By Alex Tarrant
Finance Minister Bill English has stopped short of rubbishing the latest report from the 2025 Taskforce on closing the income gap with Australia, but says the government does not agree with the speed of reforms recommended by the group led by former National Party leader and Reserve Bank governor Don Brash.
The Labour Party labelled the report as "ideological claptrap".
English said the Taskforce’s report – part of ACT's confidence and supply agreement with National - raised some "interesting ideas, which will hopefully generate constructive debate".
"The Government will consider some of those ideas, alongside the range of other advice we receive, and make practical decisions," he said.
"However we disagree with the Taskforce report's authors about the ideal speed of reform.
"History shows that reforms done at breakneck speed tend to be fairly counterproductive. If you don't take the time to convince people of the benefits of change there's a good chance the next government will simply reverse them," English said.
In its second report released today, the taskforce recommended the government should withdraw from commercial activities to allow the private sector to maximise the potential of various state-owned entities.
However, chairman Don Brash did not go as far to say government should sell every share it has in commercial entities, and would not be drawn on whether government should sell Kiwibank, despite saying "the logic to having a government owned bank is not high".
Since its first report last year, the taskforce said it did not see any realistic possibility that the gap in real per capita income between Australia and New Zealand had narrowed.
It quoted an OECD projection that the gap could widen to 42% by 2025 based on current policy settings.
Despite this, the group was adamant that New Zealand could still catch up within the timeframe promoted by the National-led government under its confidence and supply agreement with the ACT Party after the 2008 election.
This would require growth 2% higher than Australian growth over the next 15 years, Brash said.
There was a strong case for the full or partial sale of government commercial operations, he said.
“Not so much to reduce government debt or eliminate gross inefficiency – the rationale for state asset sales in the eighties and early nineties – but to allow the private sector to maximize the potential of those businesses,” Brash said.
Mind your PPPs, Raise retirement age
The taskforce also promoted greater of use of public-private-partnerships (PPPs)
“More private provision of and education services is needed, to improve outcomes and to reduce costs to the taxpayer,” Brash said.
The taskforce recommended a stronger return-to-work focus in welfare and said the age of eligibility for New Zealand Superannuation should be raised.
It said a better business environment would promote the private sector to spend more of its own money on research and development, saying there was weak evidence publicly-funded R&D generated growth.
“Better value could be achieved by restoring full contestability to government R&D funding.”
It also said New Zealand needed to be more open to foreign direct investment.
“In just a few years, New Zealand’s foreign investment regime has gone from being among the most open to one of the most restrictive in the OECD.”
'Ideological claptrap'
Meanwhile, Labour Party finance spokesman David Cunliffe labelled the report as continuing to offer "ideological claptrap", saying its attack on National's lack of an economic plan showed a falling out on the right.
“Perhaps it’s sweet revenge on Don Brash’s part after John Key gave the cold shoulder to his first report,” Cunliffe said.
“John Key and Bill English won’t be amused, however, by his attack on the Government’s ‘backward steps’ or his claim there is no evidence National’s policies will deliver the kind of accelerated growth needed," he said.
“Labour has been saying for months that the gap between New Zealand and Australia is growing. John Key tries to deny it, but the proof, in terms of wage disparities, and in job growth across the Tasman, is irrefutable."
Cunliffe's comments follow a major rethink by Labour on its economic and monetary policy during the last month. See more here.
“Don Brash’s ideological nonsense --- with an unwavering focus on the free market and privatisation, and to hell with anything else like social policies --- don’t provide a path New Zealanders want to go down either,” he said.
The full report is available here.
Here is Finance Minister Bill English's response:
The second 2025 Taskforce report shows the Government has taken steps to lift New Zealand's sustainable economic growth, but catching up with Australia will be a long-term challenge, Finance Minister Bill English says.
"Budget 2010 took several steps in that direction – including across the board personal tax cuts on 1 October that narrow the gap in after-tax incomes with Australia," Mr English says.
"However the report shows just how challenging it will be to catch up to Australia by 2025, especially as we continue to recover from a recession - started under Labour - that Australia never had.
"Our first step has been to get the economy out of recession and growing again. We've now had five consecutive quarters of growth and we've put in place a broad programme of action, which will provide a platform for future growth.
“The Taskforce’s report – part of ACT's confidence and supply agreement with National - raises some interesting ideas, which will hopefully generate constructive debate. The Government will consider some of those ideas, alongside the range of other advice we receive, and make practical decisions.
"However we disagree with the Taskforce report's authors about the ideal speed of reform.
