Monthly Archives: March 2012

Parliamentary reform required

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This week we have had the embarrassment of our third ranked government minister Gerry Brownlee making derogatory and inaccurate statements about Finland and then laughing it off, claiming it was meant in a humorous or satirical way.

As Radio NZ reported:

“In the general debate last Wednesday, the Cabinet minister began by attacking the Labour Party’s admiration for Finland, but his monologue ended with him attacking Finland itself.”

Mr Brownlee, who holds several posts including Leader of the House, said Finland had higher unemployment, lower growth and worse crime than New Zealand. He added that Finland can hardly feed its people and has little respect for women.

The comments have been reported heavily in the Finnish media and a page on the social networking site Facebook has been set up calling for him to travel to Finland to learn some facts.” It also reached the Egyptian media.

After the issue reaching media in Finland as outrage grew, a Finnish university lecturer started a Facebook group and the Finnish embassy called for a “please explain” from our Ministry of Foreign Affairs and Trade.

John Key has apologised Brownlee’s comments when meeting Finnish President Sauli Niinisto in South-Korea!

However let’s look at the context. I caught the last of this interchange in Parliament last week when the Government and Opposition were in full attack mode over the issue of the Finland economy. On Facebook one man pointed out that this was one of those inevitable results of an outdated and archaic parliamentary system of opposition.

On Facebook one man pointed out that this was one of those inevitable results of an outdated and archaic parliamentary system of opposition.  Yes, our adversarial parliamentary system sets the scene for this to take place.  I hope someone in Parliament will now take the initiative on Parliamentary reform. Joking and jibing across the chamber increases and leads to this gaffe. No amount of talking will pass it off as satire or a joke now I am afraid. When the two major parties face each other and yell abuse at each other it is embarrassing to be in the gallery.

I have just watched a bit of a debate on a social welfare bill. Grant Robertson of Labour responded to the Minister’s speech, then a government MP read his prepared speech, making absolutely no mention of the critical issues Grant Robertson had raised. This is like kindergarten children talking to each other in parallel conversations, hardly good enough for our prestigious parliamentary representatives to dignify with the term ‘debate’.

So much of our taxpayers money is wasted. Electoral reform changed parliament, with the exception that Government and the chief Opposition still sit opposite each other and throw insults to those “on the other side”. Not good enough for the 21st century.

A Christchurch currency? An Auckland currency?

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We have always had a policy of local authority issued currencies and whenever we have put out media statements they seem to have been picked up by at least some media.

The idea of a currency issued by a local authority for me is so exciting I can barely contain myself when talking about it. We have been working for some years with LETS systems and Timebanking and have in some cases been talking about a local currency sold into existence, modeling on Wara in Germany, Worgl in Austria in 1932-3 or the various German versions of this led by the Chiemgauer currency. Each has had a negative interest rate so there is an incentive to get rid of it.

I have recently re-read Silvio Gesell’s book The Natural Economic Order, or at least parts of it. Someone gave it to me when I was on a speaking tour of Australia a few years ago.  The book is online in English nowadays, which is great, because Gesell is a brilliant thinker and many have predicted he will have a huge influence in years to come. Gesell argues that in order to put money on the same basis as goods, it has to decay, rot, go out of date or rust at the same rate as goods. Then holders of money will no longer have an inordinate amount of power and withhold money when it suits them, while holders of goods are stuck with rusting iron, out of date newspapers, or rotting fruit.

So designing a currency with a negative interest rate will create money which a causes humans to act in entirely different ways. It turns money on its head. People will need to spend it and paradoxically, according to Bernard Lietaer, the author of many books on money, they tend to spend it on long term investments. Weird eh? But true. In the years between 1040 and 1280 Europe had such local currencies, (acting alongside a long distance currency for trading other goods). What happened was that they built cathedrals which turned out to be an investment in tourism for centuries to come.

The idea of a local authority issued currency isn’t new. The Mayor of Hamilton tried to introduce Rates Vouchers in the late seventies, but was thwarted. Nowadays if we issued such a currency we would have to decide whether it would be spent into existence, whether it could be bought with national dollars (monetary dialysis) or lent into existence from a council associated bank. Or could it be issued with a certain expiry date? Or a combination of all these? How in each case would inflation be managed? What would people spend their local dollars on if there was a penalty for hoarding it? Imagine you had sold your mother’s house, lived outside the area, but had to spend $200,000 in the area because it was in local dollars. Whew. That is an exercise for you.

So I will be taking a workshop on this topic at the upcoming Australasian Permaculture Convergence in Turangi and I have just uploaded a short video describing the issues we need to face. http://vimeo.com/39162430. Hope this works!

Local authority functions and finances and incentives for intimacy

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Over the last couple of days we have had the announcement of impending legislation requiring local authorities to “stick to their knitting of supplying infrastructure, libraries and museums”.

