A funny and clever explanation about how Obamacare works by Lisa Benson. Not meant to be taken literally!

Copyright: Lisa Benson, Washington Post Writers Group 2014. Found at Real Clear Politics.

Have had a number of discussions over the last few days with various Labour people on the leadership. Everyone expects Little will win, but will it be on the first ballot, and how will the members, unions and caucus vote.

Below if my best estimate of where the Labour MPs loyalties lie. However this may not be reflected in the actual vote. With a Little victory highly likely, some Labour MPs may vote tactically and give Little their first preference to minimise any stories on him being elected with little Caucus support.

The preferences appear to be:

Andrew Little

1. Lees-Galloway
2. Sepuloni
3. Cunliffe
4. Little
5. Moroney
6. Rurawhe

David Parker

1. Davis
2. Henare
3. Nash
4. Curran
5. O’Connor
6. Parker
7. Shearer
8. Tirikatene

Grant Robertson

1. Ardern
2. Clark
3. Faafoi
4. Hipkins
5. Woods
6. Cosgrove
7. Robertson
8. Twyford
9. Dyson
10. Goff
11. Mallard
12. King

Nanaia Mahuta

1. Wall
2. Mahuta
3. Salesa
4. Whaitiri
5. Sio
6. Williams

Stuff reports:

Roger Sutton has resigned as chief executive of the Canterbury Earthquake Recovery Authority (CERA).

He had been under investigation for the last seven weeks after a complaint of sexual harassment from a senior staff member.

The allegation accused him of making inappropriate jokes and comments, and giving her an unwelcome hug.

A report provided to the State Services Commissioner Iain Rennie did not establish conduct which would have led to Sutton being dismissed and Rennie said he would not have asked him to stand down. 

“However, Mr Sutton offered his resignation and this was accepted,” Rennie said in a statement today.

A sad end to Sutton’s role at CERA. He was universally praised as the perfect person for the job when he was appointed. While he has obviously had some detractors during his tenure, he still remained very well respected.

We don’t know the details of the allegations, and are unlikely to know them. But it seems they are at the inappropriate humour side of things, rather than deliberate harassment. The SSC said that he would not have been sacked for them.

So this is my honest opinion of the four candidates. They all have some strengths, and none of them look like they have the potential to be a game changer (Shearer and Cunliffe had the potential to be, they just didn’t manage to do it).

If I was a Labour Party member and wanted to maximise the chances of winning at the next election I’d rank Grant Robertson first. Also even if he doesn’t win, he has the best skill set to rebuild the party organisation team and parliamentary team so they are less dysfunctional – and this would help the leader after him.

My second preference would be Andrew Little. Andrew was hugely impressive as EMPU General Secretary and a pretty good Labour Party President also. However he hasn’t been a star in Parliament. He may rise to the occasion, if given the leadership (which seems likely), but his record in New Plymouth shows his electoral appeal may be limited.

Prior to them both entering Parliament, I had said that Robertson and Little are potential future leaders.

The third preference would be David Parker. He’s a better Deputy than Leader though.

The last preference would be Nanaia Mahuta. I have nothing personal against her, but when she has had front bench opportunities such as being Education Spokesperson, she doesn’t seem to have been highly effective. I suspect her candidacy is more about becoming Deputy Leader.

I expect Andrew Little will be the winner tomorrow. It will be interesting to see if he gets 50% on the first ballot, and if not, how the preferences flow.

The final full day of the month in Latin America was at Machu Picchu, after doing the Inca Trail. It’s a 15th century Inca settlement that was rediscovered by Hiram Bingham in 1911. It is the most intact Inca site existing today.

The main part of Machu Picchu, as you enter.

A view from below of the scores of terraces.

Again, the quality of the construction is astonishing. They fit perfectly together.

Up in the Temple of the Stars.

Was amused that this little creature not just made its way into the Temple, but managed to get all the way up there. A few hundred years ago he or she may have ended up being worshipped as a god.

It’s hard to get all the terraces into one photo.

From near the guardhouse, you get this view of the main site plus see Huayna Picchu behind it. There is a narrow and steep trail which you can take up to the peak of Huayna Picchu.

