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Nolan says quit whining over CPI; Heine on how to get Act back on track; Bomber says Goff's still in the game

Nolan says quit whining over CPI; Heine on how to get Act back on track; Bomber says Goff's still in the game

Here's my politico-economic blogroll for your Easter reading pleasure.

From the left

1. Drop GST, raise top tax rates and bring in a Tobin Tax. The left is trying vigourously to attack the National Government on the rising costs of living, to which the government responds by saying the GST hike was compensated for, and that it can't do anything about high oil prices (although John Key is quite good at talking the exchange rate down. Maybe he can do the same the other way and make imports cheaper).

The CPI rose 4.5% in the March quarter from a year ago, the highest annual rise since Labour lost power in 2008. However, Key defended the rise saying half was due to the GST increase on October 1 last year ('which was compensated for'), while the rest was down to things govt can't control, like a rising oil price. 

The Standard's Rob took exception to this, saying government certainly could control GST:

Stop right there John. Around half of the current inflation rate is driven by your GST increase (you remember, the GST that you promised not raise). Lower GST and raise taxes at the top end of personal income (or better still, bring in a Tobin Tax). That will reduce the price pain.

Then you can really get stuck in. Raise the minimum wage and the benefits, withdraw the anti-worker legislation that helps keep wages down. That will reduce the price pain. Get to work now on a proper public transport system so that people can start to wean themselves off their unaffordable cars. That will reduce the price pain. Bring in price controls on staple foodstuffs like milk (because on NZ wages we can’t afford to pay international prices for the foods that we produce here at home). That will reduce the price pain. Stop bailing out your very good buddies in failing finance companies and put some of the money in to reversing the early childhood education cuts. That will reduce the price pain.

In fact, why not just stop screwing up the economy in general. Stop under investing in productive assets like the super fund. Stop strangling the recovery by cutting expenditure and driving up unemployment. Stop threatening to sell long term productive assets for short term gain. Stop the financial bungling that is driving us to an all time record budget deficit. I reckon that will reduce the price pain.

2. Goff is still in the game. Martyn Bomber Bradbury at Tumeke thinks Labour and Goff are still in the election game. Not because Labour could win more votes that National, but because National will possibly run out of coalition partners. Labour could easily govern with the Green and Maori Parties. Not sure whether those two would work with NZ First, but Labour certainly could, their economic policies are the same.

How does Goff win? Easy - HE STICKS TO THE BLOODY ISSUES. Look in 6 months time the recession will be biting hardest, the realities of the privatization agenda alongside the public spending costs can't be hidden after the budget. National need 47% to govern alone, they got 45% last time. 45% is a political high tide mark for them in one of the lowest voter turn out elections. The 'change' mantra can't mask their policy, so if they get less than 45% who can they go into coalition with? If Rodney gets dumped, ACT are gone (even if he stays, he may only bring one person). Dunne could be rolled by Charles, that's a second coalition partner gone leaving the Maori Party who look increasingly likely to be fight a civil war against Hone leading to Labour winning split Maori electorate seats. 

And you won't know what the bloody hell hit you when Winston starts up the populist barn-storming, wait for the predictable jump in NZ First votes. National will certainly have the most votes on election day, no doubt about it, but it's who commands the majority in Parliament that counts. Goff is still in the game.

3. But Chris Trotter doesn't agree because Goff just doesn't have the balls. Voters aren't running to National, they're running from Labour, Chris Trotter at Bowalley Road says. He sees the centre-left limping towards a horrendus election defeat this year because 1) Labour haven't thrown their punches hard enough, and 2) voters are just drawn subjectively to John Key rather than objectively being motivated by their own self interest.

Surely, in the midst of a recession, with high unemployment, falling real wages and constantly rising prices the messages of the centre-left should be falling upon ears that are more than usually receptive? As the old Stalinists used to say: New Zealanders are “objectively” ready for a change of government.

