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Labour leader outlines his economic vision for New Zealand with major speech in Auckland

Labour leader outlines his economic vision for New Zealand with major speech in Auckland

The Labour Party's leader David Cunliffe has outlined his economic vision for the country in a major strategic speech in Auckland today.

Here is the full text of the speech:

NEW ZEALAND’S ECONOMIC UPGRADE

Tena koutou, tena koutou, tena koutou katoa.

I would like to acknowledge the New Zealand Initiative and its Executive Director, Dr Oliver Hartwich. Oliver it’s great to be here with you today - and I know this group greatly values the open contest of ideas.

You were formed from a merger of the New Zealand Institute and the Business Roundtable. This is not an audience that some would naturally associate with the Labour Party.

But I believe that we have a shared interest in an economic upgrade to a high-value economy that will support better jobs and higher incomes.

It is a project that matters to all New Zealanders, and it is one in which I have personal experience.

Before I entered politics I worked as a business consultant for The Boston Consulting Group. We worked to help companies grow, export and create more value in their operations.

In one project I led a team of mill workers at a large NZ pulp and paper mill.

Our goal was to seek practical ideas from the shop floor workers about how to do things smarter and reduce waste.

My role was to build the system that allowed all the team to contribute their best ideas, and to ensure they were analysed, implemented and tracked.

It worked beyond our expectations.  Millions of dollars a year were saved by ideas as simple as changing the wrapping on paper bales and improving work flows.  

Together, we saved jobs and helped build the business.  It’s a tough industry and there have been other changes since, but we got the best we could out of what we had.

And working together – that’s what we must now do for the New Zealand economy as a whole.

Vision

New Zealanders love to say we live in the best country in the world. And it’s true. The people are great, our landscapes are spectacular, and we have a wonderful multi-cultural society.

But we are not making the most of our potential.

The problem is, while this is the best country in the world to live in, it’s not the best place to make a living.

I want to shift the New Zealand economy into high gear.

I have a vision of a New Zealand that harnesses the potential of all our people.

A vision of a country with the most productive and competitive businesses in the world.

A vision of a country with better jobs and higher wages.

It is a big step to get there.

To achieve this vision we need an economic upgrade.

That’s what I’m here to talk about today.

What’s the problem?

An old Chinese proverb says: “A peasant must stand a long time on a hillside with his mouth open before a roast duck flies in.”

It’s a warning.

Sometimes good things can fall into our lap, like periods of high commodity prices.

But it’s not a serious long-term strategy to tie our economic well-being to forces that are largely beyond our control.

Yes, New Zealand floats like a small boat on the ocean of the global economy. But I refuse to accept we can’t influence our own destiny. Together, we can achieve sustainable long-term growth.

Small states like Sweden, Norway and Singapore prove it is possible.  It’s time we woke up to what has been happening in these economies, rather than staying locked in a 1990s time warp.

I’m sure there will be some in the room who disagree. But it is the view of the Labour Party that a disproportionate and growing share of the value of the New Zealand economy is accruing to the top few percent.

Labour supports positive business, but trickle-down economics and its neoliberal parentage have failed New Zealanders and left many of our emerging businesses starved of investment capital and skills.

The opportunity gaps have widened and there is no clear, shared strategy to a high value, high income future.

That’s something Labour will change. We want an economy that works for all New Zealanders.

But in order to share wealth, first we have to make it.

We need to move away from a dependence on commodity price cycles, to build an enduring, high-value, job-rich economy that leverages our innate strengths.

What’s the solution?

An economic upgrade is needed because our economy runs on old “software”.

It’s a combination of poorly-structured investment in infrastructure, macro settings geared towards the interests of a small number of speculators, a hands-off approach to innovation, and a deficit of government-industry partnerships.

We keep doing what we’ve always done in spite of the evidence from those vibrant economies overseas. They show an intelligent hands-on approach plays an essential part in securing long-term sustainable growth.

A successful economy needs the right kinds of capital investment. It needs a culture of innovation and risk-taking which takes years to mature, and sometimes only months to lose.

It often needs partnerships at a regional and sector basis which are hard to build and to maintain.

And it needs a focus on producing more value in our businesses and our economy, instead of just a greater volume of the same old raw products.

A value focus will take a strong, far-sighted government, in partnership with business, to progress.

I have watched with dismay as many sectors of the New Zealand economy have found it increasingly hard to maintain the focus on value.  The goal seems to have slipped further away under the current government.

It will be a major strategic priority for the incoming Labour-led Government to support New Zealand business in the journey from volume to value.

From an economy driven by land banking and speculation to one extended by advanced manufacturing and innovation.

I want to set out three main parts to Labour’s economic upgrade:

  • Investment,
  • Innovation,
  • Industry.

Investment

We cannot upgrade our economy without investment. To become a high-tech economy with better jobs and higher wages, then more money going into the right areas is essential.

At the moment there is a serious shortage of cash. The NZX is a shallow cousin of stock markets around the globe. Our savings rate is dismal, meaning most new investment comes from overseas and not from local sources. Our poorly structured foreign direct investment means profits far too often drain overseas, deepening the hole in our current account.

