Activity One this week: Appeared on TV One programme "NZI  Business" talking  
about RMA Reforms (on Wednesday morning.)
(This programme screens at 6.00 am and I was first off the blocks so  
do not apologise if you missed it.)

The opening question was "Are the National Party's package of reforms  
to the RMA sufficient to satisfy business?"
I explained that all party policies had been framed before the full  
impact of the bursting of the housing bubble and the international  
credit crunch made itself felt here. By the time it did, all  
candidates were in full electioneering mode and had little time to  
develop the policies needed to deal with this rapidly changing and  
developing crisis.

Fortunately the National Party RMA policy package did include reforms  
which would make it easier and faster to get major infrastructure  
projects approved and built and so those reforms will be useful given  
that one part of the standard anti-recession package is for Government  
to spend on infrastructure.

However, for the real economy to recover, the private sector must  
regain the confidence to invest in private projects – and this  
requires much more dramatic reforms to both the RMA and all the other  
legislation which impacts on private investment decisions.

During boom times people tend to forget about the connection between  
property rights and property value and hence the value of the security  
available to banks and other financiers.

For example, many of our farmers have borrowed against the farm to  
invest in dairy farming.
Now those farmers face falling dairy prices across the board, and  
falling land values because of the property crunch. With luck they  
will still have sufficient headroom to keep their financiers  
reasonably comfortable. However, if their local council decides to  
designate a large part of the farm as "Outstanding Natural Landscape"  
with all manner of impacts on property rights, some of that headroom  
disappears, and as they now say in California, they get a little  
closer to being "underwater" – i.e. in negative equity.

If central Government then introduces an Emissions Trading Scheme  
which reduces the farm income by say $30,000 (even if over some  
indeterminate time frame) then the value of the farm and hence the  
security available decreases further –  and maybe the headroom is  
gone. Sea levels may not rise but many farmers find themselves  
"underwater".

If we look back to the Great Depression, the Roosevelt administration  
launched a major infrastructure programme which however failed to end  
the depression. The problem was that the Government also passed over  
thirty pieces of legislation which threatened or undermined property  
rights which brought private investment and lending almost to a  
standstill.

So now that the campaigning is over, Government has to step back and  
and set up some mechanism for analysing the machinery of government to  
identify those Acts, Policies, and Regulations which will prevent  
entrepreneurs and their financiers  from building us out of recession.

The first "casualty" must be those local body development  
contributions which actually fine entrepreneurs for having the  
audacity to build new tourist accommodation, factories or housing.
The Centre will be working with others to identify the full range of  
targets – any feedback will be appreciated.

Robert Higgs' famous paper "Regime Uncertainty –Why the Great  
Depression Lasted So Long and Why Prosperity Resumed after the War"  
reminds us that during this period one threat to property rights  was  
the frequent invasion of factories and offices by union members who  
simply took over the property until they got their way and yet were  
never prosecuted for trespass. Evidently they were immune to  
prosecution because "their cause was just".

These days, we need to consider the wider impact of allowing  
Greenpeace and anti-GM activists to invade private property and even  
destroy valuable experimental plants, apparently without risk of  
prosecution because they too are "doing good works".

The Centre is preparing further written material on this topic which  
we shall circulate.

In the meantime we would appreciate any feedback on regulations and  
actions which threaten, undermine or actually take away your property  
rights and hence discourage investment and devalue the security  
available to financiers.