By Bernard Hickey
Finance Minister Bill English Bill English made a habit of brandishing one chart in his first few years in the job.
It showed how the 'good' tradeable sector, which includes the productive sectors that export and compete with imports, had languished through the mid to late 2000s under Labour at the expense if the 'bad' non-tradeable sector, which includes government, financial services and real estate.
It was a very useful tool to help him argue for a re-balancing of the economy.
It powered the 'Big Tax Switch' of 2009 that encouraged saving by increasing GST and reduced incentives for residential property investing by changing the tax rules around property depreciation.
The theory was great. New Zealanders would save more, reducing the need for imported foreign capital. We would also invest less in rental property and more in 'productive' assets that generated export returns or competed with imports, improving our trade surplus and further improving our ability to pay our way in the world, which we haven't done for a while.
Nice theory. Except it hasn't worked out in practice. The chart was noticeable by its absence in the minister's Budget presentation last week. It shows the 'tradeable' portion of the economy has kept declining since the National Government was elected in 2008 and is now back to levels last seen in 2002.
Since the government's election the New Zealand dollar has averaged around 75 USc. Businesses have struggled to expand exports, particularly of manufactured exports.
Instead, the same old things have been happening. The government has continued to expand, in part because of the Christchurch earthquake rebuild, and also because of a rise in unemployment and pensions payments. Also, the real estate sector has started to warm up again over the last 18 months, particularly in Auckland and Christchurch.
One obvious measure of this is the measure of lending growth.
Back when National was elected there was NZ$162 billion worth of mortgage lending and NZ$83.4 billion of business lending.
Since then mortgage lending has risen 7.5% to NZ$174.6 billion and business lending has fallen 7.2% to NZ$77.4 billion. The government and Reserve Bank have done nothing to reverse these trends.
Last week our banks approved mortgages worth NZ$1.22 billion,which was the highest since mid 2007. Banks are falling over themselves to offer deals, discounts, high loan to value ratios and high multiples of loans to income.
It's amazing how much people can borrow when interest rates are at record levels of 5% with little prospect of sharp rises any time soon. Many new borrowers without memories of 11% unemployment and 10% interest rates are believing the soothing words of their bankers about the sustainability of their debt levels.
Realestate.co.nz figures show asking prices jumping in May to record highs. An ASB survey of investor sentiment shows rental property is again the most popular investment for most New Zealanders.
All this is happening as the government itself forecast in its budget that New Zealand's current account deficit will widen to 6.7% of GDP in 2015/16 from a forecast 4.2% of GDP this year as our demand for capital to go on spending spree outpaces our ability to pay for it.
The rebalancing has not happened.
If anything, it's gotten worse.
When will the Finance Minister and the Prime Minister change their strategy to actually discourage yet more rental property investment and encourage more investment in exporting. And when will they realise that the exchange rate does matter?
147 Comments
Damien Grant's article ( NZ not about to become the Athens of the south Pacific ) is worth a read too .......
..... as a former teacher Wolly , what sort of grades would you give the Jolly Kid / Wild Bill team , in their compulsory subjects ( finance / welfare / health / law & order / ... ) ?
I'm inclined to compare them with the Malcolm Fraser era of Aussie politics : Didn't entirely screw up the place , didn't do much good neither ........ was he awake ? .... were we awake !
Grades...hah...on humbug and dithering they all deserve to graduate.
Over three years ago we screamed out loud "these fools intend to do nothing but tweak and fiddle"...we were right.
Now the NZ economy faces a deeper crisis as the govt borrowing expands into piigs level.
'Bash the teachers' and all minor civil servants has always been the NZ govt action plan when the budget promises turn septic. No senior civil servant or MP will see a reduction in THEIR bloated paypacks...ditto the parasitic bank bosses and the SOE fatcat bosses.
Lord "tweak" (Sir John Key) will be off and away soon...joined by Lord "Fiddle" ?
Waste of space the lot of them.
Fact of NZ life AR...the fatcat civil servants hug the lying pollies and vice versa...$500000 salaries are par for the pig trough and never to be reduced...Treasury eat through more than one thousand million every year...and produce what...a load of ideas on how to slash costs in other depts, usually by chopping the lower paid lot who do the real work.
http://asianinvasion2006.blogspot.co.nz/2011/03/who-is-damien-grant.html
"Never heard of him before, so sensing this was all too good to be true that a journalist could write with such laissez faire, caveat emptor anti-populist balls I did a bit of googling and found that Damien Grant is not a journalist at all He's a liquidator and corporate undertaker."
housing is the end-game of most economic activity. After all, it's all to do with consumers, and that's where most of them live.
Amazing how many see to think that the 'productive economy' is somehow for selling somewhere else. It can only be a number of moves removed from the end consumers.
Excellent Bernard. This is important. Will National's philosophy of gradualism ever get us anywhere? Will it ever actually change behaviour? Does change at a pace we can all go along with end up as muddle through okay or as failure to change?
Personally I hope they are making changes that are in the right direction. Getting central and local government spending and debt under control seems good to me, but have they actually done this? Changing the Resource Management Act to encourage house building and mining and aquaculture seems good too, but have they done this or have they just fiddled around the edges?
Yes they inherited a poisoned chalice from Labour as they came to power just as the recession gathered force, but did they make the right choices or did they waste the opportunity the crisis gave them?
Are government workers still overpaid relative to the private sector?
In a finite country, on a finite planet, that's a temporary comment, Mr W.
As you have been told, more than once. Why is it that folk seem to ignore, wait a wee mo, then spout the same stuff as iff the rebuttal had not happend?
Cognitive Dissonance, guesses my Physics Prof friend in his lectures.
How many doubling-times left even if you scrapped the RMA?
Dr Bartlett explaining doubling times. OK, maybe a little simplistic, but makes some good points. Funny how economists have so little connection to the real world... but rather seem to live in a world where growth can go on forever, and there are always substitutes for scarce resources. Yeh right.
RW doesnt do thought.....it happens in Uni's that he doesnt agree with.....Im afraid he's a fantasy land type....
RMA, frightening thought, but I think it will be suspended when we start to scrabble for energy, the dams will be build and the mines opened....and lots of spare ex-retails workers to keep employed at it.....its going to be a shock......
regards
With 56,000 productive kiwis leaving it's only going to get worse.
Over half the New Zealanders fleeing this year were Self Employed or Contractors. The down stream effects are only just starting to be felt, ask accountants and lawyers and they will tell you the database of customers is getting smaller. Freight companies are feeling the pinch, less deliveries of manufacturing materials and end user goods.
