If National wins ...

[POSSUM THE CAT]

Fungus pudding that is your belief. Mine is different have had at least 20 faults in last six years. One took nearly a week to fix even after I paid for a computer technician to try another modem on the connection because the one I was using was not supplied by Telecom. Even after this expense I had to abuse hell out of them every three or four hours to get them to do anything. Give me the old P&T any day. Imagine living in Auckland & having to struggle with Dial Up internet.

[westerly]

Hardly typical. Thank god they diappeared before cell phones and the internet came along. New connections often took months - faster if you could get a doctor's certificate. No matter what you think of today's service, it's miles ahead of the old P+T days.

Technology changed dramatically not long before the old NZPO was privatised. TEL had the benefit of electronic exchanges and subscriber toll dialling installed by the NZPO and were not handicapped by the far larger numbers of staff required to run mechanical exchanges and manual toll boards or having to provide a new connection to almost anywhere in the country . Roger Douglas having paid large numbers to leave. Given the restrictions imposed by both parties on capital expenditure and the political pressure applied by MPs in marginal electorates at election time the NZPO wasn,t as bad as FP would have you believe

Westerly

[fungus pudding]

Technology changed dramatically not long before the old NZPO was privatised. TEL had the benefit of electronic exchanges and subscriber toll dialling installed by the NZPO and were not handicapped by the far larger numbers of staff required to run mechanical exchanges and manual toll boards or having to provide a new connection to almost anywhere in the country . Roger Douglas having paid large numbers to leave. Given the restrictions imposed by both parties on capital expenditure and the political pressure applied by MPs in marginal electorates at election time the NZPO wasn,t as bad as FP would have you believe

Westerly

It was worse than I could possibly make you believe. My first 5 years of working life were with the P and T. It was a complete joke.

[POSSUM THE CAT]

Fungus Pudding If the P&T was bad how do you class Telecom still trying to work with 10th century standard of service or have you got a better idea

[fungus pudding]

Fungus Pudding If the P&T was bad how do you class Telecom still trying to work with 10th century standard of service or have you got a better idea

I'm not trying to defend them, but however bad you find Telecom I can assure you the Pand T outfit were worse. Ask anyone old enough to remember. Anyway you don't have to use Telecom if you don't like them. I don't, and am grateful to have a choice.

[POSSUM THE CAT]

Fungus Pudding this cat is probably older than you & the present telecom service is far worse than I ever had from the P&T. And how do avoid Telecom all the others are using Telecom services at some point

[Major von Tempsky]

You always get some twisted, obsessed, perverted Telecom hater whose nephew works for 2 degrees, aunty for Vodafone or secret lover for Telstra-Clear or who once spoke to the Telecom Help Desk and got some accent they didn't like.

I bet most of them have had anti-harassment orders out against them and/or secretly watch porn/child porn. They always have the same sort of whinging Pom personality....

[POSSUM THE CAT]

Major Von Tempsky No none of my relatives work for those companies but a nephew did work for telecom about 20 years ago now works for Tait & has done for many years. If you had over 100 faults in the last 6 years you would say Telecom was Sh*t to The neighbours in my area say the whole area was cabled with cheapest & nastiest cable they could find. Are you judging others by your own personality

[elZorro]

All I know is, my Hamilton City copper cable and the broadband hardware connected to it by Telecom must be poor, because a guy in Delhi has better broadband than me. Vodafone tell me that the gear here is older version, but also add that unless my modem drops out (by itself) at least 10x a day, they won't be bothering too much about it. Frustrating when it's been raining and the wires go static..on top of the overloaded or slow hardware. I have to admit, today it's good.

It's been absolutely perfe


c


t

[Major von Tempsky]

Nope, I'm judging it by own experience. Whenever we've had a problem, and it's been seldom, we've rung up and they've fixed it. My wife gets an el cheapo package cos of her work that none of the pretenders can match in the long run.

[POSSUM THE CAT]

Major von Tempsky have you considered that you get priority service from Telecom because of your wifes work

[elZorro]

The dodgy National Party again..

http://www.stuff.co.nz/national/politics/7062894/Asset-sales-law-being-rushed-to-dodge-poll

[Major von Tempsky]

Consider that consummate politician, our previous PM Kiwi Keith Holyoake who won 4 elections and retired as PM.

He was a master of looking at political currents and when he deemed it expedient he would alter course, back off, go into reverse, regaining the majority.

If I was Labour I would be sobbing heavily at the thought of facing another Kiwi Keith..... :-)

[Pumice]

Consider that consummate politician, our previous PM Kiwi Keith Holyoake who won 4 elections and retired as PM.

He was a master of looking at political currents and when he deemed it expedient he would alter course, back off, go into reverse, regaining the majority.

If I was Labour I would be sobbing heavily at the thought of facing another Kiwi Keith..... :-)

I’m liking this National government more and more.
Think National will change tack on State funded super? Hopefully they will cut it entirely and offer commensurate tax cuts. Everyone would benefit.

[elZorro]

I’m liking this National government more and more.
Think National will change tack on State funded super? Hopefully they will cut it entirely and offer commensurate tax cuts. Everyone would benefit.

Isn't this type of brainless policy the reason National got dumped for three terms? To put the flip-flops another way, you can't trust them in general.

Colin James follows the recent win for Labour over National. Shearer still needs coaching for being in front of the camera, but this was a win.


Colin James's column for the Otago Daily Times for 12 June 2012


A win for Shearer. But much work still to do


It was a clear win to David Shearer, his first against John Key. Shearer instantly sensed parents' likely reaction to notes from teachers about Hekia Parata's brilliant scheme to raise class sizes to pay for more teacher training and a pay-for-performance system. He ran it top of his budget speech.

On Thursday Parata scrapped her scheme. Key said from Europe (his polls no doubt saying what by then Labour's were) that it was her decision.

Keep the boss clear of the mud, the tacticians say. Helen Clark was skilled at that. But it stretches plausibility rather tight that Parata could be still promoting her policy on radio one day and the next suddenly pushing senior ministers -- one a former woodwork teacher, another a tough-it-out tactician -- into scrapping it.

Why downgrade class sizes? Professor John Hattie, inventor of a method for teachers to test their effectiveness, told a Treasury semi-public lecture a few years back that class sizes are far less effective than other factors in lifting learning. Professor Dugald Scott backed that last week.

But parents, especially National-leaning parents, get skittish about their kids' education. To get parents onside would have required long, research-rich and well-led public debate -- of the sort preceding the 2010 tax changes and now starting to be prepared for a rise in the pension age. The only class size "debate" was a speech by Gabs Makhlouf, Secretary to the Treasury, not an agency parents would instinctively turn to for guidance on kids' education.

Makhlouf's minister should have twigged how parents would react. As education shadow minister, Bill English made hay out of Trevor Mallard's amalgamation of small schools, also aimed at improving learning. Clark squashed that fast when she saw how parents reacted.

Three points arise from the Parata gambit.

One is that, while the government will recover as this gaffe fades from the news, it will have lost a sliver of trust. This bit of political mismanagement, coming on top of several this year, could generate a downward momentum out of the recent small slippage in National's poll readings. And reversing momentum is a lot harder than forestalling it, especially if background factors -- consumer confidence and right-track-wrong-track readings particularly -- are also sliding, as they are right now.

The second point is that there is a public interest in good political management: stable policy. Poor political management leads either to backoffs -- remember the retreat from Gerry Brownlee's plan to dig up national parks in 2010 -- or to policy ping-pong as the next change of government reverses a policy for which there is not a solid voter majority.

Thus, National heavily softened Labour's emissions trading scheme and the next Labour-led government will likely toughen it again. National is reversing a swag of Clark-government workplace laws, which will in turn be reversed. The jury is out on SOE selldowns: if the sky doesn't fall in after the first one or two, public opposition will likely melt but the politics need managing much better than up till now. Unstable policy is bad for investment and bad for voter trust in the system.

The third point about the Parata gambit is that Labour's morale is up a notch and Shearer has taken one more step towards filling out as a party leader in a form recognisable to the public. Even if most voters won't have noticed, it is his first decisive win over Key.

The risk for Labour as its morale builds is to think it might sneak into office without changing too much.

That risk is not so much that voters might sniff out a coaster and deny Labour in 2014 nor that it leaves out the Green part of the governing equation that needs to be sorted well before election day. It is that the resultant government might be short-lived.

That puts the heat on Davids Cunliffe and Parker, Grant Robertson and Jacinda Ardern.

The two Davids' job is to cherry-pick the now fast-evolving international economic policy thinking to fit a Labour agenda. Cunliffe, who has the pivotal economic development portfolio, was to emphasise investment in human and physical capital in a speech yesterday after this went to press. Shearer wants a "new economy", research-based.

Robertson's role is to freshen environment and education thinking, oversee a general reapplication of Labour principles to modern conditions -- decades overdue and a Shearer ambition -- and lead the deal-making with the Greens. Robertson has yet to generate much of that but these are early days.

Generation-Y Ardern's role is to recast social assistance policy. She has been pushing the child-centred policy which Labour curiously neglected in the election and has been gathering a group to rethink "welfare", which she is calling "social security", thereby reviving the original 1930s notion of reciprocity.

Few outside a small circle will quickly notice much of that. But it is every bit as important as Shearer's win over Key on class sizes.





-- Colin James, Synapsis Ltd, P O Box 9494, Wellington 6141
Ph (64)-4-384 7030, Mobile (64)-21-438 434, Fax (64)-4-384 9175
Webpage http://www.ColinJames.co.nz

[elZorro]

In 2008, the IRD scored the best recent results for clawing back some unpaid taxes from the top tier wealthy. This was an amount of over $100 million. Labour was out of office in 2009 and now the target is back to the average. The top 250 individuals in terms of wealth (or ability to control wealth) have been asked to pay evaded dues of at least an extra $500 million over 10 years.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10813402

$50 million per year on average is only 0.08% of the tax take, but perhaps it wouldn't cost too much to target a smaller group like this. Except one of these individuals had 197 companies, and it would appear that many use tax havens and other avenues, some of which are not illegal per se.


"Aggressive tax arrangements can include the use of tax havens, transferring profits to associated offshore entities, using trusts to divert taxable income, and showing lifestyle and luxury assets as business assets," said IRD investigations manager Stuart Duff.


It appears that the word 'aggressive' means (in this group anyway) that IRD will be taking a good look.

I suspect it would make interesting reading to see the average tax rate paid by these people on extremely high incomes, and I doubt it would be anywhere near the highest tax rate.

[elZorro]

Bill English extols farmers to ensure their own staff are trained well, and to keep on the path of improvement in productivity.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10816094

He was on safe ground in that meeting. But from the sidelines, there is much to be bemused about with the farming sector. Here is an entire group of people who arguably focus on paying as little tax as possible, and they can achieve that by being only averagely productive most years. Every so often the sector will see bumper prices and favourable weather, and that is the time to pay a bit of tax, sell the farm and take the tax-free capital gain. A simple proposition that has worked for generations.

Why am I so sure of myself on this? You just have to look at the power requirements for milking sheds around the country for example. Most run completely off the mains supply. There are heat exchangers available to recover the warmth from the vat chillers and use it to heat the washdown water. The payback period would be 2 years. Solar tubes could be used to heat the water with an efficiency of 85%, an even quicker payback. But farms overwhelmingly choose not to buy this equipment, even though it would free up power for industry without requiring a new power station.

The reason they don't buy this gear, and lots of other equipment like it, is that dairy farms are often worked by a contractor or a sharemilker. These people don't have an interest in capital items of plant, because they might be off the farm next season. But they also have to pay for all the power on the working side of the farm. The farm owner doesn't buy the gear because they will only see a long-term gain perhaps, and the plant might expire before the farm is sold off.

So this is why you can walk into a dairy plant and see all the equipment that was there 25 years ago. It's still working, very inefficiently, and the farming sector puts up with it because of their crazy job contracts.

[fungus pudding]

Bill English extols farmers to ensure their own staff are trained well, and to keep on the path of improvement in productivity.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10816094

He was on safe ground in that meeting. But from the sidelines, there is much to be angry about with the farming sector. Here is an entire group of people who arguably focus on paying as little tax as possible, and they can achieve that by being only averagely productive most years. Every so often the sector will see bumper prices and favourable weather, and that is the time to pay a bit of tax, sell the farm and take the tax-free capital gain. A simple proposition that has worked for generations.

Why am I so sure of myself on this? You just have to look at the power requirements for milking sheds around the country for example. Most run completely off the mains supply. There are heat exchangers available to recover the warmth from the vat chillers and use it to heat the washdown water. The payback period would be 2 years. Solar tubes could be used to heat the water with an efficiency of 85%, an even quicker payback. But farms overwhelmingly choose not to buy this equipment, even though it would free up power for industry without requiring a new power station.

The reason they don't buy this gear, and lots of other equipment like it, is that dairy farms are often worked by a contractor or a sharemilker. These people don't have an interest in capital items of plant, because they might be off the farm next season. But they also have to pay for all the power on the working side of the farm. The farm owner doesn't buy the gear because they will only see a long-term gain perhaps, and the plant might expire before the farm is sold off.

So this is why you can walk into a dairy plant and see all the equipment that was there 25 years ago. It's still working, very inefficently, and the farming sector puts up with it because of their crazy job contracts.



Oh dear elZ. What bollocks. You've gone right off the rails with that one. :D:D

[elZorro]

Oh dear elZ. What bollocks. You've gone right off the rails with that one. :D:D

FP, prove your comments. I have the facts on my side. I have been speaking with the suppliers of gear to farmers, I sell some gear myself. This is hard-won data, it's just part of the reason farming is so inefficient.

[POSSUM THE CAT]

el Zorro Are these farmers on take or pay contracts. I have had nothing to do with this industry for some years, but in those days most farmers left their house & cowshed lights on 24hours a day amongst other power wasting options & were still only paying their guarantee payment. They had to contract for this large minimum payment or the power boards would not supply them. All facts are needed to give a judgement not just your side of it. Have you even taken the extra interest costs into consideration, even if they can borrow that amount of extra capital. Also who pays for it the farmer or the share milker. It just sounds like sour grapes because you cannot sell your product.

[fungus pudding]

FP, prove your comments. I have the facts on my side. I have been speaking with the suppliers of gear to farmers, I sell some gear myself. This is hard-won data, it's just part of the reason farming is so inefficient.

If a farmer, or any other business operator can see a genuine efficiency increase, or profit increase by spending they are generally in boots and all. Yes, there will be exceptions. But you seem to suggest that farmers deliberately have higher overheads to avoid spending capital. Sensible capital expenditure adds to plant value, so can be depreciated and largely recovered on sale. Worn out, obsolete plant will mean the sale price will suffer. There may be a small degree of not bothering to upgrade due to an impending sale, but that's a business decision applicable to everything in life. Very few home owners would chuck in a new kitchen and bathroom prior to sale, unless it was likely to add more to the sale price than a dollar for every dollar spent. Your challenge to prove it is naive. I have no ability to mind-read every farmer in NZ, to assess his thinking, and neither have you.

[elZorro]

If a farmer, or any other business operator can see a genuine efficiency increase, or profit increase by spending they are generally in boots and all. Yes, there will be exceptions. But you seem to suggest that farmers deliberately have higher overheads to avoid spending capital. Sensible capital expenditure adds to plant value, so can be depreciated and largely recovered on sale. Worn out, obsolete plant will mean the sale price will suffer. There may be a small degree of not bothering to upgrade due to an impending sale, but that's a business decision applicable to everything in life. Very few home owners would chuck in a new kitchen and bathroom prior to sale, unless it was likely to add more to the sale price than a dollar for every dollar spent. Your challenge to prove it is naive. I have no ability to mind-read every farmer in NZ, to assess his thinking, and neither have you.

No, you've missed the point FP. There is absolutely no incentive for a farm owner to save on power bills in their plant, because it's not their cost. They signed someone up to take that on, and a host of other on-farm costs like any milk grades, most of the fert bill, lameness costs, farm vehicle costs, dog feed costs etc. The contractor or sharemilker might take quite a few seasons to figure out what a low-cost farm overhead system looks like, and meanwhile there is a new rash of people wanting that same bad job, who will accept the poor efficiency of the farm operation.

Have a look at blog sites for farm workers and watch them moan at their plight, and how after all their work the farmer owners turfed them out for someone who would accept a lower rate, a poorer contract than they would accept, after being in the situation and struggling for a sensible capital expenditure that never eventuated.

Of course this is not true for all farms. Owner operators have their own interests at heart, but even then I know of some who despite being technically savvy, stick with the old gear and do it the hard way.

[elZorro]

el Zorro Are these farmers on take or pay contracts. I have had nothing to do with this industry for some years, but in those days most farmers left their house & cowshed lights on 24hours a day amongst other power wasting options & were still only paying their guarantee payment. They had to contract for this large minimum payment or the power boards would not supply them. All facts are needed to give a judgement not just your side of it. Have you even taken the extra interest costs into consideration, even if they can borrow that amount of extra capital. Also who pays for it the farmer or the share milker. It just sounds like sour grapes because you cannot sell your product.

Possum, I don't sell power saving gear, one of my customers does. But I have observed a very slow uptake of farm technology, a word-of-mouth system that has a gestation of 10-15 years, even if the product costs $400 as a one-off and saves several thousand dollars on overheads for every year of use. This is the madness of it all, and I've only just started to realise that the farm contracts are behind it. It's a stupid system that pushes the costs of inefficient farming onto a hapless contractor, who is trying to move through the system into farm ownership. We all pay for it with low productivity. Farmers sit back and take the capital gain, that's where the real money is usually.

Sheep/beef farms are even worse of course. A huge sheep station supports one, maybe two families. Imagine if it was planted in vegetables or fruit, how many people would it support then? Assuming the output could be sold at a profit..

[POSSUM THE CAT]

el Zorro you are still assuming that these improvements will make the farm more profitable? That is what I am pointing out about minimum power bills. Also the other point you over capitalize the farm to the point it is priced off the market people would buy cheaper ones & you cannot sell.

[elZorro]

el Zorro you are still assuming that these improvements will make the farm more profitable? That is what I am pointing out about minimum power bills. Also the other point you over capitalize the farm to the point it is priced off the market people would buy cheaper ones & you cannot sell.

No, PC, from what I understand bigger dairy farmers do get a better power price than most of us townies, but they are paying per kWHr once the power lines are in place. Tiwai Point smelter might be paying 5c-7c per kwHr, that would be the best deal anyone can cut, townies pay over 20c for most of theirs. I've said it before, any power and fuel that farmers pay for is just a tiny fraction of the power they use up in their operation, they're just very lucky that most of it comes from the Sun for free.

I'm not in the game of selling big capital items either, yet I can see probably scores of smart items costing less than a few thousand dollars each that would increase farm profitability, most of which are not deployed on more than 10% of farms. You would have to be in the business trying to sell this sort of stuff to see that the rural supply stores don't want to stock it because the turnover is too slow, the farm contractors won't buy it because it might have to stay with the farm, and the farmer owners won't buy it because it's not their problem being solved. It's still great gear that is a no-brainer in a 'normal' situation.

I don't know what the answer is to such a major issue (well in my mind it is), but I can tell you that the likes of DairyNZ are not interested either. It won't bring in extra research money or occupy their 'highly skilled staff' on leading edge research papers. It's just not exciting.

But with all this in mind I take great umbrage at farmers moaning about a lack of town-style broadband at the farm gate. They just need to pay a bit more as a business cost and point a dish in the western direction, and get satellite broadband. Then they could use the faster comms for smart purposes to make more profits, which would more than cover their extra monthly expense. Telecom will not pay $60,000 to upgrade a modem box for about 5 subscribers, (figure it out, how long it would take to get the capital back).

[POSSUM THE CAT]

El Zorro you are probably right they do not pay domestic rates but their minimum power bill could be two or three thousand dollars A month or more. As minimum charge even if the metered use did not add up to that amount. It was at one stage called take or pay & at another it was just a minimum billing amount guarantee. They were burning power like there was no tomorrow trying to use it. As they had to pay for it anyway. Other wise they would not put in the power lines to supply them. I can remember back to when some rural Townships had the same system. Minimum guaranteed power accounts. So power saving devices could end up being a dead loss. I know of some residents in country townships with wooden fired stoves for cooking & water heating etc. That were buying big electric stoves water heaters & electric bar heaters in every room to try & use the power that they had to pay for even if they did not use it. They even had to make an exception in Auckland for business consumption guarantees during the big cable fault around about the turn of the century.

[elZorro]

PTC, I didn't know about a take-or-pay electricity contract for farmers. What a crazy idea. Almost as bad as the take-or-pay Maui gas deal in the 70s -80s. In that case the gas had to be taken out to get at the oil. So we all converted our cars feverishly to CNG with great encouragement from the govt, only to find it was a crap source of energy and the gas bottles meant we had to waste more energy going up hills, and the rear suspension had to be worked on etc etc..

Here's a more recent contract, a special deal for farmers who supply Fonterra. No mention of minimum power take, but you get a special rate if you can prove you have a Fonterra number. Contract milkers and sharemilkers pay for all the shed power, the farm bikes, some rubberware, etc.

http://www.mercury.co.nz/Terms-Conditions/RD1-Mercury-Energy-Farming-Plan.aspx

But I chose this power saving stuff as an example. There is a lot more room for better efficiencies on farms. My point is that only some are seeking these improvements. Farm advisors on the web remind farmers that their sharemilkers have a right to get a share of an increased milk payout. Sounds like other farmers deliberately lock the milksolids payment to so much a kg by using a contract milker. The payout could double, but the contractor will stay on the same return. Fair? I suppose at least their income can't go down.

Farmers are also advised to head off disagreements by ensuring their plant, races, and fences are in good modern condition to give the contractors or sharemilkers the best chance at an adequate return on their investment of time, equipment and animals. All too easy to just let a new person try it next season, as it is.

[POSSUM THE CAT]

el Zorro as a contract milker they do not have to own the herd. Take or pay power supplies were quite common in the 1960's & 70's for rural areas for residential customers also

[elZorro]

el Zorro as a contract milker they do not have to own the herd. Take or pay power supplies were quite common in the 1960's & 70's for rural areas for residential customers also

Yep, I realised that sharemilkers were the ones with the bigger investment of some equipment, plus a herd. It's just that I read one 2007 web article from an advisor addressed to farm owners, where it was pointed out that they couldn't begrudge having to pass on part of a higher milk payout to sharemilkers. The implication was that shared costs in other areas of the agreement come under scrutiny, leading to disputes.

Perhaps I should point out I had a family member in this type of situation a few years back. The Queen St farmers with more equity made his working position untenable to the point he had to exit the equity partnership, just the year before one of the biggest payouts ever.

Sometime this week, I have an opportunity to meet John Key. I will try and mention R&D tax credits..does anyone know how to politely lead in with a topic like that, or should I just bail him up?

[fungus pudding]

Sometime this week, I have an opportunity to meet John Key. I will try and mention R&D tax credits.

:t_up: Why am I not suprised! :D

[elZorro]

:t_up: Why am I not suprised! :D

OK, FP I have to confess I didn't gather enough courage to speak to Mr Key, but I did watch him do an impromptu camera stint that was on the news that evening. Tough job, being PM. He gave a nice speech to the small crowd there.

He wasn't so sharp the other day when he stated that the govt doesn't need to act on the findings of the Waitangi Tribunal. All true, but he should never have voiced that.

Another legacy of the National Govt, Wellington house prices are staying much lower than Auckland's, after the rout of the public service.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10818725

[fungus pudding]

OK, FP I have to confess I didn't gather enough courage to speak to Mr Key, but I did watch him do an impromptu camera stint that was on the news that evening. Tough job, being PM. He gave a nice speech to the small crowd there.

He wasn't so sharp the other day when he stated that the govt doesn't need to act on the findings of the Waitangi Tribunal. All true, but he should never have voiced that.

Another legacy of the National Govt, Wellington house prices are staying much lower than Auckland's, after the rout of the public service.



Yes. His choice of words could have been more diplomatic. I don't know if courage is needed to speak to him. He's extremely affable and approachable in person. Most politicians I have ever spoken to are. (There are exceptions)
As far as auckland house prices go - why would anyone want any other city to follow? They're over-the-top by world standards. In fact, looking at median Auckland prices and known average incomes, I'm damned if I know how anyone can live there. So good on National for taking some of the steam out of the Wellington market.

[elZorro]

Yes. His choice of words could have been more diplomatic. I don't know if courage is needed to speak to him. He's extremely affable and approachable in person. Most politicians I have ever spoken to are. (There are exceptions)
As far as auckland house prices go - why would anyone want any other city to follow? They're over-the-top by world standards. In fact, looking at median Auckland prices and known average incomes, I'm damned if I know how anyone can live there. So good on National for taking some of the steam out of the Wellington market.

Good on them for sacking a whole lot of people and placing them in the dole queue, and increasing the flight to Australia? In what way is that a good outcome? OK if you're a property buyer in Wellington, and expecting a gain in future. But not so good for most taxpayers.

[fungus pudding]

Good on them for sacking a whole lot of people and placing them in the dole queue, and increasing the flight to Australia? In what way is that a good outcome? OK if you're a property buyer in Wellington, and expecting a gain in future. But not so good for most taxpayers.

There is no benefit in employing people to do unnecessary things. None whatsoever. Necessity is the mother of invention, and that certainly applies to industry. Only when new jobs are required, will new jobs be found. Or would you prefer we still had a blacksmith's shop on every corner? Should we all throw our auto washing machines out and re-open the chinese laundries that used to be everywhere? Out with computers - think of all the telegram delivery jobs they cost; the printing businesses who lost work. I was just reading that there used to be over 100 pie-carts in Christchurch. All gone. Should the govt. have nationalised them and kept them open? All industries die. I'll guarantee that most of your acquaintnces are doing jobs that didn't even exist fifty years ago. Certainly the transition from old to new commerce can be painful for employees (and a damn sight worse for employers) but it's simply the price of progress, and it's progress that eventually makes us all better off. And have a look at some statistics. The no. of bods reaching 65 is going to leave heaps of vacancies throughout the country. Things do change.

