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Chatham Islands treaty settlement travel costs skyrocket

website_010.jpgThe efficiency of the Office of Treaty Settlements' travel arrangements needs examination, after just nine officials racked up a $57k travel bill to the Chatham Islands alone, in only 18 months. 

Serious questions need to be asked about why the Office have not elected to use other means to remain connected with those involved in the negotiations on the Chatham Islands. Have they thought of video conferencing, emailing, or even picking up the phone? One official’s return flight from the Chathams alone cost the taxpayer over $2,600 – that is enough to get you around Europe and back.
 
The figures, which were obtained under the Official Information Act and are broken down below, are made up of $44,214 on flights, $10,911 on hotels, and $2,025 on rental cars and fees.
 
waitangi_the_main_town_on_the_chatham_islands_phot_1431883473.JPGThe Office have blamed the quality of internet on the Chathams as restricting other means of communication, but the local council there advised us that the internet works perfectly fine.  They said that people can even come into their offices and use video call facilities.
 
What’s more, officials have been negotiating with local iwi since August 2015, but they don’t even have an agreement in principle to show for it. When asked how long the negotiations are expected to last, the Office were unable to pinpoint an end date. These travel costs could go on for years and years to come.
 
A Google search of the lavish farm-stay accommodation officials elected to put themselves up in indicate that there has been no expense spared on these island getaways.

The broken down figures and OIA response can be seen below: 

 

 

Lifetime Tax (post budget update)

Tax threshold changes reduce lifetime tax by $80k /10 months

Lifetime_Tax_(post_budget_update)_cover.pngThe tax threshold changes in last month’s budget will see the largest relative tax savings go to those who already shoulder the smallest relative burden: middle-income earners.  That's the conclusion of Mac Mckenna's latest report - updating the "Lifetime Tax paper we released in the week prior to Budget 2017.

The income tax thresholds in Budget 2017 will see Kiwis in an average household save $80,000 in tax over a typical lifetime, equivalent to 0.80 years of their earnings.

Income earners in the lowest decile of households save $16,000 (0.70 years) while those at the top will pay $120,000 less (only 0.66 years). Top earners now spend 20 years of work paying tax, two years more than any other group

These findings cast the light on many of the myths surrounding who receives the most from the planned tax changes.  We hope it provides for a more informed debate from politicians and those pushing their own agenda.

The changes announced in Budget 2017 only partially compensate for the increases in average incomes (pushing workers into higher tax brackets) since 2010. The top threshold remains unchanged so a growing proportion of earners are moving into top income brackets despite not being relatively better off.

Unfortunately, future inflation will offset tax relief because of the Governments failure to announce periodic inflation adjustments to tax thresholds. Even with the changes coming into effect on 1 April next year, Treasury estimates that by 2021 New Zealanders will have paid an extra $1 billion in tax because of fiscal creep (or $200 million a year).

It's time the Government finally indexes tax brackets to inflation and protects New Zealanders from paying higher tax rates without seeing real increases in income.

Key findings:

  • The average household saves $80,000 in tax over their lifetime from Budget 2017 threshold changes.
  • Total lifetime tax for the average household is equivalent to 14.2 years of income. The savings equate to a reduction of 0.8 years.
  • Households in the bottom decile will save $16,000 in tax over their lifetime from Budget 2017 threshold changes – a saving of 0.7 years. They now spend 17.7 years paying tax.
  • Households in the top decile will save $120,000 in tax over their lifetime from Budget 2017 threshold changes – a saving of 0.66 years. They now spend 19.7 years paying tax, the longest of any group by two years.
  • Due to insufficient data available from Government, these results do not account for Working For Families, Independent Earner Tax Credit, or Accommodation Supplements changes. Including these additional policy changes would only further emphasise our point: top income earners receive disproportionately less from Budget 2017 than other income groups.

