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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TL;DR: The top six things I’ve noted around housing, climate and poverty in Aotearoa’s political economy today are:Transport and Energy Minister Simeon Brown is accelerating plans to spend at least $10 billion through Public Private Partnerships (PPPs) to extend State Highway One as a four-lane ‘Expressway’ from Warkworth to Whangarei ...3 days ago - Lester's Prescription – Positive Bleeding.
I live my life (woo-ooh-ooh)With no control in my destinyYea-yeah, yea-yeah (woo-ooh-ooh)I can bleed when I want to bleedSo come on, come on (woo-ooh-ooh)You can bleed when you want to bleedYea-yeah, come on (woo-ooh-ooh)Everybody bleed when they want to bleedCome on and bleedGovernments face tough challenges. Selling unpopular decisions to ...3 days ago - Casey Costello gaslights Labour in the House
Please note:To skip directly to the- parliamentary footage in the video, scroll to 1:21 To skip to audio please click on the headphone icon on the left hand side of the screenThis video / audio section is under development. ...3 days ago
- Why is the Texas grid in such bad shape?
This is a re-post from the Climate Brink by Andrew Dessler Headline from 2021 The Texas grid, run by ERCOT, has had a rough few years. In 2021, winter storm Uri blacked out much of the state for several days. About a week ago, Hurricane Beryl knocked out ...3 days ago
- Gordon Campbell on a textbook case of spending waste by the Luxon government
Given the crackdown on wasteful government spending, it behooves me to point to a high profile example of spending by the Luxon government that looks like a big, fat waste of time and money. I’m talking about the deployment of NZDF personnel to support the US-led coalition in the Red ...3 days ago
- The Kākā’s Pick 'n' Mix for Wednesday, July 24
TL;DR: My pick of the top six links elsewhere around housing, climate and poverty in Aotearoa’s political economy in the last day or so to 7:40 am on Wednesday, July 24 are:Deep Dive: Chipping away at the housing crisis, including my comments RNZ/Newsroom’s The DetailNews: Government softens on asset sales, ...3 days ago - LXR Takaanini
As I reported about the city centre, Auckland’s rail network is also going through a difficult and disruptive period which is rapidly approaching a culmination, this will result in a significant upgrade to the whole network. Hallelujah. Also like the city centre this is an upgrade predicated on the City ...3 days ago
- Four kilograms of pain
Today, a 4 kilogram report will be delivered to Parliament. We know this is what the report of the Royal Commission of Inquiry into Abuse in State and Faith-based Care weighs, because our Prime Minister told us so.Some reporter had blindsided him by asking a question about something done by ...3 days ago - The Kākā’s Journal of Record for Wednesday, July 24
TL;DR: As of 7:00 am on Wednesday, July 24, the top six announcements, speeches, reports and research around housing, climate and poverty in Aotearoa’s political economy in the last day are:Beehive: Transport Minister Simeon Brown announced plans to use PPPs to fund, build and run a four-lane expressway between Auckland ...3 days ago - Luxon gets caught out
NewstalkZB host Mike Hosking, who can usually be relied on to give Prime Minister Christopher Luxon an easy run, did not do so yesterday when he interviewed him about the HealthNZ deficit. Luxon is trying to use a deficit reported last year by HealthNZ as yet another example of the ...3 days ago
- A worrying sign
Back in January a StatsNZ employee gave a speech at Rātana on behalf of tangata whenua in which he insulted and criticised the government. The speech clearly violated the principle of a neutral public service, and StatsNZ started an investigation. Part of that was getting an external consultant to examine ...4 days ago
- Are we fine with 47.9% home-ownership by 2048?
