Monday, May 31, 2010

Expansion of ACC?

Paula Bennett has finally said something I agree with. We need an system for treating long term sickness beneficiaries so they can get back to work. I am hoping by ACC style system she means they would in fact be adding those with illnesses who are claiming on benefits to the ACC system rather than having sickness benefits for them. This is in fact I think a much better model. Our long term sick need better care than less than $200 a week. Especially for those on the sickness benefit long term due to social issues they would be better off getting encouragement and help fixing their social issues. I do approach this with some concern though that we cannot be forcing people unable to work back into it or leaving people without a job or coverage because we think they are able to get a job when they simply are not going to get hired. I would also prefer to see the ACC system expanded beyond simply those on benefits but it has to be one step at a time I guess the costs of doing something like that are huge. The fact she mentioned it would be very costly to me signals she does intend to put beneficiaries on an equivalent system to ACC and I look forward to seeing what model is developed.

Sunday, May 30, 2010

Yet more students miss out

Massey becomes the third university to close off enrolments. In a country where we are trying to up skill our workforce and encourage people into higher paid jobs with tax incentives we are making it impossible for them do so. No matter how much you can pay the university isn't going to let you in if you apply for second trimester this year at Otago, Victoria and now Massey. It saddens me to think how many students will miss out on the chance to study in the second trimester this year. I wonder how long it will take for them to start taking on too many in first trimester alone for them to fund at current rates. There is no fair option for the universities to take. They either have to make a first come first serve system which will mean many deserving and capable students turned away. Or it will have to determine entry by achievement at NCEA. However that would discriminate against students from decile 1 schools. They deserve a chance to try and university and some of them can move up. They better fix this funding disaster soon.

The Budget

For all of National's general reputation for doing nothing this budget simply doesn't follow that. It manages to mess things up fairly spectacularly the question is why.

Doomed From the Start?
Inflation is predicted at 5.9% this year. National has announced a fiscal cap on new spending. This cap ensured that health and education could not be fully funded without essentially every other service having cuts. They needed a billion dollars between them to simply keep up with current services and there was undoubtedly going to be new policies put in like a new national health board and national standards that was going to cut into it. Thus we knew going into the budget that there was going to be government borrowing.

This budget was also looking quite clearly a shocker from all the "leaked" (yet oddly never investigated hmm?) budget information that came out beforehand to test the public's reaction on the tax changes. Lets take a look at them first.

Tax Changes

"From 1 October 2010, all personal income tax rates will decrease. The new tax rates will be:

10.5% on income to $14,000 (down from 12.5%)

17.5% on income between $14,001 and $48,000 (down from 21%)

30% on income between $48,001 and $70,000 (down from 33%), and

33% on income over $70,000 (down from 38%).

The rate of GST will rise to 15% at the same time."

So we see here some fairly across the board tax changes here. Treasury indicated GST would cause just over a 2% rise in inflation. Thus up to 14k is slightly worse off and the other three brackets have a tax cut based on GST alone. These tax changes are quite unfair however.
Those on the top tax bracket get significantly larger tax cuts that everyone else. Most people will get around $3 a week after GST from what I can tell. Those in the top tax rate will be getting thousands. But wait you cry that is because they were paying more tax to start with. Yes that makes the numbers larger however the top tax rate is getting a tax cut 2 and a half times more in % terms than the lowest tax bracket and both are getting an equal amount in GST rise. Those on the two middle bands get 1.5% and 1% after GST from their tax cut so are sitting a little nervously as to whether they get benefit from it with other changes so we will have a look at those later on.

Given the Government’s commitment to strong finances and delivering public services,

the package is also broadly fiscally neutral. With public debt forecast to increase in the

short term, it would be irresponsible to saddle the next generation with further debt to pay

for tax cuts now. “

First however lets address this quote from the Executive Summary. The tax changes will be fiscally neutral? The wealth redistribution going on in these tax changes is immense. The Tax cuts they are bringing in will cost $17,860 Billion dollars over the next four years. This will be compensated by a broadening using GST and property changes which total $16,775 Billion. But wait these numbers don't seem to be the same. There is over a billion dollars missing. This means the government over the next four years will have to borrow $1 billion to cover these tax changes or sell assets. The tax changes are irresponsibly saddling the next generation with further debt to pay for tax cuts now.

Property Tax Changes
Apart from GST the bulk depreciation is being taken off investment property over 50 years lifespan. What this means is that landlords now have a bunch of extra cost to pay for. This is totalled up in the budget as being over $3 billion extra revenue over 4 years. Now it might just be me but does it seem unlikely to anyone that landlords are just going to take all this cost upon themselves? It seems to me that there is no reason stores would not absorb GST but landlords could absorb this tax. This is likely to lead to rising rents for people. If someone was sitting only on say a 1-1.5% tax cut this could mean that they in fact lose all the benefit to rent used to pay off this loss of property depreciation tax change. They probably in fact just got a tax increase.

Early Childhood Education
Now assuming that Anne Tolley was not in fact lying in the budget as she managed to accuse herself of in the house earlier this week Early Childhood Education took a $400 million dollar cut this year. It was planned to spectacularly encourage parents to not send their parents to qualified teachers. The cut specifically went to centres which have 80-100% qualified staff. If a centre wants good funding it is actually now encouraged to not hire qualified staff. The supposed justification is that kids need nana's too not just teachers which is quite frankly ridiculous. Centres are of course incentivised to get teachers but there is nothing to stop a really caring unqualified person from working with young children. What they are doing is preventing teachers from working with them. The cost of this to parents could be $50 or more a week depending on their centres. Parents who have children in Early Childhood Education Centres affected even if they are lucky enough to not be renting have just got a substantial hit to their pocket. The tax changes will in fact make them worse off with this in the mix.

