A lettuce lasted longer than Liz Truss' unfunded tax cuts for the rich and climate unfriendly policies. It turns out global investors believe they're dumb ideas. Christopher Luxon should take note.
Bernard I think you really need to rethink your position on energy security, especially in the short to medium term, that anything apart from green energy investment can be considered ‘bad’. A key reason for the chaos in the UK is state of energy prices, caused by a lack of energy security via lack of domestic investment in hydrocarbon and investment and green energy generation not able to support demand.
This should be a lesson to NZ that this global energy transition is going to be messy and we MUST secure domestic supply in the short to medium term probably via gas. We risk causing massive harm to the poorest in our society that will pay this price for it if we don’t get it right.
We won't make the political decisions necessary to safeguard energy supply until we have alternatives in place, even though we are likely to grow peak demand through the lift in EV numbers.
Could you imagine getting RMA (or Iwi for that matter) sign off in 2022 to build a new hydro dam?
Gas is expensive, stove top, hot water and a heater costs more than the power bill, how does that help the poorest? The more green energy we generate and use the faster the cost comes down vs being milked for every dollar of profit by sunset hydrocarbon extractors
Mr Anderson this is exactly the kind of ‘black and white’ thinking that is completely unhelpful and potentially dangerous.
Domestic NZ gas is very cost competitive as a swing producer when compared to alternatives; and the less we invest, the less supply we have, leading to higher costs. At the moment we have no installed alternative to support the grid other than gas peaker plants. It will take years for the private sector to invest to bridge this gap.
NZ is also at the mercy to oil producers for a whole bunch of other uses like transport - we will need jet fuel and bunker fuel for shipping to support exporters for example - this is likely to be the same for at least 20 years.
The summary is - we need energy security from all sources, green and legacy, to support an orderly transition that does not lead to extreme pressure on the vulnerable.
James - rich countries have had decades to invest in a smooth transition to green energy security - but neglected to fix the roof whilst the sun was shining.
Any new energy/storage solution will take years to design and commission - whether fossil or alternative.
We may as well invest directly in energy efficiency and renewable solutions now - including pumped hydro, distributed generation, equitable arrangement for Tiwari/Matapouri and intermittancy/ storage options - than new gas/FF facilities (with an asset lifespans of >50 years).
The beauty being that wind turbines and solar PV facilities will be periodically upgraded and/or recycled/replaced with new tech - or removed entirely - whereas fossil fuel extraction/use causes irrevocable harm.
Gwani this approach is just setting us up for chaos - you are here just addressing some electricity generation, rather than the energy system. We are going to need lots of fossils fuels in this economy for 20+ years to keep transport operating, fertiliser production etc etc, for which if we don’t invest we will be at the mercy of international markets. We have other options like buying a proportion of domestic gas fields to keep in reserve instead of it being exported as methanol. FF projects are not generally 50 years plus, maybe 30 years max when exploration is included.
The summary is, NZ needs further investment in ALL forms of energy to protect the average NZ consumer and business, not just green tech that is still proving itself
Gas may need to play a minor role in transition, but NZ has huge untapped potential in offshore wind, tidal and distributed solar PV generation and storage.
Power-to-X pathways in periods/regions of low demand are well-suited to supporting transportation and other applications unsuited to electrification.
For a decade the Canadian FF industry was adamant about the need to invest billions in more oil pipelines to build new/extend life of others (through to 80 years mind you!). All this despite respected analysis indicating it was a very poor investment and likely to end up a stranded asset.
When the economics shifted, the government 'had to' bail out the project proponents - to the tune of >$5B I recall - as they were considered too big (well connected?) to fail
‘Untapped potential’ doesn’t equate to an affordable, reliable, stable energy system in the medium term. I agree in the long term once the technologies are derisked and become commercial, we should be removing fossil fuels from the equation but this is currently looking 20+ years away.
I’m not sure how oil transportation pipeline investments are relevant in this context.
I agree on the gas, but we also need to be ruthless and tough on getting emissions down from the likes of Coal. Currently, we're burning coal at Huntly so Tiwai can keep pumping out aluminium at Bluff, and because the big gentailers have run their balance sheets for dividends rather than reinvestment for the last decade.