Renting for life: Shared ownership initiatives are unlikely to slow the slide in home ownership by much. Photo: Lynn Grieveson / The KākāTL;DR: The top six things I’ve noted around housing, climate and poverty in Aotearoa’s political economy today are:A Deloitte report for Westpac has projected Aotearoa’s home-ownership rate will ...4 days ago - Let's Win This
You're broken down and tiredOf living life on a merry go roundAnd you can't find the fighterBut I see it in you so we gonna walk it outAnd move mountainsWe gonna walk it outAnd move mountainsAnd I'll rise upI'll rise like the dayI'll rise upI'll rise unafraidI'll rise upAnd I'll ...4 days ago - Waimahara: The Singing Spirit of Water
There’s been a change in Myers Park. Down the steps from St. Kevin’s Arcade, past the grassy slopes, the children’s playground, the benches and that goat statue, there has been a transformation. The underpass for Mayoral Drive has gone from a barren, grey, concrete tunnel, to a place that thrums ...4 days ago
- A major milestone: Global climate pollution may have just peaked
This is a re-post from Yale Climate Connections Global society may have finally slammed on the brakes for climate-warming pollution released by human fossil fuel combustion. According to the Carbon Monitor Project, the total global climate pollution released between February and May 2024 declined slightly from the amount released during the same ...4 days ago
- The Kākā’s Pick 'n' Mix for Tuesday, July 23
TL;DR: My pick of the top six links elsewhere around housing, climate and poverty in Aotearoa’s political economy in the last day or so to 7:00 am on Tuesday, July 23 are:Deep Dive: Penlink: where tolling rhetoric meets reality BusinessDesk-$$$’s Oliver LewisScoop: Te Pūkenga plans for regional polytechs leak out ...4 days ago - The Kākā’s Journal of Record for Tuesday, July 23
TL;DR: As of 6:00 am on Tuesday, July 23, the top six announcements, speeches, reports and research around housing, climate and poverty in Aotearoa’s political economy in the last day are:Health: Shane Reti announced the Board of Te Whatu Ora- Health New Zealand was being replaced with Commissioner Lester Levy ...4 days ago - HealthNZ and Luxon at cross purposes over budget blowout
Health NZ warned the Government at the end of March that it was running over Budget. But the reasons it gave were very different to those offered by the Prime Minister yesterday. Prime Minister Christopher Luxon blamed the “botched merger” of the 20 District Health Boards (DHBs) to create Health ...4 days ago
- 2500-3000 more healthcare staff expected to be fired, as Shane Reti blames Labour for a budget defic...
Long ReadKey Summary: Although National increased the health budget by $1.4 billion in May, they used an old funding model to project health system costs, and never bothered to update their pre-election numbers. They were told during the Health Select Committees earlier in the year their budget amount was deficient, ...4 days ago - Might Kamala Harris be about to get a 'stardust' moment like Jacinda Ardern?
As a momentous, historic weekend in US politics unfolded, analysts and commentators grasped for precedents and comparisons to help explain the significance and power of the choice Joe Biden had made. The 46th president had swept the Democratic party’s primaries but just over 100 days from the election had chosen ...5 days ago - Solutions Interview: Steven Hail on MMT & ecological economics
TL;DR: I’m casting around for new ideas and ways of thinking about Aotearoa’s political economy to find a few solutions to our cascading and self-reinforcing housing, poverty and climate crises.Associate Professor runs an online masters degree in the economics of sustainability at Torrens University in Australia and is organising ...5 days ago
- Reported back
The Finance and Expenditure Committee has reported back on National's Local Government (Water Services Preliminary Arrangements) Bill. The bill sets up water for privatisation, and was introduced under urgency, then rammed through select committee with no time even for local councils to make a proper submission. Naturally, national's select committee ...5 days ago
- Vandrad the Viking, Christopher Coombes, and Literary Archaeology
Some years ago, I bought a book at Dunedin’s Regent Booksale for $1.50. As one does. Vandrad the Viking (1898), by J. Storer Clouston, is an obscure book these days – I cannot find a proper online review – but soon it was sitting on my shelf, gathering dust alongside ...5 days ago - Gordon Campbell On The Biden Withdrawal
History is not on the side of the centre-left, when Democratic presidents fall behind in the polls and choose not to run for re-election. On both previous occasions in the past 75 years (Harry Truman in 1952, Lyndon Johnson in 1968) the Democrats proceeded to then lose the White House ...5 days ago
- Joe Biden's withdrawal puts the spotlight back on Kamala and the USA's complicated relatio...