Public Transport
Kiwirail gets $250 million and Auckland electrification gets $500 million in this budget to develop infrastructure. I am glad they found the money for this as these are crucial pieces of infrastructure. I would obviously have preferred there was more but they did a good job leaving a reasonably sum for it in this budget.

Health and Education Cuts
As mentioned above Health and Education were doomed to lose money. Both were given less money than they needed to maintain services so they are going to have to do some cuts over the next few years. My home town of Palmerston North was already cutting front line staff last year because it wasn't given enough money. Wellington Hospital next month is doing a downtime week of reduced activity to save money. We are going to see more front line cuts in teachers and hospital staff if these sectors are underfunded for the rest of National's terms in government. This is not merely a case of simply making them work harder. These staff already work really hard. We should not be asking more of our teachers and nurses they do a damn good job. If we want better services we need to properly fund more of them.

The aim of this budget was growth but we simply aren't going to see a real result from this. Without treasury predicting any future downturns as now looks likely from the way Europe is going we will only see 1% growth from this budget over the next 7 years. This budget had failed for creating growth despite its desire to trumpet itself as doing so.

Aligning Trusts
It recently became known that people were rorting their taxes through trusts and companies. Rather than regulating this to stop people doing it the budget did the opposite. It has required all top earner tax payers to do this. They are forced now to pay at the rate people were previously rorting at. In addition if people were funnelling their money through businesses or savings trusts they can still rort for 5% because the rate was lowered to 28%. The issue is completely unfixed. They should have brought in a criminal penalty for putting your income into a trust for the purpose of avoiding tax. Done. Not allow people who are earning massive amounts of money while others scrape by to contribute less to society (and no I am not "envious" as Key would suggest I will likely be in that top tax rate most my life and my family has always been in it). Thus the idea of tax changes due to prevent rorting was idiotic.

Perverse Incentives
This budget seems a lot to me like that of Roger Douglas. It is mired in failed old ideology of trickle down and making people work harder by punishing them. Making the poor poorer is not going to make them want to work harder. Giving the top earners more money is just going to make them buy more. When you get to a certain level of wealth you run out of time and reasons to invest. The money gets stuck and it never trickles down. The economy never grows. The life of those on the bottom never gets better. 38% in my mind was already too low although the tax bracket probably should have been higher. This budget also discourages savings. This budget pushes inflation up to 5.9% which will mean that those with savings will lose money of the next year because lets face it they aren't going to get more than 5.9% unless they actually do some risky investing rather than keeping it safely in the bank as they should. It is like they are trying to make people spend everything or put it into dodgy savings companies.

With the tax changes we are going to see a large rise in inequality unfortunately. The better off are going to get significantly better off while the middle earners and poor will be treading water or worse off. The evidence has been clearly shown that inequality leads to many societal harms in works like the Spirit Level. It also seems to me that there is a limit to how much a person can be worth and the difference between our top earners and our very hard working cleaners, teachers assistants and bus drivers who work far harder to keep our society running is way too large to ever be fair. The tax system is meant to fix that and it should certainly not be working to making it worse as this budget does.

How Should it Have Been?
I would agree there should have been some tax broadening but the way it was done is completely wrong. The tax base did need broadening yes but it wasn't. They simply increased GST and removed a tax credit. A tax broadening would have been to include capital gains. In addition the income tax cuts were too big. It would have been better to simply change the brackets if people needed some tax relief. I am not convinced they did. New Zealand has a very small tax wedge so we shouldn't need large tax cuts and really it was just a redistribution. A way to stop tax avoiding would be to better police people avoiding tax and directly closing loopholes. Education and Health are core services and should have gotten at least the amount they need to maintain current services. Research and Development should have gotten more funding. Payments to NZ super needed to start again. Finally with less work on locking people up for minor crimes we could save some money on justice. Overall this budget disappointed me and I am sure it will do damage to New Zealand in the long term despite having some good points.

Policy of the Week: Open Source

The world always seems to run on money doesn't it? Well there is one world where it doesn't have to. The world of digital media. Specifically software.

Software companies take great delight in charging hundreds of dollars for products where the individual cost of actually giving you that product could be less than a dollar. They do it constantly and we all buy into it. However over the years competition has developed to it in the form of open source. Free software. The hosting costs of allowing people to obtain the programs is so low is can easily be funded by adverts and donations. The work put into the programs is by those original creators who get recognition out of it and enjoy creating exciting new programs. The rest is done by the users themselves who want to improve their own product and are happy to share their improvements with others. It has the potential to lead to some of our best software and some of it is becoming quite main stream.

However our government still insists on paying tens of thousands of dollars across dozens of departments for paid software. This is totally unnecessary and for the same cost we could be using open source and hire our own coding experts to perfectly tailor it to our governments needs.

There should be an initiative to move all government departments which are capable to free open source software. In addition we should try to move them where possible to the same ones so that there is complete compatibility of format between them allowing easy sharing of information between departments if necessary and when they get around to organising it such a system would make it must easier to present universal formats of information to the public. Lets not buy into the software giants attempts to take over the world any more. Far more exciting research is going on outside of them than within them.

Thursday, May 20, 2010

Budget Week: Drill baby drill

One of National's great plans to lift our GDP is to mine National Parks. This week we also see the government getting ready to take over one of our most toxic mines. A bill of about $13 million for them because of toxic leechings. The same toxic leechings we would be likely to see in our high value conservation land if they continue with their insane plan of mining on valuable land. Time will tell.

