The debt problem

Cameron Bagrie writes:

Net government debt looks to be headed well above 50 per cent of GDP and is on an unsustainable path.  

A lot of other countries are in a worse predicament, but they don’t carry the same level of private sector debt. 

The best way to turn an unsustainable debt trajectory into a sustainable one, and restore the Government’s war chest for the nest rainy day, is by improving New Zealand’s economic performance.   That is going to require an extensive economic shake-up not tinkering. 

I don’t think people realise how dire the situation will be.

Let’s say we spend $50 billion just on the crisis period.

Now let’s look at last year’s accounts. Tax revenue of $87 billion. Let’s say tax revenues are down 15% or $13 billion. So income down $13 billion and the interest in the extra debt is likely to be $3 billion so even once this is over, may have a $16 billion structural deficit. Oh also add an extra $2.5 billion in unemployment benefits and you’re getting close to $20 billion.

Now if you run deficits of over $10 billion for say five years or more, then bang another $50 billion debt and so on.

A massive fiscal repair job is going to be required down the track. 

Don’t use Covid-19 as an opportunity to pursue a political spending agenda. Beyond improving our health capability and border controls, now is not the time to be cementing more money in government spending baselines that will prove difficult to extract and unwind when needed.  Tough times demand tough decisions.

This is essential. Any extra spending beyond those two areas must be temporary. Locking in permanent spending increases will cripple our ability to recover.

Low quality ineffectual spending such as the free tertiary fees (which saw numbers actually drop) must be reviewed also. That money can do better in Vote Health.

No right to bear arms in NZ

The Herald reports:

A legal challenge by firearms owners to the Government’s military-style semi-automatic weapons ban claiming New Zealanders have the right to bear arms under the Treaty of Waitangi was “doomed to fail”, the Court of Appeal has ruled.

Unless guns are a taonga, no surprise!

The so-called constitutional right to bear arms, the Kiwi Party argued, had derived from ancient custom, which evolved into a common law right and was affirmed by the Magna Carta, the Bill of Rights 1688 and the Treaty of Waitangi.

The Magna Carta deals with the following:

  • Freedom for the English Church
  • Heirs should inherit land
  • Widows don’t have to marry
  • Money lent from Jews doesn’t need to be repaid by heirs
  • London shall be free
  • Lawsuits to be heard in a fixed place
  • Royal family to stop stealing wood

And a bit more like that, but nothing about guns.

He said New Zealanders need to be able to exercise their “constitutional right” to access semi-automatic weapons and large capacity magazines to be able to effectively defend themselves against any unlawful use of arms by agents of the Crown or Executive.

In particular, he argued New Zealanders need access to semi-automatic weapons in order to match police fire power should the cops resort to unlawful use of firearms against New Zealand citizens. 

Not surprised that argument didn’t fly.

General Debate 31 March 2020

Govt and Police need to have the same message

Luke Malpass writes at Stuff:

The biggest problem to date has been the mixed messages from the Government on the one hand, and the cops on the other. The Prime Minister initially seemed to be of the view that as long as you stayed within your “bubble” and away from other people, you were more or less ok and could move around a bit.

The cops, however, are clearly of the view that you should be staying at home.

And it seems you can now get arrested just for being out in public (walking or in your car) even if you are nowhere near anyone else.

There should be no misunderstanding this: it is a 24-hour, 7-day-a-week curfew for the nation. If you are on the way to the supermarket, or the local park (but not playground) and are stopped by police, you had better have a good reason.

The focus should be on not getting within two metres of anyone else rather than silly debates about whether you can drive two minutes to the beach or have to walk there etc.

Some people in Khandallah are walking up Mt Kaukau as great exercise. But if you live in Ngaio and do it, you might be arrested!

Why not remove the tariffs permanently?

The Government announced:

New Zealand will temporarily remove tariffs on all medical and hygiene imports needed for the COVID-19 response.

Trade and Export Growth Minister David Parker and Commerce and Consumer Affairs Minister Kris Faafoi said today that the New Zealand Customs Service will apply tariff concessions to all diagnostic reagents and testing kits used for COVID-19 testing and soap imports in the first instance.