But what the Stalinists never quite grasped (until Hitler’s armies were battering at the gates of Moscow) is that human-beings are almost never motivated by what is objectively in their best interests. Politics is driven by how people respond subjectively to the options placed in front of them.

And the brutal truth about New Zealand politics at the moment is that, subjectively, the voting public is drawn – overwhelmingly – to John Key and his National Party colleagues. Whether the centre-left commentariat likes it or not, these guys strike a chord with roughly two out of every three voters – to such an extent that they are willing to overlook the real-world consequences of National Party rule for themselves and their families.

Now, John Key, Stephen Joyce and Gerry Brownlee are all pretty likeable guys – but they’re not that likeable. For roughly 15 percentage points of electoral support to have vacated the centre-left camp something else has to be going on. Much as we hate to admit it, what seems to be happening here is not so much a case of people running to something, as it is of people running from something.

And what they are running from, comrades, is us – the centre-left.

They don’t like us and they don’t trust us. Why? Because long, long ago they got the very strong impression that we don’t like them.

We don’t like their values. We don’t approve of their culture. And we’re so infuriatingly certain that we know – so much better than they do themselves – what’s good for them.

4. The dangers of an ANZAC dollar, as foretold by the Euro crisis. Aug in Hamilton is thankful New Zealand did not sign up to a currency union with Australia. He/she? also wonders about the inflationary situation that will arise from the Christchurch rebuild.

As I’m sure you all know Europe was hit hard by the 2008 Financial crisis, the geographical core of Europe, France, Germany, Scandinavia were hit hard but have come through in relatively good condition the same cannot be said for the periphery, Ireland, Greece, Portugal and Iceland are all in a very bad state with Spain not far behind. And here comes the problem, there is high inflation throughout the Euro zone, standard economic logic says that the central bank should raise interest rates to slow inflation down a bit, however this move could seriously damage the fragile economies of the periphery.

Needless to say the interest rates were increased. Strangely this also follows rather closely the core-periphery model that people used to describe interactions within an imperial system.

Now lets think of the situation between New Zealand and Australia, which do you think is the core and which is the periphery? and whose interests will be acted upon and whose will be ignored?

Of course the same argument can apply within countries, no doubt Christchurch would like very cheap loans at the moment in order to get the economy their cranking while the rest of New Zealand would like to have loans a bit more expensive in order to try and keep the price of things down. Local currencies for all!

From the right

5. Why is Labour intent on attacking the rich, rather than helping those at the bottom of society? David Farrar at Kiwiblog attacks Labour's 'politics of envy' in its response to PM John Key's use of an Air Force Helicopter to get from the Hamilton V8s to an Auckland golf club dinner.

Labour’s finance spokesman David Cunliffe said Mr Key’s actions showed he is out of touch.

“Maybe Mr Key’s lavish lifestyle with his $55 million worth of investments tells him that flying around from Auckland to Hamilton and back in a helicopter is just normal business, but to most kiwis in this age of austerity it’s outrageous.”

One can have a debate about whether use of a helicopter is justified on a particular occassion (I suspect all PMs only use them when necessary), but what I find interesting is that Labour are once again attacking John Key for having been successful in business, and for being a “rich prick”.

This just reinforces to me that when Labour talk closing the gaps, their focus is not helping those at the bottom of society, but clawing down those who have done well.

6. Tighter student loan rules overdue. Homepaddock argues the implementation of tigher student loan rules for those overseas and over 55 is far overdue.

I have a student loan which is interest free, however I would have studied whether or not I would have had to pay interest because I needed a university qualification for what I wanted to do (incidentally I started off doing a law degree, realised the error of my ways - I got an E in the first paper cos I didn't go to class - went overseas for 8 months, then came back and studied politics, media and some economics with the intention of becoming a journalist).

I can't help but think about Labour's interest free student loan policy, and whether there's a connection with the current trades skills shortage it keeps bleating on about. In my opinion there are way too many people attending university and getting pointless degrees ('because it's free') who would be much better suited in a trades job. There's a shortage now, and those that did do skills training have buggered off to Australia.

