OnPoint by Keith Ng

The answer is less government. What’s the question again?

The report is quite spectacular in how far it goes beyond the frontiers of right-wingedness.

Whereas normal right-wingers say that the government shouldn’t pick winners by backing specific industries or technologies or companies, Brash & Co have taken this several step further: The government shouldn’t even aim for goals like “more savings” or “more research” or “diversify exports”, because that’s basically trying to pick winners.

Whereas normal right-wingers believe that when the government step out of the way, the market will step in to provide something better, Brash & Co just don’t care. If it doesn’t make economical sense for parents to go to work and send their kids to an early childhood centre, then it’s not worthwhile. Whatever the market delivers up is, by definition, the optimal outcome.

For primary healthcare subsidies, not only do they ignore the point of the entire field – to ensure people don’t get sicker and require more serious medical intervention – and claim that there’s no public benefit, but they seem to take ideological offence, warning of “increased regulatory control and administrative hassle that tends to accompany greater government funding, stifling innovation and enterprise”.

What does that even mean? That individuals fail to innovate with medication at home? That we don’t have enough entrepreneurial alley-surgeons with a scalpel and a bottle of scotch?

But the bit that takes the cake is what we usually consider to be actual productivity: People. Out of a 150 page report, this is the section on human productivity. In its entirety:

The size of the workforce, and the level and quality of “human capital” – the skills and aptitudes each of us acquire through work, training, education and experience – are important parts of any story of wealth accumulation and improving living standards

It seems unlikely that deficiencies in this area can explain much about why our incomes lag so far behind those in Australia and elsewhere in the OECD. There are no direct measures of human capital, but data indicate that the share of the New Zealand population with a tertiary qualification is now among the highest in the OECD (having increased markedly in recent decades). Skill shortages were a common theme in business surveys this decade – but that is to be expected when demand is running well ahead of the economy’s underlying productive capacity. It is well known that New Zealanders in employment work long hours by international standards: across the population as a whole, hours worked per head of population in New Zealand averaged 887 in 2008, higher than in either the United States (852) or Australia (864), and well above the figure for the OECD countries as a whole (805).

Our workforce is maxed out, with high workforce participation, high employment rate and long working hours; our businesses report a skills shortage, but that’s nothing to be concerned about, because it’s just demand outrunning our “underlying productive capacity”… as in skilled workforce. Ah, so businesses are reporting a skills shortage because there’s a shortage of skills. Nothing to worry about then. Less government, that’s what we need.

WTF, Don?

It’s hard to avoid the conclusion that this is a big fat patsy, generating outrage so that whatever the Tax Working Group report suggests will look moderate and sensible by comparison.

Stay tuned: Will live blog from the TWG.

Doesn't anyone else get suspicious when a Minister jumps out, on her own initiative, and declares that her portfolio is in crisis?

We now have more prisoners behind bars than at any other time in New Zealand's history," Ms Judith 'Crusher' Collins said. “At Monday unlock this week - where prisoners throughout the country are counted - there were 8509 people in prisons or police stations, which is 16 prisoners more than the previous peak of 8493 prisoners on 7 September 2009.”

Honestly, what kind of journalist would believe that she said it because “the public has a right to know”? Because if that was the case, then the public might also have a right to know that there'll be even more prisoners next week. And even more the week after that.

It's called an upward trend – and it's predicted to go up, and up, and up. Whether it's next Thursday, 8th February 2011 or the end of the Mayan calendar – pick any day, and we'll probably have “more prisoners behind bars than at any other time in New Zealand's history”. (Except for Christmas, when the prison muster is at its annual low.)

Sure, there's a serious capacity shortfall that's only going to get worse. It's a problem that needs to be dealt with, but have we really suddenly hit a “crisis point”?

None of this is new. A cabinet paper prepared by Collins' office in January stated pretty clearly: “The first new prison capacity is required in late 2009/early 2010.” It stated pretty clearly that in the short-term, that capacity has to come from double-bunking. It also stated that union agreement was required to allow the additional double-bunking to proceed. Then, in the Budget, they got $364.4m to do it. That's right: $364.4m specifically for double-bunking.

So, let's get this straight. Collins knew about the problem, got solutions to the problem, approved those solutions, then got the money to pay for those solutions. And yet, here we are, with talk of highest prisoner numbers ever, imminent capacity crisis of dooom, suggestions that troops might be called in, oh and, by the way, privatisation.