Officials are in the process of identifying other medical and hygiene products needed for the COVID-19 response, and further tariff concessions will follow shortly.

“There is increased global demand for these medical and hygiene products and some countries are restricting their exports of them. We want to make sure that New Zealand has the most straightforward and cost effective access possible to the supply of the goods needed to respond to COVID-19,” Kris Faafoi said.

Totally in favour of this, but why put the tariffs back on in a few months? Do we really want to increase the cost of medical and hygiene products used by New Zealanders?

Great analysis by Bill English

Bill English spoke to Jarden on the COVID-19 crisis. I’m summarising it here as I think it is such a quality analysis it needs a wider audience.

Some key points are:

  • Government needs a feedback loop so it can adjust policies that are not working
  • Kiwis arriving home still a major risk due to lack of screening
  • Caregivers working for people in care at home need protective gear
  • Need an exit strategy for the lockdown. Medical experts have said might be needed for 12 – 13 weeks.
  • Risk management is important – some risk has been transferred from private sector to Crown’s balance sheet.
  • Unwise to assume central banks can control the global debt market for long
  • This crisis will change the economy permanently – won’t just return to normal in a few months or even years
  • Governing parties benefit in a crisis as they have saturated media coverage.
  • This is not a financial markets crisis so can’t be served by financial markets intervention. This is a “real economy” crisis.
  • No corporate big or small is safe when revenues drop 30%
  • Government will need to rebuild business confidence which may mean having to do things that don’t sit well with their core beliefs
  • Government should have to peel back some regulations as the regulations are a “nice to have” vs economic survival
  • Infrastructure spending is needed but Kiwibuild shows Government struggles with execution. Also lack of inwards migration may make it difficult to step up.

Great to see someone thinking beyond the next few weeks.

General Debate 30 March 2020

Govt should use its powers to temporarily amend the Shop Trading Hours Act

Under the current law every supermarket in New Zealand has to close on Friday 10 April and Sunday 12 April.

As the only significant source of food open in New Zealand, it would be moronic to force them to close. It would also creates even larger queues for supermarkets on the days after. We already have reports of 400 metre long queues to get into supermarkets.

The Government should use it powers to temporarily amend the Shop Trading Hours Act to allow supermarkets to open on 10 and 12 April, should they wish to. They could even stick in a provision stating no one can be forced to work those days.

There is no logical reason not to amend the law. The normal arguments in favour of no trading of those two days do not apply at the moment. They tend to be:

  • We need one long weekend off where families can spent time together. As families are spending 28 days together in a forced lockdown, this argument is insane.
  • We should not allow trading, so people can go to church on those days. Well the churches are closed.
  • People need a day off shopping. This is not about discretionary shopping. This is about being able to get nappies and food etc. There are no cafes open, no takeaways, no deliveries. They are the only source of food at the moment.
  • Workers need a day off. We now have probably over 100,000 people unemployed and desperate for work and to earn money as household incomes are dropping.

Let’s not turn 400 metre queues at supermarkets into 800 metres queues. The Government should do the sane thing and amend the Shop Trading Hours Act for as long as we are in Level 4 lockdown.

UPDATE: The PM has said Ministers are considering this issue

Lovely forgiveness

Stuff reports:

Inside Rahimi Ahmad’s home no-one in the family of four speaks about the man responsible for turning their life upside down.

Just over one year ago Ahmad and his then 11-year-old son Ahmad Razif were inside the Masjid An-nur (Al Noor) for Friday prayers when a 28-year-old Australian man opened fire.

Shortly after the gunfire began Ahmad Razif ran off and disappeared from his father’s sight as the men at the back of the prayer line screamed and shouted for everyone to run from the shooter. …

“I know that the bullet penetrate to my body from right side. I pray I have to survive to see my son.”

Facing the floor Ahmad tried desperately not to lose consciousness, his mind concentrating on his son.

A terrible ordeal – both physically, plus the anguish of concern for his son.

He still struggles with pain, with fragments of the bullet still lodged inside his body. He’s been told the nerve will take years to recover and the shrapnel in his body will take years to be covered by tissue.

He takes about five different types of medication to ease the pain which can make him drowsy. He has physio three times a week, but can still not move his right leg, needing a splint and crutches for walking. For long distances he uses a wheelchair.

