Cunliffe Waves Hands, Brings House Prices Down [updated]

Last week the Labour Party’s “finance team” floated their new boat, a “new tool,” a  variable-compulsory savings rate tool which can be tweaked when necessary, they say, to assist the Reserve Bank in keeping the inflation genie under control.

Yet the boat they floated already looks holed beneath the water line.  Responding this morning to claims that his "new tool" just isn’t a big enough lever for the Reserve Bank governor to pull – suggestions that compulsory savings rates of 15% or more might even be necessary to have anything like the effect on inflation claimed for it^1,2 – Cunliffe waved his hands at the criticisms. This “new tool” he said is but a part of a “suite” of tools – making the variable-compulsory savings tool they said last week was a “big tool” not the big tool at all, but just a tool.

Got that?

It turns out, in Cunliffe’s mind at least, that the the variable-compulsory savings tool is but a “complementary” tool to his real big tool. The complementary variable-compulsory savings tool is going to act in the short-run, stabilising monetary policy (how? somehow!) while the “real big tool” will bring down housing prices over the long run, so that even low-income folk will be able to make the high and higher compulsory Kiwisaver contributions that Cunliffe all but conceded might be necessary.

So what’s this real big tool? No, it’s not his spokesman for finance David Parker. Their real big tool, it turns out once the hand waving subsides, is their old friend the Capital Gains Tax which, he insists is going to “cool” house prices and rents so markedly – by up to a third, he told Radio NZ’s Suzy Ferguson this morning! – that this will leave ample room for folk forced to save to afford the forced-saving his little “complementary” tool of a variable-compulsory savings rate will still require.

Do you see a problem here?  It’s called a reality gap – a gap that no amount of hand waving can massage.

It’s a little like the realty gap with Labour’s housing policy itself. …

Show Me the Monetary Policy! [updated]

“I STAND UNASHAMEDLY FOR raising people’s wages,” said Labour’s David Parker this morning, as he announced a policy to lower real wages.

Go figure.

Like all New Labour’s policies in this New Age Under Cunliffe (somewhat like the Age of Aquarius in that they’re all mostly dripping wet), their new “monetary policy” – i.e., giving the Reserve Bank more power to control the exchange rate by controlling people’s savings rate – seems to have been thought up on the hoof and issued in haste, without any pause for reflection along the rushed road to release.

Let’s be clear. It’s not wrong to talk about changing what the Reserve Bank does, because by their very existence they are already doing far from what would occur in an unhampered market.

Watch out,Winston wants your wallet

If KiwiSaver is Welfare for Empty Suits, as I’ve argued before—a form of “soft compulsion” herding NZers’ paypackets and a forced subsidy from employers and taxpayer towards suits who wouldn’t be able to attract it otherwise—then  what would Winston’s would-be nationalisation of Kiwisaver be?

Maybe we could call it Welfare for Bureaucrats in Suits?

But really, it’s much worse even than that.

It’s means whereby which most of the country’s savings and wealth would be handed over to government to run.

Which would essentially make one large pot in the government’s hands—a slush fund for future governments in need of funds to back up their overspending, with no constitutional restraints against its plunder.

That, right there, is why Labour will have no problem with accepting Winston’s would-be bottom line as their own. Because no government can turn down a chance to plunder a pot like that, especially when the blame for going wrong (and what could possibly go wrong with such a scheme!) can always be sheeted elsewhere.

There is an argument around this morning that Winston making his proposal a “bottom line” in coalition negotiations would pose a problem for Labour.

This, too, is nonsense.

First of all, as every journalist should know, Winston’s only bottom line is baubles. Everything else he says is just window-dressing.

Second, there is enough in common between Cunliffe-and-Peters stated policies already to form some kind of common-law marriage, without their supporters falling out.

Both Labour’s new leader and NZ First’s old leader want to soak the rich.

Both Cunliffe and Winston wish to devalue the dollar to “help” exporters.

The Labour Party announced a few months back it wants to nationalise the electricity market.

And the NZ First Party announced over the weekend it wants to nationalise the KiwiSaver industry.

You’d think all this and more would make the two nationalisers a good fit. And with Winston making his nationalisation plan a “bottom line” for any post-coalition deal, that also gives Cunliffe the chance to pretend (for a while at least) that he’s only a reluctant nationaliser.

And since both these “markets” are already full of what economists call “rent-seekers,” I’d be surprised if anyone involved will be able to make a decent principled case against it.

KiwiBank and Gareth Morgan up a tree … [updated]

So KiwiBank is to buy out Gareth Morgan Investments, including the Gareth Morgan KiwiSaver Scheme—a case of the politically appointed “People’s Bank” buying out the self-anointed “People’s Financier.”

KiwiBank’s CEO Paul Brock reckons “The ‘aligned values’ of the two businesses reinforced the decision to buy rather than build.”

Rarely has a truer word been spoke. Their “values”are aligned—and in more ways than one:

• KiwiBank was set up by a political tool with truckloads of taxpayer money to help resurrect the tool’s political career. Meanwhile, the Gareth Morgan KiwiSaver Scheme was set up by a political fool eager to use his notoriety to attract money from gullible fools, and to suck down loads of taxpayers’ money.
• As a bank KiwiBank is simply a welfare case; a bank set up with taxpayers’ money to do things profit-seeing banks wouldn’t and unable to survive in the market without frequent injections of ever-increasing tranches of OPM to prop up its credit rating—at the extraction of which from successive Ministers of Finance it has proved outstanding. Meanwhile, the Gareth Morgan KiwiSaver Scheme has taken advantage of what is little more than a welfare programme for suits, at the exploitation of which it has proved exceptional.
• And finally, KiwiBank has delivered the worst return on capital of any bank in the country. While year on year the Gareth Morgan KiwiSaver Scheme has proved to be the worst performing KiwiSaver scheme in New Zealand.

