Labour: Time For Plan B

"If you can't be good, be good at it." - Old English proverb 

What on Earth is going on with Labour? Not meaning any disrespect to the party, even though they'll never get my vote; but the closer they get to the election, the worse they seem to look. Unlike ACT on Campus, Young Labour is directly controlled by the party, and testament to centralized control - they got the poor kids to do a 'Stop Asset Sales' dance in the middle of Wellington Central. Are they desperate or trying really hard to look desperate?

Every poll, every survey, and every commentator on the upcoming election says this will be a piece of wees for National, not only will they be the most represented party in Parliament, but they could potentially govern alone. With this, Labour seems to want to fight this to the end and try to win the election. While I admire their determination, this close to the election - they are fighting a losing battle, and my recommendation to Labour would be to change their campaign strategy completely. At this time, the best offense is a good defense. 

Losing the Left

Unlike National, who do well to encourage voters to vote strategically, Labour doesn't do this so well: if you can't be good, be subtle. National has backed Rodney Hide in Epsom and United Future seems to hang on to Ōhariu quite nicely. Labour has nothing to gain from not standing candidates in electorates, but it needs to change its strategy from "Vote for Goff and get a Labour government" to "Vote for Labour and get a serious opposition to National."

Not everyone supports National's policy, but clearly even less support Goff. If Labour wants votes, taking Goff out of the picture and pitching themselves as the team to oppose National's policies may work better. People can keep the smiley John Key in government, but not completely unchallenged. Labour appears incompetent as an opposition and a weak challenge to National because they keep fronting Goff for Prime Minister. Labour and Greens votes will be turned off by the idea of voting for the loser, and the current Labour government is going to lose the election, but that doesn't meant they have to lose the war. Chances are people will simply not vote if it appears their side will lose the election and drop their nuts while in opposition. 


Let's be honest, they've made a bad impression on voters while in opposition so far, with the ridiculous filibustering of the VSM bill and few credible contributions to parliament. No one will trust a party that makes poor opposition to be in government. They might lose this election, but proving themselves as worthy opposition will mean they can win the next election.

Splitting the Left

The reason why Greens are polling at an all time high - in my opinion - is because Labour appears incompetent. Not only losing the election, but having no credibility or authority in parliament just means wasted votes. With the way the results look, Labour will have 31% of the seats (iPredict) but will probably have 13% of the voice. The Greens will get 11% of the seats but will continue to have a bigger and louder voice. With the Greens appearing more credible and centrist than they used to, it almost renders Labour irrelevant. Apart from where the Greens have been caught with their pants down astroturfing and media manipulating, they appear to represent a stronger and more determined opposition to the government, even when they could go into coalition with National! With no disrespect to the man, the Phil Goff brand had never worked with the public, and Labour is going to have to remove his image from the campaign if they want to purport their policies.

The Anti-National Agenda

Rather than campaign for expensive $15/hour minimum wages, bullying National's homosexual MPs, mandatory exercise for kids, censoring media and sending money overseas;  things like 'Worried about National? Vote for us' and 'Don't like a National policy? We'll stop them' will be received better. Technically, 'stop asset sales' is one such idea, but surely they can push this better than dancing around Lambton Quay with sandwich boards. Why not 'we'll stop asset sales, let's own our future' as a slogan? It's a bit longer, but the key words added imply the actions, rather than a bizarre chant that conjures up the image of Phil Goff's face.

New policies like capital gains tax and $15/hour minimum wages are not engaging voters or switching them over to Labour. Their strategy needs to be to prove that they'll make a formidable opposition, especially in a way that switches voters back from the Greens.

Why am I writing this? I'm a libertarian free-market supporter that feels best represented by ACT!! I'm not the sort for 'I told you so's or having a whinge on people, I prefer constructive criticism. I doubt Labour will take it though, and all of this does hang on the information brought forward that says their policy alone makes them more popular than National. Clearly if their policy is more popular, than it should be that which they'll sell to voters, not a certain Phil Goff that appears weak and incompetent. As much as I support a National government over a Labour one, National shouldn't really go completely unopposed. Labour has a duty to its supporters and especially former supporters to step up to that role.

Selling the Family Silver

"You just want to sell off the family silver!!"