New Zealanders are a strong breed, they follow their desires and ambitions.
A decent quality of life for a decent days work.
It's when they realise after 10 years work they cant afford a home of their own and there doesn't seem to be any changes to that on the Horizon.
Maybe a couple more reports, a couple more focus groups, discussions with specialist consultants etc will help,,,,YEA RIGHT.
We need action, we need to be hammering in nails etc, not to be paralysed by red tape and boffins.
Once again you nail it Bernard. You state :-
"Back when National was elected there was NZ$162 billion worth of mortgage lending and NZ$83.4 billion of business lending.
Since then mortgage lending has risen 7.5% to NZ$174.6 billion and business lending has fallen 7.2% to NZ$77.4 billion."
These figures do not make much sense - until >>>>>>>
I have a mental vision of 80,000++ small NZ business owners 'reducing' their business overdrafts - by ramping up the mortgage against their homes. Been there - that is why my vision burns deep.
That is, 80,000 hard working families hoping for the return of the "Old Normal" trading levels.
If I am correct - this will end in tears.
I need you as my customer - and you need me as your customer. This simple linkage is broken. Neither John or Bill have any experience in such simple matters.
I think the idea is that it is ok for debt to grow if it does so at a lower rate than GDP. In that way the ratio of debt to GDP still falls but without the chaos and hardship of an absolute reduction in the debt level. Central banks get very nervous about debt deflation spiralling down and down.
It is a tightrope walk.
Steve keen works in a university and does real economics...try reading his work....it may dawn on you just how essential uni's are.
http://www.debtdeflation.com/blogs/
"The Chinese economy is in the final stages of largest Ponzi scheme ever devised."
Or maybe another academic with an "interesting" graph,
http://krugman.blogs.nytimes.com/2012/06/01/the-breakeven-point-wonkish…
"This chart shows a euro on the verge of imploding. If the ECB can’t change this perception very, very soon — and I think it really is up to them — this goose is cooked."
The point is such ppl can and do warn of problems to give an advanced opportunity for lay ppl and pollies to fix the issue.....which of course blinkered ppl ignore....(at their peril). Its bad gambling, but it seems thats what ppl will do, double or quits......but we are many times into losing now...
regards
Fair observation Rudderless
My business overdraft is split up and tagged onto my rentals at the floating rate. Bank manager just gave me a 50 basis point reduction below the market rate for the next 2 years. that's one way to reduce your financing of debt costs for SME's (BTW my overdraft isn't much and seldom have to use it :)
On another note I get the feeling banks are not willing to reduce their floating much further...
Regards
An interesting idea, do you have any data to back it up? Also its possible some of it is being used as a debt hole to reduce the tax bill....ie buy a 2nd house geared in such a way that it makes a loss and allows you to claim tax rebates is I believe how it goes....also then claim WFF. It wouldnt surprise me if in fact this is what bankers have forced mind....un-secured overdraft bad, asset backed mortgage good....an asset to grab and I assume far more liability as its full recourse? ouch....
The "old normal" is gone I believe and with that risk has multiplied...debt then becomes an awful thing.....and if as I suspect we see a huge housing collapse aka USA then there will be a lot of ppl really [far] under water......tears could be, will be, copious I think....
regards
let's hear it from Damien Grant!
"The Kiwi: Greece borrowed Euros and must repay Euros. We have borrowed New Zealand dollars. If we ever found ourselves where Greece is today, we could re-write the agreement with the Governor of the Reserve Bank and our debt would be gone by lunchtime.
Key and English are conservative managers of our affairs. However, they are not taking the steps needed to break the culture of dependency, shrink the size of the state and unlock our economic potential.
Key claimed he was ambitious for New Zealand. This Budget shows no sign of that ambition. He knows what needs to be done to catch Australia, even if it costs him a third term. It would be a far better thing for him to do and will earn him a far better legacy."
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10810291
Alas Damien has a Kiwi education in economics and finance..."rewrite the agreement" and shoot yourself in the foot Damien....this economy is debt dependent...reneg on the debts by devaluing the dollar to ease the debt financing burden and you risk what Damien?...come on now...you can work it out Damien...think boy....
..... call it vanity if you will , but I'm kinda proud of the fact that NZ has never defaulted on it's debts ...... one of only a handful of countries able to make this claim ......
But DG makes a good point , that NZ's destiny is within it's own hands , with it's own currency ........ Greece is munted ! The Euro has them stuffed & squealing like the piigs that they are ......
And Damien notes, "A large part of the Greek problem is that tax laws are not enforced. More than 40 per cent of their taxes are not being collected. This does not happen here."
Hmmmm ....
A penny for your thoughts Gummy?
A penny ! ...... you flatter me , Les ..... no one else thinks they're worth that much .......
..... let's tackle welfare , as a starting point : OK to have kiddies looked after , good schooling , some milk , a school lunch & necessary school equipment .......
And happy to pay the universal NZ super to all the oldies , but raised to 67 years of age .....
...... my difficulty is all the welfare spent in the middle years of life ...... the WFF , rental subsidies & the like , interest-free-loans , yadda yadda .....
As a starting point , get welfare back to the beginning of life , and the end of life ....... biff out the sloppy fat lazy middle age welfare ......
What about our 'Dutch Disease' and the beneficiaries of that trough? We just ignore them do we?
http://www.interest.co.nz/opinion/59623/bernard-hickey-argues-government-making-no-progress-rebalancing-economy-if-fact-he-sus#comment-688222
What is the answer DG , when we have both major political parties hooking on spending ? ......
...... any pollie who runs on a platform of fiscal responsibility ( as Don Brash did in 2005 ) is not gonna be elected .....
Both Labour & National are pandering to a milksop electorate that demands " entitlement " to some one else's effort ......
WFF is rubbish policy , middle class welfare ..... to name but one junk " package " bestowed upon us ........
Ever so pleased to hear that Damien...of course you do realise the 'printing' is going on right now under your nose!....it's called debasement.
Sometimes countries need govts with guts and I am not speaking of Gerry....
The lack of guts is best seen in Key's refusal to raise the pension entitlement age...he is buying grey power votes at the cost of future taxpayers so why should he give a dam. likewise Labour bought votes with WFF. They are both at the same pork slicing vote buying game and if the Greens should ever by some fluke become the governing party....it will be by the same pork slicing behaviour.
Welcome to lala land.
and speaking of Greens pork we have this in the Herald:
"Mrs Turei promised that if elected, Greens would give the children of beneficiaries an in-work tax credit, and would extend paid parental leave to six months.
