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2025 Taskforce: 35 recommendations to close the gap with Australia (Update 2)
November 30th, 2009Here are the 35 recommendations made by Don Brash’s 2025 Taskforce that it says would bridge the income gap with Australia by 2025. The gap is currently sitting at around NZ$64,000 a year for a family of four, it says. My view is below. (Update 2 includes Finance Minister Bill English saying report opens debate, but National won’t break promises)
1. Core government spending should be cut to 29% of GDP by 2012/13, which is the same as it was in 2004/05.
2. Core government spending should be reduced further after 2012/13 by capping per capita spending in real terms (ie adjusting for population and inflation)
3. The Public Finance Act should set a medium term target for operating spending, either in real per capita levels or share of GDP.
4. The government should look at further measures to strengthen long term fiscal discipline, including possibly a Taxpayer Bill of Rights or an independent Fiscal Advisory Council.
5. Taskforces should be appointed to scrutinise each major area of government spending.
6. More rigorous cost benefit analysis should be used for new government spending and for periodic reviews of existing spending.
7. Ambitious welfare reforms should reduce the ‘very large’ number of working age people on benefits.
8. Take early steps to lower the prospective costs of New Zealand Superannuation as a share of GDP. This could include progressively increasing the retirement age in line with life expectation and indexing NZ Super to CPI rather than after tax wages.
9. Remove KiwiSaver subsidies
10. Reform health spending via the following:
- Abolish universal subsidies for doctors’ visits.
- Reduce subsidies for prescription drugs by forcing those on high wages and in good health to pay the full price up to a cap.
- Reintroduce a split between the government as funder and hospitals as providers, with private sector involved more heavily in providing those taxpayer funded services.
11. Reform educations spending via the following:
- Reverse subsidies for early childhood education
- Adopt a funder-provider model to schools, allowing new private providers to enter with all-up per student funding equivalent to that for existing state schools.
- Abolish government imposed caps on university fees
- Adopt market based interest rates on student loans
- Rationalise the non-university tertiary sector and establish universities as independent foundations
- Review the Tertiary Education Commissio, the Education Review Office and Ministry of Education to make them less prescriptive and intrusive.
12. Reduce average tax rates. Cutting core government spending to 29% of GDP would allow the top personal tax rate, the company and the trust rates to be cut to 20%. Or create a dual tax system with a top personal tax rate of 25% and a capital income tax of 12.5%.
13. Reform Working for Families to reduce high effective marginal tax rates for middle income taxpayers.
14. Make the income tax system simpler to help reduce average tax rates.
15. Sell all businesses owned by central government where competition is actual or feasible.
16. Local governments should be encouraged to sell their trading enterprises.
17. Establish an independent Crown Commercial Appointments Commission to recommend board members for all crown commercial enterprises.
18. Wind up the New Zealand Superannuation Fund to cut gross government debt.
19. Introduce congestion charges for central Auckland and other cities where a cost-benefit analysis shows it would work. Full road-user charging should be introduced where economically efficient.
20. Restore rigorous, transparent cost benefit analysis for all public capital spending with formal reviews by Treasury for projects costing more than NZ$50 million.
21. Mining under sensitive crown land should be generally permitted provided it passes a cost-benefit analysis. Mining should be done by private operators paying royalties to government.
22. Enact a Regulatory Responsibility Bill.
23. Add property rights to the Bill of Rights.
24. Improve the quality of regulatory impact analysis.
25. Establish a Productivity Commission as a centre of microeconomic and regulatory analysis.
26. Establish a taskforce to review resource management law.
27. Local authorities should take account of the differences in land prices when zoning land, with a presumption that increasing the supply of land would reduce land prices.
28. Establish a system of tradable water rights.
29. Labour law. Make the following reforms:
- Make it easier to dismiss workers and streamline procedural matters
- Extend mutually agreed probationary periods for new employees from 90 days to 12 months
- Employees earning over NZ$100,000 should be governed by contract law rather than the Employment Contracts Act
- Reduce the minimum wage to the same ratio to average wages that prevailed in 1999.
- Reinstate a youth minimum wage
30. Remove all tariffs from January 1, 2011
31. Review and liberalise foreign investment restrictions
32. Review the Emissions Trading law periodically
33. Review the Commerce Act to restore economic efficiency and long term consumer interests in the design and conduct of competition policy
34. Government should encourage the transformation of Fonterra into a conventional company with fully-traded outside capital
35. Zespri’s monopoly on kiwifruit exports should be removed.
My view
Don Brash and his fellow commission members have written a wish list that is likely to be rejected almost completely and almost immediately by John Key. Key (and Labour) are likely to write this off as the rest of Roger Douglas’ (discredited) reform plans.
That’s a pity. There is some useful and potentially brave ideas in here that should be picked up. I agree with the moves to a flatter tax system and restraints on government spending. The water rights trading scheme is a no-brainer. It’s surprising, however, that the Taskforce has ignored the area of taxing property. There is no proposal for a land tax or a capital gains tax.
John Key needs to step back and think about the longer term, or at least past the next election. He doesn’t have to break any promises. He needs to show some leadership. The truly great leaders convince their followers to change direction for the better. He could distinguish himself as a truly great and brave leader by proposing reforms such these for enacting after the 2011 election.
He has the political gifts and the capital to do it. But does he want to take a risk to really reform this economy so our graduates don’t buy one-way tickets to Australia.
Your view? We welcome your comments and insights below.
Here is the powerpoint below of Don Brash’s presentation.
Here is the full Taskforce Report below
Finance Minister Bill English said the report was interesting and raised some interesting ideas, but that the government would remain pragmatic and not break any election promises.
The Government will consider the 2025 Taskforce’s recommendations and make practical decisions about them, Finance Minister Bill English says.
“The Taskforce’s report issued today raises some interesting ideas and challenges, which will hopefully generate constructive debate about options for improving New Zealand’s economic performance.
“Having steered the economy through the recession in better shape than many had predicted, the Government is now focused on getting a step change in New Zealand’s economic performance over the next three to five years.
“We must consider a range of options if we are to get the investment, economic growth and new jobs needed for that to happen.
“Having said that, this Government is pragmatic. And any decisions about key economic policies must meet the tests of fairness and equity.
“Where we specifically campaigned on doing certain things, we’re not going to break our word.”
Mr English notes that the 2025 Taskforce is one of several review groups that have already reported to the Government or will report back in the next month or so. The others cover regulatory responsibility, taxation, infrastructure and capital markets.
“As with the 2025 Taskforce, they have all gone about their work in a transparent way and encouraged public input,” Mr English says. “The Government welcomes their contribution to policy debate.
“We will consider their ideas – and others – over coming months as we work towards making decisions for Budget 2010 and beyond.”
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November 30th, 2009 at 1:46 pm
My prediction is that the media focus will be on all the gnashing of teeth around reducing minimum wage and reinstating youth wage.
Its a shame: We won’t get much objective analysis of any of this in the mainstream media. Guess that’s why I come here…..
November 30th, 2009 at 1:54 pm
Nothing on Land Tax . No addressing of the LAQC system . ………… Some good ideas to discuss . But a mass of ground not covered , at all . We get a greater range of ideas from the team on this blogosphere . Yet the Task-Force are eminent luminaries , the best and brightest…………..Bloody hell !
November 30th, 2009 at 1:54 pm
Perhaps i’ve mistaken the whole point of this exercise, but how does cutting tax & then increasing costs to me by cutting services I might use actually increase my income so that it matches what I might get in Australia?
Don’t I basically just end up pretty much where I was? I know this isn’t the actual document the taskforce has come up with, but it just reads as a wishlist Brash might have written 15 years ago.
November 30th, 2009 at 1:55 pm
I don’t agree with the whole list, but I’ll give it an A- overall for how it could have at least changed the direction the Nanny State is on.
There is much that is laudable in this. And I just wish Brash had kept his private affairs in check and got himself elected two elections ago: NZ would have been a much better place, and in a much better position than at the precipice we’re staring wide-eyed over now. As it stands, just another wasted report by another Nanny State supporting, irresponsible and reckless government.
November 30th, 2009 at 2:06 pm
36. Stop setting up task forces to investigate issues where the government is going to ignore all its recommendations.
November 30th, 2009 at 2:07 pm
Hi Bernard i would like to read your 35 wish list for NZ ,see if you can head off the Brash 35 FINE TUNINGS FOR NZ or add to them for long term results not just a sticking plaster solution.
November 30th, 2009 at 2:08 pm
John Key is a clever chap. I read a column recently about generational changes in approach. Maybe John represents the approach of the next generation in politics. The previous generation were much more confrontational (me too, I’m afraid) – just compare John Minto with John Key.
If I read John Key correctly he is saying radical change produces a backlash so incremental change is preferred. He is not saying he thinks this report is rubbish, just that he will not be suddenly implementing any radical proposals.
He also doesn’t say that he will not be incorporating those changes which he think can be implement without causing uproar. He will no doubt be looking at including a lot of them for the next election, subject to their popularity.
He may be a more subtle and capable politician than we are used too.
November 30th, 2009 at 2:11 pm
page 98
“As already noted, we do not share the popular view that the income tax system treats leveraged purchases of investment rental properties in a way inconsistent with other assets, especially other real assets. Un-leveraged owner-occupied housing can certainly be seen as being treated in a preferred manner (an issue dealt with in the McLeod review of the tax system in 2001). But any bias is not obviously greater in New Zealand than in many other countries.”
November 30th, 2009 at 2:13 pm
It should be a case of Nike – just do it .
But John Key and the Nats , like all pollies these days , have hearts the size of carraway seeds in regard to doing anything that would threaten their chances of re- election.
So I guess we will just flounder along until we finally get a visionary pollie with the cajones to shake what Kiwis are left out of their nannie state mentality.
November 30th, 2009 at 2:16 pm
Perhaps this is a smoke screen to get the leftist media all would up and foaming at the mouth, prior to the release of a more balance recommendation from the Tax Working Group in December.
November 30th, 2009 at 2:17 pm
Roger W : The NZ-Debtanic is about to impact upon the icey burghers of world banking . Got the time for a subtle shift ?
November 30th, 2009 at 2:23 pm
What gaps are we suppose to close? With this prescription – between elites – only.
Where in this planet people are happier – where everything is user paid ?
Where people are healthier – where every doctor’s visit paid ?
What country is better served – where study costs a fortune ?
Where the elite feels the best – where there is big gap -
but between rich and poor – and keep it that way.
That’s why is not mention LAQC, capital gain or land tax.
We are elite; keep the bastards working hard so we can afford another rental.
Let them extend mortgages to 50, 100 years so they can afford another TV……
November 30th, 2009 at 2:24 pm
Well, what nuggets do we have in the middle?
Encourage and establish a commission. Yep, I promise you at least this will happen.
November 30th, 2009 at 2:27 pm
Jimmy: Perhaps i’ve mistaken the whole point of this exercise, but how does cutting tax & then increasing costs to me by cutting services I might use actually increase my income so that it matches what I might get in Australia?
Surprise Jimmy. In Australia you pay less tax and more for services. Strange that everyone is earning more money there, isn’t it?
November 30th, 2009 at 2:37 pm
3 recommendations:
1. Allow Kiwis into the Aussie Super Scheme – trick Aussies into retiring in NZ
2. Send all young people to work in a proper country, then rip them off when their misplaced nationalism brings them home.
3. Build a bridge/tunnel to Aus and accept that by 2025 we will be part of Australia.
What a damnably stupid idea for a taskforce – an open admissiion of failure, and a goal date so remote as to be completely pointless.
November 30th, 2009 at 2:38 pm
Actually, on reflection I think Key & English’s comments boil down to this:
‘We made uninformed promises back before the election. Now we’ve had the issues studied, and we can consider ourselves to be informed. However, its more important to us to keep [some of] our promises than it is to do what is right’.
And that, people, is not leadership.
November 30th, 2009 at 2:38 pm
Just another piece of evidence that Don Brash is a waste of space.
Regrettably DB was a major player in getting NZ into its current plight.
I well remember the differences between RBNZ and RBA relationships with their respective governments in the nineties and comments then about which were better.
It did not take long to find out. Of course even by 2000 our illustrious leaders paid scant attention to the problems.
What hope that this time will be any different?
November 30th, 2009 at 2:38 pm
If something is free or subsidised by a govt that promised the benefit for votes, people will increase their use of the benefit. Make them pay and they use less. Free insulation anyone…money for babies….benefits here and benefits there…This is the point lost on Key. He can yell “NO” from the copper roof of the Beehive and still it will not change the facts. This country is so deep in debt and sinking faster than a lump of lead that even if every one of Brash’s brainwaves were taken up..the sinking will not stop for two decades. That is the extent of the crisis. By the time Noddylanders wake up to having voted themselves into pemanent misery..it will be Sir John Key resident in Hawaii !
