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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Don't speak, I know just what you're sayin'So please stop explainin'Don't tell me 'cause it hurtsDon't speak, I know what you're thinkin'I don't need your reasonsDon't tell me 'cause it hurtsSongwriters: Eric Stefani / Gwen StefaniDo you remember the first time you encountered Corporate Speak? Important-sounding buzzwords used to camouflage ...1 day ago - Budget cuts penny wise & pound foolish
Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Monday, November 4: Budget cuts are storing up costs for future taxpayers and Governments. Scoop of the day: The Government is set to deliver another budget-cutting blow for ...2 days ago - A Fresh Horizon for Greater Auckland
A few months ago we asked for your help, and you answered. Thanks to the generous support we received, you may have noticed a more consistent and diverse stream of content over the last few months – which is in large part due to us being able to pay for ...2 days ago
- 2024 SkS Weekly Climate Change & Global Warming News Roundup #44
A listing of 35 news and opinion articles we found interesting and shared on social media during the past week: Mon, October 28, 2024 thru Sun, November 3, 2024. Topics covered this week Here are the main topics and the media outlets where they appeared in: Climate Change Impacts ...2 days ago
- Hey, I Need Your Help
For those of you who are new here, I’m Mountain Tui.National Geographic imageI’m the one that first started badgering NZ about Atlas Network - and it went mainstream easily from that: from Mihirangi Forbes asking David Seymour about it, to David Seymour and Chris Bishop lying, to the evidence easily ...2 days ago - Official Flightless Bird T-Shirts!
Hi,It’s a big election in three days. Like me, you’re probably sick of hearing about it, but like it or not — what America does tends to trickle down everywhere else. America farts and we’re all under the sheet being hotboxed against our will.I’ll do a fresh Webworm on election ...2 days ago - All I Ever Am
I lose all my life like thisReflecting time and memoriesAnd all for fear of what I'll findIf I just stop and empty out my mindOf all the ghosts and all the dreamsAll I hold to in beliefThat all I ever amIs somehow never quite all I am nowLyrics Robert Smith.Today’s ...3 days ago - The Book of Evidence-based-evidence
Now, in the land of leaky buildings and the Warehouse-where-everyone-gets-a-bargain, there came an electionAnd this was the one known as the show-bloody-Labour-the-bloody-door electionAnd there came into this election the one known as ChrisAnd of fresh thought or original idea, Chris was full emptyBut this was all good broFor Chris was ...3 days ago - Fact brief – Are most glaciers growing?
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 from the Gigafact team in collaboration with members from our team. You can submit claims you think need checking via the tipline. Are most glaciers ...3 days ago
- It’s not (just) about the economy, stupid.
In 1992 James Carville, Bill Clinton’s lead strategist, hung a sign on the wall of the Democratic candidate’s campaign office in Little Rock, Arkansas. It had three lines on it to focus the team on the key vote-swinging issues and one of those lines would become so famous it’s turned ...3 days ago - Let’s Make Things Better
If you're down and out and you feel really hurtCome on over to the place where I workAnd all your loneliness, I'll try to sootheI'll play the blues for youLyrics: Albert King.Often, in these newsletters, I tell you about what is wrong. You know the sort of thing - oh ...3 days ago - Floating a few ideas
4 days ago - Our Thousand-Year Struggle Over Technology and Prosperity
A new book challenges how we need to think about technological innovation.Last week’s column mentioned the three 2024 Nobel laureates in economics. The column focused only on the 2012 book Why Nations Fail by Daron Acemoglu and James Robinson with little reference to Simon Johnson, although the three have worked ...4 days ago - Rebutting 33 False Claims About Solar, Wind, and Electric Vehicles thanks to the Sabin Center for Cl...
Earlier this year our volunteer editor Marc Kodack spotted an impressive answer to climate change solutions denial, "Rebutting 33 False Claims About Solar, Wind, and Electric Vehicles," which he included in our weekly climate research survey. Written by Matthew Eisenson, Jacob Elkin, Andy Fitch, Matthew Ard, Kaya Sittinger & Samuel ...4 days ago
- An expert walks into a bar
Quiz1. On what study was Mike King basing his assertion that Alcohol is not a problem for people with mental issues. It’s actually the solution ?a. Klein, Sawyer, Chomsky et al; Harvard, 2002b. Black Brown and Bleu; Yale, 1999c. Bloomfield, Verall, Ardern et al, Otago 2022d. Homer, Lenny, Carl and ...4 days ago - The High Court says “Land Back”
Way back in 1839, the New Zealand Company bought the area that is now Nelson from local iwi and hapu. As part of the deal, they promised that Māori would retain their homes, fields, and burial grounds, and that in addition, 10% of the land in the planned township and ...4 days ago
- US military-industrial-sports complex.