Wednesday, May 19, 2010

Budget Week: Farrar's Dodgy Accounting

Despite being an avid reading of Kiwiblog I often get puzzled by the massive jumps in logic to results that sometimes entirely conflict with his earlier arguments. Today I have concerns over whether one of his latest posts today was really anything more than an attempt to deceive.

It shows how an MP who had housing interests would only get $3 a week if they owned an investment property. Thus they cannot be self-interested on tax changes. There are several major issues with this.

Firstly 51 MPs in the current parliament do not have a second property. These people were they the ones in his calculation would be getting over $25 a week still.

Secondly he makes the calculations based on the lowest backbencher. However the lowest backbencher has absolutely nil influence in dealing with budget issues. If a backbencher votes against the budget they leave parliament. It simply isn't going to happen. The people who have real say are cabinet ministers. Cabinet ministers earn far more and thus would get a much larger tax cut.

Thirdly he assumes all MPs do not have working partners. I imagine most would so their tax cut would be even larger.

Fourthly he assumes the personal benefit they want is tax dollars. They are just likely to be acting to fulfill their own personal wacko ideology (i.e. ACT) or wanting to help their peers in the business world to improve their social standing. Both of these are still strong personal interests.

Fifthly he assumes that MPs do not merely intend to pass on the costs of their new tax changes to renters.
Sixthly he assumes MPs do not intend to leave parliament one day and get a higher paying job as many of them are qualified for.

Finally the largest part of all the intent of the post is clearly to deceive. The article he links says 71 own second properties which he is clear implying means investment properties. Actually no the article says "more than 20 declared property that is either explicitly stated as, or appears to be, investment property" i.e. there may not even be 20 MPs with investment properties only a bit over 20 who appear to. MPs frequently need to own a home in Wellington and in their electorate which is why the number is 71. It has nothing to do with investment. Also all the parties are represented in that number so National MPs owning investment properties is likely to be below 10. This means a very tiny proportion of National MPs have investment properties, they are unlikely to be the low paid ones and to not have a working partner. i.e. there may not be anyone in his category and if there is only a few. His entire analysis as to the housing changes affecting MPs is flawed.

The analysis of GST is very legitimate. They do effectively have 1-2% shaved off their whopping 5% tax cut but it is folly to say this comes close to saying they get to pecuniary benefit from this and they are likely to get wider benefits from it also. I personally don't think the vast majority of National MPs are voting for this based on self-interest. There may be a couple although I hope they would be few. They are voting for it out of misguided views but that does not mean you can pretend they aren't going to get financial benefit from it. Even if they were only going to get $3 most Kiwis will not get that much factoring in GST assuming they don't have investment properties and assuming their rents don't rise.

Budget Week: National Helps Tax Dodgers

The big headline I see walking to university this morning was NATIONAL TACKLING TAX DODGERS IN BUDGET. Interested I thought I would look up what amazing idea this was going on about. Of course it would be something new and not just a National Press release the Dom Post decided to publish. It was institutionalising that dodging of course.

According to National people are hiding their income in trusts at the 33% tax rate rather than paying the legitimate 38%. What is their way of fixing this? Surely it is to prosecute all these people and have them backpay all of that tax right? Nope. Have them legitimately pay 33%. In fact if you look at this from a taxdodging perspective National is forcing people to tax dodge. People who wish to pay the 38% rate will now automatically be paying the 33% rate. If they wanted to donate money to the government no doubt they could but they aren't going to do that are they?

Such brilliant plans...

Budget Week: Jealous?

John Key today has realised why clearly all the people earning under 70k a year are not happy about the tax cuts which won't make them better off. Of course. They are Jealous. But really they just have to get over this because really rich people are crucial to the economy.

No they are angry.

Our workers are far more crucial to the economy than our rich. The truly "rich" in New Zealand are not paying much income tax anyway because they earn money through foreign currency transactions, capital gains investment or they have large business interests and write their tax off to that. It is not common knowledge that around half of our top earners are not paying the correct amount of tax. Those who do pay a lot of income tax? Well they are the CEOs and the John Key's of ths world on salaries. These people are high level workers who do not invest because they run businesses instead. These people will walk away with hundreds or thousands of extra dollars a week in their pocket. For nothing. Yes they work very hard. No doubt they work long hours. However so do our cleaners working 12 hour shifts who get paid less than a tenth per hour what these people do.

Why do these high up people earn so much? They are parasitic. The earnings they get are from the work of a multitude employees beneath them which they take credit for. Even when they do not deserve it as we saw with the multi-million bonuses at Telecom when it had declined in value massively and then was swiftly followed by XT failing. They got a bonus of millions of dollars for ruining their companies. It is not that the poor are jealous but these people are cheating the employment system and draining on those below.

They deserve to be taxed at a higher rate and have that redistributed to those lower down because they do not deserve to earn that much plain and simple. Our top tax rate is low internationally. Australia it is 45%. In the UK it is 50%. Why on earth would we want to drop to 33% and put ourselves in the same boat as Iceland or Ireland?

I am not jealous of those on the top tax rate at all. I will probably be there myself when I finish university. I still do not want it dropped to 33% and regardless of what I was earning I would push for a higher tax rate. I think many people feel the same. We are not jealous John. We want what is fair and these tax changes are unlikely to stimulate our economy anyway.

