National policy "akin to communism"

So says a man who should know – Dr Michael Cullen according to Stuff.

He was commenting on the absurd policy announcement by John Key that National would direct the New Zealand Superannuation Fund – the only superannuation fund in the country that pays out the same regardless of how much or little you contribute to it – to invest 40% of its funds in New Zealand companies.

Key’s announcement is completely banal. It risks not only reducing the returns for the fund, but also concentrating too much risk in New Zealand investments. Furthermore, he talks about it investing in “infrastructure bonds”, which means simply, funding government borrowing. You don’t need infrastructure bonds if you let the private sector build, operate and charge users for infrastructure – such as how the country’s two mobile phone networks have been financed and built, and how the internet has been developed, how Auckland and Wellington airports have been developed. No – John Key is in Think Big land.

Dr Cullen is right – regardless of the merit of the NZ Superannuation Fund – not letting the fund managers invest where they see fit will devalue the fund. Furthermore, to suggest that it should finance “Think Big” style central planning government infrastructure projects on telecommunications, water, roads or whatever, is further reducing the likely return (or increasing government borrowing costs, you can’t have both), as well as supplanting private sector investment (increasingly used overseas) with compulsory taxpayer funding.

Of course, renationalising an airline and a railway are also “forms of communism”, so Dr Cullen is very experienced in what he is talking about.

The right answer is to do what, ironically, Winston Peters once advocated. Divide the NZ Superannuation Fund into individual accounts, and hand them to taxpayers to keep, invest in or sell. The consequence is that you are responsible for all or part of your retirement income (with some pro rata adjustment for those currently retired or relatively close to retirement).

Imagine - politicians for individual responsibility.

Cullen leaves Air NZ vulnerable to bloodbath

According to Stuff Qantas, through Jetstar, is about to wage war on the NZ government state owned airline. The statement "Jetstar also plans to use the two centres as a hub for direct flights to the United States and Asia using the new Boeing 787 Dreamliners." (meaning Auckland and Christchurch) will send shivers down the spines of Air NZ's minority private shareholders.

Who should be surprised - it is exactly the consequence of Michael Cullen's decision to not allow Air NZ to be bought by Singapore Airlines in 2002.

Many will have forgotten how Michael Cullen effectively vetoed by indecision Singapore Airlines increasing its stake in (the 100% privately owned) Air New Zealand/Ansett from 25% to 49% in 2002, despite the Air NZ board voting unanimously for the deal, despite Air NZ desperately needing the capital to re-equip its fleet and Ansett's fleet, despite the deal being recommended by officials (who saw it as critical to enable the airline to grow and have a strong strategic future). Dr Cullen did it because Qantas made a rogue bid to invest in Air NZ, which Air NZ's then shareholders opposed, which would have kneecapped its strongest competitor to enable them to merge. A concept Qantas's cunning management sold to the Labour Government, with the undercurrent that it was better for Kiwis and Aussies to stick together and face the world as one (with an enormous monopoly airline), than for NZ to sell out to... others.

Dr Cullen wanted to consider both the Qantas and Singapore Airlines bids, whilst in the meantime Air NZ bled red ink, lacking capital, desperately needing to restructure Ansett - until finally, following September 11 2001, the airline was to fall over, and Dr Cullen renationalised it, on condition that Ansett was left to fail. The rest is history.

Qantas saw its longest standing competitor on domestic and some international routes fall over, granting it complete dominance over the lucrative domestic business market in Australia, it saw its growing international competitor - Ansett/Air NZ/Singapore Airlines - pull out of Australia. Qantas faced only a new and budget market driven Virgin Blue, and saw competition reduce on the lucrative USA and Japan routes.

Qantas owes Dr Cullen a great deal for letting its competitor fail - because Dr Cullen would rather own the airline himself, than let owners of one of the world's best and most successful airlines own it.

So after all that it tried again, and Dr Cullen supported Qantas buying the rump Air NZ - despite competition authorities saying it would be disastrous for the state owned carrier to be owned partly by its biggest competitor.

Thankfully that brought it all to an end. Air NZ restructured, became a profitable carrier, Singapore Airlines bailed out after Dr Cullen severely diluted its ownership, and as a result felt cheated by the Labour government. Air NZ is a shadow of its former self in terms of size, although it has upgraded its fleet and products to compete. Its long haul international network largely comprises routes it monopolises or dominates, with only traffic to Europe and Hong Kong facing serious competition. It does it very best, its efforts of late to install personal video screens on 767s and Airbus A320s for all Trans Tasman flights is a clever competitive move, as it providing more legroom for frequent flyers on its domestic 737s.

