Deeply unserious country

Every bit of this seems insane. And people wonder why productivity is falling through the floor. 

Energy News reports that the Environment Court finally threw out Allan Crafar's appeal against a solar farm.

From the story:

• Consent was granted in 2022.
• Crafar appealed November 2022. On what grounds? That turning a dairy farm into a solar farm would mean the effort of turning it into a dairy farm would have gone to waste. In his view, there would be a $30m annual loss to the country.
• Competing experts provided evidence about whether there would be a net national benefit. I don't know why this was a consideration.  
• Bryan Leland, for Crafar, insisted that solar farms ought to have their own backup energy storage.
• James Findlay, for Crafar, claimed that agricultural returns are commonly believed to 'have six-times multiplier effects'.
• Crafar claimed the Paris Agreement means a dairy paddock (in a country that doesn't have a carbon price on ag emissions and in a part of the country trying to push down nutrient load from runoff from dairy farms) can't convert to solar panels because of effects on food production. 
• Judge Tepania dismissed the appeal.

It isn't crazy to object to a land use change that would have substantial adverse flow-on effect on your land use. 

It's nuts that the system entertains objections like this one where there is zero reported real effect - only what amounts to a view that the outfit putting in the solar farm might lose money as compared to keeping it as a dairy farm. 

It's nuts that Todd felt they had to commission an economic analysis to prove net benefits.

It's nuts to invoke Paris Agreement as a reason to block a reduction in dairying. 

And it's darned weird to say that, at current system balance, a solar farm ought to have its own specific backup. When the sun is shining, solar is low-cost power and the hydro lakes spin less water through the turbines, saving it for when the sun isn't shining. 

Deeply unserious system. And environmentalists wonder why National is pursuing a fast-track consenting process that cuts all this crap out (along with potentially less unreasonable objections). 

Afternoon roundup

The end-of-week closing of the browser tabs

• Seeing like a Bank. Superb explanation of bank IT systems, tradeoffs between customer fees and customer experience, how helpdesks actually work, and problems in cobbled-together systems. It explains a lot more than banks. 
• Interesting piece on price dispersion in generic pharmaceuticals. One snip: "Regulations around pharmacy ownership in Australia and New Zealand make them more difficult to compare." Indeed. 
• If you think the social discount rate should be very low, you should support reductions in transfers to the elderly. Forthcoming in Econometrica. 
• The Rocket Lab launch failure a while back comes down to an electrical arc in a power supply under partial vacuum; they're enclosing and pressurising the power supply system. 
• Wellington Council selling its shares in the airport to have less exposure to quake risk seems sensible. 
• Low attendance at school, Covid is given as one reason. Meanwhile, schools still aren't properly ventilated, nobody uses masks, and the government bans boosters for those under 16. Kinda crazy. Government requires scaffolding for jobs where a ladder would be perfectly safe, with company directors liable for risks. But government bears no liability for unsafe schools and prohibitions on full youth vaccination. 
• "What's so scary about Bryce Wilkinson?" The caption under a smiling picture of Bryce. What indeed! Bryce is lovely. 
• An 88 megawatt solar farm blocked in the Mackenzie Basin. There's uncertainty about how some native plants might change because of shading and sheltering from the panels on a sheep paddock. NZ officials do not want net zero. They want a return to the Pleistocene. 
• Turns out that there's a summer camp for training left-wing activists in NZ. Wonder whether the reporting on a pro-liberty version would be as friendly.

Quota management and environmental stewardship

I hadn't seen it put this way before, but it's rather nice. 

Dion Tuuta, Pou Whakahaere (Chief Executive), Te Kotahitanga o Te Atiawa, talked about the NZ Quota Management System at a fisheries symposium in February. The proceedings report paraphrased his comments:

The QMS does something very rare in Aotearoa, as Sir Tipene O'Regan, one of our chief negotiators of the settlement articulates, it blends a treaty right with a conservation system to achieve the outcome of sustainable use, which is a very Māori approach to resource management. So, by virtue of the 1992 settlement, the Quota Management System is the only fisheries management system mandated by Māori.

"The QMS is now 37 years old, and to me that continues to represent kaitiakitanga in action at a national level. It is generally misunderstood, it is maligned by those who oppose commercial fishing, but it has been a tremendous success for New Zealand in moderating unregulated fisheries pressure."

Similar approaches could yet be applied for water and nutrient management.

Carbon capture and storage

Nikki Mandow at Newsroom has a long piece on carbon capture and storage.

It's really getting to be time that we have a regulatory framework in place for it. Sure, there aren't that many huge point-source polluters for capturing from smokestacks, but didn't the government just throw a giant pile of money at NZ Steel while claiming that flipping to an electric arc furnace would have huge effects? They can't both be right. 

And remember that CCS is bigger than just capturing from smokestacks. Lots of techs in development for direct air capture. In Nikki's piece, I mentioned the work Allan Scott's doing at Canterbury on olivine. By coincidence, Works in Progress notes another way of using olivine weathering for sequestering carbon. 

And The Economist figures carbon removal (point-source CCS and direct air capture) could wind up being a trillion-dollar business. 

Nikki gave me the closing word at Newsroom, and I'll post it here. This crap is going to wreck the path to Net Zero. 

A ‘hair shirt’ mentality

Crampton worries CCS has become tied up in an ideological debate between the value of gross versus net emissions reductions.

“The Government has been sending increasingly mixed signals, but I think more recently it has been wanting more focus on gross emissions.

“I don’t know that the climate cares about whether the next tonne of emissions that failed to be in the atmosphere is because someone failed to emit them in the first place, or because somebody sucked them out of the atmosphere directly. So long as you get to the same atmospheric concentration of carbon, it shouldn't matter how you get there.