The Prime Minister and the Minister of Local Government both imply that the activities of councils in looking after the social, environmental, economic and cultural wellbeing of the citizens are responsible for the extra cost burden and rising rates.

Not so. Last time I looked at the financial statements of our council I found that it is the infrastructure of sewerage, stormwater, water and roads which is taking up the bulk of the expenditure. Our own council plans to spend $100 million in stormwater infrastructure over the next 20 years for our town of 5000 inhabitants. They cite climate change as being one of the factors, together with a growing population and an ageing infrastructure. Our town is built over a swamp.

I don’t think the Prime Minister or the Minister of Local Government mentioned the extra expense in dealing with climate change. Nor did they mention the continuing growth of population in this country or the GST that ratepayers have to pay. And 12% of council’s expenditure is for servicing loans to private banks issuing them with money. Unnecessary when they could create their own Rates Vouchers (but that is another topic). But what strikes me most is when I think of this in association with today’s Listener article on the growing social trend of single person households. New Zealand it says now has 23 percent of households as single person households, this percentage is growing and it is a global trend.

OK so for every house we have water reticulation, sewerage reticulation, and stormwater management. Basic infrastructure, the council’s main expenditure. If the number of single person households is increasing and the population is increasing and the standards for sewage treatment and water quality keep rising, then it stands to reason the costs will keep rising.

For every extra dwelling that is occupied, there is a house, its furnishings, a fridge, a washing machine, a motor mower and probably a car. More purchases, more expense. Not the Council’s expense but it does add to per household expenditure if the trend is to single person households. But the council has to pave more roads. This means buying more bitumen, which being an oil based product, has already risen in price by 95% in the last decade. And the cost of pipes has risen fast.

I have yet to hear of a politician at local authority level who addresses the issue of how to economise on infrastructure investment through giving incentives for households to have more than one person occupying them. Already we have a welfare system which penalises intimacy. You get more income from WINZ if you separate. We all know why. A stupid welfare mess is part of the problem which can only be solved with a citizens income.

Given the realities of local authority finances, it stands to reason that political parties must build in incentives for efficiency in housing. Efficiency is what Nature does best. Nothing is wasted.

 

Land went out of the Consumer Price Index in 1999

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Despite the fact that section prices tripled in fifteen years to 2007, land is not now included in the Consumer Price Index. This means that the official measure of inflation is unreliable as it is far lower than the actual figure.

Today I received a letter back from the Minister of Statistics, Hon Maurice Williamson. I had heard that land went out of the CPI but couldn’t remember when or why so I sent in an Official Information request. The Minister dates the letter 14 Mar 2012 and says “Dear Ms Kent

Thank you for your letter of 20 February regarding the exclusion of the price of land from the Consumers Price Index (CPI) basket of goods.

“I am advised by Statistics New Zealand that land (i.e. residential section) was included in the CPI until the June 1999 quarter. Following a review of the CPI in 1997 land was excluded, taking effect from the September 1999 quarter.

“The 1997 review by an external advisory committee confirmed the CPI’s main purpose as being informing monetary policy setting, and that the CPI should be focussed on the concept of “acquisition”. The reason given for excluding land from the CPI from 1999 was that it was considered to represent the investment component of home ownership (with dwellings representing the shelter component).

“The September 1999 quarter CPI information release explained it as follows: “A dwelling provides shelter over a long period of time. Over time land is not consumed and so can be considered to represent the investment component of home ownership. As investment expenses are outside the scope of the CPI the rebased CPI excludes expenditure on residential sections.”

“Information on the sale of land is available from QV (www.qv.co.nz) and the Real Estate Insititute of New Zealand (www.reinz.co.nz).

I trust this information meets your needs and thank you again for taking the time to write.

Yours sincerely

Hon Maurice Williamson

Minister of Statistics.

You can be assured I will write back to ask how inflation can be accurately measured when the price of residential sections is excluded. Every time a section rises in price it puts up the price of the property. So when someone buys property in the future, they will have to pay a higher prices than previous owners paid. This also means the total mortgages and the total money supply has to rise accordingly. When the money supply increases there is inflation. So it is not a small quantity we are talking about. We are neglecting a huge factor. The CPI cannot be taken as a valid measure of inflation and there is no reason to have any faith in it. The Productivity Commission said the price of residential sections tripled in the fifteen years to 2007.

Right now we are going through a period of fairly stable prices, but no doubt in the future the cycle will come around again and prices will rise.  The value of all residential properties in New Zealand was estimated by the Tax Review committee of 2007 to be $298 billion. This excluded land for commercial forestry, agriculture, industrial, commercial or mining or land owned by central or local government.

As Eisenstein says “Money is deeply and irretrievably implicated in the conversion of the land commons into private property, the final and defining stage of which is its reduction to the status of just another commodity that can be bought and sold.” After this letter, we could add to this “and used as an investment”.