How Budget 2017 impacts different household's Lifetime Tax (household earning deciles)

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Revealed: MFAT giving taxpayer money to North Korea

images-3.jpgFurther to our earlier exposés of aid money being wasted on countries spending it on space programmes and the millions going to subsidiaries of the Clinton Foundation, we can now reveal that under the current Government, the Ministry of Foreign Affairs & Trade has given $215,000 to North Korean aid projects, despite the despotic regime's efforts to develop delivery systems for nuclear weapons aimed at some of our closest allies. 

Included in the aid were six tractor/trailer units to be used on a DPRK "NZ Friendship Farm" - i.e. equipment under the direct ownership and control of the despotic regime.

While North Korea wants to wipe Western nations off the face of the Earth, our Government has been diverting taxpayer money to business schemes owned and managed by the regime. It is inexcusable.

The Government can say all it likes to justify this spending, but the fact it stopped when Taxpayers' Union started asking questions on the issue, shows that it really is indefensible.

Labour Party, Phil Goff deserting the poor in support of motorway tolls.

Phil Goff and the Labour Party need to re-examine their support for motorway tolls if they want to remain champions of low income workers, say the Taxpayers’ Union. It is pointing out that motorway tolls would disproportionately affect low income workers in Auckland’s outer suburbs.

Jordan Williams, Executive Director of the Taxpayers’ Union, says “Congestion charging which manages demand is one thing, but allowing Auckland Council to dig deeper into our pockets by tolling existing motorways is a step too far”.

“Auckland Council claims poverty, but in actual fact its revenues are growing while the proportion of that going to transport infrastructure investment is reducing.”

“The best way to get Aucklanders moving would be for Phil Goff to follow through in his promises to cut wasteful council spending and reinvest that into higher spending priorities.”

Op-ed: I'm a neoliberal. Maybe you are too

This piece first appeared in the National Business Review on 19 May 2017

I’m a neoliberal. Maybe you are too
Opinion piece by Jordan Williams

‘Neoliberal’ is a fashionable term, but is often poorly defined and misunderstood. Radio New Zealand could barely contain itself last month when former-Prime Minister Jim Bolger repudiated neoliberalism and, incredibly, blamed his Government’s ‘neoliberal’ policies from the early nineties as a cause of New Zealand’s ‘growing inequality’ [of course as demonstrated by Bryce Wilkinson and Jenesa Jeram of the New Zealand Initiative, inequality has barely changed, but I’ll leave that for another day].

‘Neoliberal’ gained credence by those who use the term to attack fans of the free market – applying the ‘neo’ prefix to paint a greed-obsessed narrative of what was more commonly known as ‘classical liberalism’, ‘libertarianism’, or in 1980s New Zealand, ‘monetarist’ policy.

Rather than spend our time defending the left’s ill-defined strawman, or debating the term, I say it is time we embrace it.

The Douglas-Richardson economic reforms, although treated as controversial in the media, are also mostly accepted as mainstream and prudent.  Nine years of Labour Government under Helen Clark didn’t rollback a single initiative.  But we lack a useful descriptive term. People who, like me (and many of the commentators in this paper), argue that the reforms set New Zealand up for at least two decades of economic prosperity and should go further, lack a label to grasp.  We are people who are libertarianish — but fundamentally different to the mainstream libertarian movement when it comes to important values and approaches.  Libertarians, in their eyes, see us as too corporatist, statist, or leftist, especially when it comes to our dismissal of wholesale legalisation of drugs and other social ills.

I am one of them, and perhaps you are too.  Our left-wing opponents describe us as neoliberal to slander us.  Why not follow the Suffragettes and wear this label with pride?

So who are “we”?  Based on this piece by my counterpart at the UK’s Adam Smith Institute, Sam Bowman, let’s set out who a New Zealand neoliberal is, and who they are not. 

Here are a few common beliefs that I think “we” have in common. I’m not claiming that these beliefs are exclusive to us, of course.

  1. We like markets a lot. We think that markets are by far the best way of organising most human affairs that involve scarce resources, because they align people’s incentives in ways that communicate where resources can be used most efficiently, and give people reasons to come up with new ways of using existing resources. We are proud of New Zealand leading the world in implementing a tradeable quota fishing rights management system.  This serves to prevent the near-certain degradation of the natural resource when in common ownership.  We want to harness markets and market-like systems in areas they’re not present at the moment — healthcare, education, water allocations, organ allocationstraffic congestionland-use planning.