“It almost feels like there’s this desire on the political side to wear a hair shirt around this, that it’s not real change unless we can feel the burn. It's like it’s cheating, like in their heads carbon capture and storage is somehow getting away from our obligation to reduce gross emissions.

“Even if it’s going to screw up our path to net zero.” 

Morning roundup

We have too many tabs open here at the Crampton Discount Browser Tab Warehouse, and we have to liquidate stock immediately. All the links you can handle at rock-bottom prices.

• Turns out that, entirely predicably, subsidising electric cars gives a pile of money to rich households while doing bugger all to reduce emissions. Just as we told them two years ago. Stupid. 


• I'm not a Ben Sheeran fan, but I'm cheering for him in this lawsuit. Another stupidity long foretold. If you haven't read Spider Robinson on Melancholy Elephants and Infinite Copyright, do attend to that. That's the stakes on the Sheeran lawsuit. 


• Meanwhile, Chris Luxon wants to follow Australia in banning vaping, if National should form government. I'm cheering for the smugglers in this one. I don't know why Luxon's pro-smuggling. On the plus side, I love having something I can cheer about no matter who wins the election!


• The government says it wants a no-frills budget. NZ's videogame sector's pretty convinced that subsidies to the videogame sector aren't a frill. I think NZ should go further than simply not playing the subsidy game. Instead, NZ should seek the equivalent of international arms control agreements banning film and videogame subsidies. The dangerous nature of these subsidies is obvious if we're even talking about having them in a year that's going to require a lot of budget restraint. 


• Looks like there's a treatment option for lakes with too much phosphorus. Of course, New Zealand doesn't seem interested. Presumably it isn't sufficiently circular. Too much like waste-to-energy plants that solve the obvious problem, but that don't solve the underlying problem of regulators wanting to tell people what to do. If the thing works, farmers ought to be able to fund remediation if that's more cost-effective than other options. 

MfE's circular goals

"The circular file" used to be a euphemism for the garbage can. "Oh, yes, I did get your useless memo. I put it in the circular file." 

Was reminded of it when reading the reporting on the Ministry for the Environment's latest Circular Aotearoa paper. 

Energy News writes:

The Government is wary of waste-to-energy schemes conflicting with its wider goal for a circular bioeconomy.

Environment Minister David Parker has announced an overhaul of waste management and recycling and a strategy for reducing rubbish volumes and cutting landfill emissions.

But the Getting Rid of Waste for a Circular Aotearoa New Zealand paper expresses scepticism that energy projects are better than alternative uses for waste diverted from the tip.

Pyrolysis and gasification of municipal solid waste projects are “unlikely to align with our circular economy goals,” the Ministry for the Environment says in the document.  

Such schemes are commonly used in Europe and North America to process waste into an energy source.

But MFE says these are technically challenging projects likely to create hazardous by-products and greenhouse gas emissions.

We have a tech-neutral energy grid. If you can supply power, put your bids in to supply. Easy. If you're not competitive as a generator, you're going to be out of luck. 

We have a tech-neutral ETS (barring biogenic methane from agriculture). If you emit carbon, you pay for it. Just like everyone else. 

And landfills cover their costs through tip fees. And they get charged for any methane. And Wellington's landfill turns that waste methane into energy, burning it off to make money from electricity and save on carbon charges.

If a waste-to-energy plant can pay its own way, in that landscape, then it's obviously ok (subject to meeting non-CO2 emission standards on any smokestacks - and plenty can). If it produces greenhouse gasses, it has to pay for them. It can't force anyone to deliver it trash for feedstock; it has to be at least as attractive as other alternatives. 

But that isn't good enough for MfE. You see, MfE has very strong preferences about how we all live our lives. And good living, for them, is circular. Old clothes? Turn them into a patchwork quilt! Use $300 of your valuable time to fix a $5 gadget rather than use up $0.05 of space in a landfill. Organic material shouldn't go into a waste-to-energy plant to produce electricity! No! You should spend multiples of that cost to compost it, and maybe get some mulch that somebody can use later. 

Any incoming government would be well advised to put MfE into the circular file and start over. 

Afternoon roundup

The closing of the tabs:

• Environmental review laws have long been used for NIMBY purposes. This is a new one. The best that could come of this is a recognition that environmental review needs to be fixed.
• If Australia starts enabling nuclear power, NZ should consider a trans-Tasman approach that would let us piggyback on some of their regulatory efforts. There are economies of scale in this kind of reg. And Australia should be sure to kick NZ out of the arrangement if we start behaving like dicks. 
• The simplest explanation for Labour's approach to labour-market regulation is that they base their expectations of employer behaviour on how government behaves when it is a monopsonistic employer. 
• The simplest explanation for occupational regulation for medical workers is that it's a cartel arrangement that proved sticky when conditions changed.
• They've stopped pretending to be playing at anything other than extortion. “By doing things with news organisations, Facebook was attempting to reduce the risk of government hitting them with a big invoice,” one publisher said. “By pulling out, they’ve made it more likely that they will be whacked with regulation.”
• Could make for a fun test around Peltzman effects, if they gathered numbers on it.
• More reasons to be sceptical of the value of peer review, in some disciplines. The most obvious explanation for the problem (department demographics will reflect international demographics in the field, with some home-country bias, rather than home-country demographics full-stop) is ignored. But the paper's problems are bigger than that. Almost reads as a Sokal hoax. But it seems sincere. At U Manitoba, where I went for undergrad, there were more profs who were US Vietnam draft dodgers than there were in the Winnipeg population overall. An overrepresentation of them necessarily means an underrepresentation of the Canadian-born. Which is totally fine. Canadians will be overrepresented on US university faculties too. 
• David Harvey on problems in proposed changes to hate speech regs.

