Where our Assets have gone

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1. srylands 1

   13 August 2013 at 4:02 pm

   You need to remember that money is fungible. Most of these seem like sensisble (even essential) investments.

   To put the “asset sales” debate into some context: Folk are getting worked up over the partial sell down of a couple of Crown owned power SOEs. Elsewhere in the OECD – including in countries with stronger perofrming economies, this would pass as unremarkable.

   Again some context – in Australia at the Federal level alone, the Commonwealth has completed 39 privatisations, mostly full privatisations with more in the pipeline. These have been completed by both Labour and Liberal/NP Governments. There are many many more completed at the State level.

   http://www.finance.gov.au/property/asset-sales/past-sales.html

   As a public policy issue – despite the massive scale of privatisation – it simply does not rate with the elctorate.

   So I suggest you not get too worked up about it here in NZ. It wil be a footnote in our economic history.
   • richard 1.1

     13 August 2013 at 4:14 pm

     More copy/paste tosh. What other countries do is their own business. It is not New Zealand’s business to blindly following in their failing footsteps.

     For an econ 101 student, such as yourself, this will be hard to digest. Mainly because the munters at NZ treasury have been blindly following failed schemes for the last 30 years. So the entire experience of your lecturers will be based on failure.
     • Suitably Clueless 1.1.1

       14 August 2013 at 3:09 pm

       No wonder me and economics got on like Sodium and H2O, it just seemed like a munted subject that was taught in the wrong area, seemed like it should be a social science, not part of business studies. Enter plenty of people to tell me I’m wrong.
       • Colonial Viper 1.1.1.1

         14 August 2013 at 3:36 pm

         Orthodox economics was based on a lot of bad mathematical models, falsefiable assumptions, and a habit of fitting reality to the theory regardless of actual empirical information.

         It would do stupid things like leave out financial intermediaries out of its modelling (banks are merely connect borrowers and savers after all and don’t play an active role in the economy apart from that) and debt levels were irrelevant and did not need to be considered (since we know that the sum of all liabilities always nets out to zero against the sum of all assets).

         Then the ridiculous assumptions over people having perfect ability to forecast the future and make the best decisions for that future now (rational agent) and the idiocy of market efficiency (where the intrinsic set up of most markets to hide information to just a few key players was ignored).

         The list goes on and on and on. The last one I will mention is the assumption that you can scale up and generalise the behaviour of one rational customer in a one product market, to a multitude of customers in a multi product multi market economy. Mathematically bullshit.

         Oh and I do have to mention one last last one…the assumption that markets are always at equilibrium or very close to it, and will always naturally head that way if for some reason they ever briefly got knocked out of equilibrium. It’s FACEPALM material.
   • framu 1.2

     13 August 2013 at 5:02 pm

     “it simply does not rate with the elctorate.”

     i hope you mean the aussie electorate – but even then i would hazard a guess that your utterly wrong
   • Shaz 1.3

     13 August 2013 at 5:59 pm

     The important point here is that the government got Treasury to spend a lot of time, energy and intellectual effort making the case that it was the management of the whole class of government assets (revenue generating and revenue using) that was important for New Zealand’s future. It was (and remains) an odd case to have made. The purpose was to give the asset sales a smokescreen of pro-citizen respectability.

     One relevant Treasury paper states

     “The proceeds from the sale of these assets, estimated by the Treasury to total $5 billion to
     $7 billion, will be invested in schools, hospitals and public infrastructure.”

     http://www.treasury.govt.nz/publications/reviews-consultation/mixed-ownership/mom-cons-maori-v3.pdf

     Money is of course substitutable for any purpose but we were assured that it was to be ring-fenced for public assets of specific classes. The OIA results indicate that broadly that this is not the case. It’s a story about trust and credibility.
   • lprent 1.4

     13 August 2013 at 6:15 pm

     srylands: Just another silly neolib displaying their lack of knowledge about NZ economics. Perhaps he should look at why National have a fiscal hole that they need to cover.
   • Colonial Viper 1.5

     13 August 2013 at 6:18 pm

     So I suggest you not get too worked up about it here in NZ. It wil be a footnote in our economic history.

     Yep. The one entitled The Road From Economic Sovereignty to Economic Servitude.

     Hey did you see Meridian score record profits? Boy, those private investors can’t wait to get a slice of that risk free reward!
   • Foreign Waka 1.6

     13 August 2013 at 8:51 pm

     Yes, many OECD countries have privatized power but you fail to mention that a/ there are many more people that are being serviced by b/ many more providers and sources of energy. NZ has 4 mil people that is elsewhere a city like i.e St Petersburg in Russia or Shenyang in China. Size wise this would rank about 40st.(from the top). To have power supply to all households within the current infrastructure and given that it is after all a sign post of a civilization no less, a different approach might need to be taken. Perhaps it is time to have solar panels on every roof, small windmills where appropriate with the possibility to actually feed power back into the grid. This technology is readily available and proofed. It could be subsidized in the same way as the insulation of houses were. I am sure that the uptake would be great and none of the average households have to financially support Rio Tinto in the future.
     As to the sale of assets paid for by the taxpayer, I won’t even touch on the immoral side of that issue, selling something you don’t own has a different name where I come from.
   • Tracey 1.7

     13 August 2013 at 10:46 pm

     Yes, the sales in the 80’s worked so well, we should feel very confidant about these ones… What’s the total Government debt again?
   • Murray Olsen 1.8

     14 August 2013 at 2:22 am

     The privatisation of hospitals, schools, prisons, and detention centres is actually a growing issue, now that the corruption and gifts to political allies and family are becoming widely know.
     It would have passed as unremarkable in Aotearoa all those years ago if women had been denied the vote. If it had relied on apologists like you, it would never have happened. My guess is that you’ve just read Friedman for Beginners and are filled with missionary zeal. Luckily for the rest of us, it’ll wear off.
   • felix 1.9

     14 August 2013 at 6:57 pm

     “So I suggest you not get too worked up about it here in NZ”

     Here in NZ? lol srylands. Until last week you didn’t even know what the GST rate in NZ is. Drop the here and us and our, you’ve probably never even visited NZ.
2. tracey 2

   13 August 2013 at 4:27 pm

   The point is syrlands this govts mandate for tge sales was based on where it promised to spend the money. In business terms they would now be sued for a misleading or fraudulent prospectus. Afterall we were all shareholders when they made those promises.
   • Lanthanide 2.1

     13 August 2013 at 7:11 pm

     What really pisses me off is John Key kept saying over and over on TV that selling shares is good, because it gives the companies money they can use to expand and grow etc.

     Then in the next breath he talked about how it would be used to reduce debt.

     And finally we aren’t actually reducing debt at all, we’re just buying other types of assets instead.

     I really wonder why no one in the MSM pulled him up on it, especially the first point because it is so transparently a misdirection.
     • Tracey 2.1.1

       13 August 2013 at 10:47 pm

       it’s an inconvenient truth amongst the “National has a mandate” brigade.
3. tricledrown 3

   13 August 2013 at 4:53 pm

   Srylands more BS from the man from goldman sachs.
   When you look at the total asset sales in Australia and compare them with NZ we have sold way more in volume and value!
   Your not even a good liar like your master.
   • srylands 3.1

     13 August 2013 at 5:38 pm

     “When you look at the total asset sales in Australia and compare them with NZ we have sold way more in volume and value!”

     Can you substantiate that?

     New Zealand was very slightly ahead of Australia at the end of the 1990s. However the 5th Labour Government undertook no further privatisations, whereas they continued in Australia over the last decade.

     http://www.rba.gov.au/publications/bulletin/1997/dec/pdf/bu-1297-2.pdf

     I predict that if you did the analysis of assets sold as a proportion of GDP back to 1988, New Zealand would now lag behind Australia on privatisation by a clear margin.

     “Afterall we were all shareholders when they made those promises.”

     How many dividends did you receive? You were not a shareholder. The Crown was the sole shareholder.

     “It is not New Zealand’s business to blindly following in their failing footsteps.”

     So Australia is failing economically? The deepening of capital markets in Australia over the last 25 years has been a success, not a failure.

     “i hope you mean the aussie electorate – but even then i would hazard a guess that your utterly wrong”

     Of course I mean the Australian electorate. That is the point of my post. I am contrasting the consensus in the Australian community around the continuing privatisation programme with the reaction in New Zealand.