This is a free articleCoverageThis morning, US President Joe Biden announced his withdrawal from the Presidential race. And that is genuinely newsworthy. Thanks for your service, President Biden, and all the best to you and yours.However, the media in New Zealand, particularly the 1News nightly bulletin, has been breathlessly covering ...5 days ago - Why we have to challenge our national fiscal assumptions
A homeless person’s camp beside a blocked-off slipped damage walkway in Freeman’s Bay: we are chasing our tail on our worsening and inter-related housing, poverty and climate crises. Photo: Photo: Lynn Grieveson / The KākāTL;DR: The top six things I’ve noted around housing, climate and poverty in Aotearoa’s political economy ...5 days ago - Existential Crisis and Damaged Brains
What has happened to it all?Crazy, some'd sayWhere is the life that I recognise?(Gone away)But I won't cry for yesterdayThere's an ordinary worldSomehow I have to findAnd as I try to make my wayTo the ordinary worldYesterday morning began as many others - what to write about today? I began ...5 days ago - A speed limit is not a target, and yet…
This is a guest post from longtime supporter Mr Plod, whose previous contributions include a proposal that Hamilton become New Zealand’s capital city, and that we should switch which side of the road we drive on. A recent Newsroom article, “Back to school for the Govt’s new speed limit policy“, ...5 days ago
- The Kākā’s Pick 'n' Mix for Monday, July 22
TL;DR: My pick of the top six links elsewhere around housing, climate and poverty in Aotearoa’s political economy in the last day or so to 7:00 am on Monday, July 22 are:Today’s Must Read: Father and son live in a tent, and have done for four years, in a million ...5 days ago - The Kākā’s Journal of Record for Monday, July 22
TL;DR: As of 7:00 am on Monday, July 22, the top six announcements, speeches, reports and research around housing, climate and poverty in Aotearoa’s political economy in the last day are:US President Joe Biden announced via X this morning he would not stand for a second term.Multinational professional services firm ...5 days ago - 2024 SkS Weekly Climate Change & Global Warming News Roundup #29
A listing of 32 news and opinion articles we found interesting and shared on social media during the past week: Sun, July 14, 2024 thru Sat, July 20, 2024. Story of the week As reflected by preponderance of coverage, our Story of the Week is Project 2025. Until now traveling ...6 days ago
- I'd like to share what I did this weekend
6 days ago - For the children – Why mere sentiment can be a misleading force in our lives, and lead to unex...
National: The Party of ‘Law and Order’ IntroductionThis weekend, the Government formally kicked off one of their flagship policy programs: a military style boot camp that New Zealand has experimented with over the past 50 years. Cartoon credit: Guy BodyIt’s very popular with the National Party’s Law and Order image, ...6 days ago - A friend in uncertain times
Day one of the solo leg of my long journey home begins with my favourite sound: footfalls in an empty street. 5.00 am and it’s already light and already too warm, almost.If I can make the train that leaves Budapest later this hour I could be in Belgrade by nightfall; ...6 days ago - The Chaotic World of Male Diet Influencers
Hi,We’ll get to the horrific world of male diet influencers (AKA Beefy Boys) shortly, but first you will be glad to know that since I sent out the Webworm explaining why the assassination attempt on Donald Trump was not a false flag operation, I’ve heard from a load of people ...6 days ago - It's Starting To Look A Lot Like… Y2K
Do you remember Y2K, the threat that hung over humanity in the closing days of the twentieth century? Horror scenarios of planes falling from the sky, electronic payments failing and ATMs refusing to dispense cash. As for your VCR following instructions and recording your favourite show - forget about it.All ...1 week ago - Bernard’s Saturday Soliloquy for the week to July 20
Climate Change Minister Simon Watts being questioned by The Kākā’s Bernard Hickey.TL;DR: My top six things to note around housing, climate and poverty in Aotearoa’s political economy in the week to July 20 were:1. A strategy that fails Zero Carbon Act & Paris targetsThe National-ACT-NZ First Coalition Government finally unveiled ...1 week ago - Pharmac Director, Climate Change Commissioner, Health NZ Directors – The latest to quit this m...
