Stuff reports:

As well as excluding first time buyers from the rules, Labour would exclude areas where there was no need for them.

This story on LVRs suggests to me that Labour totally miss the reason the Reserve Bank is bringing in LVRs. It is not bringing them in to drop house prices in Auckland (even though there could be an impact).

It is bringing them in for financial stability of the banking system. They don’t want banks to have 100% of their portfolios with say only 5% deposits.

If you exclude some regions, then the banks may end up with too high a proportion of loans with little capital.

But the other thing Labour seems to miss, is that there is no universal rule that every loan must have an 20% deposit. The LVR rule is that 90% of their loans must have a 20% deposit. A bank can still do a mortgage on a 5% or even 1% deposit for some of their customers – just not more than 10% of them.

If you exclude say all of NZ outside the main centres and all first time buyers, then you are impacting just 30% or so of the housing market which means LVRs will not work in terms of their roles of protecting the banking system from a crash.

The Police and Stats NZ have released the latest annual crime stats, for the 2012/13 fiscal year. Major changes:

• Total crime rate down 7.4%
• Assaults down 0.1%
• Sexual crimes rate up 10.8%
• Robbery rate down 8.2%
• Burglary rate down 10.1%
• Thefts down 9.2%

The Dom Post editorial:

The immensity of the task facing new Labour leader David Cunliffe is starkly illustrated by his party’s bungled attempt to embarrass the Government over new minimum house deposit rates.

Mr Cunliffe has talked about putting Labour on a war footing. This week’s events show it is not on a war footing. It is in a deep slumber. …

It is six weeks since the bank announced a minimum deposit level of 20 per cent for most home buyers. You’d think in that time Labour would have been able to come up with a young family who’d been saving for several years and had had the dream of home ownership snatched from their grasp at the last minute. Instead the best the party could manage was a 23-year-old IT consultant who was not even sure he would live in a house, if he bought it. “If it’s good enough I could live in it, otherwise it could be an investment property,” said Kanik Mongia.

No criticism of Mr Mongia. Good on him for saving enough for a 10 per cent deposit on a $400,000 to $500,000 home.

But does Labour really want to portray itself as the party of upwardly mobile young property investors? And is it really prepared to undermine the integrity of monetary policy to give Yuppies a leg up?

It was a staggering own goal. They propose destroying the independence of the Reserve Bank so a 23 year old can get a bank to fund a $500,000 investment property for him. It would be difficult to find a more unsympathetic case to highlight.

Not only did they fail to find someone better, they had their leader railing against property investors in the same story as they are promoting one.

I’m reluctant to blame parliamentary staff for the failings of a party, but in this case the bungle should ring warning bells. I have to assume that Cunliffe wasn’t told that the photo op he was doing involved an aspiring 23 year old property investor. Surely he would have said no if he was told.

So this suggests that his leader’s office didn’t do due diligence on the person. They should have had a conversation with him and found out that he was thinking of using the house as an investment property.

At this early stage you can get away with errors like that, but going into the election you can’t afford to have such fuck ups.

Labour’s failure to find a more suitable “victim” for its campaign indicates that it is either out of touch with the issues or not well connected to the community it purports to represent.

However, the party’s fortunes will not be transformed simply by the leader performing better. The party must also do its bit. On this week’s evidence it has a long way to go.

Normally it is the Government that is happy when there is a recess as it means no question time. I’d say Labour should be very happy there is no Parliament this week, because they’d be getting a massive mocking in it, if there was.

Adam Bennett at NZ Herald reports:

The Government has loaned stricken state owned coal miner Solid Energy $100 million and extended a further $30 million standby facility as part of a restructuring package announced this morning.

Finance Minister Bill English and Minister for State Owned Enterprises Tony Ryall said the package had been agreed between the company, the Government and key lenders.

“As we have said previously, ministers were not prepared to expose taxpayers to on-going losses if Solid Energy’s core business was not considered viable,” English said.

“However, we also said that we were prepared to provide support for the company if there was a reasonable chance it could be made viable, and we expected the lenders to also contribute to that recovery,” he says.

This is a good outcome for the 1,000 or so staff of Solid Energy. However it is risking a further $100 million of taxpayer money. Hopefully the loan will be repaid in time, as Solid Energy adjusts to the new environment.

This for me reinforces why absolutely the Government should not own competitive commercial companies like Solid Energy. Taxpayers should not have to be exposed to the risks involved with such investments.

