Poll Dancer by Keith Ng

Black and White

With a full scalp of hair, NZ First MP Craig McNair, aged 29, stands out from the rest of his colleagues. Salient writer Nicola Kean talks to him about family values, social engineering, and being a young man in a old folks' party.

Where do you see New Zealand in twenty years time‭?

It might sound a bit idealistic,‭ ‬but my vision for the future is to see a vibrant,‭ ‬healthy,‭ ‬successful group of people‭ – [‬the ones‭] ‬that are between the‭ ‬18-30‭ ‬mark now‭ ‬-‭ ‬that have been able to have an education provided to them,‭ ‬where they don't have to borrow to live as far as tertiary education is concerned‭; ‬where they actually have a government that enters into a social contract with our young people.‭ ‬Basically,‭ ‬to provide our students and our young people an opportunity to be able to thrive and to have the best wages in the world here in New Zealand‭; ‬to be able to have that quality of life as well as those top end wages.‭ ‬That's my vision for New Zealand.

‭<‬b‭>‬In your policies and press releases,‭ ‬you talk about‭ “‬traditional family values‭” ‬and Labour's‭ "‬social engineering‭"‬.‭ ‬What Labour is doing‭ – ‬does it fit into your vision of the future‭?<‬/b‭>

Absolutely not.‭ ‬Right from areas such as the ones I've just mentioned.‭ ‬They'll come out with a policy at the last minute for an election bid to create interest free student loans,‭ ‬but with no real thinking,‭ ‬no real vision about it,‭ ‬no real plan.‭ ‬Just a last minute thing decided by two senior cabinet ministers one evening because they were desperate.

You've probably seen a few of my press releases.‭ ‬A lot of them have concentrated on keeping our young people off drugs,‭ ‬cannabis and even harder drugs like P.‭ ‬There are a lot of young people that are experimenting on things and experimenting in life.‭ ‬We‭ [‬should‭] ‬create a society where the Government holds up a standard and says these things aren't right,‭ ‬such as the cannabis issue.‭ ‬We need to keep the legal status of cannabis the way it is.‭ ‬I make no apologies if there are a lot of young people out there that think that I'm wrong on those issues,‭ ‬that's fine.‭ ‬I honestly don't think a positive,‭ ‬healthy society is going to be produced by advocating policies to decriminalise cannabis.

‭<‬b‭>‬When you talk of‭ “‬traditional family values‭”‬,‭ ‬how would you define that‭?<‬/b‭>

Traditional family values are values that New Zealanders have held on to for the last‭ ‬100-150‭ ‬years,‭ ‬basically since‭ [‬New Zealand‭] ‬became a nation.‭ ‬There has been radical change in the last few years in legislation concerning those issues.

If you're making major changes like that to legislation,‭ ‬the people of New Zealand should be able to have their say on it.‭ ‬These are major issues,‭ ‬not just Civil Unions,‭ ‬but Privy Council and all those other things that I know will affect young people in the long run.‭ ‬I just don't think that,‭ ‬for example,‭ ‬decriminalising prostitution has sent a message out there to our young people and communities that it's alright to treat women like that.

When it comes down to it,‭ ‬we're making some huge changes in our family structures and the way we define family.‭ ‬Don't you think with big changes like that New Zealanders should be able to have a say in a referendum‭? ‬Then people are able to feel satisfied that they've been heard.‭

‭<‬b‭>‬If we had referenda on these issues,‭ ‬do you think that people would come out and vote‭?<‬/b‭>

I think you'd be surprised at how many people would go to the polling booth or the computer‭ ‬-‭ ‬you can make it very easy these days.‭ ‬It keeps things on the table.‭ ‬While‭ [‬young people are‭] ‬sitting out in the Octagon in the University or where ever it is,‭ ‬saying‭ '‬oh,‭ ‬the referendum is in a few weeks,‭ ‬how are you going to vote‭?' '‬I'm not voting‭' '‬well you should vote‭' ‬and duh duh duh dee duh.‭ ‬And then it gets the issues in people's minds,‭ ‬and it also keeps it away from the politicians.

‭<‬b‭>‬And this is a good thing‭?<‬/b‭>

It's not always a good thing,‭ ‬but there are some major issues that do need to go to the people‭ ‬-‭ ‬the more mundane things the people expect us to do.‭ ‬That's why we're elected.