"History shows that reforms done at breakneck speed tend to be fairly counterproductive. If you don't take the time to convince people of the benefits of change there's a good chance the next government will simply reverse them.
"We are already moving in some of the directions suggested in the report. As well as cutting personal and corporate taxes, we have put a cap on new Government spending, have put better incentives into the welfare system and are reviewing major regulation.
"But any changes must meet the tests of fairness and equity, be consistent with our election promises and occur at a sustainable pace.
"The only way we can permanently lift New Zealand's economic growth is through considered and consistent reform and change, year after year," Mr English says.
Here is the Labour Party's response to the report:
The second Don Brash 2025 Taskforce Report continues to offer ideological claptrap, but its attack on the National Government’s lack of an economic plan shows a “falling out” on the right of politics, says Labour Finance spokesperson David Cunliffe.
“Perhaps it’s sweet revenge on Don Brash’s part after John Key gave the cold shoulder to his first report,” David Cunliffe said. “John Key and Bill English won’t be amused, however, by his attack on the Government’s ‘backward steps’ or his claim there is no evidence National’s policies will deliver the kind of accelerated growth needed.
“Labour has been saying for months that the gap between New Zealand and Australia is growing. John Key tries to deny it, but the proof, in terms of wage disparities, and in job growth across the Tasman, is irrefutable.
“Don Brash’s ideological nonsense --- with an unwavering focus on the free market and privatisation, and to hell with anything else like social policies --- don’t provide a path New Zealanders want to go down either,” David Cunliffe said.
“If we are going to persuade Kiwis not to follow their dreams on the other side of the Tasman, we need to be promoting a value-added and high-tech economy, monetary policy that assists our exporters, policies that address the savings gap, and tax and social policies that are fair for all Kiwis.
“National is doing none of this. Instead it’s wasting money on this taskforce. It should scrap it now.”
Labour’s SOEs spokesperson Clayton Cosgrove said Don Brash’s relentless pre-occupation with selling off our SOEs to private enterprise ran absolutely counter to what Kiwis want.
“Even National knows it can’t get away at the moment with selling off the family silver,” Clayton Cosgrove said. “The difference between Labour and National is that National would sell the family silver if it gets the opportunity after the next election. Labour will keep Kiwi assets in Kiwi hands.”
(Updates with Labour response, changed head, English's response)
79 Comments
Has Brash been reading the ACT party manifesto? Another neo feudal nut job
That's right, flog off everything to to rent seeking overseas ticket clippers. I bet Ralph Norris would be drooling at getting his greedy paws on Kiwibank - just so he could "maximise it's potential" of course, wink wink.
Is this the best Brash can come up with? We could have just run an old tape of Roger Douglas from the eighties and saved the bother.
The taskforce also promoted greater of use of public-private-partnerships (PPPs)
Now in difficult times investments in public-sector infrastructure has positive implication for our economy, guarantees employment, lifts skill, works for account deficit reduction, supports the manufacturing sector, etc. – yes - when properly executed that part is a good step in the right direction.
I’m wonder if the NZMEA agrees with PPP’s, although it is in accordance with my proposal for years ??
..and I’m wonder, where, if and when we see practical implication Mr. Browlee/ Joyce ???
Yet another privatisation of profits, socialisation of losses scheme, from the neo-liberal camp that got us into this mess in the first place.
Quite depressing as said above, that they cannot think of anything new and innovative apart from looking after themselves and their mates.
Brash - your model has failed - you and your type are yesterdays men - accept it an move on.
Adopt the approach of the Austrian School and recognise that the future is not in rapant private enterprise and the me me me attitude of the eighties
Get into your rocking chair, get out your pipe and reminisce about past glories - they have faded or collapsed, but dont need to be imposed on a new generation.
Updated with English's response.
My view is this taskforce has largely been a pain in the rear-end for National. We knew what was going to be coming out of it, so why wasn't it done differently?
Brash and Caygill got rather animated at the press conference today because everyone was saying, 'well this isn't politically viable with National'
Their response was that they weren't asked to present a politically viable report - they were asked for their professional opinions on how to close the gap by 2025. Of course it's going to include such recommendations.
Brash said something like "If they wanted politically viable, they should have hired a political scientist".
The 2025 approach is different from the working groups that were set up - such as the tax group - although there were some things in their recommendations that were not that viable, such as Cap Gains Tax, the group accepted there would be political restrictions.
That's politics, like it or not. English is not Roger Douglas, although does he need to be a bit more like the old fella?
Of course this has all got to do with ACT, and the conf and supply arrangement.