She emphasised the importance of education as a strategic investment for children, and said the party would repeal controversial changes such as class size."
Notice she fails to explain where the money would come from....are these not green pork promises.
Damien - I remember your article going against what Bernard and others* (Raf Manji) were proposing at the time. Here is Bernard's article dealing with the objections:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10789589
What do you think?
Cheers, Les.
I am still opposed to printing money, I think it debases the currency and is a poor substitute for actual reforms that improve productivity. That, and as you know, my faith in neo-classical economics is more faith than reason.
However, I was reacting to comments by a number of commentators (Messer’s Hickey and Hide amongst them) that we were heading the way of Greece. We are not, and the ability to print money is one of them.
I’m not saying printing money would not work. Slavery works (I am not comparing slavery and inflation to be morally comparable, just making a point and nothing less extreme comes immediately to mind).
My comments at the time that printing money is wrong. It steals from the savers and rewards borrowers. I have not changed my mind in that but printing money would be a better solution than economic collapse.
I think Greece should simply default. German banks be dammed. Do what Iceland did. Sometimes creditors lose money. Happens in my industry all the time. The lenders may learn to be more prudent next time.
Damien - I like your honesty about having more faith than reason supporting neo-classical economics ..... Good point about not substituting printing for reforms and improved productivity, Raf Manji deals with it here:
Debasement need not occur and productivity improvement could be supported rather than undermined. However I agree appropriate other reforms are also necessary.
The debate we need to be having, is how to continue in a regime of reduced available wealth.
Left and Right will continue to ignore that, and argue for 'full wages', so folk either earn heaps or nothing. That is silly, given that two teachers on half-pay is better for society, than one on full and the other out the door.
Voluntarism - what I do all the time - has to be part of the equation. Perhaps logged as "contribution to society', and an agreed 'in kind' amount at that. Ultimately, it'll be a matter of effort need regardless of renumeration - as when communities meet natural disasters.
The unpaid (not regognised) part of our ecomomy - staffed by local volunteers - is huge.
Out of this activity a new local economic model grows as neighbours discover each others skills. They then trade directly with each other. The REAL new normal.
I need you as my customer - and you need me as your customer. And regardless of the $ value - the exchange of currency has solid value.
Director of foreign exchange at Westpac Institutional Bank suggesting shorting NZD as the best doomsday trade.Would the PM care to comment?
All we need now is the Lehman moment to revisit 2008. Everything will get sold off apart from the USD and Yen, gold included.
http://www.cnbc.com/id/47652715
"As for what to buy the dollar against, Bourdeau has three criteria. She wants a currency that is correlated with global equity markets, that is relatively illiquid, and that is from a country with high levels of external financing that would dry up in the event of a global economic problem. "The New Zealand dollar fits all three of these," she says.
Bourdeau warns that "you should only enter this trade if you think it's the end of the world." But if you do, she recommends buying the dollar against the New Zealand dollar at 75.30 with a stop at 83.50 and a target of 0.5000"
I remember the "'Big Tax Switch' of 2009". That was the Nats one and only opportunity to restructure the tax system to remove the incentives to invest in property, and level the playing field for the long-suffering productive sector, particularly manufacturing.
Various people suggest a CGT or Land Tax. The overwhelming silence from the Feds made it quite obvious that Key & English had quietly told the farmers that that could never happen on their watch, even if the whole economy went down the tubes.
So the other main option was to ring-fence rental properties, so that the costs couldn't be set against primary income. A messy alternative, that would have been relatively easy to waltz around. But better than nothing.
However, the howls of outrage from the landlord body (most noticeable on this site thru a rant from Bernard's friend Olly Newland) put that option off the table.
So the chosen remedy was to disallow depreciation on rentals. A remedy that was never going to have any real impact. A friend of mine with various rentals told me that he never bothered to claim the depreciation anyway - his whole business model was based on claiming losses year on year and then getting his tax free capital gain.
There is now no chance that the Nats will rebalance the economy, they have made it abundantly clear. Both English & Key have made positive comments regarding their support for a strong property market.
So its sayonara to any possibility of a first-world economy .
http://www.interest.co.nz/opinion/59623/bernard-hickey-argues-government-making-no-progress-rebalancing-economy-if-fact-he-sus#comment-688222 However, look where the golden eggs end up? Well, if it's ok for 'The Backbone' it's ok for ...... hence we are where we are.
Good piece Bernard, keep at it you never know people might start to take notice. Hopefully its not too late by then. Personally I dont blame ths goverment I blame the percentage of this country who want everything for nothing. We all know that if National done what is actually required to stop NZ becoming the next Greece they would be voted out first election. They are trying to get away with as much as possible, and keeping their fingers crossed it wil be enough while retaining power, knowing that this is better than giving power back to those who will make an even bigger mess pandering to the bottom feeders of our society.My view is that it may be too late, Greece is going to go then Spain and Italy, then the real attention will turn to the likes of NZ. Whos going to be dumb enough to keep lending to us once those others have reneged on thier debts, anyway who will have the money to do so? Once the lending and borrowing stops the game is up for NZ.
Realistic - what you say is dead right, and something that I wish that others on this site would recognised more. The site is full of knowledgable contributors with good economic and therorical judgement, but very little political sense
I think we all have a fairly common feel for what needs to be done, but have to acknowledge that unless you bring the NZ public with you when in power, your'e history very quickly. What is the point of a 3 year sacrifie where you can get little done, and you're just replaced by another lot who will either do damage, or quickly find themselves in the same position - nothing progresses eitherway
I doubt National can do it any other way, but I would value contributors thoughts on this site more greatly, including Bernard's, if some constructive suggestions were made around how to manage the polictical aspects of their respective suggestions - far too many, indeed most, show no consideration of the vital aspect needed to get things done
Yes what can be done to save us from ourselves, not much unfortunatly it would appear. I believe one way is to provide more finacial and ecomomic education at schools, that might help the next genertaion but is too late for this one. People only seem to learn the hard way, if National did put a capital gains tax, opened up more land or enforced deposit to loan ratios of 20% plus then we would see house prices come down, this would hurt a lot of people but exactly the people who need the lesson. The down side is these people would turn on national and vote them out. Until we change the kiwi mind set around property speculation and debt nothing will change. The only mind changing lesson that is sure to work is if these people lose out. My guess is they will eventually lose a lot but too late to save the rest of us.
PM – reduce infrastructure imports.
In the current and upcoming worldwide environment talking about growth as a nation only makes sense, when industries are in place to fulfil demand/ necessities.
