Goff’s speech

The speech is here.

First the bad:

Contact Energy was sold by National in 1999. Since then $1 billion in profits from it has gone out of the country to foreign investors. 

A meaningless figure unless you know what it sold for – which was $2.3b. That $2.3b may have al gone towards paying off foreign debt. Goff’s argument is stupid and misleading. He did the same in January:

“Foreign-owned Edison made a lot of money out of the sale of Contact,” Phil Goff said. “It sold its 51 per cent stake in Contact for nearly $1.7 billion in 2004 when the whole company was sold for $2.3 billion in 1999.

At least he mentioned the purchase price here, but again Labour forgets to mention the cost of capital or equity. If I was generous I would say it is because none of them have a business background and really do think money grows on trees.

Edison’s average return on their investment is a bit under 8% per annum. That might not even have covered the cost of their equity.

That $2.3b in 1999 is worth $5.8b in 2011, if you assume a 8% cost of equity. You can not compare prices a decade apart without including the cost of capital/equity.

John Key and Bill English promised in the election campaign they would not cut KiwiSaver.  

They lied. 

On Friday they passed legislation to do just that. 

Goff is flat out wrong here.In the 2008 election campaign National explictly promised they would cut KiwiSaver, and they got elected on that mandate, and implemented it.

And in 2011 they are again saying they will make changes to KiwiSaver, and giving people the chance to vote on them before they come into effect in 2012 and 2013. The total opposite of what Mr Goff did in Government which was to not give the public a vote on new policies.

I can’t today promise to restore KiwiSaver completely.

Which he would do if he really thought it was the wrong decision.

But I am telling our top earners today that they need to pay a little more  to help reduce our debt and get the economy growing. 

Those earning over $60,000 (those Labour deemed rich last time) now pay around 90% of net income tax. And Goff says this is not enough.

In our first year, Labour will increase the minimum wage to $15 an hour to ensure that people who work for a living get a fair living wage. 

And who is going to hire a 16 year old with no skills and no experience at $15 an hour? Wouldn’t it be better to allow a 16 year old to take a job at say $12 an hour and actually gain some experience so then in their next job they may earn a bit more?

There are now 77,000 young people under 25 who are unemployed. That’s one in four – one in three in the Māori and Pasifika community. 

And I plan to make it worse by pricing them out of the Labour market. Idiot.

We will introduce a R&D tax credit initially at 12.5%. That will cost an average of $160 million a year – $800 million over five years.

It is a good thing to have the country undertake more research and development. That is an important part of increasing productivity and economic growth.

However a tax credit is a fairly blunt tool. It can often lead to companies just trying to gain the tax credit, without actually doing innovative research and development. The tax credit can become the goal, rather than a catalyst.

I welcome the $180m/yr on R&D but am not convinced an across the board tax credit will be that effective in lifting our R&D.

In another example of poor economic choices, National left every New Zealander having to pay for their transport and electricity emissions,

Goff is wrong again. National is subsidising the transport and electricity emissions so that consumers only pay half the cost of their emissions. Labour’s policy has been to remove that subsidy which will see power prices increase 3% and petrol prices by 3c/. They don’t mention this very loudly when complaining about the cost of living, as it undermines their rhetoric.

but exempted farming from paying for their agricultural emissions. That is not fair.

Having the taxpayer meet the cost simply means that the pollution goes on for longer.

The exemption removes the incentive to agriculture to move more quickly to reduce global warming gasses which account for 48% of New Zealand’s greenhouse gas emissions. 

Labour is proposing to restore the entry date of 2013 for agriculture to come into the Emissions Trading Scheme. This means farmers will pay for just 10 per cent of their 2005 agricultural emissions, plus any growth since then.

We don’t believe this is asking too much. Agriculture is important but all sectors need to pay their fair share. 

This is a rather stupid decision. Until there is some scientific breakthough on reducing methane emissions from cows, bringing agriculture early into the ETS will merely make NZ farmers uncompetive with their competitors, and lead to a drop in exports.

It is not about whether a sector is important or not. It is about whether a sector has external competitors. This is basic economics again.