Agree that coal is the main culprit, but would be good for you, as someone with real influence in this space, to be a bit more realistic about the benefits of a diverse, secure energy supply to support us through a likely long, messy transition period.
The gentailers are a good point - given their positioning as dividend cows I struggle to believe they are the parties that will be providing the large amounts of capital required for a wholesale transition - especially how they will appeal to shareholders when the returns on these investments are likely be much lower than they have previously expected
Luxon can't make a U turn without it costing him the leadership or National the election, posdibly both.
Tax cuts are National's go to policy since the dawn of time. It's almost all they've got.
He will rely on the fact NZers aren't suffering as much as the UK, despite best efforts of the media to portray it that way. Unfortunately there's enough voters in NZ who still believe in trickle down, still think tax cuts will get them the desired ticket to the millionaire club and who deny climate change has any effect on us.
The unfortunate outcome is this will not put a pressure on Labour to WIN the next elections but rather let National loose it so if I had a bit of hope left that Labour do something transformational I might be disappointed again.
Trickle down: - "Hi, I earn $1m per year after tax. I don't spend all of that; some I save. So, if I get a tax cut and have another $100,000 in the pocket it will all get saved. Trickle down? Yeah, nah".
It is barely half what you estimated. Now if they buy a $3m beach house the Gov clips $450,000 in GST. Add in private schools, new cars. Top income earners have been bankrolling the low income earners via Working for Families. Get a 2nd job, get ahead.
I think you can support higher taxes when you have a government and public service that can efficiently and effective deploy tax dollars. In the case of this current j government that is definitively not the case.
So I take it National are preemptively admitting to not being able to efficiently and effectively deploy tax dollars and therefore offering tax cuts. Why are they heralded as better manager of the economy then? And why vote for them if by their own admission they are useless?
Government is not always an efficient allocator of money beyond activities that cannot be done effectively by others. The ideology is about who does it better? You or Government.
E.g. Private health can deliver more surgeries for less dollars than public, so balance works - hence the contracting out to catch up on operations. The vaccine "rollout" was terrible until MoH accepted that GP's, pharmacies, and iwi were better suited to delivering services closer to the end user.
The governments 'one size fits all' centralised approach was costly, cumbersome and ineffective. Add water, health, polytechs, FPA's, and others to their centralisation will deliver more of the same. It will lose them the election
Does the number of new bureaucrats in the past 5 years and equate to more effective outcomes? Not on the evidence so far.
Would I agree with higher taxes for better services? Yes
Am I seeing better services using the big tax increases I have paid so far? Nope.
Yes indeed Bernard, these are wise words from Conservative MP Charles Walker. So are these hot mic remarks from Channel 4 presenter Krishnan Guru-Murthy about Irish Minister Steve Baker.
Walker made only passing reference to governing in the national/constituents' interest - mostly whinging about Tory MPs' prospective unemployment status in 2024. Bunch of incompetent, self-serving, Brexiteer, Etonian twats.
Bernard, you’ve got a real thing for tax cuts for the ‘rich.’ 2 easy Qs: How much revenue will the IRD loose if this is implemented and how does it compare to the white elephants like Light Rail? Government wastage is the issue, you were critical of the $53B in QE and $9B shortfall from bond repurchasing. Add in consultants, Harbour Bridge crossings, cost of living payments to the dead and cap it off with the millions given without ACCOUNT to Maori for vaccination ie zero deliverable metrics or demonstration of effect.
Great questions Neil. My quick estimate from the latest budget figures is close to $3b. But I need to dig deeper and cross Ts and dot Is. I’m also not a fan of light rail, but mainly for emissions reasons. It’s not carbon neutral for another 20 years or so because of the emissions embedded as it’s built. I’d like to see much faster mode shift (ie turning roads and motorways into cycleways, busways and walkways) instead. I was not a fan of the cost of living payment full stop. I was a fan of the vaccination money. There are very deliverable metrics on that. And people alive now because of it. Here’s more detail from an immunologist in a BMJ article. https://www.bmj.com/content/376/bmj.o180
As usual historians are on to it. Last night on UK Times radio an analysis was done on when three PM’s in one year and the economic similarities where Bank of England refused to support the Government of the day in provision of food to the citizens causing the Irish famine and mass casualties and destroying the Union in its wake. So not new of course and same suspects every time.