I am sick of that line, matched with a red and angry face as it's leaned over and yelled into my confused face. It tends to be an older crowd that does it too, the ones from a cradle-to-grave care system that have benefited from a government that provides all and owns all. At the advent of Rogernomics, the government set out on an ambitious plan to free the market right up, selling many state assets like an imported rug clearance sale. Since then, we as a people have seen dramatic improvements in accountability, efficiency, and productivity of both the public and private sector activities. At another time of economic downturn and public fiscal deficit, state asset sales are on the cards again.

Emotion Not Enough

This gets the older generation understandably upset; they are the ones who've worked hard to pay taxes to buy and maintain the assets, they are the ones who voted for governments that promised to buy them the assets, they are the ones who've been served by government-run airlines and power companies most of their lives. This we can understand, it's more than fair that many people are upset that today's government want to sell off the state assets that they have paid for and are accustomed to. To add to this, younger generations get a feeling of 'inheritance' to the assets we've built up, that it has indeed been passed down to them. The emotive tone of 'selling off the family silver' comes from that attachment and fear of change. The emotive tone behind this resentment is not enough to retain state assets.

The New Zealand economy, like many, isn't in a flash state and our public fiscal situation is horrible! Our government debt is huge, and growing by millions of dollars per week, while we spend on liabilities and unproductive sectors! The rate of borrowing and spending is both unsustainable and irresponsible, and everyone with half a brain at least know John Key is not doing nearly enough. News of our sovereign credit downgrade is just the bomb ticking faster than it was before. National is proposing though partial asset sales, not whole ones like ACT would, but just selling minority stakes in some of these assets. Pretty centrist, pretty agreeable, but not everyone's happy…

Privatization Gone Wrong

While I do think this is a good idea, I acknowledge those that say that privatization hasn't worked. Back in the good ol' days of Rogernomics, we basically did do a flog-off of state assets. While necessary, the ends didn't justify the means so well. We did it too hard, too much, too fast; and it's left everyone with bad memories of the frantic deregulation of the 80's. Much of the argument against it points out the failures of the Rogernomics privatization, however the idea is not inherently bad.

However, I do criticize the same defense of socialism, that it was just 'done wrong, but still a good idea.' The fact that privatization did work in the end shows that, well, it does work! The trick to doing it a second time round is learning from our mistakes in the 80's and taking it slow and easy, something the Key government does rather well.

Partial Sales?

Even if it is only a part, this is a good thing. It is a step in the right direction, and taking a 'steady as she does' approach would probably start like this anyway. Partial asset sales put the market forces back to work, give investors and people with real interest to advance the companies a chance to make their magic work. Besides, this could easily be the first step to entire asset sales. With half the stake of each asset already sold, it would be easy to sell off the other half. We can take a steady-as-she-goes approach and gauge the results of the asset sales, if Labour (unlikely) proves true, we can reverse it much easier than the shoddy buy-back of the railways. Releasing the stakes slowly also allows for the price to rise as the stakes themselves will be in hot demand but limited supply, ensuring we get a good market price.

The Real Investment

One of the common criticisms of asset sales is that it's a short term benefit that's easily "nibbled away, for expedients, and by parts" (partial quote by Voltaire). The money raised from asset sales is a contentious issue, and right wing governments would often use it to pay for tax cuts. The point is that it is indeed a short term benefit, but it is up to a responsible government to make the money last. Lefty governments love to raise revenue and spend with no long term benefit, so the trick is to give the money raised by asset sales back to the people, and make the money last in the long term at the same time.

While tax cuts are a great way to give the money back to the people, they are a short to medium term answer, as they can only pay for tax cuts for a certain time until the money runs out. We know that the best way to make money last or even become productive is to invest it, save it, collect interest or dividends from it. The money raised by asset sales can be put to good use by investing it in something that needs investing in, maybe new schools, hospitals, for example. The money raised from selling half of the railways (valued at approximately $800m) would pay for building a hospital more than the value of Middlemore Hospital in South Auckland (sourced from Auckland Council GIS viewer). It's only fair to give back the money people have paid into the system, the fact that they charge us for services anyway means we're not paying for the services already. Investing in education, healthcare, infrastructure, defense, the environment, and other valuable services of the government improves them and improves our quality of life overall. We might as well put money into the things the government is supposed to do and that do well, then hold on to liabilities such as the railways.

