Telecommunications in NZ

The Commerce Commission has published its sixth annual telecommunications market monitoring report.

Some interesting facts:

  • Investment $1.26b
  • Revenues $5.22b. Voice revenues falling, data revenues growing.
  • 78% of households with a fixed line, have a broadband connection. We have the fastest growth rate in the OECD.
  • The number of voice call minutes dropped from 6.1 billion to 5.7 billion
  • Telecom’s fixed line market share dropped from 65% to 61%
  • We have 111 mobile phones per 100 people
  • 13.9 billion text messages sent, which is around 3,000 per person, the highest by far in OECD. Love to see a breakdown by age!
  • Increase in Naked DSL connections from 30,000 two years ago to over 100,000 in the last year.
  • Average data use per DSL line increased from 10 GB to 19 GB
  • Average download speed of 3.9 Mbps – pretty crap
  • Overall the telco market becoming significantly more competitive, while UK and Australia are static
  • Text or SMS revenues of $376m greater than Mobile broadband revenue of $354m, but next year broadband revenue should be larger
  • Mobile data doubled to around 4 petabytes or 4 million MBs.
  • 66% of NZers own a laptop, 48% a smartphone and 29% a tablet

Telecommunications is such a dynamic industry as people move from voice to data, and from fixed to mobile.

Student letters to the editor

Stuff reports:

A police plea for the name of the writer of a letter threatening to unload an automatic assault rifle in Canterbury University’s library has been turned down by the institution’s students association.

The letter, written anonymously and published in the students association’s magazine Canta on March 20, lists a series of gripes the author has about university life, including people who ride bikes on the footpath and students who wear camouflage. It then reads: “The above things are slowly transforming me from a Gandhi-like character to the kind of guy who is going to walk into James Hight [the library] one day with a fully loaded automatic assault rifle and unload my anger into you.”

The letter has also featured on the magazine’s website since March 20, but only came to the university’s attention when a student’s mother complained about it on Friday.

University Vice-Chancellor Rod Carr said he only became aware of it yesterday and referred the matter to police.

“This is a person who needs help,” he said. …

Despite police asking for the individual’s name, Carter said, the University of Canterbury Students Association (UCSA) had declined to release it on privacy grounds. Since no offence had been committed, police were unable to seek a warrant to force the release of the name.

“We are looking at other options for getting in touch with this person,” Carter said. “We would like to speak with them, and hopefully satisfy ourselves that there is no need for concern. If they would like to come forward and contact us, we would welcome the opportunity to discuss the letter and the concerns it raises.”

Canta editor Hannah Herchenbach would not comment and forwarded all queries to UCSA president Erin Jackson.

Jackson did not respond to questions about why UCSA would not release the name to police. But she did say the last paragraph contained content that “could be interpreted to look like a non-specific threat”, but the “tone of the letter was largely hyperbolic”.

She said given the tenor of the letter, and UCSA’s previous dealings with and knowledge of the author, it was assessed there was no serious threat.

I’m with UCSA on this one. Those who are serious threats, don’t tend to write letters to Canta about it. The letter maybe somewhat bad taste, but so are the vast majority of letters to student newspapers. They range from the hilarious to the defamatory. The letter was an obvious rant, not a threat. There is a difference, and we don’t want to end up like the UK where a guy got arrested for tweeting how he’d blow up an airport because they made him miss a date with his girlfriend. You obviously don’t say such things while in the queue for security scanning or on an aircraft – but that is different from saying one can never ever ever joke about such stuff.

RIP Parekura Horomia

Parekura Horomia had a big heart – both literally, and symbolically. The most common word I am reading in the tributes about him was kind, and I think that is a good description of him. He was not a mean person.

My abiding memory of him will be the televised Ikaroa-Rawhiti debate between him and Derek Fox in 2008. Cam Slater and I were in the audience up in Gisborne for it, as part of our blogmobile tour.

The hall was packed. Around 300 people I’d say. And it was a debate unlike any other I had been to. The questions from the audience were not over what we may call the big issues, but on very real local issues such as school bus routes, local housing developments and the like. All too often politics is about abstract policies, and questions in debates comes from party activists, rather than genuine constituents. It was, as I said, a very good debate.

What most struck me was the closing statements. Derek (the) Fox is an accomplished politician and speaker. He got up and flayed Labour’s record, and Parekura’s record. It was a brutal devastating indictment of their time in office.

The response from Parekura was a real contrast. He spent probably most of his speech greeting the various audience members by name, citing their children, what schools they are at, what he had done for those schools or communities and just connected to the audience is a very real way. Finally he declared that not only were post of the audience part of his extended whanau, even Derek was his cousin and he loved his cousin even when he was trying to take the seat off him and that Derek was a good man.

