I cannot say how much dread and foreboding this incites

For your information the Reserve Bank released this news release a short
time ago

News release

11 June 2007, 3.45pm


Reserve Bank confirms forex intervention


The Reserve Bank confirmed it has intervened today in the foreign
exchange market to sell New Zealand dollars.

Reserve Bank Governor Alan Bollard said: "As stated in our June
Monetary Policy Statement, we regard current levels of the exchange rate
as exceptional and unjustified in terms of the economic fundamentals.

"This action does not prejudge the future direction of monetary policy,
which as always will remain dependent on emerging economic trends.

"The action is consistent with clause 4(b) of the Policy Targets
Agreement, which requires monetary policy to avoid unnecessary
instability in the exchange rate."



For further information contact:
Mike Hannah
Head of Communications
Ph 04 4713671, 021 497418, mike.hannah@rbnz.govt.nz

Budget and Economy conference

Had a fascinating evening at the FINSIA Government Speaks event on Wednesday with Tony Alexander, Bill English and Phil Goff giving their views on the budget and economy; enlivened via the expert MC in Barry Soper.

Of course it probably would have been even better had Trevor Mallard turned up as scheduled rather than scarpering at the last moment to Valencia as he realised that otherwise he was going to miss his photo shoot opportunity with Team NZ winning.Typical of politicians in general, but the current administration in particular; sod any other commitments if there is a good looking photo on offer...

Bill English, despite looking like he'd just stepped off a flight back from Europe with too much 1st class alcohol, gave a pretty god account;but the real star speech of the night certainly went to Tony Alexander. With Billy Bowden (of old) exuberance he gave some interesting and challenging views on the economy, direction and views on what the Reserve Bank has and should be doing around inflation.It's just a shame that he needed to heavily contradict himself under questioning around the points of consumer import spending being a one off catchup under the high dollar (his view); as this significantly weakened his arguments that otherwise would have had a greater impact on my viewpoints.

Overall though a spectacular event; and looking forward to the next!

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...

TaxBlog prediction was right - a Year in advance!

Thanks to taxblog post: http://www.taxblog.co.nz/?cat=23

That annoucement caused the Labour government some seriously negative press… And prompted calls to reduce the company tax rate to 30%. Interesting that Cullen is still thinking about such a move, at the expense of introducing a payroll tax.
So whatever happened to the payroll tax?
Probably someone in treasury is crunching the numbers working out the revenue implications of trading a 3% drop in corporate income tax for the introduction of a payroll tax

I'm almost worried to find out what he might predict for next years budget...

KiwiBank Home Loan Sale

Anyone else fascinated by the KiwiBank home loan sale on at the moment?
In that the only bank currently discounting rates in the face of the rhetoric of the housing market causing inflation seems to be the Government owned bank?

So the questions would have to be -
Has KiwiBank been given the OK because the Government really does acknowledge that it is their spending that is inflationary, not just the housing market?
Is KiwiBank the only bank that can sustain these squeezed margins, because at it's heart the money returned to the Reserve Bank via the OCR still has the same shareholder...
Does KiwiBank know something about the future direction of NZ's monetary policy that the other banks don't?

Subway Storm

OK - there really is little point in arguing about this guys until the point around whether there was two or one cup of drink involved is settled.In one case we have clear intent, the other really is just bad judgement. In the former case, yes, the employer was justified - if somewhat harsh in their treatment of the employee;in the latter case the employee is probably justified in their PG.

But taking the hypothetical of the first case is the PG of the employee still justified - because this really is part of the issue with NZ Labour laws at the moment and why they remain a huge impediment to the growth of NZ companies.

To move to a different scenario (so that I actually know the true circumstances):

We had an (ex)collegue that was so disruptive they had managed to get 3 people to resign in a company of 20.However they were so litigous and CYA oriented that the process of letting them go was drawn out over 6 months.And to prove how unstable they were during the final meeting the employee ended up threatening one of my other colleagues with a stack of glass coasters,and (at least partially) due to the unsettling effects of being stood over by someone yelling at them with a potentially quite harmful object drawn back they stuffed up some of the finer procedural points of that meeting.So to cut what could (and will be if anyone wants more details) be a long story a bit shorter; this person ended up getting paid out around 2 months salary and given a positive reference to their next employer (victim) because their "rights" had been infringed.Never even mind the rights of their collegues to a functional workplace. Because while people bang on about workers rights and rights of criminals etc they often seem to forget that there may be other people having their rights trodden on in the process...

