From the OUSA President

August 4th, 2011 at 5:08 pm by David Farrar

Logan Edgar, the President of the (compulsory) Otago University Students’ Association left this message at 8.42 pm last night on the Facebook wall of Sir Roger Douglas:

Get fucked you dinosaur…just trying to give yourself a legacy because you know you’re getting too old. You should actually debate the Bill with Pete or Grant… you’d get torn to shreds. Cunt

He has since deleted it, but a copy was automatically e-mailed to the page admin.

What better example can you find of why student associations should be voluntary. Every student at Otago is forced to fund Mr Edgar’s salary. This is what Labour are fighting so hard to preserve. I bet you no President of a voluntary society would ever act like that – they’d lose all their members in minutes.

Meanwhile Otago students may want to consider whether they wish Mr Edgar to continue to represent them.

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Will Sir Roger be the parliamentary leader?

May 2nd, 2011 at 11:00 am by David Farrar

Just heard some speculation that Don Brash may appoint Sir Roger Douglas as his parliamentary leader. I have no idea if it is accurate speculation or not, but let’s look at what logic may lie below it.

If John Boscawen remains Deputy Leader, then Heather Roy may feel resentment that her support of Don hasn’t gained her old job back.

If Don appoints Heather, then Rodney and his supporters may feel this is a slap in the face and go feral.

Appointing Sir Roger could avoid both those scenarios. Plus it reinforces the Brash focus on reducing spending. Finally it also means a seamless transition as presumably Sir Roger will retire at the election, so he leads the parliamentary wing up until the election, and Brash afterwards (if they get re-elected).

As I said, I don’t know how accurate the speculation is – but it doesn’t seem totally implausible.

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Douglas retires again

February 18th, 2011 at 10:00 am by David Farrar

No great surprise that Sir Roger is standing down at the election. Apart form his age, it is obvious he is not that happy in ACT’s caucus.

Sir Roger has a great legacy as NZ’s second greatest finance minister. In his second spell in Parliament, there is less of a legacy but personally I’ll always be grateful he sucessfully sherpherded the VSM Bill through Parliament while Heather was a Minister.

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A good poster

October 21st, 2010 at 1:07 pm by David Farrar

Youth Rates

Sir Roger makes an excellent point. Young inexperienced first time job seekers are being priced out of the market. Sure no one wants to stay on $10/hour for long, but hell if it will get you your first job, it is worth so much more than that as you then get actual work experience.

I started work at 12 as a paper boy and occassional dairy assistant. At 14 I was working every day after school. There is no way I would have got those jobs if they had to pay me full adult wages.

The massive increase in youth unemployment is partly because of young people being priced out of the market. And sadly, Labour wants to make it even worse – they want to make it impossible for any young job seeker to take a job for under $15 an hour.

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Is Roger being dodgy with his sums?

September 24th, 2010 at 1:58 pm by David Farrar

I am a big fan of Sir Roger’s policies. I regard him as the second best finance minister New Zealand has had.

So it is with trepidation, I scrutinise the figures he uses in his brochure below.

I’ll even leave alone the wisdom of claiming a specific level of economic growth, on the basis of proposed policies. All I’ll say is if you are that good at predicting economic growth, you could make a lot of money on iPredict!

The figure I am interested in is the claim “The Tasman Wage Gap has already grown 29% under Key’s management”.

In September 2008, the gross average weekly earnings in NZ were at 85% of Australia’s. So you see a claim of the gap growing 29% and you think, hell we must now be 56% of Australia.

In fact the latest data has us 82.8% of Australia. Yes a decline of 2.2%, but not quite such a scary one is it.

Before I get to how Sir Roger got his 29% (a classic example of correct yet misleading), I’ll also point out that Sir Roger is only comparing before tax wage rates. As a proponent of lower taxes, I am surprised he does not compare after tax wages – because they would show that in face NZ has closed the gap.

But how did Sir Roger get his 29%? Well, I’m not sure. My best guess is he is referring to the relative change (as opposed to the absolute change). But even then it does not quite add up. The nominal gap in Sep 2008 was $133.70 and in Jun 2010 was $169.34 and the relative change is 26.6%.

But I regard talking about a relative change as a percentage is quite misleading. It may be technically accurate, but it is deceptive. Let me give two examples:

  • Party A goes in the polls from 5% to 6% and they claim they have climbed 20% in the polls.
  • The gap between A and B is 2% in 2008 and 3% in 2010 – you claim the gap has grown 50%. instead of claiming it has grown 1%.

If you look at the position of the arrows it clearly gives an impression of a massive increase in the gap – not a 2.2% change.

The pamphlet would be more defensible if it said that NZ has gone from 85% to 82.8% of Australia.

And the arrows should show both going up – NZ by 7.1% and Australia by 10.0%. Not one going down massively, and one going up massively.

Now I may have interpreted Sir Roger’s calculations incorrectly. I would be happy to have provided how he calculated the 29% – but I am pretty sure is is talking about relative change, rather than absolute change.

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Sir Roger’s alternative budget

May 19th, 2010 at 12:01 am by David Farrar

As is usual, Sir Roger has done what is effectively an alternative budget. Here are some of the details:

  • Cutting $3.1 billion of “wasteful” spending
  • Increase GST to 15% ($1.9b)
  • Reduce depreciation claims ($1.2b)
  • Tax cuts of $4.2b
  • Deficit reduced by $1.4b

The tax cuts package would be:

  • 21% tax rate drops to 18%
  • 33% and 38% rate drops to 24%
  • Company rate drops to 24%

Now that would lead to investment!!

Sir Roger also proposes replacing WFF with a tax free threshold,which would be $41,600 for one child, $49,400 for two children up to $81,000 for six children. If a parent earn under the threshold they get a tax credit equal to the difference between their old WFF subsidy and this regime.

