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.

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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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Auckland - living on the edge of a volcano - they didn't see it coming

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On the 17th March 2013 I wrote about the risks posed by a volcanic eruption in the Auckland Volcanic Field. I posed a number of questions as much as anything, since as a geologist, I go on evidence, and frankly, I was at a loss to find any. I don’t live in Auckland, so I don’t have any particular interest beyond an odd-hours research, but since writing this story, I’ve seen an escalation in interest in the issue. Might it be that there is more evidence than originally reported? Well there is a follow-up story in the NZ Herald today which raises several more issues which I want to address:
1. Focus of activity – The story probably creates unnecessary fear because it suggests that each of the old active volcanic craters in the Auckland Volcanic Field is active. This is unlikely. More probably an eruption is going to be in the Rangitoto Island area, if not the existing cone.
2. Eruption history – It suggests that Rangitoto has a sporadic eruption history of up to 1000 years. This is less important than the nature of the eruption. Really the threat posed is from an early blast rather than a later flows of liquid, highly fluid magma. Since the eruption is probably going to be offshore, I suggest the greater threat is a mini-tsunami in the bay, as well as a volcanoclastic surge blasting your windows to smithereens. You might want to rethink that bay-side waterfront apartment acquisition; if only for the high rents and the surge risk.
3. Eruption activity – The evidence suggests that volcanic activity has increased in intensity, i.e. the latest eruption some 500 years ago from Rangitoto Island was the most activity in terms of lava flow and ash.  Where does that leave us? Maybe more explosive coming? Maybe simmer or subside.

It goes without saying that Auckland is unique in the world. It is not unknown for cities to be built adjoining volcanoes. The problem for Auckland is that it is probably the only place that I know which is actually built on top of a volcanic field. Having said that; the next eruption is probably going to be offshore. Let’s not forget how ‘recent’ human arrival was; and I’m including the Maoris.

Does it make sense to rethink the focal of NZ development? Does it make sense to keep developing Auckland? Well, given the characteristic of these types of volcanoes, I think it does make sense to keep developing Auckland. Does it make sense to retain it as the centre or focal point for NZ development? Perhaps not; but then expensive housing prices are probably destined to drive people out. Who wants a bird’s eye view of a volcaniclastic surge? Not me.

The reality is that there is a great deal to question about the nature of this volcanic phenomenon. Does one lead one’s future in the hands of academic volcanologists with a limited understanding of geological events? Such volcanologists are really learning as they go, largely on the basis of empirical evidence. They have not even observed an eruption from any field with this style of eruption; let alone from this volcanic field. Reason for caution? Not really perhaps until the evidence trail grows.

Associate Professor Phil Shane said: “Future planning would have to consider living with active volcanism for a long period of time….It is not as bizarre as it sounds, if you think about Iceland and Hawaii - societies have gotten used to living with volcanic activity for generations”.

I have a problem with this statement insofar as Hawaii and Iceland are a completely different type of eruption centre; both in terms of style and character. I doubt there is even the evidence to suggest that Auckland is even a ‘hot spot’ in the conventional sense. Certainly not like Hawaii with its flood basalts, or Iceland for that matter. I suspect its origins are more tectonic than is appreciated, with activity arising from a fractures opening up offshore of Auckland. The evidence is simply not there. There is a major kink in the tectonic plate at Wellington, and you can bet no work has been done interpreting earthquake activity offshore from Auckland.
The problem too often with ‘empirically-driven’ scientists is that they only start questioning convention when some event jumps up in front of them to tell them how little they know about the world (having an incomplete geological account due to erosion and limited observation) and not a great deal of knowledge about the cause of the Auckland Volcanic Field. In this last respect, these empiricists are largely ‘talking blind’. There are not too many geologists around who say ‘I don’t know’. Neither are there many people who define themselves as ‘critical geologists’. Everyone wants to fall back on convention to convey how much they know. The flipside is that unpopular academics seems to be a contradiction in terms, hence you cannot always expect volcanologists (indeed any scientist with unconventional ideas to get taken seriously). Can you imagine how safe one must get with life-time tenure? Can you imagine how annoying a person could become if you worked opposite a professor you did not like for a lifetime? My sense is that they grow to get along; much like the Japanese, defined by their own sense of safety.


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John Key on asset sales: Three Strikes And Your Out!!

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In both October 2011 and January 2012 ( a year ago) I alluded to the threat of a closure of the Rio Tinto alumina smelter, and the prospect of the smelter closure impacting on the electricity market, and the forthcoming power industry privatisation. It loomed at as a compelling reason for the NZ government not selling the power assets - probably the only reason. But given the market outlook its a big one. On the 23rd March 2013, I gave John Key a third warning. Now, I know this guy reads my blog posts because he seems to respond to everything I say. On this occasion however he showed utter contempt for my advice. So what's the problem? Aside from the adage "Three strikes and your out", the problem is that:

The spectre of the Rio Tinto aluminium smelter closing means that 11% of the nation's electricity consumption is handing over the market. That is a big problem for several reasons:
1. The nation's population growth is flat
2. We are in the midst of a recession

The fundamentals for asset sale otherwise look pretty good; but this disposition will remain the case for the foreseeable future. In fact, there is good reason for expecting a future government to increase immigration, and to perhaps expect more Kiwis to return home. There is also the prospect in 5-10 years to expect some offshore resource development, with all the onshore developments that are associated with energy processing. But that's a long way off. In the near-term, we are looking at 10 years of subdued energy demand. More worrisome for Key is the push for reform of the Resource Management Act, which would reduce the cost of installing new generating capacity. This is less of a concern for large capacity additions; but there might be perceived to be a 'pent-up demand' for mini-generators like private wind farms, solar concentrators, mini- and run-of-river hydro schemes. The wind farms are particularly appealing in NZ, given the falling costs of installation, and growing acceptance.