After going around the main site, we took this path to the Inca Bridge.

Was rather glad not to actually go over the Inca Bridge. One slip, and ouch.

You can see where the trail used to be on the far side of the bridge. It was a sort of back route into Machu Picchu, as a defence against invaders.

Then we headed up to the Sun Gate, passing these llamas on the way.

People enjoying the view from the Sun Gate.

The view from the Sun Gate, which I also saw the previous day. Just after this it started to pour with rain, so we then headed back to the entry, and down into town.

Then it was on the train back to Cusco.

The train staff do am amusing dance routine, and also model clothing from Sol Alpaca. Makes the trip go faster.

And on the way out we passed the entry point for the Inca Trail where I started four days earlier.

After that it was one final night in Cusco, and then four flights home to Lima, Santiago, Auckland and finally Wellington. All up 31 days in Latin America.

3 News reports:

There’s a call to ban “zero hour” contracts following evidence their use in New Zealand is spreading.

The contracts don’t guarantee any hours of work and employees have to be ready to come in when they’re called.

Unions say employers have started following their overseas counterparts.

“McDonalds, KFC, Pizza Hut, Starbucks, Burger King, Wendy’s – all of the contracts have no minimum hours,” Unite Union’s Mike Treen said on Radio New Zealand today.

“People can be, and are, rostered anywhere from three to 40 hours a week, or sometimes 60 hours a week.”

The use of zero hour contracts when the employer’s hours of operation are well known in advance seems pretty scummy. If you know your opening hours you should be able to guarantee a minimum number of hours to staff.

NZ First says they must be outlawed.

Industrial relations spokesman Clayton Mitchell says the contracts are “a dreadful British experiment” that New Zealand doesn’t need.

“These contracts are despicable and cruel, and designed to put workers at the beck and call of their employer,” he said.

Banning them however would be very stupid and undesirable. Not all employers are the same. Some employers do not have fixed hours of operation. They only have work for their staff, when they have clients who have work for them to do. If you ban zero hour contracts for all employers, then you would potentially bankrupt some employers who would be having to pay staff to turn up and do nothing.

Treating all employers as the same is stupid and inflexible. McDonalds is not the same as a call centre, for example. The solution to the zero hour contracts at McDonalds is now a law change, but negotiations with McDonalds.

Brian Easton writes at Pundit:

I support raising the age of eligibility for NZS but not, primarily, for reasons of fiscal sustainability. Rather it needs to be increased for equity reasons. Longevity is increasing. When the Old Aged Pension was introduced in 1898, life expectancy at the age of 65 was 13 years; today it is 20 years, and it will continue to rise. It is a matter of equity that as the age of longevity rises, the age of eligibility for NZS should rise too. Here is how I would do it with five integrated steps.

1. We should set out a target age of eligibility based on life expectation. I suggest we choose the age as that where life expectancy is 17 years (similar to the 1938 level for 65). In current terms that would set an age of eligibility of 69.That target age would rise with increased longevity.

I like the idea of having a method to change the age over time, as life expectancy increases, without needing to change the law every few years.

However life expectancy seems to be growing at the rate of three years per decade. Or in other words life expectancy has increased by six years in the last 20 years. That would mean that the age of eligibility would constantly be increasing at three to four months per year.

2. However, the actual age of eligibility would be raised by only 3 months every year until it reached the target age. So it would take 12 years to reach 69, and the full adjustment would only affect those born after 1958 if we started next March (2015).

A sensible way to do it, but by the time we got to 2027, then life expectancy would have increased another four years and the age would need to keep increasing until age 73. Is there a limit at which we stop?

3. We need to recognise that there are people who cannot be expected to work in the years before the current age of eligibility, and who will have insufficient savings. They should get an early retirement benefit. Except for its name – reflecting a different status – it would be very similar to the Invalids Benefit.

That’s an excellent idea.

4. We need to strengthen private provision for retirement by making KiwiSaver compulsory and increasing its contributions. A compulsory contribution is much like a tax; but the beneficiary is solely the individual taxpayer. (This sort of approach may be a way we can get around – to some extent – the deadlock over raising income tax rates for structural macroeconomic purposes.)

