By Bernard Hickey
Over the final two weeks of the campaign I'll be interviewing the major party finance spokesmen, including National's Bill English, Labour's David Parker, New Zealand First's Winston Peters and Green Co-Leader Russel Norman.
Here's the first one recorded with Winston Peters, in which he argues for a new monetary policy, foreign buyer controls and migration limits.
He began by arguing that New Zealand needed to expand its export wealth through higher value exports.
"When your economic, your education, your immigration, your research, all your other policies are not focused on that, then you slide down the OECD, and there's no chance of stopping this slide unless you get the fundamentals right," he said.
Peters said New Zealand had failed twice in the last two years to pass a private members' bill to reform the Reserve Bank Act by one vote because of National's "blind ideological support" for the current act, which did not address the persistent over-valuation of the New Zealand dollar.
He said the Reserve Bank should have other targets, including export growth, employment, and GDP growth, alongside inflation.
"Other countries have done it. There's no rocket science involved. There's no other country with a currency has volatile as New Zealand's," he said, adding IMF and others had noted the New Zealand dollar's persistent over-valuation.
"But they're paralysed about doing something about it. We're not," he said. "The Reserve Bank would remain independent, but doing a job for our economy rather than international bankers, insurance companies and downtown Queen Street currency speculators."
"We are an export-dependent nation. Let's have policies that reflect that."
Foreign buyers and migrants
Peters said he would ensure the rules were tight and penalties severe to ensure foreign buyers could not buy New Zealand land and houses. Bonds would not be included in the ban, he said.
"The idea that you can park yourself up in some other country and buy scores of houses as some sort of speculative investment because you've got low (1%) interest rates and huge tax advantages, to call that a fair environment is anti the interests of this country, it's anti the nationalist economic approach, and it's just silly," he said.
"Other countries understand that. Why don't we?"
He rejected the idea that a ban on foreign buying would cause an investment strike or capital flight that would push down the New Zealand dollar and push up interest rates. He said the New Zealand Superannuation Fund and the New Zealand First-created Kiwifund (a guaranteed default fund for Kiwisavers) would ensure New Zealand had sufficient capital.
He said the privately-run fund managers of KiwiSaver funds would charge NZ$22 billion in commission over the next 30 years.
He also went on to spell out New Zealand First's migration policy, including the need to reduce migration to Auckland to reduce demand for housing.
New Zealand First would reduce overall migration levels and focus, in particular, on the reducing low skilled migration and the family reunification category, where migrants close to retirement were receiving New Zealand Superannuation and other benefits with few contributions.
Housing and Holyoake
Peters then when ont to talk about homeownership rates and housing affordability.
"Our position is to buy land banks around this country, to ensure those section prices are going to be reasonable, and set out to build houses like we used to when we became in the words of Keith Holyoake, one of the greatest property owning democracies in the world," Peters said.
Both the Government and the private sector would build the houses and New Zealand First would look whether to bring back in schemes like the State Advances Corporate loan scheme where the family benefit could be capitalised.
"The idea that the market is going to meet demand is proven categorically to be fallacious," he said.
Peters disputed the Labour plan to build 100,000 houses in 10 years, accusing it of ditching Holyoake-era policies during the 1984-90 reform period under Roger Douglas.
"The Labour Party started this right wing economic mess in 1984. They threw their manifesto in the bin, pulled out their secret agenda, and to use the words of Shakespeare, cried havoc and let loose the dogs of inflation, and the rest has never changed."
New Zealand First favoured a NZ$17/hour minimum wage and compensating businesses to pay that wage. Peters also declined to support the Labour/Green New Zealand Power model for a single buyer of wholesale power, saying New Zealand First aimed to buy back the recently-sold state-owned power gentailers and combine them into a single generator.
"We're going to put this back together again like that our forefathers wanted us to do and enjoy the profitability of something we can enjoy sustainably and at affodable price. We're not going to settle for models which are a half way house to nowhere," Peters said. Here is NZ First's full electricity policy.
Peters declined to say which policies he would push for in any government-forming negotitations or which party he would favour, arguing he needed to see what voters favoured on election night.
See all my previous election diaries here.
See the index for Interest.co.nz's special election policy comparison pages here.
30 Comments
He's had ours for years.
I'd enjoy seeing National with no way of forming a government without him given his bottom line of a Royal Commission into this Dirty Politics mess.
Can't see Key wanting it but the point is, if Winston is the kingmaker on the day, then there will be one no matter who he goes with.
Cunliffe and Parker seem to have the same economic policies as Winston, (and they probably came up with them first) so I will probably vote for them. Nevertheless Winston has articulated more clearly in simple terms why the current monetary policies don't work, and would be well worth a vote If the Davids are not your thing.
