Crack down on recidivist drink drivers

David Farrar recently blogged on The Herald on Sunday’s story Number of repeat drink-drivers on the up. As I have previously blogged, I am largely supportive of the government’s response to the Law Commission review but I do feel that this is an area where they could do better. The government has proposed some measures to combat recidivist drink-driving, but they should have a much stronger focus on alcohol abusers who genuinely pose a threat to society rather than responsible drinkers. The HoS reported:

The number of recidivist drink-drivers has risen steadily over the past three years, and more than 4000 have been prosecuted already this year.

Many of them are involved in fatal crashes.

Figures released to the Herald on Sunday under the Official Information Act reveal 7200 people were convicted of their third or more drink-driving offence in 2009 compared with 6995 in 2008 and 6639 in 2007.

While the Business Roundtable has been critical of many of the Law Commission’s recommendations, we have gone on the record (p. 23) calling for tougher action in serious drink-driving cases. Last year in a media release on the Law Commission report I posed the question:

Why, for example, do we tolerate repeat drink driving offences without cancelling licences, naming and shaming offenders more prominently, using ignition interlocks, confiscating vehicles in serious cases and jailing recidivists?

I also think car-crushing was a brilliant idea for boy racers; why not do the same for recidivist drink drivers?

We need solutions like these that target alcohol abusers who pose a threat to society.– not laws that discriminate against responsible citizens, like banning dairies from selling wine or banning 18 and 19 year olds from off-licence purchasing (we would join only 11 other countries in the world with a minimum age of 20). I do have sympathy for 18 and 19 year olds and the ‘old enough to get married, join the army, go to jail, vote etc’ argument.

Meanwhile I read yesterday Professor Doug ‘the Ayatollah’ Sellman of the Alcohol Action Group calling supermarkets drug pushers and comparing their sale of wine to ecstasy or morphine. He wants to ban all alcohol sales in supermarkets. I wonder which countries we’d be joining if that basic convenience was removed from our lives?

To address problems like recidivist drink driving we need policies that target the misuse of alcohol rather than responsible use.


Saving may encourage growth, but growth also encourages saving

The Savings Working Group announced this week is a good initiative and the group is well qualified for the task, but I do think they face some constraints.  An article of mine on this topic appeared yesterday on Business Day on Stuff.

In the article I suggest that a good starting point for the group would be to look at the results of the last similar exercise, which was part of the 2001 McLeod Tax Review, and focus on the facts about savings. In this post I’ll just touch on some of the review findings and some relevant facts.

 Some key findings of the McLeod Tax Review:

  • It was not apparent that New Zealanders save too little.
  • There is little evidence that changes to the tax system would induce higher saving.
  • The current account balance is the result of many influences (such as New Zealand’s international competitiveness), not just saving.
  • Most New Zealanders are making adequate provision for their retirement, given New Zealand Superannuation.
  • Higher private savings would lower the cost of NZS only if it were means-tested.

Some facts about savings:

  • Total national saving comprises government, business and household saving.  They are inter-related.  If governments save a lot (run large fiscal surpluses) the private sector is likely to save less. 
  • Saving is difficult to measure, but OECD statistics suggest New Zealand’s national saving rate is above that of the United Kingdom, the United States and some other OECD countries.
  • There is no ‘right’ level of saving.  People save to be able to consume more in the future. 

 Simply raising saving is not a valid policy goal, even if it helped to increase investment and economic growth.  Legislating for a 60-hour working week might also increase economic growth but most people would regard themselves as worse off. We value leisure.

Addressing New Zealand’s growth challenges and its vulnerability to high external debt levels requires a broad sweep of policy initiatives, not a narrow focus on saving.  Saving may encourage growth, but growth also encourages saving.

Read the full article here

The increasingly lonely business of leading the world

Watching last night’s Back Benches special on our ETS, I was somewhat bemused to see a British diplomat (chapter 3 online) effusing over New Zealand’s ETS bravery, rather patronisingly assuring us that we are not alone, and challenging New Zealanders to look a Pakistani flood victim in the eye and tell him we’re not willing to raise petrol prices by a couple of cents to save him. If only it was that simple.

