Kiwiblog

The Herald reports:

The Council of Trade Unions (CTU) has welcomed the Government’s decision not to support the reintroduction of youth rates.

So the CTU is happy.

Opposition leader Phil Goff welcomed the decision.

“It’s crazy to suggest that any young person doing the same job exactly as older people should be paid automatically at a lower rate. It didn’t add up,” he told reporters.

As is Phil Goff. This means it must be wrong!

Goff’s own statement shows a total misrepresentation of the situation. Having a lower minimum wage for teenagers is exactly that – a lower floor. How the hell you translate that into “should be paid automatically at a lower rate” I do not know. Once again, for the really stupid people, – this is about a floor – not a ceiling, not an automatic rate that you must apply to teenagers.

In today’s NBR 24/7 column I rip into the Govt’s decision:

It really brings into doubt the seriousness of the Government in terms of job creation, when it persists with a law that has clearly priced many teenagers off the job market. …

Most teenagers are not seeking full-time employment. What they desperately want is to gain some work experience, and to gain some extra money on top of whatever parental or student support they have.

By agreeing to vote down Sir Roger’s bill, the Government is saying we want young people to be unable to gain work, unless an employer thinks they are worth almost $13 an hour. …

Later this year, overall unemployment should start tracking down. If youth unemployment remains persistently high, the Government will have no one to blame but themselves.

There are 45,000 teenagers unemployed. This decision is a very bad one.

NBR has a “The good, the bad and the ugly – NBR 24/7’s plays of the week”, It is behind the firewall and always a good and often amusing read.

I am sure they don’t midn me sharing one small extract from it:

The good

Bureaucrats are getting fired (slowly)

If you want to know whether a government policy is a good idea or not you usually just need to listen to the reaction of the Public Service Association and take the opposite view.

This week the PSA, along with the union’s Labour allies, was bleating about comparatively minor ($25 million) restructuring at the Ministry of Education as part of a wider plan that includes possibly merging some ministries.

Voicing vociferous opposition to any pen-pushers being shown the door they said (as if it was some kind of tragedy) that about 2000 public sector workers had lost their jobs since National got elected.

This was quite possibly the best news of the week: National has seemingly managed to sack 2000 bureaucrats without anyone (except Labour and the PSA) noticing.

NBR goes on to explain the difference between jobs that create wealth and those that use it up.

I take what is probably a final look at the Hollow Men e-mails in NBR 24/7 this week:

The illegal (and it was almost certainly illegal) obtaining of the e-mails, and their subsequent publication, had a major impact on New Zealand politics. They effectively forced Don Brash out of the leadership of the National Party, despite the fact National was ahead of Labour in the polls at the time.

It is very unusual for an Opposition Leader to resign, when his party is leading in the polls. And the Hager book based on the e-mails did not in fact have any smoking guns. However, Brash correctly judged that he would have been unable to make traction in the face of the book, and resigned.

If Brash had not resigned, it is quite possible National, under his leadership, would have gone on to win the 2008 general election, and while it is conjecture what policies a Brash-led government would have had, suffice to say that it is hard to imagine it being happy to borrow $240 million a week to fund interest free student loans and working for families.

And the usual conjecture on how they were obtained.

Over at NBR (sub needed), I review the Government’s 20 year infrastructure plan. A couple of extracts:

The most under-reported story of the week was the release of the country’s first ever 20 year infrastructure plan. The 141 page plan is our first ever stock-take of the national infrastructure yet it got a fraction of the headlines given to an MP musing on a blog about financial incentives to child abusers to get sterilised.

It is tempting to ridicule the notion of a 20 year plan, recalling that even the Soviet Union only had five year plans. But when it comes to capital spending on infrastructure, it does seem sensible to be looking beyond the next election. …

And on the roading side:

A user pays principle does raise the issue of whether or not the Government should have a fixed amount of petrol tax, or whether it should simply vary the petrol tax, so there is sufficient funding to pay for all roading projects that have a positive benefit to cost ratio. This could mean petrol costing $2 a litre, but it would mean safer and faster roads.