     The NSW Government is now embarking on a huge programme of electricity privatisation across the sector.

     http://www.businessspectator.com.au/news/2013/7/30/politics/nsw-sell-electricity-generators

     The point I am making is that these are hardly “failed” policies. They have been underway for 30 years and are continuing with vigour. It is New Zealand that has recently been out of step.

     The current asset sales programme if anything is too modest and tentative. But it is a good start taht will hopefully lead to a fuller programme. The NSW experiencw will be interesting to monitor over the next two years. Something for us all to watch and learn from.
     • Colonial Viper 3.1.1

       13 August 2013 at 6:22 pm

       Australia’s on the crash mate, and they won’t cope with it very well at all.

       The current asset sales programme if anything is too modest and tentative.

       I do wonder why you keep shilling for private sector capitalists. These are the nation’s most profitable, most strategic real assets and you’re all for gifting them away?

       Thankfully, the reverse process, nationalisation, is also well understood.
     • muzza 3.1.2

       13 August 2013 at 7:47 pm

       Fraud-lands, you have a cheek llort, asking someone else to substantiate anything!

       Sling your hook fella, your diversions make no impact here, you’re better off cheerleading in natural home elsewhere!

       Oh, and you have no idea what you’re talking about, someone gave you credit for being a 101 level, dude you’re not even high school, you are the script reading zombie!

       Nact gove lied about the amount they would gain, and where it would go – FACTS!

       The sales were always going to lead to more NZ debt, and less income and less control of vital infrastructure – Why do you suppose the department os stats have pulled the government debt figures!!!

       LLORT
       • Wayne 3.1.2.1

         14 August 2013 at 2:49 pm

         Hi Muzza,

         I take it you don’t like reading alternative views, only those that reinforce your own perspective. Well of course you can do that, but it rather limits what you might learn.

         Successful political parties adapt. One of the ways they do that is to look at what their opponents have done which worked for them. Labour could never have beaten the Nats in 1999 unless they worked out what the public accepted as permanent changes in the 1990’s.

         For instance Labour did not try to bring back compulsory unionism, or wholly repeal the benefits cuts of 1991. In 2008 the Nats did not end student free loans, WFF, or try and bring back ECA.

         Labour has not yet gone through that exercise with the reforms since 2008, but they will have have to, even though they have the somewhat shrill Greens out to their Left. But Helen Clark had the Alliance out to her Left and she worked it out.
         • fender 3.1.2.1.1

           14 August 2013 at 2:54 pm

           Oh yes Wayne, parties can’t deviate from the race to the bottom, right you are.
         • Puddleglum 3.1.2.1.2

           14 August 2013 at 7:43 pm

           Wayne, despite your involvement in politics at the time, you seem to have completely misunderstood the public mood during the 1990s as indicated by voting patterns.

           In 1990, National was voted in, by an FPP landslide, on the expectation of a ‘decent society’ and an end to the ‘Rogernomics’ reforms. Those reforms were why Labour were dramatically dumped. (Of course, at the first post-election caucus meeting the National manifesto went out of the window, as you will be aware, and the second wave of Rogernomics – overseen by National – was then rolled out. The BNZ bailout was the crisis of the day that justified abandoning the manifesto and instituting more Rogernomics – ironic, given that the bailout resulted from the cultural change at BNZ towards Rogernomics-inspired investments.)

           In 1993 National received 35.1% of the vote (a reduction of 12.7% of its 1990 vote share of 47.1%), Labour 34.7% (a 0.4% reduction from its 1990 vote), Alliance 18.2% and NZFirst 8.4%. By anybody’s reckoning that is a complete rejection, by the electorate, of the policies of the then National government. The electorate once again, wanted out of ‘Rogernomics’. (Interestingly, in 1990 the Greens and Alliance got 12% of the vote between them.)

           In 1996, National got 33.84% of the vote, ACT 6.10%, Labour 28.19%, Alliance, 10.10% and – of course – NZ First got 13.35%. Remember that this was when Ruth Richardson had been dumped by Bolger who realised her policies were electoral poison and, unless you wish to claim that NZ First was widely understood to support further ‘Rogernomics’ reforms, it’s obvious, once again, that those reforms, even in their more tepid form, got the thumbs down from the electorate.

           That these reforms were not rolled back during the 1990s – or after Labour came in with the Alliance in 1999 – was not for want of the electorate trying its level best to be rid of them.
     • Tracey 3.1.3

       13 August 2013 at 10:48 pm

       So are you recommending we have strong unions and higher wages, like Australia too?
       • srylands 3.1.3.1

         13 August 2013 at 11:48 pm

         “So are you recommending we have strong unions and higher wages, like Australia too?”

         Yes. The Government should simply regulate for system of award wages that match Australia. Actually we could regulate to match Swiss wage levels. That way we would leap-frog Australia living standards. Just introduce a living wage of $57 NZD per hour as a minimum.

         Make collective bargaining and union membership compulsory.

         Simple.
         • Colonial Viper 3.1.3.1.1

           14 August 2013 at 12:12 am

           Oh don’t be ridiculous, that would never work.

           Moving just 5% of the national income from corporations and millionaires to the bottom 3/4 of workers will be quite sufficient, thanks.
4. fabregas4 4

   13 August 2013 at 5:29 pm

   I’m waiting for the money promised to assist the kids struggling at school which the National Standards identified. So far more work, less money, more blame, no money. Why am I not surprised.
   • In Vino 4.1

     13 August 2013 at 6:38 pm

     Well said. I remember a Picot report that said that if the expensive Dept.of Education was dismantled, a good $90 million could be put into the schools where it could do some real good. Schools never saw a cent of that – even the Schools Trustees Association eventually complained about underfunding. I also remember early Rogernomes – probably Roger himself – saying, “Let’s get the economy right first, then we can really help Education, Health, etc.” That big influx of money never came – but at the 1987 crash, we were told that there had previously been a boom.

     A boom that never happened for Health and Education. Always lies and spin from the greedy Right.
   • Anne 4.2

     13 August 2013 at 6:48 pm

     Heard a good simple slogan yesterday. Difference between National and Labour?

     National – money not people.
     Labour – people not money.
     • Colonial Viper 4.2.1

       13 August 2013 at 6:54 pm

       It is a good slogan but there are just so many examples where that is not true. Overnight pay for caregivers for one. Requiring SOEs like Meridian to operate commercially sucking the money out of NZ communities for two. Continuing the massive build up of often un-repayable student debt on NZ’s youth for three. Allowing housing prices to massively and unaffordably inflate during the 9 years of the Clark government for four.

       Labour’s policy options and initiatives remain totally bound up by the same concepts of monetarism and free market economics as National, just not to as large an extent.
       • Anne 4.2.1.1

         13 August 2013 at 7:45 pm

         I anticipated someone would expose past examples where it isn’t true CV. But in defence of the last Labour govt., they could only move as fast as the coffers would allow, and that wasn’t very fast – especially given we had a fiscally very careful Finance minister. A fourth term would have seen at least some of the examples you give being addressed, but they lost to a modern day Shylock and a bunch of shysters so they never got the chance. Their careful progress paid off in the end but was squandered by tax cuts for the rich by the incoming government. The trickledown effect never worked of course but the majority of voters – having very poor memories – have long since forgotten.

         Slogans like this are not for the informed and the politically aware amongst us anyway. They’re for Joe and Mary Bloggs who for 9/10ths of the electoral cycle don’t even follow politics.
         • srylands 4.2.1.1.1

           13 August 2013 at 7:50 pm

           “They’re careful progress paid off in the end but was squandered by tax cuts to the rich by the incoming government. ”

           Bullshit.

           Can you provide evidence? How much of the current net debt is as a result of the net cost of tax changes introduced by this government? Not cyclical factors – structural changes caused by tax rate changes.
           • Colonial Viper 4.2.1.1.1.1

             14 August 2013 at 12:39 am

             shitlands, you’re full of meaningless questions. Go back to your slide rule, we have real world economic problems to solve, not mathematical models for you to fit.
         • Colonial Viper 4.2.1.1.2

           13 August 2013 at 8:10 pm

           But in defence of the last Labour govt., they could only move as fast as the coffers would allow, and that wasn’t very fast – especially given we had a fiscally very careful Finance minister.

           well, I can’t see that reasoning as holding water tight, Anne. Cullen literally had tens of billions in surplus. He made a decision to repay foreign bankers and bondholders first, instead of using a fraction of that money to pay overnight caregivers, reducing the cost of university education etc.