A US friend of mine wrote on social media about attending a Homecoming football game at her niece’s Red State university. Although the referees stunk and her team lost, my friend said that she enjoyed her visit, especially the halftime … Continue reading ...4 days ago - The Hoon around the week to November 1
The podcast above of the weekly ‘Hoon’ webinar for paying subscribers on Thursday night features co-hosts & talking about the week’s news with:The Kākā’s climate correspondent on the latest climate news, including research showing the lethality of gas hobs and research on the health effects of climate ...4 days ago - ‘Get ready for more landlord buying’
The RBNZ sees the potential for a spike in demand from landlords. Photo: Lynn Grieveson / The KākāKia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Friday, November 1: The RBNZ has warned the Government’s tax changes ...4 days ago - Alcohol and Mental Health
5 days ago - Weekly Roundup 1-November-2024
Wow, we’re in November already and it’s a Friday so welcome to another round-up of interesting stories about what’s happening in Auckland and other cities. Feel free to add your links in the comments! This post, like all our work, is brought to you by a largely volunteer crew and ...5 days ago
- A Mysterious Sound
Hi,Thanks for all your feedback to Hayden Donnell’s fantasy of communal living. “Camping in summer is really the only time I get to experience village life and I love it so much,” said Michelle. “You’ve infuriated me by writing the article that’s been in my head only much better than ...5 days ago - Toxic positivity and toxicity in the kitchen
Long stories short, here’s the top six news items of note in climate news for Aotearoa this week, and a discussion above between Bernard Hickey and The Kākā’s climate correspondent Cathrine Dyer:A study looking at psychological distress associated with climate change has stimulated discussion about the insistent demands for ‘hope’ ...5 days ago
- Geoffrey Miller: New Zealand’s breakthrough free trade deal with the Gulf
New Zealand’s new free trade agreement with the Gulf Cooperation Council is a major win for both sides. Todd McClay, New Zealand’s trade minister, announced the long-awaited deal on Thursday with his counterparts in Doha, Qatar. It is a remarkable, yet also surprising sudden success: the genesis of the agreement ...5 days ago - Todd McClay wins breakthrough for women in Saudi Arabia
In a major international breakthrough, New Zealand has negotiated a free trade agreement with Saudi Arabia and other Arabian Peninsula countries, which includes a provision requiring them to uphold the UN Convention on the Elimination of Discrimination Against Women. Trade Minister Todd McClay signed the agreement in Doha overnight. The ...5 days ago - Gordon Campbell on America’s fear of foreigners
Mike King’s latest comments about the relationship between alcohol and mental health – according to King, alcohol does more good than harm – raises red flags once again about this organisation, and the quality of the “counselling” it provides. Here’s what the scientific research says. The latest example of King’s ...5 days ago
- Skeptical Science New Research for Week #44 2024
Open access notables Communicating the most accurate and reliable science on climate change to society: A survey of editors from the Intergovernmental Panel on Climate Change, Molina & Abadal Abadal, Geoscience Communication: This study focuses on the perspectives of scientists involved in the IPCC AR5 and AR6 synthesis reports, examining ...5 days ago
- Gumboot Friday’s Founder Says Drugs and Alcohol Is A “Solution”
This afternoon, I turned to the fellow sitting near me and called out:“Guess what? A guy who runs a charity for mental health just said alcohol is a solution!”And his eyes popped out…his mouth opened ajar.That gave me some satisfaction - only because this person has zero care when it ...5 days ago - What can you do about bad journalism?
