Housing Warrant of Fitness

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

The Herald editorial says:

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

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

I think urgency and haste could backfire.

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

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

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

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

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

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

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

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

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

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Latest Herald tax is only 0.09% of revenue

February 19th, 2014 at 4:00 pm by David Farrar

As readers will known both APN and Fairfax editorials have stated certain companies do not pay enough tax in comparison to their revenue.

I believe tax should be on profit, not revenue. But the editorials of the Herald and Dom Post do not seem to agree. It is for their benefit I have proposed a living tax campaign of 15% of revenue as a fairer tax system.

APN announced their full year results today. They are:

  • Revenue $817m
  • Profit $2.6m
  • Tax (at 28% of profit) $728,000

Now this means they are paying tax at a rate of only 0.09% of revenue. This is appalling by their own editorial’s standard. At a 15% living tax rate, they should pay $123 million in tax. I look forward to their voluntary payment in line with their editorial stance.

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10/10 in 34 seconds

February 16th, 2014 at 10:00 am by David Farrar

A gentle quiz this week.

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NZ Herald on Sallies report

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

The Herald editorial:

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

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

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

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

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

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

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

All good.

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

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

Yep, overall a pretty fair and balanced report.

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NZ Herald on Buy Australia

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

The Herald editorial:

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

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

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

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

You can’t take export markets for granted.

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

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

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Quote of the Week

February 5th, 2014 at 2:00 pm by David Farrar

The Herald reports:

Mr Key also ruled out any chance that a coalition with NZ First could result in its leader Winston Peters becoming prime minister for a portion of the term if he did stand down.

“To paraphrase a lovely turn of phrase I read in the paper yesterday, about as much chance as Amanda Knox holidaying in Italy. Zero.”

I love it.

This is now the third story from the Herald that has mentioned this fantasy scenario. I am awaiting the stories where they ask the Prime Minister to rule out genocide in Invercargill, if that is demanded as a coalition condition. They are equally credible.

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8/10 in 39 seconds

February 1st, 2014 at 11:00 am by David Farrar

One tricky question this week. Quiz here.

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Herald on baby bribe

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

The NZ Herald editorial:

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

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

 

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Drug use spreads at the Herald

January 29th, 2014 at 10:00 am by David Farrar

The Herald continues with the fantasy that there in a parallel universe in which National might agree to make Winston Peters Prime Minister.

Audrey Young writes:

John Key this morning scoffed at speculation that National might consider any power-sharing arrangement with New Zealand First leader Winston Peters as though it were complete fantasy.

Scoffed? This is the equivalent of asking if there are little green men on the moon. It is complete fantasy.

But the notion is not that off-the-planet that is hasn’t been contemplated. Here’s some of the context.

Back in 1996, at the final stages of coalition negotiations, NZ First asked Labour for a power sharing arrangement in which Peters would be Prime Minister for some of the term and Helen Clark the other.

I’m sure Winston did ask for it in 1996, or someone on his behalf did. He may have asked for the Crown Jewels also. The issue isn’t that of course Winston wants to be PM. The issue is whether a party that gets 5% of the vote would ever get their leader made PM.

It was instantly rejected by Labour.

Of course it was. So what makes anyone think that if a party on 28% of the vote instantly rejected making the leader of a party that got 13% of the vote Prime Minister, that a party looking to get 45% of the vote would make the leader of a party that gets say 5% of the vote prime minister?

Herald correspondent John Armstrong raised the power-sharing issue at the weekend in his political column following Key’s decision last week to lift his ban on working with NZ First post-election.

In light of John’s column, I asked the Prime Minister this morning if he would rule out a power-sharing deal and he said “that’s not on the table.”

Pressed further, he said ”No, Winston Peters won’t become Prime Minister.”

ZB’s Barry Soper asked him if it were put on the table, would he consider it, and Key said No.

I look forward to the Herald asking the leaders of National and Labour if they would agree to declare war on Australia, if NZ First ask for it. Also ask them if they would agree to sacrifice their eldest child to Lord Xenu, and become Scientologists if NZ First asked for it. All there scenarios are equally likely – ie zero.