The implication is that Rio Tinto is effectively using the power privatisation issue to "extort" a concession. The deal looks like this:
1. The government subsidies Rio Tinto in the long term to stay
2. The government takes a hit on the asset sale price

Ultimately, it might not even be the government who pays. The government might be setting up a lot of voters for failure; or will it be its reputation. I suspect the pain will be less if it just accepted the lower return because at least it can say, Kiwis had the opportunity to buy the asset. He can also argue that 'they got the price it was worth'. Well, true 'today'. But who knows what a bit of policy could do in the future?

Notwithstanding the benefits of selling the asset, it makes more sense to retain it for the time being. It would not do Key's reputation any arm by delaying the sale for 5 years. Interest rates will stay low, so whilst the government is getting a 10-12% return on investment, they are only paying 4-5% interest on the public sector debt. In the meantime, they might be able to raise economic activity. In fact, the global economy should start looking a lot more positive by that time.

John, you need to listen more. If I've told you once, I've told you three time. False pride go'eth before a fall. Your prospects for a third term looks pretty bad. Thanks for the legacy! Defer the privatisation. Great ideas have their time. Your timing is wrong.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

What NZ should do with its privatisation proceeds

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It seems inevitable that National Party is going to sell off some more power company assets - the prestigious hydro assets. Probably not the best timing since we are currently in a drought. Buyers will be thinking; oh dear, we better mark down the price for potential adverse climate change response. Maybe NZ is going to be a drier place? This on top of the possibility of Rio Tinto closing its Aluminium smelter.

The NZ government government is saying its going to pay down the state's debt. This makes a lot of sense for several reasons:
1. The debt levels of NZ are rather high
2. The terms of trade of NZ are rather favourable; and they can be expected to deteriorate as more food is grown offshore
3. Its actually a reasonably good time to sell off assets - particularly if the process can be used to encourage NZ savings. This is good because there are too few opportunities for NZ'ers to invest, and these are high-yielding assets.

NZ needs to take a look at Norway's approach to prosperity. It does not perform all the exploration work, and then give it away to the private sector. It places some value on its national assets; giving its people a 'windfall' and not the private, commercially-motivated operator who has the capacity to delimit its risk. The NZ has have to set the right 'terms and incentives', as otherwise no one will want to perform any work, and you don't want to be expropriating profits or changing terms down the track; that's just not fair to them.

The focus seems to be upon conventional oil & gas development in NZ - whether onshore or offshore. The much under-appreciated asset is methane hydrates - that sit on the seabed. Japan has been developing the engineering to extract these resources around Japan, and NZ could take a leap from its book in terms of developing an offshore gas hydrates market. There are several compelling reasons:
1. They are lucrative resources - large in size
2. Its easy extraction - a glorified form of dredging
3. The gas can be channelled into NZ's gas pipe infrastructure
4. NZ has a shortage of gas - which is contributing to the very high prices of it. More gas means the country can decommission its high cost Huntley coal-fired power station.
5. It can potentially displace a large import bill for petroleum into NZ

There is actually no better time to develop such energy resources because:
1. Interest rates are very low and set to stay low; so if you can make lucrative returns; this is a good time in use debt
2. The emerging markets are energy-poor in Asia so there is a great opportunity for those countries who get their political terms (i.e. sovereign rating) right; and keep them consistent.

There is a particular shortage of expertise and capital accumulation in small, consumption-driven countries like NZ. This can make the country vulnerable. This is not a deficiency in capitalism; its actually caused by socialism driving the value of emerging market labour down because of the distortive impacts of surplus Asian labour suddenly released onto global markets. This means governments are destined to need to finance  efforts at the margin to keep the economy secure. I don't like it; but its better to protect your labour than sabotage their preparedness to live; because ultimately dogmatic retention of ideas is a betrayal of those ideas because principles need to be held in context. Capitalism did not create the problem; and it will inevitably solve the problem quickest; but it requires the discretion and empathy of capitalists to 'cover' the threat posed by distortions to our values. This support will be required for at most 20 years; and if we upskill our labour, for much less time. This is why many of these European nations like Germany and Switzerland, Holland etc have been able to sustain their economic strength despite their high cost of living. They upskilled everyone rather than simply laying them off in the United States. In the US, you have this bitter intractable debate about who is responsible for the 'poor & destitute'. There is no discussion about what's causing it. One side says 'not my problem, work harder, get a job, get skilled' and the other side says 'can't live, can't get a job, need your money'. Its a false dichotomy because two parties - Conservatives and Democrats, and even some anti-intellectual libertarians, which is not going to be resolved unless these people learn some epistemology (a branch of philosophy). The problem is causeless assertions, i.e. Having unreasonable expectations, whether its the cause of other people's malaise, or a question of empathy (conceptual value judgement). Either way, it sux when these people drive the political debate.

Of course its the same issue in NZ - except there is less money; more reliance on foreign investment. This is why energy is critical, or why business and labour need to develop a greater respect and understanding for each other's position. Wealth holders deserve rights and recognition for their interests; and without the 'discretion' to retain it, to do as they please with it, there is not going to be a solution to this intractable problem. It starts with principles people - and it starts with your constitution - its starts with not having one...because they are a piece of dogma destined to undermine principled, contextual understanding of ideas.  Simple prescriptions don't work; they are too easily misappropriated by vested interests. That means no arbitrary 'representative democracy' because its not a rational process.