I’m not convinced compulsion is a good idea, as it may force some people into a particular form of savinsg, which is not ideal for them. Paying the mortgage off or investing in a business can be the best decision for some people.

5. Any fiscal savings we gain from the raising the age of eligibility should be channelled into better provision for residential and domiciliary care for the very old. If we dont, we may under-provide for them or cost-shift provision onto their children – privatise it.

If KiwiSaver was made compulsory, I think the level of NZ superannuation (specifically the link to the average wage) needs to be looked at. When KiwiSaver was first introduced the calculations were that someone on the average wage would end up with a higher level of income in retirement from KiwiSaver and NZ Superannuation, then while working. That implies to me a level of over-taxation as people should have higher incomes while working (with associated costs of working) than while retired.

We should have a first principles approach to defining what level of retirement income is desirable, and then if KiwiSaver is compulsory, have NZ Superannuation set at the level between the desired level of retirement income, and what people will get from KiwiSaver.

I’d do that be ringfencing the current NZ Super scheme for those currently retired or near retirement, and designing a new scheme for future retirees.

The Herald reports:

Students are now less likely to have a male teacher, with many going through their early education years without ever encountering a male role model.

Ministry of Education figures show fewer than one-in-five primary school teachers are male.

Principals want more research on what is putting men off the profession, but fear pay and high-profile sexual abuse cases are to blame.

The Ministry of Education is “very conscious” of the gender imbalance, but says with no shortage of teachers there are no recruitment drives aimed at men.

“Evidence tells us that the most important factor in lifting achievement is the quality of teaching, not the gender of the teacher,” said Dr Graham Stoop, the ministry’s head of student achievement.

But that doesn’t mean the gender is insignificant. There is a wide and growing disparity between the achievements levels of boys and girls at school. Girls on average are doing significantly better. It should be a priority to close this gap by improving the outcomes for male students, and I would not dismiss the possibility that the lack of male teachers is a significant factor.

9% more female students achieve NCEA Level 1 in Year 11, 8% more achieve NCEA Level 2 and 13% more achieve NCEA Level 3. These gender gaps are larger than the gaps between decile 4 to 7 schools and decile 8 to 10 schools.

Stuff reports:

For the rest, student debt – or “deferred tax liability” as one financial adviser likes to see it – has become a fact of life with over $14.3 billion now owed to the state.

But the ubiquity of student loans does not lessen their impact on individuals. Indeed, the sums borrowed continue to rise. The average amount borrowed by students in the 2012 year was just under $8000, up more than $520 from two years earlier. It probably would have been more if not for the fees “stabilisation” enforced on tertiary education providers by the Government.

The average loan at the end of June was over $19,000 – though the median was just over $13,300. At that rate, average balances of $20,000 or more appear likely to become the norm.

It’s a large debt overhang to start a working life with, though, in theory, a quality education should more than pay for itself in higher earnings.

So the median debt is $13,300. Does the extra earning cover that cost?

Well if you do not get a post-school qualification your median weekly income from wages is $729 a week (Stats NZ June 2014) which is $38,012 a year.

If you do not get a degree your median weekly income from wages is $1,055 a week (Stats NZ June 2014 for a bachelors) which is $55,011 a year.

That’s a difference of $16,999 a year. Over say a 40 year working life post study that is around $680,000 before tax in extra income. For a median student loan balance of $13,000 or so that’s a superb investment for most people.

It’s very had to argue that hard working truck drivers and builders should pay more in taxes, so accountant and lawyers leave university with less of a student loan.

The Herald reports:

After five years of negotations, Korea and New Zealand are set to sign on a free trade agreement this afternoon.

Prime Minister John Key advised the deal was done soon after arriving into Brisbane for the G20 this afternoon. It is a landmark deal for Mr Key as the first bilateral free trade agreement under his watch as Prime Minister.

He will meet with Korea’s President Park Geun-hye before making the announcement. However, he said it would still be a challenge to get it through Korea’s Parliament, which has baulked over free trade agreements in the past.

Mr Key said that was because it involved agriculture which was a politically sensitive issue. However, the agreement was similar to those Korea had signed with Australia, Canada and the United States.

