A is for Adam Smith

The NZ Initiative will be publishing an A to Z of economic literacy to help improve knowledge during the election campaign. I’m keen to do the same, so as long as I remember will republish them here every week.

They start of course with A:

Few economists are more famous than the Scotsman commonly regarded as the founder of economics, Adam Smith (1723-1790). On one hand this is understandable and much deserved: Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations (1776) is the book that established economics as an academic discipline. The Wealth of Nations also contains many important insights into economic logic.

On the other hand, it is also a little bit odd for two reasons. Before Smith appeared, there had already been centuries of economic discussions. And Smith probably would not even have called himself an economist but a moral philosopher.

Smith did not start his intellectual life as an economist. To his contemporaries, he would have been better known as the author of The Theory of Moral Sentiments (1759). In this earlier work, Smith explained how society is held together by people caring for their neighbours. His vision was one shaped by virtues, conscience, moral rules, altruism and law.

The Wealth of Nations is the other side of the same coin in Smith’s thinking. Here he showed how self-interested behaviour fits into his moral philosophy. It fitted surprisingly well.

Smith’s critical insight was that competition harnesses self-interest for the greater good of society. “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest.” It is as if ‘an invisible hand’ led people to do not just what is good for them but for their neighbours as well.

Smith’s second-most important contribution to economics was understanding the division of labour. By observing how much more efficient a pin factory becomes if workers specialise on different tasks, Smith concluded that it is such specialisation which makes us more productive. This is true for companies, but also for countries – which is why he was an advocate of free trade.

Few ideas he presented in The Wealth of Nations were genuinely new but it was Smith who collected the economic wisdom of his time, gave it a new framework and firmly established economics as a social science.

Two hundred and thirty eight years after The Wealth of Nations, Smith’s timeless ideas are still relevant and inspirational – both for policymakers and for economists. Smith remains the best teacher for anyone aspiring to understand how altruism and self-interest belong together in society.

The Cato Institute has an original copy of The Wealth of Nations in their office in DC. I resisted the urge to steal it!

A 20 year high for business confidence

The latest ANZ business outlook survey has business confidence at a 20 year high. It was last this high in 1994. That is quite extraordinary when you consider how fragile the world economy still is, and the problems Australia is having.

Business confidence is at +71%. This doesn’t guarantee that the economy will grow strongly, but it does suggest that businesses will invest more money and start hiring more staff. Indeed a net 32% of business plan to hire more staff – the highest level since December 1992. In the manufacturing sector it is even higher at a net 37%.

ANZ is now talking economic growth between 4% and 6% in the next year. I think that is rather optimistic, but anything over 3% is great.

Jones leading again

The Herald reports:

Labour Maori Affairs spokesman Shane Jones has slammed a new rule requiring Auckland property owners to seek iwi approval to work on sites of cultural and heritage value to Maori, calling it dangerous and an extra compliance cost.

Mr Jones is opposed to the rule in Auckland Council’s draft Unitary Plan that requiring applicants carrying out work on 3600 sites of “value to mana whenua” to obtain a “cultural impact assessment” form one or more of 19 iwi groups.

“As someone who was involved in the core group which wrote the Resource Management Act in 1988-1989 never in our wildest dreams did we imagine it would lead to 19 new consent authorities over the Tamaki Makaurau area.

“The proponents need to balance heritage against the cost pressure of developing housing and land so that the final product is affordable,” Mr Jones said.

Well done Shane on calling it straight. Out of interest has anyone asked Labour’s other Maori MPs if they agree with Shane? Most importantly does their Leader agree with Shane?

Local body politicians who aren’t focused on their city or region

The Manawatu Standard reports:

Palmerston North’s voice will be added to calls for New Zealanders to be told what is in the proposed Trans-Pacific Partnership Agreement, amid fears it will allow multi-national companies to bully local and national governments.

The city council yesterday received a deputation led by Sue Pugmire and Warwick Smith asking for it to urge Prime Minister John Key to drop the veil of secrecy surrounding the agreement.

Such a key issue for the Palmerston North City Council.

The exception was Cr Leonie Hapeta, who said she did not believe local government should get involved in a central government process.

She was the dissenting voice in a 15-1 vote.

In passing its resolution, the council joined Auckland, Nelson and Greater Wellington in calling on the Government to reveal the content of the proposed agreement.

Horizons Regional Council was to consider a similar proposal today.