It all just makes National look a bit silly I think. It's great to focus on growing our per-capita incomes but why spend all this money on reports that we all knew the outcome of?
And they've realised it's made them look silly. You can tell just by the nature of English's response
Your views?
Well, the "professional" economist that he is conducted his postgraduate research on one of these very economic issues .... and even back then he managed to "justify" based on his "professional" knowledge and research whatever conclusion fitted his political leanings (i.e. values bias) at the time.
Such is the folly of the "science" of economics:
[Don Brash] continued his studies in economics, receiving his master's degree in 1961 for a thesis arguing that foreign investment damaged a country's economic development. The following year he began working towards a Ph.D. (again in economics, at the Australian National University), which reached the opposite conclusion.
http://en.wikipedia.org/wiki/Don_brash
And yeah, I agree it makes the National Party look silly. Hopefully next time round ACT will be off the scene and they can release themselves from association with the even sillier looking Yellow Canary :-)
Hahaha ... yep, he has pointed that out as some sort of 'badge of honour' on numerous occasions; just like he used to point out over and over again during his election campaign how his (now ex) wife was a foreigner... and somehow that was supposed to make us think he wasn't prejudice toward other races - just like his comment on these economics 'texts' makes his some sort of "expert" on these matters.
Not all economists are biased politically....Steve Keen's minsky type work does not seem to be......I think the key here or certainly what I take is split economists reports/papers into research on the problem which is often pretty good and mostly ignore their conclusions especially when they are not independant. From here I think it then becomes societies choice on what actions to take, personally I pretty much ignore any "economist" who comes out with a political line / solution almost invariably they have a strong bias that wont work in the real world.....
This task force was a joke....but the joke is on ACT really....more Dodgy Douglas retoric that has achieved diddly over the last 30 odd years....I mean if this cr*p didnt work for us last time around and put us ahead of OZ....why would it again....
The fundimental problem with catching OZ is they are exploiting their mineral resources at a breathtaking rate we dont have that injection into our economy....they have a huge property ponzi scheme even worse than ours...
I'd actually like to see some real research where they take out the effect on the OZ economy of the mineral pillage and then compare us...then repeat with the housing madness.....
and maybe look at correcting for the crazy debt as well.....all these things pump up an economy for a while.....you just have to look at the mess in America to see it ends nasty.
regards
Banks should be private but the generation of money should be held indirectly by the governement as money must not be printed unless there is actual growth. A meltdown is inevitable in our current bank controlled economy.
I'm all for full privatisation of non-essential services.
Have to agree with anon.
Brash is past his use by date and needs to retire gracefully.
If the Government haven't got the message about selling of state assets it's hard to believe.With whats happening overseas this approach seems so pointless and so unhelpful.Unfortunately he is getting paid a packet to regurgitate this failed message.
Agree Wolly,believe task force is a "stalking horse" for Key and English to spook NZ to the right.Don Brash has always been an academic economist/politician,anything that has required business skills have not suited him.We`re not Aussie,never will be,why would we want to be?
I can not understand this irrational desire for NZ to compare ourselves per capita with Australia. They have 5 times the population we have! They are digging up their minerals like there is no tomorrow and this is their main source of income. We are not doing this. They have no water- their rivers are drying up and a very high dollar. This will slowly kill all their manufacturing and farming, wine industries etc. I say their future looks grim. Why do we want to end up like them?
Australia GDP due to minerals is around 9%. It is around 4% in NZ. Not a big difference. Japan has no mineral wealth. Mineral wealth is irrelevant.
There is no correlation between population size and income per capita. Population size is irrelevant. Singapore has a similar population to us. USA is much larger and China is larger again. Look at those countries per capita income.
It is government policy that makes the difference.
um.....9% of OZ GDP is hugely different to 4% of our GDP and you are wrong the mineral wealth is a huge issue.....its a one time bounty....once it used they become like most of the developed world....an empty shell with expensive labour racking up huge consumer debt with no industry left to pay for it.
Government policy (certianly for NZ) plays a fairly small role these days....globalisation just works around it...
regards
We also need to keep pretending that USA, UK, Ireland, Greece etc are in a worse situation than us. Somehow our dept (mostly personal, but NZ Government doing its best to make large), low productivity and exporting of the best brains does not matter. We have to keep believing that the government knows best, and keep knocking successful people until they leave.
