Donal Curtin

Donal Curtin is a macroeconomist (former chief economist for a big bank), writer (six years as a financial journalist with Euromoney, award-winning economics columnist, blogger), economic regulator (12 years on the Commerce Commission). He has an economics consultancy based in Auckland and blogs for The Dismal Science. Donal is on Twitter @donal_curtin

The real increase in infrastructure - The Dismal Science

May 28, 2017

The government made a decent effort in the Budget to boost the spend on infrastructure, as it showed in this graph, taken from the ‘Capital at a Glance’ document handed out yesterday as part of the Budget material. But if you thought that we will have an extra $32.5 billion worth of shiny new infrastructure in four years’ time, think again. All these numbers ignore depreciation. But, as we all know, road surfaces get worn, bridges develop cracks, classrooms get leaks, equipment wears out. How much of the budgeted $32.5 billion is actually going to get us new stuff, and how much is going to maintain, repair or replace existing stuff? Repairs and maintenance are of course a good and necessary thing, and nobody’s begrudging that spend, but how much of the infrastructure is going on maintenance … Read More

The state of our telecommunications – 2017 edition - The Dismal Science

May 22, 2017

We pay too much attention to bad stuff, so here’s some good news that has come out of the Commerce Commission’s latest annual report on the state of the telco markets (media release here, quick infographic here, whole thing here). Speeds are up. Congestion is down. Value for money is better. Prices generally compare well with other countries. Competition is working. Investment is high, with a big slab of dollars going into the rollout of the Ultra-Fast Broadband (UFB) fibre project. And even though the telco team at the Commission don’t say so in the report, I’d give them credit for helping to make this happen. There are lots of ways to illustrate the good stuff: here’s just one, on fixed line broadband, which speaks for itself.   As I said in my piece on … Read More

Media merger: Common sense – at last - The Dismal Science

May 05, 2017

Yesterday I warned you that I was writing a piece for competition policy tragics, and this is it. In the event it’s not terribly technical, so give it a go even if you’re not a tragic – especially as it shows how we’ve got, finally, to a better place when it comes to assessing things like the NZME/Fairfax merger. Plus it’s got some pirates in it. First some context. The Commerce Commission when it gets the likes of NZME/Fairfax has to decide, if there’s a loss of competition (as there was), whether to authorise the thing anyway, because there are, overall, net benefits to New Zealand: the good stuff (cost savings, international competitiveness, whatever) outweighs the bad (mainly the increased market power of the new entity). Here’s a completely general, utterly uncontroversial little diagram of all possible benefits … Read More

Media merger: Yup, as expected - The Dismal Science

May 04, 2017

By now you’re likely reaching saturation point on the NZME/Fairfax merger decision – every newspaper in the country seems to be running an editorial on it this morning, with the Herald for example saying ‘Blocking this merger is a big mistake’ and the Dominion Post going for ‘The Commerce Commission doesn’t get it’ – so I’ll try and say something new. First thing is, I have a fair degree of sympathy for the folks in the two companies. They’re on leaky ships that are taking in water, and even though the merger lifeboat wouldn’t have held all of them, enough of them would have clambered on board to live for another day. You can understand why they’ve reacted with everything from disappointment to rage. But that’s commercial life, folks. Technologies  improve, customers switch preferences, economic policies change, businesses … Read More

An economist chooses his favourite books of 2016 - The Dismal Science

Dec 18, 2016

Surrounded by “isn’t it awful”, “the world is going to the dogs” types? Here are two antidotes: Nobel laureate Angus Deaton’s The Great Escape: Health, Wealth and the Origins of Inequality and Johan Norberg’s Progress: Ten Reasons to Look Forward to the Future. Both document the immense progress made in the past three hundred years by large parts of the world on multiple fronts – not just in living standards, but also in health, longevity, literacy, freedom, peace and global equality. Deaton’s book in particular will remind you that a prime reason many poor countries have missed out is political: they are kleptocrat tyrannies (another reminder, if you haven’t yet, to read Acemoglu and Robinson’s Why Nations Fail), which is one of the reasons why Deaton is critical of foreign aid (it keeps the Mugabes going). He’s … Read More