Student loans might be interest free while studying and for those who stay in New Zealand afterwards but they’re not gifts.

They are required to be repaid and, for those who go overseas, with interest.

Tightening up the rules around who gets a loan, how much they can claim and the requirement to repay it is long over due.

People who with overdue fines are stopped at the border if they try to leave the country. There would be an uproar if people with student loans were treated that way but when the 15% of those with loans are overseas and owe 55% of the debt they are an obvious target for tighter rules.

Suggestions by Tertiary Minister Steven Joyce are reasonable. Giving those who’ve had loans and go overseas a three year holiday before they’re required to start repayments is far too generous.

And for your viewing pleasure here's the first ever video I did for about how to make free money from interest-free student loans. I've got mates who are creaming this for all it's worth (I actually gave it a go for a bit too before deciding to spend the living costs on beer, petrol and clothes.)

7. What Act needs to do to become relevant again. Clint Heine thinks being in government with National has harmed the Act brand more than anything in the party's history. He has seven tips for Act to find its feet again, with one being don't enter back into coalition with National. Ah, but now Rodney's tasted the baubles of office, will he relenquich them for his image Clint?

Lets move on to election 2011. What does ACT need to do to fight off the vultures?

#1 Commit to being an independent voice away from National. Do not go into Govt with them. 
#2 Hit the road hard, preach about the debt and why ACT was right about cutting spending and not borrowing against our grandkids futures.
#3 Give Rodney a free pass to attack waste, spending and bureaucracy. Push all boundaries with National. We have the ETS, WFF and debt to start with.
#4 Give John Boscawen a chance to win his electorate seat. Give it a fair shot.
#5 Get back into the habit of upsetting the lefties. 
and of course
#6 Bring back the flat tax debate and remind voters we have supported SOE sales before the Nats did.
#7 Realise that being close to National isn't an advantage, their hug of death has many sharp blades.

8. The Veteran at No Minister, in Western Australia, takes a look at the latest NZ poll results and says it seems dissatisfied Labour voters don't seem to be migrating to NZ First...yet.

The fleeting news over here was the comment that if the Aust Labor Party had problems then that was nothing compared to the state of the Labour Party in NZ. The 30% lead by National over Labour comes at no surprise so I won't comment on that. But the results achieved by the minor parties do deserve comment.

ACT. I note with some satisfaction that their result, if repeated, and provided they win Epsom, will see them with a minimum of two seats post the election. That is good news. National needs responsible allies and ACT, less the Douglas faction, is just such a Party.

Winston First. Isn't it great that with the slump by Labour their voters have resisted the temptation to go with Winston. Goes to prove that some erstwhile Labour votes are exhibiting a modicum of sense. Psycho Milt will be disappointed.

The Maori Party. The Maori Party has problems. The Hone fuelled grievance and handout mode that exists in Maoridom may well see the Maori Party become bit players going forward and Labour come through the middle in the Maori seats. Sad because Labour has treated their members as pet poodles and voting fodder. Maori had their big chance under MMP and they may have blown it.

Two parties that won't be there post the election are United Future and the Progressives. Parliament will be the better for that. Wasted spaces.

The Greens ... nuff said 

Economics blogs

9. Inflation targeting vs nominal GDP targeting. Eric Crampton at Offsetting Behaviour thinks targeting GDP growth rather could be a good way to go for central banks rather than inflation expectations, but sees problems for NZ if we were to do it here. Crampton was responding to this NZPA article where economist Scott Sumner argued inflation targeting was flawed because it relied on consumer price indicators that were affected by factors not requiring a monetary policy response such as sales taxes and exchange rates.

I'd definitely take Sumnerian NGDP targeting over a mismash of central bank policy targets. But I'd expected a better reply from RBNZ. "Everybody's doing it" isn't a good answer to Sumner's "Everybody's wrong." They're right to point to their very specific mandate to ignore one-off changes in price levels - a more mechanistic form of inflation targeting could have negative real consequences.

