Should the Reserve Bank target unemployment as well as inflation? Will the new government abolish the dual mandate?
Back in 1989 – near the end of the fourth Labour government – the inflation-busting Reserve Bank Act was passed. Labour has shifted well away from the Rogernomics of that decade, and in 2021 Grant Robertson added maximum sustainable employment to the bank’s mandate - with the support of coalition partner NZ First.
The next three years – the job ahead for Labour, Greens and Te Pāti Māori
The Fabians had a session on Nov 14th reflecting on the elections. Our panel of Simon Wilson, Senior Writer at NZ Herald, Bridie Witton, Stuff Press Gallery Reporter and Ollie Neas, freelance writer used the election results as a springboard to target some of the key issues for Labour, the Greens and Te Pāti Māori as they head into opposition.
Thank you for the opportunity to discuss the Pae Ora health reforms with you.
Since I was sacked by the Health Minister I have taken time to reflect on the experience and to make a considered assessment of what I learned in the process. My intention tonight is to share that with you, making the assumption that we share common ground in wanting to have an effective, efficient, excellent and equitable public health service.
If anyone does not want that, I don’t really have anything useful to share with you.
Interview transcript: Ambassador Wang Xiaolong with NZ Fabian Society
Hello, my name is Mike Smith, from the New Zealand Fabian Society. It's my great pleasure today to interview Ambassador Wang Xiaolong from the People's Republic of China to talk with us about China's values. I heard Ambassador Wang speak at a meeting convened by the Institute of International Relations(NZIIA) last year and in the course of that meeting, he addressed the question of China's values and said, "China's choice for values, social system and path to modernity is made by our own people, based on our own history, culture and realities. All these choices have proven to be suitable and effective to solve China's problems and meet the needs of the Chinese people".
It is very likely that another 2008 financial crash will occur very soon, according to Dr Robert Howell. In a presentation to the Fabian Society Dr Howell outlined the evidence, including overseas experts such as Ben Bernanke, former Chairman of the Federal Reserve, and Mark Carney, Governor of the Bank of England, that the causes of the 2008 crash have not been significantly addressed. The ‘too-big-to-fail’ issue has not been dealt with. The expectation that financial institutions can privatise gains and socialise losses encourages excessive private sector risk-taking and can be ruinous for public finances.
The financial and banking system continues to be unstable due to the accumulation of debt. Dr Howell described the evidence by such authorities as Martin Wolf of the Financial Times, that the role of private banking in money creation, and the fractional banking system, needs changing. Wolf is associate editor and chief economics commentator at the Financial Times. He is widely considered to be one of the world’s most influential writers on economics and regarded as “staggeringly well connected” within elite financial elite circles.
Dr Howell stated that Wolf’s critique of the current economic model that underlines the international trading system demands serious attention. The cost to the funding of public services in particular is excessive. Dr Howell took as an example the cost of interest to the Auckland City Rail scheme to show that changing the privatisation of the money system could reduce interest costs by one sixth.
Dr Howell also looked at the world’s ecological footprint that is running at 150% above the capacity of the Earth to support human life. The current system is predicated on a growth economy and this cannot continue without major ecological and financial collapse.
NZ currently has currently a partial CGT because through accrual rules, and any intentional buying for resale, property gains are taxed. The notion of intention is not very rigorous. The Government have proposed that the ‘intention’ clause be replaced by having any property sales within two years, taxed.
A 2010 Tax Working Group stated that the current system is deeply flawed, inequitable and inefficient. Vertical equity deals with the principal that tax payers earning more should pay more. Horizontal equity states that people who earn the same should pay the same. Their recommendations were not accepted, perhaps because it would affect farmers.
The principles for assessing a tax are:
Equity
Certainty
Convenience (low compliance costs)
Efficiency (low collection costs)
Neutrality (should not restrict options, eg, partnership v company)
Meet Revenue Needs
Visibility (transparent link between tax paid and benefits)
Coherence (tax system as a whole should make sense).
The most compelling argument for a CGT is based on fairness. Without a CGT there is a lack of horizontal and vertical equity. Introducing a CGT would also remove the uncertainty between what is capital and non-capital earnings. Dr Russell stated that there is a large area of uncertainty: she felt that the distinction should recognise that there is short-term and long-term earnings.
Most OECD countries have a CGT. Dr Russell felt that a CGT (with the family home exempt) would slow down property speculation and rapid rises in prices as currently experienced in Auckland, but other measures were needed.
Summary of Auckland & Wellington Presentations by Dr Deborah Russell,
Alan Johnson recently gave a challenging talk to the Fabian Society in Auckland on what social housing has become and might become. He made the point that the biggest deficit in the social housing equation is a philosophical one and that any future for social housing is dependent on finding a firm philosophical justification for this programme. Above all, Alan sees that any lasting solution must be firmly grounded in community involvement.
Alan's slides can be downloaded here and his notes here.
Wellington's Connolly Hall was packed full last week for Geoff Bertram's brilliant lecture on Thomas Piketty's Capital in the 21st Century. Geoff will repeat the lecture in Auckland next month.
Piketty's book has become an international best-seller, unusual for a treatise on economics. Dr Geoff Bertram summarises it as follows - The economic logic of a capitalist market system with private wealth plus inheritance leads to a highly unequal, but stable, social order with a patrimonial rentier class at the top. Whether this social order is compatible with democracy depends on what a democratic society is prepared to tolerate. If the capitalist distributional equilibrium does not lie within the boundaries of democratic tolerance, one or the other has to give.
Geoff will expand on this summary and explain why he thinks the work will earn Piketty a Nobel Prize. 6:30pm, Monday 1 September, University of Auckland. You can register here.
Robert Howell has recently returned from Canberra where he worked part-time with the Australian Quaker Peace and Earthcare Committees. During his time in Australia he also helped establish the Australasian Centre for Corporate Responsibility to assist investors. He is one of the authors of Right Relationship Building a Whole Earth Economy, and one of a team of authors from Sustainable Aotearoa New Zealand in their publication, Strong Sustainability for New Zealand Principles and Scenarios.
The first presentation looked at the necessary foundations for a resilient economy based on modern science and ethics. The second presentation discussed some policy implications, and in particular ways to adapt to a turbulent future threatened by climate change, peak oil, water and food insecurity, and financial and banking system failures.
Suggestions were made for all sectors on how to change our investment and banking systems that are in keeping with scientific and ethical principles, and some of the ways that New Zealand can adapt and prepare for the rapid changes and crises that will be forced upon us by an international trading regime that can no longer cope.
The diagram from the first presentation is here, and the slides and audio recordings at the links above.