There is significant shortage of capital, especially venture capital to go towards Kiwi businesses.

To make matters worse, most of our investment goes into the out-of-control housing market where property speculators make a killing. The productive economy sees very little of that money.

Our banking and insurance sectors, which are supposed to be the main conduit for financing smart Kiwi businesses, have become almost entirely overseas owned. That doesn’t help Kiwis build an economy they own.

Labour’s strategy is to upgrade the size and focus of our capital markets.

We will dramatically increase the local investment pool available to New Zealand businesses.

We will make KiwiSaver universal.

Every employee will contribute to their KiwiSaver account, not only ensuring financial security for New Zealanders in old age, but also making a significant boost to available for investment now. We have seen the success of this across the Tasman. I want to replicate that, and I know I am supported in that goal by many New Zealand businesses.

We are also committed to restarting contributions to the Super Fund. This was one of the great successes of the last Labour Government, and it will be so again under the next one.

But increasing the investment pool is not enough in itself.

Our capital gains tax will dissuade investors from speculating in the housing market and encourage them to put money into the productive exporting side of the economy.

That’s money to invest in the economic upgrade. It’s also policy many New Zealand businesses support.

The second major element to the investment upgrade is overseas investment. Foreign direct investment (FDI) is a good thing, if managed well.

But right now FDI is poorly managed, and it’s Kiwis who are losing out. Overseas investors are buying up land, farms and good companies, then sending the profits and jobs offshore.

New Zealanders want choices in their future. We need to make sure this happens.

Labour will revamp FDI to attract quality investors with a credible business cases designed around creating jobs and providing new technology to New Zealand companies.

Overseas investors are welcome to be part of our economy but they must contribute to the upgrade.

Our changes to Overseas Investment Office (OIO) rules will ensure overseas investors will bring access to leading-edge technology and new overseas markets.

Investment works best if costs and barriers to business are reduced. The biggest obstacle to our exporting businesses is the consistently overvalued and volatile exchange rate. Labour has long signalled it will review monetary policy to ensure our dollar is more fairly valued to help business and lower our external balance.

My deputy and Finance spokesperson David Parker is leading this work and will be speaking more on this in the near future.

Increasing investment and getting it into the right areas with the right payoffs will be a major part of the economic upgrade. Primarily it will help fund the economic upgrade for innovation.

Innovation

Innovation is essential to New Zealand’s economic upgrade. To be a high-tech, sustainable economy that offers skilled jobs and high wages we need to be at the forefront of global innovation.

If we don’t innovate we can’t compete.

The innovation upgrade won’t just be about new gadgets and great products. It will require a culture of change.

Thankfully New Zealanders have an innovative culture. We think outside the square. We’ve always had to. We have great bones to build on.

But in commercial terms New Zealand’s investment in R&D is well below par in global terms, and it is in private R&D that we are particularly weak.

Our R&D spend is currently 1.27% (2012) of GDP, of which only 0.58% is private spending.  Compare that to Denmark, with 3.07% (2010) or Israel at 4.34% (2010).

We need to turn our numbers around, and fast.

Labour in government will restart New Zealand’s stalled innovation story.

We will renew the R&D tax credit.

We will significantly increase Crown investment in R&D, with a focus on co-funding from the private sector.

Before I became a business consultant and entered politics, I had the privilege of studying at Harvard University. In the United States I saw the value of universities, industry and venture capital working together.

That is the culture Labour will be encouraging in our research and teaching institutions; unleashing our best minds into partnerships with industry.

Labour also brings a broader concept of innovation to the table.

We must meld our creativity with capital to build small to medium companies which dominate in market niches. We must foster talent to develop innovative products and services that people want to buy, and we must protect our intellectual property.

We need to honour and replicate the likes of HamiltonJet, Icebreaker and Orion Health - mid-sized companies that have developed innovative products and services that the world wants to buy.

In these cases, the high value activity and ownership has remained in New Zealand.

But innovation is not just about hard science and new products. It is also about the softer aspects of business, such as distribution and marketing.

Our current innovation problems are hurting us in the industry that will drive our future – ICT.

If we compare ourselves with other smaller successful nations, it soon becomes clear that we have a deficit of around ten thousand high-tech jobs.

Many of our children, and those who are teaching them, are running yesterday’s technology, and are falling behind their peers in the rest of the developed world.

We cannot let that continue. ICT today plays a role similar to the railway in the 19th century.  It is the infrastructure that opens up new markets and new supply chains.

Places like Israel have realised the importance of upgrading ICT skills and related creative skills to support growth and innovation in other industries.

We need to follow in their footsteps to upgrade our ICT industry.

Labour is committed to overcoming the digital divide. We will not build a tech-savvy generation without new generation technology.

That’s why our policy is to raise the bar in terms of ensuring access to fast broadband within low-decile schools.

And Labour will introduce a “digital bill of rights” to give certainty to business and all New Zealanders that we can live, work and play safely and productively in the digital world.