And some scepticism about the airports:

Rather boldy the Government declares that ports and airports operate within a competitive market, and the Government does not need to intervene with their investment decisions. I’d like to know how Auckland International Airport is in a competitive market. If Air New Zealand objects to increased landing charges, what are they going to do – land in Hamilton instead?

The full column is at NBR 24/7.

This week’s Dispatch from St Johnnysburg for NBR 24/7 is on Labour. A couple of extracts:

Labour have had a good couple of weeks.

First of all, something has happened to Phil Goff over the break. He has come back a far more relaxed and engaging politician. Yes, his party’s supporters may still pine for Helen, but over time they may appreciate a less polarizing leader.

And on the tax issue:

Labour has been making waves on the GST issue. As the Government has yet to detail its tax package, Labour is doing it for them. They assume that the top tax rate will be dropped to 30c, and a pliant media report their scenarios that Telecom CEO Jack Paul Reynolds will get a tax cut of $150,000 a year and Joe Average will get a few dollars a week.

National needs the debate on tax to be about the macroeconomic effects – the desire to increase the incentives to work, to invest and to save and to reduce the incentive to borrow and consume. If the debate becomes one of simply who gets how much, they will have problems.

I conclude by saying the next set of public polls will give some idea as to whether the public have started to tune into what Labour are saying.

This week’s Dispatch from St Johnnysburg is online (but subscriber only).

I comment on the package this week:

Normally a programme like this would be greeted with howls of outrage from the left. A dozen unions would be announcing strikes. Scores of lobby groups would be howling in anguish. The rhetoric would be that the Government has turned into a combination of Roger Douglas and Ruth Richardson.

Instead the over-whelming message was that the reforms announced do not go far enough.

I also note:

Labour has never known how to try and paint John Key. Half the time they claim he is a do-nothing Prime Minister who won’t do anything unpopular, and half the time he is an evil uncaring rich prick oppressing the poor. And the problem is the two propositions are largely contradictory. Until Labour have the discipline to go down one path only, I suspect they will not change many people’s opinions of the Prime Minister.

The only discipline from Labour has been the constant references to “ordinary New Zealanders”!

This week’s Dispatch from St Johnnysburg, at NBR, is titled “The summer the tide went out on global warming”.

It is one of my longer columns – 1,300 words, and I think a good summary of the political climate around this issue, such as China and India now refusing to even sign the non binding Copenhagen Accord. A couple of extracts:

I believe the chance of there being a post-Kyoto agreement in the next five years or so to now be minimal. In reaching this conclusion, I look at recent reports of opinion within Governments, then the public and finally what it may mean for the NZ Government. …

The loss of the Massachusetts Senate seat has been a clear message to the Government to focus on the economy and jobs. This is reflected in a Pew Research poll on priorities for 2010. Citizens were polled on 21 potential priorities, and asked for each issue whether it should be a top priority. The three top issues were the economy, jobs and terrorism – all at over 80%. The very bottom issue, of all 21 issues, was climate change at 28%. Three years ago it was at 38%, so has been declining every year. Amongst the all important “Independent” voters, it is bottom ranked at 25%,

My conclusion, focused on what it means for New Zealand, is somewhat provocative.

My first Dispatch from St Johnnysburg is at NBR 24/7. An extract:

So why are things so good between the Obama administration and the Key administration? Is it the rapport between Obama and Key? Is it the wooing of Hillary Clinton by Murray McCully?

Nope. While both may be factors, the majority of the credit goes to Winston Peters.

My column this year is now subscriber content, so you need to be a subscriber to access it.

My Dispatch from St Johnnysburg is titled The rise and rise of Andrew Little. An extract:

Now under the leadership of Helen Clark, the parliamentary leader was the supreme leader. There was no question of the party president questioning her in public, or some decision being made she did not agree with. Clark’s great legacy to Labour was the unity it had under her rule.

But Phil Goff is no Helen Clark, and the power of Andrew Little is on the rise.

Comments and feedback can be made at NBR.

Matthew Hooton writes in NBR:

In the government’s defence, its two major strategic decisions have been absolutely right.

First was Bill English’s decision to resist calls to stimulate the domestic economy, beyond the effect of the automatic stabilisers and Michael Cullen’s election bribes, in response to the financial crisis.