I wonder how may of the writers of the foolish comments above realise it was only 20 years ago that NZ & Australians incomes were very similar. Australia has been doing things differently than NZ over the last 20 years and the results are obvious to all. John Howard has very publicly acknowledged that he admires Roger Douglas and it was Douglas's policies he largely implemented. Sure Howard took a longer time to implement and I believe this is what is going through English's head. NZ'ers are very socialists, conservative and non-liberal, and are not learning from others what works or doesn't work. NZ'ers are driven by ideology and would sooner shoot the messenger than discuss the ideas. NZ'ers should take note of what the Australian representative on the task-force says and try to understand how those ideas have help Australia. NZ is already loosing most of it's best educated to Australia (and other countries) and unless NZ grows-up this is not about to change.
Average annual wage Aussie Nov 1990 - A$28,038
Average annual wage Sept 1990 - NZ 26,392 ( @.8000 = A$21.113).
Aussie were still 32% ahead, even then.
http://wiki.answers.com/Q/Average_salary_in_australia_in_1990
http://www.beehive.govt.nz/release/after+tax+earnings+9+cent+2008
Excellent two posts by " sctajc " , above , and " John H. " , below .
Kiwis' witter on about " catching Australia " ......... And then moan that Ozzie got the luck of mineral wealth , and it just ain't fair .......... Wizzle wizzle , moan moan !
Daft arses in NZ keep voting for government policies that impoverish the nation financially ......... WFF . DPB . Interest-free-student-loans . Bail outs and guarantees . And the all comprehensive health and ACC system ................ All are sucking the juice out of the productive sector !
Government is spending too much . Employing too many unproductive civil servants .
You are living beyond your means . And borrowing $ 250 million per week to prop up Michael Cullen's election bribes .............. Just how thick are National ? ........... Anyone got a " Thicko-Meter " to put it to the test !
It was indeed Australia's measured approach to economic reform that is responsible for its relative prosperity as compared to New Zealand. Examples include their gradual privatisation of Telstra - the first public share sale being in 1997, second in 1999 and third in 2006.... and the people of Australia still own 10% of it through share transfer to their government superannuation fund. NZ sold Telecom lock-stock-and-barrel in 1990.
The Australians had plenty of time to learn from Roger Douglas' costly mistakes! No wonder John Howard thinks highly of him! Nothing like having a next door neighbour carry out all the 'tests' for natural gas leaks, eh?!!!!
But what indeed has kept wages strong in Australia was the collaborative approach taken by the various reformist Governments toward the labour movement. New Zealand's Employment Contracts Act did the damage intended to NZ worker rights/wages with very comprehensive effect - and HC's repeal of the ECA and replacement with the ERA was just too far down the track to have been able to make up for the lost ground.
Not really Kate, I think what's kept OZ strong has been the biggest commodity boom (ever?) and successfully keeping the property ponzi scheme inflated...
I do look across the ditch and see they did relatively little, compared to what RD here...so if RD's work was meant to deliver where the hell is that delivery.....obviously he was and is a complete failure....
I dont think i really go along with the ECA / ERA damaging workers rights....I go with Steve Keen's work, the financial sector is responsible for damaging the real economy both workers and employers....
Going back 30+ years the Unions certianly damaged the UK and from what I can read NZ....now its back the other way a bit much possibly, yes.
regards
biggest commodity boom (ever?)
What surprised me the other day was seeing Australia's level of external debt (private mainly) it's huge, so they must have their fair share of Uridashi's and other such things as well. If you were sitting on the back of years of export mining commodity boom shouldn't you be investing the proceeds, and therefore be showing up as a creditor nation?
but private debt is good! it has no negative effect on an economy!
Its only Govn debt thats bad, bad, bad.....
I think the OZ govn tried to increase the tax/royalties in order to get some decent proceeds? Meanwhile what they appear to be doing is spending what they are getting as fast as they can to prop up the housing ponzi scheme. So it would seem very few countries have done a Norway and invested their one off windfall wisely....the rest just seem to blow it on vote buying....
regards
sctajc - I would have to disagree with much of your comment
NZ is actually more liberal in many of its policies and laws than Australia. There are a number of examples, but I'll provide one I am familiar with.
A good example from my position in the development industry is ill informed people often say:
"They just get things done is Aus, none of this RMA rubbish"
In fact, the planning hurdles in Aus (from my time there a few years ago) are just as bad if not worse than in NZ. I saw a document the other day that had some crazy figure like 80 days is the average processing time for a development approval there.
that is not to say NZ cannot or should not change. Of course it should. And yes we can be conservative at times, But I disagree with your comment that kiwis are somehow "socialists" and by implication Aussies are all progressive liberals. By my crude estimation Aus has had a similar number of years of a Labour govt as a Liberal Govt since 1990, and Aus demonstrates quite a few strongly left leaning aspects such as its strong union movement .
a further counter to your assertion is that (as you in fact alluded to with the Douglas reforms) NZ has in fact been very progressive with many of its reforms and policy, in many ways more so than Aus
"Based on current projections of the income gap and its impact on emigration, a net 412,000 New Zealanders could leave(will leave) over the next 15 years," the taskforce says.....herald.