Mr Key said it was “a good deal” and would see tariffs imposed on New Zealand exporters drop by about $65 million in its first year with further drops until tariffs in most areas phased completely over a decade. Mr Key said there were some areas which were of little relevance to New Zealand and other sectors where it would have been impossible to budge Korea further

“I think those sectors might, at the margins, be slightly disappointed but overall people will be pretty happy.”

“Korea is a big market, there is $4 billion in two way trade. We pay about $225 – $250 million in tariffs each year. I think there will be a lot of New Zealand businesses quite happy with it on Saturday night.”

Good to see another FTA agreed. Reducing tariffs benefits both countries involved.

The HoS reports:

Four brothers slipped out of Australia last week to join the fight with Islamic State (Isis) in Syria.

As authorities attempt to contain home-grown terrorists from leaving Australia, the latest recruits from Western Sydney have been labelled “cleanskins” by police agencies because they were completely unknown to intelligence.

The brothers – aged 17, 23, 25 and 28 – told their parents they were going on a holiday to Thailand, according to Sydney’s Daily Telegraph.

The siblings are believed to have travelled to Turkey and crossed the Syrian border in the past week.

I suspect it is only a matter of time until there is a successful terrorist attack in Australia.

With the 2014 mid-term election campaign in full swing in October the US Federal Reserve’s decision to ease back on its bond buying program (quantitative easing) didn’t receive the coverage it deserved by the media. So what is ‘quantitative easing (QE) and why is it used? The Economist explains:

When the crisis [GFC] struck, big central banks like the Fed and the Bank of England slashed their overnight interest-rates to boost the economy. But even cutting the rate as far as it could go, to almost zero, failed to spark recovery. Central banks therefore began experimenting with other tools to encourage banks to pump money into the economy. One of them was QE.

To carry out QE central banks create money by buying securities, such as government bonds, from banks, with electronic cash that did not exist before. The new money swells the size of bank reserves in the economy by the quantity of assets purchased—hence “quantitative” easing. Like lowering interest rates, QE is supposed to stimulate the economy by encouraging banks to make more loans. The idea is that banks take the new money and buy assets to replace the ones they have sold to the central bank. That raises stock prices and lowers interest rates, which in turn boosts investment.

So how has QE worked in practice? This is strongly debated by economists with the Wall Journal having canvassed economists for their views on QE. Meanwhile Robert Samuelson over at Real Clear Politics is arguing why more research is necessary.

Take the “event studies.” They observe interest rates only during the first hours or days after a Fed bond-buying announcement. Over longer periods, interest rates may reverse course. On his blog, economist James Hamilton of the University of California, San Diego, says that rates on 10-year Treasury bonds actually rose during periods of Fed bond buying — the opposite of the goal. Whatever the Fed’s influence, he writes, it was overwhelmed by “developments beyond [its] control.”

Likewise, economic models may exaggerate the tendency of lower interest rates and higher stock prices to increase spending. Maybe the financial crisis has made people more cautious. The models may be outdated.

Some of the potential pitfalls of QE are discussed here in analysis by ECR Research. The Economist shares similar concerns.

Studies suggest that it did raise economic activity a bit. But some worry that the flood of cash has encouraged reckless financial behaviour and directed a firehose of money to emerging economies that cannot manage the cash. Others fear that when central banks sell the assets they have accumulated, interest rates will soar, choking off the recovery. Last spring, when the Fed first mooted the idea of tapering, interest rates around the world jumped and markets wobbled. Still others doubt that central banks have the capacity to keep inflation in check if the money they have created begins circulating more rapidly. Central bankers have been more cautious in using QE than they would have been in cutting interest rates, which could partly explain some countries’ slow recoveries.

The challenge for economists is to increase their knowledge of QE by developing more advanced modelling and measurement systems enabling QE to be further refined. As it stands not enough is known about its inner workings and how it influences economies.

By John Stringer

The HoS reports:

Runaway killer Phillip John Smith will voluntarily return to New Zealand to escape harsh conditions in the Brazilian jail system, says his lawyer.

Smith was transferred from the notorious Ary Franco Prison to the Bandeira Stampa public jail, part of the Gericino Penitentiary Complex – the largest public prison in Brazil – on Friday.

