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Budget in surplus but little else for taxpayers to crow about

 Budget 2014 is now public. The Taxpayers' Union had two people in the budget 'lock-up' crunching the numbers before the embargo was lifted at 2pm.

Overall we give the budget a score of six and a half out of ten.

We're disappointed that Finance Minister Bill English has failed to commit to giving New Zealanders meaningful tax relief.

Points for getting the books back into black, but deductions for not addressing the long term fiscal issues facing New Zealand.”\

While there’s a little bit of fat trimming here and there, overall its more of the same tax and spend. To fix our long term problems of an excessive tax burden, Bill English needed to wield an axe to superfluous spending. He’s failed to do so.

Compare this Government’s approach to Australia. Despite Australia’s dire fiscal outlook, its Government is reforming things such as the retirement age to make the public sector sustainable.

Over the next four years, the New Zealand Treasury forecast $7.6 billion in fiscal surpluses and this year, just $15.5 million is allocated to tax relief.

That represents $4,935 per household of over taxation. Instead of committing to giving that money back, the only tax cut in this budget is to cheque duty. That’s a tax cut of one dollar a year per New Zealander.

In answering a question from the florr during the lock-up, Mr English told journalists and analysts that he has the balance about right. We don’t agree. What’s needed is an early and clear commitment to a program of reducing tax and compliance costs.

Of $4,935, Kiwi taxpayers get back $1 per year. And that’s only if you still use cheques!

No wonder John Key has hinted at tax cuts during the election campaign. This is a tax cut that benefits only the one per cent who still use cheques.  What’s next, removing excise tax on fountain pens?

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Pre-budget analysis from the Taxpayers' Union: What we're looking for.

This morning our Executive Director, Jordan Williams was interviewed on TV3's Firstline on what we hope to see in today's budget.

Click below for video on demand.

Caution needed after surplus - Tax Union 3News - 15/05/2014

The Government is being urged to keep a tight lid on new spending as it delivers its first surplus in six years.
With a wafer thin surplus set to be announced today, Taxpayers Union executive director Jordan Williams says National should focus on paying back debt.

"There should be some prioritisation before politicians create new ways to spend our money," he says.

"When there is a surplus that should be used to pay back Government debt and give back money to the Kiwis that earned it."

The Government should also put an end to "unfair" corporate welfare, Mr Williams says.

"One of the things the Taxpayers Union is really focussed on is Government welfare – millions of dollars picking winners in the commercial sector – we say that's unfair to New Zealanders to divvy out money to the selected few."

Putting an end to corporate "subsidies" would help get the Government books back to pre-Global Financial Crisis levels, says Mr Williams.

"When we entered the GFC the books were in good shape.  What we now need to focus on – especially after Christchurch – is getting the books back into good shape in case we hit some more turbulence." 

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Double dipping MP should pay money back

This morning's Dominion Post covers the double dipping of New Zealand First MP Tracey Martin, who until October was on the Rodney Local Board.

NZ First MP Tracey Martin was paid more than $70,000 as a local council board member - on top of her almost $150,000-a-year MP's salary.

Martin, who entered Parliament on the party list in November 2011, was a member of the Rodney local board until elections in October last year. Auckland Council confirmed yesterday she was paid a local board salary during this time. She also received a ratepayer-funded cellphone, a council spokesman confirmed. Parliamentary Service supplies MPs with a smartphone.

Martin was also entitled to a mileage allowance for any travel undertaken on behalf of the board.

MPs are not barred from collecting the salary as long as they declare it in the Registry of Pecuniary Interests - which she did last year.

Outgoing Labour MP Ross Robertson was elected deputy chairman of the Otara-Papatoetoe local board last year, and said yesterday he planned to donate his $39,000 salary to a local school.

Martin says she makes donations to charity and community projects but refused to specify how much.

"Don't know - never added up all the things I paid for around the community. I guess I could but I would need more time to go through my records."

She said she helps fund a Women's Refuge project and local art projects. The hours serving the local board were "extensive" with many held on weekends.

Martin confirmed she accepted the phones. "One for parliamentary work, one for council work, and a third phone for personal business," she said.

A council spokesman confirmed Martin was paid between 2011 and 2013. The annual salary was between $34,000 and $35,000.

"There is no defined number of hours that members are required to work. Elected members receive a salary for their role, governed independently by the Remuneration Authority. The Remuneration Authority considers that Local Board members are not fulltime."

Read more.

Being an MP is a well paid and full time job. Ms Martin should pay Auckland ratepayers back for the double dipping.