Tuesday, May 18, 2010

Budget Week: Kiwirail funding boost

Very glad to see today that Kiwirail is getting $250 million to help it build up its network. It is a good thing to see our rail network receive some special attention. But why so little funding?
The total project for improvement is $4.6 billion over the next ten years and Kiwirail will fund most of that itself. Yet the government is prepared to spend $11 Billion on new roads over the next ten years. Why are rail users less entitled to have their base infrastructure built than those who drive cars? Surely the networks should be equally funded so that people can make a genuine choice between them. The current road network is massive and highly developed while rail is small and far too much of it is old. Yet Roads will get nearly twice the funding all of which will be paid by tax. Rail on the other hand with its half amount will also be paying for the vast majority of that itself. Currently it looks like the total it will get from government is only $500 million. Less than 5% of roads. How can this be justified?
We know that within the next decade or two most people will not be able to afford a car because of the cost of fuel. There are not and will never be enough electric cars to go round because of the rare elements they contain and the difficulty in producing their batteries.
Here is to hoping next year they change their mind and realise Kiwirail needs this kind of funding regularly. Rail users have just as much right to have the networks they travel on funded as cars do. If they want to make Kiwirail self-sufficient then they should make roads self-sufficient too and only allow spending on road accidents and road maintenance out of petrol money and levies.

Budget Week: The Coin We Will Never See

This year the minimum wage is rising just 25c. That a 2% increase. This year we will also see inflation rise by 2.3% according to treasury predictions and GST will increase by 2.5% and this rise will be permanent, you cannot reduce GST or rather it is pointless to do so because companies will not lower their prices as a result. The tax is going up on rental properties. Landlords are somewhat trapped by the finite number of customers so cannot increase prices too much. However those with multiple properties or expensive rental properties will be unlikely to be able to afford their mortgages and absorb all the tax. The prices of more expensive rental properties is likely to rise significantly (I have heard of several people having $50 a week increases or more in anticipation of tax changes this year). This will result in these tenants being forced to move either home with their parents, to their own house or to a cheaper rental property. Those moving to cheaper rental properties will increase demand there. Those in the cheap properties are likely to be people unable to buy houses, students studying in another city or low income families who cant go move home with parents, and well there is no more down. This will likely to increase costs for them. During all of this prices will be flying up for the higher earners but what is there to drive pay rises for lower income workers? Bosses working with these people don't give them pay rises because they usually have large turnovers and can just hire a new person rather than paying the old one more. It is in the nature of unskilled work. How people living on or close to the minimum wage are going to make up for how the tax changes will hit them this year I don't know. All I can say is we won't be seeing their pay rise helping.

Policy of the Week: Guaranteed Income

This was intended to be posted last weekend but I had a few other things on and felt it would be better posted after a budget doing the opposite of this policy.

We have a budget flattening our tax structure. Instead we should be having one making a more progressive system and one of the foundations for that can be a guaranteed minimum income.

The specifics of it would be a fixed income set at 60% of the average wage paid weekly/fortnightly. I would prefer 66% but that is preferably going to become the new minimum wage and those who are working should receive more. It would probably start lower than 60% for those not currently in other categories and increase with time otherwise it is not going to be fiscally possible.

The level it pays out at should be in legislation by % and the responsible department should determine this exact amount each year. The government of the day should not have a role that should be something left to parliament if they amount must be changed.

If they are partially earning the system should be able to detract this automatically from the amount as it does with student allowance. However it should be based after tax pay not before. The perverse effect on student allowance in New Zealand where a student is working part time is that for every before tax dollar you earn you will lose one after tax dollar from your allowance. This means the more they work after this point the less money they get total until they are working to a level where they get no student allowance.

Should people be overpaid it would be reasonably simple for IRD to work this out each year with tax returns.

The first of the benefits of this system is fairness. All people in New Zealand deserve a decent quality of life even if they might not be contributing. They obviously do not deserve to live as comfortably as the working population if they are doing so due to laziness but they do still deserve food and shelter. If there is universality there also ceases to be this strict need to fall into a category to claim assistance and so those deserving who would normally be excluded cease to be so.

There is a counter argument to this that it will encourage people to not work. I don't think this is ever going to be a real concern however. We always have a large number of people looking for work. Some may give up and not try to get a job however these people will not actually affect our employment system in New Zealand because the fact is we can support more people that we can provide jobs for and that isn't going to change any time soon.

The second benefit of this is administrative simplicity. No constant testing of whether people are actively job testing, instead of having pensions, student allowances, invalid benefits and unemployment benefit you would only need one system and the detail you would need is simply peoples tax records and proof of identity. Systems like WFF and 20 hours free ECE would also be able to be safely reduced. This is very likely to outweigh any additional work needed by the increased number of people claiming.

A third major benefit is also the recognition of the large support role stay-at-home mothers and fathers play in our country. People who take time off from work to care for their children are greatly benefiting our society. The one on one relationship they can develop with their children can be far better for the education those children than any daycare can provide and the benefits of closer family relationships are massive also. One working parent and one at home especially when the children are very young is much better for New Zealand society and families should be given every possible opportunity to do this.

This is not something we are likely to see any time soon but something we should hope for none the less.

(Post on the budget itself will be next weekend when I have more free time to read it and compare it to last year)

Wednesday, May 12, 2010

Competition Does Not Control Quality

One of the things I hear often talking to neoliberals is that the private market improves the quality and price of services and goods. It does this through competition and the mechanism of supply and demand according to most.

It is meant to work that when there are multiple companies who wish to sell the same product. The person wishing to buy the product will buy that which is best value for money for them thus the companies will attempt to compete for this position lowering their prices and increasing the quality of their goods.

It doesn't work.

Firstly the company aims to make profit only not provide the high quality good or the lowest priced. These are just ways it might choose to increase its profits. There are numerous other ways to do it. They can make there be less competition. They can charge around the same price as their competitor so that the customer has no option. They can use advertising to increase sales. Finally they can trick customers into buying faulty products.