Summary:As New Zealand loses at least 12 leaders in the public service space of health, climate, and pharmaceuticals, this month alone, directly in response to the Government’s policies and budget choices, what lies ahead may be darker than it appears. Tui examines some of those departures and draws a long ...1 week ago - Flooding Housing Policy
The Minister of Housing’s ambition is to reduce markedly the ratio of house prices to household incomes. If his strategy works it would transform the housing market, dramatically changing the prospects of housing as an investment.Leaving aside the Minister’s metaphor of ‘flooding the market’ I do not see how the ...1 week ago - A Voyage Among the Vandals: Accepted (Again!)
As previously noted, my historical fantasy piece, set in the fifth-century Mediterranean, was accepted for a Pirate Horror anthology, only for the anthology to later fall through. But in a good bit of news, it turned out that the story could indeed be re-marketed as sword and sorcery. As of ...1 week ago - The Kākā's Chorus for Friday, July 19
An employee of tobacco company Philip Morris International demonstrates a heated tobacco device. Photo: Getty ImagesTL;DR: The top six things I’ve noted around housing, climate and poverty in Aotearoa’s political economy on Friday, July 19 are:At a time when the Coalition Government is cutting spending on health, infrastructure, education, housing ...1 week ago - The Kākā’s Pick 'n' Mix for Friday, July 19
TL;DR: My pick of the top six links elsewhere around housing, climate and poverty in Aotearoa’s political economy in the last day or so to 8:30 am on Friday, July 19 are:Scoop: NZ First Minister Casey Costello orders 50% cut to excise tax on heated tobacco products. The minister has ...1 week ago - Weekly Roundup 19-July-2024
Kia ora, it’s time for another Friday roundup, in which we pull together some of the links and stories that caught our eye this week. Feel free to add more in the comments! Our header image this week shows a foggy day in Auckland town, captured by Patrick Reynolds. ...1 week ago
- Weekly Climate Wrap: A market-led plan for failure
TL;DR : Here’s the top six items climate news for Aotearoa this week, as selected by Bernard Hickey and The Kākā’s climate correspondent Cathrine Dyer. A discussion recorded yesterday is in the video above and the audio of that sent onto the podcast feed.The Government released its draft Emissions Reduction ...1 week ago
- Tobacco First
Save some money, get rich and old, bring it back to Tobacco Road.Bring that dynamite and a crane, blow it up, start all over again.Roll up. Roll up. Or tailor made, if you prefer...Whether you’re selling ciggies, digging for gold, catching dolphins in your nets, or encouraging folks to flutter ...1 week ago - Trump’s Adopted Son.
