Posts Tagged ‘New Zealand’

New branding, but same old tories

Prime Minister John Key just squeezed himself into the New Zealand Rich list. With an entry requirement of NZ$50 million, John Key has just made it with $55 million personal worth. Compared with world standards, this can hardly be called very rich. However, among the world's leaders, he's ranking is quite high above - 18th.

What this reveals is that he must be quite clever to gain that amount of wealth, and succeed in both economic and political arena.  As a banker, you can also safely assume that he is highly financially literate. So lack of knowledge can hardly used to explained Key's comparison of wage gap between Australia and New Zealand:

Loyalty dictated John Key take the support option. To loud guffaws from the Labour benches, Key told Parliament that he had been advised that the gap between gross average weekly earnings in Australia and New Zealand, adjusted for purchasing power parity, was $160.25. "That is certainly a lot less than it was in 2005, when it was $187.60."

Indeed it is. But National did not win the 2005 election. It was elected in 2008 when - according to Key's own figures - the income gap had narrowed to $138.

There are two things that I definitely did not expect - 1. how did he become a millionaire? 2. I am actually very surprised to find out that the wage gap actually decreased - at a quite considerable rate, at the time when Labour was at the helm until the recession. I guess this is just another example of misconception that the right-wing biased media has created.  You thought you know the very essence of politics, but in fact you only know the facts as being digested and manipulated by others.

A shiny example of how ETS should not be done

New Zealand has started its emission trading scheme (ETS) from 1 July (yesterday). The country is one of the handful countries that have such scheme in place. Once again, New Zealand has become an experiential ground of a new concept for the world to observe.

New Zealand’s has experienced serious changes even before it is implemented. As the centre-right wing national government gets elected in 2009, the scheme has undergone a hasty review, and several changes were resulted.

One of the major issues that will eventually topple this ETS is the removal of caps on total amount of emissions allowed nationally, and by sector. Government is responsible to supply unlimited amount of emission units at a fixed price of $25 per unit until 2012.

Now this is a very weird thing to do by a government which proclaims itself as “pro-market”. The reason for a cap isn’t just limiting the country’s total emission, but providing a market mechanism that provides financial incentive for cleaner sectors to emerge.   By removing such cap the scheme becomes no more than a new type of tax, since there is no limit on the amount of emissions, businesses can go on as usual, and the cost of this new “tax” is conveniently  transferred to end users – i.e. every day consumers.

And this appears just like what has happened.

The effects of ETS are further reduced by not having agriculture sector included in the scheme until 2015. As the country’s largest polluter, agriculture accounts for nearly half of the total greenhouse gas emissions.  This isn’t a sign that such issue is being treated seriously in New Zealand.

No wonder this ETS receives very little support – consumers absolutely hate it, even  politicians don’t agree. From the very right wing Act Party, which highly doubts the existence of global warming, to the very left environmentalist Green Party, all voted down for such scheme.

But such scheme does provide a good example to rest of the world though – how it should not be done. I highly doubt the ETS will last as its current shape for long - a major overhaul might just be an election away.

A new national sport

Who would thought that All Whites could remain unbeaten after all three matches in group stage? I certainly didn't see it coming. Against all odds,  being widely recognised as the weakest team in the world cup, who probably "doesn't deserve" to be there, All Whites have achieved exceptionally well.  While All whites didn't progress, they should still be very very proud of themselves - in fact, if the ref disallow the offside goal against Slovakia, all whites should already in the knock out stage.

However, I have to say that, after watching all three games, it is clear that there is still a huge gap between All Whites and other teams. The team almost defended their way out of every march. It is a tactic but victory is not achieved through just defend. This kind of explains All Whites ability to draw with other international teams, but it is extremely rare to see a victory.

There is still a long way to go, but what All Whites achieved is exceptional - it generated a huge national  interest on soccer and encouraged the widest imagination. This is quite similar to the situation after socceroos' performance in 2006' world cup, and we could also see soccer on its way to become one of the national sport in New Zealand.

The GST hike

The biggest reverse culture shock I'm experiencing (by reverse I mean NZ is obverse side of my little world) is that this country suddenly seems so hopeless. Everything in China, at least in big cities like Beijing and Shanghai is booming, building projects are happening in a lightning speed. China is also a world's second biggest, or biggest? market for luxury goods. My friends there are speeding their money like burning toilet paper, while I'm still counting every cent of my earnings.

Making my feeling worse is the price hike on almost everything. I only left the country for 3 month but everything seemed to have its price increased for several rounds, and I'm hearing the GST is also on the price hike list.

