Labour third off the block to announce business PAYE policy or consultation

July 18th, 2015 at 4:00 pm by David Farrar

Stuff reports:

Andrew Little has launched his first policy since becoming leader, proposing changes to the way businesses pay tax.

Flexible tax for business would introduce a pay as you earn element to company tax. Labour also wanted to double the threshold at which businesses are required to pay provisional tax to $5000 and abolish late payment penalties.

The policy is the first the party has announced since the 2014 election. The scheme is voluntary,  and Labour has presented the plan as one open for consultation.

Provisional tax is a plan and I welcome Labour looking at a PAYE scheme for businesses. My Xero accounting package gives me monthly accounts which are accurate. I could easily pay income tax on quarterly profits rather than pay based on my previous year’s profitability which can be very different.

However Labour’s idea is far from a new one. The Government announced a consultation on it four months ago!

In March, Revenue Minister Todd McClay revealed a consultation paper from Inland Revenue which raised the idea of a business PAYE.

And they’re not even 2nd with the idea!

Earlier this week, New Zealand First leader Winston Peters signalled a strikingly similar policy for business tax.

“In the interests of New Zealand we ask the Government to support a much needed change to an oppressive business tax that strangles small businesses especially,” Peters said on Wednesday.

But third is better than not supporting it at all.

Acting Finance Minister Steven Joyce said Labour had simply “cut and paste” the Government’s position.

“Labour announced today it was launching a discussion document on changes to provisional tax for businesses. However it seems to have overlooked that the Government launched its own discussion document containing almost identical proposals back in March,” Joyce said.

“These in turn were based on National Party policy at the last election.”

But again regardless of it not being a new idea, it is still good to see Labour hopefully embracing a policy which will make it easier for businesses.

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Is Labour seeing sense or is it a con?

July 18th, 2015 at 2:00 pm by David Farrar

The Herald reports:

Labour leader Andrew Little has indicated his party has changed its position and now backs controversial 90-day trial periods for new employees.

Great if true.

Speaking after a business breakfast this morning, Mr Little was asked about the 90-day trials, and he said Labour’s policy was to add a “fairness requirement”.

“The principle thing is, on the 90-day trial thing, every business owner I talk to about having to give feedback to someone under a trial, they all say, ‘Yeah, but I do that already’.

“So there won’t be any new onerous obligation in that regard. But it will make it fair and we want to write that into the law.”

Asked if his comments meant that the trial periods – previously opposed by Labour – would remain in a Government under his leadership, he said they would.

“We wouldn’t be talking about making the 90-day trial period fairer if we were going to get rid of it…the 90-day trail thing is there, we want to make it fair.”

Now what is crucial is what will be in this fairness requirement? If it is a requirement to follow the same process as for staff outside the 90 day period, then it is effectively abolishing the 90 day period.

If it is merely a requirement to give feedback to staff during the 90 day period, then that is a genuine change of policy – and one to be welcomed.

Stuff reports:

CTU president Helen Kelly called for clarification.

“Making it fairer gets rid of it, right? He needs to clarify that,” Kelly said.

“We would expect them to effectively get rid of them by making unfair dismissals unlawful.”

Kelly said the 90-day trial periods allowed workers to be dismissed for reasons which would otherwise not be fair, without giving the worker the option of taking a personal grievance claim.

If Labour introduced “just cause” provisions to the trials to allow personal grievances, the CTU could accept that, as this returned to the earlier rules in existing laws covering probationary periods.

Helen Kelly is saying that if you make them “fair” then you are effectively getting rid of them.

So until Labour actually comes up with a explicit policy, we simply don’t know. For now it might just be trying to say one thing to employers and another to unions, and hoping no one notices they are different.

But if it is a genuine change of policy, then it is a good sign for Labour. They’re running a two year consultation on the future of work, and beyond doubt the message they will be getting back is that work in 2015 is massively changed from the 1970s and work arrangements need to be more flexible to reflect that. If they spend two years onsulting and then come up with the exact same policy as in 2011 and 2014 – well it will look like a farce.

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A Labour member complains

July 18th, 2015 at 10:00 am by David Farrar

First let’s deal with the headline of the story:

Has the leak worked? Poll boost for Labour

The headline writer should be shot.

Labour has lifted by six points to its highest level since March 2014 in the Roy Morgan Poll.

Labour is up to 32 per cent in the poll – up six points from a fortnight ago while National was down six points to 43 per cent support.

However, the impact of Labour’s analysis of leaked Auckland real estate data remains unclear.

The poll of 886 voters began on June 29 and ended the day after Labour released that data on July 11.

So 90% of the poll was before the release. So the headline is trying to manufacture a story.

Onto the rest of the story:

The Herald revealed today that former Maori members’ chairman Shane Te Pou has written to the party demanding his personal data be removed from Labour’s database of home buyers, which it claims is the same information leaked from Barfoot & Thompson.

Te Pou cited the Privacy Act in the letter after being told by the estate agency that the purchase of his family’s house was likely among those used to bolster statistics purporting to show people in China were buying up New Zealand houses.

In revealing the statistics, Labour’s housing spokesman Phil Twyford tweeted: “People of Chinese descent bought 39.5% of houses sold by major (Auckland) real estate firm. This is foreign money.”

Te Pou is married to Annie Du, who is of Chinese ethnicity. He told the Herald his wife’s name was used to buy the family home during the period covered by Barfoot & Thompson sales data, obtained by Labour.

Te Pou wrote: “I am Maori. My wife is of Chinese descent. My money is not foreign.”

If I had purchased a house in Auckland, I’d be appalled that a political party had got hold of the data without permission.

