OnPoint by Keith Ng

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OnPoint: Spoonfuls of sugar

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  • rodgerd,

    I'm interested that you appear to think "lifestyle" doesn't count, only income. Really?

    If only income counts, people moving to Oz are muppets. They could be getting way richer in Europe or North America.

    Wellington • Since Nov 2006 • 512 posts Report Reply

  • rodgerd,

    In the end, I don't think your grandchildren are going to look back on us with too much generosity

    Who's we, white man? I'm part of the generation who's paying for the mess built up from when people voted Nordy out for haviung a balanced budget in favour of debt binging until recently. I'm with my grandchildren.

    But I guess that would require a little more than sound bites designed to scare the crap out of people, wouldn't it?

    There's also not turning into a pissy bitch at the drop of a hat, so you both have something to work on.

    Wellington • Since Nov 2006 • 512 posts Report Reply

  • Jackie Clark,

    just applauding

    Mt Eden, Auckland • Since Nov 2006 • 3123 posts Report Reply

  • Anne M,

    a politically mature debate would involve reframing the debate to focus on the quality of public spending rather than the quantity.

    A politically mature debate could include both.

    Since Nov 2006 • 101 posts Report Reply

  • Philip Wilkie,

    a politically mature debate would involve reframing the debate to focus on the quality of public spending rather than the quantity

    Agreed. Unfortunately such a debate might demand a level of thought and mature restraint to which blogland appears quite unaccustomed.

    Moreover the suspicious lefty mind rather tends to interpret a right winger saying "quality spending" as "spending cuts"...and many large govt expenditures (superannuation being the obvious one) have no obvious sense in which we might measure "quality". Especially when the call for "quality spending" is followed by hand waving vagueness and a thumping policy vacuum. If seriously pushed the right wing thinking might sometimes admit to a Victorian policy of "if we give them less money they will spend it smarter". Way to go.

    The six big items on the govts list are super, health, education, welfare, infrastructure and defense that between them account for about 80% of all expenditure. Any reframing the debate must focus on these items first. A tramper looking to reduce their pack weight is told to first of all examine the "big three", sleeping bag, pack and shelter; it is only after these have been optimised does it make any sense to start trimming back the handle on the toothbrush.

    Cullen to his credit has done more to make superannuation sustainable than any other Finance minister in all of our history; and given that the retired form a voting wedge that no party can defy at the ballot box it is hard to anticipate that this expenditure has much scope for cutting.

    Education. The bulk of the costs are for salaries, not much scope for "quality" reductions unless you can detail a plan for shedding the total head count in the sector.

    Welfare. Is pretty much at historically low levels, even when you combine unemployment and sickness beneficiary numbers. With a drum tight labour market there is not much scope for improvements here.

    Infrastructure. We still spend too much on roads, but the electorate seems to have an insatiable appetite for them.

    Defense. If we cut this any more we won't have any.

    Health is the nightmare. Even the extra $1.4b tossed at the DHB's this Budget will barely touch the sides. But again the big cost in this sector is wages and a global shortage of labour supply putting endless pressure on them.

    Where to go guys? I remain unconvinced that "privatisation" is a useful path as it fails to yield any significant long term nett efficiencies. Quibbling over how the public and private sectors get to divide up the pie are quite fruitless. The real debate should revolve around our structural imbalances; the lack of capital formation in NZ, the lack of investment in productivity and value creation, high interest rates, low wages, and the continued to struggle of the NZ business community to engage the global economy as equals.

    Since Mar 2007 • 23 posts Report Reply

  • Malcolm,

    We could get rid of our medical schools, and just import doctors from overseas. That would save bucketloads of money at both the schools themselves and the clincal teaching centres.

    Since Apr 2007 • 69 posts Report Reply

  • Anne M,

    You're not serious Malcolm? What about NZ medical research?

    Since Nov 2006 • 101 posts Report Reply

  • Nobody Important,

    What scares me about the Kiwisaevr scheme is that it is not govt guarranteed. If the fund you enter craps out in 10 years because the provider was crap then you are left with nothing. My father entered a super scheme in the 70s that yielded nothing because the reputable people running it were charging reputable fees and investing in reputable stocks that turned out to be not so. I lost my life savings in the 87 sharemarket crash (too young to know better I put all my money in shares prior to my first OE - duh!!)(it was the prevailing wisdom at the time). In the 90s I bought my first house and impressed with the capital gains I started putting more funds into rental property. 4 years ago I sold the 2 rentals and put the money into the sharemarket; because even back then the govt was beating the drum that property investment was bad and they were going to move to curtail it. Unfortunately the free market said otherwise. Anyway, my money was put into a diversified portfolio and has seen paltry return since then. If I'd stayed in property I would have doubled my money.
    MY POINT IS THAT Joe Kiwi knows jack about investing (hence they spend instead of saving) and so Kiwisaver Providers will have a field day. How can they lose? You have to put your money somewhere so you pick the brand you trust and give them your money each payday. They take out the fees and the performance bonuses and send you quarterly newsletters telling you how well your investment is doing. But with a little asterisk pointing to a footnote on Page 17 you really don't understand.

