Chris Barton has a splendid article in the NZ Herald today. Splendid for a number of reasons. One because, it is shining light of excellence in the current editorial darkness reigning at NZ Herald and two, because it tells the cold hard truth about the state of the play and history of spineless  Communications ministers. Cardinal Richelieu would do well to read it and take heed.

The time is rapidly approaching when we discover whether Steven Joyce has what it takes. Whether he is a communications minister with mettle or whether he travels the way of so many communication ministers before him – to the realm of the spineless jellyfish.

No point wasting words getting to the crux of the issue. Now for a history lesson, when it is all in one place and with out the spin of politicians it is an indictment on various governments and individuals.

Maurice Williamson went there, championing the ideology of the light-handed regulator, but consigning the country to the slow lane of telecommunications for more than a decade in the process. Paul Swain went there too. Faced with the big decision – whether to open monopoly services to competition – poor Paul didn’t have the bottle. He’ll forever be known as the minister who the dropped the unbundling bundle. He too set the country back another decade in the process.

Then came brave David Cunliffe, the minister who lived up to his name and slew the Goliath, Telecom. It wasn’t a slingshot to the forehead. Cunliffe used the twirling bolas of operational separation around the ankles to fell the giant and curb its rampant monopoly power. Sadly, Cunliffe was weak on the mobile front – where duopoly rather than monopoly rips off consumers.

And that is just when Ministers had the responsibility, since then “Karori Bill” went and took that decision making process and put it in the hands of Telecom and Vodafone the Telecommunications Commission.

By machinations too tedious to mention, Vodafone conspired, with the help of Bill English, to force the minister, in 2007, to step aside from adjudicating in the arcane arena of mobile termination rates. Basically, these are fictional fees mobile operators pay each other for calls terminating on one another’s network. In truth they shouldn’t exist at all, but such is the power of telecommunications companies, they can make fiction reality and rort the hapless consumer. Which is why New Zealand has one of the most expensive mobile services in the world.

I’m not entirely convinced, had he been given the chance, that Cunliffe would have brought the Vodafone/Telecom duopoly to heel. But in the end the task fell to Trevor Mallard who handled it with all the aplomb of a spineless jellyfish.

I just bet Tiger bursts forth in a rant on Red Alert about this article. The truth hurts Tiger though, he is spineless, especially when he has to won his own shit.

Joyce has two big decisions on his very near horizon which will show us his true colours. The first is whether to regulate mobile termination rates and the second is to decide who to partner with to build our new “open access” fibre network. If you are pro consumer, the answers to both are obvious. Regulate mobile rates and have the power lines companies lay our new fibre. Whatever you do, don’t give Telecom a sniff at the latter.

You betcha Telecom should have now’t to do with the Fibre network. They can’t even run their mobile network.

Regulate, because we’re sick and tired of paying through the nose for our mobile phones. And give the new “ultra fast broadband” job – which involves $1.5 billion of taxpayers’ money – to the lines companies because the telcos, especially Telecom, have all shown they’re not only not interested, they’re not up to the job. Even when it builds a new network, Telecom still manages to make it broken.

Yep. Arguably, moving data is far less taxing or demanding than deploying power to every house.

If anyone has any doubts about this it’s worth reading the Ministry of Economic Development’s statement about this grand scheme. “Private sector companies have decided, on behalf of their shareholders and as a commercial decision, not to invest in a nationwide network of fibre-to-the-home at this point in time.”

Translation: Since the Labour government, in a fit of stupidity, sold our telecommunications network for a $4.25 billion song to private ownership, it has been run down to such a decrepit state that we (the Government) now have to bail it out.

Or as the MED puts it: “The Government understands this, and so wishes to assist and work with the private sector in improving the business case for ultra-fast broadband because of the public benefit to be gained from such a network.”

Lets hope what that really means is: “If we are going to stump up $1.5 billion for a new network (something a sensible Telecom should have been progressively making over the past 15 years instead of taking exorbitant monopoly rents for its shareholders) then we’re sure as hell not giving Telecom a bean.”

So far zero faults with Chris Barton. His article is a succinct view of the parlous state of telecommunications in New Zealand.

Finally a message for Cardinal Richelieu.