It's very difficult to avoid paying GST, it exists everywhere in people's daily economic life, making it one of the most effective revenue gathering machines for the government. There are many ways to avoid paying too much personal income tax, and tax on specific goods is more likely to decrease demand rather than increase the taxation revenue.

But of course this isn't all about revenue gathering. This is because Mr Key wants to give people tax cut, more specifically, the high income earners. In his speech made to parliament,  Key states that low income earners will be compensated through a upfront increase on benefits and working for families programme, but the trouble is, there's still very little details to see whether the compensation is enough to offset the GST increase.

Another feature of GST is that it treats every one equally, people all pay for the same rate. Statistics New Zealand says GST increase to 15% is likely to affect the CPI by a 2%+ one off increase, theoretically at least. What would really happen after the increase is still subject of a debate. Many New Zealand businesses advertise goods price ends with .99 just to make the price more appealing.  Many businesses will be facing a not so tough choice - whether to absorb the 2.5% increase themselves, or add it to the current price.

Well one of the phrses or excuses businesses just love to use is " we have to make profits".  So my guess is that the actual increase is likely to be more than 2%. Low margin and low price goods are more likely to get a $1.99 to $2.99 type of price hike as businesses are already sturggling making profit on those goods. Statistically, the overall increase would not be that huge, but the fact that troubles me is that low priced goods are more likely to be daily necessities.

I can't really quite understand the ideology behind this tax structuring apart from making high income earners happy. Yes this does give people more choice, as they got more money in hand - whether by more it means another 50cents or $50 in hand, is another problem. However, there are some choices people just don't have the choice, we all need food survive regardless whether you are high or low income earners.  The idea of removing GST on foods and petrol has been floating around for quite some time, but the government seems to have very little interest in it.

Capital gain tax is another thing government isn't very keen on. Speculating on real estate did make a lot of people rich, but that's at the expense of putting even more people at miseray. And most importantly, a healthy economy needs real economic activities,  new money has to be made - in the form of goods or services.  Prosperous property market sounds good, and looks good on GDP, but that's not real economy. It's unsustainable and who knows if he or she isn't the unlucky one or the greatest fool?

Government's very little action on these area does suggest me something they didn't tell. In his election promise John Key said he wants oversea kiwis back to their country and keep the young ones here. However, as a young adult myself,  the outlook of  me to stay in this country looks fainter every day, stuffs this government is doing, or not doing is making a graduate student  more difficult to make a decent living out of average wage.

New driving law

Just a reminder that starting from November, driving while using the cellphone by hand is not allowed anymore. That includes texting and talking on the phone.

Base my experience I support this measure. As a still relatively  inexperienced and cautious driver I have never attempted to do either. I don't know how others managed to do two things at the same time, but for me, using cellphone removes my eyes from the road, it's no different than driving blindly. No need to prove how dangerous that is.

However, cellphone really is just part of the problem.  People do and can be distracted by all sorts of things while driving. But most importantly, I usually find that it's where your mind is, rather than where your eyes are that makes the difference. I have found  little evidence shows that such law change can reduce the road toll, but plenty on how bad mood can influence driving performance. Talking over the cellphone, although using the hands-free set, can still take people's mind off the road.

The only solution  that can genuinely reduce the road toll is to ban cellphone use altogether, but no government at its right mind would adapt this measure as it would likely to be very unpopular among voters.

Rebiya in NZ

I went to Rebiya Kadeer's speech in Auckland.  Her visit was organised by the Green Party and Amnsty Internaional in NZ, two well-kown "anti-chinese" organisation among politically minded Chinese students here. However, I was there to hear another side of the story, not to protest, and I did gain some knowledge on her story and position on a range of issues.

But I was more interested in the role of Chinese government in regard to leaders like the Dalai Lama and Mrs Kadeer.  Kadeer was not a well-known figure before the unrest in Xinjiang in July this year, before that if you refer that name to a Chinese, he or she is more likely to have very little or no knowledge on who she is.

People sometimes joke that Chinese government regularly award two awards that are even more important than the Nobel, namely GFW's Web Choice award and Chinese Government Recommended Award - if you know a website is blocked by the Great Firewall of China, you know it's a website worth to visit. Similarily, if Chinese government blames someone, you know he or she is worth to listen to.

A state like China needs enemies - if you go back in history, at any point of time, Chinese government always propoganda at least one enemy of the state to its people - the Dalai Lama, oversea chinese democracy movement, "oversea anti-chinese forces" and so on.  This is a bit like Bush administration, it's the only way to divert people's attention.

However, for the speech itself, I was in fact quite disappointed. It was a good introduction for her positions on some issues, but nothing else was there but more of a blame game.  I still think that her popularity is largely due to the help for the communist government, in real life, she's no way near the Dalai Lama.