Afternoon roundup

It's been a busy week of lockdown. On Monday, we released my report looking at cap-and-trade solutions for freshwater quality. Yesterday, Matt and I sent in our submission on the Commerce Commission's inquiry into supermarket competition. 

Don't think the computer's shut down this week. The browser tabs....

• It's a shame that rapid antigen tests are illegal in NZ. They aren't nearly as accurate as PCR. But when people are waiting six days for a test result and, in some cases, trying to run at-home isolation from the rest of the family during that period, having rapid antigen testing as a complement would be really good. RNZ reported on nurses living with close contacts being told to turn up for work even where those contacts' results hadn't come in yet. We could have had rapid antigen tests rolled out for staff starting shifts in hospitals and care homes. MedSafe banned them in April 2020 and re-upped the ban in April 2021. 
• I love this. North Canterbury's MainPower is telling staff to "Take Two for the Team". If 90% of their workforce is fully vaccinated by 1 December, every vaccinated staffer gets an extra day of special leave. Vaccination isn't just for you, it's for the team. Perfect. 
• I had a bit of fun in our Insights newsletter comparing the stringency of SmokeFree rules with the stringency of rules for MIQ exercise facilities. I'm pretty sure the Crowne Plaza's exercise area would not have been approved as an outdoor smoking patio for the bar.
• Meridian is putting in battery storage. Presumably they'll use it during times of peaking demand when power prices are through the roof. And of course, screwing around with the electricity market with price caps would discourage these kinds of investments. 
• Scientific American makes the case for the combination of carbon prices and carbon dividends. The Climate Commission pretends this option doesn't exist. It's depressing. I suppose the advice from NZ for Americans looking at this option: make damned sure that they're actually going to distribute the money back as a dividend, because the political establishment very much prefers to turn that money into its own discretionary slush fund to target to their voters. New Zealand's Green Party understands the case for carbon dividends. But they'd rather give their own voters a subsidy for a Tesla. It's depressing. Standard logic-of-collective-action stuff: concentrated benefits to Tesla-buying people, distributed cost to everyone who doesn't get a carbon dividend. And it'll make it easier to claim that reg measures on carbon are needed because of political pressure on ETS if prices rise - the sign on which would reverse if we had a carbon dividend. 
• The Atlantic continues to be great on Covid coverage. Best case, stupid endemic Covid becomes more like colds and flus because everyone will have some protection through vaccination and our immune systems will be able to handle it. But the virus could mutate to evade vaccines and immunity from prior infections. 
• My Dom column on the freshwater management report.

Lockdown accountability

Newsroom provides an excellent we-told-you-so this morning. 

Here's Jo Moir:

While the source of the Delta outbreak that plummeted New Zealand into a Level 4 lockdown is all but confirmed, how it got into the community is a work in progress.

Investigations are now homing in on a public walkway that shares the same airspace as the exercise area at the Crowne Plaza managed isolation facility.

In July Newsroom raised the issue of the public thoroughfare, which is the only access to a busy office block in downtown Auckland and requires passing directly beside the exercise yard via an un-roofed walkway.

The photo shows the obvious problem. The 'outdoor' area is anything but. It's enclosed on so many sides that you'd probably not be able to run it as an outdoor smoking area if you were a pub: there's a roof and walls on two sides, and the open side at the end is awfully small.  

The Ministry of Health recently consulted on its definition of an 'open area' for outdoor smoking areas for bars and pubs. Smoking is banned indoors but not outdoors. What counts as outdoors though? Does an awning make something indoors? How about an awning and a wall? This caused a lot of problems when different liquor enforcement officers would come to different views. 

The Ministry of Health's preferred option, in that consultation, was Option B. Any outdoor seating area that met this description would be prohibited from allowing smoking, because of the risks to passers by. 

Option b: Define it as an area that is completely or partially enclosed with a roof or overhead structure of any kind, whether permanent or temporary. This means that if an area has any roof or overhead structure, regardless of how much the roof or overhead structure encloses the area, it will meet the definition of an internal area.

I bolded the relevant bit. If you had a roof over the smokers, and then a minor bit of unroofed area, Option B would prohibit its use as an outdoor smoking area. 

The photograph obviously shows that the MIQ 'outdoor' recreation area has at least some kind of roof or overhead structure. Passers-by had to be right next to them, though there was a minor barrier. 

It looks like the Ministry of Health's preferred protection measures to guard against outdoor second hand smoke at pubs are stricter than the Ministry of Health's preferred protection measures to guard against Covid. 

And this is absolutely par for both courses for this player.