Our one sided economy isn’t sustainable and therefore doesn’t grow.
Most everything we need for our daily life’s and workplaces is bloody imported.
Recommended: http://www.uncsd2012.org/rio20/index.php?menu=62
…….planned, manufactured, installed, maintained by Kiwis.
We have 'Dutch Disease'. Our policy settings favour investment in property. Who are the beneficiaries?
"A typical dairy farm in 2009/2010 carried approximately $6m of assets, $3 million of debt, earned $850,000 in revenue, paid $115,000 of wages and paid around $11,000 in tax* (the average share-milker paid tax around $33,000). A software business with double the revenue would have no debt, has $100,000 of assets, pays $600,000 in wages and pays $100,000 in tax. The New Zealand version of the Dutch Disease has made us poor - farming is generally a low margin business so there are fewer spillover benefits to the wider economy.
What does this mean when the financial sector is generally attracted to low risk ventures? The software business exists in a competitive environment, has few assets and therefore is much less attractive as a lending proposition than tax advantaged, asset backed farm, in spite of the cash flow differences. It is worth noting that the Australian banks soak up close to 20** times the tax paid to the New Zealand tax authorities on the average dairy farm. Spot the long term threat there? More broadly this debt bias in the New Zealand economy means that most years the banking segment of the NZX top 50 companies earn more than the remaining top 50 companies put together. Is that not a worry?"
http://www.johnwalley.co.nz/181-dutch_disease_fatal_to_innovat.aspx
Interesting numbers, eh. Maybe if this problem had been addressed in the recent budget we'd have less of a problem?
When will NACT get to grips with this?
Yeah right, oink, oink, flutter, flutter. Or should that be, moo, moo, baa, baa, la, la land, Mr Key, Mr English?
Cheers, Les.
www.realeconomy.co.nz
* http://www.stuff.co.nz/national/politics/5017285/Is-the-rural-sector-paying-enough-tax
** Not only the "backbone of the New Zealand economy" then .... People should be getting medals for this outcome ....
Where to for the NZ unbalanced farce?
Why into the future of course...into greater debt and more downgrades...knighthoods for English and Key.
I wonder how many Kiwi are bothering to read and follow the aussie property collapse...where they go we shall follow....the slaughter of the mortgaged is underway...
Great article that unfortunately the media that most pay attention to (TV One News) will ignore. Their political reporter described the recent budget as "prudent and sensible" from memory. Got it straight from the Nat's media office, no doubt.
Overseas investors must have laughed their heads off at what suckers we have been, courtesy of our respective governments, and a wilfully blind reserve bank. And those investors are sensible enough to have made sure they have invested in stuff that will always have value, even with a significant devaluation. I.e. Farms in particular; and property in general. We're now even stupid enough to throw in power companies and other core infrastructure as well. Why would they invest in our tradeable sector- they have those industries themselves.
Often our monetary paradigm seems to be looked at as Demand for money for property; when the real issue is that is what the Suppliers of money have pushed the money at us for. If the way to have overseas holidays, flash cars, lots of toys, is to first have property to borrow against, then that's what people will do.
So we have to address both the supply and the exchange rate; copy the UK, US, China, Japan, Switzerland et al. Control our own supply of money, interest rates, and exchange rates, with a core objective being either a current account surplus, or growth in the tradeable sector, putting inflation down to a secondary target.
Before too long we will run out of any leverage on our property, and then the music will have to stop anyway. Could be very soon. I would prefer we had some control over the process, than faced a Greek or Spanish solution. Probably too late though.
It would be better if John Key were to have some kind of epiphany, so that we don't have to wait 3 years or for a really damaging crisis. Presumably Key is in the PM job partly for the power and ego rush, but partly also to leave some sort of legacy.
The current path suggests a legacy of virtually no useful growth; even further loss of ownership of NZ's productive base; mass emigration of the most productive workforce, increased unemployment, and very quickly growing national (as in current account) debt. And all of that is National's own somewhat rosy budget document. Bernard's graph graphically shows the direction this is all heading.
Key seems to like to present himself as a CEO type figure. Any CEO faced with these figures, knowing that he would be sacked himself if he didn't do anything about it, would sack the chief accountant (English) and the CFO (Bollard), and get someone new in. The someone new would have to be able to explain how their plans would change things. There are simple such plans. Just maybe his trip to Europe will show him a few alternatives, and give him some much needed urgency.
Contrary to the views of the left wing ranters on this site more lending on property is the best medicine for the economy. It creates a huge number of jobs to build property. As well it keeps those jobs going as repairs and maintenance are required continuously.
Any further disincentives such as CGT or other ring fencing, will cut jobs, and create a bigger than ever strain on the rental market guaranting further price and rent rises.
A CGT will ensure that people who may wish to sell will hold back, driving up prices even further and faster. A CGT applies in many overseas countries and has had no effect on rising prices. All it has done is create tax losses that will last for decades and be set off against future profits.
A CGT must apply to each and every property and must especially include Mum and Dad home owners. Mum and Dad home owners, are the biggest speculators of them all making up over 90% of the market.
It would also have to appy to the sale of businesses (look at Garath Morgan's tax free windfall from Trademe), and farms, and shares, and a host of other things otherwise it will have no effect. You can't have a market where the majority of sellers are free of tax on gains and a minority are not. This leads to distortion as money drives from one asset class to another.
The record low interest rates we now have are in effect a huge wage rise for mortgage borrowers and a better way to deliver more money to peoples pockets without a wage price spiral .
The austerity idea cannot work either .You can't have austerity and growth at the same time
People either spend and make the wheels go round, or save by slashing spending and thereby deepen the recession for even longer.
It'd be a sweet change around here if the team debated BigDaddy's ideas , rather than launch into a tirade against him ........
..... for instance , the disallowance of depreciation as an expense against rental incomes , will have cost jobs ..... it was a dumb way that Wild Bill chose to attack the house rental industry ....
And the CGT is a shite idea , destined to distort investors' behaviours , and a sop to tax planners & accountants . Investors will be hacked off with it . And the government won't raise much out of it ......why would a CGT be any different in NZ than it has been in Oz or elsewhere ? ....
BigDaddy - you say, "A CGT must apply to each and every property and must especially include Mum and Dad home owners. "
So, what CGT rate do you propose? (am keen for you to answer this question please.)
And then, "A CGT applies in many overseas countries and has had no effect on rising prices."
But was it meant to have? Suppose they didn't have a CGT, do you think their price escalation would have been more or less intense?