Of the money Corrections got in the Budget for double-bunking, $218.6m was operating funding. And yet, here we are, with Corrections saying that they have no money to pay corrections staff more, blaming them for holding up double-bunking, and floating privatisation and mass sackings as a solution – as if cramming more prisoners in the same space was a great opportunity to train up fresh staff on lower pay under new management.

It's not a stretch to suggest that they're just manufacturing a crisis. The formula is pretty simple:

'Prisons in crisis! We'll have to stick them in containers! We'll have to send in the troops! We'll have to stick them in police vans! We'll have to send them out onto the streets! We'll have to keep them in your children's room!

Or, I guess, if you really pushed us – because we totally didn't come into office wanting to do it – but if you left us with no other choice, I guess we could privatise the prisons. I mean, that does sound like a better option than keeping violent offenders in your children's room, doesn't it?'

I don't know if private prisons are a good idea or not. I don't know much about prisons. I didn't even watch Prison Break (that tattoo was retarded). But I suspect that the push for privatising prisons, however cynical the methods, isn't just about ideology. It's about reducing the cost of a tsunami that coming right for us.

It comes down to the opposite of what Collins said. We shouldn't be worried that prisoners numbers are as high as they are now – we should be worried that they'll never be this low again. According to the current forecasts, the prison population will grow from 8,500 now to 12,500 by 2018.

It'll cost $1.8 billion over the next ten years to build the prisons required to house these people. It'll cost $1.9 billion to operate these prisons over the same period.

Yeah. That's right. Billions.

This is what the Treasury had to say about our prison population (emphasis added):

This paper signals the need for $1.795 billion capital in Budgets 2009, 2010, 2011, of which $19 million is for growth in CPPS (Community Probation and Psychological Services) capacity and $1.776 billion is for the construction of prison beds. This is greater than 40% of the allowance for new capital spending for these three budgets. This will significantly constrain the Government's ability to put new spending into productive infrastructure.

Furthermore, building this many beds will result in an annual operating increase of $400 million per annum by 2018, and require 2500-2700 additional full-time equivalent employees.”

Instead of building hospitals, schools and cycleways, we may have to spend 40% of our capital spending allowance on prisons.

It makes me hurl.

The real debate shouldn't be about whether it's $1.8b worth of prisons or $1.6b, whether they're cargo containers or reinforced concrete, private or public: It should be about why we have such an high prison population in the first place.

Really? Or am I just being a candy-assed liberal? I'll leave you with this other gem from the Treasury:

New Zealand's current imprisonment rate is 185 per 100,000 people, which is the 4th highest in the OECD. The prison population forecast in this paper signals that our imprisonment rate will increase to 270 per 100,000 by 2018.”

--

In case you're wondering (I was, which was why I OIAed all this stuff in the first place), the growth in the prison population isn't National's fault. Well, not the fault of the law and order stuff they campaigned on, anyway.

According to Justice and Corrections estimates:

- The repeal of the Bail Act 2007 is expected to require approximately 170 additional beds by 2018.
- Increasing the aggregate sentence by 20% for all offenders committing offences against children is expected to require approximately 130 additional beds by 2018, and
- Ensuring that repeat serious violent offenders with a sentence of five years or more serve the entirety of their sentence is expected to require approximately 40 additional beds by 2018.

Total: 340 above the original forecast by 2018. About a tenth of the total increase. It's not nothing, but it's not the source of the problem, either.

Here are some things I know about gotcha.co.nz.

It's registered to one Cameron Slater, of GOTCHA Publishing Limited, which is based in 35 New Road, um... Belize City, Belize.

35 New Road, Belize City, Belize, is the office of Orion Corporate & Trust Services. They help people set up Belize International Business Companies (IBC).

Why would one choose a Belize IBC? Aside from not having to pay any taxes in Belize, they also guarantee the confidentiality of directors and shareholders in that company.

No information pertaining to the identity of directors & shareholders is filed in any public register in Belize. As a licensed registered agent, we ensure privacy for our law-abiding clients. The only thing that must be filed with our IBC Registry is the name of the Registered Agent and the Memorandum and Articles.”

(Registered Agent would be Orion themselves.)

Overseas companies trading in NZ have to be registered as a company in New Zealand, for disclosure and tax purposes. Cough cough.

The copyright notice on Gotcha.co.nz, as of Tuesday, read “Copyright © 2009 Gotcha Publishing Limited” (i.e. Gotcha operates a NZ site...). Gotcha has ads served by tpnads.com, which is registered to a NZ company (...which receives revenue from a NZ company).