And we have wound up in a spot where a couple of guys out on jetboats on the weekend will wind up charged for breaking Level 4 restrictions, when the only harm they imposed was a potential one to rescue crews if they wound up in trouble, but none of the officials who decided it was a great idea to put this recreation area up next to a walkway will be up on charges, despite this now being the most likely candidate for how we wound up in lockdown and despite its having been an obviously recklessly stupid idea and despite their having been warned about it back in July. 

Police safety

The police union regularly asks to be armed. A few years ago, I included a chapter on our unarmed constabulary in a piece arguing that New Zealand really is the Outside of the Asylum. 

Policing in New Zealand is, all things considered, safe – even without firearms. Auckland University of Technology criminologist John Buttle tallied the figures for 2008–09, a high point in assaults against police. He found police reported being assaulted 2,481 times that year – out of 1,221,823 incidents attended by police. In the 123 years from 1886 to 2009, 29 officers were killed by a criminal act in the line of duty.

If loss of life at work is a measure of how dangerous an occupation is, then policing comes quite far down the list of hazardous jobs. This raises the distinct possibility that it is more dangerous being a farmer than it is a police officer.

Farmers do not carry sidearms to guard against enraged livestock.

Peter Kelley points me to an excellent OIA request he made for police injuries over the past several years. 

Injuries include not categorised; exposure to biological factors; chemical substances; contact with cold objects; sharp objects; noise; radiation; falls from height; being hit, struck or bitten by an animal, insect or spider; rubbing and chafing... there are a lot of categories. 

The one that is most obviously something that might be avoided by being armed would be "Hit, struck or bitten by person (Assault)". But they helpfully list the proportion of assaults among the other categories as well. Unfortunately, it looks like they didn't count being spat at until 2017. And I'm not sure that that's something where an armed response makes the most sense anyway. 

It's hard to see any obvious case in here for arming police. Or at least there is no surge in injuries from assaults. Thomas Lumley put together some charts on it:

Ok trying that one again with the right cutoff date for 2021. It has 2013 and 2021 scaled pro rata to full years, and with uncertainty intervals (95% Poisson confidence intervals) pic.twitter.com/1DzlF8qbCl

— Thomas Lumley (@tslumley) August 19, 2021

Vaccines for children

Good news! Cabinet has decided to end its prohibition on vaccinating children aged twelve and up. From 1 September, parents will no longer be banned from protecting their children against Covid. 

At least if their children are at least 12 years old. 

The Prime Minister framed it at the press conference as a difficult decision, because they're talking about other people's children.

But they've shown absolutely no similar concern about banning parents from vaccinating their children. 

I could understand her framing it as she did if she were talking about mandating vaccination for children. And I can see a very good case for mandating vaccination. But that isn't what she was talking about. She was talking about removing a prohibition that currently prevents parents from getting their kids vaccinated. 

Medsafe approved the vaccine for those aged 12 and up back in June. The FDA approved it on 10 May. We've known it's safe for over three months. Cabinet has just not seen fit to allow it to be used. There is no medical reason for it. 

I expect that the main problem has been a lack of vaccine supply. 

Because of the lack of vaccine supply, it has been convenient to consider those aged 12-16 as ineligible. All the comms on New Zealand's terrible vaccine roll-out have been around vaccination as proportion of the eligible population. One easy way of juking that stat is by artificially restricting the number of people considered eligible. If you don't have enough vaccines to go round anyway, then you can make a terrible figure look marginally less terrible at low cost. 

The ban continues for children younger than 12. 

The trials on the younger cohort are still continuing. If the FDA doesn't give a ruling on it until October, then we might not have a MedSafe determination before November, and then Cabinet extending to younger kids in December?

Given that we continue to tapdance on landmines in MIQ, and there is Covid in the community, might we consider allowing emergency authorisation for vaccinating kids younger than 12 if there is strong medical reason for it?

While risks for children on average are lower than for others, pediatric wards in the US are filled with kids with Covid. If might not make sense to make an 11 year old with co-morbidities wait the extra few months for her birthday, where the vaccine risks for 11 year olds are going to be awfully similar to the risks for 12 year olds, and delta's risks for kids seem kinda high. 

MIQ's Aristocracy of Pull

This week's column at Newsroom went through the problems in allocating MIQ spaces by political pull. Unfortunately, Newsroom's version strips out the links; the version on our site has them. 

A snippet:

The surest way to a space in MIQ, for the past sixteen months, has been political influence. Those with political influence get spaces. Those without it are forced into a broken room booking system. Getting a room through that broken system seems to be a full-time job all on its own: some would-be travellers have even hired people to sit at a computer and hit the refresh button, all day long, on their behalf.