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Labour may be very embarrassed when we get the actual data

July 17th, 2015 at 10:00 am by David Farrar

The Herald reports:

About 50 Chinese buyers packed a real estate agency office in Epsom, and snapped up 23 sections within minutes of release yesterday. …

Mr Law said all were either New Zealand citizens or permanent residents.


Mr Law said just one of the 150 sections sold in the subdivision so far went to a foreigner – a Chinese national waiting for his permanent residence visa.

So not a foreign investor.

Five purchasers declined to be interviewed when approached by the Herald, and one said Labour’s claims and recent media reports had “turned Chinese into crooks”.

Labour’s data implied 30% of Auckland house sales are going to foreign investors from China,  because of their surname. If I were them, I’d be nervous about what the real data will show post October.

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So will Labour apologise if it is revealed most ‘Chinese’ buyers are not foreigners?

July 16th, 2015 at 7:10 am by David Farrar

The Herald reports:

Principal agent James Law said Labour’s leaked figures that showed 40 per cent of homes sold at auction in Auckland over a three-month period went to people with Asian surnames was “about right”.

Mr Law said four out of 10 of the 350 who bought real estate through the company last year were of Chinese ethnicity.

“But what we found from our sales record was less than 10 per cent of them are actually overseas-based investors,” he said. “Most of them are citizens or residents who have lived here for years.”

Mr Law said it was “tradition” for Chinese people to buy real estate, and many made it their “first priority”.

Many regarded real estate as a safe investment and one that they could either make a profit on or hand down to their children.

“This explains the high number of Chinese buyers and investors, because many find their security in owning houses,” Mr Law said.

“In the same way, data on dairy business sales will show a high number of ethnic Indian buyers.”

I made this point yesterday on social media. I’d say over half of dairies are owned by people with Indian surnames, yet only 3.9% of NZers are Indian. So does that mean that our dairies are being purchased by people from Mumbai? No – it means different ethnicities have different purchasing priorities.

Now let us assume that 40% of buyers do have Chinese surnames. Of course a proportion of those will be foreign buyers. But it is 1% or 10% or 80%? There is a huge difference.

If the data is just 10%, will Labour then apologise for slurring the 90% who are Kiwis, just Kiwis with a Chinese sounding surnname?

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Labour’s policy would breach the FTA Labour signed

July 15th, 2015 at 10:00 am by David Farrar

Richard Harman at Politik reports:

Labour would exempt Australians from any restrictions it might put on foreign buyers of New Zealand real estate.

In a move that raises questions about the reasons for appearing to single out Chinese residents, Housing spokesman, Phil Twyford says the Australian exemption is because of the Closer Economic Relationship with Australia. …

But back in the Labour Party Mr Twyford has been continuing to assert that Labour would ban all foreign buyers.

He repeated this claim in a piece he wrote for the Herald. 

But he told POLITIK that “sometimes simplicity is the enemy of nuance.”

“Our policy is to ban all foreign buyers with the following exceptions —“If you intend to come here and settle.”

“If you build new.

“Australians – in the spirit of CER, given that they exempt Kiwis from their restrictions on offshore speculators.”

This tells us two things. The first is you can’t trust an article written by Phil Twyford. Sure in a live interview you may need to go for simplicity, but in a written op-ed for a newspaper, it is disgraceful to lie about your own policy.

But assuming he has told the truth to Harman, he has killedhis own policy. Stephen Franks explained why in 2013:

But wait – another Article (the most favoured nation clause) commits New Zealand not to pass law that discriminates against Chinese investors in comparison with other overseas investors (such as Australians).

Article 139 requires that investors of [China] be treated no less favourably than investors of any third country [Australia] “with respect to admission, expansion, management, conduct, operation, maintenance, use, enjoyment and disposal” of investments.

So Chinese would-be  investors do not get direct rights to insist on investor equality but they can’t be treated worse than Australians.

Labour has said Australians would still be allowed to buy residential property under their policy. This would breach Article 139.

So Labour’s policy is a soundbite, not an actual policy that could be implemented.

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Rob Hosking on Labour’s surnames research

July 14th, 2015 at 10:00 am by David Farrar

Rob Hosking writes at NBR:

This is where Mr Twyford’s effort is a cheap and nasty political shot. By basing his claims on data about whether investors have what Labour considers foreign-sounding names, he has opened up a seam of racism.

It appears he and Labour Party researcher Rob Salmond have simply gone down a list of property buyers and singled out anyone who has a name that sounds vaguely Chinese.

This has been wrapped in a patina of bogus statistical chatter in a bid to make it sound less odious: for example, Mr Salmond says someone with the surname of Lee has a 40% chance of being Chinese.

Message: if you have a Chinese-sounding name, you’re probably foreign. What’s more, Labour researcher Rob Salmond has an algorithm that calculates just how foreign you might be.

And over 30,000 have visited the parody site – and a fair number it seems think it is a legitimate Labour site. Labour should reflect on what that means that such an obvious parody is not seen as too far from what they have been doing.

This is really nasty stuff. Anyone with a passing acquaintance with some of the more bloody racial conflicts of the 20th Century will feel a chill that the Labour Party is doing this.

Really though, the matter of offshore investment in Auckland’s property market distorting that market is primarily an economic issue, not one of race.

By emphasising the racial aspect of the matter, Labour has deliberately embarked on a move calculated to raise racial tensions.


A good question.

Some of this is to do with Mr Twyford’s ambitions for the deputy leadership. This is also tied up with those well-known west Auckland voters who deserted Labour for National in recent elections.