You say M&D are 90% of the market and the biggest speculators and some countries don't CGT the family home, same as proposed by Labour and Greens, so maybe you are right, "A CGT must apply to each and every property and must especially include Mum and Dad home owners."
However, are there other reasons for introducing a CGT, or land tax, say?
Firstly the money is mostly lent on existing property so the only benefits are maintainance and the occational upgrades (usually paid for with more dept). Even on a new home the build is only around 12-20 weeks excluding weather delays etc for most homes, after that the money is tied up creating no employment other than repairing the occational electical fault or leaking tap until it gets a spruce up 20 years down the track.
In contrast a similiar sum lent to build a business provides permant work and its associated paye/company taxation, plus the business benfits the multitude of other firms that provide it with goods and services during day to day running.
There is no way property investment benefits the wider economy to anywhere near the level of lending to business. I have also read somewhere that rental property investment actually reduces government revenue as the owners claim costs against their income tax, plus the extra demand created pushes up prices increasing the cost of govt housing subsides for low income earners.
No wonder young professionals/trades poeple get out of NZ. They see older people with good incomes dodge tax and make big untaxed capital gains while they pay their full paye plus 12% student loan on an income that buys no more than what factory works pay bought in the 60's. Then ad the fact that they watch those on lower incomes hover up all the tax they paid in big working for families payments or benefits while they struggle with big mortgage payments on a modest house an hours drive from work in peak hour traffic.
Anyone over 45 smart enough to buy a home when they were young has seen its value multiply several times. .The pro blem created being that the young now have to pay a fortune for their homes.The boom is great for the Aussie banks but takes away from NZ inc as it greatly reduces disposable incomes.
Also just wait to until rates rise again. A basic 2 bed unit in the better burbs of outer central auckland now selling for $400000 will have repayments of between $600-700 a week over 30 years. With food, bills, rates, car loans, petrol etc they will need to net around $1300 a week to scrape by week to week. This is the sort home those on two moderate incomes are buying around my place, heaven help them. They better forget about the real joys in life like having kids, travel etc!!! Best wait till they are finally freehold at 60 or hope for a big 80's style dose of inflation.
You mean............National lied? well.....surely not, surely old Bill and John are masters at running economies?
Ohhhhh, what's that? they are masters at 'running them into the ground?'
Just like Labour. Roll on next election! Yay let's see...... will it be idiot in RED or idiot in Blue? or maybe... just maybe, 'give em a shot cause we got nothing to lose' guy/gal in Green?
Contrary to the views of the left wing ranters on this site
You are right, Big Daddy. There are a lot of (mostly) blinkered left wing ranters and ravers on this site. I've just been over to the Herald’s website and read Bernard's article online. It has attracted 45 comments so far from what I would take it to be is a far more representative range of New Zealanders and their views. And I have to tell you, that Her Majesty's loyal New Zealand correspondents have administered something of a good old fashioned knock-down and drawn-out arse-whipping to Mr Hickey! It somewhat made my day.
Ohhhhhh, please enlighten us with their profound ramblings such as yours? Please.....tell us the answers to how we correct the endgame ponzi scheme exactly called our monetary system David?
Don't just harp on about liberals and "left wingers". What's YOUR IDEAS smartass? Give us an ass whipping IF your dare? And people like me with the 140+ IQ will try to make sense of it all!
See.....YOU have got NOTHING! You know what the most profitible investment for ALL (the whole of society)is David? Do YOU?
Nah,...well I will tell you just to help with your myopia that you think makes you so rich and oh important.
Here it is: IP (not PI) Intellectual Property, of which I own. Hence the 140+ IQ
Oh please, you're being pathetic. Do you think you're the only person on this site who holds IP? You're looking at another one, buddy, but unlike you I don't need to go around blowing my own trumpet about it to in order try and make myself look important or smart. Like holding IP means either. How pathetically shallow! That you have done so just goes to show that you are neither smart nor important, but are vain and weak.
It is so typical on this site that all one gets from the Left is abuse, personal attacks and insults, and an inability to rationally discus issues without resort to petty and abusive personal attacks. It says an awful lot about the character of the Left in this country, nasty, nasty, nasty, blinkered, cynical and dogmatic.
David says...
Oh, you'll be a good mate for scarfie then. He's another of the board’s resident self-confessed outstanding geniuses. We are all so lucky to have you. LMFAO!
and then says...
It is so typical on this site that all one gets from the Left is abuse, personal attacks and insults, and an inability to rationally discus issues without resort to petty and abusive personal attacks.
Is this a case of the pot calling the kettle black?
Don't scoff Justice. Puts refers only to the present singular third person.
Robby could have simply been refering to an action in the past, or perhaps a group of people (implied by the use of their) who might do such a thing (eg a groups of morons, as opposed to a single one!!).
A very understandable reaction on the Herald website. During all of this "prosperity" for property investors, there has been a truly shameful donation of much of our industrial and commercial worth to foreign owners. Most if not all has been assisted by ignorant governance starting with Douglas & co.
Blame Governments both left and right for that. Do not try to rest blame on the leftys.
Personally I have no wish to be a serf in my own country but it is evident that most of critics are quite happy to continue in that direction and use the rental ponzi scheme to hold out as long as next week at least.
Scanning the 45 + responses on the NZHerald to Bernie's article , there was a broad spectrum of opinion ....... a general theme seemed to be that property investment was less risky than shares and finance companies , and better than zero returns , which term deposits at the bank are .....
.... no spam : " you sound like the proverbial broken record , and your commentary isn't adding anything new to the discussion ." ....(. not a fan there , Bernard , and 29 folk gave no spam the thumbs up ! )
Higher School of Thought has been thinking : " ... they don't really care so long as they figure out how to get re-elected next election . What you need to realise Bernard it is a game of how to hoodwink the General Public . " .......( I reckon this guy is the campaign manager of either Labour or National , if not , he should be .)...
Mike in Welly says " If people spend as much time in educating themselves in financial markets as they do on doing up their rentals we would be a more balanced investment market here in NZ " ......(. the tenants are starting to piss you off , aren't they Mike ... go on , fix their bog !..)
.... and our very own Kunst chipped in with : " PM , reduce infrastructure imports . "
The Herald didn't unfortunately include the graph. In this case the picture does tell a thousand words; and the graph shows the effect of national's non policies in dramatic fashion- especially if the good Bill used to trot out the very same graph before he was elected.
Question: Why do people like "justice" never present alternative ideas in a rational manner and can only resort to personal abuse instead ?
Answer: Because they have the "Mob" mentality that only knows how to howl down any reasonable discussion.