There always does seem some conflict in the Labour Party- I'm not remotely on the inside, so can only consider what is public. The media has also been far too complicit in destroying a couple of Davids in a row. Dirty Politics has shown just how complicit journals like the Herald have been in seriously harming democracy here. Nevertheless the old conflict over Prebble making government more efficient and commercial (surely still having broad support) and Douglas selling everything off (only now supported by the neo liberals of the Nats, where even Bill English seems belatedly trying to distance himself from the value destruction of the foreign takeover of the power companies for example). Capital Gains taxes seem not well thought through, so probably do have some internal conflict, I'm guessing.
With all that, ideally a centrist government would have a strong and broad leadership, and that is not Winston, or even Russell Norman, so it's best in my view to see Labour with the largest share of the vote in any coalition they may form. As long as Winston gets over the 5%, which he surely will do anyway.
Winnie is going to lose a _lot_ of voters if he does that.
At the moment he has an excellent chance of picking up large numbers of dissatisfied Labour voters but they won't go to someone they think is going to put National into power.
Likewise there are many that want National out of power but aren't willing to risk Green financal damage, but people wanting Nats out of power aren't going to back Winnie if he's going to put them in power.
could be interesting erection coming up
Winston is not afraid to upset groups of voters.
He has a firm immigration stance that others cannot afford to touch. Why not? The problems with immigration is one of quantity not ethnicity. The Auckland housing problem has been exacerbated by the numbers. As a country our policies have been slack under both Labour and National. Failure to act in the last 6 years and offering little if any relief damns National and they must be hoping for Winston to come aboard if only to use him as a means or excuse to change tack.
As for English insisting that the exchange rate is outside their control is a feeble excuse. the very least they can do is to discuss the problem with RBNZ and give it a chance to fail or even succeed.
My conclusion about English is that he is that he is like an old record with its needle firmly stuck in the groove.
National seems to be about selling assests to foreigners, first it was power companies, next is land. They have sold themselves as being pro exporters and pro farming but i feel this is just a front. Business conditions have got increasingly difficult in the last for years, we are overregulated, the dollar is too high, as a farmer i feel like we are being manipulated, there are wider agendas. I feel like they are anti small business. I think Winston is right , the country is being run to benefit international banks and corporates.
Before you criticise selling assets to foreigners - just remember we have a large and increasing current account deficit to fund via only 3 options.
- Printing money - an approach we have forgone despite everyone else doing it
- Borrowing offshore - we are already in debt up to our eyeballs
- Selling assets to foreigners
You have to choose - there are no other options - so please let us all know how you propose to fund the shortfall before blindly criticising assets sales.
There are other options -
Stop borrowing from overseas for domestic consumption
Examine and analyse what the overseas borrowing has been used for, what was acquired, and where it has gone
Remember
The mantra on the need for foreign capital
John Key and National say
We don't have enough capital of our own
We need overseas capital to support jobs and growth
And that has been going on for decade(s) - when does it stop?
Where are the dividends? where have they gone? Have there been any?
Where has all that capital that has come in gone?
It's too glib to just keep on saying we need foreign capital without qualification
Another option is to go back and audit all major acquisitions of domestic assets by overseas capital (for the past 14 years) and test them for the supposed results - if it hasn't met the required test-levels of creating local jobs and export income then require them to relinquish the assets and leave
They can dispose of the assets to other foreign capital investors who can meet the tests
Re: printing money. Most other countries are devaluing their currencies, certainly china, ECB, and FED. Jim Rickards says the best way to win a currency war is to stay out if it. But I'm not sure I believe him. If the NZD becomes overvalued we'll be forced to devalue to save our exporters, this will be a massive wealth transfer which will hurt savers. We had low interest rates for a while, which was a form of money printing. It's not the money printing that's the problem, it's where the newly printed money ends up. What about Steve Keens proposal to give newly printed money directly to citizens, with the caveat that outstanding debt must be retired with the gifted money.?
To develop any kind of internal private infrastructure (ie factory's, offices, creative experiments) people need capital - and that's owned private capital, not taxpayer capital stolen from others trying to scrap togrether a bit of capital, and not temporary capital with the worlds highest interest rates demanding repayment.
With the economic mindset of NZ leadership, the only place to invest is "pullback"/hiding. eg solid securities, riding inflation, housing stock, primary production. It is the macro-economic version of stuff coins in your mattress for safety.
To do more than this, the people need to have enough money available to "waste" on risk, and it's got to worth doing it. For every "risk" failure, eg finance companies, there are others that have received payment for services.
