Here's my edition of Top 10 links from around the Internet today.
We have a Monday-Wednesday-Friday schedule for Top 10. Bernard will be back with his version this Wednesday. We will have another guest posting on Friday.
As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz.
See all previous Top 10s here.
1. 'US wage income is accelerating'
First, it was the Aussies who started to question their official labour force stats.
After an investigation, the ABS had to admit that their survey under-counted the unemployed and undercounted the labour force itself. They have issued a revision that supposedly corrects for the previous deficencies, but actually questions remain.
Now questions are being raised about the American "non-farm payrolls" series and specifically about the income monitoring.
In the American case the analysts think their survey under-estimates wage increases. The evidence is their tax receipts which are showing good gains, which is different to the survey data that shows flatlining.
Here is what Jim O'Sullivan wrote in the FT:
More comprehensive personal income data show wages per hour up more than 3 per cent from a year ago, versus 2 per cent for average hourly earnings. Total wage income, including a 2 per cent rate of growth in hours worked, is up more than 5 percent. The compensation series used to measure unit labor costs is also up more than 3 per cent on a per-hour basis. The employment cost index measure is tamer, but it has accelerated in the last two quarters.
Data on tax receipts add to the evidence that wages are not as stagnant as widely perceived. Employment-based tax receipts have been rising at a 5-6 per cent pace, consistent with the 5-per-cent-plus signal from total wages in the personal income report. Not surprisingly, the budget deficit has been falling rapidly.
The extra strength in the broader measures likely reflects increased variable compensation, including bonuses. That type of pay is less of an inflation threat than basic wages. Even so, the employment report is understating the extent to which tightness in the labor market is putting upward pressure on costs and boosting consumer spending power. Some of the pick-up likely also reflects increased turnover; the quits rate is almost back to its pre-recession level. Changing jobs is typically a prime opportunity for a pay increase.
It is worth noting that the New Zealand 'household labour force survey' and the 'quarterly employment survey' have also come under question by some economists. Their suspicions have been raised by the jerky nature of the results.
Perhaps it is time Stats NZ started ditching their traditional surveys and use 'big data' more. Certainly our use of the LEEDs by the IRD for our Roost home loan affordability research has tended to show higher pay that the QES.
2. A deeper Q4 slowdown
This Saturday report from Reuters caught my eye: bank lending in China in October was down sharply, a situation that underlies their growth problem. While it may not be all it seems (electricity production grew at a faster clip in October), it may portend some worrying economic head winds.
The amount of new loans issued by Chinese banks fell by more than a third in October, adding to signs of faltering demand in the world's second-largest economy which could prompt Beijing to unveil fresh stimulus measures.
The decline came after some banks reported bad loans rose at their fastest clip in two years in the third quarter, while deposits shrank, limiting their ability to lend and highlighting growing strains on the financial system as activity cools.
Chinese banks made 548.3 billion yuan ($89.5 billion) worth of new loans in October, data showed on Friday, missing market expectations of 650 billion yuan and well below 857.2 billion yuan in September.
Taken together with earlier data for October, the credit numbers point to a further loss of momentum in the economy in the fourth quarter, and growing risks that the government will miss its 7.5 percent annual growth target.
3. What Auckland Council can't see
It's not often you read about our problems in a New York academic blog, but our housing affordability issues in Auckland are the subject of a recent piece by Alain Bertaud. He offers some policy suggestions:
What should be done?
There are two ways to compensate for the constraint on land supply imposed by topography:
- increase the amount of land available to developers at the city periphery
- decrease the regulatory constraints which prevent a higher density of utilization in centrally located areas where demand is high
While these two measures should be used simultaneously to increase housing supply, faster and greater impact would come from making more land available to developers. Increasing the housing supply through densification is always slow due to the need to change legislation, NIMBYism, from adjacent residents, the cost of relocating existing land use or occupants, and the increasing demand for floor space per capita.
New Zealanders are rightly concerned about maintaining the natural beauty of their country. However, with urban land only constituting 0.8% of all land in New Zealand, its cities have plenty of room to expand and give residents of all income levels access to the benefits of urban life.
4. Tomorrow's muck-metal?
On November 30, Switzerland will hold a popular vote calling for the Swiss National Bank (SNB) to permanently retain at least 20% of its assets in gold, and to store all its gold at home.