No Change of Heart

One of the frustrating parts of arguing for asset sales is trying to show that taxpayers really have no ownership of state assets. Labour wants to hold on to power companies, Air New Zealand, TVNZ, railways, and other companies that we still pay for! Why is there state ownership of Air New Zealand - a company that competes well in the international market, stands on its own two feet, but has no benefit for taxpayers. Despite being one of the lucrative (not always profitable) assets we own, the benefit for everyday Kiwis is next to nothing. When was the last time we had free or discounted flights? When was the last time the government forced an unprofitable, but locally useful, airline route to stay open? For something that we all pay money into, there's not a lot of return for everyday New Zealanders. The government's stake of Air New Zealand is over $3.4 billion, which would pay for 20 million adult one-way trips from Auckland to Napier, enough for everyone to fly four or five times each. 

The other issue is transparency. A good company would appease its shareholders by providing information on the company's progress, take input into how the company should be run, and consult with its shareholders on big decisions it wants to make. None of the state owned enterprises have ever asked me for any input, except for TVNZ with its ads asking me if anyone said 'fuck' on TV and if I was upset by it. For owning so many assets and having such large stakes in them, we have no power over what these companies are doing. We own them less than we do our schools, which invite parents to teacher conferences on how they think the child can improve their learning. I know that if TVNZ ever asked for my input, we'd have much better stuff on TV! We have no real connection to the companies and we've only had to pay to them twice. Not bad for our own assets...

While on the topic of shareholders, there's no dividends paid back to the owners. In fact KiwiRail is making terrible losses, prompting Steven Joyce (Nat-14) to unveil a $750mil plan to keep the company. He has mentioned that he wants rail freight to take over and eventually pay it's way, and partial asset sales would be a fantastic step to allow companies to buy shares and invest in the company. 

Stop Asset Sales!!!!

ACT on Campus have retaliated to the 'Stop Asset Sales' campaign the Lefty Labourites have with yellow 'More Liability Sales' signs. As for Labour's crusade against sales, there's a YouTube video on the party website (ownourfuture.co.nz) where David Cunliffe thinks that we can use the money to pay back the colossal debt the National government has added to from the last Labour government. The problem is, the profit of $300 million per year is not going to pay it off, with a $76bn billion debt and a $300 million income, no wonder our credit rating got downgraded! They have estimated the gains to be $6-7 billion, which can wipe off a tenth of the debt in one hit, showing our commitment to financial stability and not having to wait 253 years for the capital gains tax to pay the debt back assuming no interest is added. They even estimate the cost of selling off the assets to be $300 million, surely we can find someone cheaper than that!

They did mention that the profits will likely go overseas, to foreign owners in places like Australia. Kiwibank in particular was set up by the government to oppose this, as our largest banks are owned by Australians (such as ASB owned by Commonwealth Bank). With the record that Australian banks have, it was precisely this that spared us a lot of hurt from the GFC (global financial crisis), since many of the safest banks in the world were Australian. Not to say that foreign ownership of everything is amazing, but the interest they have here is usually benign. This question was asked at an ACT meeting in Takapuna where Dr Don Brash was speaking. He cited Auckland International Airport as an example of two foreign bids for the stakes in the airport were rejected, despite the first being a 'passive' investment, where the Canadian Pension Board would have put money into the company but let New Zealanders run it having no interest in modifying it. While the second by a syndicate related to Emirates Airlines of the UAE, that wanted to turn Auckland International Airport into a major regional hub, to compete with Sydney's Kingsford Smith International Airport and the like, which would have created a lot of jobs and income for New Zealand. It's not as if the owners can pick up our power plants and move them overseas, everything will stay here.

New Zealand is troubled in that we don't have the capital to expand businesses and invest like the Hong Kongers or Americans do. While we're trying to grow our economy, there is hardly any savings or investment to try and grow. Selling to companies overseas may bring benefits such as the capital to expand and develop, employing more Kiwis, paying better incomes, and improving the goods and services for New Zealand consumers. Companies like Air New Zealand and TVNZ are capable of standing on their own two feet, encouraging mum and dad investors to get in on the shares in the company will help more New Zealanders invest and make money, as well as retain ownership, except real ownership where we can really get a say in the company. As for Labour's buzzkill campaign, their alternative is a capital gains tax. Lesser of two evils anyone? Their report supporting a capital gains tax, prepared by Dr Ganesh Nana, shows that individuals will be paying the most in that system, largely through farmers trading their own land and individuals trading property. Ouch.

