Devon Funds Management's Paul Glass details the policies he'd like to see our politicians implement as we head towards the September 23 election

By Paul Glass*

While financial markets have been watching political developments overseas with interest, it is just over 140 days to our own election on Saturday 23rd September.

There is a high degree of uncertainty with the New Zealand election with political polls indicating that if an election were held today the result would be too close to call.

NZ has been fortunate to have had stable governments over the last 17 years under the leadership of Helen Clark and John Key. However, that could all change this year and any coalition is highly likely to need to rely upon the support of either NZ First or the Greens to get the numbers. Neither Bill English nor Andrew Little has won an election before. So what should English do if he wants to keep his job? We thought it would be interesting to get the debate going on what policies we would like to see implemented.

Here’s a quick summary of some of our ideas: 

• Infrastructure. Interest rates are still close to historic lows and the world is awash with capital looking for long term infrastructure projects. NZ has a significant infrastructure deficit and this is the time to embark on some material projects. The Government needs to set a framework so that private capital can be used. Initial projects could be dual carriageway motorways linking some of New Zealand cities and a significant investment in rail to get passengers and freight off roads and into high speed trains.

The Irish government has issued 100 year debt at 2.35%, surely we should be taking advantage of the current interest rate environment to fund long term infrastructure. The current projects that have been announced are relatively small and won’t make much of an impact on our massive infrastructure deficit. 

• Immigration. We have the highest immigration rate in the Western world and about 3 times that of the US on a per capita basis. We cannot keep up with the current rate and need to use immigration as a lever for the sole benefit of the NZ economy. 

• Housing. Remove the tax deductibility of negative gearing. Restrict sales to NZ residents. 

• The transition to electric vehicles will become an unstoppable force over the next decade. NZ should take a leading role and encourage this transformation by providing subsidies for electric cars and solar energy and providing a nationwide network of charging stations. We followed this model with CNG (natural gas) and we used to have world leading technology that we exported.

• Congestion pricing. As our cities grow, roading becomes a scare resource and needs to be priced. A congestion toll in Auckland, similar to London is a no-brainer. The proceeds need to be ring fenced for public transport. 

• Water is a valuable national resource. Kiwis are passionate about clean water. The wholesale use of water needs to be priced correctly to ensure that our rivers, lakes and drinking water are up to a higher standard. Swimmable by 2040 is not acceptable. 

• KiwiSaver needs to be made compulsory. We should also enable the NZ Superfund or ACC, who both have extremely capable investment teams, to provide a high quality KiwiSaver fund at cost. This will drive down fees and significantly boost the retirement wealth of Kiwis.

• Green credentials can help NZ gain a premium for its goods and services and attract high value tourism. We need a range of high profile initiatives in this area including targeting 100% renewable energy by 2030, more accessible marine reserves, compulsory green spaces in our cities, no plastic bags and storm water improvements. 

• Burglary is a major problem in NZ in terms of both financial cost and human anguish. A major rethink is needed on how we tackle this crime including the penalties and use of private investigators. 

• Restructure the fishing quota system. The fisheries are a scarce national resource that should belong to all. Allocating perpetual quotas to individuals and companies based on dubious historical fishing records does not work in practice and has resulted in a huge wealth transfer. The Government should put fishing quotas up for tender for 20 year blocks in the same way as they do with other national resources like spectrum. 

• The big four Australian owned banks make more money out of NZ than all the companies listed on the NZ Stock Market combined. We should force these institutions to partially list their NZ operations. We are moving very slowly to ensure that multinational companies pay their fair share of tax in NZ. We need to get much more aggressive in this space. 

• Centres of excellence for specialised healthcare. We are a small nation and should look to move to single centres for providing world class healthcare in highly specialised or capital intensive areas. This would be based around hospitals but include universities and private practice. 

In their third term, National have been strangely reluctant to lead and are possibly too focused on not making mistakes in order to get re-elected for a historic fourth term. This has come at a cost and they have been uncharacteristically slow to react to a number of issues. National’s biggest strength had been Key, but now he is gone English needs to articulate his vision for the future beyond Key’s cycle ways (which have been great) and the failed flag referendum. Maybe as a nation we could adopt the Chinese approach and have a 5 year plan?

Please send us your ideas as we welcome the debate.

----------------

*Paul Glass is executive chairman of Devon Funds Management. This article first appeared here and is used with permission.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a 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.

34 Comments

most of the points can be recycled for wish list for next election and every election after it..

You would have my vote Paul.

... I can see through Glass's arguments .... he is using commonsense ... and policies that benefit the citizens of New Zealand ...

Pull the other one , Paul ... that is appalling ... this is politics we're talking about here ...

... and our pollies require policies that will sucker the populence into voting for them , rather than ones which will actually do us all a lot of good ....