Their pointing to the broadening of the PTA worries me, as always, though that's the fault of the PTA, not the RBNZ. And I'm not convinced by the potential for GDP adjustments to bollocks things: surely in an NGDP targeting world RBNZ would be running output gap models and setting policy to make up the difference. It might be harder to hit an NGDP target, but that just argues for larger error bands around the target. 

The better answer Sumner gave himself: NGDP targeting works best in large diversified economies anyway. I can imagine a few problems resulting from our GDP figures' sensitivity to global dairy prices. 

Further, NGDP targeting would have hit the exact same problems as inflation targeting over the last decade. In 2005/6, RBNZ was too loose relative to its own inflation target; why do we think that an NGDP target would have then been any the more constraining? In 2008, RBNZ saw the crisis coming and increased the money supply; I'm not convinced that they would or should have done more in an NGDP regime than they did do under inflation targeting.

10. Quit whining about the GST increase. Matt Nolan at TVHE takes exception at the left blaming the government for the rise in the CPI due to the GST increase, because people were compensated for it.

He also points out that the high NZ dollar at the moment is helping keep down the price of those neccessities the Labour party keeps saying are too expensive, with Labour then turning around to call for a lower currency.

I asked Phil Goff about this, and his answer was that economics was a dismal science, and that people would respond to higher petrol prices through take-up of biofuels and the like. Well stop banging on about the price being so high then Phil - it's a great incentive for people to change their behaviour...or perhaps you don't want that or you'll have nothing to attack.

GST went up, and income taxes were cut by an amount that implied that pretty much EVERYONE had greater real disposable income following both changes (benefits and super were adjusted as well remember).  So don’t pull this line.

And also, all this talk about prices rising rapidly … well the CPI rose 0.8% in the quarter, almost all the result of a spike in petrol prices (on unrest in the Middle East and North Africa) and a spike in food prices (on the back of droughts and floods overseas).  Prices across a whole range on retail products actually fell during the quarter – such as clothing and footwear.

Also, lets not forget that both parties arbitrarily want the exchange rate lower – remember that a lower exchange rate increases the price of imported goods.  This is something that will make it harder for families to put food on the table and make it more difficult for mum and dad to pay for a new school uniform for the kids.  The high exchange rate (due to high food prices, when we sell a lot of food overseas) helps to take some of the gains from high export prices and pass them on to other households in society – don’t forget this, as politicians and exporters seem determined to hide this fact from the public.

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3. Nicely put by Trotter, wow he recognises his own failures.....its quite simple the left will screw over the middle voter, meaning to aim for the upper voter sure, but the fallout/shrapnel will cause the most carnage on the middle ground.  On the other hand this is balanced by anyone with sense should be seeing National will be aiming to hand the middle voter chicken feed while handing the upper voters fillet steak.......Middle voters face a no win either way IMHO, its just which is the least worst.



Well you see, as a lifetime supporter of the Labour Party, and based on my many years of extensive work as a University lecturer since graduating I can tell you that the narrative of patriarchy that is implied by the construction of contemporary and classic social theories provides a paradigm shift of convergent flows from the social scaffolds of intergenerational communities and sculpts both societies and individuals and places dangerous burdens on the postmenopausal imperatives of equality and equity. Now I have published extensively on this in leading international peer reviewed journals, and I have been an invited speaker on many international conferences I am very concerned by what I’m finding in post-neoliberal paradigms that manifest in current Government policy.

So I am standing for Parliament on the Labour party list because I think it is so desperately important that the construction of these imbalances are fully addressed so that our communities are fully engaged in building institutional equality in the this age of dogma of the global corporate and the triumph of internationalism.  It is my very firm view that with my many years of extensive study in this area that I have a vast experience that is highly relevant to bringing about better communities and outcomes for New Zealand, by setting government economic and social policies that are so desperately needed to be fully aligned with the needs of the underclass. I will be a strong voice in Parliament and the next Labour Government representing those views.