Parekura was the winner of the debate, and of the election. It was a good reminder that politics is about more than just policies and politics, but can be very much about people at the individual level, not as abstract statistics.

The other abiding memory of that debate, was the almost comical seating arrangements. There were no tables and no chairs. The two debaters just had a tiny stool to sit on, on the large stage.

Now Derek came out, and just sat on his stool. then Parekura came out and saw the stool, and paused. You could almost see what he was thinking – his face had a “You must be kidding” look on it. As there was no alternative, he moved in front of the stool and sort of reversed onto it in a scene akin to a large truck trying to park. Then as he lowered himself onto it, the entire room was collectively holding its breath. The old saying that you could have heard a pin drop, was in play. As he sat on the stool, you saw it buckle but then everyone exhaled as it held up.

It was a comic moment, and I recall him laughing about it at the after debate drinks in the pub across the road.

I don’t think Parekura will go down in history as one of the more effective Ministers, but he was a very decent man who cared greatly for his constituents and for Maoridom. He was the most well known Labour Maori MP, and his death will leave a big hole for them – both personally and politically.

He is the third MP to die in office, since MMP came in. Green List MP Rod Donald died just after the 2005 general election aged 48, and National Tamaki MP Allan Peachey died of cancer just before the 2011 general election, aged 62.

There will of course be a by-election now in Ikaroa-Rawhiti. I’ll focus on that in a later post. For now, my thoughts are with those who were close to Parekura. He was a popular member of Labour’s caucus, and this will be a very sad time for them.

Assisted suicide may allow some to live longer

The BBC reports:

The court has previously heard that Ms Fleming, who is not attending the three-day hearing, is confined to a wheelchair, physically helpless, lives in constant pain, cannot swallow and suffers choking sessions which wear her out.

She wants to be allowed die peacefully with dignity at home, when she chooses, in the arms of her long-term partner, Tom Curran, without him facing the threat of jail.

Brian Murray, senior counsel, told seven judges hearing the appeal in Dublin on Wednesday that his client was being denied what she seeks for fear that without an absolute ban on assisted suicide there could be more relaxed practices by doctors.

“It is our position that it is possible to design legislation that facilitates the plaintiff in a way that does not present any risk to the involuntary death of others,” he said.

Mr Murray said it may be legitimate government policy to discourage people from choosing death over life, but he argued it was not a proper basis for telling people what decision they can make about their lives.

What strikes me in cases like this, is provision for assisted suicide may allow those in this situation to live longer. If you know your partner or a doctor can assist you to end your life when your quality of life has become intolerable, you can put that day off until as long as possible.

But if you know that once you reach the point of being physically unable to do it yourself, then there is no legal way for you to end your suffering, you may commit suicide years before you otherwise would have to.

That is not just a theory. It has happened here in New Zealand. I’ve blogged on such a case before.

Just as I think the rights of someone when living should be paramount when it comes to issues such as organ donation and burial location, I think you should also have the right to decide to die, and gain assistance if necessary.

Of course there must be stringent safeguards. But the debate should be on what those safeguards should be, not on whether people should be made to suffer.

In December, Ms Fleming told a three judge division of the High Court court the ban on assisted suicide was forcing her to live against her will in a life of pain and indignity.

The former lecturer is almost completely physically incapable and would need help to take her own life.

The irony is that if she was not in such an agonising condition, should would be able to kill herself without assistance.

Hooton on why Labour is veering hard left

The history of politics in not just New Zealand, but in most countries is that oppositions veer towards the centre. That is where votes are to be won.

Labour has embarked on a policy programme that can only be called radical. They are campaigning to get rid of current monetary policy and interfere in the exchange rate. They are proposing nationalisation of the energy generation sector. They are promising to pay beneficiary families the same at working families for child support (despite the extra costs of working). Their policy programme is resembling what the Greens have been pushing for the last decade, rather than what Clark and Cullen did in Government.

So why have they headed hard left? Matthew Hooton explains in NBR:

The most famous theory in political science is the median voter model.

Developed in 1929 by Stanford economics professor Harold Hotelling, it provides strategic guidance to politicians, anticipates their policy positions and predicts election results.

Broadly, it suggests that, in any two-candidate election, both are best to adopt policy to please the median, middle-of-the-road voter, and that the candidate closest to the median will win.

Indeed.

In politics, the model’s predictive power is proven not just by vast screeds of algebra by microeconomists, game theorists and political scientists, but – unlike much social-science theory – by real-world observation.

Even with apparent exceptions, like Baroness Thatcher’s three election wins, she was indeed closer to the median than failed prime minister Lord Callaghan in 1979, Soviet appeaser Michael Foot in 1983, and even Lord Kinnock in 1987.

UK Labour finally won power when they abandoned the very socialist policies that NZ Labour is now embracing.