November 30th, 2009 at 2:42 pm
Berend de Boer – Earning more money (which is only natural if you’re being taxed less) doesn’t necessarily equate to more disposable income – especially if you’re having to pay more for services.
November 30th, 2009 at 2:45 pm
The Bee-Hive roof is copper , Wally ? ……….ummmmmmm , can I borrow your ladder ? Got some , arrrrhhhhh , loose nails that need tapping down …….Yeah , that’s it !
November 30th, 2009 at 2:51 pm
30. remove all tariffs? Go on…give them away before we can use them as a tool in negotiations in FTA’s. Even if many other countries have larger tariffs against us!
November 30th, 2009 at 3:05 pm
Sure is Roger…the last silver to be sold ! Not the only funny roof in wgtn either…there’s one with a heap of huge chimneys that never smoke…figure that one out…
November 30th, 2009 at 3:12 pm
36. Abolish the taskforce immediately – do not waste any more money on it as John Key has no intention of implementing any of it!
November 30th, 2009 at 3:17 pm
the ACT/Rogernomics/Brash wishlist is based on the idea that everything will be okay if the old fogies can just get the Gen X, Y and Z’ers out of bed and off to work in the morning. If they sell all of our assets off, including our water supplies, then they might just afford to pay off the baby boomers’ debt of the past 40 years. They don’t mention the ETS because they probably also believe that it’s fine to charge future generations $90k a family to pay for farmers and businesses to pollute the country because they’re all old school like Roger and Don. They’ve decided that it will be better to cut the minimum wage to under-18 year-olds quickly just-in-case they expect a fair deal later on…
November 30th, 2009 at 3:21 pm
The main trend appear to be reducing cost to the government.
November 30th, 2009 at 3:26 pm
How about becoming a state of Australia and problem is solved. Half the things mentioned here will cost me as an individual more. Might as well packing my bag and head across the ditch
November 30th, 2009 at 3:42 pm
I don’t agree with their health reforms. Often your health is beyond your control, so why should people who earn a good wage be penalised because they earn a good wage and save, and pay more tax, than someone who is on a low wage. In essence that would require those on a higher wage, to get health insurance, which really means that they are paying twice for their health. It is all smoke and mirrors, because even though you may be earning more, your costs will also go up, so the net amount you have in your pocket at the end of the day will be the same or less depending on your circumstances.
You then get those people who structure their earnings and assets, so on paper, they earn a very small wage. eg. Farmers do this. Then when they come to selling their properties, they make a tax free profit on the capital gains on their property. Property is something that is totally missing, yet more people have money invested in property,then any other investment, and get tax free property gains. Property is one of the biggest problems in NZ, and I can’t believe they have missed it. Perhaps too many people on that board have too much of their money invested in property. I presume the reason it has been missed, is due to political pressures.
November 30th, 2009 at 3:45 pm
Wally Says:
November 30th, 2009 at 3:05 pm
Sure is Roger…the last silver to be sold ! Not the only funny roof in wgtn either…there’s one with a heap of huge chimneys that never smoke…figure that one out…
You mean the old government building with the polystyrene chimneys that are purely there for decoration, that roof is just steel. Perhaps they should remove the copper on the beehive and sell it, and replace it with coloursteel.
November 30th, 2009 at 3:52 pm
Rob : schtum on the ” remove copper on the bee-hive and sell it “, dude . Lemme assess the state of the roof first ……….OK ! ……….( Wally , I’ll grab the ladder , you fire up the truck , the buggers are onto us )
November 30th, 2009 at 3:56 pm
5. Ha ha classic, they missed the “and may I recommend this one”
November 30th, 2009 at 3:57 pm
Bernard – don’t agree that it is surprising that they don’t proposed CGT or land tax. With a libertarian agenda they would not be interested in introducing another tax.
November 30th, 2009 at 4:01 pm
Bernard : jill ( 2:07 p.m. ) is correct , that you ( and us , the bloggers and bloggeresses ) could draw up a 35 point plan better than the TaskForce did . Shall we get cracking on it ?
November 30th, 2009 at 4:04 pm
Matt in Auck this list is a great start from the dreadful position we’re at now, but it is far from Libertarian.
And regarding the CGT, I’ve posted on another thread on that this morning, I hope you and Bernard have a good look at the linked report below – below I’ve copied the salient part of my earlier post:
‘Hat tip NotPC’s ( Peter_Cresswell ) twitter feed, for all the capital gains tax enthusiasts, you should read Stephen Kirchner’s report on the failing Australian Capital gains tax titled ‘Reforming Capital Gains Tax: The Myths and Reality behind Australia’s Most Misunderstood Tax’:
http://www.cis.org.au/policy_monographs/pm103.pdf
If you think this further distortion of our economy so good, then look at these points from the executive summary of this report:
and:
November 30th, 2009 at 4:07 pm
Kiwifruit reform, now that will really close the gap with Australia.
Median household income in Australia was A$66,820 in 2007; in New Zealand, NZ$62,556. (http://en.wikipedia.org/wiki/Median_household_income_in_Australia_and_New_Zealand)
How therefore do Brash & co come up with an income gap of $64,000 for a family of four? Are Australian households 1/4 the size of ours?
November 30th, 2009 at 4:09 pm
Aussie has 5 x as many people as NZ, no way we are going to close the gaps. Report should read: “Fixing up Labour’s mess”
November 30th, 2009 at 4:16 pm
Robert Says:
November 30th, 2009 at 4:07 pm
Kiwifruit reform, now that will really close the gap with Australia.
Median household income in Australia was A$66,820 in 2007; in New Zealand, NZ$62,556. (http://en.wikipedia.org/wiki/Median_household_income_in_Australia_and_New_Zealand)
How therefore do Brash & co come up with an income gap of $64,000 for a family of four? Are Australian households 1/4 the size of ours?
Wouldn’t that gap be by 2025, and not in 2009.
A family of 4, would be a ‘nuclear’ family, and how many of those are there in NZ these days, and I assume the percentage will be even less by 2025.
November 30th, 2009 at 4:17 pm
Roger, Jill,
Well surely we would first have to set up an expert taskforce to review the taskforce’s recommendations. Goes without saying really.
November 30th, 2009 at 4:19 pm
1. Core government spending should be cut to 29% of GDP by 2012/13, which is the same as it was in 2004/05.
So we cut our health budget!!!!!!
8. Take early steps to lower the prospective costs of New Zealand Superannuation as a share of GDP. This could include progressively increasing the retirement age in line with life expectation and indexing NZ Super to CPI rather than after tax wages.
We cut our health budget for the elderly!!!!
6. More rigorous cost benefit analysis should be used for new government spending and for periodic reviews of existing spending.
We look into what the elderly contribute!!!!!!
7. Ambitious welfare reforms should reduce the ‘very large’ number of working age people on benefits.
We tell the elderly that they are still of working age and that they do not get any benefits!!!!!
Looks like a good message to me. Now where are those built in babysitters, now they live under my roof they can play by my rules…. lol
Wouldn’t that be ironic.
November 30th, 2009 at 4:25 pm
Alex : You have a team of experts , the length and breadth of this fair country , girt by sea . And some off-shore , to boot ! Gie us the challenge , bonny lad , and we’ll lay open a master-plan afore ya .
November 30th, 2009 at 4:32 pm
Are we trying to close the gap with Australia or with Monaco?
How many of those recommendations do the land of milk and honey follow? 2 out of 35?
How about we have more sensible, consistant and centrist policy – instead of lurching left and right each election cycle. I’m sick of it.
The leftisit over-correction of WFF and interest free student loans is going to be ‘corrected’ by another rightist over-correction of a replay of Rogernomics and Ruthenasia.
November 30th, 2009 at 4:36 pm
I think we should know how many on this taskforce own Turners & Growers shares? God help the kiwifruit growers. They’ve already wrecked ENZA.
November 30th, 2009 at 4:48 pm
To quote the great George S Carson…” the wealth of a Nation is the sum of the wealth on all of the Nations individuals”… enabling increased wealth of a few by externalising costs to the many, does not make NZ wealthier.
The 2025 taskforce needs to consider both sides of the balance sheet….see this Pearla from Russell Norman… >http://www.greens.org.nz/press-releases/inequality-won%E2%80%99t-lead-economic-prosperity
All of this comparing ourselves to Australia is like… peeking across the urinal and comparing yourself to Johnny Holmes… We need get over our insecurities and be content with what we have… NZ is not Australiia… Viva la difference!
November 30th, 2009 at 4:49 pm
Alex:
“How about we have more sensible, consistent and centrist policy – instead of lurching left and right each election cycle. I’m sick of it.”
Agreed – A population of 4 million – really just a city council – you’d think it would be easy.
Just treat it all as a number of suburbs.
Is Ken Livingstone doing anything these days?
Sometimes feels like NZ political class uses NZ as apprenticeship before going off to a proper job somewhere. Unfortunately many of them don’t qualify as apprentices though.
November 30th, 2009 at 5:01 pm
How much could the health budget be cut if diet/exercise issues could be addressed along with drug intake, both legal (alchohol, tobacco, over presription of all manner of medicines) and illegal?
November 30th, 2009 at 5:02 pm
Hot off the NZMEA press….
“Good advice? Perhaps, but much more is needed.”
The New Zealand Manufacturers and Exporters Association (NZMEA) is calling for the Government to seriously consider the recommendations from the 2025 Productivity Taskforce. The Taskforce has suggested some widespread reform to turn the economy around, but comment coming from the Government indicates that this advice is largely being ignored. This attitude must change if the goal of matching Australian incomes is to be a serious one.
NZMEA Chief Executive John Walley says, “The Productivity Taskforce has identified a number of inhibitors to growth such as inefficient and excessive Government spending, which are self evident, and others which are more contestable. The key message is that the Government must listen, learn and act – in that order, rather than blocking proposals even as they are leaked prior to formal announcement.”
“Proposals such as lowering tax rates, reforming welfare packages that give the wrong incentives and further simplifying compliance costs for firms will all help to turn the economy around. The Taskforce fell short of recognising the need for a Capital Gains Tax and monetary policy reform which are key factors in shifting investment incentives to the real economy, a vital part of increasing economic growth.”
“John Key has talked about the incremental changes introduced in Australia that have not been matched in New Zealand. These do not just happen by themselves; there needs to be a constant focus on changes that can improve the policy framework and leadership is required in this debate,” says Mr. Walley.
“There has been a lot of talk from the Government on the imbalances in the economy. With this report released today and the Tax Working Group’s conference tomorrow there are plenty of options available; now the challenge is to deliver on all the talk.”
IMHO, gov. will just simply have yet more good ideas and recommendations to ignore tomorrow.
Bernard – “It’s surprising, however, that the Taskforce has ignored the area of taxing property.” No it’s not:
http://www.interest.co.nz/ratesblog/index.php/2009/08/05/have-your-say-housing-minister-others-benefit-from-rents-paid-by-government/
November 30th, 2009 at 5:09 pm
Re: the figure of $64,000 used in the title of the report, Rob said “Wouldn’t that gap be by 2025, and not in 2009″ – the executive summary opens
“Over the last four decades, living standards in New Zealand have fallen far behind those in Australia. The gap is large. Measured in terms of real Gross Domestic Product (GDP), average Australian incomes are around 35 percent higher than those in New Zealand. For a family of four, that gap is worth around $64,000 a year.”
so they seem to be referring to the present day. I think that is as misleading as the rest of the statistics used in the summary. In each successive graph the baseline for comparison is shifted so as to influence the desired conclusion.
November 30th, 2009 at 5:17 pm
Just skimmed the full report and see that the evidence presented for the recommendations include a letter to the editor of the Listener and an article from the North Shore Advertiser.
!!
November 30th, 2009 at 5:34 pm
Mouse,
Agree we should not be following Aus. Aus has a worse house price to income ratio than NZ. Whats the point of being wealthier if it all gets sucked up my mortgage payments. According to the RBA deputy governer Ric Battelino, Aus prices are justified because Aussies spend less than the US on other things lke cars and stuff to put in your house. So reading between the lines Aussies are poorer in real terms because they cannot afford to buy as much after mortage paymnets?????? This is where I depair of economic measures and our policy makers. Apparently the US eceonomy is a whole lot worse than NZ/AUS, yet a young family would have a far better quality of life there. Yes, unemployment is higher, but not that much higher and these things tend to turn themselves around (unlike debt, that hangs around for a good 30 years …. or 10 years if you are lucky enough to live in America).
In terms of taxation, Australia is the LAST place we should be following. Hmmm, maybe we should also adopt their first home owners grants. That might keep bankers and REAs happy.
