Key’s Jobs Summit:your ideas in a comment please
Now at the end of this month the government is holding it’s Jobs Summit, chaired by Mark Weldon and attended by many of the usual suspects from the ‘great and the good’. John Key has said he wants a ‘do fest’ not a ‘talk fest’.
Adam is therefore asking his readers and indeed anyone else you might come into contact to make constructive suggestions in the comments section of this post as to actions the Key government might take to assist economic improvement in NZ and to fight the recession.
Adam suggests that commenters might care to say in their comments whether the actions they propose are for immediate, medium term or long term action.
Adam will collate all the comments and forward a consolidated list of suggestions to the Prime Minister. He hopes that by having a good number of suggestions that more notice might be taken. Adam will submit this as well to Charles Finny, CEO of the Wellington Regional Chamber of Commerce with a request that the WRCC take account of the suggestions in any submissions that they may make.
Adam’s initiative in this is sparked by a concern that the Summit might not amount to very much, but that the participants will pat themselves on the back and in typical NZ fashion form a committee which will consult but not do. Further, Adam is concerned that the Summit will be captured by the major corporates and not think laterally or innovatively.
All comments and suggestions are welcome. Nobody should feel inhibited from suggesting something just because they think Adam will not agree with it or accept it, because of his own views.
Now is the time for us all to be open minded and see if we can make some useful and perhaps innovative suggestions.
Adam hopes that this initiative will spark much comment, debate and good ideas.
If you have a blog, please reference this post and ask your readers to add their comments to this post at The Inquiring Mind.
This post will remain at the front of The Inquiring Mind until Friday 20 February. Then Adam will collate the comments. A copy of the consolidated document will be posted on this blog early in the following week.
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The Inquiring Mind 
Given the likely social benefit costs which are looming, then some cuts will need to be made.
Where is the question?
Should government money be spent on infrastructure or on education?
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Who is Sally McIntyre?
I couldnt AGREE more with her analysis or solutions nor could I improve on them. In the short term I believe the 4 day week could help.
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On the 4 day week idea is it better and more cost effective for Government to promote this or to pay unemployment benefit
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adam
Peter’s comments in my opinion sum it up.
Someone in government is going to have to have the courage to say that the time has come to cut expenditure? The talk of a four day week, the day by day bad news overseas shows that there will be a huge drop in the tax take.
The dairy farmer is in the same predicament. He thought his income was going to be substantially more when he did his budgets and in a very short time his income has been slashed. He has to slash his expenditure to balance his books. Government should be no different.
“Is one of our problems an innate dislike of business in New ZEaland?”
To a certain degree. A labour government in power too long has not helped the attitude of some.
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idea to “eliminate sick days”
cut back the 4 week annual leave to 3 weeks.
but keep the sick days, allow the sick days to be taken (i dont know how many there are but say there are 5 a year) allow 5 to be taken off in a row if it is arranged in advance i.e a week so it will be like they are annual leave days.
so the change overal will be the people who currently take sick days loose 5 days a week but the people who dont take sick days will be the same annual leave a day, whilst
make the sick days not saveable like annual leave is so on termination of a employee only can get up to “one weeks sick leave”
there will be a problem like people will take there sick leave first for holidays and when are sick will have to use annual leave and might not be able to get the day off when they are sick, so allow annual leave to be taken without notice 5 times a year if so. or change the the idea to fix this problem
people generally take less sick days when in a recession so wont help businesses out that much in $ but will help them plan THIS WILL BE A MORE EFFICIENT WAY FOR STAFF TO USE THEIR HOLIDAYS AND BUSINESSES TO BUDGET STAFF COSTS
this may work well with cutting back the class of full time employement to 30 hours allowing 4 days a week work or alowing people to star later and finish earlier. also as a result decreasing traffic congetstion at peak hours
Andrew
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Brian Fallow had an interesting column in the NZ Herald today on tax and the type of taxes which have the most useful impact.
Fallow suggests that research shows that personal taxes and corporate taxes are significant negatives and that consequently our tax structure is out of kilter.
Does his article help crystallise anyone’s views?