           Now, tell me if you believe if that was putting people before money, or was that putting money before people.

           Their careful progress paid off in the end but was squandered by tax cuts for the rich by the incoming government.

           You do realise this is the most frustrating fact, right? EVERY Labour government knows that it has 3 terms or maybe 4 terms absolute max.

           What Cullen did was CHOOSE to keep taking money out of the private sector economy (that’s you and me) and to gift National those extra fiscal options when they came into power.

           It’s not like losing power at the end of three terms was not a foreseeable possibility. Its like Labour loves to save up money for National to spend how it likes.
           • Anne 4.2.1.1.2.1

             13 August 2013 at 8:37 pm

             Its like Labour loves to save up money for National to spend how it likes.

             With the benefit of hindsight that’s exactly how it looks, but they really believed they had a good chance of getting that fourth term. It’s not as though it hasn’t ever happened before because it has – Holyoake/Marshall between 1960 and 1972. I guess it was a case of thinking they were invincible. They miscalculated big time, and the media turned against them big time.
             • Colonial Viper …

               13 August 2013 at 9:01 pm

               Yes of course Labour had a decent shot at a fourth term, but the key point remains: Cullen and Clark sucked up money from the private sector to create a large government surplus, and instead of spending that money on the people, they paid back international creditors, gifting English with outstanding fiscal options.

               They miscalculated big time, and the media turned against them big time.

               I mean this is another frustrating thing. With that money, Clark and Cullen could have set up corporate independent public broadcasting news media and investigative journalism which would have lasted a generation. But there was no policy or philosophical space left to move in, within the orthodox economic framework that Labour had decided to adhere to.
               • Anne …

                 13 August 2013 at 10:15 pm

                 With that money, Clark and Cullen could have set up corporate independent public broadcasting news media and investigative journalism which would have lasted a generation.

                 I bet they rue the day they never did it! Maybe they planned to do something along those lines in the ‘fourth term’. Too late.

                 I agree that third term was very frustrating. They had by then developed a siege mentality because the media and others were rarking up the hysteria to unprecedented levels and Labour pretty much went into hiding. Helen has admitted they got some things wrong in that last term and I give her credit for having the nous to say so.
                 • Colonial Viper …

                   13 August 2013 at 11:45 pm

                   My summary of the last year of the Helen Clark government is represented by what we have in Labour today:

                   an inward looking, Wellington focussed, small target centric, philosophically adrift, beltway bubble largely divorced from what is being thought and felt on the ground from Kaitaia to Kingston and further south.
             • srylands …

               14 August 2013 at 12:18 am

               “Its like Labour loves to save up money for National to spend how it likes.”

               This is totally fucking deluded.

               The 5th Labour Government increased spending by over 50% in the last 5 years 2003-08. It was an orgy of untargetted spending fueled by cyclical revenue. When revenue crashed in 2007 all those policy settings continued. That was the cause of the rise in debt, not tax changes.

               The path to recession was well in train before the 2008 election. The Treasury’s advice to the incoming Government on DAY 1 was if you don’t do something drastic you will face a decade of deficits. Well thanks very bloody much Labour.

               The cause of the debt rise has been empirically demonstrated by the Treasury in the Crown accounts and BEFUs since 2008.

               The mantra you chant “unaffordable tax cuts” blah blah is a complete myth, not supported by any evidence. The tax “cuts” did not result in a deterioration in the fiscal position. This is clear in the analysis of the package prepared by Treasury and IRD in 2010.

               http://www.treasury.govt.nz/publications/informationreleases/budget/2010/pdfs/b10-t2010-503.pdf

               But keep chanting “tax cuts (sic) bad” all you like. Making shit up is better than looking at empirical analysis.
               • Colonial Viper …

                 14 August 2013 at 12:36 am

                 The path to recession was well in train before the 2008 election. The Treasury’s advice to the incoming Government on DAY 1 was if you don’t do something drastic you will face a decade of deficits. Well thanks very bloody much Labour.

                 Given that English himself on coming into Government said that NZ was in a good position and had saved up for a rainy day, I don’t think that your statements are correct.

                 Oh yeah, you got them from Treasury, that figures.

                 But keep chanting “tax cuts (sic) bad” all you like. Making shit up is better than looking at empirical analysis.

                 You don’t do any empirical analysis. Almost no economist does.

                 By the way, if you’re forecast to have a deficit why would you cut taxes and make things even worse? Oh shit dude, you’re not a devotee of the ol’ Laffer Curve are you?

                 Man you suck. And here you are calling other people “deluded” lol

                 English has even had to raise taxes on petrol lol
               • Sable …

                 14 August 2013 at 12:41 pm

                 As I have said more than once Srylands if you are SO confident why are you here? Sounds to me like self justification with more than a hint of doubt thrown in.
           • lprent 4.2.1.1.2.2

             13 August 2013 at 9:08 pm

             What Cullen did was CHOOSE to keep taking money out of the private sector economy (that’s you and me) and to gift National those extra fiscal options when they came into power.

             So? Just because National have traditionally been the wastrel governments in NZ should not mean that Labour has to follow the same path. The consequences of a country walking into a depression. Where the workers are flung out of work at the same time that the government cannot raise debt to cover the shortfall because of the previously typical wastrel right wing governments aren’t particularly hard to find throughout history. There have been a few left-wing governments that have done the wastrel approach as well – typically they’re populist/dictatorial rather than the democratic.

             At some point all government debt has to be paid for, otherwise it accumulates. Excessive inflation just makes the interest rates to pay for it increase. As a government you have to take taxes in some manner from the private sector to reduce it. That is because at some point you will need those reserves of available credit to counter cycle the economy or to cope with disasters like drought, floods, or earthquakes.

             Voters vote in left governments *because* they look to the future. Unlike the usual right wing government who seem to look largely at their supporters back-pockets (ie unsustainable tax cuts and economic stimulation that seem to target their financial backers). Part of that appeal is because left-wing governments tend to counter-cycle economic cycles rather than having the short-term 2-5 year approach of stock-exchange businessmen – praying they will be out of the company they just shafted for short-term dividends.

             It is always amazing to me how well relatively economically ill-educated left-wing supporters understand this. But most people living close to the poverty line are aware how easy it is to get washed under when disasters, economic or physical strike – and there is no-one in the family or friends to call on. Banks are of course usually useless in most circumstances for individuals. It makes it easier if the state can borrow on your behalf.
             • Alanz …

               13 August 2013 at 11:29 pm

               “EVERY Labour government knows that it has 3 terms or maybe 4 terms”

               It is difficult to see a Shearer-led Labour (touch wood) government having 3 terms or maybe 4 terms, or even 2 terms … and hopefully, miraculously winning to get in for just one term.
             • Colonial Viper …

               14 August 2013 at 2:21 am

               So? Just because National have traditionally been the wastrel governments in NZ should not mean that Labour has to follow the same path. The consequences of a country walking into a depression. Where the workers are flung out of work at the same time that the government cannot raise debt to cover the shortfall because of the previously typical wastrel right wing governments aren’t particularly hard to find throughout history.

               “So?” What do you mean so?

               Cullen greatly reduced public sector debt. Hoorah. Now let’s look at how he did this. He let the private sector bury itself in debt, flushing the economy full of debt based money, which he then taxed back to create his surplus. Effectively moving debt off the government’s balance sheet on to the private sector balance sheet. Do you really think that was a smart move, given (as you note) that the private sector has to pay far higher interest costs than the sovereign?

               Let me list the other negative effects of this:
               – Massive housing bubble fuelling ongoing property speculation and problems of unaffordable housing.

               – Deteriorating balance of payments as Kiwis pay massive mortgages and interest flowing out of the country month by month.

               – Severe debt stress as unemployment and under-employment rises meaning that household income flows stagnate or decrease while the stock of debt remains as high as ever.

               Further – your other statements are based on assumptions that a ‘balanced government budget’ and ‘repaying government debt’ is necessarily a good thing and that the only source of money in the economy comes from private sector creditors, foreign and domestic. Both are false assumptions, and both limit the policy space that any Labour government has to move in.

               Firstly, the Government is not just a user of NZD, like you and I are, it is also an issuer of NZD. That means that the Government is a completely different beast altogether.