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NZ Constitutional Consultancy a charade

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Anyone who takes the time to participate in political discourse will realise that the process is designed to defeat change - whether the exponents or stewards of such 'purported change' realise it or not. There are a number of reasons why its a charade:
1. The representatives appointed to the panels which preside over the issues in these affairs are selected by the government. i.e. The government is destined to select an appropriate number, ratio and spread of people to make the process look 'broad based', but at the same time, it is destined to avoid giving any consideration to people who are destined to radicalise the agenda by offering ideas too controversial to entertain. In the case of the Constitution Reform issue, you can see that this panel is stacked with liberals, lawyers and Maoris. No one who will make a difference.
2. The terms of reference is the outline establishing what a 'so-called' independent commission or inquiry is supposed to cover in its inquiry. The problem is that such terms are destined to curtail or delimit the scope of the program or inquiry, to the extent of actually directing its outcomes. For instance, this is the terms of reference for an inquiry into Constitutional issues in NZ. It purports to offer direction, but the Terms of Reference are so explicit that they prevent any consideration of political reform. This panel is all about getting a few Maori to sanction the process and the outcome; irrespective of how 'staged' the result. In effect, these people are being paid to give a good show.
3. The person to head the inquiry is very important. In this case the head is a government minister; and that's about as safe as you can go. Sometimes a government will want to appear more detached from the process. When the Australian PM Kevin Rudd pursued an inquiry into human rights; he got a Church clergy to head it. This was another political process. The inquiry went nowhere. It was simply forgotten.
4.  The findings will be confidential or only advice to the government. There will be no requirement for the government to act on the advice; in fact it by shear incompetence in their selection process, that some radical agenda was offered, they could easily bury or publicly castigate the panelists, and never employ them again for such duties. In the case of this NZ Constitutional Inquiry, its clear who is controlling the process - a Catholic Deputy PM Bill English:

"The Deputy Prime Minister and the Minister of Māori Affairs will jointly lead a Consideration of Constitutional Issues. They will consult with a Cross-party Reference Group of Members of Parliament on major findings and reports before reports are made to Cabinet".

Even a hundred years ago there was less government control over the process. In this case, the government cites the fact that it will 'consult widely', however it is far from the most accessible process, and the process by which the report will be tabled is just as flawed. This is a process merely intended to give the greatest reformers 'hope' or 'faith' in a better life. They are dreaming. This is governance which is intended to keep people in their place. It is not about intellectually engaging with people. Its rhetoric which says people are important but fails to treat them as human beings. Consider that even the framework describes its over-arching philosophy, which is to subjugate:

One need only consider how this constitutional issue arose in the first place:

The Relationship and Confidence and Supply Agreement between the National Party and the Māori Party (16 November 2008) agreed to establish a group to consider constitutional issues, including Māori representation.

The National Party had no interest in constitutional reform. It is merely going through the issue because membership of the National Coalition would mean Labour would be forced to give greater consideration to Maoris, and not take them for granted. i.e. Labour had to learn respect because Maori hold a very powerful role - the balance of power - in our extortion based system of representative government. It is this very reason for the Western world to drop the facade and lambast this hopeless system of tyranny for the inefficient and deceptive piece of nonsense it is. This process is not a source of hope; its a deceptive effort to have representatives of Maori sanction the process and to keep the general Maori population waiting....losing faith, until they are so disenfranchised they just die. The government is trying to outlast Maori.
I hope that Pakehe don't view the process this way because white Europeans have more to gain from the process than Maori - precisely because they have less. By way of their good fortune, Pakehe have long believed they already had political rights. Its only when viewed alongside the token respect for Maori sovereignty that you realise how little regard politicians have for 'white fellows'. Pakehe have no voodoo. They are downtrodden after centuries of Western subjugation. Maoris are in contrast empowered by:
1. A sense of pride in their culture and sovereignty
2. A sense of victimisation
3. Liberal sympathies
4. Formal recognition of sovereign claims

Paheke have none of that because they were born subjugated by parents, an education system, a parliament. Look back long enough, they were subjugated by monarchs as well. People are accustomed to thinking so little of themselves, that they just obey and accept the law, irrespective of how irrational or immoral it is. It does not have to be internally consistent, i.e. You can have one standard for politicians, one for others. You can treat low-life one way, business leaders another. You can have statutory laws which breach common law. This is the politicians discretion to keep you in your place. Oh well, when will it end. It won't end with this process. Will it take a new type of leader? This process seems to be above any particular leader? Does it lie in the party machine? This process is intended to keep people subjugated to the entrenched party interests, and that means the people who have fought to get to the top, and who want to preserve the motivation that made the fight worth having, and the legacy, so there is no question of them deserving the spoils of high office.
You want to learn more about this constitutional process - see their website or download this booklet.

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Minimum wage levels - capitalism is not the problem

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There are increasing pressures around the world for a rise in wage levels - namely in the United States and New Zealand. These claims are of course greatest in the the Western labour markets, where stagnant wages for unskilled workers have been a drain on private consumption, given the spectre of high indebtedness. The interesting aspect about these campaigns is just how little understanding there is about the issue. People simply don't understand, or don't care to acknowledge the reason why wages are down. Here are some critical facts to acknowledge:
1. Wage levels are not all stagnant: People will skills such as professionals have seen substantial increases in their wage/salary levels. It is the unskilled wage earners who have seen their wage levels go sideways because they are effectively competing with China. In 10 years they will be competing with Bangladesh and Africa. Even in the third world, the disparities are even greater, depending on whether you are providing a service to 'locals' or foreign enterprises. i.e. Software programmers in Asia are making a killing and you might think they are pocketing the 'wealth', but the trickle down is evident because these people want to distinguish themselves by eating at nice restaurants, living in upmarket apartments and buying brand-name clothes. The attitude is that, my parents suffered without these things for so long, so they want to have, and they want their parents to have, that which they went without. Some of these cultures are more savings/education-orientated than others, but most allocate cash for luxuries.
2. Capitalism is not to blame: The lack of wage growth among unskilled workers is the result of statism; that is government intervention into what were regarded as 'third world markets'. Under the guidance of the IMF and WB, most of these countries have since adopted austerity measures and liberalised their labour markets. Having conveyed a great deal of discipline, these countries are being rewarded with investment. Africa and central Asia are attracting the bulk of mining investment, SE and China, the bulk of the factory jobs. Now, its important to realise that this sudden rush of third world labour onto the global market has transformed these economies into tiger economies.