Not sure this will help him. I understand a fair few Labour MPs are very upset with him.

There is no doubt people with Chinese names whose families have been here for years are justifiably enraged by Mr Twyford’s rather glib, shallow and irresponsible ploy.

But even for more recent arrivals: the assumption that anyone with a Chinese sounding name is foreign is nasty and poisonous.


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The Labour cure/curse hits again

July 14th, 2015 at 7:00 am by David Farrar

Labour have a long history of claiming something is a crisis, and then you have record good news in that area. Their claims of a manufacturing crisis saw the manufacturing indexes hit 10 year highs.

Just last month Labour was claiming milk prices were too high. They said that it was awful that milk cost less than coke, which seemed a bizarre comparison. And as I pointed out they picked the one month in the last two years where in fact milk was cheaper than coke.

Their cure/curse continues with Stats NZ reporting this month:

In the year to June 2015, food prices decreased 0.1 percent, Statistics New Zealand said today. This drop follows eight consecutive food price increases since the year to October 2014.

Grocery food prices decreased 2.1 percent over the year, influenced by lower prices for fresh milk and bread. Prices for meat, poultry, and fish also decreased – down 1.9 percent from June 2014.

“The average price for 2 litres of blue-top milk was $3.36 in June, down 9.4 percent from its peak in November 2014,” consumers price index delivery manager Matt Haigh said. “The price of fresh milk is the lowest it’s been since August 2013, when 2 litres of blue-top cost $3.17.”

Well done Labour. Once again your timing is superb.

Some interesting data from the release:

  • Food prices overall are 0.1% lower than a year ago
  • Fresh milk is 6.7% lower than a year ago
  • Soft drinks are 4.2% higher than a year ago
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Rutherford on Labour’s surname policy

July 13th, 2015 at 10:00 am by David Farrar

Hamish Rutherford writes at Stuff:

What do Labour’s figures about the number of Chinese names appearing on property transactions in Auckland prove?

Nothing concrete about the state of foreign ownership in New Zealand’s largest city. In terms of evidence, it is seductive, yet shaky at best.

There is every chance that a Wang appearing on a property record can claim a century of proud Kiwi ancestry, while the Smith who bought the house next door is the foreign investor. …

So what the release has done is made everyone with a Chinese sounding surname seem second class.

The research has concerning limitations. Labour will not say who gave it the data, beyond saying it is from one of Auckland’s largest real estate companies. If the figures were not nakedly political – if they had been presented by an economist – they would almost certainly be dismissed completely for the lack of rigour.

I really wonder what Labour were thinking with this. They’ve alienated a lot of their own supporters, and opened themselves up to a lot of ridicule.

Eventually new rules will force the disclosure of where buyers are based for tax purposes, a better measure of foreign investors than Labour’s name game.

This should come close to settling the argument about the extent of offshore investment in New Zealand real estate. There is every chance it will prove Twyford correct, that thousands of investors are seeking a way to get their money out of China and into a stable investment.

Alternatively it may mark Twyford as the man, and Labour as the party, who squarely pointed the finger of blame a substantial portion of New Zealand for no other reason than that they sound like they might be Chinese.

On that note Melissa Hu (a Young Nat) writes:

I’m not sure if you saw Andrew Little, Phil Twyford and the New Zealand Labour Party hit a disappointing and desperate new low yesterday.

They blamed the challenge of housing affordability on whether your name sounds Chinese or not. 

I was born here, I study here, I work here and I’m a New Zealand citizen but because my last name sounds Chinese I’m apparently a big part of the housing affordability problem – (I’m actually of Mongolian descent but would Labour care about that?)

Melissa continues:

I’ve lived here all my life, and I’m proud to call myself Kiwi. Young New Zealanders like me are ambitious, excited and open about New Zealand’s future. I don’t think my last name, or yours, has anything to do with trying to buy a house.

We need to be encouraging all Kiwis – young, old, European, Maori, Chinese, whatever – to aim high, work hard, create wealth and continue to raise our living standards. We also need the Government to keep taking common sense steps with councils to make more land available for housing. That’s why I support National- they know there’s a problem and they have a real plan to fix it.

We don’t need to start a “pick on the Chinese” attitude which could create more problems than it solves. Auckland’s housing problem is a supply issue – not a Chinese issue. We’re a multicultural, ambitious and prosperous country – I hope we stay that way.

Well said.

The Herald reports:

Labour leader Andrew Little has stood by the decision to release figures showing a high proportion of Auckland house sales to people with Chinese names, saying it is time to blow the whistle on what is happening in the city.

The use of the data has been criticised by many as racist and “shonky” and Mr Little admitted there had been some backlash.

I understand a number of Labour MPs are very unhappy about this and see it as a test of of Little’s leadership, if he keeps defending this. They’re not so unhappy with the data as Phil Twyford’s comments which implied Chinese NZers are now hard working Kiwis. John Key demoted Lockwood Smith for his comments on Asians. Will Little continue to defend Twyford?

Imagine if for example a Don Brash led National Party had come out with a shonky analysis like this, and used the language Twyford did? Every Labour and Green MP in Parliament would have been calling Brash racist. Instead, we have silence.

Finally, if you want to work for yourself if you’re Kiwi enough to buy a house under Labour, try out this new Kiwi-O-Meter. Well done to the Young Nats for this humourous response to Labour’s dog whistles.

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Stats Chat on Labour’s surname story

July 12th, 2015 at 12:00 pm by David Farrar

Thomas Lumley (A Professor of Stats) writes at Stats Chat:

So, there is fairly good evidence that people of Chinese ethnicity are buying houses in Auckland at a higher rate than their proportion of the population.

