What plan? Government incoherent

Written By: - Date published: 12:30 pm, April 17th, 2009 - 39 comments
Categories: budget 2009, economy, national/act government - Tags: , , , , , ,

Peeking through the OECD policy brief there were some interesting issues when looking at the short-term economic issues over the next few years.

As usual Granny Herald in their usual editorial policy of supporting NACT has it wrong. On their front page article they said…

The economy is in for a long and deep recession, but the Government has done all it prudently can to stimulate it, says the OECD.

What the OECD really said was that the government can’t spend more than it is already in fiscal stimulus. The question is are we spending it on the right things – the issue that the Herald  avoided.

Phil Goff has pointed this out – OECD Report Highlights Need For A Real Plan. Perhaps the black budget next month will give more of an idea. But I wouldn’t hold my breath waiting for it. The government seems to have no coherent idea about how to handle the next few years and is frittering away its fiscal advantages ineffectively. In the meantime our economy keeps getting worse than it should.

The OECD looked at the history..

Policy makers have moved aggressively to support demand and put a floor under a potentially vicious downward spiral. In this they have been helped by greater room for manoeuvre than in most other OECD countries, the result of relatively conservative monetary policy during the last phases of the boom and a very low level of gross public debt.

In other words, Michael Cullen was doing his job. In 2005, Don Brash and John Key wanted to put in irresponsible tax-cuts targeted at the better off. The consequent reductions in government revenue would have left us completely vulnerable to the economic downturn. It is likely that money from those tax-cuts would have simply been used to fuel the real-estate bubble*. Instead Cullen used the revenue to reduce government debt and to put the investment in savings programs like the NZ Superannuation Fund and Kiwisaver for the longer term aging issues. This put the government in a good position to handle the immediate shock of this crisis. Cullen started the emergency measures and English has continued with them.

The handling of the economy over the next few years by the government has since then been apalling. They are not addressing the issues that Alan Bollard raised in his speech to the job summit.

The non-government parts of the economy have unhealthy levels of exposure to the unfolding finance crisis. There is a drop in demand in offshore markets, which inevitably shows up in exports. This is partially being offset by our currency exchange  rates dropping back to better export levels. However this exchange rate advantage is likely to be transitory. The banks have a ongoing credit crunch as they have to roll their funding loans.

The biggest economic exposure is because of the inevitable  readjustments in the local economy resulting from the level of leveraged debt from speculation in real estate over the last decade. People are repaying debt rather than spending and increasing demand. This is causing a major drop in local demand, and consequently fueling the increasing unemployment rate. The OECD report highlights this when looking at the dire prospects over the next few years and the governments possible responses.

Fiscal measures can increase employment and demand fairly quickly by way of infrastructure projects and the like, provided they can be implemented in a timely fashion. Tax cuts are less potent as demand boosters but could bolster confidence and assist balance-sheet adjustments. Already, recent and planned tax cuts and accelerated infrastructure spending will provide a fiscal expansion equal to approximately 5% of GDP over the two financial years ending June 2010. The government has also helped shore up confidence

As everyone except the ideologically driven wingnuts (some in this government) and the Herald appear to be aware, tax-cuts at the upper levels of income are not particularly good at producing economic stimulus. In the more affluent tax-payers the money tends to go into savings (low in a recession) or debt reduction. Savings can produce longer term benefits  for the economy if the savings go into productive investments – not the case in NZ*.

The more numerous less affluent tax-payers use tax-cuts on consumption which does help – but they got bugger all in NACT’s tax-cuts.

This is exactly the picture that a recent survey has shown on peoples intentions about what they are doing with their taxcuts. It doesn’t significantly help the economy in the short-term as a demand booster.

Infrastructure projects that start quickly and have a longer term economic benefit are probably the most effective use of the fiscal power of the state. However the government is frittering the favourable fiscal state of the government away in projects of little immediate benefit while effectively cutting ongoing ones on ideological grounds.