Sadly , our political glass is half empty ...

I totally agree on the immigration stance.
We don't want New Zealand to be the next United States where businesses have relied on immigration for skills since the late 70s instead of training staff and working alongside the government to improve education standards. The result is an abysmal and outdated schooling system, immigrants featuring much higher than locals in the income bands (Indians have the highest household income in the US out of 130 different ethnic groups) and absolute reliance on imported skill generation after generation.

locals simply need to lift up the game to be competitive. If you can't make sure your kids can be competitive.

Get serious - Try this - Australia charges work visa fees which are paid by the employer

A Shorten Australian Labour Government would increase Work Visa Fees
Fees for temporary skilled migrant visas will increase to 3 per cent of the Temporary Skilled Migration Income Threshold, which is currently $53,900

That means, in practice, visa fees for temporary skilled migrants would rise to $1617 per year, $3234 for two years or $6468 for four years

"This is a strong price signal to employers that they should be looking for local workers first. Under Labor, putting local workers first won't just be fairer – it will be cheaper

In comparison the Turnbull Liberal-National Government presently charges the following fees
The Turnbull government's planned visa fee hikes will see fees for the new two-year visa set at $1150, or $575 per year, and $2400 for the new four-year visa.

http://www.smh.com.au/federal-politics/political-news/shorten-labor-gove...

"Get serious - Try this - Australia charges work visa fees which are paid by the employer"

that's a good one, instead of spending it on a visa spend it on training a local, assuming you can find a local that wants to work and be trained...

agree with most of them except one part of the fisheries one,
the quota system promotes a lot of wastage as non quota product is tipped back into the sea.
i would like to see that fixed

Election Wish List : Early election

Too many policies. Leave out the 4th and the last four.

Immigration is interesting. Agreed importing poverty wages is crazy unless you are a selfish wealthy person (typical National party person? blinkered academic Labour party member?). So long as Kiwis enjoy their OE then NZ will have a large partnership category. And there is a need for a small number of really high skill level migrants (I mean the Aussies may want their own as CEO of our/their banks, etc).

My view is for Govt to, ideally, invest heavily in infrastructure during the downturns.... but that would require visionary leadership.
eg.. The best time for the Govt to have done something about the Auck. housing crisis was back in 2010 when the NZ building industry was in the depths of depression.... the worst since the great depression.

There were enuf commentators suggesting this back in 2010 , which shows, to me, that foresight is possible.... that wise visionary leadership is a possibility... ie... a longer term roadmap....?

Seems arse about face ..to ramp up infrastructure investment when the construction sector is already at full speed.
Seems arse about face to have full -on immigration without having an infrastructure plan/budget in place.., beforehand ??

they will do this to keep the ponzi going but it makes ZERO sense. Because we cant even afford to maintain the infrastructure we already have ... and its going to get worse. The easy fossil fuel is done (which is what we built most of our stuff with).
If it was just a matter of keeping money circulating it sounds logical, but we arent short of money, we are short of resources.

ham n eggs,

You keep repeating that we are short of resources,but I have never seen you provide any evidence for that assertion yet. Of course,one day we will be short of fossil fuels,but not yet. I could give you a lot of figures for global shale gas and oil,most of which has not yet been exploited. Some of it will be too difficult for geological reasons and some would only make economic sense at much higher prices. Meanwhile,much more solar and wind power energy is being created. Again,I have good data from sources such as the US Dept. of Energy. Elon Musk is developing an electric truck and Zunum Aero-backed by Boeing,is looking to develop a short-haul hybrid 'plane. Will they succeed? I don't know,but the point is that the world is becoming more energy efficientso fossil fuel use will lessen over the next 20/30 years,while we adjust to a post-carbon world.

Any evidence? Ask every other living mammal if theres a resource shortage!!
But if you want an interesting presentation, try this
https://www.youtube.com/watch?v=TFyTSiCXWEE

The Oil shortage comes from the affordability you mention (ie.in your words.. "some would only make sense at much higher prices") .... but unless we can lift wages across the board (in effect increase NET energy available across the board), we cant "afford" these high prices ... so OIl prices keep collapsing ...

I agree with the list, it is common sense stuff that could bring about change quickly. I do t know why politicians make everything so complex. I bet if this list is provided to the government they would spend 3 years only on consulting and then come back with a list 3 times longer to say why they cannot do any of it. It is time they start thinking about what is best for NZ instead of what is good for their wallets. Things are a mess and if some leaders show courage they could create a lasting legacy which will long be remembered after they have left their parlimantery office.