These are two entities clearly made for each other.

So now the directors of Gareth Morgan Investments are eager to get a payday for their consistent underperformance.  And with this buyout of industry-leading underperformers, KiwiBank has once again confirmed their own.

UPDATE: Taking time today out of his busy schedule writing another book about how good he is, Gareth Morgan  responded today to criticism of his funds’ less than stellar performance (his balanced fund has returned a negative - 0.1% per annum since inception; its “growth fund” a negative -3.4% p.a.; its conservative fund  faring better at a positive 2.4% p.a, which still however sees his investors losing against inflation) blaming, in order, the ignorance (of others), the financial illiteracy (of others), and the league tables produced by ratings agencies Morningstar and Fund Source—who shamefully use actual figures instead of the ones provided by the voices in Gareth Morgan’s head—before pausing to point out his funds had done brilliantly against the “benchmarks” in his head.

He also said a “key focus” for GMI with respect to its KiwiSaver funds was “wealth preservation,” at which performance he maintained anyone criticising his growth portfolio’s return of negative 13.1% just doesn’t understand risk like he does.

He then touted for KiwiBank’s Kiwisaver work, before heading off to the travel agent to book his next holiday.

Coerce more Kiwisavers, say Kiwisaver providers

Looking to their bottom lines, Kiwisaver providers came out in their droves this morning in support of the government’s plans to coerce more New Zealanders into Kiwisaver. 

Milford Asset Management managing director Anthony Quirk said yesterday's announcement was positive. "The broader the [KiwiSaver] coverage the better," said Martin Lewington of Mercer.  Tower Investments chief executive Sam Stubbs said he supported the move towards "soft compulsion."  "This is a positive step forward, no question," he said.  

Surprise, surprise. The government announces it intends to herd NZers’ pay packets in the direction of these suits, and the suits step up and agree with them.

By such deals are “grand political consensus” made.

Why we don’t need Kahunas or compulsory saving—or the c***s who promote them

Here’s a thought for those of you contemplating the self-serving proposals peddled by suits wanting more welfare for suits. (Come in Gareth Bloody Morgan and Sam “I’m Just Another Self-Serving Suit” Stubbs.)

You’ll have noticed by now that prices have been rising every year since the Reserve Bank of New Zealand was born. (This compared to a half-century of prosperity and gently falling prices in the period before  modern central banking was born.) You’ll have noticed too that they’ve been rising even in the period that “inflation” is supposed to have been tamed, rising this year at least five percent on last year’s prices, and about four percent the year before that.

If you think about it however not so much as prices rising, but as the value of money falling, you’d actually be more accurate—more accurate, since that is what is a actually happening.  Every dollar the Reserve Bank prints (or allows to be created out of thin air by the banking system) dilutes every existing dollar in your pocket or your savings account. That, in short, is the reason both for rising prices and for your dollar buying less and less every year.

Your dollar buys less every decade than it did before.  According to the CPI (which famously understates inflation) since the beginning of 2002, every dollar has lost over 20% of its purchasing power, a precipitous decline in less than 10 years—and if your savings were invested at less than the CPI rate (or less than the real rate of money dilution), you’d have lost the value of your savings each and every year.

The loss is significant. Especially when you consider that the value of your dollar is around ninety-five times less than it was just ten decades ago, when the First World War blew apart the period of peace and prosperity backed by the gold standard.

You want to know why people don’t save as much as they used to? Because they noticed that their goddamn money after they’d finished saving wasn’t worth as much as it was when they started! They noticed that the grey ones were stealing from them by inflation! People aren’t stupid. Not as stupid as the pollies and the central bankers think they are. You keep diluting their money, and they’ll keep trying to get rid of it while it’s still worth something. And you keep interest rates below the rate at which their cost of living is rising, and they’ll borrow like hell—and know they’ll still come out on top.

Inflation is a killer, even at the so-called tepid rate of five percent that it’s at now. (But note that in 1971 five-percent inflation was enough to get Richard Nixon so worried his “brains trust” called for wage and price controls.)

So, instead of fatuous schemes by fatheads who lose you money (like the rum old Captain Morgan), or compulsory saving called for by the recipients of that compulsion (like the suit called Sam Stubbs), or shop talk about letting inflation fix things from Prime Ministers more interested in smiling and waving than effecting real repairs, why not just leave people’s money alone; why not stop the inflation altogether; why not stop diluting the currency, full stop, so that people’s savings actually start to mean something again.

They might even thank you for it.

Welfare for bankers. There’s a lot of it about. [Updated]

‘Tis the season to give welfare to bankers. Unfortunately, New Zealand is not immune.

What is Kiwisaver, after all, but a giant welfare scheme for local paper shufflers; the nett result of which is that NZ’s overall level of saving hasn’t changed a whit—just the places where saving is done, and the levels of the taxpayer subsidy for it.

And what is the call for compulsory saving but even more welfare for those same suits with nothing in them—suits who’ve already failed to grow the money they’ve been give voluntarily, so that giving them your money by force just looks like rewarding failure.

Which is pretty much the case with Kiwibank.  A bank set up simply to assuage those New Zealanders who are frightened of foreigners—one that gives no returns at all to its shareholders (i.e., you, whether you like it or not), that makes virtually no return on the enormous capital you and I have sunk into it, and on the back of its lower profits has been rapidly expanding its loan book ((by $2.2 billion last year) by propping up the rapidly deflating housing bubble.

