Hamish Rutherford at Stuff reports:

Parliament’s Speaker is refusing to disclose whether a New Zealand First employee has travelled at the expense of the taxpayer, after the MP he lives with, Denis O’Rourke, denied the two are partners.

Yesterday Parliamentary Service confirmed it was investigating a complaint into O’Rourke, who entered Parliament in 2011, and Stephen James, an out of Parliament staff member for the NZ First transport spokesman.

Under the directions of the Speaker, David Carter, MPs are not allowed to employ their partner, husband or wife. O’Rourke has denied that James is his partner, reportedly saying that the two live in different parts of a single house.

Electoral records from 2011 showed O’Rourke and James living at the same address. Although the latest electoral roll shows James now lives at a different address, property records show it also relates to O’Rourke’s Christchurch home.

The two were previously directors of the same company, and companies they continue to run give similar contact details.

So they live together, and run business together, and O’Rourke has out him on the taxpayer funded payroll. It’s not a great look.

James is said to frequently travel from Christchurch to Wellington during weeks when Parliament is sitting. It is unclear whether he travels at his own expense, and a spokeswoman for Carter said the Speaker would be making no comment on the matter until Parliamentary Service had completed its investigation, expected next week.

It is rare for Out of Parliament staff to come to Wellington. Most OOP staff would probably come to Wellington just once a year or so. James has been seen out and about in Wellington, often with O’Reilly O’Rourke.

MPs are allowed to have their partner or spouse travel with them, or if they do not have one, nominate a family member, under the directions of the Speaker.

Staff members can also travel via funding from the MPs parliamentary budget.

The Herald also has a new angle:

New Zealand First MP Denis O’Rourke is under further pressure after being caught out over a fake testimonial on the Trade Me page of his classic car rental business. …

However, the complaint from Queenstown resident David Simpson which sparked the investigation said there was “a clear case of Mr O’Rourke and Mr James conspiring to create bogus testimonials about a wedding car hire firm they both have an interest in”.

The pair were directors of Christchurch-based wedding business Garden City Weddings.

After the business ceased trading, Mr O’Rourke continued to lease classic cars for weddings, including a 1948 Jaguar Mark V named Winston.

Under his Trade Me handle DJSteve, Mr James wrote: “Such beautiful black cars – thanks for your great service for our wedding.”

Mr O’Rourke replied: “Denis: Many thanks Steve. it was our pleasure.”

The post was placed three months before Mr O’Rourke was elected to Parliament in 2011 and has since been deleted.

Mr O’Rourke said he knew Mr James had placed the reference but, because it was done before he was an MP, he did not need to apologise to the public.

Yep fake testimonial from your business partner are fine so long as you did them before you were an MP!

BNZ Chief Economist Tony Alexander analyses the likely impacts of Labour’s monetary policy. Some surprises as he summarises:

• Long tern Kiwisaver returns will be reduced as savers are forced to buy more shares when prices are high and fewer when they are low. 
• Volatility in the sharemarket will rise. 
• Investors will have extra incentive to purchase residential property, thus pushing house prices higher. 
• Overseas debt will tend to be boosted. 
• Bank profits will rise.

Alexander explains:

In fact the policy as proposed would probably act as an incentive to raise one’s debt level thus boosting New Zealand’s external debt rather than lowering it as Labour would like. Why? Because the explicit reduction in the heights to which interest rates would go over the monetary policy cycle means the income shock from that tightening would be less. Borrowing money would become safer as interest rate variability would be reduced and the incentive to fix one’s mortgage interest rate reduced.

Thus while some of the commentary from Labour and others has been negative toward banks, their proposed monetary policy would actually boost bank profits because more people would stay on floating rates than going fixed and bank margins are greater on the former than the latter. In addition because people would borrow more money bank business and profits will be boosted. Plus earnings from managing the larger Kiwisaver accounts would be greater.

So Labour’s policy will boost bank profits. Excellent.

Now look at this from a portfolio investment point of view. The policy would boost Kiwisaver contributions when the economy was booming and presumably asset prices like shares rising firmly and at high levels. The tightening of monetary policy would lead to more asset buying out of the contributions and this would amplify the equity price cycle while forcing people to buy more when equity prices are high. Then when the economy is weak and Kiwisaver contributions get cut people would be buying fewer shares thus amplifying the falls in share prices while seeing people buy fewer long term assets when their prices were low. Thus Labour’s policy would achieve exactly the opposite of what is recommended for long term savers with regard to purchasing equities, namely steady monetary value purchases through the economic cycle or even boosting purchases when prices are cyclically low rather than running with the herd and contributing to boom then bust asset price cycles.

And lower average returns for KiwiSaver investments!

The policy would also tend to boost house prices because the risk of having a large mortgage posed by the potential for high interest rates would be reduced. Additionally, because of lower average borrowing costs and because of reduced returns on the likes of term deposits plus the increased volatility in share prices we would expect to see more investors divert toward residential property. This would again tend to boost house prices, reduce home affordability, and again bias the housing market against young buyers.

Not starting to look such a great idea, is it.

He is also unimpressed with blaming house prices on immigrants:

And is it migration which has been pushing Auckland house prices in particular higher? Not at all. Auckland house prices rose by 38% between January 2009 and July last year. It was in July that the net annual migration flow for NZ rose above the ten year average of 10,000 people on its way to the latest reading near 32,000. Thus prices soared during a period of below average migration gains.