They have effectively cut ongoing projects like the rail upgrade in Auckland by fiddling with its funding. They are bringing forward state highway roading projects, most of which have lead times in years and offer little immediate benefit to the economy.

So the question is – what in the hell is the governments plan for dealing with the local demand in the next few years? At present it is hard to see that there is any coherent plan. It seems more of a mish-mash of ministers favourite projects with no underlying short-term strategy.

The big issue at present is that there is a rapidly decreasing local demand with the consequent increase in unemployment. This government is making token gestures in that direction for PR reasons. However the government appears to be internally stalemated into ineffective decision making process based on ideology and personalities. They are concentrating on fiscal debt rather than substaining  growth as is now required.

Having a 8% of our population in  unemployment with the consequent drop in revenue costs a lot more than servicing the governments debt. The current lack of coherence in the government policies doesn’t seem to be addressing that problem apart from silly PR exercises like the job summits.

* NZ’s lack of a capital gains tax on property means that savings usually get sunk into relatively unproductive property assets.

39 comments on “What plan? Government incoherent ”

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  1. Jasper 1
    17 April 2009 at 1:31 pm

    In his speech to the Wellington Chamber yesterday, to a large business audience Goff said that the tax cuts implemented by Nact was Wrong.
    As others have pointed out, the economic downturn is further exacerbated by only providing cuts to the upper echelons of society. To improve the economy, cuts need to be aimed at those earning under 40K as they are more likely to spend their cuts, and not save or pay down debt.
    While I do earn around 70K, my cut has been useful to pay down debt further. The upside is that having less interest to pay gives me more money in the hand, which is going out to 3 charities (and increasing)
    It’s a perverse cycle.

    Regarding the property assets comment, while it may be unproductive, it is still providing a service. The issue here lies in the fact that unscrupulous landlords are only too happy to sit on deferred maintenance, while collecting the associated tax breaks.
    I don’t see any value or merit in a CGT, but do see more value in removing the ability for landlords to claim depreciation on RESIDENTIAL property. Commercial property is a different story.

    From the job summit talk fest (as it has proved to me) it’s worthwhile noting that the 9 day fortnight will never work unless it’s rolled out to the other 97% of businesses that have less than 20 staff. All other ideas from that JS weren’t “job creating” at all, but rather addressed grievances that companies have in respect to perceived ‘red tape’. Such a waste, and unfortunately dozy kiwis aren’t going to wake up until all the state assets have been sold again, unless the left get more solidarity and support in the next 18 months. Now is the crucial time to start cementing that, and Labour/Greens really need to get out there with those made redundant and highlight the policies they would have implemented… we are a big “what if” country, especially in times of uncertainty.

  2. Snook 2
    17 April 2009 at 1:36 pm

    Too right, Michael Cullen was doing his job otherwise we’d be in muck up to our necks. His statement that he had no problem with people being well off – he had a problem with people being poor has stuck with me ever since.

    Where I work, doing the payroll is part of the job and one of the naive National supporters I work with was excited about the 1 April tax cuts. She was crestfallen when she discovered that she’d actually be paying an extra $3 more in tax a fortnight because she was way under the 45k threshold and that ACC earner premiums had increased. I didn’t have the heart to say to her, “You didn’t really think National meant tax cuts for workers like you, did you?”

    A while ago I read this on a blog written by an Aussie -‘The Truth About Wealthy People’ – sorry I don’t know who it was written by but I believe it sums up the wealthy classes perfectly:

    The Truth about Wealthy People

    There is another issue that keeps being alluded to in this discussion that I think has to be faced directly distribution of wealth.

    Mind you, I can see why everyone is frightened to mention it, the political right here in Australia (and I gather elsewhere) has used the lefts’ tactic of Political Correctness to put anyone who mentions it in the same category as racists. Every time anyone notices how the rules of the game are being changed to advantage the rich they get “Politics Of Envy’ screamed at them and retire suitably chastened.