Universal Franchise is an obvious mistake when people like him have the vote.
It is neither abusive or name calling but describing the antisocial behaviour that these two have previously admitted to.
I am also quite serious when I propose that no solution will be effective until the greed of the few is seen by the rest of the population for what it is. I have been meaning to outline this in response to Kunst's comments. Capitulation is what the point that has to occur before progress can be made. The debate should not be as inane as left or right, but how to educate and fast track to the point of capitulation(thereby hopefully not going as low as it might otherwise).
But you are right but sometimes my resistance doesn't hold and I err :-)
While I am not an extrovert if I do get the chance I do have a simple technique to show people how the money supply works. I use $100 and some small change to accomodate the interest and bits. I then 'issue' this $10 from the central bank to a trading bank. The trading bank then lends $100 to the person (it should be $90 but I keep it simple) bearing 10% intererst. Given that the $100 represent the total money supply I then say a year is now up so pay me back the loan plus interest. I get some interesting reactions.
Well if my subject gets the first part, I then go on to explain that the interest is the method that the greedy few use to redistribute the wealth :-) I have a friend that has jumped into the camp of the OWS movement and is acting as their treasurer, even he didn't understand until I explained it to him. This is a guy that is a chartered accountant and was trying to convert me to bitcoin. To his credit he was quick to grasp the concept though, and is the sort of guy to spread the news far and wide. It would be interesting to know what the silent readership of the forums is like, and what their interest (excuse the pun) is. They are the ones that hopefully pick up enough from those of us telling the story. It is a shame Iain Parker has gone so quiet on the forums.
Oh yes, all that accelerates the inevitable. If you also believe in resource constraints, then it will be a double whammy when this all falls apart. I have been trying to model my predictions based on this theory and have done some graphs in word. 3-3.5% seems to be the cutoff for interest rates causing hyperinflation but what can't really be modelled is velocity. I suspect the best solution is to look at the outcome, which is debt to GDP. It has to be total debt mind you, and for the US the graph does lool ominous. Interestingly the figures from RBNZ don't yet support the hyperinflation hypothesis. I think they eventually will. M2 or M3 is the other one to watch.
Raf has linked an interesting article from his website from the threads in his article. I will work through that tonight hopefully.
I have been reading a bit of that Sustento link but I need to be on top of my game to absorb all that properly:-) He makes the claim that money borrowed for production only has a velocity of 1, it doesn't work after that. I think I have that right anyway. It looks quite good from just skimming it and I can wait to get my head around it. I believe he comes to similar conclusions despite the increased complexity of his equation. My theory about my theory is that it shows economics doesn't work.Lol
I have had a look at the real bills doctrine and I believe that also would fall over when interest is considered.
Did you see the TED link some months back that showed the graph of 25,000 corporations from around that world that have 'peaked'? Money, resources or both?
Thanks ive been trying to find this piece for a while....this of course flows into the NZ v OZ argument ....the scalability OZ has means we cant ever catch them as a Nation.
(12mins)
and this is well worth watching...........
http://www.ted.com/talks/james_howard_kunstler_dissects_suburbia.html
regards
But I contrast Iconoclast's comment below with that of DavidB or BD. Most are looking to support their prejudices and just don't want to know. For some I illustrate what is going there is simply too great a chasm between their perception and reality. You can only hope that the next person who tells them helps it sink in a little more and I have had the experience of someone saying in response to my illustration above "oh yes someone was telling me that".
I hope you don't think I am criticising you Walter, it is in fact quite the opposite and I am trying to compliment your contributions.
The two in question here are amongst the very best at avoiding debate and are actively involved in behaviour that is the cause of some of the problems this debate is about. Resorting to 'left wing' is fallaciousness at its best, a common theme amongst the genally worthless comments from them. Do you want to talk the burglar or thief about why they shouldn't steal or do you want to stop their thieving behaviour?
BD universal franchise might seem a mistake, unless you consider the alternatives. They all end up as tyranny in some shape or form, you might want to try living in one (try Mugabe, or Assad - I will chip in for the one way ticket) before you come out with such an inane comment (one that undermines any credibility you might otherwise deserve on other subjects).
BH has a point, though he has not demonstrated how NZ can trade our way out of our indebtedness (NZ has run current account deficits for decades). Eventually the credit will run dry, the government's finances will collapse and the rich will leave the poor to starve (the foreign owners of our productive assets are not likely to stay awake at night over that).
PDK outlines a similar scenario, coming at it from the angle of unaffordable energy. The solution seems obvious for NZ (the problems of the world at large are infinitely more difficult), end immigration, remove incentives for breeding, and create a culture of energy thrift (e.g. by bringing externalities in from the cold with userpays for energy spendthrifts) and sustainability.The resources exist in this nation to sustain a reasonable number of people,in some degree of comfort, we have only increased our material wealth by borrowing it from future generations (without permission of course). If PDK called that intergenerational theft I wouldn't disagree with him. Where I do differ though is how we get to that sustainable future. My belief is that unless we democratically choose to move in that direction, the imposed austerity route could just spiral us into a violent, Somaliesque nightmare. Not what I want for my grandkids, how about you and yours?
Ive never heard anything rational on your part "rents will go up...up!....UP!!!!!"...so at best kettle calling pot black.....
and actually I have seen Justice write out ideas in the past....that were worth reading and discusing....
The rest of you post is just conceited drivel, so dont like the "others" lets take away their voting rights....then we can continue to live in la la land and the peasants can lump it......that's how America is gone/going....."let them eat cake" didnt work out to well.
regards
Nice try, If you had been following I was one of first on this site giving plenty of ideas, not to mention my letters to Bill English and Alan Bollard since 2003. Should I go through YOUR own comments over the years looking for abuse Hypocrite? You, Chris J, David etc?
looking at my crystal balls...I bought two cos they are cheap...Chinese imports...through the smoke and haze I can see where things are going....fast....debasement of toiletpaper money on a grand scale in the EU UK and USA to name but three....and oh look see...inflation now thought to be a good thing to have....which will mean what, when it comes to the cost of refinancing the trillions!
It was a good article, dealing with macro issues. Many of the Herald respondents went off on a tangent dealing with "micro issues". Out of 50 respondents only 2 went close .. but, if you look closely this is what you find
people do not want the truththey only want their prejudices reinforced
It is a Great Article... It is about "us, NZ Inc" and issues we must face and addess.
Many of the Herald respondants are simply National Party Patsies. You will note their responses and vision being limited to the royal "me, me, me", because that is the primary limitation bestowed upon them by their Neo-liberal Economic God.