Gotcha Publishing Limited is not on the companies register.

Cactus Kate is a lawyer. She had some really bad food in Belize on 27 July.

I was in email contact with her on Tuesday, asking her who the directors and shareholders of Gotcha were, and why it was registered in Belize. She was very angry.

Thursday. Cactus Kate is no longer a blogger on Gotcha, citing... well, I'm not entirely sure.

Gotcha's copyright notice now reads “Copyright © 2009 Gotcha!.”

–

Ya know, I didn't actually care about tax arrangements, professional consequences for break the law, income declaration to people who might be interested, or breaches of the Companies Act – I just wanted to know who was behind the site. Oh well.

On Q&A on Sunday, Nick Smith claimed that Greenpeace's campaign for a 40% emissions reduction was unaffordable, and cited a report showing that it would have “a cost of about $15 billion per year at 2020”, or $60 per person per week.

This is catastrophically bullshit. The report cited by Smith wasn't even about emissions reduction!

It was a report about carbon credit allocation, which the authors note (in big bold letters in the “Key Points” section in the first goddamn page):

With international trading, New Zealand’s AAU [aka carbon credit] allowance... [is] not analogous to a domestic emissions target.”

In case it wasn't clear:

To be clear, this report investigates the impact of changes in New Zealand’s AAUs under the framework of an international agreement whereby New Zealand takes responsibility for any emissions above a given amount. This is not the same as investigating different domestic emissions targets and should not be interpreted as such.” (Emphasis added.)

The point is hardly ambiguous: NOT DOMESTIC EMISSIONS TARGETS.

In fact, in all the scenarios discussed in the report, New Zealand's emission was held at 87.7Mt. Every single one of those scenarios assume the same level of emissions!

That's because the report was investigating how New Zealand would fare at different levels of carbon credit allocations. Carbon credits are worth money. So the more we get “for free”, the richer we'd be – obviously. If we didn't have enough, we'd need to buy them from other countries; this would hit our balance of payments and exchange rates, and that'd make us poorer.

When the report said that “40%” would cost $15b, it meant that if our carbon credit allocations were reduced by 40%, and our emissions level was unchanged, then it could cost New Zealand the equivalent of $15b.

So the cost that Smith talks about is categorically NOT the cost of cutting New Zealand's emissions.

It is the opposite. It is the cost that New Zealand could face if we DON'T cut our emissions. Every unit of emission that we reduce now is a unit that come off this “$15 billion” price tag that Smith talks about.

Of course, the “$15 billion” was the worst-case-scenario. It's not outlandish, but it's definitely on the high end. But since Smith thought it was a reasonable enough scenario to use for his own ends, I'm happy to hold him to it:

According to the analysis that Nick Smith has been waving around, if we keep to the current emissions trends, it will cost us $15b per year – or $60 per person per week – by 2020.

Of course, cutting emissions will cost money too. But it'll be offset by the reduction in the carbon credits we have to purchase. That's the whole point of an emissions trading system.

That Smith managed to get it so spectacularly wrong is either gross dishonesty, or an abject failure in reading. Either way: SPANK!

(Irony points: The press release accompanying the release of the report: “New reports help inform climate change policy.”)

(Apology: Sorry for the gratuitous bolding and exclamation marks. I get pretty worked up about these things. If you were listening to this in person, you'd have spit in your face and some hearing damage.)

Can somebody take this up for me?

Can the Minister for Corrections explain why the previous prisoner forecast, included in the Briefing to the Incoming Minister in November 2008, required 275 new prison beds per year, while the new forecast projects a requirement for 555 new prison beds per year?*

* (5000 beds required by 2018 = 555 new beds per year; original forecast was 2200 beds required by 2016 = 275 new beds per year.)

Was it because somebody - not naming any names - made some iddybiddy policy changes?

Drop me a line if you're gonna to ask this.

--

It's the same bloody pattern again. Focus on the "controversial" stuff, like shipping containers and double bunking, and making it sound as though National has a very new approach to solving an old problem that they are carrying from Labour.

Nevermind that the double bunking is just using "supplementary beds", which is not new or novel - they are following the plan they inherited from Labour down to the letter.

Here. Page 23. The line goes into "supplementary beds" territory. It means that "hey, we're probably going to have to double bunk by mid-2010".

And now, Key and Collins are making the hard calls... by telling us that we're probably going to have to double bunk by mid-2010.

The tough act is a smokescreen for the *actual* news, that the number of new beds required are expected to double.