Pathetic politicians, trying to make themselves feel important.

As I have said many times before, the Government is unable to unilaterally reveal the contents. To do so would see it expelled from the agreement, and never allowed into any other trade negotiation again.

Where were these moronic City Councilors when the China FTA was being negotiated? Did they demand that text be released? Of course not. It’s different when Labour does it.

Fallow on tax

Brian Fallow writes in NZ Herald:

Large chunks of the tax base resemble icebergs, drifting north into the warm waters of the global and digital economy.

Policymakers have a term for this: “base erosion and profit shifting” – BEPS for short.

They are grappling with the changing nature of international commerce, where the eternal desire to minimise the tax you pay is assisted by the rapid growth of e-commerce, and by the opportunities presented by countries’ different tax laws and the ability of multinational firms to locate debt funding and intellectual property wherever will maximise the bottom line.

As part of that effort, finance ministers from 20 major economies, meeting in Sydney last Sunday, agreed to adopt a regime for automatic information sharing among tax authorities.

The Organisation for Economic Co-operation and Development (OECD) calls it the Common Reporting and Due Diligence Standard. You can translate that as: “We are going to make your banks tell on you.”

The erosion of the tax base globally is a problem, but so is erosion at home.

Let me give you an example of how you can erode the tax base locally, and legally.

  1. Set up an incorporated society. It can be any sort of incorporated society.
  2. The society doesn’t have to pay income tax but it does have to deduct tax from its employees and pay GST.
  3. Now if you don’t pay that tax, then the IRD can come and liquidate you, which means the society gets wound up.
  4. So set up a limited liability company, and have some of your transactions go through that company instead of the society. You can have the lease assigned to it, and charge management fees. You can also charge your salary through it also, as that then allows you to deduct stuff off tax.
  5. Have the limited liability company spend all its money on behalf of the society, and not pay any tax to the IRD. This means you have more money to spend.
  6. IRD liquidates the company, leaving the society untouched and the IRD ends up out of pocket by say $150,000 – while the society carries on unscathed.

This is all totally legal, using a crafty mixture of corporate tax structures and non payments.

I look forward to political parties putting forward policies on how to stop the erosion of the tax base in this way.

Abbott’s Qantas dilemma

The Herald reports:

The disastrous results and huge job-shedding announced by Qantas yesterday is battering at the door of Australian Prime Minister Tony Abbott, who must decide what the Government will do for the ailing national airline.

The decision will test his resolve and the Government’s mantra that “the age of entitlement is over” as he comes under furious fire from Labor, the Greens and unions, which have accused him of plans to tie federal assistance to an attack on wages and awards.

I guess they just think taxpayers should subsidise Qantas.

The airline’s A$252 million ($270.5 million) pre-tax half-year loss, and its plans to shed the equivalent of 5000 jobs – meaning the final tally of sacked employees will be even higher – add to the series of Australian corporate icons hammered since Abbott won power in September last year.

These include the end of the local automotive industry with the loss of Holden, Ford and Toyota. The Government has repeatedly said companies must stand or fall on their own.

He’s right.

“We’re determined to help Qantas,” Abbott told Parliament. “We’ll help Qantas by guaranteeing a level playing field [and] by saving Qantas some A$270 million in carbon tax costs over two years … This is a Government which is determined to keep faith with businesses which have made investment decisions honestly and fairly on the basis of government policy. Second, this is a Government which will do its best to ensure, as far as is humanly possible, a level playing field between the domestically produced and the imported product.”

Transport Minister Warren Truss blamed much of the airline’s problems on the carbon and mining taxes, high wages and award conditions, and said fewer jobs were needed with new technology.

Air New Zealand uses technology well. The check in system is almost entirely automated, and the number of staff they have there now is probably 20% of what it used to be – and with far fewer queues.

Migration at 10 year high

The Herald reports:

New Zealand’s inbound net migration rose to a 10-year high in January as fewer people quit the country to cross the Tasman and the number of new migrants continued to gain.

This is generally good news. Important to note there are four aspects to net migration. They are:

  • New migrants to NZ
  • NZers returning home
  • NZers leaving NZ
  • Migrants (not citizens) leaving NZ

Let’s look at what is happening to each of these.

New migrants to NZ

In the last year this reached 68,920. A year ago it was 62,300 and this level is the highest since mid 2003. The level of new migrants is determined by both demand and government policy (aspiring migrants need to meet criteria such as qualifications, wealth etc).

