Govt clearly serious about avoiding forecasts for large, growing deficits

While the governments of the U.S. and the U.K. carry on their massive borrowing acts as if there is no tomorrow, it seems that the government in New Zealand has given a strong commitment to international ratings agencies that we will not be following suit.

 

Treasury's forecasts in December for the Crown's deficits to grow alarmingly in the years ahead had been weighing down on potential investors in NZ-dollar denominated debt - meaning that getting access to long-term financing offshore had become very hard to get.

 

The government's re-assurances to international investors that it won't allow the Crown's balance sheet to get out of control (triggering a Sovereign Credit Downgrade) - is good good news for employers looking to grow or maintain their business with bank funding.

 

The government's re-assurances have apparently assisted ANZ National Bank to raise US$1 billion through an issue of government guaranteed three year bonds to US investors last Friday - its first long dated fund raising exercise since July of last year.

 

That will assist to counter the upward pressure on longer-term interest rates seen lately, but it also must mean that government departments are under enormous pressure to ensure that the re-assurances that the Government has clearly given to financial markets are fully met in Budget 2009.

 

The worst thing that could happen now is if the government disappoints foreign investors after it has given clear messages that the New Zealand Government is serious about maintaining strong Crown accounts and that the New Zealand Government is taking action to avoid any downgrade by international ratings agencies.

 

http://www.interest.co.nz/ratesblog/index.php/2009/03/31/analysis-how-john-key-secured-a-us1-bln-loan-for-new-zealand-with-a-newspaper-interview/

The Nasty National Party once again

The graceless, boorish comments Paul Henry made on tv are the sort of thing that, if he made them somewhere else, would simply leave you thinking, 'that guy's a dick.' You would leave it there. After all, is there really anyone who cares what Paul Henry thinks about how people should look?

But what is especially objectionable is that TVNZ has allowed itself to be used to bully and humiliate someone. This is not a conversation in someone's living room: it is a national platform from which someone belittled and abused a person who had done nothing wrong.

The misuse of power is awful. In front of tens of thousands of people, a television anchor has used his camera time and his audience, to administer an intentional humiliation. A schoolyard taunting. On their own, the comments are just impolite and ugly. It is the misuse of power, the thuggish, ganging up and picking on someone he thinks is different, that is unacceptable.

Henry, of course, is a National Party candidate. The National Party blogs are all praising him of course. Because National has never met a bully it didn't like.

Under National, TVNZ is a vehicle for abusing anyone different.

IMF advises NZ Government to raise taxes

The Stuff website is carrying an NZPA story entitled 'Govt told to curb spending' http://www.stuff.co.nz/national/politics/2294570/Govt-told-to-curb-spending 

 

"Low priority spending should be cut, but the required adjustment (to save the Crown accounts from deteriorating significantly) is so large that the Government would have to consider raising revenue - taxes to bring debt levels down," the IMF is quoted as saying.

 

The reason why the Crown is required to run structual surpluses in New Zealand was highlighted yet again today when Statistics NZ issued the balance of payments for the last three months of last year (this tells us NZ's current account balance with the world by aggregating the balances of merchandise trade, services trade and international investment income between NZ and the world). 

 

NZ Inc. (driven by the household and business sectors) lived on the credit card to the equivalent of just under 9 percent of GDP in the year to December 31.http://www.stats.govt.nz/products-and-services/media-releases/balance-of-payments-intl-investment-position/balance-of-payments-and-iip-dec08qtr-mr.htm

 

International investors require the Government to keep its own books in surplus to offset the risk associated with lending to New Zealanders arising from the open credit card practices of our households and businesses.

 

We've been living on the credit card, running annual current account deficits in each and every year since 1973. The running deficits are cumulative - adding to our total net overseas financial liabilities as a nation - so that by 31 December 2008 New Zealand's overseas liabilities exceeded its overseas assets by $167.7 billion (92.9 percent of GDP) versus 87.1 percent of GDP a year earlier.

