David Parker – Lower interest rates, a more competitive dollar and better jobs from Reserve Bank changes
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9:02 am, April 29th, 2014 - 169 comments
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A couple of weeks ago, we marked a significant anniversary.
It was 40 years since the start of the Kirk Labour Government’s universal savings scheme.
The scheme was bold, visionary, and ahead of Australia.
And Muldoon scrapped it, for ideological reasons. With dancing Cossacks and cold war
rhetoric, he managed to scare the country that it was all a giant socialist plot.
Looking back, it sounds bizarre that people were sucked in. But he got away with it. And as a
nation we are still paying the price.
We are heading towards another 40th anniversary, of sorts, but this one will most likely slip
by unnoticed.
New Zealand has not had a current account surplus for 40 years.
That’s right. It has been 40 years since we paid our way in the world. Even this current
financial year – with fantastic terms of trade – we will still have an external deficit.
With a tail wind, maybe we’ll get close to negative 2% of GDP. Thereafter, it will be back up
over negative 5% to the end of the forecast period.
Forty years living on the national credit card. Forty years of spending more than we earn.
Forty years of borrowing and hoping it will all come right in the end, somehow.
There are some who are quite happy to say, in effect, that this is as good as it gets.
What’s wrong with borrowing and hoping, they say. What’s wrong with kicking the debt can
down the road a bit, for someone else to sort out.
We’ve been doing it for 40 years, and the sky hasn’t fallen. There’s plenty of overseas
money to borrow, plenty of Kiwi businesses and New Zealand land to sell offshore.
Because to these people, monetary policy is sacrosanct, a kind of infallible article of faith,
and they vigilantly guard against meaningful change.
Yet history shows that monetary policy needs to be updated periodically.
From chartered companies with exclusive trading rights in return for opening up colonial
economies, to the gold standard, to currency controls under Bretton Woods, to independent
Reserve Banks and inflation targeting, to post GFC arrangements – monetary policy has
always changed.
Change, even sensible change, whose time has clearly come, inevitably has its critics.
In earlier generations we had plenty who wanted to hang on to the gold standard beyond its
use by date, and then to Bretton Woods currency controls.
But simply pretending there is no alternative, and protecting the status quo, is not good
enough anymore.
I get the sense that for some people, even mentioning a change in monetary policy settings
is uncomfortable.
Let me reassure you, because others will try to put words in my mouth.
To be crystal clear, the New Zealand Labour Party remains committed to the independent
full service Reserve Bank, which you will remember a Labour government introduced in
1989.
We remain committed to the control of inflation and the existing inflation target, to a floating
currency, and free capital movement.
But that does not mean we are blind to the limitations of current arrangements, and we are
willing to act to improve them.
After 25 years, it’s time to take another look. And who better to do it than those who set up
the current system?
Just like Muldoon before them, our political opponents and their ideological cronies will
criticise us – accuse us of economic heresy, of rampant socialism, of runaway inflation, of
destroying jobs.
All of which is complete nonsense, of course.
The critics of any change to monetary policy occasionally proffer excuses – we are a young
country – our net migration explains our need to import capital rather than earn or save it.
Of course, these critics often don’t propose any alternative. They say there is no alternative.
They occasionally wring their hands and say feckless New Zealanders don’t save or export
enough, but are unwilling to concede that monetary policy can be improved to assist.
I find it hard to understand why some deliberately fear broadened objectives for New
Zealand’s Reserve Bank, when other independent Reserve Banks including the Federal
Reserve and the Reserve Bank of Australia already have broader objectives.
It stands out like the proverbial that under current settings our export mix is narrowing further
and further towards over-dependence on dairy products, and in particular milk powder sales
to China.
It stand out like the proverbial that under current settings we will never achieve an external
surplus.
And it stands out like the proverbial that under current settings we will borrow billions extra
every year from overseas lenders, and sell more and more of our land and companies
overseas to fund our external deficit.
Because let’s be clear – that is how we make up the difference between what we earn and
what we spend by borrowing and by selling our birth right.
New Zealand’s record over recent decades proves this. This history is a fact, not some
arguable proposition.
It is fact not fiction that we have not had an external surplus for 40 years.
It is fact not fiction that last time we had terms of trade this good we had a current account
surplus. This time we are still in deficit.
And it is fact not fiction that the forward projections of the Reserve Bank, the Treasury, the
OECD, the IMF, the Banks, the economic consultancies from NZIER to BERL, and the rest,
are unanimous in saying our external deficit will return to minus 5% per annum and stay in
deficit for as long as they can predict.
And that means our external liabilities – already our greatest vulnerability – get worse.
To alter that course, requires sensible change. It’s obvious. Change nothing, and nothing
changes.
A successful and fair economy requires a sophisticated matrix of values and settings.
Freedom from corruption, a fair division of income and wealth, respect for property rights and
the rule of law, protection of natural capital and the environment, respect for human rights,
and an educated and healthy population. These are all important ingredients.
Strong democracies are vital to achieve this mix.
Ours is one of the most successful democracies. Our record of over 150 years of continuous
democracy – unbroken by war, civil disturbance or political upheaval – is one of the longest in
the world.
The Labour Party is the oldest political party in parliament.
We clock up 100 years of service to New Zealand in 2016. We could fairly claim some of the
credit for New Zealand’s success, but the real credit goes to generations of inventive,
hardworking, everyday New Zealanders.
Judge us from that long history and you will see that it is the Labour Party that has driven
most of the important social and economic change over the last hundred years.
Conservative parties tend to trim the sails and tinker, but otherwise are guardians of the
status quo. They tend to govern for today, whereas Labour tends to govern for tomorrow.
They tend to eventually catch up, and then become defenders of changes they vehemently
opposed which Labour initiated.
Take this current National government.
They inherited zero net government debt because of the huge surpluses Labour ran – which
National opposed – and low unemployment.
They inherited KiwiSaver – which they voted against – interest free student loans – which
they voted against – and working for families – which they voted against and called
communism by stealth.
They have kept them all. They even now begrudgingly praise the Cullen fund, which they
opposed and called ‘a dog’ when we introduced it.
Since taking the reins, National’s biggest moves have been to cut income tax for high
income earners and put up GST, in their first term, and to privatise the value of the public
water which drives the hydro turbines of our power companies, in their last term.
And they borrowed around $65 billion – some for Christchurch – but mostly to keep
themselves out of the headlines – and keep smiling.
That’s pretty much it after 6 years. National has done nothing significant to address the
imbalances they railed against.
House price inflation has continued to outpace CPI inflation and income growth. It’s actually
sped up. Home ownership rates are dropping.
Yet they refuse to address tax biases which contribute to rising inequality, and have been
astoundingly ineffective at increasing the supply of the affordable houses our country needs
to be built.
Their housing policies are a disaster – a total failure – and that failure is contributing to
higher interest rates and higher rents – and the collapse of the Kiwi dream of home
ownership.
Last quarter New Zealand’s general price inflation was zero – except for the tax rise on
cigarettes.
So, despite low general inflation, and with our interest rates already higher than the rest of
the developed world, the National government’s current settings have our interest rates
going up higher still – heading for 8% mortgage rates.
We have had the best terms of trade in a generation, and we still posted a deficit.
Despite recent drops in export prices, and with higher interest rates, the exchange rate is
now going up even further. Our external deficit is set to follow.
The sad truth is our opponents are constrained by their ideology, in this regard.
By definition, they hold back prosperity because their ideology denies them the flexibility to
adapt.
Their natural instinct is to stick with the status quo – to blame and scapegoat others.
The current National government’s export objective since 2008 has been to increase exports
to 40% of GDP by 2025.
Exports were 32% of GDP in 2008. With the best terms of trade for 40 years, exports were
33% of GDP in 2013, and are projected by the Treasury to be 30% of GDP in 2018.
It is clear the admirable objective to lift exports to 40% will not be achieved under current
settings. They have failed.
Of course economic policy is complex, but some things are obvious. As I said earlier,
change nothing and nothing changes.
We need more exports and import substitution to pay our way in the world and build the
wealth of our nation. To achieve this we must improve the competitiveness of our export
sector.
A suite of carefully considered changes in macro and micro economic policy will be required.
Our policy package already includes major improvements to investment, innovation and
industry.
We will make KiwiSaver a universal scheme, like it is in Australia. This will genuinely deepen
capital markets and reduce the cost of capital. If anyone doubts this, consider how it is that
the Aussies now own their banks and most of ours, plus so much of the rest of our corporate
sector.
Labour has pro-growth tax policies to direct more of New Zealand’s existing and future
capital into the tradeable sector.
Our capital gains tax pushes against the tax bias which currently encourages capital into the
speculative sector at the cost of the productive sector.
In addition to improving the economy, this will make the tax system fairer, and will take
pressure off house prices.
As in most other countries, it will not cover owner occupied homes. The family home will be
exempted.
Our research and development tax credits encourage innovation, and our accelerated
depreciation encourages industry to invest in productivity enhancing plant and equipment.
Our policies push New Zealand’s economy from volume towards higher value products and
services, both in traditional commodities and new industries.
I know from my discussions with business leaders that it is already widely accepted that we
are promoting an integrated series of policies which will lift export performance.
Our well-considered solutions form a joined up roadmap to growth and prosperity.
But significant as these steps are, we do not believe they alone will be enough to lift our
export performance to overcome our current account deficit and get our net international
liabilities on a sustainable downward track.
We are stuck with high interest rates relative to our competitor nations – higher than they
ought to be – and not just in the current cycle, but long term.
We exhibit the very characteristics which the IMF warns can adversely affect
macroeconomic stability.
Labour has concluded that the current trend is clear and undesirable, and that monetary
policy is partially responsible.
We have concluded that a broader role for the central bank in support of macroeconomic
stability would assist, along with a new tool to achieve that broadened objective.
We believe this will help deliver secure and better paid jobs, less inequality and decent
returns on our own capital.
We will own more of our own country, and so have more control of our own destiny.
We will also be better able to provide the social supports that New Zealanders know make
our country strong and fair. These include universal access to high quality health care and
education, and support for the elderly and the vulnerable.
And so we will sustain and strengthen our democracy into the future.
Why does the effect of current arrangements, which largely ignore our overvalued currency,
matter so much in New Zealand?
We know we are a small trading nation distant from large markets; that our internal market is
small; that we are more reliant on exports than larger economies.
We know this means that exchange rate risks are concentrated for many New Zealand
based exporters compared with their competitors.
In other words, we know it is even more important in New Zealand than in larger economies
to get these settings right.
Exporters and import substitutors readily understand that economics is multi-faceted, and
that addressing the effect of monetary policy on the exchange rate is but one part of the
recipe.
Nevertheless, exchange rates are a key determinant of profitability and cash flow generation
for the tradeable sector, and hence a major risk factor influencing the ability and willingness
of market participants to invest.
While CPI inflation targeting has helped domestic price stability, exporters note that for them
effective price stability cannot be divorced from currency levels. On that score the current
system fails exporters.
There is a widely held view that New Zealand’s currency is overvalued most of the time.
The IMF and OCED have both estimated that the NZ dollar is up to 15% overvalued. Based
on OECD figures, HSBC says our dollar is the sixth most overvalued in the developed world.
The Reserve Bank says that it believes, from a long-term perspective, the exchange rate is
overvalued. And only last week, when announcing the hike in the OCR, the Bank reiterated
the belief that the exchange rate is not sustainable at these levels.
Exporters say, and their reluctance to invest shows, current settings lead to pessimistic
projections for the tradeable sector and hence under-investment. Further investment in
fixed assets, innovation, and staff depends upon projections of future exchange rates.
Investment decisions are forward looking. It is no surprise that faced with a likely
unfavourable future export settings; there has been under-investment in exports and
manufacturing outside of the dominant primary processing sector.
Of course perishables in dairy are processed – you can’t sell sour milk – but success in dairy
is not enough for our country.
Milking more cows, natural disaster recovery, rampant house prices and migration are not an
economic policy.
Global and domestic experience over recent years suggest that monetary policy’s almost
exclusive focus on low inflation, while arguably necessary to bring high inflation under
control in the 1980s, has become too narrow for today’s challenges.
The experience of the Global Financial Crisis and the period leading up to it has
demonstrated the instability that can flow from high credit growth, inflated asset markets and
trade imbalances.
It is now widely accepted that central banks will have to assume wider macroeconomic
responsibility, with particular focus on emerging imbalances – including in asset markets –
that pose threats to medium-term macroeconomic stability.
In the case of New Zealand, the monetary authority’s focus should also include the
consequences of persistent external deficits.
This is not a criticism of the Reserve Bank. They are doing what Parliament told them to do –
target only inflation and publicly advocate for the idea that this is the right thing to do.
Labour has concluded that a change to the objective of monetary policy is necessary,
enabled by the deployment of an additional tool to assist in meeting the broadened
objective.
It is proposed that the objective of the Reserve Bank be updated and broadened beyond
inflation to include achieving a positive balance in New Zealand’s external position.
The new objective would be that:
The primary function of the Bank with respect to monetary policy is to enhance New
Zealand’s economic welfare through maintaining stability in the general level of prices
in a manner which best assists in achieving a positive external balance over the
economic cycle, thereby having the most favourable impact on the stability of
economic growth and the level of employment.
Critics often default to the assertion that changes imply a desire to intervene directly in the
foreign exchange market to control the currency, or some intention to limit capital flows, and
in both cases tolerance for higher inflation.
Not so. Again, it’s the old Muldoon-style scare tactics from the 1970s.