So its 2013, and there are various appeals being made for increases in the minimum wage. Is it justified? Well, you might be surprised to here me argue that it depends on the context. Generally, I would argue against minimum wages, however if one acknowledges that there is already distortion in the economy, then you might find that it actually makes more sense to adopt counter-distortive measures. The question is 'how you do it', because the wrong distortion can actually make matters worse. So what is the distortion we are talking about, and what are the impacts:
a. Immigration restrictions - There is little mobility between labour markets, and for good reason, this would be incredibly destabilising. It would be nice to expect a perfectly integrated labour market in future. But first the disparities in labour pricing have to be absorbed, and that could take another 2 decades if you think about all those workers who are still to be released from low-productivity jobs in Asia, Africa, etc. There must be 0.5-1 billion people to be absorbed into higher-pay jobs. That takes time; but rest assured no system will do it faster than the capitalist 'market system'. Are you worried about kids working in factories? As sad as this might sound; many actually welcome it. Of course there is the spectre of parents mistreating their kids, by forcing them to work long hours for the sake of personal luxuries, but this is a 'parenting' and regulation issue, not a problem with capitalism. i.e. Capitalism is trade between consenting adults (i.e. moral agents). It does not recognise a child as a moral agent, so any abuse of a child is a regulation issue.
b. Eventual absorption of excess labour - The excess of labour in third-world makets is really an issue of under-utilised labour that needs redeployment. Once that occurs, say in 20 years time, then a great many jobs will flow back to the West, if not before. The reason for the jobs flowing back earlier is that the third world, or at least some of these countries will be slow to reform their labour markets, to educate their kids, and otherwise slow to raise productivity, and curtail corruption.

So is the solution a higher minimum wage? And should there be a minimum wage at all? I will argue that there should not be a minimum wage because its a distortion upon the uptake of labour. NZ needs to price its labour competitively against other Western countries so that it can avail of niche manufacturing jobs as well as telecommunication, technical service jobs that could well be outsourced to a skilled NZ. There is always going to be a struggle for NZ to be economically relevant. The greater danger for NZ is perhaps the prospect of a resources boom - namely in energy production. If NZ became the oil sheikdom of the South Pacific, one could expect a huge gain in the currency, given its an economy of just 4.3 million people. This is a compelling point of vulnerability for any manufacturer; as well as being a point of vulnerability for a call centre. The good news is that this 'vulnerability' for manufacturers is likely to take 10 years to arise. Almost enough to make it a non-issue.

You have to ask yourself whether a minimum wage set at a sufficiently high level to make a difference would actually make a positive difference. The reality is that it makes it impossible for under-skilled people to get a job; whilst raising the wage value of people who are worth more. But it does this at the expense of others. The appeal of higher wages is that it might be construed as resulting in more money being spent in the economy, salary earners paying more tax. This is true for those who retain their job. But the problem is those who are marginalised by their lost competitiveness. Worse still is that higher wages at the top of the skill chain will merely boost spending, raising imports. We want more people employed for less, as opposed to fewer people for more. You'd expect unions to welcome this; but it appears they are only interested in the perceived gains extorted for members. They don't actually care whether their policies are effective or not. i.e. Unions will send members broke in order to retain their relevance. Kind of like the political parties who don't reveal this false dichotomy between arbitrary wages and distorted labour markets.

You might wonder whether Asian or 'emerging' markets could be enticed to raise their labour costs in order to make the West more productive. i.e. Might they welcome higher taxes on labour? The answer is that Asian countries are very poor and the culture is non-compliance for tax collection. They only tax imports, and the wealthy, because no one else has enough money, or would pay taxes. Most local governments have a litany of landowners who don't pay rates. Income taxes on the poor would be even harder. It is also not a desirable policy to tax that process of wealth creation that is creating jobs. This is what the West killed with its high-cost impositions. Asian countries are forcing the West to economise: expect more of it. If wealthier Asian countries were able to adopt a labour (say payroll tax), they would loose jobs to the informal economy, or offshore. They don't want to kill the goose that lays the golden egg. Why would you stop a process which is correcting the distortions created by governments in the first place.

If this is so simple; why are academics so confounded by the problem. Why can't economists agree? The reason they can't agree is because economists are parasites who are living off taxpayers. They are so privileged with easy money, they have become detached from the real world. They are actually not obliged to find answers. Instead they bed themselves down into 'schools of thought' and spend the rest of their tenure   fighting it out with other schools, without ever reconciling their ideas. To what end? They live in the vain hope that some bureaucrat in the PM/President's Office will proclaim them an economics genius, and henceforth they will be celebrated as the 'anointed king' of economics. They will not even care if, as was the case with John Maynard Keynes, whether the government misappropriates their ideas. This is after all why bureaucrats and academics exist - to justify government policy. Political leaders simply pick the ideas that appeal to them; that offer them a rationalisation for placing them at the centre of economic activity.

Rest assured I will never be a celebrated economist expounding like these. You have to suck up to government or business leaders to get that gravy. Nobel Prize! You must be dreaming! I'd be stoked it you'd just mention me to your kids in your next bed-time story. Yep, its a horror!



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Financial plan for the homeless

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NZ is the arse-end of the world; neverthless within this stagnant economy there are cities which are doing relatively well, such as Hamilton, Auckland, Palmerston North, Christchurch (belatedly). But within those cities, as well as elsewhere, there are people who are struggling to make ends meet. We might well consider this to be the 'doughnut effect'.
From Hamilton, NZ comes this interesting story of a homeless man living on government job benefits but otherwise with $70K in savings. This is an interesting issue both from a personal finance perspective, as well as from a public policy perspective. In this post I want to consider 4 issues:
1. How this man is impacted by National Party policy
2. How he would be effected by Labour Party policy
3. How he would be affected by ACT Party policy
4. My public policy advice to these parties
5. My financial planning advice for this man - even though he is not asking


National Party policy impact
What I like about this guy is that he breaks the stereotype of what we have come to expect of homeless people. Anyone who has been to Japan realises how proud the Japanese homeless people are. Its as if the origin of their pride was their mistreatment by the Japanese government. Yes, another success for representative democracy. Hoorah!