November 30th, 2009 at 5:49 pm
I can’t believe that the bloggers on here still mix up CGT and the house price bubble!!
Lack of a CGT may well influence speculation in housing in NZ for a couple of decades or something but ultimately the price of housing is a supply demand problem. Having CGT is a way to get an equitable taxation system. There was a compelling story from the American advisor to the tax taskforce about whay they do it and how important it is to their system.
I’ve asked over and over on these blogs, what is the political rsik of having CGT. The last time I asked I was reminded of the farming vote that wouldn’t like it because the poor sods are down to needing it because they can’t make any money otherwise. That’s not enough reason. They don’t have enough votes. There’s more to it. Has to be. You can’t argue against it in terms of being equitable, and arguments about implementation are just silly. All implementation of taxes is hard.
Anyone else got any real reason why John and Bill don’t want one? I don’t think it’s as simple as them just having to personally pay tax on theor own housing investments. Really – what is behind their reticence?
November 30th, 2009 at 5:59 pm
No, no, no jimmy(the other one), you must have got it wrong!!! Auz can’t have a worse house price to income ration than ours, because they have CGT!!
You should have realised from the collective wisdom above (excluding Brian W), that CGT is the absolute solution to our house price problem, and all our other problems. All we have to do is have a CGT and all our economy inefficency problems will be solved in one go! (apparently)
Brian W, you don’t mean to say that the Don Brash report might be actually independent, well-thought-out advice?! Surely not, no-one else thinks that!!
(Frustration drives me to sarcasm.)
November 30th, 2009 at 6:26 pm
Rob wins the gummy bear. The whitest cleanest ‘chimneys’ in the land. You’re own your own Roger. I have a team of blokes digging my copper out of Laos. Try searching out some of those early telegraph cables on the seabed. Must be a the odd one just waiting to be pulled ashore. Looks like the aussie market has shrugged off the Dubais and got on with it. A 2.83% rise for the day.
November 30th, 2009 at 6:57 pm
Tum te Tum,
“Auz can’t have a worse house price to income ration than ours, because they have CGT!!”
not so fast. CGT was halved under Howard, so like NZ assets enjoy a tax advantage relative to savings. The Henry report cites this as a factor feeding the bubble.
Aus also has other policies adding to the bubble that we do not have, most notably the FHOGs which depending on circumstances can be 30,000 + when including state and federal grants. Maybe these outweigh the full/half CGT differences.
November 30th, 2009 at 7:06 pm
@Comment 2.16pm: Very likely; nothing like getting the rabble all fired up, then when all you want to do is privatise ACC or something similar it’s a lot easier to achieve if they’re expecting worse…..
November 30th, 2009 at 7:23 pm
Brian W – do the sums:
http://www.interest.co.nz/ratesblog/index.php/2009/11/26/have-your-say-lindsay-tisch-claimed-govt-rent-allowance-for-living-in-his-own-rental/#comment-49493
Plus, I do think Bernard is onto it, from that thread:
“My view
No wonder National (or Labour for that matter) are so reluctant to change the rules around property investment. It seems many MPs and ministers know exactly how to extract the best out of both the taxpayer and the tax system.
The hypocrisy is appalling. On the one hand we have the government saying the economy is unbalanced and New Zealanders have over invested in property and under invested in the productive sector. On the other hand they are personally investing in property and using the taxpayer to reduce their risks and generate tax-free capital gains.
We reported in August last year about how over half of MPs in parliament before the election use family and other trusts. Nine MPs declared ownership in rental properties, although many of the trusts will also own properties which do not need to be declared under the current rules. Labour is not much better. When I asked Labour MPs at the banking inquiry how many had LAQCs, at least a third put up their hands.
This is symptomatic of a fundamental problem. Those people running the country have become personally rich from the doubling of property prices between 2002 and 2007. Yet that underlying shift in the economy is handicapping New Zealand’s ability to grow faster, to raise real incomes and to keep Generations X and Y from buying one way tickets to somewhere else with higher incomes and affordable property.
This tendency of the baby boomers (Lindsay Tisch graduated from Lincoln University in 1974) to protect their capital gains is coming at a cost to them and New Zealand. They are having to watch their grand kids grow up overseas.”
November 30th, 2009 at 7:31 pm
The beat and fairest way to close the gap between NZ and Ozz is to avoid the following from happening.
The Control freaks (Govt, Banks and other money lenders) have taken advantage of Bernard’s persistence in pushing for land tax over CGT that they are now signalling thro the media that the changes to NZ tax system will pretty much be,
1 increase GST
2 intro property tax
3 reduce top tax to 30%.
This will mean that the average person will pay a lot more to live. While those who live a life a kin to a money trader will be able to carry on there way of obsession with money and getting one over every else.
The fact that the Govt will end up taxing new zealanders income, saving, spending, local body rates and now their home, makes this country pretty queer.
The biggest problem for NZ wether we are in a recession or a boom is the amount of borrowing and lack of saving. I’m amazed that so many intelligent people can’t identify this. We need to have tax-free income from saving for all individuals. This would encourage people to save which would reduce the inflation rate, lower interest rate for domestic burrowers and help to hold down the exchange rate of the New Zealand dollar.
But the money lenders would not be happy, unfortunately a certain group including the Government (GST) Banks and others is hell bent on making New Zealand a low income, high cost country. What the control freaks want is for Kiwi’s not to be citizens of new zealand (there are plenty of poms, boars, yanks, germans, canadians, irish etc) but to be consumers.
November 30th, 2009 at 7:37 pm
It’s so simple. Good cop (Jon), bad cop (Don).
The answers will be mainstream. An average cops answer.
They have to make the tough calls but it’s imperative that they are helping us for more than just 3 years.
Politically, this is just part of genius move by Key.
November 30th, 2009 at 8:30 pm
Just what is the preoccupation with closing the gap with Australia.
Is it pure sibling rivalry or is there actually a point in setting that as a goal?
Why not take a better performing country with a comparable economic structure as a benchmark?
Or why not simply listen to Bernard and Rod Oram and define where New Zealand NEEDS to be in terms of productivity, domestic investment et al and work towards that goal?
November 30th, 2009 at 9:02 pm
last weeks auction results in aus–melborne+ sydney {mexicans] running their own show
http://www.realestate.com.au/cgi-bin/rsearch?a=ars
November 30th, 2009 at 9:22 pm
Yeah!
Raise the incomes and spend it all and then some on the services you now get too cheaply.
There must be logic there somewhere.
I have family in Sydney.
Finding a good school is impossible unless you go private.
Having a baby costs thousands.
Health insurance is exorbitant.
Car insurance treble that for Auckland.
Must be time to get my nose pierced so DB can attach a ring and chain to lead me into nirvana Aissie style.
November 30th, 2009 at 9:29 pm
@Jimmy, exactly….this isnt a sound document its an ACT wish list and highly biased…and it will go mostly where it belongs, in the bin….
Im all for looking at ideas to improve NZ, slashing taxes for the well off isnt the way….ie lets see something sound with solid reasoning behind it and not faulty right wing idealolgy that has already been shown as berefit of any positive outcomes….The USA spent 8 years under Bush cutting taxes and it did no good…
I think trying to catch OZ is a joke, by all means improve NZ…but lets examine where OZ is, it hasnt done these things….in fact it avoided roger Dodgy Douglas’s first round and is better off….that should tell the voter heaps.
regards
November 30th, 2009 at 9:39 pm
@rob: agree…..
Oh ans property is central to a Libertarian ideal, hence no mention of it as that would be counter-productive to their fundimentalist outlook…..so we shouldnt be surprised.
regards
November 30th, 2009 at 9:52 pm
Wally : My team are digging copper out of Canada . Every 6 months or so , the pile they’re working on grows bigger , no peak-copper just yet . Gets a tadge nippy in winter , might send them some ugg boots . Alot of it aboot , tonight !
November 30th, 2009 at 9:53 pm
Noticed there was no solution on how to deal with that state owned cash bleeder called ACC.
November 30th, 2009 at 10:03 pm
Good point , Mike M , that went unmentioned . A few other things too . But ACC is a biggie , and high profile . Plenty of meat on that bone , to carve off . As with WFF , and interest free loans , some massive savings could be made easily . Why are we borrowing , to prop up Labour’s 2005 election bribes , which enabled them to beat Don Brash ? Why are National supporting Labour’s bribes to the electorate ?
November 30th, 2009 at 10:49 pm
A LOT of these recommendations look as though the Taskforce was only thinking 15 months ahead, not 15 years.
For instance, turn market-interest back on student loans now; and the graduate brain drain to Aussie will kick into high gear, not reverse.
November 30th, 2009 at 11:03 pm
Have a look at Australia. What’s to envy? They’re in the shit, big-time. Doesn’t matter how cashed-up you are, if you can’t get water as you sit waiting for the next firestorm.
They’re a mine – and no more. Where my better half comes from (Q’land) there is a $5,000 instant fine for having your garden hose attatched – not running, just attatched – to your outside tap. 100.000 people and they’re down under 7% in the contributing dams.
Why want to be like them in 2025? I wouldn’t change places with them for all the cane toads in Mackay.
As for the Brash ‘report’, I could have dashed it off anytime since 1984, in 5 minutes flat. These folk don’t understand failure of their doctrine, they just call for more. Pedal to the metal, looking in the rearview mirror.
Resource depletion of a cranial kind, I call it. This Govt is looking more and more like the last roar of an obsolete era, rather than the challenge of new pretenders.
I remain, yours truly, cynical.
November 30th, 2009 at 11:03 pm
A lot of cost cutting in regards to government will have to come in, regardless of this report.
Tax cuts seem a bit unrealistic for some time to me though.
No government came keep borrowing a billion dollars a month for very long, especially not one in a country as small as NZ.
November 30th, 2009 at 11:39 pm
Phil, I think it will more likley be tax hikes along with most of the good Doctor’s other remedies. Iceland and Latvia provide the clues;
http://www.huffingtonpost.com/nathan-lewis/the-imf-destroys-iceland_b_276193.html
I just wonder whether Australia will legislate to prevent the free flow of NZers across the ditch? I suspect in the lead up to NZ’s take over by the IMF, new rules for immigration across the Tas will require Kiwis (as a minimum) to first have a firm job offer – and they could also require a dollup of capital as well – after all, they’ll wanna sell our sons and daughters one of their over-sized, over-priced ‘fringe’ houses.
Forget the grumpy grandparent argument, I’m going to be speaking to the kids tomorrow and suggest they seriously consider the crossing before the door gets shut.
We olds can hold onto the batch here in the event the tap runs dry over there.
November 30th, 2009 at 11:52 pm
Les I hope NZMEA are not just looking for an “anything, as long as we are inside the tent policies” because those 35 recomendations will deliver the slaveminded of this nation the elitist theifdom they seek where the commoners work for low wages servicing the production and leisure activities of the mega wealthy. If folks cant see this is the blueprint for their investment bank money laundering tax haven and they are using fear based on statistics with flawed methodologies that they know are not good for directly measuring prosperity between nations, for instance the report states this:
“The 35 percent gap refers to GDP per capita, which measures the value of what each
economy produces within its geographical borders per capita. This does not directly
measure income, but is the most commonly used economic indicator to demonstrate
relative economic performance.”
Don Brash admitted to me in 2005 that GDP is a poor gauge of prosperity between nations:
OFFICE OF THE LEADER OF THE OPPOSITION
13 September 2005
Mr ID Parker
Dear Mr Parker
I acknowledge receiving your written questions when I was in Taranaki last week.
Your first question was about how I justified using GDP per capita “as an ethical means of directly comparing the prosperity of nations such as New Zealand against the likes of Australia and the USA when they have many, many more times the natural resources to create their internal money flow”.
GDP per capita is not a completely reliable measure of wellbeing, as has been acknowledged by many economists over the decades. But it is the best approximation we have to date on comparative living standards.
Yes, some countries have more natural resources than New Zealand does, although most countries have a lot fewer natural resources than we do. In any event, natural resources are in no way a guarantee of high living standards, as many resource rich countries have shown. Moreover, some of the most affluent countries have very few natural resources, with both Singapore and Japan being good examples.
You also asked me whether I believed that there is a hidden economy worth between “$11-$28 billion” in New Zealand, and asked further whether this was “anything other than a direct transfer of wealth to the initiated few”.
I have no recent estimate of the size of the hidden economy in New Zealand, although the numbers you quote could well be about right. No body knows, of course, with any precision.