A key issue is whether there is $3.1 billion of waste to be chopped. Sir Roger has listed around 200 programmes he would chop ranging from the fibre to the home rollout to some of the research and science fund. The major ones are:

  • $30m from public broadcasting
  • $82m from energy efficiency
  • $248m from broadband
  • $53m from school staffing
  • $100m from social services NGOs
  • $330m from abolishing MED
  • $470m from the ETS
  • $530m from interest free loans

Now the Government got elected on the basis of keeping interest free loans, an ETS and a fibre to the home broadband package. If it abandoned those promises, I suspect Phil Goff would be Prime Minister next year.

However that does not mean the direction Sir Roger pushes is wrong. If we can at least slow the rate of increase in spending (I support Sir Roger’s idea of a capping it on a real per capita basis), then over time we would have the ability to get tax rates down to a level where economic growth will be bullish.

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Minimum Wage for Youth

March 19th, 2010 at 10:00 am by David Farrar

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.

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And the winners are

February 23rd, 2010 at 12:27 pm by David Farrar
  1. Employment Relations (Workers’ Secret Ballot for Strikes) Amendment Bill – Tau Henare
  2. Smart Meters (Consumer Choice) Bill – David Clendon
  3. Minimum Wage (Mitigation of Youth Unemployment) Amendment Bill – Sir Roger Douglas

Tau’s bill requires all votes on strike action to be secret ballots. In theory almost all unions do this anyway, but there has been some dispute on the West Coast recently about whether this does always happen, so it will be good to have it a legal, not a voluntary, requirement to prevent intimidation.

David Clendon’s bill is inherited from Jeanette and regulates the use of smart meters. Not sure of all the details, but it looks to be worth supporting at first reading anyway so a select committee can look into pros and cons.

Sir Roger’s bill will allow the Government to set a different level of minimum wage for younger workers. I welcome it as there is pretty clear evidence that the huge increase in youth unemployment is bext explained by the scrapping of the youth rate for the minimum wage. National will be nervous about being seen to be “cutting wages” but I hope they will support it to select committee, so arguments can be heard about the linkage.

Rather than cut the minimum wage for any current workers, what I would do if I was the Government is just use it to increase the youth minimum wage more slowly than the adult minimum wage.

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An attempted ACT coup

December 19th, 2009 at 10:50 am by David Farrar

The Herald has a stunning story:

Act founder Sir Roger Douglas, with deputy leader and Consumer Affairs Minister Heather Roy, is understood to have led moves in the party against Mr Hide during the controversy over the international travel costs of his partner.

The Act board was told the caucus had issues over the leadership, and a special caucus meeting was called for November 22.

Some people in ACT must have a suicide wish. While Rodney did make an error of judgement with his trip (which he apologised for), ACT only survive in Parliament because he holds Epsom. If Rodney goes, then in all probability ACT will be booted out of Parliament at the next election.

Mr Key is understood to have learned about the moves against Mr Hide shortly before that – between his return from Apec in Singapore and his trip to Trinidad for the Commonwealth summit.

He told Mrs Roy that if Mr Hide were removed from the leadership, her own ministerial position would be in jeopardy.

It was naive to think a leadership change would have no impact. When National changed leaders in 1997, Winston approached Helen Clark and asked if she would be interested in forming a Government.

And it is believed that at the height of controversies in the two support parties – the Act leadership and the Maori Party’s turmoil over MP Hone Harawira – Mr Key briefly considered a snap election to gain National an outright majority.

Hell, that will send the 2010 election stock on iPredict upwards!

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VSM Reaction

September 25th, 2009 at 8:32 am by David Farrar

vsm

A snap of Sir Roger with Salient Editor Jackson Wood, showing off one of the badges funded out of compulsory student association fees that say “Leave us alone Roger”.

The irony is that it is fact the compulsory student associations that won’t leave students alone. And that they spend their compulsory funds on stupid badges.

I doubt anyone actually believes the press releases from various student unions, but just in case. First of all OPSA:

ACT’s bill differs from previous attempts at voluntary membership. It will not only force voluntary membership on all campuses irrespective; but it is essentially the same as the “full-blown” type tried in recently in Australia, where institutions are not allowed to charge a compulsory services levy and use this to buy services from students’ associations.

The bill is in fact very much in line with the three previous bills in the 1990s. They all allowed individual students to decide whether or not to join. The current law was a last minute compromise by NZ First.

The issue of service levies has arisen, because it has become de facto compulsory membership in some areas with an institution funding an association through this back door.

Then Te Mana Ākonga:

“The National government have expressed previously that they would like better outcomes for Māori in education. TMA questions how this view is possible if they take the reliable tools we have, this being our voice and the right to express our autonomy” said Poutu

Except Maori students do not have autonomy. They are forced to join the compulsory student associations. Post VSM, Maori student associations could actually compete for members with the main student associations. Students should have a choice as to whether to join any or all of the main campus association, their faculty association, a Maori association if they are Maori.

Then Albany Students Association:

The Albany Students’ Association, a not-for-profit incorporated society that currently serves over 7,000 Massey University Albany campus students, relies heavily on student membership levies and, without them, would be economically crippled. “Contrary to what the ACT Party is suggesting, students are able to opt out of membership if they do not want to be a part of their students’ association, but most of them appreciate and support the fact that we provide student-focused services such as Orientation; student publications, independent advocacy advisors, and welfare services.

They contradict themselves in the same paragraph. They claim with compulsion they would be crippled, yet also claim students can opt out and the fact most don’t is because they do such a good job.

NZUSA do the same:

“Independent representation, advocacy and support, sporting and cultural clubs and social events such as Orientation would all be under threat in the unlikely event that this Bill succeeds, and all in the name of choice – which already exists!” said Blair.  …

New Zealand would do well to heed the lessons from the disaster that recently unfolded in Australia, which saw associations collapse nationwide under a voluntary system, …

I think the SAs must think MPs are morons. They keep claiming there already is choice, yet also claim that voluntary membership will see associations collapse.