And he also points out the stupidity of a certain statement by a certain spokesperson:

Also, if one were a spokesman on matters economic then it would probably not be a good idea to suggest one has low understanding of how monetary policy works by saying low inflation in the most recent quarter means no need for any change in interest rates. Monetary policy looks forward and cannot affect what has already happened – though with a time machine as proposed by Mr Wells one might give it a go. Monetary policy changes now affect inflation a year and a half down the track.

Ouch.

Australia gives us a good picture of what NZ might be facing if we had continued with massing increases in spending, as proposed by Labour.

Australia, like NZ once did, faces a structural or permanent deficit. Turning it around will not be a quick thing. An Audit Commission has just identified 86 ways to reduce spending by $70 billion a year – which would get the Government back into surplus by 2023.

The recommendations are large, and many will not be politically palatable. They include:

• End of universal health care and a $15 charge for doctors visits
• Cutting 15,000 public service jobs and selling state-owned assets
• Slower rollout of the NDIS and raising the pension age to 70, while including the family home in means testing for the aged pension.
• Abolish seven Commonwealth agencies, merge 35 and privatise nine
• Reject paid parental leave in favour of focusing on child care
• Strip the dole from young unemployed people who don’t move to areas with jobs and freeze the minimum wage for 10 years

As I said, some quite unpalatable. But both the Government and the Opposition will have to produce their own policies on how to get back into surplus.

Meanwhile in NZ, we will hopefully have a Budget in three weeks showing a return to surplus next year.

Stuff reports:

At 20 years old, Hamilton’s Andrew Colin George Jacobs is already a career conman with 40 convictions.

His modus operandi? Everything from lying to police to blackmail and forgery – basically anything to get a quick buck.

He owes more than $14,000 in reparations to his victims.

This week Jacobs was back before the courts and was jailed for five months for three charges of obtaining by deception and one of using a document for pecuniary advantage – three weeks after being imprisoned for 13 months for blackmail, in the High Court at Hamilton.

I like to believe in rehabilitation, and certainly many young people can turn from a life of crime – especially if they have drug or alcohol addictions.

However, earlier this month he was sent to prison for further fraud offending – including blackmail – after falsely telling a 17-year-old girl he had cancer in order to get part of her dead father’s estate.

He was sentenced to jail by Justice Gilbert on April 3, who at that stage was concerned about his criminal history of 36 convictions.

It was while on bail awaiting sentencing on those blackmail charges that Jacobs committed his latest offending, between December last year and January this year.

It involved him using an alias to buy a Toyota Altezza via Trade Me for $8350.

Jacobs forged a “nationwide bank” email confirming he had transferred funds into the victim’s account.

Jacobs doesn’t seem to be from a “disadvantaged” background, or be in a culture of drugs or violence. He just seems to be a greedy little c*** who has no regard for the people he rips off.

Hopefully he will dislike prison enough to change his ways. I’m not optimistic though.A

Stuff reports:

Northern Ireland police say they have arrested Sinn Fein leader Gerry Adams on suspicion of involvement in the Irish Republican Army’s 1972 abduction, killing and secret burial of a Belfast widow.

Adams, 65, confirmed his own arrest in a prepared statement and described it as a voluntary, prearranged interview.

Police long had been expected to question Adams about the 1972 killing of Jean McConville, a 38-year-old mother of 10 whom the IRA executed as an alleged spy. According to all authoritative histories of the Sinn Fein-IRA movement, Adams served as an IRA commander for decades, but he has always denied holding any position in the outlawed group.

“I believe that the killing of Jean McConville and the secret burial of her body was wrong and a grievous injustice to her and her family,” Adams said. “Well publicised, malicious allegations have been made against me. I reject these. While I have never disassociated myself from the IRA and I never will, I am innocent of any part in the abduction, killing or burial of Mrs McConville.”

Reflecting the embarrassment associated with killing a single mother, the IRA did not admit the killing until 1999, and her unmarked grave was discovered only by accident near a Republic of Ireland beach in 2003.

Wikipedia has info on the murder.

Adams has been fingered for ordering the killing by former IRA members in tape recordings made before their deaths.

The Herald reports:

A New Zealander killed by a United States drone strike in Yemen has been named by an Australian newspaper as Daryl Jones.

He was identified by The Australian, which said Jones was married with children. According to those who knew him he had lived in Sydney and attended Australia’s largest mosque, the Lakemba Mosque in southwest Sydney.

Jones, who had dual New Zealand and Australian citizenship, was killed last November in a US Predator drone strike on a convoy of al Qaeda militants in Yemen. He was not the target of the strike.

Jones reportedly went by the name of “Muslim bin John” and fought under the name “Abu Suhaib al-Australi”.

Sad for his family, but if you go to a foreign war zone and join a war – then you introduce considerable risk to yourself.

Not many people in New Zealand get killed by predator drones!

The Australian reports:

“They were foot soldiers,’’ the counter-terrorism official said, concerning the role played by the two in AQAP. “And there was a suggestion they were involved in kidnapping Westerners for ransom.’

They were not the targets of the strike. They were collateral damage, which often happens (sadly) in wars.