Now I’m quite happy to stand by my certainty. The odds of Elvis being alive are 1000 to 1. I’m happy to offer the same odds against National ever making Winston Peters Prime Minister – 1000 to 1. The only criteria are you must pledge at least $500 (so I would pay out $500,000) and you must pay the $500 immediately to me, and I will pay the $500,000 on the day Peters is sworn in as Prime Minister, backed by National.

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NZ Herald on boat building contract

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

The Herald editorial:

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

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

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

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

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

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

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

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

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Herald hypocrisy

January 13th, 2014 at 3:00 pm by David Farrar

The Herald editorial:

Many firms that practice tax avoidance probably do feel wretched about it. But they owe it to their shareholders to pay no more tax than their lawyers and accountants say they must, and they transfer the blame to the legislators who leave loopholes for them, or who set taxes too high or spend the revenue unwisely. With the company tax rate at 28 per cent in New Zealand, lower than the top personal income rate, it is hard to justify corporate avoidance here.

A NZX filing by APN which owns the Herald in 2013:

APN News & Media [ASX, NZX: APN] today announced an update in relation to a tax dispute following a report received today from the Adjudication Unit of the New Zealand Inland Revenue Department (‘IRD’).

As stated in the Company’s 2011 Annual Report and the 2012 Preliminary Final Report lodged yesterday, the Company is involved in a dispute with the IRD regarding certain financing transactions.

The Company is satisfied that its treatment of the financing transactions is consistent with all relevant legislation and that no tax will become payable.

The dispute involves tax of NZ$48 million for the period up to 31 December 2012. The IRD is seeking to impose penalties of 50% of the tax in dispute and interest in addition to the tax claimed. In the event the Company is unsuccessful in the dispute the Company has tax losses available to offset any amount of tax payable to the extent of NZ$32 million.

These wouldn’t be financing transactions that resulted in a lower tax bill and hence was tax avoidance?

So does the Herald feel wretched about its own tax avoidance?

Will they apply their own moral standards to themselves and pay up the $48 million they owe the taxpayers of New Zealand, according to the IRD?

I look forward to both RNZ Mediawatch and the Herald own’s media column highlighting this flagrant case of total hypocrisy.

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Brewer’s trip was declared to the Council

December 23rd, 2013 at 11:00 am by David Farrar

Cameron Brewer facebooked:

Auckland Council Electoral Officer and Public Information Officer Bruce Thomas has confirmed with Auckland Councillor Cameron Brewer today that while he did not file a full “Register of Members’ Interests” annual statement by 30 June 2012, Brewer’s much criticised four-day sponsored trip to Australia was in fact declared by the Councillor for Orakei at the time and was subsequently in the Council gift register all along. 

In a surprise turn, Mr Thomas advised Mr Brewer in an email today that “You did however declare the Port Douglas trip and this was included in the gift register. A copy of the gift register was given to the Ernst Young Inquiry.”

In an email to Mr Thomas from Mr Brewer on 8 September 2011, Mr Brewer wrote “Bruce, please declare… 1 trip to Port Douglas courtesy of Mediaworks, Four nights in august. Value approximately 2k. Secondly, my partner and I are in SkyCity box for opening night and game tomorrow. Cost unknown. Please let me know what further information you require. Thanks Cameron” 

Mr Brewer was responding to an email by Mr Thomas titled ‘Code of Conduct – Declaration of Gifts’ he had sent to all elected representatives the day before on Wednesday 7 September 2011. 

The email read: “Dear Councillors and Local Board Members, with the Rugby World Cup about to start, I thought it prudent to remind you of your obligation to declare gifts in excess of $300. Some of the ticket and hospitality packages that you (and your partner) may be offered by a third party are likely to exceed $300. If you suspect this to be the case then you should advise myself and we will log it and ensure it is recorded as part of you declaration on 30 June 2012.”

Mr Brewer said he is very pleased to learn that he did in fact formally advise the council of the trip soon after his return, and that it was subsequently officially declared in the gift register. 