And its reward for its dismal return on your involuntary investment of more than $300 million?  That’s right: another hit of the same.  A promise from Bill English to pour $150 million more of your money down its black hole, just so it doesn’t lose its credit rating.

There is no rational argument for Kiwibank to exist as a state-owned bank, nor for it to keep sucking in more taxpayers’  money just because (with its unprofitable business model) it can’t generate enough itself.  There are four other big banks and fifteen smaller ones doing the job banks actually need to be doing without having otherwise productive capital tied up in a bank whose advertising and very existence is based on little more than NZers’ xenophobia.

New Zealand has a small labour force, and it enjoys among the developed world’s worst figures for labour productivity. A primary reason for that is because entrepreneurs have so little capital with which to put labour to work.  Yet this government and the last one seem insistent on making the little capital we do have is put to the least productive uses they can find for them.

It makes no sense.  But then, xenophobia never does.

UPDATE: Eric Crampton spotted superb commentary on this at NBR’s Plays of the Week:

National’s decision to use taxpayer funds to prop up Kiwibank’s credit rating ensures not only will this dog remain on the government’s books but also the liability will continue to grow.
    Only a few months after considering at least a partial sell-down of Xenophobiabank, the government has decided to give it a credit facility, allowing it to borrow about half a billion dollars more to try to keep the housing bubble inflated.
Massey University banking studies lecturer David Tripe told media the facility was basically a government guarantee that gave Kiwibank an unfair competitive advantage over the other main banks.
    But there should be no surprise the spineless National Party has continued to pander to unthinking nationalism and economic illiteracy.
    Just as with Kiwirail, that other capital-destroying “investment” made by the previous Labour government, National opposed Kiwibank when it was created.
    However, when handed the levers of power it decided to send more funds down this giant black hole for taxpayer money, just as it did with Kiwirail.
    Throwing good money after bad is a strategy only governments can get away with for any length of time, because they can continue to thieve from taxpayers to fund the stupidity.
    If a private company destroyed this much wealth it would go bust faster than you can say “malinvestment.”

Magnificent! I’d be proud to have said it myself.  :-)

Captain Morgan’s sinking ship

The rum old Gareth “Captain” Morgan continues to demonstrate that the success of his Kiwisaver Fund is inversely proportional to the amount of time he opens his yap to criticise his competitors.  Even Adolf at No Minister reckons it’s Time To Boot The Yapping Fox Terrier::

“[Yesterday's published summary from Morningstar is a jaw dropper, coming just a few days after Morgan had the sheer gall to use his Herald column to castigate his competitors for poor performance.  Here's the 'money quote:-'

    ‘"The biggest contrast is in the growth sector where the Gareth Morgan Growth fund has attracted the most money at $121 million but is the worst performer over two years and bottom of the pack over the last three months.
    ‘The Gareth Morgan Balanced fund was also the largest balanced fund at $165 million but was second from bottom over two years and 18th out of 27 over the last three months.’

“It's time this financial undertaker made an undertaking to get out of the advice business. Clearly, he is a not much more than a mouthier version of Bryers and Petrecovic.”

 As a few of us here have said before.

The  Morningstar figures on Kiwisaver providers show once again that the whole Kiwisaver scheme is little more than welfare for suits with nothing in them—a mechanism whereby your money (and a good dollop of taxpayers’ money as well) is delivered to puffed-up paper shufflers to make smaller than the rate of price inflation  (and if your chosen provider is Gareth Morgan, much smaller) from which they extract exorbitant fees.

Inflation only makes the incredibly poor returns they deliver even poorer.  And frankly, as we should all know by now, inflation is just another word for stealing from savers: stealing from small savers, and giving it to suits to piss up against a wall.  Get rid of monetary inflation, and ipso facto you get rid of the desperate need for fancy schemes that purport to address the superannuation problem.

A comment at Ron Manners’ blog makes this point perfectly:

    “If the Reserve Bank hadn’t presided over such an enormous rise in the money supply, maybe there wouldn’t be such a pressing need for superannuation [and Kiwisaver] in the first place….”

Think about that while you’re perusing your poor returns.

How to kill saving [updated]

I see that in a desperate attempt to get noticed, the Labour Party now contemplate making Kiwisaver compulsory should they ever get back in power, and allowing the Reserve Bank the power to inflate.

Are they insane?

The latest Morningstar figures on Kiwisaver providers (released yesterday) show that the Kiwisaver scheme is little more than welfare for paper shufflers—a mechanism whereby your money and taxpayers’ money is given to suits for them to make smaller than the rate of price inflation.  (And the funds “managed” by our old mate Gareth Morgan is still doing worse  than most, appearing near the tail end of all them—worst result 24th our of 24th for his ill-named “Growth” fund, which has lost 2.1%pa over the last two years. )

Inflation will only make these losses first.  And frankly, as we should all know by now, inflation is just another word for stealing from savers: stealing from small savers, and giving it to suits to piss up against a wall.  Get rid of monetary inflation, and ipso facto you get rid of the desperate need for fancy schemes that purport to address the superannuation problem.

A comment at Ron Manners’ blog makes this point perfectly:

    “If the Reserve Bank hadn’t presided over such an enormous rise in the money supply, maybe there wouldn’t be such a pressing need for superannuation in the first place. In my grandparents’ day, money in a savings account could be counted on to maintain its value to such an extent that it was perfectly possible for the lay person to budget for retirement just looking at the account balance.”

So the power to inflate is just the power to steal from savers. Nice, huh.