Productivity Commission: Good ideas – but now what? - The Dismal Science

Nov 29, 2016

Yesterday’s report from the Productivity Commission, ‘Achieving New Zealand’s Productivity Potential’ (press release here, overview here, whole thing here), is full of good ideas. In the housing market, for example, their proposals would have the happy outcome of pressing both the equity and efficiency buttons at once. In addition to dealing to people sleeping in cars, a better functioning market would lift productivity: “A housing market that responds to demand pressures facilitates labour mobility and improves productivity by allowing firms access to a deeper labour market, as well as more opportunities for specialisation, innovation and technology spillovers. For workers, being able to live in places where their skills are most valued improves their incomes” (p65). The Commission is big enough and bad enough to push its own barrow, so I’m not going to recycle its … Read More

Budget 2016: No drama – and that’s fine - The Dismal Science

May 26, 2016

First thing I’d say about yesterday’s Budget is that I hope the central economic forecasts work out as expected. If we do indeed get annual economic growth of close to 3% a year, low inflation, and the unemployment rate gradually falling to 4.6% by 2019, we’ll be doing quite nicely, thank you. The growth numbers aren’t as hot if you do them on a per capita basis, as you really ought, but even so 1.3% a year isn’t too shabby. And a 4.6% overall unemployment rate does a power of good for getting more marginal groups into employment. The Budget is one of the few places where people can get some sort of feel for what is likely to happen to business profits in coming years: we don’t yet have a Statistics NZ measure (most other countries do), but fortunately … Read More

A once in a generation opportunity - The Dismal Science

Mar 10, 2016

I’m going to be talking about infrastructure, but first let’s detour back to August 1968. President Johnson is waging the Vietnam War, the Warsaw Pact forces have invaded Czechoslovakia. In Dublin I have just turned 17, and I’m hoping that José Feliciano’s Come on baby light my fire will encourage one of the prettier girls from St Louis Rathmines to have a slow dance with me (it won’t). And on August 19, 1968 this concrete power pole was manufactured: the date was inscribed in the concrete by someone at the (unidentified) factory. It’s one of Vector’s, and it’s on Albany Heights Road in Auckland. It’s a fine example of how infrastructure can be a great, enabling investment. It’s not just that this pole has been giving good service for 47 years already and, based on manufacturers’ blurbs and various … Read More

Visit to a Special Housing Area - The Dismal Science

Nov 27, 2015

A while back, I saw that a Special Housing Area (SHA) had been set up quite close to us, in Browns Bay. So I went and had a nosey, as you do. It wasn’t what I’d expected, from a number of perspectives. I’d had at the back of my mind that SHAs would be reasonably substantial sites – it’s rather implicit in the term ‘area’, you’d think – so I was somewhat surprised that the SHA consisted of a single, small to medium sized commercial building at 4 Bute Road (pictured below). To be fair to Auckland Council, this must be an unusually small SHA. Their guidelines for approving SHAs say (at point 5) that “The council has a preference for SHAs with a yield of at least 50 dwellings”, and this one just scrapes in. The Council’s … Read More

When network effects go bad - The Dismal Science

Nov 23, 2015

“Final Mail Newsletter”, says the December 2015 issue from a chap I buy stuff from. “Due to the increased costs of postage and decreased service from NZ Post this will be the final newsletter that you will receive via post. From 2016 the Monthly Newsletter will be sent out by email”. Nothing new there, you might think: that’s how it is these days. And yet it says some important things about monopolies and network industries. One is that we tend to assume that monopolies, and especially those ‘natural’ monopolies, are a fixture that we’re lumbered with. There’s only ever going to be one national grid for electricity transmission, only one network of letterboxes and post offices. And with that mindset comes at least some disposition towards regulation – if nothing’s going to relieve us any time soon from our vulnerability … Read More