  2. We base our beliefs on empirics, not principles. There is an unlimited number of stories that you can tell about the world, but only a few are true.  You find out which are true by comparing the stories to reality with experiments and throwing away the ones that don’t fit.  It doesn’t matter if a theory appears to be internally coherent — if it can’t stand up to experimentation, it is probably wrong.  In particular, quantitative empirical research is what we look for.

    This annoys our libertarian friends.  We appreciate the inefficiency of the ACC-model and the necessary health and safety approach lacking economic incentives (and safeguards) created by personal injury tort-law.  Nevertheless, we wouldn’t give it up in favour of our previous legal lottery – where fault (and the ability to pay by a tortfeasor) is determinative of whether compensation is receivable following injury.  It is not perfect, but better than the alternative.

  3. We are liberal consequentialists. A system is justified if it is the one that best allows people to live the lives that they want to live, or makes them happiest or more satisfied than any other.  There are no inherent rights that override this.  People’s wellbeing is all that matters, and generally individuals are best at defining what is best for themselves.  We are suspicions of big government, and appreciate that, in general, people make better choices about how to spend their money than public agencies or politicians.

  4. We care about the poor. Caring about people’s wellbeing leads us to caring about the worst-off people. Usually an extra $200 makes a pauper better off than it makes a millionaire.  This diminishing marginal utility means that poor people’s lives are the easiest to improve for a given amount of time, energy and money.

  5. We care about the welfare of everyone in the world, not just those in NZ. It’s natural to feel more in common with people who live near you and live like you, just as it’s natural to care much more about your family than about strangers. But when it comes to policy, we care about improving everyone’s lives, wherever they are. Increased international trade, less barriers, and adoption of ‘neo-liberal’ market reforms, have seen extreme poverty fall from 44 percent in 1980 to around 10 percent today.  We know this is a good thing, even if we would prefer that developing countries worked harder and faster to bring their labour standards up to par.

  6. We try not to be dogmatic. Testing your beliefs against the world requires you to be prepared to throw out the ones that are wrong, even though it’s often painful to do so. This means that we have to be willing to change our minds, contradict our friends, forsake our heroes, and be unpopular with fellow-travellers who think that they’re obviously right.  Sometimes we wonder whether we’re contrarian, or find ourselves respecting those who we disagree with, but value their holding truth to power.

    One way to deal with the emotional costs of this is to internalise the virtue of open-mindedness so that changing your mind makes you feel just as good as being ideologically consistent once did.

  7. We think the world is getting better. And, really, it is: pro-market ideas have taken hold nearly everywhere, raising living standards by an extraordinary amount for a huge number of people. The centre-ground consensus in nearly every developed economy is extremely pro-market and liberal compared to where it was fifty years ago, and although they are often less pro-market than they were one hundred years ago, that is offset by major advances in the rights of women and non-whites.

    Assuming life-expectancy is the best single measure of economic, health and social progress, the world is a tremendous place. Two hundred years ago no country enjoyed average life expectancy of more than 40 years old.  Today, no county’s population has an average life expectancy of less than 50.

  8. We believe that property rights are very important. Predictable and formalised ownership of scarce resources is extremely important. It allows people to make long-term plans for the future, which incentivises improvement of their own circumstances. Overriding property rights capriciously undermines the incentive people have to hold off from consuming and invest in their futures instead, because they will be unsure about whether they’ll actually get to enjoy the returns of that investment. This is extremely important in the developing world, where weak or nonexistent property rights preclude capital accumulation and growth.

  9. But we’re comfortable with redistribution, in principle. Because we’re consequentialists we don’t think that property rights are morally significant in and of themselves — they’re a useful rule that allows the economy to function properly but there is no intrinsic value to them.  People don’t really deserve the talents they’re born with any more than they deserve to have been born in a rich country rather than a poor one, or to be born in 1996 rather than 1896.  Because of this, redistributing wealth or income from lucky people to unlucky people may be justifiable, if it’s done without depressing economic growth too much.