What they really mean is that students have choice, in the Cuban sense of choice. A Claytons choice.

NZUSA vows to fight to keep students in the driving seat and interfering politicians out, and to win the battle to protect universal membership and retain quality advocacy and representation for New Zealand students. They deserve nothing less.

Oh really NZUSA should feature in a George Orwell novel. Their fight to stop students being able to decide whether or not to join a student assocaition they label as fighting to keep students in the driving seat.

It sounds like apartheid era South Africa’s defence of the “homelands” on the basis of keeping Black South Africans in the driving seat.

And then they use the Orwellian term universal membership and call it something to be protected. This is like calling armed forces conscription “universal service” and pledging to fight for the right fo young people to be conscripted!

Finally they push the myth they represent New Zealand students. They do not. No one body can represent NZ students. Students have diverse views on issues, and students should be able to decide to fund the views they agree with.

The CTU also joins the fray. Yes the Council of Trade Unions. Their members lost the right to have compulsory membership in the 1980s but they battle for student unions to remain the last hold out

CTU president Helen Kelly said the bill guaranteed the loss of essential student support services.

“Student associations provide critical services such as student loan advice, welfare support, advocacy services, sporting and cultural clubs and facilities that are all essential for student welfare,” she said.

“The loss of these services would be incalculable.”

What a load of nonsense. Student Loan advice?? VUWSA (for example) couldn’t even balance its own budget for most of the decade. Their history of financial mismanagement would make them as suitable to be student loan advisors, as it would be Charlie Sheen to give monogamy advice.

Advocacy services, means advocating for Labour and the Greens – not an essential service. Students should get to choose their advocates.

And is the CTU really claiming that sporting and cultural club are “essential” for student welfare? Oh my God what would we do without the chess club.

Of course that also assumes these clubs would disappear under VSM. They won’t. They just won’t get grants to subsidise (generally) their travel. But the vast majority of clubs will carry on – with students deciding to join and participate in them – as they do now.

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VSM on the agenda

August 20th, 2009 at 5:37 pm by David Farrar

Superb news. Heather Roy’s voluntary student association membership bill (now in the name of Roger Douglas) got drawn from the ballot today.

I’ll be doing a lot of posts on this topic as I have 15 – 20 years worth of research on the pros and cons of VSM.

The Young Nationals and ACT on Campus are excited about the bill being drawn, and no doubt will be campaigning hard for it to be passed.

Very appropriate that the man who gave New Zealand so many of our economic freedoms, may end up also being the person who give students the freedom to choose as individuals whether or not to join a student association.

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More on Expenses

August 2nd, 2009 at 12:04 pm by David Farrar

So many stories and issues to respond to. First we have:

The Green Party has renewed its call for travel allowances for former MPs to be cut. …

Act MP Sir Roger Douglas, who took his wife on an overseas holiday, put 90 per cent of the air fares on taxpayers. …

Present and former MPs elected before 1999 receive a 60 per cent discount on travel after nine years of service, after 12 years they get 75 per cent and after 15 they get 90 per cent off.

There is no compelling public policy rationale to have subsidised for former MPs. A case could be made for former PMs and GGs (as they get so many speaking offers and charity requests) but there is none for former MPs as a group.

Hence it was a good move that in 1999, Parliament changed the rules and that any MPs elected from 1999 onwards do not qualify for the subsidy.

Despite the popularity of such a move though, I do not support the Greens position which is to apply the change retrospectively to those elected before 1999. The subsidy was part of the terms and conditions they got elected to Parliament on. Now sure removing the subsidy from them would be hugely popular, but it sets a precedent that it is okay to change the rules retrospectively on other issues.

I do think it was politically unwise of Sir Roger to use the perk, once he was back in Parliament. When you are a former MP you don’t have to worry about what the public think, but having re-entered Parliament you do. In fact if he had not re-entered Parliament we would not even know of the trip.

There is a fairly strong case that now MPs expenses get broken down to each MP, so should the subsidies for former MPs. Either way though, as the subsidies have now been stopped for future MPs, the cost of this perk will only reduce over time.

The Press editorial welcomes the new transparency and says generally most expenses are justified. The do say:

It was revealed that Key had run up $172,000 using Crown cars. The Prime Minister’s astonishment at this figure, itself another positive feature of opening the books, and the overall cost of the limousines should cause a rethink of whether they are the most cost-effective way for ministers to travel. Key’s own high car cost is influenced by the reality that, for security reasons, he must travel with two cars, although even this is more modest than the lengthy motorcades of other world leaders. But it might be a better use of resources for more junior ministers to use taxis more often.

Actually it would probably cost taxpayers more if they did this. It all comes down to the difference between fixed and marginal costs. VIP Transport has a number of cars and drivers available. If a Ministers needs to use them, the marginal cost is minimal – petrol and wear & tear. Definitely cheaper than the $2.50/km a taxi charges.

However the DIA have a book keeping charge of $90 per hour or so, for use of VIP Transport, to reflect the capital costs of the cars and the staff drivers.

The problem is that demand for transport by Ministers is uneven. During the working day there may be little use, while Monday morning and Thursday evening there could be 20 cars in use all at once.

So there is no cost saving in using a taxi when a VIP car is sitting in the Beehive basement with a driver being paid regardless of whether he is driving or not. That will cost the taxpayer more money.

To reduce the costs, you would have to reduce the number of cars and drivers in the fleet, and that would mean a decision that some Ministers would not be able to access VIP Transport at times of high demand. And maybe that is what will happen one day, but it will also mean that those Ministers will not be able to have secure conversations while being transported, and in my experience many Ministers do spend most of their trips returning calls on the phone or discussing issues with staff. No easy answer here.