Chairman Mark Ford said the proposal “would allow the refocused coal mining business to trade its way back to profitability over the next few years, but that this would have to be supported by ongoing efficiencies and cash generation and improvements in the international coal market”.

“We believe that the company has a good operating future and we hope that with the continued support of our shareholder and our funders, we can re-establish the company as a major employer and economic contributor in our key coal mining regions.

The moment it is stable again, we should sell it – and not just 49% of it. If we had sold it three years ago, the taxpayer would be hundreds of millions of dollars better off.

Andrea Vance at Stuff reports:

National list MP Chris Auchinvole has confirmed he is one of a number of National MPs planning to step down at next year’s general election.

Internal Affairs Minister Chris Tremain said on Monday he would not contest the Napier seat he has held for almost a decade. …

Other MPs expected to stand aside are Invercargill MP Eric Roy and Hunua MP Paul Hutchison, who are both 65.

Auchie will be missed. A wonderful guy wit a great sense of humour.

I always have mixed feelings when an MP announces they are retiring. On a personal level I feel sad, because the majority of MPs are really decent people and make good contributions to Parliament. However on a political level I welcome the renewal because a political party that doesn’t renew will struggle to get re-elected.

At present I can honestly say there isn’t a single National MP that I dislike and want gone. Being lucky enough to get to know many of them reasonably well, I appreciate the contributions they all make.

However as I said, the demand for renewal is important, especially when there is limited opportunity to gain additional MPs (hard to increase the vote very much from 47.5%!). The public have shown they will not keep voting for the same faces time and time again, unless there are some new faces coming through also.

So renewal takes place at two levels – cabinet and caucus.

At the cabinet level, John Key has shown he is determined to have renewal. In almost a first, he dropped two Ministers at the beginning of this year, to allow new Ministers to come through. This is very rare. Normally Ministers only go mid-term when they have done something wrong (and neither had). This was a very encouraging sign. It is possible there could be another cabinet reshuffle early next year as there are certainly some good backbenchers waiting in the wings to become Ministers who should be given the chance.

Renewal at caucus level can be more challenging, as that only really gets done at election time. Ideally you want MPs to decide for themselves if their spell has been long enough, and as Chris and Chris have done make an announcement around a year out from an election.

If an MP is an electorate MP, they can of course be challenged and National has a proud history of allowing members to decide the local representative without head office getting a vote. John Key and Judith Collins both won their seats by challenging an incumbent.

The list is the other area of renewal. In previous elections the caucus has been mainly protected on the list, with all but a handful of new candidates ranked below current MPs. Doing so helps maintain the stability of a Government. However it has a price to pay in not having enough renewal. My hope is that the PM will make clear to the party that in 2014 the caucus should not be automatically protected in list ranking. This doesn’t mean that they don’t all get winnable spots. It means that you only over-ride the regional rankings by members unless there are exceptionally good reasons to do so. We won’t get good candidates coming forward on the list if they see the top 55 or so spots are already taken up.

Nicholas Kristof writes in the NYT:

IMAGINE having to pick just one of your children to save, while leaving the others to face death.

One of my most searing experiences as a reporter occurred in Cambodia, where I met a woman whose daughter had just died of malaria and who was left caring for seven children and grandchildren.

The woman, Nhem Yen, showed me her one anti-malaria bed net and told me how every evening she agonized over which children to squeeze under it — and which ones to leave out and expose to malarial mosquitoes.

That’s the kind of excruciating question that extreme poverty forces on families.

Most of us couldn’t even comprehend having to make a choice like that.

For thousands of generations, a vast majority of humans have lived brief, illiterate lives marked by disease, disability and the loss of children. As recently as 1980, a slight majority of people in the developing world lived in extreme poverty, defined as surviving on less than $1.25 in today’s money.

So 30 years ago half the developing world were near starvation, or did starve.

The share of people in the developing world who live in extreme poverty has been reduced from 1 in 2 in 1980 to 1 in 5 today, according to the World Bank. Now the aim is to reduce that to almost zero by 2030.

That is a huge gain, and a trend we want to continue.

Timeout for a skeptical question that is both callous and common:

When additional kids survive in poor countries, does that really matter? Isn’t the result just a population explosion leading to famine or war, and more deaths?

That’s a frequent objection, but it’s wrong. When child mortality drops and families know that their children will survive, they are more likely to have fewer babies — and to invest more in them. There’s a well-known path from declining child deaths to declining births, which is why Bangladesh is now down to an average of 2.2 births per woman.

An interesting observation I had not seen before.