The National Party is the current party and they are paying this guy $180 less $12 per week for the interest earned on his $70K savings. Firstly, the guy should be applauded for saving money, and working prior to his last decade of joblessness. It is not easy to work in a country when you are relatively unskilled, surrounded by more able-bodied persons, and amidst a labour oversupply. Its not all bad. He has a proven track record of working. 

What is shameless about the conduct of this administration, and indeed, all governments is their blatant ignorance and incompetence. Some voice should be shouting inside of them saying that "This guy is a value; not to me, but to someone. His life is not worth zero". Now you might say that the government gives him $168 per week, so they are not treating him as zero. Not right. Governments don't have money. You the taxpayer are financing this man to aimlessly drift around Hamilton in the vain hope of his getting a job. The sad issue is that he is just going to get more mentally ill, he is going to get beat up, so he will no longer be employable, or even 'useful'. Post-traumatic stress will probably ensue. So then we have a 'disability pension', with all the rights and 'obligations' upon you, the taxpayer that that entails. What is apparent is just how detached governments are for the money. If this was your money, you would have some discretion to withhold it if you did not like what the guy was doing with it. Maybe you wouldn't give it to him anyway, because 'it's not your problem'. The thing is - it is. The government is taking $168/week for this guy alone, from you & a great deal of other people. It's your problem! You don't take issue with it because you feel disempowered. It's not kindness. You're indifferent to this guy's existence; and you'd not allow yourself to consider his plight, because it's out of your control. The problem is too big! It's your problem. You have a government responsible for such things. Problem solved! 

I guess the National Party are hoping that this guy should hang on until the job market recovers. The problem is - he is 60yo - and there is going to be an excess of labour for the next 2 decades because of the liberalisation of global labour markets after collectivist (socialist) governments collapsed, and purportedly saw the error of their ways. It will take 20 years for capitalism to solve the problem caused by collectivism over centuries. It's a big backlog. So basically, the National Party is offering voters no respite. They are indifferent to this guy's happiness. It might be argued that it's his decision to stay on the street; but ultimately it's you - the taxpayer - who will pay when he gets beaten up. So there will be a hospital bill and invalid pension. The good news for indifferent taxpayers is that this guy will immobilised, and will probably die early of diabetes. Unless there is more costly intervention.

So, to you this guy is not looking good at a $168/week investment. He's what you might call a drag on the economy. He is right to feel like he deserves his money. He's playing by the rules, he's paid taxes, and so he has a sense of entitlement. Interestingly, in Australia, he could not get a jobless allowance if he had more than $10,000 in the bank or investments. But is that the issue? I know because I claimed for a time between jobs when I was young. It pissed me off too because, like him, I argued, why can't I get the 'dole' when I pay taxes. There are people with $500,000 houses who can get it because they manage to have less than $10,000 in cash. The implication for NZ is that welfare is a form of income insurance, whereas in Australia, it functions more as a form of nominal insolvency insurance. i.e. You get it if you lose your capacity to service costs of living. If you have cash, you can still service your costs. 

My interest here however is not the equity or inequity of welfare, but the waste. This guy could be doing something useful. He is not worth anything in this economy....and that ought not sit with people so well. He could function as a child carer's assistant, a trainee, carer for elderly, cleaning the streets. There are any number of things he could be doing, even if they entailed no sense of efficacy. What a waste when there are things needing consideration. Instead the government says, take the day off....just fill in these forms to say you are looking for a job, you have no chance in hell of getting for the next 2 decades - when he will be 80yo. By the way, I see no reason why he cannot be working until he is 90yo. Old people regret giving up meaningful activity.  

I'd not be surprised to see National take the Australian approach in future. This would in a way be worse because it would give him greater financial apprehension because he's dwindling away his savings, and he might be more frugal with it, to the point of diminishing his diet, resulting in the decline of his health. It would incentivise him to find work if he was capable of competing; but realistically he is not. He has not worked in a decade. 

Labour Party policy impact

Now, looking at the NZ Labour Party. They have always advocated minimum wages. That will only make him less employable...even if he had a running chance. At 60yo, he doesn't in the contemporary labour over-supply. In fact higher minimum wages will add to the unemployment queues. I suspect Labour would increase benefits to people like him, but really no substantive change, to this guy's life, since he is saving for the future. 

ACT Party policy impact

Now, one might expect the ACT Party to be the 'economic rationalists'. I would expect however their position to have the most beneficial impact on joblessness, which would ensure a great many youths would get a job, i.e. they would lower/scrap minimum wage, they would cut regulation. The problem I have with ACT, is that whilst they hold the upper leg, they fail to consider: 

1. The impact of market distortion - stripping away some distortions creates other distortions

2. The legacy of market distortion - stripping away distortions creates other distortions

My policy suggestion

The value of this guy is not zero. The value of the taxpayer is not negative $168 per week. These people are important, if only to themselves. These people have hopes and aspirations. These people have real grievances; and most of them arise systematically, and as some horrid legacy of government intervention, often stretching back 100s of years. It will not be cured overnight, it will probably take a generation....but we are not solving the problem. These people are useful. You cannot rely on the market to solve the problem if you distort the market; if you market says they are worth 'zero' or 'negative' value, when by any objective standard, we know there are valuable things which they could be doing, but don't because centralised governments can't get around to organising solutions. Why is John Key so busy? Well, he's focused on changing the term of parliament. You have got to be joking? The problem is not his job term; the problem is the decision-making process which means he is ineffectual for the first and last years; not to mention the fact that it's an unaccountable, majoritive, extortion-based system. What does his priorities tell you? It's all vanity. He wants the job because it serves his vanity. He cannot honestly say he is doing a good job, so he blames the system (which is bad), but he has no solution. 

'
Now, I have a resolution for this problem, but it's another topic. I am concerned with this guy. The 'unemployable' worker who is useful. Offer people 'conditional support'. You can't help them get jobs in the current market if the market values them at zero, so:

1. Create opportunities for them to work 'staying alive', i.e. Growing food to live. NZ is currently importing foods from abroad, supermarkets are adopting huge mark-ups for these vegetables, and so people can grow here for own stake, or for sale, and live on the proceeds. 