We will make further announcements in this important area.

Industry

Investment and innovation are the essential frameworks for supporting business and growth and leading the economic upgrade.

But it is also essential that government mucks in and supports businesses. While I back our business community to lead in the global economy we are competing with far bigger and stronger players than us.

Government should back positive Kiwi businesses, not leave it to the wolves of international trade. Labour will do that. We want good jobs in every region in New Zealand.

That also means attracting industry to New Zealand regions that need it most.

Industry policy has become a dirty word. It isn’t. Regional development has also fallen by the wayside. Labour will bring it back. We want good jobs in every region of New Zealand.

We have witnessed a loss of heart in regional New Zealand.  There are opportunities for growth, investment and innovation in our regions, and in sectors such as forestry.

Yes, there are challenges.  But experience has shown there are ways to partner with local businesses to create value.

So under Labour the regions will play a major role in the economic upgrade.

It is time that central government stopped treating regional and local government (and their economic development agencies) as second class citizens.

Sustainable economic development means jointly developing one vision, one strategy and one engagement structure for each region. 

That means simplifying the governance structures and no wrong door for businesses and communities wanting to engage in building a better future.

It means enhanced coordination and prioritisation of Crown investments, with a focus on transformative projects executed within a strong strategic framework.

Examples could include new infrastructure like a rail head to Northport or dredging the Opotiki Harbour bar to drive new aquaculture.

Or expanding research projects tailored to lead industry clusters like Scion’s Rotorua forestry expertise, or the Marlborough Wine Research Centre.

Or harnessing our polytechs to provide industry-specific training to the 70% of NZ school-leavers who do not go on to university; as centres of excellence that serve the key industries in their area, such as in forestry, tourism, fisheries, ICT, CAD, construction and viticulture.

And post-settlement iwi will have an important role as core asset owners and employers in our regions. They must be part of our shared future.

Success stories tell us something, and that is that when government is a partner in the long journey from volume to value then regions and communities can thrive.  

There is no set template for regional growth. But disengagement achieves nothing. We must work together and ensure all our industries are humming. 

In the very near future, I’ll be making the first of a series of industry announcements, providing concrete examples of how the economic upgrade will work.

Summary

Today I have outlined the framework for New Zealand’s economic journey to a higher value, higher knowledge, higher income and renewable future.

We want better jobs and higher wages for all New Zealanders.

We all know that in order to sustainably lift incomes we need to sustainably lift productivity.

We all know that just being a producer of raw materials, stuck on the treadmill of commodity price cycles, is not the way to that better future.

Especially when our warped tax system and our inadequate savings system incentivise over-investment in real estate, and under-investment in innovation.

New Zealand must be more than a farm to be harvested by offshore banks. We must grow our manufacturing and high-end services sectors. We must provide opportunities to inspire our best and brightest young innovators to build job creating businesses here in New Zealand.

Today I have set out for you the crucial elements of an economic upgrade that will put us on the road to shared prosperity: Investment, Innovation and Industry.

These require serious policy changes, not tinkering. That’s why we will have:

  • Capital gains tax to move from speculation to innovation,
  • Universal KiwiSaver to grow our onshore investment capital,
  • Monetary policy reform to back our exporters,
  • R&D tax credits to encourage innovation,
  • A series of industry and regional strategies that grow New Zealand’s wealth.

And all of this will leverage off a sound fiscal policy based on fairness, responsibility and sustainability.

Conclusion

We are a wonderful, beautiful country.  We can be a land of hope and opportunity for all New Zealanders.  We can truly be  - as the late Sir Paul Callaghan dreamed – a place where global talent wants to live.

We are small in size but we don’t have to be small in vision.  We cannot bet on all possible futures at once – but we can focus on what we can do well, and do it even better.

Actually we should aim to be world class in every niche we enter into.

And that – by definition – must be a shared journey. We are all in this together. Government and business, employers and workers.

Today has been about setting out the vision for a high value, sustainable future with better jobs and higher wages.

Labour’s economic upgrade is an opportunity to provide the decent society we all want.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

53 Comments

Not one mention of agriculture or the rural economy ? !!

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"to a high-value economy that will support better jobs and higher incomes."

and the per capita earnings  for agriculture is pathetic isnt it?

So why expect such?

and the rural vote is hardline national?

Why spend money in supporting ppl who wont vote for you no matter what?

and its urban generally Labour supporting that needs good jobs ie where is the un-employment worse, yet solvable?

(edit)

or,

"Sometimes good things can fall into our lap, like periods of high commodity prices." 

Hardly surprising agriculture isnt mentioned is it.

regards

 

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This bloke is clueless and hopelessly out of touch with ordinary Kiwis.

Maybe its  Herne Bay thing ?  

No mention of agriculture , nor tourism , nor oil and gas royalties ... our 3 biggest income earners and among our biggest employers

Then he says capital gain will be taxed .