Waiting In The Wings: For truly, if Trump is America’s un-assassinated Caesar, then J.D. Vance is America’s Octavian, the Republic’s youthful undertaker – and its first Emperor.DONALD TRUMP’S SELECTION of James D. Vance as his running-mate bodes ill for the American republic. A fervent supporter of Viktor Orban, the “illiberal” prime ...1 week ago - The Kākā’s Journal of Record for Friday, July 19
TL;DR: As of 6:00 am on Friday, July 19, the top six announcements, speeches, reports and research around housing, climate and poverty in Aotearoa’s political economy in the last day are:The PSA announced the Employment Relations Authority (ERA) had ruled in the PSA’s favour in its case against the Ministry ...1 week ago - The Hoon around the week to July 19
TL;DR: The podcast above of the weekly ‘hoon’ webinar for paying subscribers last night features co-hosts and talking with:The Kākā’s climate correspondent talking about the National-ACT-NZ First Government’s release of its first Emissions Reduction Plan;University of Otago Foreign Relations Professor and special guest Dr Karin von ...1 week ago
- Skeptical Science New Research for Week #29 2024
Open access notables Improving global temperature datasets to better account for non-uniform warming, Calvert, Quarterly Journal of the Royal Meteorological Society: To better account for spatial non-uniform trends in warming, a new GITD [global instrumental temperature dataset] was created that used maximum likelihood estimation (MLE) to combine the land surface ...1 week ago
- Release: Charter schools to remove the rights of teachers
A late change to charter school legislation will cheat educators out of fair pay and negotiating power proving charter schools are just a vehicle to make profit out of our education system. ...23 hours ago - Te iwi Māori will not stand for another Foreshore and Seabed
In 2004 te iwi Māori rallied against the Crown’s attempt to confiscate our coastlines and moana with the Foreshore and Seabed Act. This led to the largest hīkoi of a generation and the birth of Te Pāti Māori. 20 years later, history is repeating itself. Today the government has announced ...2 days ago
- Te Pāti Māori Acknowledge the Need for Fundamental Change in State Care
It has been five and a half years since the Royal Commission of Inquiry into Abuse in Care was established to investigate the abuse of children, young people, and vulnerable adults within state and faith-based institutions. Yesterday, the final report - Whanaketia through pain and trauma, from darkness to light ...2 days ago
- National disgrace for children in poverty
Shifting the goalposts on child poverty is a new low for the National-led government. ...2 days ago
- Release: National disgrace for children in poverty
Shifting the goalposts on child poverty is a new low for the National-led government. ...2 days ago
- Government quietly waters down child poverty targets
The Government’s move to dilute child poverty targets is a reminder that it is actively choosing to preserve hardship for thousands of households. ...2 days ago - Release: National jumps on Labour’s trains
National is so short on ideas it is now announcing Labour’s rail announcement from a year ago, Labour transport spokesperson Tangi Utikere said. ...2 days ago
- Release: Opposition parties unite to protect ECE
Labour, the Green Party and Te Pāti Māori are uniting to stop the Government’s dangerous changes to the Early Childhood Education sector. ...2 days ago
- Release: Another step forward for survivors of abuse in care
Labour welcomes the Royal Commission of Inquiry into Abuse in Care’s final report and the government committing to a formal apology in November. ...3 days ago
- Govt must listen to experiences of abuse survivors
The Government must do all it can to bring abuse in care to an end following the release of the independent inquiry. ...3 days ago
- Release: Health New Zealand exposes Minister spinning in freefall
Health New Zealand contradicted the Government’s spin that back-office bureaucracy is the cause of overspend in the public health system. ...4 days ago
- Govt must act on Israel’s illegal occupation of Palestine
The Green Party is calling on the Government to take action off the back of the International Court of Justice ruling on Israel’s illegal occupation of Palestine. ...4 days ago
- NZ Government Must Enforce ICJ Ruling
On Friday the International Court of Justice reaffirmed what Palestinian’s have been telling us for decades: that the occupation and colonisation of Palestinian lands by Israel is illegal and must end immediately. They also called for reparations for Palestinian’s who have lived under Israeli occupation since it began in 1967. ...5 days ago