[elZorro]

There is no benefit in employing people to do unnecessary things. None whatsoever. Necessity is the mother of invention, and that certainly applies to industry. Only when new jobs are required, will new jobs be found. Or would you prefer we still had a blacksmith's shop on every corner? Should we all throw our auto washing machines out and re-open the chinese laundries that used to be everywhere? Out with computers - think of all the telegram delivery jobs they cost; the printing businesses who lost work. I was just reading that there used to be over 100 pie-carts in Christchurch. All gone. Should the govt. have nationalised them and kept them open? All industries die. I'll guarantee that most of your acquaintnces are doing jobs that didn't even exist fifty years ago. Certainly the transition from old to new commerce can be painful for employees (and a damn sight worse for employers) but it's simply the price of progress, and it's progress that eventually makes us all better off. And have a look at some statistics. The no. of bods reaching 65 is going to leave heaps of vacancies throughout the country. Things do change.

Some of what you said here I can agree with FP, like industries needing to change. Most businesses can morph into more profitable areas if they are given enough time. They should never sit back and assume they're only good at one thing. The National Govt has not helped businesses work this out more quickly, because they took away the R&D tax credits for example. So that is a fail grade for them as far as I'm concerned.

I've worked in the public sector for a few years, and it was very good training for me. I was doing unnecessary things, like my first major coding project under supervision. Several thousand dollars cost for a little widget that was a one-off. But it was alongside other profitable or cost-saving work that I performed for the public sector enterprise, and I used that knowledge to later employ others in the private sector.

So the public sector has other uses besides keeping people off the dole. Of course each employee will pay a lot more taxes and buy more goods elsewhere than someone on the dole, and many of them will be getting training in areas that might spin off into who knows what.

Your pro-National black and white opinion on the public sector cannot be all of the truth FP.

[fungus pudding]

Some of what you said here I can agree with FP, like industries needing to change. Most businesses can morph into more profitable areas if they are given enough time. They should never sit back and assume they're only good at one thing. The National Govt has not helped businesses work this out more quickly, because they took away the R&D tax credits for example. So that is a fail grade for them as far as I'm concerned.

I've worked in the public sector for a few years, and it was very good training for me. I was doing unnecessary things, like my first major coding project under supervision. Several thousand dollars cost for a little widget that was a one-off. But it was alongside other profitable or cost-saving work that I performed for the public sector enterprise, and I used that knowledge to later employ others in the private sector.

So the public sector has other uses besides keeping people off the dole. Of course each employee will pay a lot more taxes and buy more goods elsewhere than someone on the dole, and many of them will be getting training in areas that might spin off into who knows what.

Your pro-National black and white opinion on the public sector cannot be all of the truth FP.

Good heavens! I didn't know I was pro-National; although I did vote for them in one election. You may like to see public sevants employed who are not necessary, doing thankless tasks. And i'm well aware of your stance on R+D. Both over employment in the public sector, and R+D creits costs each and every other business and tax-payer. It's all about not picking winners. Its far better to run taxes on businesse at tyhe lowest level possible. All businesses - not having a higher tax and then crediting back to a selected few. e.g. R+D credits.

[elZorro]

Except growing the 'employed' sector is good for the govt tax take, and all of us. It shares the burden for state-supplied goods and services. Labour were good at this.

Governments always seem to be bad at picking winners, no matter who is in power. But I still think that a small R&D carrot dangled in front of most of the private sector is likely to give the best result. Not a whole lot given to larger firms that will spend on R&D anyway, because they have to, to retain market share.

Actually I didn't think you were a National voter FP, which has me puzzled.
National...x
Labour....xx
Greens...xxxx?
NZ First? Possible
Act? Probable.

Not that this matters, but I'm just not sure which party has policies in line with your thinking.

[fungus pudding]

ll
Except growing the 'employed' sector is good for the govt tax take, and all of us. It shares the burden for state-supplied goods and services. Labour were good at this.


Expanding the work force by paying the wages out of the tax take is pain stupidity, as well as immoral. I'm not talking about necessary workers on the public payroll. I mean inflated numbers to reduce unemployment statistice. Despicable politics. As far as voting goes, I rarely have voted for a party; rather, i use my vote in the most effective way I can against the party I least like. Next election I will use it in the hope that it helps keep Labour out. It will be that way as long as Cunliffe is around ready to pounce on the Labour leadership.

[elZorro]

OK FP, so you don't like David Cunliffe, he's just one member of the party..:)

Anyway here's an interesting article on R&D from earlier on in the year.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10795493

Again I hear that word from the National side about the Labour policy: rort. They haven't put up a policy that is any better, just casting about hoping something might happen by refitting a building or two.

The tenor of this article is that 18-25 year olds will be our innovative salvation if they get the chance. As in many other areas, youth is wasted on the young. They might be keen to do long hours, but each one of them will probably only hit their straps 10-20 years later, unless they get very lucky. They need to set up their contacts and sales channels first, the same problem that the CRIs have. That's why we are poor at commercialising our innovation, we need to network more, and stop trying to do our own thing in small cells.

In defence of Labour, I have already proven that the tax take went up most years while they were in office, ending near a high. The money flowed round, and it would be hard to separate the seat-warmers from the workers in many firms, public and private. Most operations work out profitably because the average return from each person is above their cost to the firm. The public service is always there when we need them, despite the mixed messages they must be getting from National and Labour.

[fungus pudding]

OK FP, so you don't like David Cunliffe,







That hardly makes me unique.

[elZorro]

This guy is not a Labour voter - or Why the trickle-down theory never works. (http://www.nbr.co.nz/article/judge-reveals-petricevics-luxury-launch-spending-ca-123850)

[Major von Tempsky]

This guy is not a Labour voter - or Why the trickle-down theory never works. (http://www.nbr.co.nz/article/judge-reveals-petricevics-luxury-launch-spending-ca-123850)

One area that is certainly not trickle down is the Maori tribes after their Waitangi settlements.
The Chief and all his relatives award themselves huge salaries and expenses and cars and holidays and make bad investments.
And yet they are the people claiming water (and everything else they can think of) as Maori and whom the Labour Party are strongly supporting.

Makes you think doesn't it. Maybe Cunliffe would be better....

[elZorro]

One area that is certainly not trickle down is the Maori tribes after their Waitangi settlements.
The Chief and all his relatives award themselves huge salaries and expenses and cars and holidays and make bad investments.
And yet they are the people claiming water (and everything else they can think of) as Maori and whom the Labour Party are strongly supporting.

Makes you think doesn't it. Maybe Cunliffe would be better....

That's so far from the truth here in the Waikato MVT: Tainui (http://www.waikatotainui.com/?id=1)were initially sucked into some poor investments with their $170mill settlement from 20 years ago, but have recovered from that strongly to build Hamilton's most advanced shopping centre (The Base, Te Awa), and be large shareholders in a Hotel in town, amongst many other investments that employ people. But even now, if all settled, the investments would only pay each tribe member a few thousand dollars. In the great scheme of things, spending by the top brass of Maoridom is modest, we'd certainly hear about it if that wasn't the case.

Maori are not claiming water etc, they are stating their position that it is very important to their culture. Tainui are behind the large project to clean up the Waikato River banks and the river itself, prime movers in a country that has in recent decades spoiled many waterways. NIWA, DOC, Federated Farmers, local regional councils have observed and reported and debated on this, but in effect little has been done to stop the trend.

A positive view is possible:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10821126

[elZorro]

Many of the companies we're investing in will have cornerstone shareholdings owned by rich individuals and families. Too often, I have seen evidence that many are using tax havens to hide their involvement from the tax man.

http://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=10821400&ref=rss

No surprises about them usually being right-wing voters.

Just getting back to the public sector issue, I had to visit Waikato Hospital today, for work. There are a lot of projects going on up there at the moment. I had to go all the way to the 12 floor of the carpark building, because it was full of contractor's vehicles. But a big public sector is always bad, right?

[Major von Tempsky]

I recall at least one younger Maori of my children's acquaintance who inquired about financial help to go to Varsity after his tribe received a generous Treaty of Waitangi settlement only to be told, not even politely, to shove off - the settlement was in effect just for the chief's relatives and mates.
Then there's Tuku Underpants Morgan. They're as bad as corrupt 3rd World dictators at the top of the Maori tribes.

[elZorro]

I recall at least one younger Maori of my children's acquaintance who inquired about financial help to go to Varsity after his tribe received a generous Treaty of Waitangi settlement only to be told, not even politely, to shove off - the settlement was in effect just for the chief's relatives and mates.
Then there's Tuku Underpants Morgan. They're as bad as corrupt 3rd World dictators at the top of the Maori tribes.

Hard to tell why the sponsorship was turned down when we don't know all the facts..

Tuku - I have met him, he has mana still, probably always will. I read the book about the underpants leadup. Looks like the TV company (who had a contract with govt) produced a lot of TV footage on a small budget, and at the end as a parting gift from management he was given an allocation to buy some good clothes for parliament. That store had the goods on the shelf, obviously for sale to someone. But as it later turned out, the public was made to think that buying fine items is something that most should never aspire to.

I have to wonder at the morals of the till operator who was happy enough to make the sale and take the cash (perhaps the commission also), but then handed over the docket to the National Party as a trophy. You and I both know that rorts, tax dodges and outright scamming on a massive scale have been perpetrated by (business) people from many walks of life. Difficult to compare these situations.

[Major von Tempsky]

Hard to tell why the sponsorship was turned down when we don't know all the facts..

Tuku - I have met him, he has mana still, probably always will. I read the book about the underpants leadup. Looks like the TV company (who had a contract with govt) produced a lot of TV footage on a small budget, and at the end as a parting gift from management he was given an allocation to buy some good clothes for parliament. That store had the goods on the shelf, obviously for sale to someone. But as it later turned out, the public was made to think that buying fine items is something that most should never aspire to.

I have to wonder at the morals of the till operator who was happy enough to make the sale and take the cash (perhaps the commission also), but then handed over the docket to the National Party as a trophy. You and I both know that rorts, tax dodges and outright scamming on a massive scale have been perpetrated by (business) people from many walks of life. Difficult to compare these situations.

Why doesn't he pay for his own underpants like normal people....

He is now permanently a figure of derision, an embodiment of corruption to most of the NZ population. Mana? Everyone is rolling around laughing at him.

[duncan macgregor]

Why doesn't he pay for his own underpants like normal people....

He is now permanently a figure of derision, an embodiment of corruption to most of the NZ population. Mana? Everyone is rolling around laughing at him. It would never happen in scotland where I come from where underwear is a non traditional item. Macdunk

[elZorro]

Why doesn't he pay for his own underpants like normal people....

He is now permanently a figure of derision, an embodiment of corruption to most of the NZ population. Mana? Everyone is rolling around laughing at him.

Tuku was earmarked by Tainui when he was still at college, he's been a leader in many areas, even recently. He's done a lot more moving and shaking than most of us. Just sit back and think, if he was not of Maori descent, would the underpants saga have flown? If he was middle aged and pakeha back then, it would not have been a story. You know it.

[fungus pudding]

Tuku was earmarked by Tainui when he was still at college, he's been a leader in many areas, even recently. He's done a lot more moving and shaking than most of us. Just sit back and think, if he was not of Maori descent, would the underpants saga have flown?

It most certainly would have.

[elZorro]

It most certainly would have.

Well, it wasn't just one pair of flash underpants for $89 by all accounts. But by then, Tuku was fairly good at TV work, and like anyone that sticks at a craft, sooner or later they want to be paid properly for it. Just out, the big listed company CEOs in NZ are being paid 22x (http://www.stuff.co.nz/business/money/7366296/Growing-pay-gap-between-CEOs-staff)the average pay of those they are in charge of (NZ$1.44mill p.a average). This is nothing to the multiple in USA.

Better news: someone in Labour has been thinking.
(http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10822711)

[Major von Tempsky]

Once corrupt always corrupt and growing morre corrupt.
I bet if one went into the sordid details of Underpants Tuku various Tainui/Maori gravy train posts people would be absolutely mortified by what they would see in terms of entertainment expenses & &.

About the only exception I can think of is John Profumo the 1963 British Minister of Defence (Christine Keeler and Mandy Rice-Davies) who after resigning really did devote the rest of his life to working for charitable causes for a pittance.
Incidentally I am told that Ngai Tahu (the South Island Maori) about the only tribe who haven't stuffed up their Treaty Settlement, are refusing to get involved in the Maori water claim rip-off.

[elZorro]

Once corrupt always corrupt and growing morre corrupt.
I bet if one went into the sordid details of Underpants Tuku various Tainui/Maori gravy train posts people would be absolutely mortified by what they would see in terms of entertainment expenses & &.

About the only exception I can think of is John Profumo the 1963 British Minister of Defence (Christine Keeler and Mandy Rice-Davies) who after resigning really did devote the rest of his life to working for charitable causes for a pittance.
Incidentally I am told that Ngai Tahu (the South Island Maori) about the only tribe who haven't stuffed up their Treaty Settlement, are refusing to get involved in the Maori water claim rip-off.

Why don't we just wait to see what the real details are on any water rights claims MVT. Running through Hamilton is the Waikato River, where Maori fished for mullet, eel and whitebait, and grew crops for bartering, on the banks. Some background on the Land War in the Waikato (http://www.doc.govt.nz/upload/documents/conservation/historic/by-region/waikato/waikato-war-of-1863-64.pdf). Maori were largely banished from here during the land wars, to the King Country in the south, for many years. The courts looking at any claim will be well aware of these facts, and many more. Let's leave it for them to decide what is a fair outcome, if it even gets to court.

I like the look of David Parker's background. (http://www.labour.org.nz/news/business-demands-leadership-on-exports) He's very interested in what are some of our biggest problems. How do we all earn a good living in a recession?

In the SST today, Martin Hawes (columnist and writer of a small book on tax incentives for rental owners amongst other new publications) has changed his mind on a Capital Gains Tax. Now he's all for it. I applaud that, and it might have something to do with the fact that rental property owners, farm owners and share investors are mostly going nowhere fast, with capital gains flat-lining. (http://www.martinhawes.com/recent-articles.shtml) But profitable income-producing assets and businesses are still fine. We just need a lot more of them, and we need investors willing to help with well-grounded start-ups.


Martin Hawes: Sooner or later, as a country and as investors, we need to get back to the idea that investment is for production and income, not simply hoping for a capital gain.

[elZorro]

Here's an article some would go along with perhaps.

http://www.stuff.co.nz/business/money/7416899/Figures-suggest-wealthy-carry-tax-burden

The tax rate on declared or taxable income for the wealthy may indeed be fairly high. What is not noted is whether that taxable income (from over $50mill of investments) approaches say 10% or more of the capital employed, as you'd expect to see in any given year. I'd place a bet that on average it's not very high at all. Imagine the tax on over $5mill per annum, anyone not in the public eye would be doing something about that. Of course they work the system, and a lack of capital gains tax is the most obvious mechanism.

[fungus pudding]

Here's an article some would go along with perhaps.

http://www.stuff.co.nz/business/money/7416899/Figures-suggest-wealthy-carry-tax-burden

The tax rate on declared or taxable income for the wealthy may indeed be fairly high. What is not noted is whether that taxable income (from over $50mill of investments) approaches say 10% or more of the capital employed, as you'd expect to see in any given year. I'd place a bet that on average it's not very high at all. Imagine the tax on over $5mill per annum, anyone not in the public eye would be doing something about that. Of course they work the system, and a lack of capital gains tax is the most obvious mechanism.

That is pure garbage. You know perfectly well that capital gains can be, and often are treated as income in NZ. While it is quite possible to complete the odd transaction without incurring tax, you cannot live off such earnings, or make a habit of trading tax-free. Your suggestion that 50 million of investment should have return of around 10% is silly. It's perfectly legitimate to invest money for little or no return: or as some Europeans are now doing, to bank money for capital protection, and receive an agreed negative return.

[elZorro]

That is pure garbage. You know perfectly well that capital gains can be, and often are treated as income in NZ. While it is quite possible to complete the odd transaction without incurring tax, you cannot live off such earnings, or make a habit of trading tax-free. Your suggestion that 50 million of investment should have return of around 10% is silly. It's perfectly legitimate to invest money for little or no return: or as some Europeans are now doing, to bank money for capital protection, and receive an agreed negative return.

I would expect a well-established business to return over 10% NP on their turnover, and some (like Apple) do a lot better. But there is a big trend in NZ towards larger farms for example, with the owners not living on the property. I know that some of this capital has come from people selling out of other areas that would have employed more people, produced higher value goods, to buy a land bank. For the next few years any taxes due on the farming operation are swamped out by amortised capital improvements, and presumably at the end of this process, carefully timed on the normal cycling peak in farm prices, another tax-free capital gain is made.

So on the face of it, smart money has gone into an asset with a low ROI, where they are price takers, and where few are employed considering the size of the investment. Yes, it's legitimate. But is it ethical?

[fungus pudding]

I would expect a well-established business to return over 10% NP on their turnover, and some (like Apple) do a lot better. But there is a big trend in NZ towards larger farms for example, with the owners not living on the property. I know that some of this capital has come from people selling out of other areas that would have employed more people, produced higher value goods, to buy a land bank. For the next few years any taxes due on the farming operation are swamped out by amortised capital improvements, and presumably at the end of this process, carefully timed on the normal cycling peak in farm prices, another tax-free capital gain is made.

So on the face of it, smart money has gone into an asset with a low ROI, where they are price takers, and where few are employed considering the size of the investment. Yes, it's legitimate. But is it ethical?

Perfectly etrhical. People involve themselves in all sorts of businesses for reasons other than profit maximisation. CGT will not alter that. And oif course capital improvements will continue to be made in all sorts of businesses - that is a necessity. Don't forget - capital improvements are not deductable like R and M expenditure. Certainly some businesses do make tax-free goodwill, but a business proprietor cannot make a habit of it. There are huge complications with taxing such things - suffice to say, they're not worth traxing, as treasury will attest. Your comments about employing people are off the wall. Do you really think it's unethical to operate a business that does not provide much employment? If that is unetical - then I am an offender of the highest ranking. I have been self-employed since around 1970, and have studiously avoided any investemnt or business activity that involved anyone else, or employing staff. I would never directly employ anyone, simply because I like to be in control of my operation, and NZ employment law does not allow that. As for your expectation that a well established business should return over 10% - that is simply naive. There are thousands and thousands of businesses who never get anywhere near that - but so what? Profit is the name of the game. Nothing to do with percentages. A friend of mine operates a very simple business with profit margin so low it defies logic, but he is one of the highest earners I know. Is thgat unethical? He will sell one day for good money. Is that unethical? If CGT comes in befiore he sells and he pays a bit of tax - has he then become ethical? Finally, Apple is so much the exception, it tells us nothing of whatever point you are trying to make.

[elZorro]

FP, you're right, I don't believe that these other operations are unethical, I was looking for a better word, but traded the effort for the surety of a response. I've only been self-employed for about 20 years, and for all of that time I have employed others, through thick and thin.

My operation has relatively low capital employed, high profit margin on normal turnover. My investment has been in IP, the edge we have with our goods and services. If I had $50mill available, I'd produce startling results for NZ Inc, and I'd employ more staff in top-notch premises, paying better wage rates. I wouldn't touch low-tech areas, as these have too much competition. But unfortunately this doesn't mean I'll head off to the bank and borrow money to realise these ideas, at least not in the current environment. In any case the bank would run out of property security fairly fast.

Maybe that's what disturbs me: the very people who have the freehold assets like farms and commercial buildings, flats etc, are precisely the ones who will never make industrial or manufacturing investments with spare capital, because they have a fixed opinion on staying away from the employment risks. And they can be some of the tightest skinflints, ensuring no NZ supplier can make a dollar off them either. What sort of a country will we end up with if we all get our stuff made somewhere else, join the global trend completely? Where are your children and grandchildren going to get their income and training from? McDonalds?

We are still one of the highest-wage countries in the world, although it may not seem like it. When businesspeople give up on the idea of paying people good wages because they are producing a healthy profit through the business they've established together, I suggest we're heading for a heap of trouble.

[fungus pudding]

FP, you're right, I don't believe that these other operations are unethical, I was looking for a better word, but traded the effort for the surety of a response. I've only been self-employed for about 20 years, and for all of that time I have employed others, through thick and thin.

My operation has relatively low capital employed, high profit margin on normal turnover. My investment has been in IP, the edge we have with our goods and services. If I had $50mill available, I'd produce startling results for NZ Inc, and I'd employ more staff in top-notch premises, paying better wage rates. I wouldn't touch low-tech areas, as these have too much competition. But unfortunately this doesn't mean I'll head off to the bank and borrow money to realise these ideas, at least not in the current environment. In any case the bank would run out of property security fairly fast.

Maybe that's what disturbs me: the very people who have the freehold assets like farms and commercial buildings, flats etc, are precisely the ones who will never make industrial or manufacturing investments with spare capital, because they have a fixed opinion on staying away from the employment risks. And they can be some of the tightest skinflints, ensuring no NZ supplier can make a dollar off them either. What sort of a country will we end up with if we all get our stuff made somewhere else, join the global trend completely? Where are your children and grandchildren going to get their income and training from? McDonalds?

We are still one of the highest-wage countries in the world, although it may not seem like it. When businesspeople give up on the idea of paying people good wages because they are producing a healthy profit through the business they've established together, I suggest we're heading for a heap of trouble.

Your 3rd paragraph is a huge generlisation.

[elZorro]

Your 3rd paragraph is a huge generlisation.

Maybe I'm moving in the wrong circles, but I've seen and heard enough to know that some large property owners are a bit tight with suppliers. Maybe they're struggling, but the time to admit that, is before the deals are done. These are some things I've heard about.

-Farmer who owns a couple of farms gets a large milking plant item installed, doesn't pay a cent on it for over a year. Unarranged free credit.
-Residential property guru uses work computer, work van, probably work time to run his rental business (includes blocks of flats), skimps on maintenance, does his own crude paint jobs instead of using a contractor.
-Town-based large farm owner submits complaint about council fees for a water drillhole/uptake consent being circa $40k when the resultant profit and capital improvement will be magnitudes higher.
-Large farm equity partners refuse to honour market wage agreements when the appointees turn up, because they think they can get other staff with less qualifications and save a few dollars?

And of course there are some great investors out there too. Just so long as they realise that most suppliers get just one shot at a margin, on the original sale to each client. Investors get to make ongoing profits, usually for several years or over the lifetime of the asset.

[fungus pudding]

Maybe I'm moving in the wrong circles, but I've seen and heard enough to know that some large property owners are a bit tight with suppliers. Maybe they're struggling, but the time to admit that, is before the deals are done. These are some things I've heard about.

-Farmer who owns a couple of farms gets a large milking plant item installed, doesn't pay a cent on it for over a year. Unarranged free credit.
-Residential property guru uses work computer, work van, probably work time to run his rental business (includes blocks of flats), skimps on maintenance, does his own crude paint jobs instead of using a contractor.
-Town-based large farm owner submits complaint about council fees for a water drillhole/uptake consent being circa $40k when the resultant profit and capital improvement will be magnitudes higher.
-Large farm equity partners refuse to honour market wage agreements when the appointees turn up, because they think they can get other staff with less qualifications and save a few dollars?

And of course there are some great investors out there too. Just so long as they realise that most suppliers get just one shot at a margin, on the original sale to each client. Investors get to make ongoing profits, usually for several years or over the lifetime of the asset.

In my neck of the woods most property operators value their credit rating highly. Of course there are ratbags in all walks of life, and all industries - but you've got some sort of bee in your bonnet about anyone who is successful. Open your eyes. At least one of them is shut.

[elZorro]

In my neck of the woods most property operators value their credit rating highly. Of course there are ratbags in all walks of life, and all industries - but you've got some sort of bee in your bonnet about anyone who is successful. Open your eyes. At least one of them is shut.

No, I'm not a one-eyed git at all. I just say what I think, knowing what I've experienced. At least you've helped me encapsulate that FP. Many of the relatively wealthy, with their penny-pinching, (let's not employ staff), pay minimum tax, attitudes - won't be helping the country solve its looming issues.

[fungus pudding]

No, I'm not a one-eyed git at all. I just say what I think, knowing what I've experienced. At least you've helped me encapsulate that FP. Many of the relatively wealthy, with their penny-pinching, (let's not employ staff), pay minimum tax, attitudes - won't be helping the country solve its looming issues.

I don't or won't employ anyone, and I can absolutely assure you I am not a penny-pincher in any way. It has nothing to do with cost. Some employers pay minimum, wages, but generally that's more to do with the industry they are in. Nobody pays more tax than they have to, The same logic makes people of all income levels shop around when buying a new TV or bedroom suite. That's got nothing to do with wealth. It's common sense. I know many people on high to very high incomes. If they have anything in common I'd put a sense of humour first, then generosity. None of my friends pay more tax than they have to, but give freely (not just money) to charity.

[elZorro]

For the record FP, I have no doubt that you're as jovial and charitable as your peers. With no staff to supervise and worry about, why wouldn't you be?

I'd guess every employer spends some time thinking "Why on earth am I doing this?". In a way I'm sure that many manufacturers have ended up in that area because they responded to constant enquiries for work placements, by moving their business in a direction that would allow it. Profit is still meant to be the underlying motive for running a business, but each job may support most of a family unit. Employers like me will spend some of their profits from the good years on part-subsidising wages in a bad year, so as not to lay off staff. We also provide job placements over student breaks. Manufacturers in particular, will create a new product, a new market, a new export, where none existed before.