Talking of VIP Transport, Whale Oil has blogged about the mystery of Darren Hughes seen using Ministerial BMWs recently.

Now we have the story around Bill English’s accommodation, which a witty sub-editor captioned “An English Man’s Home is Our Castle”.  Before I talk about this seriously, I should mention that as Bill was being interviewed by the Herald about this, I was with a group of media and press secretaries an we noted Bill was doing his normal arm gestures. I decided to translate these and started a running commentary “And the swimming pool is going to go here, and over here will be the tennis court, and up here the golf putting range and finally we plan to replace the road with a moat. Heh.

Bill, as Deputy Prime Minister, would in fact normally live in Vogel House – currently valued at $4.7 million on Woburn Road. But the Governor-General is squatting there at the moment. If it were not for that, this issue would not even have arisen.

Here is how I see it. Bill is the MP for Clutha-Southland. He has a home on his farm in Dipton. At some stage after he became an MP (I can’t recall when), Bill’s wife and six kids moved to Wellington so they had more time together as a family.This does not make him a Wellington based MP. In fact the law is explicit on this – s72(6)(b) of the Electoral Act states the place of residence shall not change because a person “is absent from that place for any period because of his or her service or that of his or her spouse, civil union partner, or de facto partner as a member of Parliament”.

The backbench MPs Wellington accommodation expense limit of $460 a week is designed to allow an MP to have a small apartment in Wellington, or stay three nights a week in a hotel room. It does not cover having a family home in Wellington, let alone one for a family of eight. So Bill and Mary have been paying rent and/or mortgage costs on having a Wellington home on top of their Dipton home (and yes they do still spend time there).

Now as I said the MPs Welington expense limit of $460 a week is not meant to cover an MP living in Wellington. It is to give them a place to sleep during the week when the House is sitting.

Ministers are different. Many, if not most, Ministers are required effectively to be in Wellington most of the year, and unless they like getting divorced, their families often move to Wellington also. That is why they get Ministerial Houses.

MPs spend three days a week in Wellington around 30 weeks a year (and select committees sometimes on top). Ministers spend close to five days a week, 46 weeks a year. Again that is why they get Ministerial Houses.

Now Ministerial Services owns some properties, and rents others. John Key has, I believe, introduced a rent cap of $700 a week for renting properties for Ministers. AFAIK there was no cap previously.

Now ideally Bill English should rent out the home he owns, in Wellington (for which he paid most of the cost) and move into a Ministerial Services provided home. As I said, he would normally be offered Vogel House (valued at four times his current residence).  This would avoid any hint of him being seen to gain money from being a Minister by having Ministerial Services rent a property he owns back to him.

But his explanation of why he did not want to move house again is pretty good. Having previously rented, they had moved house four times in the last two years and so they decided to purchase it (through their family trust) and he isn’t keen on putting the family through another move.

Bill actually could make more money if he moved into a Ministerial Services home, and rented his Wellington property out as it is quite possible he could rent it for more than $700 a week. Seven bedroom properties tend to cost a lot. So he is not financially benefiting from staying put.

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Douglas & Hubbard on Auckland Council

July 25th, 2009 at 9:55 am by David Farrar

The Herald reports:

Sir Roger Douglas wants ratepayers to be able to shop around for the best local council, saying that being able to defect to one nearby even if they do not live there will invoke the spirit of competition.

Great idea.

Sir Roger told a parliamentary select committee considering legislation setting up Auckland’s Super City that there should be a flexible community council structure with ratepayers able to decide its size and even set up their own councils.

Groups of ratepayers who lived next to another community council should also be able to opt out and join another council.

“The capacity to change council will create competition for ratepayers, which is likely to see value for money being delivered by local government,” Sir Roger said.

Those who place a premium on low rates can get a Council that does that, while those who like enhanced community facilities can also get what they want.

Former Auckland City Mayor Dick Hubbard told the committee he strongly supported the proposed powers for the Super Mayor after his experience of being hamstrung by the “power-hungry” Deputy Mayor Bruce Hucker.

Mr Hubbard said he was elected on a vision, but then obstructed in implementing it by Dr Hucker who had a voting bloc on the council. For this reason, the Super Mayor must be given the power to hire and fire the deputy.

I agree with Dick Hubbard. The Mayor needs a team he or she can work with. The Council still gets a veto over policy and spending decisions, but an effective leadership team is a good thing.

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The Blue Baron and Snoopy

June 4th, 2009 at 11:39 am by David Farrar

dpf-007

There was a good crowd at the Backbencher last night for the unveilign of the new puppets. John and Bill were cast as the Blue Baron and Snoopy. Was very disturbing as John kept ticking Bill’s stomach (the puppet that is).

Also had Pita Sharples in a waka, and Roger Douglas as Rodney Hide’s puppet master.

John Key joked that he could have done with the machine gun in the plane at around 8 am yesterday. Bill joked about wanting to know about which National MPs had been seen in the Backbencher after Boycie revealed this is where Clark, Wilson and co plotted against Mike Moore.

And as the Dom Post reports, Rodney said:

“The great thing about having Roger Douglas in our caucus is that you get plenty of advice,” Mr Hide said last night.

“The advice is never contradictory because it hasn’t changed in 20 years.”

Afterwards around 60 of us went upstairs to hear about Obama’s first 100 days from a visiting US expert. Thanks to the US Embassy and State Department for helping make it happen. People seemed to enjoy it, and we had a good turnout of MPs.

After that we had Backbenches which was fun also. A good Wednesday night.

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Is Jordan a secret fan of Roger Douglas?

April 9th, 2009 at 3:57 pm by David Farrar

Jordan Carter blogs:

Michael is a smart, funny, warm and caring man who is already clearly one of my party’s more successful finance ministers.