However it lacks capital and lack a strategic investor from a large foreign airline.

Dr Cullen would say it should have been Qantas, ignoring that this would decimate competition on domestic, Trans Tasman routes and from Auckland to LA. If the airline continues to be majority state owned with no new capital, it will face all of its lucrative markets under pressure from Qantas-Jetstar. It is already facing a significant decline in UK, Japan and US origin tourism.

Jetstar has a huge advantage over Qantas, in that it has a lower cost base, because the employment contracts were signed outside the legendary generous Qantas pay structure. Jetstar has the economies of scale of the Qantas group, and will aim at the primarily low yield NZ tourist market (the business market will remain with Air NZ, but this is rather small beyond domestic routes, USA and London routes).

So well done Dr Cullen - your own xenophobic preference for Australian capitalists over Singaporean capitalists, your bizarre refusal to give a damn about competition in the aviation industry, and your desire to own an airline come what may, has left Air NZ - which to its credit has improved its game enormously in recent years - vulnerable to the Qantas group waging a war of attrition against it.

Singapore Airlines wont buy it while Labour is in power, for obvious reasons, and indeed there will be little interest in the airline unless it has a presence in the Australian domestic market - already crowded with three airlines (Qantas-Jetstar, Virgin Blue and Tiger Airways). The choices are simple:
- Seek a substantial foreign investor (preferably a Lufthansa, Singapore Airlines, um that's about it in this environment);
- Pour taxpayers' money into financing a competitive battle;
- Let the airline withdraw from markets that are decimated by Qantas/Jetstar.

Well done Mr economic genius.

Greens take from the wise to pay for the foolish

The Greens are all in a funk about the Nats proposing to drop Labour’s “subsidise the wasteful” policy of paying for homeowners to insulate their own property. Their approach to this issue speaks volumes about what it thinks about incentives, rewards and penalties. Stuff reports on Jeanette Fitzsimons moaning about how she thinks it is a huge return on investment - which of course makes you wonder why people wont do it themselves.

Now having said that I support insulating state houses, as it increases their value for a future sale, but that isn't going to happen soon.

If you own your home, you either bought one with insulation or had it installed yourself, in either case you paid for it – with your own money. It’s called private property, a concept the Green Party has remarkably little time for. Presumably you did it for all of the good reasons the Green Party outlines, it saves money on heating, reduces risks of dampness and the related health problems (and damage to other property). In short, it can make very good sense to have insulation. However this is where the Greens, freedom and responsibility separate.

Choosing not to have insulation is a valid choice. The Greens don’t think it is, so want to bribe those who choose not to install insulation. What they don’t get, because they believe the state is some sort of benevolent Santa, is that the money to pay for this bribe comes from those who did choose to install it (and those who didn’t).

It is NZ$1 billion, not a paltry sum, over NZ$650 per household (more when you strip out state and council housing), a fair contribution to paying for installing insulation. That money could be returned to those who have and have not got insulation, and they could choose if they prefer insulation or prefer new clothes, a holiday in Australia or to invest it. Choices the Greens would disapprove of, because nothing is as important as the religion of “reducing emissions”.

So the Greens want to penalise those who have made a “good” choice and reward those who made a “bad” choice. Why? Jeanette Fitzsimons gives this banal explanation “This will keep people in worthwhile work during the recession, reduce power bills, improve health, especially for children with asthma, and reduce our climate change emissions”

Worthwhile work!! Because the way YOU would have spent your money wouldn’t have been for worthwhile work, those shops, that business you own, the airline and hotel you may have bought a holiday from – that isn’t “worthwhile work”, no.

National has made the right move. Taxpayers shouldn’t be forced to pay for those who don’t see value in insulating their properties anymore than they should be paying for new carpet, better heating, new hot water cylinders or curtains. The Greens should butt out of the decisions that property owners make about their own properties, and if they want to help people get insulation, give them their taxes back, instead of rewarding those who can’t be bothered paying for insulation themselves.

Their press release that the Nats plan to keep homes cold and damp speaks volumes of their statist centrally planned mindset. The message kiddies is simple, if you own a house YOU are responsible for whether it is cold and damp. If you depend on a politician to fix it then you are too stupid and irresponsible to own a home, and if your child's asthma is exacerbated by it, what kind of a parent are you? The sort who votes Green and Labour to get other people to tell you what to do and give you money to do it I suppose.