I’ve just scoured the podcasts around the time October 21 The Red Box which the historian was interviewed after. So two elections of three of 4 PMs one in 1834 and another year of turmoil where BoE wouldn’t support the policies of the Government then, like now, raised costs and taxes and caused mass death, starvation and migration. Crashing premierships as they went.So sorry can’t find the interview but I’m sure it’s a part of historical record and of course it is still happening behind the veil of faux democracy and having tax and citizens funnelled to the Military Industrial complex and the wealthy instead of provision of obligations and services to the public and paid for by the public. Numerous times and by various different methods. When they can literally just print and hold forgive and recover on balance sheets however much they like in reality. As you know. But clearly universal suffrage, people and planet are not the priority. Exploitation, destruction, oppression and abuse are for wealth and power for the male class in servitude to the obscenely wealthy few. This has been going on for hundreds of years but it is simply a mirage with nothing real basis in fact or reality or any good it’s just a belief in a failed and hidden system.
On second thought they may have a list of who is interviewed (Prof History) on that day. I too do love the study of these things being Maddison/Delaney (yes very French 😀) on my Paternal Grandmothers and given on my paternal Grandfathers side (Scottish borders clan) and the Scottish clearances and who benefitted from all the carnage against the indigenous there as well the minute detail of the players and causes of such destruction is always worth examining. So I think “it’s the economy , stupid” being weaponised against people seems to be a tediously recurring theme and which is why the markets central banks, Treasuries etc, in my view, need to be brought back under democratic and transparent control by the rule of law as does Government and in the public good.
He did get cut off with great haste from his commentary (as they do😀) but I’m not sure if that was because what he said was so exposing or because The Conservative Party, Government and PM had just burst into flames over their U turn on the Fracking Moratorium they had campaigned on and the actions of BoE putting rates up previously and Liz Truss’ and Kwasi Kwartangs massive subsidy to hugely profitable energy companies and neo liberal trickle down policies favouring the wealthy and now austerity again under Jeremy Hunt. Shambles UK Times radio was trying to report on anyway at that time. But none of these “psychodramas” used to distract the public nicely from where the publics money is actually going and whose really in control of that. Not pretty.
I hope you have released this Bernard to all. I am going to choke on "The rising tide raises all boats' and GDP "growth" is good . All of Luxon's statements and that of his deputy are based on old 20th century discredited economics but they will be parroted in all the "blue rinse" brigades soirees as usual. Thanks for the evidence base. At least the Bond Vigilantes are "Getting It".
By the way how about doing an evidence base on the Groundswell idiots wasting yet more of their precious diesel protesting so they can continue to trash the Planet ( see George Monbiot "Regenesis"). Some of us are Toitu certified and pay for use of oil and gas by carbon credits for our consumption. They stick to their Magical Thinking Pasture fed agriculture which in 50 years the world may not want.
The BMJ article doesn’t address the key question “was the money given to Maori a good return on investment.” For example, could it have been spent elsewhere and achieved better outcomes. Foetal alcohol syndrome is a massive problem in Maori leading to failure in the education system, increased rates of social support and criminal convictions. Answering this requires a full economic assessment which will not happen. The following may give a crude benchmark using influenza vaccination costs from 20yrsago. The number of doses sold was less than 1-million and the public price was under $10/vaccine, some of which was purchased privately. Add in reimbursement for vaccinator costs and education roll out and you have a number that is a single figure percentage of our COVID-19 costs for Maori alone. The abuse and misallocation of funds is criminal.
Open it up 🙌
Thanks Jonathan. I’ve done that now. Free to share. Sorry for the delay.
Bernard I think you really need to rethink your position on energy security, especially in the short to medium term, that anything apart from green energy investment can be considered ‘bad’. A key reason for the chaos in the UK is state of energy prices, caused by a lack of energy security via lack of domestic investment in hydrocarbon and investment and green energy generation not able to support demand.