Now this got me curious, as this suggests that Jordan thinks that Labour has had other finance ministers more successful than Dr Cullen. Because he did not say “the most successful”.

Who have been Labour Finance Ministers, and which ones do he think were better than Dr Cullen? The post WWII/1949 list is:

  1. Arnold Nordmeyer 1957 to 1960
  2. Bill Rowling 1972 – 1974
  3. Bob Tizard 1974 – 75
  4. Roger Douglas 1984 – 1988
  5. David Caygill 1988 – 1990

Nordmeyer was the author of the infamous Black Budget that made Labour a one term Government so we can assume it wasn’t him.

Rowling was Finance Minister during the oil crisis, and has a pretty disasterous record. So presumably not him.

No one could seriously think you would rate Bob Tizard abaove Michael Cullen.

So hence, the only possible conclusion is that Jordan rates Roger Douglas and David Caygill as Labour’s most sucessful finance ministers! :-)

This will endear him to Leader Phil Goff, as Goff was once Sir Roger’s most loyal disciple. As was Annette!

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Sir Roger’s prescription

February 11th, 2009 at 6:33 am by David Farrar

Sir Roger Douglas gave the now famous Orewa Rotary Club speech last night. His full speech is here.

The Herald reports:

Act MP Sir Roger Douglas is proposing a new low-tax option for taxpayers in which the first $30,000 of income would be tax-free – but only if they pay for their own retirement, health care and welfare insurance or costs.

Income over the $30,000 tax-free threshold would be at a flat tax rate – 15 per cent – to be phased in over 15 years.

The Douglas plan would cut corporate tax rates to the same 15 per cent.

Sounds a good idea to me. Encourage people to look after themselves.

There are fish hooks though. The Centre for Independent Studies had a seminar on this a couple of years ago, and the challenge is how do you cope with people wanting to move from one option to another. Should the decision you make at 18 be unchangeable throughout your life? But if you let people change, they might take the low tax option when healthy, and then when older the high tax option.

The other challenge is what if someone has gone for the low tax option and pledged to look after their only health and retirement costs – yet they lose their savings. As a society do you let them die because they can’t pay for their health care?

As I said, I am very supportive of the principle, and like the notion of people choosing. It would be good to have some further research done on how one might practically have such a system work.

Sir Roger outlined his opt-in proposal to the Orewa Rotary Club.

He would inflation-proof the tax-free income so the $30,000 threshold would rise at the rate of inflation.

But rates would vary for income-earners with dependent children: the threshold for a couple with one child would be set at $50,000.

Families would have a guaranteed minimum income, so that if they earned less than the tax-free threshold they would receive a tax credit up to the threshold.

The concept of people paying no tax until they are earning the minimum income they need is very sound. It avoids the deadweight costs of churn where you pay taxes to then get soem of it back in welfare.

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Sir Roger at his best

December 15th, 2008 at 8:00 pm by David Farrar

A journalist mentioned to me that Sir Roger Douglas has been very effective in countering Labour’s claims over the tax cuts. The Hansard is now out, so I figured I would take a look.

This bill restores the tax threshold position of 10 years ago for those who are on 21c in the dollar or those who are on low to middle incomes. It does not restore the relative position of those on the 33c or 39c index. In other words, those on the higher income are still in a relatively poorer, or worse, position than they were 10 years ago. The arguments that have been put forward by the Labour speakers in relation to the bottom tax rate of 12.5c simply do not hold water. If we analyse the people who pay only 12.5c we find that around 90 percent of that group actually come from high-income families. They are the wives or the husbands of high-income earners. They are the children of high-income earners. What the Labour Government did in its tax legislation of last year was to encourage income splitting so high-income earners who had the capacity to do that said “Thank you very much Labour” and the poor suffered, and the low-income and disadvantaged paid for that.

This sent Labour into full frenzy mode.

I have listened to the speakers from Labour cry wolf about how they want to help the poor and the disadvantaged, but over the last 9 years they took $18.2 billion in extra taxation from average New Zealanders or $1,000 a month. The fact is that had we left that extra $1,000 a month with low-income families in particular, they would be a whole lot better off than they are at the moment. The fact is that Labour spent that extra tax, that extra $1,000 per family, on dubious programmes and failed social experiments that have not benefited New Zealand households by anywhere near the $1,000 a month it took from them. Labour would have been far better to leave the money with them. For families, that $1,000 per month represented books for children, meals in restaurants, carpets, clothes, and extra savings. For the economy it represented lost jobs in shops, factories, and service industries right across the country.

I think we are gong to hear a lot about that $1,000 a month!

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Rodney faces prosecution for his yellow jacket

December 3rd, 2008 at 5:21 pm by David Farrar

The Electoral Commission has found four items were illegal election advertisements, and has referred three of them to the Police for possible prosecution. The one that will get all the news is that Rodney Hide’s yellow jacket has been referred.

ACT told the Electoral Commission that Rodney rectified any problems by affixing an authorisation inside the jacket that can be shown to anyone who asks to see it, but this wasn’t deemed sufficient. So Rodney and his jacket may end up in the dock. That’s a shame as no doubt he’ll start weariing it again!

It does show of course how stupid the law is.

The Greens had some unauthorised fence signs in Palmerston North, but ruled the breach inconsequential.

National MP Nicky Wagner has been referred to the Police. It seems she distributed printouts of some powerpoint slides at a meeting and the final slide had tick Wagner and tick National. That made it an election advertisement. I think this is the first National breach of the law.

Finally a flyer for Roger Douglas put together by his local campaign team was not authorised by the ACT Party Secretary, so was also a breach of the EFA and has been referred to the Police.

I wonder if the law will be repealed before any prosecutions occur?

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The Central North Island Seats

November 13th, 2008 at 12:15 am by David Farrar

Oh I do like that solid blue look. And in 2002 only a handful were blue.