About 7% of Swiss reserves are currently held in gold - a near tripling of the current reserves would make Switzerland’s holdings bigger than those of every country in the world except the US and Germany.
Both the SNB and the Swiss government have voiced their opposition to the proposal - but polls show that the vote will be close.
Obviously, the Swiss are ignoring market facts. The Gold Council has just reported their Q3 2014 data and despite their boostering, things are not good for the yellow metal. Nobody but a few renegade governments (including Russia) seem to want it. Jewelry demand is down, industrial demand is going nowhere (except sinking slightly), investors in coin and bars are starting to shun it, and the pro's have been net sellers for quite a while. Mine production is up. If it wasn't for Russian buying, the sinking price would collapse.
That Gold Council data shows that there is about 150 tonnes of excess supply per quarter (despite the Council's shameless headlines). [If you are interested, I will post our updated tracking of the Council's data next week. Let me know.]
A winning Swiss vote might halt the slide for a while. But for something that has little practical use and relies on medieval history to give it its value, the Swiss may end up 'investing' in a pup.
5. How to shift the intellectual debate
Mostly young, mostly American, and mostly at Harvard: Capitalism’s newest critics offer a groundbreaking account of slavery, but does their economic history add up? Their's is a case study in how to shift an intellectual debate, as Timothy Shenk explains in a long read in The Nation.
Historians, as a rule, love to complain about economists.
There are exceptions, but in a field where self-described economic historians make up less than 3 percent of the total population, they are a decided minority. Yet in 2008, most historians were just as baffled by the financial crisis as economists.
In the rush to find the prehistory of a bewildering present, stories of the Rockefellers and their ilk were retold as parables of capitalism overflowing with lessons for the current day: the importance of elites, especially elites with access to massive amounts of capital; the indispensability of finance to more dramatic revolutions in production; the resilience of an economic order that appeared messier than economists allowed, but proved harder to resist than earlier historians had admitted. In a time of recession, nothing stood out more than the stubborn persistence of economic growth - the force that had transformed the son of a small-time charlatan into the commander of powers beyond the imagination of kings a century before. Growth was occasionally checked, but it always revived, and it remade the world along the way.
With memories of the crisis still fresh, a group of academics calling themselves historians of capitalism started to attract increasing attention. Capitalism might seem like a strange topic to require discovery, yet until recently, scholars concerned with the subject tended to style themselves practitioners of economic history, or social history, or labor history, or business history, not the history of capitalism as such. But that is the genius of the label: it names a topic, not a methodology, opening the field to anyone who believes capitalism worth studying.
Mostly young, and mostly specializing in the history of the United States, historians of capitalism are one part of a broader revival in political economy. Yet the success enjoyed by this segment of a larger groundswell remains noteworthy - and surprising. Despite the seeming predictability of the subject’s popularity at a time when economic issues have moved to the forefront of public debate, turning capitalism into the central category of historical analysis requires intellectual sacrifices, pushing some topics into the spotlight and relegating others to the shadows. This has not escaped the capitalism cohort’s peers, many of whom fear that the trend would undo advances made by a generation of cultural historians, while leading to even more scholarship of and by white men. Historians of capitalism vigorously protest those charges, but murmurs of discontent have already begun, and they will grow louder if the field continues to thrive.
Although major intellectual contributions and timely subject matter have boosted capitalism’s newest historians in their ascent, those qualities alone cannot account for their success. They have supplied, as their colleagues in business school would say, a case study in how to shift an intellectual debate. Unlike most case studies, however, tracing the origins of the turn toward capitalism brings into relief a history with profound implications for how we understand the past and the present - and how we envision the future.
The invention of modern economic growth - capitalism, if you like - reshaped the world. But it was part of an ensemble of larger transformations that we are still grappling to understand, and control. If it was possible, in the midst of the Great Depression, for John Maynard Keynes, an economist who hailed from Britain’s elite, to insist that his nation must not “overestimate the importance of the economic problem,” the rest of us have no excuse. The categories we use to make sense of the world - including such basic concepts as ecology, economy and society - have all changed before. The twenty-first century belongs to whoever changes them next.
