The first of two required reading pieces from the weekend. Financial journalist Rod Oram sums up the Nats’ economic performance in an excellent piece in the SST. Here are some extracts:
Full speed going backwards
…Our driverless Government is taking us for a ride. Guided by damage control, it is running amok over good governance, democracy and even its own policies and principles. … Prime Minister John Key prides himself on pragmatism. But his quick fixes, shortcuts and deals are piling up in a mass of contradictory and counter-productive actions.
First, the Government says it wants to help more first-time home buyers by expanding the Welcome Home programme it slashed in its first term. It is also easing the rules for using KiwiSaver funds for deposits, even though KiwiSaver is meant to encourage people to broaden their investments beyond the housing market. Those actions will increase demand for housing, thereby fuelling the damaging housing boom. …
Second, the Government says it wants to help increase the supply of housing by allowing open slather on subdivisions. But that will only make it harder for councils to deliver good urban development and efficient infrastructure, two crucial factors in making housing more affordable.
Third, the Government says it has brought certainty to the workers of the Tiwai Point smelter and investors in Meridian Energy by paying Rio Tinto $30 million to agree to a new electricity deal with Meridian. But the money, which breaks one of National’s much-cherished principles of no subsidies, does neither. The deal does nothing to secure the huge investment the elderly smelter urgently needs to regain its competitiveness. …
Fourth, these uncertainties in the electricity market continue to depress shares in Mighty River Power. It has yet to recover to its $2.50 float price. Despite investors sitting on a loss on MRP and the continuing threats hanging over the market, the Government is determined to float Meridian in October. It says such SOE sales are designed to encourage new retail investors into the stock market, while bolstering its own finances. But the poor showing of MRP, and thus the need to sharply discount Meridian to attract buyers, undercuts both goals.
Fifth, ultra-fast broadband (UFB) is another flagship policy of the Key Government. It is stumping up $1.35 billion to help fund the rollout of fibre to deliver it, with Chorus the main corporate recipient. … Telecommunications Minister Amy Adams is planning to intervene with a price up to four times higher than the regulator’s. Other telcos are complaining bitterly that this would inflate Chorus’ profits and share price, and reduce their ability to compete. …
Sixth, the Government has announced radical changes to the Resource Management Act. It says they will reduce uncertainty, legal wrangling and delays in the consenting progress. Some of the additional minor changes would be useful and are widely supported. But it is carving the heart out of the act. It will remove from Part 2, the purpose and priorities of the act, any reference to environmental bottom lines or aspects such as public amenity. This means the environment will take its chances alongside economic development, landowner’s rights and other considerations. …
Seventh, Key says that, once the Fonterra-tainted whey inquiries are completed, he will “travel to China and look down the barrel of their television cameras with the answers as to why this happened, give consumers confidence that it’s been fixed and all issues have been identified”. … He will damage, not rebuild, confidence in New Zealand.
If Key feels like apologising, he should start at home. Having ditched its roadmap of policies and principles, the Government is taking the public for a scary ride. It is getting more reckless by the day.
Go read the whole piece in the SST.
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