Refugees

We currently have the sight of the New Zealand and Australian governments arguing over very small numbers of refugees. In New Zealand we have National and Labour vying for the moral high ground.

We know from the experience in Germany last year that the moral imperative of not torturing refugees, quickly runs into the problem that the goodwill of even the most generous recipient nation is exhaustible.

Angela Merkel took the heroic decision to let in as many immigrants as made it to Germany, which resulted in around 1 million immigrants in 2016. In 2017 the anti-immigration party AfD (Alternative fur Deutschland) won 94 seats in the Bundestag, and now Germany has no government.

Australia has a humanitarian program was with a cap on numbers for 2105-16 of 13,750 immigrants, plus an additional 12,000 visas available for refugees from the conflicts in Syria and Iraq. Hopefully that puts the 170 being discussed from Manus and Nauru into perspective.

The argument is not really about 170 people. that number is so small that no one really thinks it is any kind of problem. The problem is that we are no closer to knowing what is the right maximum number. Germany has demonstrated the truth of the old adage that “taking all the people from poor countries and putting them in rich countries does not solve anything”.

Maybe the New Zealand government can play an role in moving this debate forwards, but poking the Australian government in the eye with a sharp stick is not going to get us there. By playing politics with the lives of truly desperate people, the New Zealand government is no better than those anti-immigration forces that it disparages.

 

Fake News

The Nation, a weekly political roundup on New Zealand TV, had an article last weekend reviewing Donald Trump’s year since he was elected. They started with a montage that would have made the BBC proud, including a piece on “the crowd size” at his inauguration. They even showed the now famous picture comparing crowd size at the Trump inauguration ceremony itself, compared with that at Barak Obamas first inauguration. They then interviewed Teen Vogue Columnist Lauren Duca who said “the president has lied, literally thousands of times”, and allowed that comment to pass without challenge.

Here is the link to Sean Spicers statement. As you can see he refers not to “crowd size” at his inauguration, but to the audience that witnessed the inauguration “both in person and around the globe”.

I have not seen reliable figures for audiences around the world. It must be all but impossible to produce such numbers. However; given the rising world population and spread of technology over the intervening eight years, it must be highly likely that Sean Spicer had it absolutely right.

Trump critics have rolled out Sean Spicer’s audience claim, relabelled as a crowd size claim, again and again. They give the convincing impression that this is their best shot at proving that Donald Trump disseminates fake news. Well, their best shot is itself fake news.

That the liberal, establishment, elite in New Zealand buys into this narrative may explain why the policy platform of the new Labour-led government in New Zealand is devoid of any radical ideas. Maybe they felt they simply could not get a fair hearing? They will spend a bit more and tax/borrow a bit more than the previous administration, but their policies are versions of the policies that they say have failed.

Is it really true that Bernie Sanders and Jeremy Corbyn can have radical ideas, but not this NZ government? There is a saying about what happens – If you keep doing what you’ve always done . . .

 

Polarising Prosperity

The London Business School Review out this month includes an article on increasing Income Inequality. It concludes, emphatically, that we should be concerned.

The figures are staggering. In the USA the bottom 50% of households average income in 1980 was $16,000. By 2014, adjusted for inflation, this had risen [marginally] to $16,200. For the top 1% the comparable figures are $428,000 and $1,300,000. And mobility between generations is actually less where income inequality is greatest, in the USA and UK.

This has many knock on effects, such as on health. “An American male in the bottom one percent of the income distribution is likely to die before his 73rd birthday, whereas a man in the top one percent can expect to live to 87”.

LBS is a global citadel of uber-capitalist and uber-free-market thought. So for the LBS review to include such an article is encouraging. Income inequality in New Zealand is not [yet] comparable to the USA and the UK. They lead the world in this regard. However, under the National Party, New Zealand showed all the signs of heading in that direction. In the UK the Labour party, under Tony Blair, only made the situation worse. Can this New Zealand Labour Party led government find a different course? Jacinda Ardern worked in Tony Blair’s policy unit, so she is well placed to know what not to do.

New Zealand Coalition Policies

The 2017 General election in New Zealand was on 23rd September; and the final result, including all “special” votes was announced on 7th October. The parties involved announced the coalition / cooperation agreements to form a Labour-led government on 19th October, with the Labour / New Zealand First and Labour / Green agreements being signed and released on 24th October. That is eighteen (18) days from the final result being known to the formation of a new government. This is in stark [and favourable] contrast to Germany where elections were held on 25th September and agreement on the next coalition government is not expected before Christmas. I assume that is Christmas 2017, though Belgium managed to take 541 days to form a government in 2010/11.