    But, in reality, the long, hard lesson of history is that it is catastrophically dangerous to allow your neighbor to become much more wealthy or powerful than yourself because:
    1. He will have the resources to further weigh the system in his favor and will do so as humans are hard wired to exploit wealth due to the reproductive advantage it gives.
    2. His interests will rapidly diverge from yours, becoming diametrically opposed in many cases.
    3. As humans are hard wired to admire wealth and power, the social status they gain him will make it even more difficult to do anything to redress the balance. This will lead to a runaway effect that is catastrophic to your interests.

    In short, there are hard, practical reasons to prevent individuals or organizations from accumulating too much wealth, reasons that go far beyond, in fact have nothing to do with, moral arguments about redistributing wealth to help the poor.

    Many cultures understood this and had measures in place carefully designed to prevent excessive accumulation of wealth, at least away from the king’s court. Ours is just learning it again as we realize that the USA political system has been basically taken over by the richest one tenth of one percent. Further, that not only have they used their wealth to corrupt the political system, they have used it to corrupt the world view and culture of the common people.

    • aj 2.1
      17 April 2009 at 4:05 pm

      ” I didn’t have the heart to say to her, “You didn’t really think National meant tax cuts for workers like you, did you?’

      Get the heart. Those people need to be reminded.

  3. Patrick 3
    17 April 2009 at 3:23 pm

    Granny H is the mouthpiece of the Mactional Party – why do people act surprised when granny parrots the Mactional line?

    • The Baron 3.1
      17 April 2009 at 4:05 pm

      Do you base this claim on any sort of analysis, Patrick? There are plenty of media and political analysts that would probably disagree with you there – hard to tell when you provide little in the way of evidence.

      Though if you are referring to their campaign against the EFA, hell – most of NZ hated that. Perhaps they were just reflecting public opinion?

  4. senzafine 4
    17 April 2009 at 3:30 pm

    Hmm. What the OECD Also said was:

    The country appeared to be on the right policy track with its earlier market-oriented reforms. But the policy focus on productivity and growth eroded during the years of economic buoyancy, while other countries advanced. Notably, a large amount of new regulation, at times poorly designed, coordinated and focused, was introduced. Such measures have increased the costs of doing business and sent bad signals to foreign investors. The incoming government has taken some steps to reverse this trend. First, it established a new ministerial portfolio of regulatory reform. Second, it is reviewing key regulations thought to have adverse effects on productivity. Third, it has set up a task force to develop the principles for future regulatory management.

    In other words: The previous government screwed up.

    • BLiP 4.1
      17 April 2009 at 3:38 pm

      No. Business operating under the bouyancy during the last government preferred to ship profits off shore rather than invest in infrastructure and equipment required to improve productivity.

    • aj 4.2
      17 April 2009 at 4:07 pm

      Yeah really screwed up. We are in the top three countries in the world when it come of ‘ease to do business’ and at the top of the ones of ‘ease to start a business’

      And read up on productivtiy. Latest is, in the USA years of productivity gains have not resulted in real income growth for the bottom 95%

  5. Clarke 5
    17 April 2009 at 3:55 pm

    So the OECD is advocating a return to the 80’s. It’s just a pity that the IMF is recommending nothing of the sort:

    “The research also finds that countercyclical policies have played an important role in ending recessions and strengthening recoveries. In particular, fiscal policy appears to be especially helpful during recessions associated with financial crises.”

    http://www.imf.org/external/pubs/ft/survey/so/2009/RES041609B.htm

    The difference between the OECD and the IMF is that the IMF has actual practical experience with troubled economies around the world – in stark contrast to the OECD.

  6. The Baron 6
    17 April 2009 at 4:12 pm

    Interesting post, Prent.

    While I don’t want to discuss the substance until I read the documents myself, I certainly agree with the sideline point that NZ’s besotment with property is one of our biggest problems in terms of having sufficient domestic capital to fuel growth. And that a correctly implemented capital gains tax could be a solution to that.