NZers returning home

This is at 26,660. A year ago it was 23,320. It was list this high in 2004. This is purely driven by a desire to return home, as it is a right to return.

Migrants leaving NZ

This is at 23,120. They are permanent or long-term residents (but not citizens) who have moved to another country.  A year ago at 24,070. The lowest level since mid 2006.

NZers leaving NZ

This is at 46,000. A year ago it was 61,550 so a huge drop of almost 25%. It was lower in 2009-10 during the global recession and financial crisis (people don’t leave home during a crisis). In 2008 it was at almost 61,000.

Australians

Also of interest is the flow of to and from Australia. 7,040 Australians came to NZ in the last year – an all time high. An increase of around 35% from a year ago.  Also 12,990 Kiwis have returned from Australia – also an all time high.

The number of Kiwis going to Australia is at 33,030. A year ago 48,450. Also a drop by around a third.

Views on McCarten

Chris Trotter writes:

The New Zealand Left suddenly finds itself in the position of the dog who caught the car. For years, slagging off the Labour Party as a bunch of neoliberal sell-outs has been one of the Left’s favourite pub and parlour games. But now, with one of this country’s most effective left-wing campaigners just one door down from the Leader of the Labour Opposition, the Left, like the bewildered pooch for whom the fun was always in the chase, has finally got what it wanted and must decide what to do with it.

Yes, it is a huge victory for the far left.

If Cunliffe and McCarten are allowed to fail, the Right of the Labour Party and their fellow travellers in the broader labour movement (all the people who worked so hard to prevent Cunliffe rising to the leadership) will say:

 “Well, you got your wish. You elected a leader pledged to take Labour to the Left. And just look what happened. Middle New Zealand ran screaming into the arms of John Key and Labour ended up with a Party Vote even more pitiful than National’s in 2002! So don’t you dare try peddling that ‘If we build a left-wing Labour Party they will come’ line ever again! You did – and they didn’t.”
 
Be in no doubt that this will happen – just as it did in the years after the British Labour Party’s crushing defeat in the general election of 1983. The Labour Right called Labour’s socialist manifesto “the longest suicide note in history” and the long-march towards Blairism and the re-writing of Clause Four began.
Not sure comparison to Michael Foot are helpful to Labour.

So the dinosaurs are back. Richard Prebble returns to run ACT’s election campaign. Matt McCarten returns to become Labour leader David Cunliffe’s chief of staff. The ironies are multiple. These two were the chief brawlers in the brutal and byzantine ruckus within Labour over Auckland Central in the 1980s.

A generation later the two will once again be on opposite sides of the political war. 

Not opposite sides. Prebble is campaign manager for ACT, not National. McCarten is chief of staff for Labour.

Mr McCarten is a similarly divisive figure, and already his old comrade Mr Anderton has said he won’t work for Labour this year, apparently because of Mr McCarten. Labour is billing Mr McCarten’s return as a symbolic healing of the rifts in the Left-wing family, but clearly the rifts do not heal easily.

What was interesting is that Cunliffe said he was sure Jim would still be supporting Labour, and then Jim said he won’t be while McCarten is there. What is surprising isn’t Anderton’s views, but that no one spoke to him in advance and hence Cunliffe said something that was contradicted an hour later.

The Herald:

But that presumes Labour’s existing voter base also favours a move to policies aimed at attracting the lost tribes of the left. There is a risk surely that some working, non-unionised, moderate social democrats will see a Labour Party raising taxes, advancing union interests, expanding the state and redirecting wealth to support beneficiaries and the poor as altogether less appealing.

Most non voters are proportionally under 30. I’m not sure a return to 1970s policies will be appealing to them.

Labour’s result in 2011 was its worst for generations. Its poll rating now, under Mr Cunliffe, has not increased much at all from its early-30s standings under David Shearer, despite promising expanded paid parental leave and a baby bonus for all those earning up to $150,000 a year. 

In August 2013 when Shearer was Leader, Labour’s average poll rating was 32.4%. In February 2014 their average poll rating is 32.2%.

Talking of manufacturing

The Press reports:

A new report released by ManufacturingNZ says contrary to popular belief, the New Zealand economy is actually manufacturing heavy compared with other OECD nations.

And:

Manufacturing contributed 14.6 per cent to the country’s gross domestic product in 2012.