Toyota is citing a profit of $1.2 billion in a period where it had to recall 8 million cars. It is selling dangerous goods and yet customers continue to buy not knowing whether or not their model is going to be the next to be recalled.

Because customers make false market choices.

They may not know that the cars would break down. Certainly a significant portion of customers would be relying on earlier good reputation.

The customers may trust the adverts the company puts out saying that its cars are safe now over whatever the actual fact may be.

Customers may be drawn in by low prices ignoring the risk of the car being dangerous. I would say this is the most common.

Thus a company selling faulty products starts to do even better than beforehand. The market isn't always going to do the right thing. The assumptions that most people work on ignore the dozens of associated variables. Markets need tempering to run effectively and for some things it is simply not safe to entrust them to do things.

With two of our prisons turning over to the private sector in Auckland are we sure we are getting safety? One of the largest petrol companies in the world is destroying a massive chunk of the ocean at the moment. We have Toyota recalling unsafe cars. Our entire global economy collapsed sending tens of thousands out of work because of finance companies and investors stealing around the edges eroding its support. We have also seen a lot of bad cases with private prisons before with the bribing of judges over in the USA to give longer prison sentences, up to 22% of judges over there have admitted to being involved. Several private prisons have also recorded higher escape rates, higher drug use and it is common for them to have lower training standards. Once we give out those contracts it is done and it will take a lot of money to fix it later.

I for one am not convinced.

What are the Lib Dems getting?

Looks like nothing to me.

The talks are apparently over and what do we know? They won't be getting the main policies they campaigned for. Europe is a no go. They will get no policy concessions there. The electoral reform changes that they wanted so badly seem to have become a referendum on switching to PV which still gives little more than an a partially selected dictatorship. It also will mean the soonest these changes will come in would be two elections time. That is a long wait.

We see no policy confirmed that they can agree on. What do we see? A bunch of cabinet seats. That is the only thing they seem to be gunning for. Forget their promises to the public what they wanted was cabinet seats.

Cameron had no democratic right to rule. He got 37% of about a 70% turnout. Less than a quarter of the population not including the fact that votes are skewed under first past the post because there are no real other options to vote for. If you are right wing you get Cameron or the BNP who would you choose? The Lib Dems should not have accepted any coalition that did not give the policy balance which fitted 50% of the vote. We all know that was only possible by coalitioning with Labour despite how unstable that could have been due to needing other minor parties. The Lib Dems and Conservatives do not have enough policy in common to govern together. I am not giving this government a long lifetime at all and I think Clegg will be taking the hit in votes when it all falls apart.

Monday, May 10, 2010


The blog is moving to a new domain. Will take up to three days to switch over. Still available at regular url for now and then will switch over to

Saturday, May 8, 2010

One for #OpenLabourNZ

Make sure all official reports on progress in issue areas are actually released.

This report showing the unfairness of positions for female teachers in schools. Should have been released 18 months ago when it was completed. Instead it had to be released late and only due of an Official Information Act request. Without that it may never have been released. There is little reason why information on the performance of government should not be made public as soon as possible. Cabinet can make its decisions in private if it needs to but there is no reason why the information and advice it makes that decision on should not be public. The people have a right to know how their government is doing.

In comment on the actual report it actually amazes me such a small proportion of women make it to being principals when so many are teachers. I would never have expected the disparity to be so large. It needs some review as to why it is happening.

Friday, May 7, 2010

UK Election

Despite my general apathy for all things British (aside from their candy which I love dearly) I actually followed the UK elections tonight. The Conservatives are clearly going to be the largest party in parliament. However they are still not the party the majority of people want. It is annoying me greatly that the reports keep going on about Cameron's moral right to form a government as the largest party. I am sorry but they do not understand democracy at all. While it is hard to consider an FPP country a democracy it is at least purported to be representative. The group with the largest share of parliament has the moral right not simply the largest party within it. Less than 40% of Britons support the conservatives. The fact is in parliament right now under a proportional system with the votes moving away from large parties as they often do under PR it is unlikely Labour and the Conservatives together would make a majority of seats. The way the Lib Dems have been marginalised despite their massive support and the number of electorates I saw that went 15k to lib dems, 15k to labour and 20k to conservatives when I knew if one of Labour/Lib Dems had not stood the other would have gotten it annoyed me so much. No persons vote should be wasted like that. Under FPP the fact is the majority of the populations votes actually don't care. All that matters is the 50%+1 in each electorate and other than that it doesn't matter to representation to votes. It isn't fair and it needs to be changed. Whoever the Lib Dems agree to coalition with to give government in the UK this election I hope they make installing democracy in the country a condition of their agreement.

Policy of the Week: Abolishing Prisons

Toxic. That is what prison systems became a long time ago. They may have once been a good idea back 800 years ago. They are a better idea than beheading like we used to but they are still wrong. They may never have worked properly. It is clear however that prisons are a detriment to society. Now we do not want to abolish prisons themselves. We can't get rid of the buildings. The guards. The courts. We need to use incarceration some times in order to deal with crime and a controlled environment is often important for dealing with mental issues. What we need to abolish is the way people conceptualise prisons. What it is there for. It isn't helping us as much as we think it is and we should not be using prisons as punishment.