The Right Argument

Where Labour have done a song and dance about 'Own Our Future,' the right-wing has retaliated with 'Own Our Furniture' (Dr Brash Twitter parody) and 'Labour - Pwn Your Future' (Whale Oil). No one on the economic right believes retention of spiraling costs, state liabilities, and competently competitive companies are the answer to our economic situation. While the Canterbury Earthquakes have contributed to the cost, National is continuing to hold on to expensive and unsustainable policies created by the last Labour government, and opposed while in opposition. Asset sales and spending cuts are our only real way of being serious about recovery, as much as we'd also like to spend money on fiscal black holes, we simply can't afford it!!

I got the idea to write this post on a bus service between Hastings and Auckland and admiring the impressive country of New Zealand. The afternoon sun beaming down on Hawkes Bay and Waikato forests, farms, mountains, lakes and bushland. The magic lakeside town of Taupō, the friendly bus driver that waits for you when you're running late, the roadside café or dairy when you're on a long journey, and all the future Burger King beef patties (cows) chilling in the paddocks. These are all examples of our real family silver, the beautiful friendly country that we've inherited from our ancestors who've worked to give us this gorgeous land. These are what we feel real ownership of, what we really benefit from, and what give us our sense of identity and belonging. They don't need government ownership, and most of the time we're not even aware if there's foreign investment or input toward them. 

None of us feel any pride or connection with Air New Zealand, the power companies or the railways. If anything, we usually feel pissed off that they charge us a limb or two for flights (Napier to Auckland is usually well over $200, hence the bus) and electricity. Sentimental values over companies and investments is immensely shallow and a nostalgia not worth keeping. The arguments, the dances, and the logic is useless. The idea is not selling the family silver, we never owned it, this is about selling back to the market what is not meant to be government property, and being serious about a more stable and prosperous economic future.

Further Reading

David Farrar (from Kiwiblog) has an article in the New Zealand Herald website

Phil Goff's role in selling state assets back in the Rogernomics heyday

Privatize the Air!

The ACT party would like to scrap the emissions trading scheme (ETS) that was implemented by the National government. This is one of our few disagreements.

For a party that believes in a market solution for everything, the fact that an ETS is a market solution is being ignored. Libertarian thinkers such as Milton Friedman have advocated for a sort of ETS, with pollution controls being an effective market solution and an inefficient government solution. The ACT party is full of climate change skeptics, and while I don't believe in climate change 100%, what does concern me is the amount of air pollution there is. People forget that the same emissions causing global warming is also causing acid rain, environmental degradation, breathing problems for people, and dirty brown skies. 

Auckland and Wellington far from the dirty brown skies famous in New York City or the blood red sunsets of Los Angeles, and definitely nowhere near the pea-soup smog now prevalent in Beijing; but this does not mean we shouldn't uphold our 'clean green' aspiration, the unique selling point giving us a competitive edge for our exports, now highly desired by markets such as Britain and the PRC. We all got scared when a botched report said that Auckland's air quality is comparable to the heaving megalopolis of Tokyo, to which the WHO has later apologized and said we're not doing so bad after all. Len Brown's vision of making Auckland the most livable city in the world and our export economy which sells the country as clean and green; will not survive if our air pollution gets any worse.

Tragedy of the Commons

I have a lot of respect for David Syemour (ACT-5, candidate for Auckland Central) who spoke at a University of Auckland Economics Club meeting, where one of the concepts he raised was 'tragedy of the commons.' The idea that things left in public ownership always fare badly because it will inevitably lead to someone abusing it for their own gain, summed up by a Milton Friedman quote "no one treats someone else's property as well as their own." In this talk, Seymour explained that most environmental issues were the result of a 'tragedy of the commons' scenario, as they are usually seen as either government or no-one's property, and so they are left to abuse by private activities.