This makes New Zealand one of the more manufacturing- heavy economies of the OECD.

By mid-2013 there were 191,000 jobs in the manufacturing sector.

Average wages are greater than those in the retail, accommodation and food service sectors

Also one manufacturer notes:

Skope managing director Guy Stewart said the company, which manufactured chillers and freezers for the hospitality and restaurant sectors with clients including Coca Cola Amatil, felt support had increased from the National Government compared with the previous Helen Clark-led Labour government.

“Helen saw manufacturing as a twilight industry, and boring and to be ignored. [Manufacturing] survived despite that position.”

I wonder what a living wage of $22.89 will do to manufacturers, as they compete with off shore manufacturers?

The report has some ideas:

Compiled by researcher Castalia, the report notes the Government has support initiatives under way, but says more can be done.

The Government needs to tailor export promotion, increase the supply of skilled workers, and help smaller New Zealand companies during government tendering processes.

They sound good ideas.

New Zealand Manufacturers and Exporters Association chief executive John Walley said he agreed with the conclusion that the Government needed to develop an overarching manufacturing policy particularly for “added value” manufacturing.

Firms like Skope needed to be able to compete from a New Zealand base rather than move overseas, Walley said. A high kiwi versus other currencies was the biggest issue the sector faced, he added.

The Government does not set the exchange rate. We don’t have tens of billions of dollars to spare to try and manipulate the exchange rate to whatever level a lobby group says it should be

Recall Labour saying the regions are missing out on economic growth?

Labour really can’t get a break. Almost every economic issue they have targeted, their timing has been woeful.

Their manufactured manufacturing crisis has become a joke, as the sector has record confidence.

Their targeting of the exodus to Australia has seen Australian flocking to New Zealand.

And their claims that the provinces are missing out, with only the three big cities getting economic growth – well, here’s the ANZ measurement of economic growth in the last quarter, in order from largest to smallest.

  1. West Coast 2.4%
  2. Northland 2.4%
  3. Canterbury 2.1%
  4. Waikato 2.0%
  5. Otago 1.9%
  6. Manawatu-Whanganui 1.6%
  7. Bay of Plenty 1.6%
  8. Southland 1.5%
  9. Hawke’s Bay 1.5%
  10. Gisborne 1.1%
  11. Nelson-Marlborough 0.9%
  12. Taranaki 0.7%
  13. Wellington 0.2%
  14. Auckland -0.1%

Maybe Labour could start campaigning on the crime rate, as that would probably see it drop even quicker than it currently is!

Power Plant

Just been on a media preview of Power Plant, which opens tomorrow at the Botanical Gardens. It’s superb, and a must see. You start at the Cable Car and follow a 50 to 60 minute loop path through the gardens. Not only is there a great array of different lighting on the plants, the sound effects merge in wonderfully also.

Below are a few photos to give you an idea of the different sights. I understand it is already fully booked up this weekend, but it carries on until the 16th of March.

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Well done to Contact Energy and the production team for a great spectacle.

Future timed posts

Someone mentioned to me a while back that they can see the titles (but not the content) of future timed posts from their user page, or similiar

As I sometimes time delay embargoed material, I want to close this “bug”. But having admin access myself, hard to see how it happens for others.

If anyone out there is able to see the title of the post timed for 10 pm today, can you comment below as to its title, and also post the URL you were on which allows you to see it.

Ta

DPF

Cox on Muldoon

An interesting column by former National MP Michel Cox:

One can envisage Rob, the former corporal, together with two former brigadiers, Duncan McIntyre and David Thompson, sitting up on the ninth floor of the Beehive, planning their next moves. A former private, Colin McLachlan, filled the glasses and fetched more water.

It is amazing how former corporals mix it with history. From Napoleon to Adolf Hitler to Idi Amin to Robert David Muldoon; all have played interesting roles.

Not the most flattering comparisons. I suspect Michael was not a big fan!

The House was in “urgency”, to enable it to pass the Finance Bill through its third reading. This bill contained the Budget. Sixteen days of debate had passed, perusing every item, since Budget Day when Rob Muldoon had moved its first reading. In those times “urgency” meant that the house sat until all the required bills were passed; no knocking off at midnight, but a slog to the end.

After helping to dispatch the first bottle, Rob decided to see what his caucus members could offer. He was on the prowl. I kept a bottle with only a couple of nips in it for such visitors; not all my colleagues were as cautious.