2. People with sufficient resources like this guy can do it themselves. They have the time if they are spared the burden of 'useless job searching'. They will never get a job in market economy that is distorted. Pay them to produce food, i.e. If they have $70K plus, they can self-sponsor. If they don't, have a government sponsored scheme using contractors who tender for these programs. These people might need basic services upfront; but they will act if they are able because its meaningful work. People coming out of prison could go straight into these programs. Once taught some of these people could use their savings to build their own 'food production' scheme.

The world is currently reliant on foreign food increasingly because of low-cost emerging market labour. What is not appreciated is that, when in 20-30 years time, those country's surplus labour is fully absorbed by global markets, then their labour rates will match ours, and food production will make more sense locally. These are valuable skills we are loosing. These people could be the foundation for a budding industry; but more importantly - they are useful! And their utility to themselves and others is being wasted.

Want to rebuild NZ? Start with people left behind. Reduce the cost of looking after them; then you'd be surprised at how well the economy can run without useless government programs, without useless govt regulation. You'd be surprised how many problems like mental illness, joblessness will disappear!

My financial planning advice for this homeless guy

This guy has $70K of cash and a benefit. My advice to him is to buy a house in a depopulating place like Wanganui. The nice thing about this solution is that you have an asset, a place to retain possessions (which if you are poor, might include things other people don't want). The bad news is that you have an expense - your rates. Given the waste of money on rates, you should question the value of government. Most of you clearly don't. $1800 per year in NZ; I pay just $300 per annum in Japan for a 18-year old house. This guy could be eating salmon & rice bento box in Japan at Hokka Hokka Tai for Y420 ($NZ5.50). Back to expensive, over-serviced NZ. I would suggest he pays $65K for a house - yes they exist. If he contracted with a tenant, he might be able to secure one ahead of time. Here is how I would do it. Probably settlement takes time, so whilst being on the street for 3 months, I would try to meet someone in a similar position. It might be easier in Auckland city. I would say to them: "Look mate...we could be dead on the streets if we stay here. I have money saved for a house. If you pay me $60/week, I can give you a home, or $80 with minimal services, leaving his friend with $100/week for other costs. That gets him and a friend off the street, gives them spare money, and if gives them land to grow vegetables. The house might not appreciate, but it gives him more cashflow than the bank. Now he is discouraged from doing that because the government will say he has rental income, so his benefit will be reduced. For this reason, he will probably not declare that income, and will instead receive cash.

Perhaps the government could save money by offering financial advice because according to this guy's plan, he is living on the streets to get cash, placing his life/health in jeopardy, and his prospects for an early death from diabetes are enhanced. Good job gov!

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John Key The Moderate - what does it mean?

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John Key clearly considers himself a moderate. What does that mean?

Prime Minister John Key addressed the issue of the Waitangi Treaty at his annual Waitangi Day address, as is customary. Just as customary is to say nothing substantive, and to engage in rhetoric which contributes nothing to the issue. Now, the prospects of a settlement of Waitangi issues, some settlement of grievances, is considered extreme by Key. He sees himself in the ‘moderate’ of course, and anyone seeking resolution as ‘extreme’. After all, John Key is hardly moving the debate towards anything. I’m an Aussie…I have nothing to gain from this issue. Do I want to see Maori recognised as ‘first occupants’ and worthy of sovereignty? No, that ship has sailed. Perhaps its easier for Key to dismiss the issue if he can erect a ‘straw argument’ like that and dismiss all people who feel a sense of dismay at where the Waitangi settlement is ‘not’ going.
Key speaks of ‘public goodwill’ as if that is a meaningful conception in the context. Either a resolution achieves one of two things:
1. It achieves the interpreted objectives of the Waitangi Treaty
2. It achieves something better
I would argue that the framework and values of the Waitangi Treaty are illegitimate and irrelevant; not because the treaty was not signed by most of the tribes, nor by the British Crown, but because its values are not fixing with justice. This is an opportunity to achieve something more than the treaty sought. At the time of the Treaty, the British people were subjugated to the collective notion of ‘empire’, and that concept ought to be equally as abhorrent to Pakehe as Maori.
Key is making the same old tired claims of old, hoping that the issue will die. It will die by this method; but is that a desirable outcome. Key would sooner quash the aspirations of people, rather than contend with them.

‘People are not reasonable’ he might argue; or that ‘you will never please everyone’. 

But I see no great effort by any government since the Treaty was raised to address the issues. Instead, governments are only too pleased to outsource the task to the courts.
He talks of participation but offers no avenue for achieving it. No government does. It is a common attribute of all representative democracies to malign minorities. For his government that is an easier task than most considering:
1. He confronts a useless opposition
2. He need only offer token concessions to vote as a ‘extortion bloc’
3. He faces no Senate
4. The two major parties developed a Bill of Rights to create the illusion of protection; despite it making little meaningful difference to the nation’s people. Ask yourself – did it make a difference to your life? Did it address issues raised by the Treaty of Waitangi? No, it was not designed to solve problems. It was framed to avoid them. This was actually the original motive of the Treaty of Waitangi in the first place. The British government wanted to avoid conflict. It used the idea of a treaty to invoke a sense of purpose and goodwill with Maori. The Maori simply assumed it existed by matter of intent. They did not know that an unsigned document is useless. Of course, given that the British drafted it, it carries some significance….at least it terms of terms of reference.
John Key asserted that “the Treaty settlements process had given iwi the resources needed to run their own affairs, create jobs and care for their people”.
Really; was the treaty just about money and subsidised jobs? Well, it might well be about that for people who see no other motivation in life but to provide for family and do something constructive. But why can’t it be about more than that? Why can’t it be about things not even raised by the original agreement? For instance:
1. Why can’t it be about the inappropriateness of tribal leaders committing their people to a contract, regardless of whether it was in their interests or not
2. Why can’t it be about the illegitimacy of a contract with a party who does not have the legal efficacy to appreciate the merits of the contract
3. Why can’t it be a question of whether the state has the capacity to impose its will on anyone

All these value judgements are assumed. None of these moral imperatives have been proven. They are accepted because they serve the status quo, and keep people working towards goals subscribed by others. So what does that mean:
1. Working for the government – retaining only a minority stake in one’s efforts
2. Losing choices – because any other ‘non-conformist’ route is punished by lack of tax concessions, damaging your credit ranking, diminishing your right to travel to foreign countries, being denied access to certain services.