 

The last time international ratings agencies downgraded our Sovereign Credit rating was in 1998 when the last National government was cutting income taxes and facing the Asian financial market crisis.

 

What is very clear is that everything has changed in the global economy and financial system since October of last year.

 

Kiwis will forgive the National-led government if it decides to can the 2010 and 2011 round of income tax cuts. In fact, Kiwis will support the Government's moves to cut low-priority government spending, and they'll even support tax rises, if they are kept in the loop and spoken to honestly by the Prime Minister who enjoys high popularity and leads a government enjoying a prolonged "honeymoon".

 

With expensive population ageing and global climate change challenges facing our small trading nation in the decades ahead, real strong leadership is what the country needs and which, hopefully, National will deliver.

Rare praise

This blog is not always complimentary to the National Party. But when they do something they should do, we should have the integrity to recognise it.

This is a good thing to do, in principle: reviewing spending on low priority programmes and axing a few.

Progressives cede this ground to the right far too easily - because the right always claim to have a war on the size of government in the name of lower taxes. But Progressives shouldn;t cede this ground. There is nothing wrong with making spending as efficient and powerful as possible. 

The real right agenda is to cut services that are effectively redistributed - for example, to reduce health care provision, and free education, so that the taxes of the wealthy are not used to pay for the social services accessed by the rest of us. They don't really care about the efficiency of spending - it is redistribution and social equality they are worried about.  The right wants to use government to stop social mobility and to keep working families from rising above their station - progressives want to maximise mobility and equality.

Therefore Progressives should resist the right wing agenda to slash essential social services, but strongly support efforts to keep the public sector as lean and light weight as possible in the pursuit of better outcomes. The more bloat that gets stripped away, the more there is left to be spent where it is most needed - and the more we can expose the right wing agenda to cut essential services, which they disguise under their criticism of bloat.

Every government should have a programme of permanently reviewing lowest priority spending. Ministers should be required to offer up the lowest value thing they do every year. Otherwise, programmes that are set up with good intentions can lumber on without delivering results.

So, praise for John Key over this. But one reservation: The Nats have already shown nastiness runs in their blood. You just know they are going to cut programmes not because they are low priority, but because they have a vindictive agenda. They will cut anything that doesn't appeal to their bigotry. They will cut any programme they can that helps poor people.

And if they really wanted to get rid of waste in the public sector, they would get rid of ridiculous, old fashioned and insulting colonial titles like 'sir' and 'dame'.

Nasty Nats

If you ever need to see how provincial, nasty and ugly some of the national Party can be, just read the nasty comments here. And notice how they vote each other up and down.

Kiwiblog is really just a vigilante group. An angry mob of neverdowells, raving at each other. It is sad that New Zealand harbours so many ugly people. 

What is it about National party philosophy that attracts such ugly people - the culture of selfishness and greed? the bigotry beneath the surface? The bitterness of personal failure transformed into blustering, bullying political ideas? Or maybe the whole lot combined.

Erosion of 4 Weeks Annual Leave is an attack on families

The National Party, together with its mates like United Future, voted against Matt Robson's Four Weeks' Paid Annual Leave Bill when the Progressive Party Bill was voted on in Parliament in 2003.

 

It wasn't a surprising stance as the National Party quarter of a century earlier had voted against the Third Labour Government's decision to introduce a third week of paid annual leave.

 

It is unclear what the National Party truly believes the number of paid holidays employees should be entitled to (five days, or ten days as it was in the 1960s, or none at all?), because National isn't an honest party that tells citizens what its actual agenda is before people vote. It doesn't outline the intellectual and moral basis for its agenda, and then seek an open mandate to deliver. 

 

Instead it aggressively opposes all progressive gains by Labour governments but, because it has no mandate to bluntly reverse the gains when it does get into power, once it is in Government its goes about its regressive programme in sneaky, piecemeal ways.

 

National will undermine working people's four week holidays piece by piece.