“I still cannot spend quality time with my family as I [am] always in pain, I don’t know how many years it will take to get back walking.” …

Their son remains “mentally traumatised”, finding it difficult to get to sleep. He meets with a psychologist once a week.

Ahmad says he has already forgiven the unnamed man and prays he will be a “good and better guy later”.

Such forgiveness is inspiring. I know I wouldn’t be capable of forgiveness in this situation, but deep faith can lead some people to be able to do so and I admire them for it.

Not sure you want addicts doing cold turkey during a lock up

Stuff reports:

A respiratory advocacy group says it is outraged the Government could apparently allow a tobacco factory to continue operating during the coronavirus lockdown. 

The Asthma and Respiratory Foundation is calling for the supposed decision to allow Imperial Tobacco’s factory in Petone, Lower Hutt to remain open to be reversed immediately.

Imperial spokeswoman Louise Evans McDonald told Stuff on Thursday the Ministry of Business, Innovation, and Employment (MBIE) had approved the factory’s operation through the lockdown.

It does seem unusual but worth thinking about what happens if there is a shortage of tobacco for those addicted to smoking.

We’ve already seen the tax increases leading to a huge spike in burglaries and black market activity. I’d say a shortage of legal product would be like that but on steroids.

Also a 28 day stay at home lockdown is stressful enough, without addicts being unable to satisfy their cravings.

So the decision does actually make some sense.

General Debate 29 March 2020

Government slated as incompetent

Massey University senior lecturer Steve Elers writes:

I’m not a lawyer or legal expert, but what I do know is that your rights to freedom of movement and assembly have been impinged by an incompetent Government that has put tens of thousands of lives at risk.

Sorry, I’m not buying into the “we must support our Government in times of crisis” myth. On the contrary, every single decision needs to be questioned and challenged if necessary – now more than ever.

So why is our Government incompetent? Let’s start with the obvious. On February 3 the Government implemented “temporary entry restrictions into New Zealand on all foreign nationals travelling from, or transiting through mainland China to assist with the containment of the novel coronavirus and to protect New Zealand and the Pacific Islands from the disease”.

This was the time for a blanket ban on all entries except for New Zealanders, who should have been tested for coronavirus on arrival and then quarantined – not isolated – until clearance was given from the lab.

I agree we should have implemented wider travel restrictions much earlier. The Government wasted weeks with its nonsensical self-quarantine idea.

Instead, Prime Minister Jacinda Ardern left the gates wide open and made one shocking decision after another.

An example is the health checks, including temperature checks, our PM ordered for all travellers flying to the Pacific Islands – police and Customs were on hand to assist. However, at the same time, visitors to New Zealand could continue to just waltz on through – the PM did not order health checks on arrivals, none whatsoever. Perhaps Ardern momentarily thought she was the prime minister of the Pacific Islands and not New Zealand?

This one was bizarre. We still are not testing the thousands of people arriving. At a minimum we should have thermal scanners and temperature checks at every airport, plus compulsory testing.

Yes, our Government’s approach has been reactive – no-one can deny it based on its approach to date. We had a head start to stop this disease from entering our country, but our Government thought it would deal with it by reacting to this disease once it arrived. By doing so, it has put tens of thousands of lives at risk. Can you see how that’s not a good plan?

Yep the Government kept saying we don’t want to put measures in too early, that we don’t want to get ahead of the curve. The strategy was flatten the curve rather than suppression. It was only as criticism mounted that they swapped from a mitigation strategy to a suppression strategy.

Govt closes down all non daily newspapers

The Government announced:

  • The current focus for government and all New Zealanders must be on minimising the movement of people to stop the transmission of Covid-19
  • In relation to news and media this applies both to the movement of staff of media organisations and their supply and distribution lines
  • The focus for news and media as an essential service has to be on the provision of timely news and current affairs
  • Daily newspapers are currently included in the definition and are expected to take strong measures to ensure safety of staff and the public; combined with their digital reach, they remain essential at this stage for the timely dissemination of news to the majority of New Zealanders
  • Printed periodical and non-daily publications are not considered essential under the news and media designation
  • This assessment is based on the requirement to minimise the movement of people, reduce the potential for transmission via delivery of physical objects, and reduce strain on supply and delivery industries that may be expected to play a significant role in supporting other essential services (eg, health and food supply)

This is a terrible decision.

