Monday, 20 October 2014

Nation building through flag change


Parliament was formally sworn in today, and the "Speech from the Throne" will follow tomorrow. It's likely that the re-elected Government of John Key will formally commit to passing the legislation for two referendums on New Zealand's flag, to be completed by the end of this parliamentary term. There will be campaigns by both sides, and it won't come as much of a surprise to anyone that I'm involved in the "Yes" side, for change.

A debate that has sporadically cropped up in the last forty years* may finally come to a resolution. It is yet another step in New Zealand's long road to nationhood, an assertion of our independence and identity to the world. I fully understand that many - especially those who have actually served for New Zealand - feel a legitimate sense of connection to the current flag. It would be foolish for anyone supporting change to deny these strong feelings. Those sort of feelings are actually exactly what supporters of change are trying to engender - a shared sense of nationhood, not one that only appeals to one segment of the population.

I realise these reasons are going to be shunned, as they have been often in the past, by the political elite. They will protest there are always more important issues. Child poverty. Climate change. Unemployment. Healthcare. Diversifying the economy. Dealing to ISIS. No-one is claiming any of these issues are more important to the flag, and it's a false dichotomy to claim that debating the flag means any of these issues can't be addressed. It's simply convenient for some segments of our elite to claim that it is.

They will argue it's simply a distraction to enable John Key to push other issues. Or that it's more about the Prime Minister's legacy than a genuine desire to continue the process of nation building (I'm fairly sure from his first speech on the issue it's a mix of both - but then, so what?). Or that it's a waste of taxpayers' money, for a change the public hasn't asked for. These arguments always crop up - it's the context that changes. I remember very vividly the same claims being flung at Helen Clark over the Supreme Court, claims that were untrue.

What they emphasise is that opposition to change, outside of those who have actually served for New Zealand, is largely negative and reactionary. It will focus on proposed alternative flags, cringing as it does at the fact that we could replace a flag designed by someone who apparently never even visited New Zealand** to a flag designed by one of us. I'm confident we'll find a design that appeals and connects to many - and hopefully a majority - of New Zealanders.

We're only talking about New Zealand's national flag. Some may act like we're committing a massive historical or religious disservice. It's worth pointing out to them that everyone still has the right to fly whatever flag they damn well choose. If we need the Union Jack on our flag to remind us we were once a British colony (of course, we don't - the fact I'm writing in English about our Parliamentary democracy shows otherwise), I'd suggest there's deeper problems. And let's be honest, a large part of the motivation for changing New Zealand's current flag is that it really isn't ours. It's the British Blue Ensign.

So I'm going to be campaigning for change over the next two or so years. There are plenty of potential pitfalls - the biggest being division over the alternative flag. This is a positive campaign, and with a strong campaign I'm sure we can earn the support of enough New Zealanders to bring it about.

*The first attempt at having a policy on the issue was a remit that went up - and failed - at Labour's 1973 conference. Oddly, Norman Kirk was previously (while in opposition) in favour of adding a Kiwi to the flag.

**Albert Markham Hastings, the guy who designed the current flag, was stationed at Sydney with the Royal Navy, but I can't find any record that he visited New Zealand.

Friday, 17 October 2014

Wages in Upper Hutt

In this week's Upper Hutt Leader there's a report that Upper Hutt has some of the lowest wages in the Wellington region. The report didn't note these wage rates are for jobs advertised in Upper Hutt, not necessarily what workers living here are paid. A large number of people - about 50% according to the Hutt Chamber of Commerce - live in Upper Hutt but commute daily to work in Wellington City.

The report doesn't take into consideration cost of living either. What the figures do show is that more needs to be done to attract businesses and their well-paid jobs to Upper Hutt. The council's recent economic development incentives are a good start on this.

Monday, 13 October 2014

Labour's leadership election

The Labour leadership election is an ongoing circus, largely driven by the media and personalities involved.

Back in September last year I argued that having the leader directly elected by party membership (and not just the party caucus) was a good thing - a decision made by the wider party would unite them behind the leader and result in a stronger outcome, as had been the case with the UK and Canada's Conservatives, both of whom directly elect their leaders. The same is sort of true for the leader of the UK Labour Party.