- Release: Listen PM, boot camps don’t work
Refusing to listen to evidence, experts or experience the Government is stubbornly marching ahead with its boot camps. ...7 days ago
- Release: Govt must act on ICJ ruling on illegal Israeli occupation
Labour calls on the Government to act after the International Court of Justice (ICJ) ruled that Israel’s occupation of Palestinian Territories is illegal. ...7 days ago
- Release: Rents up under National, promises fall flat
National Party policies which promised to put “downward pressure” on rents are having the opposite effect. ...1 week ago
- MSD figures show Govt determined to punish beneficiaries
The 53.7 percent rise in benefit sanctions over the last year is more proof of this Government’s disdain for our communities most in need of support. ...1 week ago
- We need real solutions, not more failed boot camps – Willow-Jean Prime
Aotearoa could be a country where every child grows up feeling safe, loved and with a sense of belonging in their whānau and community. But for some of our children, this is far from reality. Instead, they are trapped in a maze of intergenerational harm that they can’t escape on ...1 week ago
- David Seymour is Unfit to Serve as Minister
Te Pāti Māori are calling for David Seymour to resign as Associate Health Minister in response to his call for Pharmac to ignore the Treaty of Waitangi. “This announcement is just another example of the government’s anti-Tiriti, anti-Māori agenda.” Said Co-leader and spokesperson for health, Debbie Ngarewa-Packer. “Seymour thinks it ...1 week ago
- Renters suffer as soaring rents feed rising inflation
The soaring price of renting is driving the rise of inflation in this country - with latest figures from Stats NZ showing rents are up 4.8 per cent on average while annual inflation is at 3.3 per cent. ...1 week ago
- National’s climate strategy undoes good progress
National’s Emissions Reduction Plan will take New Zealand further from the economy we need to ensure the next generation has a stable climate and secure livelihoods. ...1 week ago
- Green Party releases executive summary of independent investigation
Following consultation with named parties and thorough consideration of privacy interests, the Green Party is in a position to release the Executive Summary of the final report from the independent investigation into Darleen Tana. ...1 week ago
- Government back off track on climate action
Today’s Draft Emissions Reduction Plan shows the Government couldn’t care less about a liveable climate for all. ...1 week ago
- PM needs to step in over Shane Jones’ undeclared meeting
Prime Minister Christopher Luxon should be asking serious questions of his Minister for Resources Shane Jones now it’s been revealed he misled the public about a dinner with mining companies that he didn’t declare and said wasn’t pre-arranged. ...2 weeks ago
- Te Pāti Māori Opposes Three Strikes Amendment Bill
Te Pāti Māori have submitted to the Justice Select Committee against the Sentencing (Reinstating Three Strikes) Amendment Bill. The bill will further entrench racism in our justice system and fails to focus on rehabilitation. “Reinstating Three Strikes will empower a systematically racist system and exacerbate the overrepresentation of Māori in ...2 weeks ago
- Govt Determined to Make Aotearoa a Country of Disposable Renters
The Transport and Infrastructure Committee is set to make a determination on the Residential Tenancies Amendment (RTA) Bill in the coming weeks. “This legislation will give landlords the power to kick our whānau out onto the street for no reason” said Housing spokesperson, Mariameno Kapa-Kingi. “Their solution to the housing ...2 weeks ago
- Statement on retail crime Ministerial Advisory Group
“National’s campaign was about tackling crime and the best they can do is a two-year long Ministerial Advisory Group,” Labour justice spokesperson Duncan Webb said. ...2 weeks ago
- Statement from Labour education spokesperson Jan Tinetti
“There are more examples of charter schools failing their students than there are success stories. The coalition Government is driving to dismantle our public school system and instead promote a privatised, competitive structure that puts profits before kids,” Jan Tinetti said. ...2 weeks ago
- Govt Continues to Destructively Withhold Information
“This government is choosing to deliberately mislead and withhold information, keeping our people in the dark about this government’s agenda and the future of our mokopuna,” said co-leader and spokesperson for Health, Debbie Ngarewa-Packer. The call comes after the demand from the Chief Ombudsman that Associate Minister of Health, Casey ...2 weeks ago
- Statement from Labour climate change spokesperson Megan Woods