The Labour claim extends this by saying that many of the buyers must be foreign. The data say nothing one way or the other about this, and it’s not obvious that it’s true. More precisely, since the existence of foreign investors is not really in doubt, it’s not obvious how far it’s true. The simple numbers don’t imply much, because relatively few people are housing buyers: for example, house buyers named “Wang” in the data set are less than 4% of Auckland residents named “Wang.” There are at least three other competing explanations, and probably more.

First, recent migrants are more likely to buy houses. I bought a house three years ago. I hadn’t previously bought one in Auckland. I bought it because I had moved to Auckland and I wanted somewhere to live. Consistent with this explanation, people with Korean and Indian names, while not over-represented to the same extent are also more likely to be buying than selling houses, by about the same ratio as Chinese.

Second, it could be that (some subset of) Chinese New Zealanders prefer real estate as an investment to, say, stocks (to an even greater extent than Aucklanders in general).  Third, it could easily be that (some subset of) Chinese New Zealanders have a higher savings rate than other New Zealanders, and so have more money to invest in houses.

Personally, I’d guess that all these explanations are true: that Chinese New Zealanders (on average) buy both homes and investment properties more than other New Zealanders,and that there are foreign property investors of Chinese ethnicity. But that’s a guess: these data don’t tell us — as the Herald explicitly points out.

One of the repeated points I  make on StatsChat is that you need to distinguish between what you measured and what you wanted to measure.  Using ‘Chinese’ as a surrogate for ‘foreign’ will capture many New Zealanders and miss out on many foreigners.

The misclassifications aren’t just unavoidable bad luck, either. If you have a measure of ‘foreign real estate ownership’ that includes my next-door neighbours and excludes James Cameron, you’re doing it wrong, and in a way that has a long and reprehensible political history.

Lumley also points out:

But on top of that, if there is substantial foreign investment and if it is driving up prices, that’s only because of the artificial restrictions on the supply of Auckland houses. If Auckland could get its consent and zoning right, so that more money meant more homes, foreign investment wouldn’t be a problem for people trying to find somewhere to live. That’s a real problem, and it’s one that lies within the power of governments to solve.

Making it easier for supply to meet demand is a better solution than trying to reduce the demand.

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Labour becoming more reliant on union donations

July 10th, 2015 at 2:00 pm by David Farrar

A reader has sent in an analysis of what proportion of disclosed major donations, have come from unions for Labour. There is a real trend here.

  • 1999 – 7.2%
  • 2002 – 10.4%
  • 2005 – 15.0%
  • 2008 – 27.8%
  • 2011 – 46.7%
  • 2014 – 64.5%

So Labour has lost any broad appeal it once has, and in election years is dependent on unions. The unions are not a subsidiary of Labour, Labour is becoming a subsidiary of the unions!

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No Jacinda, this is what dreadful looks like

July 10th, 2015 at 7:15 am by David Farrar

The Herald reports:

The Government’s latest report card for the public service shows an increase in the number of children and young people being assaulted – a trend that Labour describes as “dreadful”.

One of National’s 10 targets for the public service was to reduce the number of children being abused by 5 per cent, to approximately 3000 children, before 2017.

An update released this week showed that 3144 children were physically abused in the year to March, compared to 3111 the previous year.

When the target was set three years ago, the rate of physical assaults on young people was increasing and was projected to rise to around 4000 by 2017.

State Services Minister Paula Bennett said this increasing trend had been “successfully flattened”, though she admitted more needed to be done to hit the target.

Labour Party children’s spokeswoman Jacinda Ardern said Government’s targets had served to highlight its failure to tackle child abuse.

“Those are dreadful figures, yet police stats tell us the situation could be even worse than that, with the number of violent assaults on children up 3.5 per cent to a record 5397 offences in 2014.”

First of all any level of child abuse is too high, and everyone wants it to trend down. But before we call a 1% increase “dreadful” let’s look at what has happened here over the past decade.

Data for confirmed child abuse cases is a bit hard to find but you have it for 2004 to 2008 on Te Ara, and 2010 to 2014 on CYF.


So from 2003/04 to 2007/08, child abuse cases increased by 93%. There is a year missing in 08/09 and in 09/10 it was 21,025. In the four years since then it has reduced by 6.7%.

So my definition of dreadful is the 93% increase under the last four years of Labour. That is what failure looks like. Not a 1% increase, but a 93% increase.

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Trans-Tasman on Housing

July 3rd, 2015 at 11:00 am by David Farrar

Trans-Tasman reports:

Opposition parties thought they had found the perfect stick to beat up the Govt on social housing needs, after TV3’s The Nation disclosed Aust charity Horizon Housing could be in the market to buy up to 500 state houses. It had those elements (profits going overseas, privatising state assets, “ foreign” buyers for taxpayer-funded housing stock on the cheap) which politicians regard as hot-button issues for voters. But Govt Ministers batted away the attacks, pointing out the Aust charity would be subject to the community housing regulatory authority, and then coming up with a quote from the Deputy PM of Aust (when the Labor Govt was in office) declaring Horizon Housing to be “an amazing organisation” doing a great job in Queensland.

It is only NZ Labour that has this strange hatred of the private sector. Other Labour parties focus on results and effectiveness. but NZ Labour instinctively think anything private sector has little or no role in providing Government funded services.

To rub it in the PM then cited comments from Labour’s housing spokesman Phil Twyford his party wanted to see a larger, more capable, empowered community housing sector. 

They want a larger community housing sector yet oppose all the policies designed to achieve that.