Day after day of David Seymour being accorded media time and attention like he’s doing this stuff in good faith and advancing these ideas in earnest. Come on. He’s a cosplaying libertarian who is really just a glove puppet for anti-democratic capitalist pigs. Read more ...5 days ago - A collapse in police legitimacy
Last week, the government had a big wank about police raids in Ōpōtiki, crowing about "gangs" and "drugs" and "law and order". Unfortunately the police did exactly the same shit they did in the Urewera terror raids 17 years ago, dragging people off in front of their kids and terrorising ...5 days ago
- 2024 Reading Summary: October (+ Writing Update)
No, I haven’t vanished from the Internet. Or died. Completed reads for October: The Castle of Otranto, by Horace Walpole The Sidereal Messenger of Galileo Galilei, by Galileo Galilei and Johannes Kepler Jurgen, by James Branch Cabell A very quiet reading month, and a very quiet writing month ...5 days ago - Suicide Rates Continue To Climb (Because We Are Not Treating Suicidal Patients)
Our suicide rates are skyrocketing again, and I’m going to spare you the faux-shock I could put on here, given that it would be frankly more surprising to me if our death toll had gone in the other direction. Preliminary data from 2023-24 shows that our annual suicide deaths have ...5 days ago - Are We The Baddies?
Difficult Questions: Does denying human equality and rejecting the principles of colour-blind citizenship place you among the baddies? Yes, I’m afraid it does.THE DEMON OF UNREST documents the descent of the United States into civil war. The primary focus of its author, Erik Larson, is the period of roughly five months ...5 days ago - Thursday 31 October 2024
Health and safety campaigner Sonya Rockhouse has come out in support of the joint open letter from the NZCTU, Business NZ and others. A new Xero Small Business Insights report shows that small businesses are cutting staff and keeping wages low, while the Salvation Army’s State of the Pacific Peoples ...5 days ago
- Today’s Political Roundup – From Health to Self-Certification Risks
The focus on budgets is "going to cripple the health system".1. Cardiac specialist quits, saying Dr Lester Levy, the Part Time Health Commissioner, is "living in La La Land" and has no idea what's happening on the groundDr Dean BoddingtonDr Boddington, an electrical cardiologist, was the only person who did ...5 days ago - A deliberate and unnecessary crash landing
Photo: Lynn Grieveson / The KākāKia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Thursday, October 31: US and European GDP growth figures overnight show the world’s largest economies, along with that of our nearest neighbour Australia, ...5 days ago - Seymour: Swastikas OK
Race hatred cannot stop usThis one thing we knowYour poll tax and Donald TrumpGreed has got to go!You’re bound to loseYou fascists bound to lose.Original Lyrics: Woody GuthrieThere are a lot of things this government doesn’t like. Te Reo - got to go, they said, it’s too confusing for our ...5 days ago - Sumbission: Have Your Say on Work Health and Safety
Health and safety is core union mahi. Unions recognise that health and safety is a fundamental aspect of good work, and that every worker has the right to work that is safe and healthy, and to have a voice on the operation of their work. In this submission on MBIE’s ...6 days ago
- The hidden health toll of hurricanes
This is a re-post from Yale Climate Connections by Neha Pathak Disasters can disrupt medical care both during and long after the event. (Photo credit: U.S. Air National Guard / Sgt. Jorge Intriago) Weeks after Hurricanes Milton and Helene tore paths of destruction across the Southeast, pictures of communities ...6 days ago
- First section of Te Ha Noa Opens
Something definitely worth celebrating is the opening of the first section of Te Hā Noa, the Victoria St Linear Park. As we highlighted eight years ago, this project is vital for helping move the thousands of people that will pour out of the Te Waihorotiu station once the CRL opens. ...6 days ago
- Boldness be my friend
When Nicola Willis gave the annual Finance Minister’s speech to the country’s top public servants last week, what she said must have landed like a bomb. “Now is the time for your best and boldest ideas,” she said at the Institute of Public Administration (IPANZ) event. Coming from a minister ...6 days ago
- Wednesday 30 October 2024
The NZCTU has joined with Business NZ and health and safety groups to call on the Government to drop its plans to reform health and safety law. The Postal Workers Union is opposing a plan to reduce rural postal deliveries from five to three days a week. The Government has ...6 days ago
- Yer doin it all wrong mate
Reader Jeff Howell is the best kind of social media friend to have. When there's outrage and denunciation needed he’s in there dishing it with verve; and when those storms pass you get happy Jeff, sharing his projects. His projects are awesome.Until a week or so ago it was a ...6 days ago - Out Of Sympathy.
6 days ago
- Two States – But No Solutions.
