Clash of Titans

I haven’t posted in a while, and, since there’s not a lot that hasn’t been said by others about Labour lately, I thought I’d have a quick look at some minor parties. Firstly this, which I noted on Kiwiblog:

The Green Party says it has the numbers to prove farms will remain very profitable, even if they’re charged for irrigation.

It says MAF statistics show its suggested charge for irrigation is 4.8 percent of total farm income for the average Canterbury dairy operation.

Co-leader Russel Norman believes it shows farmers can afford the cost

As David Farrar points out, 4.8% of total income, not profit, is huge for most businesses. I’m no expert on farming, but I suspect that 4.8% of total income would represent closer to 48% of total profit – probably more. Ironically, this would inevitably push up milk and dairy prices, into which the Greens would no doubt call for further (taxpayer funded) public inquiries. It is possible that Russel Norman mis-spoke and that he meant profit, not income. Although I doubt that MAF would have profitability figures for farms.

Assuming that Russel did mean “income”, this leaves two possibilities. Either he genuinely believes that businesses forced to part with 4.8% of their total income would continue to be “very profitable”, or he is being deliberately misleading. If it’s the former, this just further demonstrates why the Left generally, and the Greens specifically, should never be left in charge of the economy. If it’s the latter, then it demonstrates that the Greens are willing to intentionally misuse data to mislead their credulous, anti-business, anti-farming constituency.

Secondly, Don Brash has announced some of ACT’s key economic policies. Here they are (with my paraphrasing):

Re-introduction of youth minimum wages
Further reform of employment law so as to make it less stacked against employers
Scrapping the Emissions Trading Scheme
Radical reform of the RMA, and possibly even the complete replacement of the RMA
Reducing government spending as a share of the economy
A major reduction in tax rates
Far-reaching welfare reform and reform of the education system
Ensuring the fiscal viability of New Zealand Superannuation
Sale of government-owned businesses
Legislation to constrain the future growth of government spending
Legislation to make it harder for governments to pass laws and
regulations which would impinge on the rights of citizens
An amendment to the Bill of Rights to protect the property rights of citizens

On the whole, these are the sorts of economic policies that a classical liberal can endorse. In particular, I strongly support the reduction of government spending as a proportion of GDP. I would be interested to know, however, how ACT would propose ensuring their legislation to contain government spending would survive the next election of a left-wing government.

One of the interesting things in Brash’s speech is that he would spend the next four years reducing spending as a proportion of GDP to late 2005 levels. Given that we’ve had one term of Labour and one of National since then, it’s an interesting demonstration of how hard it is to wind back government spending. Even following ACT’s prescription for the economy, it’ll take at least seven years to roll back three years of increases. Without checking the details, I imagine that the recession has made rolling back spending as a proportion of GDP tougher than it would otherwise have been, but even so I find this sobering.

I haven’t paid a lot of attention to the Emissions Trading Scheme, and so haven’t formed a firm view. On balance, I am persuaded climate change is both taking place and is to a greater or lesser extent anthropogenic. I am certainly of the view that it is a risk that needs to be addressed. That said, I am not convinced that there is much point introducing an ETS unless our major trading partners do too.

Also of note is that Don appears also to have hit upon the idea of having ACT supplant National as the farmers’ party. I can certainly see that farmers would be supportive of the above economic policies, in particular lower taxes, no ETS and a revised Resource Management Act. If ACT can do a good job selling themselves to farmers this may have a significant effect on their polling, although presumably only at National’s expense. I expected ACT’s polling to improve after Don’s take over, but it hasn’t so far. So I shall be interested to see whether his courting of farmers does the trick.


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