Any nation which earns its living as an international commodities trader is going to be affected by what happens to purchasing power in our major markets.

It is true that that the New Zealand banking and finance sectors have not been in the business of offering ‘toxic loans’ like United States and European banks, but we have nevertheless experienced an overheated speculative housing boom. 

That helps to put pressure on the productive sector. When speculators force up housing prices, interest rates go up, and then our dollar gets over-valued too. And no one is helped when a boom turns into a bust.

There are a couple of things we can do.

We can run the government’s finances in a way that smoothes the business cycle better. For example, the last government refused to over heat the economy by turning surpluses into deficits in the good times. This left us with one of the strongest sets of government accounts in the developed world. The other side of the coin is that we need to be ready to give the economy a push when international financial waves crash on our shores.

The worst thing we can do is make the crisis worse by tightening the government’s belt when private spending is already falling.

There is more we can do to help our selves. A backstop of local financial institutions, including Kiwibank, can pick up some slack.

And the other thing we have to do is invest in regional development and the strength of our most productive parts of the economy. In New Zealand, this means our primary sector.

When I was minister of economic development and then agriculture I saw regions that had been hammered by years of low or even negative growth. We got stuck in and within three years every region in New Zealand was in positive growth mode. As they grew, the jobs came back quickly, and communities grew far stronger.

It will be interesting to see if the current government can maintain that record.  I do know however that they will not do it by building a bicycle lane or by cutting back on the working fortnight which are measures which cannot or will not increase either production or productivity.

I have been saying since National cancelled the two billion dollar NZ Fast Forward fund that I was looking forward to seeing how they replaced it. Unfortunately, they have replaced it with the largest cuts in science and research in New Zealand’s history.

While governments around the world are investing to make sure their economies come out of recession stronger, in this year’s Budget the National-led government cut as much out of science and research in the primary sector as it is investing in infrastructure.

The total value of primary sector science investment falls from $2 billion in the NZ Fast Forward Fund under the last government, to as little as $1.2 billion now. With matching private sector funding, the total investment in primary sector research and development is going to fall by $800 million, or about 0.4 per cent of GDP.

The government has not replaced a cent of the cancelled research and development tax credits and has cut innovation spending by more than the value of the personal tax cuts. This huge cut in science and research spells disaster for the future of New Zealand’s economy, especially in our highest export earner, the primary industries sector.

Tags: Agriculture

The recent controversy over the appointment of Christine Rankin to the Families Commission has revealed the extent of an unwelcome intrusion of tabloid journalism into our media.  But it has also failed to lead to the canvassing of significant issues which have nothing to do with Ms Rankin’s private life (which is her business) and which are to do with the whole subject of Crown entity appointment.

Most New Zealanders are blithely unaware that behind the structures of formal parliamentary democracy in New Zealand lies a comprehensive structure of Crown patronage under which literally thousands of appointments are made to statutory bodies each year.  Ms Rankin’s appointment is just one of such, and a fairly minor one at that when compared to appointments to bodies such as SOEs and a wide range of Crown companies in fields such as energy and finance (Transpower, for example, or the Commerce Commission).  These entities can and do make decisions daily affecting the lives of all New Zealanders but those making the decisions are virtually unknown to most New Zealanders.

The complexities of any modern state mean that no Minister can be expected to keep their finger on everything that happens within their portfolio, however constitutionally accountable they may be in theory, and require delegation, in some cases to specialists whose expertise is crucial to the continued operations of the government.  But as the case of Ms Rankin shows the government of the day has more or less carte blanche to appoint whoever they want to many of the controlling boards involved without any structures for ensuring suitability or accountability.  The surprising things is that, despite accusations to the contrary made from time to time, the Cabinet Committee members and officials involved do try to ensure as far as possible that politics does not enter into the matter and that those appointed are full credentialed for the job in hand. 