Labour have announced:

The Labour Party has complained to the United Nations over the continuing denial of democratic elections for Environment Canterbury (ECan) councillors.

“The National government took away the right of Canterbury people to elect councillors on ECan and in doing so denied them their democratic rights contrary to international agreements we are party to,” Labour MP for Port Hills Ruth Dyson says.

Two important UN treaties, the Universal Declaration on Human Rights and the International Covenant on Civil and Political Rights, confirm that it is a human right that citizens have a say on the running of their country and take part in the conduct of public affairs.

“The National government has shown it has no concern for the democratic rights of people here because they didn’t just take away the right to elect regional council members once, they’ve done it twice and there is nothing stopping them doing it again.

“When your own government trashes the democratic rights of its people, there aren’t many places to go to seek redress, but the Human Rights committee of the UN is a place we can go to get the issue investigated, hence the letter written by my colleague and Labour’s Justice spokesperson Andrew Little.

As pathetic stints go, this one is exceptionally bad.

Labour is trying to trash the reputation of New Zealand internationally.  The Parliament of New Zealand, democratically elected, sacking an incompetent local authority. This is quite common. They are now trying to say this makes NZ a violator of human rights.

And who are the countries that Labour is running off to, asking them to decry NZ’s human rights record. Here’s some of them:

• Algeria
• Egypt
• South Africa
• Tunisia

So very pathetic.

UPDATE: I wonder if Labour complained to the UN when David Cunliffe sacked the democratically elected Hawke’s Bay District Health Board?

The Herald reports:

More than 300,000 business owners and self-employed people would be exempted from Labour’s new policy to make workers pay more into KiwiSaver to dampen inflation in boom times.

Labour finance spokesman David Parker confirmed yesterday that his variable compulsory saving proposal would apply only to employee contributions to KiwiSaver – not to employer contributions, and not to self-employed people and employers who choose to pay voluntarily into their own KiwiSaver accounts.

This is a point I wasn’t aware of. The variable rate will only apply to employee contributions.

This means that the impact of a change of rate will be quite small. I’ve done some basic back of envelope contributions.

The current annual member contributions to KiwiSaver are around $1.8 billion. That’s based on a 3% minimum rate. So a 1% change in KS contribution rates would lead to $600 million more into KiwiSaver. However only around 40% of this will be increased savings (based on evidence to date) rather than transferred savings so the amount of money taken out of circulation (so to speak) will be $240 million.

Now the total amount of lending is currently around $330 billion. So a 1% change in interest rates would have an impact of around $3.3 billion.

So a very rough ballpark estimate is that you would need to increase the KiwiSaver contribution rate by around 14%, to have the same anti-inflationary impact as a 1% increase in interest rates.

Someone with better economic modelling skills than me can calculate a more precise figure, but the salient point is that any impact will be very small. It will not be a choice between interest rates going up or increasing the KiwiSaver contribution rate. Both will occur. Increasing the KiwiSaver contribution rate will have a small impact at the very margins.

The Herald reports:

A New Zealand First MP is the subject of a complaint to Parliament’s Speaker over the employment of a person who lives at the same property.

Queenstown resident David Simpson has raised questions about the nature of the relationship between MP Denis O’Rourke and Stephen James, whom Mr O’Rourke employed after the 2011 election. MPs are not allowed to employ their partner, husband or wife in or outside Parliament.

A spokeswoman for Parliamentary Service, the in-house watchdog, confirmed Speaker of the House David Carter had “referred an issue to us and we are looking at it, but that’s between us and the Speaker’s office. I’m not going to say any more than that”.

She said there was nothing in its files to indicate that Mr James was Mr O’Rourke’s partner.

Living at the same property doesn’t mean they are partners. I’ve lived with many people who are not partners.

There is probably no one single test for whether or not two people are partners. Obviously one aspect is whether or not the relationship is platonic. But I imagine that the best way to assess is to use the same criteria that WINZ uses in determining the same thing. I’d look at stuff such as whether they go out to functions together, do they cook for each other, shop together. 

Mr O’Rourke also said rules around MPs employing their spouses or partners were “something we looked at very closely after the election … . and we understand the situation”.

“Stephen is definitely not my partner, he lives at a separate address in Christchurch.”

Mr O’Rourke and Mr James were listed as living at the same address in the 2011 electoral roll, but Mr James is listed as living at a separate address in last year’s roll.

However, Herald investigations reveal both addresses apply to the same property – Mr O’Rourke’s home. …

On Tuesday Mr James emerged from the Mt Pleasant property to check the mailbox. He was later seen inside the property but refused to answer the door.

Mr O’Rourke later confirmed Mr James lived at the same property.

“Yes, there’s a flat attached to my home with separate bedroom and kitchenette and an ensuite and so on. It’s separate accommodation.”

Online records show Mr O’Rourke’s property is listed as a single dwelling. Mr O’Rourke later said Mr James lived in “a room that’s been separated from the house and used as a bedsit”.

“It’s not a formal subdivision … I did upgrade it a couple of years ago and that’s the same time that we got the separate letterbox.”

He reiterated that he and Mr James were not partners. “We’re deliberately not partners and whatever it takes to convince people we’re not partners, that’s what we’ll do. We don’t intend to be partners, we’ve agreed not to be partners, we don’t do the things that partners do, so we’re not partners.”