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Labour’s new overlord

July 3rd, 2015 at 10:00 am by David Farrar

Stuff reports:

Delegates of the Engineering, Printing and Manufacturing Union (EPMU) voted in favour of a proposal to merge with the Service and Food Workers Union (SFWU).

EPMU national secretary Bill Newson said the discussions had been ongoing for quite some time and it was a milestone for the merger.


The new mega-union will have massive power in Labour. This one union will control 13% of the leadership electoral college.

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Milk prices

June 30th, 2015 at 10:00 am by David Farrar

Stuff reports:

New Zealanders are paying over-the-top prices for milk, with Coca-Cola now more affordable, the Labour Party says.

Figures from Statistics New Zealand showed the average price of two litres of milk was $3.19 in May 2013, which had jumped to $3.45 in May this year.

The milk price index has actually dropped 4% in the last 12 months, so Labour are complaining at the time milk prices are dropping.

The index was 1204 in May 2015, 1254 in May 2014 and yes 1129 in May 2013. So by going back two years Labour makes it look like prices are currently increasing.

What do they look like over the last 15 years?


So milk prices in NZ are quite volatile, with some big increases some years and big decreases in other years. That suggests a competitive market.

In the six years and five months since 2008, milk prices have increased just 8.5% overall. That’s an average of 1.3% a year – so below the mid-point of the inflation target range.

Now let’s go back to the comparison with Coke

Shearer said Primary Industries Minister Nathan Guy had some explaining to do, as it was “all looking a bit too cosy”.

It was “perverse” that Coca-Cola was more affordable than fresh milk, at a time when child obesity and diabetes were causing major problems in the health system, he said.

First of all the Government does not set the prices of goods. It is no surprise that something which is basically water with some mass produced syrup costs less than milk which has to be produced on a farm and transported.

But even putting aside the stupidity of the comparison, let’s like at the price increases of soft drinks and milk since December 2008.

Milk inflation has been 8.5% while inflation for “soft drinks, waters and juices” has been 21.7%. So under Labour coke was even cheaper than milk!

Now Stats NZ also has the specific average price for a 2 litre container of milk and a 1.5 litre soft drink. If we make this a cost per litre what does it show?


Now you may understand how truly stupid Labour is being. They managed to pick the exact month where in fact milk is slightly cheaper than coke (by 1 cent) – $1.73 vs $1.74. And of course if we go back to 2008, milk was $1.67 a litre and coke $1.31.

But we should not just blame Labour for not doing their homework. They were counting on media who would not fact check them. This took me around 30 minutes with the Stats NZ database. Wouldn’t it be great if a journalist actually did this and when Labour spout off crap like this, ask them questions such as:

  • As milk prices have fallen 4% in the last year, why are you claiming the price is increasing?
  • As milk prices have increased just 1.3% a year since 2008, what is the problem you are claiming needs fixing?
  • As milk is currently cheaper than Coke, why are you claiming it isn’t?

The only way Labour will learn not to shoot off stupid inaccurate crap, is when people call them on it.

UPDATE: Kudos to Claire Trevett who in this article did look beyond the spin from Labour, and point out prices had dropped in the last year.

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One union to rule them all

June 26th, 2015 at 4:00 pm by David Farrar

Stuff reports:

The old adage of strength in numbers is the main driver behind the proposed merger between two of New Zealand’s larger unions.

In July, the potential combination of the Service and Food Workers Union (SFWU) with the Engineering, Printing and Manufacturing Union (EPMU) will be put to the vote at a national conference and if it gets the thumbs up there, the memberships of both groups will then get to have their say.

These are the two largest unions of Labour’s six affiliated unions. Individually they have 42% and 25% of the affiliate vote. If they combine they will have 66% of the affiliate vote. It means the combined union will effectively select their own vice-president of the party, have reps on the list moderating committee, be far more dominant at selection meetings and this one entity would control 13% of the leadership electoral college.

In other words the Labour Party would not be far removed from being a subsidiary of the new combined union.  In a leadership ballot the vote of each delegate would be worth almost 50 times as much as an ordinary member.

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Bishop on Labour being the No party

June 22nd, 2015 at 1:00 pm by David Farrar

National MP Chris Bishop writes in NBR:

Historically in New Zealand politics, the Labour Party has liked to think of itself as the party of progressive, even radical, social change.

Conversely, it is sometimes claimed National is the traditional party of conservatism – the party that manages the status quo; that builds on social changes already made.

Whatever the truth of these claims, today’s political situation differs markedly from these perceptions. National and Labour’s traditional roles have reversed.

Labour is now the real conservative party – fearful of innovative social policy, afraid of new ideas – in short, the party which says “No” to everything.

This is so true.

National has been driving a quiet revolution in the state services, getting government departments to focus on results from the better public services programme.

This is having demonstrably good outcomes, as the regular target reports show: a 38% reduction in youth crime since 2011, a 40% drop in the number of teenage solo parents on a benefit since 2011 and immunisation rates for Maori which are now as high as the rest of the population.

Between 2003 and 2008, government spending jumped 50% but there were little to no improvements in social services, as the Salvation Army noted in its State of the Nation report at the time.

Labour are good at spending, but not good in results.

The government is transforming the welfare system toward one designed around an investment and liability prism. Rather than taking a traditional year-on-year cash view, the Ministry of Social Development looks at the lifetime costs of its clients.

This creates the opportunity to spend more today to get a better long-term outcome for individuals and households. This is leading to profound changes in government policy toward people receiving welfare and other government support.

This is encouraging the government to invest in people, particularly the young, and to do it early. This social investment approach is about targeted, evidence-based investment to secure better long-term results.