But for those with political pull, things are a bit easier.

Last August, in the leadup to an election, the Provincial Growth Fund considered horse racing tracks to be vitally important pieces of infrastructure. An all-weather track in Cambridge needed specialist workers from overseas.

Entry into MIQ was then relatively simple.

Minister Faafoi’s spokesperson assured everyone that officials made the decision without input or advocacy from politicians.

And he was surely right.

No such advocacy was needed.

Criteria for entry always prioritised workers essential to the continued operation or construction of critical infrastructure. As soon as a horse racing track was considered critical infrastructure, the system’s gears turned and spaces for those workers were available as priority.

Horse racing, before last year’s election, had political pull. So horse track workers could use the MIQ express lane.

The America’s Cup was also a government priority. The government had already provided a substantial subsidy for the boat race and did not want it to fail for want of spaces in MIQ.

Because the government made a boat race a priority, all officials then needed to do was follow the rules. Over seven hundred entry visas followed for the racing crews, technical support, family of the syndicates, and even a nutritionist for one of the teams.

International film projects have political pull. So even Kirsten Dunst’s nanny was deemed an essential worker.

The Wiggles’ fan base gave them political pull. When the normal channels did not lead to a space, the Prime Minister’s suggestion that a space should be found seemed to do the trick.

The rules make it harder to get into MIQ if you are not a New Zealand resident. Political pull can turn a stalled immigration process into a fast-track so you can travel abroad and be eligible for MIQ for your return.

And political pull meant some four hundred MIQ spots are being saved for bureaucrats, businesspeople, and performers heading to a trade expo in Dubai in October. In 2017, the National-led government had committed over fifty million dollars for a pavilion for that expo. The government has considered it a priority. Once it is a priority, there will be spaces. That is how the system works.

Families split by the border and a lack of MIQ spaces cannot compete with any of that. The rules ensure that those with political pull can find a way through. Longstanding insiders have political pull. More recent migrants who have not seen their families for a year and a half do not.

The system seems corrupt – but not in any bribe-taking sense. Instead, it is corrupt in what seems a particularly Kiwi sense of the term. No money changes hands. No officials or Ministers are bribed. None need to be. The corruption instead is baked into the rules of the system providing a fast-track for those with political pull.

Officials follow the rules of a game that was rigged from the outset.

Dunedin lessons for the Christchurch Stadium

Newsroom put up a superb piece last week on all of the messes that Dunedin got itself into by spending stupid amounts of money on a stadium. 

I knew it was bad but hadn't known it was this bad. It was "Let's divert money from the CCO that runs the local lines company, deferring maintenance and leading to outages" bad. 

The judgment reads: “Aurora accepts it failed to exercise the skill, diligence, prudence and foresight to be reasonably expected.”

Between 2010 and 2016, Aurora failed, “without adequate justication”, to spend $37 million of forecast expenditure replacing and renewing assets. This led to a significant proportion of network assets “being at or near the end of their lives”, the judgment said.

The timing of this scandalous neglect was no coincidence, says whistleblower Richard Healey, of Dunedin, who exposed Aurora’s potentially harmful problems in 2016.

While a backlog of dangerous power poles weren’t being replaced across Otago, Aurora and sister company Delta paid $30 million in “subvention payments” – shifts within a corporate group, between profit-making to loss-making companies, for tax reasons – to Dunedin’s stadium.

“There were other factors and decisions related to maintenance that made sure we were always going to end up in this mess,” Healey says. “The key to the whole proposition is the fact that that money, which should have been used for the rebuild of the network, was portrayed by various people within council as some magic pot of gold that could be shifted across to fund the stadium – and it wasn’t.

Go read the whole thing. 

Yay, Sportsball and blackouts. 

Lunches

Well, we're very likely to be heading into another lockdown on the basis of a community case in Auckland.

Back in July, we found that the government had blown a pile of the emergency Covid money on the free school lunch programme. 

The free school lunches programme draws on special Covid recovery funds for another two and a half years, despite Treasury's misgivings about depleting the emergency money reserved against a resurgence of the virus.

The Covid-19 Relief and Recovery fund (CRRF) is a $50 billion pot of money that was established in the early days of the pandemic to respond to the health emergency and its economic fallout.

It's been tapped for a wide range of Covid-19 related expenses, but the Government has also used it for a range of increasingly tangential "Covid recovery" spending, and just $5.1b remained in the kitty at last tally.

Shame that the cupboard's a bit bare.