Mind you, with tax rates as they are now, one person in every couple is going out to work just to pay their tax bill, so that hardly leaves them much to save with, does it.

So forgive me, then, if I consider anyone talking “compulsion” when it comes to saving, when every incentive is there at present to discourage it—and nothing is being done or proposed to be done that would change that. 

Not to mention the implicit government guarantee that comes when you make the scheme compulsory, and all the waste and moral hazard that comes with it.

Let’s face it: the Labour Party really cares as much about saving as the other team.  All they’re doing here is politicking.

But you know the best plan a political party could recommend if it truly did want to encourage saving? Here’s a start:

1. Stop taxing everyone to hell so they’ve got some money left over to save;
2. Stop taxing interest on savings so they’ve got some real incentive to save; and
3. Stop inflating the currency so the money that is saved isn’t diluted by every new note flying off the Reserve Bank’s printing press.

That’s what a responsible party would encourage. 

Pity there are none in this parliament then, eh.

UPDATED:  “Are we seriously going to start writing quadratic loss functions into the Reserve Bank Act, with parliamentary debate on the exact weight to put on to each term in the function” asks Eric Crampton Seamus Hogan, in a way that only a born economist could.

The rumness of Captain Morgan [updated]

The resignation today of Peter Huljich for what looks like spruiking the trading results of his Huljich Wealth Management KiwiSaver fund might lead to a little more focus on what some of these government-sponsored Kiwisaver funds have been doing.

And maybe one in particular: the Gareth Morgan funds, which trade on the basis of Morgan’s name—trading on "his “'Kiwiness' and self-proclaimed high-performance abilities” -- yet while Morgan himself leaves the grunt work of managing the fund to others he spends the major part of his time travelling the world talking up his bike-riding, and travelling round NZ boardrooms bad-mouthing other Kiwisaver providers—for both of which he now has something of a reputation.

This would be perfectly fine if the results of his managers matched his mouth.  But they don’t. As David Chaplin noted in the Herald not so long ago,

    “According to the Gareth Morgan Kiwisaver website, in the 12 months to January 31, 2010: its growth fund lost 6.61 per cent; the balanced fund dropped 2.51 per cent, and; the conservative fund returned 1.75 per cent.
    While it's not an exact overlap in time, the recent Mercer KiwiSaver survey 2009 annual performance data serves as a proxy benchmark to measure Gareth Morgan Kiwisaver against. In the Mercer survey the average conservative KiwiSaver fund returned 8.1 per cent in 2009; the average balanced fund returned 12.1 per cent, and the average growth fund grew by 16.5 per cent.

Not so good.

And a recent Morningstar survey of Kiwisaver providers confirmed the less than stellar performance of Mr Morgan’s managers over the last year.

• With $28.5 million under their putative control in their “Conservative Fund,” Gareth’s managers’ ranked just 15th out of 16 in this class.
• Handling $102.7 million of other people’s money in their “Growth Fund,” they ranked only 19th out of 20.
• And with $130.9 million of people’s would-be savings invested with them in their “Balanced Fund,” they could only manage 22 out of 23.

How does that make you feel about him? That’s over $250 million of other people’s money, a lion’s share of the Kiwisaver treasure trove dropped into his lap through government policy, that Gareth is just not looking after.

Not good at all for a company that’s used his name to attract it all. In a market, that, we should remind ourselves, only exists because of government action (i.e., explicit tax benefits for savers and a legislative requirement for employers to plonk 2 per cent of employees' wages or salaries in their funds). With a company that’s helped get Morgan into positions where he now thinks he can tell you how much you should be taxed, and how.

Time to reconsider the sundry ponderous pontifications of this “people’s friend.”

Time for him –- if he’s to be taken seriously -- to stop talking his book and writing others, and instead to get his arse behind his desk instead of out on the world’s roads on the back of a Harley.

And time for editors to stop reprinting Gareth’s rants as if they’re the revealed wisdom of a secular saint.  They’re not.  They’re mostly just the rum old whingings of an underperforming seal.

As “Steve of Wellington” said in response to one of Morgan's recent whinges in the Herald:

    "I've got my Kiwisaver with you Gareth and all I seem to do is lose money - thousands at the moment. How about less spin and more time trying to recover some of my money you have lost?"

Looks like a good call.

Disclosure: Peter does not have any money invested with Gareth Morgan.  Nor would he.

UPDATE: Cartoonist ‘Blunt’ wonders if Gareth's asked for his own money back yet from “the top scientists” who so easily convinced him that anthropogenic warming was going to destroy the planet.  And further:

The biggest dead rat of all [updated]

The National Party spent all last election swallowing dead rats, to the loud applause of its staunchly Labour-Lite supporters who thought this tactic was sheer genius. 

Interest-free student loans to bribe university-age voters? Me too, said the geniuses in the National Party strategy machine. KiwiSaver? Me too, they said. Labour’s Emission’s Trading Scam – a deadweight tax directly on producers – me too!  Foreign policy? Me too. Welfare for Working families?  Me too. No privatisations?  Promising not to slashing bureaucrat numbers? Keeping the cap on GP's fees? No bulk funding for schools?  Income-related rents for state house tenants? No strike force for the Air Force? Keeping the Families Commission? Spending hundreds of millions on a motorway bribe to Peter Dunne-nothing? Me too, me too, me too was the refrain.  There was the faintest whiff of controversy?  Oh, go on then, me too.

National supporters swallowed all the dead rats and kept on coming back for more. They went along with it.  They talked up the “moderation” and they talked about tax cuts.  They kept talking about tax cuts.