I don’t think O’Rourke’s comments help him. Saying that we are deliberately not partners is a strange thing to say. If someone is not your partner, or someone you have a relationship with, then you don’t need to make a deliberate decision not to be partners. When I have a flatmate, we never have a discussion about being partners or not – because there is no need.

So O’Rourke’s comments do not help him. I don’t know if James and O’Rourke are partners but a friend tells me they have been seen out together regularly around Wellington. Again that doesn’t mean they are partners – it is not a single test. But O’Rourke’s comments and the changing of the addresses does make it look like they do have some sort of relationship and have deliberately tried to structure it so James can be employed.

And regardless of the legality, I think it is unwise to hire as a staff member someone whom you live with. The complications are significant if something goes wrong. How do you reprimand them if they stuff up, if you are living with them?

3 News reports:

New Zealand leads the world in crime prevention and putting victims first, according to a visiting criminologist.

Gloria Laycock, a professor of crime science at University College, London, is in New Zealand for the Leading Justice Symposium, held yesterday in Wellington.

She told attendees, including Prime Minister John Key and Justice Minister Judith Collins, that New Zealand’s approach to fighting crime is working.

“I think you think you’re not doing too well, but I actually think you’re right at the top,” she said on Firstline this morning.

“The way things are going in New Zealand, you’ll be having people beating a path to your door.”

Ms Collins says crime in New Zealand is at a 36-year low, which she attributes to stiffer sentencing, rehabilitation “attitudinal change”, among other things.

The Government has had a sensible mix of policies – taking a hard line on repeat serious and violent offenders, plus making parole and bail harder – but also investing heavily in rehabilitation, drug and alcohol treatments and the like.

The Herald reports:

A National Party Minister contacted a top ranking police officer after a wealthy businessman with close ties to him was arrested on domestic violence charges.

The Prime Minister’s office is understood to be considering Maurice Williamson’s future as a Minister, following Herald inquiries into the phone call that he made.

His office is understood to have also questioned Mr Williamson over his involvement with Donghua Liu’s criminal case.

Prime Minister John Key will make a statement later this morning.

I’ll update this story as it develops. I’m at the gym 1045 to 1145, so likely next update around midday.

UPDATE: Maurice Williamson has resigned as a Minister

Prime Minister John Key today announced he has accepted the resignation of Maurice Williamson as a Minister.

“I have been made aware that Mr Williamson contacted Police some time ago regarding their investigation of Mr Donghua Liu,” Mr Key says.

“Mr Williamson has assured me that he did not in any way intend to influence the Police investigation.

“However, Mr Williamson’s decision to discuss the investigation with Police was a significant error of judgement.

“The independence of Police investigations is a fundamental part of our country’s legal framework.

“Mr Williamson’s actions have been very unwise as they have the potential to bring that independence into question.

MPs regularly assist constituents in their dealings with Government agencies, including alleged criminal issues.

However it is unwise to discuss a criminal case directly with the Police if you are an MP, let alone a Minister. The better thing to do is have staff members make inquiries, rather than have a Minister directly contact Police. No matter how innocent, or otherwise, the inquiry – a Minister making a phone call/s will at a minimum be seen as potential pressure.

The Herald reports:

Maurice Williamson told a senior police officer that a wealthy businessman facing domestic assault charges was “investing a lot of money in New Zealand” and urged police to be on “solid ground”, according to internal police emails.

The former National Party Minister, who resigned this morning following Herald revelations that he made the phone call, said that he “in no way was he looking to interfere” with the criminal case against Donghua Liu but just wanted to “make sure somebody had reviewed the matter to ensure we were on solid ground as Mr Liu is investing a lot of money in New Zealand”, according to Inspector Gary Davey.

Referring to the amount of money someone is investing in NZ, is not relevant to a Police investigation and should not be referred to

A sad way for Maurice’s ministerial career to end, with 15 years or so as a Minister.

UPDATE2: The PM is speaking to the media about this. He has referred to Section 4.14 of the Cabinet Manual which states:

Following a long-established principle, Ministers do not involve themselves in deciding whether a person should be prosecuted, or on what charge.

The PM has said that a phone call to the Police on a decision to prosecute crosses a clear line. He also said that as a result of the phone call, the Police did an internal review of the case.

UPDATE3:

National MP Maurice Williamson lobbied a ministerial colleague to give New Zealand citizenship “as fast as possible” to a wealthy businessman – then conducted the ceremony himself the day after citizenship was granted against the recommendation of officials.

The urgent VIP ceremony, believed to have taken place in Mr Williamson’s Parliamentary office, is another close link between the former Minister and millionaire property developer Donghua Liu, who has donated $22,000 to the National Party previously.

I’m sorry, but how could you think that was a good idea after what Shane Jones and Dover Samuels did with Bill Liu. How in God’s name did no warning bells go off. This is like deja vu.

At first Labour claimed they were just against foreign investment, but now they’ve gone further and are against foreigners coming here.

3 News reports:

The fine print in Labour’s plan to make mortgages cheaper contains a political bombshell.

Labour wants to stop some immigrants coming into New Zealand because they are pushing up house prices in Auckland.

In the overheated Auckland housing market, Labour already wants to ban foreign buyers. But now it wants to go further and ban some at the border, cutting back immigration numbers.