Contrary to this straw man implication, there are a number of options that should be
developed, ranked and prepared for activation. These are detailed in the paper we have
released today.
Using the mechanism I will describe, the Reserve Bank does not lose control of its inflation
target.
The new objective would be operationalised through a revised policy targets agreement
between the Governor of the Reserve Bank and the Minister of Finance.
The Reserve Bank would retain its independence, and its obligation to achieve its inflation
objective.
Let me repeat, so as to avoid any misunderstanding, the Reserve Bank would retain its
independence, and its obligation to achieve its inflation objective.
Are we clear, or do I have to say it again?
The new policy targets agreement would include the existing inflation target, which would
remain unchanged.
The external balance objective in the policy targets agreement would state the government’s
objective for the external balance. This would include both an objective range for the
medium term, and a longer term trend objective towards a positive external balance.
The objectives set by government will be influenced by projected long term growth rates and
the desired level of net international liabilities.
The achievement of a positive external balance will be a multi-year process and will involve
a downward correction of the exchange rate to a sustainable level. The adjustment may be
less drawn out than current economic models would suggest.
A macroeconomic strategy credibly focused on a more competitive exchange rate and the
external balance along with a change in the mindset of policy-makers will encourage higher
rates of investment in the tradeable sector than experienced under the current policy regime.
The agreement would invite advice from the Bank as to what mix of instruments would best
achieve the new broadened objective.
Three categories of tool are identified – existing tools, a new tool and other measures.
The existing tools of the Reserve Bank include adjusting the interest rate (through the official
cash rate), foreign exchange purchases, and so-called macro-prudential tools such as
capital ratios, and loan to valuation restrictions.
I expect the Reserve Bank will consider whether the broadened objective is better achieved
through a varied use of the Bank’s existing tools.
Overall, interest rates will be lower and so will our overvalued exchange rate.
We propose an important new tool – varying the employee contribution rate for work based
savings. The variable savings rate mechanism – or VSR – would allow the raising or
lowering of savings rates, rather than interest rates, to reduce or boost local consumption.
Of course, a universal KiwiSaver scheme is necessary, as we are proposing.
Instead of paying more interest on your mortgage, a similar amount of extra savings would
go into your KiwiSaver.
Higher interest payments are lost to the lender, with much of it heading overseas, whereas
savings would belong to the saver.
As everyone is enrolled in KiwiSaver, and as contributions are increased over time from the
current 6% towards the intended total of 9% of earnings, consumption pressures will be
lower.
The policy targets agreement would set out the government’s intentions in respect of
savings. During this transitional period, the Reserve Bank should be able to manage
inflationary pressures with lower interest rates than would otherwise be necessary.
The policy targets agreement will request that the Reserve Bank use this once in a life time
opportunity to attempt to get underlying (as opposed to cyclical) New Zealand interest rates
back to the lower levels charged in our competitor countries.
The policy targets agreement would state whether or not it was the government’s
expectation that over the economic cycle Reserve Bank variations to the KiwiSaver rate
would be neutral.
Using changes in savings rates as an alternative to changes in the official cash rate would
mitigate the currency effects of higher or lower interest rates, and reduce overseas transfers
on the proportion higher interest payments which currently go to overseas lenders.
Distributional and hardship effects for the lower paid would need to be considered, but could
be accommodated in the detail of how the variable rate was applied.
Labour would ensure that everyone was treated fairly.
As I mentioned earlier, it may sometimes be appropriate for the government of the day to
choose not to use of the new VSR mechanism, because the multiple objectives which
governments have to balance are broader than monetary policy outcomes.
The contrary view is that enabling the Reserve Bank, within parameters, to deploy the new
VSR mechanism would assist in de-politicising its use.
The current proposal is that the Reserve Bank only have the power to recommend the use of
the new VSR mechanism. Where alternatives to an increase in the official cash rate are
excluded, the Reserve Bank would instead use the OCR.
Additionally, the Governor could recommend other measures for the government to
consider. These would not be substitutes for current OCR decisions, but would be identified
as important topics for the government to address, and are addressed in the paper released
today.
With a wider responsibility for macroeconomic stability, the Reserve Bank would explicitly
consider the trade-offs associated with its policy decisions and recommendations.
The analysis supporting the possible use of the new tool instead of the OCR, and what
trade-offs are involved, would be included by the Reserve Bank in advice to the government
each time it is due to makes its determination of the official cash rate.
The Treasury would also provide its own advice to the government, independently of the
Reserve Bank.
Arguments can be put for and against, just as arguments can be mounted for and against
use of the OCR.
If the government chose not to use alternative tools, the Reserve Bank would use its interest
rate lever.
The Reserve Bank thus maintains control and responsibility for achieving its inflation target.
The policy work on other longer term policies, which could be used to assist the Reserve
Bank to achieve the broader mandate, would be carried out by the Treasury in consultation
with the Reserve Bank.
This process will expose the important trade-offs involved. It will aid in public and political
understanding and lead to better decisions for the betterment of the tradeable sector and
New Zealand’s external position.
This does not mean we are going soft on inflation. The crippling effect of high and volatile
inflation is clear.
No positive growth/inflation trade-off exists in the long run. On the contrary, uncertainty
about the inflation outlook adversely affects decision-making by households and businesses,
and lowers the potential growth rate of the economy over time.
High inflation is hardest on those who lack the means to buy and leverage assets which
inflate in value.
High inflation, especially in the absence of any capital gains tax, encourages speculative
investments in land and buildings to the detriment of investment flows into productive capital
equipment.
The high interest rates associated with high inflation also increase the cash cost of investing
in that capital equipment needed to improve productivity and maintain export
competitiveness.
It should be acknowledged that while New Zealand has succeeded in keeping inflation low
since the Reserve Bank Act, the international trend was for lower inflation anyway. Some
inflationary pressures would have abated even without the Reserve Bank Act.
The spike in imported energy costs passed. The effects of the communication and
information technology revolution included major advances in automation. These technology
changes combined with lower labour costs in rapidly industrialising emerging markets
markedly deflated the price of most consumer goods.
While the success of the Reserve Bank Act 1989 is reasonably clear – low and stable
inflation – we should not be blind to the limits and side effects of current monetary policy.
Other countries have achieved control of inflation without, as is the case in New Zealand, a
prolonged current account deficit or interest rates higher than international norms.
The changes to monetary policy I have announced today are substantial.
But they are not radical.
Under the policy I have announced today, the Reserve Bank’s independence is preserved,
the inflation anchor is maintained, as is the floating exchange rate, and the freedom of
capital movement, as is the ability of the Reserve Bank to stimulate the economy so as to
avoid deflationary traps.
But we believe there are tigers other than inflation to be tamed.
Our changes to monetary policy, in combination with the other policies I have discussed, will
result in higher exports.
This means higher per capita national incomes, better jobs, higher wages and lower interest
rates.
We will reduce New Zealand’s net international liabilities, and have better control over our
future.
Politicians can’t do everything. We have to prioritise.
Significant change requires cooperation with businesses – with both capital and labour. It
also requires the various arms of governments to hear clearly what politicians want to
achieve.
It helps when politicians underline their plans by agreeing to be judged on the success or
failure of the metric they have chosen. I am more than pleased to hold myself to account
before the public.
These new settings will mean we can start down the long road to living within our means, as
a nation, by earning our way and paying our way in the world – for the first time in 40 years.
It is an ambitious target that will deliver structurally lower interest rates, greater investment in
the export sector, and well-paid sustainable jobs.
Moreover, we will own our own country again, control our own future, pay our own way and
stand on our own two feet.
I end by reminding us all of the obvious, which we sometimes forget.
As Joseph Stiglitz has said, “… managing inflation is not an end in itself but a means to an
end. The end is a more stable economy – not just price stability but real stability – and an
economy that is growing faster in a sustainable way.”
And that is what Labour’s policies will deliver.
A comprehensive policy document is available here.
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The absolute brass neck of this guy.We want more medical doctors, not more spin doctors, Luxon was saying a couple of weeks ago, and now we’re told the guy has seven salaried adults on TikTok duty. Sorry, doing social media. The absolute brass neck of it. The irony that the ...17 hours ago - Jones finds $410,000 to help the government muscle in on a spat project
Buzz from the Beehive Oceans and Fisheries Minister Shane Jones relishes spatting and eagerly takes issue with environmentalists who criticise his enthusiasm for resource development. He relishes helping the fishing industry too. And so today, while the media are making much of the latest culling in the public service to ...18 hours ago - Again, hate crimes are not necessarily terrorism.
Having written, taught and worked for the US government on issues involving unconventional warfare and terrorism for 30-odd years, two things irritate me the most when the subject is discussed in public. The first is the Johnny-come-lately academics-turned-media commentators who … Continue reading ...21 hours ago - Despair – construction consenting edition
Eric Crampton writes – Kainga Ora is the government’s house building agency. It’s been building a lot of social housing. Kainga Ora has its own (but independent) consenting authority, Consentium. It’s a neat idea. Rather than have to deal with building consents across each different territorial authority, Kainga Ora ...21 hours ago - Coalition promises – will the Govt keep the commitment to keep Kiwis equal before the law?Muriel Newman writes – The Coalition Government says it is moving with speed to deliver campaign promises and reverse the damage done by Labour. One of their key commitments is to “defend the principle that New Zealanders are equal before the law.” To achieve this, they have pledged they “will not advance ...22 hours ago
- An impermanent public service is a guarantee of very little else but failureChris Trotter writes – The absence of anything resembling a fightback from the public servants currently losing their jobs is interesting. State-sector workers’ collective fatalism in the face of Coalition cutbacks indicates a surprisingly broad acceptance of impermanence in the workplace. Fifty years ago, lay-offs in the thousands ...23 hours ago
- What happens after the war – Mariupol
Mariupol, on the Azov Sea coast, was one of the first cities to suffer almost complete destruction after the start of the Ukraine War started in late February 2022. We remember the scenes of absolute destruction of the houses and city structures. The deaths of innocent civilians – many of ...23 hours ago - Babies and benefits – no good newsLindsay Mitchell writes – Ten years ago, I wrote the following in a Listener column: 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. ...1 day ago
- Should the RBNZ be looking through climate inflation?
1 day ago - Bernard's pick 'n' mix of the news links
The top six news links I’ve seen elsewhere in the last 24 hours, as of 9:16 am on Thursday, April 18 are:Housing: Tauranga residents living in boats, vans RNZ Checkpoint Louise TernouthHousing: Waikato councillor says wastewater plant issues could hold up Sleepyhead building a massive company town Waikato Times Stephen ...1 day ago - Gordon Campbell on the public sector carnage, and misogyny as terrorismIt’s a simple deal. We pay taxes in order to finance the social services we want and need. The carnage now occurring across the public sector though, is breaking that contract. Over 3,000 jobs have been lost so far. Many are in crucial areas like Education where the impact of ...1 day ago
- Meeting the Master Baiters
Hi,A friend had their 40th over the weekend and decided to theme it after Curb Your Enthusiasm fashion icon Susie Greene. Captured in my tiny kitchen before I left the house, I ending up evoking a mix of old lesbian and Hillary Clinton — both unintentional.Me vs Hillary ClintonIf you’re ...1 day ago - How extreme was the Earth's temperature in 2023This is a re-post from Andrew Dessler at the Climate Brink blog In 2023, the Earth reached temperature levels unprecedented in modern times. Given that, it’s reasonable to ask: What’s going on? There’s been lots of discussions by scientists about whether this is just the normal progression of global warming or if something ...1 day ago
- Backbone, revisited
The schools are on holiday and the sun is shining in the seaside village and all day long I have been seeing bunches of bikes; Mums, Dads, teens and toddlers chattering, laughing, happy, having a bloody great time together. Cheers, AT, for the bits of lane you’ve added lately around the ...2 days ago - Ministers are not above the lawToday in our National-led authoritarian nightmare: Shane Jones thinks Ministers should be above the law: New Zealand First MP Shane Jones is accusing the Waitangi Tribunal of over-stepping its mandate by subpoenaing a minister for its urgent hearing on the Oranga Tamariki claim. The tribunal is looking into the ...2 days ago
- What’s the outfit you can hear going down the gurgler? Probably it’s David Parker’s Oceans Sec...Buzz from the Beehive Point of Order first heard of the Oceans Secretariat in June 2021, when David Parker (remember him?) announced a multi-agency approach to protecting New Zealand’s marine ecosystems and fisheries. Parker (holding the Environment, and Oceans and Fisheries portfolios) broke the news at the annual Forest & ...2 days ago
- Will politicians let democracy die in the darkness?Bryce Edwards writes – Politicians across the political spectrum are implicated in the New Zealand media’s failing health. Either through neglect or incompetent interventions, successive governments have failed to regulate, foster, and allow a healthy Fourth Estate that can adequately hold politicians and the powerful to account. ...2 days ago
- Matt Doocey doubles down on trans “healthcare”Citizen Science writes – Last week saw two significant developments in the debate over the treatment of trans-identifying children and young people – the release in Britain of the final report of Dr Hilary Cass’s review into gender healthcare, and here in New Zealand, the news that the ...2 days ago
- A TikTok Prime Minister.
One night while sleeping in my bed I had a beautiful dreamThat all the people of the world got together on the same wavelengthAnd began helping one anotherNow in this dream, universal love was the theme of the dayPeace and understanding and it happened this wayAfter such an eventful day ...2 days ago - Texas LessonsThis is a guest post by Oscar Simms who is a housing activist, volunteer for the Coalition for More Homes, and was the Labour Party candidate for Auckland Central at the last election.