Must be good news for the property sector...time to buy buy buy...borrow borrow borrow.
These reports essentially by Act and Brash have very little credibility at all.
It's based on their personal opinions and interpretations.
We tried all this for over 20 years and although some of it was necessary, a lot of it hasn't really worked.
The main reason Aussie has better wages, it because they have a massive big country, with huge mineral resources, that are selling for astronomical prices, and that just about sums it up.
If we actaully emulated the Aussie model we would have very strong unions, and I bet Brash wouldn't put that down to why they have better wages.
He just cherry picks what fits in with his own views on economics.
I'm not saying our unions needs to be stronger I think they are about right probably, although they went too far with the Hobbit debarcle, and are too closely tied to political parties, members contributions shouldn't be funneled off to support Labour.
But it just shows how Brash ignores the things that don't fit into his philosophies.
Actually isnt that a good case in point? ie wasnt it the OZ acting union trying to wreck an NZ industry?
In terms of union subscriptions, actually the Labour party came from and is the political wing of the union movement....so supporting its own organisation isnt that un-reasonable.....In the UK I think you can opt out of a labour levy thats part of the union subscription.....same here?
In terms of the labour laws, actually i think we are probably a little too far in favour of employers......but not significantly....
Brash is really ACT and thats 3% of the voters....this is just a repeat
regards
"History shows that reforms done at breakneck speed tend to be fairly counterproductive. If you don't take the time to convince people of the benefits of change there's a good chance the next government will simply reverse them," English said.
LOL, hypocrite. That excludes anything for big corps like Warners Bros or Fonterra RIGHT Bill?
Going by John Key's comments on TV1 re the Brash report...you can kiss goodbye to the 410ooo kiwi over the next 15 years and say hello to staying down at the bottom of a bloody deep dark hole....There isn't a hope in hell that exports can expand real returns sufficient to pay down the rural debts let alone the nearly 180 billion owed by households to the banks. And we have yet to see the rates shoot higher...as they will. So stay safe...always wear a "NO" when walking past a bank...you don't want to catch the debt disease.
Put aside the relative merits or otherwise of this report but ask John Key what he is going to do to stimulate our economy. The reality is that lots of well educated and motivated New Zealanders ARE going to move to Australia to better their prospects. That leaves a less well qualified base in NZ. This is NOT an ecouraging prospect.
Meantime, our export led recovery is being killed by a high $nz and John Key is not prepared to tackle the other side of the problem ie government spend. "Working for families" is a scacred cow along with capital gains tax, land tax etc. etc.
Its the very same dilemma that Obama faces but refuses to respond to, ie cutting government expenditure preferring instead to allow the use of artificial money to extend the current rotten situation.
The voters in the US have shown today that they expect their leaders to BE LEADERS and act accordingly. John Key faces a similar fate if he does not show some leadership.
What is his plan if a 'black swan' event took place relating to the quality of our agriculture base eg a serious contamination of our dairy or meat exports?
Why does JK have to stimulate it? with what tools? The OCR is almost to the point is doenst matter....companies are described by the banks as under-leveraged....they are not borrowing...Relaitically forget stimulus we are in a global situation that is dire, NZ can do nothing but wait.
JK has tackled the govn spend, given the limitations of his mandate from the ppl....sure he could swing to the right, which of course the voter didnt vote for. So on the one hand you want cuts and on the other stumulus....so I know lets not throw huge wads of cash around in a pointless stimulus, problem solved.
Personally I dont read anything into the US election about being leaders in the context of NZ, I think you are in fantasy land....Obama has failed to tackle the root of the problem, the banksters he has without doubt paid for it but this isnt about blindly cutting expenditure, its about not undoing 30 years of laissiar faire damage....which he promised to do....ie he faile din his mandate from the ppl....
A contamination of an export sector would be limited, that isnt likely to be a black swan event. Invading Iran would be more of the worry in terms of huge impact on us.....
regards
Do you notice the flaw in your argument?
Everyone does what you suggest, and who is better off again?
The game changed when the ability to underwrite wealth - to honour promise-redemption notes of whatever kind - peaked.