If the 40-year-old sex offender chooses to fight his extradition to New Zealand, he could face several months in a dangerous and basic South American prison.

Smith boasted from Brazil that New Zealand would have considerable difficulty getting him back – if they caught him.

But given the conditions behind bars, lawyer Tony Ellis said he expected his client would voluntarily return to New Zealand, rather than go through an extradition or deportation process.

That would be good.

When he is back in NZ, he will face further charges, but to some degree they are meaningless. He is already on a life sentence, and I think his actions have shown he should never get parole, so hopefully he can fade to a distant memory.

Auckland Pacific Labour have said:

The Auckland Pacific Sector of the New Zealand Labour Party met last night to discuss and rank the Labour leadership candidates. After much debate and discussion it was carried by a unanimous vote that the leadership candidates be ranked in the following order:

#1 – Nanaia MAHUTA
#2 – Andrew LITTLE
#3 – David PARKER
#4 – Grant ROBERTSON

Rating Robertson last is ridiculous. But fair to say that it looks very difficult for him to win.

The Greens whine:

New documents released to the Green Party show that Prime Minister John Key used New Zealand’s intelligence services for the National Party’s political ends a few days out from the 2014 election, the Green Party said today.

Documents released to the Green Party under the Official Information Act show that Prime Minister John Key pressured the Government Communications Security Bureau (GCSB) into releasing previously classified documents just days out from the election.

“The Prime Minister has arrogantly used the GCSB in order to assist the National Party’s elections chances,” Green Party Co-leader Dr Russel Norman said today.

“John Key knew that investigative journalist Glenn Greenwald and NSA whistleblower Edward Snowden were going to provide information damaging to his Government.

“In order to counter this damage John Key made certain that the GCSB declassified and released documents in an effort to provide damage control to both himself and the National Party.

“This is a Prime Minister who was using the security services for political purposes.

The Greens have so lost the plot on this.

Are they really saying that when someone makes a false claim based on partial information, the Government should not respond and prove they are wrong?

This just shows how unsuited to Government the Greens are. They seem to be on the side of the foreign journalists and opposed to the Government revealing that they had it wrong.

The Herald reports:

German Chancellor Angela Merkel says she will back a New Zealand push for a free trade agreement with the European Union – words that will be music to Prime Minister John Key’s ears.

Speaking to media during her visit to Auckland today, Dr Merkel said Germany would champion New Zealand’s cause.

“I think we should also come out in favour of a free trade agreement between the EU and New Zealand. New Zealand has such agreements with China and other areas of the world.

“As a member of the European Union, Germany is very much championing, despite the great distance that separates us, to foster our trade relationships, to bring forward trade with the European Union.”

She said she was impressed by New Zealand’s growth, saying it was because the country was open minded and encouraged free trade.

Mr Key said Germany was already a critical trade partner and two-trade was now larger than with the United Kingdom. However, there was scope to do more and he had spoken about NZ’s aspirations for a free trade agreement with the EU.

Interesting that Germany is now a bigger trading partner than the UK.

An FTA with the EU would be great as they are highly protectionist. But it would require consent of all EU countries and I can’t see France agreeing.

Two way trade with the EU is around $12 billion a year.

The Press reports:

Canterbury Earthquake Recovery Authority (Cera) chief executive Roger Sutton says he is considering his future after an allegation he sexually harassed a staff member.

The allegation accuses Sutton of harassing a senior female staffer, including making inappropriate jokes, comments and giving her an unwelcome hug.

A State Services Commission inquiry into the claims by a staff member is expected to deliver a finding next week. The inquiry has taken about seven weeks. …

Sutton, a flamboyant cycle-riding face of the recovery authority, said last night he could not talk about details of the complaint although The Press understands he has disputed some of the allegations or the alleged intention behind his behaviour.

“I can be a larrikin and make stupid silly jokes. It is a very difficult, stressful job and I’ve sometimes used humour to cope. I wish this wasn’t happening and I was horrified when I learned about it [the allegations],” he said.

“But I’m not the victim. I’ve made some stupid mistakes.”

One has to be careful of commenting without knowing the full details.