    Unfortunately, I doubt that any political party in NZ would have the courage to look at implementing such taxation… oooooh my that would cause a MASSIVE stink. It’s probably the sort of thing that an outgoing govt could look to do if it was clear that the writing was on the wall; but that doesn’t feel right either…

    I dunno how to solve that one. Do think that this country needs to have an honest discussion somehow about this Capital Gains tax issue though…

    • lprent 6.1
      17 April 2009 at 6:43 pm

      Yeah. It is pretty clear that the property market distorting the rest of the economy. It is a political hot potato. Best time to fix it is when the market is down and we have a government willing to take the flack.

      We have the first. But the second isn’t. This government is more into PR than structural policy.

  7. logie97 7
    17 April 2009 at 4:21 pm

    Can I have a little clarification here? OECD? Where are the people who write these reports and who have such insight into “New Zealand” systems like Health Boards. Are they based in Switzerland, The Hague, Singapore? Or is there an outpost office in Wellington that is staffed by NZ’ers who write about NZ for NZ? I am trying to imagine readers of the Guardian or the New York Times waiting with bated breath for reports from the OECD about NZ… Can we have some names of authors of IMF and OECD reports?

    • The Baron 7.1
      17 April 2009 at 4:33 pm

      Doesn’t appear to have originated in NZ, at least according to the bottom of the doc:

      For further information regarding this Policy Brief please contact:
      Alexandra Bibbee, tel.: +33.1.45.24.76.14, e-mail: alexandra.bibbee@oecd.org;
      Yvan Guillemette, tel.: +33.1.45.24.90.23, e-mail: yvan.guillemette@oecd.org.

      +33 sounds european to me…

      However, the value of the OECD is in comparisons between what are supposedly “like” economies… I don’t think they profess to be experts on the domestic situation, only on comparisons of inputs and outcomes between first world countries. Those comparitives have some value, though you do have to bear in mind the caveat that you well point out.

    • ripp0 7.2
      17 April 2009 at 8:57 pm

      canna answer your final questions.. yet can advise that a former national government minister – Simon Upton – has been (is still ?) a Paris-based appointment officiating at the OECD..

      which is to say how top-level and experienced people are invariably involved there.

  8. Kevyn Miller 8
    17 April 2009 at 6:43 pm

    I won’t try and argue that tax cuts for the rich would have been a good idea because that’s obvious bollox but it’s a different story for tax cuts for workers and the middle classes. The foreign debt stats provide strong evidence that Cullen’s use of the surpluses did nothing more than transfer foreign debt from the Crown to it’s taxpayers. Very simply, New Zealanders borrowed to replace the tax cuts they didn’t get. Ergo the national debt that threatens the economy is the same as it would have been if Cullen had ‘bribed’ Labour voters with tax cuts instead of paying down government debt and creating the super fund.

    IMHO, the combination of the LAQC and no CGT is at the heart of what’s wrong the kiwi economy. Failure to adress those fundamentals makes Cullen’s stewardship of the economy an abject failure.

    Of course, CGT has been recommended by vastly superior finance ministers in the past but Paliament has generally lacked the wisdom to implement one. The borrowing for roads and railways from Vogel’s great public works program was supposed to have been repaid by a CGT on the increase in land values. That never happened and consequently 50 years later the NZR ended up with the interest on accumulated loans of 28 million pounds absorbing it’s entire operating profit. In fact the government eventually wrote off that debt almost a century after the scheme started by which time the debt had reached the equivalent of $1.5bn in today’s money.

    • Pascal's bookie 8.1
      17 April 2009 at 8:23 pm

      The foreign debt stats provide strong evidence that Cullen’s use of the surpluses did nothing more than transfer foreign debt from the Crown to it’s taxpayers. Very simply, New Zealanders borrowed to replace the tax cuts they didn’t get.

      That’s assuming that they wouldn’t have used their tax cuts to leverage even more debt into an even more inflated property market.

      • Kevyn Miller 8.1.1
        17 April 2009 at 8:51 pm

        Since the statistical correlation between foreign indebtedness, mortgages and aggregate house values goes all the way back to the 1950s, I dare say that when you add in the LAQC incentive to borrow to buy rental properties the outcome of tax cuts, even if they went mainly to sub-median income households, would have been what you claim.