Second was Mr Key’s absolute determination to maintain trust with the people. …

The problem is that the desire to maintain sound political strategy has overwhelmed its raison d’être. Some in the Beehive now see it as an end not a means.

Worse, one or two appear to believe that the government’s high poll ratings mean they are some kind of political miracle-workers.

Wiser Beehive heads understand that there is nothing surprising about a new government – especially one which has defeated a tired, hectoring and corrupt regime – achieving 50%+ in the polls, simply by keeping its promises, managing the daily news cycle and ruling anything out that doesn’t enjoy clear public support.

The difficult bit is turning this into a worthwhile legacy. Unfortunately, there appears to be no plan or even informal modus operandi to integrate political management with policy goals. …

Ludicrous policies will continue, like interest-free student loans, and free GP visits and daycare for the children of millionaires. Labour’s Working for Families, which traps people with massive effective marginal tax rates and which Mr Key described accurately as “communism by stealth”, is now defended.

It’s easy to accept the political logic of all these moves but their cumulative effect is that it’s difficult to see what levers Mr Key has left if he truly wants to achieve anything important with his prime ministership.

I agree that the numbers of levers remaining is relatively few. I think the 2010 budget is an important one. National needs to do more than merely announce how it has allocated the $1.1 billion spending contigency.

This week’s Dispatch from St Johnnysburg looks at the toll the ETS has taken in New Zealand and Australia. I note:

So it has been quite a torrid time for National, who had days and days of negative headlines. Finally they got the changes passed into law, with some medium to heavy political bruising as the cost.

However painful those bruises might be, they pale into insignificance with the crippling wounds the ETS legislation has inflicted on the Australian Liberal Party. Despite only being the Opposition, not the Government, the ETS legislation resulted in a move to their fourth party leader in just two years.

I also look at what may become an ETS referendum election in Australia:

While it is difficult to imagine that Tony Abbott could win such an election, it would pose a fascinating dilemma for NZ National if Abbott did. There would be great pressure on New Zealand to delay or further amend its ETS, if Australia abandoned having one. After working so hard to get the genie into the box, it would be a political nightmare to have the issue flair up all over again.

So it poses the question. If Australia does go to the polls early next year to an ETS triggered election, will John Key be quietly hoping for Labor’s Kevin Rudd to win?

Comments and feedback can be made at NBR.

My weekly Dispatch from St Johnnysburg at NBR, has become a Dispatch from Tel Aviv, on Middle East politics.

I discuss Iran and nuclear weapons and Palestine.

Comments and feedback can be left at NBR.

My Dispatch from St Johnnysburg is about the Emissions Trading Scheme. AN extract:

So it is not a matter of choosing the right option, and not choosing the wrong option. All options around the ETS will lead to a decrease in living standards for New Zealanders. And that means that regardless of what happens, the Government is likely to end up getting blamed.

Comments and feedback can be left at NBR.

In my weekly Dispatch from St Johnnysburg at NBR, I look at the various air travel perks for MPs, and rate how justified each one is. The summary is:

• Domestic Air Travel for MPs 9/10
• Domestic Air Travel for Partners 8/10
• International Travel for Parliamentary Purposes 10/10
• Private International Travel for MPs 3/10
• Private International Travel for Partners 1/10
• Domestic Air Travel for Children 8/10
• Former MPs (and partners) Travel – 0/10

Feedback and comments can be made at NBR.

As everyone else has done it, I’ve rated the Government’s first year in my weekly Dispatch from St Johhnysburg.

Unlike others, I have rated policies, not Ministers. My ratings range from 4/10 to 9/10 with an average 7/10.

Comments and feedback can be made at NBR.

Great party last night, hosted by LM and J at the Green Room. They are a Wellington instiution.

This is why there has been no blogging this morning. In fact have just finished my NBR online column. It is on the forecast that income tax rates will have to increase by 5.5%, if we don’t make changes to superannuation. Apologies to NBR for missing the deadline.

Matthew Hooton has written on ACC in his opening salvo for NBR. It is only available in the tree version, but some extracts:

In 2001, Australian insurance giant HIH collapsed with debts of around A$5 billion, caused by gross mismanagement, including charging too little for premiums and failing to put enough aside for claims.