So I might be one-eyed in your opinion, but I think I'm doing my bit for NZ too. Several family incomes worth.

[Major von Tempsky]

I thought el Zorro and other Labour lining groupies might particularly appreciate this from the media today ;-)

"The National Party made minor gains in two political polls out last night. The One News Colmar Brunton poll had National up 1 percentage point to 48 per cent, while the TV3 Reid Research poll saw it jump 4.8 points to 50.6 per cent. Both polls also had Labour down slightly - at 32 and 30.8 per cent respectively.
The Greens also remained low in the polls at 12 and 11.2 per cent, while NZ First remained on 3%.

Prime Minister John Key also remained the strong favourite in the preferred prime minister rankings. The TV3 Reid Research had him on 43.2 per cent, while One News Colmar Brunton had him on 45 per cent.

Labour Leader David Shearer was down in both; at 8.9 and 13 per cent. The TV3 poll had NZ First leader Winston Peters on 6.2 per cent and Green Party leader co-leader Russel Norman on 2 per cent.

The polls have margin of error of about 3 per cent." (The Press 6 Aug 2012 page A3.)

[elZorro]

Oh, you meant Labour leaning MVT. Tricky word that one.

I'll be more interested in the polls closer to the next elections. In the press today, a National Party initiative has saved $300mill for the taxpayer in 2 years already. Brilliant!

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10824831

Except on reading the fine print, the $293 million is spread over the 5-7 years of the contracts, so the saving is more like $50mill a year, which is 0.08% of the tax take each year. To achieve this, all government departments probably have to buy their stationery from one approved supplier, the others miss out, for example. Is that likely to boost employment?

Actually, taking the old rule of $100,000 turnover per employee, perhaps 500 New Zealanders will be newly unemployed from this initiative, and it might well be worse, because many suppliers will be badly chopped out, and the ones who do have the contracts will be cutting back on staff percentages to meet the lower selling prices. Add these people to the dole queue and forget about their income taxes and extra GST, and the actual bottom line saving will be more like $25mill per year, if they're lucky.

Looking for the NZ Herald's Asset Sales cartoon featuring John Key but found this.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10824629

[Major von Tempsky]

Keep laughing pathetically just as you two did at the last two elections and I'll keep on enjoying winning. Look at the scoreboard, look at the scoreboard.
It seems you don't get out much el Zorro...read many mags....the phrase is Labour lining as in lining up with Labour.
There, you've learnt something today so your day is worthwhile.

[elZorro]

Keep laughing pathetically just as you two did at the last two elections and I'll keep on enjoying winning. Look at the scoreboard, look at the scoreboard.
It seems you don't get out much el Zorro...read many mags....the phrase is Labour lining as in lining up with Labour.
There, you've learnt something today so your day is worthwhile.

I would stand corrected, but I can't google that phrase, does it exist in your imagination MVT? Computer says No.

[fungus pudding]

I would stand corrected, but I can't google that phrase, does it exist in your imagination MVT? Computer says No.

Stand corrected then. It's a synonym for align or aligning, but it's not common.

[CJ]

"The National Party made minor gains in two political polls out last night. The One News Colmar Brunton poll had National up 1 percentage point to 48 per cent, while the TV3 Reid Research poll saw it jump 4.8 points to 50.6 per cent. Both polls also had Labour down slightly - at 32 and 30.8 per cent respectively.
The Greens also remained low in the polls at 12 and 11.2 per cent, while NZ First remained on 3%.First off, all these movements are within the margin of error.

Had a discussion with a labour supporter onthis, below is my view:

Labours issue is they dont appear to be doing anything. Whle people aren't necessarily for the asset sales, they see as a necessary evil and National won the election with that policy. Labour should let that one die and come back strongly "if" the first asset sale is not successful.

They need to sell their CGT policy better and probably change it from the half hearted version they campaigned on. If it was comprehensive and tax neutral (ie corresponding tax cuts) I am sure some right wingers wouldn't be too fussed, even if the tax cuts were targeted a bit lower down.

Labours tax the rich policy which again they campaigned on of increasing the top margin tax rate was shown in an IRD paper on Friday to be a big failure, resulting in a lower tax take as business people reinvested profits into their business (taxed at the lower 28%) rather than take as salary. Very Legitimate and I am pleased to see no one that I could see came out and said it was tax avoidance by the rich.

Labours issue is they dont appear to have any policies to grow jobs, other than the public sector which I think most people want to see as small as possible - National seems to be doing a good job or reduce the public sector while keeping front line people in their jobs.

Both parties dont seem to have any policies for Growth but Nationals policies maintain the line better than Labours which seem badly targeted. Labour needs a comprehensive growth policy, not a tax policy.

[elZorro]

Stand corrected then. It's a synonym for align or aligning, but it's not common.

I thought you said you had a sense of humour FP..

[fungus pudding]

I thought you said you had a sense of humour FP..

Stand corrected again. You know I said that.

[elZorro]

First off, all these movements are within the margin of error.

Had a discussion with a labour supporter onthis, below is my view:

Labours issue is they dont appear to be doing anything. Whle people aren't necessarily for the asset sales, they see as a necessary evil and National won the election with that policy. Labour should let that one die and come back strongly "if" the first asset sale is not successful.

They need to sell their CGT policy better and probably change it from the half hearted version they campaigned on. If it was comprehensive and tax neutral (ie corresponding tax cuts) I am sure some right wingers wouldn't be too fussed, even if the tax cuts were targeted a bit lower down.

Labours tax the rich policy which again they campaigned on of increasing the top margin tax rate was shown in an IRD paper on Friday to be a big failure, resulting in a lower tax take as business people reinvested profits into their business (taxed at the lower 28%) rather than take as salary. Very Legitimate and I am pleased to see no one that I could see came out and said it was tax avoidance by the rich.

Labours issue is they dont appear to have any policies to grow jobs, other than the public sector which I think most people want to see as small as possible - National seems to be doing a good job or reduce the public sector while keeping front line people in their jobs.

Both parties dont seem to have any policies for Growth but Nationals policies maintain the line better than Labours which seem badly targeted. Labour needs a comprehensive growth policy, not a tax policy.

CJ, as a Labour lining? person I feel a need to correct you on what you have put forward there as fact, when it is actually fiction.

While Labour was in office for two terms the tax take went up, a very clear pattern. When National got in, it trended down again. The same trends ocurred in the number of enterprises that were operating. We all know there were less unemployed back then too. OK, Labour did have some fortune with the timing. But to say the tax ideas were a failure in gathering revenue is plainly incorrect.

You haven't been in business for long I take it, if at all. Otherwise you'd know that there is no free lunch with run-of-the mill, normal business operation taxes. You can choose to leave income in a business, and not take it out as drawings. It gets added to some nebulous pile called equity, and net profit is taxed at a lower rate like 28% as it gets added to the pile. But if at a later date you'd like to get hold of some of that pile to use it privately, you'll need to pay a topup tax which then brings it into line with normal drawings. So that's why no-one mentioned tax avoidance. But the idea is to encourage more people to invest in their business, a good Labour initiative.

CGT: Even Sam Morgan thinks we should have one, like almost all other developed countries. The fine details will be worked out when it comes to pass. It'll be another strong message: put your efforts into a truly productive enterprise, where the operational profits are above average too.

I'm a passionate believer in the private sector, but we do need a few incentives, and Labour's R&D tax credit scheme was a terrific idea. Copied from the Aussies, where it is worth a lot more to businesses percentage-wise. National canned it, that's what they think of smaller businesses. Look into both parties properly and you'll see the terrible National pattern of ensuring that there are plenty of unemployed -so that wage rates can be held down- and the way to do that is to stifle the chances of small business growth, as they have done with the government procurement contracts, for example. Doesn't affect me thank goodness.

If you want to vote for growth in the economy next time round CJ, it's more likely to occur with Labour policies, going on recent history. Maybe the message isn't getting out too well, but the policies are there, and they can be accessed via the web.

[Major von Tempsky]

Good post CJ.

El Zorro, you aren't very good at using Google yet.....try "political party lining".

I'm sure everyone here except you has heard of "the party line".

[elZorro]

Good post CJ.

El Zorro, you aren't very good at using Google yet.....try "political party lining".

I'm sure everyone here except you has heard of "the party line".

OK I'll concede defeat MVT, I found an American definition that covers it.

But MVT, if you think CJ's post is "good" as in "accurate" or "truthful", then you must frequent the same bar. It's a great conversation starter, I'll give it that.

[CJ]

CJ, as a Labour lining? person I feel a need to correct you on what you have put forward there as fact, when it is actually fiction.

While Labour was in office for two terms the tax take went up, a very clear pattern. When National got in, it trended down again. The same trends ocurred in the number of enterprises that were operating. We all know there were less unemployed back then too. OK, Labour did have some fortune with the timing. But to say the tax ideas were a failure in gathering revenue is plainly incorrect.I was specifically referring to this report: http://www.treasury.govt.nz/publications/research-policy/wp/2012/12-03/twp12-03.pdf The tax take may have gone up under Labour but they were in power the end of the boom. My point was the higher taxes for the rich (at 39%) did not increase the tax take, the proprotion of tax paid by the rich actually went down!


You haven't been in business for long I take it, if at all. Otherwise you'd know that there is no free lunch with run-of-the mill, normal business operation taxes. You can choose to leave income in a business, and not take it out as drawings. It gets added to some nebulous pile called equity, and net profit is taxed at a lower rate like 28% as it gets added to the pile. But if at a later date you'd like to get hold of some of that pile to use it privately, you'll need to pay a topup tax which then brings it into line with normal drawings. So that's why no-one mentioned tax avoidance. But the idea is to encourage more people to invest in their business, a good Labour initiative.I think we are actully on the same page here re reinvesting in business is good. However the point was linked to the above report. Because there was a differential in the company and personal tax rate, there was an incentive to reinvest in the existing business, even if that business did not need reinvesting in. You only have to look at the US to see the issue with looked in retained earnings - Apple has ... wait for it ... $100B in cash sitting in the bank. Why - because it would cost to much in tax to pay it out to its shareholders. By closing the gap in company and personal tax rates, there is no incentive to keep cash in the business and therefore people choose the best use for the cash, not the best tax outcome.


CGT: Even Sam Morgan thinks we should have one, like almost all other developed countries. The fine details will be worked out when it comes to pass. It'll be another strong message: put your efforts into a truly productive enterprise, where the operational profits are above average too. I was throwing Labour supporters a bone here. Introduce a CGT but make it a proper one. Both Gareth and Sam Morgan would not support the one suggested by Labour, in fact I think they specifically came out against it (as such you shouldn't be using their name to support Labours policy - It would actually be interesting to know who they do support given GM has a completely alternative tax policy). If you want a CGT, put it on everything, dont try to buy votes and appeal to your voter base by exempting the family home. You create anomalies which the rich can take advantage off, in this case called the McMansion effect.


I'm a passionate believer in the private sector, but we do need a few incentives, and Labour's R&D tax credit scheme was a terrific idea. Copied from the Aussies, where it is worth a lot more to businesses percentage-wise. National canned it,It may have been a good scheme in theory but was an absolute nightmare to apply for. The accounting firms loved it, lots of fees for them.


If you want to vote for growth in the economy next time round CJ, it's more likely to occur with Labour policies, going on recent history. Maybe the message isn't getting out too well, but the policies are there, and they can be accessed via the web.Closer to the next election, I will investigate Labours policies again. But they have to get the headline ones right and they didn't for the last election. If they have good ones that wil promote growth, let people know what they are and get business people to say they are good.

Disc: I am right wing, think JK is wrong with the super age, right with asset sales (though he has sold the policy very bad continually flip flopping on why he is doing it), ambivalent about CGT (it wont raise as much as you think and can create big distortions if not done properly). I dont think National has any good growth policies but am of the view that the government should first not do anything to stop growth, before it does anything to create growth. On this point, I thing right wing policies are best.

[elZorro]

CJ, appreciate the reply. I had a skim over the report, more algebra than you can shake a stick at. They love modelling at the Treasury, but seldom are the models correct at predictions. The paper could have been summed up in plain English: once the top decile people knew there was a big top bracket tax increase coming up in 2001, they piled a lot of drawings income into the previous year and paid tax on it at the old rate. For the next few years they kept a lid on drawings, if it was going to be taxed at 39%. Maybe that extra equity flowed into new business setups. But I repeat, under Labour for six years, the tax take trended upwards and so did business enterprise and employment. Not a maybe.

R&D tax credits: a nightmare for a few hours and then it became clear: I did the paperwork on my own application and filed it through my normal accountant at no extra cost, it sailed through. Would have been much easier in following years. That work is paying rewards now.

CGT and McMansions: if an exemption applies to one property only (perhaps one NZ bach too), can't see the harm in it. Someone has to build these properties.

Asset sales: well over 50% of us would rather not see this go ahead. It's madness, as simply stimulating the enterprise sector would provide the extra income for the govt, and mop up many unemployed. Asset sales are likely to do the opposite.

[CJ]

Yes they brought forward dividends but no extra tax would have been paid due to imputation. They then didn't pay dividends and reduced shareholder salaries for future years. Alot of algebra and your summary is about right. Personal I prefer pictures - Fig 8 on page 12 setting out exactly what happened.

R&D Credits - was involved with a few as well. Some took upto the 3 year max to file and would have cost $100k+ in accounting fees plus internal time to prepare the disclosures. The refunds however were on the bigger side of town (ie. Millions). IRD also had to set up special teams to determine what R&D was. Not sure picking winners is any better (the likes of Fisher & Paykel would have done the R&D anyway) but it is a lot more efficent to run.

CGT - Dont over 60%of people live in their own homes? Dont most investors buy and hold (delays the taxing even and most CGT regimes have rollover releif if you reinvest)? In theory, are property speculators already subject to tax on gains. This suggests that CGT will raise very little. I do agree that it is a whole in the current tax regime but personally think it will be more hassle than it is worth.

Asset sales: The merits of selling the power cos has been debated on other threads. My point is Labour lost the election and not selling was a very prominent feature of their campaign. Move on. Or take a different approach - set criteria to show the first sale is a flop to try and stop the 2nd and third sale. In a way they are doing this by saying only Keys rich friends can afford but that is the politics of envy (using Keys term).

How will Assets sales increase unemployment - are you saying they are being run inefficently?

Stimulating enterprice - agree this is the key. It doesn't sell as well to the uneducated/uninterested unfortunately

[elZorro]

Firstly, thanks for your polite replies to my posts CJ. I perhaps have not been feeling very jovial or charitable recently. I assume you know a fair bit about business, the occassional typo had thrown me off. You're right (and I'm left..), there is a lot we agree on.

Here's that figure you were talking about, must have caused great consternation at IRD.


Figure 8 shows that the sharp increase in taxable income of the top percentile of income
earners in 2000 was due to a rise in dividend income during that year. Under
New Zealand’s imputation system, credits are attached to dividends for income tax that
has been paid at the company level. The introduction of the 39 per cent top personal
marginal rate and nonalignment with the company tax rate meant an additional 6 per cent
tax liability for earners with income above $60,000. As a result, companies paid out large
profits before the 39 per cent top personal rate came into effect. Figure 8 also shows a
decline in shareholder employee salaries following the introduction of the 39 per cent top
marginal rate.


I agree with you on needlessness of the R&D payments to only larger firms, that is the order of the day from National.
These big firms must have great lobbyists, because they would have to spend that money anyway, to keep their market share. The smaller players like myself need a bit of a kick to get going, and we're just starting to set up our sales channels. But dollar for dollar, we're the best bet.

R&D in larger firms tends to go into automation. The idea is to reduce staff levels per product line.
Smaller firms have to expand with new products, they have no choice, because they're already lean.

I haven't thought through a CGT very well. As I feel there is probably a big demarcation to those with a full interest in holiday homes, a CGT should apply there. Applying this tax to those who are just starting on the property ladder (if it will be called that in future) with their own home seems unfair. The rest of us made capital gains on property years ago, that allowed us to get into something else that paid a better real return.

Asset sales: again I don't have a fully formed opinion, except that I wouldn't sell the most profitable parts of my business off. Perhaps what we don't remember here is that the GST on power is a lot of dosh, that won't be diluted. The new shareholders could demand a better dividend, increasing power prices, and that's been easy to justify in the last two decades. More GST, and reduced capital requirements from the govt with new stations. But will taxpayers pay for all this anyway? My opinion is that the NZED should be reformed and take back all the stations, for a small country that put most of this gear here with taxes from around 1950 onwards, and made the sacrifices in full recreational use of the rivers. At least a centralised NZED made (reasonably) careful decisions on where to site power stations in the best interest of the whole country, and had time to do it in an orderly fashion. Now the different SOES and Contact are playing games with each other, putting up proposals for big stations that never get built, because each is too small to carry the can.

[CJ]

the occassional typo had thrown me off.
Superman has Kryptonite, I have spelling.

While i am from the right, I know the left will get back into power. I hope they have the right policies when that happens as they cant rely on having an economic boom like they did for their last few terms. Less of the bribes and envy politics and more economic policies.

Good luck with the business. Small but growing businesses (I assume like yours) are NZ future. Is it the Governments job to pick winners or just to create an environment where the cream rises to the top.

[elZorro]

Superman has Kryptonite, I have spelling.

While i am from the right, I know the left will get back into power. I hope they have the right policies when that happens as they cant rely on having an economic boom like they did for their last few terms. Less of the bribes and envy politics and more economic policies.

Good luck with the business. Small but growing businesses (I assume like yours) are NZ future. Is it the Governments job to pick winners or just to create an environment where the cream rises to the top.

CJ, I see I can't spell occassionally either. While I like the policies of the Labour party (and probably the Greens), there are extreme sides to their behaviour in public that I don't like. So I don't line up waving banners, but I do believe in fair play.

The National Government has listened to their Science Advisor (he doesn't always get things right) and is picking their winners. Any big company that has spent a lot on R&D already, and has a big turnover, yes, they can have R&D grants from the taxpayer at the moment. So I think I agree with you, we should provide smaller amounts to multiple small enterprises, and watch the cream rise to the top.

Bruce Wills, National President of Federated Farmers, is starting to be more statesmanlike in his articles for the press. He has noted that since taking office, National has had to borrow about $10billion a year. (http://www.fedfarm.org.nz/n3729.html) Since the tax take got to $60billion p.a. under Labour and is trending back, partly due to National's policies, that's a big part of the problem. Ballooning to $70billion by 2014 before being under control (in theory), the debt will be well more than is owed by all of the country's farmers to the banks. The relatively safe bonds the government has used to fund this debt are in demand, along with the NZ dollar, leading to poorer returns for farmers.

http://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/high-dollar-continues-to-confound

Against this, selling part of the state assets for a few billion as a one-off will not make much difference to the picture. But coax the 470,000 enterprises in NZ to boost their profits and so pay an average of a few thousand dollars of extra tax each year, along with the extra staff they'll need, also paying taxes and reducing the beneficiary overheads, and the problem could be quickly solved. I'm not an economist, but I suspect that level of extra income would only be derived from exports.

I hadn't thought of it this way before, but if 4 million NZers, plus tourists and overseas shareholders pay NZ tax of some kind (GST, Prov, fuel, alcohol and tobacco taxes, PAYE, company tax, etc) then we only pay an average of well under $15,000 each year. There's the potential to share the burden, right there.

The government must encourage business enterprises, and cutting back on the opportunity to sell goods to government departments at a useful profit in a race to the bottom, is not helping. If someone can rebut that, please do. Meanwhile the National Party says they're pro-business. No, they are not, unless it's a business or business group, big and organised enough to lobby.

[neopoleII]

""NZ tax of some kind (GST, Prov, fuel, alcohol and tobacco taxes, PAYE, company tax, etc) then we only pay an average of well under $15,000 each year. There's the potential to share the burden, right there.""

i am also not an economist, but here is some things i have read in the last few weeks that makes me think that the governments... left or right have a long way to go before the tax burden is even.

examples,
the excise tax on tobacco is somewhere around 80% and the income from that tax is more than all the divis paid by NZ soe's. so that is not a fair burden... especially since treasury has said that the tax way exceeds the health costs.
then you have the govt saying that because of WFF a net 50% of households pay no net tax.
then we have a country of 4 million folks and 250 thousand children in NZ living on welfare payments or subsidies... so much for user pays.

we have political parties and lobby groups crushing any attempt to explore let alone exploit our natural resources.... wind farms crushed, hydro crushed, coal crushed, oil exploration crushed.

then we still have "creative accountancy" and "family trust adjustments" that dodges tax liabilities etc.

all i can see from our political parties is do anything to retain power, and then spin doctor like crazy.

NZ has been at the forefront of free trade agreements on a globe scale and bringing an end to excise taxes and tariffs...... yet internally...... they excise tax things far better than squeezing blood out of a stone.

this land has a long way to go before the tax burden is fair.

and the politicians use that fact against us.

i now think back to the '80s and '90s and stuff like the winebox saga with its "terms of reference" as protection to the big boys, and the telco sales and its govt friendly " merchant bankers" etc and i realize that the majority of middle income tax payers get shafted either way of the political spectrum.

and its the middle incomers that are the life blood of this land.

NZ is a great place, and so are its people, but voters vote from their pockets and the left and right know this, and therefore we have the problems of today....... and they are getting worse because there is not one political party willing to do what is needed.

thats my opinion anyway.

[elZorro]

Appreciate your comments NeopoleII, I didn't know the excise tax on tobacco was that much of an income spinner. No wonder the govt likes the idea of selling off part of the relatively poorly performing power companies. Charging extra for power is harder to get away with, and surely there will be some big capital costs coming up there. But of course the only reasons are to pay off some debt and to give the local sharemarket a boost. Yeah right.

Should have added gaming taxes into the mix too. 1/3 of all the pokie takings,and the GST.

These sideline fees mean that all of us pay substantial taxes and overheads like insurance as a proportion of our income. Even if we're on the dole or benefits. My way out of this has been to get into a position to earn enough so as not to be too bothered by it all. But in a quiet year these costs are all painfully obvious.

I don't think politicians are all heartless to the plight of NZers, and I don't even think they are well paid for what they do (on the face of it anyway). Some do seem to be captured by lobbyists, but considering I believe our future is in middle NZ as well, Labour has the policies that fit best with that. Labour did a lot of great things when they were last in office, and NZ really did start looking like a country to be proud of, a place that was moving forward.

Looking back, I think it was the general feeling of inclusiveness that helped. Now more than ever, every enterprise in NZ needs to be thinking about how they could expand again, where there might be an extra dollar to be had. And hopefully not by undercutting competitors, but by forging their own way with new profitable outputs.

[POSSUM THE CAT]

Working for families is actually a subsidy to business. Otherwise there would have to either massive price cuts or the demand for wage rises would be colossal. Try living on $15.00 per hour in any place in NZ even as a single person.

[elZorro]

Working for families is actually a subsidy to business. Otherwise there would have to either massive price cuts or the demand for wage rises would be colossal. Try living on $15.00 per hour in any place in NZ even as a single person.

Hi Possum, do you mean that the govt is already providing subsidies to all businesses? If Labour was in, the minimum wage would already be at $15, not $13.50 or whatever it is. Personally I would not be so mean as to pay an adult $15 an hour, but as you say, many cleaners and caregivers etc are on the minimum rate. Some make a dollar or two out of this by investing in the likes of RYM.

I agree, most of us wouldn't like living on even $15 an hour.

[POSSUM THE CAT]

elZorro that is actually what I mean without those subsidies the demand for wage increases & increased welfare benefits would probably need the armed forces in the streets. The Australian tax free threshold & higher tax rates further up was a far better idea as it put more into the hands of those that had to spend most if not all there income. The flow through business was far better for the economy.

[POSSUM THE CAT]

Belgarion we all know you would like NZ to be like America where the poor are subsidising the rich that pay little or no tax.

[Major von Tempsky]

Raise the minimum wage substantially, like motherhood and apple pie - who could possibly be against it?

Anyone who thinks it through a bit further.

(a) you choke off first job experience for youth, their launching pad to get into the workforce. (b) you raise unemployment substantially. (c) you shift more industries and jobs overseas. (d) you lose stuff like readily available pizza and gardening services and ...and...grape picking ...& & &.

[elZorro]

Raise the minimum wage substantially, like motherhood and apple pie - who could possibly be against it?

Anyone who thinks it through a bit further.

(a) you choke off first job experience for youth, their launching pad to get into the workforce. (b) you raise unemployment substantially. (c) you shift more industries and jobs overseas. (d) you lose stuff like readily available pizza and gardening services and ...and...grape picking ...& & &.

There's a university qualified person I know who has been leasing a small part of a block to grow veges, sold at market. During winter he traps possums for fur, not under contract. This is his fulltime occupation. He's not paying much tax (if any) because both careers don't pay well with the limited amount of investment he's made. He works very hard on average, but some days will harvest just $20 wholesale for crates of veges, after driving to the block. He's been involved in other ventures that have been better. Now, if he can't afford to employ staff in either of these operations, and he can't even drag an income out of it after overheads, you'd have to say he'd be a lot better off working for someone fulltime.

But it is obvious that no matter what the minimum wage was, he's not going to be employing any staff unless the business changes radically. He needs a business with an edge, so he should leave those two operations for others with an economy of scale and the capital to make it work.

If this person started carefully on the right sort of enterprise, something that on a small scale starts to show a good profit, before long he'll be able to employ staff on a part-time or full-time basis, and any government-set minimum wage rates will be affordable.