6. More on Piketty
Bill Gates has read Thomas Piketty. He has also spoken with him. And then he has penned some thoughts which are broadly supportive of the Piketty analysis. But he doesn't agree with it all of course:
I agree that taxation should shift away from taxing labor. It doesn’t make any sense that labor in the United States is taxed so heavily relative to capital. It will make even less sense in the coming years, as robots and other forms of automation come to perform more and more of the skills that human laborers do today.
But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption. Think about the three wealthy people I described earlier: One investing in companies, one in philanthropy, and one in a lavish lifestyle. There’s nothing wrong with the last guy, but I think he should pay more taxes than the others. As Piketty pointed out when we spoke, it's hard to measure consumption (for example, should political donations count?). But then, almost every tax system—including a wealth tax—has similar challenges.
Like Piketty, I’m also a big believer in the estate tax. Letting inheritors consume or allocate capital disproportionately simply based on the lottery of birth is not a smart or fair way to allocate resources. As Warren Buffett likes to say, that’s like “choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics.” I believe we should maintain the estate tax and invest the proceeds in education and research—the best way to strengthen our country for the future.
7. Rotten at the top
In the face of some opposition, the EU recently 'elected' Jean-Claude Junker as its President. The EU is also about to embark on a high-profile effort to get the large multinational companies to pay more tax in their jurisdictions. However, the ironies involved have not escaped many observers. Junker was previously Prime Minister of Luxembourg, one country that has as its central economic policy encouraging tax breaks for international companies.
Along with Ireland and the Netherlands, it encouraged and sought these companies, changing its tax rules to attract them. In fact, the companies have done not much more than respond to the incentives offered, almost certainly nothing illegal.
Junker is being exposed as two-faced. Some are calling on him to resign already. Der Spiegel for instance:
Leaked tax documents released last Wednesday by the International Consortium of Investigative Journalists showed how large corporations have taken advantage of loose policies in Luxembourg to evade paying taxes. At a time of slow economic growth and tight national budgets, sensitivity has grown in large parts of the EU over countries that facilitate legal tax evasion.
Juncker is fond of pointing out proudly that he was Europe's first "leading candidate," and the first to be more-or-less directly elected as president of the European Commission. Across Europe, many celebrated it as the moment when more democracy came to the EU. Unfortunately, optimism blinded people to one salient fact: European politicians themselves never took this newfound democracy particularly seriously.
In contrast to the United States, where getting to know the candidates is a matter of course, the EU never had any intent of truly introducing its leading politicians to the people. This has created a situation in which a person like Juncker can effectively lead two lives. One as an (honest) proponent of the EU and the other as a cunning former leader of an EU member state who promoted Luxembourg's self-interest by blocking treaties that would have forced the country to adopt stricter tax policies.
8. We are different
Watching American household income levels is now a spectator sport for some. I like the amazingly rich data series from the US, but I do scratch my head when some folks assume the US experience means that New Zealand's will be the same.
The cause célèbre currently is that household incomes are flatlining*. But is that true for New Zealand? The data I looked at recently suggests not; it suggests we are in a long run sweet spot - interrupted by the GFC, true, but that real earnings are back continuing their long-term rise.
This chart is from two Stats NZ quarterly series. Starting with the Quarterly Employment Survey (QES), we have deducted the quarterly CPI. What you get is the real change in earnings. Since 2001, only the GFC had this less than inflation. Since the end of 2012 we have had one of the longest, 'fattest' periods of weekly earnings growth. Yes, there will be winners and losers within the working population (and it is easy to hear the tales of those not at the average, but the trend since 1997 is clearly positive and increasingly so.
WDKHLWA.
(* It might not even be true for the US either; see #1 above.)
9. Why Key won and Obama struggles?
And here's another. The US is noting that finally, jobs for men are now higher than before the start of the GFC. So we built an equivalent chart for New Zealand, and that reveals how much better we have fared on that front as well. More evidence that narratives out of Europe or North America don't always translate well here.