               Secondly, if any government actually achieves a surplus and starts repaying its debt with that surplus, it will absolutely cripple the ability of the private sector and private sector households to save.

               Why? Because every dollar of surplus that the government achieves is by definition, a dollar of deficit from the private sector.

               But most people living close to the poverty line are aware how easy it is to get washed under when disasters, economic or physical strike – and there is no-one in the family or friends to call on. Banks are of course usually useless in most circumstances for individuals. It makes it easier if the state can borrow on your behalf.

               NZers rely on the government too much to do the right thing at the right time for “people living close to the poverty line”, particularly when you realise that Tory Governments are far more common than Labour ones.

               And lets remind ourselves of some other ways that Cullen was able to run such large surpluses in addition to heating up the economy and the property market with private debt – the Labour Government kept most benefit levels near to or under the poverty line, it had market rents in lots of state houses, it sucked money out of communities through Meridian, MRP etc.

               But at least, the government’s own books were looked after.

               But most people living close to the poverty line are aware how easy it is to get washed under when disasters, economic or physical strike

               Remind me who it was who privatised what became State Insurance?
               • lprent …

                 14 August 2013 at 7:32 am

                 Cullen greatly reduced public sector debt. Hoorah. Now let’s look at how he did this. He let the private sector bury itself in debt, flushing the economy full of debt based money, which he then taxed back to create his surplus.

                 These days, the government effectively only taxes businesses on profit and individuals on expenditure (GST) and income (PAYE). A piddling amount is on financial transactions or real estate. If you look at the influx of private debt money, most of it got tied up in property because that was where the low risk demand was. A smaller proportion got put into consumer debt like credit cards and was therefore GST taxed

                 Moreover the quantity of money coming as debt was small compared to the overall GDP of the country. It was also largely sequestered in property and not part of the active economy. Only in a fantasy can you simply look at it and magically translate it into the government coffers. In reality you have to look at the mechanisms of taxation…

                 If you look closely at the taxation system, you’ll find that most of the increase or decrease in taxation revenue effectively comes from the velocity of money. It isn’t the amount of money/credit in the system that matters so much as it is the much smaller amount that is in active use. The problem with a recession is that while a similar amount of taxable money is floating around, but it is moving more slowly. That has a direct impact on government revenues as they are less able to clip the ticket when it is spends too much time sitting in relatively low interest bank accounts and not out being used to pay wages, pay for goods, or to make profits from..

                 Further – your other statements are based on assumptions that a ‘balanced government budget’ and ‘repaying government debt’ is necessarily a good thing and that the only source of money in the economy comes from private sector creditors,

                 Actually no. If you look at the nature of most of the money going into government bonds, you’ll find that much of it comes either from other governments or various pension systems like the Cullen Fund, disaster funds like the EQC, charities that run off predictable interest, etc etc. They are usually after a relatively dispersed low risk portfolio.

                 The amount that comes from the classic private sector is typically quite small. They tend to have much much higher proportions of higher risk investments in their mixes than government, city, or utility bonds. The effect is that in those issues the majority of the money coming into it comes from organisations far more interested in security of the principal than most of the usual private sector – who tend to be more interested in profit.

                 Secondly, if any government actually achieves a surplus and starts repaying its debt with that surplus, it will absolutely cripple the ability of the private sector and private sector households to save.

                 Which is why this is done on a counter cyclical basis. The government repays debt when the economy is overheating to dampen it exactly as it did in the 00’s. The effect is to skim the amount of operating capital in the system available to expand businesses in the unsustainable fashion that entrepreneurs are notorious for.

                 Government uses its ability to borrow to sustain incomes during the downturns and to keep the economy and the velocity of money running. This effectively counter-acts the private sector reaction to recessions to hoard money as the opportunities to invest profitably dry up and causing businesses to close as operating capital becomes hard to find and consumers stop spending because they’re out of work.

                 Firstly, the Government is not just a user of NZD, like you and I are, it is also an issuer of NZD. That means that the Government is a completely different beast altogether.

                 Effectively the government has the ability to cause inflation. Usually it uses its ability to inflate to inject enough “new” money into the system to roughly match the increases in economic activity. This ensures that the money supply remains sufficient to sustain a flow of economic activity without an artificial constraint of making money to start or expand businesses hard to obtain. When it inflates in excess of that it devalues any savings that people or organisations have.

                 Having been through a period with high inflation, I can testify that it is the biggest disincentive to save that you can possibly imagine. It also massively distorts all economic behaviour for generations following. The most rational individual response in periods of inflation is to put all surplus money directly into fixed assets where their value isn’t diminished by the inflation sucking the value out of it. Which is why the NZ property market and economy is the way that it is.

                 Everyone who was adult during the latter 70’s and 80’s (and their children) have a set of conditioned responses to surplus money. They view saving in banks to just be a way of losing money, the NZX and funds as being an efficient way to donate money to crooks, and buying property to be the only effective way of saving. So they put the greater part of any surplus into property. The only real exception to that are the elderly who require money to be in a more accessible form as they live off savings. They sell property and with fear and trepidation put it into the banks, funds, and the NZX expecting the thieves in the private sector and government to attempt to steal it away from them with inflation, fees, and criminal activity. Which incidentally is what you are suggesting on increasing with your views on the government using inflation to tax cash savers. The response will be to probably lose what little local capital we have for businesses to lower inflation areas of the world.

                 The property market in NZ is an long-term economic distortion brought about by a long period of deliberately and stupidly applied inflation. The problem isn’t with the supply side of that, it is with the demand side. That is also why there has been such opposition to capital gains tax despite its obvious economic sense

                 The economic structural problem is that the step for getting into property, the deposit and the monthly interest, have been steadily getting larger over time and slowly causing it to become less viable as a savings system for more people. Having everyone piling surpluses into a single area causes a speculative market. This also means that more people are simply unable and will probably never be able to participate in that form of saving because of the step up required.

                 It also means that everyone saving in this market is at significant risk to changes in population growth, increases in supply, and changes in the taxation regimes. Eventually it will collapse into a static or diminishing market as the number of people invested in that market diminishes to mostly be landlords, the need for investment in usable low cost housing increases requiring the state to invest (the private market won’t), the population growth goes static or starts diminishing, or the political investment that currently protects the sacred cow from more effective taxation diminishes.

                 Anyway, suffice it to say that I find your views on government economic management simplistic because they don’t reflect what actually happens in how the government currently taxes. More importantly they don’t reflect what the downstream inter-generational effects of inflationary policies on economic behaviour have. In the absence of a revolutionary structural shift away from the type of mixed economy that we currently have there is quite simply limited room fro governments to tinker.
               • Colonial Viper …

                 14 August 2013 at 9:45 am

                 Hi lprent I’ll reply to my own comment as I don’t want the column width to keep shrinking.

                 These are my three primary concerns
                 1) The country is massively under-investing in its people, infrastructure and systems. This is occurring in the context of accelerating climate change and resource/fossil fuel depletion. Both of which will be severe within 30 years, and the effects of which will be impossible to ignore within say 10 years (some say they are impossible to ignore right now). You say you cannot see any revolutionary and structural shift in our current mixed economy occurring, I say that with respect to the real physical economy it is occurring right now, but our way of viewing fiscal/monetary operations is not keeping up.

                 2) Due to the orthodox economics framework, every government is willing to use the bodies of unemployed people as one of their main inflation buffers. Currently we have approx 200,000 unemployed (real) and perhaps another 200,000 under-employed. Conservatively, that means that there is ~$20B pa too little spending in the economy. The other aspect of this is that our current monetary and fiscal framework sees this as inevitable and even required. To a greater extent to a National Government, to a lesser extent to a Labour Government.

                 3) We have an economic system which sees us transferring real resources – soil fertility, water, nitrogen, labour hours, IP, power generators, etc offshore in an exchange for paper and electronic credits which are inherently worthless, but for now allow us to import real goods and services from offshore.

                 To address (some of) your points:

                 You explain the mechanics of what currently happens in the government’s revenue machine better than I can. But that’s all that is, the status quo. Forgive me for having a “simplistic” view of the current because from my perspective, the status quo is not working – for reasons 1) 2) 3) above. Which government is in power currently boils down to spend/tax/save a little more (or a little less), and then only in slightly different ways around the margins of the Budget – would it even be +/-2% of GDP…since things like super, schools and healthcare are the big items and extremely fixed.