So spend more in areas where it will save you more in the long-term, and spend less in areas where little is achieved.

Labour’s response to social policy
The first response is often silence. The party has nothing to say about the social investment approach to policy, nothing to say about better public services targets and little to say about Whanau Ora.

You won’t find many press releases from Labour on these important social reforms, or many Parliamentary questions. It’s almost as if it’s too difficult for its MPs to engage with the issues.

If Labour does have something to say, it often reverts to tired and trite clichés. A favourite is to call the government “neo-liberal” – the social democratic politician’s favourite term of abuse for centre-right governments.

Labour’s response to a recent Productivity Commission report about social services was to wail about the government introducing “vouchers” in social services. The party seemed blissfully unaware that “vouchers” (which simply means funding following people when choosing services) are all around us already – in early childhood education, in tertiary education and so on.

Vouchers is what the left call choice.

On the new social impact bonds, Labour wailed about people “profiting” from social services. Profit already exists throughout social services.

As Eric Crampton of The New Zealand Initiative has pointed out, private hospitals profit by providing publicly funded surgery, private pharmacies profit by filling Pharmac scripts and private medical device manufacturers profit by developing better replacement hips for publicly and privately-funded operations.

Do Labour want to nationalise all pharmacies, all GPs, all midwives?

Overall, Labour is fundamentally uninterested in new approaches to old problems. It is a party stuck in an ideological time-warp – which insists, despite all evidence to the contrary, the government has the answers to everything, can effectively address social problems and all that’s required is more government spending.

Social democratic parties around the world have moved on from this 1970s view of government – social impact bonds, for example, were originally a UK Labour government initiative – but New Zealand Labour appears determined to remain stuck in the past.

These days, National is the party of progressive, equitable, social reform. Labour is the real conservative party – saying no to everything, opposing for opposing’s sake and uninterested in new ideas.

As Chris said, NZ Labour is way out of step with other Labour parties around the world.

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Is unity why Labour lost?

June 16th, 2015 at 10:06 am by David Farrar

Rob Salmond writes at Public Address:

Last year I worked on Labour’s campaign in a relatively senior role, and as a result I had access to some of our internal research, including opinion polls and focus groups.

When people in focus groups reported having voted Labour in the past, but reported planning to vote National in 2014, they were often asked: “why have you changed your mind?” In response, issues of unity, backstabbing, in fighting, and so on came up immediately, spontaneously, and repeatedly. Sitting behind the one-way glass listening to that was no fun at all.

That is interesting.

You then need to ask if people will think if things have changed. The leaking of the review report will not have helped change the perception the public have. Some MPs wanting to expel people who want to set up a think tank won’t help either. The fact their leader only got four votes in caucus is a barrier also.

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Trotter asks if Labour is finished?

June 15th, 2015 at 2:00 pm by David Farrar

Chris Trotter writes:

IF IT HAD ONLY HAPPENED ONCE, I could have written it off as a simple overstatement. Politics lends itself to exaggeration, and there was a lot of that associated with the Labour Party’s Review of the 2014 General Election. But, what I’m describing wasn’t the usual bluff and bluster of the instant commentariat. What I was hearing was coming from “civilians” – people without a platform – ordinary folks. And, what they’ve been saying to me, over and over again, in the week or so since the Review was leaked to TV3’s Paddy Gower, is the same statement-cum-question:  “I think Labour’s finished as a major party – what do you think?”

Now, this is a not the sort of statement/question that political parties ever want to hear. Because it isn’t just another complaint about this leader, or that policy. No, this is an existential query: and existential queries only get made when the subject has already got at least one foot (and a good portion of leg) in the political grave. …

The difference between National’s response to its electoral nadir and Labour’s reaction to its worst result since 1922, is that the former took its thrashing seriously and Labour isn’t. Long before the Review was complete, Labour insiders were already speculating on whether or not it would be big enough to make a passable door-stop.

This is the key thing. Labour didn’t respond to their then worst ever modern defeat in 2011, and following an even worse defeat in 2014, they again have not looked to make any major changes.

National looked upon its defeat as a catastrophic market failure. National Incorporated’s share price had crashed, the Bank was ready to call in its overdraft, and the receivers were hovering. Time was of the essence. The Board of Directors had to do something.

What did they do? Well, they did what every big business in trouble does. They called in the political equivalent of McKinsey & Co. – consultants in extremis – and ruthlessly refashioned the National Party into a lean, mean electoral machine. National’s review panel didn’t just lop-off the dead wood, they fed it into the wood chipper, mixed it with the blood and bones of several sacred cows, and spread it over their flower beds!

Yep. I recall the special conference to approve the changes. I spoke in favour of them (bar one).

Democracy is one of those things (like fairness) that National tends to honour more in the breach than the execution.

I’m reminded of the quote by General McArthur – I’m here to preserve democracy, not practice it :-)

Perhaps Labour could be saved if, like the ancient Romans, they were willing to install a dictator to “save the Republic” from its enemies (in the case of Labour’s membership that would be themselves!) someone capable of turning the party into a lean, mean electoral machine.

Except, of course, Labour’s never going to do that. Which is why so many people are telling me “Labour’s finished” – and  why, regretfully, I’m agreeing with them.

I think Little, as a former president, could save the party. If he is willing to use his position and prestige to push a significant reform package, then he could get it through. But will he take the risk, or just rely on the hope that the voters won’t want to give National a 4th term?

UPDATE: Rob Hosking has similar thoughts:

Hemmed in by enemies on all sides, the New Zealand Labour Party looks increasingly like the old New Zealand Liberal Party: a movement whose time has passed.