    Too much redistribution can have bad consequences because taxes tend to depress investment and growth, but too little redistribution has bad consequences too — poor people don’t live good enough lives.  A neoliberal is someone who believes that markets are astonishingly good at creating wealth, but not always good at distributing wealth.

  10. We think the rule of law is important. We understand that there is a difference between the rule of lawyers and the rule of law.  We approve of English-law bright line doctrines: law which is certain and predictable, as opposed to principle-based and interpretive or flexible.  Even if regulation isn’t perfect, better to have certainty so people can order their businesses and lives around predictable regulative outcomes.  We are suspicious of regulatory discretion, applaud permissionless innovation and generally welcome technological innovation/disruption.

I’ve noticed that most, if not all, the above statements are true of many people I hang around with and consider my closest intellectual bedfellows.  I also suspect a weak version of most of them is held to by many people who consider themselves centrists, and that a very weak version of this might be the basic ideology that underpins the modern world.

My name is Jordan Williams, and I’m a neoliberal.

Jordan Williams is the Executive Director of the New Zealand Taxpayers’ Union.  This piece is an adapted version of an opinion piece by Sam Bowman of the Adam Smith Institute published in 2016.

Op Ed: John Bishop on Budget 2017

Joyce’s budget soothes path to re-election

In a climate of strong economic growth and continuing surpluses in the government’s account, Steven Joyce has opened his wallet wide and gone on a spending binge. This is an election year budget in which every itch in the electorate has been soothed to the maximum extent possible.

Total government spending is increasing by $5.0 billion to $100.8 billion and even more spending is promised. But the really sharp increases are taking place in Budget 2017, with more modest increases later (although still much larger than previous years).

Stephen Joyce is embarking on the biggest election year spend up since Roman politicians in the dying days of the republic gave out free bread to get votes from the plebeians.

Yes, there is considerable tax relief at the lower and middle levels and more assistance for low and middle income families and that is to be welcomed, even though it is not clear that the full extent of fiscal drag since National came to power has been compensated for.

In fact, the analysis prepared by the Taxpayers’ Union released prior to the budget showed that for average earners on $57 000 a year, a reduction of $26.17 a week was needed to compensate for fiscal drag caused by wage inflation. Joyce has delivered a reduction of just $20.38 which means a person on the average wage has actually gone backwards under this government.

A professional earning $120 000 was due $42.04 on the Taxpayers’ Union figures. Joyce delivered just $20.38 because there has been no change to their upper tax threshold.

The good news is that there are no new taxes other than a very small rise in the EQC Levy – to a maximum per household of $69 a year.

Perhaps the government has quietly gone a bit soft on one of its ambitions – to pay down debt. On the face of it debt as a percentage of GDP is reducing to 20% of GDP by 2020 and to between 10% and 15% by 2025.  Most of that is due to rising surpluses fuelled by economic growth which treasury projects at 3.1% over the next four years.

However, a more detailed look at the budget tables tells a different story. The statement of cashflows for the debt programme shows that net debt increased by $2.787 billion in the 2016 fiscal year. And it will increase again by $3.02 billion in the current year - much less than the $8.3 billion originally projected.

However, repayments in the following four years - 2018 – 2021 – show net repayments of $10.13 billion, but almost half of that is in 2021. If the strong and positive economic outlook change, then the projections of sharply reducing debt in this budget’s out years will fall too.

Certainly, that will make it more difficult for Labour and other opposition parties to make a credible case for even more spending. Joyce’s elections bids are so high that outbidding National and still staying credible that the money can be spent effectively, will be hard.

Joyce denied this was an election bribe, but the fact remains that with all the changes coming in on 1 April 2018, voters who like this package will have to vote for National (or its support parties) in order to get it.

Incidentally Joyce addressing this in the budget lock up said that advice from officials in IRD and related departments was that they needed until April next year, and the changes couldn’t be done before then, such as in October this year.