Afternoon roundup

I've got tabs, they're multiplying. And I'm losing all control - why can't Chrome be as good as it was a decade ago?

So time to clear them. The worthies:

• The ag sector's plan for dealing with ag emission pricing was released yesterday. I'm still thinking through this one. It is definitely not a first-best. Trying to figure out whether it's a second-best or a fifth-best. Executive Summary here, full report here. Stuff covers it here and here, and here with very minor comment from me. And here's BusinessDesk.
• Prohibitionists get mad that Emerson's Brewery donated to a breast cancer research fund. I'm pleasantly surprised that there's a cancer charity that cares more about cancer than about anti-alcohol activism. 
• Labour's proposals around supermarkets are populist nonsense. I worry that they're a foreshadowing of what's coming down the track for more sectors. Labour's falling in the polls, the next year will bring some horrible combination of high inflation and higher unemployment, and an election's due for 2023. Populist stuff like this will be tempting. 
• If water takes were under a cap-and-trade regime, this sort of thing would be better policed.
• A Grand Inquisitor has been appointed who seems likely to be very diligent. 
• America's welfare system has some worse EMTR cliffs than New Zealand's.
• The Ministry of Health continues to be a dangerous clown-show. 
• Winnipeg has a new slogan: 'It's made from what's real.' Bartley Kives ahs a thread of alternatives...
• Set density restrictions on bars and outlets, create rents for incumbents. Tullock's Trap. 
• The Commerce Commission has published submissions on regulatory barriers to entry in key building supplies. The Affordable Building Coalition's submission is very good.
• Maybe it would be a good idea to make it easier for foreign-trained GPs to practice in New Zealand? Maybe?
• There's maybe one degree of separation between everyone in New Zealand but come on.

So many people who so confidently know what's best for me

If you drive an SUV, you've already demonstrated that you don't worship at their church.

If you write a column on how the ETS works and that people should remember that when casting aspersions on other peoples' vehicle, you're telling them that their church is kinda dumb. 

And they don't like that.

A selection of people who think they know what's best for me.

Sam Archer, Director of Market Transformation at the NZ Green Building Council, writes, as satire of my column:

Why I need a Slave: The importance of the 'sympathetic principle'

It's not hard to change the subject of this article to see it's absurdity:

Tune in to enough dinner parties in Wellington, and you’re bound to hear someone claim that nobody living in the city needs a slave.

Leave aside for now that slave traders must free other slaves through the slave trading scheme (STS). The government only allows so many slaves. Leave aside as well that rising slave prices make slaves more expensive – and we all should be expecting those prices to keep rising.

A more basic point presses. How could anyone so confidently claim to know what other people need?

In The Conversation last week, Otago University Senior Research Fellow Jen Purdie said, “There is no need for slaves these days and they are too often used as a status symbol rather than a workhorse.”

If you cannot imagine why a city-dweller might want a slave, other than as a status symbol, you may not be trying to understand things from the other person’s perspective.

Owning an SUV is comparable to owning slaves. 

What I like best about this is that the rationale is clear. Ending emissions, and SUVs in particular, is a moral and religious imperative, just like ending slavery. 

That the Emissions Trading Scheme means that, if I only bicycled everywhere and never used petrol, someone else would buy the ETS credits at an incrementally lower price, is irrelevant. It's a moral case. And moral cases do not brook trade-offs against the sacred. 

I see a good moral and economic case for pushing down the cap in the ETS, at least to the point where prices here match prices in Europe, where combined with a carbon dividend. That's the level at which you can affect net emissions. If you instead ascribe moral purity rules to everything under the ETS, you're going to screw up all the trade-offs in trying to get emissions down, and you're going to piss off those who have very good reason for the choices they have made. 

Ike Yogarajah, in Sam's thread, says my family should have two cars, or buy a van. 

Let's run the comparison with a van. A second car, we'd probably need a different house because maneuvering around a second car wouldn't be fun at our place. Here's the high-spec Odyssey vs the high-spec CX-8. You won't get any difference if you compare the low-spec options. 

The Honda Odyssey is more expensive than a CX-8 and costs more per km to run and has higher emissions (204 grams per km vs 184 grams) - of course the last part doesn't matter, because transport is in the ETS, except to the extent that it affects running costs and expected increases in running costs. 

But Ike also knows what's best for me. And he'll vote accordingly. Because voting is without cost. He can enjoy all the smug self-satisfaction, with none of the consequence. 

Cycling advocate Patrick Morgan gives me heck for not writing a column instead on ways of driving the ETS cap down faster. A Google News search on my name plus the term "carbon dividend" gets just about 50 hits - either columns I've written, or press releases, or media commentary. I'm sure I will wind up writing more of them. 

Tim Welch, who also knows what's best for me, figures I'd save a lot of money buy having a smaller car instead, and renting a car for the few months a year when my parents visit. If only that were true. 

Best I can tell, the cheapest 2-month rental from a cheap car rental place is about $3500. 

And they're sometimes visiting for more than 2 months. And cheap rentals aren't the nicest to drive around anyway. The GenLess website put the all-up running costs of my diesel at $0.55/km, and the all-up running costs of a Mazda 3 at $0.45/km.

So I'm spending $0.10 per km for the option that the CX-8 provides. If I drove more than 35,000 km per year, then it would be cost effective to get the 3 instead of the CX-8 and get a rental for 2 months of the year - based only on cost, ignoring all of the inconvenience. And I do not drive 35,000 km per year.

Searching again, I've found a cheaper option! $2,257 for two months for a Suzuki Swift. We're getting closer to break-even. Still haven't gotten there though. But it also ignores that while my Canadian prairie parents were fans of driving around when we lived in Christchurch, they sure as heck aren't in Wellington. Our roads are confusing goat tracks, and wrong side of the road. And they often stay for more than 2 months. And it ignores the fuel costs on the rental. 