The Australian authorities took the matter seriously, including Prime Minister John Howard, who established a royal commission. The company’s principals were jailed for offences including knowingly disseminating false information, filing false financial statements, being intentionally dishonest and failing to discharge their duties in good faith and in the best interests of the company.

I think I know where Matthew is going with this.

This week, New Zealand’s biggest insurer, ACC, reported a NZ$4.8 billion loss on top of a NZ$2.4 billion loss the previous year.

Like HIH, ACC’s crisis was knowingly hidden from the public. The Treasury’s Pre-Election Economic and Fiscal Update, signed by then finance minister Michael Cullen, did not disclose it, a failure subsequently found by an independent inquiry to have breached the Public Finance Act.

Yes my suspicions are correct.

Even worse were the public statements of then-ACC minister Maryan Street.
On June 26, 2008, ACC was apparently strong enough for Ms Street to announce that 400,000 casual and seasonal workers would get improved cover.

On September 11, she had enough confidence in the company’s finances to announce a re-elected Labour government would cut the motor vehicle levy from $254 to $203.

Three weeks later, and just five weeks before the election, Ms Street was at it again, announcing an expansion of ACC entitlements to people over 65.

The most charitable interpretation is that the former university academic might suffer from some advanced form of oniomania that makes her believe that, despite ballooning liabilities and a global financial crisis, it was possible to keep buying new services from ACC, while cutting its revenue, and expect it to remain viable. Alternatively, perhaps she was just telling lies in the heat of a close election campaign.

I had to look up what oniomania is!

Far from turning itself in to the Serious Fraud Office, Labour now has the audacity to launch a new narrative that accuses ACC Minister Nick Smith and ACC chairman John Judge of establishing some kind of conspiracy to privatise the scheme.

Audacity is the nicest word for it. I still think it is a pity the Government did not demand prosecutions for the breach of the Public Finance Act!

At NBR today, I blog on the Government’s triduum horribilis. The opening para:

It is hard to recall a more chaotic few days for the Government. It is not that any wheels totally fell off the wagon, but all four wheels seemed to come loose at the same time, with John Key trying to refasten them all simultaneously.

Comments and feedback can be left at NBR.

Most of my NBR online columns I can do in a couple of hours. This one is a lot longer than normal and has taken half a day or so. Even got up at 3 am to finish it!

It is on the sentencing of Phillip Hans Field, and has (if I can say so myself) a nice mixture of research (including how the British House of Commons in 1695 first made bribing an MP an offence), explaining why the sentence is longer than many people expected and then diving into the politics and comparing how Labour dealt with Field and ACT dealt with Donna Awatere-Huata.

The column is here. Some extracts:

Field was convicted of 11 charges under s103(1) of the Crimes Act 1961, being “Corruption and bribery of member of Parliament”. This has been an offence under New Zealand law since at least 1908. Its history though in fact goes back to 1695 in the United Kingdom, when the House of Commons resolved that offering a bribe to a Member of Parliament shall be a high crime and misdemeanour which subverts the English constitution, and that an MP accepting such a bribe shall be a matter of privilege.

In New Zealand, both offering and accepting such bribes are deemed serious crimes with a maximum sentence of seven years jail. …

As Field’s offending was unique in New Zealand’s parliamentary history, the Judge had no direct precedent to guide him in sentencing. The closest cases he could find was a Customs officer who took bribes and got four years jail. However he, unlike Field, pled guilty and co-operated fully. Without that he would have got six years.

An overseas precedent was a Canadian MP who got five years jail for a one off 10 years $10,000 bribe. Closer to home a New South Wales Minister got ten years for taking bribes to let prisoners out early.

You can read the sentencing notes here.

And then I look at how ACT handled things, compared to Labour:

Some time ago I phoned up then ACT Leader Richard Prebble and asked him if he could detail to me everything they did to force Awatere-Huata out. I explained I wanted to contrast their resolve to condemn such corruption, with Labour’s defence of Field.

I was staggered when Richard said he did not want to be held up as a role model. He explained that he actually felt guilty that they didn’t do more. Perhaps they should have asked questions earlier he said, as there was the odd rumour about her.