‭<‬b‭>‬What about human rights issues,‭ ‬like the Civil Union Bill or allowing people in same sex relationships to have their partners classified as the next of kin and so on‭? ‬Should those be dealt with by referenda‭?<‬/b‭>

In effect,‭ ‬what Labour's told us in the House is‭ '‬ok so since this is a human rights issue,‭ ‬we know best‭'‬.‭ ‬I just think it's quite arrogant for politicians to say we're more educated on these issues and you guys are the plebs and don't know what you're doing and so we have to make the decision for you.‭ ‬What a load of rubbish.

‭<‬b‭>‬Are you trying take New Zealand back to the way it was in the‭ ‬1950s‭?<‬/b‭>

I don't think so,‭ ‬I think there are family structures that have worked for hundreds and hundreds and hundreds of years,‭ ‬that have been proven to work,‭ ‬that can actually create families.‭ ‬We realise that there are other family structures out there in this world‭ ‬-‭ ‬believe you me,‭ ‬my head is not in the sand.‭ ‬What we're saying is that there are certain family structures that should be promoted because they have been proven to benefit society.‭

‭<‬b‭>‬And by that you mean marriage‭?<‬/b‭>

By that I mean Mum,‭ ‬Dad and the kids.‭ ‬Mum and the kids.‭ ‬Dad and the kids.‭ ‬Adoption.‭ ‬Grandparents.‭ ‬But keeping it away from the social engineering agenda of the Labour Government.‭ ‬We're not going to get into other people's private lives,‭ ‬we're not going to tell them what to do,‭ ‬how they should live their lives,‭ ‬whatever lifestyle they decide to choose.‭ ‬But we just say there are certain structures that should be promoted because they've been proven to work.‭

‭<‬b‭>‬Given your view on Labour's‭ '‬social engineering‭'‬,‭ ‬would you be able to go into coalition with them‭?<‬/b‭>

We've worked with Labour and we've worked with National.‭ ‬We've proven that we can work with either of them,‭ ‬so I think that's your answer there.‭ ‬If those kind of issues come up,‭ ‬well then,‭ ‬if the people are going to decide on issues I'm happy with that,‭ ‬because then it's not Labour pushing this agenda.‭ ‬We will stop the Labour Government from ramming through their own agenda,‭ ‬because the people should have a say and I don't apologise for that.

‭<‬b‭>‬New Zealand First wants to bring back interest on student loans while students are studying.‭ ‬You've been totally outplayed by Labour on that front haven't you‭?<‬/b‭>

A lot of people are happy about it,‭ ‬but it is going to be a poisonous apple.‭ ‬And I hope we don't swallow it as a country.‭ ‬I know our plan is better,‭ ‬it's going to reduce student debt even further.‭ ‬We're going to provide universal student allowances,‭ ‬so obviously it would stop students from having to borrow to live.‭ ‬Labour's not stopping that continuing.‭ ‬The reason why we would charge interest while they were still studying‭ ‬-‭ ‬only at the equivalent to the consumer price index,‭ ‬somewhere around‭ ‬2%‭ ‬-‭ ‬it encourages young people to keep their student loans at bay.‭ ‬Then once they get out of their tertiary education then it's CPI plus‭ ‬2%.‭ ‬It's still not as much interest as they're paying now,‭ ‬but it's enough to say‭ '‬I've got to get rid of this.‭' ‬Also,‭ ‬they're not going to have as much of a student loan because they're not going to have to borrow to live either.

‭[‬Labour's‭] ‬plan has just come out of nowhere.‭ ‬They had six years to implement it,‭ ‬nothing talked about in the budget,‭ ‬they start going down in the polls and they think‭ '‬shoot,‭ ‬what are we going to have to do‭?'

‭<‬b‭>‬You also seem to be giving a lot of money to the elderly,‭ ‬dishing out money here and there‭ – ‬is it affordable‭?<‬/b‭>

Do you hear us promising across the board tax cuts‭? ‬No.‭ ‬We are promising a lot,‭ ‬but we also know that we can deliver.‭ ‬We've priced these things and we realise that we want all of these things and we're not going to be able to provide across the board tax cuts straight away.‭ ‬We're going to provide tax incentives for exporters‭ ‬-‭ ‬strategic,‭ ‬pinpointed tax incentives to grow our economy.‭ ‬The only way we're going to survive as a country is by getting our export growth up,‭ ‬so we'll do those things that aren't going to cost the country a lot of money,‭ ‬but will increase our earnings hugely.

‭<‬b‭>‬There's no youth wing of the New Zealand First Party.‭ ‬Does that reflect the party's emphasis on the elderly‭?<‬/b‭>

New Zealand First doesn't believe in dividing New Zealand up into groups.

I think the most amazing thing about being a young person involved in New Zealand First is that you actually get to do the real things that the Young Nats,‭ ‬the Young Labourites and all of the other ones is their little groups would dream of doing.

