Mauri party seats on Auckland City Council

Share |

There is a debate raging in NZ over whether Maoris should have seats on the Auckland City Council. The arguments between vested interests appear to be divided over:
1. Democratic representation: This argument holds that we live in a democracy, and the principle of democracy is that each person has a vote, irrespective of their race.
2. Treaty settlement: This argument holds that Auckland is not simply about democratic traditions, but rather was the result of a Treaty settlement with the original inhabitants of the area.

The problem I have with each of these arguments is the following:
1. Democracy is not a desirable political system in as much as reason is not the standard of value. Numbers matter more than reasons, so I would argue that Maoris have too much 'numbers' power in the Greater NZ political system, so I would not be so keen to offer Maoris a similar share of a bad system. Having said that, Maoris should have a voice in a system where reason is the standard.
2. Auckland is not a national government. There is a great deal of difference between a national government which subsumes universal education, defence, etc policies and a regional government which tends to dictate land use patterns. I think there is an important distinction to be made in terms of traditional Maori issues, and the origin of those issues. I think Auckland is a Western 'modified environment', so it ought to be evident that it should be driven by Western values, not Maori values. That said, Maoris still have a presence in Auckland. They therefore ought to have recourse through the court system, and of course they do on matters of principle.
3. Maori Party is not necessarily representative. The Maori Party does not necessarily represent all Maori people, even if most Maoris do vote with the party, there should be no necessity that they do. Clearly a push by the Maori Party for more representation in the Auckland City government is an attempt to get more 'arbitrary' power. What is really needs, and only has a right to is the power and influence of a better argument. Judging by their lack of 'influence' in national politics, they would hardly be the best custodian of Maori interests anyway. That is of course the decision of Maoris to decide, and to the extent that democracy and legal provisions offer that participation, that is the sensible approach. Of course I maintain my objections to democracy. Its a poor system that shackles the creative genius of the human mind.

In conclusion the Maori Party does not deserve seats on the Auckland City Government. If it wants to protect the interests of its people, it should engage with the national government on sovereign issues. It could greatly benefit by engaging in judicial activism.

Want to learn about a better system? Read here.

Driving age rising for NZ drivers

Share |

After a spate of young driver-related deaths it appears probable that the minimum driving age will rise from 15 years to 17 years. This increase will of course make a difference to road fatalities, however it will not end the pattern of youth-related deaths. What is often not appreciated is the nature of those deaths. At the moment the license precludes the young drivers from having passengers. The problem is that young drivers routinely breach this rule, and the fact that alcohol is illegal is little discouragement since its easy for kids to get alcohol. It is a recipe for disaster.
NZ is of course a rural-based economy so no youth license is an obstacle for rural families more than city families. I can understand the need to raise the driving age, but actually kids up to 25yo tend to be pretty irresponsible. I would suggest a string of other measures:
1. A link in the driving age to school results. Kids who show a strong average school grade should only be given the right to get an early drivers license.
2. Continued restriction on youth drivers having passengers

NZ taxation under scrutiny

Share |

New Zealand is considering changes to its taxation policy in order to make the country more competitive for foreign investment. In this task they are destined to fail. Let me suggest why. There are several failures the NZ government will make.
1. It will fail to consider efficiency measures - it will focus on raising money rather than improving efficiency/productivity or cutting expenditure. e.g. From hospitals
2. It will fail to recognise where the prospects for economic growth come from. It will focus on cutting the corporate tax rates in order to attract large companies. The scope for expanding business in NZ does not rest on big business, it rests on small business. The reason I say this is because NZ is a very small market, and any decision to align with Australia is only going to reinforce the belief that any regional office in Australia (Syd/Melb/Bris) can service the NZ market. For most countries, NZ does not even justify a presence. This could actually be a strategic advantage for NZ small business.

There are likely to be two serious contenders for tax increases:
1. Capital gains tax on investment property - this would be consistent with the tax regime in Australia, and there is considerable appeal in aligning the tax systems.
2. Stamp duty on property transactions - expect a tax of up to 3%
3. An increase in the GST - I don't expect this tax increase to succeed, least of all at at time of recession. Frankly the suggestion that it is a serious prospect I believe is intended to make people feel like they actual 'won' a concession, when in fact the government will look at the other taxation options.

These tax increases will be used to fund tax reductions for business. The question is - do these tax cuts make sense? Given my arguments above, I believe any revenue increases should be used to invest in NZ small business rather than big business who really only invest in primary resources. Resource producers stand the best chance of passing through costs in this recession, so they are not the group of investors I would be looking to support.

Some time ago NZ joined the chorus of governments which adopted libertarian policies. I consider myself libertarian, but one has to maintain a sense of reality. It I was a taxpayer with any voting power I would not sell an asset based on prices of $0.12/kWh, only to allow the new owner to raise prices to the marginal cost required to commission new generating capacity, which is $0.24/kWh. The reason is because the power companies can generate ample profits at $0.12/kWh, given the cost of generation capacity is zero for most hydro plant (which is 70% of total capacity). Privatisation was a bad deal for NZ'ers. That does not mean it always is; just in this case. This is hardly an incentive for business investment. Of course big business can negotiate harder by 'threatening' to build their own generating capacity.