Tragic failure of the McCain campaign

John McCain has sadly failed to demonstrate positively why he should be elected President of the United States. I say sadly because he is quite a man in and of himself. He is not of the socially conservative wing of the Republican Party, but unfortunately those who aren’t don’t get agitated enough to propel that party along.

John McCain could have campaigned as himself, a man who is deeply committed to the USA, committed to its security and opposed both in word and deed to the existential threats made upon it over his lifetime. At one point it was Marxism-Leninism, today it is Islamist led terrorism. He took his own principled, and unpopular stance in favour of overthrowing the murderous gangster Hussein regime, and in favour of the surge which has turned the tide of the Iraqi insurgency and granted Iraqis the peace and freedom they should have had after the fall of Hussein – but failed to do so because of the Bush Administration’s crass errors. The Middle East and the world are a safer place because of that.

Beyond that John McCain has been promising on two fronts domestically. Firstly he has opposed pork barrel politics in government spending, something that Barack Obama can’t ever say without his nose growing. The use of pork, a cancer of theft and corruption that infests so much of the US body politic, is something that war deserves to be waged on. A McCain Presidency could, at least, veto pork wherever it came up, to tame a Democrat dominated Congress. Not that the Republicans are averse to some pork – but McCain himself is. Finally, McCain’s principled belief in free and open trade has been a beacon of reason in a world where protectionism is becoming de rigueur once more, led by the irrational response of developing countries to high food prices, whilst Europe remains in a statist coma. A revitalised Doha round would have helped contribute to a global recovery.

There are many reasons to criticise McCain. His desire to move forward on health care reform while well intentioned has been misguided, although shifting tax preferences for private health insurance from employers to individuals would do wonders to shift this regulated market to one of personal responsibility. He is patently incapable of moving his party to a more liberal stance on individual freedom issues. His performance in the Presidential debates has been stilted and unfortunate, Obama is clearly the better speaker, and Obama also has the advantage of believing in what he says – even though most of what he says is drivel.

McCain’s selection of Sarah Palin was thought by some, including myself, to be inspired from a political point of view, even though on the face of it she didn’t offer much from my perspective. No doubt the selection of Palin was hoped to attract three different constituencies, a strategy that has backfired in several ways.

Palin was first and foremost intended to fire up the conservative Christian base – a base that re-elected George W. Bush in 2004, and a base that has felt distinctly neglected by the Republican primaries when both Mitt Romney and more importantly Mike Huckabee looked unlikely contenders. As an evangelical, it was thought Palin could connect with those voters and give them a reason to back the far more secular talking McCain. Secondly, it was hoped Palin being a woman would help swing middle America female voters who may have backed Hilary Clinton (and less enchanted with Barack Obama). As the only woman on a ticket, this on itself would attract attention. Thirdly, her youth was seen as a contrast to his age, almost a mirror image of the Obama-Biden camp.

She gained media attention, but beyond the superficial and the curiosity value Palin has demonstrated one thing overall – her inexperience. The Vice Presidential role is largely a symbolic one, I say largely because it is about stepping in if the President is incapable of acting – something that admittedly didn’t stop Americans voting for George Bush senior when he had the idiot Dan Quayle running with him. However, Palin has come across as a fool – indeed one that takes the stereotypes of insular, unworldly and ignorant and shows them up to be true. To talk of foreign policy experience because Alaska is close to Russia – to not be able to name a single newspaper she relies on for international news (even if she didn’t read it) – this is not someone that many Americans, including most definitely many women and young people want one step away from the ability to wage war with nuclear weapons.

Palin’s conservatism is unsurprising – perhaps the saddest tragedy of US culture today is the yawning gap between the closed minded authoritarian Puritanism of the conservative right, and the moral equivalency, sacrifice worship, anti-science statist identity politics of the so called “liberal” left. One side preaching God, the other side preaching the environment, collective identity and “all cultures are as good as each other”. One side preaching family, hard work and co-operative communities, another side preaching non-discrimination, respect for individualism and secularism.

Barack Obama is likely to win not because he offers anything substantial to the US voting public. He doesn’t. He is an image and a brand, with hype based on his race, his speaking style and his slogan of “change”. On foreign policy he is keen on putting more effort into Afghanistan, whilst pulling out of Iraq, and talking to “everyone” (although his position on what he’d say is far from clear). Domestically he believes in tax cuts for the “middle class” and tax increases for the “rich”, whilst he has an enormous plan for pork, subsidies and government spending that is understandable given his left wing political roots. He is suspicious of free trade, and his response to the global financial crisis is to inanely say it’s Bush’s fault. Meanwhile, he wants to force the health insurance industry to accept everyone regardless of risk.