Will there be changes in tax rates in future? All the budget says on that is the standard bland reassurance that the government “intends to continue to adjust tax and transfer settings as fiscal conditions allow.”

John Bishop is the chair of the New Zealand Taxpayers’ Union

John Bishop overview on Budget 2017

Budget 2017 overview - a taxpayer perspective

Budgets are essentially political documents, and especially in an election year. It’s the government of the day’s bid to win the election.

And in 2017 Steven Joyce is embarking on the biggest election year spend up since Roman politicians in the dying days of the republic gave out free bread to get votes from the plebeians.

In a bid for re-election Joyce has sought to soothe all the political itches he could, and to leave little room for Labour and other parties to outbid National.

With all the changes to personal incomes and transfers taking place from 1 April 2018, there is a clear political message: you have to vote for National (or one of its support parties) to get these benefits.

Total government spending is increasing by $5.0 billion to $100.8 billion and even more spending is promised. But the really sharp increases are taking place in the next financial year, with more modest increases later (although still much larger than previous years).

All budgets have a centrepiece, the presentational maypole around which Ministers dance with all the glee they can muster.

This year there are four pillars of which the families package is the central one.

This delivers an average of $26 a week to 1,340,000 families at a cost of $2 billion over four years. Tax thresholds are adjusted, although tax rates are not changed. The accommodation supplement is simplified and increased. And Working for Families also gets more. 

What’s interesting about the changes to the Accommodation Supplement is that the rates will now vary by region, which will deliver more money to families in West and South Auckland and parts of Wellington and Christchurch, precisely the places where low and middle-income families are struggling financially, and also struggling to vote National.

The families package is supported by three others. There’s more money for public services: another $3.9 billion for health; $1.1 billion for education mainly to fund roll growth.

And $4 billion on infrastructure. Included in this is $812m to restore SH One north and south of Kaikoura; $450m for more rolling stock for Kiwi Rail; $436m for Auckland’s City Rail link; another $392 m for new schools, and much more.

Ministers even found $11.4 million to upgrade Radio New Zealand’s technology.

Finally, there’s the business growth agenda, an omnibus term for more money for programmes supporting business like Innovative New Zealand ($373m) which gets a total of$433 million. 

Governments go to a lot of trouble to frame the debate over the budget in terms favourable to them.

This budget simply continues that tradition. If government rhetoric is to be believed all the extra spending is responsible, necessary and will achieve its intended purposes.  Enabling ordinary New Zealanders to share the benefits of economic growth is the mantra uttered by Ministers. 

And the assumptions underpinning the projections are bold: growth averaging 3.1% over the next five years; no sharp fiscal shocks, and surpluses continuing from $2.9 billion this year to $4.1 billion next year and $7.2 billion in 2020/21. And that’s taking into account all the extra spending announced today.

Average wages will continue to rise and unemployment will continue to fall. And the balance of payments will not blow out. Nominal debt will remain broadly the same, although it will fall as a percentage of GDP.

There’s only the vaguest of commitments to actual changes in tax rates: Minister Joyce told the budget lock-up that the government “intends to continue to adjust tax and transfer settings as fiscal conditions allow.”

In fact on today’s numbers the average wage earner is going backwards under Mr Joyce’s deal because the full extent of fiscal drag since National came to power has not been compensated for.

In fact, the analysis prepared by the Taxpayers’ Union released prior to the budget showed that for average earners on $57 000 a year, a reduction of $26.17 a week was needed to compensate for fiscal drag caused by wage inflation. Joyce has delivered a reduction of just $20.38 which means a person on the average wage has actually gone backwards under this government.

A professional earning $120 000 was due $42.04 on the Taxpayers’ Union figures. Joyce delivered just $20.38 because there has been no change to their upper tax threshold.

The good news is that there are no new taxes other than a very small rise in the EQC Levy – to a maximum per household of $69 a year.

Overall this is an election year budget intended to propel National back to power. Any benefits it might have for the economy or for ordinary taxpayers seem secondary. Real tax reform is still needed but not forthcoming in this budget.