So far, you have to say, Joyce has played with an exceedingly straight bat. But it won’t be easy negotiating the quagmire of a split recommendation by Commerce Commissioners on mobile termination rates. Two argue for putting heads in the sand while one voice of reason says enough is enough – Vodafone and Telecom have had more than enough time to sort this out and have, time and again, shown they can’t be trusted.

Joyce will be familiar with the sordid last-minute deal stitched together between new mobile entrant 2degrees and Vodafone last year. While the public isn’t allowed to know about this venality, anyone who cares to can find it online (search under “NZ Cellphone racket”). It shows that Vodafone will move if it has a gun to its head. Joyce will also be familiar with www.droptherate.org.nz and www.fibretothedoor.co.nz – two campaigning websites where the public is helping the minister make up his mind.

Go there at once.

What fed-up consumers want minister, is Clint Eastwood’s Dirty Harry. For some of us, it’s so bad, we don’t just want Clint to pull out his .44 Magnum and ask whether the punk feels lucky. With Telecom and Vodafone, we want him to pull the trigger.

And on the Thursday, Chris Barton rested, and he saw it was good, good it was.

Popularity: unranked [?]

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Popularity: unranked [?]

Unlike Pinko Farrar who waxed lyrical about his paymaster’s daughter, I will simply say well done, good girl, Now go help your father.

He understands words like prevarication, dithering, analysis, procrastination, cunctation, timid, browbeaten, subjugated and shillyshally.

The one person with the brains in the family could help him with the pronunciation and spelling of words like action, carry through, accomplish, execute, carry out, bold, do, effect and effectuate.

Perhaps also a remedial course of Shakespeare’s great play MacBeth so that he may learn the dangers of an over-bearing wife.

Crack to it, There’s a good girl

Popularity: unranked [?]

The MoF has put out his pre-budget feelers while setting the date for the Key Government’s second budget at 20 May. I’m pleased to see the above statement, albeit hidden at the end of the press release, especially after seeing this disaster in a Treasury working paper:

Ugly, isn’t it? The red line is what we can afford, the blue line is the trend we’re spending on. So while Mr English might talk about jobs and growth (and don’t get me wrong, these things are important) the real underlying issue he must address is our unsustainable rates of spending.

Popularity: unranked [?]

Adolf at No Minister isn’t happy that this blog is continually critical of our finance minister, Bill English, and approvingly quotes from an op-ed English had published in NZ Herald. Adolf rightly points out that Bill hasn’t literally “done nothing” as Finance Minister, and does have a few initiatives under his belt (albeit some of those listed by Adolf aren’t the work of English – education standards are the work of the Education Minister).

But that’s not the point – when even The Standard is pointing out that English isn’t doing ‘anything’ in terms of policy implementation (where they’d otherwise be moaning he’s cut funding to some quango or sold something off), you’ve got to wonder. Now I don’t think The Standard has got it right for a minute on the rhetoric of English’s op-ed. The real story – reading between the Labour Party lines – is that they aren’t moaning about the centre-right decisions of the Key Government, because aside from there being no spending binge, there aren’t any.

Compared to the first terms of both Sir Roger Douglas and Ruth Richardson, English hasn’t done much. In his defence he hasn’t had a currency crisis to deal with or the BNZ melting down and requiring a taxpayer bail-out. But the most annoying part is that Bill hasn’t done as much as Mikey Cullen did in his first year – or in other words, he hasn’t fully undone Cullen’s tax increases and Reserve Bank fiddles. I suspect Bill’s problem is that he’s was formerly a policy wonk, lapping up forecasts and spreadsheets at number 1 The Terrace. He prefers to take advice from all quarters, thrash out every argument before making a decision. That’s great if you’re a Treasury official, but not when you’re the Minister of Finance. As Cullen’s tenure shows us, sometimes a little guile is needed to get where you want to go.

Anyway, here’s the next ten suggestions in this series:

11. Develop innovative governance arrangements to facilitate economies of scale in accessing natural resources.

Bit too much waffle for my liking – what exactly is a “innovative governance arrangement”? So long as property rights are respected and upheld, I have no issue with accessing natural resources. Economies of scale will come if a business is able to invest enough capital in developing its production. Perhaps they’re really after some sort of government created co-operative between, say, mining companies for equipment?