I wonder what Rajen Prasad and Raymond Huo think about Labour’s new policy to reduce immigration.

3 News reports:

I don’t think this issue has anything to do with Matt Robson, and including him in the complaint to the Police seems to be a publicity stunt.

Unless there is evidence that Robson had anything to do with the alleged blackmail (and it seems there is none), then his role in helping her migrate is not material to what allegedly occurred. I think the inclusion of him in a public complaint is not in good faith.

Iain Martin writes at the Telegraph:

YouGov for The Sunday Times yesterday asked voters how they would vote in the event of a referendum on the UK’s membership of the EU. Despite the country being, according to Ukippers, on the brink of a revolution which will bring down the entire political Establishment and liberate Britain from the LibLabCon tyranny, the numbers suggest that Britain wants to stay in the EU.

Asked how they would vote in an in/out referendum, 40 per cent said they would vote to stay in, 37 per cent said out, 18 per cent don’t know and 5 per cent would stay at home watching Cash in the Attic. Obviously a lot to play for, with as you might expect, a large number of don’t knows. Still, the inners are in front, despite all the recent excitement related to the European elections.

And look at the result when a second question was asked.

“Imagine the British government under David Cameron renegotiated our relationship with Europe and said that Britain’s interests were now protected, and David Cameron recommended that Britain remain a member of the European Union on the new terms. How would you then vote in a referendum on the issue?”

In such circumstances, 50 per cent say they would vote to stay in, 26 per cent to leave, 18 per cent don’t know and 5 per cent would stay at home watching the repeats of Location, Location, Location which (I’m told) follow Cash in the Attic.

So it could go either way if no renegotiation, but will stay in if there is one.

A caveat applies, of course. Perhaps Cameron would not get a renegotiation, with other major EU countries perhaps being incapable of seeing that unless there is a major shift in how the EU is structured one of its key members (the UK) could decide to try something else instead. 

It takes only one other country to block it, but if they do so then they will be responsible for the likely departure of the UK.

What I think we will see is a two-tier EU. One bloc being committed to full integration, and another to a less binding set of rules.

Before the hardliners from among the Ukip hordes – increasingly almost as intolerant of dissent as hardline Scottish nationalists, I note – denounce me as a traitor to my country, I want to make it clear that I am a moderate Eurosceptic who cherishes European culture but thinks the EU as currently constituted is bloated and bossy. In the event of a referendum I am persuadable, based on the arguments laid out by the inners and the outers, although like many people, I particularly hate being shouted at by golf club bar bores. I’m perfectly prepared to accept that the UK could have a successful and bright future trading as either an associate member of the EU or completely outside it with free trade agreements, if the outers explain, calmly, how the numerous obstacles might be overcome.

I have a similar view.

An interesting UK report on Entrepreneurs and specifically “SuperEntrepreneurs“. Well worth reading the full report.

Their summary:

• SuperEntrepreneurs founded half the largest new firms created since the end of the Second World War
• There is a strong correlation between high rates of SuperEntrepreneurship in a country and low tax rates
• Equally, a low regulatory burden and high rates of philanthropy both correlate strongly with high rates of SuperEntrepreneurship
• Active government and supranational programmes to encourage entrepreneurship – such as the EU’s Lisbon Strategy – have largely failed.
• Yet governments can encourage entrepreneurialism by lowering taxes (particularly capital gains taxes which have a particularly high impact on
  entrepreneurialism while raising relatively insignificant revenues); by reducing regulations; and by vigorously enforcing property rights.
• High rates of self-employment and innovative entrepreneurship are both important for the economy. Yet policy makers should recognise that they are not synonymous and should not assume policies which encourage self-employment necessarily promote entrepreneurship.
• Policy makers should use a definition of entrepreneurship which is based on innovation.

I’m not sure NZ has any SuperEntrepreneurs yet (have earned over one billion dollars) but Rod Drury can’t be far off. Sam Morgan also.

The Telegraph reports:

Paul Weston, chairman of the far right Liberty GB party, was making the speech on the steps of Winchester Guildhall, Hampshire, on Saturday, when a member of the public complained to police and he was arrested.

He had been reading from Churchill’s book The River War, written in 1899 while he was a British army officer in Sudan.

Liam Hehir writes in the Manawatu Standard:

When Labour MP Shane Jones announced he is bringing his Parliamentary career to an early end, my mind turned to one of the best bits of Monty Python’s Life of Brian.

In the scene, the protagonist approaches a group of political subversives and asks, “Are you the Judean People’s Front?” The subversives take umbrage to that suggestion as they actually belong to the People’s Front of Judea.

There’s no way the People’s Front of Judea would ever consort with the Judean People’s Front! The joke was a biting commentary on the tendency of political activists to splinter and for the various factions to then marginalise each other.

One of the many hilarious parts of that movie. Have watched it at least 20 times.

Actually, I’m not sure that this really is an immediate disaster for David Cunliffe.

Labour is not going to win the election without making a significant accommodation with the Greens. An economic moderate, Jones has publicly chafed at that idea. He even avoided responding to a question about whether National would be preferable to a Labour – Green coalition in an interview this weekend.

So for all of Jones’ talents, it’s probably better for leader David Cunliffe not to have to manage such a forthright Greens sceptic in his caucus during this particular election campaign.