As it was rising exponentially (all graphs of which trend to the vertical) it had to hit the ceiling at some point.
So the cake remains the same for a while, then gets smaller.
Scrap over the cake by all means, hope for a return to BAU by all means, but keep an eye on the long game.
Yes, talented Kiwis would be good to have, where we are going, but we first have to identify what will be the required 'talent'. Any product of an existing school of economics, for instance, may as well go. Lateral-thinking engineers, on the other hand, will worth their weight in....well, well, well!
was replying to Jonh H, not you steven!
Adaption will be a key skill. We're probably a generation adrift from that now - the old farmers and blacksmiths who made it out of something else, because it was 6 months for the order to get back to England, 3 months for it to be made, and six months to ship it back. Meant two seasons without - so they improvised.
We'll be back there by 2020.
This is written powered by a gentle-annie w/m motor, spinning in the creek, if you see what I mean.
cheers
5 minute post-strong coffee MIA Solution...
Reduce OCR drastically (maybe down to 1.5%)
Devalue the dollar
Free up urban planning controls - lower interest rates plus more liberal planning controls will massively stimulate building construction and industry. Whilst liberalising planning controls, at the same time require strong green development mandates so that NZ builds its "clean green" reputation. Seek to translate that to the "green hungry" Chinese market
Boost investment (public and private)
Increase immigration - escalate Auckland's growth, so that with more liberal planning controls it becomes more vibrant, helping to keep some of the kiwis who would otherwise cross the ditch for birghter lights
Nearly, Matt. Are you going to hand over your job in architecture to a new import? What will the new immigrants do? Sure in the really longer term extra people = more demand = more production. But the initial blast creates more surplus labour= lower wages= lower demand ~ and an increase on the welfare system. We can't afford immigration at this part of the cycle. That's for when things are better. What do firms do at this stage? Cut costs = people. That's what the country is doing, rightly, now.
bring in lots more "business immigrants" ie. loaded individuals (with conditions attached of course ), if you liberalise the planning controls then we will see more building happening, business immigrants can pump money into that
theres a shitload of Chinese money out there waiting for a home. I have several Chinese developer clients who are just bursting at the seams. One of their biggest frustrations are the planning controls.....
If the planning / building controls are sufficiently liberal, then the burst of immigration shouldn't drive prices toward another bubble, as, theoretically at least, housing supply will be more responsive
Matt " bring in lots more "business immigrants" ........... then we will see more building happening" Is this a wind up?
We're not getting sufficient Business type immigrants to meet even the existing (modest) requirements. Not surprising when you think about it:
If you're rich you can have a good life where ever you are - within reason
Why would you want to start a business in New Zealand. Domestically there looks to be overcapacity everywhere and our export sector is being crucified by our high dollar
Don't we have enough buildings already, how will adding to the building stock be of any help whatsoever? It's the week tradeable/export sector and consequent lack of domestic capital that are the problem.
Ah. So it's 'money' not business that you want to bring in. And when that money panics out again, as it will, when the emerging market 'boom' is over? EM's are awash with Western liquidity looking for a recylced home. Make that here, and watch what happens to our economy when it reverses. Your 'business immigrants 'won't care. It's just about the money. One of two things happens now; The West revitalises and start producing what it is now importing form the East ( bad for EM's) or the West 'collpases', one way or another , and demand for all production drops ( even worse for EM's). So really, it's a lose, lose situation that NZ should not take part in. Let's shore up what we have, with who we have here, and keep trying to internally rebalance our economy. We can import all the people you want, later, when we can afford it.
Don Brash and Caygill must have the thickest skins around. ither that or their skuls are sufficiently thick to leave little room for anything inside.
Are we all Socialists on this forum. I don't think I have seen such an overall consensual damning of anything here before and I am sure that even the arch right wingers are showing their disapproval by their relative silence.
I do just wonder why this lot even expect to be paid for their report.
Bloody good idea, float SOE's so that people have something of value to be able to invest their savings and save for retirement.
The issue is predatory bankers that would load them up with debt merge them bleed them dry.
But look at SOE's even they get into financial chicanery, Transpower selling the (or part of) the national grid to Wachovia and then leasing it back (for tax reasons wasn't it?), wonder how that's going, probably on the Federal Reserves books right now.
And PPP's should be for productive investments not prisons.
And I've always wondered why opium continues to be grown in Afghanistan despite 9 years of US control.
Good explanations here;
http://freedomainradio.com/BOARD/forums/p/26617/205968.aspx#205968
Mike Ruppert wrote a book about that sort of stuff a while ago.