So why the lurch to the left?

Do the maths again, but assume three major players, and you get a different result.  Suddenly, there is an incentive to differentiate and diverge. …

Similarly, in politics, the model suggests that, in three-party systems, parties will no longer all cuddle up to the median voter but some will offer more radical policy choices.  It’s argued, as with consumer markets, that this leads to a more lively democracy.

The release of the Labour/Green electricity policy suggests something like this is happening in New Zealand.

The Greens are now clearly established as a permanent third party, with the other small parties melting away.  Professor Hotelling and his academic heirs could have told us this would likely lead to something like the electricity policy, which has already wiped hundreds of millions from the Crown balance sheet, including the SOE portfolio and the ACC and Superannuation funds, and from KiwiSaver accounts.

This explains why Labour has adopted so many Green party policies.

It is no good Labour/Green saying the policy is not radical by arguing that something like it has been implemented elsewhere.  That would be like National saying a 15% flat tax is not radical in a New Zealand context by pointing to Hong Kong.

Exactly. As pointed out previously, the model they cite has generally been adopted in countries moving from a totally nationalised power industry to one with some competition. It has never been used in a country which already has 14 competitive generating companies.

Here’s a competition for readers. See if you can identify all the Labour Party policies that they have stolen from the Greens? Abolishing youth rates was Greens policy, and resisted by Labour initially. As was massive hikes in the minimum wage, and extending paid parental leave.

We also have their lurch to the left on monetary policy, and their nationalisation agenda and the extending Working for Families credits to beneficiary families.

What others ones are there?

A question

question

 

In the attached picture – will a 110kg breaking strain rope be sufficient to support these two 100kg loads, or do they combine to become 200kg of strain total ?

It is an amateur theatre question, one of the 100kgs will be a witch, and the other end someone who lifts and lowers her…

Parekura seriously ill

Stuff reports:

Labour Maori affairs spokesman Parekura Horomia is seriously ill and people close to him confirm they are very worried.

Some colleagues are believed to be on their way to his bedside.

They say he has been ill for some time and he has missed several high-profile events he would normally attend this year, including Ratana celebrations and the national Waitangi Day celebrations in the Bay of Islands.

The Ikaroa-Rawhiti MP’s family have requested privacy but say he is convalescing at home.

Labour’s acting leader Grant Robertson would not say what the nature of Horomia’s illness was nor when he would be likely to return to Parliament.

It’s a very tough time for Parekura’s family, friends and colleagues. My thoughts are with them.

UPDATE: And he has died. Condolences to those who knew him well.

Herald says good time to sell Air NZ shares

The Herald editorial:

Air New Zealand’s soaring fortunes were confirmed last week when it flagged that its annual earnings would more than double this year. Normalised pre-tax earnings would be between $235 million and $260 million if current market conditions and the trading environment persisted, it said. Air New Zealand’s share price immediately shot up 8c to $1.52, signifying a 10 per cent rise this year. …

As it is, Air New Zealand may well hold more appeal, especially for the mum-and-dad investors the Government aims to attract. The airline industry has always had an allure despite the vast sums of money that have been lost in it, and the national flag carrier has a special place in the hearts of New Zealanders.

It has faced a multitude of problems in the past few years, including high fuel prices, landing fee increases, earthquakes in Christchurch and Japan, and discount competition. Yet it has managed to not only survive but to achieve a profitability more commonly associated with budget operators while maintaining a high standard of customer service.

A strong management team, headed by new chief executive Christopher Luxton, provides reason for confidence in the future, including a strong response to the challenge that will arise from the transtasman alliance between Qantas and Emirates, which awaits only the Transport Minister’s go-ahead. Jetstar is also talking of expanding its domestic network to regional centres, flying routes that it says are a “big profit play” by Air New Zealand. Balancing these threats to some extent is the benefit that the national carrier will undoubtedly gain from the Government’s $158 million boost for promoting tourism.

There are also practical reasons to encourage the Government to promote Air New Zealand. It is already listed on the stock exchange, so a prospectus will not be required. The selldown of the Government’s 73.4 per cent stake to 51 per cent will be more straightforward than those of the power companies. There will be no repeat of the late rewriting of Mighty River’s documentation.

If ever there is a time to sell shares in Air New Zealand, this appears to be it. Investors wary of the unpredictability of the airline industry may not touch it, but there is considerable appeal for mum-and-dad investors. It could offer succour as the Government licks its wounds.

I agree. The Government doesn’t even have to do it in one go. They can just release parcels of shares when the price is high.

I look forward to hearing intelligent arguments from opponents as to why the Government should own exactly 73.4% of Air New Zealand – not a share less or a share more. Tell us why it should not be 51% or why it shouldn’t be 95%?