The Liberals had their time in the political sun, but society moved on and the party did not. The different wings of the party hived off into other movements and the party itself was subsumed.

Labour looks headed the same way: its cadre of professional politicians have relied on the political cycle turning their way again but the thing about cycles is they tend to turn and end up in a different place.

That s basically their plan – hope the tide turns.

New Zealand’s political Left is overdue for realignment: that re-alignment has, over the past month, moved much closer. 

Budget 2015, meanwhile, dealt another blow: in its combination of the first real increase in benefit levels since 1972 and greater incentives to get off those benefits, it raised the awkward question of why Labour did not do something similar when in government.

Not for the first or last time, the underlying question many on the Left are asking is: what is Labour for?

Giving more power to unions, so they get more money and members, so they can fund Labour.

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Hooton on Labour’s suspicion of the economy

June 15th, 2015 at 11:00 am by David Farrar

Matthew Hooton writes:

Labour’s finance spokesman, Grant Robertson, expresses this suspicion of “the economy” quite well.  As he puts it, fairly gently: “To me, the economy is only a means to an end to the kind of society we want, to the well-being of New Zealanders.”

This makes it sound like the economy is something that is the property of the Government!

For many in Labour, though, the sentiment is more extreme: “The economy” is something dirty and unpleasant; the other; something almost to be feared.  After all, talk in the 1980s of economic efficiency and reform – let alone the dreaded “neo-liberal orthodoxy” – is what created the horror of today’s satanic mills that replaced the workers’ paradise they seem to believe existed prior to 1984. Such talk created the vast underclass that these Grey Lynn and Wadestown liberals have read about on Bryan Bruce’s Facebook page and seen on Campbell Live.

The Grey Lynn and Wadestown sets are smart enough to know they must tolerate the continued existence of “the economy” but only because it is necessary to fund benefits for the  “missing million” and government-funded arts festivals for themselves.

Sadly this is only slightly exaggerated.

In contrast, Progress wanted Labour to take a more holistic view of who people are, how they live and where they want to be.  As they see it, in a 24-hour day, people want the opportunity to spend eight hours being involved in creating something meaningful and valuable at work.  They want another eight hours to enjoy time with their families and communities.  And they need the remaining eight hours for sleep in a safe, warm, comfortable home.

That’s a very good way to look at what people see as important – work, family, and home.

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Trotters forgets tax

June 14th, 2015 at 11:00 am by David Farrar

Chris Trotter writes:

Well, here’s an idea (hat-tip to Danyl McLauchlan). Why not make it a rule that a Labour MP cannot take home more than the average wage of, roughly, $55,000 per year. The balance of their income, $95,000, would go to the party. This would guarantee Labour an annual income, from its current 32-strong caucus, of at least $3,040,000 per year, or, $9,120,000 over the three year parliamentary term.

That’s not a bad war chest – and just think of the effect on Labour’s voters! Knowing that their MPs are unwilling to take home more than the average income earner. That they’re prepared to give up two-thirds of their salaries to ensure that, come election time, the party of the workers stands a fighting chance against the party of the bosses. That they’re not just in it for the money, and the perks, and the power. What do you think that would do for building trust and identification?

There’s one problem with Chris’ calculations. He’s forgotten tax.

Perhaps Chris silently yearns for a low tax economy, where high earners can donate most of their salary to good causes, rather than pay it to the IRD. But we are not there yet.

The IRD will take $40,420 in tax off each MP compared to $9,520 for someone on $55,000. So that is $30,900 less money per MP to be tithed which is $2,966,400 less money over a three year term.

Maybe that would convince Labour to champion low taxes though – so they can tithe more of their income to Labour!

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Hehir’s three tips for what Labour should do

June 12th, 2015 at 12:00 pm by David Farrar

Liam Hehir writes:

TV3 political journalist Patrick Gower got his hands on a draft of Labour’s “what went wrong in 2014” report last week. This in and of itself seemed a curious happening, because I had it on good authority that all journalism in this country came to an end when John Campbell’s show was cancelled. Nevertheless, the report is a keen and penetrating insight into what Labour thinks about what is arguably its worst ever result.

It seems that one of the party’s major problems is that its internal bureaucracy is just not extensive enough. In addition to its existing deliberative and decision-making bodies, the report recommends that Labour add a campaign committee, a list vetting committee and an executive committee.

On the off chance that more meetings won’t do the trick of restoring Labour to her electoral former glory, I can suggest three other measures that can help get the party back on track for the 2017 general election.

His three measures are simpler to implement. They are:

  1. Uninstall the Twitter app from all MPs’ smartphones
  2. Ban all references to ‘neoliberalism’ in all verbal or written communications
  3. No more personal attacks on the prime minister

Good reasoning on the Twitter issue:

Yes, I know that it is exciting for opposition MPs to have their latest ‘slam’ of the government retweeted 17 times. I’m sure it is also thrilling to be mentioned in political scientist Dr Bryce Edwards’ “top tweets”. In the last election, however, Labour trailed National by more than half a million votes. Social media isn’t going to fix that and, to the extent that it encourages Labour MPs to play to the gallery, it will make closing the gap all the harder.

The more time Labour MPs spend on Twitter, the more confused they become that people did not vote for them, as everyone likes them on Twitter when attacking the Nasty Nats.

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NZ Labour to the left of other Labour parties

June 11th, 2015 at 9:00 am by David Farrar

A lot of NZ Labour’s problems come from its ideological hatred of the private sector, and their kneejerk opposition to anything involving the private sector – regardless of the impact a programme may have in helping the most disadvantaged.