 I won’t go into whether it’s appropriate for a British diplomat to be commenting on New Zealand politics on a pub politics TV show.  But it’s timely to reflect on the ETS, now that the next stage has been in place for a couple of months and the costs are beginning to bite.  The decision to proceed when our major trading partners such as Australia and the US still have nothing comparable in place, remains, in my view, a dubious one, as I noted in this article published in The Spectator last March. While the government was wise to ensure the scheme was a relatively low impact one, it has nevertheless pushed up power and fuel costs for consumers, who will also be bracing themselves for the impact of the upcoming GST increase.

 Post election, the Australian position is more uncertain than ever. Both parties appeared to foreshadow little action in this area in this next parliamentary term, although the influence of the Greens may come into play. The major international milestones coming up are the UN meetings in Mexico at the end of this year and South Africa at the end of 2011.  It’s highly unlikely that the Mexico meeting will see important agreements on major issues.  If the same happens at the 2011 meeting in South Africa, there’s a real possibility that there will be no second Kyoto commitment period.  In that event New Zealand politicians will surely think twice about proceeding with further costly stages of their pledge to fight global warming.

Ask Joe

An article by Kevin A Hassett Bury Keynesian Voodoo before It Can Bury Us on draws some similar conclusions to this one I wrote for the ODT a couple of weeks ago.

 I’ll paste in a few sections from Hassett’s article:

Initial claims for unemployment benefits surged to 500,000 in mid-August, a level more typical of a recession than a recovery. The bad news confirmed what conservative economists have been saying for some time: The biggest Keynesian stimulus in U.S. history was a bust.

But the Keynesians still weren’t fazed:

Incredibly, some Keynesians who supported Barack Obama’s $862 billion stimulus now claim it fell short of their goals not because the idea was flawed, but because the spending package was too small.

So where to turn for evidence for that claim?   The US stimulus package was in fact the largest ever tried in that country and bigger than that tried by any other OECD country. Hassett asks Joe the plumber:

Why is the left so profoundly committed to stimulus-by-spending, even though there is scant evidence that it succeeds?

Joe the Plumber knows the answer: The left has become religiously Keynesian because that is the only corner of economics consistent with its redistributive ideology.

You remember Joe. During a campaign stop in the 2008 presidential election, Samuel Joseph Wurzelbacher asked Obama whether higher taxes would punish his business. Obama answered in part, “I think when you spread the wealth around, it’s good for everybody.”

Obama’s words captured Democrats’ ideology: outside of fairy tales, only government can play Robin Hood, taking money from the rich and giving it to the poor.

Joe the plumber won instant fame in the US after this exchange. The truth is Joe was right – higher taxes would punish his business. Tax cuts rather than tax increases are far more effective in a recession. Obama’s outgoing chief economic adviser recently said herself “tax increases are highly contractionary … tax cuts have very large and persistent positive output effects.”  As Hassett notes, that fact is bad news for the Robin Hooders:

If you cut tax rates in a recession in order to stimulate the economy, then you are conceding that lower tax rates can be a good thing. And if that’s true, then higher tax rates will be harmful–something the left has always denied.

So the Obama economic team was left to rely totally on spending in its response to the recession.

 Which turns out to be bad medicine:

Supporters of this type of stimulus are either unfamiliar with the literature or willing to ignore it. The result is policy that is harmful to our country and inconsistent with modern economic science. If the Obama economic team were medical doctors, they would be pushing the use of medicine not approved by the Food and Drug Administration.

Indeed, as I wrote in my article, naïve Keynesian ideas have not survived the GFC well, and should never have been contemplated.  Keynes once wrote:

 “If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise [to dig them up again] … there need be no more unemployment and … the real income of the community, and its capital wealth also, would probably become a great deal greater than it actually is.”

Few economists would take that proposition seriously today.

In all likelihood, the data will soon be so convincingly bad that we’ll again debate the need for an economic stimulus. Let’s hope that when that begins, all will finally concede that the ideas of John Maynard Keynes are as dead as the man himself, and that Keynesianism is the real voodoo economics.

Let’s hope. 

Read Kevin A. Hassett’s full article here and my article The Dubious Benefits of Fiscal Stimulus here.