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Why do New Zealanders so often sell up to foreigners?
Is one of our problems an innate dislike of business in New ZEaland?
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Time to get back to basics. Government to protect, maintain law & order, an environment that ensures contracts are honoured etc. Down-sized seriously in any event.
Follow Pitt the younger. Cut red tape, reduce the civil service, eliminate privilege, reduce taxes, deregulate, more accountability, more transparency. Encourage thrift. Consider. So many times good businesses are cashed up to foreigners. It’s a form of neo-colonialism. If NZ was allowed to work properly we’d be doing it to others! Why? Because BIG GOVERNMENT screws that much liquidity out of the system, little is left. NZ is cash strapped by Govt consumption.
Plenty there for a summit. Why not make NZ a fun place to live? Still a lot of deck chairs to kick over.
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I urge every one to read Cactus Kates blog- letter “From The Boss.” It sums up exactly where we are.
https://www.blogger.com/comment.g?blogID=19786816&postID=3073471549702650568
“Concerned kiwi’ I feel you miss the point. We don’t want the government borrowing the money, only to have our taxes increased to fund the interest and eventually the principal. It makes much more sense for the government to cut taxes, rather than them to spend money, in order to improve the economy.
And Cactus Kate’s letter I believe backs up what I have been trying to portray. “….about Tax Cuts, it has been proven over & over again in all Western democracies that for all tax brackets, for every $1 of tax cut the multiplier effect is $3 – now that’s a stimulus!”
That’s how the economy would grow! People would then invest in their businesses and employ more labour. Investors and entrepreneurs are the only people who can get us out of this mess, but the powers that be, particularly overseas, think they know better and are determined not to let the markets handle the process, come what may.
ropata – Governments constantly bring in more and more regulation. Where has that got us? Into one big black hole! We must get rid of the red tape. No more regulation please.
There are too many people in this country that think they are owed a living, without doing the hard graft. We need to stop living a lie and believing an illusion.
adam – I feel uneasy at Key’s comments. What happens when other so called ‘icon’ companies come to government with their begging bowls?
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Do Key’s comments about F&P or equivalents alter anyone’s opinions?
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“Government will assist, in allowing us the freedom to be innovative, by getting rid of the red tape that is a noose around our necks of all businesses.
Yes absolutely agree with this statement sally but i would like to see tougher regulations put in place to prevent companies preying on the weak. stops finance companies seeking investment by providing false or inaccurate forecast.
For government to spend money in order to improve the economy, is a NO, NO!”
Then how would an economy grow ? how would you make money by not spending ? In order to make money (in any business environment) one must spend money.
SPEND WISELY…..make smart investments..we the resources and the people capable in assisting with these decisions…
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Sally, I cannot AGREE with that analysis.
Regulation of some sectors is far too light — otherwise how would the defunct finance companies have been able to dupe thousands of hopeful Kiwi investors with their property seminars and overhyped “money-for-nothing” schemes?
Yes there’s red tape but some industries NEED coercion and even nationalization to prevent their flagrant monopolistic behaviour. Notions such as “the public interest, building infrastructure, employee wellbeing” lag miles behind the corporate goal of eternally increasing profits.
In a just society, finance should be a public utility with minimal cost. This will encourage economic activity. In the current environment, lenders tend to extract as much interest as possible, and exaggerate their profits to encourage speculative investors. In a regulated environment, mortgages are budgeted and realistic, not based on the myth of endless appreciation. Also lenders would be audited by independent parties with consistent reporting standards.
In any system where humans are involved, people will find ways to get around it and leech off the honesty of everyone else. The problem we have now is that there’s more parasitism than production.
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Cannot improve on that analysis.
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KEY’S JOB SUMMIT
The credit markets flooding the world with cheap money, courtesy of the government printing press have caused the problems we face today. Over consumption got the world in its mess, now consumers have decided they aren’t prepared to spend as much on nonessential items.
It is silly to think that the economy can be ‘fixed’ through government manipulation of consumption spending.
The purpose of an economic system isn’t to provide jobs, rather it is to provide goods that consumers’ desire. If people want to cut back on their purchases of certain items, the economic system should respond to those changed preferences.
