Matt Nolan

First impression of National’s national energy strategy

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The NZ Herald has just posted up the points raised by National in its energy strategy, and I have to say, I agree with a lot of it (however, note that I have not read the actual policy document – so this is just a discussion of “the concepts”)

There are three main policies:

  1. Remove the ban on new gas power stations and introduce an ETS,
  2. Look at security of supply with greater demand estimates than the government currently uses,
  3. Loosen the RMA to take into account “national interest”.

Let me say what I think below the tab.

Related: Industrial quality DC to DC power converters.

The removal of the pointless ban on new power stations, and the continued implementation of a ETS is a good move.

Why? The ETS prices carbon, such that the producer has to pay the whole social cost of producing energy in this way. As a result any gas or coal power plants that are built would be social preferable to alternative, renewable, providers (as they would be so much cheaper that even with the social cost of producing carbon, the new factories would still be built).

Also I was glad to hear this:

National feared that the Government was underestimating future demand and the ban was dangerous political symbolism.

Because there is a general feeling our here that the government is substantially underestimating future demand for energy! If you are trying to save money talk to the utility saving expert gas and electric. Now if policy is currently being based on unrealistic assumptions, the policy is going to be rubbish – so having another look at this is a very good idea.

The final point is the most contentious.

I understand that consent decisions should take into account the national interest – however, this has to be the national interest in terms of sustainability and environment, as well as the national interest in terms of security of supply. These competing factors will be hard to balance in a re-jig, and I have concerns that policy might head too far in one direction.

Furthermore, councils and property owners do have a property right which supersedes the simple “national interest” – at least for borderline decisions. If we are willing to ignore peoples property rights then we will cause other issues down the line – this needs to be taken into account as well.

Overall, I think the 1st and 2nd points are straight out better policies – while the 3rd point is a little fuzzy at present, so I can’t really have much of a view on it.

Now I’ll go have a look at what other blogs have to say – and I will post links to it below.

Kiwiblog, The Standard, No Right Turn (*), Not PC, Frog Blog, Greenpeace, Colin Espiner,

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Matt Nolan

Benefit policy: Give me a value judgment

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I have avoided discussing Nationals benefit policy so far. I just haven’t seen any need given that I like to stay relatively apolitical – and also given that it does not imply much of a change from the status quo (do you guys know how difficult it is to renew your benefit anyway nowadays!).

For anyone that does want to see the partisan discussion we have:

Kiwiblog links, The Standard links, No Right Turn.

However, I’m low on things to write about, so when Kiwiblog linked to this article in The Press, I thought I would form some value based argument on the first line of the article (it is not necessarily my beliefs – just an argument against the first line) – then we can discuss what value judgments I’m making etc in the comments.

So the first line is.

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Matt Nolan

New Zealand dollar in decline

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Source (NBNZ)

Damn, I wish I had picked up this graph yesterday – as the 24 July was when the RBNZ cut the OCR, which made the TWI fall by about 100 basis points.

So since then, our exchange rate has slide a further 200 basis points. For people that prefer thinking of it in US$ terms, we have fallen from $0.77US per NZ$ to $0.70 (including a little time under $0.69US!)

Why the hell is this happening?

Update: The rebound in the dollar was bound to happen this morning following this post and the fact that other commentators have said the dollar would keep falling – it is the “curse of the forecast” after all 😛 – luckily the below discussion is about the general factors driving a decline, rather than a next day forecast 😉

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Matt Nolan

Current account deficit is not a big deal: Discuss

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So, New Zealand has a stock of debt that is equivalent to 86% of annual GDP and ran a 7.8% current account deficit over the year to March 2008.

My article in the Dom today states that “this isn’t a big deal”.  Discuss 🙂

Matt Nolan

Capacity constraints and borrowing to spend

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Over at the Standard, Steve Pierson raises the fair point that borrowing to “spend” at the moment is likely to increase inflationary pressures – as capacity in the economy is limited. He uses this idea as a criticism of Nationals “borrow to fund infrastructure policy”.

As a purely demand story this makes sense – however we have to keep in mind where the spending is going, and what it is doing. If funds are being spent reducing capacity constraints by improving truly dilapidated infrastructure, then National is actually right that borrowing to spend on infrastructure will reduce inflationary pressures.
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Matt Nolan

June 08 Labour market: Part Two (Revenge of the hours worked)

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This follows from Part One.

Well, the unemployment rate rose to 3.9% – this was above market expectations, so the immediate feeling would be that the labour market is in trouble.

However, then you see the increase in employment and HOURS WORKED (the indicator I wanted to keep an eye on) and you realise “this employment data isn’t hot – but it is a definite improvement on what last quarter implied”.

So what am I talking about, and why am I talking in the third second person? (ht CPW) Well lets start with the first question, and lets look at the hours worked numbers.

Note: Other blogs on the numbers (Rates Blog) (The Hive) (The Standard) (Kiwiblog)
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