        A nation of fools blinkered to the fact that climbing the property ladder is only part of the game of snakes and ladders!

        If Labour had been smarter than Pete Hodgson, when they were confronted with their first winter power crises they could have revised the building code insulation standards and made them applicable to house being sold, leased or rented, then handed out tax cuts to ensure the housing bubble deflated slowly rather than popping.

      • aj 8.1.2
        17 April 2009 at 8:58 pm

        Lets be real. CGT did not stop rampant real estate speculation in other first world countries. Eg Australia.
        As for NZ’ers borrowing to replace tax cuts they never got. What crap. They borrowed to live beyond their means and that is their problem. No different to workers borrowing to live beyond thier means because thet were not getting wages rises that beat inflation and just as stupid.

        • Kevyn Miller 8.1.2.1
          17 April 2009 at 9:13 pm

          NZ’ers borrowing to replace tax cuts they never got = they borrowed to live beyond their means. Yep, it is as stupid as workers using easy credit to live beyond thier means because thety were not getting wages rises that matched inflation. TANSTAAFL.

          Stupid? My second paragraph was a polite way of saying exactly that.

  9. Macro 9
    17 April 2009 at 7:06 pm

    A CGT is hugely difficult to administer if it is not to be discriminatory against genuine home owners who through circumstances are forced to move for work or other reasons. Investors can hold onto their properties indefinitely – the working family who are required to move by their employer etc are taxed. There was a CGT in the late 1970’s early 80’s but it was so difficult to administer it was dropped.

    • The Baron 9.1
      17 April 2009 at 8:41 pm

      You could get round some of those issues by making the first property CGT free… which would make the policy at least more palatable as well.

      As for the administrative burden, I have no idea. I imagine that it is unlikely to be more complicated than some of the stuff already in place.

      Didn’t know we had one previously. Did the 4th Labour Govt chop it?

      • Kevyn Miller 9.1.1
        17 April 2009 at 8:56 pm

        I thought the last time we had a CGT was the urban CGT to fund rail improvements. I think it was introduced at the same time as the petrol tax (mid or late 1920s) and was abolished in the mid-50s, hence the cancellation of Auckland’s rail upgrades at that time.

      • logie97 9.1.2
        17 April 2009 at 9:07 pm

        I understand the UK has had a CGT for generations and look at the state of property inflation there. As I understand it the tax is not applied to sale of the primary residence. The two property families get around the tax by simply selling their primary residence and moving into their secondary residence. Buy a new house with proceeds of the first sale and then after a reasonable time of “convenient” residence in the second house, sell it as the now-primary residence, move into the “new house”, and buy another house on the proceeds -and so the chain goes on – people will always find a work around.

        • The Baron 9.1.2.1
          17 April 2009 at 9:42 pm

          Oh yes, I imagine that such a tax would be inflationary in terms of house prices. If so, it would reduce housing affordability, and therefore access to housing for the poorest and the first timers.

          But is that “less bad” than the other distortionary effects that our non-CGT regime creates? I dunno… any econometrics types about?

  10. Artie S 10
    18 April 2009 at 12:27 am

    They did plan 100 days but that was without Parliament sitting mainly.

    How can a party plan when its MPS and Ministers are flying off in all directions.

    To plan you need to have a brain.

  11. Bart Hanson 11
    18 April 2009 at 1:33 am

    It does not matter one little tiny hoot whether National or Labour were in government at present. They are both in the process of selling New Zealanders into slavery.
    Climate change caused by normal human activity and the with “Global Warming’ tag attached is just plain scare-mongering propaganda used to try to control us free-thinking types. Do I agree that the land and environment are worth looking after? yes, but I will not believe in pseudo-science, damn statistics and convenient lies.
    see
    http://www.scoop.co.nz/stories/HL0904/S00154.htm

    • lprent 11.1
      18 April 2009 at 6:48 am

      …but I will not believe in pseudo-science, damn statistics and convenient lies.

