What was left at the bottom of Pandor's box, when all else was let out? Hope; and when that was gone...there was nothing left.

Steven, you've got a valid point. Many people are conscious of the need to invest for their own future, however have no real idea on how to do it.

Or at least, they have limited ideas. Many will put something into KiwiSaver because it seems to make sense and is easy. It also seems "safe". Some might just tuck something away into a savings account and move to a Term Deposit when they've got a reasonable sum saved. After all, it generates interest and is "safe". And finally, everyone in NZ has heard the term "investment property", so that's another frequently used option. It's easy to comprehend, seems guaranteed to go up in value over the long term, cannot disappear and generates a return. If you want to improve your return, it doesn't require much brain power. You just pick up a paintbrush and decorate the place, or run a mower around the lawns.

It is also easy to borrow money to purchase an investment property - just try borrowing money to invest in a business!

I'm afraid that encouraging investment in businesses and the export sector will require more than just taxing the hell out of property. Somebody has to make it easy, safe and accessible.

Only now, do I know what it must have felt like, to be the sucker on watch that night, screaming out for the helm to be put hard to port and hearing no reply from the bridge on the Titanic. You see, we are destined to watch as our morons guide us into the slab of Greenland at full steam ahead, because deep down they really do believe the economy is unsinkable, that we are not an Iceland or an Ireland but some mystical land of Noddy, where bad things never happen.

Hopes ?
Dopes !
Economy on ropes .
Wifey mopes ,
can't copes !

( now that is art , where's me $ 15000 , for a pile of shite ? )

Govt: "If it's O.K with the Property Council of NZ we will ___ otherwise___."

Expat, sadly I fear very much its going to be the latter of your two options
too many vested interests, not enough balls
John and Bill will be remembered 10 years later as the guys who COULD have made a difference

But at least we can chop down annoying trees! That would never have happened under Labour Govt.

"Stuffed " - what would you give the Nats out of 10 so far?
I'd give them a 4.5 out of 10
a lot of talk but little action

Watched Bollard on TV3 news.

http://www.3news.co.nz/Bollard-warns-about-dangers-of-another-housing-bu...

After watching that segment, and if I was considering going to buy a house, I would say that he has given a big green light to house debtors throughout NZ to go and buy some more debt (secured by property).

The main message I took from his body language, the words he used, the tone of his voice etc was "I know that another housing boom is most likely a bad thing. But there is no way I'm going to do anything to stop it. If you are into buying debt (secured by property) then go right ahead. The OCR is going nowhere."

Problem here is that most people incl. policy makers have in one way or another interests in investment properties. Hence, no one dare to introduce measures such as Cap Gain Tax, because it'll be like shooting yourself in the foot! I wondered if Mr Bollard has any rental property???

Lara Says:

September 10th, 2009 at 9:42 pm
But at least we can chop down annoying trees! That would never have happened under Labour Govt.

Yes thats true Lara some trees are very annoying, always going on about green shoots or being rooted in inconvienient places.

Chop em all................ scorched earth policy.... I feel an episode coming on... oh the horror the horror!!

We all know how this ends. Replay 1984-87. Big crisis then the government invoking TINA (there is no alternative) and flogging off everything in sight to whoever wants it. Michael Fay, David Richwhite and co must be licking their lips about now. Expect huge parts of the conservation estate to be opened up to logging and mining. This National government won't be as overt as Ruth Richardson and Bill Birch - they'll just ring their hands and do nothing and say its out of their hands.

# Matt in Auck Says:
September 10th, 2009 at 9:52 pm

"Stuffed " - what would you give the Nats out of 10 so far?
I'd give them a 4.5 out of 10
a lot of talk but little action

It would have to be under 5 Matt in Auck as they have failed to do anything.

People keep expecting Bollard to do more. He really only has a job to keep inflation in the 1 to 3% band. He cannot change taxes or laws. That is Key and Cos responsibility.

we are stuffed Says:

September 11th, 2009 at 9:38 am

People keep expecting Bollard to do more. He really only has a job to keep inflation in the 1 to 3% band. He cannot change taxes or laws. That is Key and Cos responsibility.