But when you suggest that this can be nothing but a “direct transfer of wealth to an initiated few”, you seem to imply that the hidden economy is mainly a benefit to the very affluent, who have learn’t how to avoid or evade taxes. Actually, most estimates of the hidden economy assume that it is mainly made up of quite a large number of small businesses which have, to date, been able to completely avoid detection by the Inland Revenue Department or perhaps been able to significantly understate the size of their activities. Most of the very affluent people in our community are well known to the Inland Revenue Department, and would therefore find it quite a lot more difficult to avoid or evade taxation.
With best wishes
Yours sincerely
Don Brash
Leader of the Opposition
Leader of the National Party
——————————
The median or average wage figures in Aus are distorted because there financial sector monsters their realsector to an extent even greater than ours, mainly due to the in excess of $50 million per annum of the common folks wages that are forced fed into it.
They may have great mineral deposits, but much of the profits gained end up in the hands of a mega wealthy few. The Australian markets are rife with insider trading, thus the superanuation funds are often left hanging onto gearboxes full of banana skins. The disproportionate earnings of the financial sector are then thrown into the pool that is then devided by the work force to come up with an “average” or “median” wage which is misleadingly inflated. Same deception is used in every nation that prostrates themselves to current “generally accepted worldwide best practice”.
I lived in Aus for a ten year stint upto 2004, and I remember it much more increasingly becoming a nation of transnational corporations getting hold of your necessities of live and increasing what you pay for them on a regular basis:
http://www.stuff.co.nz/life-style/499476
Australia has perhaps the most cunning system of financial servitude ever yet devised, but pin this to your fridge, by the time the 2011 election has come around John Key and his band of merry asset salesmen will have used the excuse of the continuing global crisis and the debt repayment crisis NZ will face due to its massive bond issuance program, to say “we now sadly have no choice but to sell assets to alleviate debt or face the consequences of reneging”
This will apparently be a surprise to Don Brash as in a 1996 letter to Mr David Coote he seems to be saying that issuing bonds is not borrowing, when even Michael Cullen explained to me that Bonds were “certificates of indebtedness,” he also appears to imply that govt bonds are immediately issued on the open market, when infact I can supply ample proof that a select closed network of private primary bond dealers have the exclusive rights to monetising government debt(bonds) before they decide if they do or don’t on sell them on the secondary bond market:
RESERVE BANK OF NEW ZEALAND
6 December 1996
Mr David Coote
Dear Mr Coote
I do not normally reply to letters of thanks(!), but felt I should just make one or two additional observations in reply to your letter.
Your penultimate paragraph implies that New Zealand is still borrowing “from institutions that don’t hold the best interests of the people of New Zealand as their primary concern”. I think it is important to recognise that the New Zealand Government has not been a net borrower overseas for a number of years now and on present projections looks very unlikely to be a net borrower overseas in the future. To be sure, overseas institutions which, by the nature of things, have no particular interest in New Zealand people, do buy New Zealand Government Bonds on the open market, but this certainly gives them no direct influence over policy. To be sure there is some indirect influence, through the fact that any buyer of our bonds is interested in whether or not the government intends to run an inflationary policy which might erode the value of their bonds, but since high inflation does even more damage to New Zealanders that it does the bond holders, the interest of those bond holders coincides quite closely with the interests of New Zealanders.”
With best wishes
Yours sincerely
Don Brash
——————–
Well folks was Brash a good man looking to first among equals, or a Fool or a Liar?
The nation already voted to dump him once, what the hell is he doing here anyway.
Public Credit is the only way to stop these Muppets(Mometarist Puppets)
December 1st, 2009 at 12:01 am
Sorry, getting tired, in above it should have read in excess of $50 billion(not million) of common folks wages force fed into the stockmarket casino.
December 1st, 2009 at 12:06 am
36 invade Poland
37 inforce ‘work camps” for public good
38 Gas all “undesirables” (Beneficiaries)
might be just a little to close to JKs heart
December 1st, 2009 at 3:26 am
Someone give Don Brash a Knighthood now.
He truely is a National treasure.
December 1st, 2009 at 4:25 am
Heard on both 3ZB & RadioLive last night , several callers , scathing of Don Brash , and berating him for having learnt nothing since he was prime minister ! Either I went into a time warp & parallel universe , or there are some people out there even more deranged than me………..Holy poop , Bat-Man , now that is scarey .
December 1st, 2009 at 7:21 am
If social service spending was cut as proposed, what would happen to the crime rate as the number of truly desperate people would increase. People who have no options are going to do some terrible things.
Secondly how come the the the western European countries with high productivity, low crime and high living standards such as Germany, France, Sweden, Denmark, Norway have a high tax, high social service model?
December 1st, 2009 at 7:22 am
This link is meant to be at the bottom, but this stupid editor doesn’t work as everyone knows-
http://www.interest.co.nz/ratesblog/index.php/2009/11/20/special-report-why-nz-needs-a-bipartisan-grand-coalition-for-economic-reform-not-tweaks-to-the-rbnz-act/ -
“The Taskforce, chaired by Dr Don Brash, has been appointed for an initial term of three years. Other Taskforce members are Dr Bryce Wilkinson, Judith Sloan, Jeremy Moon, and David Caygill. All members have been appointed until 30 June 2012.”
David Gaygill in an interveiw in the Dominion when appointed electricity commissioner admitted he had not a clue what the guts of Rogernomics was all about, he just repeated what the treasury advisors told him to say, I suspect it will be the case again and his inclusion is one of ceremonial token gesture to give it a bipartisan look.
The other members I have already profiled:
http://www.interest.co.nz/ratesblog/index.php/2009/08/19/2025-productivity-taskforce-includes-former-labour-finance-minister-caygill/#comment-33817
Want the real story of the conditions of workers in the Australian realsector under the likes of Judith Sloan:
http://www.multinationalmonitor.org/mm2006/072006/matthews.html
Read this thread getting to the nuts and bolts of Public Credit, it is the only way to stop the cancerous tumor that is being left to leach into the body of NZ and make us ill. The elitist are like vampire bats, they inject you with an anesthetic in order that you remain unaware that they are sucking your blood and returning you to anemic class system conditions of slavery by cunning.
December 1st, 2009 at 7:25 am
Remove all tariffs
Review and liberalise foreign investment restrictions
Establish a system of tradable water rights.
Government should encourage the transformation of Fonterra into a conventional company with fully-traded outside capital
None of the above have much to do with closing the income gap. ( in my opinion)
I feel there is nothing fresh or new in that report…. It feels like it is written by economists…. and has an ideological theme that is old and a bit tired.
The result is that , even thou there are some good ideas, overall the report is unpalatable and most people will be dismissive of it.
What on earth does turning Fonterra from a cooperative into a public company have to do with closing an income gap.
Since the days of Rogernomics, ruths “mother of all budgets”, Jim Bolgers dreregulation of the labour market, Helens disregard for the productive sector…etc.. so much has happened… there are many lessons to be learned.
I have not read the full report.. only the 35 points listed above.
Did the report talk about… exchange rate volatility… current account deficits… impact of globalization… effects of the carry trade….etc ..etc… innovation…. the ETS..
I can understand why the GOVT has reacted so negatively to it.
December 1st, 2009 at 7:44 am
“Bill English.. says bringing the two countries to economic parity by 2025 is an “aspirational” rather than realistic goal”(herald)…it was in other words a bare arsed load of BS designed by the spin doctors to suck in the peasants for the better part of a year while stuff all would be done. He has yet to admit that the ‘6 part strategy’ of which we have heard so much…is in reality “aspirational” and not something to be taken seriously. And so we plod ever closer to the final scene in the last act of this drama part comedy..when all will be as it was always going to be before these fools took the stage.
December 1st, 2009 at 8:02 am
In the 1970s NZ had 28 people working to support one person on government assistance. Today it is nearly one to one. What a complely impossible ratio to turn around.
While these 1.2 million contribute nothing to the tax take they can still vote. That is the real problem for national when considering the dramatic changes that are necessary to turn NZ around. Their re-election needs will surpass NZ needs.
Don Brash has given the recipe for recovery and we will ignore it at our continuing peril.
December 1st, 2009 at 8:08 am
And a day after the re-release of a blast from the past, Steve Keen has another whack at neoclassical economists
http://www.debtdeflation.com/blogs/2009/12/01/debtwatch-no-41-december-2009-4-years-of-calling-the-gfc/
December 1st, 2009 at 8:12 am
35. Disband the most productive fruit crowing co-op in nz. ? ya gotta laugh, at Tony Gibbs disingenuous whining that zespri is successfull in getting the best price for its members.
Much better to compete against each other and drive the price down!
ideological crap.
December 1st, 2009 at 8:20 am
Ed, showing why NZ is a doomed country, says:
If social service spending was cut as proposed, what would happen to the crime rate as the number of truly desperate people would increase. People who have no options are going to do some terrible things.
So we set up an extortionate Nanny Welfare State that produces the underclass it was supposed to be lifting up, then have to succumb to the blackmail argument such as stated here – keep this group in the comfort to which it has become accustomed otherwise they will take from the productive what they have left by force. No, we should have no part of this, and more importantly, we should stop creating the violent underclass before it is too late. We have to reduce the size of Nanny State.
Secondly how come the the the western European countries with high productivity, low crime and high living standards such as Germany, France, Sweden, Denmark, Norway have a high tax, high social service model?
Glad you brought this up. As a laissez faire advocate the myth of Scandinavian “socialism” was always an anomaly for me, until I read this link, and then started researching the articles from it:
http://mises.org/Community/forums/t/5616.aspx
Quote:
Note that last sentence – again, In many ways, Scandinavian countries are more “laissez faire” than the United States.
Many of the links from this linked post are worth reading.
December 1st, 2009 at 8:26 am
Hey Gibber…where do you plan to be when the deleveraging depression gets up a head of steam?
December 1st, 2009 at 8:40 am
Gibber – great article – the conclusion is oh so true. I love the reference to today’s “Zombie Capitalism”.
December 1st, 2009 at 9:03 am
Hi Mark Hubbard.
Who says I’m coming from left?
Totally agree with your reference saying Denmark and Sweden are not totally socialist, but are a mix. I agree with your reference that they have a formula that is working better than ours; thats why I think we should emulate them.
Totally agree with you that we should aspire to lift the underclass to fully contributing members of sociality. I just don’t think by cutting them off you will achieve this. Compare the cost of keeping one person in prison with the number of people you could train for the same money.
December 1st, 2009 at 9:10 am
Here is an example of an idea that questions modern economic logic.. and “goes against the grain”….
Maori lease large amounts of fishing quota to the Japanese…
What would be the “wealth benefit” if they took a “small is beautiful ” approach.
What would be the economic benefit of the velocity of money flowing thru a local economy if , instead, 100 families had their own fishing boats , fishing the quota…??
Instead of leasing some quota to the Japanese… what would happen if they gave 100 families the quota.
Helped them buy small fishing boats…
As an economic, social and wealth creating experiment….. why don’t they go to a coastal area and try it…..see if that local village can thrive and grow.
The economic benefit of the flow of money thru a local economy might surprise even Don Brash.
The fish would still end up being exported, but because most of the economic activity is happening locally the “velocity of money” as it flows thru the local economy would be very wealth enhancing.
The trouble is … modern economics does not measure the wealth cost of “economies of scale.”.. It only, mostly, sees the enhancement of Corporate profits and productivity gains as the sole measure of the value of economies of scale.
In the farming sector , the “corporatisation” of farming is a good example. What were once 4or5 farms supporting 4 or 5 families is know 1 big farm .
Economics measure this as a BIG economic gain because the one big farm is more profitable..
But is that really the case..??? is there actually an economic cost as well ???
What happens when a community loses the “velocity of money ” flowing thru its local economy…
Not just the 4-5 farming familise are affected….. the local mechanic, the corner store…etc may all be impacted…. BUT economics is completey blind to all this.
I believe that it is thru questioning economic principles, within the context of common sense and a frame work of what I call the “everyday economy”, that we can come up with solutions that are practical , and empowering to ordinary people, lift our standard of living and quality of life and also that are aligned to economic principles that have not been distorted by special interest groups.
Instead of something like this… Don wants lower tariffs and more liberal foriegn direct investment…
To me this just seems like … more of the same stuff that has got us to where we are.
December 1st, 2009 at 9:18 am
Ed…at what point would you say socialism fails?
December 1st, 2009 at 9:19 am
That brings up a valid point, is the efficiency of one big entity better or worse for the economy than multiple less efficient entities eg your 4 farms into 1.
Singapore also immediately springs to mind- huge labour resources doing inefficient jobs that may be better done by machinery, but keeps them employed and the economy doing well.
December 1st, 2009 at 9:25 am
This generation, having bought into the entitlement and greed cycle, has bankrupted society and jeopardised any hope for future generations. What moral right have we to shackle them with a debt that incurs them to a lifetime of servitude to shadow governments that sit in offshore, panelled offices?
