Minimum wage discussion

The minimum wage

Part that seems to be missed in these debates isn't what happens to the jobs directly affected by the rise, but what happens to those that aren't?

If they all also rose, then the change has achieved nothing except pure inflation.  If they don't rise then what happens to the motivation of those that had through education, longer service, and better performance produced a margin above the base...?

So how come we don;t hear about these?

The news always seems to be full about jobs being lost from New Zealand - especially when these are lost through offshoring;  and yet when one of the major Australian banks decides to move 100 jobs this way across the tasman we hear nothing - why is that?

Sure they're only call center jobs - but that didn't stop the outcry when Telecom was involved - so why the media silence this time?  Perhaps because it might upset their doom and gloom slant on the world...

Revisting Kiwibank (to be done...)

It will be interesting to revisit the question of banks and adequecy given the apparent meltdown in the global financial markets over the past period of time - not least to contrast the movements of this "pillar" in the NZ market versus the exposed international banks; but also versus my pet favorite TSB.  Not least to see whether the inclusion of KiwiBank by the media in the "major banks" categorisation is warranted, as versus the exclusion of both TSB and HSBC from this reporting...

Lest we forget

Thanks to the hive for reminding us of this in a critically important year:

Clark's not on solid ground when it comes to hidden agendas. As deputy Prime Minister and Labour's key strategist at the 1990 election she helped perpetrate the big lie of that campaign.

In 1990, New Zealand was teetering towards economic recession. But the Labour Cabinet kept claiming right up to election day that the Government's accounts were in surplus.

National Prime Minister Jim Bolger's plans for a decent society were scuppered when he was confronted by officials just one day after the election with news of a serious fiscal crisis that they had kept secret under Labour's orders.

The Bank of New Zealand was about to go belly-up, something senior Labour ministers had known about for weeks, and the Treasury was forecasting a $3.7 billion deficit for the 1991/92 year which would blow out to a $5.2 billion deficit by 1993/94 unless drastic actions were taken.
Bolger's Cabinet had to cut costs to avert a major credit rating downgrade for New Zealand.
These are the conditions that led to the mother of all budgets.

But beneficiaries were not the only ones to feel pain.

New Zealand businesses folded as the recession bit and many Kiwis lost their jobs and were forced into major reductions in their living standards. It was a horrible time because the country was broke.

I'm sure we would rather have been prepared for the hard times ahead by a truthful Government instead of being conned by the snow-job perpetrated by Clark and her senior colleagues at the 1990 election.


Perhaps our Finance Minister trained as he is in economic history will reminisce of these times in the election year ahead?

What should be the basis for identifying which breeds should be included in Schedule 4?

Only those breeds able to be statistically shown to be more likely to attack than any other attributable factor (EG: Neutered / Chained / Owned by Beneficiary) should be included on Schedule 4.

Furthermore breed specific bans should only be implemented where a breed can be shown to be more likely to cause major harm or death than the highest risk racial group. Otherwise that racial group should have the same restrictions applied to them first.

I would also refer to the message by Associate Professor Kevin Stafford (Institute of Veterinary Animal and Biomedical Sciences) which states that:
In the late 1980s a list of breeds involved in 40 serious dogs attacks on children in Adelaide included German shepherd dogs (10), German shepherd crossbreds (5), rottweilers (7), pitbull terrier-type dogs (4), Siberian huskies (3) and one akita, doberman pinscher, labrador retriever, chow chow and Australian shepherd. Pitbull terrier-type dogs have been involved in many of the recently reported dog attacks and are the target for those promoting breed control legislation. But dog aggression was a public problem in New Zealand before this type of terrier became common and some of the breeds listed above may come under scrutiny in the near future. In a 1995 study of veterinary opinion in New Zealand, rottweilers were considered much more aggressive in the veterinary clinic than any other breed of dog. Intact male dogs are also much more likely to be involved in dog attacks than females or desexed animals.

This makes it critically important that dog breeds are assessed on evidence; not popular opinion. It is the focus on "bad breeds" which leads to the number of attacks by Labrodors and Jack Russels; both rarely focused on in "bad dog breed" lists - but frequently in the news stories of dog attacks.

Who can really blame him?

Unfortunately that is my first reaction to the news that a 50 year old man has been arrested in connection with the fatal stabbing of a 15 year old in Manurewa this morning - after a "tagging incident". (hattip: NZ Herald)

Ultimately, no, that can't be a condoned reaction to someone spray painting your fence - but until the justice system can start placing some real responsibility on those vandalizing other's property I can't help but see an increase in vigilantism against those caught. Especially when the results of 9 years of Labour's bleeding heart response to crime is becoming evident - 10 murders in 2008; and we're only 27 days in!