The media pay an essential role in society, and this extends beyond the daily media. Some of the best investigative reporting can be done by non daily media.

The role of the media is not just to disseminate news. It is to hold the Government to account. It is to scrutinise. And while daily media do this also, they are sometimes so caught up in the day to day, you need non daily media also.

If the media companies affected had any fortitude they’d take this to court for judicial review. I do not believe any court would find such a narrow definition of media as an essential service to be acceptable.

Shoplifting now only gets a warning!

The Herald reports:

Just hours before New Zealand’s four-week coronavirus lockdown, a woman was seen allegedly stuffing her bag with groceries from Fresh Choice in Ōtāhuhu on Wednesday.

In footage obtained by the Herald, staff members were seen confronting the woman before the altercation turned physical.

While she was confronted, the woman, who was wearing a mask, can be heard shouting: “Get out of my way … you’re not allowed to. You’re not allowed to touch me and you’re not even allowed that close, bro. You cant touch me bro.”

A staff member requested the woman open her handbag before a tug-of-war broke out where both the woman and two staff members wrestled over the bag.

“Show me! Open your bag,” the Fresh Choice worker was heard saying before the alleged shoplifter shouted: “Get your hand off my bag. It’s got my f**king wallet in it. Excuse me, get the f**k out my bag.”

During the altercation, a block of cheese fell out of the woman’s bag.

A Fresh Choice worker then demanded the woman to take items of meat out of her bag.

During the incident an employee wearing a hi-vis vest helped block the woman from leaving the store and assisted in trying to wrestle the bag off her.

The alleged shoplifter was seen climbing over boxes of fizzy drink in a bid to leave the store.

Staff members then blocked her again and demanded she empty her bag.

The woman attempted dash for the door, only to find it had been locked. She then shouted “don’t touch me” before the door was opened. She then ran away.

So she not only was a shoplifter (thief), she also physically resisted emptying her bag, and fled the scene of the crime.

And what did the Police do?

“Police located the woman a short time later. The stolen items were located and returned to the store.

“The woman was arrested and received a warning for shoplifting.”

Incredible.

General Debate 28 March 2020

200,000 job losses predicted

Stuff reports:

Westpac is forecasting 200,000 jobs will be lost in New Zealand as a result of the response to the coronavirus pandemic.

Chief economist Dominick Stephens estimated that economic activity during the four week lockdown would decline by a third, despite the Government and the Reserve Bank having “done a lot to calm financial markets”.

It was obvious the country was going into a “severe economic crunch”, he said.

Stephens said his feeling was that GDP in the three months to June would fall by more than 10 per cent “which is completely unprecedented in our lifetimes”.

That would make it a depression, not a recession.

It is beyond belief that Labour are continuing with a hike in the minimum wage next week, with projections of 200,000 job losses. The minimum wage hike won’t just add to the job losses, but it will make it harder to create jobs once the depression is over.

“But our early is estimate is that about 200,000 jobs will be lost, which is about 7 per cent of the workforce.”

That would take our unemployment rate to 11%.

The priority after this is over must be job creation, and a big part of that is reducing costs on businesses so they can afford to hire again.

U-turn on horse racing as an essential industry

I blogged yesterday on how horse trainers had been granted an exemption to stay open. Since then (might be coincidence) the decision has been reversed.

Lincoln Farms reports:

Trainers’ hopes that they can keep exercising horses during the Covid-19 lockdown have been dashed with the Ministry of Primary Industries ruling this afternoon that all horses must be spelled unless paddocks cannot be found for them.

Last night New Zealand Thoroughbred Racing and Harness Racing New Zealand issued trainers and track operators with an exhaustive list of rules to follow to allow horses to be worked, protocols approved by the MPI.

That led to tracks like Cambridge Raceway and Franklin Park preparing systems for how and when horses would be worked. Trainers, anxious for owners to not have to wait months before racing their charges again, were also going through the myriad of paperwork involved.