What did it the school lunch programme buy us? Last week Wednesday, Ministry of Ed dropped the evaluation of the school lunch programme. That evaluation has a cover dated May 2021, so draft findings would have been around before the budget was set.  

What did it find?

The programme had large effects on the proportion of lunches with at least one vegetable, and also reduced the proportion of lunches with sweet snacks. 

It provided a tiny and statistically insignificant decrease in the proportion of kids hungry after lunch. 

But kids who were often hungry after lunch, before the pilot, had larger increases in "being full", and in reported mental wellbeing.

And none of it cashed out into higher attendance rates at school. And improvements in school functioning (paying attention and such) were not statistically significant.

It's not immediately obvious that this pilot warranted expanding for broader rollout. There were existing food-in-school programmes before the government's programme, targeted at hungry kids. So effects weren't ever going to be huge: they'd have to come from kids that those programmes missed, or from improvements in what might have been on offer. 

And regardless of your views of the merits of scaling the thing up, I don't know what the word misappropriation even means when they're able to use emergency Covid spending on school lunch programmes. Might as well fund them out of the Defence vote if you're going to stretch things that far. I mean, some of those kids could be soldiers some day maybe. Is it more of a stretch than doing it out of the Covid budget? And what's the point of doing a pilot if you're just going to ramp the thing up to 11 regardless of whether the pilot shows it to be a good idea? Does anything mean anything anymore?  

Dosed

Driving home from Palmerston North last night around 6pm, a man was waiving a Covid-19 Vaccination Centre banner on the median of the road outside of the Onslow Medical Centre. 

We rolled down the window. They had end-day extra doses and wanted to get them into arms.

So the cats had to wait an extra half-hour for their dinners, and we got dosed. 

All went very smoothly. 

On checking in, I offered my NHI number but they didn't need it - they pulled it from name and date of birth.

About five minutes later Susan and I got jabbed. They wouldn't jab the kids, unfortunately. While MedSafe has approved the vaccine for those aged 12+, there is currently no way in New Zealand for a 13-year-old to be vaccinated. And the 11-year-old certainly isn't allowed, though I'd have very happily given her my dose.

We were told to book in for the second dose, along with a workaround for an issue they were having with the website for second-dose bookings. 

Great that they're getting any spare doses into arms. The banner on Moorefield Road was far more welcome than the set of antivax placards outside of Otaki.

Covid costs and quarantine costs

I don't like New Zealand's film subsidy regime and generally view it to be a good thing when an international film company chooses someone else's subsidy regime instead.

But it looks like Amazon's shifting Lord of the Rings production to the UK isn't just about the subsidy war. 

However, a crew member, who asked to remain anonymous, told Stuff they understood New Zealand’s Covid-19 border restrictions and the requirement that international cast and crew spend 14 days in managed isolation upon arrival was part of the problem.

...The crew member told Stuff that while there was “a general feeling of surprise” over the decision, some saw the Amazon project leaving New Zealand as an opportunity, because Amazon was holding up some of Auckland’s prime studio space for a year before season two was even planned to go into production.

But those opportunities would only eventuate if international productions decided to film here, and MIQ restrictions might turn them off, the crew member said.

“Unless we change MIQ, there’s no other productions,” they said.

Other production staff told Stuff they were disappointed, but not surprised, to be among the last to hear that production was moving to the UK. They said they heard about the move from media, and received confirmation via an email on Friday morning.

A year ago, I wondered whether NZ might be particularly attractive for international film production even without subsidy because the costs of set disruption with a Covid case can be substantial. Shutting down filming for a while because someone's turned up infected is costly. 

This crew member could just have been wrong on stuff reported here. Maybe the UK just offered a pile more money, and NZ really shouldn't be in those bidding wars anyway. 

But whatever advantage NZ has had in offering a Covid-free filming experience now seems outweighed by the combination of MIQ time costs and whatever the difference in subsidies might be. 

MIQ costs will not have changed substantially over the period, although expectations of ongoing MIQ costs may have - I do not know how much easier it is for film types to access rooms at their preferred times of travel, but I expect that it's easier for them than for the rest of us. They should be expecting that MIQ restrictions would be easing considerably next year for fully vaccinated and tested cast and crew, though there would always be risk of restrictions resuming. 

But the risks and costs of Covid cases among a vaccinated crew will be much different from the risks and costs of Covid cases in crews before vaccination was available. Running a tight ship - mandating 100% vaccination among crew and maintaining regular testing - may be sufficiently close to the experience of working in a Covid-free place that the certainty of two-weeks' delay in getting cast and specialist crew in just isn't worth it. 