And looking at the nature of those 10 their failure is made even starker by the ages of those involved in most cases; between 14 and 20. Look closely at that, subtract 9 and figure out what period of political influence has been responsible for the formative period in these murderer's lives.

Even those Liberals starting to click still don't seem to really get it though. Listening to Kerry Woodham and her "Sunday Panel" this morning one at first thinks they start to see the connection; realising that "something must be done" and that the Liberal approach to justice is failing. However they then start on about how many of these youths were "doomed in the womb" due to parental drug use etc. And this is the problem. (Not the drug use although that is a major problem). Until we assign responsibility to those making the actions, they are powerless to work their way out of their positions. While we excuse them for actions, we take away their power over themselves to change.

Of course someone with a hard life, or drug affected in the womb is going to find life harder, and more difficult to break the cycle - but it doesn't make them any less responsible for their own actions. As if they are powerless and not responsible as many soft justice types would contend; then they should be executed at birth. If growing up in an underprivileged situation means that one is destined to a life of crime; society should use a bullet and be done with it - their past is unchangeable, so if their past is to blame they are incurable?

I don't believe so; which is why their past cannot be blamed. They are to blame.

So when will the left get it?

Interesting, yet overall depressing figures just out from Statistics New Zealand (hattip: NZ Herald)
on Average Household income.

I just can't help but focus in on the statement:
Income from self-employment was down 24.5 per cent to $4213, from investments it was up 17.4 per cent to $3057, superannuation and war pensions rose 1.6 per cent to $3970, and government benefits were up 5.7 per cent to $3740

In particular; self-employment down 24.5%, Government Benefits up 5.7%

One would think that the Government and the Labour party would finally be able to see what many keep telling them: they are killing the entrepreneurial and no 8 wire spirit of this country.
By destroying any possible reward for risk taking endeavors they are shepherding more people into "jobs" with existing corporates; rather than supporting those that would actually help to make a difference through creation of wealth - instead of selling time.

I'm sure they will crow about the increases in wages and salaries; but at a fundamental level this will never help us reverse our declining balance of payments, nor declining levels of corporate ownership. Only by supporting risk with real return; and reducing the over subsidization of risk aversion will we make a change for the better.

Otherwise we keep channeling our productive funds to those who, by definition, are most incompetent in their use.




http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10479424

Reserve Bank announces changes to FX management

An interesting change announced by the Reserve Bank - in particular the obvious reference to "responding to crisis situations involving sharp falls in the NZ dollar."
One wonders whether this is mainly an announcement for effect, a real repositioning to give themselves more flexibility in the types of moves they have already tried, or an independent repositioning of their strategies.

Certainly it is obvious that the Bank has now realised that it will not be getting any help from the Government in terms of Labour curbing its inflationary policies - and that the Reserve Bank has realised that to continue hiking interest rates to counter this will irrevocably damage the export sector.


The Reserve Bank today announced changes to its financing and management
of New Zealand's foreign currency reserves.

The moves arise from a review of the Bank's balance sheet, announced in
its Statement of Intent in June 2006. The review was aimed at enabling
the Bank to manage its balance sheet to best meet monetary policy,
currency, liquidity management and foreign reserves requirements.

Reserve Bank Governor Alan Bollard said that for the last 20 years, the
Bank's foreign currency assets have been fully matched by foreign
currency liabilities.

"That was an unusual approach by international standards and we are now
moving in the direction of a more conventional approach," Dr Bollard
said.

In the future we will hold some portion of our foreign reserves on an
unhedged basis - an "open FX" position. This means that part of the
foreign reserves portfolio will be funded in New Zealand dollars rather
than in foreign currencies."

Dr Bollard said that the main reason for this new approach to foreign
exchange (FX) management is to give the Bank a more effective means of
responding to crisis situations involving sharp falls in the NZ dollar.


"In crisis situations it is of paramount importance that the Bank
retains access to foreign currency reserves. With a portion of our
reserves no longer borrowed from abroad, but funded internally, we will
become less dependent on international capital markets in times of
crisis.

"Also, the use of unhedged reserves in this situation will be less
costly and give rise to less additional risk than would be the case
using hedged reserves. Unhedged foreign reserves provide a more
effective form of insurance against a currency crisis."

The Bank's guidelines for operating in the foreign exchange market have
also been modified. Overt intervention intended to affect the exchange
rate directly may still occur. In addition, the Bank will be able to
more gradually accumulate or reduce its foreign exchange position when
the exchange rate is at extreme levels and unjustified by medium-term
economic fundamentals.