10. Of that you can be certain
Abe and Esther are flying to Australia for a two week vacation to celebrate their 40th anniversary. Suddenly, over the public address system, the Captain announces, "Ladies and Gentlemen, I am afraid I have some very bad news. Our engines have ceased functioning and we will attempt an emergency landing. Luckily, I see an uncharted island below us and we should be able to land on the beach. However, the odds are that we may never be rescued and will have to live on the island for the rest of our lives!" Thanks to the skill of the flight crew, the plane lands safely on the island. An hour later Abe turns to his wife and asks, "Esther, did we pay our $5,000 PBS pledge check yet?" "No, sweetheart," she responds. Abe, still shaken from the crash landing, then asks, "Esther, did we pay our American Express card yet?" "Oh, no! I’m sorry. I forgot to send the check," she says. "One last thing, Esther. Did you remember to send checks for the Visa and MasterCard this month?" he asks. "Oh, forgive me, Abie," begged Esther. "I didn’t send that one, either." Abe grabs her and gives her the biggest kiss in 40 years. Esther pulls away and asks him, "What was that for?" Abe answers, "They’ll find us!"
51 Comments
Wrong on every level !
I received a shock in the mail Friday , the relvaluation of our home in Greenhithe , and I am mightily pissed off.
My rates are going to go through the roof , and what have I done? Nothing .
What more will we get for this? Nothing .
This is not a windfall that we should go and spend recklessly , in fact its nonsense .
WE ARE GOING TO BE TAXED MORE BY AUCKLAND CITY ARISING FROM THEIR INABILITY TO PLAN THE CITY'S GROWTH , THEIR UTTER INCOMPETENCE TO SORT OUT LAND SUPPLY CONSTRAINTS AND MASSIVE CURRENT AND WASTEFUL EXPENDITURE
I refuse to use the unearned "gain " to splash out on anything , becuase at my age there is nothing I need that badly
Its incongruous that the Auckland City Council get rewarded for their incompetence .
That land prices have doubled is a direct result of their incomptence in
1) Not allwoing the city to grow in an ordelry fashion
2) Not taking action against the evil of land banking , where rent seeking speculators gain 30 % pa on a vacant section , restrciting supply and holding vast swathes of land getting a yield 10 times what thety get from a bank
Its time they penalised those holding sections for more than 2 years doing no improvements , they should be charged 200% rates or a vacant land tax
Shows complete ignorance of how the rates will change.
To my knowledge Greenhithe in general have risen with cv hikes of no more than the rise for the whole city. Hence the rates will be roughly in line with the previous year plus the 3.5% that they have passed on to all.
Even the non -residential levels have not risen so the holding of 2013/4 levels will help soften the residential rises.
Stop moaning. The world has yet to come to an end despite Key and English who refuse to recognise that Auckland costs are directly the result of too many people arriving be they returning citizens, from Dunedin or Beiging.
PLUS investors picking the low hanging fruit for years without any constraints.
I know how the rates work , I have to pay for everything that the Council should be doing for my rates including my waste being collected .
I also have to pay for water , waste water removal , my berms to be mowed , horrendously expesive parking , using expensive, dirty , cold , smelly 30 year old busses, dog linceses , ( duplicate dog licence dics cost more than NZTA charge for a dup car licence disc ! )
Then I get shaken down for money for the council to squander on things thast I never use like
ATEED
MOTAT
Pasifiak festival
Diwali Festival
Variuos ( expensive to get into ) food festivals
V8 Motor racing which we cant afford to go to
The gay day out at Pt Chev
to name just a few .
Actually, guys, although lots of gloom and doom, Boatman's perspect is a valid one. Are any of you prepared to guarantee that the revised valuations will not result in increased rates? Are any of you prepared to vouch for the integrity of the politicians in charge of these decisian making processes to put the interests of the rate payers ahead of their own?
Actually this also provides a basis for capital gains tax, where the realisation of the gain could be come taxable. That is where anyone moves to take advantage of the change in value by say re-morgaging to buy other luxuries, or other properties. The home owner (majority) who do nothing other than continue to live in their property, and maybe sell it to buy another, where the relative change is comparable should not be penalised for something they have no control over.
The reassement of market value by the council every three year does not cause the value of houses to go up. House values have been going up continously over the last three years. Anyone is free to re-mortgage at any point. They do not need to wait until the council releases their valuations to do so, the banks have other assesment tools at their disposal. If you want to know the value in order to re-mortgage, rather than wait 3 years, why not spend 50 bucks at QV to get an e-valuer?