While procedurally Cameron still erred in not also doing the formal annual declaration, the substance is that he did disclose the gift to the Council.

What will be interesting is if it is revealed who informed the media (incorrectly) that the gift had not been disclosed? My money is on one of the six ratepayer funded spin doctors working for Len Brown.

The Herald reports:

“Given this information was put on the council gift register and was actually part of the Ernst Young review, I’m very disappointed that council staff didn’t give me and the media the correct information last week.”

Will the Herald now retract their editorial and story on Brewer?

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10/10 in 34 seconds

December 21st, 2013 at 1:00 pm by David Farrar

An easy one for year end. Quiz here.

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Herald politics quiz wrong again

December 14th, 2013 at 12:00 pm by David Farrar

Last week they had a wrong answer, and this week they have repeated the answers for one question for the following one (Q9). So I got 9/9 in 40 seconds,

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8/10 in 46 seconds

December 7th, 2013 at 9:00 am by David Farrar

The Herald quiz is here. I got 8/10 in 46 seconds but I think it should be 9/10 as they have the wrong answer to Q6 in my opinion!

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Herald on the need to improve education

December 6th, 2013 at 1:00 pm by David Farrar

The Herald editorial:

When bad news is delivered, there is always a temptation to shoot the messenger. Thankfully, that, by and large, has not been the case with this country’s sharp drop in international education rankings in an OECD survey that assesses the knowledge and skills of 15-year-old pupils in mathematics, reading and science in 65 countries. In maths, New Zealand dropped from 13th three years ago to 23rd, while in science the fall was from seventh to 18th. In reading, where this country also ranked seventh in 2009, there was a slide to 13th.

To her credit, the Education Minister, Hekia Parata, did not attempt to discredit the Programme for International Student Assessment (Pisa) rankings. She chose instead to depict them as confirmation of the challenge ahead. It fell to think-tank the New Zealand Initiative to underline the rankings’ serious implications. This “Pisa shock” should, it said, be a catalyst to change education for the better. The institute pointed to the example provided by Germany, which in little more than a decade had achieved the sort of improvement that must now be sought by this country.

Hopefully those who resist change will now concede there is a need for change.

Broadly, the Pisa assessment identifies the lifting of teacher quality as the key to such a turnaround. The best-performing countries, it says, put a special emphasis on teacher selection, training, career incentives, and innovative teaching. When deciding where to invest, they prioritise the quality of teachers over classroom sizes.

Crucial.

The importance of excellent teaching comes as no surprise. People have become increasingly aware of this, and are keen to see high-quality teachers acknowledged and rewarded appropriately. Ms Parata has proposed the development of a new teacher appraisal system, a requirement for all trainee teachers to have a postgraduate qualification and, potentially, performance pay. The latest Pisa rankings confirm all would be welcome. It can be no coincidence that in world-leading Shanghai, performance-related pay for teachers is normal.

The time has come for it. Top teachers should be able to earn over $100,000 a year, just for being great teachers.

But implementing their findings on what works will require political will. The teacher unions will resist any change to a national bargaining system that rewards experience rather than excellence. 

The first thing that should go is the national bargaining system. Let each school pay its teachers what they want to. Let them compete for the best teachers!

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Beware the regulation

December 2nd, 2013 at 7:43 am by David Farrar

The Herald editorial:

In themselves, the Government’s proposed amendments to the Fencing of Swimming Pools Act contain a reasonable degree of common sense. What can be wrong with changes that aim to reduce the risk of children drowning? And if the new law would mean even portable or inflatable pools need to be fenced off, isn’t it right to encourage parents to adopt best practice and empty them after each use?

The only problem is that the proposal is a further sign of a Government regulatory itch that is now of eczematous proportion.

A fair point.

Regulation appeals to governments because it is the easiest response to a problem. But each affects people’s freedom in some way. At their worst, regulations can also skew patterns of investment and the use of economic resources. That is why any government is right to question whether a planned restriction is strictly necessary. And if one is implemented, it should watch it in practice, not least for unintended consequences, and continue to ask if it is justified.

