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File --> Export --> Brash Inbox.txt | Aug 31, 2005 16:57

With the Nats throwing out wild accusations at Labour and ACT over the leaked emails, I thought - as a geek with an intravenous email system - I'd just add some fuel to the speculation.

Molesworth & Featherston notes that "no emails sent by [Brash] seems to have escaped". This isn't strictly true, as Ruth Laugesen's article does quote a single, mundane line from Brash:

Brash thanks him and responds, "hope I get a chance to catch up with you shortly perhaps at Jenny Gibbs' home tomorrow evening?"

... though this looks much more like an inline part of a reply than an email sent by Brash. So it seems reasonable to assume that, as M&F muses, the leaker only had access to incoming emails, not outgoing ones.

This is very peculiar.

If it was someone who had access to the emails after the fact (i.e. An unauthorised access), then the emails would not be stacked in the inbox. It would have been filed away, or left in a massive archive (essentially a trash-bin). If it was filed away, why would the emails sent by Brash not have been filed there, too? If it was dug up from the trash, they would have had to use some kind of email-threading or "sort by sender" function, which would have given them access to the Brash-sent emails, too.

It, therefore, seems improbable that someone who was able to surreptitiously obtain emails sent to Brash would have been unable to steal emails sent by Brash.

Likewise, if it was one of the ACT/BRT players, surely they would have received *something* from Brash? Brash might not have taken their advice, but he would have responded in some form. Perhaps, if it was ACT/BRT, they were too embarrassed to show the correspondence from Brash telling them to piss off?

However - SST also quoted from a caucus speech and from faxes. ACT/BRT group would not have access to the former (the idea that they would be asked to review drafts of Brash's ultra-sensitive coup-speech is pretty far-fetched), and where would outsiders get faxes?

Which, really, just leaves us with National staffers. My friend up-on-high in Parliament tells me that a) of course Don Brash has someone reading his emails for them; b) some secretaries have shared inbox access with their charges, allowing them to sort their emails for them. If the culprit was indeed a staffer with this kind of access, it would also explain why the leak only included income emails and not the outgoing ones - Brash would have sent those from his own computer.

(If anyone can properly explain how the shared email-flow works in Parliament, it would be most enlightening.)

And aside from having lopsided access to emails, how many people would have a copy of the caucus speech? How many would see all of Brash's faxes?

M&F notes that "with only one exception, virtually all Bill English's staff in the leader's office were kept on by Dr Brash after the coup. Dark questions are being asked about the loyalties of one or two."

An outsider - say, someone from Labour - getting their hands on those emails would have been difficult to begin with, but it's the selective nature of what was leaked that's most telling about who the source is.

If the leak is really a Leader's Office staffer with ACT sympathies, then this isn't so bad for National. Well, okay, so their security is compromised and they have a rat in their nest, but at least it's not coming from one of their MPs (well, not directly, anyway). And, even though it shows Brash to have had the support of ACT/BRT, it also shows that he no longer has their support, which goes part-way to demonstrating that he is no longer their stooge (though it does make him a turncoat...). Okay, so it's pretty bad...

Moral of the story? Use the goddamn phone.

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Black and White | Aug 30, 2005 16:52

With a full scalp of hair, NZ First MP Craig McNair, aged 29, stands out from the rest of his colleagues. Salient writer Nicola Kean talks to him about family values, social engineering, and being a young man in a old folks' party.

Where do you see New Zealand in twenty years time‭?

It might sound a bit idealistic,‭ ‬but my vision for the future is to see a vibrant,‭ ‬healthy,‭ ‬successful group of people‭ - [‬the ones‭] ‬that are between the‭ ‬18-30‭ ‬mark now‭ ‬-‭ ‬that have been able to have an education provided to them,‭ ‬where they don't have to borrow to live as far as tertiary education is concerned‭; ‬where they actually have a government that enters into a social contract with our young people.‭ ‬Basically,‭ ‬to provide our students and our young people an opportunity to be able to thrive and to have the best wages in the world here in New Zealand‭; ‬to be able to have that quality of life as well as those top end wages.‭ ‬That's my vision for New Zealand.

‭<‬b‭>‬In your policies and press releases,‭ ‬you talk about‭ "‬traditional family values‭" ‬and Labour's‭ "‬social engineering‭"‬.‭ ‬What Labour is doing‭ - ‬does it fit into your vision of the future‭?<‬/b‭>

Absolutely not.‭ ‬Right from areas such as the ones I've just mentioned.‭ ‬They'll come out with a policy at the last minute for an election bid to create interest free student loans,‭ ‬but with no real thinking,‭ ‬no real vision about it,‭ ‬no real plan.‭ ‬Just a last minute thing decided by two senior cabinet ministers one evening because they were desperate.

You've probably seen a few of my press releases.‭ ‬A lot of them have concentrated on keeping our young people off drugs,‭ ‬cannabis and even harder drugs like P.‭ ‬There are a lot of young people that are experimenting on things and experimenting in life.‭ ‬We‭ [‬should‭] ‬create a society where the Government holds up a standard and says these things aren't right,‭ ‬such as the cannabis issue.‭ ‬We need to keep the legal status of cannabis the way it is.‭ ‬I make no apologies if there are a lot of young people out there that think that I'm wrong on those issues,‭ ‬that's fine.‭ ‬I honestly don't think a positive,‭ ‬healthy society is going to be produced by advocating policies to decriminalise cannabis.

‭<‬b‭>‬When you talk of‭ "‬traditional family values‭"‬,‭ ‬how would you define that‭?<‬/b‭>

Traditional family values are values that New Zealanders have held on to for the last‭ ‬100-150‭ ‬years,‭ ‬basically since‭ [‬New Zealand‭] ‬became a nation.‭ ‬There has been radical change in the last few years in legislation concerning those issues.

If you're making major changes like that to legislation,‭ ‬the people of New Zealand should be able to have their say on it.‭ ‬These are major issues,‭ ‬not just Civil Unions,‭ ‬but Privy Council and all those other things that I know will affect young people in the long run.‭ ‬I just don't think that,‭ ‬for example,‭ ‬decriminalising prostitution has sent a message out there to our young people and communities that it's alright to treat women like that.

When it comes down to it,‭ ‬we're making some huge changes in our family structures and the way we define family.‭ ‬Don't you think with big changes like that New Zealanders should be able to have a say in a referendum‭? ‬Then people are able to feel satisfied that they've been heard.‭

‭<‬b‭>‬If we had referenda on these issues,‭ ‬do you think that people would come out and vote‭?<‬/b‭>

I think you'd be surprised at how many people would go to the polling booth or the computer‭ ‬-‭ ‬you can make it very easy these days.‭ ‬It keeps things on the table.‭ ‬While‭ [‬young people are‭] ‬sitting out in the Octagon in the University or where ever it is,‭ ‬saying‭ '‬oh,‭ ‬the referendum is in a few weeks,‭ ‬how are you going to vote‭?' '‬I'm not voting‭' '‬well you should vote‭' ‬and duh duh duh dee duh.‭ ‬And then it gets the issues in people's minds,‭ ‬and it also keeps it away from the politicians.

‭<‬b‭>‬And this is a good thing‭?<‬/b‭>

It's not always a good thing,‭ ‬but there are some major issues that do need to go to the people‭ ‬-‭ ‬the more mundane things the people expect us to do.‭ ‬That's why we're elected.

‭<‬b‭>‬What about human rights issues,‭ ‬like the Civil Union Bill or allowing people in same sex relationships to have their partners classified as the next of kin and so on‭? ‬Should those be dealt with by referenda‭?<‬/b‭>

In effect,‭ ‬what Labour's told us in the House is‭ '‬ok so since this is a human rights issue,‭ ‬we know best‭'‬.‭ ‬I just think it's quite arrogant for politicians to say we're more educated on these issues and you guys are the plebs and don't know what you're doing and so we have to make the decision for you.‭ ‬What a load of rubbish.

‭<‬b‭>‬Are you trying take New Zealand back to the way it was in the‭ ‬1950s‭?<‬/b‭>

I don't think so,‭ ‬I think there are family structures that have worked for hundreds and hundreds and hundreds of years,‭ ‬that have been proven to work,‭ ‬that can actually create families.‭ ‬We realise that there are other family structures out there in this world‭ ‬-‭ ‬believe you me,‭ ‬my head is not in the sand.‭ ‬What we're saying is that there are certain family structures that should be promoted because they have been proven to benefit society.‭

‭<‬b‭>‬And by that you mean marriage‭?<‬/b‭>

By that I mean Mum,‭ ‬Dad and the kids.‭ ‬Mum and the kids.‭ ‬Dad and the kids.‭ ‬Adoption.‭ ‬Grandparents.‭ ‬But keeping it away from the social engineering agenda of the Labour Government.‭ ‬We're not going to get into other people's private lives,‭ ‬we're not going to tell them what to do,‭ ‬how they should live their lives,‭ ‬whatever lifestyle they decide to choose.‭ ‬But we just say there are certain structures that should be promoted because they've been proven to work.‭

‭<‬b‭>‬Given your view on Labour's‭ '‬social engineering‭'‬,‭ ‬would you be able to go into coalition with them‭?<‬/b‭>

We've worked with Labour and we've worked with National.‭ ‬We've proven that we can work with either of them,‭ ‬so I think that's your answer there.‭ ‬If those kind of issues come up,‭ ‬well then,‭ ‬if the people are going to decide on issues I'm happy with that,‭ ‬because then it's not Labour pushing this agenda.‭ ‬We will stop the Labour Government from ramming through their own agenda,‭ ‬because the people should have a say and I don't apologise for that.

‭<‬b‭>‬New Zealand First wants to bring back interest on student loans while students are studying.‭ ‬You've been totally outplayed by Labour on that front haven't you‭?<‬/b‭>

A lot of people are happy about it,‭ ‬but it is going to be a poisonous apple.‭ ‬And I hope we don't swallow it as a country.‭ ‬I know our plan is better,‭ ‬it's going to reduce student debt even further.‭ ‬We're going to provide universal student allowances,‭ ‬so obviously it would stop students from having to borrow to live.‭ ‬Labour's not stopping that continuing.‭ ‬The reason why we would charge interest while they were still studying‭ ‬-‭ ‬only at the equivalent to the consumer price index,‭ ‬somewhere around‭ ‬2%‭ ‬-‭ ‬it encourages young people to keep their student loans at bay.‭ ‬Then once they get out of their tertiary education then it's CPI plus‭ ‬2%.‭ ‬It's still not as much interest as they're paying now,‭ ‬but it's enough to say‭ '‬I've got to get rid of this.‭' ‬Also,‭ ‬they're not going to have as much of a student loan because they're not going to have to borrow to live either.