 

One of the arguments used against extending an extra week when the Progressive Party Bill was first introduced to Parliament in late 2002 was outlined by National's sister organisation, Business New Zealand:

 

It said at the time that: "Proposals to increase holiday entitlements to four weeks a year would harm New Zealand's growth prospects. MP Matt Robson's Holidays (Four Weeks' Annual Leave) Amendment Bill is likely to get its first reading in Parliament this week, and Labour Ministers are apparently being lobbied hard to support it...Mandating another week's holiday for everyone sounds appealing of course, but it would reduce the nation's productivity. None of that would help growth or prosperity in the longer term."

 

The argument of the Regressives was, of course, very dishonest - it deliberately mixed up three different concepts into one - productivity, growth and prosperity - as if they were all exactly the same thing. http://www.businessnz.org.nz/doc/433/Extraweeksholidaywouldharmproductivitygrowth

 

The United States enjoyed strong productivity, economic and employment growth over the period 2001-2007, for example, but when it comes to the question of prosperity the honest thing to address is to answer for whom?

 

•  Most U.S. working people's inflation-adjusted or real wages have been stagnant in the 2000s, especially since 2003.

 

• In American under right-wing administration since the start of the New Century, the productivity/wage gap grew strongly. The gap between productivity growth and workers' wages, especially those of middle- and low-wage workers, is at a historically high level. What that means is that wage growth has been very unequal. 

 

The practical effects of the right wing agenda, whether in the U.S., New Zealand or any other country, is not greater prosperity for a majority of citizens, but just a minority. http://www.epi.org/publications/entry/bp195/

 

But there is another aspect of the Right's programme.

 

The effect of eroding working families taking four weeks annual holidays a year, in a society where two incomes are a financial necessity for the majority, is also an act which puts additional pressure on families themselves and the cohesion of families.

 

That's right, the freemarket ideology which relishes inequality and opposes annual paid leave on principle, is a backhanded attack on family values and the interests of a majority of families.

Failed finance companies

Neville Harris, Registrar of Companies, has done the public a service with his report to the Commerce Select Committee into the factors that contributed to the destruction of so many households' savings in the debris of so-called 'finance companies' over the past two and a half years (pg 8-14)

http://www.parliament.nz/NR/rdonlyres/16F22058-8DD8-4541-B9A9-064848076239/100892/DBSCH_SCR_4272_6521.pdf

The report covers 20 or so companies now in receivership and the nine companies where investors have approved a restructure and/or moratorium on maturing loan repayments for periods of up to five years.

The report is vital reading for anyone ever thinking of putting money into a finance house in New Zealand.

We have been told for two decades that the basis of New Zealand regulation of finance houses rests on the honesty, competence, adherence to the law and "good governance practices" by boards of directors - with critial supplementary roles by independent auditors, trustees and financial advisors.

Well it is not possible to to read this report and feel any sense of confidence in the roles of Trustees or Auditors in the regulatory framework of the non-bank financial sector in New Zealand.

There is no rational basis for any investor or potential investor to have confidence that there are these independent directors, these trustees and these auditors out there looking out for the interests of small time investors.

The  Registrar of Companies' findings contrast with any positive impression that anyone might have got from the Securities Commission which in August 2006 issued a statement telling us that:

"Finance companies' disclosure of information for investors has markedly improved since the Securities Commission published a Report on Disclosure by Finance Companies in April 2005. This is the finding of a Commission review of offer documents of 20 companies prepared since the Commission's Report."

http://seccom.govt.nz/new/releases/2006/240806-2.shtml

So in August of 2006, the Securities Commission was happy to issue a statement explaining to investors that it is the Commission's job "to intervene when finance companies do not provide the information required to enable investors to make informed investment decisions" and explaining also how it had been tough on no less than 12 companies - requiring them to rectify their disclosure deficiencies.