As a whip, I was designated to keep an eye on our leader as he would be required to move the third reading in the debating chamber when the time came.

At 2am Rob rolled into the chamber, obviously high as a kite and took his seat. The Opposition could see the state he was in. “Rob, we’re over here!” called out an exuberant and waving David Lange. 

Heh, Lange was such a funny man.

The time came when Rob was required to move the third reading. He stood and was recognised by the Speaker; “The Right Honourable Robert Muldoon,” he called thrice, only to be met with a drunken grin.

It was obvious to us whips that Rob could either stand or he could speak, but he couldn’t do both at once. After several attempts we made another senior minister sit with him to distract him in his attempts to put the final touches to a Budget.

While he was so distracted we made the Associate Minister of Finance, John Falloon, stand and move the third reading.

The days before the House was televised!

When Marilyn Waring resigned from the National caucus, he grabbed his opportunity, and called a snap election. Marilyn’s letter of resignation arrived on my desk and I delivered it to Rob who told me to check with every marginal member to see if they were ready to face the electorate.

This was about three in the afternoon, and the drinking began – brandy was the tipple. He had finished the bottle and at 10.30pm announced to the media and caucus that he would hold an election on Bastille Day. We stood behind him, ready to catch him should he stumble. At that time National was up in the polls by 8 per cent, but when, probably with an awful hangover, he blamed Marilyn for this sudden event, his credibility and our lead collapsed. The rest is history.

I always thought Tom Scott’s cartoon summed up that day. He had Rob sitting up in his bed in Vogel House, with an ice pack on his head.

“Thea [his wife]” he said, “I dreamt that I called a snap election!”

One of the best cartoons ever!

Good luck banning 3D printer designs

Stuff reports:

Three-dimensional printers can already make guns, and may soon allow people to create gold, gems, food or drugs in their living rooms, the Customs Service has warned.

It suggests the law needs to be changed to control importing designs for restricted or prohibited goods in the same way as child pornography is restricted.

A report obtained under the Official Information Act says 3D printers have already been used for criminal activity and to create weapons. In Australia, one was used to make a working “card skimmer” device, which could steal credit card details

Designs exist online for printing working guns, such as the Liberator, created by Cody Wilson, a 26-year-old who calls himself a “crypto-anarchist”.

The Customs report, Border Implications from Emerging Technologies, says 3D printers have passed a “tipping point” and will radically change how borders are policed. The ultimate end of the technology could allow molecular-level printing of “gold, gems, food or drugs”.

The Customs and Excise Act is being reviewed, and Customs Minister Maurice Williamson, who requested the report after publicly voicing concern last year, said he could “almost guarantee” the review would include provisions to deal with 3D printing.

“How do you police a physical border when a vast amount of stuff could get past you by way of a digital file?” he said. “You may be able to carry through [customs] the digital specifications for it all . . . the printer can go ahead and produce [it].”

Trying to ban the import of the digital files will just lead to them being e-mailed or file-shared. The genie is out of the box, and you can’t put it back in.

Whyte and incest

The Herald reports:

New Act Leader Jamie Whyte is standing by his comments that incestuous relationships between consenting adults should not be illegal and says it would be “intellectually corrupt” of him not to be honest when asked such questions.

In an article published on The Ruminatorwebsite, former philosophy lecturer Dr Whyte was asked whether the state should intervene if adult siblings wanted to marry each other.

“Well personally, I don’t think they [the State] should”, he replied, adding it was “a matter of almost no significance because it just doesn’t happen”.

Dr Whyte told the Herald his response was based on his belief that: “I don’t think the state should intervene in consensual adult sex or marriage, but there are two very important elements here – consensual and adult”.

“I wonder who does believe the state should intervene in consensual adult acts?”

He said he was “very opposed” to incest.

“I find it very distasteful I don’t know why anybody would do it but it’s a question of principle about whether or not people ought to interfere with actions that do no harm to third parties just because they personally wouldn’t do it.” …

His view was not Act policy and “nobody who votes for Act has anything to fear”.

I find it refreshing that a political leader will stand by his personal views, while making it clear they are not party policy. Whyte is a classical liberal. There are many areas of society where he thinks the Government should not play a role. He should not back away from his views. The media will go for the sensationalist headline, but he should maintain a position of saying “Yes this is my personal belief, but ACT is focusing on a b and c”.

Some ACT supporters will be uncomfortable with his views, but the public like someone who is genuine and doesn’t hide behind weasel words.