‭[‬Labour's‭] ‬plan has just come out of nowhere.‭ ‬They had six years to implement it,‭ ‬nothing talked about in the budget,‭ ‬they start going down in the polls and they think‭ '‬shoot,‭ ‬what are we going to have to do‭?'

‭<‬b‭>‬You also seem to be giving a lot of money to the elderly,‭ ‬dishing out money here and there‭ - ‬is it affordable‭?<‬/b‭>

Do you hear us promising across the board tax cuts‭? ‬No.‭ ‬We are promising a lot,‭ ‬but we also know that we can deliver.‭ ‬We've priced these things and we realise that we want all of these things and we're not going to be able to provide across the board tax cuts straight away.‭ ‬We're going to provide tax incentives for exporters‭ ‬-‭ ‬strategic,‭ ‬pinpointed tax incentives to grow our economy.‭ ‬The only way we're going to survive as a country is by getting our export growth up,‭ ‬so we'll do those things that aren't going to cost the country a lot of money,‭ ‬but will increase our earnings hugely.

‭<‬b‭>‬There's no youth wing of the New Zealand First Party.‭ ‬Does that reflect the party's emphasis on the elderly‭?<‬/b‭>

New Zealand First doesn't believe in dividing New Zealand up into groups.

I think the most amazing thing about being a young person involved in New Zealand First is that you actually get to do the real things that the Young Nats,‭ ‬the Young Labourites and all of the other ones is their little groups would dream of doing.

We purposely don't have a Young New Zealand First.‭ ‬We could if we wanted,‭ ‬we actually have heaps of young people actually in the party.‭ ‬They're loving it.‭ ‬They're actually doing something rather than just being in a social group or‭ [‬have us‭] ‬sidelining them and saying‭ '‬we've got a little youth group here for you,‭ ‬you get to go ice-skating on a Saturday night.‭' ‬I know it's not quite like that,‭ ‬but you know.

‭<‬b‭>‬How do you cope being a young MP in a party that is perceived to be chasing the elderly vote‭?<‬/b‭>

Being young in New Zealand First is the greatest thing.‭ ‬You've got policies that you can actually say:‭ ‬it's not just about one section of society,‭ ‬the elderly sector,‭ ‬it's about young people as well.‭ ‬We've got a vision for the betterment of New Zealand and it's not just about plugging towards a certain age group.

We do have policies that are there to honour our elderly and the ones that have gone before us,‭ ‬to give people dignity in their retirement such as the‭ '‬Golden Age‭' ‬card that we've just released a few months ago.‭ ‬But New Zealand First is not just a one policy party or a one focus party.

‭<‬b‭>‬Or a one politician party‭?<‬/b‭>

Definitely not a one politician party‭! ‬It's great to be in party with a strong leader,‭ ‬but we are a team and we make decisions collectively.‭ ‬People make fun of it,‭ ‬and say Winston's a one-man band,‭ ‬but there's nothing wrong with having a strong leader.‭ ‬He's also the most democratic person I've ever met.‭ ‬He's amazing.‭ ‬Even if he doesn't agree on a certain policy,‭ ‬or a bill that we're voting through,‭ ‬we put it to the vote.‭

‭<‬b‭>‬Where do you see New Zealand First going post-Winston Peters‭? ‬Do you have any leadership aspirations yourself‭?<‬/b‭>

Not personally.‭ ‬Not to be leader of a political party.‭ ‬But definitely I aspire to be the best MP I can be.‭ ‬I love politics.‭ ‬I love being here.‭ ‬I love being able to have my say.‭ ‬I don't even think about what would happen post-Winston.‭ ‬As soon as you start thinking that,‭ ‬what's the point of having the current leader‭? ‬As far as I'm concerned Winston is here for the long,‭ ‬long term.‭ ‬It's not even a consideration for me,‭ ‬because I know Winston is going to be here for a long,‭ ‬long time.

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A message from the National Party... | Aug 24, 2005 19:22

I got a phone call from the National Party earlier today, and I must say, I'm rather flattered. I guess I must be doing something right, or I'm doing everything *spectacularly* wrong!

By convention, the Opposition gets to borrow a boffin from Treasury during the election to help them with their scheming. Given the small circle of people who were in the loop about the tax cut plans, this boffin, Simon, would have been intimately involved with those plans. Given his speciality and the particulars of this election, he is the busiest and most valuable person in their research unit. So I was rather surprised, flattered, and bloody worried that he spent the better part of an hour trying to straighten me out about my last post (the Calculator one, not the $12.8b one).

His biggest issue with it was that I was wrong about National funding its tax cuts out of the debt increase. I have to say, he's technically right, but the "technically right" part is not particularly convincing. Here's why (an explanation arrived at after much pen-pointing and diagram-construction):

Currently, the Labour government is running a big operating surplus (i.e. Its income is higher than its expenses). It has a lot of money left over after meeting all its operating costs, and its spending that money on contributions to the Super Fund, making capital purchases (buying big stuff, like ships and hospitals) and repaying debt.

What a National government would do is give some tax cuts, which means it would run a smaller operating surplus, which means it will have less money left over after meeting all its operating costs. It still has enough left over to put money into the Super Fund.

Note that, at this point, the tax cuts have been funded, but no borrowing has occurred.

*Then*, because they still need to buy assets, they borrow money to fund those capital purchases. Hey presto - they are borrowing, but they are not borrowing to fund tax cuts.

It's not as duplicitous as it sounds. From National's point of view, capital purchases should never have been paid out of cash in the first place - they'd say it's Cullen who's doing the dodgy accounting by paying for capital purchases out of the cash surplus and making it seem like there's not much money. Capital purchases should be paid for by borrowing, and then that debt should be repaid over the lifetime of the asset, because the benefits of the asset are enjoyed over that time (thus it's a way of spending money that's "better", from an accounting point of view). So if you start off with the assertion that capital purchases should be funded from borrowing - just because it's better accounting - then it really is true that the surplus is higher than it needs to be (i.e. You can afford a tax cut).

They also consider this method to be fairer, since the people who benefit from the asset will be paying for it. For example, if current taxpayers pay for the assets out of cash now, then they could be in another country or dead without having fully enjoyed the benefits of said assets (sucks to be them). That's grossly simplified, but the fundamental idea is that people should only pay as much as they're using, as they're using it.

The advantages of Cullen's way of doing things is considerably simpler - it's cheaper, because borrowing always comes with a cost.

Bottom-line, Simon the Boffin is right, the money that National borrows does not directly go towards tax cuts - however, the tax cuts wouldn't be possible without the borrowing, either! So:

* If you like National, you can say that they are justifiably borrowing money for capital purchases, which reveals that the true surplus really has room for tax cuts.

* If you dislike National, you can say that their tax cuts means they can no longer afford to make the necessary capital purchases out of cash, which forces them to borrow, so their increased borrowing is an indirect effect of their tax cuts.


So, in all seriousness, the whole tax cut argument - and by extension, this *election* - can be reduced to an accounting debate.

Scary, eh?

But within the accounting debate, there's also an underlying philosophical conflict (the "Political Philosophy-Public Accounting Nexus"): the Left's believes that the state is more than just the sum of current taxpayers - that taxpayers keep the state going, and the state provide for the people, but the relationship isn't necessarily dollar-for-dollar, as the Right's state-as-a-service-provider model would have it.


Simon the Boffin also makes a few minor points:

* The debt increase *is* $3.2b, not $3.5b, because the $3.5b figure doesn't take into account the savings from not funding the Reserve Bank for some kind of monetary policy thing, and extra spending on roads. (Okay...)

* $3.2b increase in debt is not actually very big, when you put it into context. (It's still 1.8% of GDP, or a 9% increase in debt over what's forecasted. But uh... I guess different people have different definitions of big. Wait... the double-entendre is working *against* me here, isn't it?)

He also made a point which I couldn't figure out whether it was major or minor. He kept saying that I didn't understand baseline spending (He was right. I didn't have a clue what he was on about!). I'm sure he'll correct me if I'm wrong, but I think he was saying that National's $3b lowering of new budget spending isn't quite what it sounds like.

I left the numbers at the office, so I'll have to settle for some hypothetical numbers, but the idea was that if it was a $700m decrease in 2006/07, $1b decrease in 2007/08, and $1.3b in 2008/09, then the 2007/08 cut is really only a $300m cut, because $700m of it was already cut the year before. So the savings from that cut continues to be counted, but it's not as if *another* $700m cut takes place. So really, the new budget spending has only been cut by $1.3b over three years, but it's the saving from the cut that adds up to $3b.


Alright. I think that's plenty more than enough geeking for a day. I'm going to go and... er... transcribe an interview I had with an economist now. DOH!

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Head down, calculator up | Aug 24, 2005 12:35

Alright, let me try this again. I have National's own numbers in front of me - I'll stick to the basics this time.

Things we know:

* National is promising $9.4b worth of tax cuts in the next three budgets. Except not. Because they're removing indexation (adjusting the tax brackets by inflation - the idea that was introduced and bagged in the Budget this year), they're essentially removing $500m of "tax cuts" over the same period.

So, taxes would be $8.9b lower under National than it would be under Labour, not $9.4b. Small point, but worth noting.

* National promises to cut $1.2b of waste over the next three fiscal years. The focus will be on "low quality spend [sic]", "economic and regional development", "welfare delivery". Can this be done? Labour says no, National says yes. But while this seems to be the most contentious issue, it's not the biggest.

* Debt, despite it not being the "$12.8b Wally" I thought it was, is still a very big number. National will be borrowing $3.5b more than Labour (or repaying $3.5b less, depending on how you look at it) to fund the tax cuts.

In their statement, they've labelled their net shortfall line "net additional". I'm not quite sure what they mean by "additional". I think it's short for "money additional to money we actually have".


(The total "net additional" is $3.5b, and that's probably more accurate than my $3.2b figure, which is calculated from their debt as percentage of GDP figure, which of course contains gigantic rounding errors.)

* The second biggest cut, though, is "lower new budget spending allowance", sitting at $3b. As Cullen said in an earlier interview here, this doesn't represent new blow-outs, it's what's required to keep health/education spending up with the population requirements. Drop this, and the pressures on health/education spending will have no release, according to Cullen. The problem with Brash/Key's argument here is that they can't say they'll just cut the fat off the system and put it back into core spending, because they already cut the fat off in that $1.2b line above. This is real additional spending they're cutting - not "wasteful" spending.