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2 days ago - Bernard's pick 'n' mix of the news links at 6:06 am
The top six news links I’ve seen elsewhere in the last 24 hours as of 6:06 am on Wednesday, April 17 are:Must read: Secrecy shrouds which projects might be fast-tracked RNZ Farah HancockScoop: Revealed: Luxon has seven staffers working on social media content - partly paid for by taxpayer Newshub ...2 days ago - Fighting poverty on the holiday highwayTurning what Labour called the “holiday highway” into a four-lane expressway from Auckland to Whangarei could bring at least an economic benefit of nearly two billion a year for Northland each year. And it could help bring an end to poverty in one of New Zealand’s most deprived regions. The ...2 days ago
- Bernard's six-stack of substacks at 6:26 pm
Tonight’s six-stack includes: launching his substack with a bunch of his previous documentaries, including this 1992 interview with Dame Whina Cooper. and here crew give climate activists plenty to do, including this call to submit against the Fast Track Approvals bill. writes brilliantly here on his substack ...3 days ago - At a glance – Is the science settled?On February 14, 2023 we announced our Rebuttal Update Project. This included an ask for feedback about the added "At a glance" section in the updated basic rebuttal versions. This weekly blog post series highlights this new section of one of the updated basic rebuttal versions and serves as a ...3 days ago
- Apposite Quotations.
3 days ago - What’s a life worth now?
You're in the mall when you hear it: some kind of popping sound in the distance, kids with fireworks, maybe. But then a moment of eerie stillness is followed by more of the fireworks sound and there’s also screaming and shrieking and now here come people running for their lives.Does ...3 days ago - Howling at the MoonKarl du Fresne writes – There’s a crisis in the news media and the media are blaming it on everyone except themselves. Culpability is being deflected elsewhere – mainly to the hapless Minister of Communications, Melissa Lee, and the big social media platforms that are accused of hoovering ...3 days ago
- Newshub is Dead.
I don’t normally send out two newsletters in a day but I figured I’d say something about… the news. If two newsletters is a bit much then maybe just skip one, I don’t want to overload people. Alternatively if you’d be interested in sometimes receiving multiple, smaller updates from me, ...3 days ago - Seymour is chuffed about cutting early-learning red tape – but we hear, too, that Jones has loose...Buzz from the Beehive David Seymour and Winston Peters today signalled that at least two ministers of the Crown might be in Wellington today. Seymour (as Associate Minister of Education) announced the removal of more red tape, this time to make it easier for new early learning services to be ...3 days ago
- Bryce Edwards: Will politicians let democracy die in the darkness?Politicians across the political spectrum are implicated in the New Zealand media’s failing health. Either through neglect or incompetent interventions, successive governments have failed to regulate, foster, and allow a healthy Fourth Estate that can adequately hold politicians and the powerful to account. Our political system is suffering from the ...3 days ago
- Was Hawkesby entirely wrong?David Farrar writes – The Broadcasting Standards Authority ruled: Comments by radio host Kate Hawkesby suggesting Māori and Pacific patients were being prioritised for surgery due to their ethnicity were misleading and discriminatory, the Broadcasting Standards Authority has found. It is a fact such patients are prioritised. ...3 days ago
- PRC shadow looms as the Solomons head for electionPRC and its proxies in Solomons have been preparing for these elections for a long time. A lot of money, effort and intelligence have gone into ensuring an outcome that won’t compromise Beijing’s plans. Cleo Paskall writes – On April 17th the Solomon Islands, a country of ...3 days ago
- Climate Change: Criminal ecocideWe are in the middle of a climate crisis. Last year was (again) the hottest year on record. NOAA has just announced another global coral bleaching event. Floods are threatening UK food security. So naturally, Shane Jones wants to make it easier to mine coal: Resources Minister Shane Jones ...3 days ago
- Is saving one minute of a politician's time worth nearly $1 billion?Is speeding up the trip to and from Wellington airport by 12 minutes worth spending up more than $10 billion? Photo: Lynn Grieveson / The KākāTL;DR: The six news items that stood out to me in the last day to 8:26 am today are:The Lead: Transport Minister Simeon Brown announced ...3 days ago
- Long Tunnel or Long Con?Yesterday it was revealed that Transport Minister had asked Waka Kotahi to look at the options for a long tunnel through Wellington. State Highway 1 (SH1) through Wellington City is heavily congested at peak times and while planning continues on the duplicate Mt Victoria Tunnel and Basin Reserve project, the ...3 days ago
- Smoke And Mirrors.
You're a fraud, and you know itBut it's too good to throw it all awayAnyone would do the sameYou've got 'em goingAnd you're careful not to show itSometimes you even fool yourself a bitIt's like magicBut it's always been a smoke and mirrors gameAnyone would do the sameForty six billion ...3 days ago - What is Mexico doing about climate change?This is a re-post from Yale Climate Connections The June general election in Mexico could mark a turning point in ensuring that the country’s climate policies better reflect the desire of its citizens to address the climate crisis, with both leading presidential candidates expressing support for renewable energy. Mexico is the ...3 days ago
- State of humanity, 2024
2024, it feels, keeps presenting us with ever more challenges, ever more dismay.Do you give up yet? It seems to ask.No? How about this? Or this?How about this?When I say 2024 I really mean the state of humanity in 2024.Saturday night, we watched Civil War because that is one terrifying cliff we've ...4 days ago - Govt’s Wellington tunnel vision aims to ease the way to the airport (but zealous promoters of cycl...Buzz from the Beehive A pet project and governmental tunnel vision jump out from the latest batch of ministerial announcements. The government is keen to assure us of its concern for the wellbeing of our pets. It will be introducing pet bonds in a change to the Residential Tenancies Act ...4 days ago
- The case for cultural connectednessA recent report generated from a Growing Up in New Zealand (GUiNZ) survey of 1,224 rangatahi Māori aged 11-12 found: Cultural connectedness was associated with fewer depression symptoms, anxiety symptoms and better quality of life. That sounds cut and dry. But further into the report the following appears: Cultural connectedness is ...4 days ago
- Useful context on public sector job cutsDavid Farrar writes – The Herald reports: From the gory details of job-cuts news, you’d think the public service was being eviscerated. While the media’s view of the cuts is incomplete, it’s also true that departments have been leaking the particulars faster than a Wellington ...4 days ago
- Gordon Campbell On When Racism Comes Disguised As Anti-racismRemember the good old days, back when New Zealand had a PM who could think and speak calmly and intelligently in whole sentences without blustering? Even while Iran’s drones and missiles were still being launched, Helen Clark was live on TVNZ expertly summing up the latest crisis in the Middle ...4 days ago
- Govt ignored economic analysis of smokefree reversal4 days ago
- True Blue.
True loveYou're the one I'm dreaming ofYour heart fits me like a gloveAnd I'm gonna be true blueBaby, I love youI’ve written about the job cuts in our news media last week. The impact on individuals, and the loss to Aotearoa of voices covering our news from different angles.That by ...4 days ago - Who is running New Zealand’s foreign policy?While commentators, including former Prime Minister Helen Clark, are noting a subtle shift in New Zealand’s foreign policy, which now places more emphasis on the United States, many have missed a key element of the shift. What National said before the election is not what the government is doing now. ...4 days ago
- 2024 SkS Weekly Climate Change & Global Warming News Roundup #15A listing of 31 news and opinion articles we found interesting and shared on social media during the past week: Sun, April 7, 2024 thru Sat, April 13, 2024. Story of the week Our story of the week is about adults in the room setting terms and conditions of ...5 days ago
- Feline Friends and Fragile Fauna The Complexities of Cats in New Zealand’s Conservation Efforts
Cats, with their independent spirit and beguiling purrs, have captured the hearts of humans for millennia. In New Zealand, felines are no exception, boasting the highest national cat ownership rate globally [definition cat nz cat foundation]. An estimated 1.134 million pet cats grace Kiwi households, compared to 683,000 dogs ...
5 days ago - Or is that just they want us to think?
Nice guy, that Peter Williams. Amiable, a calm air of no-nonsense capability, a winning smile. Everything you look for in a TV presenter and newsreader.I used to see him sometimes when I went to TVNZ to be a talking head or a panellist and we would yarn. Nice guy, that ...5 days ago - Fact Brief – Did global warming stop in 1998?Skeptical Science is partnering with Gigafact to produce fact briefs — bite-sized fact checks of trending claims. This fact brief was written by Sue Bin Park in collaboration with members from our Skeptical Science team. You can submit claims you think need checking via the tipline. Did global warming stop in ...6 days ago
- Arguing over a moot point.I have been following recent debates in the corporate and social media about whether it is a good idea for NZ to join what is known as “AUKUS Pillar Two.” AUKUS is the Australian-UK-US nuclear submarine building agreement in which … Continue reading ...6 days ago
- No Longer Trusted: Ageing Boomers, Laurie & Les, Talk Politics.6 days ago
- Mortgage rates at 10% anyone?
No – nothing about that in PM Luxon’s nine-point plan to improve the lives of New Zealanders. But beyond our shores Jamie Dimon, the long-serving head of global bank J.P. Morgan Chase, reckons that the chances of a goldilocks soft landing for the economy are “a lot lower” than the ...6 days ago - Sad tales from the leftMichael Bassett writes – Have you noticed the odd way in which the media are handling the government’s crackdown on surplus employees in the Public Service? Very few reporters mention the crazy way in which State Service numbers rocketed ahead by more than 16,000 during Labour’s six years, ...6 days ago
- In Whose Best Interests?On The Spot: The question Q+A host, Jack Tame, put to the Workplace & Safety Minister, Act’s Brooke van Velden, was disarmingly simple: “Are income tax cuts right now in the best interests of lowering inflation?”JACK TAME has tested another MP on his Sunday morning current affairs show, Q+A. Minister for Workplace ...6 days ago
- Don’t Question, Don’t Complain.