                 I have little interest in learning how to manage the current system when others are already doing that.

                 Only in a fantasy can you simply look at it and magically translate it into the government coffers. In reality you have to look at the mechanisms of taxation…

                 Leaving aside the magic of derivatives and securitisation with which you can declare anything an asset and leverage it to obtain (or create) cash, I don’t view taxation and borrowing as the only sources of fiscal means for the government. The issuance of currency is a real alternative, which allows taxation (and not unemployment) to be used to control inflation.

                 you’ll find that most of the increase or decrease in taxation revenue effectively comes from the velocity of money.

                 And apart from cash transactions, which are very minor in the economy, let’s take a look at what this actually is. I pay the shop keeper $5 by eftpos, my bank account is electronically decremented by 5, the shopkeepers is electronically incremented by 5 (nothing remotely physical moves between the two, they are two separate and independent electronic arithmetic operations) and the government makes a claim on the shopkeeper of 65c in GST.

                 Which is why this is done on a counter cyclical basis. The government repays debt when the economy is overheating to dampen it exactly as it did in the 00′s. The effect is to skim the amount of operating capital in the system available to expand businesses in the unsustainable fashion that entrepreneurs are notorious for.

                 My major point here is that the business cycles you learnt about in your MBA are no longer dominant, the cyclicality is now subsumed on a secular change (downdraft) in the global economy. The Keynesian approach of public spending into a recession, while saving (or repaying debt) during good times becomes much less relevant if 3/4 of the years going forwards are now going to be down or flat years.

                 Do we have a revenue and monetary system which takes this into account? A debt system which requires interest to be paid but from an economy which can no longer consistently grow?

                 I would say – no we don’t. We are now sailing on the wrong type of water with the wrong type of boat.

                 It also means that everyone saving in this market is at significant risk to changes in population growth, increases in supply, and changes in the taxation regimes. Eventually it will collapse into a static or diminishing market as the number of people invested in that market diminishes to mostly be landlords…

                 You see the trap quite clearly. Apart from Auckland, the rest of the country is expected to age and depopulate over the next 30 years. Further in terms of the risk of middle class and upper class capital flight: if people decide that NZ is too unsafe for their investments because of the risk of higher taxation, inflation, economic deflation etc. I’d like you to actually name where in the world you think they will decide their funds would be safer – Euros? US Treasuries? BoJ bonds? Gold? ASX?

                 And this is the problem: there are a lot of paper and electronic claims in the world, and very little sound real economy left to put those claims. Hence you hear stories of outfits like Goldman Sachs keeping warehouses with thousands of tonnes of aluminium, Blackstone buying up 10,000 rental properties at a time, etc.

                 If I could mirror your closing sentiment…suffice to say I find your views on the monetary and fiscal system our government operates under interesting and informative.

                 However, the status quo system will probably fail to cope with the twin crises approaching (climate change and resource/fuel depletion…not to mention GFC 2 and 3) and the way it compensates in a “muddling along way” via explicit and implicit austerity on the people…unemployment, underfunded education, healthcare, social services, private debt loading, infrastructure stretched and not properly maintained etc. is not acceptable.

                 To summarise the summary. The real wealth and strength of a nation is maximised when everyone is working and contributing to their utmost. The current system will never enable that and drives elite behaviour that considers maximising paper and electronic claims as more important.
5. lprent 5

   13 August 2013 at 6:13 pm

   National are just using it to cover up their great self-inflicted fiscal hole caused by their criminally negligent taxcuts.
6. Populuxe1 6

   13 August 2013 at 6:22 pm

   “In other words, it’s become a government slush-fund to pay for National’s mistakes and pet-projects, along with some general expenditure.”

   Care to explain where the $900M for the Canterbury rebuild fits in there? I’m not entirely clear why you’re bitching about it.
   • Ben Clark 6.1

     13 August 2013 at 6:29 pm

     There’s a reason it’s at the bottom, more included for completeness than “bitching about”.
     A good chunk of that will be for rebuilding schools and hospitals no doubt, some for general expenditure, some for Nat incompetence and pet projects like sports stadiums (always at the front of those living in garages minds…). It’s not divided up by Treasury.
7. Colonial Viper 7

   13 August 2013 at 6:28 pm

   This is all ridiculous anyway. A way to transfer the ownership of real world physical and productive assets based on the increment and decrement of electronic figures in bank accounts.

   The Reserve Bank can be ordered to issue the $900M that NZ needs to get work like the Christchurch rebuild done, without having to sell off any state assets whatsoever. We’re a nation of idiots trapped in an idiotic, imprisoned way of looking at the economy.
   • Lanthanide 7.1

     13 August 2013 at 7:19 pm

     18 months ago there was a guy on National Radio saying that. I emailed him afterwards asking how inflation would be controlled: if the government just printed money, why wouldn’t private contractors hitch their prices, since the government could always just “print more”. He didn’t really have any answer.

     Do you?
     • muzza 7.1.1

       13 August 2013 at 7:53 pm

       Sure do,

       The funds come into the system be it with/without interest attached. To manage inflation is simply via the tax system to ensure the supply of money does not expand, tax out the overflow is all that is needed, and happens in our current system every day!

       Contractors would not up their rates, you tender the jobs, as per statutory requirements, and have very stiff penalties in place for poor delivery with locked down contracts. If private wants the govt deals so bad, they can be locked in, thats a huge part of the problem.

       Another is no one challenging the international banksters, to call their bluff!

       Its not printing money, its issuing debt free money, as per what a sovereign nation is entitled to do!
     • Colonial Viper 7.1.2

       13 August 2013 at 8:00 pm

       I emailed him afterwards asking how inflation would be controlled: if the government just printed money, why wouldn’t private contractors hitch their prices, since the government could always just “print more”

       I’ll break good manners and answer you by asking two questions, and then making an observation.

       1) When $900M is pumped into the Christchurch economy from asset sales, why wouldn’t private contractors hitch their prices, since the government is already planning to “sell more assets”?

       2) How is a bricklayer able to tell whether his $500 invoice has been paid by $500 from the proceeds of a government asset sale which is then deposited into the EQC, or $500 from the Reserve Bank crediting the EQC’s bank account with new base money?

       Observation: inflation cam be defined as widespread across the board price rises for no increased productivity or delivery in real value. Not for say, bricklaying prices increasing because there aren’t enough bricklayers around. That is not “inflation” that is merely markets doing their thing.
       • Lanthanide 7.1.2.1

         13 August 2013 at 9:08 pm

         “1) When $900M is pumped into the Christchurch economy from asset sales, why wouldn’t private contractors hitch their prices, since the government is already planning to “sell more assets”?”

         Because eventually you run out of assets to sell and/or buyers to buy them.

         There’s no limit to the amount of ink or electrons you can manipulate.

         “2) How is a bricklayer able to tell whether his $500 invoice has been paid by $500 from the proceeds of a government asset sale which is then deposited into the EQC, or $500 from the Reserve Bank crediting the EQC’s bank account with new base money?”

         Because it will be very widely publicised that the money has come from the government printing it and not any other source. So, why should the government stop printing it? If I charge $550 instead of $500, and all my mates do the same, the government might be forced to ‘print’ another $100m to finish up all the work, and we know there’s nothing stopping them doing this because there’s no consequence or any reason for them not to print money.

         “Observation: inflation cam be defined as widespread across the board price rises for no increased productivity or delivery in real value. Not for say, bricklaying prices increasing because there aren’t enough bricklayers around. That is not “inflation” that is merely markets doing their thing.”

         Yes, and you haven’t explained why this wouldn’t come about in a scenario where everyone knows that the government just printed their way out of the situation.
         • Colonial Viper 7.1.2.1.1

           13 August 2013 at 11:13 pm

           Because eventually you run out of assets to sell and/or buyers to buy them.

           Wait. You are making a lot of assumptions about statements that I did NOT make. I’m not advocating for the printing of an infinite amount of money, nor am I advocating for government to own everything, nor am I advocating that everything should be for sale.

           So, why should the government stop printing it? If I charge $550 instead of $500, and all my mates do the same, the government might be forced to ‘print’ another $100m to finish up all the work, and we know there’s nothing stopping them doing this because there’s no consequence or any reason for them not to print money.

           This is a nonsense. What you have described above is a price setting conspiracy. Guess what that brings you – a big fine, or a jail term.