    Wha wha wha .... I don't know what the answer is. It's certainly not having the govt guarrantee the banks!! I'm just venting I s'pose ... buggar this, I'm off for a latte!

    expat • Since Mar 2007 • 319 posts Report Reply

  • Malcolm,

    You're not serious Malcolm? What about NZ medical research?

    Well, maybe I'm being a bit naughty. But what is happening at the moment? Heaps of doctors go overseas, while we import heaps more from other countries. So why are we training all these departing doctors?

    There is some kind of systemic problem, to do with debt, salaries and opportunities. When big student fees were introduced, the argument was that they reflected the private benefit of eduction. With hindsight, we can see that has encourged people to chase the (higher) private benefit overses, and we have found that actually there is a substantial public benefit in actually having some doctors.

    To me, both National and Labour have ignored the fact that we are a small country in a global labour market. That was ignored by National's labour market and education reforms in the 1990s, and is being ignored by Labour's current income tax policy.

    My opionion is that our health system would work better if we had less tall poppy syndrome, and less envy of successful people.

    Since Apr 2007 • 69 posts Report Reply

  • Anne M,

    Well, OK. Phew in fact, I thought you may have been really serious.

    I'm not sure that young doctors sloping off overseas is a 100% bad thing - for a start they get to learn on someone else. Like the 2% death rate in stomach bypass operations - nearly all occur in the first 20 ops. So they can become skilled overseas.

    And lots of them do come back - how many PAers have worked or done post-grad overseas and then bought those skills back to NZ. more than a few of us.

    But if you do want to retain them, how about bonding schemes, whereby fees are paid, scholarships given in return for a commitment to spend a certain amount of time doing less popular work (GPing?) or in less popular places?

    Since Nov 2006 • 101 posts Report Reply

  • Craig Ranapia,

    There's also not turning into a pissy bitch at the drop of a hat, so you both have something to work on.

    *cough* You were saying, dear? Odd as it may seem, I have my doubts that either Michael Cullen or John Key lie awake at night trying to figure out new depths of depravity they can bamboozle the stupid peasants with. I'd just like Messers Cullen and Key to at least pretend they think the same, and perhaps credit the rest of us with some smarts.

    North Shore, Auckland • Since Nov 2006 • 12073 posts Report Reply

  • Anne M,

    But why should they credit us with smarts? The evidence tends to point the opposite way.

    Since Nov 2006 • 101 posts Report Reply

  • Malcolm,

    I'm not sure bonding will work. Not a bad idea in theory, but people can always buy their way out of bonds. I think making people feel valued and rewarded will work better.

    I'm also not sure how many Doctors do come back from overseas, but admit to having no data on the issue.

    Since Apr 2007 • 69 posts Report Reply

  • Anne M,

    But couldn't some contract lawyers write a really tight bonding contract? With "you can't pay it back and weasel out, not ever" clauses?

    I've no idea on the number of returning doctors either, beyond the traditional "I know a guy..." story. But the data will be somewhere.

    Since Nov 2006 • 101 posts Report Reply

  • Muriel Lockheed,

    What scares me about the Kiwisaevr scheme is that it is not govt guarranteed.

    Don't join then - no-one is forcing you to.

    Wellywood • Since Nov 2006 • 44 posts Report Reply

  • Nobody Important,

    What scares me about the Kiwisaevr scheme is that it is not govt guarranteed.
    Don't join then - no-one is forcing you to.