It has to start somewhereIt has to start sometimeWhat better place than here?What better time than now?So it turns out that I owe you all an apology.It seems that all of the terrible things this government is doing, impacting the lives of many, aren’t necessarily ‘bad’ per se. Those things ...6 days ago - Auckland faces 25% water inflation shock
Three Waters became a focus of anti-Government protests under Labour, but its dumping by the new Government hasn’t solved councils’ funding problems and will eventually hit the back pockets of everyone. Photo: Lynn Grieveson/Getty ImagesTL;DR: The six news items that stood out to me at 8:06 am today are:The Government ...6 days ago - Small accomplishments and large ironies
6 days ago
- Release: Dark day for Kiwi kids as a third of Govt cuts affect them
News that 1000 jobs at the Ministry of Education and Oranga Tamariki could go is devastating for future generations of New Zealanders. ...2 days ago - Release: Alarm as Government signals further blow to school lunchesMore essential jobs could be on the chopping block, this time Ministry of Education staff on the school lunches team are set to find out whether they're in line to lose their jobs. ...2 days ago
- Release: Quick, submit – stop Govt’s dodgy approvals billThe Government is trying to bring in a law that will allow Ministers to cut corners and kill off native species, Labour environment spokesperson Rachel Brooking said. ...3 days ago
- Government throws coal on the climate crisis fire
The Government’s policy announced today to ease consenting for coal mining will have a lasting impact across generations. ...3 days ago - Release: Public transport costs to double as National looks at unaffordable roading project insteadCancelling urgently needed new Cook Strait ferries and hiking the cost of public transport for many Kiwis so that National can announce the prospect of another tunnel for Wellington is not making good choices, Labour Transport Spokesperson Tangi Utikere said. ...4 days ago
- Release: Cost of living in Auckland still not a priorityA laundry list of additional costs for Tāmaki Makarau Auckland shows the Minister for the city is not delivering for the people who live there, says Labour Auckland Issues spokesperson Shanan Halbert. ...4 days ago
- Greens look to fast-track submissions on harmful lawThe Green Party has today launched a step-by-step guide to help New Zealanders make their voice heard on the Government’s democracy dodging and anti-environment fast track legislation. ...7 days ago
- Release: Govt should stop making people’s lives harder and build more homesThe National Government’s proposed changes to the Residential Tenancies Act will mean tenants can be turfed from their homes by landlords with little notice, Labour housing spokesperson Kieran McAnulty said. ...1 week ago
- Release: Melissa Lee missing in action on mediaThe action Melissa Lee promised to protect democracy and the media sector is missing, Media and Communications spokesperson Willie Jackson said. ...1 week ago
- Landlord Government leaves little hope for rentersThe Government’s announcement on tenancy rules prove that it does not care about renters. ...1 week ago
- Opportunity to build a more sustainable economyGreen Party co-leader Marama Davidson is calling on all parties to support a common-sense change that’s great for the planet and great for consumers after her member’s bill was drawn from the ballot today. ...1 week ago
- Significant step forward in fixing cruel and unjust pastA significant milestone has been reached in the fight to strike an anti-Pasifika and unfair law from the country’s books after Teanau Tuiono’s members’ bill passed its first reading. ...1 week ago
- Missed opportunity but NZ will surely one day recognise the right to a sustainable environmentNew Zealand has today missed the opportunity to uphold the right to a clean, healthy, and sustainable environment, says James Shaw after his member’s bill was voted down in its first reading. ...1 week ago
- Release: Don’t cut our lunches – clear message sent to GovernmentTens of thousands of people are demanding the Government commits to fully funding free and healthy school lunches. ...1 week ago
- Release: Govt makes U-turn on Suicide Prevention OfficeLabour welcomes the Government’s U-turn on the closure of the Suicide Prevention Office, says Labour Mental Health spokesperson Ingrid Leary. ...1 week ago
- CCC issues warning over further climate delayToday’s advice from the Climate Change Commission paints a sobering reality of the challenge we face in combating climate change, especially in light of recent Government policy announcements. ...2 weeks ago
- Luxon targets lame and lousy example of leadershipIf talk is cheap, Chris Luxon’s “targets” are bankrupt. ...2 weeks ago
- Luxon targets are lousy example of leadershipIf talk is cheap, Chris Luxon’s “targets” are bankrupt. ...2 weeks ago
- Release: Commitment to disability communities missing from Govt prioritiesMinister for Disability Issues Penny Simmonds appears to have delayed a report back to Cabinet on the progress New Zealand is making against international obligations for disabled New Zealanders. ...2 weeks ago
- Methane target review is dangerous duplicationThe Government’s newly announced review of methane emissions reduction targets hints at its desire to delay Aotearoa New Zealand’s urgent transition to a climate safe future, the Green Party said. ...2 weeks ago
- Release: Government must commit to school building project for disabled studentsThe Government must commit to the Maitai School building project for students with high and complex needs, to ensure disabled students from the top of the South Island have somewhere to learn. ...2 weeks ago
- Release: National must take mental health seriouslyMental Health Minister Matt Doocey and his Government colleagues have made a meal of their mental health commitments, showing how flimsy their efforts to champion the issue truly are, says Labour Mental Health spokesperson Ingrid Leary. ...2 weeks ago
- Referendums for Māori wards a racist step backwardsThe Government's imposed referendum on Māori wards is a racist step backwards for Māori representation, and disregards Te Tiriti o Waitangi. ...2 weeks ago
- Release: Job losses at Health not worth it for tax cutsNew Zealand will feel the harm of the National Government’s reckless cuts to jobs at the health ministry for generations, says Ayesha Verrall. ...2 weeks ago
- Press release: No Māori initiatives in Government’s nothing planMāori are yet to see anything from this Government except cuts, reversals and taking our people backwards, Māori Development spokesperson Willie Jackson said. ...2 weeks ago
- Thirty six point PR spinThe Government’s ‘36 point’ plan for the next three months is as pointless as it is hollow. ...2 weeks ago
- Thirty six point PR spinThe Government’s ‘36 point’ plan for the next three months is as pointless as it is hollow. ...2 weeks ago
- Thirty six point PR spinThe Government’s ‘36 point’ plan for the next three months is as pointless as it is hollow. ...2 weeks ago
- Release: Social housing off Government’s to-do listThe Coalition Government’s refusal to commit to ongoing funding for social housing is seeing the sector pull back on developments and families watch their dreams of securing a home fade away, says Labour Housing spokesperson Kieran McAnulty. ...2 weeks ago
- Release: Less money in most people’s pockets this AprilChanges to minimum wage and benefit indexation means many New Zealanders will get less this year, as the Government gives a big tax break to landlords instead. ...3 weeks ago
- Comprehensive Partnership the goal for NZ and the Philippines
Prime Minister Christopher Luxon held a bilateral meeting today with the President of the Philippines, Ferdinand Marcos Jr. The Prime Minister was accompanied by MP Paulo Garcia, the first Filipino to be elected to a legislature outside the Philippines. During today’s meeting, Prime Minister Luxon and President Marcos Jr discussed opportunities to ...12 hours ago - Government commits $20m to Westport flood protectionThe Government has announced that $20 million in funding will be made available to Westport to fund much needed flood protection around the town. This measure will significantly improve the resilience of the community, says Local Government Minister Simeon Brown. “The Westport community has already been allocated almost $3 million ...17 hours ago
- Taupō takes pole positionThe Government is proud to support the first ever Repco Supercars Championship event in Taupō as up to 70,000 motorsport fans attend the Taupō International Motorsport Park this weekend, says Economic Development Minister Melissa Lee. “Anticipation for the ITM Taupō Super400 is huge, with tickets and accommodation selling out weeks ...18 hours ago
- Cost of living support for low-income homeownersLocal Government Minister Simeon Brown has announced an increase to the Rates Rebate Scheme, putting money back into the pockets of low-income homeowners. “The coalition Government is committed to bringing down the cost of living for New Zealanders. That includes targeted support for those Kiwis who are doing things tough, such ...20 hours ago
- Government backing mussel spat projectThe Coalition Government is investing in a project to boost survival rates of New Zealand mussels and grow the industry, Oceans and Fisheries Minister Shane Jones has announced. “This project seeks to increase the resilience of our mussels and significantly boost the sector’s productivity,” Mr Jones says. “The project - ...21 hours ago
- Government focused on getting people into workBenefit figures released today underscore the importance of the Government’s plan to rebuild the economy and have 50,000 fewer people on Jobseeker Support, Social Development and Employment Minister Louise Upston says. “Benefit numbers are still significantly higher than when National was last in government, when there was about 70,000 fewer ...24 hours ago
- Clean energy key driver to reducing emissionsThe Government’s commitment to doubling New Zealand’s renewable energy capacity is backed by new data showing that clean energy has helped the country reach its lowest annual gross emissions since 1999, Climate Change Minister Simon Watts says. New Zealand’s latest Greenhouse Gas Inventory (1990-2022) published today, shows gross emissions fell ...1 day ago
- Earthquake-prone buildings review brought forwardThe Government is bringing the earthquake-prone building review forward, with work to start immediately, and extending the deadline for remediations by four years, Building and Construction Minister Chris Penk says. “Our Government is focused on rebuilding the economy. A key part of our plan is to cut red tape that ...1 day ago
- Thailand and NZ to agree to Strategic PartnershipPrime Minister Christopher Luxon and his Thai counterpart, Prime Minister Srettha Thavisin, have today agreed that New Zealand and the Kingdom of Thailand will upgrade the bilateral relationship to a Strategic Partnership by 2026. “New Zealand and Thailand have a lot to offer each other. We have a strong mutual desire to build ...2 days ago
- Government consults on extending coastal permits for portsRMA Reform Minister Chris Bishop and Transport Minister Simeon Brown have today announced the Coalition Government’s intention to extend port coastal permits for a further 20 years, providing port operators with certainty to continue their operations. “The introduction of the Resource Management Act in 1991 required ports to obtain coastal ...2 days ago
- Inflation coming down, but more work to doToday’s announcement that inflation is down to 4 per cent is encouraging news for Kiwis, but there is more work to be done - underlining the importance of the Government’s plan to get the economy back on track, acting Finance Minister Chris Bishop says. “Inflation is now at 4 per ...2 days ago
- School attendance restored as a priority in health adviceRefreshed health guidance released today will help parents and schools make informed decisions about whether their child needs to be in school, addressing one of the key issues affecting school attendance, says Associate Education Minister David Seymour. In recent years, consistently across all school terms, short-term illness or medical reasons ...2 days ago
- Unnecessary bureaucracy cut in oceans sectorOceans and Fisheries Minister Shane Jones is streamlining high-level oceans management while maintaining a focus on supporting the sector’s role in the export-led recovery of the economy. “I am working to realise the untapped potential of our fishing and aquaculture sector. To achieve that we need to be smarter with ...2 days ago
- Patterson promoting NZ’s wool sector at International CongressAssociate Agriculture Minister Mark Patterson is speaking at the International Wool Textile Organisation Congress in Adelaide, promoting New Zealand wool, and outlining the coalition Government’s support for the revitalisation the sector. "New Zealand’s wool exports reached $400 million in the year to 30 June 2023, and the coalition Government ...3 days ago
- Removing red tape to help early learners thriveThe Government is making legislative changes to make it easier for new early learning services to be established, and for existing services to operate, Associate Education Minister David Seymour says. The changes involve repealing the network approval provisions that apply when someone wants to establish a new early learning service, ...3 days ago
- RMA changes to cut coal mining consent red tapeChanges to the Resource Management Act will align consenting for coal mining to other forms of mining to reduce barriers that are holding back economic development, Resources Minister Shane Jones says. “The inconsistent treatment of coal mining compared with other extractive activities is burdensome red tape that fails to acknowledge ...3 days ago
- McClay reaffirms strong NZ-China trade relationshipTrade, Agriculture and Forestry Minister Todd McClay has concluded productive discussions with ministerial counterparts in Beijing today, in support of the New Zealand-China trade and economic relationship. “My meeting with Commerce Minister Wang Wentao reaffirmed the complementary nature of the bilateral trade relationship, with our Free Trade Agreement at its ...3 days ago
- Prime Minister Luxon acknowledges legacy of Singapore Prime Minister LeePrime Minister Christopher Luxon today paid tribute to Singapore’s outgoing Prime Minister Lee Hsien Loong. Meeting in Singapore today immediately before Prime Minister Lee announced he was stepping down, Prime Minister Luxon warmly acknowledged his counterpart’s almost twenty years as leader, and the enduring legacy he has left for Singapore and South East ...4 days ago
- PMs Luxon and Lee deepen Singapore-NZ tiesPrime Minister Christopher Luxon held a bilateral meeting today with Singapore Prime Minister Lee Hsien Loong. While in Singapore as part of his visit to South East Asia this week, Prime Minister Luxon also met with Singapore President Tharman Shanmugaratnam and will meet with Deputy Prime Minister Lawrence Wong. During today’s meeting, Prime Minister Luxon ...4 days ago
- Antarctica New Zealand Board appointmentsForeign Minister Winston Peters has made further appointments to the Board of Antarctica New Zealand as part of a continued effort to ensure the Scott Base Redevelopment project is delivered in a cost-effective and efficient manner. The Minister has appointed Neville Harris as a new member of the Board. Mr ...4 days ago
- Finance Minister travels to Washington DCFinance Minister Nicola Willis will travel to the United States on Tuesday to attend a meeting of the Five Finance Ministers group, with counterparts from Australia, the United States, Canada, and the United Kingdom. “I am looking forward to meeting with our Five Finance partners on how we can work ...4 days ago
- Pet bonds a win/win for renters and landlordsThe coalition Government has today announced purrfect and pawsitive changes to the Residential Tenancies Act to give tenants with pets greater choice when looking for a rental property, says Housing Minister Chris Bishop. “Pets are important members of many Kiwi families. It’s estimated that around 64 per cent of New ...4 days ago
- Long Tunnel for SH1 Wellington being consideredState Highway 1 (SH1) through Wellington City is heavily congested at peak times and while planning continues on the duplicate Mt Victoria Tunnel and Basin Reserve project, the Government has also asked NZ Transport Agency (NZTA) to consider and provide advice on a Long Tunnel option, Transport Minister Simeon Brown ...4 days ago
- New Zealand condemns Iranian strikesPrime Minister Christopher Luxon and Foreign Minister Winston Peters have condemned Iran’s shocking and illegal strikes against Israel. “These attacks are a major challenge to peace and stability in a region already under enormous pressure," Mr Luxon says. "We are deeply concerned that miscalculation on any side could ...4 days ago
- Huge interest in Government’s infrastructure plansHundreds of people in little over a week have turned out in Northland to hear Regional Development Minister Shane Jones speak about plans for boosting the regional economy through infrastructure. About 200 people from the infrastructure and associated sectors attended an event headlined by Mr Jones in Whangarei today. Last ...7 days ago
- Health Minister thanks outgoing Health New Zealand ChairHealth Minister Dr Shane Reti has today thanked outgoing Health New Zealand – Te Whatu Ora Chair Dame Karen Poutasi for her service on the Board. “Dame Karen tendered her resignation as Chair and as a member of the Board today,” says Dr Reti. “I have asked her to ...7 days ago
- Roads of National Significance planning underwayThe NZ Transport Agency (NZTA) has signalled their proposed delivery approach for the Government’s 15 Roads of National Significance (RoNS), with the release of the State Highway Investment Proposal (SHIP) today, Transport Minister Simeon Brown says. “Boosting economic growth and productivity is a key part of the Government’s plan to ...7 days ago
- Navigating an unstable global environmentNew Zealand is renewing its connections with a world facing urgent challenges by pursuing an active, energetic foreign policy, Foreign Minister Winston Peters says. “Our country faces the most unstable global environment in decades,” Mr Peters says at the conclusion of two weeks of engagements in Egypt, Europe and the United States. “We cannot afford to sit back in splendid ...7 days ago
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Stand by as National’s minions scour the papers line for line to come up with claims that the policy is wrong using selected interpretations and time periods …
Fisiani in duty at the moment.
Wonder when his shift ends and srylands comes on?
Or are they all just the alter egos of one Cameron Slater?
Yeah! We’ve already had Steven Joyce and Peter Dunne proclaiming on Twitter that it’s the end of the world.
Joyce says:
As far as I’m aware, Labour is structuring its policy so that there won’t be any additional increase to inflation. Also, with our exporters earning more they can afford to pay their employees more. They can also afford to employ more people who are then able to save more. How on earth can that be a bad thing?
Dunce says:
What he clearly doesn’t understand is that the cost of imported goods doesn’t have much to do with the exchange rate and much more to do with what the middle men think they can get away with charging. Overall prices haven’t decreased because of a high NZ dollar.
The Reserve Banks main function was to implement monetary policy as directed by a government act to help maintain stability in the general level of prices. In terms of the price of housing in New Zealand they have utterly failed. Here’s what Labours policy document states:
The alternative is to do nothing and watch unemployment grow and housing become even less affordable for your average Kiwi family. Also, if we don’t increase competitiveness and thus income from overseas, our debt will become completely unmanageable.
Our debt is already unmanageable due to it being almost entirely ex nihilo and bearing interest.