If you had read that in 2006 you might have taken comfort from knowing that "the standard of disclosure in the finance company sector has improved significantly as a result of the Commission's work" (particularly since an initial 2004 Finance Company Discussion Paper http://seccom.govt.nz/publications/documents/disclosure/index.shtml ) and that "most finance companies had taken the (Securities Commission's) report seriously and have been able to apply the guidance in it."

Neville Harris, Registrar of Companies, has done the public a service in clearing up any confusion.

 

Strategic implications of America's massive government debt policy

U.S. Federal debt, thanks mainly to the big tax-cutting and Iraqi war policies of the eight-year Bush Republican Administration, now stands at about US$11 trillion (NZ$21,000,000,000,000).

 

The operationally-independent Congressional Budget Office today estimates that, due to both the ongoing costs of the Iraq War and the need to clean up the mess created by the financial market intermediary gurus that have wrecked the U.S. banking system, the U.S. central government will be running huge annual deficits in each and every year for the next decade - adding perhaps another US$9.3 trillion on to that outstanding level of Federal debt over the next ten years.

 

Is it OK for the American government's gross debt levels to rise to toward 150 per cent of GDP, its net debt levels towardr 100 per cent of American GDP?

 

This is not a moral question, but a political and financial one.

 

If China, Saudi Arabia, the UAE, Switzerland and Qatar et al are major holders of U.S. government debt, does this have implications for United States foreign policy in, let's say, the South China Sea (where there are disagreements over national sea boundaries and over the status of Taiwan) or in Afghanistan and Iraq (where militants fighting the U.S. get a lot of their funding from conservative Sunni supporters in the Arabian Gulf)?

 

One of the oddest things about the Bush Administration and its right-wing supporters is how they always ignored the medium term strategic and political implications of the high government indebtedness policies.

 

http://www.nytimes.com/2009/03/21/washington/21deficit.html?_r=1&hp

 

UK Tories call halt to tax cuts; Irish conservatives eye personal tax hikes

The Leader of the Opposition David Cameron says that if the Conservatives win next year's UK election then they will give priority to reducing government debt over and above tax cuts.

The Tory leader has thereby abandoned his party's previous commitment to "sharing the proceeds of growth" (i.e. he is abandoning the high- risk idea of deficit-financed personal income tax cuts) and signalling instead that a Conservative administration would stop adding to public debt.

http://www.guardian.co.uk/politics/2009/mar/20/david-cameron-conseratives-economic-policy

It is clear than the British right wingers don't want to get into the mess than the Irish conservatives find themselves in.

Charlie McCreevy, Eire's finance minister between 1997 and 2004, used to scorn the old fashion notion that fiscal policy should lean against the business cycle.

While the Labour-Progressive government in New Zealand was running large government surpluses in the face of persistently strong global growth that economists could never adequately explain at the time, Mr McCreevy was in government on the other side of the world implementing what National in New Zealand was demanding for our own country.

"When I have the money, I spend it. When I don't, I don't,"  McGreevy would say as Ireland cut income taxes and ran "balanced budgets" during the good times which left public finances too dependent on windfall revenues from VAT on new homes, capital-gains tax and stamp duty.

These days those revenues have all dried up as house prices and sales slumped.

The Irish budget is massively in debt today. The Irish Government is about to introduce its fourth fiscal package in a year - the unemployment rate is over 10 per cent and a public wages have been cut 7.5 per cent - but the government is still scrambling with its debt problem created by its own poor, risky fiscal policies.

Next on the agenda for the Irish Conservative Government?

Higher income taxes, wouldn't you know it!

http://www.economist.com/world/europe/displayStory.cfm?story_id=13331143&source=hptextfeature

Nasty Nats get even the tiny ideas wrong

Gordon Campbell makes a very good point about the Nasty Nats' cynicism over the '9-day fortnight.'

The more successful it is in reducing average ordinary time after tax earnings, the less it costs the government, because the level of superannuation is set by a constant ratio to average ordinary time after tax earnings. 