However, it is not clear what policies have been agreed. The agreement documents between and labour and NZ First, and Labour and Greens, specify those policies of NZ First and Greens that will be pursued by the new government in addition to Labour’s policies. There is only one Labour policy that has been dropped, water charges for farmers, as specified in the agreement with NZ First. This cannot be true!

There are significant spending commitments in these agreements. For instance; the agreement with NZ First includes a NZ$1BN pa regional development fund, and a NZ$20 per hour minimum wage (which the government will be paying many of its employees directly and contractors indirectly). The Green agreement has expensive commitments on housing and mental health. The money cannot be there for the entire Labour program (less the revenue that would have come from the water charges for farmers) and the additional policies from NZ First and Greens.

There is, of course, the wrinkle that we do not actually know what the Labour policies are. They never issued a manifesto, in common with the other parties. We are supposed to make what we can of; their website, the alternative budget they issued during the campaign, and various speeches, post, tweets and interviews. Remembering that they made significant changes even after advanced voting had begun, most notably by withdrawing a policy to implement the outcome of a review on capital gains tax before the next general election.

Does this matter? Maybe not, as there will have to be a budget in due course. However, The Labour, NZ First and Greens have raised expectations in a way that cannot be met. Even more so than is normal in the democratic process. Electorates around the world are becoming much more demanding, in a way that the established liberal elites are not handling well. Maybe that process just accelerated in New Zealand.

 

Housing

In New Zealand, as in the UK, we have a problem with houses being too expensive. Which is to say that we have too few of them. Increasingly children are living with their parents into middle age. People in their twenties are poorer than their parents and houses are much more expensive relative to earnings.

You would have thought that 35 years of property owning democracy since Thatcher sold off council houses in the UK; plus the evidence for the rest of the world, including New Zealand, would have convinced everyone that the free market is not the only club in the bag to solve this problem. I realise that Conservative thinkers believe the problem is that we have not actually tried a free market in housing. However, I sat on the local plan committee in Tendring District Council. There is plenty of land available for building, either with planning permission already or land designated for development.

The free market has failed lower income families and the poor. Private developers are simply not interested in supplying this sector of the housing market. They don’t make enough money. There are much richer pickings elsewhere. This ends in the disgrace of an “affordable” house in Auckland costing NZ$650k.

During the recent general election in New Zealand all parties committed the government to build much more social and affordable housing in the next three years than had been done in the last three years. The mystery is why there has been no comparable development in the UK. I am a fan of Ben Chu in The Guardian. However, even he could only bring himself to suggest these three “essential” remedies;

“First, taxation reform to curb the incentive to view housing as a financial asset, something that has put considerable upward pressure on prices in recent decades. Second, greater rights and security for renters under the law. Third, planning liberalisation to facilitate a greater supply of private homes and bigger government grants for the construction of many more social ones.”

If even The Guardian cannot see the need for governments to build houses, there is no hope in the UK. Or maybe Jeremy Corbyn’s time really has come!

Arctic Ice

The arctic ice sheet continues to NOT shrink! For the last eleven years arctic ice sheet extent has been stable.

On September 13th the extent of the arctic ice sheet reached its annual minimum at 4.64 m Km2. This is the eight (8th) lowest on record and 1.25m Km2 (37%)above the all time low of 3.39m Km2 recorded in 2012.

Here is a graph of arctic sea ice extent over the last eleven years. The higher three years are 2009, 2013 and 2014.

The lowest horizontal line is 3m Km2, rising in increments of 0.5m Km2. The 2017 line is the blue line (or green depending on your eyes / screen) that finishes in mid-September.

For the last eleven years the arctic ice sheet has been stable at 4½m Km2. For the last nineteen years global temperatures have been stable. It seems that it took some eight years for the arctic ice sheet to catch up with the 0.4oC rise in temperature that occurred between the late 1970’s and 1998.

Figures for annual minima are:

 Year  m Km2
2007 4.16
2008 4.59
2009 5.12
2010 4.61
2011 4.34
2012 3.39
2013 5.05
2014 5.03
2015 4.43
2016 4.14
2017 4.64

There is no trend here. You can inspect my graph here.

Early Voting

In New Zealand we have a system of Advance Voting. A voter can cast their vote up to two weeks in advance of election day. Election day this time is Saturday 23rd September and advance voting began last Monday 11th September.