Go Warriors!

Or at least give us something other than that abysmal performance on Saturday!At least the judiciary agreed with us (the crowd) at the appaling standard of the reffing:to only have 2 of the 5 Warriors put on report actually charged shows what the standard of the original decisions were...

Although to be fair it really didn't have that much effect on a team that was determined to lose.

More interesting though is whether the Warriors are truely a side with a culture that corrupts its players?I notice with interest that Tony Martin this week had a "discount" on his charge due to it being his first in 7 years - Wade McKinnon similarly suddenly cops a grade 3 contrary conduct charge last week after 7 years free of charge - while Steven Price also in his first year copped his first judiciary charges of his (not insubstantial) career.So one really has to question the causality in this relationship - does the Warriors outfit really make players more likely to offend; or more likely to get charged?

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...

Caring and Charity - Socialist Style

First apologies for the recent stasis of my blog :-{
Changing jobs, renovations and increasing despair at the state of New Zealand and it's politics created a mix of apathy and timelessness that has conspired against contributing back to the community. I've still been active listening to the voices though.


As such as I was referred to this from dpf I couldn't help but shake myself out of my reverie at least briefly - mostly because it reinforces what Cactus Kate blogged about recently and the socialist left supporters still couldn't understand - that the Socialist parties are not charitable and do not understand the concept.

John Key's offer was charitable - he offered something of his to Made from New Zealand.
In typical fashion, Mallards response is not charity - he offered something of mine to Made from New Zealand (alright - not just mine - something from everyone but him!)

Do you start to get it now? The right / libertarian wings tend to understand and grasp the concept of charity. They like having the money they earn so they can do charitable things with it.
The left do not understand and like to have everyone else's money so they can spend on what they want - preferably so they can take more of what is someone else's. And pretend to hold the moral high ground while doing so.

The Real Stadium Decision

It is easy to see that the proponents of the Waterfront stadium live in a sadly deluded world - just by looking at the comments of the main support base.
The most common reason you see given for supporting the Waterfront stadium is that: "the 1 billion is going to be spent anyway; so why not on this? / something we want?". Which of course is the saddest possible reason to invest in a project; it's not good enough to actually do - but hey we've got the money so lets spend it!

It also makes an ironic mockery of Cullen et al. claims that there is insufficient money for a tax cut - in fact this type of project is the precise definition within corporate theory showing where dividends lead to far better outcomes due to the removal of agency issues.

Lets face it - the real decision here is actually between the Waterfront stadium or Jade, but Jade with a $300 dividend (fully imputated) distributed back. And that is the connection and thinking that this Socialist driven Government has managed to supress. It has managed to pervert and subjugate the thinking of the country to such a degree that we cannot seem to actually make a real comparison anymore. No one I have spoken to refutes that the latter is a far better idea than the waterfront stadium; and yet surely this is the real underlying decision that is being made?

How is this not news? (NZ national saving falls to $575 per capita)

Hattip: Stuff

I actually first spotted this as a small side bar in the printed NZ Herald today - but then apparently it isn't even newsworthy enough to post on their website. Fortunately Stuff have deigned to post it - although only as their 21st story within the business section.

Due to how important I feel this really is I have included the whole article at the end of this post. Although given it's not that long that really isn't much of an imposition.

How as a nation we can continue to complain about levels of foreign ownership and poverty while returning appalling statistics like this is beyond me; despite our disposable incomes rising 3.9% our national savings have plummeted to $2.3 billion - or $575 per person. This is reinforcing the
statistic I was initially planning to highlight which is that the median level of share ownership in this country at the moment is only $6000.

Of course most of our companies are owned offshore and return their profits there. As a nation we are too stupid and apathetic to do anything about it. Buying shares just isn't that hard people - and until you do you are abdicating any right to whinge about offshore profits, and morals of offshore conglomerates. There are two main ways that people should be affecting the behaviors of companies; the first to exercise your powers of choice as a consumer - if you don't like the practices involved in providing a product do not buy it and notify the producer why you're not buying their product. Secondly, become a shareholder - when two of the three main stakeholder groups for a company are intrinsically aligned it becomes really easy to mold behavior...