All else equal, is the combination of MIQ restrictions plus low risk of Covid cases better or worse for international film productions than the combination of no MIQ restrictions plus higher risks of cases and outbreaks, now that vaccination is becoming the norm? We can't disentangle it from whatever's going on in relative subsidies. I would *love* to know more about this assessment on Amazon's side. It would be impossible to get a straight answer because it would get into subsidy detail that's probably confidential. But I still would love to know more about it. 

You can find the UK's arrival restrictions, along with everyone else's, at the IATA site. It looks like vaccinated travelers to the UK from the US only need to complete two Covid tests after arriving, on days 2 and 8, and fill in forms with location details - presumably so they can be found if someone on their flight turned up positive, or if they fail to show for their required tests. 

Vaccination class

If, as the Skegg report suggests:

1. A Delta outbreak is not unlikely before the vaccine rollout completes;
2. Border restrictions will start easing when the adult vaccination programme reaches completion, but under an aggressive containment model that will push hard to knock out any outbreaks that we do get; and,
3. "The degree of community protection will be increased if eligibility for vaccination is extended to people between 12 and 16 years of age"

then why aren't we aggressively pushing vaccination for 12-16 year olds before the end of the school year? MedSafe approved it for that group back in June. Government's said nothing about where those kids sit in the rollout. 

Right now, kids are in classrooms. They will be until December. 

Classrooms are risky: tightly packed enclosed spaces with poor ventilation. If something gets in there, it will spread, and Delta has been proving far worse for kids than prior variants have.

Classrooms are also a massive opportunity. If you send public health nurses out to the schools, you can jab all of them right there where they are. That's how we did the normal kid vaccinations when I was in elementary school in Manitoba. The public health nurse was Beth Kissick. She'd go from school to school and get all the Grade (whatever) kids with whatever jab was needed for them. The kids would line up outside the gym, then go in to get jabbed. Each kid was instructed to yell as loud as possible; she'd tell everyone ahead of time it was a yelling contest to see who could yell the loudest after the jab. Then nobody who was actually scared would feel bad about screaming. 

This stuff isn't rocket science. 

Getting everyone to make appointments to bring their kids to wherever vaccines are being administered is a hassle compared to sending nurses and jabs out to the schools where the kids are. 

If we do this, there's less risk to kids, there's less risk of the virus being spread by kids if it gets out here, and there's less chance that the risk posed by a big unvaccinated population would cause problems in any planned easing of border restrictions later.

If we don't do this, there's every chance that, when the adult vaccination programme completes, we'll get the following from the Prime Minister. Maybe December, maybe January:

"We have now completed the adult vaccination programme. Vaccination rates have been high. If you haven't gotten yours, we still urge you to get yours. And our plan has always been to ease border restrictions at the completion of the vaccination rollout.

But now that we have had time to think about it, Delta looks very scary for children. And those aged 12-16 have not yet been included in our vaccination rollout. If we opened now to vaccinated travelers, there's a high chance that Covid would get through into the schools. We cannot take that chance. We ask you all to wait just a little longer.

Unfortunately, it looks like the most effective way of doing that will be when school starts in February. Everyone is out on summer holiday now, and we can't expect people to make vaccination appointments for their teenagers during that time. The programme will begin mid-February and should complete by mid-March. It won't take that much longer.

We are aware that international regulators approved the Pfizer vaccine for those aged 5 to 11 years old back in late September 2021. We have today asked MedSafe to begin its evaluation of the vaccine for that younger cohort; we have decided that we cannot order any vaccines until MedSafe approves them. We blame Pfizer for not submitting applications to MedSafe to start this process earlier. We will start thinking about whether to finalise orders for vaccines for that cohort after MedSafe approves them, and we will start thinking about how to roll out vaccines to younger children after they have been delivered."

Surely there's a case for shifting some of the sequencing to get kids done before summer holidays hit. Make vaccination at school the default. Provide an opt-out mechanism for those with a doctor's certificate if there's any kid for whom there'd be a real medical risk in providing the shot. But otherwise, line 'em up outside the gym and jab 'em. 

I cannot remember a single kid who opted out of in-school vaccination in the 1980s. We all just lined up and got the shots. It was fine. This will be fine too. We just need to do it. 