Ancient diseases are on the way out. Guinea worm and polio are likely to be eradicated in the coming years. Malaria has been brought under control in many countries, and a vaccine may reduce its toll even further.

AIDS is also receding. Last year in southern Africa, I interviewed coffin-makers who told me grumpily that their businesses are in recession because AIDS is no longer killing large numbers of people.

Good news for most is always bad news for some!

The drop in mortality understates the gains, because diseases don’t just kill people but also leave them disabled or unproductive, wrecking the economy. Poor people used to go blind routinely from disease or were unable to work for want of reading glasses. Now they are much less likely to go blind, and far more likely to get glasses.

These achievements aren’t just the result of work by Western donors or aid groups. Some of the biggest gains resulted from economic growth in China and India. When the poor are able to get jobs, they forge their own path out of poverty.

Their embrace of a market economy has pulled hundreds of millions out of extreme poverty.

The world of extreme poverty and disease that characterized life for most people throughout history may now finally be on its way out.

I’d love to see that in my lifetime.

It can be tough to talk about the future; sometimes it seems like there are so many unknowns. Just think about how much the world has changed since the introduction of New Zealand Superannuation (NZS) in 1977 creating a universal – and not means-tested – scheme that paid 80 per cent of the average wage to married people over 60.

During the ensuing years, adjustments have been made to the scheme which in itself was the latest incarnation of much older systems. This shows we can be flexible when we need to be – and right now, with a population which is living and working longer,we need to talk about superannuation.

It’s time for an honest and frank discussion about how NZS might need to change to reflect these changing circumstances and lifestyles because the current arrangement of eligibility for NZS at 65 may not suit everybody’s needs.

Earlier this year, United Future leader Peter Dunne released a Government Discussion Paper on aFlexi-Super plan and New Zealanders have just a few more weeks left until the Friday, 11 October deadline to comment on the proposal.

Flexi-Super gives New Zealanders the option of choosing to take a reduced rate of NZS from the age of 60 or an increased rate if they delay taking up superannuation until they reach 70.

“The basic motivation for this policy is giving people more choice because New Zealanders want choice about how they live their lives,”Mr Dunne says.“At the moment, they have no option but to carry on working until they’re 65 or leave and make do.”

Under Mr Dunne’s Flexi-Super plan, the standard age of eligibility for the state pension remains at 65 and payments stay at two-thirds of the average after-tax weekly wage for those who take their super then. But the earlier someone decides to first take NZS, the lower the payment will be each year relative to the rate they would have received had they decided to first collect NZS at 65; alternatively, taking NZS after age 65 means receiving a higher relative rate.

These rates will be adjusted for inflation and wage increases,so the mechanism for adjusting rates of NZS does not change. It will remain possible to continue working and receive NZS-and that could offer greater flexibility to those in physically demanding jobs.

The paper points out that there are advantages and disadvantages in allowing such flexibility.

Advantages include making the system fairer for workers in tough, physical jobs and those, such as Maori and Pasifika, who have a lower life expectancy. It also avoids the possible stigma associated with seeking benefits among those who, for a variety of reasons, can no longer work. It may also enable some people to pay down debt or build up assets.

Giving people the option to wait till they are 70 before drawing down NZS will encourage older workers to stay in the labour force for longer, helping to retain much-needed skills, experience and institutional knowledge.

There is a risk that Flexi-Super may reduce incentives for the 60- 64 year olds to work and if NZS is taken too early, it could create hardship for many who retire early. It is vital for us all to understand that the reduced rate we accept in return for being paid earlier would be the rate received for life.

The State might end up having to supplement the incomes of people who retire early, then find themselves unable to make ends meet because of an unforeseen change in circumstances.

A layered system could also seriously complicate what is at present an easily understood and administered system. Government actuaries will face a Herculean task to figure out a sliding scale that takes all the required factors into account and delivers a system that iscost-neutral, as is proposed.

“This is part of a wider conversation about financial literacy that we all have to have and I encourage all New Zealanders to think about these issues and discuss them in the course of daily life,” MrDunne says.

According to a Fairfax Media-Ipsos poll in February, 49 per cent of people want to choose when they receive their state pension, with reduced or enhanced rates depending on the age they start drawing payments.

So we need to consider carefully Flexi-Super and the Government wants to hear your views. The Discussion Paper can be viewed at www.unitedfuture.org.nz and also on the Minister of Finance’s website.