The Government should, therefore, be asking if changes to the swimming pool legislation are necessary when the most stringent fencing will not save young children from all potential water hazards. Many pools are, after all, not far from beaches or lakes, which cannot be barricaded in the way that private pools are meant to be.

Kids can drown in baths. Maybe we should require baths to be fenced off. Also maybe Councils should have to fence off all streams, rivers and lakes. And kids have been known to fall down drains, so perhaps we need to fence off all drains as well.

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Herald says if there is that much oil there, we should dig it up

November 27th, 2013 at 2:00 pm by David Farrar

The Herald editorial:

Now Greenpeace has given up its seaborne protest against exploratory oil drilling off Raglan it is not clear what it intended to prove out there. Once one vessel of its flotilla entered the statutory exclusion zone the protest statements became somewhat contradictory. Sometimes they said their action showed the exclusion zone was not justified, at other times they reckoned it proved Anadarko Petroleum was reckless.

They seem very disappointed they were not arrested.

A report commissioned by Greenpeace last month imagines an undersea drilling accident could release 40,000 barrels a day. If we have an oil well of that scale and pressure under our continental shelf it would be very good news indeed and we should find it.

A very good point. The price of oil is US$93 a barrel or NZ$113 a barrel. So that would be $4.5 million of oil a day. Over a year that is $1.65 billion. Why would we want that left there, so we have to buy more oil from the Middle East instead?

Unfortunately for our prospects of wealth, but reassuring for our coastal environment, few experts agree with the Greenpeace report. If oil or gas reserves can be found, they are likely to have a gentle flow more easily plugged.

The good news is that even looking for the oil is involving spending of $1 million a day – which benefits the NZ economy.

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The Herald rest home series

November 25th, 2013 at 3:00 pm by David Farrar

The Herald has started its series on rest homes. We’ve all been waiting for this since Whale published their plans several weeks ago about what types of stories they were seeking, who they would get comment from etc etc.

I thought the opening paragraph was interesting:

A Herald investigation of rest homes – where a greater proportion of elderly people die than in 12 other developed countries – has found that although most care is at least adequate, some reflects major failings.

So in other words we have the 13th best rest home mortality rate in the developed (and no doubt entire) world, which puts us in the top third or so of countries. It takes considerable effort to make that seem a bad statistic.

That is not to say that there are not issues with some rest homes. But I’m not sure portraying what is a pretty good statistic as a very negative one is helpful.

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Herald on Air NZ sale

November 19th, 2013 at 2:00 pm by David Farrar

The NZ Herald editorial:

According to the Labour Party leader, David Cunliffe, the timing of the Government’s selldown of shares in Air New Zealand is arrogant. Describing it as astute would have been far closer to the mark. Shares in the airline have been trading at a five-year high and investment advisers have voiced their enthusiasm for them. What better time could there be for the Government to reduce its holding in the national carrier from 73 per cent to 53 per cent?

That is a good question. Unless you believe that 73% is the exact right amount of shares for the Government to hold. Which is like believing in astrology.

One can make a principled case for 100% or for 51% (or for 0%) but to insist it must be 73% is daft.

The selldown has been criticised because it is being done just before a referendum on the part-sale of state assets. That complaint is misplaced. The focus of the Government’s mixed-ownership model strategy and, therefore, the referendum has always been the part-sale of the state’s three power companies, not an airline that the government acquired essentially by accident. Air New Zealand is very much an ancillary part of that strategy.

The referendum question also includes Solid Energy. It is a very badly worded question. Because if you think the Government should sell off the power companies and Air NZ, but should not sell off Solid Energy (because we won’t get 10 cents for it) then you should vote no I guess. Likewise if you think the Govt should sell more than 49% of any of the five companies, then again you arguably should vote no.

Green co-leader Russel Norman has gone so far as to suggest the selldown could lead to reduced regional services or higher fares.

I wish there was a competition for the most financially illiterate comment of the year, so I could nominate it.

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10/10 in 38 seconds

November 16th, 2013 at 11:00 am by David Farrar

Aced it this week!

Quiz is here.