My Enemy’s Enemy Is My Friend: Mohammad Amin al-Husseini, the former Grand Mufti of Jerusalem, at the opening of the Islamic Central Institute in Berlin, December 19, 1942. The elimination of the Jewish state has been the unwavering ambition of successive generations of Palestinian leaders.AMIDST ALL THE HORROR of the Israel-Hamas War, ...6 days ago
- NZ For Sale: Chris Luxon Is Concierge To The Wealthy
Watching a Christopher Luxon press conference is a masterclass in gaslighting. You just know what he’s saying is disingenuous - if not outright deceptive and lies - but out he comes - with confidence and vigour - telling me black is white, and white is red.According to the Prime Minister, ...6 days ago
- Will banks & insurers back self-consented homes?
Kia ora. Long stories short, here’s my top six things to note in Aotearoa’s political economy around housing, climate and poverty on Wednesday, October 30: The Government’s move to allow qualified builders, plumbers and drainlayers to self-consent their work faces potential hurdles from reluctant insurers and bankers wanting protection against ...6 days ago
- Ātahu from Moana Maniapoto
We are blessed in Aotearoa with certain people that you might call National Treasures—those with great talents and a strong affinity for this place they are the custodians of. It’s not an official list; the people you think of might differ from those I think of.What are the attributes of ...6 days ago - Henderson Station Upgrade but will it Improve Customer Experience
Over the long weekend rail shutdown a new project got underway, an upgrade to Henderson station but the plans highlight that improving the customer experience by making it easier to use public transport is not a part of Auckland Transport’s agenda.
...
7 days ago - Climate Adam: Is climate change fuelling mega hurricanes?
This video includes conclusions of the creator climate scientist Dr. Adam Levy. It is presented to our readers as an informed perspective. Please see video description for references (if any). From hurricanes like Helene and Milton, to typhoons like Gaemi, vast storms are causing devastation: destroying cities and tearing up lives. ...7 days ago
- Get in the sea, old mate
For the State Highway One traveller, some sights remain dramatic no matter how many times you see them: Wellington harbour opening out at the bottom of Ngauranga Gorge; the first glimpse of Ruapehu; three quarters of the South Island. Also: the moment when you reach the top of the Brynderwyns and ...1 week ago - Taking the piss again
Remember Casey Costello? The government's most ignorant Minister? First she was referred to the Chief Archivist after claiming that key advice on her cancer promotion policy had simply magically appeared on her desk one day, and that she had no idea where it came from. Then, when the Ministry of ...1 week ago
- Monthly Employment Data shows weakness in economy
Monthly employment data released today by Statistics New Zealand showed our continuing labour market weakness, and particularly challenging conditions for young working people, said NZCTU Te Kauae Kaimahi Economist Craig Renney. “There are 21,000 fewer filled jobs than this time last year, and the fall has been led by those ...1 week ago
- Copy of Rwanda’s Kagame: from Saviour to Tyrant?
Is Rwanda turning into a country that seeks regional dominance and exterminates its rivals? This is a contention examined by Dr Michela Wrong, and Dr Maria Armoudian Dr Wrong is a journalist who has written best-selling books on Africa. Her latest, Do Not Disturb. The story of a political murder ...1 week ago
... 
- Release: Government’s disgrace for Christchurch homeowners
The Government is backtracking on existing commitments to do the right thing by homeowners let down by EQC (now the Natural Hazards Commission). ...1 day ago - Release: National’s FamilyBoost a colossal flop
Nicola Willis continues to over promise and under deliver, with most families receiving only $30 a week from National’s flagship FamilyBoost flop. ...1 day ago
- Ngarewa-Packer Demands Support for Palestine Ceasefire from New Plymouth Mayor
Te Pāti Māori Co-Leader and MP for Te Tai Hauāuru, Debbie Ngarewa-Packer is calling on the Mayor for New Plymouth, Neil Holdom, to do the right thing. “I am shocked at his decision to disregard the petition presented by Palestine Solidarity Taranaki calling for an immediate and permanent ceasefire”, said ...1 day ago
- Release: Trade deal with Gulf states welcomed
Labour welcomes the conclusion of a trade deal with the Gulf Cooperation Council (GCC) that was restarted under a Labour government after languishing for many years. ...2 days ago
- Release: Labour welcomes OAG fast track inquiry
The Government should consider the outcome of an Auditor-General report into conflicts of interest before progressing the Fast track Approvals Bill through Parliament. ...2 days ago
- Greens reignite call for free dental
A new report detailing the enormous social and economic costs of our dental system has reignited the Greens' call for free dental care. ...2 days ago - Greens call for bottom trawling ban and call out Minister for lacklustre response