Dr Bollard said that the Bank's more passive FX transactions will not
necessarily be expected to directly affect the exchange rate.

"However, such transactions will allow the Bank to give concrete signals
regarding the extent to which the exchange rate is seen as over- or
under-valued. That may indirectly affect the exchange rate by
discouraging speculators from pushing the currency to extreme levels."

Because the interest rates on the Bank's New Zealand dollar borrowings
are higher than on foreign currency borrowing, the annual cost of
holding foreign reserves is expected to increase somewhat with the
change in approach.

The increased open FX position on the Bank's balance sheet is also
expected to result in greater variability in the Bank's net income, as a
result of foreign exchange gains and losses. However, the Bank's foreign
exchange positions could be expected to be profitable on average over
the medium term.

The Bank has been using and will continue to use its FX market
operations to lift the level of its unhedged reserves towards a new
long-run average level. The Bank publishes its open foreign exchange
position monthly on its website, with a lag of one month.

Background documents on this new policy are available on the Reserve
Bank and New Zealand Treasury's websites.

KiwiBank - the real one

Hattip: Stuff

TSB Bank has yet again shown what an incredible waste of taxpayers money the white elephant of KiwiBank truely is.
It "has posted a $34.8 million after-tax profit for the year to March, 11.3 per cent ahead of last year and its 20th successive record profit."
While still retaining "the lowest two-year fixed interest rate on the market for the past seven months."
In terms of risk and return:
TSB's capital adequacy ratio of 16.08 per cent was the highest of any bank in the country and more than double the international standard of 8 per cent.
Return on average assets of 1.28 per cent compared with the benchmark of 1 per cent.

And that is right, while returning a return to the community - not continuing to bleed the poor NZ public for more and more capital injections. Go to Taranaki at some point and see the levels of public infrastructure funded by the TSB and you'll get the idea. The TSB does more for Taranaki than the local body council (although that's hardly surprising - they are too busy building themselves new offices and water features).

But of course without KiwiBank we wouldn't have a(nother) monument to the stupidity of Jim Anderton and the failure of left wing dogma.

Regional Road Taxes

Hattip: NZ Herald

Oddly enough I'm actually not against the new regional road taxes -
they do introduce some oddities into the market equilibrium due to the arbitrary boundaries involved but overall they do help to move more towards a user pays environment.

Which is where my real objections lie - the remaining general fuel taxes. Because if each region actually was retaining the fuel tax paid within its boundaries Auckland would now be able to introduce a subsidy - not the 10c tax hike.
The inefficiency is shown through the need to place a regional fuel tax on the motorists of the region which already subside most of the reat of New Zealand.

Which is endemic to the issue of the Labour party and its governing style; the inefficiencies created through the income allocation and redistribution performed keep needing more and more to occur to iron out the imbalances created.
There is a shortfall in spending on Auckland roading infrastructure because the Labour party has decreed that there should be, not because the consumers in that area aren't already paying for it.
I think the regional tax is a great idea - but the existing slush fund of fuel taxes should be scrapped first...

Housing Affordability

Thanks to the NZ Herald I discover today that Parliament's commerce select committee has decided to hold an inquiry into housing affordability.

Now of course I hope that something good and practical actually comes out of this; like the removal of special treatment for the family home, recognition that the high interest policy leads to higher - not lower - housing costs especially for those in low income brackets etc. But somehow I doubt it.

And more importantly I doubt they will have the wherewithal to try and tackle the main issue with housing prices - people buying things they can't afford. Lets face it the main factor driving up the housing prices in New Zealand today is stupidity. And the complete lack of any willingness to compromise.

We conntinue to read about the lack of affordable housing in Auckland - which is just complete and utter tripe. It is still completely possible to buy a 3 bedroom house for $278,000 in Auckland within walking distance of the largest mall in NZ, the train station, 2 main bus trunk routes, on 700 square meters of land. Or at least I can guarantee that as of last September anyway...

What is the real issue; oh it's not in Remuera et al. And so it's outside where people are willing to look. And so the 'desirable' suburbs are so overpriced as to push the median house price to over $450,000. Note the difference?

Oh of course school zoning doesn't help this - but that really is the exact same issue, as both DPF and Cactus Kate have so eloquently blogged on before; it is the lack of willingness to actually look at both what you can afford - and more importantly what you actually need.

Do beneficiaries need to live in $1.5 million dollar houses in Orakei - by definition proximity to the city to reduce commute times isn't exactly a priority...