I leave readers with that comparison. One party that went all the way to the Supreme Court to force a corrupt MP out of Parliament, and then still felt guilty that they didn’t do more.

And another party that received a 158 page report detailing the numerous abuses and lies of one of their own MPs, and resolved to defend him. Desperate not to upset a core constituency their leader said one day he could be a Minister again. Their deputy leader said his only crime was to work too hard. They posed with him for the TV cameras as he claimed to be exonerated. And then two years later after he is sentenced to six years jail, the new leader and deputy leader still refuse to condemn him. They refuse to say whether or not they think he did in fact break the law. They refuse to express any remorse, shame or disgust over not just his behaviour, but their party’s behaviour in defending him.

Can Labour ever be deemed fit to hold office again until they do so?

Your views and answers can be left at NBR.

As usual, Chris Keall has the best summary of what the offers are on mobile termination rates:

Commerce Commission proposal
Voice calls: immediate halving of MTR on voice calls from 14 cents to 7.5 cents. Glide path to 3.8 cents by 2015.
Txt: immediate cut from 10 cents to 3.8 cents. Further cuts to 0.5 cents by 2015.

Vodafone
Voice: Looking to head off regulation with offer to cut MTR on voice calls to 12 cents per minute from April 2010, with glide path down to 73 cents a minute by 2015.
Txt: 1.2 cents from April 2010.

Telecom
Voice: cut to 12 cents per minute from January 2010. Glide path down to 7 cents per minute by 2015.
Txt: no offer
Expresses support for bill-and-keep, an alternative to MTR that sees the a phone company whose network initiates a call pay all costs.

2degrees
Wants MTR scrapped on all voice calls and txt. Prefers bill-and-keep model (initiating caller’s telco pays all cost). If that’s not possible favours immediate drop to 6.54 cents per minute for voice, falling to 3.45 cents by 2015.

So let us look at voice calls first. In 2010 the rate would be 7.5c under the Commerce Commission proposal, 12c offered by Vodafone, and 12c offered by Telecom.

By 2015, the rate would be 3.8c under the Commerce Commission proposal, 73c offered by Vodafone, and 7c offered by Telecom.

For text messages in 2010 the rate would be 3.8c under the Commerce Commission proposal, 1.2c offered by Vodafone, and 10c offered by Telecom.

By 2015, the rate would be 0.5c under the Commerce Commission proposal, 1.2c offered by Vodafone, and 10c offered by Telecom.

It is good to see Vodafone offering a more tempting package, with the huge drop in termination rates for text messages.

Also interesting to note:

Telecom’s numbers are close to those of its previous submission. More noteably, the telco has also expressed support for bill-and-keep – an alternative to MTR in the US and elsewhere that sees the phone company that initiates a call paying all costs.

I don’t think that is explained right. With bill and keep there is effectively a zero interconnect fee or termination rate. It is pleasing to see Telecom moot that. I think it is a superior model.

Think how retarded the Internet would be if ISPs charged each other 10c an e-mail?

Also pleasing has been that the Minister has ruled out any last minute negotiations with telcos on the proposed regulation. Trevor Mallard fell into this trap of privately negotiating a deal. Steven Joyce has said that any commercial offers have to go to the Commerce Commission, not him. And then once the Commerce Commission makes a recommendation, he will either accept it or not accept it – but won’t get into a game of considering ever increasing (or decreasing) commercial offers every few days.

It will be interesting to see what the final Commerce Commission recommendation will be.

Note that my company has done some market research for Exceltium Ltd on the issue of mobile termination rates, but all views are my own.

In my NBR online column, I praise Phil Goff for the outstanding results from the China Free Trade Agreement and lambast the Government with continuing existing tariffs until 2015. Some extracts:

So in the week we should be celebrating the success of free trade, the National-led Government bizarrely decides to continue with our current tariffs on imports, freezing them in place until 2015.