Editorials on Syria

The Press editorial:

The United States and the international community have to respond to a suspected nerve gas attack by Syrian government forces on civilians in Aleppo.

If the attack is confirmed – and it seems likely that it has happened – President Bashar al-Assad’s regime cannot be allowed to get away with this atrocity.

The trouble is there are no good solutions, just a variety of different intensity bad ones.

The difficulty for the West is that any imaginable military response is dangerously complicated. Even a no-fly zone over Syria, which would work to the obviously military advantage of the rebels battling Assad’s forces, cannot be easily enforced.

Assad is believed to have 600 fixed surface-to-air missile sites and about 300 mobile units, some of which would survive any first strike by US cruise missiles or planes flying from the Royal Air Force base in Cyprus. Putting Assad’s anti-aircraft capability out of action could be difficult and costly.

Most can be destroyed easily enough, but enough would survive to take down some aircraft. However if drones are used, the loss of life to US or NATO forces could be minimised.

If the chemical attack is confirmed, Assad has to go. Any regime which carries out nerve gas attacks on its own civilian population has lost all pretence of legitimacy.

The trouble is the alternatives are not overly appealing.

The Dom Post urges caution:

Barack Obama warned Syria that if it used nerve gas against its people it would “cross a red line”. The president meant that if the Assad regime was guilty of such a war crime, the United States would have to do something.

And now the evidence is mounting that Assad might have used sarin. And so now the president is in a difficult position, largely of his own making.

It would be easy to scorn Mr Obama over this. It would be easy to interpret his hyper-caution as shillyshallying and even cowardice. It would be easy to demand he stick to his word and start bombing. Predictably, some senior American politicians are now urging him to do so.

I don’t think he should bomb, but I think he was stupid to talk about a red line, and not be prepared for what to do if it is crossed.

$2b for Christchurch

Vernon Small at Stuff reports:

The Government has taken another $2 billion hit to its books as the estimated cost of the Christchurch rebuild continues to escalate amid signs the bill could grow even more.

Yesterday, Prime Minister John Key revealed the forecast cost to the Government had risen from $13b to $15b since the Treasury’s December update was issued.

The new figures, to be included in the May 16 Budget, would also show the overall capital cost of the rebuild would soar by a third to reach $40b against December’s $30b estimate.

Speaking at the National Party’s Mainland Region conference in Hanmer Springs, Mr Key said the new figures showed the extent of the challenge of rebuilding the earthquake-damaged city.

“This is the largest and most complex, single economic project in New Zealand’s history. The scale of the rebuild is unprecedented,” he told delegates, who had earlier negotiated a mock “toll booth” placed by anti-privatisation protesters at a bridge on the way to the conference venue.

Even the Crown’s spend of $15 billion must be several times bigger than any other project in NZ? What would be the biggest to date before the earthquake?

UPDATE: I’m informed that the only “project” that has been a larger spend for New Zealand was WWII. Puts it in perspective.

Hartwich on the power plans

A must read column on the Greens and Labour power policy is by Oliver Hartwich. He cuts through the rhetoric to focus on some key issues.

Leaving the emotive language aside, will the opposition’s plans actually work? Will they achieve the stated goals of providing secure and more affordable energy to New Zealanders? And what are the potential side effects?

Good questions.

It should be noted that the power proposals are not quite as outlandish as they may first appear. A number of Eastern European countries have also implemented single-buyer schemes where all wholesale electricity is purchased by a government authority before being sold on to distributors. However, in the Eastern European cases this market arrangement followed from a completely nationalised energy sector as a step towards liberalisation. In New Zealand’s case, however, it is a move in the opposite direction.

This is a important point. In assessing the desirability of a policy, you need to look at what the current arrangements are. A single seller policy may well be sensible when you are moving from a point of the Government owning all the generators. But less so when you have 14 different generator companies already operating.

If you were designing the NZ power market from scratch, I think you could have a reasonable debate about the pros and cons of a single buyer model. Personally I’d still be skeptical  but there are pros and cons. But we already have 14 companies who have invested in NZ power generation, and the impact on not just them, but also investor confidence more generally by unilaterally imposing a monopoly government buyer on them is huge and bad.

On the plus side, a single buyer can more easily match physical electricity generation to demand. Such schemes also allow governments to regulate markets effectively because they have direct control over both prices and capacity. After all, this is why the Greens and Labour are proposing their scheme.
 