So might be good for Cunliffe.

That being said – and as I’ve written before – the political interests of David Cunliffe and the Labour Party do not always match exactly. If Cunliffe fails to win this election, he’s toast – he won’t get a second chance.

The Labour Party, on the other hand, will survive and go on to fight other campaigns.

Taking that longer view, the (admittedly self-imposed) exile of Shane Jones appears to be symptomatic of a general narrowing of the Labour Party. The man himself has basically claimed this, saying that he regretted not doing “…due diligence to discover how much the Labour Party had changed…” before becoming an MP.

That was a very telling comment.

All successful political parties are an alliance of different constituencies. Those on the Left can typically be broken down into what is known in American politics as the “wine track” and the “beer track.”

These descriptors are generalisations, of course, but they are convenient and evocative as political shorthand.

The wine track roughly corresponds with the metropolitan middle classes. These are people who usually have tertiary qualifications and who are often relatively secure economically.

They are politically engaged and are proud about their social concern. They are scrupulously politically correct (even if they hate that term).

Of the present Labour caucus, think of Wellington Central’s Grant Robertson or list MP Jacinda Ardern as being roughly representative of this group.

Those on the beer track are less concerned with politics day-to-day. They are economic battlers and their principal concern is the security and aspirations of their family and friends. They are less apt to get directly involved in politics or social crusading. In a politician, they are less concerned with political philosophy and tend to support people they feel are on their side.

Here, one might picture (along with the retiring Jones) West Coast MP Damian O’Connor.

The wine track vs the beer track. Powerful images.

There are legitimate objections to Shane Jones credentials as some kind of working class hero – he is a Harvard alumnus, after all.

Nevertheless, it is worth noting how his critics have bristled at his “blokey” persona.

Labour-aligned consultant Brian Edwards has trashed him as a “Crass, sexist [vulgarian].” Greens Co-Leader Merita Turei said he is ” . . . a 19th century man in a 21st century world . . . ” – a throwback, in other words.

And fair enough – the man’s turn of phrase can be a bit off-colour and that’s not to the taste of everyone.

The problem is that there are millions of people (including many potential Labour voters) who do not think Jones’s style makes him a bigot. On the contrary, plenty of ordinary, decent people find it honest and unpretentious.

Jones thinks there is no room for his type in today’s Labour Party. If true, then at least the party is a purer, more coherent organisation – not unlike the People’s Front of Judea.

A very salient point. Having Jones painted by some of the left as a bigot, makes the left less attractive to a lot of people.

Eric Crampton blogs:

Imagine that hazardous drinkers really really cared about the price of alcohol. If you increased the price of alcohol just a little bit, they’d stop drinking harmfully. Imagine further that moderate drinkers didn’t respond very much to prices: what does it matter to the rich Chardonnay-sipping set if a bottle is $8 or $40? If that were the true state of the world, we would have a very simple solution to alcohol problems: hike excise taxes. Harmful drinkers would stop drinking and would stop doing alcohol-related harmful things; moderate drinkers would pay more but that would just be tax revenue for the government. Since they wouldn’t change their consumption by very much, deadweight costs would be pretty small relative to the harms avoided. Yay taxes!

But is the assumption that heavy drinkers are more price response true?

Unfortunately, the world don’t quite look like that. Our best evidence on it remains Wagenaar’s metastudyshowing that heavy drinkers respond to a 10% price hike by reducing consumption by 2.8%; average consumption drops by 4.4% with the same price increase. Moderate drinkers respond more to price increases than do heavy drinkers.

The answer is no.

Enter the NZ Government report on excise and minimum pricing. Fortunately, the Minister has more sense than her Ministry and hasn’t gone ahead with minimum pricing; hopefully, she’s not looking at excise. What’s the problem with the report? They started by assuming that heavy drinkers are more responsive to prices than are moderate drinkers.

So why would you assume something that is not backed by the evidence?

And they know it’s wrong. Here, at Table 5, they show the general consensus of the international literature: heavy drinkers don’t respond to prices nearly as strongly as do moderate drinkers. …

Bottom line: heavy drinkers are roughly half as responsive to prices as are moderate drinkers. That’s page 20. And they cite Byrnes accurately at page 21.

So they know their assumptions are wrong, yet they still used them?

But then what do they go and do? They started by trying to get SHORE to estimate NZ elasticities, but something went wrong there: the elasticities were completely out of whack with reality. Reading between the lines at page 25, it looks like SHORE was using the increase in purchases of products on special at supermarkets as part of its price elasticity estimation, and that just ain’t right. If you switch brands because something’s on special and buy more of it than you otherwise would have, that isn’t the same effect as you’d expect for across-the-board price changes you get with excise or minimum pricing.

Way different things. I might buy more Coke rather than Pepsi when Coke is on sale. But that doesn’t mean if the price of both Coke and Pepsi increases that I’ll buy less overall.

The report agrees the NZ figures are wrong:

“It was decided that the significant reductions in consumption estimated using NZ elasticity estimates are not a realistic representation of what is likely to happen in reality and are contrary to all international evidence of the responsiveness of alcohol consumers to changes in price.”