So yeah, it all adds up (minus another $600m in Law & Order spending and plus another $500m saving from scrapping Kiwisave) - a cut in sloppy spending here, a cut of real spending there, borrow for the rest. Hey presto, tax cuts.

That's all I got. Not nearly half as sexy, but pretty damn solid. Still feel like a bit of an arse for the stuff last night, but ah, live and learn. Hopefully this - less yelling, more calculating - will go some way to restoring my geek-creds.


Lisa: If I'm going to bail the country out, I'll have to raise taxes, but in my speech, I'd like to avoid calling it a "painful emergency tax".
Milhouse: What about... "colossal salary grab"?
Lisa: See, that has the same problem. We need to soften the blow.
Milhouse: Well, if you just want to out-and-out lie... okay, we could call it a "temporary refund adjustment".
Lisa: I love it.
Milhouse: Really? What else do you love, Lisa?
Lisa: Fiscal solvency.
Milhouse: Oh. Yeah. Me too.

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Allow my foghorn to answer your question... | Aug 24, 2005 10:28

Woou-wooul! Guess I got it wrong. Yesterday, I wrote that National intends to fund its tax cut by increasing debt to 26.3% of GDP by 2008/09. Well, it turns out that I was right for a small part - National does intend to raise debt in 2008/09 by 1% of GDP, but that's compared with 2006 figures (which will be National's first budget), not 2004 figures, and damn, it makes a pretty big difference.

The 2006 gross sovereign issued debt is 21.3%, compared with 25.3% in 2004. So, rather than the 26.3% figure I pulled out last night, it's only 22% (according to National's estimates).

This would mean that National is still going to be more indebted at the end of the forecast period than Labour, but rather than $12.8b more, it'll be around $3.2b.

It's not entirely insignificant, but heck, it's a big difference.

[Update: The forecast at the time of the Budget was that gross debt in 2008/09 was going to be 20.2% under the current government. This is the figure that National was working from. The 19.1% that I used yesterday was from the Pre-Election opening of the books. My bad - thanks Idiot/Savant.]

So, I retract my last post (will keep it on there for comical and self-flagellation purposes), and I apologise sincerely for any fiscal indigestion I may have caused.

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Hey dude, I found the $12.8b you were looking for. | Aug 23, 2005 19:27

I wanted to build this up for dramatic effect, but, oh, I can't help myself. National's tax cut is perfectly affordable, and they laid out exactly where it's coming from: **NATIONAL IS FUNDING THE ENTIRE TAX CUT PACKAGE OUT OF A $12.8b INCREASE IN DEBT OVER FOUR YEARS**! Waaaaaaaa!!!!

Where's this $12.8b Wally? In the fine print, of course. It's always in the fine-print...

It's a very simple and seemingly innocuous line in Key's press release yesterday:

Gross sovereign issued debt is forecast to be approximately 1% higher relative to GDP than currently by the end of the forecast period.

Well, this is harmless, isn't it? According to Treasury forecasts, gross debt will be $34b in 2008/09, or 19.1% of GDP. So what's one more percent? Nothing, really. Just $1.78b, and well, what's a billion or two among friends?

But read it again. It's "1% higher than currently", not "1% higher than currently forecasted". He's not comparing it with debt as a percentage of GDP in 2008/09, he's comparing it with debt as a percentage of GDP in 2004/05.

So what?

The 2004/05 gross debt is 25.3% of GDP.

(If you know what this means, you can proceed to the run-around-screaming part. The rest of you should continue reading.)

So what he's saying there is that gross debt will be approximately 26.3% in 2008/09, or a whopping $12.8b (7.2% of GDP) higher than what it's currently projected to be.

There. Big fat $12.8b Wally. Found.

Stuff the spending cut, waste cut, baby-selling, etc., etc., there's enough debt there to fund the entire tax package. I blame my not picking this up yesterday on sleep deprivation. But anyway, here you go.

I had some more speculation about where the money was coming from before, but frankly, I don't think we need to speculate any more.

Of course, there's a flip side to this, too. National will be saying that, sure, it's a massive increase on *forecasted* debt levels, but it really is only 1% of GDP - it's the forecast that's the dodgy result, because it takes into account ol' Mad Doctor Cullen paying off debt when there's no need.

And there's a genuine case for that. But put it this way: Under National, the government will have $12.8b more debt in 2008/09 than it would under Labour. Is this good or bad? I don't know, but at least now we can have a debate over what the appropriate debt level should be.

Right, I'm going off to my poker game, two hours late. Now, where'd I leave that $12.8b...

[Update: Tried to contact John Key, but he told me to talk to their researcher, who can be reached in the morning. My friend, a spindoctor in the opposition's opposition, told me that if I got it wrong, he would have set me straight there and then. So I guess I'll see what happens tomorrow...]

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Tax Rebates vs Income Supplements: The Eternal Struggle | Aug 22, 2005 20:47

My head hurts. So, so many numbers. I was staring at National's Tax Cut Calculator, the fields began to blur, and pretty soon I was comparing the tax cut I'd get as a single parent with three dependent children and what I'd get as a Level 11 Elven Ranger.

It really is getting ridiculous: the student loan calculator, the Working for Families calculator, National's tax cut calculator - so many calculators are required just to figure out what we're getting bribed with.

That's been my biggest disappointment with National's tax cut - despite all their talk about smaller government, reducing bureaucracy and cutting government waste, they've gone and made the tax system even more complicated, and loaded all the goodies on as tax rebates.

But before I rant further, one excellent bit of National's tax policy that I'm afraid will be drowned out in the deafening din: Dropping the secondary tax rate from a ridiculous 33% down to 19%. Fantastic. People work two jobs because they're poor, or because their first job pays peanuts, so it makes very little sense to tax them more for working hard (and not necessarily getting rich doing it). Moreover, it's a recognition of the casualisation of work, etc. I hope that, should Labour win, that they look into this, too.

Anyway, the line from Brash that really stumped me:

"During the interim period while the family tax is being developed, a 20% abatement rate will be applied on top of our 19% tax rate out to $50,000. This will mean that even with income support abating, lower income earners will face an effective marginal tax rate no higher than the top rate of personal income tax of 39% (19% plus 20%)."

No, don't bother trying to work it out - you'll waste more time than that tax abatement is actually worth.

That's not a completely flippant remark. We're in an election where our choice of bribes are a) an income-adjusted tax-relief/income-supplement package tied to the number of kids you have, versus b) an expansion of existing tax brackets (along with the addition of a new one) and a swath of tax rebates.

I think I might just work for the goddamn money, thanks.

Then there's the process of actually getting it. I applied for an accommodation supplement under WFF two months ago (worth $30-40/week, I expect), and I'll get to see a case manager later this week (I have no idea why I need to talk to them, or what we'll talk about, but The Bureaucracy demands it), and then my application will be processed and considered.

This is the kind of stuff that gives traction to National's "the government is wasting money on pen-pushers" message and to their shaming of Labour for making people grovel to MSD to get their own money back. But what does National do? Offer to take the money away from MSD's grubby hands and give it to IRD's grubby hands. Instead of applying for benefits like a peasant, you get to apply for tax rebates, like a big businessman.

As the Libertarianz say, "it's enough to make you want to vote Libertarianz".

Incidentally, I gave my candidate vote to the Libertarianz last election - they were the only ones who offered a universal allowance. It was a remarkably simple concept - instead of the current welfare system, you just give a sum equivalent the dole to every adult, regardless of income, so that nobody has an income lower than that, and you completely remove the problem of marginal tax rates caused by benefits being taken away. That, and you can shave the welfare infrastructure down to the bone, which is a gloriously satisfying concept. And you're not giving rich people more money, because the extra will be funded from their taxes, anyway. It's not nearly as crazy as it sounds...


Anyway, I'm sure there are some of you out there who are more mercenary about this, and for you, the choice can be really simple - punch up the appropriate numbers on the various websites and let the calculator decide your vote. After all, that's what a good rational economic agent would do.

If you want to get more reductionistic, don't even bother with being a rational economic agent - just be a blip in a demographic. Do you have a student loan, dependent children, or a low-income? Vote Labour. Are you rich, single, or childless? Vote National.

What? You care about the state of the economy and the nation beyond your own short-term financial gain? You're in the wrong election, buddy.

But then again, I guess I am, too. Watch this space for some geniune economic wonk later in the week. In the meantime, chew on Jordan Carter's numbers.

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To the Spreadsheet! | Aug 22, 2005 14:22

Play the audio for this post MP3, 50.5 KB

Graphs and tables have been produced on National's tax numbers. Click on the "Audio" link above or the "Audio" button at the bottom to open them up.

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Revenge of the Nerds | Aug 17, 2005 12:43

With the National Party finally prepared to unleash the torrent of fiscal wonk that they've been baiting us with for so long, we're about to enter the geekiest two weeks of the election campaign. This week, I talk to Michael Cullen about what really happened with the "Chewing Gum Budget", tax cuts, and countercyclical whatchamejigs. So put some fresh batteries in your calculator and get ready to *wonk*!

[Sitting-in on the interview was Patricia Herbert, Cullen's Press Secretary, who helpfully chimes in once or twice during the interview. And sorry, I know this is pretty jargon heavy - I was going to make links for all the economic terms, but I was up till 3 transcribing this bloody thing, and I'm supposed to be on holiday. So if you're unfamiliar with any of the terms, google it yourself or look it up on Wikipedia. The entries on Keynesian economics and monetary policy are probably the most relevant background pieces, if that's what you're looking for.]

Would it be fair to say that the Government has surplus at its disposal, but is choosing to invest in long-term assets and debt repayments rather than on present spending or tax-cuts?

In part, yes. In part it's also simply a matter of macroeconomic management.

One of the problems we're running into is, because the economy's been running at a very strong rate for about five years now, we've got around 4% [growth] or very close to it, and sometimes a bit above that, we've forgotten that there's such a thing as an economic cycle. And the rate of growth over the next couple of years is expectedly to be significantly lower than that number, [down] to 2.5%.

So basically what we're talking about, the surplus in last year, is a surplus at the peak of the cycle. In that situation, the government would be expecting to run, effectively, a somewhat contractionary fiscal policy, because it's trying to take some heat out of the economy. And obviously, we have a significant amount of heat in the economy at the present time, looking at labour shortages, inflation at the top-end of the band, and so on. If the government is not doing that, then it'll simply lead to a monetary policy response.

So in effect, what's happening here is good old-fashioned counter-cyclical fiscal management of the sort that doesn't lead to any great lurches, but simply says let your automatic stablisers work. When the economy is growing particularly strongly, you run surpluses, you pay off debt; when the economy is running much more weakly, you're borrowing more, in order to stimulate the economy.