But it is precisely this strict control by the government over the market that is the greatest disadvantage of the single-buyer model. The core problem, as with other centrally planned regimes, is that it decouples economic incentives from decision makers. This means that the proposed new Crown entity tasked with deciding on the right capacity for electricity generation does not itself bear the consequences of over- or underinvestment in the industry. This may in turn lead to an unprofitable energy sector – or to blackouts. Older New Zealanders may still remember the experience of electricity rationing when the state controlled the market in the 1970s. 
It is also worth recalling that we have a single buyer model in the 1970s, and as this report shows (page 19) prices increased 58% from 1975 to 1979.
Despite some appealing theoretical advantages of a single-buyer model, ultimately the government could achieve far more by facilitating effective competition at the generation and distribution stages. Nationalising the wholesale market, on the other hand, is likely to create more problems than it might solve, beginning with decisions on capacity.
Improving competition is where the focus should be. Regulation can and should be part of that. But removing competition and having a government mandated price for wholesale electricity is a very bad way to try and get lower prices.
In any case, if the intention is to support low-income earners with their power bills, wholesale nationalisation is a sledgehammer to crack a nut. It would be much more straightforward to provide direct support to affected households instead of playing havoc with the structure of the market.
Again a key point. This is absolute overkill. It’s like nationalising supermarkets to reduce the price of milk and bread.  They claim that this will save a household $6 a week. Would be far better to give low income households a tax cut or subsidy of $6 a week, than nationalising a $6 billion a year industry.
Even if the Greens/Labour plan actually achieves what both parties promise, which is dubious, it is still an example of how not to make policy. This is not because of its alleged economic merits but because of the way it was announced.
 
The strong public reactions to the proposal, as well as the substantial losses for energy companies listed on the NZX, show what a bombshell of an announcement it was. Practically from one second to the next, and with no previous warning, let alone any kind of meaningful stakeholder consultation, the rules of the energy market were called into question.
This is a point worth reflecting on. Important rule changes are consulted on. Unilaterally announcing the rules will change, regardless of evidence or arguments, is very scary for investors. The Commerce Commission normally will put out a discussion document, a draft determination and then a final determination. That allows affected parties input.
A responsible Labour Party would have set out an options paper, listing maybe three options for energy regulation. One of them might be the sole buyer model. Then one could have a debate on pros and cons, and power companies could understand where Labour’s thinking was going. If they eventually came out with a sole buyer model, then at least the industry would have had time to consider it.
But to announce a final policy on the hoof, 18 months before an election, with no warning or consultation strongly suggests that it was a half baked idea dreamt up to sabotage the MRP float, and with no regard for the consequences on the wider investor confidence.
Small parties can get away with announcing radical policies on the hop, because people know they won’t be Government. But the two major parties need to be more less reckless.
International investors looking at New Zealand can only draw one conclusion from this episode: that their investments here are not as secure as they previously believed.
 
For an economy reliant on international capital markets, this loss of investor confidence is significant. As First NZ Capital’s chief executive Scott St John says, the intended $300 reduction in household power bills could be easily offset if the Greens/Labour power plans led to a perception of greater sovereign risk. Indeed, if capital funding costs increase, households will directly feel the effects in their mortgage payments. This is almost certainly an unintended consequence – but a negative consequence it is.
The potential consequences of the policy range from power blackouts to investment dropping off to power prices actually ending up higher as the Government can use its position as both monopoly buyer and seller to fund other spending.
As economists are aware, regulating network industries is fiendishly difficult. No matter where you stand on the single-buyer model and whether it could be made to work, shocking markets and investors with populist proposals (provoking equally populist responses) is not the way to go about it.
Again this is key. Even if you think the policy has merit, you should condemn Labour for the way they just announced it with no warning – in a deliberate move to sabotage MRP float with no concern about the wide consequences.

Paid parental leave

Hamish Rutherford at Stuff reports:

Prime Minister John Key says parents will have to wait until at least 2015 before the Government considers extending paid parental leave, because it cannot afford to do it now.

A One News-Colmar Brunton poll released yesterday showed 62 per cent of voters back a law sponsored by Labour MP Sue Moroney that would extend taxpayer-funded paid parental leave from 14 weeks to 26 weeks.

The law change also appears to have enough support in Parliament to pass, but the Government has signalled it will use its veto power, which it can if a law would have a significant impact on the Budget.

Today Key said bill would be blocked because of cost, which the Government estimates at $150 million a year, but said the leave would likely be extended eventually.

“I think paid parental leave will increase one day, it’s just not today, because we just don’t have the money,” he said.

“No one’s arguing it’s unreasonable but it’s all about affordability.”

If the Government was to extend paid parental leave it would mean abandoning its target of reaching a fiscal surplus by 2014-15, or cutting spending elsewhere, Key told TVNZ’s Breakfast.

This is why the Government has a financial veto – granted to it by Parliament. If the Government has no control over expenditure, then it isn’t governing.

Supporters of the bill dispute the Government’s estimates of the cost of the law change.

Rebecca Matthews, spokeswoman for lobby group 26 for Babies, said she understood the cost of the change would be $166 million over three years, which the select committee hearing submissions on the issue had said was within the margin or error of the Government’s forecasting.