Excuse me.....why arnt the existing companies on the stock exchange worth buying? oh wait because they have been gutted of value and loaded with debt by greedy CEOs and institutions. Ordainary people would lose money. The SOEs have value where they are they provide a return and are doing a good job, Kiwibank is keeping our costs down otherwise the 4 OZ banks would be pillaging our pockets. This right wing crap about selling everything isnt about value for the Govn of the day but for "investors" actually rapists IMHO....
Retirement is a worry even once debt is paid down as actually being able to put money aside without getting burnt by some scam seems almost impossible......
regards
Kiwibank is keeping our costs down otherwise the 4 OZ banks would be pillaging our pockets
Are you kidding, have you fallen for that one? Costs down? (But everyone seems to be saying it). You haven't started paying yet $180bn Residential debt, 45bn Farming debt + ? What is it all up? 300bn (what is that compared to GDP? 3 times GDP. GDP too has been artificially inflated by the rate of increase in debt so when that effect disappears we are left with a much reduced level of GDP supporting that same debt. (GDP is a failed measure Government spending should deducted from GDP not added to it).
Interest rates will rise. Banks will be making up for mortgagee sales. Plus their costs will be fixed and without that steady stream of new mortgages coming in generating profits they will shift their attention to the existing book.
The pillaging of our pockets hasn't started yet!!!. The only question is would it have been less bad if Kiwibank hadn't been around.
being able to put money aside
A negative number in a ledger account is not money, you've been conned. The only investments are they physical, directly into a mortgage on productive investment (but when it's paid off you have to give up your savings), or shares.
I should qualify my comments by saying that I have not read any of these reports, so my criticisms of them may be wrong, but what I find so utterly unsatisfying about them as reported is that although they tell us what we should do to catch up with Australia they never actually explain why and how their proposals will actually work.
They strike me as fundamentally would-be-if-they-could-be in nature.
In the absence of clear explanations of how and why these ideas will work, these reports just come across as a load of ideologically driven woolly thinking that has nothing more going for it than any other ideologically driven approach that comes from a different or opposing school of economic thought. What have they written to show that their proposal has the greatest weight of evidence or strength of argument behind it to show that it will be more successful than any other approach, and that allows me, as an ordinary NZ citizen, to judge that theirs is the most worthy of merit and implementation?
From what has been reported so far, nothing.
Hey thanks Iain, but to what purpose? No one seems to be able to agree on the solution. To me it's obvious. Fractional reserve is great, it allows money to be loaned out for investment, it's created out of thin air but it's still backed, it's backed by the loan itself and then the shareholders of the bank, who lose their money if their investment decisions are bad ones. Andrew is right in a way but it's an "after the lending thing" not before.
For a fair society it's best to be debt free, and everyone should have a chance to get there. But the trouble is, without debt there is no money, and physical gold and coins are barbarous relics.
My suggestion is simple. The means of exchange, the transactions, are like the roads, this is a public good, and it should be owned by the Government. Everyone should get a central bank account. Make it the same as your IRD number. You pay your tax into this account, and the Govt spends directly into this account. Banks are also account holders and they are treated the same as everyone else.
Balances in these accounts would be charged negative interest and all transactions are charged for, a tobin tax, for the cost of running the thing and for additional taxes.
Banks can then issue their own notes, and are free to do what they like (subject to all the prudential stuff). The only other thing I would possibly add is the freegold concept. The central bank may stand in the market and say that a percentage of it's account balances will be backed by gold and this is market to market. This way if you are doing international trade you can show a "reseve bank" balance and if it is at least partially backed by gold you will be trusted to trade.
Total Government debt? it's the sum of all of these accounts, it can be published daily. Bank runs? No worries, remember you will be walking up trying to deposit a particular bank's "banknotes".
So it's a mixture of fiat currency and "free banking", "free gold" as an optional extra. We could implement this here because we are a relatively small country, but we could at least demonstrate it as a working model.
Too risky? Well what doe we have to lose, look are Ireland, Iceland etc. We should act now before it's too late.
Perhaps the rational thing to do is STFU and go and start a bank, employ some economists in cloistered "schools of thought" (Chicago, Keynsian, MMT etc.) to run decoy to befuddle with all sorts of irrelevant stuff.
Tarpley and Hudson here talking sense.
We need to remember that current projections this year are for Govt expenditure to be ~ 45 % of GDP.
Add in local government and the SOE's and we see this figure rising to around 60 %.
It is simply not possible to provide the services NZer's seek when we lack the income to pay for these. Rest assured - these 60 % are not generating export income.