[But] equally, we've also been focusing on the long-term, with the transfers into the superannuation fund and with a concern to keep debt coming down, because in the long-term, we face some significant fiscal pressures around health and superannuation.

In your 2000, 2001, 2002, 2003, 2004 budget speeches, you didn't talk about the cash surplus at all, only the OBERAC. In 2001, when you were talking about the OBERAC, you said that it "may be regarded as the measure of the underlying surplus"...

Yes, I think that's right...

But in the 2005 speech, you focused on the cash surplus as the 'real surplus'.

Yes, because unfortunately the media - and obviously political opponents, for purely tactical reasons - couldn't get it through their heads that the operating surplus wasn't the amount you could spend. I mean, I just couldn't explain to them: out of the operating surplus came the money that went into the superannuation fund, came large amounts of money from capital investment of other sorts that went off deparmental balance sheets, came the retained profits in the SOEs and Crown Research institutes and Crown entities and all the rest of it, and they kept talking of it as though it *was* the cash surplus.

It's still correct, in my view, to say that the OBERAC reflects the *underlying* fiscal position, but that's not [the figure] that tells you what you've got free to spend, over and above what you're spending now. This last year we've had a very large cash surplus. We won't have anything like that much in this current year.

About the counter-cyclical adjustments: Do you consider yourself a Keynesian economist?

In that sense, yes. I believe that one of the secrets of fiscal management is to allow the automatic stabilisers to work as best as you can, rather than actually acting consciously pro-cyclically or counter-cyclically, which assumes you can pick when the turning points are.

It's bad enough the Reserve Bank having to make those decisions, it's terrible if you've got someone else in the economy trying to make them as well - and probably making different ones. And the thing that went wrong with Keynesian fiscal management in the post-War era - and you can see it in this election campaign - it very easily degenerates into one-sided Keynesianism, where you spend at the top of the cycle, because you can afford to do so, and you borrow at the bottom of the cycle, because you need to to stimulate the economy - and so you're *always* turing towards a deficit! [laughs] And so you're always building up debt, and never paying it off! [laughs]

Are you concerned about the political implications of this kind of fiscal management? That you're losing out on the potential political gains from spending the money now, and you could be giving it to a National Government three years down the track? Is it kind of... political selfless, or even politically self-defeating?

Well, we'll know on September 17 whether it's politically self-defeating or not, but the reality is if an incoming National government decided to fund large amounts of tax cuts without reducing any form of spending anywhere, they'll quickly run into trouble. The Treasury reports will be screaming blue murder, and fairly fast, about the direction of fiscal policy over the medium-term. The Reserve Bank will be starting to issue major warnings and probably start to push up interest rates, etc. I think any such government will quickly find that its room to move is rather less than they're assuming.

I think the problem we've got now is a rather odd one, in that we've got both a leader and a finance spokesperson of the major opposition party who are very inexperienced, politically. I don't think they really understand how difficult it is to constrain the growth in health and education spending below a certain level.

Isn't that just the wave of a pen?

That's what they seem to argue. If they do that, they'll very quickly find themselves running into trouble in service delivery - in the hospital sector in particular - and an enormous political backlash, and they'll have to loosen again on the spending side. And that's pretty much common experience over the last 15 years or more now, in New Zealand and indeed any other number of countries similar to us.

What if the money from the tax cuts came from borrowing and from reducing the contribution the super fund?

Well, they've either really got to abolish the super fund or they've got to carry on keeping up the level of payments we're planning, because it's mandated in the statute.

Could they reduce the level of the contribution?

They could reduce it, but they'd have to explain why, and "so we can have some tax cuts now" would not be a very convincing explanation. I don't think that, politically, that would be very acceptable at all.

They could borrow more, but if they were borrowing more to effectively hand that on by way of tax cuts, they'll be stimulating a higher level of consumption, and that would inevitably lead to a monetary policy reaction. That would lead to interest rate rise, so it would be very very bad fiscal management indeed. And I don't believe that someone like Brash, as an ex-Governor of the Reserve Bank, could actually really seriously be thinking about doing that.

I think that Brash does believe that it's going to be quite easy to somehow cut state spending back, and that there's going to be no great political pain in that. That's where I think he's fundamentally wrong.

What do you think about the theory of some people that National is trying to create a strategic deficit?

Well that's a possibility, of course. Certainly, Douglas did that in 1987 with that tax package. No question there was a strategic deficit in there, and the plan was that spending was going to have to be cut back to fill the hole. It's been used before in the United States context - I think that's to flatter Bush's economic management rather heavily. I don't think he's being strategic at all!

As I say, I find it hard to believe that Brash would engage in a fiscal strategy which would lead to substantial increase in debt over time. That's not consistant with everything he's ever said in the past.

But you think that he can use debt as a lever to reduce spending?

Not to a great deal, no. Very hard to justify it. And there'll be lots of very nasty Treasury reports about it, which will cause them all kinds of intense embarrassment. Given what they've been saying, if they got into government, they would have to deliver these tax cuts with both minimal impact on social services and minimum impact on borrowing. I think that's a very hard ask.

You said before that you've being trying to push "cash surplus" into the public discourse to replace people talking about the OBERAC, the message being that "there is no money to spend" rather than the message that "the Government is trying to save money for the future". Do you think that's a political problem, that people don't realise that the Government has these long-term goals in mind?

I think people understand some of that. They certainly understand that around superannuation: putting some money aside to save for the future, to build up assets, etc. What I do think a lot of them believe is that we could actually have a bit of a splurge. But what I find interesting is that at public meetings I go to, there are probably more requests for increase spending than reduced taxes.

It is matter of the Government not really trusting NZers to understand that message [of long-term fiscal planning]?

Er, no. No no. I mean, in a funny way, I suppose we are trusting them - we've put our eggs in that basket, pretty much.

But you haven't really pushed that message very hard?

[Patricia: I think often Dr Cullen's speeches do...]

Yes, that's right. Trouble is, when you keep saying the same thing you don't keep getting it reported. On the other hand, there is a degree of resonance for the argument out there that you've got to be careful about tax cuts, because it's likely to affect spending in health and education, etc. People *do* actually grasp that point. That's what the opinion surveys say.

If you were going to sell the budget again, would you be saying that there was no money for further spending now, or...

No, I'd say it's a budget which is around the long-term. The hard bit of the argument is actually arguing about the fact that, in one sense, you could put tax cuts in now, but that would unwise macroeconomic management. The problem is paying for them further out, when the government is already forecasting to move into substantial cash deficits, and the operating surplus is basically just sufficient to fund the super fund and those bits of capital expenditure which aren't really about increasing our capacity to grow as an economy. There's quite a lot of that in government capital spending: we buy our armed forces equipment, we do various other things; these aren't like buying machines for a factory - we're not going to lift our productive capacity.

Do you feel jibed by the response to the budget earlier this year?

A bit. I'm disappointed that the focus wasn't on the Kiwisaver scheme, and the sort of longer-term plans that represented, and home ownership stuff and so on. [They] got buried in this sort of suddenly created avalance of expectations around tax cuts, which wasn't there a week out from the budget. It sort of suddenly appeared from about Monday onwards... but in politics, sometimes you have to weather through that.

Where did that expectation come from?

That entirely came out from basically two newspapers' sets of journalists in the Gallery here. My failing was not to stamp on that before budget day.

Was it just a simple mistake?

Well... [grins] no comment.

[Patricia: It was more that they started to speculate, and so then if we denied the speculation, then by the process of deduction they can...]

That's right. So we just said we wouldn't get drawn into this sort of "oh well, let's speculate this and you can rule that out, so then once you're silent, we know that's it".

I'm more teed off that they blame me for their speculation, actually! I mean, that, I think, was grossly unfair. And what's really unprofessional is that they resented me for criticising them for blaming me for their false speculation, because I gave them no encouragement about that speculation at all. None at all.

But you didn't do much to discourage it?

No, because as Patricia says, the terrible thing about budgets is you start getting speculation about a range of things. The more you keep ruling everything out, the more the danger is that you end up with no budget to give at all, because basically they've already made sure they've got everything that's in it.

The long-term view of fiscal management - does it reflect your perspectives as a historian?

Yes... short-term pain for long-term gain. It might be my pain and the country's gain, we'll just have to see about that. So, yes it is. But also experience. What's happened over the last 30 years is where debt rose rapidly, and particularly under Sir Robert Muldoon. Very bad fiscal management led to an extrordinarily rapid rise in the government debt in NZ. And that then became a trigger for a period of restructuring which was pretty painful for an awful lot of people. My version of life is that by and large, you should try to avoid pain being inflicted on people. So a little bit of moderation and breathing carefully - which is what I'm saying fiscal management is about now - can save a lot of very nasty pain down the track.

If you did lose the 2005 election on the back of the last budget, would you think that it was worth it, not splurging when you had the chance?

Ha ha... um... yeah, well, I won't say I'll cross that bridge, I'll say I'll swim across that raging torrent when I come to it. [laughs]

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Morality is Not Statistical... | Aug 14, 2005 19:11

...but if it was, at least it should be statistics from a proper sample, not like the Sunday Star Times' "Great Morality Debate", which is trying to pass off a self-selected sample of conservatives brought there under some 1960s conception of "morality" as a "survey" that represents "us".

They tell us to trust them, saying that: crunching the numbers and comparing the demographic patterns of respondents against those of the general population, we were able to conclude that those who took part were roughly representative of the general population, with some exceptions.

One of those exceptions, being, for example, that 17% of respondents were United Future voters. (This is from the print version. The online version omits this.)

Dude, that's not an exception. A 5% under-representation in the 35-45 age bracket, now that's an exception. A 1000% over-representation (M&F's rolling poll put UF at 1.77%) of moral conservatives in a survey about moral conservatism is an invalidating, systematic fuckedupness on the scale of having an ass for a face.

To say that the survey is "roughly representative of the general population", or that it bears any semblance to the the general population at all, is nothing short of a plain, bald-faced lie.

'All in all', concludes Phoenix Research's David Fougere, 'the 10,000 survey participants are not too different from the profiles of all New Zealanders.' (Print version.)

17% UF voters; 1000% over-representation; comprising nearly a fifth of the total sample. "Not too different"? Argggh, this is making my Vulcan blood boil!!

And despite saying that Wellingtonians were much more liberal, they don't do a breakdown of the respondents by geography. And most strikingly, they don't mention the age of respondents at all. Gee, you think that age might have something to do with attitudes towards sex and sexuality?

They use a loaded term like "morality" and ask whether "morality" is important, and then when people who think "morality" is important are the only ones who can be arsed writing in, they consider this to be a "finding"? No, dipshit, it's called a coverage error.