The solution to most 'tragedy of the commons' issues is to privatize the commons. Simple. To solve air pollution problems, it's as simple as privatizing the air, as scary as that sounds. Obviously, this does not mean paying someone to breathe, or being denied the use of air for breathing. What it does mean though, is setting up a not-for-profit organization that sells the right to pollute the air to those that can afford to do so, as they can justify polluting the air by gaining the most utility from doing so. The revenue made from this can then go to negative pollution emitters, such as forestry. This encourages replanting and forest retention, while pricing air polluters out of doing so. 

The most common argument against this is that it will hurt industry and farming. This is only true if they're slow or reluctant to adapt. Farmers can pay for air pollution and then be aid for keeping trees on their property. A few trees on a paddock than collect revenue to bring down costs, and can even become cost neutral if they can plant enough trees. Forestry as an industry can gain from this significantly, encouraging less productive farmland to be reforested to earn money. As for industry and transport, who create most of the air pollution in urban areas, switching to less emitting technologies, and only using dirtier technology where it is economically necessary. Environmentally friendly technology will become more prevalent, adding to our image and competitive edge. Public transport and more environmentally friendly transport will improve air quality and bring Auckland closer to Len Brown's vision of the world's most livable city.

Fast Followers of the Biggest Polluters

Don Brash has this idea that we should not be 'world leaders' in this sort of thing, but 'fast followers,' mentioning that our biggest trading partners are yet to implement this sort of thing. Our biggest trading partners include Australia, the PRC and the United States; all of which are ridiculed on the world stage for having terrible environmental records, this is not something we want to follow fast, especially when our reputation and quality of life depend on the opposite of this. A poll on the ALP (Australian Labour Party) Facebook page showed that 57% of Australians supported a carbon tax, meaning Julia Gillard is not unpopular because she is bringing in this policy, but because she's an outright liar. The fact Australia is bringing in a carbon tax shows that our neighbor across the ditch, who we want to follow fast, is doing exactly what we're trying to do.

The part that gets me though is obviously that Don Brash doesn't want us to be world leaders. I think this an awful gaffe, when we should be celebrating the talent, intellect, creativity, and ingenuity of this country, that prides itself on being the inventors of No 8 wire and other contraptions. World leaders are market leaders too, it's only obvious that if we lead the world in something, we have a competitive edge over the entire world. 

I'm all for privatizing things, which includes the air. I differ from much of the ACT party in that I have a more environmental focus, and I know there are many market and economical solutions to environmental issues. This is one of them. The ETS could of course be better implemented, refined, redesigned, and modified in all sorts of ways. Not going to happen if we don't rise up to the challenge and become a world leader in this field, otherwise we'll just have to wait until someone else does it.

Getting Railways On the Ground

As an urban planning student, I take great interest in transport systems and the like, boring as people think it is. To broaden my knowledge and get information, I often go to lectures and debates that take place at the university about transport and planning. As you would expect, it's usually full of lefties, with Jacinda Ardern and Keith Locke making appearances regularly. Auckland is a critical topic, with piss poor planning almost ruining the city for the last 80 years and a transport system on the brink of gridlock. Lefties want more public transport (I think they're just attracted by the word 'public') and especially more railways. The problem is, lefties hate business and have never mentioned any commercial use of railways - except for one MP.

Gareth Hughes (Green-7, candidate for Ōhariu) has said "Rail freight and coastal shipping are more sustainable, safe, and energy efficient modes for moving freight." ACT hasn't been too impressed with this, and the shipping part is bad timing with the oil spill, but finally there is a case for railways.

Public transport (especially for Auckland) has always been a contentious issue, ever since planning policy back in the 1950s advocated a sprawling car-dependent city, it has been difficult to implement public transport where necessary. People live too far from where they work now, too far apart, and Auckland's geography with all the hills and estuaries makes it sprawl even further. Industrial and commercial areas are actually well situated for railways though, since many industrial areas grew up around them (think the mass of railway tracks around the old slaughterhouses in Otahuhu). The problem is, railways have been neglected for goods transport, and this has happened before, during, and after the privatization of them, so it's not a case of private railways. In fact the biggest interest in railways has been shown by Fonterra and Mainfreight, so there is interest in their commercial use.