National has already been doing this using Kiwisaver contribution levels (dropping them to 3% to leave more money in peoples back pockets to help stimulate the economy, now raising it back to 4%) and most comentators here disagreed with this. Please explain to me the difference?
Also, isn’t this policy just removing the burden from mortgage holders and spreading it to lower income households that can’t afford a mortgage at the moment?
A simplistic way of looking at this policy, it is effectively the same as raising the lower tax rate and locking the extra income away from you until you turn 65. Less money in your back pocket now (because everyone has too much at the moment), but if you make it to retirement age you will get it back…..
Bob.Just think of the dosh we would have in our coffers now if Muldoon had not scraped Big Norms,super scheme.
Bob:
The difference is that the Reserve Bank is politically independent – that’s the whole point of the Reserve Bank Act.
If, as you say, National is already doing it, then it makes even more sense to define the mechanism, the constraints under which it is to operate, and the intended outcomes, and then pass it to the Reserve Bank which is generally accepted as acting outside of political party politics and therefore politically neutral and transparent.
Yeah politically independent in that it’s not loyal to either Labour or National, just loyal to the pro-neoliberal monetarist status quo.
+1111
And the how of the “independent central bank” came about is all about how the private sector grabbed power over the State (Debt: The first 5000 years by David Graeber).
Yep. And central bank independence was supposed to prevent big financial crashes by keeping elected officials and their populist ways out of the picture.
Worked a treat so far eh.
Thank you.
The elephant in the room with the Reserve Bank Act: who the hell elected the bankers?
The banksters did – about 500 years ago – by the simple expedient of being the ones that the kings were in debt to. This has, effectively, meant that all law since then has been to the banksters benefit.
It has already started lol
I’ve had a bit of a read, in direct benefits it sounds like it would be a bit crap for renters who aren’t “low income” and would benefit homeowners more, so from a realpolitik perspective it’s probably very smart, they’re a massively powerful political block. I assume there are the additional policies to make home ownership more accessible or renting more attractive that might even it out, and of course if it helps job creation a rising tide lifts all boats and all that.
Keep the policy that allows 1st home buyers to delve into their kiwi saver and you have a winner there
So Labours new tool is giving the ability of the reserve bank to compulsorily take as much of workers income as they feel like and lock it away in kiwisaver for 40+ years.
So currently if interest rates go up people with mortgages will lose more $$$ in mortgage payments.
Under their scheme interest rates may still go up however they will also be forced to lock away more of their income into kiwisaver as well……….not going to win many votes.
Also what happens if the economy tanks – will they release $$ from kiwisaver back into peoples bank accounts? I doubt it.
More communism by stealth. If there is one thing the left need to learn is that kiwis don’t like being told that they have to do something and that the government knows best and they’re a bunch of dimwits.
New Tool?…What a tool….
What time your shift end, Jimmie?
Talking of tools….and paid puppets.
LOL I’m sure people will hate keeping their money in Kiwisaver as opposed to just throwing it away paying it in interest to a bank.
Jimmie, it seems to me like we’ll be spreading the load much wider.
Instead of rising costs of those who have floating mortgages (and sometime down the road for those on fixed mortgages), the rising costs can be applied to everyone earning an income at short notice.
If you are wealthy and mortgage-free, the interest rate increase was good for you because it meant a bigger return on your savings in the bank. But if you’re already mortgage free, then you’re better off than about 90% of the country, so how is it fair that you should get a free ride?
Yes, your analysis is certainly that of a ‘tool’. A choice between paying higher interest to Aussie banks or putting that same money into your KiwiSaver is a no brainer. Unless you are a Tory.
You didn’t read that did you? Just went and got your lines from Crosby/Textor.
Is this how you guys are going to spin it? Really??!!!
Or are you going to mix it up with ‘a high exchange rate is a good’, ‘I would love to see wages fall’, ‘if you’ve got nothing to hide, then you’ve got nothing to fear’ and a bit of bene-bashing?
Not to mention why workers who rent and dont have a mortgage should be robbed of some of their income to help benefit those who do…
I’m not sure of many landlords that don’t take into account their mortgage payments when they set the rent on their property.
Lower mortgage payments = lower rents for renters. Any offset of kiwisaver borrowing is likely to be less because the cost is shared over many more people, and further the money isn’t gone forever (like paying rent to your landlord, who pays it to the bank on their mortgage), it’s put aside for their retirement.
Probably just means that the rents won’t rise as fast. The only time I have seen rents drop is when a building was getting its leaky building status rectified.
And yes, all landlords including me on the odd occasion will pass on all costs; mortgages, rates, lawnmowing costs, etc whenever possible. The idea is for a property that doesn’t cost the landlord anything and if possible makes then a profit (that usually happens when the mortgage principal is reduced)
Yep, the whole purpose of being a landlord is to be a bludger – just like the old aristocrats.
DTB
100% right! Buy to rent is one of the major parasitical get rich schemes ruining this once egalitarian land. No wonder our young get out to Australia. At least they get paid decently there. We’re making Australian banks rich paying all the inflated mortgages and interest to them to fuel our anti social housing bubble literally kiwi dollars pouring out of our economy into another foreign country’s.
Yes, rents not rising as fast is what I meant, rather than a drop in rents. That would only happen if the landlord’s costs significantly decreased, and they weren’t greedy. Substantial cost decreases are very uncommon.
over 25 years renting, I have never once seen a drop in the rent 🙂
A fair few leases will actually outright prohibit a rent deduction.
Oh I saw one once. They’d torn the whole front of the building off using grinders. There was scaffolding and plastic blocking the sun and a layer of concrete/plater dust everywhere. All day you could hear the scream of the grinders and the pounding of the hammers.
The rents throughout the building went down to about $320pw to $280pw for the single bedroom apartments.
I moved out to my sisters for a couple of months and didn’t rent the apartment.
Chill out Jimbo this monetary policy is heading in the correct direction and is designed to correct 40 years of the pendulum swinging to far in favour of the wealthy. Within Labour change is a foot back to core values of a fairer equitable thinking and policies.
People purporting to be left can ridicule cynically from the sideline, or do like many of us have. Get in there and force changes from within. For lower income earner we fight to reduce the inequality gap. Employment laws rebalanced, higher minimum wages and a living wage are but a start to bring in a universal income.
Wingnuts this is a post to people I can relate to, so stick to critiquing your own ilks posts like PG 🙂
“Chill out Jimbo this monetary policy is heading in the correct direction and is designed to correct 40 years of the pendulum swinging to far in favour of the wealthy.”
I don’t think so.
The policy has merit and I would like to see it implemented. But it has some disadvantages.
Firstly, it favours wealthy people with mortgages. I would MUCH rather increase my savings via Kiwisaver than pay more interest on my mortgage.
.. BUT if I was forced to increase my compulsory savings I would probably reduce my voluntary savings. This would negate the effects of the policy.
Thirdly, if you do succeed in forcing people to save more, their net worth rises. This enables them (other things being equal) to borrow more. This would also negate the effect of the policy.
Fourthly, the policy is regressive – it reduces the income of low income earners who do not have mortgages (remember only a relatively small proportion of the population has mortgages)
Fifthly, Labour shockingly glosses over the impact of lowering the dollar (if this is what happens) on cost of living, especially for low income earners who spend a large proportion of their income – if you are a low to middle income renter with a car to run in South Auckland this policy will hit you hard. Lowering the dollar by 15% will put up the price of petrol by about 15 cents per litre (give or take).
So it does have merit, but it is unlikely to replace the OCR as the main lever, and it will be welcomed by high income earners with a mortgage. If Labour’s core constituency is capable of understanding the likely effects of the policy, I think they would be concerned.
What about more savings being reinvested in the NZ economy and its flow on to jobs?
If you see the outgoings of profit flowing overseas, this policy taps into that and redirects that money into the hands of NZ, something to lend, and someone other than foriegners to borrow from.
So your assumption that all borrowing is bad because we currently do so much of it from over seas is in error.
Ask yourself who the majority holders of ”retirement savings schemes” are, here’s a hint, the foreign owned trading banks, full stop.
SO, is it a given that those banks will reinvest the compulsory savings in the NZ economy, i see NO compulsion from Parker that He will require the foreign owned trading banks to do this,
SO, NO, the compulsory retirement savings are just as likely to be invested overseas where there are bull markets in shares etc etc etc,
The banks will invest such windfalls where they see the biggest profit is to be made and that aint necessarily here in New Zealand…
+1
Are you really saying that a foriegn investor who takes dividends offshore is the same as a trading bank using savings from kiwis to fund mortgages and business loans? I think that’s what you are saying. The Reserve bank recently ask banks to find more of their investment money from NZ, i.e. loans to first time home owners.
I know its hard to fathom, that having more citizens having more savings instead of foriegners taking dividends overseas, goes against the grain so to speak.
aerobubble, we seem to speak in different brands of the English language, Trading Banks will by and large get the lions share of retirement savings accounts that are ‘forced’ to be opened,
The trading banks by definition are in it for the profit, SO, while having to give a return on the savings the trading banks will be looking for the best return they can get per dollar,
Quixotically, the intent by David Parker is to pull discretionary spending from the NZ economy to LOWER interest rates, if this does succeed in lowering those interest rates then the trading banks will look to other economies that have a higher rate of return for all the capital that will be their’s to invest how they see fit to provide the profits for them and the return for the retirement saver,
If there is less demand in the NZ economy how can there then be higher employment, the reverse will be the case,
SO, as far as the monies from the forced retirement savings regime goes, NO, i see little difference in the flow of money offshore, except that should the retirement saver live to 67 they will in theory get their money back with interest,
This is the rhetorical question you should have a think on, where is the majority of the Cullen super-fund invested,…
NOooooo–having disagreed with every piece of drivel that SSland’s has ever posted as a comment here at the Standard its taken David Parker’s piece of neoliberal snake-oil to have me just about agreeing with his whole comment,
This proposal simply steals money out of the pockets of those in the bottom of the economy so Parker et al can use the ‘tool’ to ‘fix’ interest rates for borrowers, last figures i seen was that there were 400,000 mortgage holders but that doesn’t tell the full story does it, the farming sector and those who borrow to fund their life-styles will all be winners here along with, of course the foreign owned trading banks,
Anyone earning 45,000 a year or less should be worried about this proposal which i suggest is Parker and Labour’s ”linking” policy that will see the retirement age raised first to 67 and then to 70,
Who in the demographic are the least likely to reach either of those ages, 67 and 70, who would have thunk it those who over their lives will earn the least, the under 45,000 earners, Parker now wants to tax them by forced retirement savings which a considerable % of them will not live to collect,
Parker should have added another ”there is no alternative” just to let us all know what He really thinks of us…
I would be a tad careful about drawing such conclusions Bad12.
Don’t you have to take all the policies of Labour into account?
It may be that this one taken on its own has the effects you fear it does, yet it may also be that other policies are there, or will be brought out to counteract any negative impact on the poorer people/ households. That issues facing the poor will be addressed is certainly more likely under Labour than National.
Why should i be careful ”drawing such conclusions” blue leopard, IF Parker or Labour had policy that would alleviate the obvious negative effects of this current announcement on those who will always be in the bottom of the economy then they should have revealed such policy shouldn’t they,
Have they got such policy, well no, i heard Parker on radio NZ say they did think about not forcing retirement savings upon those who obviously cannot really afford to do so, but, that’s as far as it got, Parker thought about it, what a frigging load,
”the issues facing the poor will more likely be addressed by Labour than National”, who blue leopard are you trying to fool here, in 9 years of Clark’s Government were such issues addressed, please enlighten us all wont you…
My comment was written in sincerity.
I have found when I have agreed with a right-wing person in the past, I have gone on to realise I was wrong for having done so – that I should have gathered more facts first!
In 9 years of Clark government:
Social Policy
Economic Policy
Don’t forget to compare with National’s ‘efforts’:
Social Policy?
[un]Economic Policy
blue leopard, when, maybe i should put a big IF here, David Parker announces how those on low incomes, both workers and beneficiaries, will be compensated for the loss of (a), the initial 3% of their weekly income that they will by compulsion be forced to save, and (b),the initial 1-2% of price inflation that will occur as a result of lowering the price of the New Zealand Dollar by 15% i just might be convinced that this scheme has slight merit,
This whole policy favors those who hold debt or are planning on going into debt, those of us who live within our small means will be directly subsidizing those on the monetary pecking order above us who have access to borrowed capital that we who earn far far less can never have,
Its a protection racket for the middle class, the dairy farmer, the business person operating their businesses off of borrowed capital,(who doesn’t these days),
i also have my doubts that Parker’s wee plan wil have much effect on the price of the NZ Dollar as international banks with budgets that dwarf our total GDP have taken an interest in controlling that price on a daily basis using it as a simple cash cow,
But, i will happily be proven wrong…
fair enough….& yes here is hoping you are wrong 🙂
Here is a totally made up scenario for you:
If there was a government-in-waiting who actually did want to help those most struggling, yet the social climate consisted of a whole swathe of people, who are in better circumstances and had been conditioned into resenting the poor (hard to imagine how that could ever possibly occur, but let’s say it was the case)…and if that government-in-waiting knew they wouldn’t win the election that if they shouted from the…er ‘rooftops’ (thanks Shearer) that they intended to do something to improve the conditions of those in difficult circumstances because the people in better circumstances wouldn’t vote for them. What would be the best way forward?
I am guessing they would have to be careful to have policies that benefitted a large amount of the people who would get angry if solely the poorest peoples’ interests were addressed – because if that government-in-waiting didn’t do that, and ended up on the Opposition, they wouldn’t be much help to the poor there would they?