Did I mention that the "survey" was conducted by Phoenix Research? The online version quotes from Fougere extensively, but neglects to mention that his firm was the one that conducted the research. Oops. I was going to link to Phoneyx Research, but now I'm concerned that some people will actually *want* to commission this kind of shit. Can I suggest that, if you want a rigged survey, that you just make it up? It'll have just as much credibility, but it'll be a lot cheaper.

But, to be fair, there was one useful piece of information in there (no, seriously, there was) - the Maori Party respondents were relatively liberal, perhaps indicating that their support base is younger/more educated/more urban than previously thought. Yep, that's quite possibly the only piece of worthwhile information to come from that survey.

I feel a bit bad about bashing the SST after Helen Bain was nice enough to devote a few column inches to my leaders' debate coverage in the sidebar on her blog story, and after Simon Pound was really scathing towards her in his Agenda spot yesterday (and nice towards me). But this whole "Great Morality Debate" thing is really low. It's worthless as research, atrociously dishonest as their major election project, and the coverage they're giving to it is damaging to the public discourse.

On top of that, the whole idea of a survey on morality designed to sway the polity is repugnant to start off with. If 80% of New Zealanders think that homosexuality is bad, should we therefore ban it?

Morality is not statistical.

[Ouu, my article on the Asian vote is finally out in this week's Listener. Go buy a copy and check it out! (More on the issue next week.)

Also coming soon: Dr Michael Cullen! Watch this space...]

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Up the Worm Without a Paddle | Aug 11, 2005 23:22

Leleleleleleead, lilililiisten, lilililisten to lead by lililiistening. And leading. By listening.

Ladies and gentlemen - these are the leleleleaders of our country.

I like suspense, but I'm just going to say it - I think Labour's going to win this election. No, not just because Don Brash started his speech by blurting out the buzzwords that his people told him to blurt out, and no, not because it got worse after that. No, the most striking aspect of the debate was the failure of Peters and Hide to get any traction with their respective messages of "country going down the drain" and "country wants change", and that Anderton had his biggest spike when he delivered the feel-good message of New Zealand being a successful country - and doing better than Australia.

The overwhelming mood of the crowd was positive, and this does not bode well for the opposition. It's that simple.

I had a great time at the debate, which I got to through a series of coincidences. TV1's Agenda flew me up today for an interview for their show on Saturday (it's for the media segment, on the successes of student media, on this Saturday at 8:30am and 11:55pm. And it has me in it.), and on the way up, I was on the same plane as Fran from the Greens, who got me in touch with Roger from TV3, who got me into the debate.

I ended up in the green room, where all the TV3 bigshots and the media minders were, just watching the same TV as everyone else - but it was worth it, just to see the look of G-rated ecstasy on Dunne's minders' faces when that worm kept rising, its veins swelling with the middleness of middle New Zealand.

Good thing that they were all there, then - it just wouldn't have been the same without Peter Dunne to fluff the worm.

Observation and thoughts (most of which are mine):

* ACT: Namechecking Michael Campbell didn't do Hide any favours; undecided voters, it seems, don't agree that change is needed; tax cuts provided an instant response, though interestingly, the numbers didn't make a difference (perhaps it's too difficult to quickly digest?); Hide looked like had a bit too much P going into the debate, but chilled out later on.

* Greens: Did not mention GE; nobody cared about the rivers; albatross-saving is not a vote winner; pollution tax (as a gradual replacement for income tax) was surprisingly well received - I suspect that people thought it sounded like a tax cut, but didn't realise that it, well, wasn't.

* Labour: Consistently talking about consistency. Well, at least that makes her consistent, and her worm rating showed it - it was consistent, too. Tze Ming says that this is meta-mimetic, which is all the analysis we have between the two of us. Tze Ming also notes that she had good hair.

* Maori: It was painful to watch - all the right buzzwords (families, children, etc., and in English, too!) were used, but flopped dismally, even when the exact same lines worked magic for Dunne - Dunne's people say it's about the credibility that Dunne has; seemed scared of the crowd, and, I suppose, that was justified by its hostility; maybe *she* should have mentioned Michael Campbell.

* National: "Oh my god - twilight golf and pet homeopathy" has been flogged to a pulp - it's time to let it go; people liked funny Brash, for a moment; then people laughed *at* him for his "just a few farms comment"; closing speech, the worm made upward progress, but dipped the second he said "vote National Party". Oh dear.

* NZ First: Lacklustre performance by Peters, who uncharacteristically let himself be bitchslapped around by Campbell; his negative message of New Zealand being overrun (by who? Oh, you know, *people*.) didn't work; it was interesting that neither covert or overt racism did much for the worm, and even "gender-bending" didn't provoke a response - whatever happened to Winston "Love-Him-or-Hate-Him" Peters?; and boy, did it all go downhill after "paddling". "Paddling" is not a buzzword. Which focus group did you get that one from, Winston? NAMBLA?

* Progressives: Positive messages of growth, success and stuff-Australia worked well, and saved Anderton's ass after a dull opener of "pragmatic", "incremental gains", and basically 'we're better than nothing'; amazed, however, at how effective his bullet-point closing "speech" actually was, perhaps nobody expects a vision out of this man anymore - but they do see him as someone who gets things done.

* United Future: Undecided voters trust an undecided politician - hell, undecided voters *are* his constituency. I finally understand the utter bewilderment of pundits in 2002. I don't know what he's doing, but he sounds good doing it. Actually, no he doesn't. Fuck, I don't get it.


The whole exercise was an incredibily rich and valuable resource for the pundits and spin-doctors. And it was great fun, even after Tze Ming, in the absence of a worm controller, punched me to express her disapproval during Peters' speech.

Still - a bit of context: These are all undecided voters, and as numerous as they are, they are equally volatile, so let's not take this too seriously. The key thing to watch is voter contentment - if people think that the country is heading in the right direction, if people are happy with their lives, Brash and co. will have an uphill battle to convince us that New Zealand is worse than Australia, and that our lives, in fact, suck.

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Minority Rights | Aug 08, 2005 23:08

As a mother of five young children,‭ ‬she is well-equipped to deal with life in the ACT caucus.‭ ‬And it shows.‭ ‬From ACT's last list MP in‭ ‬2002,‭ ‬Heather Roy has leapfrogged most of the caucus to take the second spot on ACT's‭ ‬2005‭ ‬list‭ - ‬though it's by no means a safe spot.‭Salient's Courtney Sanders talks to Roy about Rogernomics,‭ ‬social liberalism and feminism.

In a previous interview,‭ ‬Victoria University Political Scientist Jon Johansson suggested that this election is the end of Rogernomics.‭ ‬Do you agree‭?‬

If you look at the people in power,‭ ‬they weren't part of the Rogernomic group in the‭ [‬Fourth‭] ‬Labour government,‭ ‬but have they changed anything that Roger Douglas put into place‭? ‬Rogernomics is going to be with us forever,‭ ‬but it won't be identified as Rogernomics.

When‭ [‬ACT‭] ‬thinks of economic liberalism,‭ ‬we just want to have a country that celebrates free enterprise.‭ ‬There are times when markets fail,‭ ‬but that's the only time that it's acceptable for the government to step in.‭ ‬Beyond that,‭ ‬businesses should be able to go about as unhindered as possible.‭ ‬We need to remember that small businesses employ‭ ‬80%‭ ‬of people in NZ.‭ ‬That's a staggering figure and it's something that people just don't realise.‭ ‬If it wasn't for them,‭ ‬if there weren't people out there prepared to take the risks,‭ ‬we'd be‭ [‬left‭] ‬high and dry.

Do you believe that the economic liberalisation‭ (‬of the‭ ‬80s/90s‭) ‬will continue‭?‬

There's always the possibility of moving right back to where we came from.‭ ‬You can never ignore that,‭ ‬and you have to be quite vigilant to stop that slow backward slide happening.

What we need to do is build on what Roger Douglas started and,‭ ‬in particular,‭ ‬we want a thriving economy.‭ ‬We can't just think about tax and business,‭ ‬we need to address the social issues as well.‭ ‬That's Roger Douglas‭' ‬great regret,‭ ‬that he got part way through the job and wasn't able to follow through into all those social areas‭ ‬-‭ ‬health,‭ ‬education,‭ ‬welfare in particular‭ ‬-‭ ‬and get the gains from the stronger economy.‭ ‬You can be more generous to your vulnerable if you've got a strong thriving economy.

If ACT was in power,‭ ‬where would they take the NZ economy‭?‬

We would implement immediate tax cuts that would see us with significant economic growth,‭ ‬above what we have now.‭ ‬Treasury has costed our policy and said it would result in about‭ ‬1%‭ ‬more economic growth than what we have now,‭ ‬and that will put us in a very good position with countries we like to consider ourselves on par with,‭ ‬the UK in particular.

At the moment we're losing many of our best and brightest,‭ ‬our new graduates and even our unskilled people because of better economic conditions,‭ ‬lower taxes,‭ ‬better standard of living‭ [overseas]‬.‭ ‬I like the idea of younger people travelling.‭ ‬You see all these wonderful things,‭ ‬you come back with a wealth of experience,‭ ‬but you come back and you also appreciate what we have here.‭ ‬Our fear at the moment is that people get overseas and there's such a gap between what there is over there and what's available here that it's not an attractive option to come back.

I've got five children who are all school age‭ ‬-‭ ‬what I want is for NZ to be up there as a viable option for them,‭ ‬in whatever career they choose.

Where do you see our generation in‭ ‬20‭ ‬years time‭?‬

I would hope that we get economic policies in place that will allow for sustained economic growth,‭ ‬so that we become a prosperous nation‭ [‬and‭] ‬individuals‭ [‬will‭] ‬have greater opportunities.‭ ‬Hopefully we'll get our young people back from overseas.

I'm really staggered when I go to campuses these days.‭ ‬When I was a student,‭ ‬campuses were very left-wing places.‭ ‬I go to Vic now,‭ ‬and ACT on Campus are the guys who are out there doing things,‭ ‬and a bit from the Young Nats.‭ ‬And the Greens are there,‭ ‬so they're catering for the other side of the political spectrum.

ACT and the Greens,‭ ‬we come from different places,‭ ‬but if there's one thing we both believe in,‭ ‬it's having a tolerant society.‭ ‬I think that's a great sign.

You voted for most of Labour's social bills that have been through the House in the last couple of years.‭ ‬How do you think these are being received by the public‭?‬

Confidence votes are really interesting and you never get them right‭ ‬-‭ ‬you always alienate half of the community.