That is why I call immediately upon the National Government to increase working for Families by 15%, and to axe the tax cuts for the rich and to increase the top tax rate back to 39%. I also call upon the Government to give and an immediate 10% cost of living increase to all beneficiaries and superannuatants, free doctors visits to all those under the age of 16, and fully subsidized early childhood education as well as 75% subsidized day care  for all working families and 100% subsidy’s for all solo mothers.  I am also calling on GST to be dropped on all food and student fees to be frozen. I would like to see a capital gains tax introduced, as well as property tax and an increase in the top corporate tax rate to 42%. And finally I would like to pass a law that outlaws sex between men and women unless they have applied for and been granted a licence to do it. Same sex couples are exempt.



Nice troll....



David B (it's not Bain is it?),I can see you are a true Labourite, through and through. Your statement will put you somewhere at the top of the Party List, for sure.

As for the rise of NZ First, unfortunately for Labour it could be at their expense, so the combined vote for the two should be about what the polls say now, it just may be the ratio of Labour:NZ First is a bit different from currently.  At end of day if their policies are so similar it doesn't really matter if a supporter votes one or the other, does it?


I think u fell for the troll...



Well I’m very surprised you would say that, Steven!?

My long experience of studying New Zealanders at University has equipped me with a true understanding of their lives. It has allowed me to conceptualise profound theories of the narrative of social dialogue of the self within the post-neoclassic post-modern melange. I can’t think of what better more relevant training I could have had to be both on the Labour Party list, and a potential Member of Parliament for the Labour Party.

I can assure you that over the years I have spent many hours listening to the profound stories of women’s lives, the outcomes of which I first discussed in my Master’s thesis; Patriarchy and the misogynist. A study of the repression of women in the age of disco.




Well thank you, muzza. And no, lol, it's not Bain.

I am very proud of my Labour roots. I’m also very proud of my long history within the party which I have been a member of since I joined the student’s association branch at University, straight out of school. I can proudly say that I cut my protest teeth on the front lines of Stop the Tour, and Piggy’s are for Eating, movement.  

I’m likely to get a high position on the list after the strong support of my fellow academic colleagues within the party, and also from supporters at Male Friends of Feminist Womyn, and of course, the Gaggle, all of who share my view that we know what’s best for this country, based upon our vast experience of research and teaching about it at University.  

I believe that I am an excellent example of what the modern Labour Party is all about, and I am proud to say that my colleagues within the party recognise a fellow traveller when they see one.  Given the challenges that New Zealand faces I am delighted to be given the opportunity to bring my experience and understanding to the task of bringing about real social change and justice in New Zealand. Our people deserve no less.


Hilarious David B!  Almost as impressive as Alex's "E" in law (I thought you needed to submit a blank page to get an "E" nowadays).


Yup , gotta agree , that was very funny , DB . ........ Briiliant !


To be honest I realised it wasn't for me after the point where you could quit the paper and get your money back. So I kept up a few lectures and went to the exam for fun. 32% :)

I didn't really want to be a lawyer, I'd just heard having a law degree was a good thing so I enrolled in that - didn't even think to not look at uni or take a year off (which I think is a good idea for most kids out of high school).

But on the topic, I think way too many students just attended uni because it was so easy to enroll and get the funds. The psyche was that it was 'free' and you'd pay back whatever you owed ages later - there were no budgeting courses at high school warning you about the future debt burden you'd have (and I never saw any advertised at uni).

And now we have the retirement commissioner saying they were able to roll out their financial literacy package to schools because of funding restraints at the Min of Ed...


And we should get lotsa laughs come Budget day next month...not the lowest of the state workers of course...always first to get the least they will be able to look back and feel pleased that their demise resulted in a big fat pay rise for the bloat at the top...what's the going number for the 'bloats' these days...$500000 plus....for sitting on your arse.