The Greens’ economic plan

June 5th, 2012 at 11:00 am by David Farrar

Isaac Davidson at NZ Herald reports:

He contrasted the Government’s “risky” investments in fossil fuels and intensive farming with Greens’ proposals – investment in clean technology and energy.

Dr Norman admitted that, if elected, the party would have to “pick winners” to achieve a green economy. A Green government would develop clean energy as an export industry by forming partnerships with power companies. It would also export expertise in geothermal and possibly marine energy.

Asked whether there was a risk in backing developing technologies, he said clean energy was a safe bet because there was huge growth in that area.

It is worth remembering that the Greens policy is to reduce the national dairy herd by about 20%. Think about what that will do to our balance of trade, and current account deficit.

As for their lovely slogan of “green jobs”, let me quote 2011 NZers of the Year Sir Paul Callaghan on it:

Our brilliance has been in the “weird stuff” that the big players don’t think to exploit.

So here is the risk. Politicians latch on to fashions, and the latest fashion is Clean Technology. Ten years ago it was Biotechnology. There is a huge danger in the application of political bias to the “smart economy”.

My view is that to succeed, New Zealand businesses need to be the best in the world at what they do. I do not care what they do, so long as it is legal and not morally objectionable.

There is absolutely no reason why we can expect to be best in the world at Clean Technology. Indeed, our major wind turbine manufacturer has struggled to sell products and NZ energy companies like Meridian buy their wind turbines offshore.

The irony here is that the country with the biggest environmental problems will probably be the world leader in Clean Tech, namely China.

Let me quote from the Green Party document: “Boost government R&D funding through a combination of tax credits and grants costing $1 billion over three years. R&D in clean technology industries would be prioritised, specifically in areas where we enjoy a competitive advantage, such as: sustainable agriculture, organic farm production, fisheries management, forestry management, renewable energy generation, and conservation.”

This is exactly the mistake of the past 10 years, prioritising according to some perceived international trend – then Biotechnology, now Clean Tech. And the Green’s idea of a Clean Tech line-up is remarkable.

Putting aside the paradox of organic farming, unscientific to the core that it is, the rest is an absurd list.

It is absurd, in particular, because we have proven particularly dreadful at developing advanced knowledge-based industries or leading technologies in any of those areas. …

I suggest people read the entire article. It is a superb demolition of the Green’s misguided policy.

What is scary is that in a Labour-Greens-NZ First-Mana Government, the Greens will probably hold the Finance portfolio. Their policy seems to be summed up as:

  • Tax more
  • Kill the dairy cows
  • Waste billions on pet projects
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Paul Callaghan RIP

March 24th, 2012 at 3:56 pm by David Farrar

Sir Paul Callaghan succumbed today to his colon cancer.  Probably not a household name, but he was one of the greatest scientists.

He was made a Professor in his 30s and later established the MacDiarmid Institute for Advanced Materials and Nanotechnology. Amongst his many prizes were the Ampere Prize and Rutherford Medal. He was the Kiwibank 2011 New Zealander of the Year.

His full list of qualifications and honours were BSc(Hons) DPhil DSc Oxf GNZM FRS FRSNZ FInstP FNZIP.

He wasn’t just a scientist though, but also was an expert in the commercial use of science and technology.

Condolences to his family and friends.

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Callaghan on Greens jobs plans

October 2nd, 2011 at 9:55 am by David Farrar

Sir Paul Callaghan is one of our leading scientists and was the 2011 Kiwibank New Zealander of the Year. He writes on the Greens jobs plan in the NZ Herald:

The Green Party announced last week a policy of focusing significant government investment in the area of “Clean Technology”.

In their document they correctly quote me as saying that New Zealand needs to be a smart country where talent wants to live. As part of that view, I strongly believe that we have to protect and restore our environment.

Surely, then, I should support the Green Party suggestion. On the contrary, I oppose it wholeheartedly. Let me explain why.

So they quote Sir Paul in their document, which almost implies he endorses their policy, yet he opposes it entirely.

So what are we good at? New Zealand is 0.2 per cent of the world’s economy. In other words, the world’s economy is 500 times bigger than our own. As a result, we tend not to succeed in highly obvious technologies like cell phones, computers, flat screen television sets or energy technologies.

Indeed, the higher the profile of a new wave of industry the less likely it is that New Zealand will be world leaders in it, for the very reason that anything that sounds pretty important to the world will attract the attention of the big technology investors, the General Electrics, the Samsungs.

What we excel in are the niches, the little pieces of the world of technology where the big players can’t be bothered, but which, because of the 500 times factor, can be huge for us.

Sounds very sensible to me.

Fisher & Paykel Healthcare dominates the world market in respiratory humidifiers and sleep apnoea devices, As a consequence it exports $500 million per annum and employs over 2000 people.

I didn’t know that.

Our brilliance has been in the “weird stuff” that the big players don’t think to exploit.

So here is the risk. Politicians latch on to fashions, and the latest fashion is Clean Technology. Ten years ago it was Biotechnology. There is a huge danger in the application of political bias to the “smart economy”.

My view is that to succeed, New Zealand businesses need to be the best in the world at what they do. I do not care what they do, so long as it is legal and not morally objectionable.

There is absolutely no reason why we can expect to be best in the world at Clean Technology. Indeed, our major wind turbine manufacturer has struggled to sell products and NZ energy companies like Meridian buy their wind turbines offshore.

This is a good reality check against the fantasy that just because we wake up and say we want it, we can grab 1% of the world’s market in clean technology.

Let me quote from the Green Party document: “Boost government R&D funding through a combination of tax credits and grants costing $1 billion over three years. R&D in clean technology industries would be prioritised, specifically in areas where we enjoy a competitive advantage, such as: sustainable agriculture, organic farm production, fisheries management, forestry management, renewable energy generation, and conservation.”

This is exactly the mistake of the past 10 years, prioritising according to some perceived international trend – then Biotechnology, now Clean Tech. And the Green’s idea of a Clean Tech line-up is remarkable.

Putting aside the paradox of organic farming, unscientific to the core that it is, the rest is an absurd list.

It is absurd, in particular, because we have proven particularly dreadful at developing advanced knowledge-based industries or leading technologies in any of those areas.

Absurd, and a mistake to think the Green caucus will be better at picking these “winning” industries than those who are actually prepared to invest their own money into such businesses. Even worse, the Green caucus have a near religious belief in these industries, not even a cold hard clinical analysis of which areas we have an advanatage in.

Basically they are proposing Muldoon’s Think Big, on an even bigger scale.

Sir Paul puts it better:

So the evidence suggests what we are actually good at is not at all what the Green Party would like us to be good at. What we are good at is a result of brilliant entrepreneurship and business expertise. Such genius does not follow politicians’ prescriptions.

And I endorse this comment:

Of course, I am for cleaning up the environment. That’s the basis of the “Place where talent wants to live” mission statement. But cleaning up the environment will be a consequence of prosperity improvements.

So long as we remain poor, we are destined to let the possums destroy our forests.

Hear hear.

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