It would be a shame , if in such a scenario, those that were poor (or spoke out for the poor) started getting angry with that government-in-waiting for not speaking loudly about their interests.
It would also be enough to start a proverbial revolution if said government-in-waiting got into power by gaining the votes of the poor and proceeded to do nothing.
Gee… I’ll bet Labour are glad they aren’t in the type of scenario that I just made up; that would be like having to navigate a minefield……it would be a case of constantly being “damned if you do and damned if you don’t.”
Lolz blue leopard, and Lolz again, heres a totally un-made up scenario, Sir Roger(spit) Douglas,i stuffed letterboxes all over my hometown to help get that Labour Government elected upon much the same ”blind faith” you are asking me to show in Parker and the current Labour leadership,(sorry once bitten twice shy)…
Oh dear me, no, you poor thing! 🙁
The first election I could vote in was the 1990 one, I knew that it was a farce, but still voted Labour because I knew Nat would be worse; and they were.
I was most relieved at being given the choice to support a change of system to MMP in the next election.
So, my response to you on your well founded concern is; one has to remember that the parties are working under a system that doesn’t allow for as much unaccountability as it did back then; parties know they will pay for that at the polls. (Although, I do accept that these things can be worked around if both main parties are captured by big money interests)
I did consider the type of concern you express here, when writing my made-up story, which is why I put in a wee message for Labour in there too re what the effect on the public’s attitude is likely to be toward a party [and the entire voting system] that gained votes from those in difficult circumstances, who then had their wellbeing ignored.
One can vote for smaller parties, which I may well be doing, or the only other option, if you are that mistrustful of politicians is not voting and I really don’t think that option is doing us much good at all.
blue leopard +100…yes they will have to have OTHER social welfare policies to look after those who fall through he cracks….and more likely Labour and the Left will than Nact will!
You can trust National to look after the poor bad12 says, Labour will do nothing about an collateral effects of their policies.
What a load of bollocks. The people who can actually save will continue saving the same amount. Of course, the people who normally can’t save as their income is too low (ie, the majority of the population) would be forced to save more keeping inflation low.
I’m that there would be some unscrupulous scumbags that will try this on so we’ll need government education programs showing that if you do this then you’ll be worse off.
The present high NZ$ is allowing us to live well beyond our means. The correction will come sooner or later – the only option we have is if we do it the easy way or the hard way. Labour seems to have chosen the easy way.
As I’ve said before – the real problem is that our dollar is pushed up by speculation and hot money looking for the higher interest that we have rather than by actual trade. Labour looks to be trying to address these points which is more than can be said of National which, like you, are insisting that we can live beyond our means forever.
Always the spoiler Shrillands. I note your pushing the ‘low income earners will suffer the most’ rhetoric. Parker has every intention of looking after this group it even gave him a chuckle when confronted about this and said something like “we will after them don’t you worry about that.” Your rich wingnut mates at the top know what that means ‘stumping up’ paying their share, their wings are about to clipped, and you know it.
To think if that other (Key) power drunk National Leader Muldoon didn’t scrap Labour’s visionary savings plan, we would have a decent universal income & free education scheme etc going right now.
Good to see Labour introducing a policy that the Nats cannot hang their hat on.
Indeed
National would have to embrace Kiwi Saver first – and that’s a big dead rat for them to swallow
Skinny +100 ….I like the sound of Labour’s new monetary policy!
…this new Labour Left 2014 Govt could be a paradigm changer for many New Zealanders and a quality of life , if not life saver for many others …
Go Cunliffe and Parker and Labour!
+1 with you, gentle Chooky
No – access to kiwi saver funds for first home buyers
A case of making sure they do treat everyone fairly. No point in expecting detail at the moment. Last time Labour gave any detail (family policy) they were hammered.
I’m still getting my head around the subtleties, Jimmie, but I don’t think it’s fair to talk about people being robbed. Money saved is a long term benefit to the individual, not a loss. And renters are affected by interest rates; an extended upwards trend hikes rents (although they don’t change with every all adjustment).
A few of us would feel the effects more than others (I am in a long-term superannuation scheme that’s better than Kiwisaver), but overall I think this is an interesting set of proposals and certainly worth considering rather than automatically slagging.
I’m still unsure of compulsory Kiwisaver. From an economic perspective, it makes perfect sense and I lean toward supporting it. It wouldn’t change my situation.
However, I remember growing up with a parent who had to make every last penny count. She has a decent pension and savings now because she educated and trained her way out of that situation (National’s attack on adult learners is the most bizarre policy of their government), but a compulsory saving scheme might have ruined her back in the dark days. Are there any safeguards in place for that? All I see is a throw-away line about a “variable rate”.
(And don’t anyone dare say: well, under Labour, wages will go up, blah blah – because that is probably true, but also placing people’s well-beings in the hands of assumptions.)
“National’s attack on adult learners is the most bizarre policy of their government”
absolutely
I’m 45. After my last redundancy I looked into retraining, but the fact that I would have to borrow all living costs as well as all study costs makes it impossible. I have no real assets apart from my tools. In this climate, who is going to go Guarantor for an unemployed 45 year old male with no assets in need of a $20,000 a year loan? I am understandably getting a bit sick of 25 year old WINZ workers telling me retraining is the best way to find a career path.
I have a career, it’s the jobs that pay for it that is MIA.
You should be eligible for the student allowance. Of course, that doesn’t mean that that’s enough.
Lost me right there. As far as I can tell, if you cede any control of you financial management regime, you necessarily cede related amounts of political freedom beside those ceded economic freedoms. Just ask the ANC, who with all their post Apartheid social/political dreams preside over a train wrecked SA thanks to external control of finance. Or look to Spain, Italy or who-ever who are politically neutered due to ceding currency control to the European Central Bank, which in turn is ‘guided’ by the agenda of non-national, undemocratic institutions like the IMF and WB, who have a primary focus that just ain’t you or me or any citizen anywhere.
Yep, that’s the big problem that I was having with it. That and the fact that we really don’t need savings to lower the cost of borrowing as the government can create the money and loan it out at 0% interest. Relying upon Kiwisaver to increase savings puts even more control of the economy into the hands of the private banks and thus even more of the returns to those self-same banks.
One thing I’m sure of in this is that the private banks are drooling over it.
Exactly right Draco, we can forget any notion of Labour having the nous to look at the printing of money as the logical tool to both keep interest rates low and lower the price of the kiwi dollar,
As you point out, the banks, the foreign owned ones that Parker takes a hypocritical swing at in His speech will be the real winners either way in this equation,
Should the Reserve Bank raise the Official Cash Rate the banks get the payoff via higher interest rate charges,
Should the proposed official savings rate be used as the tool the trading banks who hold the majority of the retirements savings portfolio get the payoff of millions and billions of dollars of everyone’s cash to make even more money on as well as clip the ticket on all those extra people Parker and Labour want to force into retirements savings,
There’s a ”tool” working here alright and until Parker outlines exactly how He intends to protect the incomes of the working poor and beneficiaries,(none of whom he has excluded from this proposal), from both the initial 3% of compulsory savings and then the 1% a year rise in those savings, plus the extra costs that lowering the NZ dollar will create,this is a non stater,
From where i sit this proposal will gravely hit in the pocket those who earn less than 45,000 a year and only benefit those with a mortgage,
i see no policy from Parker to reverse the 2009 tax switch for those earning more than 75% with an intent to redistribute these monies,
Business as usual in other words, a protection racket being run on behalf of the comfortable middle class…
“As far as I can tell, if you cede any control of you financial management regime, you necessarily cede related amounts of political freedom beside those ceded economic freedoms.”
Isn’t the corollory of that that if we didn’t have the Reserve Bank then NACT would currently be in charge of it instead?
But a publicly accountable and democratic (yes, I know, we’re talking National here who just don’t do accountability) than private banks that aren’t accountable at all. Also, we put in very, very strict rules regarding how our money is used.
National doesn’t need to be ‘in charge’ – public accountability was eliminated by Reserve Bank ‘independence’, and that suits the Nats just fine.
Unless you’re suggesting National doesn’t support the neoliberal framework to which the bank was committed 25 years ago?
‘To be crystal clear, the New Zealand Labour Party remains committed to the independent
full service Reserve Bank, which you will remember a Labour government introduced in
1989.
We remain committed to the control of inflation and the existing inflation target, to a floating
currency, and free capital movement.’
Parker intones the catechism – the dedication to enabling free capital movement prohibits a financial transaction tax, or any speculative tax, which he has specifically ruled out. Surely it wouldn’t hurt to at least look at a tax gaining some traction in Europe. If nothing else it would raise awareness.
And renters will be disadvantaged by higher Kiwisaver rates, unless landlords transfer the advantage of lower interest rates.
And with that statement alone he indicates that the much promised movement away from neo-liberalism was lip service at best. Until such time as any government is prepared to look seriously at the reality of money creation and usury, then policy announcements such as this will be tinkering around the edges and a perpetuation of the current monetary ponzi scheme.
Don’t get me wrong, there are good elements to the policy but it’s somewhat akin to putting a bandage around the ankle when it is a heart transplant that is required.
+1111
again + 1111…those in the bottom of the economy being forced to provide 3% and rising of their income weekly so those above them in the monetary pecking order can have cheap money to borrow to fund their lifestyles…
And with that statement alone he indicates that the much promised movement away from neo-liberalism was lip service at best.
Doesn’t this depend on how you define neoliberalism?
Neoliberalism was a move away from any concern about unemployment levels and totally fixated on inflation instead. (D. Harvey, ‘A Brief History of Neoliberalism’, p.23)
…..”and any interference with the market, state ownership and management of the economy and any form of strategic industry policy are incompatible with this [neoliberal] model” (Donald. M. Nonini, ‘Is China Becoming Neoliberal?’, p. 157 – n.b behind a paywall)
Perhaps we need to look at the overall picture that Labour is offering, rather than transfixing on every separate little statement/policy.
Who is offering the most non-neoliberal approach? Labour or National?
(Because the correct answer is such a no-brainer there will be no chocolate fishes awarded for correct answers, sorry)
“Doesn’t this depend on how you define neoliberalism?”
Well yes it can do however even somewhere as basic as Wikipedia seems to have the commonly accepted definition of what neo-liberalism is:
“Neoliberalism is a label for economic liberalism whose advocates support economic liberalizations, free trade and open markets, privatization, deregulation, and enhancing the role of the private sector in modern society.”
“Who is offering the most non-neoliberal approach? Labour or National?”
Granted – yet not particularly relevant given National have at no point renounced neo-liberalism 🙂 Labour on the other hand (supposedly) have.
Having gone and read a fair portion of the Wikipedia page on neoliberalism in response to your comment, it appears that there is no clear definition of neoliberalism.
My conclusion is: you could be criticising National for not being neoliberalist enough, considering their position, just as easily as criticising Labour for not being non-neoliberalist enough.
A major impact of neoliberalism (from observation and reading) is it’s delightful capacity to divide and destroy the community spirit by creating vicious attitudes toward one another based on the emphasis it (the neoliberalist approach) places on competition (you gotta be in to win – cos its a dog-eat-dog world – damn those lazy bastards for being poor and dragging us*-I-mean-themselves down *cos there aint no such thing as ‘us’ anymore).
I hear Labour challenging these view points in every main policy they have thus far released and to hear such things from the people who will form the next government is proving to be a welcome relief in this quarter.
Points 4 & 5 in Elizabeth Martinez and Arnoldo Garcia ‘s definition of neoliberalism resonates:
Economic historian Philip Mirowski is very good on Neo Liberalism here:
The Thirteen Commandments of Neoliberalism
By Philip Mirowski.
Neoliberals are not fundamentalists. But they approach crises with a certain logic—one that is directly relevant to comprehending neoliberalism’s unexpected strength in the current global crisis.
Throughout the second half of the twentieth century, the neoliberal project stood out from other strains of right-wing thought in that it was self-consciously constituted as an entity dedicated to the development, promulgation, and popularization of doctrines intended to mutate over time. It was a moveable feast, and not a catechism fixed at the Council of Trent. It is very important to have some familiarity with neoliberal ideas, if only to resist simple-minded characterizations of the neoliberal approach to the financial crisis as some form of evangelical “market fundamentalism.”
http://www.the-utopian.org/post/53360513384/the-thirteen-commandments-of-neoliberalism
“Labour on the other hand (supposedly) have.”
I’m not yet sure they have. They need to in unambiguous fashion before they EVER get my party vote again.
Seems to me they want to be both ‘a little bit country, and a little bit rock’n’roll’. (Moik Williams and Josie Pagani anyone?)
I could be a ‘little bit’ charitable however, and roll out the cliches …. Rome wasn’t built in a day; it’s a good start; the electorate can’t handle it; etc;
…. still no party vote though. Put up an OK electorate candidate and maybe.
It IS a good start though admittedly
““Labour on the other hand (supposedly) have.”
I’m not yet sure they have. They need to in unambiguous fashion before they EVER get my party vote again.
Seems to me they want to be both ‘a little bit country, and a little bit rock’n’roll’. (Moik Williams and Josie Pagani anyone?)”
Completely agree. +1
+1
Essentially positive and well reasoned, but the Reserve Bank has no privileged status in my mind – if it does not produce a public good it is disposable.
Reinhart and Rogoff were wrong, and all the inflation hawks have proven to be wrong with them.
We should not let the political reluctance to admit errors force us to perpetuate an institution that has not served New Zealand well.