How can we put up prices enough to cover expansion and decent wages, if every coin is ripped away to tax and interest? How are people going to pay for higher margin "premium" services (provided by NZ startups) if very few of them having spending money?? (or their spending money is only via banks & their interest rates). How is a producer or services provider going to get sustainable income, to reach the critical point of sales, if only a small subsection of the population can afford more than basics? Increasing minimum wage, makes it worse (puts up prices, but keeps incomes on the bottom rung) - it is the proof of the problem not the solution.
NZ owned businesses have been under capitalised throughout my entire life. Why have I never seen anything from a financial or government expert on how to counter this problem?
How are you going to get high quality local production or luxuries services, if the economic policy is designed to keep the majority in poverty???
Yes capitalism is dead. The central banks have ensured that. Fiat currency is not a store of value, it's only a medium of exchange. This has become painfully obvious from 2002 to now. Like you say when people stuff money in the mattress (property and gold) they're effectively repudiating the dollar as a store of value, and this is probably a wise thing to do. Im sure a lot of the economic problems you refer to are related to the devaluation of the dollar. I'm not sure why you're so down on government spending though. It's not all financed through taxes. I mean governments issue debt, if the debt is used to build infrastructure and future revenue generating projects then it's all good. The government bonds are then paid back with interest. In this way governments as well as central banks can create money. At least with government spending you have a chance that the debt won't be used to finance unproductive speculation.
government doesn't issue money (under our current system) they get banks to do so with interest costs attached.
So if government spending doesn't come from taxes where does it come from? the banks with interest cost? offshore with more interest? Who's making the profit margin? not NZers.
I'm particularily down on tax because if I want to hire someone for 8 hours at $20 an hour, I must pay the government more than $30 for the privilege. Where do you think that $30 is coming from? Either I personally lose $30 for the effort and risk of hiring a person, or the worker loses $30 of their spending power, or the customer must pay an extra $30+gst for the workers time. Which ever of those 3 sources occur it makes it harder for my business to operate, makes it harder and more expensive to hire people and give them buying power, and/or prices must be higher to cover it - sending people out of business or keeping them paying the bank for longer, which makes ROI and future investment harder...all in a country with undercapitalisation and low wage issues.
Then we get on to the government spending, why is government spending intrinsically better than private spending? In the case of (now part-private owned) power stations it can insure central pricing remains neutral and clean. Or in the case of roading (some now part private) it means all users can have cost neutral access without one company gaining advantage and damaging small holders....but then we look at what it cost to develop that roading, the number of hangers on and surveys and political kissarse meetings that must held - a private operation wouldn't have all those overheads, and thus wouldn't require that level of funding.
Also if a project simply isn't reasonable, private business won't go there - but government will consider it "an opportunity". In Palmerstopn North they wanted a velodrome...lots of people liked the idea...but it turned out it would _never_ operate at breakeven, not even close, nor was it expected to ever do so...not only that but with the cost chances are most of the people it was build for would never be allowed access to it's professional quality surface. That kind of thinking only works in government and socialist heads.
Also we have, like we do in Palmerston North as the moment, a council whose job is it to keep citizens safe and operate infrastructure, trying to create bylaws about what you can keep or do with your own property, limiting cars, caravans etc and demanding that all hold registration. This is demands made of private landholders - the safety aspects and property values aspects are already in law...but local government thinks because they are supposed to handle that infrastructure that they are the local barons.
Likewise we her the discombobulated heads in the justice system saying how "councils have been patient and helpful with water rules" when nothing could be futher from the truth. the have been pushy, difficult, misleading, overcharging and frequently breaking of the legal foundations of NZ law. But "because they're government" that's like Mum and Dad's house eh?
Hmm, yes you're right. It seems that NZ government bonds are issued and repurchased through "Registered tender counterparties". I wonder why the NZ reserve bank cant just purchase the bonds directly. That would increase the money supply, effectively QE but the critical difference is the reserve bank is not privately owned, the additional money would go straight back to the NZ government for public good.
Regarding taxes, we honestly don’t pay that much here in NZ. I worked mine out to be less than 30% and I'm on a reasonable salary. If you have rentals then you're totally home and hosed with all the tax deductions. Regarding business, If you cant afford to employ someone with all the accompanying tax deductions then your business isnt really viable. Remember when you employ someone you free up 40 hours/week of your time for productive endeavours.
Regarding unproductive investments, its a problem indeed. Kaipara council springs to mind. I In some instances though certain investments (libraries for instance) may never be financially viable but contribute to public good.
I include the Child Support tax - so mine is up over 70%.
OK so I'll quit my business - chuck in this whole farming lark, that I have better efficiency than 95% of of dairy farms is utterly irrelevant. After all I only went here to get so dollars to get through uni and could get off the sickness benefit. So I go back on the benefit. All those backing me can just claim the loss as a tax write off.