I can be persuaded either way on whether there is a need for incest between consenting adults to be a criminal offence.  There are good arguments for and against. But the reality is, as Dr Whyte said, that it is an almost non-existent issue in NZ and not an issue anyone will be casting their vote on.

Edwards vs Fair Go

Brian Edwards writes:

The television consumer programme Fair Go returns to TV1 tonight. This means work for Judy and me, work which we would ideally prefer not to have at all. Dealing with frightened and distressed people, who have been harassed and intimidated by Fair Go reporters and who see their businesses, reputations and lives being destroyed in the interests of television entertainment and advertising revenue, is both harrowing and frustrating. ….

For some years now Fair Go has been a programme out of control. Its reporters, with the notable exceptions of Hannah Wallace and Kevin Milne,  about whom we have never received a single complaint, are power-drunk bullies, its journalism is suspect, its honesty open to question.

It’s time to even the odds for the victims of Fair Go.

So here is some free advice to anyone contacted by a Fair Go reporter:

*Have nothing to do with them.

*If they send you an email, do not reply.

*If they phone you, hang up.

*If they come on to your property, ask them to leave. Repeat your request more than once. If they remain on the property, call the police.

*If they harass you in a public place, ask them politely to go away and leave you alone. Do not run, hide your face or say ‘No comment’.

*If the harassment continues, write a letter of complaint to the Chief Executive of TVNZ as soon as you return home or to your business. Send a copy of your letter to the Broadcasting Standards Authority, marked FYI.

*Talking to Fair Go is the worst thing you can do. Your replies will be taken out of context and used against you.

*Do not send the programme a written statement. Your statement will almost never be broadcast in full. It will be heavily edited, parts taken out of context and used against you.

*Engaging with Fair Go is almost certain to do you more harm than good. They have already made up their mind about you.

That’s the most damning critique of a show I have seen, and coming from a former host, more so. I have not watched it for years so can’t judge. Has Edwards gone from gamekeeper to poacher or has Fair Go become a bully?

Bus Ticket

Never thought I would have such a good time spending an hour on a bus, but I did last night during Bus Ticket, at the Fringe Festival.

The show starts at the bus stop on Cambridge Terrace where you get an amusing briefing (by coincidence by one of my former staff) and then the bus pulls up. You take you seats and wonder where things will head.

After a few minutes you notice a couple of passengers behaving strangely. You have no idea who are cast, and who are fellow passengers. The girl in front of us basically changes into her more glam clothes on the bus, does her makeup using the bus mirror and even brushes her teeth. this is because her boyfriend gets on the bus at a later stop.

Another girl is rather ADD and blurts out random facts and asks people both on the bus and outside if they will be her friend and go clubbing with her. The people outside the bus not knowing this is a production look very surprised at having someone yell out inviting them to go clubbing.

One poor guy just misses the bus and runs after it in his suit. He is really fast and a sprinter – almost catching it but not quite. He reappears to comical effect all over Wellington. The bus even breaks down for a while and you decamp into a park which sees some more drama. Some of the audience get pulled into the production – but not in a major way.

Overall the show is a pretty hilarious 60 minute voyeur session. The bus moves all around the city and suburbs and various cast get on and off and all add to the drama. If you travel on a bus, some of the scenes will be very familiar – the loud businessman on his phone. The fighting couple. The nervous traveller. The overly talkative girl.

The show was lots of fun, and a very neat concept that would have required a lot of logistical planning.  The show is sold out (no surprise) but if they ever do another one, I’d recommend going along for the most fun you’ll ever have on a Wellington City bus!

 

A fail for the press editorial

The Press says:

Cynics would say that the latest rise was an easy move for the Government to make. When the minimum wage rises by 50c, the Inland Revenue Department gets nearly 9c extra for every hour worked by a minimum- wage earner as the income tax liability increases. For workers with children, the Government’s Working for Families liability will decrease at the same time. All of this money will be funded by employers directly, and indirectly by the consumers who use the goods and services that those employers provide.

A number of people make this mistake. Putting up the minimum wage decreases the tax take for the Government. They have ignored the fact companies pay tax, and at a higher rate than individuals on the minimum wage.

A full time minimum wage of $13.75 an hour is $28,679 a year. Going to $14.25 an hour is $29,721. An increase of $1,042.

