Hone Harawira is right

Yep I don't say that too often.

According to Stuff "He was having difficulty supporting a tax increase that made things easier for the wealthy "at the expense of those in need".

"GST hits poor people the hardest because nearly all of their money is spent on things that you pay GST on – food, petrol, electricity – so any increase is going to really hurt them.""

Yes, and you don't need to be a socialist like Hone to realise that consumption taxes do this because those on low incomes spend more than they save.

There can, of course, be income tax cuts. In fact simply winding back government spending in real terms to what it was in 1999 would enable the deficit to be abolished and for the top rate to be scrapped and the 33% rate to be cut without raising GST.

Imagine the change in economic activity and international perceptions of NZ if government did scrap the spending outlined by Roger Douglas, wound back spending to 1999 levels, scrap middle class welfare such as "working for families", put serious caps on welfare and see the top rate drop to 21% for income and company tax, and make the first $14000 tax free.

Hone Harawira would be arguing about spending cuts (yes you wont get subsidised broadband, your university fees would go up with inflation and welfare would be far tougher), but he'd not be arguing about tax because those he is interested in would be paying less. Everyone would be.

However, I forgot, many of you elected a Labour Lite government led by Helen John Clark Key with Michael Bill Cullen English as Finance Minister.

After all Labour only increased income tax once (the 39% rate) and then reduced income tax once, and did not ever increase GST.

UPDATE: Oh NOW I know why you voted for Labour National, David Farrar makes it clear it is about staying in power for three terms. Quite why you'd choose the blue team over the red team to keep implementing the red team's policies is beyond me

Fifth bailout in twenty years

The announcement by the New Labour National government that it is spending NZ$750 million of your money, to strengthen a company that the Old Labour government bought for NZ$690 million ought to provoke outrage on behalf of those supporting the current government, and should condemn Labour and its cheerleaders the Greens to history for being the most egregious destroyers of taxpayer wealth since Sir Robert Muldoon.

It should be so obvious to a child that buying something that is worth NZ$690 million and having to spend $750 million to save it is lunacy. Labour receives the blame for the former, and now New Labour National does for the latter.

What to know why you're not getting a real tax cut? Ask both of those gangs of reckless spendthrifts. Why their parents didn't spend a couple of hundred bucks to buy them train sets when they were kids so they could indulge in this pastime is beyond me? (mine did by the way).

Will Kiwirail make a profit that will even approach to recovering this (and the other money poured into it in the past year or so)? No. Indeed, the goal is to be "self-sustaining", which presumably means make an operating profit, not recover the long run cost of capital in this very capital intensive business.

The problem is we've been there before. Government is regularly using your money to rescue railways in New Zealand. The first time was understandable, the second time could even be partly excused as due to the legacy of Think Big, but ever since then it has worn a little thin.

The simple truth railway enthusiasts (and I count myself as one of those) have to accept is that the economically viable future for railways in New Zealand is to operate a severely curtailed network carrying moderately high volumes of containers and bulk commodities.

Two years ago I wrote this post, still valid today, where I outlined what looked to be viable and what did not. Railways north of Auckland have little future, as does the line north of Masterton and between Stratford and the main trunk. The Napier-Gisborne line has had a fortune poured into it, so may be best to keep mothballed in the event of traffic.

David Heatley from the NZ Institute for the Study of Competition and Regulation has an excellent presentation called "The Future of Rail in New Zealand". I wrote about it as well.

You see the railways were bailed out in 1982 when transformed from a government department to a commercially oriented corporation (the first "SOE" before the term SOE was coined).

The railways were bailed out again in 1990, in part to pay the full cost of the main trunk electrification approved before corporatisation (and which was found to be a loss making capital investment even if the electricity was supplied for free), and in part to pay for the restructuring following the removal of the monopoly on long haul freight.

Then it was privatised in 1993.

It was bailed out once more when Dr Cullen bought the track from Toll Rail (having earlier paid over the nose for the Auckland rail network), and then refused to enforce the cost recovery track access charges needed to pay to maintain the network.

The fourth time was the renationalisation, by paying well over the market price for the "business" it kept it open, except that it is unprofitable.

Now you're paying more, this time to make it "viable".