Hunua is a new seat. The party vote is another 60:20 type solid seat. On the electorate vote Paul Hutchison narrowly beat Jordan Carter by 14,738 votes and Roger Douglas another 2,700 votes behind Jordan.

Waikato is 58% to 22% on the party vote. And Lindsay Tisch drove his majority from 7,000 to almost 12,000.

Coromandel went from 45% to 31% up to 51% to 26%. And Sandra Goudie scored a 13,400 majority for the seat she won in 2005.

The two Hamilton seats are no longer marginal weathervanes. Hamilton East went from a 9% party vote lead for National to a 19% lead. And David Bennett turned a 5,300 majority into one of over 8.000. Hamilton West saw an 11% lead in the party vote for National after being 2% behind in 2005. And Tim Macindoe turned his 1,100 loss in 2005 to a 1,500 victory in 2008.

Bay of Plenty is another 60:20 seat on the party vote. and Tony Ryall got a massive 16,500 majority up from 11,000 in 2005.

In 2005 in Tauranga, National had a 15% lead in the party vote. In 2008 the lead was 32%. Bob Clarkson beat Winston Peters by 730 votes in 2005. This time Simon Bridges beat him by 10,700. Simon will be happy to be the Member of Tauranga for some time.

Rotorua saw National lift the party vote from 43% to 51%, and Todd McClay scored a majority of almost 5,000 over a sitting Minister.

Taupo saw a party vote victory of 15% and Louise Upston beat Mark Burton by almost 6,000 votes. She ran a good campaign and for a big enough majority to make it safe for National. Burton got 2300 more votes than Labour so even harder for any future Labour candidate.  I also heard a rumour that Louise held the first meeting of her 2011 campaign committee at 8.15 am on Sunday morning :-)

The East Coast had a 15% lead in the party vote (the graphic has it wrong) and on the electorate vote Anne Tolley turned a 2,500 majority into a 6,000 majority.

The growing seat of Napier saw National go from a 1% lead in the party vote to a 12% lead. And Chris Tremain drove his 3,300 victory over Russell Fairbrother in 2005 to a 8,400 margin. Remember this is a seat Labour held for all but three years from 1928 to 2005 and Tremain is building John Carter or Nick Smith type majorities as a brilliant local MP who owns his seat.

Over on the west coast, we have the huge Taranaki-King Country seat which is another of those lovely 60:20 seats.  And the 12,000 majority motors up to 14,500.

Finally we have New Plymouth. National was ahead on the party vote last time by 8% and this time it was 20%. And it was too much for Harry Duynhoven who lost the seat by 300 votes. In 2005 he held it by almost 5,000 votes and in 2002 his majority was a staggering 15,000. New candidate Jonathan Young will be watching the special votes though.

Labour will struggle to form a Government again, while so many seats have them getting just 1 in 5 party votes. Every seat in this region had at least an 11% gap in the party vote, with many having a 40% gap.

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Roger Douglas

November 11th, 2008 at 10:45 am by David Farrar

The common theme on the left blogs seem to be to try and use Sir Roger as a bogeyman for the new Government, even though he won’t be a Minister in it.

I find this amusing as the new Leader and Deputy Leader of the Labour Party will be two of Sir Roger’s former loyal lieutenants.!

Yes Clark and Cullen did serve in Cabinet with Sir Roger, but they were in the Lange faction. Goff and King were definitely in the Douglas faction. Maybe a journalist could ask them whether or not they voted for Douglas to return to Cabinet in 1989, against Lange’s express wishes?

Personally I hope Sir Roger is made Chairman of the Finance and Expenditure Select Committee. He would do a good job holding both Departments and Ministers to account for their spending.

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Business NZ Conference Part III

September 3rd, 2008 at 11:24 am by David Farrar

Three minor “leaders”

  1. Rodney Hide, ACT
  2. Russel Norman, Greens
  3. Derek Fox, Maori Party

Russel Norman

Environment movement needs to move beyond treating humans as a virus infecting the planet. Not about just doing less bad, but more good. Business sector is key part of this.

Need to transition to a sustainable economy. I then drifted off as various enviromental and resources issues were outlined. I do find the Q&A sessions much more useful than just plenary speeches.

Rodney Hide

Talked of Sir Roger’s goal to beat Australia by 2020 – and not just in the rugby or the netball. Says he loved it. Much more inspiring than some OECD average.

Said that he wanted Sir Roger around cabinet table as if he could convince a Labour Cabinet the merits of free market policies, sh should be able to do the same with a National Cabinet :-)

Repeated Douglas on holding govt spending to inflation and population will allow a personal and company tax rate of 20%.

Derek Fox

I’ve got bored with the leaders and am working on some further Winston stuff, so no summary of Derek. Generally not a useful content compared to the Q&A which I thought worked very well.

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Business NZ Conference Part II

September 3rd, 2008 at 9:34 am by David Farrar

We have five Finance Spokespersons after Winston pulled out. They are:

  1. Bill English, National
  2. Dr Michael Cullen, Labour
  3. Russel Norman, Greens
  4. Peter Dunne, United Future
  5. Sir Roger Douglas, ACT

Each was asked three questions:

  1. Will you cut company and personal tax and by how much and when?
  2. Will you have a cap on government spending as a percentage of GDP?
  3. Will you include labour and environmental restrictions in free trade agreements

Bill English

  1. Yes we will lower tax rates. Details soon. Important to do so to put cash in pockets, but more importantly incentives to work, save and invest. Also want a more efficient tax system.
  2. No as GDP goes up and down. Focus on quality of spending not a set target. Expect PREFU will show Crown is in deficit. So period of restraint needed. Govt spending excluding welfare growing at 8% per annum. Can’t carry on at that rate so will slow growth down, but will still grow in absolute terms.
  3. Not desired, but US Congress turning protectionist and they may demand them so we may need to be flexible. Generally supportive of Govt work on FTAs.
  4. Generally comment: no more cheap credit – growth will come from earning it and need to lift productivity.