Tax on the former is $4,039 and the latter is $4,221. So an increase in tax of $189.

However the employer pays tax at 28%. Their profit will drop by $1,042 and hence the tax they pay drops by $292. That means a net reduction in tax to the Government of $103.

So a rather big fail for The Press editorial.

The McCarten appointment

Vernon Small reports:

Labour seems to have burned off one of its most effective campaigners after leader David Cunliffe confirmed former Alliance president Matt McCarten will be his new chief of staff.

Former deputy prime minister Jim Anderton yesterday said he would not help Labour at the general election, after managing the party’s campaign in the Christchurch East by-election last year and working on the 2011 general election campaign and for Megan Woods in Wigram.

That is a big loss to Labour in Christchurch. It may not be the last.

Matt is very high profile and has fallen out with a fair few people, and criticised a lot of them also.  He’s even said on the record:

There’s no doubt Cunliffe is a gifted performer. What is discomforting is his every nuance and action seems calculated.
With Shearer you can sense his real character. With Cunliffe, I can’t escape the feeling that he has the same phoniness as the Republican US presidential nominee Mitt Romney.

There’s an old quote about Rasputin along the lines of “You can be a famous poisoner or a successful poisoner, but not both”. I tend to think the same applies to being a Chief of Staff. 99% of New Zealanders do not know who John Key’s Chief of Staff is, and that is a good thing.

Matt has great campaign skills, but his relationship skills are not so strong. And the Chief of Staff role is 90% about releationships. You have to manage relationships with the caucus, the relationship with the party, manage a staff of 20, and also manage relationships with other political parties.

I wonder if Labour would have been better to make David Talbot Chief of Staff, and have Matt as the Campaign Manager.

If Labour do win the election, then would Matt become the Prime Minister’s Chief of Staff – a key role basically running the country. With no disrespect to Matt (whom I personally like a lot), but that would make me very nervous.  Vernon Small thinks not:

He may or may not stay on after the election, if Labour wins, but it is hard to see him running the back office in government.

Maybe what Labour have done is bring McCarten in as the de facto campaign manager, but in a taxpayer funded role (as they have so little money). So McCarten may be 90% working on the campaign, and they’ll just have a deputy chief of staff do the back office stuff. That may work, but it is a risk.

The real risk for Labour is the signal it sends that they are heading towards the far left. Matt left Labour because it was not left wing enough and with Jim Anderton set up the Alliance. He then left the Alliance because under Anderton it was not left wing enough and ended up in Mana – a party that gained 1.1% of the vote in the last election.

John Armstrong notes:

He has been brought on board to inject much-needed pre-election urgency, fresh thinking and attention-grabbing strategic audacity into a party whose political reflexes and energy – with the exception of Shane Jones – are on a par with a sloth on tranquillisers.

Heh.

McCarten’s campaign skills should help draw voters back to Labour in its metropolitan strongholds. The real test is whether his input can break National’s stranglehold on provincial New Zealand, as well as broaden Labour’s appeal among lower middle, middle and upper middle income earners.

Given the country’s present conservative disposition, the initial impact may be the reverse. Regardless, winning over those voters to Labour’s cause is likely to require him to compromise personal beliefs, something that has not been part of the McCarten fabric.

Indeed.

Ryall retires completing the biggest ever rejuvenation for National

Health Minister Tony Ryall has announced he will retire at the election, which makes him the 14th National MP elected in 2011 to announce their retirement (three have already left).

Tony is doing a Simon Power and getting out on top. His management of the health portfolio in both opposition and government has been legendary. MPs used to see being given health as a political death wish, and a sign their leader wanted them damaged. Tony not only asked for it, but has almost entirely removed it as a gaping wound that haunts governments.

Labour had scores and scores of well meaning goals, almost none of which were ever achieved. Ryall implemented half a dozen clear targets for the health sector, and we’ve seen real progress made towards them. Some of the targets are:

  • 95% of ED patients dealt with within 6 hours – at 94% (up from 87%)
  • An extra 4,000 election surgeries a year – at 105% of target
  • Cancer treatment to start within four weeks – – at 100% (was 65% in 2008)
  • 90% of infants immunised – at 91%

If National gets a third term, deciding who to make Health Minister will be a challenge. Every week there are a dozen issues that could become front page stories if not handled well.  Paula Bennett could be a sound choice. Jo Goodhew is a sound Associate but she is not yet in Cabinet.