Firstly we have to realise prisons are pretty ineffective at preventing crime. Within 48 months 49% of prisoners are convicted and return to prison at least once. Half of all prisoners are so woefully reformed that they go out and just commit another offence that lands them in prison again. This does not include the massive numbers that go uncaught in future crimes or that have insufficient evidence to convict, that would be even higher. Contrary to public opinion reoffending for violent crimes is one of the less common recidivist things. For murder there has not been a reoffending recorded by corrections within 48 months of a release. What is really high is all the theft related offences. 71% of people convicted for burglary are reimprisoned within 48 months. This says something about the reasons behind repeat offending. It also shows we are clearly doing something wrong in how we treat people. The successfully carried out threat of a prison sentence doesn't deter the majority of offenders. When the majority of the prison population reoffends it is time to look at fixing that especially given some studies which suggested reoffending rates were lower for those who escape conviction.

Secondly prisons are expensive. We have around 8,500 prisoners at the moment in New Zealand and each one of those costs over 90,000 every year. That is just to maintain them its not including all the costs of the criminal justice system before that caused by their offending, or the damage to be repaired as a result of their offending, or the increased numbers of police officers we have to have to deal with crime. If there is an alternative to doing this that can be cost effective surely it is better?

Thirdly prisons are inhumane. As nice as conditions are the fact is we think the fair way of dealing with crime is to lock our fellow citizens in cages. No matter how you dress it up it still comes back to that point. On colonisation Maori found European prisons to barbaric a way of treating people. It is easy to see their point. We need to look at a different way of what we conceptualise the punishment to be.

So what is the alternative?

It should not be suggested to be soft on prisoners. What needs to happen is for them to realise the totality of their offending and then get the support needed to fix themselves in a controlled environment. Realising the totality of their offending would be much more painful to any prisoner than any prison sentence. Many already do realise it which is why so many prisoners try to kill themselves. Pre-trial suicide rates are around 7.5 times the average and in prison rates are 6 times the average. Feeling bad about yourself is not a soft option and the current prison system just makes the majority of prisoners be angry at the people who put them there.

Firstly prisons and especially sentence length shouldn't be seen as the punishment. It gets constantly splashed across the news: "So and so only got six years for this terrible crime." The fact is people always push for harsher sentences without really knowing why even though it has been shown to increase reoffending rates time and time over mostly out of some sense of vengeance. All this does to the prisoner is make them lash out against this. If they receive a penalty they think is too high they will blame society for their actions. It ceases to be that they did something wrong but that society did a wrong to them. There needs to be greater focus on the conviction itself being the penalty. People shouldn't feel bad because they have to sit in a room alone for several years they should feel bad because of what they did. In my mind sentences for crimes should be automatic by statute (discretion for judge largely being is this a serious or minor breach of this law with two sentence length options) and then people may be paroled at such point as is suitable for them. Sentence should not be the key thing about the trial.

Convictions need to be the core focus of the sentence if there is one. Shame is a very powerful tool and people who commit crime should be made to feel ashamed for what they have done. Without that they will never be fixed. By imposing large sentences and focusing on prison as the punishment people are actually reducing the prisoners feeling of shame for their crime and thus the effectiveness of the penalty.

Secondly rehabilitation schemes need to be the norm. Most prisoners have alcohol and drug addictions. The schemes to cure these only cover about a quarter of those who need them. Most prisoners cannot read or write properly. There are schemes to improve this but not nearly enough. Many prisoners when released will go back into the same community that made them criminals without a job. With all these factors how could a person not turn back to crime? They need to come out of jail clean, with a job and in a different social group if they want to get away from their criminal associations.

This is why we need more programs like Te Hurihanga pilot which was unfortunately scrapped this year. It took youth offenders likely to have a high rate of reoffending and over a year and a half reintegrated them into their communities. At 167,000 per prisoner per year when factoring in the projected massive reductions in reoffending (around 0% reoffending rate) it would have saved money and reduced crime. Price Waterhouse estimated the program would break even in five years. To save that amount of money simply by reducing reoffending is a massive feat. If this could be replicated in our adult prison population it would be a massive benefit to society and there is no good reason why it can't. The long term savings justify the monetary costs and we would see a more humane, peaceful and happy society.

We also need to see more victim focus for offenders. Offender/Victim reconciliation has been massively successful. By actually getting the offender to meet their victim and apologise it does far more to satisfy the victim than a long prison sentence as they get some closure. For the offender it brings the totality of their crime to them. They see that their victims are real people with thoughts and feelings. They are not just stealing some stuff people can buy again they are seriously hurting people. It is good that it has started to gain traction and hopefully it will be expanded far more rather than relying on prisons. Victims need to play a role in the rehabilitation of those who have wronged them also.

Finally more within community detention would be a massive improvement. People need to get back into society one day when you put them in prison. If you spend less time in prison and more time monitored in society they will be able to integrate once again much better and this should be supported as much as possible.

Overall prisons are ineffective at preventing crime and are immoral. It cannot be right to detain a person for being either mentally ill or bring forced by their circumstances into crime and every prisoner falls into those two categories, they are not just evil. Two wrongs do not make a right and we need to recognise the prison mentality needs to end so we can move on to a better society.

Tuesday, May 4, 2010

Three Strikes

Three Strikes has now passed its second reading and looks set to pass. It is an awful bill that will cost us massive amounts of money, lock people up for disproportionately long periods of time and according to the official government advice may increase the chance of murders. I am glad to see that the Maori party and United Future have seen sense and are not voting for the bill. Shame National has not seen sense but it seemed always destined to support this bill. I live in hope that it will get repealed next time they and ACT are not a majority in government by themselves which is very likely to happen next election.

National Nanny-Statism

Last poll results are in:

If it was for your own good would you want someone determining your life for you?

Yes: 5
No: 13
Indifferent: 2

It appears most people want to have free choice in their life among the readers of this.