This should be a lesson to NZ that this global energy transition is going to be messy and we MUST secure domestic supply in the short to medium term probably via gas. We risk causing massive harm to the poorest in our society that will pay this price for it if we don’t get it right.
We won't make the political decisions necessary to safeguard energy supply until we have alternatives in place, even though we are likely to grow peak demand through the lift in EV numbers.
Could you imagine getting RMA (or Iwi for that matter) sign off in 2022 to build a new hydro dam?
Gas is expensive, stove top, hot water and a heater costs more than the power bill, how does that help the poorest? The more green energy we generate and use the faster the cost comes down vs being milked for every dollar of profit by sunset hydrocarbon extractors
Mr Anderson this is exactly the kind of ‘black and white’ thinking that is completely unhelpful and potentially dangerous.
Domestic NZ gas is very cost competitive as a swing producer when compared to alternatives; and the less we invest, the less supply we have, leading to higher costs. At the moment we have no installed alternative to support the grid other than gas peaker plants. It will take years for the private sector to invest to bridge this gap.
NZ is also at the mercy to oil producers for a whole bunch of other uses like transport - we will need jet fuel and bunker fuel for shipping to support exporters for example - this is likely to be the same for at least 20 years.
The summary is - we need energy security from all sources, green and legacy, to support an orderly transition that does not lead to extreme pressure on the vulnerable.
Let's all watch how things play out in Germany over the next year and see if there are any lessons to be learned
Like recommissioning nuclear plants that were due to be decommissioned fully, to avoid the gas supply cold war.....
Thanks James. What policies would be better than current exploration ban? In particular, what works best to get rid of the coal fastest?
James - rich countries have had decades to invest in a smooth transition to green energy security - but neglected to fix the roof whilst the sun was shining.
Any new energy/storage solution will take years to design and commission - whether fossil or alternative.
We may as well invest directly in energy efficiency and renewable solutions now - including pumped hydro, distributed generation, equitable arrangement for Tiwari/Matapouri and intermittancy/ storage options - than new gas/FF facilities (with an asset lifespans of >50 years).
The beauty being that wind turbines and solar PV facilities will be periodically upgraded and/or recycled/replaced with new tech - or removed entirely - whereas fossil fuel extraction/use causes irrevocable harm.
Gwani this approach is just setting us up for chaos - you are here just addressing some electricity generation, rather than the energy system. We are going to need lots of fossils fuels in this economy for 20+ years to keep transport operating, fertiliser production etc etc, for which if we don’t invest we will be at the mercy of international markets. We have other options like buying a proportion of domestic gas fields to keep in reserve instead of it being exported as methanol. FF projects are not generally 50 years plus, maybe 30 years max when exploration is included.
The summary is, NZ needs further investment in ALL forms of energy to protect the average NZ consumer and business, not just green tech that is still proving itself
Gas may need to play a minor role in transition, but NZ has huge untapped potential in offshore wind, tidal and distributed solar PV generation and storage.
Power-to-X pathways in periods/regions of low demand are well-suited to supporting transportation and other applications unsuited to electrification.
For a decade the Canadian FF industry was adamant about the need to invest billions in more oil pipelines to build new/extend life of others (through to 80 years mind you!). All this despite respected analysis indicating it was a very poor investment and likely to end up a stranded asset.
When the economics shifted, the government 'had to' bail out the project proponents - to the tune of >$5B I recall - as they were considered too big (well connected?) to fail
‘Untapped potential’ doesn’t equate to an affordable, reliable, stable energy system in the medium term. I agree in the long term once the technologies are derisked and become commercial, we should be removing fossil fuels from the equation but this is currently looking 20+ years away.
I’m not sure how oil transportation pipeline investments are relevant in this context.
Thanks guys. Good debate. I learned things.
Couldn’t you argue though that using gas instead of coal, if that’s the only immediate alternative, is a less damaging form of irrevocable harm`/
I agree on the gas, but we also need to be ruthless and tough on getting emissions down from the likes of Coal. Currently, we're burning coal at Huntly so Tiwai can keep pumping out aluminium at Bluff, and because the big gentailers have run their balance sheets for dividends rather than reinvestment for the last decade.
Agree that coal is the main culprit, but would be good for you, as someone with real influence in this space, to be a bit more realistic about the benefits of a diverse, secure energy supply to support us through a likely long, messy transition period.