John Bishop
Chairman
New Zealand Taxpayers' Union
www.taxpayers.org.nz

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Media Release: Changes in tax thresholds sell us short

Changes to tax thresholds don’t compensate for changes in average earnings growth for the average earner with an income of $57,000 based on previous reports on fiscal drag by the Taxpayers’ Union.
 
“The effect is that the average worker is paying a higher average tax rate now than in 2010 — even after the introduction of this ‘families income’ package,” says Taxpayers’ Union Economist, Mac Mckenna.
 
“Stephen Joyce has sold us short.”
 
“Because income tax thresholds have not been adjusted to reflect growth in average earnings, New Zealanders have had sneaky tax hikes every year since 2010 that have pushed people into higher tax brackets.”
 
“The changes announced today, which will come into effect on 1 April 2018, do not even have the effect of returning the average tax rates faced by average income earners back to 2010 levels.”
 
“Given the huge surpluses, there is no excuse for the average income earner to paying more than in 2010.  This is supposed to be a Government which believes in fiscal conservatism, and Budget 2017 doesn’t deliver.”
 
Notes:

  1. Effects of growth in average earnings for average earner ($57,000 pa)
  2. Annual income tax paid (current): $10,120
  3. Annual effect of average wage growth (based on changes in average earnings): $1,361 ($26.17 per week)
  4. Savings as a result of threshold changes: $1,060 ($20.38 per week).

Media Release: Bill English bets on a modest carrot, big spending, to win an election

‘Vote for National and get a tax cut next year’ is the message from Budget 2017, says Jordan Williams, Executive Director of the Taxpayers’ Union. “But middle and high-income earners will be burdened with a higher proportion of the costs of government.” 

“The person on the average wage has gone backward tax-wise, since 2010.” 

“In politics, the squeaky wheel gets the oil, and Budget 2017 is an enormous spend-up seeking to soothe all the political itches Mr Joyce can find. Even worse, virtually none of the new spending initiatives appear to be funded by reprioritisation of funding. In fact, the word 'reprioritisation' doesn’t even appear in the today’s budget documents.” 

“The changes in income tax thresholds are obviously welcome, but they do not fully compensate for fiscal drag for average wage growth for the typical income earner on $57,000 without children. Nor do they come into effect until 1 April 2018.” 

“We’ve heard this all before from National in election years. Vote for us, and we’ll give you tax relief. Unfortunately, this Government has canceled more promised tax cuts than it has delivered.” 

“This isn’t a taxpayer’s budget. It’s a naked election year spend up.”

Media Release: Very little for business sector in Budget 2017

With the exception of corporate welfare (which taxes all businesses more, to divert grants to favoured businesses and industries) the business-friendly initiative which features in the Budget announcements is a single proposal to allow deductibility of capital investment 'viability expenditure'.  The Government has announced $372.8 million of new operating funding for ‘Innovative New Zealand’, including $74.6 million for Callaghan Innovation’s ‘Growth Grants’.

Jordan Williams, Executive Director at the Taxpayers’ Union, says: “Today’s Budget continues to grow the corporate welfare empire, so the likes of Oracle Racing and Rocket Lab USA are the winners with everyday Kiwi firms paying the price.”

“Despite recent damning reports about the management and decision-making at Callaghan Innovation, the Government is pumping more of our money into the organisation’s grants.”

According to Jim Rose’s report based on the Budget 2016 numbers, if the Government’s corporate welfare regimes were abolished, enough money could be saved to reduce the company tax rate from 28% to 22%

Responding to Minister of Revenue Judith Collins' announcement of a proposal to address blackhole expenditure, Mr Williams says, “This proposal relates to feasibility expenditure which is currently unable to be deducted, but also unable to be depreciated.  Businesses in project capital intensive industries will welcome this, but the fact it isn’t even costed yet suggest that it is a long way from being implemented."

“This is a Budget which has largely ignored growing New Zealand’s enterprise and productivity.  The ‘once in a generation opportunity’ mooted by the Prime Minister in his budget speech, appears to be a missed one.”


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