And actually having some real, country generating wealth means we can start to improve the standards of living for the people living here - rather than mortgaging ourselves to selling our land as the only asset we own. It is not real wealth you are sitting on there people, but fools gold maybe.

NZ national saving falls to six-year low
16 November 2006

New Zealand's saving fell in the year to March to the lowest level in six years, Statistics New Zealand said today.

National saving fell to $2.3 billion, from $5.5 billion in 2005, and $7.3 billion in 2004, according to the consolidated accounts.

At the same time, national disposable income for consumption or saving rose 3.9 per cent, following a 5.3 per cent rise in the March 2005 year, the government agency said.

Increased final consumption by households and government – up 6.9 per cent – eroded national saving, on the back of falling agricultural profits and lower export growth.

Time will tell

Hattip: Stuff

At the same time it said its surveyors had costed the waterfront stadium at $902m.

Mr Mallard said Eden Park's latest figures for how much they think the waterfront would cost were "absolutely outrageous" and incorrect.

I hope Mallard is still willing to stand by his claims when the stadium does end up costing that much. In fact one would think this would be a good time to introduce the practice of personal guarantees into politics.
It is a fairly common practice in business where the owner has to place their assets and asses on the line as a guarantee for their culpability - one would think that the governors of our country would be far more truthful and prudent if they were held to the same standards of accountability...

Good on ya boys!!

Spectacular work by the Kiwi's to thump Great Britain in the league on Saturday!
Although I have to admit that there were actually a few worrying signs despite the 34-4 scoreline;
Great Britain's ability to compromise our line with line breaks almost perpetually through the game,
A number of our tries were just luck (OK - I know Stacey is a fantastic kicker, but if 'that' kick hadn't taken the crossbar it was about to be a 20m restart because it was well covered behind the line)
Great Britain was only that far behind because the blew a couple of chances (although personally I think the try being disallowed was the correct decision)
Given the possession and territory stats - surely we should have got more points!


Simpkins showed a worrying decision around Keith Senior and Steve Matai. While I agree with the final decision to send them both for 10 minutes (this option really should get used more) he intimated that originally he was only going to send Matai. When you compare the conduct of the two players; throwing the ball at Danny McGuire, or storming in from 3 people away to throw a punch - I know which one I would be sending first. Whereas apparently Senior only got sent because of his conduct while being called up for the chat...

And for one final complaint about the officiating:
You have got to get consistent - get the ruck area cleared, draw a line and then stick to it. This crap of throwing out random penalties for holding down in the ruck for what are clearly not the worst offences just confuses and frustrates the players and fans.
Similarly there is a reason the lines are drawn at 10m intervals refs - Simpkins was all over the place on Saturday and I have to commend both sides for not giving away a plethora of offside penalties as a result. But it has got to be unsettling for your defensive line when you don't know from tackle to tackle how far you are going to have to recede.

Political Compass Meme

Economic Left/Right: 3.13
Social Libertarian/Authoritarian: -3.08

hattip: www.politicalcompass.org
Helps to serve as a disclaimer for your posts :D - interesting that it does actually place me about where I would expect myself to be. From reading the posts around the blogosphere it sounds like it is relatively accurate...
So where do your persuasions lie?

Incentivising sub-optimal behaviour

The interesting thing in watching the latest round of commerce commission inquiries into Credit Cards and interchange payments is that the issues highly parallel many policy initiatives that Labour has been implementing these terms.

The primary issue with Credit Card interchange fees and the reason they stay high is because there is a behavioural driver towards using the most inefficient method of payment.

To explain (very briefly) - when you pay via Credit Card the charge for using the card (the net revenue) goes to the bank that has issued you with the card. IE you have an ASB Credit Card, when you pay with it ASB Bank makes money, and the bank that the merchant you are buying from actually loses money. When you pay via EFTPOS however it is the opposite way around - you pay with your ASB Bank EFTPOS card the ASB Bank loses a transaction fee to the merchant banking operation. In both cases the transaction switch (ETSL or EFTPOS NZ) takes a cut, but this can be seen as net zero across a comparison of transaction type.