What an outrageous sense of entitlement to be accepting payment from ratepayers while sitting in Wellington as an MP. Winston Peters should be demanding the money is paid back to Auckland ratepayers, and paid back now.

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Wellington Regional ratepayers on the hook for earthquake damage

This morning the Taxpayers’ Union went public (click here for the Dominion Post coverage) with concerns regarding the oversight of Wellington’s CentrePort by the majority shareholder, Greater Wellington Regional Council.

The Council owns 76.9% of CentrePort, which has invested heavily in the 'Harbour Quays' development – a series of office buildings adjacent to the Wellington train station.  

I am familiar with the developments, and the risks to ratepayers, as some years ago I acted for  group promoting Wellington’s liveable and compact central business district.  We submitted to the Council’s Long Term Plan and showed that the Council was not recovering a market return given the nature of the Port’s property development activities.

As an example we referred to the Majestic Centre to remind councillors how risky large scale office development is.  It was budgeted to cost $150 million. After the developers and the receivers finished it the total cost in 1991 was reportedly $205 million including funding costs.

It was sold to Kiwi Income Property Trust for only $48 million 3 years later.

The most recent annual report of Kiwi Income Property Trust Limited shows the current fair value of the Majestic Centre at $61.3 million, less than half the cost of development over 20 years ago. The same report also reports that $54 million is required to bring the building up to 70% of code.

In the most recent CentrePort Annual Report, the Chairman, Warren Larsen, says: 

"In 2014, the company will advance new plans for the popular Harbour Quays property precinct. These investments play a vital role in funding port growth plans.”

Mr Larsen goes on to say:

"Impact of recent events

On Thursday 20 June 2013, an intense cyclone brought strong winds and high waves to central New Zealand, causing damage to much of the region, including CentrePort. Wind gusts of up to 200km per hour were recorded.

Though outside the reporting period, it is important to note the 6.5 and 6.6 magnitude earthquakes that struck central New Zealand on 21 July and 16 August 2013, respectively.

Importantly, the port resumed operations immediately after the events, but the earthquakes caused damage to some CentrePort property, most notably the BNZ building which has been vacated for repairs to the interior of the building.

CentrePort is working with its engineers, insurers and affected parties to determine the exact cost of the repairs, which will flow through the business in the months and year ahead."

So, in January I asked the Council what the expected costs of the Earthquake were and whether impairment adjustments have been made to the value of CentrePort’s investment property portfolio.

Despite reports only in the last few weeks that some BNZ staff are still not able to work in the Harbour Quays building, Wellington Regional Council don’t know how much damage/cost resulted from the quakes.

The Council’s response to my information request is below.

Plenty of buildings were damaged by the Cook Strait quakes - why is it important in this case?

The key reason why ratepayers in Wellington should be concerned with CentrePort’s buildings, and the further development hinted at, is that unlike any other property investment company, Greater Wellington guarantee CentrePort’s debts.  That means, that unlike any other property developer, if things really do get nasty, Wellington ratepayers will be in the gun.

You’d think in these circumstances, Greater Wellington Regional Council would be keen to keep a close oversight of the Port and it’s property investments.

Apparently not…

Below is the Council’s response to our request for information.  Note that the Council only appears to be concerned with direct out of pocket costs (it words losses in terms of “the Council is paying NIL”).  As I experienced back in 2012, the Council does not appear to understand that losses and risks borne by CentrePort are tied to the Council thanks to the debt guarantee.

We think there are some key questions:

1. What was the extent of damage at the Port and it’s property development arm - “Harbour Quays”?
2. Who is bearing those costs?  The Port, the tenants such as BNZ or insurers?
3. Given the revaluation losses in the past, will CentrePort be forces to write-down (impair) the value of the Harbour Quay buildings as a result of the Cook Strait quakes?
4. Why doesn’t the Council have the information?  What oversight are they having of the Port?
5. Why does the debt guarantee exist in the first place? Why should Wellington ratepayers subsidise the Port to borrow cheaply to develop buildings that pull people out of Wellington’s CBD and onto Port land?

 

Click "Continue Reading" to view the Council’s response to our request for information.

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Update on electric cars

We've had plenty of feedback on the story we broke earlier in the week relating to Wellington Council's $100,000 spent on an electric car programme that resulted in an expensive staff car park.

First up, despite our own checking over the Easter Break and a service station attendant telling us that the charging station was lucky to be used once a month, two members of the public have contacted us to say that they use it to charge their electric vehicles. In fact one boasted to Radio NZ that the charging station was 'the cheapest 5 hours of parking in town!'.