John Keys says “settlements largely relied on public good will and acknowledgement that the grievances were genuine”.

Unfortunately they are not so important to be a matter of priority after 140 years.
He argues that the “actions of "permanently aggrieved" protestors, including those at Waitangi, would endanger the public consensus there was over the issue of settling legitimate grievances”.
What a farcically meaningless comment to make. The entire purpose of a parliament is to countenance points of conflict. No, sorry, modern democracy or at least ‘conservatism’ entails avoiding those morally questionable issues that you cannot resolve. It therefore has to be about concrete, self-event things like money. Well, they are not self-evident, but both sides of government seem able to handle those. You might wonder how without conceptual frame of reference. But in their case, it’s all about extortion or ‘political pull’, and their capacity to make it happen.

“Public good will should not be taken for granted. It needs to be treated with respect. It is short-sighted and counter-productive of activists to use tactics and language which have the effect of eroding public support for initiatives aimed at turning around the very situation that the activists are complaining about”.

If you think about it…that is actually a nice, drawn-out way of saying, as Hitler did:

“You are nothing, your nation is everything”.

Hitler had no time to waste on fluff. The modern political party lives on fluff. Whilst they fluff around, they must be making money. Why would you want to preside over government without making money? Where is the sense of pride in being ineffectual? There must be something in it…certainly no self-respect. These issues have been kicking around for 140 years. We are about to have a court case – waste of money – as Maori question whether they have a legal claim to the water in the Mighty River Corporation privatisation. It’s a joke. Is it extreme to raise that as an issue. Well, the Supreme Court did not seem to dismiss the issue out of hand. If one wants to examine the track record of John Key, the National Party, Labour Party or indeed the entire parliament, ask yourself what effort their government took to seek peace in countries taking protection of rights…and yet in the name of liberty or democracy, they are entering Iraq. It must surely be about money/oil? Why nothing about:
1. East Timor
2. PNG
3. Solomon Islands
4. Fiji
5. Muslims of Mindanao
6. Australian aborigines

Even in this last case, long considered ‘extremists’, the Moros of Mindanao in the Philippines are finally getting some justice. No thanks to Western adherents to high standards of conduct. This is despite NZ having very little trade with the Philippines.
I’m no ‘wet-nosed’ liberal. I just think governments ought to be motivated by something more than rhetoric to keep their jobs, to lock in some mindless state of subservient harmony. I think Western governments are transfixed on Japan as a model of how to achieve a ‘compliant society’. In Japan, people don’t question government. The two major parties do as they please. Celebrities tie themselves to governments, and in the end they are seduced by it.

“Turning around the current waste of human potential would do more for Maori and for New Zealand than probably any other single change”.

This is undoubtedly the case; but first John Key has to identify the nature of the ‘waste’…why the human potential of Maori has been diminished. I can identify several reasons:
1. Catch-up: Maoris started behind – they were handicapped from a time going back 130 years.
2. Legacy: They were left with an entrenched legacy of ‘Maoridom’ which rested on the premise that they were disempowered, marginalised victims, that any rhetoric of justice was not real; it was just for show. They were not given or confronted with the values which made Pakehe successful and Maori unsuccessful. Those issues were avoided because they feel compelled to leave in place the notion of a collective Maori identity, which has greatly diminished the lives of all indigenous persons around the world. It was about ‘achieving compliance’ in the short term. The implication however has meant 140 years of unresolved contention. This government, like the others, will not resolve it.

“He spoke approvingly of a United Maori Mission boarding hostel for 50 boys within the Auckland Grammar zone, saying it gave those boys a chance for a good education”.

This is not a basis for prosperity among Maori; its an elitist argument which says:
1. These Pakehe wannabes are your custodians because they are educated and think like us ‘white folk’
2. These people are successful because they are very smart, and probably wealthier, and from a good family, so there is no reason you can’t succeed like them.

“It is one of the reasons why we have a positive and forward-looking relationship between iwi and Crown. I have no doubt that we New Zealanders are better off because of it”.

No John, you don’t have a relationship with Maori. You have a relationship with the only people your governments sanction to represent Maori. You decided by forming a coalition with the Maori Party that these people are worthy of being in a coalition. You went out of your way to strike that deal, as king maker, because it suits your agenda. Most Maori don’t subscribe to your distorted world view because you have popularised these people. No doubt your ‘Auckland Grammar boarders’ will be targeted by your party as you attempt to brand your party as the part for the people. You are only so long as you dumb people down and remain dumbfounded by execution paralysis.

Quotes from NZ Herald, 6th Feb 2013.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Report card for National Party

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Ok, here is my report card for NZ's National Party....I got a bit bored going through this list....but it gives them something to start on.

See this policy list from the National Party - reading this I am inclined to think that there is a lot being done. What is wrong with it? Firstly I am inclined to say that the National Party is not doing a very good job at getting its message out to the public. This is a document that needs to be dispersed. But it really is so anti-intellectual in the realm of welfare policy, education. It simply resorts to paying off the Maoris; as if that will advance welfare. There are huge opportunity costs by not acting.

1. Future fund – good stuff

2. Road development – why does the govt need to develop ‘new’ roads; or is this merely ‘justified’ maintenance.

3. Road arteries – why does the country need to invest in new arterial roads when oil prices are high and the population is static. Is there any return on this investment?

4. Regional road infrastructure – probably justified

5. Regional rail infrastructure – probably justified

6. Regional infrastructure – probably justified

7. Regional rail infrastructure – justified in the context of higher oil prices

8. Auckland rail infrastructure – justified in the context of growing population and higher oil prices

9. Inter-island terminal – they are studying the value of a terminal at Clifford Bay. This would avoid the mountains around Blenheim and Kaikoura. Container terminal on the south island might make sense, but is this a govt project? And its already fairly close to Christchurch. The market appeal could only be for local trade? Why not a connection to Australia?

