Economics

Labour relaunches their Hobbit Hater policy

Labour has re-launched their Hobbit Hater policy at the behest of the unions, proving that their investment in purchasing David Cunliffe and the 20% vote for the leadership has provided a cash for policy arrangement that is giving their leaders sticky knickers.

The Labour Party wants to repeal the law changes that were ceded to Warner Bros over The Hobbit films, a move which the Government says would cripple the $3 billion screen industry.

Labour leader David Cunliffe and MP Andrew Little launched the party’s work and wages policy yesterday, which included a boost to the minimum wage, and a commission of inquiry into workplace conditions.

Here’s an idea…why don;t they just declare a wages crisis, and in short order National will fix the problem. Seems to have worked for manufacturing and housing…it’s worth a crack.

So Labour wants to kill off the film industry in NZ, Dotcom’s party just wants to steal it, and the Greens want to destroy the oil and gas industry.

They really are the wrecking ball of the NZ economy.

But wait it gets worse…Labour also wants to kill jobs.  Read more »

Oram justifies borrow and spend from Brown

One of the left’s biggest apologists, Rod Oram, has penned an article which basically forgives and encourages Len to borrow and spend and particularly for his train set and then at the end of the articles we find Oram is on the payroll.

So he gets hired by the ratepayers and the coincidently uses his weekly column to write nice things about his paymaster.

Ratepayers should be asking what this guy is paid and Fairfax should never have accepted the column and asked him to write about something else, in fact Fairfax should get a proper business columnist who actually knows something about business.

The fight is on for the future of Auckland. The choice is: a healthy one driven by ambition, or a dysfunctional one dragged down by a penny-pinching mentality.

The issue has come starkly to a head with the deliberations over the council’s 10-year budget. The decisions the council will make over coming months, guided by public opinion, will set Auckland’s course for years to come.

So far the pessimists have dominated the debate with their wildly inaccurate and irresponsible claims that the council’s finances are shambolic. Only savage budget cuts can save it, they say.

To set the record straight:

The council runs a budget surplus on operating expenses. In 2012/13 it was $246m.

Rates provide only half the revenues for the council’s $3 billion annual budget. The rest come from a variety of sources.  Read more »

Auckland Council debt at the limit, time to sack the Treasurer

brownhonest

The rot at Auckland Council continues unabated with more news about just how perilously close to trouble the Council is in financially.

Council is already tapping the lit of it’s borrowing capacity. Currently net debt sits at or close to 14.9% of revenue. The limit is 15%.

Which means Len Brown (as treasurer) has spent so loosely in the last two years that Council cannot borrow any more money.

The only way that Council can borrow more – is to increase it’s rates. Raising the rates by 2.5% as noted on this table will increase borrowing capacity by 3%.

Mayor Brown is talking up closure of services – libraries, inorganic rubbish and so on to trick ratepayers into believing things are tough and, to justify breaking his election promises with a significant rates increase. He is already signalling that he is likely to break that promise.   Read more »

Lindsay Mitchell – The Greatest Risk

Lindsay Mitchell has written a fantastic piece and has asked me to publish it so it gains a wider audience. I am very happy to do so.

As Rodney Hide said in the comments, this should be pinned to every wall in Treasury.


Growing up in 1960s New Zealand, houses were smaller and families bigger. Paradoxically, overcrowding and child poverty weren’t a major issue. Most families had two parents and many could even afford a stay-at-home mum. A very small percentage of families experienced financial hardship associated with an absent father.

What changed?

In 1973, influenced by the Royal Commission on Social Policy’s urgings, the government introduced a statutory benefit for sole parents regardless of the reason for their single parenthood. In the following 20 years unmarried births with no resident father more than quadrupled from around 2,500 to 12,000 – 22% of all births – annually. The relatively generous DPB saw single mums dropping out of the workforce. (The Royal New Zealand Plunket Society partially attributes this development to the eventual non-viability of Karitane hospitals which had provided live-in employment for unmarried mothers.)

These births accumulated in the statistics. By the early 1990s around a quarter of a million (mostly) mothers and children were dependent on the state for their survival. But the benefit still kept them above the poverty threshold.

When the incoming National government of 1990 opened Treasury books, the news was bad. This is where the authors ofChild Poverty in New Zealand pick their story up. They describe “benefit cuts of between 10 percent and 30 percent for many beneficiaries supporting children.” In fact, for a lone parent with one child, the cut was 10.7%; for those with two, 8.9 percent. The universal family benefit was abolished, but half of the savings were reallocated into increasing Family Support for beneficiaries and low-income families.

Nevertheless, the drop in income was enough to push beneficiary households below the poverty threshold (though they had probably been barely over it prior). Compounding this was the high number of partnered jobless parents created by an unemployment rate exceeding 11 percent in 1992. From that time the proportion of children in poverty, measured at below 60 percent of median disposable household income after housing costs, has been flat to falling slightly.

Sixty nine percent of children in sole parent households are poor compared to 15 percent in two parent families. Today, a lone parent heads around 30 percent of all families with dependent children. Long-term dependent sole parent families aren’t typically the result of a marriage breakdown. They hail from very young mothers with no educational qualifications, work skills or regular partner.

Every year around one in five new-born babies will be reliant on their caregivers benefit by Christmas. This pattern has persisted from at least 1993. For Maori the number jumps to over one in three.   Add to this Treasury’s advice to the Ministerial Committee on Child Poverty,

“…around 1 in 5 children will spend more than half of their first 14 years in household supported by main benefit. This group is at the highest risk of material hardship and poor outcomes across a range of dimensions”.