What Bernard must understand, is if you weekend after weekend make well reasoned and articulated critique of our Government(s) management... they are going to get grumpy, ring around their mates, and seek to beat you up in a cyber bullying kind of way.
Kia Kaha Bernard, the chart screams Ice Berg! , but the band plays on.
Our leader, after talks in London says that Europe's future and therefore ours is looking "Extremely Vulnerable".
Wow; what a shock! Who mentioned epiphany?
Build your own lifeboat because John & Bill wont be providing them. Nor will they be providing our unemployed with the skills or materials to do so on our behalf...
Didn't see this comment from Bill English on Friday being very widely reported:
There would be dark clouds on the horizon for 15 years because of the European and United States debt crises, he said, but there were new markets in China, Indonesia and the rest of Asia-Pacific that were strong and wanted Kiwi products.
15 years ... interesting forecast indeed.
http://www.stuff.co.nz/southland-times/news/7033037/Class-size-puts-its-hand-up-in-Gore
Maybe he's just looked at Japan's experience over the last 20 odd years.
Lets see. GFC hit late 2007 and really got going in 2008. So lets call it roughly 5 years... Another 15 years if the Japanese experience is repeated.
Bernanke et al are doing all the stuff they told the Japanese not to do... And I'm guessing that BLinglish has just thought to himself that if the Yanks and the Europeans are trying the same old, same old, that the japanese tried, its going to be a while....
15 years???good digging Kate
Yet the government is not willing to make the changes needed:
- Raise the pension age to 67 over a period of time, and means test it
- Markedly reduce WFF entitlements OR raise income tax
- Overhaul the planning system (something they promised 5 years ago)
a gutless bunch
There is a lot of research on the length of this, it seems that the de-leverageing is 2/3rds of the build up....this took 30 years+, so 20 to deleverage would be the "norm"....and Ive been saying that for some years....
But its interesting the snippets that emerge at times....these are what the pollies are really thinking behind the mask....
Raising the pension age to 67 I am highly dubious about as for myself (say) I hope to still be working past 65 if only part time....the ppl it will impact the most are the poor / unskilled but Ive yet to be convinced it will do much. So I'd like to see just how the savings are calcualted....
a) If at 65 you are too ill to work you simply get the sickness benefit...in this instance what has been gained? Peter pays you instead of Paul.....from the same back pocket of the tax payer.
b) Poor ppl live 5 to 10 years less than those on middle incomes....so in effect you are impacting them far more than any other socio-economic group....
c) Will those poor have jobs? or keep them? why pay someone at say 66 the same wage as say a 20 year old? (Minimum wage?) if no one employs them they get the dole or similar....Peter pays you instead of Paul.....from the same back pocket of the tax payer.
The problem with a planning system is 2 fold.
a) regulation such as we have is this it seems is what ppl want or the "safety" of it......The point is I guess this is the price of safety and ppl have to accept that....the disconenct is when it impacts you directly you demand it.....if it doesnt, you dont want it......
b) Usually its a method to control the extracting of a good in this case say raw materials/minerals....these however are one time use....look at coal in the UK as an example. or north sea oil, all you achieve is can kicking....so you and I get to keep our wasteful "lifesytle" for a few decades and pauper future generations....I think thats immoral personally.
WFF v tax.....no system impacts everyone the same....the problem I have with WFF is it alows the excessively fertile or lazy to get out of costs they incurred or having to work....as well as genuinely halping those in need....but the point is its aimed at large families and not to good incomes which is un-sustainable....we have to reduce the population and this is just the wrong signal a huge social engineering failure.
There was a really good graph put out by Kate? showing Treasury's absurd forecasts, the interesting bit is the dip in 2008 as that is historic and therefore accurate....that dip is coming again and worse. This means something(s) have to give....so tax has to go up. Really National have been can kicking....not sure that 2014 will see the poisoned challace being handed on any more....I can imagine BE's face for the 2014 budget....(maybe even the 2013) he's going to look like he's been poleaxed....shortly followed by him pucking into a bucket from the stress.....as he or his successor is going to hand out some nasty mediecene....on pollies wants to do that as he knows he's toast...
regards
NZ had a good system of encouraging the "productive sector", we had SMPs & export incentives, a managed exchange rate etc. We had Prime Ministers who had the power & guts to initiate large Hydro Power schemes, allocate orchard/farm land to ex-servicemen, etc ....
But no the new mantra was 'leave it to the market' - float the dollar, destroy all incentives and leave a tiny island/s with 3/4 million bobbing like a cork with the sharks ...
Cutting WFF may seem like an easy way to cut govt spending but I believe that WFF is the money that families spend out in the economy and if it is reduced the economy will tank further. And so the downward spiral continues. Families are generally so indebted (and any loan over 150k is heavily indebted in my books) that they just don't have enough disposable income to keep the wheels of business turning. National know this. The rising house market has been poison for our productive ecomony and the deleveraging process needs to be gradual at govt level. It will be a long slow grind and that's without any global recessions factored in. Sudden changes to govt spending are not the answer at the moment, and hopefully won't be forced upon us.
"So indebted" because a gutless bunch in the Beehive and at the RBNZ failed to prevent the flood of credit that blew the bubble...why didn't Cullen consider max LVR controls!...why were banks allowed to imprison the economy in debt!...where would we be now had the useless in the Beehive pushed Kiwi into being savers...and bashed the banks into line...where was the regulatory control over the thieving finance company parasites.....
You are correct to identify the economic dependence on the cycle of benefit pork....the whole stinking system is locked in place...the smart can see this and plan ahead to sidestep the serfdom promised to every Kiwi born today.
Those destined to emerge from the shite will hold positive work attitudes and be engrained savers..the rest are doomed.
Wolly - I think Cullen did see the credit bubble and tried to do something about it, but was shut down. I think I recall him tripping around with RB folk etc, warning Japanese Housewives of the dangers of carry trade, but more importantly, along with Tony Alexander (I think) he proposed a mortgage levy to arrest the credit splurge that our version of the OCR mechanism was so, so ineffective in restraining. However Helen Clark squashed the debate on that very early on and 'The Supplementary Instruments' study/group concluded, "She'll be 'right maaate."
Like Don Brash's idea of varying fuel excise duty as a supplement to the OCR, a mortgage levy may not have been ideal and I'd agree that a robust LVR regime could be much more effective. (It isn't a tax/levy!) By contrast, as we all recognise, NACT have been much, much more timid with this problem - why?
http://www.interest.co.nz/opinion/59623/bernard-hickey-argues-government-making-no-progress-rebalancing-economy-if-fact-he-sus#comment-688222
Cheers, Les.