The deadline for submissions is October 11, 2013. Submissions can be made by email to fl[email protected] or posted to Flexible Superannuation, The Treasury, PO Box 3724, Wellington 6140, New Zealand. Following this consultation, the Government will consider whether to further explore the Flexi-Super proposal. More detailed policy work and more consultation will take place before any decisions are made.

Peter Dunne, Leader, UnitedFuture, 04 817 9410

Midsummer, at Circa, is a wickedly funny play. I laughed almost non stop during it.

Photo by Yael Gezentsvey 

Kate Prior and Byron Coll play Bob and Helena. Helena is a lawyer and Bob a petty crim. They tell the story of how they met, and met again, and eventually their weekend of blowing $15,000 of cash embezzled from a local crime lord.

The scene of the initial hookup in the bar is hilarious, as their different interpretations of how it happened unfold.

Both Prior and Coll perform some songs as part of the play, but it is their acting which is just superb. They both played their roles with near comic genius. Kate Prior especially was spectacular when playing some of the minor characters such as the local crime lord ( Big Tiny Tam Callinan). Her Scottish accent, her eyes and her screwed up face were just a delight. Coll was excellent also.

They navigate a sister’s wedding (which ends with her 12 year old nephew declaring that Helena said it will only last a year as they met on the Internet), a failed bank deposit for the crime lord, and a visit to a local fetish club where they are left tied up most of the night by accident!

The set is worth a mention also. Simple yet effective with a series of boxes being used to create beds, steps, couches etc. And on the back wall you are intrigued by all the props hanging there which get used at some stage.

There are some serious themes to the play – Bob turning 35 and Helena’s failed previous relationship compared to her sister getting married. But the seriousness never gets in the way of a thumping good time.

The latter half of the play is slightly slower than the first half, but at 95 minutes in total you never get bored – far from it. My co-reviewer commented:

One of its singular charms is definitely its exuberant physicality. Both actors make such great use of all the stage, and undertake such acutely accurate and incredibly funny metamorphoses – into children, thuggish crims etc (let’s not forget the talking cock!). But as well as all the laughs, there was such a sweet poignancy to the recognisable lives and rites of engagement of the protagonists. The songs sung (and strummed) by the actors seemed to heighten both the energy and fun of the play as well as its tender intimacy and truth telling. What a rich and satisfying entertainment – all that laughing over all the clever (perfectly Scottish-accented) dialogue brought to life in such a masterly way by the actors.

Not a play for young kids, but definitely a play I can recommend to any adults wanting a great night out.

Midsummer is also reviewed at Theatreview.

Andy Tookey is an effective campaigner for increasing organ donation rates in New Zealand. He has highlighted the barriers to increasing the rates such as the current practice where the National Organ Donor Service allow the wishes of family members to over-ride the explicit wishes of the deceased.

Radio NZ did a 28 minute special on Sunday into organ donation.

Fast forward to 18 minutes and 25 seconds where Radio NZ reveals that the National Organ Donor Service refused to be interviewed by Radio NZ if Andy Tookey was also interviewed. They went even further and demanded editorial control, saying that if Radio NZ even mentioned Andy Tookey or his group, then they would also refuse to be interviewed.

Radio NZ to their credit declined to submit to such outrageous demands, and hence the NODS were not part of the programme.

I am appalled that what is effectively a Government funded organisation will try and tell Radio NZ that they are not allowed to even mention Any Tookey or his group, because he is critical of our low donation rates.

This would be a very good story for Mediawatch!

But I think it is also an issue for the Government. While the NODS is not directly accountable to the Government (it is managed through the Auckland DHB), it is funded by taxpayers. The Minister should make it very clear to them that their behaviour is wrong, and should not be repeated.

David Clark did a press release today:

New mortgage lending restrictions will be a kick in the guts to the many small businesses that borrow against the family home – although the Government has yet to do any work in the area, Labour’s Economic Development spokesperson David Clark says. 

I thought David was aware that David Cunliffe took that portfolio off him and gave it to Shane Jones! It seems not.

Pete George (who is standing for Mayor) blogs:

In a televised mayoral forum current mayor Dave Cull accused me or councillors of lying about claims of Greater Dunedin councillors working together.

I believe the evidence shows that Cull is trying to blatantly mislead the public about his Greater Dunedin ‘group’, about their motives and what they have done during the current term – in other words, he appears to be the one who is lying.

The dispute is over whether the Greater Dunedin group is just a loose association or effectively a party that if they gain the majority of seats will rule the Council. There have been reports that they do meet as a caucus in the Mayor’s office with other Councillors excluded. Now any group of Councillors can meet as they like – but transparency is important. If you are a caucus, then be open about it.