We purposely don't have a Young New Zealand First.‭ ‬We could if we wanted,‭ ‬we actually have heaps of young people actually in the party.‭ ‬They're loving it.‭ ‬They're actually doing something rather than just being in a social group or‭ [‬have us‭] ‬sidelining them and saying‭ '‬we've got a little youth group here for you,‭ ‬you get to go ice-skating on a Saturday night.‭' ‬I know it's not quite like that,‭ ‬but you know.

‭<‬b‭>‬How do you cope being a young MP in a party that is perceived to be chasing the elderly vote‭?<‬/b‭>

Being young in New Zealand First is the greatest thing.‭ ‬You've got policies that you can actually say:‭ ‬it's not just about one section of society,‭ ‬the elderly sector,‭ ‬it's about young people as well.‭ ‬We've got a vision for the betterment of New Zealand and it's not just about plugging towards a certain age group.

We do have policies that are there to honour our elderly and the ones that have gone before us,‭ ‬to give people dignity in their retirement such as the‭ '‬Golden Age‭' ‬card that we've just released a few months ago.‭ ‬But New Zealand First is not just a one policy party or a one focus party.

‭<‬b‭>‬Or a one politician party‭?<‬/b‭>

Definitely not a one politician party‭! ‬It's great to be in party with a strong leader,‭ ‬but we are a team and we make decisions collectively.‭ ‬People make fun of it,‭ ‬and say Winston's a one-man band,‭ ‬but there's nothing wrong with having a strong leader.‭ ‬He's also the most democratic person I've ever met.‭ ‬He's amazing.‭ ‬Even if he doesn't agree on a certain policy,‭ ‬or a bill that we're voting through,‭ ‬we put it to the vote.‭

‭<‬b‭>‬Where do you see New Zealand First going post-Winston Peters‭? ‬Do you have any leadership aspirations yourself‭?<‬/b‭>

Not personally.‭ ‬Not to be leader of a political party.‭ ‬But definitely I aspire to be the best MP I can be.‭ ‬I love politics.‭ ‬I love being here.‭ ‬I love being able to have my say.‭ ‬I don't even think about what would happen post-Winston.‭ ‬As soon as you start thinking that,‭ ‬what's the point of having the current leader‭? ‬As far as I'm concerned Winston is here for the long,‭ ‬long term.‭ ‬It's not even a consideration for me,‭ ‬because I know Winston is going to be here for a long,‭ ‬long time.

A message from the National Party...

I got a phone call from the National Party earlier today, and I must say, I'm rather flattered. I guess I must be doing something right, or I'm doing everything *spectacularly* wrong!

By convention, the Opposition gets to borrow a boffin from Treasury during the election to help them with their scheming. Given the small circle of people who were in the loop about the tax cut plans, this boffin, Simon, would have been intimately involved with those plans. Given his speciality and the particulars of this election, he is the busiest and most valuable person in their research unit. So I was rather surprised, flattered, and bloody worried that he spent the better part of an hour trying to straighten me out about my last post (the Calculator one, not the $12.8b one).

His biggest issue with it was that I was wrong about National funding its tax cuts out of the debt increase. I have to say, he's technically right, but the "technically right" part is not particularly convincing. Here's why (an explanation arrived at after much pen-pointing and diagram-construction):

Currently, the Labour government is running a big operating surplus (i.e. Its income is higher than its expenses). It has a lot of money left over after meeting all its operating costs, and its spending that money on contributions to the Super Fund, making capital purchases (buying big stuff, like ships and hospitals) and repaying debt.

What a National government would do is give some tax cuts, which means it would run a smaller operating surplus, which means it will have less money left over after meeting all its operating costs. It still has enough left over to put money into the Super Fund.

Note that, at this point, the tax cuts have been funded, but no borrowing has occurred.

*Then*, because they still need to buy assets, they borrow money to fund those capital purchases. Hey presto - they are borrowing, but they are not borrowing to fund tax cuts.

It's not as duplicitous as it sounds. From National's point of view, capital purchases should never have been paid out of cash in the first place - they'd say it's Cullen who's doing the dodgy accounting by paying for capital purchases out of the cash surplus and making it seem like there's not much money. Capital purchases should be paid for by borrowing, and then that debt should be repaid over the lifetime of the asset, because the benefits of the asset are enjoyed over that time (thus it's a way of spending money that's "better", from an accounting point of view). So if you start off with the assertion that capital purchases should be funded from borrowing - just because it's better accounting - then it really is true that the surplus is higher than it needs to be (i.e. You can afford a tax cut).