Darren Hughes has said the $750 million isn't enough, because $11 billion is being spent on roads. Yes well done Darren, noticed a railway to every business and home? Noticed how many people use roads compared to railways (most lines you can wait hours for a train of any kind to appear)? Might you be better asking why YOU voted for taxpayers to pay over the odds for this dog of an asset? What is he trying to achieve besides looking like he's addicted to spending bad money after bad? Does he want to spend $11 billion on railways??? He says "I think we need to be looking at how we move freight from, say Gisborne on the east coast, to Napier port". Who is this "we"? Because almost all of it goes by road, as it is substantially cheaper. This was looked at when you were in government Mr. Hughes the simple answer is that there is damn all freight from Gisborne to Napier, because Gisborne has a port. The distance is far too short for a viable rail freight operation.

This example shows all too obviously how inane the Greens are on railways (believe in them, believe in them), how blatantly wasteful the Labour was in renationalising it and how the Nats are too damned scared to do what actually needs to be done - get Kiwirail to borrow the money for its renewal itself.

If there are people willing to buy trains and run them on the network paying to use it, then let them. If there aren't then mothball parts of the network and offer to sell it to whoever wants it.

The arguments that the railways save money are clearly ludicrous.

If there is a desire to ensure rail and road are on an equal footing then set up the highways as a profit oriented corporation that borrows and invests in its network paid for by user fees.

Then both networks can be self sustaining, and be privatised. Hopefully then the ongoing political fetish of saving a network that, by and large, has had its day and is now only viable for a few core freight tasks, will be over.

Gareth Hughes a clown once more

What the Greens say about an unprofitable Hamilton-Auckland passenger rail service.

Ohhh a new rail link? Yes, we want it, you should pay for it, it must be good, it's a railway. People like trains, see the petition of those people who want it? No we didn't ask how often they'd use it, stop being mean, we want it, you pay for it. Go on, it's good for you. How much? We don't know, who cares, you'll be made to pay anyway. It will reduce congestion? How much? We don't know, we ignored any evidence that says it will do nothing.

Gareth Hughes is proving he is as much of a clown as Keeping Stock showed he himself demonstrates.

He says "the commuter rail connection had real merit and offered a long-term option for linking Auckland and Hamilton. Yes, so hard to get between those cities with that state highway, the buses that use it and even the Overlander rail service.

He goes on as the Waikato Times reports "Hughes pointed to the 2011 World Cup as a "great incentive to get a commuter service happening"". Yes, nothing so good for the environment as encouraging Aucklanders to live in Hamilton and commute, and commuting has everything to do with the Rugby World Cup, right?

Follow the thinking so far? Well Gareth doesn't even know there is a railway already between Auckland and Hamilton (most of it double-tracked) "The Greens wanted to see a "corridor of national significance", with construction of a rail-line – or space for it to be built – alongside the Waikato Expressway". Presumably he's never actually travelled between the two cities by land.

This staggering level of ignorance should render the Greens as being a laughing stock. Let alone the wilful blindness of the Greens and local authorities in Waikato ignoring that the last time such a service was trialled, it was for 16 months from 2000 to 2001, undertaken by the then privately owned and unsubsidised Tranz Rail (you know that awful foreign company that leftwing legend has it destroyed the railways). The trial was not a success, even though it used the relatively comfortable Silverfern railcars, it carried on average 12 passengers a day south of Pukekohe.

That's not even a profitable busload. A profitable rail service would need to carry at least 12 times what the trial did, every day, in each direction.

However, the Greens aren't about economics, or reason, for them railways are a religion, and any idea of a new service must inherently be good because trains are good, always.

You should be forced to pay for them because of this, because it is about faith "Mr Hughes said the Greens did not have costings for a Hamilton-Auckland commuter rail link, but they believed the cost-benefit ratios would still be greater than those for new roads.

No costing, no idea about how many people would use it, but they BELIEVE it would be more beneficial than new roads.

If the Greens are so blindly ignorant about something which is rather easy to dismiss, can you imagine how often the Greens engage in such a faith based view of the world (especially given how they dismiss those who have one they disagree with?).

Nuclear fusion achieved?

Well so says the Korean Central News Agency

So I can't wait for that country's willing idiots in NZ to cheer this on, since it already cheered on the DPRK nuclear weapons programme.

The same agency of course says US troops commit 60% of the crimes in South Korea.

