'Buying NZ Property – Download the free sample readings!

NZ presents some of the most alluring property in the Western World; particularly given the greater easy of residency, the low cost of property, and the liveability of the country. In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


Sunday, April 13, 2014

Future energy policy for NZ

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NZ has in recent years experienced some significant increases in electricity prices. These rises can be attributed to several factors:
1. Latent inflation in exceedingly low capital and operating costs in an era of low interest rates. This is destined at some point to change; whence-forth, we can expect a rise in energy prices.
2. Capital cost structure or framework for distribution and transmission cost pass-thru
3. The high marginal cost of new generating capacity - High because anyone attempting to build a new generating unit has to recover costs without knowing when competitors are commissioning their capacity 
4. The need for all energy businesses to focus on yields rather than profits in a growth restricted market. If you can't cut costs or increase sales, then you are compelled to raise prices in order to achieve the profit growth that shareholder want to see;  but  more importantly the growth executives want  to see so their option incentives deliver the gains that will put them on par with foreign enterprises and other sectors which are able to deliver those gains. 
5. The high cost of natural gas. NZ has small resources of gas and those resources are concentrated in the Taranaki area. Eventually the nation will develop more competitive supplies from other fields, and this will mean cheaper fuel. The benefits may flow through to electricity prices. This assumes however that new supplies are competitive and in a state of oversupply; and that  their geographic location will allow for interconnection through the NZ grid. There is good reason to expect that a new gas resource will be off-grid or too small in size for the resource to make a competitive  difference. If it is so large to support export sales, then the imperative to offer cheap gas is undermined by export prices. This of course will not preclude lower long term contract prices to win an energy supply agreement.


What does this mean for NZ energy policy? Well it probably supports:
1. Energy market reform to encourage more privately owned electricity generation to supply local communities;  which store surplus capacity for timely sale into the grid or captive consumption. This will make more sense as battery prices fall, whether they support wind, wood or solar capacity. Reform of the Resource Management Act (RMA) and council management and land use facilitation will also be important. 
2. The reform of the distribution and transmission pricing so that it does not result in over-investment in said infrastructure.  Observe that under govt patronage NZ capital spending has gone from under-investment to over-investment. From crippling black-outs to pillaging of customer savings. What can we say of NZ energy sector management? We can say that political intrusion has been a huge mistake.

The only political party in NZ which has an energy policy consistent with lower energy prices in the short term is the ACT Party. In the long run, one would expect National policy to increase gas exploration to eventually increase competition, but that could be decades.  Private syndicate investment in generation offers the greatest scope for cheaper NZ energy supplies.  The impact of such an energy policy would:
1. Increase competition in the power market;  resulting in more money in the consumer's pocket. The gains would not however be equal. The disparity can be expected to impact residency decisions. Even in a town or city, you might welcome living in a community with captive power generation and supply arrangements. 
2. Increased energy generation at point of use; reducing transmission demand. Sadly this will have meant prior capacity development was wasteful and that consumers reliant on said supplies will have to pay more.

The prospect of higher costs for some is not a justification for an aversion strategy by government, simply because government just adds to the distortion.
There is an opportunity for governments to optimize this investment however by easing the RMA rules. Ie. If community development was easier,  more people would be living in optimized villages. Why? The reasons for living in communities with identity and connectivity has never been stronger. We don't have the regulatory setting to achieve that. We have dogmatic proscriptions understand which Gibraltar proscribe what is a healthy lifestyle. The practical outcome has been the exact opposite. The justification for adopting private planning is not the fact that the private sector always makes better decisions; it's that the private sector pays the costs of its mistakes - not you the consumer.

Another element of energy policy concerns the locating of generating plants and power lines. Said infrastructure raises two issues:
1. Property ownership - People have a right to compensation for disturbance of person or property.  i.e. Build a generating facility in proximity to a house and people should expect compensation. I would however argue that there should be no compensation for land beyond disruption from use. I would argue that people own the property improvement,  not the land. There is a tendency to consider property rights as intrinsically good; therein failing to ask why they are valued, and therein what actually constitutes property. 
2. Property values - Any investment in property is for the sake of certain values or enjoyment. We might properly ask whether latter parties have the right to undermine the enjoyment of smothers property. In the same way that a person cannot undermine your right to live, they cannot undermine your ability to be productive or to enjoy one's labour. Again, there is a tendency to see property boundaries as intrinsically the basis of property disputes. The shortcomings of this regime have contributed to the collectivisation of property rights such that they have come to be defined as social mores. This development occurred because libertarians failed to provide an adequate solution to contemporary land use conflicts over previous  centuries. Practically they folded and allowed the stat is talk to rule. This was understandable because if the mystic Christian roots for socio-economic values even dating back well before classic economics even developed.