But we now know that they lied.  There will be no tax cuts.

When it comes to choosing which promise to break, one of the very few promises National made last year that was worth a damn is the one they choose to break. Like a thin man after an all-you-can-eat competition, what was swallowed so eagerly under all the bright lights now has to be paid for.  By you.

But you asked for it.  You wanted Labour-Lite, and you’ve got it. But now you can remove the word “Lite,” and any claim that this lot are either honest or competent.

You might object that no one could know in the election campaign of October/November last year that things were about to collapse.  That Billy Bob and John Boy wouldn’t know how bad things were until Treasury’s frightening forecasts of December last  year. This is just bullshit on a stick.

First of all, anybody who could read a newspaper in October last year could see that the crash had already happened.  It wasn’t about to happen, it already  had (see the graph at right of the Dow Jones index from July 2008, and notice just when exactly it all fell off a cliff).  And despite the almost surreal election campaign, when “don’t mention the crash” seemed to be the refrain, anybody who could understand what they were reading back then would have realised right away the implications for the government’s budget and the spending promises being made.  If they didn’t know, they were incompetent.  If they did know, they were lying about all the promises.

Second, this was a party who – even in the face of the world economic collapse – were promising to borrow to fund tax cuts.  This is reprehensible enough in normal times.  In the face of the worst economic collapse since the onset of the Great Depression, it was either a promise that those who made it knew they could never deliver, or a promise they were too incompetent to know they could not deliver.  They either lied, or just didn’t care enough to tell the truth.

A responsible political party doesn’t promise what it can’t deliver.  It would know that it can’t promise tax cuts without corresponding cuts in government spending.  John Boy and Billy Bob thought they could fake it.  That they could borrow and spend and promise the earth – and somehow never be found out.

But this Thursday it’s crunch time.  Caught between the rock of an economic slump that had already happened when they started swallowing dead rats, and the hard place of credit-rating agencies about to mark down a government about to go heavily into debt, the Billy Bob and John Boy are about to kick in the teeth are those very people who’ve been over-taxed for the last umpty-tum years, while keeping the good times going for all the parasites they’ve been paying for.

And people wonder why we call them bastards.

UPDATE 1: Paul Walker points out National have now given us the National Infrastructure Advisory Board to go along with all the other dead rats on the sinking fiscal ship.  Aren’t we lucky.

UPDATE 2:  And just to show I’m an equal-opportunity despiser, its worth pointing out that the ACT Party will be voting to support the National Party’s broen promise on Thursday – voting for no tax cuts, no real spending cuts, and around a decade of solid deficit spending. 

Is that really what you’d describe as “the courage to do what’s right?”

Mr Boring

I said a few weeks ago that John Boy's blandness had the effect of making him a blank canvas on which people projected their own hopes, dreams and wishes -- regardless of the evidence to the contrary from the Nats' bland policy mush and from John Boy himself.

The Double Standard has a list of just some of the reasons people voted for the blank canvas, and what they now expect to receive in return:

- more rapid growth
- higher wages
- better healthcare
- better education
- lower interest rates
- lower inflation
- lower crime
- no reductions in Super
- fewer people on benefits
- no more ‘power crises’
- repeal the ETS
- no cuts to Working for Families
- no blow out in government debt
- more infrastructure investment
- reduced poverty
- cleaner waterways
- no abuse of the 90-day no work rights period
- no dysfunction from privatised ACC
- repeal the amendments to s59
- longer prison sentences
- bootcamps stopping youth crime
- lower tax
- ultra-fast broadband to the home in a few years
- lower greenhouse emissions
- fewer core public servants
- improved public services
- higher savings rates, more sign-up to Kiwisaver
- no sale of Kiwibank
- cheap toll roads
- no more congestion
- lower emigration
- no government scandals
- no trouble with support parties
- Herceptin funded
- no individual case failures of health, education, or other government services
- investment in Kiwirail

When do you think these voters will begin to get the feeling they've been cheated?

No indeed, Minister [updated]

You have to laugh.  Earlier in the week No Minister was rightly lambasting Michael Cullen for meddling with the New Zealand Superannuation Fund -- insisting that the Super Fund, which is supposed to relieve the need for taxpayers to fund NZers' retirement years, must "invest" instead in "long-term infrastructure bonds," bonds whose returns will be paid for by the taxpayer.

It's not just insane, but once you start the meddling any hint of it being an "independent fund" is gone -- and before you know it Minister for Tasteless Crap Sue Kedgley will be insisting it must "invest" in mung bean manufacturers and ethical bone carving. 

Said National-supporting No Minister about Cullen's signalled intervention this leaves Cullen "looking more like Muldoon by the minute." 

But now John Key is doing the same.  See: National to legislate for at least 40% of NZ Super Fund to be invested in NZ.

This is bad.  Crikey, even National man David Farrar thinks it's bad: "We don’t want MPs in charge of a $100 billion fund," he says.  No, we sure as hell don't.

But Key does.  Key is signaling here that he's a tinkerer.  A meddler.  An interventionist. In his facile way he thinks his laudable success in the world's finance markets qualifies him as a politician to be tinkerer in our local markets. It didn't work for Muldoon -- hell, it didn't even work for Greenspan -- and it sure as hell won't work for Key, or for us.

You have to laugh.  if you didn't laugh at what they're all doing with our money, you'd cry.

UPDATE  1: Looks like No Minister aren't the only ones from the Blue Team who will need to give their Team Leader an uppercut.  The stodgy fraud who calls himself Adam Smith wrote earlier in the week that "directing the so called ‘Cullen Fund’ to invest more in NZ for political reasons is worse than National reducing Kiwisaver contributions," and their assault on the independence of the Super Fund shows "Clark and Cullen seem determined to gain short term political advantage for themselves and the Labour Party at the expense of New Zealand and the New Zealand citizenry."