It is only when an appointment is made to a body such as Families Commission – essentially a political creation for political reasons and thus open to potential for appointment for political reasons (this is sometimes referred to as ‘cronyism’ although there is no evidence of this in Ms Rankin’s case) that the danger of outright political appointments arises. 

In theory there is an independent body which oversees many of these appointments, the Crown Company Appointments Advisory Unit (known to government insiders by its acronym CCMAU) but this unit is buried deep in the bowels of Treasury, is as unknown to most New Zealanders as the bodies it oversees, and is in any event well known in the same insider circles for its conservatism in the appointments it recommends.

Thanks to a review carried out partly at my instigation under the Clark government the criteria used by CCMAU in the recommendation of appointments were broadened to try and bring more on board of those from ethnic minorities, a broader geographical area, and in particular women, provided they also have the necessary credentials.  This has made some difference but not enough.  Ironically Ms Rankin’s appointment contributes to that outcome.

It seems to me that it is time that this was brought more fully into the open and a transparent and public system of nominations introduced.  What a pity it was that the opportunity provided to do so by the Rankin and other appointments e.g. to the ACC, was stymied by the failure of our media to pursue the real issue.

Maori Party leader, Tariana Turia’s claim that Tamil Tiger leader, Velupillai Prabhakaran, the inventor of the suicide belt has left the same legacy and made the same historical contribution as Parihaka’s non-violent prophet Te Whiti o Rongomai and his fellow prophet, Tohu Käkahi, is just not credible from a Maori leader, Jim Anderton said today.

“When I heard Ms Turia on Waatea Radio comparing the two leaders - one from Sri Lanka fighting for a separate Tamil homeland – and the other well-known and revered New Zealander, Te Whiti - and the lesser known Tohu Kakahi, I did a double-take,” Jim Anderton said.

“Ms Turia said that Prabhakaran’s 33-year war for a separate Tamil homeland in Northern Sri Lanka had its roots in British colonial policies which disenfranchised the Tamil mana whenua from their land and when non-violent protest didn’t work, the Tigers turned to military action.

“Prabhakaran, their leader was a proponent of violence from the outset and remained so the whole of his political life.  The ‘military action’ that Ms Turia talks about included pioneering the suicide belt as an instrument of assassination and terrorism, and as result of which many innocent civilians and bystanders suffered horrible deaths. 

“Te Whiti and Tohu Kakahi’s greatness comes from their embrace of passive resistance, which preceded Mohandas Ghandi, and it is the kind of role model which Ms Turia and the Maori Party should be promoting particularly for young Maori, rather than the record and actions of perpetrators of mindless violence which always leads to more violence, not less,” Jim Anderton said.

See also here.

Tags: Maori Party, Human Rights, International Relations

Increasing calls this week for changes to superannuation entitlements shows that national has already caused damage by cutting contributions to the Superannuation Fund, Wigram MP and Progressive leader Jim Anderton says.

“The cancellation of contributions to the Super Fund means we will be less able to meet the cost of superannuation in the future. This must mean either cuts to entitlement, increasing the age threshold, or substantial tax increases in the future.

“Already commentators are queuing up to say the age of eligibility will have to increase, or the link to the average wage will be dropped - meaning  superannuitants will be poorer relative to other New Zealanders. Others are already calling for a return to some kind of surtax that actually penalises people for saving.

“When New Zealanders hear this, they begin to make changes in their lifestyle immediately, because you cannot change your retirement plans at the last minute. Families don’t know how much more they have to put aside to pay for their retirement. And the political consensus they rely on to make long term decisions begins to erode.

“National has a dreadful track record on superannuation because it doesn’t fundamentally believe in all New Zealanders having access to a secure retirement income at a level that enables retired New Zealanders to a reasonable standard of living.

“New Zealanders have already lost some of their security because of National’s decision to back track on meeting some of the future costs of superannuation.

“Increased chatter about future cuts to super is all the proof that’s needed that the damage is already being done,” Jim Anderton said.

Tags: Superannuation