Kiwis are not dumb , they  understand that voting for a Capital Gains Tax , is like a Turkey voting for Christmas

Who is going to risk all their capital in an export ( or any) venture only to have any reward taxed?

Does he not understand that Capital gain is what you get for risking all of your hard earned and hard saved  Capital ?

 

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One problem with our big earners is that we do not make much money out of them.

Farming- our debt load is such that most of the money we make goes to pay our interest charges on the purchase of the land

Tourism, Low wage jobs- no coutry 'touristed ' its way to prosperity

Oil & Gas royalties- great , way to go, find a country that has done well with these- quick name Norway then try and explain in what way is our Oil & Gas policy similar to that or Norways- answer- it isn't similar in any way.

As for this bit:

Does he not understand that Capital gain is what you get for risking all of your hard earned and hard saved  Capital ?

Actually most capital gains in New Zealand are unearned,income that is also untaxed  no effort at all. Just owning something because you are already rich does not count as hard earned. You can spend ages finding exceptions where people did actually work for their capital gains but in the totality of things most of those gains came from just owning stuff not actually working at it. It is hard to take but it is true. We over tax creating, doing , working and transacting and under tax unearned income. So we farm for capital gains not for profit etc.

 

 

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Another cheap shot, farms in NZ are increasinly being owned by people who do not get their hands dirty at all (foreign owners, corporate farmers, Harvard etc). Cheap farm workers from the third world do tthe dirty hand stuff. Please try and keep up.

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Assuming that Cunliffe aspires to be a three-term prime minister starting ths year you would think he would have a vision that is rooted in the current reality. Notwithstanding the isolated successes here and there in other areas the national wealth will continue to be built on primary production over the next decade.

 

But you can get all the feelgoods of value add in food technology, farming systems, food marketing, environmental management, embedded software in widgets that run the farm, software in general. It's all high-value, built on the stuff we are already good at and we already do it but could do more.

 

Missed yet another opportunity. Well spotted, David.

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Over a great many years  Labour did build our relationship with China. National was a follower in this regard, not a leader. Labour really pushed for and implimented the connections we have and much of the agricultural commodity sucesses we have had are down to Labour- But do not let facts get in the way.

It was John Key who negotiated our free trade agreement with China, opend our embassy in Bejing, negotiated earlier trade deals etc.

 

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The usual nonsense from a politician rules regulation Government interference we know best  

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Should read:

 

  • Capital gains tax to pay more to beneficiaries who make up our voter base these days,
  • Universal KiwiSaver, another stealth tax,
  • R&D tax credits to increase bureaucracy,
  • A series of industry and regional strategies that cost a fortune in consulting fees and achieve little.
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Talk about a time warp ...he wants us to go back to being a manufacturing economy ?

Never in a thousand years is this going to happen , not with all the will in the world .

The Unions killed manufacturing here , and then China nailed the coffin closed , so its never going to happen.

How on earth are we going to compete with China , Japan and Korea with

  • Low Wages for technically competent people  ( $2,00 per hour)
  • Huge incetives to manufacture stuff and export it .
  • You get paid to export .
  • Low Company tax rates for exporters (10% vs NZ at 30%)
  • Export Processing Zones with no tax (zero tax)
  • Near ZERO interest rates in Japan , China Hong Kong and Taiwan
  • To name but a few

 

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There's so little benefit to forcing the few remaining non-members into Kiwisaver - ie, for the most part, those who really don't want to be in it. 

 

Many of the people who are not saving at the moment simply don't have very much income, so forcing them to save some of it instead of spending it will (a) impose immediate hardship on them and (b) not raise total private savings by very much. 

 

If you force richer people into KiwiSaver, they are likely simply to put into Kiwisaver, money that they would otherwise have saved in some other way.  So no overall increase in private savings; possibly even an increase  in public costs, if it means the Government having to pay out KiwiSaver incentives to people who don't want or need them.

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I have to respectfully disagree.   I think there are an awful lot of people that haven't joined simply because they haven't got round to it.   A soft compulsion date will suit those people because it just happens without them having to fill in a form.  I think this is across all ages and incomes.  Those who feel strongly about not being in KiwiSaver will be able to opt out.  

How do I know? I don't.

Do I have figures to back this up? No.  

However, the KiwiSaver programme now has 2m members.   Seven years ago, there weren't 2m people saving for retirement.   Nowhere near.   The argument that people replace other savings with KiwiSaver (making no difference to the overall level of savings) is hard to support in light of this evidence.   

 

 

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How does increasing the employer contribution rate - ie,  imposing an extra cost on employers - create wealth and not destroy productive capacity and jobs?

 

Where do you imagine employers will find the increased resources needed to pay a higher contribution rate?  

 

-  out of their bottom-line profits?  Then no wealth is created; wealth is simply transferred from one group to another.  Business owners get less, business employees get more.  You may think that an improvement in equity, but that is not the same issue.  There is no increase in total wealth now, and a reduced incentive to wealth creation in future.

 

- reduced expenditure on R & D, innovation, training?  Again, hard to see the wealth creation impact.