I look forward to his response now his hero has plumped for the same mess of short-term political advantage.  [UPDATE: Good to see 'Adam' rightly upset, if a little muted: "No this is not a good idea."  It's worse than that, mate.]

UPDATE 2:  "This is a defining election issue," said No Minister's Adolf about Cullen's intervention. "Nothing is sacred for these greasy pricks. Remember the Kirk superannuation fund the demise ... has been widely vilified by people of all political stripes."

What do you think Adolf will say once he realises that "greasy prick" John Key is just as much an interventionist as the other "greasy prick" Adolf so despises?

UPDATE 3: Crampton comments:

    I'm intensely disappointed in the commentariat over at Kiwiblog. The same folks who would be (and were) foaming at the mouth about the policy when proposed by Labour find all kinds of reasons to love it when proposed by National.
    More evidence that Caplan's hypothesis in The Myth of the Rational Voter is right. For most folks, politics is just cheering for the home team, without any thought given to the content of policy.

He's right, you know.

UPDATE 4: Paul Walker has a summary of blog commentary on Key's capitulation to collectivism.

Kiwisaver? Me too.

Whatever the questions about the precise details of National's position on Kiwisaver, and Kate Wilkinson and Shane Ardern appear to have different views to their leader over what precisely those details should be, there are three things about National's position on Kiwisaver that are abundantly clear:

• they're going to keep it.
• there will be "no radical changes" to it;
• they could have killed it.

How could they have killed it when they're in opposition? Simple. They could have killed it at birth if they'd wanted too with one sentence delivered as unambiguously as they know how: "If elected, we will kill this bureaucratic mare's nest and return your money to you." Since signing up to Kiwisaver was a decision made by taxpayers based almost wholly on their expectation of the scheme's political support over its lifetime, the success or otherwise of the mare's nest was wholly dependent right from its inception on the degree to which people assumed it had cross-party support.

By announcing that they would deal to it as forthrightly as Muldoon once did to the last compulsory savings scheme Labour dreamed up, at a stroke it would have rendered Cullen's successor stillborn -- as I pointed out at the time. Instead, we're now encumbered with it, with all the impositions on small business employers that are now being more widely understood, all the implications for ongoing state control of capital markets that will become only too clear over time -- and the ongoing annual $2 billion cost of the Kiwisaver subsidy bill that John Key and Michael Cullen are forcing down taxpayers' throats.

Once again, we pay the price for John Key's 'me too.'

How many dead rats will John Key make *you* swallow?

Near enough everyone by now is aware that John Key has been swallowing dead rats to make himself look the way he thinks an electable politician should look.  He's swallowed enough dead rats already to make a bishop sick.

Interest-free student loans to bribe university-age voters? Me too. KiwiSaver? Me too. Foreign policy? Me too. Welfare for Working families?  Me too. Waffling on about climate change and emissions trading? Me too. Privatisation?  Cap on GP's fees? Bulk funding for schools?  There's the faintest whiff of controversy? Oh, go on then, me too.

There is nothing National will not do for power, including abandoning whatever principles it ever had, and fooling every supporter it ever had about what it stands for and where it's really going. 

But I'm not really here this morning to remind of the dead rats that Flip Flop Boy has already swallowed, I'd like to point out, or remind you, about just a few of the dead rats he's going to insist that you swallow.  As Steve Pierson says at The Standard (yes, Virginia,The Standard), "It strikes me there is a disconnect between what prospective National voters expect it to do in government and what it has actually promised it would do." 

"Disconnect" is the kindest way to describe the gap between what most Blue Team voters expect, and what National will deliver -- the size of that gap is the measure of cynicism of National's campaigners. 

Think power prices are too high and National will know how to lower them? Think again -- it was them who signed up to Kyoto, and who introduced the RMA.

Think petrol prices are too high and expect National to slash the fuel tax? Hell, no - Maurice Wimpianson has already ruled that out. 

How about reversing the anti-smacking law?  Not a chance -- Flip Flop Boy has already ruled that out. 

'Fixing' law and order?  They've got no more clue than the Red Team what to do. 

'Fixing' the RMA?  Nick Smith couldn't even fix a good going-away dinner - and he should.

'Fixing' the economy?  Who are you kidding.

Or 'fixing' the Electoral Finance Act?  Have you any idea what they will actually introduce as a replacement, or how -- because they sure don't have a clue. 

Reversing Labour's Emissions Trading Scheme? The bastards have got their own anti-industrial wet dream they want to introduce.  

Think they'll fix the die-while-you-wait health system, or the state's factories of illiteracy laughingly called schools? Are you kidding -- the health and school systems are the ones they introduced.

Or make serious tax cuts -- the sort of tax cut that would leave a Treasurer crying?  Hell no. Not in a million fiscal quarters.

So why would you even considering voting for the bastards?  They still don't even know from one day to the next whether they're a party of compulsion or not. No wonder NZers are leaving in their droves, even with the expectation of a National Government come November.

As a commenter says at The Standard, watching National voters after the election will be like watching a friend who starts dating 'HotChickHot4U' off the internet, and she turns out to be a scam artist who ends up with half your house...  Self-delusion is not compulsory, it’s a choice. And if people can’t be bothered to try and find out what they’re getting, they get what they deserve."

How many dead rats can you swallow?  And why on earth would you want to?

Here's Monty Python.