           Yes, and you haven’t explained why this wouldn’t come about in a scenario where everyone knows that the government just printed their way out of the situation.

           You haven’t explained why it WOULD come about.

           The reasons it WOULDN’T come about:

           1) The money supply is carefully managed, exactly as it is today, to ensure that the correct amount of money is available to the economic system.

           2) There is a massive amount of unemployment and unused capacity in the country. Most companies and workers still have very little leverage with which to negotiate prices upwards.

           3) Competitive tendering, contracting and budgeting processes. Exactly like you would run today, formal processes seek to define and obtain the best value for money.

           in a scenario where everyone knows that the government just printed their way out of the situation.

           There is absolutely no difference, qualitative or quantitative, between the government spending into circulation a dollar issued by the Reserve Bank, or spending into circulation a dollar borrowed from a Chinese or Japanese NZ government bond holder.

           If you think there is one, please define it.
       • srylands 7.1.2.2

         13 August 2013 at 9:12 pm

         “That is not “inflation” that is merely markets doing their thing.”

         Um no that is inflation. Look it up at Stats NZ.
         • Colonial Viper 7.1.2.2.1

           13 August 2013 at 11:04 pm

           Nah, very few price changes are inflation as there are many different reasons for those price changes. You’ve got it wrong.
           • Colonial Viper 7.1.2.2.1.1

             13 August 2013 at 11:16 pm

             Examples of price changes not associated with monetary inflation include:

             – price changes due to tax changes
             – price changes due to forex movements
             – price changes due to energy price trends
             – price changes due to labour cost changes
             – price changes due to profit margin requirements
   • srylands 7.2

     13 August 2013 at 7:37 pm

     “The Reserve Bank can be ordered to issue the $900M that NZ needs to get work like the Christchurch rebuild done, without having to sell off any state assets whatsoever.”

     🙂
     • srylands 7.2.1

       13 August 2013 at 7:41 pm

       🙂 🙂
       • Colonial Viper 7.2.1.1

         13 August 2013 at 8:02 pm

         It’s a very strange world isn’t it, mate.
8. tracey 8

   13 August 2013 at 6:56 pm

   How much does the govt owe in debt as of today?
   • Molly 8.1

     13 August 2013 at 7:38 pm

     As I mentioned on Open Mike yesterday, the Reserve Bank’s spreadsheet on Government debt which has been running since 1993, has been discontinued as of June 2013.

     But here is a cut and paste for you:
     Govt Debt
     $billions % ofGDP
     Sep. 2008 17,246 9.3
     Dec. 2008 18,860 10.1
     Mar. 2009 20,393 11.0
     Jun. 2009 21,111 11.4
     Sep. 2009 23,888 12.8
     Dec. 2009 23,131 12.4
     Mar. 2010 24,397 12.9
     Jun. 2010 27,358 14.3
     Sep. 2010 31,572 16.3
     Dec. 2010 32,692 16.6
     Mar. 2011 36,159 18.2
     Jun. 2011 40,783 20.4
     Sep. 2011 45,603 22.5
     Dec. 2011 42,915 21.0
     Mar. 2012 44,667 21.7
     Jun. 2012 48,383 23.2
     Sep. 2012 48,896 23.4
     Dec. 2012 52,481 25.1
     Apologies for format – don’t have the skills to put html tables in.
     • BM 8.1.1

       13 August 2013 at 7:46 pm

       WordPress or lprent doesn’t allow you to insert tables.

       If you’re interested in learning a bit of HTML
       go here

       it’s a piece of wees

       http://www.w3schools.com/default.asp

       [lprent: WordPress. Part of the KSES subsystem to eliminate possible problems with user entered HTML. The main problem is creating a closure of the tags if the user does not. If it isn’t closed then the unclosed HTML carries on down the page. So wordpress has closures for all of the common tags and even then some of those fail. The problem is that tables with all of their /td, /tr, /thead, /tbody, /th, col, and all of the rest (I forget half of the table patheon – try http://www.w3schools.com/html/html_tables.asp ) is that they really hard to do a correct closure on automatically if the user screws it up.

       I can have a look at it if it is important. To date it doesn’t appear to have been. ]
       • Molly 8.1.1.1

         13 August 2013 at 7:48 pm

         Thanks. What little I know has been learnt there, hit the enter key and couldn’t be bothered racing the clock. Also, had suspicions that after doing so, wouldn’t have been allowed anyway.
         • BM 8.1.1.1.1

           13 August 2013 at 7:58 pm

           No worries.

           I gave it a try by posting a bit of table html and it didn’t work.
           Be interested to know what tags will work and what won’t.

           What would be awesome is if he could enable a bit of java script, flashing posts how cool would that be, or popup dialog boxes that
           continuously open every time some one mouses over your post.
           • lprent 8.1.1.1.1.1

             13 August 2013 at 10:43 pm

             Why? That style of website kind of disappeared back in early 90’s with technicolor websites with bad background bitmaps, flashing GIF’s, and unreadable color schemes. It all costs at both the server side in serving up all of that bumf and

             I’ll leave that to the kiddie scripts, and other 40yo juvies..

             Just at present I’m looking at the CPU costs of the graphics and excerpts of the new feeder. At the server side it averages almost an 8% extra CPU. The client renders of the page are also slowed down before page completion as well. This is a site that pumps up a lot of new material every day. Having a look at the code to see why.

             Features cost time and effort. Sometimes even money. So if you want something on the site – please say how it would *help* the site.

             Be interested to know what tags will work and what won’t.

             Ummm I’ll uncomment the KSES descriptor in a few minutes and stuff it in a openable div. Just have to lookup the codex.
       • BM 8.1.1.2

         13 August 2013 at 8:31 pm

         How about if any imputed html is wrapped it in a Iframe, that way if the code is shit it’s contained to the Iframe and doesn’t balls up the rest of the page.?
       • Lanthanide 8.1.1.3

         13 August 2013 at 9:09 pm

         @Lyn, for tables and such, all you need to support is the [pre] tag (angle brackets got eaten), to preserve whitespace formatting. It’s by far the simplest for users and the back-end tech to deal with. Simple but effective.
         • BM 8.1.1.3.1

           13 August 2013 at 9:19 pm

           That would be quite simple fix using the pre tag.

           Any reason you don’t use something like this?

           http://ckeditor.com/

           You can customize it to whatever you want, if you don’t want people posting pictures or vids just disable those sort of features in the config file.
     • srylands 8.1.2

       13 August 2013 at 7:47 pm

       Yeah well there is a well known reason for all that debt. So what is your point? We could have introduced 20% benefit cuts for the duration of the GFC. A right wing government would have done that. But we have a left wing government so they borrowed. Debt will peak and then fall. IMF is happy in their Part Iv consultation.

       No story here. Move on. It is cyclical debt.
       • Molly 8.1.2.1

         13 August 2013 at 7:51 pm

         Go and visit the historical data.

         Cyclical in that it rises with National led governments and falls with Labour.

         Sound a little mad at the messenger there too srylands. I didn’t write the data – just posted it.
         • SomeSuch 8.1.2.1.1

           13 August 2013 at 9:16 pm

           “Cyclical in that it rises with National led governments and falls with Labour.”

           If you want to be loose with the truth then it pays not to link to the facts. The historical series clearly shows official government debt decreasing as a percent of GDP through the 90s ie under National governments. From 30% in 93 to 16.5% in 1999. A trend Labour then continued. Cullen gets the kudos in the good times of the 2000s but it was Birch and co who started paying down the debt after the fiasco that was Muldoon. Cullen had it easy. Most of the tough work had already been done and the world economy was (or appeared to be) in good shape. But when he left office, Labour had put the government firmly back on the track of expenditure exceeding revenue – his last set of accounts clearly shows this. National exacerbated it with tax cuts but the structural deficit following the expansion and introduction of state programmes (as NZ was in recession and the world economy was about to plunge) was already there. Good politics; bad economic management.
           • Molly 8.1.2.1.1.1

             13 August 2013 at 9:41 pm

             You are right. Didn’t look at the GDP – only the nominal amount. Was glibly reactive to srylands comment, which is never a good response.

             Given the amount of financial spending on what I consider items of dubious merit, the Rugby World Cup, the tax cuts, the bailout of SCF, rebates and incentives for oil and gas exploration… I think National is reponsible for making some bad spending decisions increasing our debt even more than necessary.