I don't agree with where the Labour social agenda is taking NZ,‭ ‬but when it came to the conscience votes on those bills,‭ ‬I felt they benefited the people they were intended to help.‭ ‬For example,‭ ‬the Civil Union bill‭ ‬-‭ ‬if two people want to commit to each other,‭ ‬whatever their sexual orientation,‭ ‬they should be able to have some legally binding contract.‭ ‬Now where does Labour want to take that‭? ‬I worry about that where it's leading,‭ ‬but in itself,‭ ‬I believe in‭ [‬the Civil Union Bill‭]‬.

We have the‭ [‬withdrawal of United Future MP‭] ‬Larry Baldock's bill‭ [‬last month‭] ‬about marriage being between a man and a women.‭ ‬I can't for the life of me work out why he's taken out the bill.‭ ‬We were going to support it and he would have had the numbers to have it passed.

‭[‬The Government‭] ‬put Civil Unions forward to try and replace marriage,‭ ‬but they weren't honest enough to tell the public that.‭ ‬That worries me,‭ ‬but two gay people should be able to have a legally binding contract if they want,‭ ‬and that's why I voted for it.

How did this sit with the other ACT MPs‭?‬

ACT is quite a broad church in the same way that all parties are.‭ ‬If you look particularly at the conscience votes‭ ‬-‭ ‬the Prostitution reform,‭ ‬Civil Union,‭ ‬Death with Dignity‭ ‬-‭ [‬ACT MPs‭] ‬were split on all of those.‭ ‬We all come from pretty much the same place economically,‭ ‬but on social issues we are a little more divergent.

People would look at my life and say‭ '‬well you're actually quite a conservative person‭'‬.‭ ‬I suppose I've chosen a conservative,‭ ‬more traditional lifestyle.‭ ‬I don't believe for a moment that because somebody thinks a little differently to me they haven't‭ [‬got‭] ‬every right to do that.‭ ‬As long as consenting adults are living their life lawfully and not harming anybody else,‭ ‬I think they should be free to do what's right for them.‭ ‬I guess I am quite liberal socially.

‭[‬But‭] ‬I don't buy into the social agenda of the Labour party.‭ ‬I voted for‭ [‬the social bills‭] ‬as separate entities,‭ ‬each in their own right,‭ ‬and I do think we've had a huge amount of social engineering under this Labour Government which I don't agree with.

Where do you think Labour is heading with that‭?‬

There's a lot of feminist stuff coming through,‭ ‬women in the workplace,‭ ‬children in childcare,‭ ‬while mums are out working all that sort of stuff.‭ ‬I worry about that.

It's hard to know where it might end.‭ ‬It's interesting to look at the comments that some of our current leaders made,‭ ‬in particular,‭ ‬a submission made to a Select Committee in the‭ '‬70s about‭ ‬24‭[‬-hours a day‭] ‬daycare.‭ ‬It was Soviet Russia and I don't like that at all.‭ ‬I don't want a bar of it.

The PM made that statement at the very beginning of this year about wanting to have all women in the workforce.‭ ‬We don't need to have a certain percentage of the female population in the workforce.‭ ‬How dare she say that I should be working‭? ‬It's for me and my husband to determine between us how we run our lives.

As the ACT spokesperson for women's issues,‭ ‬do you believe we live in a post-feminist society‭?‬

We don't have the same sort of feminism that was around in the‭ '‬60s.I believe in equal rights for men and women,‭ [‬not‭] ‬special rights for women.

I don't want to live in a society in which my sons are considered the enemy,‭ [‬and‭] ‬I think that's what we have at the moment.‭ ‬There're minority groups all over the place,‭ ‬and every one seems to be being catered for.‭ ‬There's one group‭ [‬that's‭] ‬always missing out,‭ ‬particularly in legislation,‭ ‬and that is white middle-class males.‭ ‬We've reached a point where they are the enemy,‭ ‬and you have to rebel against that.‭ ‬I guess the short answer is I believe in equal rights.

Do you believe that we have equal rights in society in general,‭ ‬and the workplace in particular‭?‬

I think that women have more choices than they've ever had before.‭ ‬Have we got further to go‭? ‬Quite possibly.‭ ‬I know that women hold the top jobs,‭ ‬but many workplaces,‭ ‬particularly law firms and places like that,‭ ‬report that women still are struggling to come through‭; ‬in many cases,‭ ‬women are making the choice to have a family.

Life's a juggle,‭ ‬and you make the choices that suit your life.‭ ‬A women can choose not to have a family‭ ‬-‭ ‬there's always a trade off.‭ ‬I certainly don't feel disadvantaged for having made any of the decisions I've made about my life,‭ ‬and I find it hard to believe that we can still think of women as being oppressed,‭ ‬particularly when we look back to see where we've come from.

How do you reconcile ACT's economic policy with helping women into the workforce,‭ ‬with regards to the state provision of services like state-subsidised childcare‭?‬

Women,‭ ‬like men,‭ ‬make choices.‭ ‬Some women are constrained financially,‭ ‬that's true,‭ ‬and that does limit their choices.‭ ‬But we can get around that by trying to be a more prosperous nation so that‭ [‬we‭] ‬open up choices for people.

When we're a more prosperous nation,‭ ‬families actually sort out who the breadwinner is.‭ ‬In some cases,‭ ‬it's the woman who make more money,‭ ‬and the man stays at home.‭ ‬That's socially acceptable now‭ ‬-‭ ‬and that's great.‭ ‬I just want the environment to exist so that women can make the decisions they want to make for themselves,‭ ‬within the constraints that are in their lives.‭ ‬I don't think the state should be there providing childcare so women can get back into the workforce.‭

ACT does not do well with women voters.‭ ‬Why do you think this is‭?‬

It's always been a hard one for us.I think it's because‭ [‬of‭] ‬the perception that ACT's about taxes and the economy,‭ ‬and women aren't so interested in those things.‭ ‬They keep in the back of their mind that those things are important at the big picture level,‭ ‬but‭ [‬women‭]‬,‭ ‬particularly women with children,‭ ‬are thinking at a much more fundamental level.‭ ‬You know,‭ ‬what am I going to have for dinner,‭ ‬what have I got to do to get the kids ready for school tomorrow,‭ ‬how do I balance that with work,‭ ‬etc.‭ ‬I think those things are much more important to women at a fundamental level.

Now,‭ ‬again,‭ ‬it's a gross generalisation,‭ ‬but I think when we go and talk to people,‭ ‬it's the men who are more interested in politics as a subject and the women who are looking after their families.

What we have to do is get better at marketing our message.‭ ‬We have to tailor our messages more to attract the attention of women,‭ ‬and it does help having three women in our caucus who have tackled the social issues together.

Do you think it's a problem with the Right in general‭?‬

That's right,‭ [‬the women vote‭] ‬predominantly goes with Labour.‭ ‬It's about getting out there and marketing our policies.‭ ‬The other thing is that women have a real social conscience,‭ ‬and Labour has been the party that's supposed to care for people.‭ ‬I think many of the laws‭ [‬that‭] ‬this Labour Government have put in place over the last‭ ‬6‭ ‬years aren't about caring at all.‭ ‬In many cases,‭ ‬it seems they're the opposite.‭ ‬But that perception still exists and that's a battle we have to take to people.

What's the difference between ACT and National‭?‬

We set ourselves up as a party of influence,‭ [‬and‭] ‬we've always prided ourselves on being the party with fresh new ideas.

If you look back to our first election,‭ ‬we had a very specific treaty policy.‭ ‬Every party now has got the same policy‭ ‬-‭ ‬there should be time limits‭ [‬for‭] ‬Waitangi Tribunal‭ [‬claims‭]‬.‭ ‬If you haven't filed a grievance after all this time,‭ ‬then you probably haven't got a genuine one.‭ ‬We were called racist for putting that policy forward in‭ '‬96‭ ‬and now every party agrees with most of those principles.

We've got plenty more new ideas to come that only ACT will have the courage to promote.‭ ‬That's why New Zealand needs ACT‭ ‬-‭ ‬so that we can keep promoting those things,‭ ‬keep moving forward and progressing as a nation.‭ ‬The National party has always been known as the party of the status-quo.‭ ‬We want them to be the main party in government,‭ ‬but ACT needs to be there to implement what Don Brash wants to do.‭ ‬He has got much more support,‭ ‬philosophically,‭ ‬from experienced and battle-hardened ACT MPs than he has from his own caucus.‭ ‬Don Brash needs ACT because we've got the courage to give the National party the spine it needs to go ahead and do those things it says it's going to do not just get into government.

You don't believe that National will make good on their promises‭?‬

They will on some of them,‭ ‬but I think they'll find that some of them aren't doable or some of them aren't affordable.‭ ‬Tax cuts would be one of the things that we push very hard for,‭ ‬but,‭ ‬for example,‭ ‬we're not in favour of the tax deductability for a lot of the things National are announcing now.‭ ‬They will actually result in less savings for individuals and won't be for the benefit of new Zealanders at all.

We also think we can go about some things better.‭ ‬Student loans are a very good example.‭ ‬This bidding war that's erupted with student loans‭ ‬-‭ ‬I think very few people are saying‭ '‬yay‭'‬.‭ ‬Most people are saying‭ '‬oh well,‭ ‬that's of little benefit anyway‭'‬.‭ ‬Students,‭ ‬when they're earning,‭ ‬are actually much better off with tax cuts that allow them to pay back their student loans more quickly than they are with tax deductability and certainly with interest-free loans.‭ ‬All that's going to do is encourage people to borrow as much as they can,‭ ‬and then there's no incentive to pay that back quickly,‭ ‬so people are going to have loans for much longer.‭ ‬It makes no economic sense at all,‭ ‬and what the National party is proposing is not economically liberal its economically conservative.

Do you think that this is the major difference between ACT and National‭?‬

I think we actually differ in many areas.‭ ‬People often say to me,‭ ‬if things turned to custard with ACT,‭ ‬would you go and join the National Party‭? ‬And I would say‭ '‬no,‭ ‬I wouldn't,‭ ‬I'm not a National Party person.‭'

Why not‭?‬

I think it would be harder to be socially liberal in the National Party,‭ ‬although not impossible.‭ ‬The luxury of being with ACT is that when it comes to election time you're looking to convince a smaller proportion of the voters.‭ ‬The National Party has to pull from a much bigger pool of voters,‭ ‬so they have to make compromises,‭ ‬and those are compromises that I'm not prepared to make.

This country can afford tax cuts and‭ [‬people‭] ‬would be better off choosing how to spend that money themselves.‭ ‬The National Party is more‭ '‬that government has a bigger role to play and that perhaps government can make some of those decisions for people‭'‬.‭ ‬I don't think that's the right thing to do.