It can only be hoped that sufficient numbers of libertarians will be able to politically advance a common law style of property rights rooted in rationality. To do that libertarians will need to differentiate themselves from 'small government' conservatives who have merely failed to identify the nature of the contradiction that has prompted their political brethren to sell out.

Thursday, April 3, 2014

Who to vote for in New Zealand's Sept 2014 national election

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There are a great many political parties offering their services in this coming Sept 2014 national election in NZ. I will at this point offer my thoughts on each of the parties. I'm not going to offer a comprehensive outline of all their policies simply because that would be a waste of your time and mine. The reason we can quickly dispense with some parties is simply because of their values. So lets begin.

The Labour Party, the NZ First Party, the Mana Party and the Greens Party are a pack of extortionists who seek to incite their constituents to threats of violence through political sanction. By that I mean they give people a political justification to think that its ok for them to extort wealth from taxpayers for their benefit. This is why:
1. Labour Party has union affiliation; why they seek minimum wages which are above the market rate, and basically jump on every issue which gives them an 'angle' to incite fear in people's minds. The most recent example is the TPPA. I actually have some sympathy for their position; but their position is to elicit a fear response; for you to vote for them. They are not going to solve the problem.
2. Mana Party is of course an extortion party for Maori in NZ. Their intent is to instigate claims of injustice and entitlement. Of course, if you were here first, then you can make all-manner of claims because you are the start. In the same way that, if you believe in Jesus, you created everything, so everyone should be beholden to you. There is no end and no limit to how much you can claim. It can border on the ridiculous, and it does, simply because 'more ridiculous' equals more votes, since supporters can feel morally vindicated by compromising from the ridiculous. Every claim to spiritual deprivation strangely reduces to a question of money and property claims, despite being a culture that never recognised such concepts.
3. NZ First peddles the same type of policy. In their case, they like to appeal to the fears and apprehensions of a different group of anti-intellectuals, namely people who covet national pride or patriotism as virtues. These people hark back to the good old days when NZ had a national railway system, a prosperous agricultural sector, and a great standard of living. They don't ask why this has all turned to dust; they just want it back. Now NZ First's solution is to disparage people whom they consider to have caused the problem. So immigrants are bad for stealing jobs and buying up NZ land. This type of policy proscription does not solve the problem; it treats the 'symptoms'. We need Asians because Kiwis are going abroad. The issue of how to make NZ a better place is lost on them. They are clueless, and have no sound arguments to resolve the grievances of their constituents; but since their members are clueless too, its a compelling myth.
4. Greens Party are a package of deceit in the sense that they have two schemes on the go. They each resolve around certain issues - and good examples are:
      a. Animal rights - This issue is appealing for them because its an appeal to emotion and altruism. People love their pets. They have an intrinsic love of life; so the idea of caring for animals is a lovely source of joy for them. The idea is that we would all be better off it we cared for our animals. The fact that we mistreat animals because we renounce 'self', and the greatest expression of self, is the application of one's mind. Anyway, that's too much 'cold hard logic' for them. That's not to say all of them are morally ambivalent. Some of them have evolved as well...which is a good thing, because it means they are more deceptive in their 'honest' engagement. Their illusion is more sophisticated.
       b. Climate change - The strategy is a scare campaign. What is more interesting with this issue is that it arises from the fact that liberals have evolved. A decade ago, it was hard to take liberals seriously because they did not care for rational arguments, evidence or debate. They simply knew bad things were going to happen. End of the earth from asteroids, ice age, and now greenhouse effect and of course contagion. Now, however these liberals have 'evidence' and 'arguments' that at face value 'look scientific'. They cite scientific papers, they use big words, and by shear weight of their numbers, they convey that there is a considerable weight of support behind their view. You are supposed to simply conclude...."So many people believe it; it must be true". The problem is that science is not a matter of popular opinion. Science is not conducted in the newspaper, and even imminent scientists, or those who profess to be, are not special. They just have an opinion. The implication is that it only takes one opinion to discredit all others. Ask yourself why these liberals are taking their argument to the media. The reason is because they want to 'extort' influence. They are really non-scientists who were given a 'green card' by an academic institution.