             Also – not a fan of GDP as an economic indicator
       • Colonial Viper 8.1.2.2

         13 August 2013 at 7:52 pm

         No story here. Move on. It is cyclical debt.

         Dude you are so far behind the times it’s not funny. 2007/2008 was the culmination of a secular, not cyclical change. Get with the play mate.
         • srylands 8.1.2.2.1

           13 August 2013 at 8:04 pm

           “Dude you are so far behind the times it’s not funny. 2007/2008 was the culmination of a secular, not cyclical change. Get with the play mate.”

           I think I will stick with the IMF’s analysis. They do a thorough job.

           http://www.imf.org/external/country/nzl/
           • muzza 8.1.2.2.1.1

             13 August 2013 at 8:10 pm

             Thorough job = Conditionalities Policies since 1961!

             Go look that up!
           • Colonial Viper 8.1.2.2.1.2

             13 August 2013 at 8:39 pm

             I think I will stick with the IMF’s analysis. They do a thorough job.

             Except for missing the entire GFC, driving Ireland, Greece far deeper into recession etc. I mean seriously, refer to the bible if your faith demands it, but referring to the IMF???
       • Murray Olsen 8.1.2.3

         14 August 2013 at 2:45 am

         Any vaguely left wing government would have introduced a 20% CGT and a 20% increase on the top marginal tax rate, plus a 50% cut in SOE CEO salaries for the duration of the GFC, then begun an emergency housing program, training and using local workers.
         A government has to be unthinkably right wing to condemn beneficiaries to a lingering death, which is what a 20% cut from a baseline chosen to not be enough to live on would be.
     • Tracey 8.1.3

       13 August 2013 at 10:51 pm

       Sorry for my ignorance, why was it discontinued? And thanks for the posting. I didn’t think Srylands would state how much debt was, it is not in his MO for this thread.
       • Molly 8.1.3.1

         14 August 2013 at 10:01 am

         Don’t know why this particularly interesting one has gone….

         Some of the other discontinued reports had reasons alongside their removal, but not this one. Contacted the Reserve Bank using their online form, have not yet heard back.

         A few of the other ones have also disappeared, including the labour figures tracking unemployment.
       • Molly 8.1.3.2

         14 August 2013 at 10:33 am

         Just received reply:

         “Table E3 NZ Overseas Debt was discontinued in June 2013 when we published a new suite of Economic Indicator tables, which included data on NZ’s international assets and liabilities.

         The data published in E3 was sourced from Statistics New Zealand’s Balance of Payments and International Investment Position statistics and can be downloaded from their website http://stats.govt.nz/browse_for_stats/economic_indicators/balance_of_payments/info-releases.aspx

         Government debt can be found on Table 11 – International Financial Assets and Liabilities on the Excel download. Line 29
9. tricledrown 9

   13 August 2013 at 6:58 pm

   Schrillands right wing govt’s have sold the assets by a country mile.
   As for yout claim about depening markets Gone back 30 years Australia had roughly the
   Same size difference to us 28 to one just more BS from the man from goldman sachs!
   Vested interests
10. srylands 10

    13 August 2013 at 7:40 pm

    “Gone back 30 years Australia had roughly the Same size difference to us 28 to one just more ”

    What on earth?

    Yes yes Australia has it all wrong. All the governments in Australia forever and ever. The NZ Left has it right …
    • Colonial Viper 10.1

      13 August 2013 at 7:55 pm

      When you resort to unpressured hyperbole and sarcasm, you’re on the verge of losing the discussion.
      • srylands 10.1.1

        13 August 2013 at 8:01 pm

        When you say crazy things like we can print money to pay for the ChCh rebuild you have lost the discussion. You are correct of course, we could do that.
        • Colonial Viper 10.1.1.1

          13 August 2013 at 8:05 pm

          Not entirely sure how to take your comment.

          Do you have a $20 note in your wallet? Maybe some $1 and $2 coins as well? Where did that money come from, if it wasn’t government issued?
          • srylands 10.1.1.1.1

            13 August 2013 at 9:10 pm

            Yes we could just issue money to pay for the ChCh rebuild. You are right. I’m surprised the Government has failed to adopt your solution. Perhaps the Labour Party might read your post and adopt it as policy?
            • Colonial Viper 10.1.1.1.1.1

              13 August 2013 at 11:00 pm

              Well, I doubt that you are surprised, as you know that this nation is locked into an orthodox monetary policy like most of the rest of the world.
          • Lanthanide 10.1.1.1.2

            13 August 2013 at 9:11 pm

            “Do you have a $20 note in your wallet? Maybe some $1 and $2 coins as well? Where did that money come from, if it wasn’t government issued?”

            The vast majority of money is magicked into the system by banks in the form of debt. Which of course you know.
            • Colonial Viper 10.1.1.1.2.1

              13 August 2013 at 10:58 pm

              Yes indeed, all I’m saying that instead of letting the banks profit off society in this way, the government should start spending into existence some of the money supply, itself.

              Remember – you and I are users of the currency, but the Reserve Bank is an issuer of currency.
        • Tracey 10.1.1.2

          13 August 2013 at 10:52 pm

          How would it be different to the money printing by the US and UK governments?
          • SpaceMonkey 10.1.1.2.1

            14 August 2013 at 10:17 am

            For a start, it wouldn’t be going straight to the banks.

            We’re going to have to come up with something different as there is no sign of QE stopping anywhere where it’s being undertaken. The US Fed cannot exit:

            “I don’t think the Fed can get interest rates up very much, because the economy is weak, inflation rates are low, if we were to tighten policy, the economy would tank.” – Ben Bernanke, July 2013.

            Without a change in approach, the implications for the NZ economy with all this devaluing foreign currency floating around are increasingly more of the same: high dollar, increasing house prices, sharemarket tracking higher, growing gap between rich and poor (the demarcation is closeness to the money supply), etc.
    • muzza 10.2

      13 August 2013 at 7:57 pm

      I’m sorry what were you saying about the value of NZ’s invested pension fund compared to OZ!

      Oh, you mean they got that right, and the NAT government of thr 80’s got it wrong!

      You’re learning!
11. xtasy 11

    13 August 2013 at 8:54 pm

    And wait for the due update for a similar question and comment topic at about this time next year, where we will add (after the sale of Meridian) two further posts of where the money will go:

    Potentially another 2 billion to be used to cover the shortfall in tax revenue, after the Nats will announce another round of tax cuts for their most loyal support class (the upper middle class and upper class).

    Potentially another billion for extra spending on stuff held dear by the same support and voter group just mentioned, thus assuring Nats – and their cuppa tea buddies from UF and ACT (Done Dunney Boy and Banksy Amnesia), will get across the finishing line in 2014.
12. tricledrown 12

    13 August 2013 at 9:10 pm

    So srylands your against subsidies so your happy the $506 million dollar subsidy this govt is handing to Rio Tinto so the 2 southland National party mps don’t get booted out and asset sales look good
    Anf of course Goldman Sachs get their $125 million guaranteed!
    • srylands 12.1

      13 August 2013 at 9:27 pm

      “So srylands your against subsidies so your happy the $506 million dollar subsidy this govt is handing to Rio Tinto”

      I doubt it is $506 million. But no I’m not happy. I have commented accordingly in the relevant thread on the topic.
13. Greywarbler 13

    13 August 2013 at 9:22 pm

    After the ass-ets have been decimated – They’ll probably use poisonous gases, And they’ll poison
    our asses.
14. BrucetheMoose 14

    13 August 2013 at 9:31 pm

    Gerry’s Meal Allowance must have put a sizeable hole in the purse surely.
    • Tracey 14.1

      13 August 2013 at 10:53 pm

      Fat jokes, how grown up of you
15. Tracey 15

    13 August 2013 at 10:54 pm

    If only the IRD didn’t write off all those unpaid taxes… and chased those defaulters as hard as the beneficiaries… Both are potential acts of theft from the Government and those who pay all their taxes.
16. tricledrown 16

    13 August 2013 at 11:13 pm

    Schrillands $476 million in write downs from meridian(selling power at less than cost for three years)
    $30 million from national govt for window dressing.
    As for you regurjitating roger kerrs 100% pure bullshit get a life only 1% of NZ voted Act last election .
    Kiwis read much wider than you think.
    Now the internet is here.
    • srylands 16.1

      13 August 2013 at 11:36 pm

      “Now the internet is here.”