The businesses that are struggling made bad forecasts. This doesn’t mean the people in charge are immoral or dumb. It could be true that their forecasts would have been accurate, were it not for foolish decisions that other people made. But whatever the excuses, lots of businesses used up scarce resources creating products based on the assumption that they would fetch more for these products than consumers are actually willing to pay.
In a market economy, the profit-and-loss system regulates the use of scarce resources. If a firm is suffering losses, what that really means is that it squandered valuable inputs; natural resources, labour hours, and capital equipment, in making a product, when those inputs were more urgently needed elsewhere in the economy.
It is because of these real imbalances in the global structure of production that consumers are cutting back on their discretionary purchases, and it is why producers need to adapt to the new realities as well. The government cannot freeze the economy in the unsustainable structure of the boom years.
So long as the government doesn’t interfere with the price system, any amount of money can get the job done. If people become fearful and decide they want to increase their cash holdings, this means that each dollar bill will change hands less frequently. In general, prices will tend to fall. But that means that the same per capita amount of cash will now have a higher purchasing power.
It makes much more sense for the government to cut taxes, rather than spend money, in order to improve the economy. The simple moral argument is that the money was earned by the taxpayers. It is always a good idea to take (i.e. steal) less from them. If the tax reduction comes in the form of lower marginal rates rather than lump-sum rebates, then individuals have the incentive to produce more, the exact opposite of the standard Keynesian analysis.
The logical argument for tax cuts isn’t to give consumers more money to go buy stuff, but rather it’s to give producers the incentive to go make stuff. It is better to let taxpayers keep more of their money, even if they use 100% of the savings to pay down debt.
Local Councils misguided fervor in using valuable ratepayer money for unsustainable facilities such as stadiums, rugby world cup and numerous community events is another example of over consumption. Government should not be assisting in the funding of these events.
Scarcity is a regrettable feature of the world. There are not enough resources available to satisfy all human desires.
We have already compromised the ability of future generations to meet their own needs by our over consumption binge, funded by the government printing presses. Along the way I wonder if some how all we have managed to do is squander meeting the needs of the present generation.
Adam you have asked what actions the Key government might take to assist economic improvement in NZ and to fight the recession. The general thrust of what I have written tells you where I am coming from. Innovation and hard work from us all is what will be required.
Government will assist, in allowing us the freedom to be innovative, by getting rid of the red tape that is a noose around our necks of all businesses.
For government to spend money in order to improve the economy, is a NO, NO!
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indeed. The reason property is so popular in this country as an investment is the pathetic corporate governance. Enforcing standards would go a long way to improving NZ attitudes towards equity investment in NZ. As a shortcut the application of SEC standards to all publicly offered equities would make a quick and massive difference.
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Ropata
The finance company collapses are a disgrace
Indeed to my mind we have weak company law in NZ
Standards are essential
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Govt should review the NZ finance collapses of recent years and restore the Serious Fraud Office. Keeping NZ’s image clean and green and HONEST will maintain investor confidence.
I believe there is a correlation between the moral climate of a nation (ie. the prevalence of pornography, sexual exploitation, degradation) and its honesty and work ethic. Contrasting Labour’s kneejerk hostility to such ideas, perhaps applying a few standards would not hurt.
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Everyone,
I appreciate the comments to date.
I am travelling around North island at present and internet access is limited.
Keep the comments and suggestions coming
Adam
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Adam. The single best thing the govt could do today to create jobs is to remove depreciation limits. Take the German example and allow companies to treat investments in assets as 100% tax deductions in the first year. Key has mentioned this before but it needs to be raised again until it happens. It would be costly so they could apply it only to new investment rather than retrospectively.
The second thing is to allow companies to negotiate directly with their staff rather than through the union. Flexibility means more jobs in the long run.
The problems will not be solved in a few months so the strategy to increase wealth must rectify the declines in productivity growth Labour is responsible for.
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One more thing..remove all this red tape…it stops progress…
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I am pleased and privileged to reside in a democratic country otherwise we will have people like anonymouse running the country.