(They're taxing the government's contribution too, by the way. The mean buggers.)

It is strange to be mean with the response to the recession. The problem New Zealand faces is a precipitous decline in consumer demand relative to our earnings. Encouraging people to reduce their incomes will only depress demand even further.

This National Government with not many ideas can't even get straight the tiny little ideas it has about how to cope with global financial crisis.

National's war on science continues

National's assault on science continues. 

First they axed the largest ever investment in science in New Zealand's history - Fast Forward, that would have invested two billion dollars, half of it private sector investment, into applied research in our highest priority industry. They won't replace that private sector funding. 

Now National is getting rid of the Bioethics Council. The Council might not help itself with its dreary language and excessive attempts to be culturally inoffensive. (But it's farewell note is pretty funny.) But any comment about the content of the work the Council did is separate from the need to have an ethical body. (Prog Blog thinks it was actually quite thoughtful, despite its earnest approach.)

When National gets rid of the Bioethics Council, it's not just getting rid of 'spiritual and ethical' debate around science. It is getting rid of the science as well. 

You are not going to have serious research into topics like human embryos or stem cells in this country without a clear ethical framework. 

You need a consultative body to lead the research, or the scientists and doctors involved won't get ethical approval from their own supervisory institutions; they won't get funding, especially from organisations that need strong ethical statements to secure public donations; and they will find scientists shy away from ethical minefields, because that is easier. 

Scientists are good at navigating rules around the sorts of constraints that should be put on research (such as requiring consent to use people in experiments.) 

Scientists are not good at leading debate themselves - influencing public opinion and consulting widely is not necessarily a science skill set, there will always be skepticism that scientists are focused on furthering their own areas of research interest; and they are constrained by the need to please funders.

So, if you get rid of an ethical advisory body, you effectively shut down some science.

Jim Anderton noted last week that support for science is becoming extremely political.

Never, in all New Zealand history, has any government made so many anti-science decisions in so short a time.

Interest rates to rise quickly once global economies pick up?

In the past couple of decades, the political divide between Republicans and Democrats in America has mirrored the divide between National and Labour in New Zealand on one important issue: Government debt.

 

Gross U.S. government debt skyrocketed as a ratio to U.S. GDP under Presidents Ronald Regan and George W Bush (Republican), while debt fell under Bill Clinton (Democrat) - who was, like Labour in NZ, forever attacked by conservatives by his large annual surpluses (which of course are needed to pay down inherited debt levels).

http://209.85.173.132/search?q=cache:http://www.cedarcomm.com/~stevelm1/usdebt.htm

 

But it could be that the current Democratic President is going to put an end to the Democrats' historic aversion to piling on the debt (for future generations to pay-off).

 

According to the O.E.C.D.'s measure of general gross U.S. public debt, it stood at an eye-popping 73.2 per cent of U.S. GDP in 2008, and was on track to rise to 82.5 per cent of U.S. GDP next year (that was calculated prior to the latest expansionary budget moves in America).

 

http://www.oecd.org/document/61/0,3343,en_2649_34573_2483901_1_1_1_1,00.html

 

The OECD estimates Net Public Debt in the U.S., meanwhile, stood at (MINUS) 46.2 per cent in 2008

 

(The NZ Government, in contrast, had no net Crown debt in 2008, its net financial asset position by this OECD measure was positive to the tune of (PLUS) 15 per cent of NZ GDP meaning the NZ Crown's financial assets were greater than its financial liabilities).

 

The OECD's currently published forecast for U.S. Government Net Debt is that it will rise to (MINUS) 57.8 per cent of U.S. GDP in 2010, but that is a calculation that does not take into account the latest budget and financial market support moves by the U.S. Federal Government which mean that American Net Public Debt will in fact most likely be greater than the OECD's currently published estimate.

 

What this all means is that the United States Government is carrying debt levels that are very high by historic standards. It must mean that upon the first signs of global economic recovery, interest rates around the world - particularly on long-dated debt securities) may surprise us by how quickly they rise from their current very low levels.