It also claims the US is the worst offender of human rights in the world in that:

"In this society one can live only by way of racketeering and through fraud and swindle. Without these practices one cannot but be pushed to the fringes of society where one can not keep body and soul together, denied even the elementary rights to eat, get clad and have a shelter....Drug abuses getting more rife in the U.S. with each passing day are producing an increasing number of mental and physical cripples."

So methinks that scientists need not be planning a trip to Pyongyang soon to discover fusion.

Con-Dem anti-reason anti-business coalition

Well it's out, the Conservative-Liberal Democrat coalition has shown its true colours, and they are colours of a red and green coloured wolf in the sheep's clothing of Cameron and Clegg. The new government is no more friendly to capitalism and to reason than the last one.

The coalition agreement now published gives the impression of being pro-business, and the impression of dealing with the budget deficit, but it commits to a vast range of new spending measures, and to interfere with private businesses on a grand scale in multiple sectors.

The envy-touting, dependency supporting left should be relieved, and the Greens thrilled.

Take the following:

- "The parties agree that funding for the NHS should increase in real terms in each year of the Parliament, while recognising the impact this decision would have on other departments. The target of spending 0.7% of GNI on overseas aid will also remain in place." Yes, the NHS, subject already to record spending increases in the past, can continue to extract ever greater inefficiencies, and not be accountable for it. Meanwhile, the British taxpayer will have to mortgage to continue increasing state aid to developing kleptocracies.

- "We will restore the earnings link for the basic state pension from April 2011 with a “triple guarantee” that pensions are raised by the higher of earnings, prices or 2.5%, as proposed by the Liberal Democrats" So the retired wont have to face any austerity, just their children and grandchildren. Why? Well given they voted for profligate governments in the past you might well ask.

- "We further agree to seek a detailed agreement on taxing non-business capital gains at rates similar or close to those applied to income, with generous exemptions for entrepreneurial business activities" No income tax wont be coming down, it is about increasing capital gains tax. Yes, if you get capital gains for your OWN profit, not for "business" then screw you, Clammyegg wants your money.

- "We agree that a banking levy will be introduced. We will seek a detailed agreement on implementation.. We agree to bring forward detailed proposals for robust action to tackle unacceptable bonuses in the financial services sector" Why? Well let's tax one of the country's most successful service sectors, never mind which banks never needed a bailout and those that did. Oh and let's deter the most successful people in the sector being tax resident in the UK, to please the envy ridden proletariat. So it's off to Switzerland for that lot then?

- "We have agreed that there should be an annual limit on the number of non-EU economic migrants admitted into the UK to live and work" Don't worry, you'll not be attracting the best and brightest anyway, they'll be leaving. Nice sop to the BNP though.

- Finally, taxpayers will prop up a massive programme of Green fetishes and an effective end to growth in the British aviation sector including "The creation of a green investment bank" (quite where the money comes from is irrelevant), "Measures to encourage marine energy" (again, whose money?), "The establishment of a high-speed rail network" (ah the grand show off project that has next to no positive environmental impact), " The cancellation of the third runway at Heathrow. The refusal of additional runways at Gatwick and Stansted" (privately owned airports and the airline industry can go to hell, less competition for European airports and airlines), "Mandating a national recharging network for electric and plug-in hybrid vehicles" (with whose money?).

So that's it. More spending, more taxes, more regulation of the current crop of hated businesses (banking and aviation), and worshipping at the totem of environmental fetishes regardless of cost and benefit.

No reason behind most of it, and a distinctly anti-business agenda particularly if you are in finance or aviation.

Anything for freedom? Well, besides scrapping ID cards, ending the storage of internet and email records without "good reason", and something called a "Freedom Bill", there isn't much. Free schools, paid for by taxpayers maybe, and talk of some tax cuts (which don't offset tax increases of course).

Anyone who voted Conservative expecting less government, less interference in business and a more reason based view of policy should be sorely disappointed. When the Treasury briefs the new government on the fiscal debacle, it will become clear how little of this can be afforded, and so it will be a lie, taxes will go up dramatically, other spending will be slashed substantially or a conbination of it all. Furthermore, with a new agenda of faith based Green initiatives, reason appears to be distinctly absent from this administration. The government wont be shrinking.

Fortunately I didn't vote Conservative.