[POSSUM THE CAT]

Major von Tempsky & el Zorro Unless workers have money in their pockets to spend on products including produce. The whole economy fails. Tax cuts for the low paid would do this with out increasing business costs. Take a married man with 2 very young children living in Auckland. Earning $20 per hour $41600 per year, less tax at 17.5% for a round figures $7280= $34320. $660 per week, now take basic costs Rent $350.00 per week $75 for public transport just for getting to & from work. Power at least $50 water charges about $10 per week this leaves $215.00 for all the other expense how does he survive. This is why businesses are struggling lack of customers with money. It all has to flow up from the base of the pyramid not trickle down from the peak.

[CJ]

Agree that the trickle down theory from the top doesn't nessarily work as good as the theroy https://encrypted-tbn3.google.com/images?q=tbn:ANd9GcShOEEhyPs6H6eZ6DzNCpP6of5UABXDm FrUnphyTJN98lzrz0FlCg

But remember, that married man also gets working for families so (without doing the sums) is probably a net beneficiary, not a taxpayer. 50% of households in NZ are net beneficiaries from memory (can be bothered finding the reseach on this one).

https://encrypted-tbn3.google.com/images?q=tbn:ANd9GcSRdM9BRh8tWqRZnBsXczBi3UmwaYz9Q Qy0-4oTIgoJvik7x9D9

[POSSUM THE CAT]

CJ working for families was another subsidy for business. If the true costs were shown would those businesses even be in existence. We can give private companies a subsidy but when comes to subsidy for govt. organisations such as NZ built locomotives for railways. No they go out & buy cheaper Chinese built locomotives that when delivered are not up to the job Also how are the new Wellington electric trains performing.

[CJ]

WFF is a subsidy for business - will have to think about this. I know where you are coming from but it could all get circular if you keep going - ie. WFF is not a subsidy for business it is a wages subsidy for employees because the business is earns more (based on your argument) so the business can pay/hire more. As I said, I will think about it.

The trains is an interesting case study as the government can factor more things in than private companies.. Did the govt just look at the headline cost or did they factor in trickdown etc if they hired the NZ company. ie. x% of contract price would go to wages would would give back to the govt in PAYE. It would employ people saving money on benefits. THat net wages would then be spent in the community (GST and extra jobs means extra PAYE and employment) ......

It might just be that after this was all factored in, the Chinese were still cheaper. I know the Warehouse use to have a policy (and may still have) where they would by NZ made even if it was upto 10% more expensive than imported. We all know how much imported stuff they bring in.

[elZorro]

CJ, if I can be so bold, you are parroting National Party figures about the net tax being zero for many people. I've looked into that in this thread or another one, and it is a carefully worded document that many have latched onto and started frothing at the mouth over.

But in fact we all pay pseudo taxes in terms of GST, levies on fuel, tobacco, gaming, power and SOE profits, etc. That document really only covered PAYE. The whole idea of GST was to take our minds off the total tax take. GST started at 10%, now it's 15%. But in terms of evening out the tax each person pays depending on spend (not income) it's good.

The trickle down theory has never worked properly in any country in the world, according to some studies that were summarised (OK, probably by a leftie).

I think the NZ carriages were only going to be 20% more expensive, so yes, the govt absolutely must have dropped the ball there. At least Labour would have been smart enough to do the right thing.

I agree with Possum the Cat, until average NZers have more cash in their pockets, many retail businesses and allied employers will struggle. I noted that Possum's example had $75 a week costs in transport (add other energy costs too). This is where a big chunk of spare cash has disappeared - into higher energy costs.

[CJ]

Accept that the net beneficiary comment was in relation to PAYE only. While not completely absolving my sins, I do note that rent/mortgage costs are not subject to GST which is a major expense of the lower income. I also don't know if other forms of benefit such as accommodation supplement were included but unless proven otherwise, we will assume it was.

If it was only 20% more expense, then it does seem as if a ball was dropped.

Will have to think about the trickle up theory. Surely there will be deadweight cost in there just the same as with the trickle down theory.

[elZorro]

Fair comments CJ, I forgot no GST on rentals.

Looks like Kiwirail might be selling the Dunedin workshops (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10800007), after shedding jobs there by degrees. Here's a union take on the whole saga.

http://www.rmtunion.org.nz/articles/article-building-rolling-stock-in-nz.php

There was another big contract for Auckland rolling stock that went overseas too. All this lines up with a National Party agenda to ensure the rail infrastructure is again allowed to go into disrepair, and certainly to hammer the govt wage bill for rail. Amongst other real costs, that's our light to heavy industrial training facilities being plundered.

Sure enough, KiwiRail were told by the govt that as an SOE, they were only to consider the purchasing decisions on their own merit to that organisation, in other words, completely on price/costs. So even if the local manufacturing cost was say 10% more, it wouldn't have been awarded. The overall picture would surely have meant both huge contracts should have stayed locally sourced.

I'm beginning to think that if we want any sort of job prospects in NZ for our children, we'll need to vote National out.

[fungus pudding]

[/B]I'm beginning to think that if we want any sort of job prospects in NZ for our children, we'll need to vote National out.




Not so eZ. You have always thought that.

[elZorro]

Not so eZ. You have always thought that.

FP, lets just say that I've progressed from showing the left side of some political arguments for the sake of a discussion, to being horrified about the way National is running the country down. I don't think it's all external factors - under their watch only a few will prosper.

The percentage of unemployed people continues to rise. (http://www.stats.govt.nz/browse_for_stats/income-and-work/employment_and_unemployment/HouseholdLabourForceSurvey_MRJun12qtr.aspx)

[CJ]

ElZorro - And I was horrified by the dramatic increase in expenditure toward the end of Labours last spell in government. How big did the public sector get. How many bribes did they give away (interest free student loans anyone???).

Both have their strengths and weaknesses. Its a shame we cant set laws/make decisions by referendum.

[elZorro]

ElZorro - And I was horrified by the dramatic increase in expenditure toward the end of Labours last spell in government. How big did the public sector get. How many bribes did they give away (interest free student loans anyone???).

Both have their strengths and weaknesses. Its a shame we cant set laws/make decisions by referendum.

CJ, I got the feeling Labour were putting in place some of their end goals in the last year or so of the two terms. They funded a good chunk of Maungatautari Ecological Park, the R&D tax credits were put in place (Innovation Park had already been kicked off in Hamilton) and the entire economy was burbling along well (compared to now).

You're upset by interest free student loans? My cohort went through for free, and we took our time doing that, sometimes. Now the taxpayer pays most of the cost, the students pay a smaller part, and by loaning them the money, all the nearby bars and sports shops (amongst others) do quite well. Take out the returned taxes etc, and this is a smart move that ensures mostly keen students stay in the system, and in any case the interest on the money wasn't a real direct taxpayer cost. But the policy does seem to accelerate the relocation of our gradudates overseas, at unknown cost to the economy.

Bribes? Labour tried to match the tax cuts being offered to voters by National. Looks like Michael Cullen was right, (http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10810606)it was best to hold onto that nest egg.

David Parker's name popped up again in a google search, I like the look of this article and the one below it (have a look at the hilarious video of parliament, where Gerry Brownlee skilfully deflects a loaded question from David Parker). Detailed article on David Parker (http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10716611)- just before the leadership challenge, which he backed away from to support David Shearer. This week on Shearer, for FP (maybe you're right).
(http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10826078)
http://blog.labour.org.nz/author/david-parker/

http://inthehouse.co.nz/node/912

Late 2011 on David Parker, TV3 profile
(http://www.3news.co.nz/Candidate-profile-David-Parker/tabid/419/articleID/228200/Default.aspx)
Here's one part of the Kiwirail puzzle answered: 300 wagons could have been manufactured here in NZ and I assume would have provided work for about 300 people for the duration, roughly a $30-40mill contract for Hillside. The tender was only 25% higher (http://Here's one part of the Kiwirail puzzle answered: 300 wagons could have been manufactured here in NZ and I assume would have provided work for about 300 people for the duration, roughly a $30-40mill contract for Hillside. But the tender was 25% higher than Chinese manufactured and delivered cost, and maybe a bit slower.)than the Chinese manufactured and delivered cost, and maybe a bit slower in delivery time (what's the big hurry?). On locomotives, NZ manufacture was not competitive, 70% higher - presume there were no quality issues alongside that. (Yes there are issues, see later on)

NZ manufactured and supported rolling stock, a bit dearer, but every one of those NZers employed would have rotated money back through our economy, and paid taxes on their own bat as well. Net result to the taxpayer, cheaper than importing, and a lot smarter. Note that kiwirail want a lot more of these wagons, over time.

CJ, we forgot about the excise tax on alcohol as a revenue generator for the govt. While it is at least $907million a year (let's say $450 per drinking age person), this revenue is only about 1/5 of the downstream costs involved. (http://www.ahw.org.nz/resources/Fact%20Sheet/Info%20Sheet%20Alcohol%20and%20Tax%20Final%2009.pd f) But it is a tax that has to be taken into account, and is about 1.5% of all govt revenue.

[POSSUM THE CAT]

el Zorro another thing to look at is the new highway from Puhoi North possibly a toll road & yet the first one in this area hardly recovers more than the cost of tolling there has been several price increases already. Would this be better spent on upgrading the railway north. As the planned new container ships will only go to one port in the north island of NZ & this must be Marsden Point unless the Govt. is prepared to pay billions to upgrade & deepen one of the others.

[CJ]

You're upset by interest free student loans? My cohort went through for free, and we took our time doing that, sometimes. Now the taxpayer pays most of the cost, the students pay a smaller part, and by loaning them the money, all the nearby bars and sports shops (amongst others) do quite well. Take out the returned taxes etc, and this is a smart move that ensures mostly keen students stay in the system, and in any case the interest on the money wasn't a real direct taxpayer cost. But the policy does seem to accelerate the relocation of our gradudates overseas, at unknown cost to the economy.

Me and my cohorts went through when interest was charged (even while we studied at the rate of inflation if I remember rightly). But dont you worry - we still found money to support the nearby bars etc.

I must admit, I have never seen a policy which is to ensure the poor have enough money to buy alcohol but I am sure if Labour puts that up in a billboard, they will be in power in 2014.

Personally, I would rather reward success so that people have something to aim for, while still providing a safety net for those the cant make it. Notice I said "cant", not those that decide not to.

[CJ]

el Zorro another thing to look at is the new highway from Puhoi North possibly a toll road & yet the first one in this area hardly recovers more than the cost of tolling there has been several price increases already. Would this be better spent on upgrading the railway north. As the planned new container ships will only go to one port in the north island of NZ & this must be Marsden Point unless the Govt. is prepared to pay billions to upgrade & deepen one of the others.Given this is a sharetrading forum, I will point out that POT is in the process of deepening its channel in order to cater for the larger ships, from what I understand.

As a user of the toll road, I must say it is absolutely great for getting to the family beach house. Buying a place close to John Key was a smart decision. Unfortunately we couldnt afford waterfront. :)

[POSSUM THE CAT]

CJ the current lot being built not the new ones planed. Not unless they want to spend somewhere round 200 billion dollars the present ships have been grounding in Tauranga for the last few years. Suggest they double the present toll & build the other half in 20years time when the present one has been paid for. As the $2 was for a considerable period not even breaking even with the cost of collection.

[elZorro]

CJ, amusing comment about the toll road. Waikato has long been a safe National seat, many of the MPs being farmers as well. Years back, if you were driving along a sealed country road and it turned to metal for some unexplained reason, you might see a former MP's house nearby. Always on the sealed extension.

Mike Pohio, CEO of Tainui Group Holdings, is spearheading an inland port near Ruakura Research Centre. It's not such a daft idea, he's been the container port manager at PoT. He also has a stake in NZL Group, who are more affiliated with Ports of Auckland. The idea is to construct any building a business wants, so they can relocate close to this hub. It would take out the odd older research farm, these now being on Tainui land. Since you can make an annual profit of about $3000 a hectare on farmland if you're lucky, this is the right sort of idea for added value.

Fonterra has very cleverly used the canning factories close to the rail corridor in Te Rapa to greatly reduce their road transport costs already.

[CJ]

Suggest they double the present toll & build the other half in 20years time when the present one has been paid for. As the $2 was for a considerable period not even breaking even with the cost of collection.Part of the problem is we only have one toll road. if we had more, more people would be paying toll creating efficiencies of scale and more people would have their credit card logged so more tolls would be paid by the most efficent method, not to mention the float being held by the agency.

On the other hand you could argue it is a bit unfair that their is only one toll road in the country and it should just be removed (the toll, not the road).

[CJ]

Labours tax the rich policy which again they campaigned on of increasing the top margin tax rate was shown in an IRD paper on Friday to be a big failure, resulting in a lower tax take as business people reinvested profits into their business (taxed at the lower 28%) rather than take as salary. Very Legitimate and I am pleased to see no one that I could see came out and said it was tax avoidance by the rich.

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10826278

Well it had to come. Not surprisingly a week or so late and over-sensationalised by the Herald.

But they didn't stop at tax avoidance (tax avoidance is doing something that follows the law but isn't allowed as it is only done for the tax benefit).

No, they jumped right to Evasion!!!!

[fungus pudding]

http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10826278

Well it had to come. Not surprisingly a week or so late and over-sensationalised by the Herald.

But they didn't stop at tax avoidance (tax avoidance is doing something that follows the law but isn't allowed as it is only done for the tax benefit).

No, they jumped right to Evasion!!!!

Really ? So where does something as simple as sticking a few bob into bonus bonds because of someone's dislike of paying more tax fit? Prizes are tax free. First time I've heard anyone claim that's not allowed! You'd better tell the ANZ who run the scheme. (I actually know someone who does this because of some ridiculous belief that having paid tax on earning the money - he won't pay tax on interest it earns - warped logic, but it's true and I'm sure these many more who simply act in such ways to avoid tax.)

[CJ]

There must be some legislative thing re the bonus bonds, no doubt put in place when they were run by the post office (ie Government).

Technically moving money from a normal Term deposit into a cash pie is tax avoidance but got the big tick from Peter Dunn as something contemplated by parliment and therefore not avoidance.

Penny & Hooper on the other hand followed the law to the letter. However, they got done for tax avoidance as Parliament didn't intend people would manipulate their salary to avoid tax. Find me anywhere that says you must pay someone, including yourself, a "market salary". Following the black letter of the law is not enough, you must have a purpose other than avoiding tax. The Judge even said it would have been ok if the reason they paid a lower than market salary was because they were repaying debt or investing in equipment, but because they paid a lower salary just to reourte the money via a trust made 'not paying a market salary' tax avoidance.

Evasion is a deliberate breach of the law - eg, not putting all the cash jobs into your tax return or claiming expenses that never existed. i think this is a criminal charge as well, not just a civil charge. Could be wrong as if you need to know this sort of stuff, you are working for the wrong people!!!!

[elZorro]

CJ, I don't know how to read your latest post..you're no doubt right inside the accountancy system, and so to you, this is business as usual. But to many of us who are middle class, and might be growing our own businesses and learning as we go, we're a long way off paying more than about $1500 for the annual set of books to be prepared. We don't get tax avoidance advice, and more than that, we're probably not seeking it out.

We have been PAYE people, we're used to paying 20-39% tax, and we've accepted that we'll probably pay that on average for the rest of our working lives. That article seems a bit mixed up. He's right-wing, but also giving the full story, and plainly concluding that it's a fair enough setup. And this would be because the "army of indolent people" did too well under Labour. What a load of twaddle.

Read the comments after the article, they're a bit more sensible.

I think I get it now, the reporter sees the middle class being trapped by both ends of the spectrum, into paying most of the tax. Which is technically incorrect, but as a proportion of their real income, yes they'll pay more than most I'd say.

[fungus pudding]

There must be some legislative thing re the bonus bonds, no doubt put in place when they were run by the post office (ie Government).

Technically moving money from a normal Term deposit into a cash pie is tax avoidance but got the big tick from Peter Dunn as something contemplated by parliment and therefore not avoidance.

Penny & Hooper on the other hand followed the law to the letter. However, they got done for tax avoidance as Parliament didn't intend people would manipulate their salary to avoid tax. Find me anywhere that says you must pay someone, including yourself, a "market salary". Following the black letter of the law is not enough, you must have a purpose other than avoiding tax. The Judge even said it would have been ok if the reason they paid a lower than market salary was because they were repaying debt or investing in equipment, but because they paid a lower salary just to reourte the money via a trust made 'not paying a market salary' tax avoidance.

Evasion is a deliberate breach of the law - eg, not putting all the cash jobs into your tax return or claiming expenses that never existed. i think this is a criminal charge as well, not just a civil charge. Could be wrong as if you need to know this sort of stuff, you are working for the wrong people!!!!

Yes there is legislation concerning bonus bonds, and presumably for PIEs. Perhaps not the best example. The point i was making is that avoidance is not quite the simple definition you gave it.

[POSSUM THE CAT]

CJ & fungus Pudding Bonus bonds are a lottery just like lotto not a term or bank deposit

[fungus pudding]

CJ & fungus Pudding Bonus bonds are a lottery just like lotto not a term or bank deposit

Wrong. Bonus bonds return the capital.

[elZorro]

Here's one of the responses to that article by Damien, from Grant in Otago.


Brilliant, Damien. Short, sharp, & straight to the point. What a pity that most of those who have been motivated to comment so far are envy-ridden parasites who want to tax everyone else to fund their own visions of utopia.

The Laffer curve theory is sound. I know plenty of folks whose behaviour fits with it - me included. I'll never allow myself to earn more than a bare minimum as a taxable income in NZ. I'll do that deliberately so that the parasites won't have anything to feed off of. Even if it means foregoing potential wealth.

And for the same reason, I'll never create jobs by starting a business in NZ. I'll only do that in a country that respects private property. Income & excise taxes, regulations, and a culture of enforced altruism makes NZ undeserving of a citizen's productive efforts.


NZers are leaving the country for better jobs overseas because that's where NZ's best job creators have gone. That's the sound of Atlas Shrugging.

I think we all know a few people like Grant. I'd just like to remind Grant that Sam Morgan and others like him did employ staff, and if they hadn't sold Trademe off at a huge capital gain, they'd have been paying substantial taxes on annual profit. Presumably Fairfax are paying those dues (although other business areas may be loss-making, starts to fit). So you're saying it can't be done? Look around.

I wonder if Grant pays his own way at the doctors and on any hospital visits, pays for his children's education, refuses to travel on roads because he didn't help pay for them, and begrudges every cent of GST and excise tax. Maybe he's one of those self-respecting plumbers.

[fungus pudding]

Here's one of the responses to that article by Damien, from Grant in Otago.



I think we all know a few people like Grant. I'd just like to remind Grant that Sam Morgan and others like him did employ staff, and if they hadn't sold Trademe off at a huge capital gain, they'd have been paying substantial taxes on annual profit. Presumably Fairfax are paying those dues (although other business areas may be loss-making, starts to fit). So you're saying it can't be done? Look around.



Of couse anyone can run a loss making business which will lower taxable income. Tax is assesed on the accumulation of all P+L, but you seem to imply that this is a deliberate ploy to avoid tax. Anyone who deliberately loses money to lessen a tax bill should certainly be locked up - not in a jail, but a padded cell. I'd be amazed if such an individual exists.

You also seem to be critical of Grant, which is a slap in the face to me as well. I retired from active work very early in life, simply because of Muldoon initially. I was paying 66 cents in the $ tax. Obvioulsy I wasn't doing my bit at all for the country according to your outlook. But ethics aside - it's a fact of life that high taxation removes incentive, particularly from the productive and entreprenurial types. (Mind you, when Muldoon went, I didn't bother getting back to work. I'd forgotten how, and developed too many bad habits. :p Lovely.)

[elZorro]

No FP, I was hoping you wouldn't take offence, in your case you just don't like the idea of being an employer. This guy Grant took things to a whole new level.

I have been in the unfortunate situation of having a sideline loss-making business, and I did notice the effect on reducing taxes due. But it was a waste of three years effort. Those Muldoon years were crazy, looking back. It was a clever Waikato MP, Marilyn Waring, who helped bring that to a conclusion. I suppose you were only paying 66% on the very top of your income, but fair enough.

But I think Grant actually exists, he'll stubbornly struggle on achieving less than he should, so as not to pay tax. An ex-farming family (Europeans) I knew did that, trimmed the farm operation so it paid no tax for decades. In the end most of the stock died of starvation on the hills and fell into the gorse-filled valleys, and the bank foreclosed on the mortgage. It's a true recent story.

[CJ]

I think I get it now, the reporter sees the middle class being trapped by both ends of the spectrum, into paying most of the tax. Which is technically incorrect, but as a proportion of their real income, yes they'll pay more than most I'd say.Basically it. the wage slaves in the middle (of which I am one) pay the most tax as a proportion of their income.

I also think the paper on which the article is based is good in that it points out that increasing the tax rate doesn't increase the tax take. The tax take under Labour grew because of economic growth (the end of the worldwide boom as opposed to anything Labour did), not because they decided to tax the "rich". Unfortunately this recession, no fault of national, is going on longer than is ideal.

[elZorro]

CJ, thanks for your comments. But if you're completely right, every voter should vote either National or Labour according to the best deal for them on the day, because we are at the complete mercy of external situations, and all the lever-pulling from govt does nothing.

Actually, one of those comments after the article spelled out something else. In 1999 Sir Michael Cullen set the tax rates on companies at 28%, the lowest rate for a higher earner. This did help cause more companies (and enterprises) to be formed. When National got in and the tax advantage wasn't so high, the number of enterprises dropped. National has obviously pulled other levers like dropping the number of employees in the public sector. This had a roll-on effect to many smaller service businesses, and would have been predicted. I could go on with examples but it's too depressing..

Another comment was that National as a party are primarily there to look after the already wealthy. That seems to me, to be an inescapable conclusion at the moment. I want to support a party that has the best interests of the country as a whole in mind.

[fungus pudding]

No FP, I was hoping you wouldn't take offence, in your case you just don't like the idea of being an employer. This guy Grant took things to a whole new level.

I have been in the unfortunate situation of having a sideline loss-making business, and I did notice the effect on reducing taxes due. But it was a waste of three years effort. Those Muldoon years were crazy, looking back. It was a clever Waikato MP, Marilyn Waring, who helped bring that to a conclusion. I suppose you were only paying 66% on the very top of your income, but fair enough.



I was paying 66% on over 50% of my income. A bottle of Scotch had more to do with the conclusion of Muldoon's reign than Ms Waring, although she possibly caused Muldoon to consume the stuff. You are right, I would never subject myself to the laws employers face. There are plenty of others like me on that score, and it's not that I want to underpay or exploit - far from it, I just like to operate on my own terms.
Anyway - good on Grant. It's his life. He at least is earning, and there are others with his attitude who don't even bother to do that.

[fungus pudding]

I want to support a party that has the best interests of the country as a whole in mind.


Good on you eZ. I currently support National too.

[elZorro]

I was paying 66% on over 50% of my income. A bottle of Scotch had more to do with the conclusion of Muldoon's reign than Ms Waring, although she possibly caused Muldoon to consume the stuff. You are right, I would never subject myself to the laws employers face. There are plenty of others like me on that score, and it's not that I want to underpay or exploit - far from it, I just like to operate on my own terms.
Anyway - good on Grant. It's his life. He at least is earning, and there are others with his attitude who don't even bother to do that.

From Wikipedia, it was an argument about nuclear free ships I think.

Ultimately, the end of Muldoon's government came following a late-night clash with National backbencher Marilyn Waring (http://www.sharetrader.co.nz/wiki/Marilyn_Waring) over highly contentious Opposition-sponsored nuclear-free New Zealand (http://www.sharetrader.co.nz/wiki/Nuclear_proliferation) legislation, in which Waring told him she would cross the floor (http://www.sharetrader.co.nz/wiki/Crossing_the_floor) (giving the Opposition a victory). On 14 June 1984, a visibly drunk[12] (http://www.sharetrader.co.nz/#cite_note-gustafson-11) Muldoon called a snap election (http://www.sharetrader.co.nz/wiki/New_Zealand_general_election,_1984) for 14 July that same year. (Historians noted the unfortunate coincidence with Bastille Day (http://www.sharetrader.co.nz/wiki/Bastille_Day)).[13] (http://www.sharetrader.co.nz/#cite_note-nzhistory-12) A journalist commented that this did not give him much time to campaign. Muldoon replied "It doesn't give my opponents much time". He was heavily defeated by David Lange's (http://www.sharetrader.co.nz/wiki/David_Lange) resurgent Labour Party, which won 56 seats to National's 37 with a massive vote splitting (http://www.sharetrader.co.nz/wiki/Vote_splitting) caused by the New Zealand Party (http://www.sharetrader.co.nz/wiki/New_Zealand_Party) in particular. Muldoon's drunkenness when announcing the election date led to it being known as the schnapps election.[13] (http://www.sharetrader.co.nz/#cite_note-nzhistory-12)
It is a strong convention in New Zealand politics that a prime minister does not ask for an early election (http://www.sharetrader.co.nz/wiki/Dropping_the_writ) unless he or she cannot govern, or unless they need to seek the electorate's endorsement on a matter of national importance (as was the case in 1951 (http://www.sharetrader.co.nz/wiki/New_Zealand_general_election,_1951)). Muldoon justified the snap election because he felt Waring's revolt impeded his ability to govern. Indeed, it was obvious that Muldoon was finding it hard to pass financial measures with neo-liberal (http://www.sharetrader.co.nz/wiki/Neo-liberal) rebels like Ruth Richardson (http://www.sharetrader.co.nz/wiki/Ruth_Richardson) and Derek Quigley (http://www.sharetrader.co.nz/wiki/Derek_Quigley) voting against the Government on certain issues;[14] (http://www.sharetrader.co.nz/#cite_note-13) however, some historians have been critical of this excuse, as Waring said that she would not have denied Muldoon confidence or supply (http://www.sharetrader.co.nz/wiki/Loss_of_Supply), and would not have prevented him from governing, as the government still had the constitutional means to govern.