12. Amend the RMA to more clearly establish the security and allocation of water rights for time periods that are fit for purpose where capital investment is involved, e.g. hydro generation or industrial process plant.

As mentioned previously, water rights are a critical issue for farmers and the agricultural sector generally. Getting the water issue right is critical for New Zealand’s development. To that end, the Government should create a system of water rights that can be traded, and establish systems for assessing the amount of water available for allocation and metering its use. In other words, apply market mechanisms to water.

13. Develop a replacement for the scrapped R&D tax credits.

A good replacement would be lower company taxes generally. However, from my contacts in business who invest in R&D (albeit mainly in the software development industry) it seems the real problem isn’t a lack of money to spend (which was what the tax credits were aimed at) but a lack of skilled staff to employ. The Government ought to encourage IT graduates to work in New Zealand – perhaps by some sort of bonding scheme?

14. Develop a national innovation strategy, including innovation priorities.

Not to be cute, but it’s not very innovative to have an innovation strategy.

15. Develop incentives for stronger links between public research organisations and the private sector.

The New Zealand Institute report Standing on the Shoulders of Science also proposes this.

16. Better coordinate publicly funded research for commercial application.

17. Ensure the tax review working group examines the role tax can play to promote private sector innovation expenditure and investment.

Luckily, this has been done. Now for action.

18. Offer support for basic applied research.

19. Relax co-funding requirements for government grants.

20. Simplify the current funding system, minimise the bureaucracy and make funding more transparent.

Not knowing much about the science sector, I can’t really comment. However, these proposals all seem to be reasonable.

Popularity: 32% [?]

Bill English has to go. During question time today he thoughtfully provided the evidence that he thinks he can spend a dollar better than the poor taxpayer he has taken that dollar from.

John Boscawen: Does he agree with the 2025 Taskforce that “It is difficult to conceive of a reason why the New Zealand government should own a large coal-mining company, three major electricity generating and retail companies, one of New Zealand’s largest exporting firms …”; if not, what is the compelling reason?

Hon BILL ENGLISH: No, I do not agree with it.

Hon Darren – - -

John Boscawen: What is the compelling reason for the New Zealand Government to own a large coalmining company, three major electricity generating and retailing companies, and one of New Zealand’s largest exporters?

Hon BILL ENGLISH: The compelling reason is that it does own them, and given that those assets were built up by taxpayers giving up their PAYE each week, this Government takes its role of protecting and growing the value of those assets very carefully. They have been built up by hard cash paid each week by people who could easily have used it for other purposes that might have suited them better. The previous Government did not understand that.

That is it, right there, that Bill English is a bloody socialist and proud of it. Time for a change.

Popularity: unranked [?]

The NBR reports research by Westpac economists showing that cutting income tax will lead to lower house prices:

A reduction in the top rate of tax to 30 percent would see house prices fall 13.6 percent and rents rise 6.8 percent, the Westpac economists estimated.

This is because of our fairly generous rebates for the losses from investment properties:

Landlords received a tax rebate for losses on their rental properties at their marginal rate of income tax. If the marginal rate of income tax changed, so would the size of the rebate.

If I had the time I’d work out what the actual impact on the government’s books would be – if anyone has the figures, please drop a note in the comments. Also, an interesting note on land tax:

A land tax of 0.5 percent was estimated to cause house prices to fall 4.4 percent and rents to rise 2.2 percent. The fall in house prices was based on the median house, for which land made up 40 percent of the value. Land values were estimated to fall 11 percent.

Put them together, and you get:

Under a land tax of 0.5 percent combined with income tax of 30 percent house prices would fall 16.9 percent and rents rise 8.4 percent. The Westpac economists said such a combined approach was “politically plausible”.

Politically plausible, but not necessarily the best scenario for New Zealand. If Australia’s federal government cuts their business tax rate, New Zealand businesses will be left in a less competitive position internationally, and will be more likely to move to Australia, taking their profits and jobs with them. We ought to be aiming for a 25% business tax rate in 2010 – 2011. Because, as Bill English used to say “Us Kiwis can beat those Aussies!”.

Popularity: unranked [?]