      I think that you mean that you don’t understand the science. But lets ignore that for the moment and just look at population and energy stats.

      Apart from anything else, what is ‘normal’ about having a world population of about 7 billion humans? Show me when that has happened before. Now calculate the difference in crap between the number of humans at say 1800 and now. Look up wikipedia for the population growth since then.

      Now go and look at the difference in energy usage on average between someone in 1800 and now. Try wikipedia again…

      Quite simply you are wrong about ‘normal human activity’. Even a moments thought and a quick wiki will show you that. Unless of course you have faith that something is going to fix up all of that crap miraculously.

      (bet he doesn’t answer)

    • BLiP 11.2
      18 April 2009 at 10:20 am

      You are already a slave to your myopia. Of course, free thinking types are free to think what they like, but remember: facts do not cease to exist because they are ignored.

    • Draco T Bastard 11.3
      18 April 2009 at 1:51 pm

      You got the bit about NZ being sold in slavery correct but you’re barking up the wrong tree about AGW.

      The World at Night today
      http://www.theglitteringeye.com/images/Worldatnight.jpg

      The World at Night under normal conditions.
      http://img.photobucket.com/albums/v235/draco1337/normal_power_usage.jpg

  12. Bart Hanson 12
    18 April 2009 at 10:17 am

    iprent, Why wouldn’t I answer?
    When you talk about crap, if you mean landfill, we are already taking great strides towards reducing this through recycling. Retail packaging is still a problem.
    If you mean human shit, this is good stuff and you can grow delicious veges in it in about 8 weeks.
    What actual resources are we short of in order to maintain the planet?
    We do need to consume less and share more but my only argument is with global warming and the blunt implementation of the Carbon Credit system which will just lead to fewer “haves” and many more “have nots”.
    7 billion people does not equal global warming (only some potential shortages).
    Show me some “proof” of global warming.

    • BLiP 12.1
      18 April 2009 at 10:23 am

      There are none so blind as those that will not see.

    • lprent 12.2
      18 April 2009 at 12:20 pm

      What actual resources are we short of in order to maintain the planet?

      A stable climate. We’ve had one for the last 10,000 years when humans have evolved a civilisation, and our civilisation is absolutely dependent on that (think crop failures and famines). Now we’re rapidly screwing that stability by excreting excess C02 and CH4 into the atmosphere at a rate that is bound to trigger another Holocene hot spot. Not to mention the completely artifical greenhouse gases we’re releasing.

      The whole point about raising the price on carbon gas releases is that it will encourage people to find different ways of acheiving the same results without screwing our precious biosphere.

      As to proof – please advise me about your level of knowledge about earth sciences. It gets really tedious for someone who knows this to explain the really basic stuff. Suffice it to say that if you can’t explain the basic principles of energy drops from higher scattering rates then explaining the proof to you is like trying to explain multiplication to a rat.

  13. Bart Hanson 13
    18 April 2009 at 6:15 pm

    “As to proof – please advise me about your level of knowledge about earth sciences”

    This paper from one of our best earth science universities explains the complex factors that govern gas emissions from different waterways.
    http://www.lincoln.ac.nz/story21173.html

    The NZ environment has been cleaned up hugely in the past 20 years. Toxic sprays, flourocarbon production, wood treatment plants (heavy metals) not to mention a much higher public awareness of green issues around the house.
    That NZ is jumping headlong into a scheme that could skew the ability to measure true causes and effects in the future is of great concern to me.
    http://www.lincoln.ac.nz/carboncalculator/default.asp
    I believe that accurate calculations to determine what one carbon credit is worth is still in it’s early infancy.

    Please advise me about your level of knowledge about earth sciences.

    • lprent 13.1
      18 April 2009 at 7:35 pm

      You are a scientific idiot and it appears that you have zero idea about universities as well. You look as incoherent as this government does.

      Firstly Lincoln doesn’t do earth sciences. It focuses on agriculture. Try looking at this for the undergrad degree programmes and this for the list of majors for the BSc’s there.