 

All this government borrowing (in the U.S., the U.K., Japan and elsewhere) is going to have a negative impact on the cost of working capital for the small businesses of this world that create over 90 per cent of the employment in this world. It is becoming clearer by the day that the damage done by the irresponsible fiscal policies of former U.S. president G W Bush are going to negatively impact on all of us for a very long time to come.

 

NZ Cash Rate Now Below Australia's

After the 9/11 terrorist attacks in the United States in 2001, the Reserve Bank of New Zealand cut short-term interest rates by 50 basis points (half of a percentage point)

in anticipation of a hit to global growth (and weaker inflation). At the time, the move was considered a very dramatic move, even bold.

 

But times have changed. What was once considered remarkable is now considered run of the mill, or even conservative.

 

So when the RBNZ today cut the Official Cash Rate by 50 basis points, and said it expects perhaps a couple of 25-basis-point-cuts over the next few months, taking the OCR to maybe 2.5 per cent, we didn't see FX traders dump the Kiwi dollar, but the reverse: Active NZD-buying as financial markets which pushed the NZD up by well over half a U.S. cent to US 0.5130.

 

http://www.bloomberg.com/apps/news?pid=20601081&sid=as.6UMNtNS6k&refer=australia

 

It is real indicator of how seriously weak the RBNZ judges the global economy to be (including our big trading partners in Japan, China and the rest of Asia) and how stressed international credit markets are in the wake of the meltdown in the U.S. and European banking systems.

 

The RB's Monetary Policy Statement has also seen the kiwi rise on the cross rate against the Australian dollar, up by as much as 1 percent, the highest for the NZD/AUD currency pair since March 2. http://www.bloomberg.com/apps/news?pid=20601081&sid=aUWDuip1D8TA&refer=australia

 

Exporters will be hoping for the market to reverse the rise in the NZD/AUD in coming days and weeks.

 

After all, the New Zealand economy has been weaker than Australia's for over a year now. Japanese, European and North American investors looking for safe and relatively high interest rates (real or inflation-adjusted deposit interest rates are very negative in America, Britain and Japan) should be buying up Australian currency over and above Kiwi currency and FX traders should note that Dr Bollard today did an unusual thing today.

 

Dr Bollard lowered NZ's Official Cash Rate (3%) to be below Australia's (3.25%).

 

http://www.rba.gov.au/Statistics/cashrate_target.html

 

When the OCR was introduced to N.Z. in March 1999 it was set at 4.50% (below Australia's 4.75% at the time). Both countries' rates sat at 5% by the end of 1999, but for almost all of the time since the start of the new century N.Z. short term interest rates have been higher than Australia's, sometimes considerably so (e.g. in July 2007 the OCR was 8.25% in NZ and 6.25% in Australia. NZ rates stayed at 8.25% right through until 23 July 2008, whereas Australia's rates were much lower over the period, having peaked a full percentage point lower, at 7.25%).

 

Hopefully for our exporters, we'll see the NZD fall against the AUD in the weeks ahead on these interst rate differentials - that would give exporters a boost on their returns for exporting to the Lucky Country. Its our exporters' turn to enjoy the unusal situation of NZ having lower short-term interest rates than across the ditch!   

 

http://www.rbnz.govt.nz/monpol/statements/mar09.pdf

National is backward looking and out of touch

Prog Blog winced at the Prime Minister's response to Jim Anderton's questions about knighthoods. John Key doesn't understand the difference between honouring success in a New Zealand way, and honouring it with outdated royal honours as he wants to do.

Mr Key said Jim had previously tried to get recognition for Colonel William Malone with a Bill that would confer an honour that had the 'status of a knighthood.'

Precisely. The status of a knighthood. Very few people are opposed to having high honours for great New Zealanders. Colonel Malone was one of our greatest.

