Economics

The lunatic left all promote a ‘Robin Hood’ tax, aka a Tobin Tax or Financial Transactions Tax. Matt McCarten, himself a stranger to paying tax, even promoted it in the Herald on Sunday.

The problem with such a tax is that it doesn’t work, and it has been tried before with disastrous consequences..

James Tobin, a Nobel-prize-winning economist and disciple of Keynes, first proposed the idea of a global transactions tax—on foreign exchange—in 1972. This newspaper has regularly criticised it on two counts: it would be unworkable unless all governments signed up to it (and perhaps even if they did); and a levy would harm the liquidity of financial markets, making asset prices more volatile. Now there is a third, equally valid objection: that a Tobin tax is a poor solution to the problems in banking—too much leverage, too little care taken in assessing risks and banks that are deemed too big to fail.  Read more »

Once again the parties of the left, aided by their plants in the civil service are calling for poor kids to be fed at school.

Every day thousands of Kiwi kids go to school hungry or without lunch.

They are more likely to fail in school, to have poor health and to feel ashamed. Some of our considerable additional investment in children in low- decile schools is wasted because they can’t concentrate on learning. We are all affected by the additional costs of future low productivity and welfare dependency.

The expert advisory group on solutions to child poverty report I released in December last year recommended implementing a targeted food in schools programme to support children to learn and succeed.  Read more »

Don Brash has suggested the government axe interest free student loans in order to assist in paying for the Christchurch re-build.

Former National Party and ACT leader Don Brash says the Government should use the increased cost of the Christchurch rebuild as an excuse to ditch interest-free student loans.

Prime Minister John Key yesterday said the estimated cost of rebuilding the quake-hit city was now $40 billion, up from $30 billion in December. The direct cost to the taxpayer has been bumped up by another $2 billion, but Mr Key said this wouldn’t impact on the Government’s plan to get the books back into surplus by 2014/15.

Speaking on Firstline this morning, Dr Brash said the last Labour Government introduced “a number of very unfortunate spending programmes” which should be cut back.

“National criticised those… but has left them all in place,” he says.

“You’d think with the Christchurch earthquake costing the Government itself an estimated $15 billion, they would have used that to explain to New Zealanders why some of those programmes have to change.”  Read more »

Cry-Baby: George, 66

The incident: George is a pensioner who took out a student loan of $4,000 in 1999, he hasn’t paid a cent back since he got the loan as he hasn’t earned enough to cross the threshold for repayments. Good luck or good management? Who knows? However he is now on the pension and it pays him enough to cross the threshold for repayments on his long outstanding student loan.

The appropriate response: Behave like a responsible citizen and pay what is owed, when it is required.

The actual response: George, 66 runs off to the media complaining that the government is hacking into his pension and stealing his money.  Read more »

Helen Clark’s government forecast a decade of deficits…National arrested that. In Australia Julia Gillard is similarly facing a decade of deficits despite promising many times to balance the books. Predictably the Liberals have attacked.

Australia faces a decade of budget deficits with the annual total set to pass $60 billion in 2023 unless governments take tough action to “share the pain”, an expert panel has warned.

The Grattan Institute’s assessment comes as Treasurer Wayne Swan confirms the budget has taken a $7.5 billion hit since the midyear update in October.

He told the ABC from Washington: “We have seen the terms of trade come down but the dollar didn’t move. That’s caused a hit, if you like a sledgehammer, to revenues in the budget since the midyear update of something like $7.5 billion. And of course the impact won’t just be in this financial year. It will also be across the forward estimates.”

The institute says that while notionally on track to surplus now, the combined state and federal budget deficits should reach 4 per cent of gross domestic product by 2023, which is about $60 billion in today’s dollars and would be about $100 billion in 10 years’ time.

Read more »

Seamus Hogan of Offsetting Behaviour writes an open letter to David Shearer and David Parker. It is somewhat impertinent but asks valid questions which they need to answer:

Dear David and David,

I have read with interest the policy document you released yesterday: New Zealand Power, Energising New Zealand.I wonder if you could clarify a few points for me.

1. In the document and the associated speeches, you quote the Wolak report’s figure of $4.3b of, in your words, “super profits”. Have either of your read the report, or any of the trenchant criticisms of that report? (A bit egotistically, I can suggest work that I was involved in, here, here, and here, but there are others.)
2. You say that “prices are rising faster than in many of our major competitor countries”, and show a graph comparing the price trend in a number of countries since 1986. Let’s leave aside the question of what is meant by “competitor country”. Is it your position that prices were correct in New Zealand in 1986? Elsewhere you say that your new agency, New Zealand Power, will set prices based on operating costs and a fair return on capital. Is it your position that prices were generating a fair return on capital in 1986?
3. You say that the faster rate of price growth in New Zealand “undermines the competitiveness of our economy”. But one of your graphs shows that real industrial prices have remained about constant since 1986 and commercial prices have fallen. What exactly do you mean by “competitiveness”?   Read more »

Matthew Hooton has a very good column at NBR.

If Labour and Greens can decided that electricity is not at a “fair” price what is to stop them coming after your house next, and regulating the property market so house are sold at a “fair” price. After all they do both have “affordable housing” policies. It wouldn’t take much to institute a removal of real estate agents and have an agency that bought and sold house at a “fair” price. You just go in the queue for a house and the state looks after you.

It goes without saying that such a government would be exponentially further left than the Clark/Cullen government of the 2000s.  Further, as this week’s electricity policy launch reveals, both Labour and the Greens are politically committed to cutting electricity prices and ideologically determined to impose financial revenge on buyers of MRP shares.

Businesspeople may argue that that would drive down not just the value of “mum and dad” shareholdings in Contact, MRP, Meridian and Genesis but hit almost every KiwiSaver fund, along with the ACC and Superannuation funds.

Any rational person might then point out that any private-sector wealth destruction would be exceeded by the government itself, given its majority ownership of MRP, Meridian and Genesis and 100% ownership of Transpower.  Read more »

Paula Bennett has confirmed that there are less bludgers taking from the taxpayer…29,000 less bludgers.

Social Development Minister Paula Bennett said there were now 29,000 fewer New Zealanders receiving benefits since the last quarter, the lowest number of beneficiaries at this time of year since 2009.

She said more than 17,600 people went off the unemployment, domestic purposes and sickness benefits and into work in the last quarter.

There are now 310,146 people on benefits, including 92,550 sole parents on DPB, 58,208 on sickness benefits and 48,756 on unemployment benefits.  Read more »

Bernard Hickey and his Labour party pals won’t be happy about this from the IMF.

IMF managing director Christine Lagarde was full of praise last night for the direction in which the New Zealand economy was headed.

After meeting Prime Minister John Key on the fringes of the Bo’ao Forum for Asia, in China, she talked to New Zealand reporters about the general health of the economy in light of a recent assessment of fiscal and monetary policy.

“All I can tell you is the IMF is very supportive of what is being done by the Government in that respect.  Read more »

Yesterday travel blogger David Farrar had quite the scoop about the Green party running deceptive ads.

So in summary, the Greens:

1. Misrepresented the minimum wage change
2. Inaccurately stated the minimum wage last week was $13.75
3. Miscalculated the take home pay last week (they were wrong at $13.50 and $13.75)
4. Miscalculated the change in student loan repayments
5. Miscalculated the change in Kiwisaver deductions

This is pretty gross incompetence for a political party with you know staff and MPs. There is nothing difficult about going to the IRD website and using their calculator. Their advertisement is false and misleading and they should withdraw it until corrected.  Read more »