“Today’s climate announcement by Simon Watts makes clear the National Government is simply paying lip service to meeting its climate change targets,” Megan Woods said. ...2 weeks ago
- Eight ways National is making life harder for workers
National is choosing to make life harder for workers by taking away the rights our communities have fought hard for. Here's how they’re taking workers backwards. ...3 weeks ago
- Waitlists up and workforce down under National
Health New Zealand’s recent quarterly performance report shows the public health system is going backwards under the National government. ...3 weeks ago
- Joint statement from the Prime Ministers of Canada, Australia and New Zealand
Australia, Canada and New Zealand today issued the following statement on the need for an urgent ceasefire in Gaza and the risk of expanded conflict between Hizballah and Israel. The situation in Gaza is catastrophic. The human suffering is unacceptable. It cannot continue. We remain unequivocal in our condemnation of ...17 hours ago - AG reminds institutions of legal obligations
Attorney-General Judith Collins today reminded all State and faith-based institutions of their legal obligation to preserve records relevant to the safety and wellbeing of those in its care. “The Abuse in Care Inquiry’s report has found cases where records of the most vulnerable people in State and faith‑based institutions were ...20 hours ago
- More young people learning about digital safety
Minister of Internal Affairs Brooke van Velden says the Government’s online safety website for children and young people has reached one million page views. “It is great to see so many young people and their families accessing the site Keep It Real Online to learn how to stay safe online, and manage ...20 hours ago
- Speech to the Conference for General Practice 2024
Tēnā tātou katoa, Ngā mihi te rangi, ngā mihi te whenua, ngā mihi ki a koutou, kia ora mai koutou. Thank you for the opportunity to be here and the invitation to speak at this 50th anniversary conference. I acknowledge all those who have gone before us and paved the ...22 hours ago
- Employers and payroll providers ready for tax changes
New Zealand’s payroll providers have successfully prepared to ensure 3.5 million individuals will, from Wednesday next week, be able to keep more of what they earn each pay, says Finance Minister Nicola Willis and Revenue Minister Simon Watts. “The Government's tax policy changes are legally effective from Wednesday. Delivering this tax ...24 hours ago
- Experimental vineyard futureproofs wine industry
An experimental vineyard which will help futureproof the wine sector has been opened in Blenheim by Associate Regional Development Minister Mark Patterson. The covered vineyard, based at the New Zealand Wine Centre – Te Pokapū Wāina o Aotearoa, enables controlled environmental conditions. “The research that will be produced at the Experimental ...1 day ago
- Funding confirmed for regions affected by North Island Weather Events
The Coalition Government has confirmed the indicative regional breakdown of North Island Weather Event (NIWE) funding for state highway recovery projects funded through Budget 2024, Transport Minister Simeon Brown says. “Regions in the North Island suffered extensive and devastating damage from Cyclone Gabrielle and the 2023 Auckland Anniversary Floods, and ...1 day ago
- Indonesian Foreign Minister to visit
Indonesia’s Foreign Minister, Retno Marsudi, will visit New Zealand next week, Foreign Minister Winston Peters has announced. “Indonesia is important to New Zealand’s security and economic interests and is our closest South East Asian neighbour,” says Mr Peters, who is currently in Laos to engage with South East Asian partners. ...1 day ago
- Strengthening partnership with Ngāti Maniapoto
He aha te kai a te rangatira? He kōrero, he kōrero, he kōrero. The government has reaffirmed its commitment to supporting the aspirations of Ngāti Maniapoto, Minister for Māori Development Tama Potaka says. “My thanks to Te Nehenehenui Trust – Ngāti Maniapoto for bringing their important kōrero to a ministerial ...2 days ago
- Transport Minister thanks outgoing CAA Chair
Transport Minister Simeon Brown has thanked outgoing Chair of the Civil Aviation Authority, Janice Fredric, for her service to the board.“I have received Ms Fredric’s resignation from the role of Chair of the Civil Aviation Authority,” Mr Brown says.“On behalf of the Government, I want to thank Ms Fredric for ...2 days ago
- Test for Customary Marine Title being restored