The worrying aspect of this pattern is its persistence through good economic times. In 2007, when New Zealand had record low unemployment, the percentage bottomed at around 19%. Over three quarters will rely on a sole parent benefit, the remainder on either an unemployment or disability benefit. While some of the reliance will be due to unforeseen circumstances like are job redundancy, most could have been predicted by the parent.
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In a recent Listener column Jonathan Boston wrote “…it is worth pausing and considering how easy we would find it to raise children under such circumstances.” The same counsel should be put to those people who can actually change the pattern. Though too much emphasis on “personal responsibility” would give less weight to “fairness and compassion” according to the book. Why these societal attributes would be mutually exclusive is unclear. Read more »

More good news

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No matter the amount of effort going in at Labour HQ to paint a picture of National mismanaging the economy (who thought that was going to ever fly?), the evidence to the contrary continues to engulf us like an avalanche.  The Herald’s Business Desk reports   Read more »

Oh no, another of Labour’s mantras of misery destroyed

Labour continues to run a mantra of misery about New Zealand, despite their claims of a positive campaign.

I think they think that if they say it enough it will become a truism rather than the Nasty party reputation they have built.

Unfortunately for them their campaign is built upon problems that are slowly coming right as the economy grows and their mantra of misery is becoming tiresome in teh face of facts.

One area that they have harped on about, inequality is also coming right according to latest reports.

Child poverty has dropped back almost to pre-recession levels, as New Zealanders’ jobs and incomes finally climb out of a five-year downturn.

The Ministry of Social Development’s latest annual report on household incomes says the number of children in households earning below 60 per cent of the median wage fell by 25,000 to 260,000 last year, the lowest number since 2007 when there were 240,000 children in poverty.   Read more »

An economic lesson for Labour they seem to have forgotten

The Labour party wants to raise taxes, add in the Greens tax increases and their fondness for keynesian stimulus spending, you really wonder if they understand basic economics.

You simply cannot tax a nation to prosperity.

Who better to explain the Laffer Curve than the guy who it named after, Arthur Laffer:

The IEA was delighted to host renowned economist Dr Arthur Laffer on 27th June. He was in the UK advocating lower and flatter taxes as the key to economic growth. He suggests high tax rates alter people’s behaviour and act as a disincentive to work.

Laffer Curve from Institute of Economic Affairs on Vimeo.

Read more »

More good news

The good economic news keeps on coming in, destroying the opposition and their trash talking of the New Zealand economy.

The latest piece of good news is from the IMF who have given our economy a big tick.

Macroeconomic policies are moving in the right direction. With excess capacity largely exhausted the RBNZ has begun tightening monetary policy. The government’s plan to return the budget to surplus is on track. With public debt low and interest rates above the zero bound, the authorities have monetary and fiscal policy space to respond to shocks, and the free-floating New Zealand dollar provides an additional cushion against terms of trade and other external shocks. The well targeted macro-prudential policy framework should allow the RBNZ to take additional measures if needed to guard against the financial sector risks that would arise from an unsustainable acceleration in house price inflation.

[...]

Growth is forecast to increase to about 3½ percent this year and moderate to a trend rate of 2½ percent over the medium term. Strong construction activity is expected to remain an important driver for near-term growth (text figure), although the speed of the Canterbury post-earthquake rebuild and its interaction with the wider economy are less certain. The terms of trade are projected to ease somewhat due to an assumed moderation in global dairy prices, but remain high relative to historical levels and continue to boost growth in national income. The current monetary policy stance remains well below neutral, and with leading indicators pointing to an economy that is set to grow above trend in the near-term, pressure on core inflation should follow, particularly from the construction sector.

[...]   Read more »

Labour’s 10,000 outstanding earthquake claims is actually less than 1500, busted again

Labour has proposed a horrendously expensive solution to a non-problem.

They must be rueing the day they kicked their Treasury advisor to touch because this is exactly the sort of thing they would have caught and saved David Cunliffe severe embarrassment in launching a policy to solve a problem that doesn’t exist.

The Insurance Council notes:

In a press release earlier today, Labour EQC spokesperson Clayton Cosgrove questioned the number of Canterbury insurance over cap claims with ‘settlements pending’.

Insurers involved in the Canterbury earthquake recovery have 22,455 over cap dwelling claims with 87% fully settled or agreed with customers.

Based on figures collected in the CERA quarterly survey, at the end of March 2014 there were 9,877 (44%) dwelling claims closed and completely settled.

“There is a further 9,755 (43%) which CERA refers to as ‘pending settlement’, which essentially means the insurance company has reached an agreement with their customer and is in the process of being settled, so contrary to what Mr Cosgrove suggests there is no dispute,” says Insurance Council spokesman Samson Samasoni.

“Pending settlement means that there are builders on site completing the rebuild or repair, it’s scheduled for a rebuild or repair or they’re waiting to receive their cash settlement. Insurers don’t call it ‘completely settled’ until the key to the front door has been handed over or the cheque is banked,” he says.    Read more »

A massive tax on NZ and the Greens reckon each household will save a measly $319p.a.

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The Green party is going into this election proposing a carbon tax…the exact same thing that cost Julia Gillard her job.

They even burned up quite a few carbon miles shipping in Lucy Lawless to say inane stuff like this:

Lawless flew down from her home in Auckland this morning to hear the speech.

She was given details of the policy days ago, but admitted she doesn’t understand the details.

“But I think it’s very energising. It’s a great relief to me that someone is taking some leadership towards mitigating the effects of climate change,” she said.

“I think fair has got to be fair.”

She admitted she flew down at the last minute but doesn’t fly “frivolously.”

She came as “a mother” but is not a party member. Lawless wouldn’t say if she will play a role in the election campaign.

“Somebody has got to say these hard truths and the Green Party is doing it.”

Read more »