So the issuing bank has a direct incentive to have you pay via the Credit Card, and not your EFTPOS card; which is why you get reward points on your Visa purchases, and pay transaction fees on your ETFPOS purchases. This is despite there being less parties involved in the EFTPOS transaction (no VISA / Mastercard to take their cut), and the overall system actually being cheaper and more efficient.

So as a consumer presented with the skewed information that we have at our fingertips it seems that we are better off paying via our Credit Card; and as an individual we are. However systemically this leads to higher prices, and in net terms we actually end up losing out as the amount we are paying for the goods includes a higher and higher percentage of averaged transaction cost rather than actual good / service provision.


Now apply this to the policy initiatives that Labour has used, particularly in the recent term:

WFF incentivises the premature forming of a family unit, particularly where an individuals wages / salaries are expected to rise over the medium term.

Stepped income tax brackets increases the incentive to use and retain lawyers / accountants increasing transaction costs rather than actual good / service provision.

Tax free student loans encourage borrowers to borrow as much capital as possible, and take the longest possible time to pay back - on the first major debt commitment they are ever likely to have.

Capital Gains initiatives encourage the diversification of a persons portfolio to be reduced, tending towards a maximum diversification across Australasia.

There are many more examples that they have given recently - take the time to think critically about the effects of your Governments policies - both in terms of what behaviour that encourages in terms of being beneficial to the individual, and whether the net effect is just an increase in fiscal drag on the economy.

Been out of touch

Just to make you jealous (our room with a view) - finally made it down to Queenstown for a week away (so no posting last week) - and it was more than enjoyable to cut oneself off from the world over that time.
So now this week will be a case of slowly emerging from the hermitage once again ;-)


And yes - we did the bungy; Nevis = 143m = 8.5 second freefall

Auckland, great city, great future, great big bill...

I'm presuming everyone in Auckland just received the latest Auckland City Annual Report Summary via their local pamphlet deliverer?

If not then you would have missed the delightful performance of our elected officials, who despite gaining $44 million more in revenue than forcast managed to outdo themselves by increasing expenditure by $209 million more than forcast to still reach a deficit situation.

To be fair they explain that much of this is due to one-off non-budgeted expenditure - but then again missing one-off expenditures from the budget that make up 37% of the original budget size would get most of us fired.

Meanwhile I'm sure everyone will be delighted to congratulate the 48 winners of $296,000 each in public works grants. I can partially understand the council wanting to get involved in flood risk reduction - but the question has to be asked at what point it would be more economical to buy the land as wetland reserve? Especially as the delapidated number of Kahikitea wetlands is recognised as being core to the plumitting native bird numbers. And that is before pointing out as a good Libertarian; why are the general Auckland pubilc being called on to increase the value of others property who specifically got their land for the price they did due to location and geological features that lead to the aforementioned flood risk.
You may find it harder to argue against me in favour of the council spending than you might think - my house happens to be on the edge of a 100 year flood plain. You may be willing to pay me to make that a 500 year flood plain, but personally I know that we got our land for the price we did because of it.

You have to love Labour press releases

Hattip: Scoop

“Politics is a public business and it requires transparency. National is opposed to that because they want to repeat their 2005 rorts next time, which is why they are hostile to every initiative to ensure our political system is open to all, transparent, and clean,” Pete Hodgson said.

What can you say? That Delusions of Honesty quote comes to mind as the only cogent answer.

Tax cut affordability

This snippet from the CIS report "Why tax cuts are good for growth"
is too important to leave "isolated" on Kiwiblog

One could lower the corporate, top and middle rates to 30% and the lower-middle rate to 18% for just $3.15 billion per annum

This one statement helps to reveal the Left wing rhetoric for what it is; inflamatory and empty.
Their defensive cries of tax cuts requiring service cuts are just not true; even Michael Cullen has admitted to there being "only" $3 billion (of the $11 billion surplus) that could be attributed to tax cuts. And this $11 billion surplus is after his ferriting away $19 billion in "unallocated" spending.

And it further debunks that tax cuts are for the rich at the expense of the poor and middle class.
Show me a middle class household that wouldn't greatly benefit by a 14% reduction in their taxation rate.