have paid their fees and repaid their loans over the past 20 years.

Tertiary education has seen spectacular growth over that period, attracting foreign fee-paying students as well as meeting New Zealanders’ needs. Why change the funding system now?

Or to put it another way, what problem is this policy designed to fix? Labour’s leader presents it as an answer to the frequent and unpredictable career changes people will need in the workforce of the future. But this “future” has been present for many years now and there has been no sign the costs of retraining have become a problem.

The student loan scheme is effectively a temporary targeted tax on those who undertake tertiary study. Once you eanr above a certain level, you pay a 12% higher tax rate until the loan is paid off.

So what is fairer – those who get the benefits of tertiary study paying a temporary higher tax rate, or all New Zealanders paying a permanent higher tax rate?

The economy is strong in large part because public spending is under control. Expensive proposals that waste money purely for political gain could put the country’s prosperity in peril.

It’s the old tax and spend.

Labour’s taxpayer funded campaign office

February 4th, 2016 at 7:00 am by David Farrar

An e-mail from Paul Chalmers, Project Manager of Labour House:

We all know whoever wins Auckland, wins the next election.

That’s why Labour Leader, Andrew Little, has decided to open a fully staffed Labour office in Auckland where he and other MPs will base themselves every week.

That strongly indicates it will be funded by taxpayers from their parliamentary budgets. Labour has no money, so I can’t imagine the party is paying for much of it, if any.

The building will also become the centre of the Labour and the progressive movement in Auckland and the place to co-ordinate the local government and General Election campaigns. 

So by their own words they will be running Phil Goff’s mayoral campaign of this taxpayer funded office. Something they promised they would not do.

Does The Parliamentary Service know this office will be used to run their election campaigns from? That is a breach of the funding rules.

Garner on Key and Labour

February 1st, 2016 at 3:00 pm by David Farrar

Duncan Garner writes:

How on earth can Labour beat John Key?

This thorny question must have totally consumed Labour’s MPs at their recent caucus retreat.

I can’t imagine any back-slapping took place. More back-stabbing. After all, what is there for them to celebrate?

A sunny January?

Whether you like Key or not you have to concede that he’s one smart, pragmatic holder of the vast but crucial Centre ground.

And Labour’s only helping him by looking divided and hopelessly confused over the controversial trade pact, the Trans-Pacific Partnership Agreement.

No less than four former Labour Party leaders support the TPPA: Phil Goff, Mike Moore, Helen Clark and David Shearer.

They’re in the prime minister’s camp as leader Andrew Little takes his caucus towards the Greens.

Yep Labour once again shifts left.

The truth is, if John Key is a rabid Right-winger he’s disguised it well. He just wants to stay in power.

And Labour’s doing its best to help him by looking shabby, confused and divided.

This belated anti-TPPA posturing – too feeble and too late in the game – feels contrived and lacking in conviction.

I don’t know what Labour really stands for these days, and I’m sure, Goff, Moore, Shearer and Clark are struggling to answer that question too.

Labour is the gift that keeps on giving. Especially for Key.

Helen Clark must shake her head and wonder.

Exporters worried by Labour

February 1st, 2016 at 10:00 am by David Farrar

The Herald reports:

New Zealand exporters say they are concerned that a political consensus on trade has been lost after the Labour Party came out against the Trans-Pacific Partnership.

ExportNZ executive director Catherine Beard said in the past exporters had been able to rely on the support of both main political parties on trade.

“This has helped our exporters succeed in new markets and earn valuable revenue for New Zealand,” she said.

“Exporters are now feeling some dismay at the thought that our future trade prospects could be limited by political disagreement.”

Ms Beard said it was difficult to understand why Labour supported the China free trade agreement but not the TPP, “when they are similar in all major respects”. She described Labour’s position on the TPP as a step backwards for the country’s export competitiveness.

It is sad to see Labour abandon decades of bipartisan support on trade policy. They keep getting dragged more and more to the left.

 

Labour goes even further left

February 1st, 2016 at 7:04 am by David Farrar

Labour’s announcement of three years “free” tertiary education is a remarkable lunge to the left. They’ve adopted what was a fringe Alliance Party policy.

Its what you get from a party whose leader, finance spokesperson and education spokesperson are all former student presidents. They’re spent so many years chanting “free” education on protest marches, they’re never outgrown it.

This is a very very bad policy. Not a moderately bad policy, but a really really bad policy. This is for numerous reasons.

Cost

Labour say once fully implemented it will cost $1.2 billion a year. It will in fact cost far more than this. Labour never ever properly take into account growth in demand if you make something “free”. If you make houses free, everyone will buy a house. Make alcohol free almost everyone will buy alcohol. Make tertiary education “free”, and of course you will get a huge explosion in people enrolling. They may not complete a course, but they will enrol.

Quality

Labour’s policy will be great for tertiary providers. All they have to do is get you to sign a piece of paper and the Government will give them $15,000 or so. Even under the current funding system we’ve seen a reasonable number of rorts where providers hire people to go around hamburger bars and sign people up for a low quality (but zero fee) course, so they get the funding for it.

Providers respond to incentives.  They will spend a huge amount of money on signing people up, and people will sign up with little regard for quality or usefulness – as they are not paying anything themselves. When someone offers you something for free you care far less about the quality than if you have to partially pay for it yourself.

Helps the most wealthy

People who get a degree will on average over their life-time earn at least $500,000 more income. This policy will see people who don’t go to university paying higher taxes to fund those who do go to university. Truck drivers will pay more in tax so that lawyers get $15,000 free money from the Government.

It is not unreasonable that in exchange for extra income of $500,000+, students contribute towards the cost of tertiary courses they undertake.

Not targeted

If there is an issue with wanting more people to do tertiary student, who are put off by having to get a loan, then you could target assistance based on income. This doesn’t. This is just a huge bribe.

Opportunity Cost

Almost every study in education shows that the most critical period is early childhood. If you went to 100 experts in education and said we have $1.5 billion a year to spend – where should we spend it to make the most difference to educational outcomes, no one would say spend it all on tertiary – let alone on a policy that will lower quality of education, not improve it.

So in summary it will:

  • Cost massively more than $1.2 billion a year
  • Incentivise lower quality courses
  • Help the most wealthy
  • Is not targeted to those most needing assistance
  • Has a huge opportunity cost

Rob Hosking sums up the week

January 30th, 2016 at 7:00 am by David Farrar

Rob Hosking writes in NBR:

What a week.

The Greens embraced the Treasury.

National embraced public transport in Auckland.

And Labour embraced Jane Kelsey.

A great summary.

In sharp contrast, the Labour Party is jackknifing confusingly and messily all over the road over the TPP agreement.

The week closed with Andrew Little looking as though he had lost control of the issue, with two former leaders Phil Goff and David Shearer opposing his opposition to the TPP deal, and with Grant Robertson – Labour’s choice as Finance Minister in any future government – appearing on a platform with tenured university radical and free-trade opponent Professor Jane Kelsey.

Jane also opposed every FTA Labour negotiated.

But it has to be said that this week the Green party looked like the senior, rather than the junior party of New Zealand’s political left wing.

Not for the first time.

Kelsey briefing Labour staff on TPP

January 29th, 2016 at 2:00 pm by David Farrar

It shows how left Labour have gone that they have not just abandoned decades of bipartisan support on trade policy, but have so closely aligned with Jane Kelsey (who also opposed all the trade deals they did in Government). They are even arranging special meetings of Labour staff to get briefed by her.

But what is even more interesting is that a Labour staffer or MP leaked the e-mail to Hooton. That shows how deeply divided they are over this shifting of the party to the hard left on this issue.