But it was not a knighthood. Colonel Malone couldn't be conferred a knighthood because it was posthumous. The British wouldn't let an honour be conferred more than five years after his death, when the facts about his heroism emerged.

Because we had an outdated British system, Colonel Malone couldn't be honoured. That's why Jim wanted to give him a New Zealand honour. And National voted against the Bill.

So let's see - Jim Anderton tried to introduce a New Zeaalnd award that had as much value as knighthood. The prime minister says therefore he is in favour of knighthoods? The prime minister is backward looking and out of touch.

Here is what is really disgusting about National - they are opposed to honouring genuine heroes like Colonel Malone. But they are in favour of handing out rewards to their donors. They are against New Zealand, and in favour of fuddy duddy old fashioned British awards

Sea levels may be rising twice as fast as earlier projected

Sea levels may be rising twice as fast as was projected by the United Nations as recently as 2007, according to a report in the UK's Independent about global climate change. http://www.independent.co.uk/environment/climate-change/sea-levels-rising-twice-as-fast-as-predicted-1642087.html

 

Melting ice sheets in Greenland and Antarctica are now expected to push up sea levels by a metre or more by 2100, a process that would literally swamp coastal cities and obliterate the living space currently inhabited by 600 million people who live in deltas, low-lying areas and small island states, the report says quoting a U.N. panel of scientists meeting in Denmark.

 

Rising sea levels are caused by the thermal expansion of the ocean – where water increases in volume as it warms - and by the accelerated melting of the vast, land-based ice sheets in Greenland and Antarctica, caused by rapidly rising temperatures at high latitudes. The Greenland ice sheet, in particular, is melting "dynamically" – that is to say it is collapsing in parts as meltwater seeps down through crevices and speeds up its disintegration. This process, the U.N. says, was not taken into account in their earlier 2007 report on rising sea levels.

 

The question of whether or not the Government can "afford" to take action on global climate change is irrelevant to overseas consumers of New Zealand goods and services.

 

National doesn't understand the benefits to local productivity that can arise from well managed climate change policies.

http://www.treasury.gov.au/lowpollutionfuture/

 

So far it has shown that all it understands is petty politics. National has been good at the petty fun stuff: cutting staff at the Ministry for the Environment, delaying impementation of an Emissions Trading Scheme, abandoning policies that would encourage more energy-efficient practices etc - it is fun cancelling a previous government's programmes.

 

But if the National Government wants to protect New Zealand's interests it needs to very quickly start introducing strong policies to show overseas consumers that New Zealand is going to contribute to international efforts aimed at slowing down the rate of global climate change - otherwise it won't be long before consumer watchdogs in Europe, North America and elsewhere start targeting Kiwi exports. 

Well that didn't take long

After a brief break, during which the National Party pretended to be
more sensible than their predecessors, the Nasty Nats are back.

It's as if the Trojan Horse has opened its bottom and the intruders
have tumbled out:
- Privatising prisons.
- Privatising ACC.
- Slashing ACC benefits.
- Knighthoods for the big donors and Saint John.
- The bared teeth, big mouth and incompetence of Judith Collins.
- Getting rid of our independent best-practice aid programme.

Backward, backward, backward. This mediocre government, like so many
Nasty Nat governments before it, is focused on going backwards. It
wants to wind the clock back, undo progresssive forward steps, show
its toughnesss by being nasty.

Ks

Prog Blog has thought back long and hard, and can't think of anything
down by any government in the last twenty five years as provincial,
dreary and backward as the reinstatement of knighthoods.

What disgrace any New Zealander will bring on themselves if they take
this discredited title. Who could possibly have respect for the
integrity of any New Zealander who could be so weak of mind, so weak
of character, so needful of ego-boosting, that they needed to decorate
themselves with a title? What cringe it must take to insist others
call you "Sir" or "Dame".

It just shows to show that deep in their hearts, the National Party
are not real New Zealanders at all. They are ashamed of New Zealand.
They are frustrated English Tory wannabes.