Problem is, it's extremely hard to justify railways on public transport alone, Len Brown is working extremely hard to push for the CBD rail link, and the opposition is coming from those who say it is not economically justifiable. Giving commercial use of railways does help though, the amount of goods that can be moved, the efficiency of goods being moved, and the added capacity this has to our total transport network - can provide huge benefits. Doubling the use of the tracks for commercial use is not a big deal in practice, but the economic potential is huge.

Examples:

• India: The British originally built the railway tracks to move goods around the country, so they could be exported to Britain and other markets. Now they're famous for their use as public transport.
• Europe: What is often the model for other railway networks, France and Britain are well known for their railway pioneering and high public transport usage. From living in the UK near the trunk line between London and Birmingham, they sure as hell get used for moving goods around.
• Auckland's Onehunga line: There are plans to get this extended to Mangere and Auckland International Airport. A railway line that started out serving the industrial areas of Penrose and Te Papapa is now looking at a new role as a major commuter line as well.

The problem with the railways in this country is that they've been neglected, allowing air, road, and sea transport to beat them in competition, furthering their neglect. Investment in railways is contentious, as it currently is state-owned and is not seen as efficient. But in the long term, they can make site rewarding investments, especially if successful businesses such as Fonterra reckon they could make good use of them. Lefties will never get railways off the ground without acknowledging that business, their arch-enemy, can use them too. 

National to ACT: Wake Up

Recently, polls form various sources have said that ACT is polling below 5% and that Paul Goldsmith (Nat-39, candidate for Epsom) could probably take the prestigious inner-East Auckland seat of Epsom, where I live.

This is strong ACT territory, the party does not get a huge number of party votes, but it does get the electorate votes for the ACT candidate. National encourages this to get a coalition partner in government. Granted, but with National polling so high it could govern alone, wouldn't it be fine if National left ACT to disappear? Whale Oil has already covered this, and he's concerned about what National is thinking for coalition partners in 2014 when their polling will be (in my opinion) inevitably lower than what it is now. My sources tell me that National leaked the poll to shock the ACT party, a warning that it could slip into oblivion if it does not get it's act together and shape up before election day. It shows National's apathy towards the ACT party, saying that they'll push for Goldsmith if Brash doesn't pull finger, leaving John Banks (ACT-4, candidate for Epsom) in second place and the party out of parliament. With a majority looking likely, it doesn't matter to them whether ACT gets in or not, and with the press the party's had it may be a good look not to go in coalition with them anyway. 

While I understand their position, this is still irresponsible, even from a National party perspective.

1. Whale Oil brought up 2014. If ACT doesn't get in this election, then they will be dead for 2014. My guess is that National won't be polling so high by then, maybe enough to make a coalition, but not enough to govern alone. For this, they'll need an ally, so now is not a good time to kill one off. The Māori Party probably won't do it again, and the Greens would be reluctant to do it. They'll need ACT in the long run.
2. Yes they can govern alone, but why not seal the deal? ACT almost always vote the same way, thus strengthening the majority. Every seat that ACT gets from its combined Epsom and party votes, takes seats away from National's opposition (and enemies, last time it took everything out of New Zealand First, thankfully). Not just strengthening a majority, but weakening an opposition.
3. MMP is supposed to guarantee a variety of opinions. With every other party looking to get seats quite firmly left of National, it may only benefit National to have a legitimate center-right voice to balance them out, and prevent National from looking crazy as the only right-wing voice.
4. Also under MMP, the small parties tend to get the blame in place of the big ones. National will be far more accountable governing alone and will cop a lot of negativity when things go wrong, having no scapegoat to take the fall. ACT has taken a lot of the bad publicity for National on the right, especially for things like the Auckland Council amalgamation, and still been in parliament since the party began. Same can't be said for Winston First…
5. Does National really want to risk splitting the right wing vote?!

ACT does have the potential to do it, but they do have to focus. Mishaps like Don Brash (ACT-1) not telling the party controversial issues like cannabis reform are too costly now. It's not like Banks even had to agree, it's just polite to give him a heads up beforehand.  Don Brash needs to speak more on the economy, John Banks has to really campaign in Epsom. The poll could easily be skewed, plus it is hard to get a truly accurate figure while people are distracted with all the rugby. But accurate or not (even iPredict says ACT will get 4 seats), it is a wake up call to ACT, especially if they want endorsement from the National party.