A toast to moderately common sense

Just back from the Alcohol Law Reform Stakeholders’ lockup where I found myself coincidentally sitting next to fellow stakeholder Doug Sellman.  Doug would have found a lot less to be pleased about in the government’s response to Geoffrey Palmer’s Liquor Review than I did.   Staying well away from the sledge-hammer, wowserish measures advocated by Doug and his colleagues that would penalise responsible drinkers and do nothing to curb abuse, the government’s decisions instead largely reflect a sensible, pragmatic response to the issues.  It’s pleasing to see many of the arguments set out in our submission were listened to.  For a good rundown on the package see David Farrar’s summary here.

There are a few strange quirks – for example the drinking hours proposed would put paid to a champagne breakfast – and some anti-consumer proposals for further study, such as introducing a minimum price system for alcohol.  And some, like the latter idea, are unlikely to pass the sniff test in any proper regulatory impact analysis.

But the serious omission, in my view, is anything much in the way of strategies to deal with abuse (see page 16 of our submission), emphasising individual and parental responsibility, disincentives and penalties for abusive behaviour, making abusers face the consequences of their actions (eg denying ACC benefits for self-inflicted harm), better enforcement of existing laws, and social sanctions. 

There are, of course, deeper causes that lie behind many of the problems of alcohol abuse, such as dysfunctional families, poor parenting and welfare dependency, and these urgently require attention.  But in the meantime, measures of the sort outlined above, that sheet home the costs and shame of alcohol abuse to those who abuse it, would go a long way to curbing our problem drinkers

A winter soldier

The Business Roundtable’s week just past was dominated by tributes to the organisation’s  founding chair and business icon the late Sir Ron Trotter.  The week ended with another significant milestone, the departure of Rob McLeod (Ngati Porou) as Business Roundtable chair, and the election of Roger Partridge to succeed him.  

Rob has been chairman since 2002 and led the organisation through one of the more challenging periods in its history and an environment generally unconducive to advancing much needed economic reforms.  Rob, whose depth of interest in and understanding of economics and public policy is rare in business today, proved a true winter soldier and an outstanding leader, winning widespread respect across business, politics and Maoridom.   

As well as leading much of our work on tax and related matters, Rob shaped and led Te Oranga o te Iwi Maori: A Study of Maori Economic and Social Progress, a multi-author study of factors and institutions that have influenced Maori development and ways of building on past achievements.  He frequently drew attention to his deep concerns about Maori underachievement in education and the extent of unemployment among young Maori, and his interest in seeing affirmative action programmes in private firms.  In 2006 Rob was named Outstanding Maori Business Leader of the Year by the University of Auckland Business School.  

Rob recently served on the government’s Tax Working Group and its Capital Market Development Taskforce, and was a member of the Maori Economic Development Ministerial Taskforce, the Independent Ministerial Advisory Panel for the Defence Review and the National Infrastructure Advisory Board. He is also Chief Negotiator for Te Runanga o Ngati Porou in relation to their treaty claim with the Crown.

It’s worth noting that the role of chair is a voluntary one with a significant time commitment and Rob’s contribution has been huge. He leaves the organisation in excellent heart, with a strong and growing membership and plenty of resolve to maintain the momentum for improving New Zealand’s public policies.   Rob moved to Sydney in July to take up the role of managing partner, Ernst & Young, for Australia and New Zealand.

Members warmly welcomed incoming chair Roger Partridge (chairman, Bell Gully), another top commercial lawyer and high-calibre individual with a strong track record in public policy and law reform.

Elites just don’t get Howard

For a regular fix of first-rate journalism and some serious analysis of Australian politics that goes beyond the length of Julia Gillard’s earlobes, it’s hard to go past The Australian’s Janet Albrechtsen.  Like this piece where Albrechtsen examines the Australian media’s misreading of the role of former Prime Minister John Howard in the current election campaign.

This recent sniffing by Fairfax media elites about the return of “Howardism” betrays one constancy: they just don’t get John Winston Howard. And it’s likely they never will. The reason is simple enough. If you don’t understand mainstream Australia, then Howard is equally mystifying. They cannot bring themselves to admit that Australia is quietly, comfortably conservative by nature. Not in that overtly American way of muscular individualism, flag-waving patriotism or screaming Tea Party opposition to big government. In Australia, public displays of philosophical affection give way to private pragmatism and common sense. Howard battlers are not pining for the past. They have always sought the leader and the government that best represents their values and aspirations.