The most blasphemous aspect of Brash’s Manifesto is his take on education. Privatising public schools and Universities only ensures that knowledge and resources are moved beyond the grasp of all but the rich. It should be the absolute right of every New Zealand child to learn as much as they want to – for as long as they want to. We need to invest in people and create a culture of learning in this country.
Instead we extend “no-interest loans” that guarantee a six-figure debt for those in graduate programmes. No wonder their first thought upon graduation is to decide which country they will move to.
December 1st, 2009 at 9:40 am
100 people. 99 earn $30k pa, 1 earns $1b pa. Average per capita income $10,029,700
100 people. 50 earn $100k pa, 50 earn $30k pa. Average per capita income $65,000
Simplified yes but when you look at the US and see so many super wealthy but 50 million plus below the poverty line, per capita figures are meaningless. There is not I suggest a huge gap between most Aussies and kiwis, just more extreme wealth based around their financial and mining sectors.
December 1st, 2009 at 9:53 am
Doug – you’ve nailed it. We are now under a sinking lid of opportunity (to get wealth from, at the end of the day, physical resources). Australia has more of those, so will get ‘wealthy’ until depletion, with the proviso: that she sells it cheaper than she can be militarily overrun. This is why the big Rudd defence spend.
Also under that sinking lid of opportunity, will be a inter-national, inter-class(ical?) and inter-personal scrap over the remainder.
Brash’s effort is inter-class. This has nothing whatever to do with the realities of 2025.
But everything to do with one section of society wringing out another like a sponge.
Kind of pointless, considering where we all are going. I’m thinking of starting up “Rent a Hand-cart”. Should be the last great growth industry – or tourist destination – of them all
December 1st, 2009 at 9:53 am
“We need to invest in people and create a culture of learning in this country”…perhaps it’s time for the people to invest in themselves and to stop expecting the state to do the creating!…that’s what it comes down to Doug..give a bloke a fishing line and hook and he will have to catch his fish..we have followed the socialist pathway to social laziness…I don’t need to make the effort because the govt will give me what I want..!
It has gone hand in glove with the silly idea that a community is responsible for the individuals…enough of this madness.
December 1st, 2009 at 10:05 am
stevek : The difference between an ” average ” and a ” median ” figure is borne out by your argument . A few individuals on super-salaries skewer the average figure upwards . Politicians love this , ‘cos it appears that Joe-6-pack is doing better , than he really is . In your first example , the median wage is $ 30 000 . And that reflects what the majority of that population are earning ( 99 / 100 ) . Good point , man .
December 1st, 2009 at 10:17 am
Mark Hubbard,
Unbelievable that you would have such a deep-seated bias against Scandinavia (socialist welfare state, blah blah, etc) whilst never having actually been there.
Now when you’ve done some research… you find that joy-of-joys! The region actually embraces a laissez-faire economy!!
Guys like you are a joke- full of hot air until presented with facts.
Yes, Denmark et al. are an anomaly……pure capitalism on one hand and pure socialism on the other.
And guess what, it works.
Keep researching…or even better, why don’t you actually go there?
You’d come back wailing like a born-again christian….” I’VE SEEN THE LIGHT!….. SHE… SHE WAS 5′10″, BLONDE AND LAISSEZ-FAIRE!!”
December 1st, 2009 at 10:26 am
Settle down Ray, you’ll burst something and end up waiting on our die while you wait State healthcare system.
And not when ‘presented with the facts’: I’m looking for the facts. Never be surprised just because I’ve not researched the whole world or the whole Internet: I’ve not quite got that much time.
And an Objectivist can’t be a Christian, by definition. Though some would even disagree with that (it’s just that they’re wrong).
… by the way, you can’t say it ‘works’. There are many problems with those countries …
December 1st, 2009 at 10:33 am
Mark : Can you come up with a 35 point plan to compare to that of the TaskForce ? Or at least , which of their recommendations would you drop , and what would you replace those ones with ?
December 1st, 2009 at 10:54 am
@Wally: How much of your education did you, or your parents pay for?
December 1st, 2009 at 11:00 am
No arguments there Doug…I fully appreciate what luck I had…but that does not change my view that the gravy train has run out of steam..some bugger has stolen the track..and the whole is running backward at an increasing speed toward the viaduct which some other sod dismantled and sold off. And the train driver ran off with the Indians.
December 1st, 2009 at 11:25 am
“English stressed that while the tax system was unable to meet future revenue needs in its current form, any reforms would be fiscally neutral.”(herald)
“We don’t want to be collecting any more tax revenue than we are at the moment,” BE.
To which I would add the following unspoken thoughts Bill English had playing pingpong between his ears at the time he said the above…
“…we don’t want to be…hmmmmm…better not tell them they are going to be paying a bloody sight more than they currently are…I’ll stay mum on that..must remember to use that word again more often…’Aspirational’…yes that’ll do….the goal of not collecting any more tax revenue than we were, was an aspirational goal…”
December 1st, 2009 at 11:30 am
Adding interest to a loan while students are still at studying would be draconian. Tightening the standards of University/Polytech entry would make more sense.
Mark- Yep…..my blood pressure was high after reading your post. Last week you were on the tear against Norway (based on ignorance), but now you’re singing a different tune.
If you don’t know your facts, please cease and desist.
I can’t say the economic model in scandinavia works? Really? Give me a stat…any stat….on the OECD tables and let’s see how the scandis stack up. I’m sounding like a broken record, but until you go to Denmark, Sweden or Norway to actually see with your own eyes what they do….. you really have no legs to stand on.
And of course those countries have their own problems. Who said they didn’t? I thought we were talking about political idealogies….what tangent are spinning off on?
Denmark’s main problem when I was there was 2nd generation muslim kids feeling di-attached from their culture and starting crime…..broken shop windows, the very rare murder, etc.
The danish are not used to crime so a big backlash with the ultra right-wing ‘Danske Folke Partie” becoming a coalition partner in government.
Which in turn creates it’s own problems….
Still, compared to Noddyland (stolen from wally but very accurate, ain’t it), Denmark’s a breath of fresh air.
December 1st, 2009 at 11:41 am
True. The speed of an army is the speed of it’s slowest cohort, and I see nothing at all in the Brash (sorry, the committee) ‘report’ which helps South Auckland in the slightest.
If you don’t give people buy-in, they break-in, and that clearly happens less in Norway.
Ray – don’t they also have Trolls? Seem to remember something in Peer Gynt..
December 1st, 2009 at 11:50 am
You’re thinking of Liechtenstein.
Big troll country.
December 1st, 2009 at 11:54 am
Nah..he’s been dreaming of living in the hall of the mountain king.
December 1st, 2009 at 12:15 pm
Mmm, Denmark. Perhaps it’s just a matter of being able to fly in the face of economic reality for only so long:
http://www.qfinance.com/country-profiles/denmark
Perhaps there problems are all ahead of them. NZ went through a ‘golden welfare age’, when everything seemed possible: but quite apart from freedom issues, it just can’t last as the welfare state always grows to swallow the productive hand that feeds it.
Here’s another interesting point, though, from the same page, Denmark’s company tax rate is only 25%. They have a lower tax rate than NZ!
The State in NZ has to be slashed. Brash’s report would have been leading us in the right direction …
December 1st, 2009 at 12:21 pm
Rod Oram just ‘politely’ slaughtered this report on Radio New Zealand Nine to Noon – worth listening to if you can replay it. (Tuesday 11:00)
Phew…. I was beginning to think it was only myself that didn’t get it!
Is this report is the price you pay for getting into bed with the ACT Party? Embarrassment that has to be killed quickly, and a slow, lingering discrediting of Brash.
A wasted opportunity however!
December 1st, 2009 at 3:33 pm
Further to Nicholas’s post on another thread:
“Ireland experienced average GDP growth of 9.8% during the six years 1995-2000, with no less than 10.7% GDP growth achieved in 1999, and 11.7% in 1997. From 2001 to 2007, GDP expanded by an average of 5.5%.”
http://www.globalpropertyguide.com/Europe/Ireland/Price-History
So Ireland experienced this level of growth, which would take us miles past Australia, but now faces 15% unemployment and house price falls of 25-50%. Again GDP growth is not a panacea. We don’t all have to become hippies (although I enjoy Santana and the occasional “smoke”) but as PDK has pointed out many times, continous high growth is physically impossible given we all share one planet and finite resources.
December 2nd, 2009 at 6:41 am
This was a very clever move by the banking/ transnational corporate raiding complexity, used flawed methodology to suggest to imply a massive gap between individual wages between Aust/NZ, make the cleaner here on $12.50 hr think he/she is going to gain 35% simply by getting a cleaning job in Aust. When it is clearly not the case, as the basis of the report was this:
“The 35 percent gap refers to GDP per capita, which measures the value of what each
economy produces within its geographical borders per capita. This does not directly
measure income, but is the most commonly used economic indicator to demonstrate
relative economic performance.”
Gdp is a flawed measure of prosperity between nations as it does not take into account fair distribution of created wealth or Purchasing Power Parity(how much your income will pay for at local prices) Don Brash admitted to me in a letter that GDP per capita is known to be flawed:
OFFICE OF THE LEADER OF THE OPPOSITION
13 September 2005
Mr ID Parker
Dear Mr Parker
I acknowledge receiving your written questions when I was in Taranaki last week.
Your first question was about how I justified using GDP per capita “as an ethical means of directly comparing the prosperity of nations such as New Zealand against the likes of Australia and the USA when they have many, many more times the natural resources to create their internal money flow”.
GDP per capita is not a completely reliable measure of wellbeing, as has been acknowledged by many economists over the decades. But it is the best approximation we have to date on comparative living standards.
Yes, some countries have more natural resources than New Zealand does, although most countries have a lot fewer natural resources than we do. In any event, natural resources are in no way a guarantee of high living standards, as many resource rich countries have shown. Moreover, some of the most affluent countries have very few natural resources, with both Singapore and Japan being good examples.
——————————————
Thus the corporate raiders use a false methodology to imply to the average Kiwi they would be better off across the ditch and recomend that, that wont change unless we hand over all our necesities of life and all resources of value to them and their foreign raiding mates, because they are such nice people, the trick is that the position cant be defended openly without telling the truth about Australia not being the “lucky” country for all comers that they portray, without causing a diplomatic insident.
Thus the even the opposition party can’t tell the wider public the truth even if they wanted to.
December 2nd, 2009 at 8:25 am
A RANT….and I am not sore any more, I am damn LIVID.
BRASH should suggest they fix this idiot first.
I Have not seen a paper till just now.
This is our Financial miss-manager..no wonder we all have problems.
I have been away looking after my FATHER-IN-LAW whilst he has a CATARACT OPERATION that he had to PAY some $3000 odd dollars for because there is a huge waiting list, so had to pay privately,
(another RORT from the elderly, FRED HOLLOWS will be SPINNING in his grave… but I digress….),
…….. if he wanted to keep driving to shops, he CANNOT walk to from the house he has lived in for 20 odd years. The only one HE owns, by the way.
He always worked, always paid his own way, paid his taxes, paid, paid, paid, not taken.
CONTRAST this with MR BILL (But never my BILL…mate)…ENGLISH who has the effrontery to pay out over $4k plus of the TAXPAYERS MONEY on FLOWERS for his office.
No wonder I get SORE about these idiots.
MR KEY…How about a refund for my father-in-law, how about you get rid of the RORTS and start looking after your own COUNTRYMEN instead of JAUNTING and JUNKETING our money away.
How about you get rid of the people taking and start employing people who GIVE, more than they TAKE so we can FIX this country once and for all time.
A little AUSTERITY would not go amiss.
A little COMMON SENSE, would not go amiss.
A little FISCAL PRUDENCE would not go amiss.
A little PRIORITISING would not go amiss.
I could fix this country with 15 able people off this site….
We do not need HALF your IDIOT hangers on. They are just too HALF WITTED to WORK.
WHY CANNOT YOU SEE THE OBVIOUS.
ARE YOU DEAF, DUMB and BLIND.
PLAIN ENUFF, LOUD ENUFF……ENUFF SAID.
December 2nd, 2009 at 8:35 am
Wasting your time SL…English couldn’t give a rat’s about you or your father in law..just as Key has a laugh whenever housing unaffordability is mentioned.
December 2nd, 2009 at 9:10 am
Wally,
I know, but the rest of the WORLD reads this blog too.
The idiots may never feel embarrassment, but I try.
SHAME about their financial shenanigans is my HOBBY.
I just want to warm potential immigrants what to EXPECT if they come here to the land of NODDY.
No different to USA, UK, DUBAI, ICELAND, and no money either for the ESSENTIALS of life, like all of em, but the GENTRY live high on the HOG and deep in the TROUGH.