Afternoon roundup

The afternoon's closing of the browser tabs:

• Tons of port workers have been avoiding getting vaccinated. In principle this should have been simple: have public health nurses drive out to the sites and administer it. But it's not been compulsory, antivax stuff has been influential among those workers, and they're probably (and rightly) pissed off with the regular nasal swab test requirements that could have been replaced by saliva testing over seven months ago - which would feed into a strong 'not gonna do whatcha told me' attitude. More results are out on the effectiveness of the Illinois protocol saliva tests - the one that the government doesn't want to use. And, just for fun, a plague ship berthed at Taranaki, where port worker vaccination rates are low. Let's hope we keep getting lucky, despite tapdancing on landmines. Looks now like only 11 of 98 border workers involved in this one had any vaccine. 


• Bernard Hickey has a chat with me and Oliver about Oliver's column last week. The prior link is to his column; the podcast is here. Our Insights newsletter column, reprinted in the Stuff papers, called on the government to extend residence to everyone who has been here with us since last year's March/April lockdowns - as a way of rectifying some of the harm that our immigration system has imposed since then. Oliver, Matt and I chatted about it here as well. 


• We'll be getting proof-of-vaccination that can work as a vaccine passport, but so far only intended for use in international travel. If Covid is ever here circulating, I will be happy to pay a premium to exclusively attend establishments requiring proof-of-vaccination for entry. 


• Damian Grant has a superb column on corporate social responsibility. 


• Union leader Matt McCarten on the merits of not banning speech. I agree with him. 


• The Taxpayers Union points to some odd-looking public health grants. This stuff wouldn't bug me so much if they were also putting appropriate funding into classical public health - contagious disease, vaccination promotion, the usual kinds of stuff that you might expect in the context of a global pandemic. But I could only see two grants in the whole set that seemed to have anything to do with the pandemic, and a third on measles. Just under $900k to try to get an assessment tool gauging barriers to vaccination and $1.2m looking at mucosal delivery for vaccines (not specifically to Covid, but in general). Both of those seem like really good ideas. They're also putting $1.16m toward waning measles immunity - good! But they're also putting $1.2m toward research on alcohol warning labels. It feels like infectious disease is still the poor cousin of whatever public health has more recently turned into. 


• Donal summarizes the Competition conference that was on in Wellington this past weekend. I missed it; these things usually cost an arm-and-a-leg, presumably due to cartel activity by conference organisers in preventing other conferences from emerging. Plus, I was in Christchurch Friday and Saturday teaching Canterbury's MBA students about the Emissions Trading Scheme. The session on three waters regulation would have been excellent.

Reader mailbag: electricity edition

An informed reader provided a heads-up about problems in a recent daft Dom Post piece on power markets. 

Our reader writes:

What a great idea! Let’s set up a government agency to pay existing suppliers of electricity what the agency believes to be their SRMC plus depreciated historic construction costs and to sell power to all retailers at what it pays. It’s such a good idea, why not apply this in other markets and have government agencies determine all prices? What could go wrong?

Max Bradford’s main role was to force the separation of retailing electricity and generation from owning lines. He had nothing to do with designing the market in the 1990s. The Ministers during the time the market was designed were John Luxton and Doug Kidd. The market started operating on 1 October 1996. Bradford became Minister in mid-December 1996, after the 1996 election. Easily checked on wikipedia). Why did the journalist not check what he was told on this, probably by Geoff Bertram?

The core issue at present is that some smaller retailers think the retail price of electricity is too low relative to the wholesale price or the wholesale price is too high relative to the retail. Their obvious solution is to build some generation or operate a long-term hedge policy, but that requires taking on risk. Better to moan and get a political hedge. The HHI of the generation market is around 2000. At least workably competitive and there are few instances of generators being net pivotal; their supply needed to meet demand and they win by jacking up prices, after you take into account all their forward sales. 

The “natural” situation of Meridian is to lose truck loads of money when a dry year forces up wholesale prices. Most of its generation is hydro, and so its output capacity falls in dry years. It also has a big commitment to Tiwai and to its own retail customer base, which do not go away in dry years (although it does have some ability to get Tiwai to scale back in dry years). Meridian would be short in dry years, if it did not properly hedge, and be burnt badly by the higher wholesale prices. Trustpower are similarly short in dry years without hedging. The journalist seems to think all generators inevitably make bucket loads when prices in the wholesale market are high. Rubbish.

Market separation is used where you have a monopoly combined with a competitive supplier. Retailing and generation are both competitive, so the parallel of Spark and Chorus is not relevant. The monopoly/competitive split was actually what Bradford forced through, long before this was done in the telco space. The journalist does not realise this. 

Something always allocates

Scarcity is a fact of the world. When demand for something scarce exceeds the supply of it, something has to allocate scarce resources across competing uses. 