But Tim, well, Tim knows what's best for me. He probably knows what's best for you too. Just ask him!

Update: Here's another fun one. Glen Hazelton, a Project Director for Dunedin City Council's Central City Plan, says "If this is the best an economist can come up with, then no wonder they constantly forecast things wrong." I don't do forecasting. So I asked what transport option I'd missed, that met our family's requirements. He replied, "how about who funds the NZ initiative?" Still hasn't told me what option I failed to see when we bought our CX-8. Charming guy. [/update]

Most of the other responses just channelled their rage against cars in general, with SUVs representing everything they find wrong with urban design and the world. 

I celebrate those for whom an e-bike, a battery-electric, or a hybrid, are the best option. I trust them to know best what's best for them, in their circumstances. How could I presume to know better than they do about what's best? I could lecture them about lithium shortages, potential risks down the track in costly battery disposal unless battery recycling options come available - but they'll have weighed that stuff up in the same way that I've weighed up the risks of carbon prices increasing. 

There is simply no arguing with these people. They are driven by what is fundamentally a puritanical moral imperative that will not brook trade-offs against things they deem sacred. They work backward from there to invent rationalisations. 

Some of the rationalisations aren't crazy. SUVs are bigger and may impose higher risk on others. But that's not an argument for banning SUVs. That's an argument for making sure that ACC levies are actuarially reasonable. Get the big spreadsheet with all of the accidents and all of the accident costs. Put in all the features of all of the vehicles involved. Run the regression. And set ACC rates that factor in size, height, cameras, radar, the thing that yells at you about your blind spot - all of that. Anything that comes up in affecting overall accident costs borne by ACC should come into the ACC premiums. 

But if cars and SUVs are some kind of moral imperative, you're not going to be thinking about those kinds of solutions.

Ending slavery was, correctly, a moral imperative. 

Reducing net emissions is very important, but sorting out the best way of doing it is a technocratic job that has to account for how the ETS works. Pushing specific behavioural changes while ignoring the ETS is a religious mission. 

And they will try to ban your car, when it comes to it. 

Morning roundup

A closing of the browser tabs:

• Hard to believe that anybody thought it was a good idea to rebuild an old masonry building on reclaimed land when the city has trouble funding infrastructure for housing, but Wellington Council did. $180 million now for Town Hall. Wasn't the library also going to be $180 million? 


• Chinese state media outlet correctly chides the Americans about America's lack of free trade in dairy. 


• Solveig Lucia Gold, on what Princeton's done to her husband.


• It just seems less plausible to me that cat-caused toxiplasmosis runoff into salt water is a bigger problem for endangered dolphins than fishing bycatch. 


• Enabling carbon capture and storage would be great.


• Marc Daalder summarises the state of play on long-Covid in NZ.


• I'd first heard of difficulties in making productive use of land held under Maori land tenure shortly somewhere around 2008. Tanira Kingi gave a talk about it at the Law & Economics Association meetings. It turned into a book chapter that's dated 2008 anyway. I can't remember the year of the LEANZ session - it was a day of sessions after the NZ Economic Association meetings. It's still a problem - great stuff from RNZ on it. 

Assuming others' ends

Columns like this are so depressing. 

The writer is a senior fellow at Otago University. 

She thinks that people buy SUVs because they care about status. And so banning them for townies wouldn't have much cost. 

Let's leave aside all of the other boneheadedness about measures targeting emissions already covered by the ETS. Look more closely about how she treats other peoples' utility functions. Rather than try to think through why people make the choices they make, given the constraints they face, she just figures they're bad people. 

The problem is, the average engine size of our cars grew steadily between 2000 and 2010, and stayed steady between 2010 and 2020. This decade has to be the one where engines get smaller.

But our obsession with large cars continues to grow. The Ford Ranger has been the most popular new car in New Zealand for the past couple of years.

Globally, sport utility vehicles (SUVs) grew from 16% of new car sales in 2010 to 45% of new car sales in 2021.

SUVs were the second largest contributor to the increase in global carbon emissions from 2010 to 2018 – bigger than either heavy industry or aviation. If SUVs were a country, they would be the seventh biggest emitter in the world.

There is no need for massive SUVs in an urban setting and they are too often used as a status symbol rather than a workhorse.

When you're this dismissive of the goals that other people are trying to achieve through their choices, you will fundamentally misdiagnose problems and push interventions that do harm. 

We bought a new car in November - first time we ever bought new. 

Here are the objectives we wished to fulfil. They're ours. And they're none of her damned business. But they have nothing to do with status:

1. It doesn't have to be a dedicated 7-seater, but it has to be able to seat at least 6 comfortably when my parents are again able to visit. When they visit, they're here for a couple of months, and it is great. If we don't have ability for them to come along with us in the car while they're here, we'd need a second car, or they'd have to rent one for a long period while here. 
2. It has to be reliable.
3. It should be reasonably fuel efficient. I'm not made of money. 
4. It should have a decent safety rating. 
5. It has to actually be available to purchase, and not "wait for 2 years and we might deliver you one."
6. It shouldn't be a pig to drive and should handle reasonably well.
7. It has to be able to get up Bidwell Street - so it can't be too wide or one of us will wind up losing a mirror. Wellington is full of goat tracks. And the parking garages sure aren't built for anything North American sized. 

Our former solution to that set of constraints was a 2008 Honda Odyssey that we bought in 2014 on moving to Wellington. It had about 60,000 km on it when we bought it. It was great - loved that car, even though the GPS would occasionally yell at me in Japanese because it thought I was about to drive into the ocean off the coast of a map of Japan. And the clock was set to the time in Japan and could not be changed - it updated by satellite. 