The gentailers are a good point - given their positioning as dividend cows I struggle to believe they are the parties that will be providing the large amounts of capital required for a wholesale transition - especially how they will appeal to shareholders when the returns on these investments are likely be much lower than they have previously expected
Great points. Thanks James. Any suggestions for reading or experts in Aotearoa on this area I should be reading?
"They're"?
Luxon can't make a U turn without it costing him the leadership or National the election, posdibly both.
Tax cuts are National's go to policy since the dawn of time. It's almost all they've got.
He will rely on the fact NZers aren't suffering as much as the UK, despite best efforts of the media to portray it that way. Unfortunately there's enough voters in NZ who still believe in trickle down, still think tax cuts will get them the desired ticket to the millionaire club and who deny climate change has any effect on us.
The unfortunate outcome is this will not put a pressure on Labour to WIN the next elections but rather let National loose it so if I had a bit of hope left that Labour do something transformational I might be disappointed again.
Hi Merav
Trickle down: - "Hi, I earn $1m per year after tax. I don't spend all of that; some I save. So, if I get a tax cut and have another $100,000 in the pocket it will all get saved. Trickle down? Yeah, nah".
Yeah, it only trickles to yet another property.
It is barely half what you estimated. Now if they buy a $3m beach house the Gov clips $450,000 in GST. Add in private schools, new cars. Top income earners have been bankrolling the low income earners via Working for Families. Get a 2nd job, get ahead.
I think you can support higher taxes when you have a government and public service that can efficiently and effective deploy tax dollars. In the case of this current j government that is definitively not the case.
So I take it National are preemptively admitting to not being able to efficiently and effectively deploy tax dollars and therefore offering tax cuts. Why are they heralded as better manager of the economy then? And why vote for them if by their own admission they are useless?
I’m not supporting national, I’m just voicing over what the average voter is thinking at the ballot box between the two approaches
Government is not always an efficient allocator of money beyond activities that cannot be done effectively by others. The ideology is about who does it better? You or Government.
E.g. Private health can deliver more surgeries for less dollars than public, so balance works - hence the contracting out to catch up on operations. The vaccine "rollout" was terrible until MoH accepted that GP's, pharmacies, and iwi were better suited to delivering services closer to the end user.
The governments 'one size fits all' centralised approach was costly, cumbersome and ineffective. Add water, health, polytechs, FPA's, and others to their centralisation will deliver more of the same. It will lose them the election
Does the number of new bureaucrats in the past 5 years and equate to more effective outcomes? Not on the evidence so far.
Would I agree with higher taxes for better services? Yes
Am I seeing better services using the big tax increases I have paid so far? Nope.
Kim for PM
Yes indeed Bernard, these are wise words from Conservative MP Charles Walker. So are these hot mic remarks from Channel 4 presenter Krishnan Guru-Murthy about Irish Minister Steve Baker.
https://youtu.be/L69QkDF0LT4
Walker made only passing reference to governing in the national/constituents' interest - mostly whinging about Tory MPs' prospective unemployment status in 2024. Bunch of incompetent, self-serving, Brexiteer, Etonian twats.
:)
Bernard, you’ve got a real thing for tax cuts for the ‘rich.’ 2 easy Qs: How much revenue will the IRD loose if this is implemented and how does it compare to the white elephants like Light Rail? Government wastage is the issue, you were critical of the $53B in QE and $9B shortfall from bond repurchasing. Add in consultants, Harbour Bridge crossings, cost of living payments to the dead and cap it off with the millions given without ACCOUNT to Maori for vaccination ie zero deliverable metrics or demonstration of effect.
Great questions Neil. My quick estimate from the latest budget figures is close to $3b. But I need to dig deeper and cross Ts and dot Is. I’m also not a fan of light rail, but mainly for emissions reasons. It’s not carbon neutral for another 20 years or so because of the emissions embedded as it’s built. I’d like to see much faster mode shift (ie turning roads and motorways into cycleways, busways and walkways) instead. I was not a fan of the cost of living payment full stop. I was a fan of the vaccination money. There are very deliverable metrics on that. And people alive now because of it. Here’s more detail from an immunologist in a BMJ article. https://www.bmj.com/content/376/bmj.o180
As usual historians are on to it. Last night on UK Times radio an analysis was done on when three PM’s in one year and the economic similarities where Bank of England refused to support the Government of the day in provision of food to the citizens causing the Irish famine and mass casualties and destroying the Union in its wake. So not new of course and same suspects every time.