While manufacturing hasn't been the most popular business lately, it'd be quite hard to get into it if you didn't employ anybody. This would apply to many service, hospitality, retail areas.

Good on yer Grant? He most likely has a few imaginative ways of avoiding tax, not all of them legal.

Have we moved on from the Kiwirail contracts? Saw this article..

http://tvnz.co.nz/national-news/kiwirail-s-chinese-locomotives-plagued-faults-4995763

[fungus pudding]

From Wikipedia, it was an argument about nuclear free ships I think.




It was a sozzled Muldoon calling a snap election in front of the TV cameras when he could hardly speak.

[elZorro]

Yes, fine FP, that was the end result. But Wikipedia on Ms Waring:


Waring had come especially to disagree with the National Party policy over the issue of a nuclear-free New Zealand (http://www.sharetrader.co.nz/wiki/New_Zealand_Nuclear_Free_Zone,_Disarmament,_and_Ar ms_Control_Act_1987) and, in mid-1984, she informed the leadership that she would no longer support the party line but would continue to vote for it on confidence and other issues (except a couple of other issues). Since the National Party had only a one-seat majority, the government would be likely (though not certain) to lose on an issue Muldoon regarded as one of national security.
Muldoon decided in haste to call a snap election (a general election was due at the end of the year). The election was a disaster for the National Party. Waring told Muldoon's biographer that she had deliberately sought to provoke Muldoon into this action.[18] (http://www.sharetrader.co.nz/#cite_note-17)
It has been disputed whether Muldoon's assessment of the situation was accurate.

[fungus pudding]

Yes, fine FP, that was the end result. But Wikipedia on Ms Waring:


Yes, I'm well aware of the Waring saga. Notwithstanding their differences (Muldoon and Waring) I'd bet my bottom dollar that in the sober light of day, Muldoon would have handled things a lot differently. Regardless of any opinion of Muldoon, most agree he was a masterful politician. Most dictators are or they don't get to be dictators.

[elZorro]

Yes, I'm well aware of the Waring saga. Notwithstanding their differences (Muldoon and Waring) I'd bet my bottom dollar that in the sober light of day, Muldoon would have handled things a lot differently. Regardless of any opinion of Muldoon, most agree he was a masterful politician. Most dictators are or they don't get to be dictators.

I liked Muldoon too, FP, when he was debating. The think big gear is still helping us now, maybe we need to try that one again. A lot of small businesses sprang up and then disappeared without trace around those projects. That's a great shame, that lack of stickability, when I fall over manufacturing opportunities every day that just need someone's energy for a few years.

An 'entrepreneur' who seemed incapable of driving a car without using GPS, and with cellular hardware bristling from his ears, confessed to me recently that "I've started up 20 businesses in 5 years and none of them have worked".

There's your problem right there, I said.

Anyway, I got off track. I still think I won that argument about Marilyn Waring, she was even smarter than Muldoon, and a great speaker.:)

You forgot to comment earlier up in the thread, what do you think of David Parker, FP?

http://www.sharetrader.co.nz/showthread.php?8606-If-National-wins&p=378751&viewfull=1#post378751

[CJ]

I liked Muldoon too, FP, when he was debating. The think big gear is still helping us now, maybe we need to try that one again. A lot of small businesses sprang up and then disappeared without trace around those projects. That's a great shame, that lack of stickability, when I fall over manufacturing opportunities every day that just need someone's energy for a few years. The problem was they were huge projects in the middle of nowhere. Once teh project was needed, the industry and houses etc that built up around them was no longer needed.

Nationals current Think Big scheme is the Convention center isn't it. Far to big for what NZ needs but will hire lots of people now and in the future and 'hopefully' we will grow into it if for some reason 1,000s of people like flying to NZ for a boring conference.

[elZorro]

The problem was they were huge projects in the middle of nowhere. Once teh project was needed, the industry and houses etc that built up around them was no longer needed.

Nationals current Think Big scheme is the Convention center isn't it. Far to big for what NZ needs but will hire lots of people now and in the future and 'hopefully' we will grow into it if for some reason 1,000s of people like flying to NZ for a boring conference.

The conference centre's labour pool will no doubt be mostly part-timers called in to run intermittent big events. Sky must have good lobbyists, as gaming casinos don't have to pay 1/3 gaming revenue to govt like all the smaller places, it's a lot less. Huntly wasn't in the middle of nowhere CJ, it's on the main drag between Hamilton and Auckland. Building the station certainly had a positive effect on the region, from which it has fallen back. That asset (the station) doesn't employ many really, although it stabilises our power supply. Tiwai smelter has been a big employer for a long time.

[CJ]

The conference centre's labour pool will no doubt be mostly part-timers called in to run intermittent big events. Sky must have good lobbyists, as gaming casinos don't have to pay 1/3 gaming revenue to govt like all the smaller places, it's a lot less. Huntly wasn't in the middle of nowhere CJ, it's on the main drag between Hamilton and Auckland. Building the station certainly had a positive effect on the region, from which it has fallen back. That asset (the station) doesn't employ many really, although it stabilises our power supply. Tiwai smelter has been a big employer for a long time.Should have made it clearer that I dont see the need for a conference center. But if one does need to be built, I would prefer the government does pay.

I was thinking more about the Hydro dams with my comments on think big schemes. Built in the middle of nowhere as as you point out, once up and running, dont need that many staff.

[slimwin]

The ONE thing I like about the conference centre is that its too big.we have a bad habit of building infrastructure that's suitable for the job when designed but under capacity shortly after. Christchurch Womans hospital springs to mind. Easier to build a business case for but surely more costly in the long run.

[elZorro]

CJ and Slimwin, I'm not well informed over the details of the conference centre. It does seem that Sky City have the advantage as far as ability to run something of that size, and visitor numbers. Maybe they'll get it to fly..helped by good profits elsewhere.


SkyCity currently has almost 1650 pokies on its premises, and in a deal with the Government, will be allowed to increase that to more than 2000 in exchange for a convention centre.
The deal has outraged anti-gambling organisations and the Opposition, whom say the Government is selling the country’s laws, and the increase in the number of machines will cause more problem gambling. …
SkyCity gives only 2.5 percent of its net profit to its charitable trust. Pokie machines in clubs and bars pay back over 37 percent.

[elZorro]

The govt put out a document on "Building Export Markets (http://www.scoop.co.nz/stories/PA1208/S00197/govt-releases-first-progress-report-on-export-markets.htm)" yesterday. No detail, the closest this 32 page PR statement came to mentioning innovation was the new Advanced Technology Institute which is in progress. This is where businesses travel to Auckland to pay $120 -$150+ per hour for mostly "blue-skies" R&D, they are not yet geared up to make market-ready prototypes. Travel there at your peril.

There is also a suite of services called Better by Design, Better by Lean, Better by Strategy and the Primary Growth Partnership (but you'd need to be a DairyNZ to get your hands on any of that). One of our customers is keen on the Lean principles. They ended up making lots of staff redundant, and building the gear overseas.

So far, no mention of R&D tax credits for smaller outfits. Probably they're hoping we'll just forget about it. I'm still grumpy.

[fungus pudding]

I liked Muldoon too, FP, when he was debating. The think big gear is still helping us now, maybe we need to try that one again. A lot of small businesses sprang up and then disappeared without trace around those projects. That's a great shame, that lack of stickability, when I fall over manufacturing opportunities every day that just need someone's energy for a few years.

An 'entrepreneur' who seemed incapable of driving a car without using GPS, and with cellular hardware bristling from his ears, confessed to me recently that "I've started up 20 businesses in 5 years and none of them have worked".

There's your problem right there, I said.

Anyway, I got off track. I still think I won that argument about Marilyn Waring, she was even smarter than Muldoon, and a great speaker.:)

You forgot to comment earlier up in the thread, what do you think of David Parker, FP?

http://www.sharetrader.co.nz/showthread.php?8606-If-National-wins&p=378751&viewfull=1#post378751


Where did I sday I liked Muldoon. I only said he was a masterful politicain. ? As for Parker! Would you lend him any money?

[elZorro]

Where did I say I liked Muldoon. I only said he was a masterful politician. ? As for Parker! Would you lend him any money?

I'm not sure what you mean, FP. Has Mr Parker frittered away some funds or something? His background looked fairly tidy, otherwise I wouldn't have mentioned his name.

[fungus pudding]

I'm not sure what you mean, FP. Has Mr Parker frittered away some funds or something? His background looked fairly tidy, otherwise I wouldn't have mentioned his name.

You'll have to guess what I mean, sorry to say.

[elZorro]

You'll have to guess what I mean, sorry to say.

I think you're bluffing, FP... but while having a look, I found this article from today. I am about to worship this guy. Cripes, maybe he's been reading our posts..

http://tvnz.co.nz/politics-news/labour-eyes-hands-economic-policies-5028060

I agree 100% with all of that, these policies would work.

[fungus pudding]

I think you're bluffing, FP... but while having a look, I found this article from today. I am about to worship this guy. Cripes, maybe he's been reading our posts..

http://tvnz.co.nz/politics-news/labour-eyes-hands-economic-policies-5028060

I agree 100% with all of that, these policies would work.


Well I'm not bluffing, however I'm sp pleased that youi agee these policies would work, but a little puzzled seeing neither you or I or Parker himself do not know what his policy proposals are. Suffice to say they will not 'know' as much as the market.

[elZorro]

Well I'm not bluffing, however I'm so pleased that you agee these policies would work, but a little puzzled seeing neither you or I or Parker himself do not know what his policy proposals are. Suffice to say they will not 'know' as much as the market.

1st point FP, it won't take much effort to get the R&D tax credits back up and running when Labour get back in, next term.

2nd point: Mr Market, is that the same beast that we try and tame by investing in shares? So far I've learnt that despite fundamentals often being sound, Mr Market is a flaky person, and the only thing you can do is use a nebulous piece of software variously called TA to predict his actions.

[fungus pudding]

1st point FP, it won't take much effort to get the R&D tax credits back up and running when Labour get back in, next term.

2nd point: Mr Market, is that the same beast that we try and tame by investing in shares? So far I've learnt that despite fundamentals often being sound, Mr Market is a flaky person, and the only thing you can do is use a nebulous piece of software variously called TA to predict his actions.

1st point elZ. You know my thoughts about R+D schemes. Quite unfair on the taxpayer. You might as well introduce a scheme to subsidise commercial electricity consumption - still silly but far more equitable. Picking winner type schemes acheive nothing. All the art subsidies and nonense have never produced a DaVinci or a Dali, in music they have never found a Beethoven or Beatles. Such talent will rise and evolve following the same rules as the rest of society, and heaven forbid that some competitor swamps them because of a counter-productive, theoretical clap-trap hand-out.

2cnd point: The market is the collective of all information available, which no-one person can possibly have. Of course it can appear flaky - the natural ups and downs and its amazing ability to react will make it look so. But that's healthy. The problem with socialist policies is they tend to think that a collection of politicos of the day know better. Well - they don't. Take a year off. Go and spend a few months trying to get your head around the different economies of the world. You may well. decide that Mr. Parker and his ideas will not control our economy any better, and almost certainly worse, than it is running now. The very best thing they could do is eliminate red-tape blocks - starting with employment laws. Look at Labour's ridiculous opposition to the 90 day trial thing. Plainly that allows employers to take a chance, and many have. Eliminating youth rates have left too many school leavers staring at play station all day, and Labour deny that in the face of massive evidence. That's the sort of thing Parker (or hopefully someone who replaces him) needs to open their eyes and forget the Labour party mantras that have been spouted forth for too long.

[elZorro]

FP: I've just been delivering parts to a customer's warehouse. From there, 20-30 staff are completing hi-tech equipment, some of it also developed in Auckland, for export all around the world. 7 years ago the cornerstone shareholder was dealing with us for R&D in between his jobs -in a very basic service industry. He looked a doubtful proposition.

He has used T&E funding, govt grants, R&D tax credits, and a listing on the ASX to get this impressive venture up and running. It was a 7 year slog. I'm sure if you asked him, he'd say the little bit of extra funding he received from Labour's policies was extremely important at crucial times. (Others like me helped by extending credit, not always voluntarily).

You're right though, the people who do make it, spend time overseas, getting their sales channels sorted, and making important connections. But you still have to get to the first stage, and I know you're wrong when you say R&D tax credits or something similar, is a waste of time and money. This customer created something out of nothing, gave his business an edge that others wanted, and along the way he needed to use the services of many other NZ businesses, each with their own expertise. Follow the money around, tax is being paid on it, everywhere it goes.

[fungus pudding]

Giving credits to one company means another company is paying that tax. Far better to abandon such schemes and a few other things and lower all company taxes. Make NZ more business friendly. Or play around with redistibuting their profits which is what you are suggesting. Your friend is not alone. It's not just research companies that need a break if they are ever to expand. We need all sorts of businesses. Of course R+D isn't easy. But Microsoft, Google, Facebook, Apple which among them constitute a huge percentage of the world market all started from someone's bedroom or garage. And it's not juust the computer world. I'll bet my bottom dollar the next biggie to hit the weorld will come from similar beginnings. Back to your friend. No doubt the R+D helped a bit, but so would lower taxes. I'll wager that it was the ASX listing that made the real difference.

[fungus pudding]

FP: I've just been delivering parts to a customer's warehouse. From there, 20-30 staff are completing hi-tech equipment, some of it also developed in Auckland, for export all around the world. 7 years ago the cornerstone shareholder was dealing with us for R&D in between his jobs -in a very basic service industry. He looked a doubtful proposition.

He has used T&E funding, govt grants, R&D tax credits, and a listing on the ASX to get this impressive venture up and running. It was a 7 year slog. I'm sure if you asked him, he'd say the little bit of extra funding he received from Labour's policies was extremely important at crucial times. (Others like me helped by extending credit, not always voluntarily).

You're right though, the people who do make it, spend time overseas, getting their sales channels sorted, and making important connections. But you still have to get to the first stage, and I know you're wrong when you say R&D tax credits or something similar, is a waste of time and money. This customer created something out of nothing, gave his business an edge that others wanted, and along the way he needed to use the services of many other NZ businesses, each with their own expertise. Follow the money around, tax is being paid on it, everywhere it goes.


Giving credits to one company means another company is paying that tax. Far better to abandon such schemes and a few other things and lower all company taxes. Make NZ more business friendly. Or play around with redistibuting their profits which is what you are suggesting. Your friend is not alone. It's not just research companies that need a break if they are ever to expand. We need all sorts of businesses. Of course R+D isn't easy. But Microsoft, Google, Facebook, Apple which among them constitute a huge percentage of the world market all started from someone's bedroom or garage. And it's not juust the computer world. I'll bet my bottom dollar the next biggie to hit the weorld will come from similar beginnings. Back to your friend. No doubt the R+D helped a bit, but so would lower taxes. I'll wager that it was the ASX listing that made the real difference.

[elZorro]

Giving credits to one company means another company is paying that tax. Far better to abandon such schemes and a few other things and lower all company taxes. Make NZ more business friendly. Or play around with redistibuting their profits which is what you are suggesting. Your friend is not alone. It's not just research companies that need a break if they are ever to expand. We need all sorts of businesses. Of course R+D isn't easy. But Microsoft, Google, Facebook, Apple which among them constitute a huge percentage of the world market all started from someone's bedroom or garage. And it's not juust the computer world. I'll bet my bottom dollar the next biggie to hit the weorld will come from similar beginnings. Back to your friend. No doubt the R+D helped a bit, but so would lower taxes. I'll wager that it was the ASX listing that made the real difference.

That's a funny way of looking at it (R&D credits). How about the approx $100,000 they claimed in credits (they spent a lot more) was spread amongst 2 million taxpayers, so 5c each. The bigger cashflow that came out of company equity went through a merry-go-round paying back taxes as it went.

How could a company that started from a home business sideline, list on the stock exchange, without gaining the attention of powerful investors? To do that you have to present something special to the right people. R&D, patents, profits are the way to get their attention.

Lower taxes would have been of no use to this particular entrepreneur. Although it has great potential and is employing many, the enterprise has yet to turn a profit on the books. The R&D credits were claimed by an allied R&D firm.

As Percy pointed out, Opus claimed over a million for theirs.

[fungus pudding]

That's a funny way of looking at it (R&D credits). How about the approx $100,000 they claimed in credits (they spent a lot more) was spread amongst 2 million taxpayers, so 5c each. The bigger cashflow that came out of company equity went through a merry-go-round paying back taxes as it went.

How could a company that started from a home business sideline, list on the stock exchange, without gaining the attention of powerful investors? To do that you have to present something special to the right people. R&D, patents, profits are the way to get their attention.

Lower taxes would have been of no use to this particular entrepreneur. Although it has great potential and is employing many, the enterprise has yet to turn a profit on the books. The R&D credits were claimed by an allied R&D firm.

As Percy pointed out, Opus claimed over a million for theirs.

Break any govt. cost down and it looks small. I know nothing about your friend, except that he has drive, initiative and a good idea. He would have found an angel invstor, or a partner or something. There's more than one road.

[elZorro]

Break any govt. cost down and it looks small. I know nothing about your friend, except that he has drive, initiative and a good idea. He would have found an angel investor, or a partner or something. There's more than one road.

My point is, we should never begrudge a few million of taxes spent here or there if the outcome is good, and when spent in a business, lots of it comes back, perhaps indirectly. Govt receives over $60,000mill each year in taxes etc. Not much of it being income tax.

My friend did find a few angel investors, but first he had to have something to sell. R&D put that together, that's the first step (after deciding what the market wants). A small public amount up first, the private sector fronted up with a lot more later. Early stage part funding from govt was critical in this case, of that I am certain.

You alluded (back in the thread) to young persons playing games on computers.. unfortunately being unemployed is not the problem, perhaps we're lucky game computers weren't invented when we were starting out. How gaming prepares someone for the real world is beyond me, but many school leavers seem wedded to cellphones and other portable equipment, unable to concentrate on doing one simple job so well that they can be moved onto more interesting tasks with better pay. Employers don't like paying people to keep their facebook page current.


FP: The problem with socialist policies is they tend to think that a collection of politicos of the day know better. Well - they don't.


I don't think the Labour party is as hard left as you make out. In any case, I still think most people need a hefty push in the right sort of directions. Would we go back to smoke-filled bars and workplaces? Are business owners mostly too lazy to think about exports? And other very important outcomes that a government and public service should benevolently consider on our behalf.

[fungus pudding]

Would we go back to smoke-filled bars?


In a heartbeat. :t_up:They were the days! :D

[fungus pudding]

I still think most people need a hefty push in the right sort of directions.

That's standard socialist thinking. No push is needed provided barriers are removed such as punitive taxes, restrictive regulations,etc. The pull comes from the market, from customers, from the demand. Profit is the incentive. It's not for some govt. expert to make these decisions.

[elZorro]

That's standard socialist thinking. No push is needed provided barriers are removed such as punitive taxes, restrictive regulations,etc. The pull comes from the market, from customers, from the demand. Profit is the incentive. It's not for some govt. expert to make these decisions.

FP, I note you've not admitted to, at any stage, trying to manufacture anything. So you didn't get a push in that direction. What if you had a million dollar idea, like everyone has, and went to see someone about getting it made. In 95% of cases, it turns out that the business with the million-dollar idea only has a few thousand dollars to throw at it. Not enough. At that point, a 50% grant from govt for half of the quoted costs to a first stage starts to make a lot of sense. To get a grant like that, the firm has to get in quotes and do some paperwork, quantify a market, possibly. So this is certainly a push in the right direction. If the firm chooses not to jump through these hoops, they are not deserving of a grant, and most times the project dies a natural death, or the firm didn't need a grant. I've seen both cases.

R&D tax credits are a different story, encouraging businesses to morph sideways into more profitable areas using non-core technology advances (not business as usual). The govt experts don't make the decisions on which way the private sector goes, they just help it in the general direction with a very small carrot. The small carrot is paid back in spades. I don't care what you call it, it's smart business.

[fungus pudding]

FP, I note you've not admitted to, at any stage, trying to manufacture anything. So you didn't get a push in that direction. What if you had a million dollar idea, like everyone has, and went to see someone about getting it made. In 95% of cases, it turns out that the business with the million-dollar idea only has a few thousand dollars to throw at it. Not enough. At that point, a 50% grant from govt for half of the quoted costs to a first stage starts to make a lot of sense. To get a grant like that, the firm has to get in quotes and do some paperwork, quantify a market, possibly. So this is certainly a push in the right direction. If the firm chooses not to jump through these hoops, they are not deserving of a grant, and most times the project dies a natural death, or the firm didn't need a grant. I've seen both cases.

R&D tax credits are a different story, encouraging businesses to morph sideways into more profitable areas using non-core technology advances (not business as usual). The govt experts don't make the decisions on which way the private sector goes, they just help it in the general direction with a very small carrot. The small carrot is paid back in spades. I don't care what you call it, it's smart business.

I am not a manufacturer, and never wanted to be - not my sort of thing. I have several friends and acquaintances who are designers. inventors, manufactureres, you name it. Half their ideas are hare-brained, and of the other half, most are unprofitable. In spite of all that, most have survived and/or flourished, all without govt. handouts or credits or any other schemes. Precisely as it should be. There's a hell of a lot more to commerce than r+d, evcen though it seems to be your thing. Watch Stephen Joyce on the Nation replay on Sunday morning at 8 a.m. on TV3. I saw it this morning. Nothing startling, but it does cover a far wider range of opportunities for the future than the R+D that you think should be singled out for govt. money. I repeat, it is not for the govt. to decide to provide a hefty push in the right direction, as you claim. It is not even for the govt. to decide which direction that happens to be. The market is more than capable of doing that, and the govt. should simply clear the way. The end.

[elZorro]

FP: I've got a few mates who own commercial buildings, I've leased two and I own one outright. Funnily enough, I don't feel qualified to tell you all about how to manage your interface with government on a commercial building portfolio. I suspect there should be no interface at all, in your perfect world.

I assume that being of the "right" persuasion, there is absolutely no doubt in your mind that none of those hare-brained schemes you witnessed could have made it commercially.

Newsflash for FP: I've seen a lot of ideas go past, and the ones I think have no chance, often make it, and some of the very best ones fail, because of a lack of commitment and ready sales channels.

[fungus pudding]

FP: I've got a few mates who own commercial buildings, I've leased two and I own one outright. Funnily enough, I don't feel qualified to tell you all about how to manage your interface with government on a commercial building portfolio. I suspect there should be no interface at all, in your perfect world.

I assume that being of the "right" persuasion, there is absolutely no doubt in your mind that none of those hare-brained schemes you witnessed could have made it commercially.



My world isn't perfect, and I've never claimed it was. I don't know why you would even want to tell me how to run my business activities, any more than I would want to tell you how to run yours. My 'interface with govt.' is as minimal as I can possibly make it. If you want to 'interface with govt.' go for your life. I only hope your 'interfacing with govt.' doesn't amount to lobbying for hand-outs, subsidies or tax credits, or whatever you want to call them.
If you're stuck for 'interfacing' suggestions, have a crack at them to lower company taxes. That would help a vast number of businesses to expand, not just a narrow band. (disclaimer - I am a sole trader - not a company)
I don't quite know what you mean by saying I am of the 'right' persuasion, and it is not me who rejected anything as hare-brained. But the world at large (read market) did.
Best wishes elZ, but I really must go and do something constructive now. :p

[elZorro]

You probably should do that FP, you might be losing this argument..

Left to their own devices and with no incentives from govt, manufacturing business owners will shed as many staff as they can, pay minimum wages, import cheap manufactured goods from China and put on an easy margin, and that'll be about it. Service and retail industries and the property sector will go into atrophy as cashflow dries up. The public sector will similarly have to be downscaled, not just because of policy, but a lack of tax/levy income. More unemployed, adding to govt costs. It's already happening.

Watched "The Nation" this morning, Steven Joyce, I'm unconvinced he's looking at the problem in the right way. Capital and effort will flow in to a profitable and IP protected idea. How do we get projects to that point, that's the only issue. FP has forgotten another caveat on these subsidies and grants, should a business obtain any (very hard to do). The understanding is that you'll be exporting NZ made product or services down the track.

Background of Mr Joyce. It's in media, not manufacturing.

http://www.stuff.co.nz/national/politics/7238789/Steven-Joyce-the-power-broker


Steven Joyce:
But "frankly there's half a dozen things that we need to do to really help us be more competitive . . . The real opportunities are how do we assist firms in areas like innovation and provision of a skilled workforce? How do we assist them get and maintain access to export markets? That's crucial. How do we assist in the provision of capital?"


Answer: then why didn't you leave R&D Tax credits in place, and see how it went for a few years?

Rod Oram, admittedly not known for right-wing views, wrote an article in the SST today, about the govt's third economic development strategy in its first four years in office.

The title was "Talking the Talk", - first clue.


Rod Oram: The language of the report reveals the Government's simplistic thinking. Competitive advantage and science are mentioned once each, research three times and value chains four. Yet brand is cited 21 times and story 25 times.

Sometimes the talking cure works in psychoanalysis, but never in economic analysis. With this strategy, we will not lift our exports to 40 per cent of GDP by 2025.

[elZorro]

$12million paid out in redundancies around MOBIE, about $50k per person average. Around $19mill p.a. is now being spent on contractors and consultants, which could have permanently employed about 190 staff just as easily, and maybe with better results.

http://www.stuff.co.nz/dominion-post/news/politics/7508549/12m-paid-out-in-Govt-redundancy-packages


Labour state services spokesman Chris Hipkins said the figures showed"the unnecessary cost of ad-hoc restructuring".