And they never will be.

Update: These are the other incredibly unimportant countries that have knighthoods:

Antigua and Barbuda, Bahamas, Belize, Grenada, Papua New Guinea, St Lucia, St Vincent and Grenadines, Soloman Islands and Tuvalu.

So there is a proud comparison of the sort of country John Key wants us to emulate.

What's going on with the Minister of Foreign Affairs?

Prime Minister John Key got wide media coverage today for bringing us back Dames and Knights.

 

The story remains the NZ Herald's TOP NEWS STORY as late as 8 p.m. on Sunday http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10560600 which is a pretty good PR success story given some of the other news today!

 

While the Government was over recent days and weeks working really hard to get everything ready and prepared for its big annoucement, its big PR success for the day, New Zealand itself was apparently getting dealt a massive kick in the guts on the economic front according to the www.stuff.co.nz website.

 

Stuff is reporting that the United States has halted the talks with New Zealand started by the previous government aimed at lowering America's unfair barriers on our exports to the U.S.

 

If this Stuff news story is correct, and there has been a suspension of the Trans Pacific Partnership talks, then that raises some very serious questions about what is going in the offices of the Minister of Foreign Affairs.

 

If Stuff is correct, then that is a blow to our aspirations to raise our living standards in the years ahead. If Stuff is correct, that that raises the question of What on earth is going on with the Minister?

 

The Minister's his main public statements in recent weeks have been about the foreign aid budget and NZAid - a pet hobby of his.

 

But why wasn't he in America on the public offensive - appealing to American people's hearts and minds, via TV if necessary, defending the lowering of unfair trade barriers - particularly at a time of global economic recession or depression? It doesn't make any sense. Perhaps the Stuff story is wrong, and perhaps that's why NZ Herald isn't reporting it, let's hope so.

 

http://www.stuff.co.nz/business/2120288/Obama-cans-FTA-Key-deeply-disappointed

 

 

 

 

 

 

 

Herald gets Super Fund issues hopelessly wrong

It's always a bit sad to be patronised by someone who has no idea what they are talking about, isn't it?

How else would you feel reading the editorial from the Herald about the NZ Super Fund that reads, in part, this:

"It is important to stress that this whole question is about payments into the fund, not payments out. It is highly irresponsible of the Labour Party leader to suggest that the level of pensions might be at risk, now or in the future. This fund, as Phil Goff well knows, will do no more than partially fund future pensions when the bulk of the baby-boom moves into retirement."[Emphasis added]

So the Herald has discovered a new type of investment fund where payments in bear no relation to payments out? Goodness. Can I please have some of that? I can invest whatever I like, and the return is unaffected! Wow! Sounds almost, well too good to be true! because it is too good to be true. The amount you invest obviously critically affects how much you earn. basic, basic basic.

The giveaway that this editorial has been written by someone who doesn't begin to understand is the line about partially funding the future cost of pensions. It's true, it will only partly fund the future cost. But that point is a complete red herring.

The issue is, will the capacity of the Fund to help meet the future cost of superannuation be reduced or not? 

Let us pretend I hold a jar with $10 in it to pay your next week's wages. I then reduce the amount in the jar to $5. Now, whether it is $10 or $5 it is only a small proportion of next week's wages. But if it is reduced - then IT IS STILL REDUCED by $5. See?

By the same logic, if John Key reduces the jar holding the fund that will pay some of the future cost of superannuation, then the future ability of the Fund to contribute is reduced if he doesn't put as much money in the jar - regardless of the proportion of the future fund it contributes, it is reduced in absolute terms. Therefore, either a future taxpayer will have to pay more - or the future superanuitant will have their super cut. There is no other option.

The Herald could have made a complex point about the government increasing its future capability to pay the remainder of the cost beyond the Fund's contribution, by not having as much government debt. But it didn't make that dubious point at all.

The Herald really ought to have its head around these basic issues before it begins to patronise others in its editorials.