Interesting story. I have a personal interest in those potato famines. Do you have an article or a link I could read Kath?
I’ve just scoured the podcasts around the time October 21 The Red Box which the historian was interviewed after. So two elections of three of 4 PMs one in 1834 and another year of turmoil where BoE wouldn’t support the policies of the Government then, like now, raised costs and taxes and caused mass death, starvation and migration. Crashing premierships as they went.So sorry can’t find the interview but I’m sure it’s a part of historical record and of course it is still happening behind the veil of faux democracy and having tax and citizens funnelled to the Military Industrial complex and the wealthy instead of provision of obligations and services to the public and paid for by the public. Numerous times and by various different methods. When they can literally just print and hold forgive and recover on balance sheets however much they like in reality. As you know. But clearly universal suffrage, people and planet are not the priority. Exploitation, destruction, oppression and abuse are for wealth and power for the male class in servitude to the obscenely wealthy few. This has been going on for hundreds of years but it is simply a mirage with nothing real basis in fact or reality or any good it’s just a belief in a failed and hidden system.
On second thought they may have a list of who is interviewed (Prof History) on that day. I too do love the study of these things being Maddison/Delaney (yes very French 😀) on my Paternal Grandmothers and given on my paternal Grandfathers side (Scottish borders clan) and the Scottish clearances and who benefitted from all the carnage against the indigenous there as well the minute detail of the players and causes of such destruction is always worth examining. So I think “it’s the economy , stupid” being weaponised against people seems to be a tediously recurring theme and which is why the markets central banks, Treasuries etc, in my view, need to be brought back under democratic and transparent control by the rule of law as does Government and in the public good.
He did get cut off with great haste from his commentary (as they do😀) but I’m not sure if that was because what he said was so exposing or because The Conservative Party, Government and PM had just burst into flames over their U turn on the Fracking Moratorium they had campaigned on and the actions of BoE putting rates up previously and Liz Truss’ and Kwasi Kwartangs massive subsidy to hugely profitable energy companies and neo liberal trickle down policies favouring the wealthy and now austerity again under Jeremy Hunt. Shambles UK Times radio was trying to report on anyway at that time. But none of these “psychodramas” used to distract the public nicely from where the publics money is actually going and whose really in control of that. Not pretty.
I hope you have released this Bernard to all. I am going to choke on "The rising tide raises all boats' and GDP "growth" is good . All of Luxon's statements and that of his deputy are based on old 20th century discredited economics but they will be parroted in all the "blue rinse" brigades soirees as usual. Thanks for the evidence base. At least the Bond Vigilantes are "Getting It".
By the way how about doing an evidence base on the Groundswell idiots wasting yet more of their precious diesel protesting so they can continue to trash the Planet ( see George Monbiot "Regenesis"). Some of us are Toitu certified and pay for use of oil and gas by carbon credits for our consumption. They stick to their Magical Thinking Pasture fed agriculture which in 50 years the world may not want.
Patrick Medlicott
Thanks Patrick. That’s open now to all.
Thank you for the estimate.
The BMJ article doesn’t address the key question “was the money given to Maori a good return on investment.” For example, could it have been spent elsewhere and achieved better outcomes. Foetal alcohol syndrome is a massive problem in Maori leading to failure in the education system, increased rates of social support and criminal convictions. Answering this requires a full economic assessment which will not happen. The following may give a crude benchmark using influenza vaccination costs from 20yrsago. The number of doses sold was less than 1-million and the public price was under $10/vaccine, some of which was purchased privately. Add in reimbursement for vaccinator costs and education roll out and you have a number that is a single figure percentage of our COVID-19 costs for Maori alone. The abuse and misallocation of funds is criminal.
My cat’s hairdresser said he’s resigning. A baseless rumour, but articles have been written on less