 

- reduced take-home wages?  thus reducing the employee's own choice as to how much to spend and how much to save of his total earnings.  May or may not be a more wealth-creating choice, in the long term, than the employee himself would have made; very unlikely to be welfare enhancing in the short term.

 

 

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The point is he's filling the tax loop hole/dodge.

regards

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Yeah right, the fact you detest it so much makes it a voting tick I think.

regards

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Could someone please tell us of ONE example of a country where housing is affordable because they have a CGT?

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Another yesterday's man looking at the ascent up the oil production graph and expecting it to continue for ever.

He's going to be shocked and astounded, just like all the other pollies (expect maybe the Greens) when fossil fuel guzzling growth BAU economy doesnt work any more, honest he will.

Snake oil anyone?

regards

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I actually like what has been said.

I do hope it will be more than just shouting it out. Give us something on how to deliver will be even better.

Labour has great potential but currently missing itself by targeting the wrong voting crowd. 

Working class in NZers should be your target not long-term beneficiaries.

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He's targetting working ppl and would-be working ppl.

regards

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Oh really? " Together, we can achieve sustainable long-term growth."  

 

It's like saying we can grow smaller together it makes no sense.  To steal a phrase from the Princess Bride   "You keep using that word, I don't think that word (sustainable) means what you think it does".   inconceivable  indeed !

 

 

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Well said Steven.

 

This is going backwards, fast.

 

We need to be heading for sustainablility - given that the alternative is unsustainable.

 

His religious background his undoing, perhaps? This means that Labour - in this iteration - is irrelevant. Gone.

 

 

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Yet you said you have talked to some of labour? yet they are still "clueless".  They cant be can they. Its a wanton ignoring of the problem because they have no solution/alternative.

So they  are condeming many to many years if not decades of misery unless they allow mass financial default ie a debt jubilee at some point. 

and these are our want to be "leaders"  Easter Island must have had the same quality no hopers....

regards

 

 

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NZ, 4 million people with 300,000 square kms, is "Easter Island" redux?

Whatever do you make of the 99% of other countries around the world with around 10 to 1000 times as many people per given land mass?

I think you really belong on the street wearing white robes, a beard, bare feet and a sandwich board saying "the end is nigh", rather than making comments like that on NZ's premier economics and finance forum.

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Times have changed in a global community the island becomes earth...

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Every time mankind is vainly searching for a missing airliner, I wish people would get a mental grip of just how vast the earth is and carry this impression over into the area of "resources". 

There are around a dozen crashed light planes around NZ alone that have never been found. 

Yet when it comes to resources, our mental image is of a scaled-up Easter Island?

BAH. So much for all the technology, like Google Earth, that should make us more rational than any generation before about all this. 

 

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No political party is going to change from the status quo while things are relatively 'good'. Unfortunately, 'endless growth' is the fairy tale that the people want to believe in even however absurd that may be if anyone stops to think about it. 

Things will have to worsen significantly before the majority of the populace will even contemplate changing to the system. You're miles ahead of the pack PDK. In saying that, it pains me knowing that we are squandering the time we have to make changes in what is likely the closing end of the 'age of abundance'. Such is life I guess.

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Sustainability such a nice word !!

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Patrick Troy, Australian National University Professor, on "sustainability":

".....Any term which can mean whatever the speaker/writer or listener/reader wants it to mean, provides little guidance or discipline in policy formulation or program administration...."

 

".......Modern cities are inherently ecologically unsustainable because they need to import food, energy and raw materials and they produce more waste than they can cope with within their boundaries and because they radically change the ecology of their sites. Moreover, the larger the concentration of population, the more unsustainable the city is. Even if we extend the boundary of the city to include its hinterland we cannot usefully describe it as potentially ecologically sustainable. The more the city becomes part of the international economic order, the less it can be seen as ecologically sustainable in any operational sense. To hold out such a beguiling but unattainable prospect ultimately diminishes legitimate concerns for the environment......

 

"........The only urban strategy which seems to be environmentally sensible is one which has as its goal the minimisation of environmental stress within and outside the city......."

(From "The Perils of Urban Consolidation").

Troy discusses how increased density and the more intensive coverage of land with tarmac, has already led to drainage and flooding issues; and that higher density results in increased local air pollution.

He discusses the "embodied" energy and emissions involved in higher density structures, which are usually very much higher than those of low density homes - also, that demolishing and replacing existing structures involves much greater additional embodied energy and emissions than continuing to use them.

Troy discusses the relationship between energy use in the home and dwelling type, household size and type, and income; and concludes that it is far from clear that dwelling type is significant. He points out that separate houses have much greater potential for the use of energy other than electricity eg: passive solar, solar panels, biomass, air flow for cooling, shade trees, etc.

 

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I'd be more temped to vote for Labour if they took a bolder leap to the left with big picture ideas. Such as tax.

The tax system is pretty broken and almost voluntary. Scrap company tax - multinationals dont pay it and it just leaves us hitting local companys. Same for personal tax - trusts and write offs for holiday homes,yachts etc. Replace them with a 2% finanial transaction tax and there would be money over to reduce gst to 7.5%.