Brian Fallow at NZ Herald reports:

Businesses are the most cheerful they have been since 1999, a good sign for growth and employment but a potential harbinger of higher inflation and interest rates.

ANZ’s monthly business outlook survey found 56 per cent of respondents expected the general business situation to improve in the next 12 months while only 2 per cent expected it to get worse.

The net 54 per cent optimistic, up from a net 48 per cent in August, is the highest that indicator has been for 13 years.

Firms are also extremely upbeat about their own prospects, a net 45 per cent expecting a lift in activity, up two points on August.

Hopefully this will lead to growth over 3% in the next year.

Rob Hosking at NBR reports:

A $1 million government funding to the Council of Trade Unions to run accident prevention workshops is under review.

This is beyond excellent. Not only is Judith Collins doubling the amount of funding for accident prevention, she is going to ensure it is actually spent on accident prevention rather than union membership recruitment.

I understand the $1 million a year funding to the CTU was established by a former Labour Deputy Leader when he was ACC Chair. Labour constantly tries to find ways for taxpayers to fund unions so that the unions in turn can fund the Labour Party!

The CTU has responded by hysterically demanding Judith Collins resigns, because she is demanding proof that they actually do anything worthwhile with their $1 million a year.

I understand Business NZ gets some funding also. I’d scrap the funding to both bodies, and use it to run safety campaigns at the coal face.

I do wish there would be more scrutiny of claimed increases in electricity prices. The data I consistently use to measure the impact of electricity on the average household is the Stats NZ Consumers Price Index, electricity class.

Now 3 News reports:

But at the same time, Labour and the Greens took the opportunity to release data showing electricity profits continue to increase, and 400 households each day are now having their power disconnected because bills are not being paid.

Dunedin pensioner Rosemary Dorey describes her latest power bill as “a horrible surprise”.

She is tempted to turn her heaters off to save money. 

“It’s very tough when they get to nearly $300 a month,” she says. “That’s quite a lot when you’re on a pension.”

So why is electricity getting more expensive, when new figures show electricity demand has actually dropped in the past five years, down 1.6 percent? Over that time, the price of electricity has gone up nearly 30 percent.

30% sounded too high to me. Usually the opposition are referring to price increases since the election. In December 2008 the electricity CPI was 1175 and today it is 1404 – that is a 19.5% increase over four and a half years or around 4.3% a year.

Note that includes the GST increase (which had tax cuts to compensate for it) but also the introduction of the Emissions Trading Scheme which imposed an external cost on some electricity. Labour and Greens are proposing to double the cost of the ETS on the electricity sector incidentally.

3 news reports:

A citizens-initiated referendum into National’s asset sales will be held by postal vote in November.

Prime Minister John Key confirmed the referendum will cost about $9 million and is the cheapest option to hold the non-binding vote. Voting in person would cost taxpayers $39m.

That’s a relief!

Voting will be open from November 22 and close on December 13.

By which time there may only be one sale to go! Ridiculous. Phil Goff said the 2011 election will be a referendum on asset sales. He was right.

Someone has written to all Wellington local body candidates asking them their stance on fluoridation. The responses are here.

Sue Kedgley, Judith Aitken and Grant Brookes do not support fluoridation (listed as ambivalent) so that are three easy choices in terms of who not to vote for onto the DHB.

So who would be good to vote for from the 23 standing? My top picks would include:

• Camilia Chin – good operational experience in health sector
• Sally Dunbar – excellent business and community background
• Russell Franklin – good health experience
• Virginia Hope – current Chair
• Keith Johnson – economist
• Nick Leggett – good governance skills, current Porirua Mayor
• Ian Murphy – NZ Rugby medical director
• Kiri Rikihana – good operational experience in health sector
• David Talbot – good health, science and governance background

Ones I would rank low are:

• Marianne Bishop – unionist
• Grant Brookes – unionist, Mana
• David Choat – former Labour leader’s office
• Sue Kedlegy
• Chris Laidlaw
• Helene Ritchie
• Tony Simpson, former Alliance staffer

Labour did a photo op yesterday with an aspiring first home buyer who now can’t buy his first home because of the Reserve Bank’s new LVRs. Labour has promised to destroy the independence of the Reserve Bank by stating it will instruct the Bank to exempt aspiring first home buyers from the new rules (despite the Reserve Bank saying they won’t work if you do that).

So who was the aspiring first home buyer they highlighted to show how his or her dreams had been crushed after presumably years of saving for a first home so they can live in it.