The revised valuations have absolutely no impact on the total rates take. AC will be collecting the same amount of money, plus the general 3.5% rates rise. Valuations affect what share of the total take is paid by each property. If you property has gone up more than average (central suburbs) you rates will go up more than 3.5%. If you property has gone up less than average (outer suburbs - rodney etc) then you rates will go up by less than 3.5%, or may even go down.
What has re-mortgaging got to do with anything ?
There is no way I would EVER re-mortgage the house .
Thats about the dumbest thing anyone could ever do , unless its to invest in another asset class , but its never tax - effective to do that anyway .
Our mortgage took too long to pay off in the first place , and if there is anything I want I either sell some shares , save up and pay cash or do without it .
To borrow against the house for a new car or new boat or a Cruise is just plain dumb
The rates also fall unfairly on property owners ( about 200 ,000 actual ratepeayers ) of the 1,700,000 people who live in the city .
We are expected to pay for things sponsored by Auckland city , like V8 RACING , when we as a family cant actually afford the tickets to attend these events !
Or pay for marginal and fringe things like Pasifika days , strange art events that no one attends, or the Gay parade at Pt Chev , when these things should be self funding?
Even things like rugby , food festivals and diwali festivals , these should be self funded form ticket sales.
Why do I have to pay for them , when the city does not do what city administrations tradittionally do ?
I have to pay to have my waste collected , why is this not done from my rates like to past 50 years ?
Anyone who thinks this type of inverted pyramid is sutainable had better think again
Japan rushes back into recession:
http://www.reuters.com/article/2014/11/16/japan-economy-gdp-idUST9N0SV0…
Abenomics ain't working........
I find it hard to feel sorry for anyone choosing to live in the Auckland region, been there moved on, unlikely to return. If you believe so strongly that you could not live elsewhere then stump up the dosh to remain. Otherwise, vote with your feet and step outside the box. A reversal of the flood from the regions during the 80's and 90's would sort all this nicely and leave the speculators awash in their own swill. For one such example, given the cheaper viable alternatives, I can only surmise that attending university in Auckland is just a fashion statement for the well off. Most of my other observations would run along the same lines.
#5 - I see the study of economics like the study of a tree.
The leaves and small braches are the micro-economics.
As we move into the larger branches we are moving into maco-economics
As we move to the main branches we are moving into Political, History, Social economics.
But as i see it we have not yet reached the tree trunk or the roots.
When slavery was abolished there was no increase in wage cost to the cotton farmer.
During slavery the cotton farmer bore the cost of food, clothing and shelter for the slaves and their families.
After slavery the cotton farmer just gave that money to the slave workers and said "buy your own"
I doubt that anybody would argue that slavery had many benefits for slaves, but it had been a very popular and reliable form of sourcing labour for a very long time. But as Mike B points out, the move away from slavery simply gave the appearance of freedom for many and transferred the responsibility for the management of their own support onto many who were ill equipped to do so, while leaving them trapped in the same work to survive.
I suspect the hangover from that remains in many modern societies around the world where the origins of citizens in working class, blue collar or lower socio-economic groups can be traced back to those who were slaves, serfs or indentured servants.
The commonality is that they were paid little, if at all in exchange for their keep.
Democracy works in a similar way, you may freely vote for those that the heirarchy want in power. The subtlety varies around the world but don't kid yourself that the leaders you get are going to be your top choice. You can see how this works right now in Hong Kong.
In the broad sweep of history democracy and emancipation are new ideas which are far from universally accepted or correctly applied and are still being tested for workability. Being so locked to capitalism may mean that a general economic colapse may see the lot keel over.
Being so locked to capitalism may mean that a general economic colapse may see the lot keel over.
Support from an unexpected source is not far away.
David Cameron has issued a stark message that “red warning lights are flashing on the dashboard of the global economy” in the same way as when the financial crash brought the world to its knees six years ago. Read more
Unless of course he wants to divert this travesty of government care towards all citizens.
A landmark study of the coalition’s tax and welfare policies six months before the general election reveals how money has been transferred from the poorest to the better off, apparently refuting the chancellor of the exchequer’s claims that the country has been “all in it together”. Read more
Actual research into many slavery systems had many benefits for slaves. Often the slaves had similar to what we have today in the way of animal rights , right to shelter, proper care, food, water. These were often things that the serf, villein, peasant and freeman had to provide for themselves. Even in old age a well skilled slave could expect a reasonable level of care. What was bad for slaves was things like medical care and protection against discipline, as for much of history these things have been very rough and/or expensive.