NZ Labour has come under sustained pressure on tax. Labour is committed to setting up an “independent” review body to review capital gains taxes, retaining the right to implement the findings of this body before the next general election. This is a big deal. For instance though tax on the family home, and the land it sits on, has been ruled out, it is not clear what the “family home” consists of. For instance; for a farmer does it include the entire farm? What happens where you run a business from your home? Will you be able to sell your parents family home without paying tax on that when they pass away?

And yesterday Labour changed its policy! Now any outcome of the review body would only be implemented after the next election.

So those who voted on Monday, Tuesday, Wednesday or Thursday morning voted on one set of Labour tax policies. Those who vote after this are voting on a [significantly] different set of Labour tax policies. And all parties continue to throw out lollies to a range of voters on a daily basis.

Would it be so tough to require parties in NZ elections to publish a manifesto before advance voting starts?

Election Manifestos

I ended my last blog looking forward to the manifestos from the parties contesting the NZ general election. Apparently I will be waiting a long time! The parties in New Zealand have not in the past, and will not this time, be issuing manifestos!

The Green party and New Zealand First have pages on their websites that look like manifestos; without any commitment not to change them, or even a date on which these were their policies.

The Labour party web page contains this caveat “More policy to be announced as we get closer to the election.” The National party web page contains this caveat “This page will be updated throughout the campaign as we announce new policies.”

This leaves voters having to work out for themselves what each party’s policies actually are; from their speeches, websites, blogs, interviews, tweets, and any other social media.

Does it matter, given that the UK elector who reads even one manifesto is a very rare creature indeed? I think it does in the UK. In the UK (First Past the Post), electors can refer back to the manifesto and a government which was elected with a majority can be held to that. In New Zealand (MMP), a one party majority is almost inconceivable, and each governments policies are the result of negotiation after the election results are in.

This NZ election campaign has become a giant “lolly scramble”, as no politician expects to be held to account for all the promises they make. Maybe we all head down the rabbit hole during any election campaign?

 

Tertiary Education

At last – some coverage of the New Zealand general election campaign in the UK media! The Guardian highlights the NZ Labour Party’s promise to provide three years free tertiary (university) education from 2024. It would come in stages – one year free from 2018, and two years free from 2021. Student allowances would also rise next year, from $170/week to £220/week.

All very reminiscent of the UK Labour Party at the last UK general election. Indeed the whole drive by NZ Labour to capture the [disenchanted] youth vote, is very reminiscent of the UK Labour.

However, the commentary here is every bit as bad at giving the promises made by the various parties some sense of scale. The free tertiary education promise will cost around NZ$1.2bn per year, when fully implemented. That is a very, very big deal in a country when the governments entire annual expenditure is NZ$75bn. This NZ Labour Party promise is similar in size to the National Party’s income tax promise, to happen next April if National are returned to government, which is expected to cost around NZ$1bn per year.

This all puts a very different gloss on NZ Labour’s plan to charge tourists NZ$25 each, raising about NZ$100m pa.

The same problem arises when both NZ Labour and National offer to build / refurbish Dunedin’s hospital for around NZ$1.5bn, but cannot find the NZ$123m required to complete the funding of the Christchurch Arena rebuild. Populations are:- Dunedin, 120,000 – Christchurch – 390,000. Compared to Bristol, UK with a population of 620,000.

This election campaign started with a focus on the poor in New Zealand, especially child poverty. With government schemes to build social and affordable housing set to consume substantial funds whichever party is in government, it seems that poverty may have to be challenged without being a direct spending priority. Let’s see what finally emerges in the party manifestos!

 

 

Pre-Election Fiscal Update

This week the General Election campaign in New Zealand witnessed an eminently sensible ritual, that is completely absent from the UK. The government gave the Pre-Election Fiscal Update (Prefu) as it is required to do by law. This allows all parties to base their spending on the same fiscal outlook, which significantly restricts their ability to rely on their very own growth fairy.

Why would we not have this as a standard feature of a UK general election campaign? What’s not to like?

Incidentally, this gave a [nominal] GDP growth rate of 3.0% over the next four years, with inflation (CPI) currently at 1.7%. You have to go back to 2003 for the last time the UK had a [nominal] GDP growth rate over 3.0% (actually 3.5%), with UK inflation (CPI) at 1.4% that year.

This New Zealand election is being run against a backdrop of government surpluses. New Zealand national debt has risen since the 2008 GFC, when it stood at 5%, but it still stands at just 24% of GDP. And, New Zealand had to fund the aftermath of the 2011 Christchurch earthquake during this period. New Zealand is not relying on the next generation to bail the country out.