Labour leader David Cunliffe met would-be first-time buyer Kanik Mongia, 23, in central Auckland today.

He’s 23? Labour’s pin up child for being locked out of the property market is a 23 year old? Someone who has probably been in the work force for just two years?

Mr Mongia, an IT consultant was looking at properties in the $400,000 to $500,000 range in south Auckland or Mt Wellington.

Tell me Labour are joking? their big photo op was with a 23 year old wanting to buy a half million dollar house? This is their rationale for wanting to destroy the independence of the Reserve Bank?

“If it’s good enough I could live in it, otherwise it could be an investment property.”

It gets worse for Labour. He wants it as an investment property!!!!

Mr Mongia said he has been looking for four or five months and has enough saved for a 10 per cent deposit.

Okay so let’s look at this in full. Labour is proposing to destroy the independence of the Reserve Bank so 23 year olds can buy half million dollar investment properties with a mere 10% deposit?

Now all credit to Kanik Mongia. It’s great he has saved even $50,000 by age 23, and great he wants to buy a house so early on. But when we talk about housing affordability and propose radical solutions such as having the Government over-ride the Reserve Bank, then you need a much much much stronger case than the fact that someone may have to wait until they are 24 to buy their first investment property.

UPDATE: Love the irony in this Stuff story:

Labour leader David Cunliffe ramped up pressure on the Government with a public meeting with Kanik Mongia, 23, an IT consultant, who had mortgage pre-approval for a 90 per cent loan cancelled by ASB because of the LVR changes. He was seeking $450,000 for an investment property.

Cunliffe said there was need to cool the property market, especially in places like Auckland, but the new lending rules would have “unintended consequences” on first home buyers.

“Unfortunately they are taking it out on the hide of first home buyers like Kanik, and that’s not what we want. We want young people to be able to get into their homes and we don’t want young speculators driving prices through the roof,” he said.

I’m sorry, but this is as big a fail as you can get.

Chris Tremain has announced:

Chris Tremain, MP for Napier, announced today that he will not be contesting the 2014 general election.

“I am proud of the significant achievements of this government led by Prime Minister John Key. Under his leadership New Zealand is now one of the strongest growing economies in the western world and has a very bright future. I intend to continue to contribute to this exciting future but now in the commercial sector of our economy.

“My family has been a huge part of my decision. I have three children finishing high school and I want to devote more time to them before they leave home,” Mr Tremain says. …

“The National Party continues to enjoy unprecedented support as a second term government, which means we are well placed to win a third term next year. In the last election, I had a 6600 party vote majority and a 3700 electorate vote majority, which I believe provides a solid platform for a strong National Party candidate to win Napier once again in 2014,” Mr Tremain says.

Chris is a popular and effective MP. Being an MP, let alone a Minister, with school age kids is tough. I’m sad to see Chris retire, but renewal is a healthy thing for a political party. I much prefer MPs to come in for say nine to 15 years, than be an MP whose only life experience is being a parliamentary staff member and then an MP.

Tony Randle writes in the Dom Post:

The recently released Wellington spine study recommendations on expanding public transport to and through the Wellington CBD found a dedicated Bus Rapid Transit (BRT) option is the best long-term approach compared to bus priority or changing from buses to light rail.

Since then, we have heard mostly the anguished protests of light rail supporters who dispute this recommendation.

I presume these supporters do not plan to pay for the massive cost of light rail themselves!

The transport models for Wellington show the BRT option will increase public transport trips from south and east Wellington by 8.5 per cent while light rail will barely make a 1 per cent improvement.

It reminds me of the proposal to increase train capacity on one of the Wellington bus lines. It would have cost $100 million and only removed 80 cars a day at peak time. I joked it would be cheaper to buy 80 motorists a helicopter!

A key reason light rail fails is the need for thousands of CBD- bound commuters to transfer between buses and light rail at Kilbirnie or Newtown, compared with BRT where they will complete the journey with a single bus trip.

That is a strength of our bus system – not having to swap transport modes.

In economic terms, the BRT option has $90 million in public transport benefits against only $30m for the more expensive light rail option.

The Benefit Cost Ratio of BRT is 0.87 compared to just 0.05 for light rail (a benefit cost ratio of 0.05 is a total waste of money).

Julie-Anne Genter and the Greens correctly point out that some of the roads of national significance have a BCR of less than 1, which makes their economic value debatable. Surely Julie-Anne and the Greens would agree that a transport proposal with a BCR of 0.05 is barking mad!