I sorta said this on open mike, but as the speach talks about the savings rate been used to increase or decrease consumption what are they going to do in 20yrs or so when substantive amounts of kiwisaver come due? Will they decide it will be to inflationary and seek to restrict access? I really dont favour a system dependant on one scheme open to government interference there needs to be alternative schemes to kiwisaver where you can retire and access your money when you wish not when a govt says you can.
Compulsory super saving?
How can we trust any future government not to dip into such a gigantic pool of money for their own purposes? Fact is we can’t. They just last year legislated themselves the ability to take our savings to protect banks, ffs.
Banks and governments – what a fucking laugh when it comes to trust and doing what is best for the people.
The shysters will be delighted too.
.
Yet worrying signals have been building for years. Governments have been dissatisfied with super more often than not, persistently putting it under the microscope. The latest squint was instigated by federal Assistant Treasurer Arthur Sinodinos, who expressed concern about the governance and transparency of super funds – essential stuff. Late last year, Sinodinos released a discussion paper, allowing three months for reflection. You’d have thought that, with this time to ponder, we would be stimulated by insightful responses, well-researched and argued from evidence – especially from the funds’ trustees, who are at the epicentre of the issues.
http://www.smh.com.au/national/public-service/a-super-hoax-or-just-another-stuffup-20140303-340s0.html
edit: this too
http://www.canberratimes.com.au/comment/super-illusions-and-the-great-workforce-ripoff-20140311-34k1s.html
Thats the idea of of it,invested and legislated to be used for the good of the countries social needs and only social needs,Health Education and also welfare.Where is the billions of revenue at present earned by the A.C.C.in overseas investment going.
91.8% against – the result of last referendum into compulsory retirement savings.
Nope. The referendum was on the specific scheme proposed by NZ First and National. The result tells us nothing about the views of Kiwis about the concept in a general sense.
This was the question:
“Do you support the proposed compulsory retirement savings scheme?”
Every single person in the country read that as:
“Is it false that Winston Peters is a massive wanker?”
Hat tip to Phil Verry 2007 in a parliamentary submission on Monetary policy Interest linked saving scheme.. i stumbled across a few years ago.. the benefits a re huge and make sense for NZ. The link below takes you the original submission, that explains the upside really well.
http://www.parliament.nz/resource/0000029574
This scoop article cover it off nicely too.
http://www.scoop.co.nz/stories/BU0707/S00328/ilss-low-rates-low-nz-dollar-low-inflation.htm
I was on here a week or so ago criticizing Labour for not focusing on bold and innovative policy in the context of the debate around Kiwi in America’s comments on why Labour has lost its way.
This policy, however, is a great example of some good policy thought and a well managed public release. I hope this now moves the focus from personalities onto policy.
The huge caveat on this comment is that based on recent past performance, Labour and their poor performing advisors are bound to screw this up too. I hope not, as the Government needs a quality opposition to challenge it this election year.
Look it just won’t work! Uncle Bill says so – so there! And he should know. I mean he must be the best Finance minister we have ever had. Look he guaranteed the SCF and those who invested in that never lost their money. He has promised us 173,000 new jobs every year, and I’m sure they are there if only the bludgers would care to look for them. And our overseas debt is at record Highs – now that just doesn’t happen under every Minister of Finance. So if Uncle Bill says it won’t work then you can be pretty sure about it.
😈 😆
rod oram on nat-rad is giving the parker-plan a thumbs-up..
(‘the logic is compelling’…)
They have the provisional nod from Kim Campbell and the EMA as well.
Interesting and inventive policy kept very well under wraps.
“We propose an important new tool – varying the employee contribution rate for work based
savings. The variable savings rate mechanism – or VSR – would allow the raising or
lowering of savings rates, rather than interest rates, to reduce or boost local consumption.”
I am surprised that such a personally invasive policy is left with little definition. This is a substantial loss of personal income that will be hard to forecast. Parker should have said “The contribution will only ever be changed by x%.”
Otherwise every working person in the country (because it will be compulsory) will find it very hard to budget what disposable income they have from any one pay. The economy won’t be able to function with such uncertainty for long.
I sincerely hope Parker understands that by proposing this power, they are shifting the whole blame-cycle that occurs when banks increase mortgage rates, from the banks and onto government (because Kiwisaver as an IRD function is now explicitly tied to the Reserve Bank). Every single mortgage-holder has their eyes on the every breath of the new Government-Reserve Bank alignment. Ouch.
Not arguing against the policy itself, but against the political cost. Labour need to announce a policy with some jam in it, because this is dry weetbix to swallow.
“We propose an important new tool – varying the employee contribution rate for work based
savings. The variable savings rate mechanism – or VSR – would allow the raising or
lowering of savings rates, rather than interest rates, to reduce or boost local consumption.”
A problem here is that we already know this won’t work, because we’ve just seen it in action. The introduction of Kiwisaver hasn’t been the boon for national savings that we all hoped it would be, in large part because a significant portion of the contributions flowing into it were/are diversions from pre-existing savings schemes. If you start shifting the contribution rate around, all you’ll achieve is people juggling their own finances in a slightly different way to end up with the outcome they, individually, originally wanted.
I have no expertise in this area, only personal, friends, and wider family experience. For those of us under 50, Kiwisaver was – beyond its practical benefit – a hard signal that the only way we would get out of the GFC’s effects was to save every spare penny we could, as safely and smartly as we could.
From merely the evidence of people around me, the shift of this policy as a mentality is strong, deep, and effective. Doubling down on that signal is good IMHO.
I listened to slimy guyon this am trying to denigrate any positive aspects of this policy and negating the comments of the exporters representative and I thought what an incredibly selfish and limited individual espinah is and how he only thinks of his own personal welfare and not the country at large.
And this genius bit of analysis from Tamsyn at the Herald.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11246137
” I don’t want to be told what to do….” Your not an adolescent anymore Tamsyn. Its not all about you.
Please hand your job over to someone who can provide some decent analysis.
Potentially you could sharpen the accuracy of the tool ie for regional development… inflation being driven by house prices in Auckland could be tackled by increasing the saving contribution in Auckland…. but leave the west coast a lone!
Interesting policy Release and will stimulate some much needed debate.
My only concern is will this have the effect of shifting the burden of the ‘blunt tool’ from the mortgage belt to the working poor.
I would like to see the detail before making my mind up on this. But none the less it is a good release.
Good to see a release with no gafffes as well.
From this nat voter’s perspective this is a policy idea (vsr) with some merit. Well done to Mr parker for a thoughtful contribution. It is a Pity the govt feels the need to go straight on the attack. Monetary policy is so important we should be able to discuss it dispassionately.
I think the claims that it will solve all problems are overdone. But an extra tool in the quiver is hardly a problem.
The revised Objective is more problematic. The choice of current account will no doubt lead to some tradeoffs so there will be winners and losers.
Cheers
National will hate this because it makes sense, and because it offers the average person a way to a better retirement.
Had Muldoon not scraped Roger Douglas’ scheme in 1975, next year it would have been worth $278 billion!! (Source Niko Kloeten, Stuff, 08/04/2014)
Currently Kiwisaver has approx. $17.6 bill. under management.
But imagine how much better off the country would have been had Muldoon not scraped the scheme. Typical National. Short term gain – no long term plan.
Even many of the commentators say, our wages would be higher, our debt lower, our dollar lower, and would we have had to go off-shore to borrow for the likes of the re-build of Christchurch, or building roads or other infrastructure?
Courage is what is needed, not the blind rhetoric we see washing out of the mouths of the National Party on a daily basis.
This is pure neo-liberalism:
“We remain committed to the control of inflation and the existing inflation target, to a floating
currency, and free capital movement”.
Regulating the movement of capital and the control of our currency is necessary if enough jobs are going to be created in New Zealand to soak up the 150,000+ unemployed and the 350,000+ underemployed here. This is because the profit generated here for foreign derived capital is taken back offshore and not recirculated and reinvested back into the NZ economy.
The compulsory Kiwisaver idea is great but it doesn’t go the whole way of realigning the economy for the New Zealand centric production, consumption and reinvestment paradigm that is so sorely needed here to ultimately increase our collective standard of living.
Instead the system keeps sending that profit back to the shareholders of the multi nationals, and their cohort hidden subsidiaries.
While it might have been briefly entertaining to see Parker get up and announce Labour plans to socialise the means of production, he does have an actual job to do.
The support and furtherance of neo-liberalism?
So, if the RB wants to stimulate the economy, will they be able to steal funds from Kiwi Saver accounts to inject into the economy? Afterall, why not if Kiwi Saver is to be become a financial management tool for the government?
Also, if the goal is to reduce the exchange rate, will consumers be any better off after fuel prices and other increased import costs are taken into account?
I don’t know, but I’m interested in what you think the effects will be. Every perspective is valuable. Go on, tell us.
That’s right, aspirational individuals who chose to live on a mortgaged lifestyle block forty minutes drive from their workplace will have to spend more on fuel for their shiny black 4WDs.
An interesting point, tsmithfield.
Deflation is a serious risk to an economy in recession. The Japanese experience tells us what happens when high savings continue to suppress a recovery. The Reserve Bank currently has no tools to counter deflation – the Parker plan will give them one.
Of course none of this would be possible if Labour hadn’t kicked off Kiwi Saver in the first place.
From the non economically educated shop girl-that-I-am perspective, this is reassuring and welcome news. It’s helpful to have this information. After taking so freaking long to get into my own home I couldn’t bear to lose it over an interest rate of 8%, which was looking like the forecast into the future under a hands off repeat cycle of Nat Govt.
Things are tight though and I hope we can afford the Kiwisaver, which I’m not opposed to, just slightly apprehensive about given our financial circumstances
Bring on 20th September!
+100 Rosie …this will be a life saver for many wrestling with their mortgage
Hi Chooky. Yes, great news for those who own homes. If I were still renting I would be hopeful that my landlord couldn’t use “interest rates” as an excuse to raise the rent.
I do support the idea of the compulsory Kiwisaver even though it’s a worry for us financially and it would be good to have some sort of guarantee that future governments aren’t going to muck around with the scheme. Still, better to have the funds coming back to the contributor rather than contributing the the expanding waistlines of the banks eh?!
Now they just need to scrap GST and introduce a FTT and we all might be able to breathe a little easier. That would put $$$ back in peoples hands – the people that need it the most.
I think the most significant aspect of this isn’t so much the particular method proposed – it may or may not work: I haven’t the faintest idea although it sounds good.
What matters is the commitment to fix the problem.
+1 One Anonymous Bloke
Is it odd that the Labour Monetry Policy is no longer on the Herald online front page except for the Bryan Fallow opinion piece? Other stuff from days ago is still there but the policy has vanished or is it just my blindness?
Cunliffes military medal mix-up is still there! Ha, silly MSM are choking on it!
[lprent: use the post on that topic or OpenMike. ]
Disraeli Gladstone ,
I’m one of those with a reluctance to comment on monetary policy due to feeling unqualified. But rest assured I’ll be paying attention to the debate, hopefully the Double Dipton Dipstick will too because he could certainly do with some tuition on creative thinking.
Well done David Parker.
“I’m one of those with a reluctance to comment on monetary policy due to feeling unqualified.”
Lol fender, I bet I could out do you on the unqualified -to- discuss -monetary -policy bit but on this rare occasion I put my two cents in because I’m one of those ordinary folks that Labour need to hear from – they need to know they are supported by us ordinary types. Not sure if they’re listening or not but I wanted to express my relief at knowing where they are at with their policy, and how it will be helpful to us.
Hi Rosie, Nah I beg to differ. When you said above “Now they just need to scrap GST and introduce a FTT and we all might be able to breathe a little easier. That would put $$$ back in peoples hands – the people that need it the most.” I could tell you were more onto it than that flaky Bill English..
lol again fender. The slug you find on a damp autumnal evening in the garden is more on to it than flakey Bill English
😀
..notice how the slug has more personality than boring bill.
Can someone please explain to me the benefit to the individual savers of being forced to save more at an interest rate forced lower by the government to keep interest rates down for those who borrow heaps to buy an overpriced house? Isn’t that doubly penalising everyone? Forcing money into saving at rubbish interest rates that they could potentially be investing for better returns.
When interest rates are high, borrowing goes down and saving up. When interest rates are low the opposite happens.
I doubt anyone can explain it to you, if you’re under the impression it’s about individual savers or individual mortgage-holders.
Is this honest ignorance, TR, because as someone who is genuinely ignorant of this matter (monetary policy) it sounds to me as though you have quite a strong opinion.
Why don’t you just lay out your case?
Can you point to a time in the last 20 years when that has actually happened? Because from what I can see of the last 20 years, whenever interest rates went up so did borrowing on houses due to the ever increasing amounts of hot money pouring into the economy. This has, inevitably, driven the massive rise in house prices and the massive tax free profits to go with them.
Government has to print our money, not the Banks.
And make it available at 0% interest.
Yep especially to critical strategic community and public good projects including preparations for the end of affordable fossil fuels.
For community and public good projects the money is simply created, spent on the project and then taxed back out of the economy. No interest involved.
The 0% interest is for mortgages and business loans that the government makes available through a ‘retail’ state bank. In this instance the loan has a repayment schedule that takes the money back out of the economy. The administration for these loans is paid for via general taxes. The bank isn’t out to make a profit which makes it even cheaper to run.
Absolutely. I’d suggest people looking into the Bank of North Dakota if they want to see a practical example of how this could work.
English knows how to Double Dip from Dipton.
Joyce knows how to fix Nova pay.
Brownlee knows how to fix Christchurch.
Collins knows how to fix Oravida.
Parata knows how to fix private Charter Schools.