"The National Government have no coherent plan for improving public services. They're constantly rearranging the deck chairs no matter how much it costs in the long run."

He highlighted the redundancies at the Science and Innovation Ministry,which was formed as the result of a merger last year, only to be again merged into Mobie 18 months later. Hundreds of thousands of dollars was spent on rebranding for MSI, which included 180 punnets of "promotional putty".

Business Innovation and Employment Minister Steven Joyce said "perhaps in hindsight" the mergers could have happened at once.



Colin James's column for the Otago Daily Times for 21 August 2012

Voodoo or orthodox -- take your pick

There is nothing like an idea for which the time has come -- or come again. Take voodoo economics.

Steven Joyce on The Nation at the weekend used the term to scoff at Labour party ideas to constrain the exchange rate. The irony was that the originator of the phrase, George Bush senior, applied it to some of the very policies Joyce defends as orthodox.

Joyce thereby in effect made the point that economic orthodoxy is once again unsettled. There are received wisdoms, ideologies, prejudices, learned algorithms and equations, the perfect theory that markets always tend to equilibrium and another that wealth trickles down. Contesting those are prejudices and musings, revivals of Karl Marx and Maynard Keynes, exploratory hypotheses, including about "hyperglobalisation" and the nature of work, and new or revived theories about debt and its enabling and destabilising roles.

And that is only the half of it, the "western" half. There is also the "China model" -- or not. A Wellington conference involving academics from China and the United States last week could not agree whether there is such a model to emulate as distinct from what just happens to be going on there. Remember the west's 1980s worry about or adulation of Japan's "model" before its asset markets crashed and it stalled for two decades.

Asia does have the Singapore model. It used to appeal to Joyce's chair, John Key, but Key is not Lee Kuan Yew and our democracy is much messier than Lee's tidy top-down version.

Into this buzz Joyce last week tossed a pamphlet -- oops, "strategy" -- for exports. Four more are to come on related topics. These follow "New Zealand Inc" "strategies" for China and India.

Strategies do lurk in the government's undergrowth. Ministry for Business, Innovation and Employment officials have been expanding and deepening the sectoral studies they started last term. There is also strategic thinking outside the government: the Centre for Strategic Studies will on Wednesday issue a paper on our future relationship with China which goes deeper and broader than Key's characterisation of it as "commercial".

The outcome of the officials' work and ministers' "strategies" is an economic development theme which is becoming more focused and coherent. Ministers and officials will use the new documents to jawbone businesses and to coordinate regulation and government actions, for example skilling young people and help with innovation, to facilitate development and expansion, particularly of exports.

This approach to development draws a line between National-ACT-United Future and Labour-Greens-New Zealand First. On the other side Labour is inquiring into alternatives being explored abroad.

David Cunliffe has recently been to Denmark and Finland. Those two small countries have changed the structure of their economies and, consequently, lifted their pay scales much more than New Zealand over the past 20 years. Cunliffe has come back with ideas on how the public service can flexibly work with business in a rapidly changing global environment to boost innovation and up-tech the economy, especially in clean technology.

David Parker is now off hunting ideas.

In Paris he will meet the authors of a recent OECD paper that finds the impact of a volatile exchange rate on exports and imports is greater in small economies (New Zealand and Chile) than in large economies (China, the Euro area and the United States). In small economies exporters have smaller internal markets to cushion them from currency rises than those in large economies. Small economies are less diversified so there is less scope to switch to exports which can set their own prices and ride out ups and downs -- or, as recently, ups and ups.

Parker last year proposed widening the Reserve Bank's brief to ease exchange rate problems. Joyce says that cannot work and is voodoo economics. (But note that in the Keynesian orthodoxy exchange rates were fixed for a quarter-century.)

Parker will talk to Ambrose Evans-Pritchard of London's Telegraph, the economic commentator he respects most, Jeffrey Frankel, a Harvard academic specialising in "capital formation and growth", Joseph Stiglitz, revisionist former World Bank chief economist, and Olivier Blanchard, revisionist chief economist at the International Monetary Fund. Another target, Dani Rodrik, who wrote The Globalisation Paradox, a revisionist tract on hyperglobalisation, is away when Parker is at Harvard.

His mission is to hunt down new ideas (though, tellingly, in institutions astride the "old" North Atlantic, not in "new" Asia) and see how they fit in the mix here.

Joyce might say to that: bubble, bubble, toil and trouble. But also there might conceivably be voodoo in orthodox economics in need of exorcism. What turns out to be voodoo and what the next orthodoxy we will not know for a decade or more.

Whoever is right, there is a debate now. It will build through to the next election. It beats listening to focus groups.

-- Colin James, Synapsis Ltd, P O Box 9494, Wellington 6141
Ph (64)-4-384 7030, Mobile (64)-21-438 434, Fax (64)-4-384 9175
Webpage http://www.ColinJames.co.nz

[elZorro]

Well, that might not be quite right, but if the rest of this article is to be believed, IRD has paid out $31mill to 539 staff made redundant since 2008, an average of $57,000 each, and has also paid out a whopping $125 million on contractors and consultants. All the while offering a very poor service on the 0800 number. 260,000 callers hung up after waiting too long, in one year.

http://www.stuff.co.nz/dominion-post/news/politics/7514643/IRD-redundancies-taking-toll-on-services

Maybe the number of staff dropped has been 950, since they have/had 6000 staff. You'd need a few staff, they sometimes get 25000 calls in a day.

About 15 years ago, IRD in Hamilton set up a huge waiting room so people could provide their walk-in query at a main desk, where it was relayed to staff in each section as appropriate, using screens. The tax client would be collected from the waiting room by a tax expert, and ushered to a private small room to discuss the issue. There were about 20 rooms, and other desks. Within 2-3 years this great system was replaced with a smaller version (change of govt?), then you had to phone in before visiting, and now they don't (or can't) even answer the phone. The smaller waiting room now has about 4 chairs in it. You can't even get tax forms there.

[elZorro]

Steven Joyce was on TV1 this morning and asked directly, why the govt was asking for more R&D spend by business, when they were the ones who scrapped the R&D tax credits, and reduced R&D funding.

Mr Joyce skilfully implied that businesses would have been reallocating ordinary work to fit the tax credit prescription, and adding this credit on top of TechNZ 50% funding. He thought most NZers wouldn't like this idea. He also implied it was John Walley from MEA banging the drum again.

That is just so much bull, because R&D tax credits were only a 15% credit at best, and they're audited. There are very strict rules about when it is appropriate spend, and when it is not. One of the rules is that you can't double-claim if the work has been part funded by TechNZ or other agencies.

Mr Joyce knows this of course, but the general public and the reporter, don't. I think the real reason the tax credits were pulled is that National was worried it wouldn't be able to easily fund tax breaks for the top echelon if the business sector really picked up the tax credits and ran with them. By now we'd be seeing some great results, because many small enterprises that will never get around to contacting TechNZ and going through that process, could have made a start on the R&D ladder. National should have simply left the top tax rate and R&D credits in place, as most of the 470,000 small businesses aren't that worried about what the top tax rate is, they'd just like a chance to get there.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10828408

[elZorro]

Today at work I was sent a link about $45mill of govt R&D funding, with a note that the criteria have been changed, and I should check it out. Full of optimism, I did just that.

http://www.msi.govt.nz/get-funded/build-your-business/what-we-offer/technology-development-grant/

The technology development grant is only one of three or so in the arsenal, but by the time I'd read the criteria I was thinking that some bright spark had done a typo in the link's address. Change two letters in the msi.govt.nz/get-funded and you'll see what I mean.

$45mill over three years, lets see, that's $15mill per year for 470,000 businesses, or $32 each. It's a grant for just 20% of your R&D spend. So that's close to the 15% that the R&D tax credits supplied in 2008, (Labour will drop the amount to 12.5% when they get back in).

This current 20% grant is only open to businesses with a turnover of $3mill or more for each of the last three years, and only if they've spent 3% of t/o on R&D also. That's the criteria that changed, the R&D threshold. A business can apply for up to $2.4mill of grant a year, or in other words they'd need to spend $12mill on R&D. Some bigger outfits will be able to do that, no problem. This could mean that all the funding would be used by 6 or 7 big businesses each year. Even if the average grant claim is $100,000, only 150 businesses would be let through each year. This is very easy to run of course, you don't need as many staff. And some big players are going to be very happy with the MPs in charge of the portfolio.

But is this the step change that R&D tax credits would have offered? Of course it is not, it's not meant to be, but it allows National to say that they are doing something, when in fact they're only looking after their mates. Sure enough, in the press statement we have:

Up to now, 42 businesses have received a Technology Development Grant with a total worth of $148 million.
Note this is an average of $3.5mill per business refunded.

TechNZ has two other smaller funds which can suit small businesses, however you'd need to show your turnover for the last 3-4 years and give good details on what you're going to achieve. It's not for business as usual. The technology transfer scheme..this is IRL-now ATI, $120-$150 an hour for boffins.

[elZorro]

David Parker getting more mentions in despatches.

http://www.labour.org.nz/news/changing-gear-%E2%80%93-a-new-economy-and-fairer-society

[slimwin]

Er, I'm a wee bit too old to put any value on a self promotion article on somebodys employers own website. Have you any balanced articles that you can post or just ones that agree with you view?

Wait for it...

[elZorro]

Er, I'm a wee bit too old to put any value on a self promotion article on somebodys employers own website. Have you any balanced articles that you can post or just ones that agree with you view?

Wait for it...

Hi Slimwin, I'm just making the point that David Parker seems to be getting some extra airtime. And yes, in my opinion the policies are on the right track, so the first step is to see what they are. Been a bit too busy to debate both sides of a political argument just by myself..you're welcome to post something. :)

[Major von Tempsky]

"Been a bit too busy to debate both sides of a political argument just by myself".

But El Zorro - about three quarters of the many postings on this thread are by you!

All you have to do is to look at the other side's valid point of view as you post and go "On the other hand...".
That way we would have a balanced thread even if 75% is by El Zorro....

[elZorro]

"Been a bit too busy to debate both sides of a political argument just by myself".

But El Zorro - about three quarters of the many postings on this thread are by you!

All you have to do is to look at the other side's valid point of view as you post and go "On the other hand...".
That way we would have a balanced thread even if 75% is by El Zorro....

MVT, thanks for writing something. Maybe it's a bit too far out from the election to get too interested in politics. I find it surprising that yourself and Slimwin think I don't consider the other side of arguments, I do mention those when I post, and I'll point out if I think the other side is bogus or BS. I'm a political numbskull, but I can't believe how much pub-talk thinking just sticks around, completely unbacked by the facts.

I was reading this today in the Waikato Times.

http://www.stuff.co.nz/waikato-times/7545481/Climate-change-sceptics-like-free-market-economics-study

I would like to see this thread being largely pro-National - if anyone can bring forward shining examples of how well the National govt have steered the economy in the last four years, let's hear them.

[POSSUM THE CAT]

El Zorro which nut house did that reporter escape from it is so full of contradictions

[slimwin]

I'm on holidays at my wifes,familes home in Sweden at the moment. Seems i'd be a socialist over here. 90 day work rule was introduced over here years ago by the socialist party in support with the unions. The reason I switched support to national two elections ago was Labours now too close relationship with the unions, ie being driven by them.(to me NZ unions,or at least the one I was in, are the parasite that killed th host.) My problem with NZ politics, as a whole, is one side takes a stance on the others policies no matter how good they are. We have banana republic politics that refuse to act bipartisanly and I think it holds us back dearly. Sometimes EZ and MVT I think your guys posts embody that. That's not meant to be a personal attack although I know it sounds like it. I just mean to point out that perhaps if two apparent, opposed sides actually looked at each others policies that there would definitely room for compromise and therefore progress.
God, I'm starting to sound Swedish.

[slimwin]

Oh, and the NZ press really does not help the issue. They seem to love to face off the sides for their own meagre editorial gain.

[elZorro]

Possum, I didn't find that article contradictory, I was amused by the finding..


Those who supported Left-leaning parties such as the Greens and Labour were more interested in equality and more open to change than those on the Right like National and ACT.
"A pro-climate change position . . . [is] a threat to the status quo because acceptance . . . means we'll have to do something about it."


Slimwin, I accept your points, National could have used a lot more of Labour's good policies, and Labour made a few mistakes in their last term. But as this thread has not been swamped by those on the Right showing us how good National has been for the country since they got back in power, I'm left regurgitating the items I've seen in the press today.

Rod Oram on R&D: new report very short on insights. Nothing in its remit will explicitly help companies build new models to reward them for more R&D. Phil O'Reilly, CEO of Business NZ, was one of those behind the ATI idea (rebranding of IRL). (I knew I didn't trust him for some reason). No mention of sustainability linked with innovation, something everyone overseas realises is very important.

Around about 50% of all people in NZ who have wealth in excess of $50mill (only 250 in total) declare that they have less than $70,000 of personal income per year, thus avoiding completely, the top tax bracket at 33%. ($70k is an ROI of less than 0.14%). They are likely to be putting income into trusts or companies however, which are taxed at 30% and 28%. So it's not as bad as it looks. But the point is, high income earners have already positioned themselves to avoid top tax brackets on individual income. If you are stuck with PAYE, you don't have such a luxury. Trickle down? it's not going to happen.

[neopoleII]

the way i see it,
the tax rules are made by governments, and they seem to have a habit of "instilling" tax loopholes.... why is this?
also if im earning several hundred grand a year and i was able to "offset" some tax legally, i would do it too,
but then...... i'd also be spending more in the community which in my view gives me the choice of where to spend my cash instead of it going into the consolidated fund.
my extra spending would be putting more money into community services and goods..... equals jobs.
and i would feel good about paying less tax, spending more money in the community.
disc.... my wages are pretty low compared to most on this forum..... me and the missues just get by.... but we a happy to see all the benificiaries driving around our town in nicer cars than us.
depends on your goals i guess.
and the goals of the political spectrum you support.

[elZorro]

After reading this ...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10829989

.... Can someone explain why National is selling SOE?

Hi Belge, thanks for spotting that. All the comments after it are agreeing too, most unusual.

Two years of mismanagement left to go.

[POSSUM THE CAT]

El Zorro can it be any worse than the economic management of the last four years

[elZorro]

El Zorro can it be any worse than the economic management of the last four years

PTC - no, I hope not. It's not that things haven't muddled along, maybe they have. But with a bit more direction, how much better off could we have been longer term? To go into the next Labour term of office with a big chunk of State Assets already sold off, would be a sad indictment on the voting public, if they let it happen over this next couple of years.

ETS for farmers, another National policy (not on our watch): well, the truth is food is being sold too cheaply. If a small block operator can't produce vegetables and make a good dollar from 60 hours work a week, it's being sold too cheap. Dairy/sheep/beef products are much the same, although I still say most farmers could probably produce 50% more grass if they really looked at it properly. ETS is the least of their worries, the least of their real costs.

[POSSUM THE CAT]

El Zorro the last four years have been a disaster at best & the next two could be the biggest disaster in the history of New Zealand. And unless 95% of the present Labour Party get out of politics I do not want a Labour Government either. They have to many Brainwashed University Graduates to do anything sensible. So are we between a rock & a hard place. I was invited to a meeting with Goff & his West Auckland canditate. where I got the impression a Kindergarten graduate could of done better. I told him then and there that if the Labour Party wanted to have any hope of winning the election his resignation needed to be in tomorrows Morning Paper. He had a good candidate but he was pissing off the Labour voters trying to attract a few National voters. I do not know which I dislike the most Goff or Key

[neopoleII]

regarding farmers, some back of the envelope numbers.
across the road from our place is 160 acres of cropping, the lease rate is $500 per acre so $80k just for the use of that land per year. to sow that in potatoes requires about 5 b trains of seed potatoes delivered, then several really big tractors to seed the fields..... about 3 to 4 days work.
before that though is full time ploughing and hoeing for a week.
so the seed is in, after about 5 weeks the first spray happens about 3 days tractor work with expensive spray. then repeated 5 times over the grow period.about 5 months later is harvest time. there are dozens of tractors and people harvesting for about 3 weeks 20 hours a day 7 days a week and b train trucks loading about 15 to 20 times a day taking the harvest away.
once all this is done, the fields get 100s of tons of fertilizer placed and then left fallow till next planting season.
once you add up the capital cost of the huge tractors, harvesters, trucks, storage facility, fertilizer, sprays, fuel, then add the lease fee, labour costs, gst and company tax...... the profit margin is all of these minus the $4.99 per 10 kilo sack the potatoes sell for at the supermarket..... whoops forgot the middle man markup of the supermarket.
i assure you.... farmers work very hard for their few percent profit.
and keep quite a few folks employed.

sort of makes me wonder if the career solo mums are smarter than most.

cradle to grave welfarism in this country and the proliferation of that is what will bring this land to its knees.
selling our state assets will just make it happen faster....... which might be a good thing.
it will cause a genuine and profound change in our society.... how so?

time will tell.
it takes a major event to change a society.
war, disease, natural event, financial mismanagement.
i pick option 4 for NZ and its cause is at the foot of NZ politics of the last 20 or so years.
both sides of the coin equally to blame.
i have voted for both sides over the years, and am now disheartened with both sides.

now that is sad for a hardworking kiwi.

[elZorro]

PTC and Neopole, I share your impending gloom over the next two years.. and PTC was correct to talk to Phil Goff with his thoughts, because Labour is after feedback right now, as per usual. I'm not worried about those on welfare, many of them would get a job and arrange someone else to help with childcare or other issues, if there were lots of part-time jobs available, if the pay was suitably above minimum rates, if the job was close to their home.

Manufacturing is one area that does this flexible employment well: the work can be done at any hour of the day or night, it's not retail, can be picked up quickly, although the work might be sporadic, as it feeds on orders. So to get fast improvements around here, we need strong manufacturers, good employers, and probably sales to overseas markets. Labour is very keen on this area, it fits with their party policies well.

[neopoleII]

yes manufacturing is the key to NZs woos, but.... NZ was the first country to say internationally that china is "most friendly" trading partner..... or words to that effect..... from labour.
so this has made it very difficult for NZ with a free float currency, and govt set minimum wages to compete with free flow imports from china which has no minimum wage and govt controlled currency.
we cant even compete with china on high tech as they have most of the high tech factories now.
we are turning into a land of raw material supplier to china, and having to do it with ever increasing minimum wage and escalating us$ value.
just walk into any retail shop and look at any product and ask yourself........ can we make this cheaper or better than the Chinese?
the answer is no.
farm produce and raw material is the only thing we can supply for a profit.
we could however introduce tariffs..... that would secure nz manufacturing jobs for local consumption..... but not export..... not a good plan.
our high tech industries is copied or sold out wholesale.
as is the rest of the world.

i know a man who is a kiwi who owns several mines and mine supply companies in ozzie and he is mind boggling wealthy and he recons that china has already past the stage of " what goes up must come down" ...... for the simple reason that if china goes down..... so does every one else... and that cant happen in this tight global community.
china is the worlds factory now....... for better or worse.
so what a we?
a resource supplier...... small at that.
we need to reset our political system to make sure we dont end up like greece or a banana republic.
sad but true...... at least we have a small population compared to land mass to be able to sustain ourselves if things get really bad.

ie...... currency war....... one kiwi dollar to 50cents US
ie ..... foot and mouth.
ie....... oil embargo.

we are vulnerable more than ever for export dollars but we are self sufficient if worst comes to worst.
obviously worst case points of view here....... but most smart folks have a little tucked away for a rainy day...... does NZ?

[elZorro]

Interesting points, Neopole.. but I know a few manufacturers who bring in some parts from China, but also add value here. And usually in markets so relatively small or niche that no-one will bother to compete. That's not to say the outputs aren't then exported. This works as long as the imported parts aren't really bulky or heavy, as energy costs to transport lower value items can wreck any saving. For example, circuit boards are often made in China, but the parts may be put on over here. That way the units can be made to order in smaller batches.

There's nothing to stop anyone doing product design here either, and lots of projects would also create good work for many engineers. In the rural industries in particular, there are many opportunities for smarter add-on automation gear, and monitors. Lower cost stuff that has a broad application worldwide.

Have to agree with you on most consumer gear, NZ is not going to be able to compete there.

Huntly needs more manufacturing urgently.

http://www.stuff.co.nz/business/industries/7575722/Huntly-reels-on-news-of-job-losses

[POSSUM THE CAT]

ElZorro & Neopole11 The last big depression kept going in waves. Until they had the Bretton Woods Conference where they fixed all the exchange rates & you had to get a majority of members to agree to any changes. The floating exchange rates are a financial disaster. Fixed exchange rates would allow forward planning without the exchange risk or the major cost of hedging making exporting & also some importing an undesirable activity.

[Major von Tempsky]

Oh dear oh dear Possum, you wouldn't get a single economist in any any advanced democracy to agree with that proposition.
The situation would be much much worse with fixed exchange rates which lock countries into terrible and worsening Balance of Payments problems.

As a simple illustration take a look at Europe - which countries are in trouble? The one's with fixed exchange rates who can't adjust - Greece, Spain, Ireland, Italy, Portugal, Slovenia.
Which ones have managed to avoid the problem because they have floating exchange rates?
Britain, Poland, Sweden, Czech Republic......

Take a look at Argentina, that had a fixed exchange rate against the US dollar forcing them to borrow billions of dollars but it became unsustainable and they were forced to devalue and default on their loans. Now they can't borrow a sous from anywhere in the world and their economy is basket case to the point that you are prosecuted if you dare to speculate what the real rate of inflation is.

The World recovered from the Great Depression because of Keynesian economics and the approaching war. After the war it was continuing Keynesian economics and the Marshall Aid Plan that steered the world economy on. Bretton Woods was a growing obstruction to world trade and world growth and until it broke down.

[POSSUM THE CAT]

Major von Tempsky that is the problem economists full of university theory. That cannot learn from history, you had variable exchange rates during the great depression & it continued in waves until they finally got together & fixed the exchange rates. Another sample idiotic university education was free trade are we any better off today with all the free trade & free trade agreements. No we can buy a few luxury goods cheap if you are in the top income bracket. But there is now a lack of employment for about 10% of the population. businesses are suffering from lack of customers. So they lend people money to buy goods like a lot of European Countries. But comes to a stage when the credit stops because they cannot pay it back. Take the new Chinese Locomotives for the railways they were a we bit cheaper than building in NZ. But how much extra did we pay in social welfare benefits & we bought heaps of crap. We have to much of our population being brainwashed in Universities

[fungus pudding]

Major von Tempsky that is the problem economists full of university theory. That cannot learn from history, you had variable exchange rates during the great depression & it continued in waves until they finally got together & fixed the exchange rates.

So tell us, in your ideal world should we raise or lower the dollar? Or will that vary daily depending whether we want to trade with, say, Australia or USA?

[POSSUM THE CAT]

Fungus Pudding you need to fix all the exchange rates not just one. When everybody knows where they are & where they will be in Ten years time. Also currency traders would be out of work rather than trying to manipulate currencies either up or down.

[fungus pudding]

Fungus Pudding you need to fix all the exchange rates not just one. When everybody knows where they are & where they will be in Ten years time. Also currency traders would be out of work rather than trying to manipulate currencies either up or down.

Now I know you're joking. :)

P.S. Might as well get someone to fix the world's sharemarkets at the same time. This going up and down business just makes for winners and losers. :D

[elZorro]

I'm not so sure MVT is joking..great conversation starter.

Comments from a Leader in Waiting today..


NEWS IN BRIEF
Our thoughts (http://davidshearer.createsend1.com/t/r-l-krbjhy-dtdydjxu-d/) are with the workers at Solid Energy as hundreds of them face losing their jobs (http://davidshearer.createsend1.com/t/r-l-krbjhy-dtdydjxu-h/). We call on the company to give workers at Spring Creek on the West Coast (http://davidshearer.createsend1.com/t/r-l-krbjhy-dtdydjxu-k/) certainty about their future as soon as possible. Solid Energy’s woes are further proof – as if it was needed – that National’s plan for New Zealand to sell and mine its way to prosperity is a failure.

Unfortunately, Clayton Cosgrove’s bill (http://davidshearer.createsend1.com/t/r-l-krbjhy-dtdydjxu-b/) to make it harder for our strategic state assets to be sold fell short by a single vote with National, Act and United Future opposed. The bill would have required the approval of 75% of MPs to vote for any future asset sales.

I headed down to KiwiRail’s Hillside workshop in Dunedin this week to talk to the workers about the uncertainty surrounding the business - and their jobs (http://davidshearer.createsend1.com/t/r-l-krbjhy-dtdydjxu-n/). The workshop is up for sale and a leaked report obtained by Labour shows that if it’s not sold, it will be shut down. We’ll see hundreds of skilled jobs lost as a result and there’s no doubt many of those workers will head to Australia looking for opportunities. We’ve lost 25,000 manufacturing jobs under National’s watch. We can’t afford to keep losing our talented and skilled workers.


You may mock all you like FP, but I bet National Party people will be keeping well away from the Hillside workshop.

[fungus pudding]

You may mock all you like FP, but I bet National Party people will be keeping well away from the Hillside workshop.


I'mk not mocking anything. Nor did I mention Hillside workshops - but seeing you did, come to Dunedin and have a look at the show before you say too much about it.

[elZorro]

I'mk not mocking anything. Nor did I mention Hillside workshops - but seeing you did, come to Dunedin and have a look at the show before you say too much about it.