TAKING, not GIVING.
RORTING, not uplifting, PONZI-ing, not building. Thieving, not donating. Inflating, not working.
Wrong infrastructure, wrong Parliament, Wrong ethics. Wrong policies.
Where did we all go so wrong.
I know….and so do YOU.
Pity no one else wants to CHANGE em.
Luckily I can afford to RANT.
All day if necessary.
LUCKILY I can afford my Father-in-laws surgery in FUTURE as he cannot, unless he sells his house.
By the way I always look after my Family.
These idiots only know how to take from them.
By the way, Luck never came into it…..Nuff said.
December 2nd, 2009 at 9:20 am
Shame does not worry them SL. I understand your anger and perhaps you should send Bill some flowers. :http://www.chelonia.org/articles/plantsthatpoison.htm
December 2nd, 2009 at 9:57 am
Anger is only wasted, if miss-directed and miss-managed.
Knowing the pressure we put on their antics, is all the reward I currently need.
The taxpayers and wage slaves are way to complacent here as are the business men and women suffering because of poor policy and miss-management and down right theft and stupidity.
That may CHANGE. It should change.
There is civil unrest building in other countries over the shenanigans of the trough feeders.
The next elections will be the deciding point of that change.
I have no doubt. Momentum for Change is building, just miss-directed and splintered.
There is much spin and hypocrisy, especially from the so-called TASK-FORCE recommendations etc.
Much of it based on protection and adjustment of the RORTS, not altruism.
The make-up of those involved, means just more of the same.
You suffer, you pay, I am all right JACK, or is that JOHN.
Same people, same problems as I always keep saying. Just moving around the deck chairs.
knowing the truth and putting it out there/here may be all it takes for REFORM of the Banking and Political and Social malfeasance.
Collectively we must all try in our own way to hasten that CHANGE.
If there were one RIGHT party or person to get behind to build momentum, it would help.
So far all change, no change.
Hence what I do.
December 3rd, 2009 at 12:34 pm
Iain – apologies for not responding sooner to your NZMEA and in “the tent policies” comment. I was the tax conflab and am in catch-up mode still. We don’t give a toss about tents, even big tents:
http://www.interest.co.nz/ratesblog/index.php/2009/09/24/exchange-rate-reduces-price-volatility-for-nz-commodity-exporters-westpac-says/#comment-40828
Re. PWG’s report, I was hopeful it’d be more considered piece of work than just the sop to ACT it looked like it would be. Oh well. As for the recommendations, those that reduce, “inhibitors to growth such as inefficient and excessive Government spending,” and then, “lowering tax rates, reforming welfare packages that give the wrong incentives and further simplifying compliance costs..” are difficult to disagree with. No brainers. Those that impact negatively on NZ’s sovereignty and social cohesion are what aligned it to ‘dark side’ of Neo.lib’ism and make it disagreeable – hence it’s destiny in file 19. Some articles on the subject:
Brian Rudman: Don’t swallow Brash’s medicine – Brian Rudman – NZ Herald News
http://www.nzherald.co.nz/brian-rudman/news/article.cfm?a_id=1&objectid=10612850&pnum=0
Garth George : A taskforce not to be reckoned with – Opinion – NZ Herald News
http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10613054&pnum=0
Berl economist laments export failings – Social Issues – NZ Herald News
http://www.nzherald.co.nz/social-issues/news/article.cfm?c_id=87&objectid=10612881&pnum=0
Still at least it has, so far, cost less than the sop Labour made to Winston Peters with the Export Year 2007 bs. Classic ‘centrally-planned’ wishful thinking masquerading as effective policy.
Thankfully, although lacking in the guidance of a more robust and over-arching national vision, some of the stuff coming out of the TWG will hopefully make up for the PWG’s performance.
December 3rd, 2009 at 12:41 pm
I still think you should send some flowers SL…plenty on that list to choose from.
December 5th, 2009 at 1:42 pm
Brian Gaynor: Market not up to task of closing gap with Aussies
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10613526&pnum=0
“The first Taskforce 2025 report shows that Don Brash and the other members of the review team are out of touch with reality.”
As for taking the knife to ACC and the Super fund:
ACC, Super Fund prop up Govt books as tax take dwindles
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10613447
“The investment portfolios of ACC and the New Zealand Superannuation Fund continued to prop up the government’s books as corporate and personal tax revenues dwindled, according to the Treasury.”
And:
John Whitehead: Old tools and mindsets don’t fit new environment
http://www.nzherald.co.nz/surviving-the-recession/news/article.cfm?c_id=1502812&objectid=10590120&pnum=0
“The key point of the speech was that the world has changed radically over the past 18 months and whether we are in the private or public sector, we all need to consider new approaches and ideas.”
Yep, and things have changed even more in the last 18 years – PWG, take note. So it’s been good that:
Treasury’s role [is] to ’shake the debate’, says Whitehead
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10613409&pnum=0
“The way John Whitehead tells it, New Zealand came uncomfortably close last year to earning the title “Iceland of the South Pacific”.
Ouch!
Anyway Treasury keep up the good work – some of you guys are sounding more and more like CASPers each time you speak.
Suggestion – PWG go have a chat with the CASPers in the TWG.
December 6th, 2009 at 1:53 pm
More panning for 2025 PWG:
http://www.stuff.co.nz/sunday-star-times/opinion/3130105/Brashs-Aussie-report-aimed-at-the-wrong-target
by Finlay MacDonald.
http://www.stuff.co.nz/sunday-star-times/business/3128991/Brash-fails-quiz-in-his-shoddy-report
by Rod Oram. [he can't help leaking his 'central planning' tendencies, but I agree with his 'whats' and his assessment that the work is lazy seems close to the mark.]
Shame. It looks like a waste of money.
We should can this working group and set one up for monetary system reform.
December 6th, 2009 at 2:17 pm
The faith goes deep, those who believe in the neoliberal prescription can look at the last 20 years and convince themselves it has been good for New Zealand. The bright ones use their intelligence to plaster over the cracks that experience creates; the dumber ones look to the smart ones to help keep their faith. Nevertheless, the faith is persistent and any new prescription spin can be mapped back to the neoliberal agenda.
Changing times, falling fortunes, eroding performance, and absent productivity growth don’t bring new thoughts because the faithful keep the faith.
It is hard to see this changing until things get much, much worse. The right must learn that too much freedom leads to wealth polarisation and ultimately the loss of national sovereignty, and the left must learn the central planning does not work.
December 6th, 2009 at 3:44 pm
Les / John : Breathren : Pin yer lug-holes back for a lecture from the Reverend Rogie : Not everything out of the Don Brash bash was a fiasco . One or two good ideas still lurk within . But the presentation harked of Ye Olde ACT / Douglas days . And he didn’t address key areas such as our overbalance into property at all . His focus seemed to be catch-Australia at all costs , rather than baby steps to rebalance our economy . He blew a brilliant opportunity to address the problems , and offer up some solutions .
December 6th, 2009 at 5:14 pm
Well said, John (2:17pm).
I’m sure you’ve seen Brian Gaynor’s latest piece:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10613526&pnum=0
In it, he describes the central argument of the Brash Taskforce, that the Government occupies too much of the “field”.
Brash argues that the New Zealand Government occupies 36 per cent of the field because this is the Government expenditure to GDP ratio.
The Taskforce wants to reduce the size of government and increase the amount of space available for the productive sector by reducing government expenditure as well as privatising existing State-owned organisations.
As you rightly pointed out, merely repeating the mistakes of the past.
Brian goes on to show how we don’t have the “seeds to start up new enterprises and the fertilisers to encourage their growth”. That being, the lack of saving (particularly savings channelled into equity investments) available to fund the required productive growth.
The corporatisation and reduction in government market participation coupled with deregulatory reform (since the initial Douglas reforms) are largely responsible for our poor saving rate and market distrust.
Privatisation predominantly sees private and public costs increase with profits largely heading offshore, robbing the nation of lucrative investment capital.
Market distrust coupled with “easy credit” and an imbalanced tax regime drives investment capital into housing (49% of the field), which of course, is funded by offshore borrowing, compounding on the need to grow our exports.
The solution is obvious:
Remove tax advantages.
Introduce credit controls.
Increase government market participation (to at least 50% of the field) increasing market competition in the process while utilising the flexibility of the public service model (onshore) and maximising gains offshore. (Note: Here’s another reason why the government needs to pickup the slack: The three Bs)
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10612383&pnum=0
Tighten market regulation (while also giving market regulators more bite) including controls on short-term investment to prevent currency speculation.
Nationalise our offshore liabilities and provide capital for productive investment by producing our own debt free currency.
The hard part is, finding a party willing to do what’s required.
December 7th, 2009 at 10:25 am
More criticism:
http://www.stuff.co.nz/the-press/opinion/columnists/colin-espiner/3131992/Empty-rhetoric-won-t-fix-economy
“Brash’s ideas may be impractical, his analysis may be overly simplistic, and his solutions “too radical to implement” – as English bluntly put it.
However, National is now bound to come up with an alternative that works.”
And Dod Brash’s reply, to Garth George:
‘Don Brash to Garth George: You’re wrong’
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10613954
Where Brash says, “The recommendations of the 2025 Taskforce are actually totally in line with orthodox thinking in most developed countries, and are almost entirely consistent with the recommendations of the recent OECD report on New Zealand.”
This IS the problem. We’re not learning are we Don, PWG – see:
http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neoliberalism-has-failed-new-zealand/
John W’s comment on this thread December 6th, 2:17 pm
You need to, change, adapt and be pragmatic, realise and recognise, OUR, context. Go have a look at how TWG are doing things. One thing you might find useful is to offer a range of solution scenarios – this inherently leads to out-of-box thinking (ask any MBA) and who knows, PWG might even come up with their own ‘Big Kahuna’, or two, or three…. or more importantly, something worthwhile – even considering PWG’s political limitations.
December 7th, 2009 at 10:35 am
Les : Because the TWG are not tarnished with a political agenda , as TaskForce2025 is , it will be so much harder for the Nats. to dismiss it’s recommendations so easily . Gareth Morgan’s brilliant piece of innovation aside , TWG will come up with some politically unchallenging ( not vote losing ) suggestions .
December 7th, 2009 at 10:58 am
The problems will only be perpetuated by employing old hat theories and theorists,
re-hashing the current systems.
Radical changes from the TOP downwards are required to FIX this problem, one of many pervading New Zealand and the World.
The problems were created over time by the same bunch of idiots, now trying to get their theories re-promulgated for their own personal agendas.
Having observed the self same people, perpetuating the same greed based vote buying rorts and financial shenanigans there is little wonder that a simple solution will never be found.
There is a need for total radical CHANGE, but these people tasked with fixing the problems are the PROBLEM, not the solution.
Greed and self serving interests are at the root of all of mankind’s current ills, financial and otherwise.
We have advanced so far technology wise in the past 100 years, but lost the PLOT otherwise.
Employing self serving idiots, never produced a long term solution for any lasting project for humanity.
This New Zealand and World problem is too big to screw up any more, otherwise our futures are all at risk.
December 7th, 2009 at 5:20 pm
Les, after reading Gaynor’s latest piece have you come to accept the need to increase Government market participation?
December 8th, 2009 at 9:10 am
Chairman – as you might well detect your bias to Politburo’esque, soviet-style ‘central planning’ worries me, a lot, but because I’m a CASPer and see a place for planning and regulation in appropriate areas and levels of abstraction, before I answer your closed and leading question, can you outline specifically what you mean, by “government market participation?” We might have covered some of this on the ‘Neo.lib’ism has failed us’ thread, but things change, so tell me pease?
December 8th, 2009 at 9:52 am
Chairman – just adding to my question above, and to help with getting clarity, can you also say in what and where you do not envisage “government market participation”? Cheers, Les.
December 8th, 2009 at 10:02 am
Les, as I posted above: The corporatisation and reduction in government market participation coupled with deregulatory reform (since the initial Douglas reforms) are largely responsible for our poor saving rate and market distrust.
Privatisation predominantly sees private and public costs increase with profits largely heading offshore, robbing the nation of lucrative investment capital.
Market distrust coupled with “easy credit” and an imbalanced tax regime drives investment capital into housing (49% of the field), which of course, is funded by offshore borrowing, compounding on the need to grow our exports.
As Gaynor’s article has highlighted, and as we all know, government’s participation in the “field” has been reduced. And the reduction has played a predominant role (as explained above) in the problems we now face.
Therefore, there should be no denying the imbalance (Government reduction in the field) needs to be corrected.
Failing to reach a consensus on this vital point jeopardizes any chance of national recovery.
In fact, time is of the essence, this Government plans to reduce the state’s role even further i.e. ACC, Corrections, Schools… these policy are likely to increase costs (adding to overall inflation) while further sending profits offshore.