That cost is misleading, as it covers the transition period. Once fully implemented the cost is around $150 million a year. When we are still struggling to get out of deficit, it is too large a commitment.

Strike Two

Stuff reports:

The controversial “three strikes” legislation has seen a young man jailed without parole and warned that if he steals another skateboard, hat or cellphone he will spend 14 years behind bars.

In issuing Elijah Akeem Whaanga, 21, his second strike, Judge Tony Adeane told the Hastings man his two “street muggings” that netted “trophies of minimal value” meant his outlook was now “bleak in the extreme”.

“When you next steal a hat or a cellphone or a jacket or a skateboard you will be sent to the High Court and there you will be sentenced to 14 years’ imprisonment without parole,” Judge Adeane said.

Justice Minister Judith Collins said the case showed the law was working. Sensible Sentencing Trust spokesman Garth McVicar agreed, saying the sentence of two-and-a-half years’ jail with no parole was “fantastic”. 

Victoria University criminology professor John Pratt said the case “highlighted fundamental problems” with the law.

“Was this really the type of offender that the three strikes law was meant to protect us from?”

Whaanga’s offending stretches back to 2006, including burglary, theft, resisting arrest and indecent assault. He served a short prison sentence in early 2010.

Stealing is not a strike offence, but aggravated robbery is. From what I can see Mr Whaanga has had four strike offences so far – but two before the legislation was passed.

If he does not commit any more strike offences, then he won’t get the maximum sentence with no parole.

I’ll freely say that Whaanga doesn’t appear to be the worst criminal out there, but I don’t judge a policy on sole cases. And if he is stupid enough to get a third strike, then the Judge does have discretion to make him eligible for parole if it would be manifestly unjust not to do so. So if he does another aggravated robbery and gets the maximum 14 years, a Judge could still make him eligible for parole after four years and eight months.

By the end of last month there were 2684 offenders on their first strike and 17 on their second strike.

This may be because it is early days, but the very small number of second strikes compared to first strikes *might* mean that the hoped for deterrent effect is working.

In around five to ten years we will get some fascinating data looking at reoffending rates before and after the three strikes law. That is if Labour and Greens do not repeal it before then – as they have promised to do.

UPDATE: Commenters have said that Mr Whaanga has a total of 72 previous convictions, so shorter sentences do not seem to have worked with him.

Facts and myths on foreign investment

The NZ Initiative have released today a comprehensive 75 page report detailing the facts and myths around foreign investment in New Zealand.

A summary of some key findings:

  • Despite popular myth, New Zealanders actually earn more than they spend. National resident unit savings has been positive for the last 38 of the last 41 years.
  • High debt is not the fault of the private sector. While levels of private debt may be high, these stem from the legacy of historical government policies between 1974 and mid-1980s.
  • The future debt burden will depend on future internal competitiveness and the gap between New Zealand’s growth rate and the yield in the debt.
  • Despite concerns to the contrary, Asians are not taking over New Zealand.  In fact, in 2012 Australians owned 55% of foreign investment in New Zealand, while ASEAN nations owned only 3.1%.
  • Offshore investment is a two-way street. New Zealand is not a ‘takeover’ target by foreign investors. In fact, the OECD regards New Zealand’s regime for screening inwards investment as one of the most restrictive in the world; and
  • New Zealand has been heavily dependent on international capital since colonial days, and this is normal for a young, growing country.

Some facts I found interesting are:

  • Foreign investments in NZ exceeded NZ investments abroad by 4.4% of GDP in 1973 and 64% in 1989. Today it is 72%.
  • The Australian share of FDI in NZ increased from 32% in 2001 to 56% in 2012.
  • The Asian share of FDI in NZ increased from 1.9% in 2001 to 3.1% in 2012.

The report is full of facts, figures and charts. A great contribution to our economic knowledge, and hopefully will improve the level of debate on foreign investment.

The policies of destruction

Rob Hosking at NBR writes:

Has any multi-billion dollar policy ever been made with such an air of frivolity as the Greens/Labour parties’ power plan?

The plan – which would involve interposing a government-run wholesaler into the market to set prices – shaved several hundred million dollars off the value of electricity market companies, taking investors in the New Zealand sharemarket by surprise, if not shock.

It has to be one of the most expensive branding exercises in this country’s history.

For that is all it is.

And one in which taxpayers pay the bill.

There is something essentially frivolous about anyone who would cheerfully rip up the value of some of the country’s largest firms, and the value of the investment in those firms, simply for a political positioning exercise.

This is why the exchange caught by TV3 between Green energy spokesman Gareth Hughes and party spin zambuck Clint Smith was so telling.