This wont happen though so I wont be voting for "National Light"

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I'll bite, what would a "2% finanial transaction tax" encompass?

 

And BTW, a govn that charges less tax is usually associated with the right wing. 

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Better just to put in registration and review for multinationals.  Does it increase cost for multinationals...well that just much needed creates opportunities for local growth.

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He's going no where in the Polls it seems

http://www.roymorgan.com/morganpoll/new-zealand/voting-intention-summary

regards

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It makes no sense to desperately want Capital for growth and  investment , and then propose to severely tax any capital gain .

Why would you risk everything going into business only to have it taxed by a  Labour government ?

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Perhaps, Boatman, because you were intelligent enough to understand the Tragedy of the Commons.

 

Then you'd know that unfettered individualism both leads to a habitat outside our support-parameter envelope, and does so from the position of overshoot.

 

So if you're smart, you can work out that only an altruistic, within-the-parameters society, can survive.

 

But growth-based, consumption-oriented altruism, doesn't do it either. That is where Labour fail, in a nutshell.

 

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I agree, Labour is the Tragedy of the Commons!

It's also the Comedy of the Commons too!

Shall it be called the Tragicomedy of the Commons? :-)

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The Tragedy of the Commons requires a commons - that is, a resource that is publicly owned, or not owned at all.  Individual self-interest in such a case will indeed lead to over-use and other forms of mismanagement of that resource.  Where something is privately owned, individual self-interest means that its owner has every incentive to manage it wisely and to ensure that it maintains or indeed increases its value. 

 

How exactly does an altruistic society work?  As an individual within such a society, I may only care about others' welfare - but then I don't know as much about what welfare means to those others as they themselves do.  Everybody's welfare is placed into the hands of somebody other than themselves, ie people who are poorly qualified and incentivised to improve it.   Sounds to me as though everybody's welfare would be reduced in such a case, and where is the altruism in reducing everybody else's welfare?

 

 

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The original ideas of the Commons I think you are refering to were areas used for grazing that were grazed in common, there were a lot of rules and practices that managed these resources and these were maintained for many generations because the resource was not over used. This has been well documented.

You can just as easily claim that land owned individually is open to exploitative practices designed to extract from that  land all that can be taken in the shortest possible time unfettered by any rules at all.

Where something is privately owned, individual self-interest means that its owner has every incentive to do what ever they like, it may mean conserve or it may mean exploit - there is no way of knowing which option will be taken by an infdividual owner and if the owner is a corporation with many owners who do not even live in the country where the land is then all bets are off, the managers have very very short time horizons and are insentivised mostly to exploit as quickly as possible- trely the worst of all possible worlds

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I am not inclined to be altruisitc by nature  , but having lived in some places with severe poverty over the past 30 years , I see the need to help our fellow man , and will do tihs readily.

And yes I have seen the effects of overgrazing by tribesman on tribal land in Zimbabwe , Zambia and Malawi , who claim to care for the land , but try to outdo each other in exploiting it for themselves . It ends in tears, and a cycle of poverty .

I have also seen greedy Trade Unions do the same to New Zealand , grab , snatch and take , so we have Auckland dockworkers earnig $100,000 a year , when even state  Doctors dont earn that

That said .Kiwis are among the most altruistic people I have ever come across in thier day-to day lives , yet many Pakhea are not close to religions and relatively  few go to church .

I find people like Gareth Morgan's philosophy really intruiging , he is correct when he gives to a self-help agricutural scheme that grows food , even at a subsisitence level , and will not give to a church or NGO . I give , but dont do it from some deep seated guilt , rather becasue I see the need to uplift people who try do it for themsleves

So , in a New Zealand context , from my perspective we do need a caring , equal opportunity , egalitarion society where those who can , do , and those who struggle are helped .

We cannot do this by hobbling the productive sector, which should be encouraged  

We need to really take care of the natrual environment , as we are the current custodians of it for future genrations , and we need to prevent any further deterioration of the quality of our vegetation ,  water resources , and so on .

We cannot do this by hobbling those using the environment whether its fishing , farming , mining , power generation , and so on .

We need to grow the nations cake , so there is more for everyone , and not resorting to TAX - AND -SPEND policies. These policies lead to waste and grabbing by those wanting more than they are entitled to .

Its a balance thing .

The problem with Labour is that they are out of touch , are too ideological , and like the Catholic Church have failed to move with the times.  They talk of manufacturing as the way to go ..... they killed manufacturing with Union activity in the past  and the Chinese supplied a cheap coffin

Cunliffe seems to want redistribution for redistributions sake , so he wants to tax Capital which are the seeds of future growth .

Think of Geese and golden eggs

Cunliffe says trickle down are the incoming tide does not work , and he may be right , but the alternatives are far worse for New Zealand as a whole in the long run .