That is true stuffed..... and under the act he can only be directed by the Minister of Finance to intervene in any way should such circumstances arise as.............Complete loss or erosion of public confidence..(just one of the clauses)

But he has a duty to the public to be transparent with accounts and policy.
If we are to assume he has been transparent vis a vis yesterdays announcement then we may rightly conclude he has admitted that a vital ingredient to the recovery of the N.Z. economy is now ............Out of Control.........and although within his remit,his acceptance of his inability to propose........ any solution.......should and would under normal market circumstances require his resignation to be tendered at the earliest convenience.

I repeat a blog I made long ago.........."bolly" you have been benign to the point of redundant , return to your office and await further instruction.

I would like to amend that with ..return to your office and tender your resignation as by your own regulations you are redundant.

Dr Bollard needs the support of a galvanized exporter sector.

"Dr Bollard's comments about the need for a speculation tax are underwhelming in light of the rise of the NZD to 70 cents against the US dollar and the damage another bank fuelled property bubble will do to our economy. It's time farmers and exporters joined together to tell the Prime Minister that Dr Bollard needs more sophisticated tools as the OCR is a very blunt instrument," says Selwyn Pellett, spokesman for the Productive Economy Council.

It is the PEC's position that property speculators are doing serious damage to the economy, aided by the banks and our outdated monetary policy. The PEC calls on Dr Bollard to be more candid with the country about just what the relationship between property speculation, monetary policy and the bank's behaviour is and the effect it is having on the economic outlook for the country.

"Speculating Baby Boomers have created the pull for foreign capital via the banking system, with the support of PAYE deductions in our tax system. That process drives up the dollar and kills our export sector, while making our housing some of the least affordable in the developed world and giving us one of the highest levels of National Debt," says Pellett.

"There is no way, based on underlying economic fundamentals, that our dollar should be at 70 cents against the USD and its current value is the result of pure speculation by FX traders." he says.

"The FX traders know that Dr Bollard will be under enormous pressure to increase the OCR soon as bank-fuelled inflation takes off, taking interest rates and the dollar up with it. For an FX trader within a bank this is simply a license to print money, so they are queuing up now ready for the destructive joy ride they will have at the expense of our economy, " says Pellett.

Commentators have pointed out in detail how many of our politicians are involved in property speculation and one has to wonder if that is delaying them acting in the national interest. We have increased our indebtedness as a country to a net level of around 100% of GDP.

"The reality is that trading the same small pool of properties internally, fuelled by foreign debt, will do nothing for the long-term health of New Zealand's economy. We are been driven towards an Icelandic event," says Pellett.

"Every property speculator who participates in this stupidity needs to hold their head in shame. People are going to lose jobs as a result of the increase in the dollar which has already gone from 50 cents to 70 cents against USD this year," he says.

"For an exporter with flat sales that's like taking a 30% cut on the revenue line which will translate to negative numbers at the profit line unless they reduce staff costs. That always means job cuts. As a country we still have the same asset (house or farm) but we are more in debt to foreign banks (gross debt is 150% of GDP and net around 100%) with less income to service that debt because of the effect on exporters."

"I know this isn't intuitive when presented by the economists, bankers and politicians but the simple fact is that you don't need a degree to understand what the result for all of us is when you have the same unproductive asset, with more and more debt and less and less income to service it. This is no way to run an economy, but it has become the New Zealand way. John Key needs to stop worrying about his image and popularity and act in the national interest," says Pellett.

"Allowing PAYE deductions on secondary properties while not having a capital gains tax at exit is in reality a Poverty Tax. What it means is those that don't have the money to speculate pay a portion of their taxes to subsidise property speculators. A good question in the House right now would be: "How much are we borrowing this year to fund PAYE rebates to property speculators?" "

"John Key needs to face the truth. Property speculation is an onerous tax perpetrated on hard-working New Zealanders, including the export sector, by a few irresponsible people. It comes at the expense of our economic sovereignty and he must stop it. Give Dr Bollard the tools and remove all tax loop holes related to property speculation," says Pellett.

Go PEC - flex on!