Another case of bad policy was the decision by the NZ government some years ago NOT to support 'winners'. I understand the sentiments of not providing subsidies to business, but there other choices. Small business in most countries have difficulty raising capital. Its even harder in small markets like NZ. This country needs strategic industries. Students need an assurance of jobs if they are going to study such subjects. This country needs to support niche industries, whether its manufacturing of niche sporting equipment, whether its subsidising a cargo vessels to make regular low-cost shipments to certain markets, whether its a trade shared vision for trade. I see that 10 wine growers in Australia are gathering to promote their wines. NZ needs the same shared vision. The challenges are:
1. Ensuring accountability so the money is not wasted
2. Ensuring that its not a tax scheme but an investment scheme because I hate the idea of trampling on people's rights.

It is all to often forgotten that taxation is a breach of the taxpayers rights to determine their own destiny. I can understand the counter-argument that there needs to be shared expenses like road funding, say with a road petrol tax, rather than tolls everywhere. Such taxes should be user pays as much as possible, and I think people should be able to sue the government for relief from such taxes. People should not not funding schemes they have no benefit from. We don't want bad schemes funded. There needs to be a pay-off. We need schemes to have objective standards of value, so that people and judges can establish their value. This is the vision of this report.

I am reminded of the book 'Bad Samaritans' by Ha-Joon Chang. It looks at history and discovers that the industrial giants, whether Britain in the 17th century, the USA in the 19th century, Germany and Japan in the 20th century, all existed as a result of protectionism. Only when these industries had established themselves did the governments wind back the subsidies. This is not to suggest the model of these countries is desirable. In fact there are many better ideas to boost investment. One option might be a family-based subsidy for business. It needs more thought by myself.

I think there are many successful business people in the world who succeeded because of help from family and friends. The reason that some form of incentive is needed is because people have a tragic sense of live. They are inclined to be cynical about others, and thus people end up with no savings, no customers, no feedback and no service. Ultimately a more prosperous economy today tends to arise only because of government stimulus, though such stimulus arises for the wrong reasons, in order to maintain demand, to keep governments elected; even if it hurts the economy.

Upon completion of this book I will demonstrate a scheme which will provide for the most efficient use of funds. Give me time...so many other books to write. :)

Australia-NZ Closer Economic Relationship (CER)

Share |

One of the most important policy changes in coming years might well be the Closer Economic Relationship (CER) between Australia & NZ. Having moved to NZ to escape the stupidity of the Australian tax system, I would like to warn NZ'ers they might be moving inextricably towards fascism faster than they already are, if PM John Keys keeps forging ahead with his CER agreement. NZ'ers might be thinking that Australia is the stronger economy, so how bad could the tax system be? Well its a nightmare. The reason the Australian economy has out-performed the NZ economy lies in factors such as:
1. The larger size of its economy
2. The huge stimulus provided by Australia's commodity resources
3. Less generous welfare policies - no entrenched welfare system
4. Stronger savings culture
5. Greater commercial acumen

The negatives of NZ joining Australia as one country have already been provided for in the Australian Constitution. The Founding Fathers saw the prospect of NZ being part of Australia. Perhaps they considered the possibility of economic failure. But NZ is far from a failure. Its just that the country would benefit from greater market integration. Certainly foreign investors are less inclined to invest in a different country with 'another' tax regime. If NZ could market itself as Australia 'plus' lower taxes, that would certainly be a great benefit for the country. Of course it has to be good for NZ business as well. I would think that the NZ economy is equal in size to Queensland. Its no 'Sunshine Coast', but rest assured with greater integration, you will see more Australians moving to NZ for the sake of lower property prices, as well as to buy holiday houses.

So when is the property boom going to start? Well given the tight property market in both countries, we might ask what will the focus be? I have no doubt that the greatest attraction for Australians is likely to be the tourist centres of South Island. In order of priority I would think:
1. Queenstown-Wanaka: Lower (domestic) travel costs between Sydney, Melb, Brisbane and Queenstown will result in far greater investment in these areas. We must remember that Wanaka and Queenstown have panoramic views of lakes and mountains, and they occupy confined valleys, so the value of those views is going to skyrocket, and I dare say these places will be destroyed if not properly managed.
2. Blenheim-Picton: The problem for this area is that there is no airport servicing this area for Australians, though I am guessing this will change with greater market deregulation.
3. Christchurch: This city has a lot of appeal too because it is a larger commercial hub, and its at least in the proximity of the North Island attractions, particularly Mt Cook.
4. Auckland: Auckland is NZ's largest commercial centre. No great value in itself, though people might appreciate it as a transport and North Island hub.