The Green Party is urgently calling on the Government to ban bottom trawling, following news a New Zealand bottom trawler caught 37kg of coral in international waters, prompting the suspension of all fishing in the area until 2026. ...4 days ago
- Mark Patterson: Farmers understand we have their backs
Spring is here which means the start of the A&P show season. Those treasured community days where town meets country. There's no rural-urban divide here, just a chance to meet up with family and old friends and celebrate all things that make rural New Zealand so special. I'm embarking on ...5 days ago - Release: Funding for Gumboot Friday should pause
The National Government should review its support for Gumboot Friday after unacceptable comments by its leader and champion Mike King. ...5 days ago
- Louise Upston cherry-picks data to punch down on the poor
The Government has very conveniently cherry-picked data from the latest MSD projections to justify its cruel agenda and punch-down policy when it comes to people living in poverty. ...5 days ago
- Luxon needs to address the cow in the room
The Green Party was appalled to hear Prime Minister Christopher Luxon claim we are “doing everything we can” on climate change, while his government does nothing to address emissions in our most polluting sector. ...1 week ago
- Govt Must Clean Up ‘Its Shit’ From Sunken HMNZS Manawanui
Te Pāti Māori is calling out the Government and New Zealand Defence Force (NZDF) for their inaction and disgraceful downplaying of the impact caused by the sunken HMNZS Manawanui in Samoa. “We demand the Government move without further delay to clean up its shit from the sunken HMNZS Manawanui in Samoa,” said co-leader Debbie ...1 week ago
- Jamie Arbuckle: Inquiry into Banking Competition
This week was the start of the bank inquiry hearings into banking competition. The inquiry was confirmed in the NZ First/National Coalition agreement. 140 submissions were received on the inquiry, and we will hear from over 60 submitters including all the major banks. ANZ, New Zealand's largest bank, was first ...1 week ago
- Tanya Unkovich: It’s time to start the debate on palliative care as a ‘right’
There is one topic that is the great human leveller, and that is of death and dying. One day, we will all have to face it, and I am of the belief that being able to pass away with grace and dignity is a vital, basic, human right. How we ...2 weeks ago
- Release: Labour backs Christchurch City Council sanctions on Israel
Labour is backing Christchurch City Council’s decision not to do business with firms involved in Israel’s illegal settlements in the Occupied Territories. ...2 weeks ago
- Release: Government driving away offshore wind industry
The Government has created a hostile environment for companies seeking to build offshore wind farms. ...2 weeks ago
- Another step towards Pasifika justice
The Green Party acknowledges the historical importance of MP Teanau Tuiono’s Member’s Bill, Restoring Citizenship Removed By Citizenship (Western Samoa) Act 1982 Bill, passing its second reading in Parliament today. ...2 weeks ago
- Sanctions Soar, Jobs Vanish – National’s Cruelty Exposed
Te Pāti Māori is enraged at the National government’s ruthless punishment of beneficiaries, all while jobs are disappearing. MSD data shows a 133% increase in sanctions over the past year, with over 14,000 sanctions in just three months. The kicker? The jobs this government insists people should find are nowhere ...2 weeks ago
- Police Perpetuate Siege on Ōpōtiki
Te Pāti Māori MP for Waiariki, Rawiri Waititi, says today’s police-sponsored terrorism in Ōpōtiki is a continuation of the State’s predatory behaviour towards the iwi of Te Whakatōhea. "Ōpōtiki is once again being intentionally targeted and is the direct byproduct of this Government’s 'tough on crime' legislative changes,” said MP ...2 weeks ago
- Release: Govt cuts school lunches even further
The Government has gone back on its word and cut the full school lunch programme in primary schools after saying it wouldn’t. ...2 weeks ago
- Time to shut down failed Youth Justice Residences
The Green Party is calling for Youth Justice Residences to close, following a protest in which a group of young people spent the night on the roof of an Oranga Tamariki justice facility. ...2 weeks ago
- Tell Luxon to Kill the Treaty Principles Bill
Te Tiriti o Waitangi is our country’s founding document. It forms the basis of the relationship between Māori and the Crown – and the Aotearoa New Zealand we live in today. ...2 weeks ago
- Release: Appalling process on three strikes law
The Government is subverting parliamentary process on laws the evidence already shows don’t work. ...2 weeks ago
- Release: Labour calls for investigation into tobacco tax cut
The Government’s decision to award a $216 million tax break for Philip Morris’ heated tobacco products reeks of tobacco industry interference and needs to be thoroughly investigated. ...2 weeks ago