Les - this makes my skin crawl:

"Allowing PAYE deductions on secondary properties while not having a capital gains tax at exit is in reality a Poverty Tax. What it means is those that don't have the money to speculate pay a portion of their taxes to subsidise property speculators. A good question in the House right now would be: "How much are we borrowing this year to fund PAYE rebates to property speculators?"

The whole thing just seems so unfair. The last sentence (question) is one I'd LOVE to have put to the House. I fail to see how it couldn't result in some stuttering and stammering.

Les
I look at it as a long ride. we have been heading down this path for years and now are getting close to destination. Its not something we should be at all be surprised by. The USSR failed but we think central Govt can do it better this time.
Im talking to exporters man are we in trouble, apples are knackered ,at this level losses will be made on beef and lamb, dairy is buggered. Its very very ugly and yet the Govt is steady as it goes. We will have to default come under IMF management and then maybe change will happen.
Living and investing in a country where there are 1.84 million in the private sector and 1.76 million in the public sector or on benefits is crazy. We are going down, I talked to exporters today totally shutting down their operations. I got a email from the grape growers advising me on how to mothball my vineyard.
Its going to end in a lot of pain,especially in the housing sector.

Andrewj - yep, sad but true. I've got to a point where I now believe this is less caused by ignorance, incompetence, poorly applied idealism etc. But simply more powerful vested interests wanting to manipulate maintenance of the status quo, all while they fully understand the potential outcome for the nation, but they simply don't care, as they'll be alright Jack. I guess I'm thinking more this way now, because I can't believe they could be so stupid as to not see what has, is and will happen, so pls forgive me if I seem overly cynical, I just find it really hard to rationlise the behaviours of seemingly intelligent people and have come to this conclusion. About which I'd love to be proved wrong.

Les Rudd - absolutely agree. The Nats are showing that they just care about the status quo and vested interests rather than the future of this country. It is very sad indeed. They should be acting with the UTMOST URGENCY.

Heard Brian Gould on National Radio. The conversation was about the Labour conference but he made a very telling comment near the end of the interview. He said the Nats were not doing a good job at dealing with the major economic issues we face, no better than Helen's mob.

The guy who frustrates me the most is Phil Heatley. He is doing bugger all to sort out the housing mess, he won't front up to this forum, god knows what we (the taxpayers) are paying him for, to wander around open homes and buy more investment property?

Its bloody disgusting.
I voted for these pricks, naively expecting I would get something better than the red army

I reckon in a few years time the likes of Berrnard and Rod Oram will be admired for the way in which they were of the very few who spoke out repeatedly on the fundamental economic flaws of this country and what needed to be done to fix things, but were disastrously ignored.
At least we can alll say that we contributed to the debate and gave it OUR best shot too in terms of trying to influence opinion.

That's freakin' scary Matt. But not altogether surprising. Some of my friends, no matter how badly they've been burned, still believe property is the way forward. At all costs. I'm not saying property has no place in a diversified investment portfolio, but to put all your eggs in one basket like that is, to say the least, worrying!

I work in the Financial Services field, and have seen a lot of people pleading hardship in recent times and guess what the biggest contributor is? Yep, that half million dollar mortgage.

How about this for a Vision statement for a New Party

We will see New Zealand become the exemplar among small and open economies in building a sustainable, high-wage, high growth, hi-tech economy that benefits all it's citizens, while fiercely protecting it's economic sovereignty and ensuring we create new strategic options for generation X & Y.

Anyone want to sign up! If youd rather stay with speculating baby boomers, banks and blown out national debt for unproductive asset feel free to do absolutely nothing. Why sick your neck out when our leaders clearly wont.

The next election will be fought on the sale of assets and the productive economy (one way or the other). It will be pitched a million different ways but we the public will have to make some choices.

Do we want a productive economy that aligns all its policy settings up to compete with the world in the tradable economy or

Do we sell off our strategic assets (those that exhibit monopolistic traits) to the free market so we can be milked and keep the boom bust cycle going until we join Iceland?

Let me think........

Having said that, Labour and Greens seem to have "got it" lately.