Subsidize solar & electric cars ? This is the opposite of foresight. You are basically creating a second energy system alongside the existing one (which you need to tax even further to provide subsidies).
Electric cars continue the fantasy that cars actually achieve anything apart from letting us go on joy rides when and where we like. If you want a commuting vehicle, try regulating compulsory electric golf carts - no subsidy reqd

Long term debt is well and good (a la Ireland) but the core problem is NET energy. The NET energy is what ultimately services the interest & provides work, not money printing.

Get rid of that stupid FIF and let us invest where we wish without hindrance.
Sometimes it can make your accountant more expensive than the tax.
(if you can find one that understands it)

Agree. Cullen's green eyed FIF capital gain tax is painful to administer, distorts investment decisions and adds risk to investment portfolios by discouraging geographic diversification.

Subsidizing CNG/LPG was a disaster, as was the gas to petrol conversion.
The propaganda of the time suggested we were geniuses for doing this; the reality is that converting CNG to petrol was an expensive waste of time and engines were ruined by the CNG conversions, which were primitive and poor.
Subsidizing electric cars will artificially grossly inflate their price, and will lead to little savings in CO2 emissions as fossil fuels have to be burnt to supply the electricity, as we do not have anything like an excess of renewables, and are not likely to have anytime soon with the population increase

I am going to propose something far more radical. Let's have a debate about what we think the role of government should be in our society. What should and should not be funded/regulated by the State and what should be left to individuals, families, and civic organisations. For example, what is the role of our public health system - safety net? primary delivery of care? something in-between. Maybe we could have a good philosophical discussion and, then, we could agree on funding and delivery.

I'd like to add to that debate, how big do we want Govt to be (including local govt)..??
eg...do we want Govt to be 30% of GDP... 50% of GDP..??

what is it now?

Exactly - where did 30% come from. We aren't having the bigger issues discussed.

Roelof. You can't answer that until you've first decided what functions government should be responsible for. And that is a philosophical question not a financial or mathematical one. My view that we presently have the balance about right.

middleman... For me, this is the first question to answer.
Public sector vs the Private sector.

The reality is that the public sector, essentially, lives off the back of the Private sector. (in a democratic country ).
There is a kinda tipping point between how dynamic and vibrant an economy is ( ability to provide jobs, innovate, be productive, work hard..etc ) and how big the Public sector is..
eg... Its not the Auck. council that builds the houses..??

We, as a nation , need to decide how big we want the Public sector to be. ( a function of that is, of course, the volume of regulation and the level of taxes paid, as well as services provided )..

just my view.... Maybe the 2 questions go hand in hand..?? size vs function...???

The wealth of a Nation ( apart from natural resourses ) is a function of Work ethic + innovation + productivity. ... No amount of Public sector "services"..."regulation" .. "bureaucracy" etc.. can change that fact..??

wouldnt say its radical - its basically gets debated everytime theres an election. Either way if the answer is "providing essential services" only ... who decides what is essential? this becomes the piece of string ..
Reading between the lines I think your implication is that if there was less government, there would be a whole lot more for everyone ... which ignores where wealth actually comes from; leveraging our (energy) resources. And less rules & regulations sounds fine apart from the kicker which is open slather on resources ...
A % of GDP rule is basically a % of a meaningless figure ..

I don't think it does get debated - more specific policies are debated which usually come from at best a particular worldview or at worse just a grab-bag of polices that will garner votes. I am talking at a philosophical level.

Your reading between the lines actually missed what I wrote - lets debate the issues of the role of government and not just assume that this particular thing is or is not a role for government. Deciding what is essential is the whole point - and the people will decide so it's not a piece of string argument. If party states Y and another is X then the people will decide between the two. Right now I think a lot of people are arguing passed each other and so when Labour says health needs more funding and National says health funding is fine the question is what are we trying to fund? If we debate the philosophical understanding of our healthcare we then can fund it appropriately - whatever that is.

With a further question surely on the quality of spending. Increased health and other spending does not always deliver improved services.

fair enough. I think a lot of the arguing past each other though is done for show, in the background there is more sensible discussion across party lines in working committees ... or so ive heard

I'd like to see a compulsory arithmetic test for would be prime ministers with really tricky questions like:

if the country has 71,000 immigrants and you announce that 50,000 are to be cut, how many does that leave and why is the answer not 21,000 ?

I think there should be a gullibility test for would be voters, as no one other than Nationals's spinners 'announced' there would be a cut in immigration by 50,000.

Good list.. We should be voting for policies not politicians.

Good list

Good list. Why not adjust temp immigration in relation to the net picture v Australia?. That seems the biggest influence on all our migration flows. When we're getting net kiwi inflows, tighten temp and perm work visas-we simply don't need them. Or a flat $1000 p.a. charge per lower skilled temp visa on every employer to encourage genuine attempts to hire/upskill locals.