Yet …

Rather than discard the completely nuts NZ numbers, they let those figures stand and added alternative numbers as robustness checks. Those big headline estimates you’ve been seeing in the papers about just how awesome excise is? They’re based on the numbers that, according to the report, “are not a realistic representation in reality and are contrary to all international evidence of the responsiveness of alcohol consumers to changes in price.“

Example? A 133% excise hike means about a 40% increase in the cost of low-priced beer, a 44% increase in the cost of low-priced wine, a 45% increase in the cost of low-priced RTDs, and a 103% increase in the price of low-cost spirits. The heavy drinkers SHORE estimated a 61% reduction in harmful consumers’ consumption with that tax hike. So they’re saying that harmful consumers are more than unit elastic. That’s just not right.

I’m glad we have someone who can analyse these reports, and point out the errors in them. we run the risk of flawed decisions being made on the basis of flawed analysis.

The Dom Post reports:

Wellington could become the urban mountainbiking capital of the world, a group of city bike enthusiasts say.

They have asked Wellington City Council for $60,000 to create a business plan and unlock “a unique global opportunity” which could bring multimillion-dollar benefits.

The attraction lies in the central city’s proximity to world-class tracks which could put it up with Rotorua and Queenstown as a destination for mountainbikers in New Zealand.

The next time I’m in Queenstown, I’m definitely taking a mountain bike up the Gondola. Looks great fun. A visit to Rotorua to mountain bike is also planned.

Wellington Offroad Riding Department instructor Ash Burgess said no other city had such good tracks close to downtown.

“In 10 minutes you can be on beautiful trails, and we want to capitalise on that,” he said.

Businessmen Matt Farrar and Anthony Edmonds told the council economic growth and arts committee yesterday that the city had to take the chance to become a “jewel in the crown” of New Zealand mountainbiking.

They believed a 10-year investment could lead to the capital attracting more tourists, more business and more skilled migrants from overseas.

Tourists would stay longer in the city and it could attract more people looking for adventure tourism opportunities as well as potential new Wellingtonians.

“There are a lot of people like us out there who want to go biking without getting into a car,” Farrar said. “Here you have the opportunity to bike to work, to commute back [home] or go for a ride at lunchtime. [It is] unique by New Zealand and global standards.”

Wellington is great in having trails so close to the CBD. But I agree with Matt Farrar (no relation apart from the fact we have the same parents) that you want to be able to go biking without needing a car. As a new cyclist I’ve learnt that taking your bike into the city is semi-suicidal!

Rotorua’s mountainbike sector was worth an estimated $15 million a year, forecast to grow to $30m.

Mountainbike trails could be an alternative to cycle lanes through some parts of the city, Farrar suggested, and the group would look at funding from the New Zealand Transport Agency.

Edmonds said there was real money in biking and an investment would be good business.

Councillors made some positive comments about the idea, with Nicola Young saying it was “really exciting”.

There’s heaps of people crazy about mountain biking. They’ll travel and spend to be able to cycle. Some people will even decide which city to live in, on the basis of how good they are for cycling.

The Dom Post is supportive:

 Unlike its recent pronouncements on trucks in highway fast lanes, or the flagging national demand for wood, Labour’s ambitious new monetary policy has real heft.

The idea is first to make KiwiSaver compulsory, with payment levels about 9 per cent of income. That’s not monetary policy per se, but it’s a good idea – our savings are chronically low, which pushes up our interest rates.

Compulsory savings are also necessary for Labour’s next big idea – making KiwiSaver payment rates adjustable. Under the plan, the Reserve Bank could recommend increasing savings rates as a way of slowing the economy – or, conversely, lowering them to heat things up.

They have some reservations:

What about low-wage workers, who don’t have mortgages and can’t afford unpredictable shifts in income? Labour is considering exceptions for them, but that poses its own problems.

What about the wisdom of constantly mucking around with people’s retirement savings? Isn’t that an odd message to send, that they are subject to the whims of the economic cycle?

And will such adjustments be as effective as interest rate hikes in cooling the housing sector, the most inflationary part of the economy?

So Labour has some more explaining to do. But the questions should not puncture the idea – some might be unanswerable until the policy is tried.

The Herald is also supportive:

The Labour Party has done well to come up with a constructive monetary policy for the coming election. Its proposal to make KiwiSaver compulsory and use its contribution rate as an alternative to interest rate rises is imaginative and reasonable.

But also a reservation:

But if the bank can merely recommend that a government increase the KiwiSaver levy, the tool might seldom be used. If Labour leads the next government it might welcome recommendations, at least until the combined contributions of employers and earners rise from the current 6 per cent to 9 per cent.

Even Labour, though, would be reluctant to raise the levy in normal economic times, and would make exemptions for the lower paid. The bank would usually have to resort to the official cash rate.

This is a key point – that the Government would make the decision on changing the contribution rate. It means that political considerations will be placed ahead of monetary considerations. The reality is that changing the level of contributions will not be a tool that will be used often – which means interest rates would by far remain the dominant tool.

The Reserve Bank considers changing the OCR every six weeks or so. One could not cope with having the KiwiSaver contribution rate changing more than once a year. Employer software needs to change. Employees need certainty over their take home pay, and employers need certainty over their costs.

So while the proposed tool is not without some value, it is not a tool that can be used frequently or immediately.