      The internet is where?
    • srylands 16.2

      14 August 2013 at 12:33 am

      “$476 million in write downs from meridian(selling power at less than cost for three years)”

      Meridian is a commercial company. It can sell its product to whoever at whatever price it likes. Nothing to do with the Government.
17. tricledrown 17

    13 August 2013 at 11:17 pm

    Schrillands your the shit that comes out of the tail that wags the dog.
    • tc 17.1

      14 August 2013 at 6:57 am

      Yes a trolls life is an interesting one. A graph of revenue over spending since they came to power needs to be used to show the impact of reckless tax cuts on revenue and how this debt is a deliberate choice they made.

      Blinglish has produced budgets that not even Shonkey would have got away with in his wall street hey day as they are full of holes and guesses on asset sales, jeez he even laughs that excuse out there knowing the MSM will not do the maths.
      • srylands 17.1.1

        14 August 2013 at 9:00 am

        “show the impact of reckless tax cuts on revenue ”

        Really? So if the tax mix had not changed in the 2010 Budget, revenue would be higher now? Look at the analysis I posted in my earlier post. The 2010 changes were a package of measures. Do you think the GST increase was a “tax cut”?

        http://www.treasury.govt.nz/publications/informationreleases/budget/2010/pdfs/b10-t2010-503.pdf

        By 2013/14 the effect of the package on revenue was POSITIVE – see the table at para 42.

        And stop the mindless chanting.
        • Bunji 17.1.1.1

          14 August 2013 at 3:56 pm

          a) that’s the 2010 cuts, not the 2009 cuts.
          b) the net positive increase relies on there being growth because of the tax cuts, which is something akin to economist magic beans.
          We can never test whether that assumption was false of course, as we can’t test a reality without the tax cuts. But growth (particularly in spending hence GST) has hardly been fabulous.
          • srylands 17.1.1.1.1

            14 August 2013 at 4:48 pm

            “the net positive increase relies on there being growth because of the tax cuts, which is something akin to economist magic beans.

            No that is incorrect. The estimated fiscal impact excluded any growth dividend from the tax mix change.

            My point remains – the major tax chnages of 2010 were not “unaffordable tax cuts (sic)”. They were approximately fiscal neutral (or positive) over time, employing the assumption of no economic growth dividend specifically from the policy change.
18. Skinny 18

    14 August 2013 at 7:07 am

    40 million for share bonus, propping up Prime Ministers spin department, & considering refunding the bosses for failed drug tests on the unemployed. Slippery is as slippery does. Taxpayer duped on power asset share sales! http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10912065
    • bad12 18.1

      14 August 2013 at 7:58 am

      Yes wasn’t that an interesting little list in today’s Herald online, it appears that at least that a few hundreds of millions from the sale of assets will end up just as many thought it would, a Slush Fund,

      Election year next year will see much more of the asset sales cash squandered on projects which Slippery’s National Government think will earn them votes…
      • Skinny 18.1.1

        14 August 2013 at 9:46 am

        Quite right Bad12 what a rort! I’ll be out dot dinner tonight with Labour’s industrial relations spokesperson Fenton. She is very handy to clout that little worm Bridges during oral question time. Anyway looking forward to hearing the latest plans of when we hit the bricks opposing the pending introduction of dirty new employment law changes. A message to the Greens ‘change your Industrial Relations spokesperson, I afraid Miss Roche is far too little weight!
    • Tracey 18.2

      14 August 2013 at 8:31 am

      Hasn’t the PM’s office grown its staff on a percentile basis more than any other government department?
      • srylands 18.2.1

        14 August 2013 at 8:43 am

        “Hasn’t the PM’s office grown its staff on a percentile basis more than any other government department?”

        The PM’s Office is not a government department.
        • framu 18.2.1.1

          14 August 2013 at 10:22 am

          theyre still public servants genius
19. vto 19

    14 August 2013 at 9:25 am

    where have our assets gone?

    they have gone from all new Zealanders to significantly fewer new Zealanders and mostly to srylands types.

    shouldn’t we be owning assets like this? isn’t this what the rich do? should we be doing the same thing? if so, why sell?
    • srylands 19.1

      14 August 2013 at 12:28 pm

      “they have gone from all new Zealanders to significantly fewer new Zealanders and mostly to srylands types.”

      No.

      A small number are being partly sold down from one owner (the Crown) to many thousands of New Zealanders.
      • vto 19.1.1

        14 August 2013 at 12:42 pm

        ha ha you dance on the head of a pin just like gosman used to do.

        You’re point is dreamword stuff. People own things in many forms – through a company, through a trust, personally, through co-ops, through government, through the crown. The actual entity registered as owner is immaterial to the real beneficial ownership.

        Once you take that reality into account you can see that ownership has gone from every New Zealander to hardly any New Zealanders.

        You must own a pinhead factory.
20. tracey 20

    14 August 2013 at 11:33 am

    srylands, you ok about a company lying to its shareholders and misleading them? if no, what sort of punishment would you suggest to deter?
21. tricledrown 21

    14 August 2013 at 12:02 pm

    meridian has nothing to do with govt.
    Who owns meridian.
    • srylands 21.1

      14 August 2013 at 12:09 pm

      Do you think the sharehoder tells the Board what its pricing strategy should be?
      • vto 21.1.1

        14 August 2013 at 12:13 pm

        it just did with tiwai point ffs
      • Colonial Viper 21.1.2

        14 August 2013 at 12:16 pm

        The shareholder incentivised the Board to make the deal happen, and supplied the $30M to do it.
        • srylands 21.1.2.1

          14 August 2013 at 12:23 pm

          “The shareholder incentivised the Board to make the deal happen, and supplied the $30M to do it.”

          No. the Government paid the money to NZAS. Not to Meridian.

          The Government had no involvement in commercial negotiations with NZAS and Meridian on electricity pricing.

          You are confusing two quite separate commercial transactions.
          • vto 21.1.2.1.1

            14 August 2013 at 12:31 pm

            ha ha you dance on the head of a pin just like gosman used to do.

            You’re point is dreamword stuff. The government intervened in the commercial arrangements between Meridian and its largest customer NZAS. Dress it up any way you like, that is the reality.
            • srylands 21.1.2.1.1.1

              14 August 2013 at 12:35 pm

              “The government intervened in the commercial arrangements between Meridian and its largest customer NZAS.”

              Repeating it does not make it correct.

              You may want to read about the SOE model and the role of shareholders:

              http://www.treasury.govt.nz/publications/guidance/publicfinance/pit/pit-ch6.pdf

              “The Ministers are shareholders, not the managers of the SOE. The boards have full responsibility for decisions on resource use, and for pricing and marketing the goods
              and services they produce.”

              I don’t know how I can be any clearer.
              • vto …

                14 August 2013 at 12:45 pm

                That stuff is quite clear obviously but you intentionally ignore what actually happened. In this case the shareholder intervened. Sure, they may have been careful to structure that intervention so that is didn’t breach that SOE requirement but it was still intervention. Can you not see that?
22. tricledrown 22

    14 August 2013 at 1:04 pm

    schrillands
    How do you explain to your employer all the time you spend spreading cynical lies.
    You must be well down the political pecking order to be wasting time motivating those on left.
    • tc 22.1

      14 August 2013 at 4:36 pm

      you assume what srylandz does is time wasting rather than gainful employment, depends on who foots the bill really.

      TS seems to be perceived as a credible force of sorts based on the numerous, well spoken, elegant and subtle trolling efforts being invested by some.
    • srylands 22.2

      14 August 2013 at 6:30 pm

      “How do you explain to your employer all the time you spend spreading cynical lies.”

      I don’t spread cynical lies.

      I don’t have an employer.
      • Paul 22.2.1

        14 August 2013 at 6:52 pm

        Haven’t you got better things to do then?
23. tracey 23

    14 August 2013 at 2:44 pm

    Another sidestep srylands. The govt mandate to sell assets included paying down debt. It hasnt. They lied to the shareholders and essentially obtained proxy or authority to srll under false pretenses…
24. tracey 24

    14 August 2013 at 2:46 pm

    Sorry if I keep addressing the original post instead of diverting every which way.
25. millsy 25

    15 August 2013 at 7:50 am

    Two words: Magic Beans.

    And Bridges has all but confirmed that the government is going to do the same with the mining/oil royalties that will (supposedly) come rolling in…

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