Should mining of our national parks be done through Government own ventures or offshore mining companies? What do you think would benefit us most overall?
New Zealanders are already among the most productive in the world. Worker productivity has increased by 83 per cent since 1982, and we work longer hours than any other OECD country. Over the same period, real wages were 25 per cent less.
The problem we have is that for decades ordinary Kiwis have not shared in this country’s wealth. It’s gone to profits, most of it offshore.
Since the 1980s, workers’ share has dropped from 56 to 46 per cent of GDP
http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10613672&pnum=0
December 8th, 2009 at 10:23 am
Chairman – just acknowledging, useful reply, will get back on this later, however, in the interim, can you outline where you think gov.should NOT go/particpate? (You ‘central planners’ scare me more than the Neo.libs – help me.) Cheers, Les.
December 8th, 2009 at 10:33 am
Les – Another problem we face is the private sector in New Zealand is relatively small and not particularly interested in expanding (see the link, three Bs above). Therefore, we need a combined effort to help us get through the challenges of growing our export sector and trading in the international market.
The Government is best placed to lead that challenge.
December 8th, 2009 at 10:58 am
Chairman – noted and intend to respond to your comments, but tell me, where should government NOT be, in your view?
December 8th, 2009 at 11:38 am
Brash argues that the New Zealand Government occupies 36 per cent of the field because this is the Government expenditure to GDP ratio.
The Taskforce wants to reduce the size of government and increase the amount of space available for the productive sector by reducing government expenditure as well as privatising existing State-owned organisations.
However, the problems we currently face (coupled with the hindsight of pervious neo-liberal reforms) suggests opposite is required.
We need to increase government market participation to at least 50% of the field.
Predominantly in vital sectors where Government input would be most effective. Utilising the flexibility of the public service model (onshore) and maximising gains offshore.
What’s so scary about lowering overall costs and keeping profits onshore?
December 8th, 2009 at 11:57 am
Chairman – Please be specific about those, “…vital sectors where Government input would be most effective.”
Can you expand, speciffically, on what you mean by, “Utilising the flexibility of the public service model (onshore) and maximising gains offshore.”
“What’s so scary about lowering overall costs and keeping profits onshore?” Err, nothing, it seems, but it’s a presumed outcome of a prescription that you have not defined, specifically – that is what makes things scary. It’ll help me, and you sell your prescription, if you can also say, specifically, “where should government NOT be, in your view?”
Cheers, Les.
December 8th, 2009 at 12:31 pm
Les – The public service model – i.e. public services provided at cost. Electricity, communications (such as the new broadband investment we’re paying for) etc…
Having public services provided at costs enables us to reduce local inflationary pressures while also increasing our international competitiveness. Allowing the productive sector to capitalise off the benefit of lower cost here at home while the government still retains the flexibility (in the export sector) to maximise gains offshore.
In short, utilising the tax take to best serve the overall national interest.
Tightened market regulation coupled with Government involvement in new export ventures (mining, bulk water exports, aquaculture, etc…) while also giving ‘mum and dad’ investors an opportunity to get onboard will improve investor confidence. Providing healthy market place competition which will increase accessibility to local capital. Giving not only the government but also ‘mum and dad’ investors the opportunity to generate an offshore return.
This offshore return will broaden and increase the government’s revenue streams while sustainably offsetting tax cuts here at home.
The internationally offset tax cuts will further improve our international competitiveness (benefiting the product sector) while the newly generated offshore return will improve our balance of payments.
Moreover, Government involvement in new export ventures will act as an economic stimulus, creating new jobs etc…
The newly created Government ventures and associated contractors will allow a more balanced reimbursement of overall returns, thus creating a more competitive wage environment. Tax savings will allow the private sector to adapt.
Over time, the ultimate objective is to see these ventures grow to the stage that Government can become self-funded. Then they wouldn’t need to tax us at all – and if we are really lucky they could end up paying us a return.
December 8th, 2009 at 12:47 pm
Les – in my haste I forgot to mention that our own debt free capital could be used to help fund those projects.
December 8th, 2009 at 1:12 pm
The key to the SOE model seems to be keeping cronyism to a minimum. Don Brash and others of his ilk fail to remember that most infrastructure like ports, roads, rail and airports were built with public money because they were so expensive the private sector couldn’t afford them and/or they had little profit potential given their low return on investment. They only become attractive to the private sector when idiots like Douglas and Prebble team up with idealogues from the Business Round Table and hock off assets on the cheap at well below their replacement value. Unfortunately those private sector owners then milk them, run them down, and get a defacto bail out when the govt buys them back for more than they’re worth.
December 8th, 2009 at 1:27 pm
Chairman – just a quick check-in – I guess, “…Government involvement in new export ventures (mining, bulk water exports, aquaculture, etc…)” is your answer to my question, “….be specific about those, “…vital sectors where Government input would be most effective.” If so can you tell me how YOU, or how government would, pick these sectors as winners?
And to reiterate, it’ll help me, and you sell your prescription, if you can also say, specifically, “where should government NOT be, in your view?”
Cheers, Les.
December 8th, 2009 at 1:38 pm
Les – presumed outcome?
Commonsense would suggest that retaining ownership of our revenue generating assets would see profits stay onshore, which is what I’m suggesting.
Furthermore, commonsense would also suggest that providing public services at cost would lead to lower overall inflationary pressures.
Charging ourselves more for electricity, ACC etc.. while many consumers are borrowing funds to stay afloat doesn’t advance us economically. It’s akin to trying to get rich from borrowing offshore and buying and selling each others houses.
Sorry Les, but I don’t have the figures available, but instead of giving money to Don and his team, I would strongly suggest that all sectors be fully analysed to ascertain where Government input could be most effective.
After all, stability, balance, and effective solutions are the overall objective.
December 8th, 2009 at 3:05 pm
Les – Speaking of balance, you’ve yet to answer my simple question.
Have you come to accept that the imbalance (low Government participation in the “field”) needs to be corrected?
Surely you don’t deny reducing Government had a large role to play in our demise?
You asked: “Can you tell me how YOU, or how government would, pick these sectors as winners?”
Feasibility studies.
December 8th, 2009 at 3:18 pm
The Chairman, Les
I’m reading this debate with interest – interesting.
Walter
December 8th, 2009 at 3:30 pm
Chairman – we’re getting there, slowly but surely. So to reiterate, and given this is not a loaded question, unlike…, anyway, it’ll help me, and you sell your prescription, if you can also say, specifically, “where should government NOT be, in your view?”
Something a liitle more specific than “feasibility studies” would be welcome.
Cheers, Les.
December 8th, 2009 at 3:34 pm
Indeed, Stevek. The local private sector is relatively small and in many cases can’t afford to invest in some of the larger projects required to boost our infrastructure and exports.
Public infrastructure used to be provided under the public service model, hence the low return on investment. But it was tax money working in the overall national interest.
Additionally, SOEs were structured under the corporate model, providing the profit margin, hence making it easier to allow the sector to be further privatised.
December 8th, 2009 at 3:56 pm
Les – The benefit is in the return – and the return can only really be ascertained if you have some figures to work with. Nevertheless, commonsense also comes to the fore.
Water, the US has made it a matter of national security. It’s the new oil and there is millions of dollars to be made.
We are blessed with this totally renewable, therefore sustainable resource. But what do we do? We let millions of potential dollars float out to sea everyday it rains. There is serious money to be made in that alone.
Again, the Government has discovered we have a potential amount of wealth buried in our national parks, therefore it’s a no-brainer that we fully utilise those resources as opposed to letting someone else.
As an exporting nation, how many ships do we owned? Is there a fiscal advantage in having our own fleet?
December 8th, 2009 at 4:13 pm
Hey Walter : Warm in Kaikoura ? Hot NW day here , having a beer , imported of course ( Krombacher ) . Just back from a Goldman Sachs presentation . Chap has a graph showing the decline of the $NZ over last 100 years . Commodity exporting has not stood us in good stead . It’s a steep run down for our currency , until the present day . [ I won't depress the " Gold-bugs " with GS's view of the precious metal............Oooooooops , just let the cat out of the bag ! ]
December 8th, 2009 at 4:16 pm
Chairman – is this:
“The benefit is in the return – and the return can only really be ascertained if you have some figures to work with. Nevertheless, commonsense also comes to the fore. ”
Your answer to my question about where government should not be? Figures: what we do have is history, some outer boundaries, as you say common-sense (very subjective that) and deduction. I really would like you to have another crack at this question, as I’m learning a lot, thanks.
As you know I’m not agin some of what you say. Have another crack – nothing scary here is there? Or does your full prescription include the kind “participation” that leads to election losing ideas like curly light-bulbs and lo-flow shower heads? Stuff that clearly scared the crap out of good few.
Am happy to respond more comprehensively, I think, when we’ve unpicked some of the load questioning and you answering this question will help.
Cheers, Les.
December 8th, 2009 at 5:12 pm
Hi Rogie,
“Gold bug” like that. So far we occasionally burn your “Fish & Chip” Chch News Paper, but never Paper money – hmm that may change with the devaluation of the NZ$.
Our very thin 8/1000mm gold-leaf of 22 carat, which we are using in our works of art is currently of big demand. Sept/ Oct good, but November finished as the best since we opened our ArtGallery 18 years ago – mostly selling to overseas tourists.
December 8th, 2009 at 5:16 pm
Indeed, Les (re-answer). This is about effective solutions, therefore I can’t exactly say were government shouldn’t be involved until the analysis has been done – but because it’s also about balance, I can assure you, you have nothing to fear.
We are talking all-round benefits here.
First off, we are looking at correcting the imbalance so we wouldn’t want to swing the pendulum the other way.
Secondly, the domestic market is extremely small; therefore the export sector has nothing to fear. Their market is predominantly international so there is no concern of the Government crowding them out. Ultimately, it’s about working together in the national interest.
Moreover, the Government will be utilising its flexibility of maximising gains offshore so will remain competitive while also allowing the private sector to benefit from the extra international exposure (international advertising etc…).
Furthermore, the productive sector (local and exporters) gets to also benefit from the lower inflationary pressures attained through the reintroduction of the public service model.
Finally, but most importantly, the more our Government can make offshore the less they have to tax us, which hugely improves our overall economic position. No cutting services, no robbing Peter to pay Paul.
This is about taxpayer money being used in the overall national interest. Looking after our own backyard while maximising gains offshore.
December 8th, 2009 at 5:26 pm
Under a massive worldwide competition, manufacturing and exporting is increasingly more difficult for small countries/ companies. The “Free Market order” as such is now even more limited. Therefore support/ assistance from governments are vital. Of different reasons some government aren’t capable to do so.
Looking into the economic structure of Switzerland private sector and government department work together – not like here in NZ against each other.
It is good to have an open mind and debate why it works in some countries and not in others.
-
Martinez draws from history to illustrate that political processes and the state are not only instrumental in making capitalist markets work but that there would be no capitalist markets or wealth creation without state intervention. He brings his story up to the present day to show how the seeds of an unprecedented government intervention in the financial markets were sown in past actions. The Myth of the Free Market is a fascinating and accessible introduction to comparative economic systems as well as an incisive refutation of the standard mantras of neoclassical free market economic theory.
Walter
December 8th, 2009 at 5:30 pm
I suppose all the jokes about ‘National Interest’ have been done.
Like the idea of the taxpayer owning a boat or two to get stuff to the market.
Set it up as an SOE though – just in case.
December 8th, 2009 at 5:47 pm
I am pleased your business is brisk , Walter . The point of Swiss government working together with the private sector is interesting . Our previous government ( Labour ) were openly hostile to business . Michael Cullen’s sneering : ” We won , you lost , eat that ! ” set the tone for the next 9 years . Sad , very very sad .
December 8th, 2009 at 5:53 pm
Energy might be a good place to start. There has already been a lot of comment here about following the Norwegian model if oil is discovered off NZ’s west coast. At the moment I bet Brownlee will be happy with a tiny cut and give the rest to the Aussies a la East Timor.
Can someone also explain why oil is one of our main exports AND imports. Can’t we process NZ oil at Marsden Point and only import the differece.
Why do we give away our gas to Canadian company Methanex at a “commercially sensitive” price (read dirt cheap) Surely it could get better use domestically and achieve a much better retail price.
Why is it okay for 15% of our electricity to go to a single smelter, again at a “commercially sensitive” price. Are the 1200 jobs worth it.
Why don’t NZ governments drive harder bargains with foreign multi nationals like Methanex and Rio Tinto.
Why does the Todd family dominate the energy sector in NZ rather than the government.
Why did we destroy the alternative fuel industry in which we were world leaders.
