Green party costings

I kindly received an email via the Green party yesterday pointing me to the costings on their website.  I see that the costings (here) were looked at by two independent economic consultancies – BERL and Infometrics (which is my workplace).

I haven’t been involved with any of it, or talked to any of the people involved.  So I’m going to give my views.  This is independent of any affiliations I have of course – on this blog I prefer to call a spade a spade rather than worry too much about what other economists think of me ;)

One thing I will point out, after reading the Infometrics report for the first time, is that they don’t say the things in the Green’s summary – but if you do a costing for a party, that is the way they will sell it.  The BERL tables on the other hand do imply what the Greens take from them – and that is very disappointing as they are misleading.

Still I’m getting ahead of myself.  Remember what this blog is like – it isn’t that policies are “bad” or “good”, those statements largely require value judgments.  Instead, there are trade-offs, and also for certain policy aims different policies may be a more direct way of getting to those aims.  Those are the types of constructs we’ll work over when looking at all party policies, and as a result the tone will sound critical irrespective of whether I like the policy or not – as almost all policies do have losers, which politicians understandably don’t want to talk about.

Something else I’ll note – if any other party does something like this, could someone send it to me.  I am very busy at this moment and struggle to keep up with political news on top of the types of things I am focusing on for work :)

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Minimum wage: International comparisons

Via a Timothy Taylor blog post, the following couple of graphs:

And an important priviso:

Moreover, minimum wages across countries should also evaluated in the context of other government spending programs or tax provisions that benefit low-wage families.

None of this is to say what minimum wage is right or wrong, or what set of social and economic policies are right and wrong.  It is instead to note that, relative to mean and median income, NZ’s minimum wage is very high by international standards.  Make of that whatever you will – and do so in the comments if you like.

My views on the minimum wage will appear at another time – far in the future.  For now all I want to share are graphs.

Greens announce greater income redistribution: What does it mean?

I have been remiss talking about this election – as I am a touch bogged down.  My apologies – I’ll try to write about things when I see them.

As a result, here is the Green’s plan to increase the level of income redistribution.  From the Stuff article:

  • 3 per cent – of taxpayers affected by the Greens new top income tax rate of 40 percent on every dollar earned above $140,000
  • $500m – the extra revenue raised every year from their new tax rate
  • $620 million  – raised from hiking the trust tax rate to 40 percent and limited tax avoidance through trusts
  • $60 – a week extra in a Childrens Credit, which would extend the In-Work TAx credit to parents currently ineligible
  • $2,200 – in a Parental Tax Credit over ten weeks for new born babies whose parents don’t get Paid Parental Leave.

The Greens are a left-wing party, and they are suggesting greater redistribution through the tax-benefit system, and less work testing for benefits.  That is consistent, good good.

Of course the costing are not perfect, but political party costings never are.  At least, on the face of it, they aren’t blatantly ridiculous.

Update:  Good post by Seamus Hogan here.  I’m surprised we made so many of the same points without communicating – there must be a strong econobond going on.

Now as they are a political party they are keen to talk up the benefits, but I thought I should note a few countervailing factors here:

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Crowd funding, Trade Me and Network Externalities

Very exciting news last week that New Zealand’s first two equity crowd funding platforms have been licensed. See PledgeMe’s (henceforth PM) blog announcement here and Snowball Effect’s (henceforth SE) FB announcement here and the FMA’s announcement here.

Exactly what role crowd funded equity will play in NZ is going to be very interesting to watch:

  • Will it fill a gap in the market and mean businesses get funding that they otherwise wouldn’t have? or
  • Will it merely substitute existing funding channels but provide a ready made army of brand ambassadors for the companies that receive funding?

I imagine it will be some combination of the two, but that’s not what I want to talk about. I wanted to briefly touch on how the market structure for crowd funding platforms might evolve.

We’ve had two licensees accepted and I have read somewhere that there are another two before the FMA (plus one combined peer-to-peer lending/equity crowdfunding platform). The question I have heard a few times is whether we can sustain 5 platforms and if one will rise to the top. In this regard, I have heard TradeMe given as an example that one platform will win out.

I’m not sure this is right.

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