They’re against privately managed prisons, even if they do a better job of rehabilitating prisoners.

They’re against charter schools even if they do a better job of helping the most disadvantaged students gain qualifications

And we’re seen it again with their kneejerk opposition to social impact bonds. Labour seem to have no fresh ideas of their own, just a long list of things they oppose.

Now take social impact bonds. Are they some sort of right wing master plot to privateer and make money out of social services? No doubt they were pioneered by Market Thatcher and Ronald Reagan.

Well here are the parties that have been implemented social impact bonds overseas:

  • UK Labour in 2010
  • NSW Labour in 2011
  • US Democrats in 2012
  • Massachusetts in 2012
  • NY State Democrats in 2013

You can have a valid view on the benefits and risks of social impact bonds. But the reality is that these are initiatives pioneered by centre-left Governments that rightly are focused on what works, rather than whether or not it involves the private sector. But NZ Labour seem unable to get past its ideological opposition to the private sector, so they remain stranded as a party that stands for little, but opposes a lot.

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Labour MPs want members expelled for daring to form a think tank

June 10th, 2015 at 2:00 pm by David Farrar

Politik reports:

Controversy within the Labour Party over moves by some right wing members and MPs to set up a think tank aligned with the party.

Some sources say that things got heated at last week’s Labour caucus over the proposal and  expulsion of some of those involved was threatened.

As I have said many times, Labour is all for diversity – except diversity of opinion.

But a spokesperson for Labour Leader Andrew Little says that while he does not discuss what happens at caucus, those reports are “inaccurate”.

Indeed the spokesperson said Mr Little said he welcomed the idea.

“Labour is a broad church and we welcome all sorts of ideas,” she said.

“If people want to have things like think tanks with ideas that’s good.”

I don’t even know why it was discussed at their caucus. Members should be free to set up whatever they want.

I co-founded the Taxpayers Union. I didn’t seek permission from anyone in National about it. In fact I didn’t even tell any MP about it until just before it launched. NZTU often disagrees with the Government, and/or criticises National. It’s called having a diversity of views on the centre-right. Labour though seems to again have problems with any diversity of views.

I would have thought the Labour caucus would have more pressing things to discuss than whether they like a proposed think-tank.


Gower on Labour

June 8th, 2015 at 1:00 pm by David Farrar

Patrick Gower had some harsh words for Labour in the light of the leaked review, on Radio Live.

Bryce Edwards summarised what Gower said:

“Basically this report is a vanilla description of Labour’s pathetic campaign… What it also illustrates is Labour is still leaking, Labour is still unprofessional, Labour is still engaged in bizarre ruling-by-committee. Labour wasn’t ready for Government in 2014 and I can tell you from looking at this report and the dealings I’ve had with it at the moment, Labour isn’t ready for Government any time soon”.

Gower doesn’t stop there, and argues that the Labour Party has transformed into a narrow party out of sync with ordinary people:  “Labour can’t even review their own disastrous campaign… This is a party with serious, serious problems. It’s rotten to the core. Give up, pack up the Labour tent and go home. Because it’s a shame for what was actually 100 years ago a fine movement that started. And it’s just an embarrassment today. It’s just a group of sectoral interests and chardonnay socialists that have taken it over and driven it into the ground”.

Duncan Garner also extends this point, saying, “I’ve wondered for some time whether Labour is just a special sector party for special interest groups, rather than a mainstream party”. He adds that he genuinely doesn’t know what the party stands for anymore. 

Now understandably Labour doesn’t like such harsh criticism, and they have been putting it about that Gower was so damning of them, because after he approached them over the leaked review, they released it before the 6 pm news bulletin, robbing him of his scoop.

John Drinnan buys into this narrative:

Labour Party folk were stunned when journalist Paddy Gower embarked on a radio tirade on Wednesday, saying the party was “rotten to the core” and had been run into the ground by chardonnay socialists. …

But it seems the extraordinary overreaction against Labour occurred because the report was leaked to him and Radio NZ by a Labour insider and, when the party found out, it passed the report on to other media. Gower got the TV scoop, but ironically, TVNZ screened it earlier in its bulletin. Such is the cut and thrust of media management in the public and private sector.

People brought forward an announcement to counter a leak, which they assumed would be portrayed in a more negative way, then Paddy spat the dummy, presumably to teach Labour a lesson.

With respect, this is pretty rubbish reasoning. The reason it is rubbish reasoning, is that Gower (a 10 year veteran of the gallery) would have known full well that once he approached Labour for comment, they would probably release the report. This is not an unusual thing. Almost every political party does this, and the gallery know they do this. If you hear a reporter has a leaked document and it will be on the 6 pm news, you rush to release it before 6 pm, so you can try and spin it your way.

To suggest that Labour’s releasing the report early would have so enraged Gower, that he lost his temper and went harsh on them as revenge, is just silly. This is, again, pretty normal behaviour from a political party when they hear something has been leaked.

Labour are trying to divert attention away from Gower’s actual analysis, because sadly for them it is harsh but not inaccurate.

There are several things that should be worrying Labour:

  • The review is so superficial and light that it is unlikely to produce great change
  • The voting power of Labour’s sector groups means that any change against their interests is unlikely to get anywhere
  • Oppositions generally grow vote in opposition, not lose it
  • If you do drop support while in opposition, then that is when you need to change things. National did so after the 2002 election, and Labour should have done so after 2011 but didn’t. And now looks to not do so again after the 2014 vote drop.
  • The fact that the review was leaked, shows that Labour is still very divided and lacking the cohesion to be a credible alternative Government
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