So the 14 retirements since 2011 are:

  1. Lockwood Smith, List (gone)
  2. Jackie Blue, List (gone)
  3. Katrina Shanks, List (gone)
  4. Chris Tremain (Napier)
  5. Eric Roy (Invercargill)
  6. Tony Ryall (Bay of Plenty)
  7. Kate Wilkinson (Waimakariri)
  8. Phil Heatley (Whangarei)
  9. Chris Auchinvole (List)
  10. Paul Hutchison (Hunua)
  11. John Hayes (Wairarapa)
  12. Colin King (Kaikoura)
  13. Cam Calder (List)
  14. Shane Ardern (Taranaki – King Country)

I blogged in March 2011 on the importance of rejuvenation in a party’s second term if it wants a third and/or fourth. I said:

But if re-elected, some Ministers should give careful consideration (in my opinion) to retiring in 2014. Not because they are doing a bad job. Not because they are not valued. But because you don’t win if you don’t rejuvenate.

The actions of both Power and Mapp in retiring long before they were due to be pushed, should serve as an example to others.

It’s also an example some Labour MPs could follow.

This really puts the heat on Labour. I predict Cunliffe will say this is rats deserting a sinking ship, but that’s ridiculous. National is averaging in the high 40s in the polls and has real momentum at the moment. Many of the retiring MPs have safe seats. The contrast with Labour is stark where MPs who entered in the 1980s are still hanging on for dear life.

So congrats to Tony for taking the decision to get out on top, even it means I lose a Wednesday morning walking companion! I’m sure his family are looking forward to getting to spend more time with him after the election.

It also opens up the Bay of Plenty seat for a new MP. It is a very safe seat, so should attract some high calibre candidates.

As far as I know this is the last retirement to be announced. So the focus will now go on candidate selections and list ranking in the lead up to the election.

Enough real abuse that TVNZ staff don’t need to make more up

Stuff reports:

Television New Zealand has apologised for a Breakfast stunt after discovering two of their staff had made up abusive messages to them that were read on air.

The programme two days ago had eight staff read out messages of abuse in the wake of the weekend death in Sydney of television presenter Charlotte Dawson.

But this morning the programme apologised saying that broadcaster Peter Williams and Seven Sharp reporter Dean Butler had made up their messages.

In an on-air statement the show said the two had misunderstood what they had been told to do, and believed it was a “light hearted parody.” The other messages were genuine, Breakfast said.

“TVNZ is taking this matter very seriously and will be dealing with it appropriately,” Breakfast said.

Williams and Butler have had their parody messages removed from on-line.

The message read out by Williams, now known to be made up, said: “My mother always told me that people who talk slowly think slowly. You talk slowly, Peter Williams.”

Butler’s said: “Don’t take this the wrong way but I hope someone punches you.”

In the genuine messages reporter Brooke Dobson was told to “shave off” a moustache, Seven Sharp co-host Toni Street was criticised for her “disgusting flabby arm skin” and co-host Jesse Mulligan was labelled “thick as a plank”.

That is a huge fail. Even if one generously accepts it was a misunderstanding, then it was a huge communications failure for a broadcaster that is meant to be good at communications. There is some real hideous abuse of those with a high profile, and highlighting it was a great idea. But having two of them as invented undermines both what they did, but also the two staffers involved.

Reminds me of Europe in the 1930s

News.com.au reports:

A UGANDA newspaper has listed 200 people it accused of being gay, a day after the president called homosexuals ‘mercenaries’ and signed one of the world’s toughest anti-gay laws.

“Exposed!’’ the headline of the Red Pepper tabloid read, beneath photographs of Ugandans it said were gay, as well as reporting on lurid stories of alleged homosexual actions.

“Uganda’s 200 top homos named,’’ the daily newspaper added.

That’s appalling at the best of times, but in the present climate there is almost inciting their deaths.

On Monday, Uganda’s President Yoweri Museveni signed a bill into law which holds that repeat homosexuals should be jailed for life, outlaws the promotion of homosexuality and requires people to denounce gays.

Mr Museveni said he could not understand how one could “fail to be attracted to all these beautiful women and be attracted to a man’’ instead and described in graphic details his particular revulsion to oral sex.

This is not far removed from what the Nazis started in the 1930s. I don’t mean the holocaust, but the jailing people for who they are, and denouncing of them.

I’m not sure if we give any aid to Uganda, but now would be a good time to stop.