He has fired up the Democratic base because of his short centre-left credentials, his race, and his inspirational way of speaking (without saying very much at all). That in itself should ensure his victory.

McCain’s remaining chance is small. He can’t ditch Palin and choose another. He can’t undertake the TV debates again, but he can be himself. He can talk about how the USA built its wealth on freedom, markets and business not government. He can talk about his consistent opposition to government programmes and spending at a time of recession, against Obama’s desire to spend his way out of the recession. He can talk about his strong determination to protect the national security of the USA, and willingness to be firm against its enemies, and to seek peace but not at any cost – and not at the cost of sacrificing Iraq to Islamism.

It is hard to fight with a media who is smitten with style over substance, who sees the relatively young multi-ethnic Obama as being more than what he is – and has little time for negative attacks on him – contrast its treatment of the Bush administration.

The campaign is not over yet – Obama could make an awful mistake, McCain could prove himself yet to be the one more Americans might trust, and perhaps some of Obama’s shady past could haunt him more than smiles and slogans can rebut. Whichever way the election goes it will devastate the party that loses. The question should be, at a time when the economy comes first and foreign policy a close second, who should Americans trust to lead them through this troubled time. Sadly the conclusion at the moment is that neither can offer inspiration and substance that is worth enthusiasm.

The best I can muster is that McCain appals me less than Obama - and that both appal me less than the vile Hilary Clinton. Great.

How should Maori Party voters vote?

Yes yes, they shouldn't, I know - they should vote Libertarianz, but seriously it’s not really me to help out those who I think are voting for statist collectivist racially based party, but the thing is that MMP does it for them, and Maori Party voters figured it out last time anyway. They have something supporters of virtually all other parties have – a party vote that is best NOT given to the party they support. Why?

The magic of the overhang. You see last election the Maori party won 4 electorate seats, but only won just over 2.1% of the party vote. Typically, a party is entitled to its share of the seats in Parliament according to the party vote, as long as the party wins either 5% or one electorate seat. Yes, I know most of you already knew that. However, the Maori Party won more electorate seats than it won proportionate to the party vote, which means an overhand. The Maori Party has one more seat than it would’ve got had it won one electorate seat and then just had its party vote counted.

So what does this mean? Well for starters the size of Parliament crept up by one, which meant that the number of seats for a majority crept up too.

More importantly it shows that the party votes for the Maori Party were as good as wasted – and indeed many Maori Party voters, probably unconsciously – reflected that, since in all seats won by the Maori Party, Labour won the party vote.

Maori Party voters got the best of both worlds, from their perspective. represented by a Maori Party MP and Labour list MPs.

What it means is that voting for the Maori party on the list is pretty much futile if you believe the Maori party will win more electorate seats than it is likely to get as a proportion of the party vote – which is highly likely.

For those of us who believe in less government it means, ironically, that we can either encourage those who vote for the Maori Party on the electorate vote to vote for a party that supports private property rights and less government (Libertarianz or ACT) or encourage them to, vote for the Maori Party (stopping Labour getting their vote. You see if the Maori Party wins many more party votes then the overhand disappears, there are less MPs in Parliament representing the Maori seat voters, which probably means less Labour MPs – a good thing from my perspective.

If National (or ACT or Libertarianz) were clever they would accept and welcome Maori Party supporters vote Maori party in their Maori electorates – but seek the party vote wholeheartedly. For whilst there may be an overhand, the party vote would be held by someone other than Labour.

Perverse? Yes, but that is what the electoral system allows. I once saw an ACT video pre-1996 proposing that National voters vote National in their electorates and ACT for the party vote, for the very same reason. Of course any major party actively pursuing this would be incentivising the other major party to split into Labour- electorate and Labour – party vote, parties, an absurdity, to create an enormous 65 seat overhang of constituencies.

So remember that this election, the Maori Party has every chance of winning more seats than its party vote would entitle it to do, which no doubt is what the Maori Party would want. The bigger question is whether the Maori Party listens to its supporters who will, undoubtedly, predominantly vote Labour on the party vote – or whether it will support National. The latter, surely, would be enormously risky for the Maori Party, but more importantly, if successful, such a partnership would be much much riskier for Labour.

Would Maori Party supporters dare risk a party vote for one other than Labour? Which political party has said it would repeal the Foreshore and Seabed Bill, and defend Maori private property rights? It begins with L - and it isn't Labour.