Bridges knows how to fix the environment.
Key knows how to do planking and some funny walks.
Cunliffe, Parker and Labour know just two things:
How to fix our economy and our country to make it a better place…
Superb Clem.
Soup and herbs indeed!
Bennett knows how to fix the poor.
Guy knows how to fix China.
Groser knows how to fix the global warming.
McCully knows how to fix Shane Jones.
@ psycho milt, it’s about individual votes? but even on a macro level, the Venn diagrams of workers on paye and mortgage holders don’t and perfectly nested, so there will be fair proportion of people who see this as a rum deal.
I’m all for compulsory saving / super, but it seems odd to use it variable as a measure to control how successful those savings / super become?
@OAB, I do have a strong opinion. I’d just like someone to explain to me how this is of benefit to savers?
Isn’t that the point NZ default investment is property or the bank… not particularly useful.
This initiative would probably give the share market a kick and make investment capital available for investment in business and infrastructure. – my good business friendly too!
People will look for better returns, entrepreneurs all of sudden have eager investors and boom off goes the economy!
I know that’s to much for Bill English and Trader Key to conceptualise.
Every time the housing market (non-productive) people start spending and borrowing money they don’t really have, Reserve Bank raise interests rates to control inflation, which kills off the exporters (productive job creating) that creates real wealth.
All of a sudden we have a bigger tax take, hospital get what they need, schools get the resources they need and we drop take rates! Hooray everybody wins.
Don’t sweat interest rate returns of the few when the returns and benefit to the entire nation out weigh this by a rather large magnitude.
.
I’d like someone to point out to me the benefit of saving and savers then getting money for doing nothing.
The saved funds (in a Bank) don’t “do nothing”. They get on-lent to people who want to borrow, so that they in turn can own a house or invest in a business.
That’s the delusion that people believe. In reality, the banks create new money for the ‘loan’.
And even if what you think is true was actually true the person getting the interest is still doing nothing for it.
Compulsory Kiwisaver huh? I guess that private sector casino money managers i.e. Kiwisaver investment fund managers will be thrilled at having increased access to billions in working NZers pay packets.
yes above
Let’s learn from Singapore shall we. No clean currency float, and readiness to directly intervene in asset/capital markets should the need ever arise eg. clamping down on real estate speculation and lending.
And no one accuses Singapore of being red commies.
+100 CV
@ CV What’s Singaporeans VAT and personal tax rates?
Low nominal, high effective, including the opportunity cost.
[1] If Finance Minister Bill English’s first flailing attempt to attack Labour’s new monetary “tool” is any guide, the Opposition may be on to a winner, says this article below:
http://www.stuff.co.nz/national/politics/opinion/9989243/Labours-monetary-policy-a-winner
[2] There is a poll with three options on stuff regarding this policy.
http://www.stuff.co.nz/national/politics/9988005/Labours-KiwiSaver-plan-hits-low-earners
Would that be a Double Dipton Flail Fail?
LOL…Don’t know what made English to get his knickers in such a twist!
I checked up. Here it is..
flail
fleɪl/
verb
gerund or present participle: flailing
1.
wave or swing wildly.
"his arms flailed as he sought to maintain his balance"
synonyms: wave, swing, thrash about, flap about, beat about, windmill, move erratically.
"he fell headlong, his arms flailing"
flounder; struggle uselessly.
"He was flailing about in the Dipton river"
Synonyms:
flounder, struggle, thrash, thresh, squirm, wriggle, writhe, twist, splash, stumble, blunder, fumble, wiggle, twitch More
2
beat or flog (someone).
synonyms:
strike, batter, drub, flog, whip, lash, scourge, flay, flagellate, strap, switch, tan, cane, tan/whip someone’s hide, give someone a hiding, beat the living daylights out of, clout, welt, belabour;
informalwallop, whack, lam, give someone a (good) hiding, larrup
British
cut (vegetation) with a flail.
Usage: "The modern practice of flailing the smarter Labour opposition at every opportunity to mislead the voters"
Quoting second link:
And the fact is that all that interest comes from the poor and middle classes and goes to the rich. So, you can see why Blinglish prefers higher interest rates rather than the poor saving. Bill English, and SSLands above, are just protecting the wealth stream to the rich when they say that higher interest rates are better.
http://www.stats.govt.nz/browse_for_stats/industry_sectors/imports_and_exports/OverseasMerchandiseTrade_MRMar14.aspx
Anyone want to read the truth and then get Parker to apologise for being so out of touch with reality.
Record exports and trade surplus not a deficit.
Another own goal from the ABC’s It a plot I tell you. It has to be be. Shearer must be rolling around laughing at the inability to score any points.
Try harder.
Yep. Corin Dann gave the policy a thumbs up.
Made easy for you:
http://en.wikipedia.org/wiki/Balance_of_trade
http://en.wikipedia.org/wiki/Current_account
fisiani:
Read what the man said . . .
‘Even this current financial year – with fantastic terms of trade – we will still have an external deficit.’
It’s the invisibles that are the problem, fisiani – including the profits transferred out to foreign owned banks
It’s been the invisibles for years and years. It’s always been the invisibles.
what a larf. everybody in New Zealand thinks this is a good policy except National and their little lap dog espinah.
I guess we all need to wait while New Zealand’s leading expert on life cosmos and general everything Cameron salter delivers the wisdom of the ages .
I quite like the compulsory savings aspect that is tagged to KiwiSaver. At first pass this seems like an idea to explore. Two quick thoughts. First how will those on the minimum be able to fund the increase? Those in state house won’t be affected by interest rates unless the rent goes up. Second fiddling with what is basically retirement savings makes me nervous.
So, having had a chance to have a think about this policy today in conjunction with the other policies announced by Labour and the Greens i would have to sum it all as follows:
(Also considering that both left parties are both for making life easier for beneficiaries and low income workers I wonder how these policies stack up for increasing take home income for these two groups:)
Extra income/handouts:
Minimum wage increase from current $14.25 to $15.00. Around $30 Gross/week over a 40 hour week for someone on the minimum wage. (Say $24 net?)
Power savings? Vague possibilities of some savings on power bills through a centralization of power retailing – some talk of $300/year?
Extra expenses/taxes:
ETS strengthened – likely to lead to higher excise tax on petrol, and power prices (non renewable)
Forcing the NZ dollar to devalue by 5-15% – Force petrol prices up and all imported goods (think warehouse, electrical goods, vehicles, clothing) (Lower dollar great for rich prick farmers and businesses but not for the low income worker)
Retirement age increase – Lower income folk forced to work 2 more years before getting the pension
And now the VSR – changing the voluntary kiwisaver scheme to compulsion but providing no certainty of how much the kiwisaver contributions will be.
This will take net income away from those who need it the most in order to subsidize those who are comparatively well off who own houses and also those who own investment houses.
If I was a low income worker (I have been in the past) none of these policies would speak as if they were going to help me my day to day living. Especially forcing compulsion on the kiwisaver payments and then letting the RBNZ decide how much of my income should go into kiwisaver. Compulsion is something kiwis hate.
The net affect of this policy is to make life easy for mortgage holders (usually well off) at the expense of the lowly paid and beneficiaries. This isn’t going to be that attractive at all.
I mean if you’re 27yrs old on a minimum wage, have a couple of hp’s and paying nasty Auckland rent, you aren’t going to be too impressed to hear that some bigwig at the reserve bank is going to decide take a big chunk of your take home pay to help relive the mortgage payments of Noddy Smith on $200K who has a mortgage in Parnell. ( I know this from experience as we are helping 2 such people budget their way out of debt)
Oh and also because the retirement age is going up that is another 2 years before you can get any of that money back – a lot of these folks have trouble seeing past their next pay cheque let alone 40 years time…
Overall I would rate the VSR a 4 out of 10 as it is untried and tested anywhere in NZ and will have a lot of downsides to any upside.
Overall I would rate the total economic policy package from Labour as a 3 out of 10 as more taxes and compulsion isn’t what is needed – it is irrelevant to the current economic state of NZ. That is why Labour is doing crap in the polls.
And extra bollocks from the RWNJs.
We have to pay The Piper sooner or later and NAct are telling us that we don’t have to pay him at all.
+1 DTB
It is interesting to note the way that the only time a right-whinger ever mentions the interests of those on low incomes is when they think doing so will help National get in.
They display their attitudes; that poor people are simply a group of people to use as a political football.
That is what you will get if National get back in. Just more and more and more of the same old unethical treatment of the vulnerable ones in society.
p.s ‘whinger’ wasn’t a spelling mistake.
Bullocks.
Mostly pointing out that just because the anointed leadership states that a policy is the bees knees doesn’t automatically make it so.
Plenty of history of pollies coming up with bright ideas with a lot of long term negative side effects that no one thought of….(think Dunne and legal highs etc.)
I think the VSR in isolation may have a place, but when you throw all of Labour’s policies into the mix the end result is citizens with less $$ in their pocket and pollies rolling in tax $$.
Never a good mix.
Bullocks?
Haven’t seen anyone do that – except for the RWNJs about policy that comes from their leaders of course.
And plenty of history of business leaders doing the same and, more often than not, worse. Think polluted rivers, toxic waste dumps, deforestation and climate change.
1.) Most people will be better off due to the higher minimum wage
2.) The massive debt that National has accumulated needs to be paid
xox
Kath Ryan on RNZ this morning grilled Parker on the financial proposal. Parker struggled to get a word in at times to answer questions and to refute Ryans PG type analysis. Very unprofessional of Ryan, who has to lift her game as , Lyn Freeman was far more balanced and informed. Ryan is opinionated and often corrected in her analysis by her guests. Quite embarrassing for a State Broadcaster.
This economic policy has legs, even if the MSM try to minimalize it. The simple reply to NACT comments that it will effect low income earners negatively, is that Parkers original speech stated that labour will look at some sort of exemption for low income earners. To use an objection that is already dealt with in the original speech shows desperation from the Tories and their mates in the MSM.
why do i feel nervous when ever DP opens his mouth ….could it be his track record before he entered politics….
And the poor get poorer.
Several points to considered before deciding on the policy
The VSR would allow the raising or lowering of the rate of compulsory Kiwisaver contributions (rather than interest rates) to reduce or boost local consumption.
However, local consumption is not currently driving up inflationary pressure. Rapidly inflating house prices are, hence the proposal oversteps the mark.
How high did interest rates go in the past? How high will the VSR have to go to be effective?
We’ve just come off historically low interest rates. Kiwisaver has been running for a number of years and has absorbed almost $20 billion out of our economy, yet the two haven’t taken the heat out of the property market or resulted in a lower dollar. Therefore, interest rates may also have to increase to take the heat out of the property market , largely defeating the purpose of the proposal, hence the savings being claimed.
Moreover, it would be naive to think the extra liquidity coming from compulsory Kiwisaver won’t have a negative impact in our capital markets. Too much liquidity chasing a limited number of investment opportunities is prone to blowing bubbles.
Lower interest rates intensifies the problem as investors turn to the market in seek of higher yields (see link)
http://bit.ly/1mYtxra
The claim: ‘higher interest payments are lost to the lender, with much of it heading overseas, whereas savings would belong to the saver’, is misleading.
It may be yours in name but once in Kiwisaver you’ve practically lost financial control.
The original scheme people signed up for has changed and will continue to do so. Yet, despite all the contract changes you’re still locked in and can’t decide you now want to withdraw your savings.
Labour have already announced they will lift the retirement age, preventing one from seeing their investment for at least another two years. And now further changes with the introduction of the VSR.
There has been a push to increase the risk taken. There has been a push to further increase the level of contribution. There has also been a push to hold back and drip feed investments due.
And if all that isn’t already too much, now there is even talk of forcing Kiwisaver investors to use part or all of their savings to buy life annuity (see links).
http://bit.ly/1ivhwYf
http://bit.ly/1m5hepc
Moreover, there is no guarantee the money you invest will be there for you when you retire.
Yes, to say savings belong to savers is misleading indeed.
As a investment fund with a combined pool of close to $20 billion it’s performance has been poor compared to our Superfund. Yet Labour don’t believe it to be broken but have questioned its management fees.
The big offshore banks largely run Kiwisaver schemes, hence clip the ticket with much of it heading overseas. Whereas, interest largely stays with NZ savers (75% of bank funding is local).
First home buyers may initially benefit from accessing their Kiwisaver funds, but the loss in income from higher contribution rates will leave them with less money to meet their mortgage requirements.
A number of property investors are freehold, thus interest rate hikes are not felt across the board. Hence, the scope of market competition limits the capability of passing interest rate hikes on to tenants.
Whereas, an increase in Kiwisaver contributions coupled with the wider objective Labour plan to give the Reserve Bank will result in a double whammy (higher Kiwisaver contributions coupled with a higher allowable rate of inflation) for those renting and on low, middle or fixed incomes
Those that struggle with budgeting problems will find the added income instability of a variable rate difficult to manage, with a number being better off paying off their debt than being forced to save.
Moreover, the cut in income could force some to take on more debt.
Additionally, larger employer contributions will hamper future pay increases, with funding going to cover the higher contributions, especially that of higher income earners. And this from a Labour Party that claims to want to improve inequality and increase incomes?
+1 good analysis
The Talented Mr Parker: Labour acquires the weapon it needs to win the September war.
Even Mr Chris Trotter likes it. Calls it “Brilliant !”
See more at:
http://thedailyblog.co.nz/2014/04/30/the-talented-mr-parker-labour-acquires-the-weapon-it-needs-to-win-the-september-war/#sthash.JZfMaBuQ.dpuf