A guest post by Wellington Regional Councillor Daran Ponter:

1 OCTOBER BUS FARE INCREASES

The Greater Wellington Regional Council (GWRC) bus and train fares are increasing again on 1 October (i.e. Tuesday), this time to increase the amount paid by commuters by an average of 2% (GWRC Notice).  This demand for a 2% increase in commuter fare revenue for 2013 will result in increases in the cost of Snapper and Mana card fares by 3.8% for Zone 1 fares and approximately 2.5% in most other fare zones.

On average, fares have risen by 8% over the past three years. 

The Greater Wellington Regional Council justified the 1 October fare increases on the basis of “covering rising public transport costs”.  However, the Regional Council’s 2012/13 Year End result shows that instead of a budget shortfall of $3M, the council ran a significant budget surplus of nearly $1.5 million in the transport area (see table below) !

PT Group 2012/13	Actual ($000s)	Budget ($000s)	Variance ($000s)	Last Year ($000s)
Operating Revenue	94,107	101,186	(7,079)	95,629
Operating Expenditure	92,637	104,185	(11,548)	92,861
Operating surplus / (deficit)	1,470	(2,999)	4,469	2,768

 

The Year End Report of the PT Group not only shows for the year 2012/13 the GWRC spent $11.5M less than budget on public transport services, it shows it spent less in 2012/13 than the year previously ! The council has banked the 2012/13 transport surplus of $4.5M taking the transport reserve to $9M. 

Clearly last year’s 3% fare increase was actually never needed as predicted PT costs did not increase.  This also means that this year’s 1 October fare increases are simply not warranted. The regional council, through its own policies, has kept prices high and that this year it could actually have afforded to cut fares and still stay within NZTA funding rules!

The Council’s policy of increasing fares every year irrespective of the circumstances is just simply irrational and does nothing to attract people to use public transport.

Significant Drop In Patronage

As concerning is the fact that peak hour patronage on Wellington buses has dropped by 10% over the past three years (from 11,288,335 trips in 2010/11 to 10,214,328 trips in 2012/13). See http://www.metlink.org.nz/info/statistics/patronage-numbers/.  In the same period total patronage (peak and off-peak) dropped by 2%.

The Regional Council has been predicting patronage increases of 3-4% per annum, we have gone in precisely the opposite direction.  Peak bus patronage is now less than 2005/06.  Wellington bus commuters now realise that high bus fares mean it is cheaper to drive to work and are obviously doing so in increasing numbers.

These figures seriously bring into question the efforts that the Regional Council has been taking to encourage people onto public transport.  Its PT fare policy needs to be less about revenue and far more focussed on encouraging people and families onto public transport – fares cheaper than cars, wider discounts, especially in the off-peak and a commitment to park and ride facilities for bus commuters.

The GWRC plan for increasing public transport use is failing.  Increasing fares on Tuesday is the worst thing it can do when bus patronage is plummeting.   It is especially bad when all the increased revenue will not be spent on PT services . . . it will probably just end up being banked into the GWRC Transport Reserve.

I think it is wrong for the Regional Council to be increasing fares, in what appears to be a revenue generating exercise.

The policy of both central and local Government is that the fares should cover 55% of the costs of public transport, but with these increases the proportion paid for by fares will exceed that. The other issue is they are putting up bus fares to basically cover increased train operating costs. Bus fares should cover bus costs and train fares train costs.

If you are voting for Regional Council, ask your candidates whether they support an increase in bus fares, which is not justified or necessary.

Lian Dann writes in support of LVRs in the Herald:

There are at least four good reasons for introducing LVRs.

The first is that they protect first-home buyers from being trapped into high levels of debt that they might not be able to service if interest rates rise dramatically in the next few years – which they are expected to do.

Given the projected interest rate rises of two full percentage points over the next two years, we are likely to see bank rates rise above 8 per cent and it seems entirely reasonable to imagine retail mortgage rates going above 10 per cent within the next five years. That’s where they were in 2007 and in the 1980s they went much further.

Interest rates are currently at historically unprecedented lows and that is a dangerous place to be taking on a low equity mortgage.

Worse still, if were to see the kind of house price crash that happened in the US five years ago, then it is these people with the highest debt levels who will be most likely to hit negative equity.

In other words, they could be left owing more to the bank than the house is worth. In these conditions those with high debt levels lost their homes along with their deposits and all the rest of the money they had put into their homes.