Personally I think a target for expenditure as a percentage of GDP would be a very good thing.

Sir Roger Douglas

  1. Could reduce personal and corporate tax to under 20%, maybe even 16%. Also could lower GST to 10%.
  2. Need to say yes to this, so one can say yes to Q1 (he answered in reverse order). Says Govt expenditure should be held at rate of inflation of 2.5% and population growth of 1%. So an annual 3.6% increase only. Sounds good to me!! Any increase over 3.6% should be met with savings elsewhere. If we hold expenditure to 3.6%, each household will pay $13,000 less in annual taxes in 10 years time. Govt expenditure has increased under Labour by $17 billion, after taking inflation and population growth into account. That is $220 a week per household. What did you get for that $220 a week? Could you have spent it better yourself? No equity or fairness without efficiency in expenditure. Thinks expenditure of 25% of GDP is a good target.
  3. Support free trade agreements without these restrictions

I have to say Sir Roger was brillant. He may get some very serious support for ACT if enough people hear him. Very smart to not talk about slashing expenditure but just propose keep spending to inflation and population growth. Families can relate to that.

Peter Dunne

  1. Would cut personal taxes on April 2010 to 10% for income to $12K, 20% to $38K, above $38K at 30%. Supports income splitting. And align business and trust rates at 30%. Should do regular tax reviews, rather than wait 12 years between tax cuts (hear hear).
  2. No set cap. GDP not sole measure of wealth of economy. Does have concern over current level of spending but more concerned about quality and direction of spending. Proposes merging some DHB functions centrally such as equipment purchasing. A spending cut may lead to a service cut – $50 million into IRD so it can answer phones quicker as an example.
  3. Supports FTAs. Don’t need specific standards on environment and labour, as they are dealt with in the wider business environment. We are most trade dependent nation in the world.

Dunne did well also. Some nice specifics.

Dr Russel Norman

  1. Wants a transition to a sustainable economy. More ecological taxes and reduce taxes on income. Incentive then to reduce scarce resource use and pollution. Wants incentives to use less water. Supports ring fencing of losses on investment propoerties. Not supporting a decrease in overall tax – just how it is made up.
  2. Does not have a policy for a cap on spending. It is about efficiency.
  3. Does support standards, but notes usually just involves consultative committees.
  4. General comment on need to prepare economy for higher oil prices. No other party has policy around this.

Dr Michael Cullen

  1. Lowered company rate to 30% and legislated for three rounds of personal tax cuts. Also increased depreciation rates and R&D tax credits.
  2. No. Spending at he moment same as 99/00 as percentage of GDP. Goes up and down. A cap is artificial.
  3. Yes will try and include these standards as agrees with Bill needed for US Congress
  4. General comment on the need to lift exports from 30% of GDP. New tertiary funding policy is essential. Backed Clark up on how our bottom 30% of school leavers are very poor. Middle and top are both very good. More rail needed plus more roads. Also roll-out of broadband is important. Higher savings needed and our capital markets are very weak. Sustainability also important.

All five spoke well and knew their stuff. I do have to say I think Sir Roger was by far the best – both his level of detail, his forceful arguments and the actual policy. I would put Peter Dunne second best.

I don’t think Bill English came across that well. Not due to him (Bill was very much on top of the arguments), but because he could not give any details of the tax policy yet (which I think would have been popular). Would have been good though if National had decided to release some sort of business policy today, so there is something new. Maybe that will come in a later session?

Regulatory Responsibility Act

A question on whether they would support a Regulatory responsibility Act.

English says there is support for defining the principles of good regulation, and using the bureaucracy to fight the bureaucracy so regulations can not proceed without ticking all the boxes which justify the regulation. Also said very keen to reform RMA. Bottom line is would support some sort of RRA.

Douglas supports a Minister of Regulatory Reform and an RRA.

Dunne says ironic to use legislation to fight against legislative regulations. Thinsk local govt sector is more of a problem.

Missed what Norman said.

Cullen says will make process too bureaucratic.

Company Tax Rate

EMA Northern advocated cut company tax rate to 20% as lead to more investment and eventually more tax paid over ten years.  Cullen attacks dodgy modeling of EMA. Says we have had lower company tax rate for most of last 20 years than Australia.  English says 20% rate would be fantastic but priority for now is reducing personal tax rates. If we drop company tax rate to 20% without personl rates going down, many more people will alter their tax affairs to take advantage.

EMA’s Thompson replied that when company tax rate has been cut in the past, the level of company tax has still risen.

Infrastructure

Cullen made good point that not all infrastructure contributes to economic growth – new planes for Air Force for example. But roads do.

Dunne strong support of PPPs and infrastructure bonds.

English – planning debt 2% of GDP higher than Labour but still one of lowest in developed world. Govt is running cash deficits also. National’s infrastructure plan is a prudent investment. Also thinks Govt manages assets badly, and there is room for improvement. PPPs not just about money, but about getting private sector skills around risk and management. Bill much better on this stuff. Lots of people commented at the tea break that they thought not enough detail on the earlier stuff, but very strong on infrastructure.

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More Labour polling

September 1st, 2008 at 6:00 pm by David Farrar

Betty Blue got polled on behalf of Labour it seems. She says:

Pollster’s next question; how sure are you that you are going to vote National? Then, did I believe that Labour was doing a good job, etc. Same old, same old. Did the guy not listen to my previous answers? Further down the track he brought up John Key and how well I knew his policies, if I believed he can be trusted, how did I feel he handled tricky situations, if I considered him a strong or weak leader, if he made many mistakes, etc, etc. Leading stuff, I would have thought – trying to put a thought or two in my mind…

Next, the pollster informed me that if National won, Roger Douglas would be a likely canidate for the post of finance minister, and how did I feel about that? So, where were the leading questions about Helen and co? This was a concern I voiced. I also pointed out that Bill English was likely to be the next finance minister, that Roger Douglas was ruled strongly out in this role by Key some time ago. Anyway, was good for a laugh, if nothing else, I guess. I did have pleasure in taking part, even if the pollster’s questions rang of the absurdly desperate…by the absurdly desperate…for the absurdly desperate.