      Secondly, that is a link for nitrous oxide (No2), which is yes, a minor player in NZ greenhouse gas effects. The bulk gases by effect are C02 and CH4. While they are not as strong as a greenhouse gas, the quantities released are massive, while the NO2 emissions are several orders of magnitude smaller. This paper means that there may be a few percent lower CO2 equivalents than previously estimated.

      Thirdly, there is no way that the CO2 equivalents for a country are EVER going to be accurate. They are estimates, and we do experiments to increase the accuracy of these estimates. You probably think that equations for things like transmission losses through power lines are accurate? You’d be wrong, they also are estimates. But they are quite accurate after a century of refinement. However we use them when calculating power generation. So there is no way to get an ‘accurate calculation’ through most of science. Just look at things like turbulence calcs for pipe walls… Or for that matter with the carbon calculator you linked to

      Fourthly, what do other environmental issues have to do with houses. Things like heavy metals, flourocarbons, sprays got cleaned up by some rather strict regulations and laws with harsh fines and other penalties. This is exactly what is intended with Kyoto, but using a price signal rather than fines or jail time.

      My background in earth sciences? A BSc in earth sciences. Now you may understand how much of a mindless dickhead you appear to me. Cutting and pasting crap off CCD sites because it fits your untested and unfounded beliefs better than the science does. Obviously you’re too lazy to actually learn any science..

  14. jerry 14
    18 April 2009 at 8:18 pm

    “Things like heavy metals, flourocarbons, sprays got cleaned up by some rather strict regulations and laws with harsh fines and other penalties. This is exactly what is intended with Kyoto, but using a price signal rather than fines or jail time.”

    True but tis considerably more difficult to clean up the CO2 and methane produced by our biggest export earner than curb heavy metals CFCs etc.

    “A cap and trade regime for green-house gas emissions, proposed by government as a climate-change amelioration strategy, is to be phased in over several years, with the agricultural contribution to be left until last to be dealt with. At 48.5%, greenhouse gas emissions in New Zealand from agricultural activities are an unusually high proportion of emissions for a developed country. The unwillingness of Government to bite the agricultural bullet is understandable in view of the economic importance of agriculture, the difficulties in allocating responsibility and the vitriolic response of the farming sector to the previously suggested “fart tax’. However relegating a major component of emissions to last raises questions about how realistic the proposals are.”

  15. Bart Hanson 15
    18 April 2009 at 9:15 pm

    OK Iprent, I’m a mindless dickhead and you’ve got a BSc.
    Congratulations. You win.
    Changing my gut level feelings that the world is being railroaded into Carbon Credits will take some more time I’m afraid.
    I suppose I think it is vain of us puny humans to think firstly that we are required to be so responsible for the world like some sort of consumption police, and secondly that we can fix things by monetizing peoples carbon footprint.
    It is a tax that is levied to get people to pay twice. Make no mistake, any costs carried by manufacturers and producers will be passed on the the end consumer.
    I prefer education above legislation to change behaviours.
    But the elite in our society (that would be you, dickhead) always think forcing change through new laws is the best option.
    Good luck with that.

    • lprent 15.1
      19 April 2009 at 8:40 am

      After having almost exactly the same conversation innumerable times on this, other blogs, usenet and in conversations, I’m getting a bit impatient with it. These days I tend towards finding out if people are thinking or just using their gut instincts.

      Climate change was a theory for Earth when I did the BSc almost 30 years ago. The underlying science was valid and after we looked at Venus there was a clear example. The question was exactly how much it was an issue on Earth or if the biosphere could buffer it – because it has considerable ability to sequester carbon. It has been pretty clear since the late 80’s that the biosphere wasn’t.

      Changing my gut level feelings that the world is being railroaded into Carbon Credits will take some more time I’m afraid.

      I’d suggest having a look at something like the excellent 2006 BBC Horizon documentary ummm looks like you can download it here at the bottom of the screen. There is one section in particular towards the end of the documentary where they look at the 1000AD to 1850AD in the global average temperature record using the solar cycle and volcanic events. Then they look at the last 150 years where the effect of greenhouse gases is starting to show.