Treasury’s forecasts have shown New Zealand is in for another 5 years of government fiscal deficits, peaking in 2010 at 4% of GDP. The Finance Minister has ’signaled’ spending cuts. That’s great for getting public buy-in and all that, but what’s really need is action. Despite what Labour is spinning, the reality is that New Zealand’s current level of government spending is unsustainable. FCK suspects the PR buzzword in the 2010 Budget will be “reprioritisation”, as Bill grapples with which spending to cut reprioritise and where. Here’s a couple of ideas Minister.

Popularity: unranked [?]

Marcia Russell’s excellent documentary series Revolution got me thinking about this Government and our future as a country. Revolution’s basic premise is that by 1984 New Zealand had become a “fortress” desperately fighting to hold on to a post-war New Zealand that could no longer be sustained. I sometimes wonder if we’ve learned that the only course of action in the face of economic challenges worse than taking no action is taking retroactive action to try and preserve the status quo…

Popularity: unranked [?]

Interest.co.nz has the details of papers put up by Motu economist Arthur Grimes and Deloitte partner Mike Shaw to the Tax Working Group’s final conference in Wellington on Tuesday, detailing the pros and cons of a land tax. Here’s my responses to the pros and cons:

Pros:

* Brings in property to tax base. NZ has relatively low property taxes compared to other countries.

This is certainly true – the large burden of our tax base is on low-middle income wage earners. Spreading that tax burden will help the economy no end.

* Progressive tax hits richest hardest and hits those with most children least, as they have less land

Goodo, if you’re into that sort of thing. Not really much of a pro.

* Hits Maori and Pacific Island communities least

Again, good if you’re into that sort of thing – wonder how a land tax would affect Maori land though? Would National do a deal with Tainui or Ngai Tahu.

* Likely to cause rental property investors to rethink

Which is of course one of the problems we have – the $213 billion invested in rental property is 5 times what we’ve got invested in stock market. Because of LAQCs, this investment stock represents a tax “loss” of $500m (in credits). Why not just abolish LAQCs then? Probably not an election-winning strategy, although $500m could easily go towards lowering the top tax rate in compensation.

* Very cheap to administer

Excellent – all those tax law students hoping to work on land tax law should therefore re-think their careers at the IRD…

* No avoidance or evasion

No wine boxes then. Again, tax law students – start studying something useful.

* Land is immobile so no danger of assets ‘fleeing’ tax

Also good – one thing we struggle with in New Zealand is keeping our businesses onshore. Lowering company tax will help that.

* Per hectare threshold reduces hit on farmers and foresters

This would also be good – it would make little sense to cut company tax, then load more tax on productive sectors of the New Zealand economy – agriculture and forestry.

* Threshold cleaner and easier to administer than exceptions

Again, this is a pro – a “clean” tax cuts bureaucracy, and makes the IRD a little less bastard like.

* Discourages land-banking property developers from sitting on land

Good – that should mean lower house prices for first time home owners, if you’re into that.

* Less borrowing for property investment and lower overseas debt

Whoah there… less borrowing for property investment doesn’t mean less borrowing everywhere. It does mean that what is borrowed could be put into productive assets though, but this isn’t really a pro.

Cons

* 0.5% land tax could reduce land values by as much as 15%

Ouch. Pretty much a big election loser there… so that pretty much rules out the Government.

* House prices (land and buildings) could fall by 4-8%

Double ouch. Perhaps we could make the Grammar zone cover all of New Zealand to compensate?

* House price falls depends whether tax is deductible, level of real interest rates, other local body rates

Owww… lower house prices mean lower rates Bills. That’s actually a pro in my book.

* Retired households hit hardest

An incentive to move into rest homes perhaps? Here’s a sharemarket tip: if land tax is introduced, by shares in Metlifecare, Ryman, BUPA and Oceania Group. Not really a con in my books.

* Young homeowners with little equity, low discretionary income hit relatively harder

Now this is a big con, particularly at a time when housing affordability is down. However, is it really that important that everyone own their own home?