A 5% tariff on processed foods, machinery, steel and plastic continues on, as does a 10% tariff on clothing, footwear and carpets. …

Tim Groser surely knows that even without a free trade deal, it makes economic sense to reduce tariffs. It incentivizes capital and labour to flow into industries where New Zealand has a competitive advantage. We unilaterally reduced tariffs in the 1980s,1990s and 2000s, and up until the global recession had the lowest unemployment rate in the world.

So why is a National/ACT Government failing to reduce tariffs, when even a Labour/NZ First Government managed to do so? And was this not a missed opportunity for Phil Goff? He could have brilliantly done a Clinton triangulation and claimed credit for the 60% increase in exports to China, and lambasted the Government for being protectionist. That would have caused shockwaves, and forced Tim Groser to front up and explain why he thinks a 10% tariff on footwear should continue until at least 2015.

Comments and feedback can be left at NBR.

This ad was refused by the ODT. Wowsers. I think it is hilarious. Of course ODT has absolute right to decide what ads to accept, but I doubt many other publications would refuse it.

Story on it is at NBR.

I talk about the Government’s spending problem in my Dispatch from St Johnnysburg. An extract:

The simple fact of the matter is that Dr Cullen’s spending spree over the last nine years may well turn out to be unsustainable. Rather than borrow $400 million a week to fund it, why not reduce it by $400 million a week!

Today’s Dispatch from St Johnnysburg talks about how ‘It was within the rules’ are dangerous words for MPs to rely on.

Feedback and comments can be left at NBR.

Matthew Hooton writes (offline) in the NBR:

The clock is surely ticking on Phil Goff’s leadership. New Zealand’s most accurate polls, TV3 and Roy Morgan, both put Labour below 30%, half the support of National and its partners.

Worse for Mr Goff, while the Greens are secure in Parliament, Labour’s other essential ally, Winston Peters, has no chance of resurrection.

And Anderton is retiring. That means Labour and the Greens between them need to get at least 62 seats.  They currently have 52 but on the latest polls are below 50.

Mr Goff does not help himself with his choice of issues. This Tuesday he used all his parliamentary questions to quiz John Key on whether the Ministry of Foreign Affairs and Trade (Mfat) had advised sending SAS troops back to Afghanistan before the cabinet decided to do so.

Mr Key easily swatted Mr Goff away, saying that no specific advice had been given. The cabinet would decide about putting kiwi soldiers into harm’s way, not bureaucrats.

Yet Mr Goff pushed on, asking increasingly detailed questions about what Mfat may have told Mr Key about security in central Asia. …

It’s difficult to see what Mr Goff hoped to achieve. Afghanistan is far from a driver of voting behaviour.Informed observers also know that Ms Clark was so committed to Afghanistan that she broke up her coalition with the Alliance and called an early election on the issue in 2002.

I’ve said it many times before. Labour keep concentrating on Wellington issues, not issues that connect with the average voter.

And a useful reminder of how committed Labour was to the war in Afghanistan.

Were Mr Goff prime minister, it’s likely he’d be far quicker than Mr Key to provide military support to the United States.

Most embarrassing, Mr Goff’s parliamentary attack coincided with revelations that Ms Clark had secretly sent kiwi spies to Afghanistan.

As her foreign affairs and then defence minister, there is no doubt Mr Goff was intimately involved in that decision. Only parliamentary rules prevented him being called a hypocrite.

The thought that Labour would turn down President Obama’s request for assistance from the SAS, after lending them to President Bush on three previous occasions is farcical. Of course they would have.

Mr Goff’s last hope lies with the emissions trading scheme (ETS). Labour understands that Mr Key became prime-minister-assumptive when he stood with Ms Clark on smacking.

Mr Goff knows that if a deal is done, he and Mr Key will stand as equals. Labour’s broad approach to climate change will be implicitly endorsed.
More importantly, the National/Maori Party/ACT Government would be seen as dysfunctional.

The business, farming and iwi sectors would be furious.
The ratings agencies and influential media such as the Wall Street Journal would continue lampooning New Zealand for our stupidity.

What international investment that might be possible in the midst of a global recession would evaporate.

National would get the blame for the $5,400 a year the ETS will cost a family of four.  And Mr Goff would be back in the game.

It is definitely an opportunity for Goff. His problem is whether he has enough control of his caucus to get them to back any compromise he does with Key.