General Debate, June 4, 2009

Serious allegations swirl around the head of a fallen National Party Minister.

The healthy food in schools debate runs hot, but civil on a highjacked thread.

Oil hovers in the mid-sixties, a harbinger, if my earlier predictions were correct, of the beginning of an economic recovery, at least as the growth-worshippers measure it.

Your thoughts on these and other matters?

21 Comments Posted

  1. JH

    Nolan has half a point. He’s right, we have not “overbuilt” in terms of numbers.

    We have however overpaid in terms of each house built or sold. The appetite for that passive investment in housing is still there and people have over the past decade or two, gone into it in a big way because it WORKS. The tax structure favors it and the investment risk in everything else favors it, so overpaying for an investment property is part of the problem… because it raises the unit price for the houses past the ability of most of us to afford the things.

    Which is why the NUMBERS of them haven’t been increasing at anything like the demand rate and why he can look at the numbers and draw his erroneous conclusion. He has mistaken an effect for a cause.

    You can understand the housing obsession easily by simply making clippings of all the housing related articles and mentions of housing prices. Rising prices are invariably “good” and the number of such mentions outnumber the others by roughly a factor of 3.

    You can also have a go at the Capital Gains “3rd rail” of NZ politics (Do people here know what that means?).

    The tax favoritism shown to housing investors is real. It can also be viewed as a tax PENALTY to everyone who cannot or does not invest in housing.

    But investing in housing is NOT the same as building new houses. The man needs to consider that little difference very carefully before he tries to make such an analysis.


  2. I like the idea of a house as a productive investment when combined with a land tax as in “sorry the capital gains stay in the community but this house is sited for the sun it costs $50 /year to heat and produces no wet waste Organic waste goes into the garden [then there is the cycleway system which is covered in many places] “

  3. The myth of “over-investment” in housing.

    Matt Nolan has a post on his blog: The myth of “over-investment” in housing.
    He says we can’t have been over investing in housing as there has been a shortage of houses. His point is that houses are productive as they provide somewhere to live.

    “And before anyone says “we borrowed to buy houses off each other” lets try to remember that if we buy something off someone else in the country it doesn’t change national debt – it is just a transfer.”

    In a later post Some issues with GDP he concludes:

    “I completely agree with many criticisms out there about the NZ housing market, but saying that the countries terrible debt position is the result of a “housing obsession” seems off the mark – as we don’t appear to have overbuilt.

    In reality the data seems to indicate that NZ inc has borrowed to fund a whole bunch of business investment that has turned sour – plant and machinery investment has been through the roof and we haven’t done much with it. Unfortunate, but C’est la vie.”

    If our ” whole bunch of business investment [that] has turned sour” what were the point of the mass migrations that occurred over the last few decades as we are continually told that it is all about “needed skills” as migration has put up house prices (and infrastructure charges) and in some ways improved and other ways reduced the quality of life (infill housing and traffic)?

  4. Randal O’Toole: Taking Liberties With the Facts

    by Ryan Avent on June 2, 2009

    The Cato Institute’s Randal O’Toole gets under the skin of many of those interested in building a more rational and green metropolitan geography, but in many ways he’s an ideal opponent. It would be difficult to concoct more transparently foolish arguments than his. The man is an engine of self-parody.

  5. Steven Joyce driving another nail into the public transport coffin:

    Council control over public transport to be revisited
    Updated at 7:43pm on 4 June 2009

    The Government has signalled a return to allowing a more free-market approach to public transport, especially in Auckland.

    Transport Minister Steven Joyce has told a conference in Auckland he wants to move quickly to revisit legislation passed by the previous Government.

    The Public Transport Management Act gave regional councils greater control over public transport services, even those run by commercial operators without subsidies.

    The Act had been bitterly opposed by the country’s biggest operator, NZ Bus, which argued it removed the ability to get a good return on major investment and smart practices.

    The legislation had been particularly welcomed by Auckland’s Regional Transport Authority which said it needed greater powers in order to better control a regionwide network.

    Mr Joyce says private operators need to have the confidence to continue to invest in public transport and he plans to move quickly over the next months to change the legislation.

    Copyright © 2009 Radio New Zealand


  6. It appears Worth is gone for misleading the PM – and the PM reassures us it is not for his conduct as a minister he is being investigated (so that rules out offering jobs in return for a private relationship)

  7. Surely, greenfly, when you are upset, you have learned that it is best to keep your mouth shut until it cools? Keep a warm heart and cool head, and all that?

  8. A Frog, with dander! And it’s up and frothy!
    Sensitive critters, frogs, but your reluctance to put your webby hand into the pot for a stir is intriguing…

  9. quip away, greenfly! I just don’t think that I will join in any merriment, as for some reason this issue gets my dander up.

  10. What word best describe Worths behaviour……..[ ] how can I profit in some way from this?. It makes you wonder about politicians in general; i remember some student politicians at a bar once… boy were they arrogant, super confident and full of themselves.

  11. BluePeter said: Still, at least Key didn’t order some toothless report and make endless excuses for years on end.

    I presume you are referring to the Ingram inquiry Helen Clark instigated into the allegations against Field. The Police were, of course, free to investigate those allegations at that time they were first made, as they have done with those against Worth, but for some reason they chose not to.

    A Commission of Inquiry with the power to summons witnesses to give evidence under oath may have been able to get to the truth quicker, but if it is the case that witnesses were induced to lie to the Ingram inquiry, such inducement may have also been sufficient to persuade them to lie under oath.

    But I agree that it was as serious political misjudgment by Clark to let the Field affair drag on as long as it did – I believe that together with Labour’s continued attempts to defend their pledge card (and built upon by subsequent scandals involving David Benson-Pope and Winston Peters) was the turning point that led to the downfall of the Clark Government.

  12. Worth should have gone before now. Still, at least Key didn’t order some toothless report and make endless excuses for years on end.

  13. The allegations are unseemly, greenfly, and as they make my blood boil I don’t think I will venture into the debate. I’ll speak my mind after Worth has had his day in court. It is the only courtesy I’ll give him, and the only one I would expect were our positions reversed.

  14. It is interesting how oil has soared in the last few weeks. It is certainly one of the first signs of a global economic recovery. However, if/when oil spikes again (as the result of economic recover) the high price may slam us back into another recession.

    Treasury’s forecasts of oil prices are laughable though:

    Oil prices – The average price of West Texas Intermediate (WTI) oil on a quarterly basis peaked at US$124/barrel in the June quarter of 2008 but had declined to US$43/barrel by the March 2009 quarter as demand fell with the slowing of the world economy. Based on the average futures prices for WTI oil in March 2009, it is assumed that the price of oil will gradually increase over time, reaching US$60/barrel by the end of 2010 and around US$68/barrel by the end of the forecast period. Over most of the forecast period the oil price assumption contained in the Budget Forecasts is approximately 20% below that assumed in the December Forecasts.

    ^^From page 36 of this:

    Cameron Pitches of the Campaign for Better Transport has suggested a few questions to Bill English on this:

    To Hon Bill English: Does he have any faith in Treasury Forecasts for future oil prices? If so why? Can he explain why Treasury is predicting oil prices of $68 a barrel by 2013, when in fact oil prices are at that level today? Given that Treasury continues to use the same methodology that failed to predict record oil prices last year, what steps will the Minister take to ensure improved accuracy of oil price forecasting, or does he think that current oil price forecasts are acceptable?

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