Now, in fairness to these parties, they don't have completely illegitimate or ill-founded issues to resolve; the problem is the manner in which they go about things and why. For instance, the Mana Party seems completely satisfied to have land locked up in trusts where it does not help its people, but as their people's leaders; they have complete control, and are able to pay themselves nice salaries, as well as paying themselves loans as well. The same for Labour Party. The Labour Party is taking on the TPPA issue, and it can incite a lot of fear over a document which is destined to prove contentious; but the reality is that its never going to address the real nature of that problem, and that is that statutory laws cannot resolve legal conflicts. Its context-dropping dogma that invites loopholing and injustices for both sides on any issue. The Green Party is not unwarranted in seeking clean rivers, kindly treatment of animals or the preservation of the earth. We cannot dismiss the fact that there is more plastic in the oceans, mistreatment of animals and polluted rivers. The problem is their approach to the issue. Its based on extortion, and the reason you can question their intent is because of the nature of their proscriptions for solving the problem. Its about renunciation, taxation and its always targeted at 'big business'. Big oil is a popular target. "Big oil" only produces the stuff; they never target the consumer. They are not interested in educating the consumer; they want to use politically-sanctioned government to extort power. By doing so, they get you paying money and potentially more lucrative amounts from corporations. Their 'feel good' campaign becomes a 'brand' to extort. If you want an inkling of how insidious it is, you can see how 'Cancer Foundation' brands can be used to vet products. These foundations can be used to 'extort' support. You give them money, and they give you profile. You as a consumer are probably not inclined to examine the legitimacy of the claims to 'good health'. That value is open to the foundation's interpretation, or a paid academic perhaps. Its all pretty sordid. It may not be illegitimate; but the risk is there. Some will argue that these are voluntary associations, so they are ok. I will however argue that their scam is akin to defamation, and should be open to prosecution for the same reason. This is an intellectual failing within the libertarian movement that rests on not identifying the underlying principles justifying their values. But that problem is not going to be resolved before this election, so let's put that aside.
I would also mention that groups of extorters can team up like bullies in school, or gang bangers in a football team, in an attempt to gain the balance of power. The problem is that the less credible smaller parties tend to get treated with disdain, so these members are destined to 'behave' for a time, and join the National Party. By joining the Nationals, Mana gains more influence with Labour in coming elections, but given that National posits as the 'prudentially' responsible party, Mana is actually winning credibility from that association as well. And aren't they well-behaved!