@ Spinach , you are 100% correct , but the wheels are going to come off eventually , as they simply cannot keep shaking us down the way they are doing so currently.
Problem is , they can only squnader so much before it becomes a truly unaffordable and as a result , unpleasant place to live ,
For example have within Auckland council an august body called ATEED .
Its unclear to me exactly why we have such an expensive massive bureaucratic organisation within council being run at our expense .
From what I can ATEED is the ultimate " nice to have " , although for a city that does not even collect its ratepayers waste , thats saying something.
ATEED produces absolutley NOTHING .
Currently the Chief Executive Brett O' Reiley , is on a junket overseas , at ratepayers expense !
He probably earns some obscene salary in excess of $100k per annum
All this is nonsense of the fisrt order .
The city should rate us for the basics ( like collecting our refuse and getting rid of sewage which they dont do ) , and everything else should be funded on a USER PAYS basis.
Take a look , the plasic packets you purchase are sold by the sub-contractor , the council does not collect the waste its paid for seperately by you .
Hell Auckland council does not even own the waste collection trucks , they belong to private contractors , its all outsourced .
What plastic packets? My rubbish goes out in a wheely bin provided by the council. I'm guessing you live in some rural area with user-pays waste collection? In which case you will have lower rates than me as the targetted waste collection levy will not be applied to your property.
DC: re #2 China - Interesting contrarian view here
And remember those double-quote marks around any "data"...
Not in theme, but an interesting read. http://www.forbes.com/sites/jamesconca/2014/11/14/does-our-military-kno…
#6 its easy for the ultra wealthy and childless to want estate tax, especially those like Gates coming from a high income family. For those whose lives are more hand-to-mouth having a legacy to pass towards your kids is worth living for. Otherwise if you save and die young, or worse have paid into retirement funds (or taxes towards other peoples' pensions) then the society has robbed and those around you of your lifes' efforts.
Boatman, I lived in Auckland in the mid 80's when ther was significant property value growth. A lot of people took the opportunity to re-mortgage then to buy things like boats, cars and to fund travel. I don't recall any using the change in value to buy more property. More than a few got burnt when the market crashed. It is good to know you're not that silly, but there will be some who won't be so sensible.
People like Boatman should be glad of their improved financial station in life and should accept that they have to make their fair contributions to society.
Their whinging at having to pay a fair share of tax ,in the form of property rates, is a demonstration of their greed and their isolation from the rest of society.
#6 - I don't understand why the big spender should pay higher taxes. At the end of the day, he's still putting all of his money back into circulation. Creating demand for goods and sevices is as valuable a use of money as investment in providing the goods and services. And if the argument is that it's less sustainable than parking it in a company, then I'd point out that philanthropy is also unsustainable...
Boatman's protests are a good demonstration of why we should have a land/capital tax (every year, not just gains). The capital-rich but cash-poor sitting in big houses on large sections would then need to move to something smaller to afford the rates/tax bill, freeing up the land for more efficient use
Significantly more. It would be offset by a reduction in income tax.Also negative gearing should be removed.
If your properties are not able to generate the cash to cover these costs then they are speculative investments which you will have to sell up so someone else can use them more efficiently.
No, targeting landlords is becoming necessary as more and more NZers are FORCED to rent. Houses prices need to drop or earnings need to rise, but for the rentier class, neither is a positive as they NEED people to not be able to purchase, so sorry if this affects you, but you've had your turn, time for Average Joe to get a foothold
Spot on kiwimm ...if a business, be it rental properties or making widgets can not afford to run on the cash flow generated from the capital invested - it should not be in business.
If a business relies on outside support to help this cash flow ie the accommodatiuon supplement, WFF etc ....what is it doing in business ?
#3 - $300,000,000 to access one side of the the bare land for 4470 (less 47 houses to be demolished) sprawl houses. That's $68,000 per site of public capital (and future maintenance through rates and taxes to come) per site to access land that will then need infrastructure and roading to be built. For the complete road link $472,000,000 will be spent - $110,000,000 per site. Yay for sprawl fringe housing and the cheap houses it can provide. Pity we don't have federal govt to fund it like his comparison cities.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11360108
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