10. Broadband – worthy spending

11. Rural broadband – not a priority beyond the major towns; at least not off main trunk lines and towns under 40,000.

12. Digital switchover – fine

13. Network for learning – fine

14. National grid – fine, the network is not terribly stable, so needs upgrading, though they need to fix the pricing model for electricity.

15. Home insulation – sensible intent, the problem is the subsidy just forces up the installers fee. I would also add that it contradicts global warming. Insulate houses and people start heating homes, stop wearing woolen garments. i.e. they buy cheaper Chinese cotton, stop buying expensive NZ wool.

16. Upgrade state housing – better still fix the economy so they can buy the home, and given them incentives to do so.

17. Health expenditure – There is an expectation of the latest medical technology; this requires more spending in this area. Popular policy; but priority beyond immediate maintenance? Maybe it makes more sense to send people over to Australia? I wonder if shared infrastructure with Australia is a better model?

18. Schools upgrade – Probably justified, but the problem is that the biggest issue is school ‘content’ not infrastructure. Kids don’t learn to think at school. So this is a very anti-intellectual policy…typical of a pragmatic govt.

19. Earthquake Recovery – Fair enough

20. Sports stadium – not sure why this is policy. Popular…but it doesn’t make money.

21. Resource consents – this is very important policy – reasonable expectations

22. RMA streamlining – this is very important policy – reasonable expectations

23. RMA council punitive fines – this means the rate payer pays right? Well, I guess they get the investment, and can spurn council?

24. RMA streamlining – fine

25. Natural hazards – RMA consideration of natural hazards. Really? This is new?

26. Fresh water policy – fine, but is it a priority?

27. Simpler plans – sometimes simple is not the issue.

28. Trial employment – I don’t agree..employers will just pay staff to leave earlier, so its just a cost. You can’t legislate common sense.

29. Personal grievance reform – This is probably the way to deal with last issue. Not compulsory labour costs

30. Holiday Reform – This is ok

31. Hobbit law – yep, keep the film industry happy

32. Youth wage – yep, kids need every opportunity to save money to leave the country.

33. Collective bargaining – End collective bargaining, its extortion; though you do have to offer people a union-based channel to take grievances to some objective employment court; or ‘grievance’ system (see #29)

34. Constructive dismissal – this ought to be part of #29.

35. Flexible worker terms – I understand worker needs for fixed roster, as well as corporate desirability for flexibility. i.e. Is this so hard?

36. Ban of lights & thermal power – There is no need for a ban on thermal power plant, as no one is going to build one now. Light bulbs issue; non issue.

37. State assets – selling power stations is not going to make them more competitive; in fact, you can expect greater extortion, as is happening by most of the larger businesses because there is no population growth, and inadequate regulation.

38. Utility competition – Making it easier for consumers to shift utility does not address the costs built into the system; that’s economic rationalism, but it does serve govts with an eye on asset sales.

39. Hedge market – sensible

40. Consumer compensation – sensible

41. Less regulation – cut bureaucracy but don’t abandon regulation

42. ACC funding – yep, needs to be sustainably

43. ACC ratings – yep

44. Employee levies – yep

45. Employer levies – yep

46. ACC choice – Any sign its over-priced? It might add to cost

47. ACC choice – Any sign its over-priced? It might add to cost

48. Mobile telecom termination – fine, but what about data??

49. Telco competition – fine

50. Productivity Commission – so late? Should have been done 2 decades ago…assuming that anyone will listen to it.

51. Mining & energy safety – good idea – 2 decades too late! Oh that’s right, Labour ditched it in 1993.

52. Fishing regulation – fine

53. Fast track building consents – good stuff

54. DIY reform – good stuff

55. Leaky homes – Drop this as installers just take the subsidy.

56. Building sector accountability – fine, but what about the extortion in hardware sector.

57. Financial sector reform of regulation – yeh, good one….you will never do it really. Or you will do it, then in 5-10 years you will undo it.

58. Financial service regulation – training is not the issue; ethics and responsibility are the issues, but you’ve spurned education, so toss that idea.

59. Kiwisaver investor – fine

60. Regulation of securities - fine

……

83. Water storage – yep, don’t build levy banks in Wanganui, build a river diversion scheme and generate more power.

84. Petroleum exploration – great stuff! You are listening to me. Personally, I’d be spending $100mil, not $40mil.

85. Environmental regulation – fine

86. Petroleum permits – fine, but retain a good state royalty; don’t give away all the ‘resource’ as you will end up with immensely rich people who did not earn it (all), and then the ghost of Helen Clark or Gillard (or you) will expropriate it.

103. Convention Centre – don’t use gambling to finance a convention centre. How silly is that. If it does not stand up on its merits, then don’t finance by appealing to ‘vices’. This is silly policy.

104. Air transport – What about air transport to Australia – open it up guys! I want to fly Wanganui to Newcastle or Byron Bay, not to Sydney.

This leaves me wondering what is missing – I would add the following:

1. Improve biosecurity – NZ food output is important, and so is Australia’s, so less please them to get greater access to the Australian market place.

2. Adopt ANZAC liberalization – open up deregulation of pan-Australian flights

3. Sell Air New Zealand – the enterprise is well-run, it will never be worth more than in a few years when the market recovers.

4. Adult education – What about intellectual literary and parenting literacy??

5. Local government reform - I don't see this on the list, but I understand some constraints are being placed on local govt...Good stuff.

6. Gas industry

Now, if we were going to be entirely honest, the National Party would also say that:

121. Prison construction - they are building more prisons because the economy is going to the dogs.

122. Taxation - they are building a $1 billion super computer to tax people better. i.e. More more pernicious form of enslavement because they don't know how to encourage people 'voluntarily', they feel compelled to tell us how its done.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com