Come to Huntly..

http://www.stuff.co.nz/business/industries/7584080/Mining-town-braces-for-catastrophe

[POSSUM THE CAT]

Fungus Pudding the only reason the hillside workshops are run down is the University educated Economists that think it is better & cheaper to buy cheap Chinese Junk. And pay twice as much as they save on the purchase price maintaining them. Let alone the social welfare benefits they will have to pay to the unemployed staff. Do not forget the drop in economic activity this will cause because the welfare benefits will not be as high as wages so less money to flow back through the economy. Thus creating more unemployed creating an ever increasing vicious circle. Even a kindergarten kid should be able to understand this. But the university educated idiots that are parliament definitely cannot. The sooner we get some practical people in parliament (instead of a foreign exchange gambler even a successful one) to run the country. What other country has 40 year old railway locomotives that are more reliable than the few months old Chinese new ones. IMO nobody with a university degree should be elected to government

[Major von Tempsky]

Einstein had a university degree....Lord Maynard Keynes had a university degree.....

[fungus pudding]

Einstein had a university degree....Lord Maynard Keynes had a university degree.....


Yes, but guess who hasn't? :D

[elZorro]

I'mk not mocking anything. Nor did I mention Hillside workshops - but seeing you did, come to Dunedin and have a look at the show before you say too much about it.

Looks very organised to me, good website, certified processes.. isn't this something to be proud of?

http://www.hillsidenz.com/

Brian Gaynor on asset sales, maybe not until next year. But look at the poor value likely to be obtained in what is close to a firesale.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10830887

[POSSUM THE CAT]

Major Von Tempsky Lord Maynard Keynes had a university degree. Are we not following his teachings & theory is that why we are in such a mess?

[POSSUM THE CAT]

El Zorro Asset Sales? but Economic theory says they must do it

[elZorro]

El Zorro Asset Sales? but Economic theory says they must do it

I think the fundamental problem is not whether the MPs are university qualified or not. Just about everybody that goes through a tertiary education ends up understanding that all they really learnt, was how to apply themselves to a task or an issue. Many end up doing work in areas they never qualified for, using almost none of the technical data they were bombarded with. That's OK, sometimes it's healthy to take a practical approach.

What I'm worried about, is that too many MPs are behaving like the business sector in general. Not investing in their core business, giving up on growing their employee base, downscaling, importing more raw and fully built products to put on a margin, not going out and finding new export markets. Not protecting their IP as a general business tactic, and even selling off their best core assets to shore up the books. Might look fine for the accountant types, but it's just very poor form longer-term.

[POSSUM THE CAT]

El Zorro just as I said that those theorys are brainwashed into them, They have no ability to think for themselves. They learn by Rote to pass exams, not to use their brains. At least a PHD student has to think a little bit to write a thesis. But if he wrote something not compatable with his mentors theory. I still think he would be failed. Like senior High School wrote papers querying Global Warming got fail marks.

[elZorro]

El Zorro just as I said that those theorys are brainwashed into them, They have no ability to think for themselves. They learn by Rote to pass exams, not to use their brains. At least a PHD student has to think a little bit to write a thesis. But if he wrote something not compatable with his mentors theory. I still think he would be failed. Like senior High School wrote papers querying Global Warming got fail marks.

You have to write a thesis for Masters level as well. As long as it's backed up by good research, a thesis will pass even if it's contrary to established thinking.

I have to agree with the High School that graded answers down if the students queried Global Warming though. It's virtually a fact of life now, but we might need another thread perhaps, if you have another opinion..:)

[Major von Tempsky]

Ha! Ha! Good joke!

Actually Lord Maynard Keynes (who in very simple terms espoused more government spending and artifical stimulation of demand in situations where demand was less than supply) has been responsible for the recovery from the Depression followed by the practically non stop growth of the world economy after WW2.

Only problem is governments embracing his prescription over enthusiastically in all situations gave rise to bouts of inflation which Friedmanism (Thatcher's adviser) has been required to cure.

[elZorro]

Ha! Ha! Good joke!

Actually Lord Maynard Keynes (who in very simple terms espoused more government spending and artifical stimulation of demand in situations where demand was less than supply) has been responsible for the recovery from the Depression followed by the practically non stop growth of the world economy after WW2.

Only problem is governments embracing his prescription over enthusiastically in all situations gave rise to bouts of inflation which Friedmanism (Thatcher's adviser) has been required to cure.

I've never looked into the background of this Keynes bloke, but he sounds like someone from the Left, so I must do some research. I found out by asking my daughter, who is in the process of sitting NCEA3, that the secondary schools steer clear of global warming as a Theory. They like students to know about warming and cooling periods, without an opinion on what might be causing them. You have to save something up for tertiary level courses.

Economics, that's something we should all be taught the basics of, at college.

[Major von Tempsky]

Well to save you some time - he was Jewish (at a time when being Jewish was quite a challenge), he was gay, and he made a personal fortune showing he really did understand economics :-) And he was knighted for his services in solving the depression and writing up his theories of how economies worked. In my time at varsity he was de rigueur, the mainstay, but I believe that courses have now slid away from that.

[POSSUM THE CAT]

Major von Tempsky Like another world war & was he one in later life espoused floating exchange rates. Others say it was the Bretton Woods conference that fixed the exchange rates that really brought the world right in the fifties & sixties.

[elZorro]

Well to save you some time - he was Jewish (at a time when being Jewish was quite a challenge), he was gay, and he made a personal fortune showing he really did understand economics :-) And he was knighted for his services in solving the depression and writing up his theories of how economies worked. In my time at varsity he was de rigueur, the mainstay, but I believe that courses have now slid away from that.

Thanks for that MVT, I have had a quick look on the net and found an article by one of our most objective and erudite journalists...

http://bowalleyroad.blogspot.co.nz/2012/06/in-praise-of-heresy.html

This comment after it was also interesting.


Nick said...As Galbraith said "Keynes was for a time and not for all times". Our times differ markedly from the last great Depression: resources were readily available then. By contrast the resource base we rely upon now is stretched and imminently going to fail to meet demand. Peak oil is a fact, peak everything else close.

Growth is the constant Keynes and every other economist of the past has followed; that prescription is not available longer term. The new heretics will prescribe for decline, they will be both correct and despised for their prescience. We are the spoiled teenagers whose party is about to be shut down.
June 16, 2012 9:00 AM (http://bowalleyroad.blogspot.com/2012/06/in-praise-of-heresy.html?showComment=1339794048075#c67619618248 73450199)

Nick is correct in saying that it's different this time, but E=mc2, so by the law of averages the world will find some way of harnessing unlimited energy, and if it's at the right price, we can mine, manufacture and repair the environment ad infinitum. In the meantime we should be doing more than sitting on our hands.

I hear on TV today that National has decided to use, not science, but the submissions to policy decisions from the public and interested parties (like bakers?), on the compulsion of folic acid in bread. Status quo, so if you don't take folic acid before you get pregnant, you take your chances. Depends on which bread you eat, you might get lucky and have no problems. All this to avoid being called a nanny state no doubt. Sometimes govt has to take the lead.

The seven big motorway projects are going ahead despite cost overruns so big, no-one is going to say how much. Billions are involved here. Compare this to R&D incentives of a few tens of million, which might have employed tens of thousands in sorely needed manufacturing and design areas.

I have heard though, that the few people selling big imported trucks are having a fielday, as those involved in the roading contracts get geared up for the work. So the taxpayer money is largely going into big transport equipment, damaging our balance of payments further. Madness..

[elZorro]

The MRP asset sale is on hold until next year.

http://www.stuff.co.nz/national/politics/7603112/Mighty-River-sale-on-hold

I'm quite pleased about this, it gives the rest of us the chance to have a think about the whole deal. Like Lange's pause for a cuppa.

[elZorro]

Newsflash from MoBIE today: (http://www.scoop.co.nz/stories/PA1209/S00039/govt-helps-students-gain-valuable-rd-skills.htm) an all new scheme of R&D funding for 200 undergraduate students with businesses, funded at up to $6,400 each plus GST.

http://www.msi.govt.nz/get-funded/build-your-business/what-we-offer/capability-funding/undergraduate-internships/

Except that this is not new. It is a scaled down TIF scheme that has been running for many years, I've used it with varied success. I'm not sure how many students were funded before, but now the amount of this part of the fund is $1.2mill, a maximum of 200 students throughout NZ this year.

I wonder how many science undergraduate students there are in each 2nd or 3rd year at all of the universities. Several thousand or tens of thousands? And the allocation is 0.002% of the tax take, it will reach 110 businesses, 0.02% of the enterprises in NZ. Superb.

Most university science students will be picking fruit or working in retail stores over their end-of-year then, if they can find work there.

Here's a 2011 article on National's changes, and comments from various parties. Note that the example use of the new TTV scheme is automation. This is because the company operates with low margins. The R&D spend for this type of company is aimed at reducing the levels of employment for each tonne of produce. It is not necessarily aimed at developing a high-value export manufacture. This is another very good reason for spreading the spend (from about only 200 companies in TTV), and creating a culture shift.

http://unlimited.co.nz/unlimited.nsf/innovation/lifting-our-rd-game

[elZorro]

http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=10832121

[elZorro]

20,000 to 25,000 manufacturing jobs lost since National came to power..

http://www.stuff.co.nz/business/industries/7656708/Industry-needs-your-help-Union-to-Government

The paper-based media is fairly shot, Steven Joyce should know that one. But the overall track record of National is bad, jobs are so tough to find that many are relocating to Christchurch, just to get a position of some kind in the trades. But these are all internal churn jobs. We need profitable exports.

Two sides to every story. Here's one about paint contracts. (http://www.sharechat.co.nz/article/871de6d7/dulux-resene-valspar-win-christchurch-paint-contract.html)

[Major von Tempsky]

I wonder if it ever crossed your mind El Zorro, to look at NZ in the context of the world and regional economies?

You might find that NZ is actually doing extremely well compared to Spain, Argentina, Venezuela, Slovenia, & & &.

Why should NZ try to challenge China, India, Philippines & & in manufacturing?

Surely its best to move in the direction of our comparative advantages and concentrate on non manufacturing jobs in agriculture, forestry, servicing....

And of course you will never know whether the 100,000 manufacturing jobs allegedly "lost" under National (you seem to have somehow ignored that some of them would have disappeared due to greater productivity, porobably of the more capital intensive type) would have been rather greater under Labour.
Its an easier scenario. Labour goes for greater protection leading to a lower standard of living and a balance of payments crisis where the IMF etc have to step in to ensure stabilisation. As a result, like Greece, Spain & & rather more manufacturing jobs are lost than if Labour hadn't tried to sweep water uphill.

[craic]

And now as the great Australian bubble bursts we can expect boatloads of returnees coming back because they don't qualify for the dole there and they will get it here out of the taxes that didn't pay here. I can never work out why it is that some people or agency is expected to provide a job, on the employees terms, to anyone who wants one. To me, the individual is responsible for his own survival and maybe that of his family. If during his hunting and gathering, he produces something that someone else needs, he can exchange it for goods or tokens. If he's smart enough and gets big enough to use the labour of others then he can barter with them according to their needs and skills. He doesn't have to provide work making something that isn't needed.

[elZorro]

MVT and Craic, points noted, I have some comments.

NZ might be doing better than many other countries, and that is a given. Relatively highly skilled and literate small population, a young country with many natural resources still intact, mild climate and good rainfall.

MVT and Craic, please realise that there is a great deal of variety in items that are 'manufactured'. We should not be manufacturing anything here that is identical to long-life consumer products from other countries with a much lower labour cost. So we don't make socks, shoes, cars, standard clothes, most appliances, handyman tools, toys, computers, phones, etc. NZ businesses have already gone through a lot of pain coming to that realisation. Maybe we have learned earlier than most. It's what we do from here that is important.

We can find niche areas for manufactured goods and add great value there, and we can add value to our agri exports.

My argument is simple. National will basically let the market take its time sorting all this out, and I can see that it involves a lot of people losing their jobs in the meantime. This will give a result, in that a few well-prepared companies and individuals will do extremely well from the situation.

Labour is in more of a mind to bring the whole country along. They reduced the company tax rate, they brought in R&D tax credits and many other incentives for small startups. What they were saying is this: we'll help you along the path for the first five critical years in a business venture, you will pay less tax as a proportion of your income, but we know you'll have to work harder than most. We expect you to be employing other NZers as time goes on, and we want you to be eventually working smarter, not harder.

Look deeply at the policies from both parties and you'll see I'm right (or is that left??).

Manufacturing under National's watch, back to the depressed level seen in 2009. So it's not growing as they promised, it's retracting. http://www.sharechat.co.nz/article/c837d936/nz-manufacturing-slips-deeper-into-contraction-in-august.html

[Major von Tempsky]

Well, lets make it brutally simple then - would you rather NZers had a higher standard of living without manufacturing or a lower standard of living and protected manufacturing?

[fungus pudding]

Well, lets make it brutally simple then - would you rather NZers had a higher standard of living without manufacturing or a lower standard of living and protected manufacturing?

And that's it in a nutshell. If we really want to manufacture goods that other countries can make better and cheaper, we are not helping ourselves in any way - nor are we helping the countries we currently buy from - who will be less able to buy from us. The fastest and eassiest way to head down the wrong track is to allow the govt. to poke its nose in. Entrepeneurship will find the opportunites - always has, and always will.

[elZorro]

Well, lets make it brutally simple then - would you rather NZers had a higher standard of living without manufacturing or a lower standard of living and protected manufacturing?

Neither. We have a wide range of skill levels over here, so we need manufacturing to provide employment and exchange earnings. Unlike yourself and FP, I don't view small tax incentives and part-grants as protection and government intervention. It is simply a deliberate attempt to quicken up policy and direction changes in the private sector. When done well, the outcome is an even greater tax return and a stronger economy , so this is not a waste of taxpayers money, it's quite the opposite.

I don't think either of you have been manufacturers yet, but can you imagine what would incentivise a business owner to keep making a particular product that sells well, but at a small profit because of competition, and use what is left of his/her capital to do some R&D on a new export product that might or might not sell, and might or might not have a better profit margin when it is ready to go, perhaps 1-4 years down the track. There could be well over $200,000 spent by then, on just a small product. F&P have spent 10 years looking at the next generation washers, they expect to spend $20-30mill on the development to complete it by 2016.

FP, most small businesses are working too hard just keeping the cashflow moving, to think about R&D, they will never go there without a push in the general direction. A tax incentive is the easiest way, and it's non-intrusive.

[fungus pudding]

Neither. We have a wide range of skill levels over here, so we need manufacturing to provide employment and exchange earnings. Unlike yourself and FP, I don't view small tax incentives and part-grants as protection and government intervention. It is simply a deliberate attempt to quicken up policy and direction changes in the private sector. When done well, the outcome is an even greater tax return and a stronger economy , so this is not a waste of taxpayers money, it's quite the opposite.

I don't think either of you have been manufacturers yet, but can you imagine what would incentivise a business owner to keep making a particular product that sells well, but at a small profit because of competition, and use what is left of his/her capital to do some R&D on a new export product that might or might not sell, and might or might not have a better profit margin when it is ready to go, perhaps 1-4 years down the track. There could be well over $200,000 spent by then, on just a small product. F&P have spent 10 years looking at the next generation washers, they expect to spend $20-30mill on the development to complete it by 2016.

FP, most small businesses are working too hard just keeping the cashflow moving, to think about R&D, they will never go there without a push in the general direction. A tax incentive is the easiest way, and it's non-intrusive.

Nothing wrong with tax incentives - equally applied. So just lower all taxes, and stop govt. expenditure used in picking winners.

[elZorro]

Nothing wrong with tax incentives - equally applied. So just lower all taxes, and stop govt. expenditure used in picking winners.

So you're saying all businesses are equal in terms of contributing to the go-forward of the NZ economy, FP? I don't want to have to spell it out.

http://www.stuff.co.nz/business/industries/7679453/Tower-says-F-P-Appliances-offer-too-low?cid=edm:businessday:dailybrief

[fungus pudding]

So you're saying all businesses are equal in terms of contributing to the go-forward of the NZ economy, FP? I don't want to have to spell it out.

http://www.stuff.co.nz/business/industries/7679453/Tower-says-F-P-Appliances-offer-too-low?cid=edm:businessday:dailybrief

I presume by the go-forward you mean the future. Of course not. But there are thousanda uf dairies, hairdressers, coffee-bars, small trades etc who may employ only themselves or have a small staff. There are importers, exporters, retailers etc who employ large numbers. They're all necessary. To give targeted tax relief or credits .means that money is a transfer from these businesses to whoever the govt. deems more worthy. That's simply unfair.

[elZorro]

I presume by the go-forward you mean the future. Of course not. But there are thousands of dairies, hairdressers, coffee-bars, small trades etc who may employ only themselves or have a small staff. There are importers, exporters, retailers etc who employ large numbers. They're all necessary. To give targeted tax relief or credits means that money is a transfer from these businesses to whoever the govt. deems more worthy. That's simply unfair.

No it's not. For one, we're generally talking about a small amount of tax refund, in the next (Labour) term it will be 12.5% of applicable R&D spend refunded. There's still a fair bit of paperwork involved, and it can be audited. Compare that to outfits like AgResearch, NIWA, HortResearch, IRL, many universities, who have a big chunk of their R&D work fully funded by the Taxpayer. They are not audited, but they do have to publish their findings eventually. With their internal costs and PR, legal teams, about 20%-30% of the funding actually gets spent on research.

I agree that dairies and other small businesses might find it hard to tap into R&D tax credits. But when you look at these smaller firms, they are often run by people who are learning the ropes of running a standalone enterprise, and sometimes they are there because they can't get a consistent job with good pay elsewhere. They need well-off customers, plenty of them. A strong, profitable manufacturing industry will provide that traffic, and a lot more jobs.

It's unfair that some get better tax treatment than others? How many times have you stood in front of a till in a dairy and heard the familiar ping of the "No Sale" button? Particularly if cash is offered. Manufacturers don't have a till, everything is recorded, and tax paid on it.

The same hopeful story, but is industry listening? (http://www.stuff.co.nz/business/industries/7678116/Auckland-to-become-economic-powerhouse)

Entrepreneurs conference (http://www.stuff.co.nz/business/opinion-analysis/7675997/Venture-capitalists-see-opportunity).

[fungus pudding]

No it's not. For one, we're generally talking about a small amount of tax refund, in the next (Labour) term it will be 12.5% of applicable R&D spend refunded. There's still a fair bit of paperwork involved, and it can be audited. Compare that to outfits like AgResearch, NIWA, HortResearch, IRL, many universities, who have a big chunk of their R&D work fully funded by the Taxpayer. They are not audited, but they do have to publish their findings eventually. With their internal costs and PR, legal teams, about 20%-30% of the funding actually gets spent on research.

I agree that dairies and other small businesses might find it hard to tap into R&D tax credits. But when you look at these smaller firms, they are often run by people who are learning the ropes of running a standalone enterprise, and sometimes they are there because they can't get a consistent job with good pay elsewhere. They need well-off customers, plenty of them. A strong, profitable manufacturing industry will provide that traffic, and a lot more jobs.

It's unfair that some get better tax treatment than others? How many times have you stood in front of a till in a dairy and heard the familiar ping of the "No Sale" button? Particularly if cash is offered. Manufacturers don't have a till, everything is recorded, and tax paid on it.
[/URL].

I don't know where to srtart with all that, so I won't bother; except to say if you really really really believe a dairy relies on its till tape for its p+l accounting or bookkeping, then you should get out and about more in the world of commerce. Certainly there are lots of undeclared trades jobs, and undeclared retail sales made, it's not illegal to not ring a sale up. It's not compulsory to have a till. But there are also heaps of manufacturers who buy in 'extra' bits and pieces for a personal job - or fiddle use of company vehicles and heaps of other things, flog stuff off and pocket the dough. In spite of your claim that everything is recorded, it just isn't the case. (want to buy a $30,000 boat that comes off the manufacturer's floor, but never quite appeared in the books? - see me later) Manufacturers are no different from all other tax-payers. To offer such nonsense up to justify taxing some businesses to prop-up others is nonsense.

[elZorro]

I don't know where to srtart with all that, so I won't bother; except to say if you really really really believe a dairy relies on its till tape for its p+l accounting or bookkeping, then you should get out and about more in the world of commerce. Certainly there are lots of undeclared trades jobs, and undeclared retail sales made, it's not illegal to not ring a sale up. It's not compulsory to have a till. But there are also heaps of manufacturers who buy in 'extra' bits and pieces for a personal job - or fiddle use of company vehicles and heaps of other things, flog stuff off and pocket the dough. In spite of your claim that everything is recorded, it just isn't the case. (want to buy a $30,000 boat that comes off the manufacturer's floor, but never quite appeared in the books? - see me later) Manufacturers are no different from all other tax-payers. To offer such nonsense up to justify taxing some businesses to prop-up others is nonsense.

Any business can run the risk of being audited, and in a dairy the till tape is often the audit record. Managed firms will require a written excuse for every press of the no-sale button or till drawer access. I've worked behind a till for several years part-time. The family companies I've worked in were straight-up, if there were any 'cashies' they were minor in value. How can a business owner check on the annual progress of a business if too many transactions are off-line? It would defeat a proper valuation when it was time to sell it.

And of course, a manufacturer pays PAYE for every employee as well. No shirking taxes there.

Good manufacturing businesses don't need propping up with tax advantages. But they do need to be given some direction. We're all quite lazy, let's face it.

Comment on the Len Brown article:


Brent #2 01:14 pm Sep 14 2012

Brown said the city needed to focus less on property speculation and more on the base of productive trade sectors, which would earn overseas exchange and provide skilled jobs.
That applies for the whole of NZ, not just Auckland. Our property speculation here is ridiculous, everyone sees property as a safe bet, which mainly it is, but we don't see the opportunity cost of putting our money into productive businesses. Buying property doesn't generate wealth for everyone, potentially only for an individual. Investing in businesses makes the country as a whole wealthier and makes us much better off long term. If only the people with the big bucks realised this we would have a much better venture capitalist culture than the non existent one we have now.

[Major von Tempsky]

Ha!ha! ha! That's very amusing. I do a voluntary stint at a charity shop one afternoon a week.
Every time I wish to go to the loo down the alley I open the till and stuff all the notes in my pocket while I make a quick trip. It's also not unknown to change notes for customers and to take large notes out to hide them overnight.

The IRD will have a totally unmanageable headache if they are going to question every time a till is opened.
Is an IRD staff member going to escort me to the loo?
And yes the IRD has looked at us as a result of which we got a huge refund as our chartered accountancy firm advice was totally wrong on one point.

[craic]

Years ago a friend of mine had a dairy across the street form a small butcher. My friend ate meat and the butcher ate other groceries and greens off their respective shelves and both lived happily ever afterwards - they are both long dead. It was a double dip in more ways than one. The dairy goods were "lost" when they went to the butcher and the meat was lost when it went to my friend so not only did they gain the goods but their profits were reduced by the amount they ate, resulting in tax credits. I use a whle range of cash services because I get better service and better value. GST creams off the tax in the finish anyway. A till can be opened for a $1 transaction but that has no bearing on the amount in or out of the till.

[elZorro]

Years ago a friend of mine had a dairy across the street form a small butcher. My friend ate meat and the butcher ate other groceries and greens off their respective shelves and both lived happily ever afterwards - they are both long dead. It was a double dip in more ways than one. The dairy goods were "lost" when they went to the butcher and the meat was lost when it went to my friend so not only did they gain the goods but their profits were reduced by the amount they ate, resulting in tax credits. I use a whle range of cash services because I get better service and better value. GST creams off the tax in the finish anyway. A till can be opened for a $1 transaction but that has no bearing on the amount in or out of the till.

But MVT and Craic, once a business gets above being 1-2 people, it might be managed from afar. Then the till tape becomes the audit trail, and the end of day cash receipts will have to match what the tape says. Otherwise staff can be asked to make up the balance. Banks do the same thing, but electronically. Sure, some stuff might get swapped off the shelves, pinched off the shelves, and other stuff never paid for by poor customers.

I simply made a comment that the obvious use of the no-sale button in front of customers is poor form, because it makes the firm look dodgy from the outset. They'll do it once too often, there are still a few IRD employees around.

Chartered accountants gave poor advice MVT, that's shocking. My non-chartered accountant has just been wound up by IRD for not paying their taxes...that's also very weird.

[elZorro]

Years ago a friend of mine had a dairy across the street form a small butcher. My friend ate meat and the butcher ate other groceries and greens off their respective shelves and both lived happily ever afterwards - they are both long dead. It was a double dip in more ways than one. The dairy goods were "lost" when they went to the butcher and the meat was lost when it went to my friend so not only did they gain the goods but their profits were reduced by the amount they ate, resulting in tax credits. I use a whle range of cash services because I get better service and better value. GST creams off the tax in the finish anyway. A till can be opened for a $1 transaction but that has no bearing on the amount in or out of the till.

Hang on a minute Craic, this deal is not as good as you think it is. This is an example of a right-thinking couple of traders who have accepted that they have a low markup on their goods.

X sells to Y as a swap, so if we look at each side: X gives away stock costing $100 say, but receives equivalent stock of $100 that is not entered as a purchase, and is consumed. Because his net income will be down by say $130 for the year, he saves about $40 in tax, and that's all. He has no cash for replacement stock. If he'd been able to sell those goods for $200, not $130, he'd have paid tax on an extra $100 of income, or $30 in tax, but he'd effectively have another $170 in his till in cash, with which to buy replacement stock, and repeat the process.

In other words, X and Y have screwed up their businesses, for the sake of paying less tax.

[fungus pudding]

Hang on a minute Craic, this deal is not as good as you think it is. This is an example of a right-thinking couple of traders who have accepted that they have a low markup on their goods.

X sells to Y as a swap, so if we look at each side: X gives away stock costing $100 say, but receives equivalent stock of $100 that is not entered as a purchase, and is consumed. Because his net income will be down by say $130 for the year, he saves about $40 in tax, and that's all. He has no cash for replacement stock. If he'd been able to sell those goods for $200, not $130, he'd have paid tax on an extra $100 of income, or $30 in tax, but he'd effectively have another $170 in his till in cash, with which to buy replacement stock, and repeat the process.