Judging by how New Zealand Labour went at the general election and how this leadership election is going for them, I'm not so sure that assessment is correct. As I said last year, the segmentation (i.e. giving the unions a vote as well as members and the caucus) exposes things the party doesn't necessarily want exposed, especially the division between caucus and the rest of the party, which has handicapped David Cunliffe. The UK Labour Party allows individual members of "affiliated" groups (unions and socialist societies*) to vote as if they're ordinary members of the party.

Perhaps a straight "one member, one vote" system along the lines of the sort of system the UK Labour Party uses is best. But that would require NZ Labour to lesson the influence of the unions, not something I think they're likely to do. Either way, it comes down to the personality of the elected leader. So I'm sure the benefits of having members involvement in the election of a new party leader are yet to be seen for NZ Labour - and may not be for some time.

*Apparently they still exist.

Wednesday, 8 October 2014

New Zealand's income tax rates over time

During the election campaign it was often asserted by the opposition that New Zealand was a more equal society in the past simply because our personal income tax rates were higher. The pinnacle of this argument was the comparison of John Key's childhood in the 1960s, where it was claimed the welfare state was in a much better state - i.e. it provided more support for those at the bottom - as a result of the alleged higher tax rates. Was this actually the case?

On income tax rates, The Treasury has a fascinating paper from September 2012 looking at ways in which an "Average Marginal Tax Rate" (AMTR) could be calculated for New Zealand's personal income taxes. AMTRs come from a paper by Robert Barro and Chaipat Sahasakul at Harvard University 1983. They are:
..income-weighted average of individual-level marginal tax rates, having first accounted for various factors that allow effective, rather than statutory, marginal tax rates to be estimated.
The critical part of this definition is that the average is an income-weighted average, not simply an average across all taxpayers of the percentage of the all the income tax collected.

Here's what New Zealand's top effective marginal tax rates looked like from 1907-2009:

Top marginal tax rates, 1907-2009
As you can see, the top personal income tax rates appear to validate the claim that income taxes were higher in the past. After all, it's pretty clear from the graph that our top tax rate today is down to about where it was in the 1940s. But this ignores people's incomes and more specifically whether they would actually pay the higher tax rate.

This is where income distribution data comes in. Treasury uses the New Zealand Official Year Book (NZOYB) data up until the early 80s, and IRD data from then on. The factors they look at are:
  1. how income is distributed across the tax brackets/rates for which we have tax schedule information;
  2. how exemptions against tax are distributed across income levels and tax brackets; and
  3. how far NZOYB income distribution data, generally only available for tax filers until the PAYE regime from 1958, can be supplemented to capture non-filers’ incomes.
So what does that mean over time? Does it show that income taxes that people actually paid were higher in the 60s? Here's the paper's key graph:

New Zealand's Average Marginal Tax Rates (AMTR) 1907-2009 Source:
The Treasury
As you can see. AMTRs rouse slowly from the 1920s then rapidly during World War II, but didn't drop substantially. In the 1960s - when John Key was growing up - they dipped substantially and then increased slowly again up to the early 1970s. The 70s saw a rapid rise in AMTRs, largely driven by income tax brackets not being adjusted. The peak was 1982, when the AMTR hit 44%. From then onwards it was sharply down again, bottoming out in the early 1990s and staying at about the 30% mark.

Clearly, the income tax rates people actually pay today are not substantially greater than they were in the 1960s. So it is a myth that when John Key was growing up people paid more income tax. We should bear this in mind whenever it's claimed that a higher rate of income tax means lower inequality and a better welfare state.

Tuesday, 7 October 2014

Solar energy: a great Kiwi innovation

Source: Calder Stewart Roofing
Since I was on the topic of the explosive growth of solar energy (and why it doesn't need to be subsidised to become everyday technology in our houses) I've chatted to a few people in the industry about it further. It turns out that our own Calder Stewart has created a roofing product called Solar Rib, which is a normal ribbed steel roofing panel that includes a Photo-Voltaic Laminate (PVL) panel in between its grooves.

PVL is certainly a better solution than fixed frame solar panels. From the technical specifications:
Thin film amorphous PV Solar Laminates are flexible solar modules that are bonded directly to the roof. No glass. No frames, no support structure. Using PV Laminates is not only better for your wallet, it is also better for the environment. It takes less energy and few materials to produce a PVL laminate than what would be required for a crystalline module of the same power, making it a more sustainable solution.

What a great example of Kiwi innovation.