Houston - We have a problem and Dr Brash's recommendations are perfectly reasonable in the situation we now find ourselves.
Current projections?
Sat in a meeting today with a MAF official.The growth projections put forward by his director,Murray Sherwin, looked completely unrealistic to the manufacturers in the room.
Then the MAF official explained that they use an exchange rate of $1NZD=50 cents USD as projected and required by treasury, not today's .77 rate.
I didnt know whether to laugh or cry. Then when getting home I wondered how many government projects are being manipulated knowingly and deceitfully. These were the numbers Murray Sherwin used when addressing the pine manufacturers and forest growers with John key in Wellington a few weeks back.
Truth is we are shiiping so many logs to china ,soon many of our timber processing companies will be closed because finished products will be imported in larger volumes . Happening already and likely to continue.We have lost our furniture industry and about to lose more timber processing.
I wonder what other projections are being calculated using an exchange rates from eighteen months back?
I see no reason why the loons couldn't tart up the Beehive and flog it...turn it into condos with a view and shift the current live in muppets into the cellar under Parliament. Sell the RBNZ building too. Bloody waste of space.
Do like Fiji and hire out the armed forces to foreign shite holes for cash. Offer the Chathams on a 99 year lease to Beijing for a Chinese naval base. Flog off what's left of the fisheries to Taiwan..ok there's bugger all left but it would mean some good tv when they clash with the Beijing bandits at sea. Sell the All Blacks to the Saudi...should be worth a few bob. Make the MPs pay for the priviledge of buggering the country, instead of us paying them. Hire out the Auckland islands to idiots wanting to run prisons. Sell the NZ Antarctic claim to Iran. Join the scum at the UN by putting our voting rights up for sale. Give away the taskforce to save on costs.
No end of good ways to raise loot.
There you go GBH....
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/…
While not the place I'd be seen dead in, if I'd seen that I would have bought it without thinking....thats so funny.
I assume you could tape on a picture of say Michael Cullen....just to keep you happy.
regards
Ahhhhhh , happy mammeries of my first true love , pneumatic Priscilla ............. Until one sad day , when I playfully bit her botty , and she farted in my face & flew out the window ....... That rejection still hurts ............. Oh the pain , the pain of it all .
Of course it does for the top 1%.....
;]
everybody else gets shafted of course....
:/
We have 30 years of data to show how the neo-cons simply have not delivered.....in fact not only failed to make the average joe better off but actually succeeded in not only making him significanlty worse off but lumbered him and his kids with huge debt as well.....its starkly obvious....
What I just dont fathom yet is why there is such a meek re-action....
regards
It'll go like this:
Govt ministers sell SOEs for next to nothing to some of their mates. Those mates pay the ministers a commission one way or another (cushy BoD positions, preferential share options, etc), and then sell the SOEs for a whopping great profit to HooFlungDung Corporation. The ministers will also see a cut of that.
Politics in action.
Sounds like the late 80's and early 90's.
The BNZ comes to mind - not much difference between what the taxpayer did then, and what the taxpayer did for SCF.
This time, though, there is no global chance of 'up'.
The Brash mentality always had to deny the limits to growth, to acknowledge them would be to make a nonsense of promoting same.
Sorry, of course it was the sub-prime and high land prices. Silly me....
And for nice Sunday read.....: http://www.marketoracle.co.uk/Article24076.html
" economic growth is the result of hundreds of millions of individual decision-makers, each acting in their best interests to shift their consumption plans, saving, and investment in response to desirable opportunities that they face. Their behavior cannot simply be induced by changes in the money supply or in interest rates, absent those desirable opportunities"
Funny isn't it....and now you know why the govt, the poodle media and the friendly banks are running with the BS and spin, why all the surveys pointing to positive feelings are popping up like fungi......"in response to desirable opportunities that they face"...that's you mug peasant....you are expected to stop thinking the shite in the Piigs and the USA and elsewhere, might come to a street near you....and this is helped if the media are controlled by their greed and envy to keep the bubble going..play to the game as Spencer at the RBNZ calls it....so you are starved of the information needed to recognise the hammer before it splatters you into the anvil. Be happy...your govt is there to make sure all is well...your friendly bank manager will help you take advantage of all these desirable opportunities ...and today peasant, it is all about getting you to believe in the bubble...repeat after me....."I believe in the bubble..the bubble will always be...I believe in the bubble"
Now off you go and whenever the bad thoughts return, just repeat the mantra a million times...even better if you can have a string of coloured beads...round and round you go.
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