The Government is proposing legislation to overturn a Court of Appeal decision and amend the Marine and Coastal Area Act in order to restore Parliament’s test for Customary Marine Title, Treaty Negotiations Minister Paul Goldsmith says. “Section 58 required an applicant group to prove they have exclusively used and occupied ...2 days ago
- Opposition united in bad faith over ECE sector review
Regulation Minister David Seymour says that opposition parties have united in bad faith, opposing what they claim are ‘dangerous changes’ to the Early Childhood Education sector, despite no changes even being proposed yet. “Issues with affordability and availability of early childhood education, and the complexity of its regulation, has led ...2 days ago
- Kiwis having their say on first regulatory review
After receiving more than 740 submissions in the first 20 days, Regulation Minister David Seymour is asking the Ministry for Regulation to extend engagement on the early childhood education regulation review by an extra two weeks. “The level of interest has been very high, and from the conversations I’ve been ...2 days ago
- Government upgrading Lower North Island commuter rail
The Coalition Government is investing $802.9 million into the Wairarapa and Manawatū rail lines as part of a funding agreement with the NZ Transport Agency (NZTA), KiwiRail, and the Greater Wellington and Horizons Regional Councils to deliver more reliable services for commuters in the lower North Island, Transport Minister Simeon ...2 days ago
- Government moves to ensure flood protection for Wairoa
Local Government Minister Simeon Brown has announced his intention to appoint a Crown Manager to both Hawke’s Bay Regional and Wairoa District Councils to speed up the delivery of flood protection work in Wairoa."Recent severe weather events in Wairoa this year, combined with damage from Cyclone Gabrielle in 2023 have ...3 days ago
- PM speech to Parliament – Royal Commission of Inquiry’s Report into Abuse in Care
Mr Speaker, this is a day that many New Zealanders who were abused in State care never thought would come. It’s the day that this Parliament accepts, with deep sorrow and regret, the Report of the Royal Commission of Inquiry into Abuse in Care. At the heart of this report are the ...3 days ago
- Government acknowledges torture at Lake Alice
For the first time, the Government is formally acknowledging some children and young people at Lake Alice Psychiatric Hospital experienced torture. The final report of the Royal Commission of Inquiry into Abuse in State and Faith-based Care “Whanaketia – through pain and trauma, from darkness to light,” was tabled in Parliament ...3 days ago
- Government acknowledges courageous abuse survivors
The Government has acknowledged the nearly 2,400 courageous survivors who shared their experiences during the Royal Commission of Inquiry into Historical Abuse in State and Faith-Based Care. The final report from the largest and most complex public inquiry ever held in New Zealand, the Royal Commission Inquiry “Whanaketia – through ...3 days ago
- Half a million people use tax calculator
With a week to go before hard-working New Zealanders see personal income tax relief for the first time in fourteen years, 513,000 people have used the Budget tax calculator to see how much they will benefit, says Finance Minister Nicola Willis. “Tax relief is long overdue. From next Wednesday, personal income ...3 days ago
- Paid Parental Leave improvements pass first reading
Workplace Relations and Safety Minister Brooke van Velden says a bill that has passed its first reading will improve parental leave settings and give non-biological parents more flexibility as primary carer for their child. The Regulatory Systems Amendment Bill (No3), passed its first reading this morning. “It includes a change ...3 days ago
- Rebuilding the economy through better regulation
Two Bills designed to improve regulation and make it easier to do business have passed their first reading in Parliament, says Economic Development Minister Melissa Lee. The Regulatory Systems (Economic Development) Amendment Bill and Regulatory Systems (Immigration and Workforce) Amendment Bill make key changes to legislation administered by the Ministry ...3 days ago
- ‘Open banking’ and ‘open electricity’ on the way
New legislation paves the way for greater competition in sectors such as banking and electricity, Commerce and Consumer Affairs Minister Andrew Bayly says. “Competitive markets boost productivity, create employment opportunities and lift living standards. To support competition, we need good quality regulation but, unfortunately, a recent OECD report ranked New ...3 days ago
- Charity lotteries to be permitted to operate online
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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