Overall, I would say conditionally that the pros of land tax outweigh the cons. I say conditionally because:

• The Government ought to reduce income and business tax and the same time as introducing any land tax – not using land tax just to generate more tax revenue. That means we’re still going to have to cut spending to sustainable levels.
• It’ll hurt house and land prices, something many small businesses depend on for equity, and “mum and dad” investors for their retirement. Although that is a long-term pro, as it will encourage New Zealanders to stop depending on housing to become wealthy, and put their capital to much better use.

Update: Big fail on rates there. Mea culpa. The issue is whether land tax increases average house prices and push up rates. So again, likely to make the government unelectable.

Popularity: unranked [?]

This country needs step-change. Gareth Morgan is willing to provide it:

• A Comprehensive Capital Tax (CCT) on all land, buildings, plant and equipment. Raises NZ$19 billion.
• A flat income tax rate of 25% on all corporate, personal and trust income.
• NZ$10,000 guaranteed minimum income for every adult to replace all benefits (which means the first NZ$40,000 of income is tax free).
• GST to remain at 12.5%

Don’t know if I agree with a Comprehensive Capital Tax on everything (it’s likely to hurt industries who’ll simply flee to countries where there’s lower labour costs and not capital tax – India or China perhaps?). However, Gareth appears to have more testicular fortitude than our current Minister of Finance, who despite his rugged southern man persona prefers to dismiss good ideas as “too radical” and offer piss-weak bandage solutions for gaping wounds.

Popularity: unranked [?]

Govt Spending 1994 – 2010

This is the most worrying graph for me out of the Taskforce 2025 report. Because New Zealand’s economy was growing strongly, Government spending as a proportion of GDP was actually shrinking until 2005 (which is why about 1998 it increased; as the economy contracted due to Asia’s economic meltdown spending as a proportion of GDP increased); which was a good thing. However, Labour spent up large to win the 2005 general election (Working for Families, Interest-Free Student loans, etc) and then again from 2005 – 2008 in order to keep its supporters in Parliament happy (Gold Card, superannuation increases, etc). By 2008 they’d “spent the lot”, to paraphrase Dr Cullen, and with the economy contracting while Government spending continues to grow, spending is skyrocketing.

This matters because the trajectory of Government spending is unsustainable. We’re borrowing heavily at a time when net debt to GDP is passing the 100% mark – this is in the same region as economic basket cases like Dubai and Iceland. Yet the Government’s response is that reducing spending back to 2005 levels is “too radical”.

Popularity: unranked [?]

I have to ask myself, what was the point of the 2025 Taskforce if the Governments two top soft cocks say they are going to ignore it?

New Zealand is ill, it is bloated from 50 years of creeping socialism and sadly the change of government didn’t change anything except the seats on the Titanic. Worse instead of repealing and rolling back many of the idiocy of the Clark years Key and English have assured Kiwis that their “entitlements” will remain.

Except they are borrowing huge amounts daily to pay for those entitlements. The government commissioned a Taskforce to look at how we can catch Australia by 2025 in terms of prosperity, productivity and wealth, they have produced a sensible report and both John Key and Bill English have dismissed it out of hand.

Bill English has labelled it “too radical” this from a man who would seek Treasury advice about which side of a postage stamp to lick and then confirm the advice with another request to Treasury to confirm the advice so he could confirm which side he thought should be licked. The man is incapable of making a decision. Well I suppose he has made one here and very quickly by his usual standards which is a first but to label the plan as too radical shows just how timid this government, particularly the top two have become.

Bill English though goes even further;

A plan to close the wealth gap with Australia is “too radical” for Finance Minister Bill English, who says bringing the two countries to economic parity by 2025 is an “aspirational” rather than realistic goal.

FFS what is the point, why set the goal in the first place if you don’t think you can get there? He sounds like a NZ athlete who did their personal best at the Olympics and came dead last trying to say they are a winner. This is what is wrong with New Zealand. It pervades our sports teams, winning is an aspiration rather than realistic goal, it infects our schools and now it has infected our government.

We may as well give up and just become the eighth state of Australia, that at least would be one sure way of closing the gap by becoming Australians. The people of New Zealand voted for change not more of the same.

Dr Brash said if the Government ignored the recommendations, “there may be some other cunning plan, but I’m not aware of it”.

He said the Prime Minister had “enormous political capital” and should use some of it to implement the suggested policies, which would be unpopular.

Without them, the Government’s goal of catching Australia could not be achieved.