    Oh very nice Muriel, did you read my whole comment? I consider myself reasonably savvy (despite most of that coming from learning from my mistakes) what I'm worried about is the average punter who really doesn't know much. (Or maybe they do, it's just most of my friends and acquaintances that seem clueless.)
    Anyway, here's a very likely scenario: some time in the future the govt makes Kiwisaver compulsory, and some time after that it signals that in 20-30 years time that's all the govt super you're going to get when you retire.
    So in 20-30 years time we've got two classes of retirees: those that did well with their Kiwisaver provider and those that didn't. The latter will include those that opted out in the beginning, meaning their nest egg is tiny.
    So what happens after that? Much gnashing of teeth and liberal angst about what sort of decent society are we that we can let old folks suffer like that? So once again the govt steps in to help those that need it and those who squirreled away their nuts gets pinged (twice).
    It's very much like the current means test for old age care. Old folks who go without to pay off their houses have their houses sold to pay for their care (ie you must use up your own assets before the govt will pay). Those that didn't but instead choose to travel (or whatever, ie spend up and enjoy themselves) still get their aged care paid for by the govt. And can you blame them?
    Which is why I'll be joining Kiwisaver - all that govt money being tossed in to start with is money I wont refuse. How long I keep contributing will depend on the return and the incentives.

    expat • Since Mar 2007 • 319 posts Report Reply

  • rodgerd,

    So in 20-30 years time we've got two classes of retirees: those that did well with their Kiwisaver provider and those that didn't. The latter will include those that opted out in the beginning, meaning their nest egg is tiny.

    Not much different from now, then, is it?

    Wellington • Since Nov 2006 • 512 posts Report Reply

  • rodgerd,

    Like the 2% death rate in stomach bypass operations - nearly all occur in the first 20 ops. So they can become skilled overseas.

    A friend of mine is having spinal surgery this year that he turned down 5 years, because the failure rate (where failure = paralysis) has dropped from a few in a thousand to a few tens or hundreds of thousands, simply as surgeons have become more expereienced.

    Wellington • Since Nov 2006 • 512 posts Report Reply

  • rodgerd,

    But if you do want to retain them, how about bonding schemes, whereby fees are paid, scholarships given in return for a commitment to spend a certain amount of time doing less popular work (GPing?) or in less popular places?

    Go even more radical and start marketing our medical training overseas. Free if you spend 5 - 10 years working in NZ. Allow anyone with appropriate entry quals and decent English skills from NZ or overseas to train here.

    Wellington • Since Nov 2006 • 512 posts Report Reply

  • Ben Austin,

    It could all be moot if the plan is gutted in 15 months, assuming National can get a governing coalition. This may just become another left/right "lets change it radically everytime we get power" situation like employment or ACC.

    London • Since Nov 2006 • 897 posts Report Reply

  • Keith Ng,

    What scares me about the Kiwisaevr scheme is that it is not govt guarranteed. If the fund you enter craps out in 10 years because the provider was crap then you are left with nothing.

    It's not like they're just going to spend half of it on Enron stocks and take the other half to the tracks. With funds like these, the risk is spread over a whole range of stuff. You'd need something awfully, irrecoverably, globally catastrophic to make it crap out, and if that happens, you'd have bigger things to worry about. It might not achieve its maximum gains, and you might be able to do better investing elsewhere, but it's nothing if not safe.

    Anyway, here's a very likely scenario: some time in the future the govt makes Kiwisaver compulsory, and some time after that it signals that in 20-30 years time that's all the govt super you're going to get when you retire.

    It could all be moot if the plan is gutted in 15 months, assuming National can get a governing coalition. This may just become another left/right "lets change it radically everytime we get power" situation like employment or ACC.

    Relax... nobody's going to get nuts when it comes to retirement. They know all you babyboomers are only going to get crankier from here on out. Thank god you'll all be too cool to join Greypower.

    In the end, I don't think your grandchildren are going to look back on us with too much generosity. In their own ways, both Key and Cullen want us to believe there is such a thing as a free lunch -- as long as you don't think too hard about who's eventually going to be stiffed with the tab. And why should they: Baby Boomers and Gen Xers vote. Children don't. And why should we? It's a very comfortable lie to believe.

    I thought the whole point was that Cullen was sticking us with the tab right now?

    Auckland • Since Nov 2006 • 535 posts Report Reply

  • John Farrell,

    Are any retirement schemes government guaranteed?

    I would think that the temptation of national to fiddle with Kiwisaver would depend on the takeup rate.

    Dunedin • Since Nov 2006 • 217 posts Report Reply

  • Malcolm,

    Gak! SST has a feature. Apparently 80% of new doctors are foreign trained. Go figure.

    Since Apr 2007 • 69 posts Report Reply

  • Anne M,

    Apparently 80% of new doctors are foreign trained.

    Please save me from having to read the SST - are these "new doctors" new to New Zealand, ie already with plenty of experience or are they "new" as in straight out of school?

    Since Nov 2006 • 101 posts Report Reply

  • Danyl Mclauchlan,

    SST has a feature. Apparently 80% of new doctors are foreign trained.

    How strange - it's been my understanding that all our new migrants are unskilled, dole bludging asian terrorists.

    Wellington • Since Nov 2006 • 902 posts Report Reply

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