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The Herald’s 10 greatest New Zealanders

November 13th, 2013 at 2:00 pm by David Farrar

The Herald has been going 150 years (happy birthday) and profiles the 10 greatest New Zealanders of the last 150 years, as they see it. They are:

Such choices are always subjective. I always regard Peter Fraser as the force behind Michael Joseph Savage, and that Fraser was in fact the more successful Labour Prime Minister.

With respect I don’t know how they can put Richie McCaw on the last. And I say that as someone who thinks he is great (and suspect he is hugely embarrassed at his inclusion). He is an amazing rugby player, and a great captain, but one of the 10 greatest New Zealanders of the last 150 years?

I can only presume the Herald were desperate to include someone whom younger New Zealanders had heard of and could identify with.

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Herald on KiwiAssure

November 5th, 2013 at 1:00 pm by David Farrar

The Herald editorial:

Nothing in the policy announced by Mr Cunliffe at the weekend dealt with any of the real insurance policy issues arising from Christchurch. The announcement was little more than a replay of a commercial for KiwiBank which, like it or not, could be saddled with the insurance company. “KiwiAssure will work for all New Zealanders,” Mr Cunliffe declared. It would be “a service-focused, state-owned company that has their best interests at heart”. It would “keep profits from this crucial industry in New Zealand”.

Wisely, he did not quite claim it would offer cheaper premiums than existing companies. Christchurch had an insurance company that did that. AMI had come to dominate the local market by undercutting competitors and the earthquake exposed its inability to meet all of its liabilities.

KiwiAssure could well fail in the case of another large earthquake, and it would do huge reputation damage to NZ Post and Kiwibank if it did.

The AMI experience is salutary for national taxpayers, too, when they hear Labour’s assurance that its company would not carry a government guarantee. The present Government quickly came to the relief of AMI’s policy holders, taking over the worst liabilities and selling AMI as a going concern to the multinational IAG. It is hard to imagine a Labour Government acting any differently if a state-owned insurer fell into the same trouble.

Of course it would have to be bailed out, if it is touted as a state owned insurance company.

Insurance is almost the last business that should be nationalised. Its purpose is to share risk internationally.

That is the key point. It’s incredibly dumb to set up an insurance company that will have all its exposure in one market.

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9/10 in 45 seconds

November 2nd, 2013 at 3:00 pm by David Farrar

NZ Herald quiz is here.

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Herald on TPP talks

October 8th, 2013 at 12:00 pm by David Farrar

The Herald editorial:

New Zealanders will be mildly amused that their Prime Minister has stepped into the breach left by US President Barack Obama’s inability to be at Bali this week to chair an important meeting of the proposed Trans-Pacific Partnership trade agreement. But we can be proud, too, that New Zealand still has a leading role in this project. …

It would be easy for such an ambitious project to become unwieldy and lose focus as more countries join the talks. There is always the risk that late-comers are joining the talks for the sake of appearances rather than with a serious intent.

But the last to join, Japan, seems serious. In fact its reformist Prime Minister, Shinzo Abe, may be the leader keenest to have something definite agreed by the end of this year. That goal, set by President Obama, should concentrate the minds of the meeting that it falls to John Key to chair.

If Japan agrees to a phasing out of agricultural tariffs, that would be huge.

But if it can lower barriers to our exports, New Zealand may have to make concessions in other areas. Since trade negotiations typically proceed in secrecy so that positions are not solidified by political pressure, the possible concessions can arouse fearful speculative opposition.

Opponents of TPP in New Zealand fear the Government will have to compromise on pharmaceutical purchasing, forcing Pharmac to buy prescription drugs on terms dictated by suppliers, particularly in the United States. More generally, opponents warn that the foreign companies will be able to claim damages in international courts against any Government decision that harms their investment here.

The other area of potential concern is around the US proposed intellectual property chapter. It has provisions in it such as extending copyright from life plus 50 years to life plus 70 years. I think life plus 20 is more than enough personally.

To date the NZ Government position has been to reject clauses that would require a change to our existing IP laws. I hope that position continues. There can be economic costs to having overly restrictive IP laws – as Australia has calculated.

 

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