Two key economic issues that should be tackled in Budget 2022 – but don’t hold your breath, folk

Two  of  New Zealand’s principal economic    issues   are  its  low  productivity and  high effective   corporate  tax  rates.

So will the  Ardern  government  tackle  these   issues   in  Budget  2022?

Finance  Minister  Grant  Robertson  could   write  himself   into   NZ’s  economic  history  if  he  did  so.

Sadly,  Point of  Order  suspects  he  might  go  for  what are  quick-fixes  (if he  does  anything at all)  that  do  little  to  raise  investment levels  and  lift  productivity  to stop NZ  falling   further  behind other  advanced  economies..

The  OECD in  its annual  review   of the  NZ  economy attributed  the low productivity rate  to muted product market competition, weak international linkages and innovation, and skills and qualifications mismatches.  

It looks like a trough and $438m (or so) has been dished out on completed projects – but the name keeps it nicely camouflaged

It looks like the holidays are well and truly over and our hard-working (and big-spending) ministers are back at work.

Some are boasting of policy triumphs.

• Justice Minister Kris Faafoi was keen to tell us the latest Youth Justice Indicators Summary report shows a continuing substantial drop in the rate of youth offending.
• Finance Minister Grant Robertson wanted is to know the OECD (in its 2022 Economic Survey for New Zealand) agrees our economy has proved strong and resilient while noting the country has one of the lowest mortality rates in the world.

Police Minister Poto Williams wants to assure us she is keeping us safe, reminding us that the government is committed to reducing firearms violence with further changes to our gun laws which take effect from today.

The Arms Amendment Regulations 2021 come into force and are among many changes called for by the Royal Commission of Inquiry into the March 2019 terrorist attack on Christchurch masjidain, in which 51 people lost their lives and 40 were injured.

“Gangs and other violent criminals cannot continue to threaten, intimidate, and exploit our communities and these additional regulations provide the Police further tools to keep firearms out of the hands of criminals, and to keep our communities safe,” said Minister Williams.

“Owning a firearm in New Zealand is a privilege, not a right and these changes are another step towards combatting firearms violence and making our communities safer.”

Govt invests $16m in space venture with Ngai Tahu runanga – while protecting culture and biodiversity for good measure

The Government has invested $16 million in buying plots of land as part of a new partnership with Ngai Tahu, this one launched to take part in this country’s fledgling space industry.

It was described as “an exciting multi-pronged aerospace project” and – Research, Science and Innovation Minister Megan Woods proclaimed – it is coming to Kaitōrete Spit, a 25km stretch of land on the Canterbury coast.

It’s thanks to “a special commercial joint venture” between Kaitōrete Limited (Te Taumutu Rūnanga and Wairewa Rūnanga) and the Crown,

“ …  which will unlock jobs – including aerospace, develop a space launch and R&D facilities, protect cultural interests and the unique bio-diversity of the area.”

But wait.  There’s more:

“Project Tāwhaki is a special partnership with both Rūnanga that will rejuvenate a nationally unique environment, honour deep cultural relationships, and provide amazing opportunities to tap into the multi-billion-dollar aerospace economy. This is a very exciting day.”

We trust this venture fares better in winning the hearts and minds of local Maori than Rocket Lab has done at Māhia Peninsula in the Hawke’s Bay.

Chris Liddell – yes, he worked for Trump, and he risked his job by recognising the need for a smooth transition

Chris Liddell has  dropped  his  candidacy to become  director-general of  the  Paris-based  OECD. Without  support  from the  Ardern  government  and    vilified  in the  media as  somehow being  involved in the  encouragement  by  Donald Trump of the  Washington riots, he  plainly saw he had  little  chance of  crowning  his  stellar  career  in an international post.

Liddell scored highly in the pre-selection rounds and was impressive in his interviews, according to diplomats in Paris.  He ended in the second tier behind the top three – from Australia, Sweden and Switzerland.  However, as support was not forthcoming from the new Biden administration, he felt obliged to withdraw.

Yet  those  who   have followed  his career  to  the  top rungs of international  business  and then  into the  White House  believe  NZ  is the  loser   for not winning  a  key  position in an international forum.

As for  condemning him for  his  role  in the  White  House, his critics   display their  ignorance.  Liddell is one member of the Trump White House credited with gaining credence and respectability around Washington DC in its final days.  He kept the wheels of government turning while Trump descended into a world of denial fuelled by right wing media.

Thanks to his Trump connections, Kiwi will need a Liddell help from USA’s friends to land top OECD job

National’s leader, Judith Collins, reckons the government should be supporting Kiwi Chris Liddell in his bid to become the next Secretary-General of the Organisation for Economic Co-operation and Development (OECD).