For those who missed it, Mr Hughes was asked if the party was pleased at the reaction: Mr Hughes paused, turned to Mr Smith and asked “Hey, Clint – are we pleased?”

It was telling that he even had to ask.

But the almost palpable glee coming out of the Green and Labour camps at the destructive impact of their policy is highly revealing. 

It’s like the little boy who pulls a few stones out of a dam, and giggles when the whole dam collapses.

It underlines – not for the first time – the problem with the makeup of both parties. They are dominated at the MP and the staff level by the sub-genus homo politicus.

That is, they are full of people who have done nothing in their lives apart from politics. All parties have a complement of this group, but with Labour and the Greens the group has reached critical mass.

This group has been involved in politics at university, moved from there to various political/union offices and then into parliament. 

There is little real world experience and everything is viewed through a very narrow prism of political advantage.

It’s the sort of attitude which means the value destruction seen this week can be just laughed off.

There will, unless we are careful, be more such frivolous policies to come.

I think Rob Hosking is dead on with this analysis. You have a growing political class who view things through a unitary prism. If you have never ever worked in the private sector, why would you have any empathy for private businesses? And why would you care about such foreign concepts as cost of capital? Your academic background tells you the solution is just to print more money.

As far as I can tell only two out of Labour’s top 10 have ever had a significant job in the private (business) sector. Think about that.

 

The xenophobic nutters at work

racists

 

This was pushed into various letterboxes in Auckland this weekend.

The resistance are part of the small fringe neo-nazi movement that Kyle Chapman and others are involved in.

But they do not exist in a vacuum. When politicians rail against Chinese immigration, rather than all immigration, they add fuel to the fire.

When politicians condemn a Chinese company buying a NZ farm, but remain silent over companies from other countries doing the same, they give solace to these people.

No one with an IQ over 50 really thinks there will be a Chinese armed invasion of New Zealand. But it must be sad and somewhat distressing for Chinese New Zealanders to have to put up with this crap.

300 protesters made TV lead item

Future issues

Kate Chapman at Stuff reports:

Gay adoption and euthanasia are among the final social frontiers for our parliament to cross. They’re both on the political agenda and politicians are ready and bracing for the onslaught.

Actually so called gay adoption has been already dealt with. Gay married couples can now jointly adopt. Before the passage of Louisa Wall’s bill, a gay man or woman could adopt – but only by themselves, not as a couple.

So there is no gay adoption debate to be had – it has occurred.

Now that same-sex marriage is out of the way – as far as Parliament is concerned – those from both sides of that debate are keen to take a well-deserved rest but with bills on gay adoption and euthanasia waiting to be drawn from the member’s ballot it could be a short-lived break from heated debate.

There is a bill on adoption, but as I said the issue of same sex couples being able to adopt has been dealt with. The Adoption Act is 50 years out of date and massively needs reform – but the debate will not be on whether same sex couples can adopt as Parliament amended the law to allow that just a few weeks ago.

Conservative lobbyists and church groups, so vocal in opposition to same-sex marriage, say they’re ready to take up the placards again, but they are miffed that it’s all been left to them.

Baptist national leader Craig Vernall said middle New Zealand had been “gutless” in its approach to the Marriage Act.

“We’re left to represent the majority views in many respects because people are intimidated . . . people just hide, they go underground, they don’t want to be labelled homophobic. It seems if you’re opposed to gay marriage you’re just branded and labelled homophobic, should be shot, that’s the view the media paints.”

Actually, not the majority view. Every scientific poll has shown more people in favour of same sex marriage, than against.

The men honoured on Anzac Day would be deeply disappointed they had laid down their lives for democracy and the result was decriminalisation of prostitution, legalised gambling, lowering of the drinking age and gay marriage, he says.

Dragging Anzac Day into the debate is pretty stupid. As it happens they did die for NZers to be able to decide their own laws, and of course the laws of 2013 will be different to 1915.

I note the rant against legalised gambling. Can anyone tell me if Baptist church halls have ever been used for bingo nights?

He says the legalisation of gay marriage confirmed National had swung to the left and was no longer a conservative party. Labour was voted out in 2008 for social engineering policies, including legalised prostitution, civil unions, and anti-smacking, but politicians still believed they could introduce such legislation. Family First’s membership quadrupled from 8000 to 32,000 as a result of the marriage debate and they were ready to mobilise their supporters against gay adoption and euthanasia.

I was thinking the other day that the same sex marriage debate must have been a great fund-raiser for Bob!

Agar thinks it might be a bit more complicated than that. Time, he says, can be a great help in adjusting expectations.

“Look at the decriminalisation of prostitution . . . here I am looking out at Kelburn Parade [in Wellington] and it’s not saturated with prostitutes, many of the lewd predictions just didn’t come true.