Relatively fuel efficient, perfect size, decent power to get up hills, and reliable until we got it to about 180,000 km. Then it wasn't. 

The older Japan-import second-hand Odysseys were low-slung and handled like a hatchback. You'd never know you were driving a van. 

The new Odysseys after maybe 2015 were built like a van: much higher, and reported to be pigs on fuel. 

Looked at the Honda CR-V, but the third row was just too small for our needs and ruined the luggage capacity when down. Otherwise great little machine. 

Looked at some Toyota hybrids. The RAV-4s don't have a third row and would be too small for one. The next size up looked fine, but perhaps a bit too big, and unless you wanted a bottom-of-the-range one without any of the conveniences, it would be at least an 18 month wait. And our Odyssey was due for replacement. And we were driving to Christchurch for the summer in a few weeks. Waiting would suck. 

Looked longingly at the Subaru Outbacks, but no third row.

Test drive a Mazda CX-9. Beautiful. But too big. Felt like driving a boat. And it would be scratched all to hell navigating it around Wellington and parking lots. 

Asked about a CX-8 - bit smaller, and a diesel that's cheaper to run. Narrower so a bit less comfortable but less scary through town, shorter but mainly through reductions in the nose rather than cabin capacity. There was one in Kapiti so we headed up. Last one in the country this side of Auckland. Drove beautifully. And cameras all over the place so way the heck safer than our old Odyssey. So we bought it. 

We've averaged about 8.5 litres per hundred kilometres on mainly around-town runabout. The government's own website has total vehicle costs of ownership on this diesel as being comparable to a bunch of 5-seater hybrid SUVs. And to show how little the government understands of families' needs, you can toggle car type on their comparison website, but you can't select for 7 seats. You have to hunt around, or just know which vehicles can handle 6-7 passengers. 

What happens if I run that comparison website to compare the most cost-effective people-mover, the Honda Odyssey, with the SUV Jen Purdie thinks I bought for status?

This. 

The CX-8 diesel is in fact the best buy for an optional-7-seater that you mostly use as a people-mover. Even the top-end one is more cost effective than the Odyssey. 

Nothing to do with status. 

Everything to do with optimisation subject to our particularistic constraints that are invisible and unknowable to the likes of Jen Purdie at Otago University. And everyone has their own set of constraints against which they're optimising, and their own preferences, none of which are visible to Purdie, or to MfE, or to the Minister. 

And why a new car this time? 

Not prestige. Policy risk.

I would have gone with a used one again if I didn't worry that this ridiculous government would start banning imports. Before, it was safe to buy a car with 60k km on it and trust that you'd be able to buy another great one with 60k km on it once the one you had had run its course. Now, that strategy has a lot of policy risk. By the time I'd be ready to replace that car, decent chance used imports would have been banned and that they'd have committed some kind of obscenity against the new car market. So best to buy new, so it can last longer. 

Morning roundup

The morning's worthies:

• Robert MacCulloch brings the prosecution's case against the RBNZ. A future better government will have some work to do in restoring Bank credibility. Firing the Board and Governor; resetting the Remit so it only cares about an inflation target; appointing a hawkish Governor who recognises that inflation is his job and climate change, as important as it is, is somebody else's job; and requiring that those on the Monetary Policy Committee have expertise in monetary policy rather than treating it as a conflict might be a start. 


• This has got to be the stupidest argument in favour of recycling. It begins with a grudging recognition that most recycling is pointless, before saying it might be a gateway drug to caring more about climate. The more plausible explanation for the survey results: people who get warm fuzzy feelings about environmental things in general are more likely both to recycle and to buy an EV. 


• The Government proposes a tax principles bill. I like that Minister Parker agrees that horizontal equity, vertical equity, administrative efficiency, and minimisation of tax-induced distortions are core tax principles. But he points to high EMTRs for some lower/middle income earners as evidence that the tax system isn't progressive. Progressivity is defined as the marginal tax rate being higher than the average. Those EMTRs will hit in over short ranges for some folks, and are bad, but they aren't really evidence against the tax system being progressive. And remember that some of our progressivity is delivered by transfers like Working for Families. 


• The Niskanen Centre explains how EV subsidies are generally a bad idea - you wind up providing a lot of cheap EVs to rich people who don't drive them very much. But if you could get the people who put on the most kilometres into an EV, that could be good. Now what would set that kind of incentive? Carbon charges in fuel. Cost adds up fastest for high-users. 


• A reader sent this through after my Newsroom piece on carbon forestry: the biodiversity within a pine forest.


• NZ has a lot of old people, but aged care facilities are shutting down. Why? Government banned immigration, so there are no nurses. 


• Good piece from Dileepa Fonseca. Everybody complains about costs in the construction sector, so why don't we let the folks who put up excellent cheap apartments in South Korea, Singapore and Japan build some here? I suspect we'd also want to have Japan's zoning and consenting system. And abolish the Overseas Investment Act.


• Season 6 of Kids in the Hall starts in May. Get your Amazon Prime subscription ready. 


• The unserious people oppose waste-to-energy plants, because the plants make it harder for them to push zero-consumption lifestyles. FFS any carbon dioxide coming out of them is in the ETS. 


• Craig Renney makes the case for a Parliamentary Costings Office. I like the idea in principle; would be a fair few difficulties to work out in practice. To begin with, which Parties get access, and how much of the Office's time? If it's just Parliamentary parties, you introduce a barrier to entry. If it's everybody, you get every nutjob setting up a Party and demanding a costing on their pet thing. If it's allocated by vote share in prior election, that also puts in a bias toward the status quo. I still like the idea of a costings unit that runs rolling reviews of existing spend between elections. 