WFF, yes you are correct I believe as that spending is mostly essential....so therefore a new higher tax band aka UK and it will have to go up a lot......a LOT......
70% seems probable....
"Forced" I am afraid you are wrong in that.....its not far away (<5 years) as this continues to get very bad globally...
regards
You could be right on the forced bit being sooner rather than later. Any idea what is happening to private sector debt levels. When will the rating agents be knocking on the door I wonder? Wil they threaten a down grade?
Whats the point in zero budgets year in year out when the banks are offering free galaxy tablets to encourage more private dept lol. Let the boom roll on while education and healthcare get the axe. Very smart!
Typically Big Daddy says above:
Question: Why do people like "justice" never present alternative ideas in a rational manner and can only resort to personal abuse instead ?
Answer: Because they have the "Mob" mentality that only knows how to howl down any reasonable discussion.
Universal Franchise is an obvious mistake when people like him have the vote.
Put the welfare of New Zealand as a country ahead of the welfare ( actually it's downright personal greed) of the noisy ones personified by BD
Try this for a start (but it will not happen with John Key/BE. Their brains just cannot tune into reality readily illustrated by the graph.
For those who subscribe to the Listener and read Brian Easton, his comments on the Budget demonstrate the lack of talent that we have in JK/BE.
Mortgage Belt - you being serious or kidding. The Muldoon polcies that you quoted nearly sent us to the wall - the IMF was apparently not that far away from being bought in to sort us out i.e. the likes of "Think Big" and SMPs nearly bankrupted us and you want them back, God help us...those that don't learn from history inevitably repeat it, but I was kinda hoping that we got in a few more generations first ?
MB and GrantA - both of you are living in the past.
As is Easton. Mora got him on as 'part2' of The Panel addressing 'powerdown. Where Mora failed - and I prodded him so it was a purposeful failure from my perspective - was to ask two economists, about what was a physics dilemma.
You two aren't much better, but.
We can debate where trade fits in, once we have established what the parameters are, and I'll give you the tip: global growth isn't one of them. That means the underwrite for SMP's wouldnt be there, nor for the profit-taking of the 'free market'.
BTW - hydro (I run one myself, so not biased) is probably history while solar voltaic panels continue to be available; they are now seriously cheaper than grid-power. Watch the Contacts of this world buy up the companies which start up supplying. While profits can still be underwritten.......
Infrastructure is important (and the bike is still one of the best inventions ever.
I don't think the free market could produce such a desireable outcome as the Dutch have (above).
Gerry Brownlie warned about oil prices but takes a "wait and see" approach.
He say's we'll have a much larger economy (when and if oil prices double).
Whether you are left, right or just plain "green" the chart above is a shocker.
Sums it all up, IMO
"Europe, like America, could have used all those trillions in bailout money to guarantee their citizens deposits. Instead, both have opted to guarantee their banks' losses. A clear and simple choice. But also one that just about nobody seems to have understood.
There are tons of people, I read and hear them every day, who think that the extend and pretend phase can last for years more. After all, they argue, it's already lasted for four or five.
They miss the point. Or A point, a big one.
Which is that if and when bankrupt financial institutions (and they are bankrupt, or they wouldn't have needed those trillions) are saved with our money, there is a direct claim on our wealth. And even more importantly, there is a claim on our future earning power. Those trillions will have to be earned back, after all.
The problem is that there is a limit to our earning power. That limit is there today, and there is precious little reason to believe it's not going to be there tomorrow (barring divine intervention). And that means that the financial world will come to the conclusion one day that any additional funds derived from government guarantees based on our (yourself, your children and grandchildren) future earning power are losing credibility.
The European safety nets, the ESM and EFSF, are already - hilariously and only on paper, but still officially - relying on contributions from Italy and Spain. Which will not be able to comply. And will count on Germany to make up the difference. And there's a limit there too. So the bond markets will conclude some day soon that even if the EU sold all its children into unpaid slavery, they still couldn't possibly pay for all the commitments made in European societies. And there the buck will stop.
What we can learn from all this is that our money is used to prop banks, and the banking system, while at the same time our debt to those same banks, and that same system, rises. The ECB and the Fed lend money to banks, money "underwritten" by our present and future earning power, at something like 0.05%, money the banks use to either buy sovereign bonds which pay interest rates that are 5 or 10 or 20 times higher (depending on the country we live in), or to prop up their accounts at the central banks, which also earn them higher rates. Both options, again, are underwritten by our earning power.
Our money keeps our banks alive through a mechanism that makes our debt to them grow while we keep them alive. All our central banks need to do is make sure that bond yields are higher than the interest they charge banks on "emergency loans".
More at the link
http://theautomaticearth.org/Finance/the-truth-about-europe-there-is-no-solution-part-1.html
Eeeeew. Stinky thread, full of heat from straw men on fire, and little light, BH.
Still, there's always the Resilient Community idea (Transition Towns with Guns, pdk...).
And having just read through Charles Mann's 1491 and 1493, it rather strikes me that the issue underlying a good deal of all this blather, is the English, Parliamentary, top-down model.
As in, we all expect the Gummint to do more/use less of our money/be smarter/be smaller/etc.
That conversation doesn't happen in the relatively bottom-up neighborhoods in the US: they simply tax themselves for local eduaction, policing, fire service etc if they feel like it. Or not, as the case may be. Power is leased upwards unwillingly, and temporarily.
Well, in theory, anyhoo.
Y'never know - could be worth a shot, here???
But my bottom line is - we need the absolute right to build and repair our own houses, and stuff the whole regulatory overhead that presently rules this. If'n y'all want a Revolution, There's where to start it all.
Christchurch would be a good case in point.....
Funny enough Waymad, there we're in agreement. Powerdown is essentially 'wealth-down', and one of the first thigs that go in 'wealth-down', is rules, compliance and paper-work.
You have to do the real stuff.
Been there, knowing it would be needed. Oddly enough, permitting wasn't a problem.... Counter-intuitive, but when you simplify (my interior bracing walls are single-skim 17mm ply) you simplify the inspection process, and the cost.
AUS GROWS STRONGLY HOW BOUT NZ????
Phenomenal first quarter GDP growth in for Aus - 1.3%
So why isn't NZ doing better, since we rely on Aus, and Aus is strong (mind you I think it is going to weaken significantly)
Because NZ's governance is appalling
Enough excuses, Mr Key
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