The nice thing about using the price system to allocate scarce resources is that it provides incentives on all sides. On the demand side, it encourages those whose effective demand is relatively low to find other ways of meeting their needs. On the supply side, it encourages more production of scarce things that are highly valued. 

If your main objection to all of that is that poorer people can be outbid for those resources, the main way we have of handling that in modern liberal democratic states is by taking money from richer people and giving it to poorer people.  

New Zealand's MIQ system does not work that way. Capacity in the system is very limited. The government manages the booking system for scarce MIQ spaces, charging a price of zero for entry, but with some chance of sending people an invoice weeks after their stay if their stay wasn't to be free. 

Anyone entering NZ has to go through MIQ, so demand is very high. 

What allocates scarce spaces?

Somebody at MBIE decides whether you get priority entry. If you're a person of national significance, like a sports player or a diplomat, then you can get in that way. If you have an exceptionally compelling hardship case to make, you might have a chance - but there are far more such cases than there is capacity to deal with them. 

So entry for the rest then comes down to whether you're lucky in being able to refresh your browser quickly enough to get a slot, or hire an agent to do that for you - whether physically or with a script. 

It isn't a workable system. Those with political pull always seem to find a way in through special dispensation. Those without, cannot. 

If your pull is strong enough, you'll make sure that the rules are written so that you're explicitly allowed through. Heck, America's Cup teams were able to bring a team nutritionist through the system for a short stay at the same time as migrants here were unable to get their families in - no bribes required. That's New Zealand's way: write it right into the rules, and provide discretion for officials to find a way through when the political need is great. 

If money doesn't allocate scarce resources, something else does. And that something else right now is political pull for those who have it, and a broken MIQ booking system for everyone else.  

A year ago, we proposed a better way. Or at least a way we thought was better and that I still think is better (suitably updated to account for better testing and vaccination now). 

• Let MIQ facilities charge whatever they like. 
• Let them run their own bookings. 
• Have the government charge the facilities for the services that the government provides in ensuring safety. 
• Set audit trails on compliance with all the public health requirements. 
• Let new facilities enter the system so long as they meet public health standards. If there's a lot of demand to come into the country and room fees are high, hotels and others will find it worth their while to upgrade to serve that market. Heck, somebody might make a big bet that this mess will last a while and set up a purpose-built new facility. 
• Instead of letting everyone into the system for free and charging some people afterwards, flip it. Returning Kiwis would apply to MBIE for a voucher equivalent to the cost of a stay at a basic facility at an off-peak time. They could top up the voucher with their own money to stay at a nicer facility, or to travel at peak times. They would pay while making their booking, so we wouldn't wind up with the mess of multiple bookings that result in rooms being underallocated and empty spaces. The voucher would be used at time of booking and couldn't be used simultaneously in any other booking. 

The proposal found a fairly warm reception. But we did take a bit of stick on this idea from those who thought it was bad because it would let richer people into the country more easily than poorer people 

This morning we've found out that Larry Page was able to get into the country.

Billionaire Google co-founder Larry Page visited New Zealand amid Covid-19 border restrictions after his child fell ill in Fiji, Stuff can reveal.

Kiwi businessman and philanthropist Sir Stephen Tindall, who knows Page personally, confirmed he visited New Zealand because his young child required hospital treatment in Auckland.

Page, who is reportedly spending the Covid-19 pandemic in Fiji, has since left New Zealand, Tindall said.

Page, who founded Google with Sergey Brin in the 1990s, is the sixth-richest person in the world with a reported wealth of US$121b (NZ$171b).

Various details of the visit, including where Page stayed, whether he spent two weeks in a managed isolation facility and the grounds on which he was granted entry across New Zealand's closed border, remain a mystery.

Immigration and internal affairs ministers won't comment on the case and the Government refused to say whether Page was a citizen.

Immigration NZ border and visa operations general manager Nicola Hogg said in a statement: “Immigration New Zealand (INZ) can confirm Larry Page met relevant requirements to be approved entry to New Zealand.”

It is unclear on what grounds Page was granted entry.

I absolutely do not begrudge Page's entry. Any reasonable system would have granted his entry. Mine certainly would have. Maybe the existing system treated the application in the same way as other medical necessity cases, but even those seem subject to political pull. Or maybe it was entirely political pull. Impossible to tell. 

But I do know that if we used prices to allocate scarce spaces, we wouldn't have to worry about it. Instead we could rejoice in that higher fees for entry paid by folks like Page would help build the capacity that could be used for more people to be able to get through MIQ. 

Economists on immigration

What would help boost wages in Australia? An Australian panel of economists evaluated some options.