[Next week: Is there a doctor in the House? I'll be talking to Dr Michael Cullen next week about ... well, money. Lots of it. We'll be discussing the surplus, student loans, the Cullen Fund, and the spike that runs through them all - intergenerational cross-subsidy. Uh - we'll be talking about money. It should be good, so be sure to tune/log in next week, and tell your friends/acquaintances/spam-list.]

[More shameless self-promotion: Salient's interview with Mallard earlier in the year got a good run in Parliament last week, making three appearances at the last Question Time this sitting, as well as finding its way into John Armstrong and Jane Clifton's columns (though it was misquoted in the latter, and nobody mentioned that it came from Salient). You can find the original story here. While you're at it, check out Geoff Brischke's hilarious "Warship Commander" series, parts 1, 2 and 3. There's been an even funnier one where he goes to a recruitment agency to try to buy "permanent workers" for his plantation, but that's still not up on the website yet.]

[Nippert-grade self-promotion: I've got a few entries in a photo competition aimed at encouraging young people to become more engaged with political issues. Go check it out - and of course, if you want to vote for me so I can win that camera, that would be great, too. If you're interested in that sort of thing, you can also check out my photo archive, featuring Hikoi, hair gel, and a bloody skinhead.]

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Newsflash: Economists are Wrong | Aug 04, 2005 15:16

This just in, from the office of Trevor Mallard:

A Treasury report released today forecasting the take-up of student loans following the introduction of the no-interest-while-studying policy shows just how inaccurate economists' forecasting of behaviour can be, Education Minister Trevor Mallard said.

"This report highlights how out of touch with human behaviour some economists can be. Even the Treasury report, which was reasonably conservative, got it badly wrong. This makes a further mockery of extremist economists who have used wildly inaccurate figures to bag Labour's proposal to scrap interest on student loans.

Alright, attacking WestEvilGreedyCapitalistPac is one thing, but slamming Treasury, too? Economists are "out of touch with human behaviour"? Forgive my geeky bias and Vulcan tendencies, but, uh, this seems rather illogical. After all, *somebody* has to make educated guesses about the future, and if not economists, who? Astrologers? Soothsayers? Press secretaries?

It utterly begs the question - oh, let me stress that again - it's crawling on its hands and knees, begging, begging for the question: If economists are useless, out of touch, inhuman and generally wrong, *who the fuck did Labour's costings?*

Are they: a) Inaccurate economists who are out of touch with human behaviour? b) Economists spliced with human genes? c) Not economists at all?

All I can says is: Does not compute. Does not compute.

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The New Old Right | Aug 03, 2005 11:05

"If you're not a liberal at 25, you have no heart. If you're not a conservative by 35, you have no brain." Well, he's got the second part down pat. At 35, self-confessed conservative Simon Power is National's Senior Whip and bright-young-thing. Salient talks to him about conservatism, his generation, and visiting Mary-Jane. This is the second in a series of interviews conducted with young MPs for Salient magazine, and reprinted here with kind permission from Editor Emily Braunstein.

[At a candidates forum on 20 July, Vic Politics Professor] Margaret Clark told us that you had wanted to be in Parliament since university. Did you have political ambitions before that?

No, not really. I went to Vic to study law and picked up first-year politics in 1988. I was one of those rugby-jersey wearing, back-row sort of fellows who had a relaxed view of lectures, and at the end of the first year politics class, Margaret said, 'look, if you feel passionately about politics, you should get involved, don't just sit on the sidelines'. That rang pretty true for me, and she's been a bit of a mentor in the sense that she really ignited in me my interest in NZ and US politics from the late 80s. [She's] someone who I have very high regard for.

At that stage, where did you see yourself in 20 years' time - now, I suppose?

I was practicing law busily in Auckland for Kensington Swan and I got a phone call from a friend of mine to say that they thought [sitting MP Dennis Marshall] was going to retire from [the] Rangitiki [electorate seat], and if I wanted to run, I'd better get back. So I gave up my job in the law firm and came back home to run, primarily because I thought if I didn't do it now, that's the kind of seat where somebody could hold it for 20 years and you'd never get another go at it.

When you first started out, did you see yourself where you are today, in terms of your position and the views that you hold?

I'm probably more conservative that I thought I'd be, at a younger age. And I represent a conservative electorate. Yeah, I guess perhaps I always thought I'd be doing it a bit older, but the opportunity came along and had to be taken.

You think in another 20 years, you'll be even more conservative?

No, I don't think so.

You've hit the ceiling?

I think I have - I'd be disappointed if I was more conservative in 20 years, to be frank.

Do you have any aspirations to be leader of the National Party one day?

It's not something I've turned my mind to.

Yeah? Okay... So, what do you see as the important issues for the country in the mid-/long-term?

When I came out of university, I had ten good mates. We all went through together. Seven of those live overseas and are bringing up their families in [other] countries. So the medium-term goal for me is to get some of those people back to New Zealand.

And what will bring them back?

I think a country that's run on a basis of freedom and less involvement by government will attract people home. People of my generation don't like being told what to do all the time. This is the generation that has had to balance student loans with retirement savings, this is the generation that has had to balance higher overseas earnings with lifestyle and family choices in New Zealand. They are capable, bright people, who don't need to be told what to do by Helen Clark and her government.

They don't want help from the government?

I don't think that the expectations that people of my generation have of the government are high, in the sense that I think they'd just rather they were left alone.

Do you think it's a product of your generation's experiences?

Yeah, I do. This is a group of people who were brought up in the Roger Douglas, Reaganomics, Thatcherite years, and are capable of making their own decisions in a pretty smart way. They won't need to be told what to think or what to do by people who, frankly, have pretty minimal life experiences themselves.

What are the other defining characteristics of your generation?

It's probably a generation who have had to come to grips with the fact that there is no something for nothing, whether it be in tertiary education, saving for your retirement [or] battling floating mortgage interest rates. It's a generation of people that are kinda squashed between wanting to exercise their own overseas ambitions to better themselves and to repay loans [and] trying to balance that with wanting to make a contribution to their country and stay in New Zealand. And at the moment, certainly if my friends are anything to go by, we're losing that battle a bit, because more of them are away than they're here.

Would you say that they've had a bad experience of government?

Yeah, that may be right. Reagan always use to say that government isn't the answer to the problem, government is the problem, and I have some sympathy for that view.

What's your interest in American politics, anyway?

It's just something I've always taken an interest in. Did a couple of courses at Victoria in the later part of my degree, and always really enjoyed it. It's a complex political system, and I enjoy following it.

Who's your favourite American leader?

Different leaders bring different qualities. I suppose it's a combination of recent US President that have got a combination of qualities that vary from ease, to battler... having an optimistic and sunny disposition is always a helpful thing for a politician to have. I think that if people see that politicians are grim, it's pretty hard to get enthusiastic about politics.

Who's qualities would you most like to have?

Oh, I'm quite happy with my own qualities, Keith!

If National had its way and Don Brash's vision was carried out, what would race relations in NZ be like in 20 years' time?

I hope that it would be harmonious, I hope that controversy would have fallen behind some time ago. I hope that [the] issues that still provide the stinging nettle for people around treaty negotiations and settlement would have been concluded. And I'm pretty confident that NZers are tolerant, fair-minded people who just want to see everybody have a fair go.

Do you think that, in that future, there will be a place for independent Maori identity?

There'll always be a place for ethnic diversity across the board. Because [the Treaty of Waitangi is] between two parties, [it] will always provide a special place for those two parties. The trick is not to allow it to create a whole lot of unclear division and undefined legal rights, I think that's where some of the difficulty has arisen in recent years.

Things like including the Principles of the Treaty of Waitangi in legislation... as a lawyer, I look it that and find it quite difficult to get my head around, because it doesn't give any certainty as to the meaning. Don Brash has said very clearly that we will remove from legislation, where appropriate, any references to the Principles of the Treaty of Waitangi.

So it's the "Principles of the Treaty" that you're concerned with, rather than the Treaty itself?

Yeah, I think that if you attempt to turn a historical document into a living document, you have to be clear about what it's terms are, and I don't think that we've had that clarity.

How's National going to get that clarity?

I think that these things evolve, I think that New Zealanders have a generous view of where their country is going to be in the next 15-20 years. And I think that stuff will naturally grow. What I don't think is helpful is Parliament attempting to create a sentiment in legislation which is ambiguous.

Would you say that Don Brash is of the Rogernomics generation? With the Ruth Richardson crowd?

No, I think that Don has proven himself to be one out of the mould, actually. Quite a different politician to any politician that we've seen in recent history. He brings a unique set of built-in credibility as a former Governor of the Reserve Bank, and [he's] sort of an anti-politician, which makes him a good politician. I think he's doing a great job.

Would you say that, philosophically, he's still part of the Rogernomics era?

No, I wouldn't say that. That was nearly 20 years ago. Politics of New Zealand has moved on, in my view, from a straight left-right debate, and is becoming more about finding a path that meets people's expectations about government in their lives without returning to a highly interventionist state that you saw before 1984.

Isn't that a left-right debate?

No, not necessarily, because [that] can occur as much in social policy as in economic policy, and we've seen that in this last term in Parliament with legislation around prostitution law reform, and civil unions, smoking in bars, etc. It's not whether you agree or disagree with those issues, it's whether you think government has a role.

Isn't more or less government intervention the left-right debate?

I see it as being wider than that, because the left-right debate in the 80s and 90s was very much focused on the economic theories. We've seen a debate emerge in the last 5 or 6 years which is much more based on social policy, I think.

So is economics no longer the primary axis of contention in New Zealand politics?

When you look at the Reserve Bank Act and Fiscal Responsibility Act, those pillars haven't changed. Do we agree that inflation should be kept capped somewhere between 1-3%? Well actually, yeah, the two main political parties do agree about that. Has the Labour Party adopted what could be seen as a fiscally prudent approach to managing the economy? Arguably. So yeah, I think the debate has probably shifted more to the social context than the economic one, in many ways.

Economically, are the differences between Labour and National still significant?

Yes, I think there are some areas that are still significant, and that relates to the extent - the size - of government, rather than completely different economic foundation for making policy decisions, which you saw in the difference between the 70s and then the 80s and 90s. Looking back now, between the late 80s and early 90s, in many ways, it was a continuum of the same type of political policies.

Would you characterise this as a consensus on key economic issues?

Superannuation is a good example. There is consensus there. The two major political parties have agreed: 65% of the average wage at 65 years old, and to maintain the Cullen Fund. That's consensus.