However I would make the point that if the issue was his general behaviour, rather than specific attention towards one staffer, it seems a pity it could not have been sorted out without a formal complaint. But maybe that was tried and got nowhere?

CERA staff need to be able to not feel harassed in the workplace, but if it is a case of misjudged humour rather than deliberate harassment, it would be a pity if it resulted in a widely respected CEO departing. But again, conclusions can be dangerous without the full facts.

Day 3 started off with a climb of course – but only 200 or so metres today.

The campsite behind us as we leave.

Another snow covered mountain top.

A view of the valley beyond the pass.

The trail than evens out.

Lots of birds and butterflies on the trail.

A zoom view of Aguas Calientes, the town near Machu Picchu, taken from the third mountain pass.

Then we start a 1,000 metre descent. The steps are steep.

These ruins are called Phuyupatamarca and they were only discovered in 1983.

More downhill.

And even more down!

The sun has coloured these leafs purple.

A view of the main valley which the trains come in on.

Stairs up at Phuyupatamarca.

Enjoying the view.

There’s over 40 terraces here. It would have been a major agricultural site.

Then down the stairs.

Some llamas that have made it their home.

A short walk to the final campsite. Most people camp here overnight, and trek to Machu Picchu on Day 4, but we only had a lunch stop here.

Lunch as always was great – much better than normal tramping food.

Then around a two hour trek towards our final destination.

Steps heading up to the Sun Gate.

Finally, we reach Intipunku, or the Sun Gate.

The initial view of Machu Picchu and the road up to it.

A close up of Machu Picchu from the Sun Gate.

Myself and William, my guide, at the Sun Gate.

Then a final half hour trek down to Machu Picchu itself.

Posing above Machu Picchu.

Then headed down into Aguas Calientes, to meet up with the SO. It’s a cool little town with many good restaurants and shops plus these very relaxing hot pools. Was much nicer to spend the evening here, than in a tent!

Tomorrow is the final day of the holiday, being an exploration around Macchu Pichu.

Stuff reports:

Inland Revenue has warned the Government may have to consider cutting the company tax rate next year if Australia drops its rate.

In a briefing to Revenue Minister Todd McClay, the tax department said New Zealand’s aging population could result in pressure to raise taxes to pay for health and pensions.

But it said the Government would need to take into account developments in other countries when considering company tax, which was cut from 30 per cent to 28 per cent in 2011, undercutting Australia’s 30 per cent rate.

“Tax changes in Australia should continue to be monitored as they can have important implications for New Zealand,” Inland Revenue said. “A particular focus will be Australia’s White Paper due out at the end of 2015.

“If, for example, there were a substantial reduction in the Australian company tax rate, the question of whether New Zealand should follow suit would arise,” it said.

Many people complain about companies shifting to countries with low tax rates. There is little one can do to stop this, except to ensure our own tax rates are competitive.

InternetNZ have said:

InternetNZ is surprised and bemused by recent comments from the Chief Censor that he is considering “prosecuting” Slingshot over its GlobalMode service that enabled Internet users to access sites that were otherwise blocked in New Zealand.

Whether Slingshot’s global mode does or does not breach copyright is a civil issue, not an issue for the Chief Censor.

Yes some people may use it to access material not classified for NZ, just as millions of NZers use You Tube to view videos not classified for NZ.

InternetNZ does not believe that an Internet Service Provider is responsible for what its customers do on the Internet and that to suggest otherwise creates a bizarre world where Internet providers are held up to a different standard to other utility suppliers.

InternetNZ CEO Jordan Carter says that CallPlus has every right to provide this service. “The courts have not decided that the service is illegal,” he says. Comments from the Censor would seem to single out ISPs for special treatment, and that isn’t good for the Internet or for Internet users.

 “I don’t recall the Censor making similar claims when NZ Post started YouShop, enabling customers to order items that were unavailable in NZ and have them delivered to a phoney address in the United States.

The Chief Censor is at risk of massively over-stepping his role. His role is not to act to protect the commercial business models of NZ distributors. It is not his role to promote regional geo-blocking.

If the Chief Censor does try to prosecute Slingshot, then I’ll happily donate to their legal fees.