They also consider this method to be fairer, since the people who benefit from the asset will be paying for it. For example, if current taxpayers pay for the assets out of cash now, then they could be in another country or dead without having fully enjoyed the benefits of said assets (sucks to be them). That's grossly simplified, but the fundamental idea is that people should only pay as much as they're using, as they're using it.

The advantages of Cullen's way of doing things is considerably simpler - it's cheaper, because borrowing always comes with a cost.

Bottom-line, Simon the Boffin is right, the money that National borrows does not directly go towards tax cuts - however, the tax cuts wouldn't be possible without the borrowing, either! So:

* If you like National, you can say that they are justifiably borrowing money for capital purchases, which reveals that the true surplus really has room for tax cuts.

* If you dislike National, you can say that their tax cuts means they can no longer afford to make the necessary capital purchases out of cash, which forces them to borrow, so their increased borrowing is an indirect effect of their tax cuts.

--

So, in all seriousness, the whole tax cut argument - and by extension, this *election* - can be reduced to an accounting debate.

Scary, eh?

But within the accounting debate, there's also an underlying philosophical conflict (the "Political Philosophy-Public Accounting Nexus"): the Left's believes that the state is more than just the sum of current taxpayers - that taxpayers keep the state going, and the state provide for the people, but the relationship isn't necessarily dollar-for-dollar, as the Right's state-as-a-service-provider model would have it.

--

Simon the Boffin also makes a few minor points:

* The debt increase *is* $3.2b, not $3.5b, because the $3.5b figure doesn't take into account the savings from not funding the Reserve Bank for some kind of monetary policy thing, and extra spending on roads. (Okay...)

* $3.2b increase in debt is not actually very big, when you put it into context. (It's still 1.8% of GDP, or a 9% increase in debt over what's forecasted. But uh... I guess different people have different definitions of big. Wait... the double-entendre is working *against* me here, isn't it?)

He also made a point which I couldn't figure out whether it was major or minor. He kept saying that I didn't understand baseline spending (He was right. I didn't have a clue what he was on about!). I'm sure he'll correct me if I'm wrong, but I think he was saying that National's $3b lowering of new budget spending isn't quite what it sounds like.

I left the numbers at the office, so I'll have to settle for some hypothetical numbers, but the idea was that if it was a $700m decrease in 2006/07, $1b decrease in 2007/08, and $1.3b in 2008/09, then the 2007/08 cut is really only a $300m cut, because $700m of it was already cut the year before. So the savings from that cut continues to be counted, but it's not as if *another* $700m cut takes place. So really, the new budget spending has only been cut by $1.3b over three years, but it's the saving from the cut that adds up to $3b.

--

Alright. I think that's plenty more than enough geeking for a day. I'm going to go and... er... transcribe an interview I had with an economist now. DOH!

Head down, calculator up

Alright, let me try this again. I have National's own numbers in front of me - I'll stick to the basics this time.

Things we know:

* National is promising $9.4b worth of tax cuts in the next three budgets. Except not. Because they're removing indexation (adjusting the tax brackets by inflation - the idea that was introduced and bagged in the Budget this year), they're essentially removing $500m of "tax cuts" over the same period.

So, taxes would be $8.9b lower under National than it would be under Labour, not $9.4b. Small point, but worth noting.

* National promises to cut $1.2b of waste over the next three fiscal years. The focus will be on "low quality spend [sic]", "economic and regional development", "welfare delivery". Can this be done? Labour says no, National says yes. But while this seems to be the most contentious issue, it's not the biggest.

* Debt, despite it not being the "$12.8b Wally" I thought it was, is still a very big number. National will be borrowing $3.5b more than Labour (or repaying $3.5b less, depending on how you look at it) to fund the tax cuts.

In their statement, they've labelled their net shortfall line "net additional". I'm not quite sure what they mean by "additional". I think it's short for "money additional to money we actually have".

Cute.

(The total "net additional" is $3.5b, and that's probably more accurate than my $3.2b figure, which is calculated from their debt as percentage of GDP figure, which of course contains gigantic rounding errors.)

* The second biggest cut, though, is "lower new budget spending allowance", sitting at $3b. As Cullen said in an earlier interview here, this doesn't represent new blow-outs, it's what's required to keep health/education spending up with the population requirements. Drop this, and the pressures on health/education spending will have no release, according to Cullen. The problem with Brash/Key's argument here is that they can't say they'll just cut the fat off the system and put it back into core spending, because they already cut the fat off in that $1.2b line above. This is real additional spending they're cutting - not "wasteful" spending.

--

So yeah, it all adds up (minus another $600m in Law & Order spending and plus another $500m saving from scrapping Kiwisave) - a cut in sloppy spending here, a cut of real spending there, borrow for the rest. Hey presto, tax cuts.