But today even more restrictive requirements were inserted into the list and already this has led to the closure of the Cambridge galloping and harness tracks.

It would be a very interesting OIA to MPI asking what consultations with Minister (or their staff) took place in deciding the original rules, and then the new rules.

Trump’s approval rising

Trump’s approval rating is normally a net -13% or so but at the moment it is only -5%. This shows that in moments of crisis, people tend to rally behind the Government (regardless of how well they actually are handling it).

So how does Trump’s rating stack up with other Presidents around eight months out from the election? In order their net approvals are:

  1. Eisenhower +55%
  2. Nixon +18%
  3. Reagan +15%
  4. Clinton +11%
  5. Johnson +9%
  6. Bush GW +3%
  7. Obama +2%
  8. Carter +2%
  9. Trump -5%
  10. Bush GHW -9%
  11. Truman -9%

Those in bold were re-elected.

Let butchers open

Newshub reports:

Piles of meat could be heading to the tip after butchers were told last minute they wouldn’t be able to open on Thursday – New Zealand’s first day of COVID-19 lockdown.

The list of essential businesses was confirmed late on Wednesday leaving many caught out and still confused. 

Mike Hanson of Netherby Meats had stocked up for the lockdown but instead of it being sold to customers, it will now have to be given away or thrown out.

“In the back chiller – we’ve probably got four or five beasts for the shop and 30 hoggets to put somewhere, and the freezer is not big enough to store all of this,” he told Newshub.

On Wednesday morning, Hanson was given the green light to open as an “essential business” from both his local MP and Retail Meat New Zealand. Hours later, the Government ruled otherwise.

If dairies can open, why not butchers? They both only sell stuff you can get in supermarkets?

Right next door to his butcher, a dairy is open for business as usual. 

“They’re selling smokes and coke and fizzy drinks – and what are they doing open?”

Prime Minister Jacinda Ardern said on Thursday if the Government allowed every food outlet to open, “we wouldn’t achieve what we need to achieve”.

Butchers do, however, have the support of the National Party who think this rule does require a rethink.

“If there is a greengrocer beside a dairy, or a butcher beside a dairy, they can’t open,” National MP Todd McClay said. “That doesn’t really make a lot of sense.”

There’s a huge difference between every food outlet and butchers selling meat that people need to cook. They have a far bigger range than many supermarkets also, especially for people intolerant of gluten.

There was a 100 metre queue to get into my local supermarket. You’re at mroe risk having to spend 90 minutes at the supermarket than five minutes at a butcher’s shop.

Coronavirus stats

Most infected countries:

  1. China 81,285 cases
  2. Italy 74,386
  3. USA 68,489
  4. Spain 49,515
  5. Germany 37,323
  6. Iran 27,017

Most deaths

  1. Italy 7,503
  2. Spain 3.647
  3. China 3,287
  4. Iran 2,077
  5. France 1,331
  6. USA 1,032

Most cases per million capita (over 1,000 cases)

  1. Luxembourg 2,129
  2. Switzerland 1,269
  3. Italy 1,230
  4. Spain 1,059
  5. Austria 666
  6. Norway 572

Most deaths per million capita (over 100 deaths)

  1. Italy 124
  2. Spain 78
  3. Iran 25
  4. Netherlands 21
  5. France 20
  6. Switzerland 18

New Zealand so far has only 59 infections per million capita and no deaths. Let’s hope the suppression strategy keeps us far from the top.

General Debate 27 March 2020

Meet your future voters

The Government is ramming legislation through Parliament before the election to allow prisoners serving sentences of less than three years to vote.

Now many people might assume that someone in prison for a sentence of less than three years is a first or second time offender.

Far from it.

I asked the Department of Corrections what was the average number of convictions held by a prisoners serving a sentence of less than three years.

The answer is 50.

Yes 50. These are not first or second time offenders. They are hardened recidivist criminals who have created scores of victims.

So the Government wants to give the vote to these 1,985 prisoners who have an average 50 (NB this is now 30 – Corrections made a mistake in their calculations) convictions each.

Also of interest is that 40% of them, or 797, have gang affiliations (includes prospects and associates). Do you think they are going to suddenly stop committing crimes?