Remember when I employ someone I have to provide all their equipment, make everything safe for them, lay out clear and precise work plans, take all the risk, fix and pay for all the damages they cause, pay for legal advice and other misc items regard employment law.
So what "tax deductions"... the only deduction is the money paid out (to them and IRD) and they get a better cash rate than myself and higher legal protection as employee than I have as employer....
Oh God protect me from the fk employee stupidity argggghggh
Were you aware that in Middle Ages a peasant was required to serve 1 day in every seven on his Lord's manor. Later was changed that service people and producers could send goods or services in lieu of their personal service. In times of famine or other disaster it was expected that the manor stores would also be used to stop starvation (although they were often sold off for a profit and to stop people getting their goods back through moral hazard).
that is to say a medieval peasant paid worked 1 for every six for himself and his goals.
At 30% you pay 1 day for every two that you spend on your goals
At 70% (used to be closer to 85% when I had student loan) for every paid day in my business I must spend two working for their lordships, how does that produce successful economic progress for a business or person?
And they waste it.
Seriously how about you start a business for yourself, with all the stress and risk...then I can tell you just how "unviable" it is. I very efficiently produce high quality food ingredients,, into a developed food chain.... give some actual thought into what happens if I take on a person full time.
think about how many revenue hours I need to recover just for their wages, holiday loading and sickday loadings alone. Who is going to pay for that? A business isn't a money tree, it's not a council that can just put up rates. It's not a government that can just cut a few corners, or shed 1 of a thousand staff if something goes wrong.
And if you want unproductive investment... look at Infracon and the Tararua District Council..."oops we have to close the Infracon construction company because it's losing *millions* of dollars - chop _dozens_ of staff" How the heck can any one with any functioning brain cell in government "oops we are losing millions" on guaranteed sales/contracts - because they figured they had work and would just put on more people, that would free up others..... revenue!!!! customer sales!!!
You think I should toss a two million dollar business in the trash because I don't think hiring a single person at 15% of gross revenue is a good idea??
I don't really know were to begin with that. Child support isn't really a tax. Re your farm; get a independent contractor to run it, and then get a job. If the farm makes a loss on paper you can offset it against your other income. But is it really a loss? Come on! Think of that yummy tax free capital gain and future earning potential.
But rather than focusing on my personal circumstances or yours. I'm generally interested in asking the big questions like.
1) how do we, as a country, earn money and, how is that money to be distributed among citizens. Currently the tax base is quite low, and social services are deteriorating.
2) How do we add the maximum value to our commodities so that we get the biggest bang for buck from our exports. (Selling farmland to foreigners and allowing the Chinese to achieve vertical integration in dairy sector is not good. Allowing Judith Collins' Oravida to ship raw unprocessed swamp kauri "table tops" to china is not a good example either.
3) How do we ensure that quality of life for the future kiwis will be as good, if not better than it was in the past.
4) In the context of colossal global debt and monetary easing. The possibility of sovereign default and/or hyperinflation. How do we construct policy so that NZ and NZers end up as winners over the next 20 years.
We are sacrificing farming and living way beyond our means. If we are going to allow the doors wide open to foreign ownership. We need to drop interest rates to international levels, our dollar will drop. Inflation will soar. Like it or not, this is what needs to happen. The government won't do this as it is protecting votes. I know a farmer who owns a $3.5 million dollar farm who can't make a livivg off it. Some of these properties are way over valued.
So set fire to the savers, and then throw them under the bus. A massive wealth transfer from bank depositors to land holders and wealthy overseas individuals. Its happening already and the middle class is dying, egalitarianism is dying. New Zealand is turning into a shi$$y wealth divided country just like the united states.
Why not block foreign investment in residential housing. Restrict foreign purchases of farmland to leasehold sections, and THEN lower the OCR to zero where it should be. At least that way you direct the money somewhere useful. If there's no upward pressure on asset prices from foreign money then foreign and domectic money will be directed towards productive business and not land speculation.
Dang
You silver-tongued, straight-shooting, salty-old dog you
I like the straight-shooting no-bullshit style "this is what you will do" - no ifs and no buts
I liked that your aim is to look out for New Zealand
What's good for New Zealand is good for all New Zealanders
That's refreshing - no individual hip-pocket nerve stuff - I liked that
Today I went into town to the NZ Consulate and did my thang
Hope it gets you above the plimsol line
I haven't made up my mind yet, but NZ First is a real possibility. I like Winstons stance on immigration in particular. I don't care who he makes king, National or Labour, he will at least bring some balance to either coalition.
Other than that I'm cynical about politicians.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.