I dont have the answers , just  my views

 

 

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Agree with your sentiments and much of what you say. But when it comes to tax,

1. At the moment we over tax transactions/doing stuff and under tax capital

So we have high GST, payroll taxes(PAYE) , user pays, telephone/internet taxes, insurance taxes, interest rate taxes etc ( note some taxes we pay to the state and some taxes we pay to corporations who have been given a monoply by the state and collect what are in effect a form of taxation.

2. Capital is not taxed, capital bids up the price of things that people  want like lland. By bidding up the price of land we make ourselves less and less competitive. There is actually nothing wrong with taxing capital at all, it just sounds like there is because we have been tricked into thinking that tax is what we pay for working and trading with each other when it doesn't have to be that way.

 

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unfettered indivisualism, yes.....

but also social non-ownership (the commons).  No indiviudal with duty of care, had privilege of ownership.  So we get groups like councils and government attempting to fufil a micromanagement or overseer role, meeting social demand (or worse mob voting demands) or media driven demand - yet because they have no personal duty-of-care and no personal hands on experience to grow the asset, they do not properly understand it's nature.

Question then is who gets to decide where those fetters should lie, and what rules are correct for validation of ethical use.    

Should the consumer decide? Should the industry decide? Should people with no clue whatsoever vote or take strawpolls to decide?  Experts (who change their opinion every other white paper that is published...or never change their professional opinion despite clear evidence)?

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You are even more correct than you realise, Hugh.

The UK is an illustration of what happens when you leave utopian urban planning and a property-rentier racket in place permanently and try and resolve it with statist housing.

I could recommend a bit of reading for Cunners' advisors, such as the McKinsey Institute's 1998 Report, "Driving Productivity and Growth in the UK Economy", in which they estimate that the UK's productivity GAP of 20% to 40% compared to other OECD nations, is almost ALL due to the UK's urban planning system. 

And Alan W. Evans' 2004 book, "Economics and Urban Planning". And the LSE's 2012 overview paper "What We Know (and Don't Know) About the Links Between Planning and Economic Performance:. And the 2007 Barker Review on Land Supply.

Even if you manage to ameliorate the impact on business by, say, having a lot less restriction on land for commercial development than you do on residential, housing is a workforce cost pressure, and interest rates and the exchange rate are distorted by costly housing and excessive mortgage borrowing, impacting negatively on producers.

The UK economy has survived in spite of these economic WMD Green Belts and strict rural preservation, only because it has by far the world's largest flows of inbound "global finance" fee income. Any country that is not this lucky will kill its economy dead in a fraction of the time it is taking the UK to die.

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agree completely with Land tax- but very hard to get people to actually voye for it don't you think.

Re National, one thing I would say is that Labour had a more out in th open approach to much of this sort of thing re NZTE funding and R& D support. National seems to be mofre closed door deals- no one knows who gets what nor why in a great many cases. NZTE in particular. So I do not like National appraoch much

Free trade- not sure- does anybody know anywhere that has free trade ? certainly not the people we trade with. Non tarrif barriers are all the rage

 

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how can they plan for exponential growth & foreign immigrants.   They started centuries (ie millions of people) too late for any kind of long term planning.   An how could they factor in things like the Underground and Channel tunnels, way back when such planning would be advantageous.  It's just a question of numbers, huge population is going to make mess and prices soar.  Damage control is the only resort, and they haven't slowed the initial problem.  Any one of their nuke reactors go like the Japanese ones, and it's a real game changer.

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How have the Japanese reactors been a game changer? They had an earthquake and a Tsunami that killed around 20,000 people, how many people have the radiation leakages killed?

What was the total death toll from Chernobyl, (57, wasn't it?) where the reactor shell broke wide open and released its entire radiative contents to the atmosphere - which didn't happen at Fukushima. The only radiation to escape at Fukushima was via coolant pipes. 

http://www.theguardian.com/commentisfree/2011/mar/21/pro-nuclear-japan-…

".......the energy source to which most economies will revert if they shut down their nuclear plants is not wood, water, wind or sun, but fossil fuel. On every measure (climate change, mining impact, local pollution, industrial injury and death, even radioactive discharges) coal is 100 times worse than nuclear power. 

Yes, I still loathe the liars who run the nuclear industry. Yes, I would prefer to see the entire sector shut down, if there were harmless alternatives. But there are no ideal solutions. Every energy technology carries a cost; so does the absence of energy technologies. Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power......"

And that is George Monbiot.......

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DH, I'd be Interested in Oliver H's comments, at some point.

 

The words of the speech read well, and as there's no brain-cell-count scanners in voting booths, they may indeed play well in urban and regional towns.

 

Sigh...

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DH, I'd be Interested in Oliver H's comments, at some point.

 

The words of the speech read well, and as there's no brain-cell-count scanners in voting booths, they may indeed play well in urban and regional towns.

 

Sigh...

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I have only read this speech. So cannot really comment on its delivery. I assume he spoke better than Shearer. It wouldn't be hard. But the content is drivel. Nothing specific except the same old policies CGT etc. I have been hearing these speeches from the left for 30 years. They need to put some meat on bone before anybody will bite. At least Shearer had 100,000 affffordable homes. What has Cunliffe announced that is new....