I have nothing against social engineering at all. Social engineering is a good thing. It is a necessity to keep society running functionally. Without it people would be engineered by other things instead and we can't have that. We know how much companies will try an influence us to make us buy their products or use their services. How much extremist groups will try to make us believe their morals. We need government as a bastion in the middle to straighten this out. But there are limits to this.

Firstly social engineering must be positive not negative. That is it should be based where possible on education, advertising, subsidising beneficial things and generally creating an open environment to all things good. It should not be negative relying on prohibition, price control and excessive regulation. For prohibition it should only be allowed where no reasonable person would make that decision or if it harms others for a person to do that. Price controls and regulation must be reasonable and only costing on a persons liberty to the level that is required at minimum for the harm. So overall it must focus wherever possible on being positive reinforcement not negative.

Secondly if you campaign against something it undermines your legitimacy to do it. Rightly or wrongly the standards on you are different. I want National to do what is best for the country. I do not want them to lie to the country in order to get their votes and then do the opposite of what they said. If you campaign against nanny-statism there is even more requirement on you for any social engineering to be positive.

Instead National has embarked on a crusade of nanny-state policies:
  • Cigarette price increases
  • Banning cold medication
  • Rejection of law commissions proposed drug liberalisation
  • Considering repressive alcohol reforms
  • Raising the driving age
  • National standards
  • Forcing council reforms
  • Reducing public participation

The policies National is enacting are in fact very much like a nanny state based on telling people what they can and cannot do. It goes against what their campaigns and media buzz words of years past. They have a general attitude in government of we know best. Not allowing much consultation and throwing out suggestions against their policies anyway preferring and attitude of National knows best. If they are going to enact harsh undemocratic negative policies they should at least have campaigned on them. Instead we see an undemocratic farce.

The Breakdown

Cigarette price increases go beyond the costs of smoking. They are supported by everyone but ACT but that doesn't make them fair. They should have used other options like removing displays from dairies and stores or more education policies. Instead these were rejected in favour of attempting to force people to quit by making them unable to afford cigarettes. They are not allowing people to make their own choice here by supplying them with the information to make an informed choice instead they are trying to prevent those who would make the free choice to smoke by increasing the price. National knows best.

They banned cold medicine. I am sorry but you do not get more nanny state than this. Cold medication is a good thing that helps society. But in order to appear to be waging their little war or drugs they ban it. This is despite the fact our largest source of P was in fact China not local and the P which was made here was usually stolen or imported from China anyway. Rather than addressing the underlying social issues that cause drug use or dealing with our lousy import restrictions they opted to ban cold medicine. After all National knows best.

The law commission after a very extensive study suggested lowering the penal sanctions for possession and allowing medical marijuana. It was then dismissed out of hand before it even made its final report. Instead they wish to lock people up for doing what they wish in the privacy of their own homes and to prevent genuine medical treatments or people. Remember National knows best.

Of the current proposals by the law commission only raising the price has been ruled out. However the proposal is full of restrictive provisions including raising the age to 20 which simply should not be considered given how limiting of person freedom they are. They are clearly not going to be worth it. Yet National knows best and it is considering them all.

To reduce the number of crashes of young people rather than looking at why perhaps people who aren't skilled to drive to get licenses they have decided to raise the learner license age (yes the one where you can't even drive using it) to 16. All because National Knows best.

National Standards are being brought in forcing teachers to report not on the progress students are making but against a set of national standards that give poor education of their progress. Teachers are not allowed to tell parents how their children are doing in the way they wish to. Remember National knows best.

ECan and Auckland have had reforms of their systems forced upon them. The people have no real say in these reforms and are not going to get any whilst this government is in power that is for sure. What could the people living there possibly know about running themselves anyway National knows best.

Public participation is being shot down. The foreshore and seabed discussion paper allowed only a month for submissions. Even when they have gotten adequate submission time select committee reports have been totally ignored in the house. The peoples opinions are not relevant. As always National knows best.
A lot of these policies are supported by many more in parliament than just National but they are not the government and many of them are at least upfront about it. They do not try to pretend they are against all nanny-statism when they are clearly practising it. (Except ACT who supports a bunch of these and pretends to be for freedom). It can be done right sometimes as well.

Good Nanny-Statism

The Emissions trading scheme despite being campaigned against as a Nanny State policy is ultimately fair. We know polluters do harm to others. They should be made to stop this harm or to at least pay for the damage they do. Thus we should have an ETS regardless of the economic cost. I would prefer one much stronger than the one supported by National which gives too many exemptions for business.

Anti-smacking was a good policy. It was actually a repeal of a defence for assault. People shouldn't have a defence for assault. If you hit someone you should be punished for it. Fairly simple. Just because someone is smaller and weaker than you does not mean you have more right to hit them and the law should condone it. This is just a basic application of the harm principle.

Age of 16 consent for most things. I am not a fan of the 18 restriction but I am a fan of 16. The question on ages of being able to do things should be when can you make a rational decision. It is generally agreed most people can by 16 so that should be the age of restriction. The things at 18 should be lowered to 16 and people should be given free choice. If we could I would prefer no age restrictions on things and instead an ability test but the fact is that just discriminates on stupid people which isn't fair. An age of 16 is more fair and prevents the abuse of children.

What do I want?

Pretty simple. No more because I say so. National you need to involve the people in making decisions about the country more and rather than just prohibiting outcomes you need to address the root causes of issues. All the other parties should be following this advice too if we want a better country. Live up to your election promises and let people choose how to live their lives without undue interference but instead being the guiding hand to help them grow. That is all I want and that is all we need.


No issue with trying to get people give up smoking it is a gross product. Despite everyone in my family being a heavy smoker I have never been tempted and quite frankly don't understand how it ever became popular when it gives you such a little rush for such a bad taste.