In other words, X and Y have screwed up their businesses, for the sake of paying less tax.


But have they paid less tax? Most small traders declare something for goods taken for personal consumption, or run the risk of getting caught in an audit. I know of a fish and chip shop owner who got hounded by the IRD because they were convinced he must have been taking spuds home from his shop.

[CJ]

Hang on a minute Craic, this deal is not as good as you think it is. This is an example of a right-thinking couple of traders who have accepted that they have a low markup on their goods.

X sells to Y as a swap, so if we look at each side: X gives away stock costing $100 say, but receives equivalent stock of $100 that is not entered as a purchase, and is consumed. Because his net income will be down by say $130 for the year, he saves about $40 in tax, and that's all. He has no cash for replacement stock. If he'd been able to sell those goods for $200, not $130, he'd have paid tax on an extra $100 of income, or $30 in tax, but he'd effectively have another $170 in his till in cash, with which to buy replacement stock, and repeat the process.

In other words, X and Y have screwed up their businesses, for the sake of paying less tax.Hang on a minute. I thin you have left something out.

Say he gives $100 stock away that he could have sold for $200.

Instead he sells it to the butcher for $200, paying tax of $30 and a NPAT of $70. He draws that as salary and receives $50 in the hand. He goes across the road to the butcher and asks for $200 of meat but finds he only has $50 in his pocket. He would need to sell the butcher $800 of groceries (cost $400) to earn enough to buy $200 back. And I dont even think that factors in the tax refund he gets because of the 'lost invetory'.

[elZorro]

But have they paid less tax? Most small traders declare something for goods taken for personal consumption, or run the risk of getting caught in an audit. I know of a fish and chip shop owner who got hounded by the IRD because they were convinced he must have been taking spuds home from his shop.

When I was learning the ropes, the family business did just that, wrote down all goods taken for personal use, and it was part of the drawings calculation.

I would hope that IRD has more sense than to chase small issues like spuds going missing. It took them long enough to reel in the Aussie banks. Early on I was audited for my vehicle costs, and a general GST audit. I'd only been going for a small while from home, but was able to bring out two archive boxes full of invoices, and a manual cashbook. I said to the young auditor that he could look through the whole lot to check it. He promptly suggested we have a cup of tea, a general discussion, and forget about it. That was common sense.

[elZorro]

Hang on a minute. I think you have left something out.

Say he gives $100 stock away that he could have sold for $200.

Instead he sells it to the butcher for $200, paying tax of $30 and a NPAT of $70. He draws that as salary and receives $50 in the hand. He goes across the road to the butcher and asks for $200 of meat but finds he only has $50 in his pocket. He would need to sell the butcher $800 of groceries (cost $400) to earn enough to buy $200 back. And I dont even think that factors in the tax refund he gets because of the 'lost invetory'.

But the dairy owner will have $70 in the hand, not $50, he only pays tax once. He also has $100 left over in the till to replace the stock he just sold. Without stock, his shop would be screwed. What if the goods he got back in exchange were overpriced, not something he really needed, or faulty? How much stock does he have to sell at a profit, to replace the goods he swapped out, and retain stocking levels?

[CJ]

But the dairy owner will have $70 in the hand, not $50, he only pays tax once. He also has $100 left over in the till to replace the stock he just sold. Without stock, his shop would be screwed. What if the goods he got back in exchange were overpriced, not something he really needed, or faulty? How much stock does he have to sell at a profit, to replace the goods he swapped out, and retain stocking levels?I will concede a few points there. My new position is he is getting $200 of meat for $170. [The difference being the tax saved of $30 which makes sense without doing detailed spreadsheets]

[elZorro]

I will concede a few points there. My new position is he is getting $200 of meat for $170. [The difference being the tax saved of $30 which makes sense without doing detailed spreadsheets]

That's very generous of you CJ, especially since I think there's error in my logic too. It's quite a tough problem, I'm sure there's an algebraic formula or model for it, maybe we should be working for Treasury. :)

[fungus pudding]

That's very generous of you CJ, especially since I think there's error in my logic too. It's quite a tough problem, I'm sure there's an algebraic formula or model for it, maybe we should be working for Treasury. :)

No...no...please.....help!!!!

[elZorro]

No...no...please.....help!!!!

For you FP, David Parker has some ideas about our exchange rate.

http://www.sharechat.co.nz/article/5372ecb4/inflation-targeting-has-failed-rbnz-needs-to-change-says-parker.html

[fungus pudding]

For you FP, David Parker has some ideas about our exchange rate.

http://www.sharechat.co.nz/article/5372ecb4/inflation-targeting-has-failed-rbnz-needs-to-change-says-parker.html

The value of our dollar is set by the market, hopefully never by intervening politicians. Parker and crowd want to lower our value, which is effectivly a pay cut for all NZers, certainly in real terms because our buying power would lower. Forget the interventionists/

[Major von Tempsky]

A couple of times, in response to continual ignorant goading, the RBNZ did have a go at intervention. The effect was slight and lasted for a matter of an hour or two.

Think about it - the NZ $ is the tenth most traded international currency. The NZ GDP is less than a half per cent of the World GDP. Financial flows are something like ten times the size of the World GDP.

Parker has just made a supreme ignorant ass of himself.

[fungus pudding]

A couple of times, in response to continual ignorant goading, the RBNZ did have a go at intervention. The effect was slight and lasted for a matter of an hour or two.

Think about it - the NZ $ is the tenth most traded international currency. The NZ GDP is less than a half per cent of the World GDP. Financial flows are something like ten times the size of the World GDP.

Parker has just made a supreme ignorant ass of himself.

Not just Parker though. There was some wonker on the radio spouting on that our dollar was too high against USA, but would have liked us to be on par with Australia! The mind boggles.

[elZorro]

Not just Parker though. There was some wonker on the radio spouting on that our dollar was too high against USA, but would have liked us to be on par with Australia! The mind boggles.

I'm with you both on this one about exchange rates, and Brian Fallow wrote an article yesterday about it too.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10835174

An importer who adds no value to goods will be very happy with a high exchange rate. An exporter like a farmer or manufacturer, with a limited amount of imported costs to production, wants a low exchange rate.

To his credit, Parker suggested that the Reserve Bank policies be a bit less predictable, and that idea has some merit.

In the meantime, most businesses (including mine) are not leading edge, they don't spend enough on tech equipment or R&D, or in the case of farmers, don't concentrate on maximising profit very often. They are keener on limiting taxes, usually through paying interest on some new acquisition. And there we are, back to the exchange rate.

[fungus pudding]

I'm with you both on this one about exchange rates, and Brian Fallow wrote an article yesterday about it too.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10835174

An importer who adds no value to goods will be very happy with a high exchange rate. An exporter like a farmer or manufacturer, with a limited amount of imported costs to production, wants a low exchange rate.

To his credit, Parker suggested that the Reserve Bank policies be a bit less predictable, and that idea has some merit.

In the meantime, most businesses (including mine) are not leading edge, they don't spend enough on tech equipment or R&D, or in the case of farmers, don't concentrate on maximising profit very often. They are keener on limiting taxes, usually through paying interest on some new acquisition. And there we are, back to the exchange rate.

No doubt that income tax influences business behaviour and decisions. That's exactly why the top tax rate of 33% should be less punitive. Something Labour politicians are well aware of, but choose to promote higher rates to placate the great unwashed lower paid, envious NZ voters. Unfortunately many voters believe what they are preached, to their own detriment.

[elZorro]

No doubt that income tax influences business behaviour and decisions. That's exactly why the top tax rate of 33% should be less punitive. Something Labour politicians are well aware of, but choose to promote higher rates to placate the great unwashed lower paid, envious NZ voters. Unfortunately many voters believe what they are preached, to their own detriment.

All that is possibly correct FP, but PAYE employees don't have quite the same problems with tax, as it is deducted at source. It's the trusts, companies, partnerships and sole traders who have a problem. Quite a bit of the tax calculation that might be due, is hidden inside the large churn of transactions that almost every firm has to make, to stay in business. So often for me, the big tax catchup happens after the annual books are completed. I suspect it catches many business people out, including my previous accountant, who as I mentioned was hauled into court and put into liquidation by the IRD, over unpaid tax. Maybe we should all run full sets of books and use these to keep an eye on profits, at least each quarter.

Is 33% too high a tax rate? In many ways it shouldn't be. There are tax rates at very similar levels overseas, and maybe if capital taxes are introduced here, the top income tax rate will come down further. The way I look at it, every dollar I'm smart enough to profit by, on paper, has partly been earned by the use of common assets owned by the state, the country as a whole. Reticulated power, water, sewage, roading, rail, port facilities, airline services, airports, customs, stats office, Trade and Enterprise, university linkages, etc. While some of these services have a private enterprise segment, or are partly covered by other local body taxes and excise taxes, the result is the same.

A lot of hard graft by other generations put this infrastructure here, my only problem is how to ensure the profits keep rolling. I will never be asked for taxes on paper profits I didn't make, and I'll never get to keep 2/3rds of them in my bank account either.

On another front - FP- do you think national have a gnat's chance of getting a third term at this stage? What with trying to amalgamate CHCH schools without giving the locals much say, the John Banks fiasco and stalled asset sales, it's not looking too good for them.

[Fudosan]

Unfortunately many voters believe what they are preached, to their own detriment.Well said! I'm with you.

[fungus pudding]

All that is possibly correct FP, but PAYE employees don't have quite the same problems with tax, as it is deducted at source. It's the trusts, companies, partnerships and sole traders who have a problem. Quite a bit of the tax calculation that might be due, is hidden inside the large churn of transactions that almost every firm has to make, to stay in business. So often for me, the big tax catchup happens after the annual books are completed. I suspect it catches many business people out, including my previous accountant, who as I mentioned was hauled into court and put into liquidation by the IRD, over unpaid tax. Maybe we should all run full sets of books and use these to keep an eye on profits, at least each quarter.

Is 33% too high a tax rate? In many ways it shouldn't be. There are tax rates at very similar levels overseas, and maybe if capital taxes are introduced here, the top income tax rate will come down further. The way I look at it, every dollar I'm smart enough to profit by, on paper, has partly been earned by the use of common assets owned by the state, the country as a whole. Reticulated power, water, sewage, roading, rail, port facilities, airline services, airports, customs, stats office, Trade and Enterprise, university linkages, etc. While some of these services have a private enterprise segment, or are partly covered by other local body taxes and excise taxes, the result is the same.

A lot of hard graft by other generations put this infrastructure here, my only problem is how to ensure the profits keep rolling. I will never be asked for taxes on paper profits I didn't make, and I'll never get to keep 2/3rds of them in my bank account either.

On another front - FP- do you think national have a gnat's chance of getting a third term at this stage? What with trying to amalgamate CHCH schools without giving the locals much say, the John Banks fiasco and stalled asset sales, it's not looking too good for them.

Yes. 33% is too high, and increases the black economy, as well as discouraging the productive. Tax rates will not be reduced by Labour because of Capital gains tax. CGT will raise little as much of what is consodered capital gain is currently taxed as income now. It's a bit silly introducing CGT. All that is necessary is for IRD to more actively enforce current rules.
Will National get a third term? Almost certainly I'd say. Labour are still the leading opposition parties, but haven't got a leader yet, and it's hard to see one in their ranks who would fire up the voters. It's the potential PM, who gains the swinging voters every bit as much as the policies - and Key is popular.

[elZorro]

Yes. 33% is too high, and increases the black economy, as well as discouraging the productive. Tax rates will not be reduced by Labour because of Capital gains tax. CGT will raise little as much of what is considered capital gain is currently taxed as income now. It's a bit silly introducing CGT. All that is necessary is for IRD to more actively enforce current rules.
Will National get a third term? Almost certainly I'd say. Labour are still the leading opposition parties, but haven't got a leader yet, and it's hard to see one in their ranks who would fire up the voters. It's the potential PM, who gains the swinging voters every bit as much as the policies - and Key is popular.

The company tax rate is only 28% FP, not too bad as a holding account. In any case I think many are too fixated on the top income tax rate. There's 15% GST on internal spend, fuel taxes, power taxes, local body taxes, which for the 'great unwashed' as you put it, are big costs. For those on high incomes, the effect of those is capped to some extent. What you're really saying is that if you made an extreme income, you'd like taxes to be capped, or have a sliding percentage.

But where have these profits come from in the first place? In the case of some farmers - and Brian Gaynor has been impressed by some well-travelled farm-owning entrepreneurs recently (http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10835692)- they have screwed down suppliers into delivering goods by ute to their farms for a 5% markup, and paid mediocre salaries to farm workers and managers most likely. They aren't too worried about the exchange rate, but are looking to buy other properties. They have sorted out their tax problem - they'll happily pay three times the cost in bank interest instead. And hope they don't get caught out with property values dropping. Unlike property developers, farms are held longer term and are rarely subject to taxes on sale. A CGT would change the approach to this large sector of investment.

We should have a bet on the outcome of the next election FP, because I'm certain you're wrong there. It's unlikely any government gets a third term, and there are people like David Parker on Labour's team, who held his own this morning on "The Nation", albeit alongside Don Brash and Winston Peters.

I still think they're missing the big picture. A profitable exporter isn't too worried about the exchange rate. If their goods are in demand for whatever reason, and there are no major competitors, the market will have to pay the set price. How do we set NZ up to have more of those types of exports? Everything else will follow.

[fungus pudding]

The company tax rate is only 28% FP, not too bad as a holding account. In any case I think many are too fixated on the top income tax rate. There's 15% GST on internal spend, fuel taxes, power taxes, local body taxes, which for the 'great unwashed' as you put it, are big costs. For those on high incomes, the effect of those is capped to some extent. What you're really saying is that if you made an extreme income, you'd like taxes to be capped, or have a sliding percentage.


It doesn't matter what you think, or what I would like. What matters is what happens, as shown by the Laffer curve. CGT will not change anyone's approach to anything unless it is targeted. e.g. applied to property and not shares or collectables, but that is not the proposal. CGT does more harm than good because it can stop things happening. (Try doing business in Australia and you'll see.)

[craic]

El Zorro, the result of the next election will be the same as the last - a fuzzy conglomerate of F-Wits only held together by the fear unemployment or being recycled into some area where they might have to perform. The great irony is that they have to work their butts off to stay in that foggy place. The idea of a Conservative National government or a Popular Socialist Labour government died years ago.

[elZorro]

El Zorro, the result of the next election will be the same as the last - a fuzzy conglomerate of F-Wits only held together by the fear unemployment or being recycled into some area where they might have to perform. The great irony is that they have to work their butts off to stay in that foggy place. The idea of a Conservative National government or a Popular Socialist Labour government died years ago.

I enjoyed your turn of phrase Craic :) But I can't agree with it. Like the phrase "Those who can, do - those who can't, teach" it's almost certainly not correct. How many of us in our jobs, end up making or doing stuff that makes someone else's life a bit easier, and that's all. We get paid for it, but does it mean that much that we can be smug about it?

Being a politician looks like a very hard job, and not well paid for the hours and the hassle. I think that's why many try it for a term, make some contacts, and then get out.

You're suggesting the main parties have very similar ideologies, and I don't think that's correct. Not most years anyway. Muldoon's leftish state support and Lange's correction term were aberrations.

I asked for someone to show us all how good National has been for the country since they took office. No replies on that.

[craic]

Their biggest achievement was/is preventing Labour from doing any more damage than they had already done. We would be far better off with the Swiss system where the populace get to vote on all the significant issues and can hardly argue with the results. Here, every major bit of legislation seems to be against the will of the majority, or at least the vocal majority. How many people would you have to stop in the street before you found one who could name the Swiss Prime Minister or whatever he is called?

[elZorro]

Their biggest achievement was/is preventing Labour from doing any more damage than they had already done. We would be far better off with the Swiss system where the populace get to vote on all the significant issues and can hardly argue with the results. Here, every major bit of legislation seems to be against the will of the majority, or at least the vocal majority. How many people would you have to stop in the street before you found one who could name the Swiss Prime Minister or whatever he is called?

Which damage Craic? I seem to remember the Nats, when they were in opposition, bleating on about tax cuts for everyone, to use up the budget surpluses Labour had achieved. Labour also repaid a lot of debt. When National got in, the tax cuts mostly went to the few at the top end, the surpluses disappeared, and now we're borrowing money again hand over fist, with heaps more unemployed, and other trained mobile people leaving in droves.

So from my point of view, Labour need to get back in, to stop the damage being done by two National terms.

Venture Capital can be a two-edged sword..
(http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10836029)

[Major von Tempsky]

The surpluses were used up well before National got into power El Zor. They were established by Roger Douglas and Ruth Richardson and progressively run down by Labour until in their last two years Michael Cullen was no longer able to boast a surplus at all as he desperately spent in all directions in an unavailingly attempt to hold onto power. The employment situation you complain of (one of the best in the world actually) would be much worse if National hadn't borrowed some money to ease the transition back to surplus.

[elZorro]

The surpluses were used up well before National got into power El Zor. They were established by Roger Douglas and Ruth Richardson and progressively run down by Labour until in their last two years Michael Cullen was no longer able to boast a surplus at all as he desperately spent in all directions in an unavailingly attempt to hold onto power. The employment situation you complain of (one of the best in the world actually) would be much worse if National hadn't borrowed some money to ease the transition back to surplus.

That has to be the biggest load of bollocks I've seen typed out for a while, MVT. I took the liberty of checking the budget data for the last 10 years, and found this table. It clearly shows that National is presiding over a massive change in the surplus position from fully positive data that Labour had attained. So I'm left wondering if you (i) were mistaken, (ii)were trying to get a reaction, or (iii) you're a diehard National Voter.

Colin James writes for the ODT today:


Colin James's column for the Otago Daily Times for 25 September 2012

The old orthodoxy frays, the next is debated

Last Wednesday John Key invited Winston Peters to read the books that say nothing can be done about the high exchange rate. If Key were keener on reading than he has shown in the case of John Banks' damning police report, he might find there are now also books challenging the orthodoxy he is wedded to.

These challenges are no longer a fringe activity. Some big names and brains are seriously positing alternatives. While that doesn't yet tell us the shape of the next orthodoxy, the old one is no longer securely orthodox.

When circumstances changed in the early 1970s the Keynesian orthodoxy frayed. After some debate, the Friedman orthodoxy triumphed.

That originally said central banks should control money supply. But because globalisation and financial innovation kept changing the nature of money, by the 1980s it was not clear which measure of money to target. Inflation was adopted as a proxy.

That proved a somewhat distant proxy when central banks, led by Alan Greenspan (justified intellectually by Ben Bernanke), left inflation positive when Chinese manufacturing and computerisation and new levels of globalisation lowered production prices for goods and services, which suggested there should have been disinflation, not inflation. The money supply ballooned, feeding an asset price bubble and, inevitably, a crash.

This is not just a hindsight view. By the mid-2000s a number of commentators worried about asset prices. I relayed this in a column in January 2006.

Now central banks -- supposed to epitomise the straight and narrow -- print money like seventeenth-century monarchs. The United States Federal Reserve this month opened the floodgates.

Brazil's Finance Minister Guido Mantega declared this debasing of the United States dollar a currency war which could have "disastrous consequences" for the rest of the world. Financial Times columnist Gillian Tett said that far from lifting United States producers and consumers off their sickbeds, with each new round of Bernanke's "quantitative easing" (QE), "expectations and fears are being racheted up", discouraging investment.

Our central bank can't do much about Bernanke's currency war on us. On Thursday Japan's central bank announced $US125-1000 billion of QE. The yen went down a bit -- for just a few hours.

Nevertheless, the Reserve Bank's new policy targets agreement adds "asset prices" to consumer prices, thus broadening the money supply proxy. And it instructs new governor Graeme Wheeler to aim for 2 per cent inflation, a veiled rebuke to Don Brash's and Alan Bollard's floating in the top half of their different target bands (Bollard averaged 2.6 per cent in his 1-to-3 per band).

Meanwhile Labour's David Parker has been mining the minds of heavyweight international economists who are exploring pathways towards a new orthodoxy. A learning he has taken from Harvard's Jeffrey Frankel is that no one system of monetary policy is right for all countries or for any one country at all times; New Zealand could try targeting GDP (George Stiglitz, whom Parker also saw, argues for GNP). A second learning: inflation targeting can be procyclical (compounding upswings and downswings), especially for asset bubbles. A third: use macroprudential tools as monetary policy levers.

Put that together with economic development shadow minister David Cunliffe's exploration of ways the government can usefully get alongside upwardly mobile businesses, in addition to the Friedman orthodoxy's tight focus on getting regulatory and tax settings right.

Add in that supposed enemies Cunliffe and deputy leader Grant Robertson are jointly leading a small group of MPs aiming to focus at least some of that activity on clean-tech, which has a growing appeal in some areas of business.

Then add Jacinda Ardern's gradual behind-scenes fleshing out of the "child-centred" approach to social policy first proposed in 2007. Couple that with a swag of reports and a growing range of alliances highlighting poverty and inequality which has got the government edgy, judging by the harrumphing conveyed behind-scenes to Children's Commissioner Russell Wills' Wellington workshop on poverty last week.

In sum, Labour is starting to lay some foundations for a more coherent policy than in 2011. And among interest groups there is a growing openness to its counter-propositions to the orthodoxy Key reveres.

But watch Key comfortably batting away the Banks embarrassment with a story he has internalised to the point where it has become for him a reality. That characteristic, which may be a legacy of being odd-boy-out in a state house enclave, gives him the powerful presentational strength of conviction.

Conviction-Key can keep the old orthodoxy breathing a bit longer. Book-reading David Shearer's subtleties, nuances and counterpoints accurately reflect the argumentative phase of the transition to the yet-to-be-defined next orthodoxy. But that isn't strong politics. A bookie would say: advantage Key -- for now.

-- Colin James, Synapsis Ltd, P O Box 9494, Wellington 6141
Ph (64)-4-384 7030, Mobile (64)-21-438 434, Fax (64)-4-384 9175
Webpage http://www.ColinJames.co.nz

[elZorro]

You know what?, the thread goes quiet once some facts get put up. Sorry about that.


http://www.stuff.co.nz/business/industries/7723195/No-need-to-panic-over-job-losses-say-experts

[POSSUM THE CAT]

elZorro they do not like facts only the theories they learn in universities. They must have wealthy parents or well paying jobs or they would know what the real world is like

[elZorro]

elZorro they do not like facts only the theories they learn in universities. They must have wealthy parents or well paying jobs or they would know what the real world is like

Hi PTC, it's healthy there are a range of opinions on the best policies for NZ. I just can't stand it when they are based on untruths. That was a beaut chart wasn't it.

Today, we see the National Bank brand is to disappear. More jobs and branches gone, commercial buildings freed up for..inner city shops?

http://www.stuff.co.nz/business/industries/7728524/ANZ-to-scrap-National-Bank-brand

I note that National ANZ have also been among the big banks behind the interest-saving loans for bigger farmers, that turned nasty, and they also tried very hard to avoid some hundreds of millions of taxes a few years ago. But then, so did my Aussie bank.

This is the friendly private sector at work, National's policy is that this is a good thing. Thank goodness we have a choice, Kiwibank, set up by..Jim Anderton and..Labour.

[POSSUM THE CAT]

elZorro It is not going to make much difference. It has been going on gradually for years. It has just had to happen. In some places branches next door to each other. That is why a lot of bank buildings were sold of a few years ago. Kiwi Bank has a long way to go to catch up with the service levels required. Need to get some fully trained bank staff in their own branches not franchises owned & run by Indians. Opened an a notice saver account with them on line some months ago. What a rigmarole they wanted me to go into the nearest branch to finish the details. This branch has staff that can hardly speak English. So we settled on the Idea that all transactions would be electronic to another Bank.

[fungus pudding]

Hi PTC, it's healthy there are a range of opinions on the best policies for NZ. I just can't stand it when they are based on untruths. That was a beaut chart wasn't it.

Today, we see the National Bank brand is to disappear. More jobs and branches gone, commercial buildings freed up for..inner city shops?

http://www.stuff.co.nz/business/industries/7728524/ANZ-to-scrap-National-Bank-brand

I note that National ANZ have also been among the big banks behind the interest-saving loans for bigger farmers, that turned nasty, and they also tried very hard to avoid some hundreds of millions of taxes a few years ago. But then, so did my Aussie bank.

This is the friendly private sector at work, National's policy is that this is a good thing. Thank goodness we have a choice, Kiwibank, set up by..Jim Anderton and..Labour.

Kiwibank have closed plenty of branches, and many of the ones that remain open are simply a joke.

[Jay]

How are they doing so well in customer service surveys that come out????

[POSSUM THE CAT]

Jay are all the customers they are surveying just buying stamps If it is anything requiring brains & knowledge they need you to make an appointment three to five days in advance. That is what they tried on with me. I asked do you want my business or not. Either we do it online or over the phone or your staff member needs to make an appointment & come to me. 90% of the staff cannot even solve simple postage problems let alone complicated ones as the English language is foreign to them. I for one tell the surveyors to FO or pay for my time.

[Jay]

Jay are all the customers they are surveying just buying stamps .

Who knows PTC, perhaps they are:confused:

[elZorro]

Who knows PTC, perhaps they are:confused:

I was going to research swapping my business and private accounts into Kiwibank. Are you guys saying that would be a bad idea?

[POSSUM THE CAT]

elZorro the only accounts with Kiwi Bank I would touch is their notice saver accounts. And when dealing with businesses most would be very careful dealing with you if you are using Kiwi Bank Accounts. Dealing with the big banks is a very good reference compared to dealing with the small ones.