Instead of focusing on the problems…why don’t we use our resources to come up with solutions…
Now the nz government definitely owns a few companies.. i simply do not understand why the government does not own more… is it so hard to expend that portfolio…forget about tax cuts…etc…nz’s economy is in trouble…the only way to save her is to make money…
1. INVEST locally > (technology companies) move with the time…we are in the technological age… wouldn’t it be great if the nz government gave birth to the next Bill Gates…
2. INVEST with advertising > this is an untapped market…
3. Help new companies > For crying out loud… we need employment…where is the support system to help them grow..more businesses = increase in employment = more taxes = more money for the government = healthier economy = 65 % happy kiwis (you can’t make everyone happy)
4. Now i believe the hardest decision to make is ….which company deserves it more ? My answer…the company that will last the test of time…
cheerio…
concerned kiwi.
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Extend the 90-day probabtion period for new employees to all businesses.
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Introduce a capital gains tax on property. To be implemented over the long term. We must shift the tax burden away from economic activity that produces wealth and jobs and onto fixed assets that don’t. It is insane to pour billions of borrowed money into non-productive real estate.
No more minimum wage increase for the next 3 years. Instead targeted tax cuts for those in the $12.50-$14.00 an hour range to reduce their tax down to 10% over the next 3 years. This will mean a cost to govt revenue however it’s those on lower incomes that spend extra cash stimulating the economy and getting a bit extra to them will do a lot of social good and may encourage some personal saving as well. Also businesses will not face increased costs from minimum wage increases so will be more likely to keep and may be even hire additional staff.
Stop all contributions to the Cullen fund. It is mad trying to borrow to save. Waste of taxpayers cash and risky. We need that cash for building projects or tax cuts.
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http://cashcrate.com/996129 is a better idea
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I accused some poster over at No Minister of having socialist wet dreams, and now we have Anonymouse indulging in the right-wing’s version of the same prurient wishful thinking.
Many years ago there was a sci-fi book by Octavia Butler call The Parable of the Sower. And in it she masterfully laid out an all too plausible near-future senario of societal breakdown, just the sort of world we’d have if Anonymouse gets his way, a world where everyone is either a refugee, a murderous looter, or hiding behind impenetrable walls and armed. We don’t want this, trust me.
Now, all that said, I have few ideas of what to do, to be honest, but I do like and think there’s real merit in Ropata’s idea of returning services to small places circa 1984.
People have got to have a reason to get up in the morning, and a place to go to, and someone depending on them to be there. That’s just the natural order of things.
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A parody, surely?
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So if you want some concrete suggestions:
1. amend the electoral act, push the election out to 2013 or 2014.
Short term: allow the government to focus on the economic emergency.
Long term: will ensure greater government.
2. legislate for all contracts terms to be modifiable by employers at any time.
Short term: jobs retained as contracts can be modified to suit work
Long term: economy becomes much more produtive
3. institute a 20% pay cut across the civil service (except policy & army)
Short term: improvement in public finances
Long term: productive employment becomes much more attractive
4. eliminate minimum wage
Short term: unskilled employment increases; wage rates drop
Long term: wage rates reflect NZ’s international competitiveness. full employment.
5. eliminate benefits
This is required to enable us to eliminate the minimum wage
Short term: civil disobedience
Long term: much greater international competitiveness and flexibility. Population grow stops. Crime greatly reduced
6. arm the police, increase police numbers
This is required to enable us to elimiate benefits
Short term: police gun down protestors, unionists, and labour party members
Long term: NZ society is free from protestors, unionists, and labour party members
7. eliminate all taxes on income over 100,000 and capital gains
Short term: reward excellence
Long term: reward excellence
8. zero rate corporate tax and FBT
Short term: protect profitability of NZ businesses
Long term: business and entrepreneurial work becomes much more attractive than wages and salary work. NZs employment culture completely changes
9. adopt the AUD or USD.
Short term: removes currency risk – we are much less likely to be the next Iceland.
Long term: stable currency promotes economy growth
10. remove MMP. return to geographically proportionate electorates with taxpayer franchise (or/and a property qualification)
Long term: ensure parliament is aligned with the economic base of NZ.