Brian Fallow sums up some reaction:

Labour’s proposal to introduce a variable contribution rate to compulsory KiwiSaver as a counter-cyclical tool has received mixed reviews from bank economists.

Most were tepid: It can’t do any harm, it will probably be less effective than Labour hopes.

Probably a fair summary.

But ANZ chief economist Cameron Bagrie was unimpressed: “It has political bun fight written all over it.

“Will a Government really step up to the plate and alter KiwiSaver contributions [if] asked to by the Reserve Bank? Imagine the bank asked the Government of the day to alter tax rates to help with monetary policy. This would alter public saving as opposed to private saving, but would have similar economic effects. What do you think the response would be?” Bagrie said.

“A change in take-home pay is highly personal. For low-income earners in particular the fact that they will get the money back in several decades’ time will be to all intents and purposes irrelevant.”

Indeed. A low income earner needs the money now – not in 30 years.

And this is one of the problems of universal KiwiSaver – it means the state is making decisions on behalf of each individual family as to how much they need to save – and when. For many New Zealanders it can be more sensible to put surplus funds into a business or paying off a mortgage quicker.

The Herald also looks at winners and losers:

Households struggling to keep on top of their mortgages would be the winners under Labour’s proposed interest rate shake-up, but at the expense of those who can’t afford to get a foot on the property ladder, a budgeting service warns. …

But New Zealand Federation of Family Budgeting Services chief executive Raewyn Fox said the policy to keep interest rates low while forcing everyone to save more raised issues of fairness.

“The people who don’t have mortgages will be in effect subsidising the economy for the people who are obtaining an asset by buying a house.”

Yep – the biggest winners will be those with the biggest mortgages.

Bernard Hickey also looks at the pros and cons:

The Pros

The VSR would allow the Reserve Bank to remain independent and give it another way to slow or speed up the economy. There would, of course, be a Policy Targets Agreement between the Minister of Finance and the Reserve Bank Governor to govern how the VSR could be tweaked, but the decisions on when and how to use it would be made by the Governor.

Politically, the idea of increasing the KiwiSaver contribution rate seems more attractive than raising interest rates, at least for exporters and mortgage borrowers. It means the extra savings are kept by the wage or salary earner, rather than being ‘lost’ to the bank and term depositers.

In theory, raising the VSR would allow the Reserve Bank to avoid putting up interest rates and therefore take pressure off the currency.

The other parts of the policy that didn’t get as much attention may be just as important. Labour is saying the Reserve Bank could use macro-prudential tools such as capital requirements to limit lending growth or pressure on the currency. The Reserve Bank has already partly gone down this path with higher capital requirements for high LVR mortgages and the speed limit.

This wider use of macro-prudential tools could also help reduce the reliance on the OCR.

The Cons

Simply imposing KiwiSaver compulsion and a higher contribution rate may not necessarily improve national savings. The Australian experience has been mixed at best. It turned out Australians felt richer as their superannuation pots got bigger, which encouraged them to borrow even more against the value of their houses.

Compulsion in tandem with Labour’s policy of gradually increasing the retirement age to 67 is controversial within Labour and on the left of politics. There are plenty who argue poorer manual workers are discriminated against. There’ll be some tricky questions around who gets exemptions because of ill health and who can ask to be exempted on the grounds of hardship.

The other risks with compulsion are around the issue of Government guarantees, funds management fees and means testing. If you are forced to save by the Government you could argue your funds should be guaranteed by the Government.

The Australian scheme has become notorious for high fees and compulsion has become something of a subsidy for the funds management industry, and ironically, the banking sector. There would have to be some tough conversations and negotiations around fees. Here’s an excellent Grattan Institute report about Australia’s fees mess.

And finally there is the argument against compulsion that used to be made by the ‘Father’ of KiwiSaver, Michael Cullen, which is that once these funds get very big political pressure will build for means testing, as is the case in Australia. That would rob the current NZ Super scheme of some of the simplicity and fairness behind the universal pension.

I think the policy probably won’t achieve a lot, but it could be a potentially useful extra tool for the Reserve Bank. However to be truly effective you need the Reserve Bank able to decide – not just recommend to the Government.

But one should be aware that monetary policy is ultimately about reducing demand in the economy, and hence inflation. Now increasing KiwiSaver rates could reduce spending by households. But if Government spending is not restrained, then the overall impact on the economy will be insignificant. Fiscal policy and mometary policy need to work together. Just reducing household spending will not work, if government spending is not restrained.

Stuff reports:

The man who led Google’s foray into social networking is leaving the company.

“Now is the time for a new journey,” wrote Vic Gundotra in a Google Plus post announcing his departure after eight years.

So what does that mean for Google Plus? If you ask Google, absolutely nothing. But if you ask TechCrunch’s Alexia Tsotsis and Matthew Panzarino, it means Google Plus is walking dead.

In theory I am on Google Plus. I think in three years I’ve gone into it twice. Have never worked out how it can benefit me so just ignore all the messages I get from it.

So I tend to think it is doomed.

However services can make themselves more relevant. I never used to see the point of Linked In, but in the last couple of years it has become quite useful – even if just as a CV reference service. The endorsements useful also. So I do use Linked In a but now – but to be fair only to check a specific person out – not like Twitter and Facebook where I just check in to browse when I have spare time.