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It seems that Cunliffe and his advisorsare  very poorly acquainted with the international evidence if they really believe that capital gains taxes and government subsidies of housing are going to restore housing affordability.

I could recommend some very effective written criticism from the Left in the UK (especially from James Heartfield and Ian Abley of "AudaCity"), of the consequences there of decades of growth containment urban planning. It is particularly sickening that the land rentier classes, who produce no new wealth in the economy, make larger and larger zero-sum gains at everyone else’s expense – including the capture of government subsidies – the longer this economically illiterate nonsense is persisted in.

I am reminded that the late Tony Benn fell out with the UK Labour establishment because they were cowardly in the face of the powerful rentier classes in the UK. 

The cost of land in UK cities is now around 200 to 700 times higher per square foot than a baseline comparison US city without growth constraints where land prices have remained steady in real terms for decades. In fact land prices fall in real terms when they are allowed to. Land prices in NZ cities are amazingly rapidly converging on UK prices even from a much later start date for the regulatory distortions.

What this means is that no matter how much upzoning and intensification takes place, the cost of housing increases simultaneously with it shrinking in size. I have correspondence with distinguished academics around the world about this – there is a disagreement among academics about whether upzoning reduces floor rent or increases site rent. They can argue their theory all they like, but the real world evidence everywhere is that it increases site rent. Time to revise the theory if it doesn’t fit reality. Paul Cheshire and David Levinson and those on their side are right, and the great Ed Glaeser is sadly being a useful idiot for the urban land rentiers. 

If Labour in NZ was going to be true to its roots, it would repudiate all this Greenie nonsense that hurts workers and families. GO, Shane Jones!!!!!!!  Housing and loony Green urban planning is probably the worst aspect of the lot. The claimed benefits of intensification do not eventuate anyway – besides the housing affordability issue, “compact” cities lose more in traffic congestion delays than they “gain” in mode share changes, and the alleged reduction in travel distances does not occur due to a “pricing out” effect on location decisions. In the international data on average commute times, all the outlier cities on the high side have the most unaffordable housing. None of the affordable, free-to-sprawl cities of the USA feature at all at the high end of the data, in spite of having much faster growth in some cases, and in spite of having more households that need to compromise relative to TWO jobs and multiple schools (this latter is because cities with affordable housing have more marriages and childbearing).

There is also no evidence to support the claim that infrastructure costs are lower for growth via intensification compared to greenfields. Upgrading and increasing the capacity of infrastructure where the land is already heavily built out and congested with daily activity is far more costly in the long run. There are actually dishonest motives on the part of Councils doing this.

There are economic aspects as well – it is in the urban economics literature that the UK’s productivity gap compared to other OECD nations is almost entirely due to its urban planning system.

It is also a lie that Auckland is “low density”. It is 3 times the density of a true low density city like Indianapolis or Nashville or Kansas City. Its density, properly calculated using the built-up area rather than municipal boundaries that include greenfields, is higher than many cities in Europe (especially France) and is close to even Amsterdam. It is unrealistic to expect to match Europe’s outlier high-density cities which are dense because they have been there and have economic bases dating back centuries, and generally have far higher population. Paris, for example, is several times denser and more populous, than every other city in France.

 

 

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You are indeed wise beyond your tender years , Mr Ivan ...

 

... as bad as little Johnny & the Gnats may seem ... the maternative , a Labour-Greens-whatever hodge-podge , would be so much badder still ...

 

I'll promise to vote for any government that says they'll get the unnecessary bureaucratic fluff ouf of people's and businesses way , and allow freedom of choice , and the ability to grow and innovate , to thrive ..

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I wish Cunliffe would do this

 

I think Chairman Moa gave a simple anaolgy that I elaborated on to explain this situation

 

But I suspect I am living in dreamland, the politicians will be useless and I will have nobody to vote for....

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How about this for a policy platform then Gummy?  Cut politicians salaries to a third of what they are now.  Disband useless agencies.  Take govt. back to it's core purpose.  It's hogwash that salaries must be comparative to the private sector.  If MPs think they can earn more in the private sector then they're welcome to go do it.  I'd rather have people that are passionate about being public servants than milking the taxpayer.  To me it is about allowing people to do as they choose as long as they don't harm others.  As a nation we have to define what all the various levels of harm are though.

 

Of course there would have to be some harsh medicine taken by the sheeple as well.

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... agree to take government back to it's core principles of upholding laws of justice , security , and title of property ....

 

I neglected to include local government , such as Auckland's , and their disasterous affect on the community they believe they serve .... crippling annual rate rises , and rubbish such as the unitary plan put paid to their belief that they serve us ...

 

... the sheeples need to do what our ancestors did when they first crawled out of the primordial swamps and oceans , they need to grow a backbone , and take greater personal responsibility for their actions and consequences ...

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Maybe title of property is part of the issue...

 

https://medium.com/p/c6b0116592ee

 

 

 

 

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