How are NZ'ers likely to respond to the thought of being part of Australia? Well there is always proud people who want to keep their own identity. Certainly being a state gives them that, but with some loss of independence? Does it matter if you are controlled by a government in Canberra or Wellington? Yes, clearly it does if federal policy is different. But isn't Keys indicating a desire to shift us towards Australian policy, or is NZ going to be a state with a difference?

Keys is signalling that travel could be as much as 20% cheaper, and that taxation systems will be alligned. He said that travel will be streamlined by Xmas, which is the far more important issue for property investors. Allignment of tax systems will take longer of course. So what will NZ'ers think? Are we the same?

Having lived in NZ, I find NZ'ers more outgoing, more reliant on the State, more easy-going. They are more lifestyle-orientated, less money-orientated. Of course this analysis is skewed by the fact that I've shifted from an Australian city to a rural NZ town, so herein lies the problem. City-siders in NZ are likely to welcome the integration, but rural NZ'ers might regret it. Of course it comes down to values. But towns which were slow, friendly places might resent the invasion of Aussies during the holiday season. Not because they are Aussies, but because they have changed the town's culture. It would be no different than the Wellington school excursion to New Plymouth, which resulted in the students trashing a motel. It upsets local communities. Australia is something bigger. People will have to adjust, and they don't want to. They will not make the connection between these issues and increased business activity and jobs.

Clearly the biggest benefit will be in property prices, which is why we recommend buying property here. The appeal is particularly attractive for Australians given the fact that:
1. The Australian dollar is even stronger than the NZD
2. There is a lot of property already in foreclosure, mostly city apartments in Auckland and Christchurch. People have lost jobs.

One does need to watch the exchange rates. High end properties are still too expensive. Apartment yields are good, and rural property in towns are often still very cheap, even if you are close to the beach. Want to know more about buying property in NZ - see our $20 study.

Best climate & weather in New Zealand

Share |

People often ask what is the weather or climate like in New Zealand. Often its the English or Canadians trying to escape the cold.
First some general rules.
1. It gets colder as you move south in the Southern Hemisphere
2. It gets colder as you rise in elevation
3. The diurnal temperature range (variability) of temperatures increases as you move inland

Bear in mind that weather readings are derived from weather stations, so if you are basing you decisions on city climate data, buy property in an equivalent place, i.e. A similar distance from the coast, as opposed to 10km inland because you want a rural life.

You should also appreciate that cold air sinks into the valleys at night. Its called a temperature inversion, and those areas are slow to get sun in the mornings, and early to lose sunshine in the afternoon. So avoid mountain shade, or opt for those locations with east-west trending mountain ranges or ridge lines which will not conceal sun.

Having lived in NZ for 8mths now, watching the weather and scarcely travelled around NZ in a campervan, I would suggest to you, if you don't like the cold, best to be located in towns along the coasts of the Bay of Plenty, Wanganui-Taranaki regions, Napier/Hastings regions, as they are about 4degC warmer than the South Island. Gisborne area is good too, but more remote, and Gisborne is the only reasonable size city.
Even the top of the Sth Island is very much colder, despite the fact that it has as many sunny days, if not more, than the North Island. That is based on 30 years statistics from NIWA.
Now, if you travel inland from Christchurch it will be particularly cold in the mornings/nights, and particularly hot during mid-day. I understand the appeal of the South Island, but it is colder in winter. I recommend Hastings/Napier, Wanganui (my town). The only difference is property prices. Wanganui is not overpriced. You can buy a house in Wanganui for as little as $NZ80,000 (USD48,000). Its 17degC here today thanks to a northerly, same as Auckland, which has worse weather (slightly), and its 10degC in Christchurch/Dunedin. Blenheim on the north tip of SI is a compromise at 13degC. The morning temperature is 10degC, but if there is a southerly, it can be as cold as 2degC.
Another benefit of the North Island is access to the two largest cities - Auckland and Wellington. If you fly a lot, that comes in handy, but also the inter-island ferry is expensive. Christchurch though is a growing and vibrant city, so its a good choice too, just colder. Of course there is heating, but bear in mind:
1. The prospect of a carbon tax
2. Greater heating costs in winter in the South Island

Photos of NZ volcanoes on the North Island

Share |

Returning to NZ this time from the Philippines I had a stomach upset. This is common for me. I often get sick going from a hot to cold climate. No nausea or fever this time, so I thought it was because of food poisoning or an old nut bar in the bottom of my luggage. As it turns out, it was just travel. Should have been obvious to me..

Anyway, getting the bus back to Wanganui I caught these photos of Mt Ruepehu which I thought I'd share with you. There are 3 impressive volcanoes on the North Island. I'm almost an expert on these because I climbed them as a geology student at Macquarie University. This I think is Ruepehu, the other big ones are Tongariro (nearby), Mt Egmont (near New Plymouth) and Mt Tawawera. Mt Tawawera is like the kiddies favourite because you can run or 'ski' down to the crater floor. A lot of fun given that you cannot see where you're going because of the fog.