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Half – or more – of our economy is going down the toilet.
Nothing we can do about that.
The only question is: how can we save the other half?
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Who’s Anonymouse channeling?
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anonymouse,
Your proposal to further enrich the privileged at the expense of the powerless is a complete betrayal of the social contract. It amounts to flushing half our workforce down the toilet and would cause a total breakdown of society. Are you a member of Zanu-PF?
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Short answer: neither we nor the government can “reduce unemployment”. We can hide it, or be honest about it, we can fund it, or castigate it.
So we can’t really do much about it, and arguably we should do nothing. If, anything, we should greatly increase unemployment to make the economy rather more efficient that it is now.
Pragmatically, NZ had its largest absolute employment every under Liabour (because they were keeping lots of basically unemployable bludgers on the state payroll). Early last year NZ’s economy hit the largest (internally-generated) recession for the last 15 years – caused solely by Labour’s policies – and now we have the biggest international depression since the 1930s. Our entire economy is very very highly indebted (Labour ‘s taxation policies moved government debt onto individuals and corporates); our currency is now the smallests freely-tradable currency (after the Kronur basically has been tied to the Euro); and most of our major trading partners are slapping on protectionist measures (e.g. EU greenie taxes on long-distance airlines; EU subsidies for milk products; US buy american campaign).
We’re in for a very long downward slide. It is not at all clear NZ will be able to escape as an independent economy. The question then is: how do we deal with it. Do we “soften” the blow to those who are too lazy or unskilled to be competitive in the brutal international markets we are now facing – and by doing so raise the taxes on the few truly productive and successful companies and members of society? Or do we slash taxes (and necessarily slash spending on welfare, health, and education) to remove the deadweight from the economy?
there really is only one rational choice. We should eliminate the minimum wage and all other benefits paid to the non-productive; and liquidate as many assets as we can, while they (and the NZ dollar) still has some value. We should remove (zero rate) corporate taxes and income taxes on those earning over say 100.000 per year (indexed!)
And we should stop counting “unemployment” statistics. When the state does not recognise or support the “unemployed” or any other form of bludger – well the problem is solved and there is no need to reduce their numbers in any way.
As I’ve said: for NZ to become productive, we should be looking at around 500.000 to 1,000,000 unemployed in the next couple of years. We siimply can’t afford the dole, dpb, health, or education for so many losers.
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I strongly support mawm’s point (3) above. we need to discourage rent seeking behaviour so that productive people can keep their income, not subsidise the capital gains of others!
The Greens have a good scheme to insulate substd homes — should help reduce energy costs and have health benefits.
http://blog.greens.org.nz/2009/02/10/irish-government-unveils-insulation-scheme/
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My 5c worth.
1) Reward productivity
-Cut personal and corporate income tax. A flat tax rate of about 15 – 25%. No deductions, no special deals.
-Enable entrepreneurial endeavour. Start up help, less red tape.
2) Increase individual saving levels
– by allowing indivs to keep more of their earnings
– by decreasing/cutting tax on interest from savings
– decrease reliance on government to provide for retirement
3) Disallow tax deductions of the losses of one business from other income sources. This will free up a large portion of the realty market as investors lose ability to fund ‘rental houses’ at expense of paying taxes due.
4) Cut government spending.
– core government services are external security, law and order, health, and education. The rest is unnecessary and should be cut drastically..and won’t be missed. Private enterprise will compete to fill the gaps.
– each and every service must be world-class. Money spent on substandard services is wasted and it is more expensive in the long run.
5) Welfare reform.
– extensive and severe. ‘Nuff said.
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Extend the services of kiwibank / post shops / nz post so that we have post offices dotted up and down the country just like pre 1984. For rural folk this could also be a place for local representation of central government. ie distributing tax forms, registrations, passport applications etc. With the Rogernomics reforms the poorest NZ’ers lost a lot of services like this.
Legislate to force Telecom and other utility companies to use local representatives at said offices as well as call centres. Find ways to induce companies to use local labour.
For a truckload of ideas see Tim Hazeldine: Taking New Zealand Seriously: The Economics of Decency
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