UPDATE: "You vill play schport!" says Nanny Key.  Jawohl, Herr Neville!

Key confirms National **is** a party of compulsion

Speaking yesterday on National's plans for Kiwisaver, National's Kate Wilkinson told her audience, "The National Party is not a party of compulsion."

No wonder journalists described her words as "a gaffe."  No wonder John Key leapt to point out that Ms Wilkinson is not involved in writing National Party policy (she knows the party's principles, you see, and is prepared to make them public).  No wonder he wanted to immediately clarify National's position, on Kiwisaver and much else: Compulsion is the name of National's game, he confirmed to a grateful media.  "There will be compulsory employer contributions," Flip Flop Boy told applauding reporters.

SOLO's Mark Hubbard points out that John Boy's commitment violates "in one fell swoop" four of the nine central principles ostensibly promoted by his Party.

    The National Party purportedly promotes the following principles:
  *Individual freedom and choice
  *Personal responsibility
  *Competitive enterprise and rewards for achievement
  *Limited government
    Mr Key's commitment ... to compulsory KiwiSaver Employer contributions is directly in breach of all these principles. There cannot be 'individual freedom and choice' when he is prepared to perpetrate compulsion. There cannot be 'personal responsibility' when he is prepared to replace responsibility with compulsion. We cannot have 'competitive enterprise' when employers are weighed down by compulsory levies, charges, and taxes such as this. There cannot be 'limited government' when the taxpayer is forced to finance the huge bureaucracies that are needed to administer policies such as this.

National Party supporters questioned on this violation of their party's principles said, "Who cares,"  "What principles?" and "Anything for power." 

And Ms Wilkinson?  She's gone into hiding.  Apparently the National Party isn't the party she thought it was.

Becoming a Conscientious Objector

Libertarianz East Coast Bays candidate Elah Zemorah reckons it'd be great if we could have available the 'Opt Out' choice on our Taxes like we do on our Kiwisaver.  Here's what you could tell the Ninth Floor:

Dear Prime Minister,

I hereby inform you that as of today's date I will no longer be paying my Tax. 

To this end I will henceforth become completely self-sufficient.  I will no longer ask for any of the 'essential' services that are provided by the State.  I will pay for my health via a private provider.  Should I choose to have children I will be sending them to the school of my choice, paid in full by myself and my husband, one that reflects our values -- and will educate them in a manner that is consistent with nothing short of excellence.

Since I have never been a member of a Union and never wish to be I will have an individual contract with my employer that is consistent with how I have proven my value to him.  Should we not come to an agreeable contract with regards to my remunerations I shall move on to an employer where there will be an agreeable contract.  I disagree on the morality that the State set a minimum wage for all employers to obey. 

I might add at this stage that should he wish to open for business on a Public holiday, if I was willing to work on that particular day that would form part of the voluntary contract we have both freely signed.

I would like to remind you that this is MY money which I go out to earn five days of the week, (I might add that most weeks it is six days).  To be consistent with Individual Property Rights (which you may like to familiarise yourself with), you do not have my permission to take any of this via the Inland Revenue Department, or any other method of legalised theft. In short, I will be acting only on what will be my objective best interests, since I own my life and I am the best person to judge rational self-interest.

Yours sincerely
Elahrairah Zamora

PS: That sorts out Central government.  I will also be writing a letter to my local government explaining to them why I will no longer be paying my rates.

Feel free to compose and send your own letter confirming your intention to become a Conscientious Objector.

BERNARD DARNTON: "What was the question again?"

Here's the core of Libertarianz leader Bernard Darnton's speech at the Libz conference over the weekend.

2008 looks good for all of us who have struggled to dislodge Helen Clark from the Premiership.  The Labour government no longer looks invincible.  Its ministers look more and more foolish every day.

We have a finance minister who hates money; a foreign minister who hates foreigners, and a police minister who blames a month of rising crime on a full moon -- suggesting that, under this government, crime will only fall when we start having months without full moons. Lunacy indeed.

There are many reasons for wanting rid of Labour.  Labour has continued the destruction of New
Zealanders' property rights: vandalising Telecom (our largest listed company); denying forest owners their newly minted carbon credits; and confiscating the foreshore and seabed from its rightful owners -- not to mention the myriad abuses of the Resource Management Act.

Labour has squandered a decade of economic golden weather -- extorting wealth from the creative and spending the gains like  a drunken sailor on an engorged, vampiric bureaucracy.

Most ominously, Labour has taken every opportunity to silence dissent: threatening charities
with the loss of their charitable tax status if they criticise the government; banning the use of
parliamentary images for satire or ridicule; and, with the Electoral Finance Act, attempting to muzzle
everyone during election year.

With this list of crimes against freedom, who can't welcome Labour's two-year slide in the polls and
National's complementary rise?  I for one will be damn glad to see the back of Helen Clark, come November. But I'm not so sure I'll be pleased to see the front of John Key.

National Party acolytes will tell you that National is “a broad church.”  What that means is that National is a brand name.  It doesn't stand for anything.  To National, politics is a sport -- they'd quite like the blue team to beat the red team, for all the reasons we all like our teams to win out over the other teams, but like all sports teams there's no fundamental difference between them and the other team.  In this respect, John Key is the perfect captain.

Witness National's “me too” politics. Interest-free student loans to bribe university-age voters? Me too.  National orginally said it would oppose interest free student loans "with every bone in its body." Now, not only will National keep interest free loans but will also introduce a ten percent voluntary repayment bonus, meaning that I can borrow $10,000 on Monday, pay back $9,100 on Tuesday and pocket the discount.