• I'd missed this 2019 AEJ- Ec Policy piece. Sweden put in a high carbon tax; petrol use dropped a lot. NZ is part of the counterfactual synthetic Sweden used for comparison. The Swedish carbon tax is a lot higher than current ETS prices, but NZ ETS prices will rise. The regulators here seem to believe that prices won't ever affect transport emissions here. Sweden suggests otherwise.


• An urgent appeal that masking in classrooms be the default for winter.


• I really need to read this whole book. "Questioning the Entrepreneurial State", reviewed here.  There has been far too much naive enthusiasm for the Entrepreneurial State approach in the dumber parts of the Ministries. 

Morning roundup

Today's closing of the browser tabs is also a bit of an inbox roundup. A lot of these wind up being from BusinessDesk's excellent news summaries.

• Tyler Barugh aims to either be the monopoly supplier of milk to Wellington, or to have Wellington Council abolish its antique and unused century-old milk supply legislation. 
• NZ's natural gas shortage has eased a bit, but there's still risk that industrial users will be asked to curb their production if electricity companies need the stuff. Meanwhile, Red Radio worries that NZ's ban on oil and gas exploration isn't tough enough. 
• The Auditor General isn't happy about how the NZ Govt handed out tourism grants. It looks like there was ample opportunity for dodginess given the lack of process.
• Mastery, then innovation.
• Seventy of some 400ish Fellows of the Royal Society of New Zealand have signed an open letter wishing that the Royal Society return to favouring science - and noting that more would have signed on except they said they feared reprisals. Something is deeply wrong with the Royal Society. 
• RBNZ is reviewing its monetary policy remit.
• More on the traditional media (ie Murdoch) using government to strong-arm tech platforms. 
• The government continues to ease official Covid restrictions. My personal restrictions remain in place:
• Wear a solid N95 mask when indoors; wear a decent mask (like my Cactus Outfitters one) when outdoors in more crowded spaces;
• Avoid indoor places that attract unmasked people;
• Prefer places that continue to enforce vax passes, as they will discourage riskier people from attending;
• Do not dine or drink indoors unless very sure that the ventilation is very good indeed.

Biofuel mandates

Biofuel mandates never made any sense. Critiques of American biofuel mandates go back decades, arguing that creating the ethanol to blend takes more energy than you get out of the stuff at the end. 

New Scientist ran a column a couple of weeks ago arguing that biofuel mandates should be abolished, now, as part of the response to war in Ukraine. It's one way of quickly getting more land into food production, and out of value-destroying biofuel production. 

It is an odd time for the New Zealand government to reaffirm that it wants a biofuel mandate.

The Prime Minister says the Government's planned biofuels mandate will help create long-term stability in the fuel market, something she says recent price volatility has shown a need for.

None of that makes much sense. Cutting a small bit of petrol or diesel out of a fuel mix, to add in something that's a heck of a lot more expensive, might very slightly reduce price variability of the finished product if biofuel costs are less volatile than global fuel costs, but at a price that hardly worth paying. It's like saying that you avoid price volatility in aluminium by requiring that silver be added to aluminium foil. 

Biofuel mandates are bad to start with, but they're doubly-silly when transport is in the Emissions Trading Scheme. If carbon prices rise sufficiently, maybe biofuels will become a cost-effective way for fuel companies to avoid having to buy as many costly carbon permits. Biofuels then get brought into the system when it makes sense to bring them in. Mandating it forces things, regardless of cost-effectiveness.

A lengthy snip from the New Scientist piece below. 

The war in Ukraine has already caused food prices to shoot up as global markets anticipate a loss of wheat and maize exports from one of the world’s largest producers of these crops. But Europe and the US could more than compensate for the loss of Ukraine’s exports by diverting crops destined to be made into biofuels into food production instead. This would bring food prices down and help prevent a major global food shock.

On 9 March, Ukraine banned most food exports to try to ensure that its people don’t go hungry as Russian forces invade.

Food prices were already at the highest levels for 40 years, says Matin Qaim at the University of Bonn in Germany. This is for many reasons, including poor harvests because of extreme weather driven by global warming.

Quickly increasing the supply of food crops is difficult. But a large proportion of food crops aren’t eaten but converted to biofuels. Globally, 10 per cent of all grain is turned into biofuel, says Qaim.

In the US, a third of the maize grown is converted into ethanol and blended into petrol. Around 90 million tonnes is used for ethanol, nearly double the 50 million tonnes exported by Ukraine and Russia, says Qaim.

In the European Union, 12 million tonnes of grain, including wheat and maize, is turned into ethanol, Qaim says, around 7 per cent of the bloc’s production.

The EU also produces large quantities of biodiesel. It turns 3.5 million tonnes of palm oil alone into biodiesel, says Qaim. “That’s almost the amount of sunflower oil coming out of Ukraine and Russia.”

Governments have the power to change this, says Ariel Brunner at Birdlife International. “Because the biofuel market is entirely driven by subsidies, you can unplug it literally with the stroke of a pen,” he says.

If the US and Europe were to decrease their use of ethanol made from grain by 50 per cent, they would effectively replace all of Ukraine’s exports of grain, Tim Searchinger at Princeton University has calculated in response to a question from New Scientist.

“This is one of the few really quick things we can do,” says Brunner. “We are literally burning a hell of a lot of food.”

One country has already done just this. On 11 March, the Czech Republic ended its mandate requiring ethanol to be blended with petrol. It did this to reduce the costs of fuel rather than food, but Brunner is calling for other countries to follow suit.

“It absolutely would make a difference. It would begin to relieve prices immediately.” says Jason Hill at the University of Minnesota in St Paul. “It would also send a signal that can be acted on immediately by farmers. Northern hemisphere farmers are deciding now what to plant.”

The US Environmental Protection Agency has the power to waive the requirement to blend ethanol into fuels, says Hill. “The EPA could very quickly send a signal that ethanol is not needed.”