This brings us to the next group of candidates. Now, these parties tend to be defenders of individualism, aspiration and wealth creation. The first group of parties want to reshape the distribution of the 'wealth pie', whereas these parties are more interested in 'growing the pie'. Their focus is on economic growth, and to varying degrees, upon property rights to achieve that. There are several parties in this latter category, namely: National Party, Conservative Party, NZ Tea Party, Internet Party and ACT Party. Looking at them individually:
1. National Party - The National Party is a centerist party. They attempt to be all things to all parties. Their game is 'keeping it real'; simple practical/pragmatic messages to keep the balance of power. Their focus is on aspiration and austerity because its a source of credibility and 'faith' in a better future. But if there is a big-spending Labour Party; watch how quickly they abandon that premise. Fortunately after a period of largesse, they can normally count upon their fellow 'aspirants' who are peaceably retaining the 'faith'. You are not going to see libertarians or conservatives out in the streets campaigning. They are more likely to repress their disdain, or throw a tantrum and head off overseas.
2. Conservative Party - This is a new party, and of course you'd need some Christian faith to expect small government. The problem for this party is that Christian Conservatives simply lack the intellectual fortitude to defend their policy, so they are always destined to lose credibility. Their dogmatic proscriptions will draw attention to the lack of defensive for their ideas. Its not to say that all of their ideas are indefensible; but simply that they don't display the intellectual coherency to confidently and realistically assert their policy ideas. In fairness their counterparts on the left are equally impaired; but the scepticism on the left at least means that they retain the tragic vote when ideas prove unfounded. The Conservative Party has a solid lead so far. Like Family First in Australia, expect them to get a big lead in this election, but watch how their support base flounders in the next election.
3. NZ Tea Party - This party is not getting any profile yet - maybe it doesn't have the members to even be a party, but it is really just another Conservative Party. Looking at their policies it is apparent that they suffer the same illusions as the Conservative Party. They will sink without a high profile supporter with money.
4. Internet Party - Speaking of money and high profile, we have Kim Dotcom's party. There is a lot to be concerned about, but also a lot to praise with the Internet Party. Foremost, you have to love the charisma of the guy. But charisma tends to lead a party into a bubble mania that ends up exploding like a space shuttle. The problem is policy integrity or credibility. He is a guy who is associated with copyright breaches. In fairness, its not as if its a fair regime, but then he does not seem to be adding to the dialogue for a better system. He is making a lot of money out of it. A digital currency - that's great! The problem is that we effectively have one now. That's not a source of discipline. Spying is actually not a problem either; its the arbitrary law that makes it possible. He wants to support high-value tech jobs. That's fine, but he wants to subsidize such practices. The reality is that its not a bad idea if it works, but why is this a role for government. We are to believe because an internet guru is canvassing it. But can he make money without facilitating piracy? Now, the fact that politics gives Dotcom profile cannot be lost as he backdoor lists his Mega company. He also stands to benefit from political influence, but really at issue is the use of populist proscriptions, and the lack of detail. There is no question that the nation needs competition in political discourse, but it needs more 'rational' details people, not rhetoric from populists. In Dotcom's defence; he means what he says, but he's not saying much, and he's ultimately going to be serving his own agenda. His policy proscriptions attempt to bridge left-right anarchists, so there is no question he is appealing to the youths of NZ who hate their conservative parents, and older ambivalent souls. I think there is a market for them, as long as they don't stray into broader policy subjects. If they attempt to be more than their 10 point plan, I think they will lose their market. I can see them getting 4-6%, which is perhaps why they are talking to the Mana Party to make sure. This however is a dangerous move; and likely a mistake because it takes the party out of its '10 steps' to success. I think this party will be forced to evolve, and in doing so, I think it will be forced to turn left or libertarian. I think it will be left, and I think it will amalgamate with probably with the Greens Party.
5. ACT Party is perhaps the weakest party at this stage, however I would argue that is actually a positive for them because they are a 'cleaner' party in terms of the values they espouse, and the identity they project. This is the first time I have observed a libertarian party spurn its 'conservative roots' in an attempt to develop coherent policy. It is however not all good news because they are still beholden to MMP for Epsom. Its akin to a dirty secret (actually its no secret at all) that everyone accepts because it keeps the 'aspirants' in power, and of course that is a good thing. ACT will develop a very loyal following if they continue on that path. The problem is that their support base is youths who don't take the time to vote, and they don't necessarily develop their minds to a point where they can sustain the belief. This party cannot just be the 'party for principle', it has to be the party for 'principled education'. It more than any other party needs to develop campus groups, and to spread those to other communities. The problem is that there are too many conservatives in the party looking for 'results'. It is their influence which is destined to see conservatives placated. They need to abandon that tact because conservatives will vote 'Conservative', and that is where they belong. Is there hope of 'educating' conservatives. No, there is not. The political system does not permit that. That will only happen in the community when there is an on-going engagement with people. Such influence cannot be rushed.

In conclusion, I believe people should vote for an aspirational party; and I think that whilst there are a number of them, ACT is the only one who can defend their policy platform, and thus act as a meaningful defender of 'liberal principles'. This they do to varying degrees of success. For instance, I was rather disappointed with ACT's debate (Jamie Whyte vs Norman Russell) with the Greens Party. I shall post a link to my repudiation of the Greens position. This however is Greens flagship policy, so it was critical for ACT to undermine them on this because there are a lot of votes in Greens for ACT. The problem is that Jamie is not a scientist; he comes from an economics/philosophy background. I'm all three.

There is an old adage from Edmund Burke that reads:
Edmund Burke: "The only thing necessary for the triumph of evil is for good men to do nothing".
The problem is that the exponents of good values are only as useful as their last battle, and if they have not confronted their opponents, then they are not always prepared for their policy, and they may not get another opportunity to rectify it. ACT in its glee at getting exposure has given Greens a lead, and they may not get the same exposure to correct that mistake. They need to be prepared on these issues.

Disclosure: It was a tantrum that brought me to NZ. It was Australian politics which caused it.

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New Zealand Property Report 2010 - Download the table of contents or buy this 180-page report at our online store for just $US19.95.


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