The Banking enquiry I am sure was an eye opener for them all. Some great submissions and for those that have not read any I suggest you do. BERLs was excellent as was NZMEA, Bernards and of course PECs www.pec.org.nz/wp-content/uploads/pec_submission_banking_inquiry.pdf

I think NZMEAs can be be read from there as well

Selwyn - "Having said that, Labour and Greens seem to have "got it" lately."

IMO the ONLY way to get the requisite change is form a new political party with the major focus on enconomy and sovereignty, as suggested. While it may not govern absolutely it could influence a coalition to adopt the policies espoused and hopefully drag NZ out of a trajectory to the economic crapper. I don't think we can leave this task to any of the political parties presently on offer - notwithstanding some talk implying a change of thinking in Labour - I personally don't see anything to CONVINCE me to think otherwise.

This might be fun - what should we call this new party?

Cheers, Les.

I keep hearing this line of the Nats 'not doing anything'... I can't see where this comes from. National campaigned on infrastructure and productivity, cutting red tape etc..
This they are doing are they not?

From whoa to go in 10 mths is quite an expectation...!

The labour led government was bent on reducing incentives and increasing compliance costs etc... to businesses, which IS the productive sector.

Nat is trying to reverse this. My take on it is this, the Nats are well aware that they will not be able to do much in one term, the reform and adjustment needed is too great.
If they are to get a shot at it next time around, they will need to still have enough popularity to make it in the door.
The real crux is that much of what is critically neccesary is not going to be popular. Evidence is that the sheeple of NZ vote from the depths of their pockets, not their hearts, thus radical reform can be fatal. It is this self centred and shallow attitude that will always limit NZ govt.

Labour surely had the playing to the people down pat (though this definately started to feel empty). The most ironic thing is that their general voter base (base only, not the whole structure) is the lower socio-economic classes, and beneficiaries, therefore they need to keep a good number in this area to ensure they still have voters. The conflict of interest is obvious.

National WILL work towards getting the infrastructure and business issues under control, this WILL take time.

Regards, JAM

PS. No I'm not a Nat party stooge! Or a member, I didn't even vote for them, let's be pragmatic though.

Selwyn : Who needs enemies when your " friends " are willing to support you on introduction of a CGT . Yet again Labour has got it wrong . Why a CGT ? More stupid taxes . Fix the ones we do have , rather than add more . Labour love regulating ; I love the red flag ; I love the red tape ; for I am Labour , comrade . ( Helen loved the red herrings , too )

Roger we have been over this but let me have a different pitch.

Why is any government involved in giving subsidies on housing. It's a perfect market. Hundreds of thousands of landlords and hundreds of thousands of renters. Isn't that a perfect market that will sort itself out over time.

So why do we give tax deductions to landlords? You want minimal government involvment, well here is a case where the governmnet is distrorting the market. Let's remove that distortion. Right!

Selwyn - can you upload your preso "Grow up to business" to the PEC website pls. Cheers, Les.

Les will get that done now. Back to you shortly.

What was that party Bob Jones had , " Kiwi Party " ? He got 20 % of the votes , in the FPP system .

" Hickey's Interest Party " , now that would be HIP !

Roger I agree. Ring fencing losses is the best outcome for the future but it effects people today. The ONLY reason I say CGT is because of that. I seldom have sympathy for property speculators but to do something that is lawful and supported by multiple governments and then wake up and find you are many hundreds of dollars a week short seems harsh and wouldn't want our politicians to suffer any more hardships!!!!!!!!!!!

So CGT at least gets back the subside they have been given by other tax payers carrying their share of the tax burden. They have had at a time they can pay it. It's not my ideal solution at all but one that matches cash flow as we progressively withdraw the distortion.

Matt Said. I reckon in a few years time the likes of Berrnard and Rod Oram will be admired for the way in which they were of the very few who spoke out repeatedly on the fundamental economic flaws of this country.

How about we add Mark Weldon, David Skilling Ganesh Nana and John Walley to that list among others.

The reason I say that is this is its not Left or Right politics it really is common sense.

The problem we have today is speak out against the government and you must be RED and therefore dismissed by the right.