Is that consensus a temporary phenomenon?

Who knows? The political personalities of the time will decide that. I think that people would be surprised at how much the two major political parties agree on, in the sense of voting for or against legislation in the house. If we vote with the Labour Party on different issues, that never makes the headline, because there's no story there. Free trade is a good example. [It'd] be pretty churlish of us in Opposition, to oppose free trade agreements when we would do the same in government. You have to maintain your credibility on the issue itself.

You said that you're more conservative than you thought you'd be. What's your position on raising the drinking age?

I voted for the bill to go to a Select Committee, but I haven't made my mind up about what I'm going to do about it when it comes out of the Select Committee, which now will be after the election.

What's your position on decriminalising marijuana?

No. I've spent a bit of time doing some criminal work as a lawyer, at the courts on a Monday morning. And the prisons cells, police cells, etc. I don't believe that cannabis is something that we should be, in any way, encouraging usage of in New Zealand.

And you think that the current legislation is the best way of tackling the problem?

I think there needs to be a lot more work done in the education field, but I don't think that any form of decriminalisation or legalisation will help the issue.

Back when you were at Weir House, did you ever smoke pot?

At Weir House, no.

During your time at university?


That would have been illegal, right?

Well, it's not something that I've ever done since, and with the benefit of hindsight, I wouldn't have done it.

So what would you say to other young people who want to try it?

Don't waste your time.

And the people that have tried it - should they be considered criminals?

I think the current situation is right where it is.

How do you justify saying that government should intervene less in peoples' lives and then saying that the government should ban personal drug use?

It's what you're always balancing, the right of the individual against the right of others. But, oh, I don't really see it that way, actually, to be honest. I just think there are certain fundamental things that the state has a role in. It's a question of where you draw the line. Simple as that.

ACT would probably say you're a freedom-hater, because you're saying that the individual doesn't have the right to do his/her own body as they please...

And ACT's message is very popular with the electorate at the moment.

Well, come on, I think that issue needs to be address. If you're saying that the government should stay out of people's lives, then shouldn't drugs be part of that?


Why not?

Because the public elects a government to sanction certain things, and not to sanction other things. Presently, drug use is illegal, and there is no call for a change of law.

But *you* are calling for a government that gives more freedom to people.

It's just an extreme on the continuum. It just depends on where you draw the line on the continuum. I don't draw it that far down the continuum.

So you think that the government is going too far in areas like taxes and social welfare, but not in its drugs policies?

Yeah. I would draw the line more closely on those issues that you related to formerly.

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Matters of Interest | Aug 01, 2005 00:40

If David Farrar's blog is anything to go by, it looks like National has discovered from the failure of their own policy the trick to torpedoing Labour's - throw screeds of meaningless numbers at the problem and bury any semblance of sense. While it might serve National's purpose to obfuscate what "no interest" means in dollar terms, it misses the point: The interest-free policy's strength is not financial, but psychological.

Have you ever seen a student loan statement? On my $50,000 loan, each interest line is around $300. Per month. That's more than a quarter of my income (no, Salient does not pay well).

I *know* that I'll get some kind of interest write-off, but it doesn't help. For the whole year, all I can do is stare at the spinning Loan-o-Meter, worrying about how much I'm earning, what kind of write-off I'm eligible for, what I actually have to do to get it... then I contact IRD, spend hours on hold, get an earful of arcane Bureaubabble, fill out forms, and at the end of it, nothing. No cheque in the mail, no flashing lights. The statement comes again eventually. It might show a slight dip in the balance. It might not, in which case I have to stick my head up the tax wazoo again.

A lot of it is poor communication and IRD being IRD. A lot of it is the sheer terror of seeing a wall of numbers signifying owed money with your name on it. Either way, it sucks.

The biggest problem with student debt has always been the *feeling* that paying off the loan was a Sisyphean task. And as with Sisyphus, it's not the boulder that's the problem - it's the bloody hill! Get rid of the hill, and pushing the same boulder will seem like a much more straightforward (and less epically torturous) task.

And it is for that reason, dear National partisans, that nobody gives a toss about how much the difference is between this policy and a top-rate tax cut of 6% over 45 years (see endnote). Sure, students & co. are being bribed, but it's not about the money.

If it was, then National's $70m bribe should have had a quarter of the effect. The analysis of the Herald poll, sampled mostly before Labour's no-interest announcement, showed that National's own complicated bureaucratic tangle of a tax rebate actually *cost* them a whooping 12 points among students! (And to a lesser extent, their parents.) It proves that throwing money doesn't necessarily help; throwing money in a way that necessitate explanation by way of an IRD Bureaubabble sonnet *certainly* doesn't help. I'm sure National would have seen this as a major defeat. If only they didn't get nuked to oblivion afterwards.


An interest-free student loan might look like debt on paper, but it doesn't work like debt, and most importantly, it doesn't feel like debt.

Labour should consider that this works against them, too, in that this is bound to affect borrowing behaviour. They argue that when they introduced partial interest write-offs, there was only a modest jump in the number of borrowers. Well, it didn't give them a gigantic boost in the polls, either! The partial interest write-off scheme was another complicated bureaucratic tangle that didn't have as much of a political impact as it should have because it wasn't well understood. *That's* why it didn't affect borrowing behaviour much.

By the same rationale, everyone understands "no interest". The political impact reflects the attitude change, which should be a good indicator of change in borrowing behavior.

But even without changes to borrower behaviour, the cost of Labour's policy will *at least double* within a decade, simply because student debt was already projected to double. This was a projection made before Labour's announcement and is a plain, simple, apolitical Ministry of Social Development/IRD projection that is uncontested and uncontroversial.

Contrary to the oh-my-god-the-Debt-Monster-is-out-of-control scaremongering of the Greens and NZ University Students' Association, the growth in the total debt is simply because more people are entering the tertiary system and thus more people are borrowing. And because it takes graduates a decade to pay off debt that they accrued in 2 or 3 years, you need at least three or four times as many graduates working and paying off their loans to offset the number of new students borrowing. This is the "breakeven" point, after which the total debt would stabilise.

But here's the interesting part - the original projection for the breakeven point was in 2015, with total debt at $13b. Even if we play along with Labour's fantasy that making loans painless will not encourage more people to borrow, there's still the matter of voluntary repayments, which Mallard has been conspicuously quiet about.

How would this projection look if people stopped voluntarily forking out real money to repay an interest-free debt? For all the combined might and wisdom of IRD and MSD, they say "it is not possible to calculate the amount of voluntary repayments made in a year". However, we know that around 47% of repayments are made directly by borrowers. Some of this is from self-employed or overseas graduates, but one would expect a lot, if not most, of it would be from voluntary repayments. Given that this represents nearly half of all repayments, that's er... a lot. Without behaviour modelling, I can't give an educated guess on how much this will change, but put it this way - total repayments *can* go down by as much as 30-40%, and the only reason it might not is that people are not rational about it.

Stuff the borrowing - this alone will move the breakeven point back massively, and the point at which the loan stabilises will be much higher than $13b.

But put borrowing changes back into the equation. Around 20-40% of students eligible for a loan don't get one. Again, all we know is that total borrowers *can* go up as much as 20-40%.

[UPDATE: I've lowered the rough estimate from 40-50% after a statement from Mallard's office saying that the Westpac numbers (which, like mine, used the total eligible students vs total borrowers data) doesn't take into account the part-time students, who are much less likely to borrow. Seems reasonable.

They also burn Westpac, big-time, for sticking their necks out into the poltiical arena when they have a financial interest in it (banks + loans = duh!). "Inflammatory, self-motivated garbage like the analysis from Westpac is totally unacceptable." Burn!]

The two don't just combine - they compound. More borrowers who repay less on their loan will mean a multiplied increase on total student debt.

And Labour's $300m costing excludes the write-offs that are already part of the system, too, which stands at $208m in 2003/04 (I'd overlooked this before, and this explains why the costing seemed so low). If more borrowers come into the system and pay it off at a slower rate, not only will the $300m increase, but also the existing interest write-offs.

I won't bore you with more factors, lest I be accused of trying to obfuscate the issue on National's behest. But, all the factors are big, and they all point to one direction: Up.

That doesn't mean I think the policy is bad. As economically irrational as a non-inflation-adjusted loan is, it can also be considered as an ingenious equaliser. Those who take the longest to pay off their loan (who can be considered to be most disadvantaged or burdened by the loan system) will receive the most benefit out of this. Back to the Sisyphus analogy, it's as if the boulder is being pushed down a very gentle slope.

That, in itself, is a piece of mad, loopy genius. But just because it's good, it doesn't mean it's good at any price. $300m sounds perfectly reasonable and affordable now, but what about 10 years down the track, when the total student debt is two, three or five times its current size?

As much as I love Labour's bribe, I have to join the chorus asking them to go back and give us a real costing, and what it's going to look like a decade down the line - since we're paying for it and all.


[Funny aside: One of my reporters at Salient, Matt Jones, covered Mallard's visit to Vic at the beginning of this year.

Mallard suggested that that major changes in student loan policies were only likely to happen "if the country struck oil, and we were guaranteed economic security for the next 50 years". In the meantime: "I want to keep improving things but it will be at the margins rather than a massive change."

(The article was part of a "Topless Politicians Talk About Your Lives" series of reports, which is why it looks a bit funny on its own.)]


[Economics wonk aside: All the working-life taxes-vs-interest-free-loan calculations floating around need to be approached with extreme caution. If they include inflation, or calculate salary growth without *cancelling* inflation, then they're not calculating in present-day value, and will therefore be horrendously skewed and completely wrong *coughdavidfarrarcough*. After that, there's the principle of the Time Value of Money to consider - that money is worth more sooner rather than later, completely separate from inflation. And finally, there's the consideration of marginal utility of money - $1,000 is worth a lot more to me when I'm a poor graduate on a crappy wage than when I'm a gazillionaire on my private fortress island with a giant Death-Ray holding the world to ransom. Grossly simplified - money is worth significantly more when you're younger and poorer.]


[A slightly belated congratulations to, and snipe at, NZUSA: I was originally going to do a post on how economically irrational bits can't be grafted onto a loan system. Who knew that all it took was a quick snip to make the Debt Monster harmless? And who knew that they would actually do it? I stand corrected on both counts. However, I maintain that the focus on total student debt is intellectually dishonest. The de-horned Debt Moomoo will grow massively as a result of something that's really good for students. Will they now dare voice their objections against debt? What can they say? "Government, stop making students take the money that we asked you to give away for free?"]


[Apologetic aside: Alright, I should really have split this into two pieces rather than have four "asides", now, shouldn't I?]

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