Now just to correct Betty Blue, this was not a push poll. It was testing attack lines. A push poll would involve calling tens of thousands, not a small random sample.

But having said that, it is interesting to see the likely attack lines from Labour. Despite Key’s statement, they look to be planning to use the line that voting for National will see Sir Roger Douglas as Finance Minister again.

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Salient interviews Sir Roger Douglas

July 24th, 2008 at 3:30 pm by David Farrar

An in depth interview with Sir Roger Douglas by Salient. Extracts:

Are you not concerned at all about any bad blood in the house?

(Laughs) What kind of bad blood is there?

Tensions between various other politicians…

Like who?

Well for starters Helen Clark and Michael Cullen…

Oh look, im not worried about Helen Clark or Michael Cullen, we are not going to agree anyway. How can I agree with them anyway! They are tearing the country apart! They have reduced our labour productivity to a third of what it was, multifaceted productivity is down to one seven of where it was. I’m not going to worry about what Michael Cullen or Clark think. They think as highly of me as I think of them.

And productivity growth is the long term key to closing the gap with Australia.

What is the single biggest issue facing New Zealand at the moment and how would you remedy it?

The level of government expenditure. This government has increased government expenditure over and above inflation. That’s about 17 billion a year. But in more practical terms, that’s $200 a week per family in New Zealand. The lives of families in new Zealand would be dramatically changed if the government had not taken that money from them and flushed it down the toilet because that’s essentially what they did. They wasted it.

There’s a whole lot of families out there that I used to represent, in Otara, who would feel a lot better about their lives today if they could keep that $200. This is supposed to be a government that cares about those kinds of people. They don’t care. They are chardonnay socialists. And in some ways I have nothing but contempt for them. Because they have usurped the people they claim to represent. They don’t even mix with those people. I’d mix with those people a lot more than they would.

That’s fighting words!

Why has John Ansell left the ACT team?

Well, I still talk to John. I think John probably from his point of view found there were frustrations, he wanted to control from woe to go. The problem in politics is you’ve always got that fine balance about aiming for perfection and when possibly 95% will do, and sometimes 95% is enough, you have a trade off there between speed to market and perfection. …

Id see something and say its great, but in John’s eyes it could be perfected by doing this or that. I’m sorry to lose him, hes a genius. And im hoping – I spoke to him yesterday – that he can do things for us. But, the other factor, and I don’t know if John really recognised, is the issue of the best use of his time. When you have a creative genius – which he is, you want him to work on projects that matter. Little projects aren’t as critical. Your better to keep him away from them really.

High praise for John.

So the consequence of that, apart from the years of 1992 – 2000 our productivity has been relative to other countries abysmal. We had higher productivity than Australia in 1992 – 2000 largely due to the changes Ruth and I made. During those years we were catching up. But apart from that we are going backwards. One of the other significant reasons is that you’ve had a public who have rewarded politicians who have lied to them. And the students are a typical group. They might be bribed again. I dunno. I hope not. I hope they’ve learnt their lesson. And the public have responded to politicians who’ve scratched every itch. So Winston Peters goes up in the polls when he becomes a racist. And I hate that.

Not the only one!

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Michael Bassett breakfast

June 10th, 2008 at 1:04 pm by David Farrar

A very enjoyable breakfast put on by the Wellington Chamber of Commerce, and as with everyone there now the proud owner of a copy of Michael Bassett’s book on the 4th Labour Government. I doubt I will have time to read it until the weekend, or maybe keep it for air travel the following week. So fuller review to follow.

Some of Lange’s former doctors co-operated with the book, and from what Dr Bassett said very few people knew how ill Lange was during his leadership. There were almost parallels with Norman Kirk. It was quite sad thinking of Lange struggling with ill health and the pressures of a fractured Government.

Bassett says Lange’s greatest moments were three of his speeches. One to a Labour Party conference (where he was going over the heads of the hierarchy direct to the delegates), the one wrapping up the economic summit and the Oxford Union debate. He made the point Lange’s skills were in “fronting” the Government rather than leading it.

Some good reminders of his legendary wit, such as when he told an Ambassador he had named his race horse Lackareason after the country’s foreign poliicy :-)

The internal politics of Labour were very interesting, as described. The Douglas faction had a clear majority in Caucus, but didn’t want to roll Lange, as they kept hoping (in vain) that he would “come right”. Eventually they effectively pushed him out when they re-elected Roger Douglas to Cabinet over Lange’s wishes.

Also of interest is how the Palmer Government did not want to lose Roger Douglas (who was retiring in 1990) and dispatched someone to convince Sir Roger to stay on. One Helen Elizabeth Clark it seems. It was focused on the 4th not 5th Labour Government, but there was passing reference to how Clark and Cullen voted to privatise Telecom and never raised a voice in opposition in Cabinet.

Bassett has interviewed many of his former colleagues for the book, including even Helen Clark for the anti-nuclear section. There is no doubt he is no longer a supporter of Labour under Clark, but I think people would be silly to dismiss the book on that basis – he has been a writer of history for many decades, and the rarity of having an insider write a book on how Government actually works should make it required reading for pol sci students.

I was fortunate enough to have a dinner a few years back with Michael, and his knowledge of NZ political history is extensive – the dinner and discussion went on for six hours, with conversations ranging from Seddon and Massey to Jim Anderton!

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