Even the ‘better minds’ in the media just don’t get it, writes Albrechtsen:

Howard is invariably depicted as an embarrassingly dotty, dribbling old one-trick pony forever shamed from political life by the 2007 election loss. For them, Howard represents everything they, the educated classes, despise: flexible workplaces, strong border control, moderate climate change policies, indigenous intervention. And so on.

They failed to comprehend the differences between Howard’s 2007 election loss and Paul Keating’s drubbing in 1996. Mainstream Australians stood ready with baseball bats to boot Keating, his Italian suits, antique clocks and Mahler CDs out of office in 1996. Meanwhile, the educated classes cried into their chardonnay at the rise of a balding, nerdy chap in thick glasses who espoused family values and torpedoed political correctness.

In 2007, only the educated classes had their baseball bats at the ready for Howard. Most Australians did not harbour visceral hatred towards him. While Australia’s second longest serving prime minister certainly overstepped the mark on Work Choices, his bigger problem was overstaying his time in office. After 11 years as PM, Australians gave the new guy pretending to be Howard-lite a go. When they worked out Kevin Rudd was conning them, the battlers turned away long enough and swift enough for Labor to switch to a new face.

So why, she asks, “if Howard is such a fossil from the past, has Julia Gillard mimicked the former Liberal PM on the critical issues in this election campaign? “

When Gillard shelved the emissions trading system, she signalled she is browner than Howard. Likewise, Gillard copied Howard’s strong borders policy by proposing offshore processing of illegal immigrants and echoed Howard’s policies on Afghanistan and the US alliance. On ABC1’s Q&A on Monday night, Gillard — the architect of waste and mismanagement within the $42 billion schools building program — continued the me-too caper she started early on in the campaign, lining herself as the natural heir to Howard’s record of sound economic management.

In other words, Gillard knows this election will be decided in the homes of Howard battlers. Issues that concern Australians in the sun-belt seats of Queensland and western Sydney are very different to the left-of-centre agendas pursued by those in inner-city seats where our media elites work, live and practise pilates.

So how will Howard’s legacy play out in the polling booths on Saturday?

For much of the media, the prospect of Abbott becoming prime minister on August 21 is as repugnant as Howard winning in 1996. Mesmerised by Labor’s latest messiah, they speak about the “sparkle” in Gillard’s eyes. For them, a secular Gillard who pretends to be a conservative is far more preferable to a Catholic Abbott who is the real thing.


The rest of Australia may beg to differ. In fact, it didn’t take long before Gillard started to look more Titanic than messianic. Witness her embarrassing call for help from Kevin from Queensland. Gillard and the number crunchers now know that Gillard for PM is not winning over voters in those critical Queensland seats no matter how much she talks about understanding the stresses of family life, balancing the family budget, buying that new pram and paying for those music lessons. She now depends on the man who she politically assassinated, a church-going family man, to pull Labor over the line. The question is whether Queenslanders are awake to Labor’s latest conservative con.

Eras beginning and ending

Welcome to my new blog.  A self-confessed technophobe, I thought it high time I ventured into the blogosphere and joined the era of new media.  I plan to comment here from time to time on public policy, economics and matters of related interest. 

The launch of this blog coincides with the end of another era, a very significant one in the history of New Zealand business and public life.  The death last week of Sir Ronald Trotter, one of New Zealand’s true heroes, saw hundreds of tributes flow from friends, colleagues and admirers from around the world.  Among his many leadership roles in business and public affairs, Ron was the founding chairman of the New Zealand Business Roundtable and led the business community through a necessary period of profound and painful adjustment to the benefit of New Zealand as a whole. 

In 1995 we inaugurated the annual Sir Ronald Trotter Lecture in Ron’s honour.  The inaugural lecturer, Chicago Professor Richard Epstein, arguably the most brilliant legal scholar of our times, wrote last week of respect for Ron that “comes from a life dedicated to an excellence of character and judgment and of good deeds that are universally known and respected.”

Yesterday family and friends packed Old St Paul’s in Wellington for a most fitting and uplifting send-off that Ron himself would have thoroughly enjoyed.  I was honoured to be invited by the family to make this tribute to Ron.  As Ron’s long-time colleague Sir Roderick Weir noted, Ron rose to the top of business because of his wonderful nature: “Everyone liked him”, Rod said.  Ron will be greatly missed.