So many people i know who voted National don't like the inaction on the issues that are killing the country. Reducing the dollar is a matter of national urgency. Every 1% increase is at least $200 million not arriving in our economy. This is what National hasn't addressed. The talk of productivity when we have this wastage going on is frankly ridiculous. We all know what causes it and we know that other countries protect themselves against it so why don't we.

A logical society would heavily tax unproductive assets/ investments and reduce tax on productive assets / investments. It's really that simple. Why have we got it the other way around. However CGT doesn't stop the first phase of the problem which is the cross roads that says tax deductibility that way and no tax deductibility that way. Even the cash flow advantage with CGT at the end is still an advantage of one investment over another that many will still take.

But remember we are only dealing with one symptom here. The real cause of housing inflation is excessive cash in circulation and that's a monetary policy issue / banking regulatory issue. Ask China as they are dealing with it right now with their economic stimulus package. http://wallstreetblips.dailyradar.com/story/credit_tightening_threatens_...

But its their money and they can control it where as we can't stop the flood of money via foreign banks.

Les Rudd Says: Selwyn - can you upload your preso "Grow up to business" to the PEC website pls. Cheers, Les.

Okay Les its there now. Tones of data points on why what we are doing is killing our future. http://www.pec.org.nz/

Selwyn - I like some of your ideas in the preso:

Stop unproductive property speculation - CGT or ring fence losses against PAYE?

Get investment flowing into productive businesses - Requires tax incentives

Adopt a monetary policy that gives stability to exporters to make long term investments - Singapore would be a good reference point

Progressively introduce compulsory superannuation - a must for regaining economic sovereignty, stimulates our flagging capital markets, lifts the value of our companies.

Vary contributions to superannuation according to inflationary conditions

Recapitalise Kiwi Bank for market share growth

Hardwire Kiwi Bank's behavior into our RBNZ direction settings as part of monetary policy.

Create national hero's of our entrepreneurs - support them to create new innovative export focused businesses.

Encourage any possible moves in farming into higher yielding specialist products - reduce the need for over farming, selling on commodity pricing.

Protect strategic assets as opportunities for national competitive advantage - Power Generation, Power reticulation, Telecom, Air NZ, Ports etc

Privatise activities like NZTE

Then from your summary slide:

New Zealand's economic fortunes start with a vision

Left and Right is irrelevant to 80% of the population

Right and Wrong is relevant to 100% of the population

If you don't know where your going any road will get you there

The country needs a strategic and coherent vision

With strategic imperatives, strategies and tactics to deliver the Vision

Is Labour up to the task?

It's that last question I have problems with. IMO I really don't think so and so I won't spend any effort supporting them, and I've given up on Nats and Act, but am keen to see a new party focusing on growing the real economy and economic sovereignty.

Roger's Mum - take him a dram or two, he'll be right.

Roger - yep, back NZ-side. Treatment was good, enjoyed every drop right down to last injection of room temperature Badger before I flew. It can't be beat. Cheers, Les.

Selwyn good to read important facts/ visions, which lead to changes and not whinging about politics. I tried the same for weeks - but ??

Some earlier discussions:
http://www.interest.co.nz/ratesblog/index.php/2009/08/07/nz-exporters-an...

http://www.interest.co.nz/ratesblog/index.php/2009/08/25/opinion-why-the...

Conclusion (I say that again):
Organise a national wide PR campaign about manufacturing in order to develop a public NZ- manufacturing culture first.
The seed needs to be planted first before it makes sense to care about it.

Selwyn - ok, hear what you say. You said earlier re. the Lab conference, "In short a very humble group of people that where genuinely very sorry for what they had got wrong and wanted to set a new Vision / direction for the country."

It would be great to see an apology in the mainstream media. They really let this nation down, NZ deserves an apology. After that there could be reconcilliation and trust, and maybe a vote if they adopt the right policy and don't sell out at the last minute in a horse-trading deal with the likes of Dunne, or similar, to secure power and carry on with their social engineering - including dictating what kind of light bulbs and size shower-heads we shall use.