      The problem is a matter of risk. We know that we’re warming the planet. What we don’t know exactly are the climate consequences – in particular with ‘tipping’ events causing run-away effects. Changing the heat balance can potentially have strange consequences.

      For instance shifting ocean currents (which transfer a lot of heat and cold around the world) are very susceptible to changes in relative salinity. The gulf stream which warms most of northern europe (and makes them habitable) runs on engine of salinity differences between the tropics and the polar regions. It has stopped a number of times in the past, probably as a result of increased fresh water runoff from north america. If it stops then we will get another northern glacial period.

      Or increased temperature in the siberian/canadian/alaskan tundra/permafrost could release a lot of stored carbon as it starts decomposing, thereby accelerating global warming, thereby increasing the warming.

      Or… there are a *lot* of very scary possibilities with runaway effects that can be seen in our geological history, but where we don’t know exactly if we are going to trigger them or not. The consequences of any of them happening would be catastrophic for our civilization.

      I suppose I think it is vain of us puny humans to think firstly that we are required to be so responsible for the world like some sort of consumption police, and secondly that we can fix things by monetizing peoples carbon footprint.

      The problem is that we live on the world. Whatever we do to it will affect us. There isn’t anyone else to clean up our mess – we have to. Our entire civilization has been built on the relatively stable climates of the last 10,000 years. It is unlikely that it will withstand easily the types of rapid changes that show up in the geological record. It is a lot cheaper to deal with it now rather than suffer one of those events.

      The advantage of using money as a market signal is that we know this works. Ideally, we’d just start raising the price of fossilized carbon and other greenhouse gas producing resources and processes to the point that we start getting alternatives going into usage. At present the cost of fossil carbon is just too damn low to cover the probable costs later in time.

      I prefer education above legislation to change behaviours.

      I would to. However efforts over the last 30 years has shown that this is one area that education isn’t working. The evidence in scientific terms has been overwhelming that we are effecting climate change since the early 90’s. However that hasn’t stopped the extremely scientifically dubious campaigns being fought by people who for one reason or another to say that it isn’t.

      Besides the history of environmental campaigns has shown that the end result of education is to enact legislation to stop the last few who don’t respond to education. Look at the bans on DDT or CFC’s for instance where the legislation was enacted to prevent their manufacture and sale. Their continued use and sale by a few would have affected the rest of us.

      But the elite in our society (that would be you, dickhead) always think forcing change through new laws is the best option.

      Elite? Hardly… I’m just an ordinary but well-educated citizen. I’m a computer programmer who works for private industry. Do you have a problem with having an education or having a knowledgeable opinion? Or just a gripe about people being interested in politics? None of those fit with your claim that education is the key… It does fit with being another CCD (climate change denier) diversion.

      I’m concerned enough to stand up to the lazy wreckers and wasters who don’t bother learning some facts or understanding the theories. If you can demonstrate a more effective route than legislation and convince me that it is likely to work, then I’d be happy help push. To date I haven’t seen any, and talking to people like you makes me sure that we’ll need the legislation.

  16. Bart Hanson 16
    20 April 2009 at 9:50 pm

    Hmmmm…..
    Iprent, Thank-you for taking the time to write a very considered response. I am humbled, (a little :-)) and maybe I should learn some more about the science. However, hopefully I am also big enough to say when something is merely gut instinct as opposed to fact. I will take the time out to watch that documentary too , once I’ve downloaded the 600MB or so. I see the other day they calculated the energy wastage spam caused collectively by using completely hypothetical figures. Along with the relentless “science” coming mainly from the U.K. about how each .0001 degree of temperature increase causes (name your favourite wacky theory here). I tire of it too. If scientists (you know those guys bringing us the facts) don’t start practicing real science and some examine some their hypothesis first, there’s gonna be a backlash.
    I will go away, and stop being delusional, to fight for democracy in Auckland and to study climate change (upset weather patterns).

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