“A little tinkering at the edges ain’t going to do it,” Dr Brash said.

And that is the point isn’t it, the polls suggest that there is plenty of political capital there to give some things a go, the Taskforce doesn’t recommend doing them all at once, so why not take a third of them and do them now, a third next term and a third the term after that.

Either grow some balls Bill or fuck off and let someone else have a crack.

Popularity: unranked [?]

“We need more jobs and more investment in the tradeable part of our economy, which is what Taranaki is all about,”

Said the Minister of Finance, Bill English, to an audience in New Plymouth. The speech is a reminder why there exists a group on Facebook imploring Bill English to do something, anything. English added:

“The income part of the economy has shrunk 10 per cent over the past five years, and in fact our export sector hasn’t created a single additional job over the past 10 years. But the consumer part of our economy has grown by 15 per cent in the last five years.

“There’s the problem. Try running your organisation when your spending is growing at twice the rate of your revenue.”

So, the solution would be to reduce wasteful expenditure, wouldn’t it? Well, sort of:-

“What we don’t want is more borrowing – and what we do want is more saving, more investment, and more exports and the jobs that would go with that.

Great, so that means the government will reduce red tape and payroll costs (ACC)? Good. But English is silent on the tax burden on individuals and business and excessive government spending screwing with fiscal policy. Why? The implications of doing so meet all of English’s stated aims – so why is he reluctant to take action on taxing and spending?

Popularity: 12% [?]

I have been accused via phone and in several emails of defending Bill English’s troughing in my post of yesterday. A very careful reading of that post would show no defence of Bill English at all. It was an unmitigated attack against an unmitigated liar Trevor “Putin” Mallard.

Now that the Auditor-General has delivered her report we can now put the silly housing troughing story behind us and concentrate on Bill English for his prevarication, his do-nothing-ness and his unwillingness to ever make a decision good or bad. Oh that he would make a bad decision, at least it would be a decision to DO something even if it was bad.

He simply sits and analyses everything to death. It was his failing as leader of the National Party where in the end he his nihilism dragged the party to its lowest ever poll rating.

Cactus Kate has perfectly analysed why Bill English is a dick and needs to as Finance Minister. Simply put he hasn’t done a thing. Labour should be encouraging Bill English to be on TV more not less. It’s worth 10% off National for sure. Bill English couldn’t turn on a hooker let alone a voter.

With National touching 60% in the polls he and National should be being bold not timid and prevaricating. Bill English has to go.

Popularity: unranked [?]

From Wikipedia on the Kursk

While the tragedy of the Kursk played out in the Far North, Russia’s then President Vladimir Putin, though immediately informed of the tragedy, waited for five days before he broke a holiday at a presidential resort house in subtropical Sochi on the Black Sea before commenting publicly on the loss of the pride of the Northern Fleet. A year later he said: “I probably should have returned to Moscow, but nothing would have changed. I had the same level of communication both in Sochi and in Moscow, but from a PR point of view I could have demonstrated some special eagerness to return.”

Hurricane Katrina was a PR disaster for George W. Bush. He didn’t take enough interest, left the details to FEMA who were useless and suffered as a result.

The lessons are there to be learned.  Putin was was on holiday at the Black Sea and couldn’t see why he should not stay on holiday which really hurt his reputation amongst the Russians. George W. Bush fucked up royally with Katrina, but did Bill English and Murray McCully learn the lessons that leaders need to lead?

Nope they didn’t. The first two politicians on the plane out to Samoa this afternoon were Chris “Cruising” Carter and Winnie Laban, dispatched by the Co-Leader of Labour Phil Goff.

Where the fuck were our guys? Why wasn’t Nikki Kaye, Simon Bridges, Aaron Gilmore and every other available back-bencher especially the 2008 intake all put on the bloody plane complete with gumboots and “We Care” t-shirts and some shovels and spades bloody first. Oh no….the first support Samoa gets is from bloody Labour oiks! It is shit like this that really gets my goat with National sometimes.

Bill English is acting-Prime Minister and acting is all he seems t be able to do and Murray McCully is responsible for MFat. There are two heads right there that should roll. This really should be the final straw for Bill English.

Popularity: unranked [?]