Where are the bones in National's body now -- in particular the 33 vertebrae?

This is only one example of how we're going to see a "me too" election from the Blue Team.  We've seen it already.  KiwiSaver? Me too. Foreign policy? Me too. Waffling on about climate change? Me too. Cap on GP's fees? There's the faintest whiff of controversy? Oh, go on then, me too.

Even National's greatest recent challenge, the Electoral Finance Act wasn't met with outrage. It was
simply taken as an opportunity for point-scoring against the red team. They didn't ask for freedom, they asked for "consensus."

If the question at the next election was simply how to get rid of Labour then the answer itself would be simple: vote National. However, the question at the next election is not how to get rid of Labour. It is how to end Labour's assault on our freedom.   John Key's National Party shows no signs of being willing, ready or able to end that assault. And that means that voting National is not the answer.

A vote for National sends the message to all parties that it's business as usual. And business as usual is exactly what we don't want. Only a vote for Libertarianz says that the game is up. We'd like our freedom back please.

NB: Keep an eye out on the Libz TV site for the video of Bernard's speech to appear soon.
Inside this Issue:
1. What was the question again? – Bernard Darnton
2. Three Simple Remedies for Housing affordability – Peter
Cresswell
3. Libertarianz Conference 2008 – Craig Milmine
4. Compulsory Third Party Insurance Nonsense – Liberty
Scott
Libertarianz on Campus – Daniel Aguilar
5. Letters to the editor
6. Libertarianz Press Releases
7. Deadline Approaching for Candidates – Craig Milmine
8-9. Candidate Nomination Forms
10-11. Support Libertarianz
12. Contact Details

No Kiwisaver, we're MPs!

MPs are voting with their own wallets on what they think of Kiwisaver: the just-released Register of Pecuniary Interests shows that "while all 121 MPs had some form of superannuation saving ... only five listed KiwiSaver. All were Labour MPs and only one - Pete Hodgson, 57 - is a Cabinet minister."

Obvious conclusions are invited.

Liars at large

This election year, individuals have been severely restricted in the amounts they can spend opposing government policies -- meanwhile, the Clark Government has spent record amounts of your money fitting out government departments with spin doctors to trumpet its own lies.  [Story here.]While individuals are confined to spending $120,000 over the whole year in a national campaign (or just $10,000 in a local campaign), government departments now boast a whopping 448 spin doctors -- 210 more than just five years ago, and nearly ten times the number of the mid-eighties -- who cost us the sum of $47 million, not including the cost of campaigns these lying arseholes dream up. 

This is where your tax dollars go to, while the sound of protest is muzzled.

Remember last year when a huge taxpayer-funded advertising splurge trumpeted the government's  Kiwisaver, Student Loans and Welfare for Working Families election bribes? You and I paid for that.  Remember all the lies and spin fed to you by the Clark Government-- lies and spin about smacking your children, about the Electoral Finance Bill, about their pledge card ... You and I paid for all that too, and they plan for you to keep right on paying, election after election, while being muzzled in how much we can pay to protest.

The explosion of spin under the Clark regime and of the liars who are paid to do it mirrors a similar explosion in lying and spin in Tony Blair's New Labour.  The pledge card wasn't the only thing NZ Labour borrowed from UK New Labour.  They've also borrowed their mendacity.  As Peter Oborne notes in writing of the rise and rise of political lying in Britain, the reliance on spin and the volume of its is a new phenomenon in politics.

All governments have contained liars, and most politicians deceive each other as well as the public from time to time.  But in recent years [under New Labour] mendacity and deception have ceased to be abnormal and become an entrenched feature of the British [political] system.

The institutionalisation of spin is almost complete, here as it is in Britain.

Records Ruth Laugesen in yesterday's Sunday Star Times, the number of spin doctors is at a record high.  "Government agencies have hired more new communications staff in five years than all the journalists working at Television New Zealand, Radio New Zealand, the Sunday Star-Times and the Dominion Post newspapers put together."  As Gerry Brownlee points out, this leaves them ideally placed to use the machinery of government as its personal campaign for re-election.

In the last election the Clark Government thought they could use taxpayer's money intended to run the Prime Minister's office in order to run for the Prime Minister's Office.  This was what paid for their pledge card.  This election they clearly intend to use every "communications" resource  in every government department they can lay their hands on to run for re-election.  This is the reason the Madeleine Setchell/Clair Curran employment saga was so important (the only reason): it's important to the Clark Government that the have loyal "communications staff" are in place in every department.  With the numbers Laugesen quotes, it's clear that the capture of the public service is all but complete.

• "The Ministry of Social Development topped the list with 54 communications staff and contractors, making it bigger than Radio New Zealand's entire workforce of journalists."
• "The biggest spender on communication contractors and staff was the Ministry of Education, with 70% of the $6.6m it spent going on contractors."
• "There are 10 times as many government "communications staff" as there were 25 years ago, despite a smaller public service."

Not included in this number is the cost of bloggers such as the hacks at the Sub-Standard, who spin this news by arguing that it's not that there are too many spin doctors but too few journalists -- echoing a line used by Helen Clark at a journalism conference last December, and doing it on Labour's ticket.  (As Paul M. points out in the comments at Kiwiblog, the Sub-Standard is hosted on the Labour Party's server, but without the parliamentary crest that's supposed to appear on taxpayer-funded pieces of puffery such as this is, leaving a few questions for the Sub-Standard boys and girls to answer, including who exactly pays their wages, and for what purpose.)

Watch out people.  There are liars out there, and you're paying for them.

The Rise of Political Lying by Peter Oborne Read more about this book...