What I do have an issue with is the newest tax increases and in particular how people perceive them. All figures I will use here will be either from Smoke Free New Zealand, the commonly cited government predictions by treasury and my own calculations based on that.

Firstly the idea that society is subsidising smokers is flat out wrong. Excise tax alone brings in $1.1 billion in revenue each year on cigarettes. On top of this there is the cost of GST at 12.5% of purchase price AFTER excise tax which will increase to 15%. The total costs of smoking on New Zealand is over 1.6 billion a year. This includes loss of productivity by workers dying. This is not them costing the taxpayer something but merely them not putting in the labour to support society because they are dead. That seems pretty fair to me. This is in fact a huge chunk of that 1.6 billion dollars. Medical bills alone the government is already doing pretty well. In 2004 the Cancer Society estimated the cost of medical bills from smoking to be $250 million dollars. Roughly a quarter of current excise tax income. People are not subsidising smokers with their tax dollars. Even if smokers were being subsidised with tax dollars smokers also pay tax. They also pay ACC levies (which they won't get to collect for smoking things). By getting sick from smoking they will not be claiming other illnesses on the health care system that they would have gotten later, they will not be claiming superannuation and they will not be claiming ACC work assistance because it is not an accident. Therefore they would easily balance out several hundred million dollars of difference through these things merely by not exercising tax rights that others have.

Coming onto what I object to with this increase. Firstly is the scale. It is a 33-54% tax increase depending on whether you buy loose or pre-made cigarettes. This will be followed by a 2.5% increase in GST on top of this price. It is quite a massive hike. This hike is beyond what is justifiably still the costs of smoking. Treasury predicts a $205 million (i.e. 20%) increase in excise revenue as a result of these changes. This is because people will stop smoking. This means the cost will heavily swing onto existing smokers to support their own medicals costs and the costs of those who have quit but will still eventually get forms of cancer as a result most likely. On top of this there will still be money left over from this as the medical costs alone are roughly on par to current excise tax which they will then be subsidising the general tax take with. This is in fact an increase targeted to those on lower incomes.

Everyone knows the lower income people smoke more. This tax increase will hit them hardest. It is worse than the flat tax increase of GST it is in fact one which will tax the poor more than the rich. It is unfair and unequal. It is not based on the fair costs of smoking to place on the consumer.

I could accept the first increase only as a legitimate attempt to balance costs but the further two 10% increases on top of those will mean smokers are in fact subsidising others which is not fair especially when they are predominantly lower income earners.

The fact is the decrease in smoking is going to be less than this price increase. Those that continue to smoke after this are unlikely to smoke less. What they will do quite frankly is buy less food. They will take out more loans. People who are genuinely addicted to a product will buy it anyway. You cannot stop that with price. Attempts to control via price only lead to them harming themselves in other ways or a black market developing.

Some have argued against the increase not being warned. This in my mind is only fair as otherwise people would stock up on cigarettes before the increase then smoke them all faster because they had them and thus become more addicted. It would go against the intention of the legislation to announce it in advance.

So overall I cannot support the size of the tax increases passed through parliament although I see why they have done it and accept that it is a good cause to reduce the levels of smoking. I also think the attitude that the state is supporting smokers is flat out wrong given the levels of tax they already pay. What they should have done instead of this increase is banned displays of tobacco products in dairies etc so people are not reminded of cigarettes constantly. They should have brought in harsher requirements on the nicotine and tar content of cigarettes so that those who continue to smoke have lower rates of health issues because we know we won't stop them. Finally they should put more work into quitting smoking support.

Monday, May 3, 2010

Trains in Auckland

It appears Kiwirail is passing up the chance to make $500 million stay in New Zealand. Worse the government actually thinks this is a good idea.

Supposedly we should stick to things we have a competitive advantage in...So we are meant to save up to buy trains with milk powder? I am sorry but we don't have a sustainable export valuable enough to support our lifestyle we need to be more self-sufficient. Secondly how can you have a natural advantage at building trains? Simple you invest in building trains. That is all we need to do.

The fact is if this work is done in New Zealand it will create over a thousand jobs and keep more of our balance in the country. We want as many exports as possible and as few imports as possible to grow our economy. Why would we try to import something so valuable that we can build here.

The main excuse both seem to be pushing is that Kiwirail doesn't have the capability. Well I am sorry but this is something that we need to develop capability for fast. Rather than focusing on mining us which we will never be good at because we don't have the mineral wealth for it why not invest into something we can be good at. High level electrical and manufacturing work. We know our entire train fleet is turning into buckets of rust. We know that with time trains will be more in demand after the American Military has noted we will reach peak oil at 2015. From 2015 we are going to have to stop driving. At that point we are going to be relying on trains to get us from A to B so much more and the rest of the world will need them too creating a potential export market for us.

The contract needs to be completed by 2013. I fail to see how in three years with enough investment Kiwirail could not have the trains completed by them with the whopping $500 million the contract costs. The fact is if Kiwirail can source trains within itself it won't have to pay the massive cost of shipping them from overseas or the profit required when you go through a middleman. Creating the capability to build trains would be a long term investment of high value and cost saving. This is also the perfect opportunity to do it because the contract is so large.

In terms of being competitive in tenders Kiwirail has the advantage. It pays its company tax here. Which means in any tender the government can actually deduct a third of Kiwirail's profits from the estimated cost of the tender because it will get that back as tax. This means Kiwirail can actually charge more and still the government would be better off.

It is stupid and short sighted to not give this contract to Kiwirail. They should at least take a chance and submit a tender.