There is also uncertainty surrounding who paid for the charging station.  Despite the Taxpayers' Union originally being told that ratepayers forked out for the charging station, we have now managed to assertion that Z-Energy (Shell at the time) paid for the charging station.  The obvious question now is what if anything ratepayers did get for the $100,000 spent by Wellington Council on the programme.  We're aware of:

 

  1. car leasing - the cost per year equivalent to the price of a brand new efficient hybrid
  2. a study into how people felt about the electric vehicles; and 
  3. good media coverage for the Council and the Mayor.
Now that we know that the charging station would probably have been built anyway, the $100,000 spent by the Council hardly seems worth it.

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The most expensive car park in the country?

The Taxpayers’ Union has uncovered what is probably the most expensive staff car park in New Zealand.  Between 2010 and 2012, the Wellington City Council spent $100,000 on a zero-emissions vehicle program, and only thing to show for it is a 'charging station' that no one uses.

Two years ago the Wellington City Council was boosting about the a 'pilot' zero-emissions vehicle program. The program included the installation of a 15-amp socket at what is now Z Energy, on the corner of Customhouse Quay and Whitmore St in Wellington. 

Wellington Mayor Celia Wade-Brown welcomed the arrival of the charging post. "It shows that we are gaining momentum," she said.

She was keen to see more electric cars on Wellington streets over time, with charging points scattered around the city. Read more.

But three years and $100,000 later there are no electric cars and no one to use the charging station Wellington City ratepayers forked out for.

Instead of being used to charge electric vehicles - the 'charging station' is being used as a staff car park

A member of the public who contacted our tip-line, claims to walk past the charging station every weekday and only once this year has an electric vehicle been parked there. We've wondered down and checked the site a dozen times within the last month. Every time the 'charging station' has been occupied by a conventional petrol vehicle. 

This photo was taken over Easter.  The car belongs to one of the staff members and is not an electric vehicle.

 

The green figures were always red

Even worse than a white elephant charging station is the fact that the Council was paying an annual lease for the electric vehicle more than the sticker price of a brand new, fuel efficient, hatchback. Given that the electric vehicle was used so little (it saved only 176 litres of petrol) the money would probably have saved more carbon had it been used to modernise the Council's vehicle fleet.

So why did the Council do it?

The 'evaluation' the Council referred us (prepared by a market research company for EECA) concluded that the economics of the vehicles are not viable but the program nevertheless had value as a 'communications tool'. We suspect that is code for 'good media coverage for the green mayor'. The Council couldn't produce evidence that the money spent caused a take-up of electric vehicles in Wellington. 

Tackling climate change and peak oil are not fixed by Councils wasting ratepayers’ money on pet-projects. It also raises further questions about councils trying to pick winners and subsidising an expensive infrastructure that benefits only a “handful” of people at most?

The report prepared by the market research company Synovate for EECA is available here.  The Council's response to the Taxpayers' Union information request is below.

The $100,000 of ratepayer money was used for green PR, not reducing emissions.

Wellington City Council electronic cars

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Bike NZ should front up

Today's Sunday Star Times reports the despite taxpayers' forking out over $70,000 for a review into Bike NZ's performance, the organisation is refusing to allow the public access to the report which would give insights into the value for money taxpayers are receiving from the millions pumped in to subsidise the sport.

Sport New Zealand is trying to stop information being released on the state of the government's second-biggest Olympic investment and the findings of a review into Bike NZ's capabilities.

Taxpayers will foot a bill of $70,500 after Sport NZ commissioned a review of Bike New Zealand - who received $18.3 million in public funding for its last Olympics campaign -- and which looked at the national sport organisation's financial state including the loss of its major sponsor, its relocation to Cambridge and high-performance planning in the wake of the sudden departure of successful national sprint coach Justin Grace and chief executive Kieran Turner.

Under the Official Information Act, Fairfax Media has requested details of the review. Sport NZ confirmed it had spent $70,500 on the review which was "initiated by BikeNZ" and "conducted by Martin Jenkins", a domestic consultancy firm owned by former Sport NZ boss Nick Hill.

The story goes on to say:

Last year the taxpayer-funded organisation avoided "a relatively large" financial deficit only by "capitalising" $200,000 spent on redeveloping a website (moving a $200,000 expense into an asset instead) and the organisation is still trying to replace the loss of its prime commercial sponsor which left two years ago.

If a sporting organisation throws $200,000 of taxpayer's money at a website, we think the performance review is probably necessary and its release in the public interest. We'll be writing to the Ombudsman to support Fairfax's complaint.

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