That's all I got. Not nearly half as sexy, but pretty damn solid. Still feel like a bit of an arse for the stuff last night, but ah, live and learn. Hopefully this - less yelling, more calculating - will go some way to restoring my geek-creds.

--

Lisa: If I'm going to bail the country out, I'll have to raise taxes, but in my speech, I'd like to avoid calling it a "painful emergency tax".
Milhouse: What about... "colossal salary grab"?
Lisa: See, that has the same problem. We need to soften the blow.
Milhouse: Well, if you just want to out-and-out lie... okay, we could call it a "temporary refund adjustment".
Lisa: I love it.
Milhouse: Really? What else do you love, Lisa?
Lisa: Fiscal solvency.
Milhouse: Oh. Yeah. Me too.

Allow my foghorn to answer your question...

Woou-wooul! Guess I got it wrong. Yesterday, I wrote that National intends to fund its tax cut by increasing debt to 26.3% of GDP by 2008/09. Well, it turns out that I was right for a small part - National does intend to raise debt in 2008/09 by 1% of GDP, but that's compared with 2006 figures (which will be National's first budget), not 2004 figures, and damn, it makes a pretty big difference.

The 2006 gross sovereign issued debt is 21.3%, compared with 25.3% in 2004. So, rather than the 26.3% figure I pulled out last night, it's only 22% (according to National's estimates).

This would mean that National is still going to be more indebted at the end of the forecast period than Labour, but rather than $12.8b more, it'll be around $3.2b.

It's not entirely insignificant, but heck, it's a big difference.

[Update: The forecast at the time of the Budget was that gross debt in 2008/09 was going to be 20.2% under the current government. This is the figure that National was working from. The 19.1% that I used yesterday was from the Pre-Election opening of the books. My bad - thanks Idiot/Savant.]

So, I retract my last post (will keep it on there for comical and self-flagellation purposes), and I apologise sincerely for any fiscal indigestion I may have caused.

Hey dude, I found the $12.8b you were looking for.

I wanted to build this up for dramatic effect, but, oh, I can't help myself. National's tax cut is perfectly affordable, and they laid out exactly where it's coming from: **NATIONAL IS FUNDING THE ENTIRE TAX CUT PACKAGE OUT OF A $12.8b INCREASE IN DEBT OVER FOUR YEARS**! Waaaaaaaa!!!!

Where's this $12.8b Wally? In the fine print, of course. It's always in the fine-print...

It's a very simple and seemingly innocuous line in Key's press release yesterday:

Gross sovereign issued debt is forecast to be approximately 1% higher relative to GDP than currently by the end of the forecast period.

Well, this is harmless, isn't it? According to Treasury forecasts, gross debt will be $34b in 2008/09, or 19.1% of GDP. So what's one more percent? Nothing, really. Just $1.78b, and well, what's a billion or two among friends?

But read it again. It's "1% higher than currently", not "1% higher than currently forecasted". He's not comparing it with debt as a percentage of GDP in 2008/09, he's comparing it with debt as a percentage of GDP in 2004/05.

So what?

The 2004/05 gross debt is 25.3% of GDP.

(If you know what this means, you can proceed to the run-around-screaming part. The rest of you should continue reading.)

So what he's saying there is that gross debt will be approximately 26.3% in 2008/09, or a whopping $12.8b (7.2% of GDP) higher than what it's currently projected to be.

There. Big fat $12.8b Wally. Found.

Stuff the spending cut, waste cut, baby-selling, etc., etc., there's enough debt there to fund the entire tax package. I blame my not picking this up yesterday on sleep deprivation. But anyway, here you go.

I had some more speculation about where the money was coming from before, but frankly, I don't think we need to speculate any more.

Of course, there's a flip side to this, too. National will be saying that, sure, it's a massive increase on *forecasted* debt levels, but it really is only 1% of GDP - it's the forecast that's the dodgy result, because it takes into account ol' Mad Doctor Cullen paying off debt when there's no need.

And there's a genuine case for that. But put it this way: Under National, the government will have $12.8b more debt in 2008/09 than it would under Labour. Is this good or bad? I don't know, but at least now we can have a debate over what the appropriate debt level should be.

Right, I'm going off to my poker game, two hours late. Now, where'd I leave that $12.8b...

[Update: Tried to contact John Key, but he told me to talk to their researcher, who can be reached in the morning. My friend, a spindoctor in the opposition's opposition, told me that if I got it wrong, he would have set me straight there and then. So I guess I'll see what happens tomorrow...]