So yes, it is a bummer if you’ve missed the chance to buy a house this year because of the LVRs.

But, if you can’t afford a 20 per cent deposit on a house, then perhaps you can’t really afford the house. And if that’s not fair then it is not fair because of the fact that house prices are too high.

Which is a second good reason for LVRs. If they dampen demand they could potentially lower house prices. In Auckland and Christchurch they almost certainly won’t, but they could help slow growth and that could buy some time for house hunters to keep saving for a deposit.

A third upside to LVRs is that if they work they will reduce the need for the Reserve Bank to raise interest rates as fast as it might have. That’s good for all mortgage holders, especially new home owners with high debt levels.

Finally there is the official reason the Reserve Bank is introducing these restrictions. The bank has a statutory duty to ensure the stability of the New Zealand financial system for the good of the country. That means it has some control over how banks are allowed to behave.

The Reserve Bank is simply not comfortable with the banks holding a high level of low equity loans in the wake of the worst financial crisis the world has seen since the Great Depression. Debt was to blame for the crisis in 2008.

So to those who say the bank is being overly cautious, one can only ask: “Dude, what planet have you been on for the past five years?”

 A good summary of the case for the LVRs. However they are no silver bullet he reminds us:

If the gap between supply and demand is wide enough, no amount of regulatory policy can hold back the market – just look at China where far heavier bank lending restrictions are doing little to cool the urban housing boom.

One has to increase the supply, and that will not work unless you increase the land supply.

Not content with heralding the economic and agricultural miracle of North Korea, Gareth Morgan is also promoting their healthy food, as Eric Crampton reports from an offline Press article:

He’s barely off the plane after a 40,000-kilometre ride across Russia and Korea. Controversy trailed after him like his billowing motorcycle exhaust, with critics accusing him of becoming a propaganda pawn on his six-year-in-the-planning tour of North Korea.

But he’s still gushing about the experience, and how he lost 6kg in the absence of the processed food – “crap basically” – that dominates the New Zealand food supply. That and the fact there was less food in general, and the wine was terrible. 

There it’s all whole food, that fills you up, takes longer to eat and delivers more nutrients for less energy.

And there, in a nutshell, is the thrust of Morgan’s new book, Appetite for Destruction, co-written with offsider Geoff Simmons. Fake food, he says, is killing us.

Actually it was in North Korea where millions died of starvation.

I’m staggered media still report Gareth as an expert on everything. Is there any topic at all on which he is not an expert?

But he has allies. The Greens like his idea of a fat tax.

The Greens would support an investigation into how a ‘fat tax’ on processed food in New Zealand’s supermarkets could be imposed.

But the government has dismissed the idea, saying it would add to the burden of families in tight economic times.

Why stop at a fax tax. I await them to announce subsidies for vegetables and a ban on food they disapprove of.

Kevin Hague, Green Party spokesperson on health and wellbeing, said he would be interested to read Mr Morgan’s new book as it sounded similar to party policy on combating obesity.

Clear front labelling of unhealthy ingredients and a traffic-light type classification system is a “no-brainer”, said Mr Hague.

We already have extensive labelling. A traffic-light system sounds appealing due to its simplicity, but the problem is it is simple. Milk gets a red light and diet coke and popcorn a green light.

An article explains that  flour, bread and pasts get green lights despite high carbs and lot nutrition. Also:

A bag of sugar, with no nutritional value whatsoever, would get green lights for fat, saturated fat and salt – an obvious red light for sugar. Sweets generally would get green lights for fat, saturated fat and salt. They would get red lights for sugar only – appearing healthier overall than olives and sunflower seeds on first sight.

Back to the fax tax:

In 2011, Denmark introduced a tax on butter, meat, cheese, pizza, oil and processed food that contained more than 2.3 per cent saturated fat, but withdrew it a year later due to difficulty in implementing it.

There was no difficultly in implementing it. It failed. It did not change eating habits, it destroyed jobs and led to a boon in purchasing from other countries. It did however bring in extra money for the Danish Government.

You never hear proponents of these extra taxes say that they’ll use them to reduce other tax rates such as income tax. No – it is all about  revenue grab.

However, the Greens would support an investigation into how to design an effective processed food tax.

I bet they would.

“Spending on prevention of obesity should be the absolute priority for any health minister.”

The absolute priority? Not cancer treatments? Not rheumatic fever? Not maternity services? Not life saving surgery? Not quality A&E Departments. The absolute priority for the Health Minister should be telling people what food choices they should make?

That says volumes about the world-view of the Greens.