- Release: Delay to retirement village review won’t help residents
The National Government is treading water on a much-needed review of the Retirement Villages Act, kicking any amendments down the road till the next parliamentary term in 2027. ...2 weeks ago
- Release: Serious concerns ignored in Govt’s fast track bill
National’s fast track bill enables the most radical and unbalanced consenting regime in living memory. ...3 weeks ago
- Fast-Track, off the rails: Submitters show strong opposition to Bill
Despite resounding public opposition, the fast-track legislation is being pushed through Parliament with provisions that could have real consequences for people and planet. ...3 weeks ago
- Release: Labour supports continuing fight for dairy access
Labour welcomes the National Government’s decision to further pursue our access to the Canadian dairy market under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) ...3 weeks ago
- Release: Job losses devastating for Timaru
Confirmed news that the Smithfield meatworks will close is devastating for the hundreds of people who work there, Timaru and the wider region. ...3 weeks ago
- New Zealand First Member’s Bill to Improve Access to Palliative Care
New Zealand First has introduced a Member’s Bill which aims to improve access to palliative care for all New Zealanders, ensuring kiwis have better access to the compassionate palliative support they may need. The ‘Improving Access to Palliative Care Bill’ seeks to guarantee that every New Zealander has the right ...3 weeks ago
- Release: Further uncertainty for Kiwirail as jobs set to go
KiwiRail offering voluntary redundancy to all its staff is hugely concerning given the future of New Zealand’s rail system is under threat. ...3 weeks ago
- ASA Declares Hobson’s Pledge Advertising Misleading and Socially Irresponsible
Te Pāti Māori Co-leaders Rawiri Waititi and Debbie Ngarewa-Packer welcome today’s ruling from the Advertising Standards Authority (ASA), which found that a Hobson's Pledge advertisement regarding customary marine titles was misleading and socially irresponsible. The two-page wraparound ad, published in The New Zealand Herald, suggested that nearly the entire coastline ...3 weeks ago
- Release: Benefit numbers continue to soar under National
National’s all pain approach to beneficiaries has yielded no gain as benefit numbers continue to surge past projected figures. ...3 weeks ago
- Casey Costello: What Once Was…
Entering politics is a privilege afforded to very few and, as the saying goes, with great power comes great responsibility. Being an MP is a call to service. Whatever your politics you have a duty to show up. Whatever your party's policy, you have made a promise to those who ...3 weeks ago
- Soaring benefit sanctions push more into poverty
Sanctions on beneficiaries have sky-rocketed since the Coalition Government came to power, pushing more families into poverty. ...3 weeks ago
- International Energy Agency issues wake-up call on climate action
Today’s report from the International Energy Agency highlights how far this Government’s actions are dragging us backwards in the fight against climate change. ...3 weeks ago
- Release: Lack of funding puts pressure on frontline Police
News that 173 roles are being cut at Police will only put more pressure on the frontline. ...3 weeks ago
- Release: Bipartisan agreement on outdated marriage law
Changes to outdated relationships legislation has passed its third reading giving family violence survivors the power to quickly dissolve abusive marriages. ...3 weeks ago
- Oranga Tamariki Oversight Bill passes first reading
Legislation to strengthen oversight of the Oranga Tamariki system has passed its first reading in Parliament today, Social Development and Employment Minister Louise Upston says. “These changes will build on New Zealand’s current child protection system by clarifying the roles and responsibilities of the agencies that oversee it, including greater ...5 hours ago - NZTA confirms preferred option for second Mt Vic Tunnel and SH1 upgrades
The NZ Transport Agency (NZTA) Board has confirmed next steps on the SH1 Wellington Improvements Road of National Significance (RoNS), including an expanded package to reduce Wellington’s gridlock and support economic growth, Transport Minister Simeon Brown says. “Our Government is committed to delivering a second Mt Victoria Tunnel for Wellington to ...6 hours ago
- Appointments strengthen Conservation Boards
The latest Conservation Board appointments will help to strengthen environmental efforts across Aotearoa New Zealand, Conservation Minister Tama Potaka says. Mr Potaka today announced 64 appointments to the country’s 14 Conservation Boards. “Conservation Boards play a vital role as liaison between DOC with their regions, making their community’s voice heard ...9 hours ago
- First steps towards National Infrastructure Plan