I don't have bias either way, left or right, I just want the right thing done. Noting managers do things right, leaders do the right thing - Labour should make a public apology, because that would be the right thing to do and show leadership, maybe sufficient to govern again.

Do you think they will?

Cheers, Les.

Organise a national wide PR campaign about manufacturing in order to develop a public NZ- manufacturing culture first.
Selwyn, this needs to be a long lasting PR strategy - well planned in connection with PR professionals, Manufacturers, National Media and supportive politicians/ etc. and not a "Hasty Warrior initiative".

So few Kiwis even know what's happening and that's scary.

Yes - I agree it is scary. What I don't understand is why Bernhard and his team are not going more public about this issue and how important manufacturing is for NZ. It seems to me they have a more direct link to the media.
Are they not worried ?

Walter?

Just ask the 100 people how much money they think the banks made last year ($3.6B) and get that answer.

Then ask them how much they think the rest of the NZX 50 made ($2.8B).

Watch the look on their faces and you suddenly realise just how little they know about whats happen in the economy.

What you have to do first is give them a reason to want to learn and that's a mixture of a better vision for New Zealand and some scary data about what will happen if we don't do something NOW!

As always Andrew you are on the money. I don't know what will happen to all the Anglo economies but I know that a return an asset inflation bubble here will see less and less real economy companies and that will end in tears for the country.

Selwyn, Walter - yes, it'd be good for NZ public to understand more, for instance more about the kind of issues discussed here, what drove it and how it could have been avoided:

http://www.interest.co.nz/ratesblog/index.php/2009/09/21/standard-and-po...

Walter - given the primary focus of Interest .co, I'm quite pleased with what Bernard and the team are doing so far, that could help manufacturing. See their submissions to Labour's banking inquiry and note the articles written here and elsewhere that are useful in getting people thinking about change to re-balance the economy, in other words give the productive sector (inc. manufacturing) opportunity to generate more real, export derived wealth for the nation.

Just to be clear regarding a communications campaign to promote manufacturing, I have been quite down on that idea (sorry Walter) for a few reasons, 1) the last government tried the same/similar via projects like Buy Kiwi Made, Manufacturing+ and Export Year - all of which, IMO, failed and were no more than distracting substitutes for absent policy that would actually have made a difference. (And they knew what that policy could have been, but their ideology, dogma and interests kept them from making the necessary changes. I do not believe the key people were dim or ill informed, far from it.) The danger is the present government might be just as keen to distract with communications/PR activity instead of delivering appropriate policy action. 2) This isn't just about manufacturing, it's about the productive sector as a whole, see link above. 3) If a communications campaign does not have the outcome of re-balancing the economy (via appropriate policy change) as a whole, as it's objective - it will be a wasted effort. However, YOU have influenced a change in my thinking to the point where I agree, a communication campaign to properly inform NZ of our problems and the potential solutions (possibly via a CIR to create a mandate for policy change is my wee slant) could be useful - because it appears a significant chunk of NZ media isn't doing the job we might expect of them, are they?

Selwyn - re, Phil Goff's apology, yes, I missed that. Good on him. I wonder if he could remain that attractively humble if he makes PM? Anyway, I don't think it matters. My view is he is unlikely to be PM for at least 5 years, if at all. I simply don't see NZ voting Labour in at the next election. Even if Labour take on some of the good ideas you have described to them, given (IMO) they don't have a snow-balls chance of governing for at least 5 years, can we wait that long for change, see those ideas become a political football washed around into a left versus right debate - while all the time we slide further into debt, lose more sovereignty, etc.?

Let's think through the possible outcomes of a well focused comms campaign, leading to a CIR, leading to a well defined and widely profiled mandate, leading to either, a new political party (without Labour's baggage) with said mandate as it's manifesto, or, the next government willing/able to take on some or all of that mandate.

Might this be one of the choices as well - some useful change after 2 but within 5 years. Assuming positive influence via similar process suggested above. Or, no change for 5 years? Assuming Nats don't change and Labour then govern 5 years from now, and if they are really willing to grasp the nettles. Will they, who knows?

Or maybe the tax review and productivity working groups will surprise us? (Where's that tin o' Tui...)

Cheers, Les.