Liddell, who has dual US and NZ citizenship, is serving  in the White House as US President Donald Trump’s deputy chief of staff and was nominated by Trump in September to be the next boss of the OECD.

The NZ government has yet to decide if it will support him, prompting Collins to say Prime Minister Jacinda Ardern should “front up” if she has a problem with his work for Trump.

“I would have thought that it is always going to be in New Zealand’s best interest to have a highly qualified, very experienced person like Chris Liddell heading our OECD. It’s far more beneficial to New Zealand than playing politics on it,” Collins told RNZ on Tuesday.

But it’s a complicated picture.  Liddell has lived for years in the US and, given Trump’s antipathy to Europe and international organisations, his senior position on Trump’s team may well knock him out of the running.

Trump’s defeat in the presidential elections – yes, we too say Joe Biden has won the presidential election – won’t help either.

Chris Liddell or an Aussie? Nominations for OECD chief could present Peters with a dilemma

Here’s another multi-passport challenge for Foreign Minister Winston Peters. The US is proposing former NZ businessman Chris Liddell as the next director-general of the Paris-based OECD, the Organisation for Economic Cooperation and Development.

The current DG, Angela Guria, has been in the job since 2006. There’s word he wants yet another term. He is a Mexican diplomat and former politician and his term ends this year.

Liddell is head of policy coordination at the White House. He has held high rank in Microsoft and General Motors and joined President Donald Trump at the beginning of his presidency.

What worries Wellington is that he retains joint US and NZ citizenship.

Domestic violence: when bliss turns to biffs (and blokes can be on the receiving end of beatings in the home)

OECD Ministers and other global leaders will gather at the OECD in Paris this week to discuss how to prevent, address, and eradicate violence against women.

OECD Secretary-General Angel Gurría will open the conference on Wednesday, followed by a keynote address by French Minister Marlène Schiappa, Secretary of State in Charge of Equality between Women and Men and Anti-Discrimination Policies.

Whether it is discriminatory to devote a conference to the prevention and eradication of violence against women could be the stuff of robust debate.

What about violence against men?

The allegations of film star Johnny Depp against his former wife, actress Amber Heard, go a small way to raising questions about the extent to which males are the victims of domestic violence.

It’s a tawdry case.

Oh goody – our GDP growth rate is solid (but are we envied by countries which enjoy a better standard of living?)

Here  is a  puzzle:   why  are   ordinary   New  Zealanders   not as excited  about the  state  of  their country’s  economy  as  Finance  Minister  Grant Robertson whenever he   talks  about it  in Parliament?.

Surveys have  shown    both  business   and consumer  confidence  sliding  in recent  months.

This  week  Robertson has been citing  reports  from   international  institutions to  contend  everything is  going  swimmingly   for the  NZ  economy despite some  risks, the greatest of  which is a sharp  economic   contraction in China.

But,  hey,  not to  worry, because  “I have huge confidence in the businesses and the workers of NZ that are supported by a government that’s investing in skills, in research and development, in infrastructure”.

Kiwis brace for fallout from Trump’s trade war, but Americans already are paying the price

Jeffrey Frankel, Professor of Capital Formation and Growth at Harvard University, is one of several writers to have examined Donald Trump’s trade war with China in recent days and found American consumers are the major victims of the tariffs that are Trump’s major weapon.

In an article headed The Real Cost of Trump’s Tariffs Frankel writes: 

Whereas winners tend to outnumber losers when trade is liberalized, raising tariffs normally has the opposite result. US President Donald Trump appears to have engineered a spectacular example of this: his trade war with China has hurt almost every segment of the US economy, and created very few winners.

The relevance of Trump’s economic blundering for New Zealand is ominously contained in the OECD warning that a US trade war with China could put an anchor on the global economy (see article here).

Capital gains tax among the measures suggested by OECD to ease the plight of the middle classes

Forget about the poor people, at least for the next few minutes while you digest this post, and consider the plight of the middle classes.

Correction:  let’s not forget about the poor people but, rather, think about the extent to which the middle classes are becoming impoverished.

These musings were triggered by a press release we received today headed governments must act to help struggling middle class, says OECD.  

The press statement draws attention to a new OECD report which says Governments need to do more to support middle-class households who are struggling to maintain their economic weight and lifestyles as their stagnating incomes fail to keep up with the rising costs of housing and education.

Among the actions recommended – shifting the tax burden from labour income to income from capital and capital gains, property and inheritance, as well as making income taxes more progressive and fair.