Infrastructure Minister Chris Bishop has welcomed the first steps from the Infrastructure Commission in developing New Zealand’s 30-year National Infrastructure Plan. The Commission today released a discussion document which outlines the Commission’s thinking in developing the 30-year plan, including looking at what’s needed over the next 30 years, what our ...10 hours ago
- Stats show Medsafe accelerates approval assessments
Associate Health Minister David Seymour says that Medsafe’s annual performance statistics released today show that Medsafe are accelerating their approval process. “The data produced in Medsafe’s annual statistics show that in 2023/2024 Medsafe expedited their assessment process for almost every category of medicine,” says Mr Seymour. For innovative new medicines ...11 hours ago
- New rules mean faster payment times for small businesses
New requirements for government agencies to pay their invoices faster and adopt labour-saving technology are an important part of our plan to rebuild the economy and support small businesses, Small Business and Manufacturing Minister Andrew Bayly and Economic Development Minister Melissa Lee say. “The Government is ambitious about lifting New ...11 hours ago
- Speech – Diwali 2024
Namaste. Namaskar. Namaskaram. Vanakkam. Sat Sri Akal. Kem chho. Greetings to you all. It is my great privilege, as Minister for Ethnic Communities, to host this year’s Diwali Celebration at Parliament. I am truly excited to be with you all for Diwali as your Minister, and I warmly welcome each ...1 day ago
- Accelerating maths achievement for Kiwi kids
The Government is continuing to transform maths education, by trialling a targeted maths acceleration programme to give more Kiwi kids confidence in mathematics. “After discovering just 22 per cent of Year 8 students are at the expected standard for maths, we launched our Make it Count Action Plan to give our ...1 day ago
- Government’s creative sector strategy released
The Government’s creative sector strategy is designed to increase Kiwis’ engagement with culture and creativity and to boost its economic contribution, Arts Minister Paul Goldsmith says. “Amplify has been released for public consultation and I encourage people to read the strategy and to share their feedback. “There’s an opportunity to ...1 day ago
- On-sold programme changes bring resolution to homeowners and taxpayers
Associate Finance Minister David Seymour has asked the Natural Hazards Commission (NHC) to make changes to how it delivers the On-sold support package to prevent a cost blowout while helping eligible homeowners repair their homes in a timely manner. The On-sold programme was set up by the Government in 2019 ...1 day ago
- Todd McClay to lead large trade mission to China
Trade and Agriculture Minister Todd McClay will lead a large trade delegation to the 7th annual China International Import Expo (CIIE) in Shanghai next week, followed by a visit to Guangzhou. This year, almost 70 New Zealand companies will participate in CIIE, to interact with over 3,400 exhibitors and 410,000 visitors. “This ...2 days ago
- New Charter to guarantee better access for hunting and fishing
Minister for Hunting and Fishing Todd McClay has today launched an Access Charter (the Charter) to ensure better access for recreational hunting and fishing on public conservation land (PCL) across New Zealand. “This Charter establishes guiding principles for the Department of Conservation (DOC) to provide clear and transparent decisions on ...3 days ago
- Pou Whenua blessing honours Tongariro
A beautiful new Pou Whenua at the beginning of the Tongariro Alpine Crossing will introduce visitors to the sacred landscape they are entering, says Conservation Minister Tama Potaka. Mr Potaka attended a blessing for the specially carved Pou Whenua at Mangatepopo, at the start of the track on 1 November. ...4 days ago
- New members appointed to the NZTA Board
Transport Minister Simeon Brown has today announced two new appointments to the New Zealand Transport Agency (NZTA) Board. Mary-Anne Macleod and Mike Rudge have both been appointed as members for three-year terms commencing 1 November 2024 and ending 31 October 2027. “Transport is a critical part of our Government’s plan ...4 days ago
- Welcome relief from new oestradiol gel funding
Associate Health Minister David Seymour is welcoming Pharmac’s funding of oestradiol gel, following global shortages of oestradiol patches earlier this year. “I’m well aware of the stress caused by the global shortage earlier this year. At the time I said I was confident Pharmac was working hard to find a ...4 days ago
- Deputy Prime Minister visit to Australia
Foreign Minister and Racing Minister Winston Peters will visit Australia next week. “Australia is New Zealand’s closest partner, and we are pleased to make this second official visit there for 2024 following the first ever Foreign and Defence Ministers 2+2 Meeting between our two countries in Melbourne in January,” ...4 days ago
- Applications now open for new training pathway
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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