Why don’t we have a gas guzzler tax and emission testing like other developed countries.
Given all the wasted govt spending, couldn’t some of it be redirected to a national oil research company with its own ships and rigs. I bet there’s kiwi oil and gas engineers all over the world who’d love to come back.
In a small country why do we need so many electricity retailers. Why do we need them at all. Isn’t duplication a waste. Why can’t an SOE create, distribute and sell the power under one entity at cost plus 5-10% (to allow for maintenance, new generation etc)
December 8th, 2009 at 6:13 pm
Rogie,
Its’ a constant flow of international diplomatic exchange in the filed of economics between government and private sector – learning educating and working together.
Here an example please read the pages.
http://dlib.eastview.com/browse/doc/19433207?issueId=814562&pager.offset=12
Reading stuff from NZMEA – hmm pathetic.
December 8th, 2009 at 6:36 pm
Chairman – thanks, for all that. In answer to your question, “Les, after reading Gaynor’s latest piece have you come to accept the need to increase Government market participation?” I may decide to answer more specificaly tomorrow, but briefly – what was their to accept, I’m a CASPer, so answer is – yes and no. As we’ve discussed similarly elsewhere:
http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neoliberalism-has-failed-new-zealand/#comment-46039
http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neoliberalism-has-failed-new-zealand/#comment-46099
If you are looking for, “Yes, Chairman we should ‘centrally plan’ as much as we can/everything.” Dream on, read those two links and try to get your head around CASPering.
Walter – very rude, nevermind, life’s too short:
http://www.interest.co.nz/ratesblog/index.php/2009/11/06/opinion-how-neoliberalism-has-failed-new-zealand/#comment-46098
Cheers, Les.
December 8th, 2009 at 6:55 pm
Les,
It is not rude, – I feel your approach dealing with the government and some other matters is very “kleinkariert”, very stationary -with not much of a vision (new ideas), so I don’t apologise.
Walter
December 8th, 2009 at 7:10 pm
Another example
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10614207
One has to ask the question:
“Do we make the right stuff in NZ, while importing in the Billions ?”
People from the private sector sit together, including the government and make proper planning for the future, in stead of hitting heads together.
December 8th, 2009 at 8:02 pm
Les – Multinational control is far more detrimental than Government – and that’s where our productive sector is headed. There is an over representation of foreign control of lucrative sectors. Allowing mining in our national parks or our water etc… to go into private hands is far from being in our long-term interest. This is where government needs to step up to the plate.
How will the private sector provide the overall benefits stated above???
Self-funded government sure sounds good to me. That’s what I call Government working for you. How anyone can turn that down is beyond me.
There is a need for balance but there is also a need for working together, leadership and planning – and the government is best placed to lead the challenge.
Stevek – You’re dead right about electricity and wasteful duplication. A centralised system would be far more cost effective. You also raised some other valid points about driving a harder bargain and securing better deals.
Walter – Good points (working in tandem 5:26pm)
December 8th, 2009 at 8:13 pm
A poor rant today…
Poor choices, poor treatment, poor decisions, poor Lady.
If Hone-y and English Bill get any more undeserved passes for their extraordinary behaviour at the trough, I hope we can collectively send both them and John Key off on their bikes, next election as well as their other errant cronies in Parliament.
And as for Goff, he can play the Maori tune all he likes, but I seem to remember a different fiddle being played when LABOUR were in power. Poor dear.
Shall we compile a list. It seems endless. Just like their CHILDISH games.
I would prefer a collective approach to the problem solving, not much to expect for 200-250K each P.A. plus Junketing expenses. Poor dears.
Money we can poorly or ill afford.
A bit like Hotchins and the poor cancer patient and his wife HANOVER ignored too.
Ill treated and ill used….a bit RICH you might say….eh MARK.
I hope he never sets foot in his poor house.
Sums up New Zealand at the moment.
Allied…….I think not….but what a poor choice otherwise for New Zealanders.
Not much ZEAL left in the poor old country.
Mark my words….MARK…and JOHN……poor decisions all round.
Apostles….ye ain’t.
December 8th, 2009 at 10:18 pm
In today’s world, the Private Sector and Government not working together on visionary economic plans means the nation is doomed. Well, obviously that what’s happening right now here in New Zealand.
Walter
December 9th, 2009 at 9:40 am
Chairman – good day comrade, I trust the ‘Red Flag’ is still flying high. Just to be clear, I don’t think communism is a good option for NZ, but there are aspects of ‘central planning’ that could be cherry-picked from your doctrine that would be useful, (as we’ve discussed/agreed) just as certain aspects of the Neo.lib theology would also be useful – just certain aspects, not the whole hog – in either case. So, to further answer to your question, “Les, after reading Gaynor’s latest piece have you come to accept the need to increase Government market participation?” Let’s look at some root-causes (IMO) via Gaynor’s article, that we are both fond of and do a little positive appreciation. Brian G says:
“The main problems with this approach were that the new private sector owners milked the privatised assets for their own benefit and Douglas got rid of the old and inefficient companies, particularly manufacturers, but the market failed to create sufficient new and innovative companies to replace them.
The market failed then and it will again because we don’t have the seeds to start up new enterprises and the fertilisers to encourage their growth. Thus the empty space vacated by the State and old and inefficient business is not being repopulated by new and enterprising productive organisations.
The seeds and fertilisers of a modern capitalist society are savings, particularly savings channelled into equity investments.”
He then compares Auz and NZ’s savings and we know how that looks. But the fact is we have saved, but perversely so. That is, ever more since the ‘politics of envy’ (no offence meant comrade) led to further distortion in tax rates with introduction of the, ‘let’s get those rich bastards with a 39%’er’, NZ has been pumping more capital into property – that is, investing in passive/less productive assets, in the hope that our woefully inadequate inflation control would ensure capital gain, which of course is not effectively taxed – which is Roger Douglas’ fault!!!
1) Imagine if when RD did his stuff, instead of retaining ‘the subsidy that got away’, he properly followed the Neo.lib theology and broadened the tax base to include effective taxation of capital, land, property assets – how might our savings rate look now? (And productivity….)
2) How might it look if we had appropriate regulation of our fin.sec so that M&D’s are not driven by fear and distrust into anything except property, which is nicely tax sheltered?
3) How might it look if we supported, promoted, not discouraged national savings schemes, eg. Kiwisaver, etc.? Instead what have we seen in the past and what do we see now, perversely IMO, in the PWG’s recs – opposition to these kinds of improvements.
If these three things were fixed would Brian G need to report:
“In the past two weeks the Synlait Milk and DNZ Property Fund IPOs have been pulled, the former because of a lack of individual investor support and the latter because of concerns over governance and related party transactions.
If our capital markets can’t supply the equity to allow innovative companies such as Synlait Milk to grow then “the market” will not solve our economic problems unless it is substantially strengthened.”
So the question is, what “increased government participation” is required to get a “substantially strengthened” capital market for investment in productive enterprises to flourish?
Is it intervention – some ‘centrally planned’ affair with direct government involvement? Or, is it properly grasping the three nettles (at least) that I have highlighted above with effective policy change?
Which way addresses the symptoms, which way the root-causes, as Brian G has discussed and I have highlighted?
Chairman, aside from the stuff we already agree on, since we last discussed things on the ‘Complete Neo.lib is complete b*ll*cks for NZ’ article by Selwyn, I have developed more understanding of ‘public credit’, and all that, and am keen to advocate that we AGAIN use it in NZ, so something else we agree on:
http://www.interest.co.nz/ratesblog/index.php/2009/11/20/special-report-why-nz-needs-a-bipartisan-grand-coalition-for-economic-reform-not-tweaks-to-the-rbnz-act/#comment-51441
Walter – “new ideas”, as we discussed elsewhere, the polys love discussing new ideas, as much as they love distraction with any ‘red herring’ they can lay their hands on – so as to avoid grasping the nettles of developing effective policy. I and NZMEA know, we’ve had lots of discussion with polys, it’s a major part of what NZMEA does. It does so in response to the real experience and real needs of it’s members.
1, 2, 3, at least.
Cheers, Les.
December 9th, 2009 at 12:49 pm
Les – Suggesting we rebalance the economy and advocating for effective solutions is a far cry from “Communism”.
The “root-cause” of the problem is that Government participation in the “field” and its effectiveness has been detrimentally reduced, therefore the problem needs to be rectified.
Most of the questions you’ve asked have been answered in the posts above.
1) It’s not that I disagree with having a balanced tax system – it’s just that under Neo-liberal reform it won’t increase our overall national wealth (savings)
The over representation of foreign control in lucrative sectors of the New Zealand market (due to Neo-liberal reforms) will largely see the benefits of tax reform head offshore. Retrospectively, this is exactly why we need Government to increase its coverage of the “field” – to help us compete against these large foreign multinationals that are creating this detrimental imbalance. Presently, the Government is opening the door for more privatisation.
Productivity gains (being affected by the same imbalance) also largely head offshore.
Hopefully you can now see how wide-ranging the effects stem. It distorts market fundamentals. The imbalance it creates offsets the overall benefits of a balanced tax system and increased productivity gains.
2) Tightened market regulation coupled with Government involvement in new export ventures while also giving ‘mum and dad’ investors an opportunity to get onboard will strongly improve investor confidence.
Government involvement brings with it a perception of credence, and market confidence totally relies on perception, hence further boosting confidence.
Furthermore, Government can simplify the investment process (by utlising Kiwibank) and by the use of good marketing campaigns. Additionally, they bring healthy and much needed market competition, encouraging other market players to better perform while increasing overall investment options.
Finally, the private sector in New Zealand is relatively small and not particularly interested in expanding (see the link, three Bs above). Therefore, we need a combined effort to help us get through the challenges of growing our export sector and trading in the international market.
3) Overall incomes will need to increase and credit will need to be better managed before we can significantly increases savings, which of course go against Neo liberal reforms. We currently (generally speaking) spend more than we earn and people wonder why our savings rate is so low. Alternatively, we do have a lot of savings tied up with housing, but again, many are borrowing to save and rely on the capital gain.
Allowing Kiwis the opportunity to invest in local projects that generate an offshore return is the most effective way for Kiwis to save and add wealth to the overall economy.
December 9th, 2009 at 1:16 pm
Chairman – I don’t think we are miles apart. I disagree with this however, “The “root-cause” of the problem is that Government participation in the “field” and its effectiveness has been detrimentally reduced, therefore the problem needs to be rectified.”
IMO it’s that successive governments have simply been ineffective in making appropriate and effective policy, that needs to change, as I outlined above. I agree, we have ‘market failure’ and along with policy change, in the short-term some government involvement to prime pumps and close gaps might be useful – so long as it doesn’t crowd out properly functioning free-market activity, by being involved for too long, and in the wrong places.
As for any involvement, I’d suggest a pluralistic approach (no picked winners – sorry), certainly utilising Kiwibank, as NZMEA and PEC have advocated, see submissions to Labour’s banking inquiry, where NZMEA suggest modelling KB on the Bank of North Dakato model, that utilises a public-credit approach (today, on this planet) with BND working alongside investors, operators and private banks on business growth, development projects – hence some market reality in the investment analysis, rather than biased feasibility studies written by biased officials with no skin in the game – know wot I mean?
Cheers, Les.
December 14th, 2009 at 10:13 am
‘Central planners’ will like this, a fiction by Rod Oram, in yesterday’s Sunday Star Times:
http://www.stuff.co.nz/sunday-star-times/business/3154110/The-lucky-country-that-found-its-own-way
Found this bit of miming of Michael Porter interesting:
“….. Following the 1990 publication of my book The Competitive Advantage of Nations, some New Zealand business leaders invited me to help them achieve the power of business clusters I had demonstrated in my research.
But we failed. New Zealand, gripped by free market reforms, was not ready for such collaborative business activity. Similarly, my speech to the 2001 Knowledge Wave Conference in Auckland passed largely unnoticed.
In retrospect, though, there was a much deeper problem. The economy was far too small to achieve the critical mass required for physical clusters dominating at the time. Instead, Kiwis have found their own unique solution: creating virtual global clusters.”
Oh, the bs. Oh, the lack of context recognition. Oh, the lack of recognition, that ‘picking winners’ and mis-application of Labour’s favoured ‘centrally planned’ approach, in this context, was destined to fail, because the planned ‘clustering’ was about treating symptoms, not properly addressing root causes. (See my comments above associated with Brian Gaynor’s article.) Oh, the bs jargon – “..creating virtual global clusters.” We used to call em’ ’supply-chains’ – that conveyed goods, services and knowledge, oh, maybe even value, hence the other bs jargon term, ‘value chains’.
It’s a shame they don’t publish the letters online, there was some useful critique of 2025’s work and Rod Oram’s responses to it.