Of course there are no prostitutes on Kelburn Parade. They couldn’t possibly compete with all the students giving away sex for free! 🙂

More organs needed

The SST reports:

A lack of kidney donors has forced specialists to introduce a “mortality calculator” that will bump people off the transplant list if they don’t meet certain criteria.

The process has left at least one patient “furious” but doctors say their hands have been forced by a dire situation where the list of people needing transplants continues to grow but the number of donors does not.

Actually there are lots of donors. But we have a stupid law where the wishes of the family trump the decision of the deceased to be an organ donor.

Grieving families shouldn’t be asked to make a decision over organ donation. They should be informed that their loved one directed they wished to be an organ donor, and it has happened.

The same should apply to where people are buried – the wishes of the deceased (so long as legal) should trump that of the family.

Hide on Auckland Transport

Rodney Hide writes in the HoS:

My research led me to Wellingtonian Tony Randle, who spent months trying to get the analysis underpinning the 2010 Rail Business Case, succeeding only after a complaint to the Ombudsman.

Once Tony got hold of the analysis he found:

1. Basic spreadsheet errors. The spreadsheet fails to calculate the running costs of the second purchase of 26 trains. That ignores $689 million on the train option.

2. Incorrect exclusion of costs from the rail option. The study excludes the necessary funding to extend the Northern Busway into the city centre. Building this access is a necessary part of the rail option.

3. Addition of a second bus tunnel without explanation, adding hundreds of millions to the bus option.

4. Unreasonable assumptions, including a prediction that under the rail option, present bus capacity into the city centre will carry another 20,000 passengers a day without any new bus lanes or busways.

And people wonder why the Government won’t just hand over billions of dollars. I’m not sure what is worse – the massive errors in the analysis, but the fact they wouldn’t release them without the Ombudsman.

The overall impression is that the analysis was slanted to conclude trains over buses, despite the fact that buses may provide a better cheaper service.

The errors and poor assumptions total $1.5 billion. The bias is systematic; each and every mistake favours rail over buses. Correcting for the errors reverses the study’s conclusions and shows the CBD bus tunnel more cost-effective than the City Rail Link.

Tony Randle’s review is damning of Auckland Transport’s report. And it’s damning of the rail option. Auckland Transport’s response? Stony silence.

I’ve blogged on Tony’s work before. I am surprised no Councillor has followed it up. He makes available his detailed spreadsheets freely.

Last December, Auckland Transport released a second report. City Centre Future Access Study also concludes that the city rail link beats the two bus options considered, but now for different reasons to the first report. And, once again, Auckland Transport published the study without the underpinning analysis.

I followed Randle’s lead and requested the spreadsheets and the relevant model output reports. Auckland Transport has refused to supply them to me.

Its latest is a lawyer’s letter explaining that Auckland Transport will provide what I want but only if I pay them $3850.

Oh, and they won’t send me the spreadsheets.

Instead, they will send a printed output. That’s useless to me. It won’t allow me to check the very calculations that Randle showed were so devastatingly wrong in their first report.

I am left to conclude that Auckland Transport doesn’t trust its own analysis. So how can I trust it? And, more especially, how can you?

Very good questions. The spreadsheets should be provided free of charge to anyone asking. They already exist. There is no cost involved in e-mailing them out. The cost of $3,850 demanded is a rort.

Eight adults, none working

The Herald reports:

A state house with 19 people living in it has been identified as one of the homes receiving more than $100,000 in taxpayer-funded benefits each year.

The Housing New Zealand property in Manukau houses 11 children and eight adults, according to a spreadsheet of the top 50 households which receive the most social welfare payments.

The weekly rent is $87 and collectively the household is getting $2499 in benefits each week – or $132 for each individual – adding up to nearly $130,000 each year.

$2,500 a week in the hand is equal to almost $3,500 gross or $180,000 annualised.

No wonder none of the eight adults have decided to get a job. With an unemployment rate of under 7%, the chances all eight are unable to find a job is miniscule – 0.00000006%.

Tolls are best

The Herald reports:

Aucklanders face paying to drive on city roads unless they are prepared to swallow hefty rates or fuel tax rises.

On Monday, an advisory group assembled by Mayor Len Brown is set to announce its recommended solutions to plug a $12 billion funding gap and fix the city’s ever-growing traffic jams.

The mayor says he will back whatever the “consensus-building” group recommends, even if that means tolling motorways or charging motorists to use arterial roads by 2021.

The principle is that users should pay for the costs of their transport. Hence tolls and/or congestion charges are my preferred approach.

Petrol tax is a form of user pays. It is imperfect, but much simpler to impose and collect. As technology gets better I’d like to see more congestion charges and toll roads and a lower level of petrol tax.

Rates are my least preferred method of funding transport projects. Motorists and public transport users should fund transport projects – not homeowners.