Temporarily halting biofuel mandates wouldn’t be popular with farmers. The powerful agrobusiness lobby in the US is currently demanding the opposite, that biofuel production is increased in response to the rising oil price, says Hill.

The government's biofuels factsheet notes that more than 60 countries have biofuel mandates. They'll have to cut the Czech Republic from the list I guess. 

Afternoon roundup

The closing of the browser tabs, so the poor thing can reboot, brings some worthies:

• Work from home is proving sticky in New York. The number of workers going into NYC offices is well under half of what it was pre-Covid. They're looking to turn underused commercial skyscrapers. That's what living with Covid looks like, in places that have been living with it longer than us. I don't think removing NZ's traffic light settings are going to return us to December 2019. 
• Nice. Now do contracting for PCR testing. 
• Face it. The NIMBYs are going to try to block your development in court no matter what you do to appease them. Spread the costs of inevitable lawsuits across more dwellings.
• It's not cancel-culture, it's cancel technology. 
• The Parliamentary Commissioner for the Environment warns against locking into hydrogen. Always the danger with winner-picking: you might bet the wrong one. Why not just let ETS prices take lead?
• Oh this is neat. ORBIS gives you the travel time between places in the Roman world. Rome to Alexandria in July? 14 days by fastest route and by cheapest route. Rome to Londinium? 39 days by cheapest route; 27 days by fastest route. 
• Fix the select committees already. 
• Covid testing is cheap relative to the alternative, but costs are still adding up for businesses.
• The return of the shibboleth.
• This looks fun: Townscaper.
• NZIER's tallied up employment, contribution to GDP and such for the alcohol sector. Here's the media release from the NZ Alcohol Beverages Council, and here's the report. We have 134 distilleries! There's a lot of the usual drill in portraying employment as a benefit rather than a cost, but it's a useful compilation of a pile of stats. I expect I'll be regularly googling the blog here to re-find the link to it. 
• Paranoia about the Mont Pelerin Society. Alas, it's just not that influential. 
• Would that more public goods could be coin-operated. 

Afternoon roundup

The browser tabs...

• The Internet Archive will help improve access to a lot of books currently held by the National Library. Naturally, this upsets some people. 
• Mike Joy wins a battle over what "natural levels" of nitrate in aquifers might mean.
• Places where the local schools are funded by higher levels of government wind up trying to privatize the public schools through zoning. Everything's tradeoffs though, eh? If schools are funded by the local communities, poor places get really bad schools. It's instead a good argument against even greater anti-NIMBY vigilance.
• Potential nudges to improve compliance with scanning-in for Covid tracing. I'd add one more: put the QR codes in lots of places. Make it easy. At the entrance is great, but if your phone isn't ready and you'd be holding up a queue, maybe you won't scan and you'll forget to on the way out. Put them everywhere. 
• The EMA makes a very bad argument about unemployment rates. The point of inflation targeting and increasing rates when you're hitting capacity constraints isn't to create some stupid Marxist reserve army of unemployed, which seems to be what they're arguing for. The point instead is that if a monetary push gets you past NAIRU, you just wind up back at higher unemployment rates anyway once contracts adjust AND you have higher inflation to go with it. Anyway, because either EMA put it badly or it was reported badly, a billion tweets followed claiming the Marxists were right all along. 
• Heather du Plessis-Allan cites me here on Treasury's diminished capabilities. Worth noting: all of that was prior to the current Secretary's appointment. She may well have improved things since; I need to get OIAs in to check. 
• Shipping is a mess.
• Remember back at the Budget Economic and Fiscal Update when Treasury put in a footnote saying they couldn't produce a structural deficit figure this time round because they couldn't tell how to place some of the Covid-spend? And it seemed odd because Covid-spend is supposed to be emergency = one-off = not-structural? Well, looks like the free school lunch programme is Covid spend. I simply do not understand how this works. Shouldn't the Auditor General be going after this kind of thing as misappropriation? 
• The government isn't bothering to check on whether people got their Covid tests before travelling. Some of them get caught ex-post, with the option to go into quarantine or return to Oz, after they've been circulating in New Zealand already. If they went back to Oz and turned up positive, what hope would we have on contact tracing them? However low your expectations of government competence are, you just keep being surprised. 

Subsidy incidence: EV edition

It's pretty standard drill in intermediate micro to work through some tax incidence questions. 

The general point is to remind students that it doesn't matter whether the government says some tax has to be paid by the business or by the customer, or whether it has to be paid by the employer or the employee. The burden of the tax depends on relative elasticities of supply and demand; the statutory incidence really doesn't much matter in determining the economic incidence.

The extension to subsidies is obvious - the same drill applies. 

And I guess that supply of used electric vehicles in Japan is relatively inelastic. NZ's announced EV subsidy scheme, yet to come into effect, is bidding up prices there. 

Turners' subscription fleet was made possible with a grant from the Government's green transport fund. But used EVs were becoming more difficult to source from Japan, Hunter said. "In terms of pricing, the vehicles in Japan have all gone up for the amount of the subsidy – $3450."

Robert Young, director of New Zealand's biggest used car importer Nichibo Japan, agreed prices had gone up, though not by quite as much. He said the market had been "perverted" by the subsidy, and New Zealanders would see that as the new EV and hybrid stock was shipped over from the Japan used car auction houses.

He estimated about half the $3450 subsidy would end up off-shore, benefiting the auction vendors in Japan and the UK as well as new car manufacturers. More would go to GST – meaning Kiwi EV buyers would pocket only about one-third of the subsidy.

"This policy is more about political run-scoring than achieving its objective," Young said. "It will drive up new and used car prices for New Zealanders and increase the age of the national fleet which reduces road safety. 