The bills passed under urgency

These are the bills passed by Parliament yesterday under urgency, before they adjourned.

  1. Imprest Supply (Third for 2019/20) Bill. This authorises further expenditure to 30 June 2020 of $52 billion to cover emergency spending. The largest blank cheque in our history Parliament has given the Government. $40 billion is for operational expenses, $10 billion for capital expenditure and $2 billion for capital injections
  2. COVID-19 Response (Taxation and Social Assistance Urgent Measures) Bill. Implements some minor tax changes announced last week, allows IRD to remit interest on tax owing after 14 February and to share information with other agencies for COVID-19 response purposes.
  3. COVID-19 Response (Urgent Management Measures) Legislation Bill. Allows Secretary of Education to take over any school in relation to COVID-19 measures, allows local authorities to meet remotely, prevents tenants being evicted for six months in most cases and freezes rents for six months

All parties in Parliament supported these as emergency measures.

They also established an Epidemic Response Committee to scrutinise the Government’s response and use of powers in this time. The membership is:

  1. Simon Bridges (Nat) – Chair
  2. National MP
  3. National MP
  4. National MP
  5. National MP
  6. Labour MP
  7. Labour MP
  8. Labour MP
  9. Fletcher Tabuteau (NZF)
  10. Marama Davidson (Greens)
  11. David Seymour (ACT)

No trial – Tarrant pleads guilty

The Herald reports:

Brenton Harrison Tarrant has today made a shock admission that he was the lone gunman who murdered 51 Muslims at two Christchurch mosques on March 15 last year.

The 29-year-old Australian entered the guilty pleas at a special, hastily-arranged High Court hearing in Christchurch this morning.

Tarrant, who appeared from prison on a screen via audio-visual link (AVL) wearing a grey prison sweatshirt, pleaded guilty to all 51 murder charges.

He also admitted 40 charges of attempted murder relating to the two attacks at Masjid Al Noor and Linwood Islamic Centre on March 15 last year – and pleaded guilty to one charge of engaging in a terrorist act laid under the Terrorism Suppression Act 2002.

This is excellent news. No idea why he changed his mind as I thought he wanted his moment in the sun. But this means the victims and their families are spared a long horrible trial, and we also are spared it. Plus Tarrant no longer gets to espouse his ideology in a trial.

So now we can move onto sentencing. There is only one possible sentence in my view – Life without parole. It can be imposed when:

the court that sentences an offender convicted of murder to imprisonment for life is satisfied that no minimum term of imprisonment would be sufficient to satisfy 1 or more of the purposes stated in subsection (2), the court may order that the offender serve the sentence without parole.

And the purposes are:

(a) holding the offender accountable for the harm done to the victim and the community by the offending:

(b) denouncing the conduct in which the offender was involved:
(c) deterring the offender or other persons from committing the same or a similar offence:
(d) protecting the community from the offender.

I think both (a) and (b) must lead to life without parole. If gunning down 51 people doesn’t qualify, then no murder could ever qualify.

I just hope that there wasn’t an agreement with Crown Law that they won’t ask for life without parole in exchange for a guilty plea.

Anyway again this is a great outcome for the victims, and for all of us.

Is horse racing an essential service?

Lincoln Farms reports:

Racing has been thrown a lifeline by the Government during the Covid-19 pandemic.

The Ministry Of Primary Industries has announced that training centres, stables, agistment properties and stud farms where horses are in containment are considered essential services under animal welfare considerations. …

The news was welcomed by Lincoln Farms’ trainer Ray Green.

“Common sense has prevailed. We’ll be able to look after the horses better rather than just slinging them out in the paddock.

I suspect certain Ministers were involved in this decision.

If it was purely about animal welfare, well horses do very well in paddocks – that is where the vast majority of horses live.

But what this decisions means is:

“And this will save a heap of jobs and potentially keep the whole game alive. We can continue to train the horses and have them ready to go when racing resumes.

“Otherwise it could have been another three or four months even when we got back to level three and that would have been disastrous for the industry.”

So it seems it is prioritising the interests of the racing industry over minimising COVID-19 transmission.

Now it’s not a bad thing that the racing industry doesn’t lose so many jobs, but the question is were they given special treatment due to Ministerial involvement?