Boosting productivity growth and business investment are supported. The rest of the options are not. And less than 10% of surveyed economists support cutting immigration as a way to increase wages. 

Michael Keane of The University of NSW said the idea that population growth and increased labour supply were constraining wage growth was “so naive as to not really be worthy of comment”.

Consultant Rana Roy said only a “cultivated amnesia” could ignore the near-uninterrupted growth in real wages in US, industrialised Europe and Australia amid record inbound immigration in the decades after the second world war.

Gabriela D'Souza of the Committee for Economic Development of Australia said the idea owed much to a “one dimensional view of the world” that saw only the direct impact of immigrants on particular wages and not the impact of their demand for goods and services on a broader range of wages.

Dozens of studies had identified the overall impact as “near zero”.

Productivity ‘almost everything’

Robert Breunig of the Australian National University said immigrants appeared to add to productivity rather than detract from it, meaning slowing down immigration could slow down rather than add to productivity and growth.

I wonder what a similar panel of Kiwi economists would say. 

It feels like there's just this massive gulf between what academic economists conclude and what Wellington policy people have convinced themselves is true. One person described the Wellington dynamic to me as the taking of a status-weighted average of the views in the room. It's easy for that kind of process to veer off into weird places. 

Broken bookings

Cameron Conradie has been keeping a close eye on how the MIQ booking system works, or doesn't. MIQ doesn't have nearly enough spaces to meet demand, and has been running well below capacity because the booking system doesn't work. 

Despite the reduction in operational capacity by 500 rooms, based on available data, the average occupancy for April was 67.4% (note a number of day’s data were not published), 57.1% for May, 67.1% for June and 71.1% for the first half (1-15) of July. This is taking occupied rooms against the advertised operational capacity.

By taking rooms actually occupied against full advertised operational capacity, and assuming a 14 day turn-around, I calculate that more than 13000 vouchers were not used/not issued since the beginning of this year. Each of those unused rooms represents a significant economic opportunity cost and an avoidable and unresolved human tragedy.

(Obviously the system cannot run perfectly to capacity at all times, but the scale of the underutilisation is upsetting.)

His tentative diagnosis?

I have chatted to multiple people who have successfully made bookings. Some have been through MI, or are currently completing their 14 day stay.

• It is pretty clear that the system has minimal if any controls/cross checks in it’s coding to prevent/deter abuse.
• It seems it is possible to make multiple bookings for the same passport number. It seems that people create multiple accounts in order to improve their chances of getting flights to match booked room vouchers.
• Based on anecdotal evidence, It seems the only burden of proof on the traveller in order to finalise the booking within 48 hours of initial booking is to input a valid flight number (final leg of journey) for the corresponding day of arrival. It seems there is no requirement to prove that a flight ticket is held. Interestingly, the flight numbers are even made available on the site. Travellers are emailed, but it seems to be simply to confirm that everything is correct and that their other bookings can be cancelled. I’m not sure at what point this email confirmation is received.
• I suspect that many people are hedging their bets on travel restrictions lifting and being able to secure flights matching bookings already confirmed.
• I suspect many are hedging their bets on being granted permission to enter NZ.
• I suspect that many are on a hamster wheel of repeat bookings in the hope that their travel plans might work out.
• I suspect that many bookings are not being cancelled if travellers’ plans change or if they are unable to get flights with the flight number used to make the booking, hence the significant discrepancy in bookings vs actual arrivals.

So it looks like folks are making multiple bookings while trying to secure flights and the system doesn't wipe the consequent duplicate bookings when travel plans firm up. 

A year ago, the Initiative suggested flipping the system. Instead of government trying to charge some people for MIQ spaces after they go through MIQ, they should instead let MIQ facilities charge arriving visitors whatever they want. The government would charge the facility for the government's costs. And the government would provide eligible returning Kiwis with a voucher covering the equivalent of the cost of a stay at a mid-tier facility during off-peak times. That would be less than what facilities would charge during times of peak demand, but that's ok. Airlines charge a lot during peak travel periods too. 

Critically, under that system, you couldn't use a voucher more than once. If you put the voucher toward the costs of your coming visit, you couldn't use it again when booking the next room if you were trying for multiple bookings. Facilities wouldn't want ghost or cancelled bookings so would be charging enough up-front to discourage that. And much of the problem would be resolved. 

I wonder how much of the problem would ease if even a quarter of MIQ rooms were just put up for auction at whatever price would clear the market, with the government putting the revenues toward improving the MIQ system. 

It's a dreadful mess and the government just seems to see no reason to fix it.