The funniest part is Minister Wood thinking he can do much of anything about a bidding up of auction prices of used cars in Japan.

But Transport Minister Michael Wood said the Government was keeping a close eye out for any attempts to take advantage of the subsidy.

“The new and imported used vehicle market is very competitive and I’m sure anyone attempting to distort market pricing will be called out," he said.

"I have asked my officials to keep a close eye on the market as the Clean Car Discount gains momentum. Over the lifetime of the policy, it will help make cleaner cars more accessible to Kiwis.”

Suppose that you were the official tasked with 'doing something' about higher used car auction prices in Japan. Where would you even start?  

Bridge Maths

My excellent colleague Matt Burgess has done some fun back-of-the-envelope work on the carbon benefits of the proposed $685,000,000 bicycle bridge across Auckland Harbour. Some people have strongly favoured the bridge, noting its potential effects on reducing greenhouse gas emissions. 

Here's Matt's back-of-the-envelope reckoning. The strikeouts are because a first iteration of the work hadn't adjusted car emissions for average vehicle loadings; the updated version is so-corrected. But still back-of-the-envelope, order of magnitude stuff. 

The new Auckland crossing costs $685M. That is a daily cost of $112,500 at 6%. The minister justifies the bridge based partly on emissions.

Assume 10,000 one-way crossings/day and an average commute profile between Takapuna and Sky City = 8.7km.

Depending on whether each bridge user would otherwise have done their commute by bus or car, the bridge will avoid 8-23 8-14 tonnes of emissions per day.

So that is $4,800$7,800-$14,700/tonne abated.

To be competitive with the ETS at $37 would require 1.3 2.1-4.0 million crossings per day.

If bridge users would otherwise use the ferry, which may be the most likely alternative, then the bridge avoids just 0.5 tonnes of emissions per day at a cost of $237,000 per tonne.

He also notes that these kinds of cost-per-tonne figures would have serious consequences for New Zealand's ability to get to net zero, if we did it all via MAMIL-approved bike bridges (and the like) rather than by relying on the ETS.

The cost of getting long-lived emissions down to net zero is:

• At $7,800/tonne: 94% of GDP
• At $14,700/tonne: 176% of GDP
• At $237,000/tonne: 2600% of GDP

The bike bridge is (roughly) 200-6300 times more expensive, as carbon mitigation initiative, than just buying credits in the ETS and running them through the shredder.

And so I fully expect that Rod Carr will strongly endorse the bike bridge in next week's Climate Change Commission report. 

Class and fish

Suppose you grew up in a place where only the well-to-do were ever allowed to fish for trout, where the working class only had access to 'rough fish', and you were a committed communist.

If you moved to a place where trout had been introduced and were protected through fishing licenses while some native species were in trouble and generally unprotected, what would you do?

Charlie Mitchell tells us over in the Stuff newspapers. The story almost seems unbelievable. But here it is.

The life of J. Stewart Smith was long, colourful, and driven by an uncommonly strong sense of purpose.

By the time he died in 2008, aged 95, Smith had left a permanent legacy in his adopted country's bloodstream – its network of ponds, rivers and lakes.

This account of Smith's life and legacy is based on official documents and hundreds of pages of Smith's personal notes obtained by Stuff, as well as interviews with people who knew him. several of whom requested anonymity.

They reveal an enigmatic figure largely forgotten in New Zealand's recent history, but one who has had an outsized, and permanent, impact on the country's environment.

"Imagine if one guy was responsible for the introduction of rats, possums, rabbits, stoats and pigs to New Zealand," one former official familiar with Smith's activities says.

"Stewart Smith was pretty much that guy, but he just did it to freshwater ecosystems around the country."

He was pretty clearly a Marxist eco-terrorist.

To understand why Smith did what he did, it pays to understand the long-simmering battle over who gets to fish what.

New Zealand has several dozen native freshwater fish, most of which are nocturnal, discrete, and tucked away in streams far from civilisation. Few of them grow larger than 10cm; they don't make for great angling.

Recognising this, early European settlers decided to bring their favourite sports fish with them: Trout. Trout flourished in New Zealand's cooler waters, with limited competition from native species. The trout fishery is now so prosperous it attracts anglers from around the world.

Some immigrants, including Smith, did not grow up trout fishing, which in England was a sport reserved for the elite. They fished for the so-called "coarse fish" – among them rudd, perch, tench and carp, named for their rough skin.

This class divide bled into New Zealand. While trout soon followed the immigrants, attempts to bring in coarse fish were rebuffed, largely because they would compete with trout.

And so Smith, who paid dues to New Zealand's communist party for much of his life and had a pathological dislike for social hierarchy, sought to equalise the playing field.

You really need to read the whole thing.

The year of delivery

Stuff reports:

The Government will move to ban non-compostible fruit stickers today in response to a huge new report about single-use plastic, Stuff understands.

It's understood the Government will also move to ban plastic cotton buds and single-use plastic cutlery, items which both have biodegradable alternatives made out of bamboo.

Compostible apple stickers do exist but are not in wide-use.

The announcement will be made on Sunday morning as part of a response to report from the Prime Minister's chief scientist, alongside a host of other measures.

Have seen a lot of support on twitter for this from people annoyed at having to peel stickers off of apples; I suspect shops will switch to the biodegradable ones unless there's some other better and cheaper tech out there to let shop clerks quickly tell whether they're ringing up a $3.99/kg apple or a $5.99/kg fancy apple.

On the plus side, the bit about plastic cotton buds had me quickly checking their availability at Ali Express - and they're easily available there, along with the wooden stick ones, and at much lower prices than I'm used to seeing here.

I wonder whether the government will yet be making any announcements of the kinds of infrastructure bonds that Phil Twyford talked about in opposition and during the election, and that I know that Treasury has been working on.